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	<title> - DEPARTMENT OF TRANSPORTATION BUDGET PRIORITIES FOR FISCAL YEAR 2004</title>
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	[House Hearing, 108 Congress]
	[From the U.S. Government Publishing Office]



	DEPARTMENT OF TRANSPORTATION
	BUDGET PRIORITIES FOR FISCAL YEAR 2004

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

	HEARING

	before the

	COMMITTEE ON THE BUDGET
	HOUSE OF REPRESENTATIVES

	ONE HUNDRED EIGHTH CONGRESS

	FIRST SESSION

	__________

	HEARING HELD IN WASHINGTON, DC, FEBRUARY 12, 2003

	__________

	Serial No. 108-3

	__________

	Printed for the use of the Committee on the Budget


	Available on the Internet: http://www.access.gpo.gov/congress/house/
	house04.html


	______

	86-042 U.S. GOVERNMENT PRINTING OFFICE
	WASHINGTON : 2003
	____________________________________________________________________________
	For Sale by the Superintendent of Documents, U.S. Government Printing Office
	Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800
	Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001


	COMMITTEE ON THE BUDGET

	JIM NUSSLE, Iowa, Chairman
	CHRISTOPHER SHAYS, Connecticut, JOHN M. SPRATT, Jr., South
	Vice Chairman Carolina,
	GIL GUTKNECHT, Minnesota Ranking Minority Member
	MAC THORNBERRY, Texas JAMES P. MORAN, Virginia
	JIM RYUN, Kansas DARLENE HOOLEY, Oregon
	PAT TOOMEY, Pennsylvania TAMMY BALDWIN, Wisconsin
	DOC HASTINGS, Washington DENNIS MOORE, Kansas
	ROB PORTMAN, Ohio JOHN LEWIS, Georgia
	EDWARD SCHROCK, Virginia RICHARD E. NEAL, Massachusetts
	HENRY E. BROWN, Jr., South Carolina ROSA DeLAURO, Connecticut
	ANDER CRENSHAW, Florida CHET EDWARDS, Texas
	ADAM PUTNAM, Florida ROBERT C. SCOTT, Virginia
	ROGER WICKER, Mississippi HAROLD FORD, Tennessee
	KENNY HULSHOF, Missouri LOIS CAPPS, California
	THOMAS G. TANCREDO, Colorado MIKE THOMPSON, California
	DAVID VITTER, Louisiana BRIAN BAIRD, Washington
	JO BONNER, Alabama JIM COOPER, Tennessee
	TRENT FRANKS, Arizona KENDRICK B. MEEK, Florida
	SCOTT GARRETT, New Jersey RAHM EMMANUEL, Illinois
	GRESHAM BARRETT, South Carolina ARTUR DAVIS, Alabama
	THADDEUS McCOTTER, Michigan DENISE L. MAJETTE, Georgia
	MARIO DIAZ-BALART, Florida
	JEB HENSARLING, Texas
	[Vacant]

	Professional Staff

	Rich Meade, Chief of Staff
	Thomas S. Kahn, Minority Staff Director and Chief Counsel


	C O N T E N T S

	Page
	Hearing held in Washington, DC, February 12, 2003................ 1
	Statement of:
	Hon. Michael P. Jackson, Deputy Secretary, U.S. Department of
	Transportation............................................. 9
	Hon. Nick J. Rahall, II, a Representative in Congress from
	the State of West Virginia................................. 41
	Prepared statement and additional submissions of:
	Questions submitted for the record by Hon. Denise L. Majette,
	a Representative in Congress from the State of Georgia..... 4
	Deputy Secretary Jackson:
	Prepared statement....................................... 12
	Response to Mr. Spratt's question regarding Federal aid
	for highway projects................................... 18
	Response to Mr. Wicker's question regarding the Federal
	Highway Administration................................. 27
	Response to Mr. Cooper's question regarding the
	Transportation Equity Act for the 21st Century......... 29
	Response to Mr. Baird's question regarding ship disposal. 33
	Response to Mr. Scott's question regarding the James
	River Ghost Fleet...................................... 37
	Response to Mr. Meek's question regarding Minority
	Business Outreach...................................... 39
	Prepared statement of Mr. Rahall............................. 43


	DEPARTMENT OF TRANSPORTATION
	BUDGET PRIORITIES FOR FISCAL YEAR 2004

	----------


	WEDNESDAY, FEBRUARY 12, 2003

	House of Representatives,
	Committee on the Budget,
	Washington, DC.
	The committee met, pursuant to call, at 10 a.m. in room
	210, Cannon House Office Building, Hon. Jim Nussle (chairman of
	the committee) presiding.
	Members present: Representatives Nussle, Gutknecht, Spratt,
	Brown, Portman, Thompson, Putnam, Wicker, Diaz-Balart,
	Hastings, Scott, Neal, Garrett, Baldwin, Cooper, Baird, Vitter,
	and Shays.
	Chairman Nussle. Good morning.
	This is the House Budget Committee full committee hearing
	on the Department of Transportation Budget Priorities for
	Fiscal Year 2004.
	Today I am pleased to welcome the Honorable Michael P.
	Jackson, Deputy Secretary of Transportation. Mr. Secretary, we
	look forward to hearing your testimony today on the Department
	of Transportation's budget for the coming fiscal year.
	We also extend our best wishes to a former colleague, the
	current Secretary of Transportation, and we hope he gets well
	soon, feeling better, and back at it. We thought Congress was a
	pain in the neck but a pain in the back, that is something you
	cannot recover from quickly. He has our best wishes and if you
	would let him know we are thinking about him today, we would
	appreciate it.
	This year will be a very busy year for the Transportation
	Department and for that matter, a very busy year for my
	colleagues and myself here in Congress as we deal with
	transportation issues, as the Transportation and Infrastructure
	Committee grapples with a number of very important, vexing
	issues for our country.
	The administration's proposed budget request for the next
	fiscal year will provide the foundation for the new
	authorization cycle for many of the essential transportation
	programs. In the coming months, Congress will consider
	reauthorization of many of the surface transportation programs
	under what is called TEA-21 and their programs under AIR-21 and
	passenger programs under Amtrak. Mr. Secretary, there is no
	question that we have our work cut out for us as we work
	through these.
	As we prepare this year's budget, it is going to be
	important that we balance the essential needs of our Nation,
	especially those in the area of transportation and homeland
	security with our commitment to ensure that we keep the growth
	of discretionary spending in particular in line, in this
	instance.
	With the terrorist attacks still fresh in our minds and the
	possibility of a war on the horizon, we remember the critical
	role of the Transportation Department and its many components,
	the role you have played in these past several months. The
	attacks of September 11, 2001, made it crystal clear that our
	Nation's transportation system is on the front line in this
	global war on terrorism. While two major Department of
	Transportation operating administrations, the Coast Guard and
	the Transportation Security Administration, are moving from DOT
	to the new Department of Homeland Security, so much of what
	this department does on a daily basis helps to insure safety
	and security for our way of life.
	The administration's fiscal year 2004 proposal for the
	Department of Transportation calls for $54.3 billion in budget
	resources and $53.6 billion in outlays, a $2.9 billion or 5.7-
	percent increase from the previous year's level. The
	administration bases its request on the need to ``create a
	safer, simpler and smarter transportation system for all
	Americans.''
	To accomplish this, the Department is focusing on five
	performance goals: improved safety, increased mobility in the
	support of the Nation's economy, protect human and natural
	environment, and achieve organizational excellence while at the
	same time supporting homeland and national security issues.
	This hearing will examine how the President's budget request
	would accomplish these aims as well as other priority
	objectives of the Department of Transportation programs.
	About two-thirds of the funding provided here is for ground
	transportation programs. These include the Federal Highway
	Program, mass transit operating, and capital assistance. Under
	ground transportation are rail transportation through the
	National Rail Passenger Corporation. We all know this to be
	Amtrak and high speed rail and rail safety programs.
	Additional components of this function are air
	transportation, including the Federal Aviation Administration,
	Airport Improvement Program, the Facilities and Equipment
	Program, and the operation of air traffic control systems.
	Water transportation is also considered through the Coast
	Guard and Maritime Administration as well as other
	transportation support activities.
	We want to thank you for coming today. We need to work
	through a number of very important issues. These will not be
	settled today but we need to begin work as we look not only to
	2004 but beyond.
	There is no question we saw the vulnerability of
	transportation itself as well as the vulnerability of our
	economy to transportation and transportation concerns manifest
	itself over the last 2 years. This has to be one of our top
	priorities as we look forward to the future.
	I thank you for coming today. We look forward to your
	testimony.
	I would like to turn to Mr. Spratt for any comments he
	would like to make before we begin the hearing.
	Mr. Spratt. Mr. Chairman, thank you very much.
	Secretary Jackson, welcome. You are doing something not all
	Cabinet Secretaries are willing to do. We appreciate you coming
	before our committee, particularly this year because this year
	is an important year for transportation.
	I am sorry to hear about Norm Mineta's situation. I was the
	victim of an old back injury myself. I know how he must feel
	and I hope you will convey to him my best wishes for a speedy
	recovery and tell him to take it easy.
	Shortly, Congressman Rahall, the second most senior
	Democrat on the Transportation Committee, will appear before us
	to give us his perspective on the administration's request.
	This is, as I said, an important year for transportation.
	This year, Congress will take up the reauthorization of the
	Federal programs that support highways, transit, aviation, and
	rail. The President's proposals are the baseline or starting
	point so I am interested in hearing, as we all are, the
	administration's ideas for improving and bolstering these
	programs.
	At first glance, your 2004 budget for the Department of
	Transportation appears to be modest. The administration is
	claiming about a 6-percent increase over its request of last
	year. However, last year's request included a large cut to
	Federal aid for highways due to the incoming revenues of the
	Highway Trust Fund and I would venture to say that Congress is
	all but certain to reject that and increase the amount for
	education.
	The House reported an appropriations bill of $26.7 billion
	and passed it. The Senate, however, appropriated $31.8 billion
	for transportation. I am not quite sure where the Omnibus Bill
	stands at this point but it is my understanding that the
	highway amount will be increased. I hope it will be increased
	close to the Senate amount. If that is true, your request for
	this year, $29.3 billion, is about $2.5-billion less than the
	likely level of the Omnibus Appropriations Bill for the
	Department of Transportation.
	We think that is a mistake for several reasons. All of us
	come from States where there are large, unmet agendas for
	public works, highways in particular. Furthermore, we are in a
	slump even though the economic data indicate that we are coming
	out of a recession, you cannot feel it. This is a jobless
	recovery and we may actually be dipping back into a negative
	growth situation. Under those circumstances, it makes sense
	when there is a backlog of unfinished public works programs,
	highway programs, that not only can stimulate the economy but
	also can provide a return on investment in future years, that
	this is a time when we want to spend more rather than less on
	highways.
	I know to some extent that is tied to our formulation of
	how you use the Highway Trust Fund, but nevertheless, those are
	manmade laws and we could rewrite those laws. As we propose in
	our economic stimulus proposal, we want to put at least $5-
	billion more into highways right now in 2003, put it to work so
	that we could stimulate the economy and clear at least a small
	part of the backlog that every State has for transportation
	projects.
	I would also like to hear from you this morning the
	administration's justification for freezing transit funding in
	what is likely to be the 2003 funding level. Investments in
	transit combat congestion, would help all of us and combat
	urban sprawl. Transit systems across the country in major urban
	areas are going to need to make major security improvements in
	light of the threat to our homeland.
	Use of transit has been increasing steadily over the last
	few years, so I think it is fair to ask you to consider whether
	or not it is wise to flatline investments in transit systems
	around the country.
	The chairman has mentioned Amtrak. Amtrak is in dire fiscal
	straits and we would like to know what the administration
	proposes to do to deal with Amtrak's solvency.
	Finally, we want to hear about the Department of
	Transportation's role in homeland security. The Coast Guard and
	the Transportation Security Administration are now part of the
	new Homeland Security Department. We are interested in knowing
	if DOT has any remaining role in homeland security and if so,
	what will it be under the President's budget.
	Thank you again for coming. We look forward to your
	testimony.
	Chairman Nussle. All members will be given at this point in
	time, with unanimous consent, a chance to put into the record
	an opening statement.
	[The information referred to follows:]

	Questions Submitted for the Record by Hon. Denise L. Majette, a
	Representative in Congress From the State of Georgia

	FUNDING FOR TRAINING HAZMAT RESPONDERS

	Question--I note that the administration has maintained the level
	of funding for emergency preparedness grants at the same level as last
	year--$14 million--because of the authority authorized to the
	Department. As you know, these grants provide much needed funding for
	local hazardous materials responders, and I believe these grants are
	important, especially at a time when many State and local officials
	assert that their budgets and specifically their security budgets are
	strained. In my district, I have several major highways and rail lines
	along which HAZMAT materials travel.
	I also understand that as a result of a lawsuit, the user fees that
	fund this program have been reduced. Do you believe that the Department
	still has a role in training HAZMAT responders? [IF YES,] What does
	Congress need to do to provide DOT with the authority to increase the
	funding level for this program?
	And, are there other areas that my local officials can look for
	funding for training in the event of a HAZMAT emergency?
	Response--Under provisions of the Hazardous Materials
	Transportation Law of 1994, the Research and Special Programs
	Administration (RSPA) is authorized to fund Hazardous Materials
	Emergency Preparedness (HMEP) Planning Grants at amounts not to exceed
	$5 million, and Training Grants not to exceed $7.8 million. In
	addition, in our appropriations, Congress has imposed an obligation
	limitation of $14.3 million, which funds the planning and training
	grants, a special grant to non-profit organizations that funds training
	for HAZMAT trainers in dealing with HAZMAT incidents, training
	curriculum development, technical assistance and program management.
	All funds are generated by a registration fee imposed on shippers and
	carriers of certain HAZMAT.
	In the first six years, the registration program was generating
	substantially less than the $14.3 million in user fees Congress
	intended to be collected for funding the grants program. Thus, in 2000,
	RSPA expanded the scope of the companies required to register, and
	introduced a two-tier fee structure. As a result, the registration
	program was generating over $20 million. Annually, over the past
	several years, this surplus accumulated. To offset this surplus, RSPA
	lowered the fees so that the surplus will be drawn down over a few
	years.
	DOT has a continuing role in assisting the training of HAZMAT
	responders. Over the past decade, over 1.1 million HAZMAT responders
	have received training partially funded by the HMEP Grant program.
	Funding has also been distributed to about 1,700 local emergency
	planning committees.
	Other Federal Grant programs also provide funding for training to
	first responders. The Federal Emergency Management Agency (FEMA) in
	particular provides sizeable amounts of grant funds to emergency
	response organizations. FEMA's Fire Administration has distributed
	funding in excess of $100 million per year since 2000, and is expected
	to distribute over $330 million in fiscal year 2003, to be used by the
	Nation's firefighters to increase the effectiveness of firefighting
	operations, improve fire fighter health and safety programs, purchase
	new fire apparatus, enhance EMS programs, and support Fire Prevention
	and Safety Programs.
	FEMA also established an Emergency Management Performance Grant
	(EMPG) program targeted at anti-terrorism activities, to provide States
	the flexibility to allocate funds according to risk and to address the
	most urgent State and local needs in disaster mitigation, preparedness,
	response, and recovery, and to provide delivery of specialized, multi-
	agency anti-terrorism preparedness training. This program is a
	consolidation of several previously independent grant programs.
	Training is provided through each of the 50 States. The training is
	targeted at first responders, those who might come into contact with
	and be forced to manage the consequences of terrorist acts. Funding in
	fiscal year 2003 is estimated at $117,946,000.
	However, the HMEP Grants program is the only such program that
	specifically addresses training for first responders in responding to
	hazardous materials incidents during transportation. The program also
	offers a significant degree of flexibility to grantees for planning and
	training purposes.

	BALANCING FREIGHT EFFICIENCY AND SECURITY

	Question--Given the increased security concerns with respect to our
	country's freight transportation system, as well as the importance of
	efficiently moving goods to our economy, can you please elaborate on
	some of the mechanisms by which the Department intends to reconcile
	these two concerns and deal with freight efficiency and security in the
	budget?
	Response--Immediately following the tragic events of 9/11,
	Secretary Mineta recognized the need to safeguard our Nation's
	transportation system and sustain the movement of people and goods. To
	address the challenge of ensuring mobility while enhancing security,
	the Secretary convened a National Infrastructure Security Committee
	(NISC) that included senior managers from the Department of
	Transportation's modal administrations and our Office of Intelligence
	and Security, representatives from other Federal agencies responsible
	for trade and commerce (e.g., U.S. Customs, Department of Commerce,
	etc.), and private sector transportation providers. The NISC is working
	with industry to incorporate deterrents to cargo tampering and criminal
	activity into freight transportation business practices without
	compromising customer service. In its review of the transportation
	environment, the NISC has been able to identify areas where existing
	Federal programs and regulations are adequately addressing security
	issues and areas where improvements can be made without impeding the
	flow of commerce through redundant requirements or onerous enforcement
	activities.
	The Department's proposal for TEA-21 reauthorization will place a
	high priority on the efficient and secure movement of commercial
	freight. The Secretary will be seeking to increase funding flexibility
	for State and local authorities to make effective freight program
	investments, enhance innovative financing tools to leverage freight
	transportation investments, and expand the capacity and improve the
	efficiency of freight transportation networks.
	technology to improve freight transportation security
	Question--Given your background in the private sector as well as
	your service in the Department, do you think there is a need for
	federally funded increased logistics and information technology to help
	improve the overall efficiency and security of our intermodal freight
	transportation systems?
	Response--The Department believes that increased Congressional
	support for existing logistics and technology research and development
	programs would improve the efficiency and security of our intermodal
	freight transportation system. For example, our work in freight-related
	operational tests and infrastructure development under the Intelligent
	Transportation System program is expediting the movement of commercial
	vehicles using advanced technologies that confirm the location and
	contents of cargo shipments, and assure the operational compliance and
	safety status of commercial vehicles and their drivers under the
	Commercial Vehicle Inspection Systems and Networks (CVISN) program.
	These technologies provide information to enhance the logistics
	capabilities of transportation service providers and facilitate the
	inspection and clearance of commercial vehicles and their cargo by law
	enforcement agencies.
	Many of these technologies are newly developed and their successful
	application in the transportation environment requires further testing
	and refinement. Improvements to freight logistics and security are
	derived not from technologies or devices alone, but from their
	integration into business practices and government programs. The
	Department is working with its private sector partners and other
	government agencies to validate the transportation system benefits of
	our freight-related research and development activities.

	BUS AND BUS FACILITY FUNDING

	Question--The administration has proposed to eliminate the transit
	Bus and Bus Facilities funding category. Does this mean that the
	administration thinks that all major bus capital projects can be funded
	with regular formula funds?
	Response--While we have proposed to eliminate Bus and Bus
	Facilities as a separate program beginning in fiscal year fiscal year
	2004, the funding has been incorporated into the urbanized formula
	program, the nonurbanized formula program, and the New Starts program
	in the President's fiscal year 2004 budget request. Each urbanized area
	and State will receive a share of the bus capital funds as part of
	their annual apportionment. When the funding is included in the formula
	programs, transit operators and State departments of transportation
	will be able to anticipate and plan systematically for routine bus
	replacements, fleet expansion, and facilities over a period of several
	years, rather than relying on sporadic earmarks. We also believe the
	predictability of the funding stream will allow transit operators to
	better plan for major bus capital projects over the short and long
	term. In addition, funding and eligibility under the New Starts program
	will be expanded to include major non-fixed guideway corridor
	improvements such as Bus Rapid Transit projects.

	INTERMODAL TERMINALS

	Question--Atlanta has been working on a centralized multimodal
	facility, which would combine all modes of passenger public
	transportation in one convenient hub. Such a facility helps reduce
	congestion by making intercity and local public transportation a more
	attractive alternative to the private auto. Does the DOT budget and
	related TEA-3 proposal contain any provisions that would lead to the
	development of more of these intermodal terminals?
	Response--To provide seamless transportation for the traveling
	public, there is a critical need for the Nation's surface public
	transportation modes to link to each other and to airports at
	intermodal facilities. Few intermodal passenger terminals in the
	country bring together all the surface public transportation modes:
	motorcoach, intercity rail, urban mass transportation and rural local
	transit. Further, current surface transportation programs fail to
	address the importance of intercity bus service to our Nation's
	transportation infrastructure. Intercity buses serve over 4,200 U.S.
	communities in regular service and virtually every community in the
	United States through regular route, charter, or tour service.
	Intercity bus service connects sparsely populated rural routes to
	larger corridors.
	For these reasons, we believe that it is in the economic interest
	of the United States to improve the efficiency of public surface
	transportation modes by ensuring their connection with and access to
	intermodal passenger terminals, thereby streamlining the transfer of
	passengers among modes, enhancing travel options, and increasing
	passenger transportation operating efficiencies.
	To that end, we are proposing that Title 49, U.S.C., Chapter 55,
	Intermodal Transportation, be amended to include a new subchapter III,
	Intermodal Passenger Facilities. The purpose of this subchapter would
	be to accelerate intermodal integration among North America's passenger
	transportation modes by assuring intercity public transportation access
	to intermodal passenger facilities; encouraging the development of an
	integrated system of public transportation information and providing
	intercity bus intermodal facility grants.

	BUS SECURITY

	Question--Many of my constituents rely on bus service, both
	intercity and local, for reliable, affordable public transportation.
	The security of those systems is very important. What is DOT doing to
	support the efforts of intercity bus and transit bus operators to make
	the bus systems more secure?
	Response--Since September 11, the Federal Transit Administration
	(FTA) has undertaken a series of major steps to help prepare the
	transit industry to counter terrorist threats. FTA has provided direct
	assistance to transit agencies through on-site readiness assessments,
	technical assistance teams, regional forums for emergency responders,
	grants for drills, training, and accelerating technology and research
	projects. Throughout this process, FTA has been learning, sharing, and
	applying all that we can to enhance transit security. We have learned
	from the terrorism experiences in London, Paris, Tokyo, and Israel. We
	have formed working relationships with the intelligence community, and
	have applied their expertise and knowledge to the transit industry. And
	we gained a tremendous amount of information about the readiness and
	needs of the transit industry from the aggressive five-point initiative
	we initiated immediately after September 11. Under this initiative thus
	far, FTA has:
	1. Completed 37 threat and vulnerability assessments: Multi-
	disciplinary teams including experts in anti-terrorism, security, and
	transit operations assessed the readiness of the largest and highest
	risk transit agencies. Based on these assessments, FTA has provided
	specific feedback to individual agencies on how to improve their
	security systems and reduce vulnerabilities, as well as information on
	``best practices'' to all transit agencies.
	2. Deployed technical assistance teams: Emergency response planning
	and technical assistance teams are being deployed to the top 50-60
	transit agencies to help them to implement the major components of a
	systematic security program including current security and emergency
	response plans, training assessments, security awareness materials for
	transit employees and customers, etc.
	3. Awarded grants for drills by emergency responders and transit:
	Grants of up to $50,000 were awarded to 83 transit agencies to conduct
	tabletop and full scale drills with regional emergency responders to
	test and improve their security and emergency response plans.
	4. Accelerated technology deployment: FTA accelerated the
	deployment and testing of the PROTECT system for chemical detection in
	the Washington, D.C. and Boston subway systems. In addition, research
	funds were refocused to conduct 11 short-term, quick payoff research
	projects identified by the transit industry.
	5. Facilitated training and regional collaboration: A new 2-hour
	security awareness course for front line employees and supervisors is
	being delivered nationwide. This winter, FTA will complete 17 regional
	forums to promote regional collaboration and coordination among fire,
	police, and medical emergency responders and transit. To date, nearly
	1,300 individuals, including representatives of 125 transit agencies
	and their community partners, have participated in these 2-day forums
	held in 10 locations across the country.
	Although the transit industry has made great strides to strengthen
	security and emergency preparedness, there is much more to do. It is
	critical that security be integrated throughout every aspect of transit
	programs, operations, and infrastructure.
	The most important steps to focus on right now are employee
	training, public awareness, and emergency response planning. Our
	current efforts in this regard include the following:
	Training. As part of the Model Bus Safety and Security Program, FTA
	is preparing technical assistance and guidance documents to assist
	transit agencies in implementation of safety and security system
	program plans. The Security Guidance Document will detail baseline and
	enhanced security actions scaleable by system size and will focus on
	areas such as training employees to recognize suspicious activities,
	packages and substances and to respond to threats and incidents.
	Security is a core element of this Model Program whose goals are to
	improve transit bus safety and security through the establishment of
	transit bus safety and security practice benchmarks and to provide
	Model Program implementation technical assistance to the industry.
	Emergency Preparedness and Response. Using FTA grants of up to
	$50,000, 83 of the Nation's largest transit agencies will conduct
	tabletop and full-scale drills with regional emergency responders to
	test and improve their security and emergency response plans. One
	important condition of these grants is that the drills must include the
	participation of local and regional police, fire and emergency response
	agencies.
	Public Awareness. FTA public awareness outreach on bus security
	enhancements focuses on making the public able to recognize suspicious
	activities and packages in public portions of transit facilities,
	including bus stops, and to report these to transit officials, the
	police and to each other. Over the next several months, FTA will launch
	``Transit Watch,'' a national outreach campaign to engage transit
	agencies of all sizes in a voluntary security program to improve
	personal safety and awareness, and to develop a media campaign that
	informs the public about this government/industry partnership. We will
	be working with industry stakeholders, including transit unions, to
	develop and deliver training materials, posters, pocket cards,
	brochures and other materials, The passenger awareness component of
	this initiative is a major new focus for FTA and it will provide an
	immediate and significant improvement in transit security. ``Transit
	Watch'' will be modeled after successful programs already underway in
	many of the larger transit agencies and the national ``Neighborhood
	Watch Programs.'' This will assist in positioning transit as a good
	community neighbor, and transit vehicles and employees as ``safe
	havens'' in the event of an emergency.

	INTERCITY BUSES

	Question--Amtrak receives a great deal of attention and has a role
	to play in the Nation's public transportation network, but many of my
	constituents rely on intercity buses for affordable, intercity
	transportation. What DOT programs exist, or are being proposed, to
	support this vital public service? What is your view of the importance
	of intercity buses to the national transportation system?
	Response--Intercity buses serve over 4,200 U.S. communities in
	regular service and virtually every community in the United States
	through regular route, charter, or tour service. Intercity bus service
	connects sparsely populated rural routes to larger corridors and plays
	an important role in our national transportation system.
	Current surface transportation programs, however, fail to
	adequately address the importance of intercity bus service to our
	Nation's transportation infrastructure. FTA currently funds intercity
	bus transportation through the 5311(f) program, whereby States are
	required to spend at least 15 percent of their 5311 Rural formula
	program money on planning, marketing, shelters, service agreements, and
	other activities having to do with rural denizens and intercity bus
	transportation. States can certify that these needs are being met and
	thereby not have to set aside any or all of that 15 percent (about one-
	half the States so certify each year). In addition, the Federal Motor
	Carrier Safety Administration (FMCSA) develops, promulgates and
	enforces safety regulatory standards for intercity buses. FMCSA
	provides no specific funding for this mode of transportation.

	EXPANDING COMPETITION WITHIN AIRLINE INDUSTRY

	Question--The fiscal year 2004 budget has been billed as laying the
	groundwork for the several authorization bills that will be considered
	by Congress this year. The Federal Aviation Administration (FAA)
	reauthorization bill will be important to establish the groundwork to
	continue and expand the consumer choice and the competition we
	currently experience in the aviation industry. What steps is the
	Department taking through the budget to expand further choice and
	competition for consumers in the industry?
	Response--Issues of competition in airline service to communities
	are handled by the Office of the Secretary of Transportation rather
	than by the FAA. While the Office of the Secretary's 2004 budget
	proposes to eliminate the Small Community Air Service Development Pilot
	Project and to restructure and cut back the Essential Air Service
	program, due to government-wide budget pressures and high per-passenger
	subsidies in the EAS program, the Department recognizes that airline
	service and competition remain key issues to communities across the
	Nation. The Department will study the results of the Small Community
	pilot program grants from fiscal years 2002 and 2003, and provide $50
	million for EAS service. The budget proposes over $2 million for new
	studies on the impact of changing airline business plans on competition
	and community service, competition in international airline service,
	and the impact of regional jet aircraft on competition and service. The
	Office of the Secretary will also continue to carry out its statutory
	responsibilities in overseeing such aspects as airline alliances and
	airport competition plans, with an emphasis on encouraging competition
	and service choices for consumers.

	AIR TRAFFIC CONTROLLER HIRING

	Question--As you know, much of the Nation's air traffic controller
	workforce was hired in the years immediately following the strike.
	Thousands of controllers hired in those years are approaching the
	mandatory retirement age, and I am concerned that the U.S. may not have
	a ready workforce to replace these experienced controllers at our
	Nation's busiest airports, like Hartsfield, and air traffic control
	facilities. I believe we should capitalize on the experience we have
	before it is lost by training recruits with current controllers. Does
	this budget provide adequate funding to recruit and train a quality air
	traffic controller workforce in the near term?
	Response--The Department is well aware of this situation, confirmed
	by studies of the General Accounting Office. The Federal Aviation
	Administration portion of the President's fiscal year 2004 budget
	requests an increase of 302 air traffic controllers, at a cost of $13
	million, to begin to prepare the FAA for the rapid increase in
	retirements that FAA expects to start experiencing around fiscal year
	2007.

	Chairman Nussle. With that, Secretary Jackson, welcome. We
	look forward to your testimony.

	STATEMENT OF HON. MICHAEL P. JACKSON, DEPUTY SECRETARY,
	DEPARTMENT OF TRANSPORTATION

	Mr. Jackson. Thank you, Mr. Chairman.
	Thank both of you for your comments about Secretary Mineta.
	I will be certain to convey to him today your best wishes for
	his speedy recovery. He is doing well and we expect him back in
	the office and at the desk in short order.
	On Secretary Mineta's behalf, I am pleased to share with
	you a brief overview of the 2004 budget. Mr. Chairman, you have
	given a good thumbnail sketch of it and I will try not to run
	over too much of the same territory in my oral remarks.
	As you said, we have a $54.3 billion request for the
	Department which is a 6-percent increase over the 2003 level.
	We are losing two great sets of colleagues from the Department
	this year as the Coast Guard and Transportation Security
	Administration move to the Department of Homeland Security. We
	are proud of our 35-year relationship with the Coast Guard and
	are very proud of the work that TSA has done in its first year
	of operation to stand up their agency to meet congressionally
	established goals.
	I would like to share with you some highlights from the
	2004 budget request and mention briefly some of the key
	initiatives. Then we can discuss some of these items in greater
	detail as you wish.
	As you know, current laws authorizing both surface and air
	transportation, as said here this morning, are up for
	reauthorization as is our intercity passenger rail program.
	These will be far reaching reauthorizations--in the case of
	highways and transit, a 6-year authorization; in our air
	program, a 4-year authorization is anticipated. The decisions
	we make this year will set the pace for many important
	investments in the coming years. We look forward to unveiling
	the details of our reauthorization legislation very soon and to
	working with Congress on swift passage.
	I would like to start by sharing a few principles that will
	be embedded in these reauthorization proposals and that animate
	some of our work. For surface transportation programs, we will
	include increased funding flexibility for State and local
	authorities. This is a key point of how we want to make the
	program more responsive to State and local needs. We will
	continue to encourage innovative financing tools, and efficient
	environmental review processes will be a priority. DOT will
	seek to improve efficiency for freight transportation networks,
	an area that has been too little appreciated and needs
	additional focus to help us understand how to facilitate the
	movement of freight through the Nation. We will continue to put
	a strong emphasis on public transportation by simplifying
	transit programs and fostering seamless networks and greater
	flexibility for transit programs.
	Finally, our proposals will include an emphasis on
	consolidating and expanding Federal safety programs. I would
	like to repeat that point. For DOT, 2003 will be a special year
	for focus on highway and aviation safety. Secretary Mineta has
	challenged us to bring to this year the same focus, passion and
	innovation that we used last year in creating the
	Transportation Security Administration, but to focus this
	passion and this creativity on the profoundly important goal of
	improving safety and saving lives.
	Forty-two thousand people perish annually in traffic
	accidents and almost one out of our, almost 9,000 people, could
	be saved if America would only buckle up. We think we can do
	significantly better. We know we must do significantly better.
	The President's budget will include a number of mechanisms to
	address seatbelt usage, impaired driving and overall highway
	safety measures to try to reduce this terrible toll on America.
	Regarding the highway reauthorization bill, let me begin
	with the fundamental principle. We are committed to maintaining
	the guaranteed funding that links highway spending to Highway
	Trust Fund receipts. This has been the cornerstone of the two
	previous authorizations and one which the administration
	reinforces and supports. In fact, the President's budget
	request will actually propose to obligate more for highway
	programs than we expect to collect in Highway Trust Fund
	receipts. We will try to squeeze everything we can out of the
	mechanism we have, the Highway Trust Fund, but the President's
	budget does not propose increases in highway user fees.
	For the Federal Highway Administration, the
	administration's 2004 budget request proposes that all revenue
	from gasohol taxes, 2.5 cents per gallon, be deposited directly
	into the Highway Trust Fund rather than the current approach to
	deposit gasohol receipts into the General Fund. If enacted,
	this one change would bring an additional $600 million a year
	into the Highway Trust Fund to be invested for transportation
	needs.
	In addition to spending estimated Highway Trust Fund
	receipts, our proposal unveils a brand new $1 billion
	infrastructure performance and maintenance initiative. This
	program is specifically aimed at addressing maintenance and
	short term projects that can be implemented quickly, and be
	obligated in a rapid fashion. Totalling $6-billion over the
	authorization period, this funding will target projects to
	address congestion, bottlenecks and improve pavement
	conditions. Our proposed program spends at a level that keeps
	the Highway Trust Fund balance relatively constant. The
	obligation limit for 2004 is $29.3 billion, a 6-percent
	increase above the President's amended request for 2003 and the
	level the House had marked up as we put together this budget.
	When comparing the President's 6-year surface
	transportation reauthorization proposal in total, including
	highways, highway safety, transit, and motor carrier safety to
	the 6 years of TEA-21, the President proposes an overall
	increase of some 19 percent.
	Turning to the National Highway Traffic Safety
	Administration, I return to the theme of safety. This is their
	No. 1 priority at NHTSA. The President's budget request
	includes $665 million for NHTSA to reduce fatalities, prevent
	injuries, and encourage safe driving; $447 million in NHTSA's
	2004 funding request will support grants to the States to
	enforce safety belt and child safety seat use and reduce
	impaired driving.
	At DOT, we are also working to keep highways safe through
	the work of the Federal Motor Carrier Safety Administration by
	focusing on ways to prevent fatalities and injuries resulting
	from accidents involving commercial motor vehicles. The 2004
	budget request includes $447 million to address these
	particular issues as well. A focus on safety is an integral
	part, as you see, of these core highway programs.
	Another way to improve transportation safety is by
	encouraging the use of public transit, a dependably safe and
	efficient way to get people where they need to be. The
	President's budget request includes $7.2 billion to strengthen
	and maintain our public transportation systems. The 2004 budget
	request includes $1.5 billion to fund 26 New Start projects
	that will carry 190 million riders annually when completed.
	In transit we are reducing five accounts to three. We are
	focusing more flexibility on State formula grants so that
	States can have the money to use in more flexible ways. We have
	proposed a 25-percent increase in New Start funding and a 20-
	percent increase in the funds devoted to rural areas for
	transit.
	Having touched on the surface programs, I will turn briefly
	to the reauthorization of aviation programs. While we will soon
	release the policy details of our aviation reauthorization
	proposal, the President is requesting $14 billion for Federal
	Aviation Administration programs in 2004.
	Because travel demand has dipped in the post-9/11
	environment, it is important to understand that it will be
	back. We will face congestion and capacity problems. So we
	cannot take our eye off these aviation infrastructure
	investments. We want to fund them at a significant level in
	this budget. Equally important, we want to continue to focus on
	reducing aviation fatality rates and improving aviation
	security. These are component parts of what you will be seeing
	when we send our proposal up for the Airport and Airway Trust
	Fund and the FAA reauthorization.
	The President's budget request and our reauthorization
	proposal maintain current levels of aviation infrastructure
	investment and expand FAA's safety staff, including the number
	of air traffic controllers needed as FAA faces an anticipated
	bubble in retirements. Because of the long lead time to train
	air traffic controllers, we will begin in 2004 to increase the
	work force to be able to meet this anticipated retirement need.
	Overall in FAA, we are in a period of declining revenue
	into the Aviation Trust Fund. Similar to the Highway Trust
	Fund, we are trying to squeeze as much as we can from the
	Aviation Trust Fund to maximize the funding of these core
	programs that are so important to our Nation.
	Now let us turn to railroads and Amtrak first. Amtrak faces
	severe and persistent financial challenges. The administration
	has asked Congress to adopt reforms that will strengthen
	Amtrak's business operations and its financial condition, but
	Amtrak continues to request funds to maintain their current
	business structure and services in place. The Federal
	Government simply cannot afford business as usual at Amtrak and
	the significant investment increases that are required for
	business as usual.
	The President's 2004 budget request includes $900 million
	for Amtrak. This is a funding level with a message. Amtrak must
	reform; Amtrak must do better. Passenger rail is an important
	part of our Nation's transportation infrastructure. I want to
	reemphasize that. We recognize the importance of intercity
	passenger rail. We are ready to work with Congress and the
	States in upcoming reauthorization discussions to create an
	intercity passenger rail system that is driven by sound
	economics, one that fosters competition and establishes long
	term partnerships between the States and the Federal
	Government. There is not a simple solution to this set of
	complex problems. If there were, sometime over the past 30
	years somebody would have found it. It is time to work hard at
	this one to see how we can make this organization run in a more
	businesslike fashion and how to make intercity passenger rail
	viable.
	Finally, I would like to share the President's request for
	our maritime programs. The Maritime Administration supports
	essential transportation and intermodal connections for
	domestic and international trade. The President is requesting
	$219 million for MARAD. One of MARAD's continuing challenges is
	the disposal of obsolete ships. We have 130 such vessels in our
	inventory and we are requesting $11.4 million for removal of
	the highest risk vessels.
	My prepared remarks focus on only a part of the big
	picture, compressing $54 billion into just this few minutes,
	but I want to thank you for the opportunity to testify today. I
	look forward to working closely with the Congress during this
	period of reauthorization for so many of our core programs. I
	look forward to responding to any questions you may have.
	With your permission, I would ask that my prepared remarks
	be submitted as a part of the record.
	Chairman Nussle. They will be made a part of the record.
	[The prepared statement of Michael P. Jackson follows:]

	Prepared Statement of Hon. Michael P. Jackson, Deputy Secretary,
	Department of Transportation

	Mr. Chairman, members of the committee, thank you for the
	opportunity to appear before you today to discuss the President's
	fiscal year 2004 budget request for the Department of Transportation
	(DOT).
	At the onset let me say that Secretary Norman Mineta sends his
	regrets, as he is unable to be here today. As many of you know, he is
	recovering from back surgery. While he recovers, we are in constant
	communication and he sends his regards. He is feeling great, is in high
	spirits and is ready to be back at work in the near future.
	President Bush is requesting $54.3 billion for DOT--a 6-percent
	increase over the 2003 President's request--including over $14 billion,
	or 27 percent, targeted toward supporting Secretary Mineta's top
	priority--safety.
	2004 presents tough choices. The President must balance pressing
	domestic needs, meet our international responsibilities and protect
	against terrorist attacks at home. As the President made clear in his
	State of the Union Address, the Federal budget reflects a growth at a
	rate of about 4 percent. In this context, our proposed funding for DOT
	at a 6-percent growth is responsible, and will support important
	transportation needs.
	During the past year, we at DOT have worked to strengthen our
	important role as guardians of the Nation's transportation systems.
	Under the leadership of Secretary Mineta, the DOT Team is hard at work
	to ensure a safe and efficient Federal transportation system for all
	Americans.
	This budget request provides the foundation for a new
	reauthorization cycle in both surface and aviation programs that will
	guide the course for these important programs for the next several
	years.
	The President's budget request also reflects the first full year of
	funding for the newly established Department of Homeland Security. Two
	major DOT operating administrations--the United States Coast Guard and
	the Transportation Security Administration--are moving from DOT to the
	new Department of Homeland Security.
	DOT is proud to have provided guidance and support to the United
	States Coast Guard for more than 35 years. Whether saving the lives of
	those in distress at sea, protecting the Nation from the scourge of
	illegal narcotics, or responding to environmental catastrophes like the
	Exxon Valdez oil spill--we at DOT celebrate the Coast Guard's many
	accomplishments and we wish them ``Godspeed'' as they take on an
	expanded role in homeland security.
	We are also honored to have shepherded the Transportation Security
	Administration--TSA--from its birth through its first full year of
	operation. TSA has overcome enormous challenges to bring discipline and
	consistency in providing security to the traveling public. The
	Secretary and his entire team are extremely proud that TSA has
	successfully met its deadlines for bringing airports throughout the
	country into compliance with new security procedures.
	Although TSA has much work ahead--particularly to address non-
	aviation security issues--we are confident that this new organization
	is off to a good start and headed in the right direction. We look
	forward to continuing to work closely with the Coast Guard, TSA and the
	Department of Homeland Security to ensure that the Nation has an
	efficient, safe, and secure transportation system.
	Now, I would like to emphasize some of the highlights in the DOT
	2004 budget request and key initiatives in the President's proposal.
	Current laws authorizing both surface and air transportation
	programs will expire at the end of 2003. In anticipation of this, the
	2004 budget request includes the budgetary foundation for proposed new
	legislation that will authorize these programs for the next several
	years. A few details of the administration's reauthorization proposals
	are still being refined; however, I want to share with you now several
	principles that will animate our surface and aviation transportation
	proposals.
	<bullet> For the surface transportation programs, we will include
	increased funding flexibility for State and local authorities to make
	effective program investments.
	<bullet> We will continue to encourage innovative financing tools
	to extend the reach of our transportation investments.
	<bullet> Efficient environmental review processes will be a
	priority, and we will continue to implement the President's
	streamlining Executive Order.
	<bullet> DOT will seek to improve efficiency for freight
	transportation networks--a crucial driver of our Nation's economy.
	<bullet> We will continue a strong emphasis on public
	transportation by simplifying transit programs and fostering a seamless
	transportation network.
	<bullet> Finally, our proposals will include an emphasis on
	consolidating and expanding Federal safety programs.
	I want to repeat that last point: for DOT, 2003 will be a year of
	special focus on highway and aviation safety. For the last 15 months,
	Secretary Mineta and his senior management team have spent a great deal
	of time focused on the security threats that face transportation. This
	was absolutely necessary. We've made great progress.
	But for this year, and going forward, Secretary Mineta has
	challenged us to focus that same passion and innovation on a simple but
	profoundly important goal: improving safety, saving lives.
	Forty-two thousand people perish annually in traffic accidents.
	Almost one out of four--over 9,000 lives--could be saved, if America
	would only buckle up. We can do significantly better; we must try. And
	the President's budget request will make a meaningful investment to
	strengthen our partnership with states and the public to improve
	safety.
	We look forward to unveiling the details of our reauthorization
	legislation very soon, and to working with the Congress on swift
	passage.
	Regarding the highway reauthorization budget, let me begin with a
	fundamental principle: we are committed to maintaining the guaranteed
	funding that links highway spending to Highway Trust Fund receipts.
	In fact, the President's budget request will propose starting the
	reauthorization by actually obligating more for highway programs than
	we expect to collect in Trust Fund receipts. We will squeeze everything
	we prudently can from the Trust Fund, but the President's budget
	request does not propose new user fees.
	For the Federal Highway Administration, the administration's 2004
	budget request proposes that all revenue from gasohol taxes be
	deposited directly in the Highway Trust Fund, rather than the current
	approach that deposits gasohol taxes to the General Fund. If enacted,
	this one change will add more than $600 million of available funding to
	the Highway Trust Fund for each year of the authorization cycle.
	In addition to spending estimated Highway Trust Fund receipts, our
	proposal also unveils a brand new $1 billion Infrastructure Performance
	and Maintenance initiative specifically aimed at addressing immediate
	highway needs and at projects that can be implemented quickly. Totaling
	$6-billion over the authorization period, this funding will target
	projects that address traffic congestion and bottlenecks, and improve
	pavement conditions.
	All up, what our proposed program does is spend at a level that
	keeps the Highway Trust Fund balance relatively constant. The
	obligation limitation for 2004 is $29.3 billion--this is a 6-percent
	increase above the President's amended request for 2003. When comparing
	the President's 6-year surface transportation reauthorization proposal
	in total--including highways, highway safety, transit, and motor
	carrier safety--to the 6 years of TEA-21, the President proposes an
	overall increase of 19 percent.
	I've already discussed highway safety. Highway fatalities claim
	more than 42,000 Americans each year and vehicle accidents cost an
	estimated $230 billion. Reducing this tragic statistic is ``priority
	one'' at the National Highway Traffic Safety Administration. The
	President's budget request includes $665 million for NHTSA to support
	its mission--to reduce fatalities, prevent injuries, and encourage safe
	driving practices. $447 million of NHTSA's 2004 funding request will
	support grants to States to enforce safety belt and child safety seat
	use and reduce impaired driving.
	At DOT we are also working to keep our highways safe through the
	work of the Federal Motor Carrier Safety Administration--by focusing on
	ways to prevent fatalities and injuries resulting from accidents
	involving commercial motor vehicles. The 2004 President's budget
	request includes $447 million to address these problems, including $174
	million dedicated to strengthening truck and bus safety standards,
	ensuring compliance with safety regulations, and supporting inspection
	programs that keep unsafe trucks off our roads.
	We will also continue to emphasize a comprehensive safety
	inspection program at the southern border so Americans can be assured
	that trucks entering the United States from Mexico meet U.S. Federal
	safety regulations. The President's request provides $223 million for
	Motor Carrier Safety Grants to States to ensure aggressive State
	enforcement of interstate commercial truck and bus regulations.
	Another way to improve transportation safety is to continue to
	encourage the use of our transit and rail systems by the millions of
	Americans who use them to get where they need to go. Public
	transportation is a dependably safe and efficient mode of
	transportation. The President's 2004 budget request includes $7.2
	billion to strengthen and maintain our public transportation systems.
	This request includes a proposed streamlined and consolidated
	program, giving States and localities additional flexibility to meet
	the mobility needs in their communities, efficiently and effectively.
	The 2004 budget request includes $1.5 billion to fund 26 ``New Starts''
	projects that will carry over 190 million riders annually when
	completed.
	Included in the Federal Transit Administration's funding envelope
	is $145 million to support the President's New Freedom Initiative to
	reduce barriers for persons with disabilities who wish to enter the
	workforce.
	Having touched on DOT's surface transportation programs, I'll turn
	to the reauthorization of our aviation program. We will soon release
	policy details of our aviation reauthorization proposal; however, the
	President is requesting $14 billion for 2004 for Federal Aviation
	Administration programs.
	Because travel demand for air service will inevitably return to and
	exceed pre-9/11 levels, we cannot afford to reduce our commitment to
	investing in the nations air traffic control system and our airports.
	Equally important, we cannot take our eye off the safety goal: to
	reduce aviation fatality rates by 80-percent over the period 1996 to
	2007.
	To meet both safety and mobility needs, the budget proposes to
	spend a greater portion of the accumulated cash balances from the
	Airport and Airway Trust Fund. The President's budget request and our
	reauthorization proposal maintain current levels of aviation
	infrastructure investment, and expand FAA's safety staff, including the
	number of air traffic controllers needed as FAA faces anticipated
	controller retirements.
	Let's turn now to the railroads. First Amtrak. Amtrak faces severe
	and persistent financial challenges. The administration has asked
	Congress to adopt reforms that will strengthen Amtrak's business
	operations and financial condition. But Amtrak continues to request
	funds to maintain their current business structure and services. The
	Federal Government simply cannot afford business as usual at Amtrak.
	The President's 2004 budget request includes $900 million for
	Amtrak of which $229 million is for capital maintenance and $671
	million is for operations and for implementing restructuring and
	management reforms for passenger rail. This is a funding level with a
	message: Amtrak must undergo significant reform.
	Passenger rail is an important component of our Nation's
	transportation infrastructure. We stand ready to work with Congress and
	the states in the upcoming reauthorization to create an intercity
	passenger rail system that is driven by sound economics, fosters
	competition, and establishes a long-term partnership between states and
	the Federal Government to sustain an economically viable system.
	In addition to passenger rail subsidies, the President requests
	$189 million for the Federal Railroad Administration aimed at enhancing
	safety, by reducing rail-related accidents and ensuring the safe
	transport of hazardous materials throughout the rail system.
	The movement of hazardous materials is a priority focus for the
	Research and Special Programs Administration (RSPA). RSPA oversees the
	transportation of hazardous materials, including America's 2.1 million
	miles of gas and oil pipelines. The President's 2004 budget request
	provides $132 million--including $67-million specifically targeted
	toward pipeline safety initiatives.
	Finally, I want to share with you the President's request for our
	maritime programs. The Maritime Administration (MARAD) supports
	essential transportation and intermodal connections for domestic and
	international trade. The President is requesting $219 million for
	MARAD. One of MARAD's continuing challenges is the disposal of obsolete
	ships that potentially pose an environmental risk to our Nation's
	waterways. The 2004 budget request includes $11.4 million for removal
	of the highest risk ships.
	The 2004 budget request also includes funding of $14 million for
	the Saint Lawrence Seaway Development Corporation, which supports
	domestic and international trade as well.
	My prepared remarks focus on only a part of the whole picture. Yet
	each organization within DOT contributes indispensably to accomplishing
	the DOT goals I have outlined. In addition, I am proud to note that DOT
	is working hard to address the President's Management Initiatives in
	order to improve departmental efficiency and customer service.
	To conclude, President Bush's 2004 budget request makes a very
	substantial commitment to ensuring a safe and efficient Federal
	transportation system for all Americans. Thank you again for the
	opportunity to testify today. Secretary Mineta and his management team
	will work closely with Congress as you consider the 2004 budget and I
	look forward to responding to any questions you may have.

	Chairman Nussle. I would like to start with a compliment.
	The transportation security folks are doing just a fantastic
	job. There were a number of people in a bipartisan way that had
	some concerns about what was going to happen when this was
	federalized--and people may still have some of those same
	concerns, but I have to tell you, as a frequent flyer and
	traveler, it is a night-and-day difference in the job they are
	doing across the country. They are professional, thorough, and
	polite, which is not easy to do in a situation like that.
	I am sure there are some challenges that are out there and
	people have their stories they like to tell about different
	circumstances but it doesn't take much. All you have to do is
	travel to another country to see the glowing differences
	between the job they do and the difference in the amount of
	thorough security they provide compared to the past.
	Does that mean it is fail safe? No, of course not, but I
	just want to start with a compliment on the professionalism
	that they have provided. I think it is very noticeable and
	every chance I get, I thank them as I go through the airports.
	I know that is leaving the Department and going to Homeland
	Security, but the Department of Transportation deserves a lot
	of kudos for the way that was brought into existence. I hope
	you are hearing that from other entities.
	Mr. Jackson. Thank you, Mr. Chairman. We are. I have to say
	Congress really stepped up and did the thing they needed to do
	which was set a mission, set what many thought were impossible
	goals. Secretary Mineta just refused to let us do anything but
	hit those goals and targets. We have made a great start and
	there is still much to do, but I feel tremendously proud of the
	team at DOT and TSA. We threw the whole organization at this
	task over the last year and created the largest organization
	created since World War II to meet this need. I think we have
	made an outstanding start. There is more to do but it is a
	story the whole government, particularly the men and women that
	signed up to do this task for us, can feel proud about. So
	thank you for your remarks.
	Mr. Spratt. Mr. Chairman, if you will yield, I want to
	second what the chairman just said. I have had the same
	experience. We come from different parts of the country and
	there is a decided change for the better in the processing.
	I am sure improvements can still be made, security still
	needs to be strengthened but nevertheless, it is decidedly
	better than it was.
	Mr. Jackson. Thank you, Congressman. I appreciate that.
	Chairman Nussle. A couple of things. First of all, with
	regard to gasohol or ethanol, the administration is proposing
	to redirect to the highway account the 2.5 cents per gallon
	excise tax as part of a General Fund transfer. Do you want to
	comment further on that proposal?
	Mr. Jackson. Yes, sir. It is revenue that has been going to
	the General Fund that would find a natural home in the Highway
	Trust Fund. It is a way of giving us $600 million in 2004 and
	throughout the period of this reauthorization to address core
	needs. The President supports this effort and we will strongly
	encourage the Congress to adopt that as part of the
	reauthorization.
	Chairman Nussle. Does the administration anticipate any
	other proposed changes to the tax structure involving ethanol?
	Mr. Jackson. I do not have any to propose at this time,
	sir.
	Chairman Nussle. With regard to the trust fund itself, the
	administration, as I understand, is proposing to extend the
	funding approach of TEA-21 in which highway spending is linked
	to Highway Trust Fund receipts. Will the administration
	proposal still include the possibility for funding to not only
	go up but also down as part of this proposal?
	Mr. Jackson. Yes, sir. We absolutely want to preserve the
	Revenue Aligned Budget Authority that allows us to enjoy the
	benefit if there is uptake in the economy above the projected
	outlay levels. But we think it needs to be smoothed so that the
	rapid variation that we found when the economy made a downturn,
	and this past year's proposal reflected this downturn, can be
	smoothed out. We think we have some proposals that will help
	eliminate such jagged variations in the operation of RABA and
	we hope to submit them soon.
	Chairman Nussle. You mentioned in your prepared remarks
	that ``We will squeeze everything we prudently can into the
	trust fund but the President's budget request does not propose
	new user fees.'' What will the administration's position be if
	they are proposed to the administration?
	Mr. Jackson. We think we have a responsible budget that
	balances transportation needs with the very real deficit
	management problems we have to face in the country. We think it
	is a reasonable and sound proposal and we hope it will get
	careful consideration on the Hill.
	Chairman Nussle. The budget the President has submitted
	suggests that the administration supports a spend down of the
	Highway Trust Fund unexpended balance to support an equally
	modest annual increase in highway program spending. Depending
	on the scenario that comes out from the future, that might be
	very affordable. However, there are scenarios out there, one
	that we probably are all experiencing right now and that is a
	spike in gas prices as well as the possibility of a war and
	other scenarios that may make it more difficult to see
	increases in the Highway Trust Fund and therefore, may make it
	difficult to achieve the balances to therefore spend down. In
	other words, you would be betting on the come and that come may
	not actually come.
	Does the DOT have any contingencies for a decrease in
	driving and as a result, a decrease in the revenues to the
	Highway Trust Fund?
	Mr. Jackson. Part of the work of the RABA adjustment is to
	adjust the spending in the highway program around the baseline
	targets set in the authorization bill. RABA, by definition,
	includes a mechanism to impose discipline in a time of
	downturn. In this past year, the administration initially
	supported a budget for 2003 that simply took the RABA
	adjustment as Congress had written it and put it in play. We
	then supported $4.4-billion increase that brought us back up to
	the projected levels, which basically was spending down our
	trust fund balances somewhat.
	We think our proposal that is going forward strikes a
	reasonable and prudent balance in what we leave in trust fund
	balances and what we are spending. We are actually obligating
	more than we are receiving in trust fund receipts during this
	time period. We think we can do that responsibly in order to
	push the investment out the door as much as possible.
	Chairman Nussle. I guess my final question would be if the
	administration is not supporting an increase in the user fees
	or the gas taxes, if the administration is suggesting we stick
	to RABA and while there is somewhat of a spend down, it is
	modest and still maintains the fiduciary responsibility to the
	trust fund, if a consensus develops around additional spending,
	do you have any suggestions to us on how that might be
	financed?
	Mr. Jackson. I don't have any other suggestions for you at
	this point on financing options. I think that would be
	speculative and I will lean on the President's budget.
	Chairman Nussle. But you have done what you can, so it has
	to come either out of additional deficit spending or it has to
	come out of other discretionary programs would be the way I
	would read that.
	Mr. Jackson. Yes, sir, I think so.
	Chairman Nussle. Thank you.
	Mr. Spratt.
	Mr. Spratt. Thank you, Mr. Chairman and thank you, Mr.
	Jackson for your testimony.
	How much does the Highway Trust Fund have now in cash
	balances?
	Mr. Jackson. The estimated balance is about $14.9 billion
	in 2003.
	Mr. Spratt. At the end of this fiscal year, do you expect
	to have roughly that amount as carryover balances?
	Mr. Jackson. Yes, sir. For the period of the
	reauthorization, we expect to go up to about $15.1 billion in
	the first year and down to $14.6 billion by the last year, so
	if you round it to billions, it stays at $15 billion for the
	duration.
	Mr. Spratt. Why is it necessary to carry balances of that
	magnitude year-to-year over a long period of time?
	Mr. Jackson. Some of this money has already been obligated,
	and it is based on a formula that is fairly known and settled;
	we are preserving some cushion there.
	Mr. Spratt. It is not all obligated, is it? Some is
	expected to be obligated but not actually obligated on
	contract?
	Mr. Jackson. It is a cash balance reserve.
	Mr. Spratt. Unobligated or obligated?
	Mr. Jackson. It is obligated.
	Mr. Spratt. It is obligated. It is the unexpended cash
	balance on obligated funds?
	Mr. Jackson. Yes, sir. There is a pretty good formula over
	time which I would be happy to share with you about how these
	highway programs typically obligate over a seven to 9 year
	period. The bulk of the obligation outlays over the first 2
	years. We have some pretty good figures on how that has played
	out over time, and I can share that with you.
	[The information referred to follows:]

	Mr. Jackson's Response to Mr. Spratt's Question Regarding Federal Aid
	for Highway Projects

	The following table shows how Federal-aid highways projects
	historically outlay over a 9-year period:

	FEDERAL-AID HIGHWAYS PROGRAM OUTLAY RATES
	----------------------------------------------------------------------------------------------------------------
	Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
	----------------------------------------------------------------------------------------------------------------
	27% 41% 16% 5% 3% 3% 2% 2% 1%
	----------------------------------------------------------------------------------------------------------------


	Mr. Spratt. So the Department feels it is necessary to have
	reserves of this magnitude to meet its obligations on contracts
	still being executed?
	Mr. Jackson. Yes, sir. The point about the balance in the
	trust fund is that this is money committed to specific projects
	and specific States and communities.
	Mr. Spratt. But not yet drawn down?
	Mr. Jackson. Yes, sir.
	Mr. Spratt. You do indicate, however, in your testimony
	that the administration intends to spend $1-billion more for
	selected congestion projects where immediate aid and relief is
	needed and you are also adding $600 million from the gasohol
	tax into the Highway Trust Fund, yet the amount of money we see
	is still pretty flat even though you are putting that
	additional $1.6 billion.
	First of all, where does the billion dollars come from if
	all the money is obligated? Where does the additional billion
	dollars come from?
	Mr. Jackson. It comes from spending down the trust fund. We
	would have otherwise had a growth in the balance. It actually
	drops a little bit but is kept relatively flat during the
	period of the new authorization.
	On the other money, it is consistent with the principle
	that gasohol user fees paid in should be used on highway-
	related expenditures. So we are trying to take that from the
	General Fund, and put it into the Highway Trust Fund account so
	that we can enjoy the benefit of that additional $600 million
	annual investment, on highway-related projects.
	Mr. Spratt. At this point in time, what do you expect your
	appropriated level for 2003 to be when the Omnibus Bill comes
	out of conference to the floor?
	Mr. Jackson. I really don't know the answer to that
	question yet. It is somewhere between the House level and the
	Senate level and there is a $4-billion plus swing in that. Our
	2004 budget request is approximately $1.6-billion above the
	2003 House mark.
	Mr. Spratt. You mean your amended request?
	Mr. Jackson. Yes, sir. Above our amended request. Our $29.3
	billion request for the highway program, is still above the
	House and Senate marks.
	Mr. Spratt. Let me show you a chart and show you why
	percentage comparisons become rather precarious. As you can
	see, in 2002, the funding for Federal aid to highways was $31.8
	billion. Incidentally, do you not expect to see revenues
	recover as the economy recovers to the 2002 levels?
	Mr. Jackson. Without making a particular spending or
	revenue estimate, I do expect the economy to recover and
	additional revenue to come in, and that is where the RABA
	formula would come into play. If there is growth, then RABA
	would allow for us to enjoy the benefits of that.
	Of the $31.8 billion in 2002, actually $27.2 billion was
	so-called baseline money and the remainder above that, the $4.2
	billion, was the result of the RABA action.
	Mr. Spratt. When you look at this year's request, it is
	well below 2002 but it is also for 2004 below where 2003 is
	likely to be once the Omnibus Appropriations Bill comes to the
	floor, is it not? You indicate there was a 6-percent increase
	but if the Omnibus Bill comes out over $30 billion, which it
	appears likely to do, then next year's increase for 2004 is
	actually less than what the Congress is providing for 2003, is
	it not?
	Mr. Jackson. If the Congress approves $31.8 billion for
	2003, then the President's proposal is below that number.
	Again, that large number was really the result of the program
	we put in place to enjoy the benefits of the good times
	economically and flow it into the trust fund. So it is an
	increment that is well above the guaranteed spending levels.
	What we are trying to talk about in our budget is the
	guaranteed spending level that is appropriate for the duration
	of the 6 year reauthorization. We have embraced the idea that
	RABA should be a component of the reauthorization, albeit one
	that smooths out the rough edges of such rapid fluctuations in
	an economic downturn.
	Mr. Spratt. You know pretty well the different highway
	projects going on in 50 different States. If other States are
	like my State, there is a long backlog of highway projects,
	bridge projects, maintenance as well as new construction. Most
	State highway departments can spend the additional money fairly
	expeditiously because they have an unmet urgent backlog anyway.
	Would you agree with the $5 billion additional money was
	provided out of the General Fund of the Highway Program this
	year, the State highway departments could spend it rather
	expeditiously, with dispatch, put it into the economy and put
	it to work?
	Mr. Jackson. I believe that there is a fair amount of work
	in most State transportation plans that could be accelerated.
	We would have to work on a State-by-State basis to assess
	exactly how much that might be.
	Mr. Spratt. But most States have long backlogs, do they
	not, of projects they are addressing as and when the money
	comes available?
	Mr. Jackson. Yes, sir, most States do have a pretty good
	list they work through and it is the normal way you do
	procurement. You just make a list, you prioritize them and when
	you get the money to do it, you get to them.
	Mr. Spratt. The chairman asked you about the proposal
	Chairman Young is advancing or at least broaching and that is
	to add 2.5 cents to the gasoline tax. Are you saying you would
	oppose it or you simply haven't taken a position it yet?
	Mr. Jackson. The administration opposes any changes in the
	taxes supporting the Highway Trust Fund.
	Mr. Spratt. Thank you very much for your testimony.
	Let me say one thing. The attendance at this hearing has
	nothing to do with the interest in the subject matter. There
	are lots of other committees meeting this morning and
	organizational meetings members have to attend.
	Thank you for coming.
	Mr. Jackson. I understand. We are grateful to have a chance
	to walk through this with you.
	Chairman Nussle. Mr. Gutknecht.
	Mr. Gutknecht. Thank you, Mr. Chairman.
	First of all, let me say that I strongly believe that a
	strong economy rides on good roads, so I think this committee
	historically has recognized that fact.
	I want to touch on a couple of things. First of all, to
	follow up on something Mr. Spratt raised, do you have any idea
	how many States right now, even if we did dramatically increase
	the amount of money available at the Federal level, could even
	come up with their State match?
	Mr. Jackson. No, sir, I don't. The States are in a strapped
	financial condition as well by and large and that certainly
	plays into how they would take this money and use it
	effectively.
	Mr. Gutknecht. But is it fair to say that there would be a
	limit no matter how much money we put into the fund, there
	would be a limit in terms of how many projects could be done
	nationwide simply based on how much money they have available
	for their match?
	Mr. Jackson. Yes, sir, that certainly is a variable we need
	to consider.
	Mr. Gutknecht. You touched on this question from the
	chairman, and pardon me for being a bit parochial because I
	represent an awful lot of ethanol plants, but there is a lot of
	misunderstanding about the ethanol program. Just for the
	record, no farmers receive checks from your office for the
	production of ethanol, do they?
	Mr. Jackson. Yes, sir, that is right.
	Mr. Gutknecht. It is a blenders credit, isn't it?
	Mr. Jackson. Yes, sir.
	Mr. Gutknecht. I want to make one other point for the
	benefit of my colleagues and for the record. That is that right
	now I think unleaded gasoline retail back in Minnesota is
	bumping up against $1.70 a gallon. The embedded cost of the
	ethanol in that blended fuel is about $1.10. I guess the point
	I want to make is it is not ethanol that is driving up the
	price of gasoline. As a matter of fact, in some respects, you
	could argue it is actually holding the price of gasoline down.
	So I just want to reiterate and reconfirm what you essentially
	said to the chairman, that the administration is not going to
	take sides against our producers of ethanol out there who have
	invested a lot of money and do not receive direct checks from
	the Federal Government?
	Mr. Jackson. By forecasting that $600 million figure
	flowing into the trust fund we are assuming that there is a
	continuation of revenues into the trust fund. I wouldn't want
	you to read anything more into it than that.
	Mr. Gutknecht. We will do our part to make certain you have
	adequate resources to do your job and will work with you on a
	lot of these issues.
	Thank you.
	Mr. Jackson. Thank you, sir.
	Chairman Nussle. Mr. Thompson.
	Mr. Thompson. No.
	Chairman Nussle. Ms. Hooley.
	Ms. Hooley. Thank you for testifying before us today. I do
	want to reiterate what Mr. Spratt said that there are a lot of
	other committees going on. I know I have another committee
	going on at the same time that is having a markup.
	I come from Oregon and let me tell you a bit about what is
	happening in our State. I know this is happening across the
	Nation. It is a State where we have no fat to cut, we have to
	have a balanced budget. In some school districts, we have cut
	up to 5 weeks off the school year as we are making drastic cuts
	throughout the State. We are cutting programs where people now
	don't have medicines and that will be life threatening to them.
	That is where we start.
	We also have huge needs in transportation. We look at our
	old bridges and we need $2 billion just to repair bridges.
	One of the things I think you always have to look at and
	one of the reasons we can run a deficit is particularly more
	time or when you have an economy that is down the tubes and you
	need to do something to help stimulate the economy.
	It seems to me that we have a great opportunity in
	transportation to do everything we can to bump up those numbers
	to help stimulate the economy. As stated by others, we have an
	opportunity, those projects are on the ground, those projects
	are ready to go, those projects stimulate the economy, those
	projects also deal with safety.
	I look at what is happening in our commerce right now. We
	have to close so many bridges that it is now costing companies
	more money to move their goods because they have to go around
	those bridges. When I look on our interstates, we have a number
	of bridges that need repair, that are cracked and we are going
	to have to send those on some kind of detour which also does
	not help with our economy and help our businesses there.
	Having said that, is there any way that you see that we
	could bump up these dollars? This is a time of crisis. Our
	economy is in a crisis. Can we bump up transportation funds
	which we know help stimulate the economy and helps provide
	jobs?
	Mr. Jackson. The President's proposals on economic growth
	and stimulus take a more macro view on how to stimulate the
	economy rather than trying to make explicit expenditures in a
	given sector as an economic stimulus. This is a philosophical
	and principled approach to the problem you lay on the table
	which is how to help encourage the economy to grow out of the
	economic downturn that we are currently facing. So it is the
	administration's view that this collective package of economic
	growth items, principally tax related items, will help produce
	the type of effect that you are looking for.
	As an adjunct to that, while preserving the principle of
	spending the money on roads that comes from trust fund
	receipts, we have taken this additional step of the quick start
	program of putting $1 billion a year into projects that can be
	moved quickly and make a meaningful difference in repairing
	bridges, roads and other infrastructure that is needed. So I
	think we have a modest but responsible component of the idea,
	the concept that you are laying on the table, in the DOT budget
	but the broader economic approach is layered into the
	President's growth proposal.
	Ms. Hooley. Thank you. I understand this is not the only
	way to stimulate the economy and there are several ways to do
	that. I see this as one component and I see this as something
	we really need to take another look at in trying to get this
	budget a little further.
	Right now, our State under the current budget would take a
	$37 million cut. When you start taking cuts at a time when you
	are already in trouble and have huge safety problems, and no
	way to move commerce, it becomes a huge problem for all of us.
	I have just one other quick question. I am concerned about
	the change in the formula for mass transit projects where a lot
	of communities have been fighting for these projects, have been
	working on the projects and to go from an 80-20 or wherever it
	is now to a 50-50 is going to kill some of those projects.
	Respond to me about this.
	Mr. Jackson. It is not as gloomy a picture as you might
	think.
	Ms. Hooley. Thank you. Help me. I would like to be enthused
	about this.
	Mr. Jackson. Right now, the overall match that States and
	localities are providing for transit projects actually averages
	below 50 percent. I believe it is about 49 percent, so the
	reality of what we are seeing around the country is that State
	and local communities are able to bring a large match and
	continue to make these important projects work.
	We are seeing an explosion of demand in the Transportation
	Department for these types of projects and we have expanded the
	eligibility so that we will be able to fund other projects in
	addition to fixed rail projects, including important bus
	projects that might have been excluded from some of these
	funds. It is a balancing act among scarce resources, but we
	have given more flexibility. In addition, we propose to
	continue to allow States and localities to flex surface
	transportation funds from the highway account into transit
	projects and vice versa. This is currently done on a very
	routine basis and has put many, many projects into the realm of
	the possible. So we are making a series of approaches around
	this problem to recognize the growing need for these transit
	projects in State and local communities.
	Ms. Hooley. Thank you.
	Chairman Nussle. Mr. Hastings.
	Mr. Hastings. Thank you, Mr. Chairman.
	I want to add my voice to those who wish Secretary Mineta a
	quick recovery.
	I want to focus on a couple of areas. I represent a rural
	area and a lot of small airports. One of the things that I have
	noticed, sometimes painfully, is that explosive detection
	equipment that is now being required is located in all
	different parts of airports. For example, in my hometown, you
	walk into the door before you get to the ticket counter and
	there is the equipment. Then you go to the ticket counter and
	get your ticket and back up and it gets rather inconvenient for
	customers and personnel.
	I understand that the cost of trying to bring this all up
	to date and to put it in an efficient manner is somewhere
	around $3 to $5 billion. Yet in your request, you don't have
	any request for dollars to help these airports defray some of
	that cost. I wondered if you would comment on that.
	Mr. Jackson. Congressman Hastings, I would be happy to
	comment at the risk of poaching on Secretary Ridge's turf, but
	maybe I can at least lay out some of the particulars.
	Mr. Hastings. I was wondering if there was a connection
	there.
	Mr. Jackson. TSA is part of the Department of
	Transportation today and will be until the end of this month.
	The Department does have some money to invest in trying to
	make a more efficient flow in the use of these EDS machines. We
	had a tremendous deadline to meet which was driven not only by
	a congressional deadline but by the reality of the threat. The
	difficulty of, installing this equipment in a more tidy, neat
	and efficient fashion and still get them done by the end of the
	year was great. So in some airports, we have put them into the
	lobby in anticipation of work that will eventually put them
	behind the scenes, underground, or behind the ticket counters.
	In the TSA budget we have some significant money appropriated
	to that process for fiscal year 2003. In addition, last year we
	spent about $560 million out of the Aviation Trust Fund
	essentially on discretionary programs that we could target to
	this type of activity to bring more efficiency to operation of
	these explosive detection machines. We expect again this year
	to be able to put a comparable figure into that type of project
	to help some airports.
	It is a large project if you try to do this in the most
	neat and efficient way all through the system. We are going to
	put some money against it this year in a meaningful way and
	also we are going to fund some R&D efforts to try to help us
	get to the next generation of equipment and have a replacement.
	This is essentially 1997 technology and there is a significant
	R&D effort underway in the private sector to try to make them
	smaller, more efficient, cheaper and better machines.
	We hesitate to try to take the model of what we have in
	technology today and spread it into every airport and invest
	billions of dollars in that process. If we wait just a bit
	longer, we might have a clear vision of how to do this in a
	more effective and efficient fashion.
	So we are balancing all of those things. If you have a
	particular concern about the local airport, I would be happy to
	take that up off line with you, sir.
	Mr. Hastings. It is a bit of an inconvenience the way it is
	set up and in this particular case, that probably came because
	the airport was designed 25 years ago not anticipating any of
	the security.
	Let me switch gears. As you know the final report of the
	Commission of the Future of the United States Aerospace
	Industry calls for a rapid deployment of new and highly
	automated air traffic managerial system. Clearly this new
	system must accommodate efficiencies and safeties and so forth
	that will affect civil and military operations. I think it is
	safe to say that in order to accomplish this, there will be
	multiple agency involvement in this including DOT, FAA, NASA,
	DOD, and so forth.
	Do you expect that DOT will be taking a lead in this effort
	to fulfill what came out of this report?
	Mr. Jackson. I do expect DOT to be focused very rigorously
	and in a disciplined fashion on these sets of issues. As a
	matter of fact, our FAA administrator is in your home State
	today meeting with Boeing officials on exactly these types of
	issues and will be there for a good round of discussion about
	how we take our so-called ``ops evolution'' plan, our 10-year
	rolling method of improving, modernizing, and operating more
	effectively the Federal Aviation Administration, and look to a
	bit longer cycle and look at breakthrough technologies.
	We have a tremendously talented new FAA administrator in
	Marion Blakey. She has taken a fresh look at all of our core
	technology infrastructure investments to try to get a plan and
	vision that is affordable and squeezes the maximum amount of
	innovation we can from this great country's technology base.
	Mr. Hastings. One brief question, if I may. Getting back to
	small, rural airports, they rely heavily on the Airport
	Improvement Program. With the demands mentioned with homeland
	security, demands on them to upgrade is probably more acute
	than it has been in the past. You have pretty much flatlined
	that budget. I wondered if you would comment on that.
	Mr. Jackson. We actually have declining revenues as a
	result of the post-9/11 environment. We have spent down that
	trust fund somewhat to be able to keep us at least at the
	baseline we are right now. You have heard me say too many times
	now we think it is a reasonable balance that can sustain this
	crucial investment over the next 10 years. Twelve major runways
	are going to be delivered in the country according to the plan
	and continuing to make this type of capital investment is
	important not only for capacity but also for safety.
	Mr. Hastings. Thank you.
	Chairman Nussle. Mr. Neal.
	Mr. Neal. Thank you, Mr. Chairman.
	Mr. Secretary, you indicated the priorities for the coming
	year will be along the lines of highway and airport security.
	What about rail transportation?
	Mr. Jackson. We see the reauthorization of Amtrak and
	intercity passenger rail as a significant priority for the
	department and the administration. We need to find a common
	sense solution to the issues we have before us with passenger
	rail.
	Mr. Neal. Do you have any notions of where you are heading
	on that?
	Mr. Jackson. Last year, the Secretary laid out in a speech
	some very clear principles about how we would like to see the
	intercity passenger rail business reformed. We want to
	introduce some degree of competition and we want to make
	certain that we have more disciplined operational financial
	controls. On that note, I would complement our new president at
	Amtrak. At the Secretary's delegation, I have the privilege of
	sitting on the Amtrak board of directors, and David Gunn is
	doing a very, very capable job of bringing additional financial
	discipline to the operation.
	We want to introduce principles of competition so that we
	can allow States to have the flexibility to find a low cost
	operator. We don't want to do this in some rash and precipitous
	way and kick out Amtrak. On a pilot basis, we want to let a
	couple of places see if they can find alternatives. If we can
	work on bringing financial discipline within Amtrak, they may
	be the best competitor.
	A second area I would mention is the northeast corridor.
	Mr. Hastings. A good example.
	Mr. Jackson. We have a tremendous amount of need in the
	northeast corridor. It is a vital transportation link for the
	country and it is operating under a broken model. We are not
	able to fund it in the long term for the type of infrastructure
	investment it needs under the current business model.
	When we talked to the President about this issue, the
	President said to the Secretary, ``Remember, Norm, what my job
	was before my current one. I was a Governor.'' So we can't
	throw the States off the cliff and say you have to pay for all
	operating subsidies overnight but we do have to move to a mode
	where the States can play a partnership role as many now do in
	providing the subsidies necessary for making rail work in a
	coherent way.
	In the northeast corridor, we need a longer term plan--that
	won't happen overnight--to put it on a sound financial footing
	and to have a joint Federal and State government investment
	that makes the thing viable. We will be looking forward to
	working with the House T&I Committee to review these principles
	and move them toward legislative proposals.
	Mr. Neal. You indicated the administration was reluctant to
	micromanage portions of the economy in terms of stimulus and
	subsequently mentioned the President's experience having been
	executive of the State of Texas as well. We all came to
	Congress through a different experience. Most of the Members of
	Congress came here through the State legislatures. My
	experience was having been mayor of a pretty good sized city.
	Let me testify strongly in support of infrastructure
	spending. If you want to get people back to work quickly, if
	you want to get people spending money quickly, there still is
	no better plan, despite the notion that it is all pork, than
	highway and roadway airport security projects, which get people
	back to work immediately. It is also a good expenditure of the
	public purse with the purpose of not only stimulating the
	economy but creating greater efficiency in the infrastructure
	of the Nation.
	I don't think there should be the philosophic divide that
	has developed about that question because at one time Congress
	was a model of the national principle that infrastructure
	spending helped everybody.
	Mr. Jackson. Thank you, sir.
	Chairman Nussle. Mr. Wicker.
	Mr. Wicker. Mr. Secretary, thank you for being with us.
	I want to commend you on your budget in brief that you
	provided. There is a very nice layout and very helpful.
	Let me direct your attention to page 31 regarding the
	Federal Railroad Administration. Under safety and operations,
	railroad research and development, and next generation high
	speed rail, you mentioned in all three of those paragraphs the
	problems with grade crossings: ``reducing grade crossing
	accidents, grade cross hazard mitigation.''
	This is a problem I am particularly interested in. What we
	have seen over the last century or two, a century and a half
	perhaps, is cities that have sprung up over time and grown
	because the railroad was there and then we find that the
	railroad going through town--perhaps 10 grade crossings, 20
	grade crossings in a medium sized city--becomes not only a
	safety hazard but also a detriment to economic development. It
	has actually become the other way around, the railroad that
	created the city now threatens the downtown of the city.
	I wondered if you would give us your thoughts about that?
	It is a terribly expensive proposition for a local community or
	the railroad company for that matter to move a track outside
	and yet that is what we do with highways, we don't run a four-
	or six-lane highway through the middle of town, we move it to
	the edge of town and bypass. What can you tell me to give hope
	to communities like some I represent in that regard?
	Mr. Jackson. It is a very important and excellent set of
	observations that you make about this issue. I wish I had some
	silver bullet that said here is the solution, here is the way
	to make this go away. There is no simple solution. Rather, it
	requires the commitment of people like yourself, local leaders
	the railroad industry, and the department. We are certainly in
	that camp of people committed to just whacking away at these
	problems, finding resources and technology to address this
	problem.
	The administration's proposal will give a significant
	amount of flexibility to States to use money for grade crossing
	safety programs. We hope we will be able to work very closely
	in places where this is pinching the hardest.
	I also believe that grade crossing safety is an area where
	we can make a better financial investment in technology that
	might help us do this in a more efficient way. I had a recent
	meeting with the AAR folks and some of the railroad CEOs on
	this topic. We are committed to working with them to try to
	keep a focus on grade crossing safety.
	Mr. Wicker. Because we are time constrained today, perhaps
	you can get back to me on the record about looking at where we
	have had success stories with the Federal Government working
	with local communities. When it comes to the middle of town,
	the best safety in grade crossings is simply to eliminate the
	grade crossing and get it away from the traffic.
	[The information referred to follows:]

	Mr. Jackson's Response to Mr. Wicker's Question Regarding the Federal
	Highway Administration

	The Federal Highway Administration (FHWA) has worked with
	communities throughout the country to improve the safety and efficient
	operation of State and local roads in the vicinity of high-volume rail
	corridors. Nebraska offers a good example of a coordinated effort to
	deal with this problem. Many Nebraska communities developed flanking
	the railroad tracks. The growth in rail traffic has restricted and
	delayed vehicle traffic and negatively impacted the economies of these
	communities. FHWA's Division Office in Nebraska worked with the State's
	Department of Roads to develop a plan that defines the problems in
	detail and outlines a course of action involving overpasses, improved
	at-grade crossings and crossing eliminations to address the most
	pressing needs. The State-wide plan determined the need for $440
	million in recommended improvements at public grade crossings. This
	includes the addition of 83-grade separations state-wide. With each
	viaduct project costing in the range of 5 to $10 million, the State was
	able to construct one or two grade separations per year.
	To finance these projects, States and communities may want to work
	with FHWA's Division Offices to identify and access Federal innovative
	financing programs in addition to State and local funding. The
	Transportation Equity Act for the 21st Century (TEA-21) also included
	10 percent set aside of the Surface Transportation Program (STP) funds
	for safety programs including rail grade crossing safety. Almost $929
	million was allocated to States over 6 years to address grade crossing
	safety issues. National Highway System, Optional Safety funds, and STP
	funding, in addition to the set-aside, may be used for rail crossing
	improvements at the discretion of the States at up to 100 percent
	Federal share.

	Mr. Wicker. Let me briefly ask you, turning the page to
	page 32, Research and Special Programs Administration, you
	mention hydrogen fuel infrastructure and standards for hydrogen
	vehicle fuel systems. Are you the principal government agency
	in charge of the program the President mentioned in his State
	of the Union to develop quite quickly a hydrogen powered
	vehicle?
	Mr. Jackson. No, sir, that is the Energy Department's
	focus, although we will be working very closely to support the
	initiative and to do our part. As you rightfully mentioned, we
	will be most involved in the movement of this new fuel
	technology to the retail level.
	Mr. Wicker. Thank you.
	Mr. Jackson. I would like to thank you for your comments
	about the Budget in Brief book but the lady who did the real
	work is sitting next to me, our Assistant Secretary for budget
	and our CFO, Donna McLean. She deserves the kudos along with
	her team.
	Mr. Wicker. Credit where credit is due.
	Thank you very much.
	Chairman Nussle. Mr. Cooper.
	Mr. Cooper. Thank you, Mr. Secretary.
	Best wishes to Mr. Mineta for a speedy recovery.
	Mr. Jackson. Yes, sir.
	Mr. Cooper. The Railroad Infrastructure Fund, could you
	tell me how much is currently available for loans in that fund,
	the RIF fund?
	Mr. Jackson. We have approved five Railroad Rehabilitation
	and Improvement Financing loans, we have five pending and I
	don't have on the top of my head the numbers. If you will give
	me a moment, I might be able to ask one of my colleagues to
	find it for me.
	Mr. Cooper. OK. So about five loans have been made from
	that fund?
	Mr. Jackson. Yes, sir.
	Mr. Cooper. And five more are pending?
	Mr. Jackson. Yes, sir.
	Mr. Cooper. Any ballpark idea of how much money would be
	remaining in the fund for loans? It is my understanding that
	few, if any, loans have been made from this fund.
	Mr. Jackson. We had a very slow start in this program. When
	the administration took over the mechanisms for putting the
	loans out into the market were only just being developed, so
	under Secretary Mineta's guidance, we did take a focus on this
	and pushed that regulatory regime and the initial review of
	those out. I would say the Department did not do a terrifically
	good job of launching this program. I think we have very clear
	rules and precedents for working now and I think we have worked
	with OMB well to be able to figure out how to review them in a
	timely fashion.
	I would say we got off to a slow start in managing this
	program well. I think we are doing much better now. I think we
	will have adequate resources in our budget to manage the
	program going forward.
	Mr. Cooper. So you anticipate accelerating the pace of
	loans from that fund and not shutting down the fund?
	Mr. Jackson. Donna is reminding me that we are really not
	budget constrained in this arena because the applicant funds
	the credit risk premium to cover the risk of the project and if
	it is a financially sound proposal, we have the flexibility to
	do quite a bit in this area. I don't see it as a budget-related
	issue or budget constrained. I see it more as what I was saying
	up front. Did we get ourselves launched and working right? Are
	we interfacing effectively with people who are participants in
	this? I think the answer was that we are ready to go now.
	Mr. Cooper. It is a relief to find an area that is not
	budget constrained. Don't tell anybody else.
	Mr. Jackson. I wanted to have that experience to say that
	once in my life.
	Mr. Cooper. How much money remains then in the fund if it
	is not budget constrained?
	Mr. Jackson. We have direct loans for acquisition or
	improvement of railroads. To date, we have approved loans of
	about $215 million. If the loan goes bad that is when we have
	to pay off our guarantee, so right now we are in good shape.
	Mr. Cooper. But your authority to make new loans is $1
	billion, $2 billion?
	Mr. Jackson. I don't have a dollar figure. Can I get back
	to you and follow up with that?
	[The information referred to follows:]

	Mr. Jackson's Response to Mr. Cooper's Question Regarding TEA-21

	The Transportation Equity Act for the 21st Century (TEA-21)
	provides a cap of $3.5 billion for the aggregate unpaid principal
	amounts of Railroad Rehabilitation and Improvement Financing (RRIF)
	loans at any one time, of which not less than $1 billion is to be
	available solely for smaller (non-Class I) railroads. Given that the
	five loans approved to date total $215.37 million, authority to make
	new loans totals up to a little less than $3.3 billion.

	Mr. Cooper. Another question. New start funds for commuter
	rail, it is my understanding the formula has been changed to 20
	local and 80 Federal to a 50-50 match. These are New Start
	funds for commuter rail, the funding share has been switched
	from 20-80 to 50-50. Can you tell me why that was done?
	Mr. Jackson. One of the things we found was there was much
	more demand for these programs than we were able to meet. We
	have found in recent experiences that the average amount
	provided by way of a local match is about 49 percent, so our
	practice in the real world is that we have found communities
	and States able to make a higher match level work. We are
	constrained in terms of supporting a significant number of
	these applications, more than we could afford if we didn't work
	in this direction. We provided a couple of years notice about
	how we expect to gradually move to this higher match level.
	Mr. Cooper. But it could also be viewed as discriminating
	in favor of the rich communities who can come up with a local
	match and discriminating against the poor communities that have
	a tough time finding adequate revenues. What is your solution
	to that problem?
	Mr. Jackson. I think we have been very successful in
	working with communities that show a commitment to do it. It is
	not really a question of underprivileged communities or
	privileged communities being able to afford it. We have seen
	projects with cities that have financial challenges and other
	places where the financial pinches are not so acute. It has not
	been our experience so far that it is a program for the wealthy
	or the better off communities. We are very committed to working
	with the communities to make these projects work and to help
	them figure out how to do it right. We are looking for a little
	commitment on the part of the locality to help us do it.
	Mr. Cooper. My time has expired. I thank the chairman.
	Chairman Nussle. Before we proceed, I would like to
	acknowledge a former colleague from the Budget Committee who
	has returned. He is the Speaker's representative and our new
	vice chairman, Chris Shays from Connecticut. We welcome him
	back to the committee. We hope it wasn't anything you did or
	said that had a new sentence back to the Budget Committee but
	we thoroughly enjoyed working with you in the past. I think you
	had a 10-year term here, so the fact you are back with us says
	a great deal about your abilities as well as what we are going
	to be able to do this year. We welcome you back to the
	committee and look forward to working with you.
	Mr. Spratt. I second what the chairman just said. We look
	forward to working with Chris Shays.
	Chairman Nussle. Mr. Garrett.
	Mr. Garrett. Thank you, Mr. Chairman.
	Just a couple of quick questions for you. Early on in your
	remarks, you mentioned you will have as a priority for the
	Department to provide the States with additional flexibility to
	meet their local needs. As a State legislator just coming here,
	I have worked for 12 years with local county governments. I
	will go out on sites with the engineers, walk sites and ask as
	a layman, not an engineer, why are you doing this, why are you
	putting up guard rails on a back road where there is no
	inclination on either side of the road, while you are paving
	over and fixing a drainage ditch. They will say that is because
	the Federal Government tells us we have to do it that way in
	order to get the Federal dollars.
	Then I will talk to the engineer, is there a safety issue
	here? Is this the way you would do it? The local engineers
	would say no, we wouldn't do it this way. We would use that
	money on some other projects on the other side of the county
	where there is a safety problem. This all predates you, of
	course.
	What are you planning on doing to allow the counties or the
	local governments to have the flexibility they have not had in
	the past?
	Mr. Jackson. There are a couple of levels to this question.
	The first level in our flexibility is to not have so many rigid
	categories that say you have this amount of money for this type
	of project or that type of project, and make people spend in
	buckets. The idea of the first principle is flexibility in how
	to take funds and use them to meet the real needs you have
	locally. As an example, one of the things in TEA-21 we want to
	continue is the ability to flex highway funds into transit
	projects. Well over $1 billion has been flexed to do the things
	that local communities decided they needed to do the most. So
	the first level is flexibility in on how you use the available
	funds you have.
	The second level is something that drives me nutty, as I
	suspect it must have driven you to distraction in listening to
	that engineer, which is when people tell me I have to do it
	this way because that is what the rulebook says. There is a
	long safety tradition and discipline in FHWA but there is no
	lock on commonsense at the FHWA. If a local community feels
	they need a waiver from a particular rule and can show us why
	that waiver is sound and safe and sensible, then we should and
	do have processes in place to be able to accommodate that.
	Sometimes I think people get ground down by the reality of
	dealing with a large bureaucracy, so we would like to send the
	message very clearly that common sense is a valued commodity at
	DOT. If there is a particular problem, I would love to make
	sure we wind up the right person to work on it.
	Mr. Garrett. I guess from a common sense point of view,
	couldn't you simply turn that responsibility, that decision
	making process back over to the local engineer? I know these
	guys better than the Federal guys, so I will say the local guys
	I know are trained, certified and have been on the job for 20
	years and I trust them with my life as I drive around my
	district. Maybe as you say, the local guys are ground down
	because they say, that means there is just another form or
	application I have to go through in order to get this approval,
	I will just do it. Can't we just turn it right over to the
	local county guys?
	Mr. Jackson. The principle behind the Federal highway
	investment program has been that we are going to guarantee a
	minimum level of performance. It is very hard on a macro basis
	to decide whether that engineer you know as superb and so
	capable is going to be matched in another town and another
	State by someone with equal credentials. So there is a
	discipline in the program overall to force us to meet basic
	core performance standards. Within that, I hope we can have the
	flexibility to find a brilliant engineer and treat him with
	dignity and listen to their good ideas.
	Mr. Garrett. Can you speak real quick on the PMA? Explain
	to me what that is and what you are doing to address the
	problem areas that may still exist, performance management?
	Mr. Jackson. In the Department overall or in the highway
	area?
	Mr. Garrett. In the highway area.
	Mr. Jackson. In the highway area, we are trying to work on
	performance standards across a range of variables--how long
	pavement is going to last, how strong a bridge is going to be--
	and drive into this equation not just design specifications,
	but performance specifications. This is really a theme of the
	President all across government, to say set a metric, measure
	it carefully, tell us whether we are hitting it or not, and
	reward people that do. In a nutshell, that is the principle and
	in the highway realm, it gets complicated but that is the
	principle.
	If it would help to have someone brief you in more detail
	about that, I would be happy to do so. If that is an interest,
	we can certainly follow up with you.
	Chairman Nussle. Mr. Baird.
	Mr. Baird. Thank you, Mr. Secretary, for being here, and
	thank you, Mr. Chairman, for hosting this hearing. I serve on
	the Transportation Committee, so I am very interested in this
	issue. I am going to kind of jump around because there are a
	couple of topics in the budget.
	First of all--and you may have addressed this so forgive
	me--throughout the President's budget proposal I do not find
	and staff has not found any explicit discussion of extending
	the highway and transit firewalls. Is that just an omission or
	is there a tacit intention from the administration to eliminate
	the highway and transit budgetary firewalls?
	Mr. Jackson. No, I said in announcing the budget at our
	initial budget roll-out, and I have it in my testimony today
	here--it is our intention to preserve the fundamental principle
	of trust fund revenue being used for trust fund purposes.
	Mr. Baird. Terrific. That, as you know, was a signature
	accomplishment of TEA-21.
	Mr. Jackson. Yes, sir. The core thing that has made our
	program work.
	Mr. Baird. On the issue of transit, do I understand
	correctly that--two things I am concerned about--that the
	transit budget is going to be flatlined and that the local
	share is going to be increased from 20 to 50 percent for New
	Starts?
	Mr. Jackson. Yes, sir. We have been gradually ramping the
	Federal match down and our appropriators set a target for us
	last year, of a maximum 60-percent Federal investment with a
	local match of 40 percent. We are working toward a 50-50 match.
	And as I said, right now we are finding that is not a problem
	overall because our average local match is slightly below the
	50 percent level.
	Mr. Baird. My concern is twofold. We had, if I remember
	correctly, the Under Secretary for Highway and Transit was in
	the committee and presented a graph I think every American
	should see. The vertical axis of the graph was demand, the
	horizontal axis was time, and there were two graphs going up,
	demand for road passenger capacity, and a nice linear increase
	also in demand for road freight capacity, and then on the
	bottom there was a nearly flat line indicating actual capacity
	increase. It seems to me the only way we are going to get there
	is by somehow making more efficient use of the roads we have
	got, building some new for sure, but we cannot build the way
	out. It just did not match up. So I am concerned if we are
	going to flatline the transit budget.
	And in the second part with the match, when the States and
	the local municipalities are hurting so badly financially, how
	do we do that?
	Mr. Jackson. Well, this is the dilemma of the entire
	transportation budget. We have to find some prudent balance and
	then we just have to work these dollars as effectively as we
	can and extract the maximum from the investment. It is not an
	unconstrained budget environment but we are providing a 19-
	percent increase over the funding in TEA-21.
	We think that we work smarter and make that money go
	farther by using alternative financing tools and tools that
	allow us to use technology. For example, the investment in
	intelligent transportation infrastructure will help us reduce
	congestion in a meaningful way and make our systems more
	efficient. I have done some very excited listening out at the
	Federal Highway Administration's research facility at Turner
	Fairbanks. I was told how we can build manufactured roads, in a
	factory and bring big slabs into congested areas, reducing the
	time and the cost of construction. So I think that we are going
	to have to take all of our intellect and apply it to the
	problem.
	Mr. Baird. Let me ask one last question also on
	transportation. We have studied the problem of the MARAD ships
	that are dilapidated and needing disposal. One of the problems,
	maybe all of us as humans but I do not think the Government
	should do it, is we do not like to clean up our messes, if you
	remember that ``everything I need to know I learned in
	kindergarten'' principle. We actually have a company in my area
	that could quite readily dispose of these, create a number of
	new jobs, and do so responsibly. The tendency has been to tow
	these ships over to Third World countries and have these folks
	risk their lives and risk their environment by dumping PCBs in
	their bays, et cetera. I would like to know how closely our
	budget for this area of MARAD ship disposal matches the demands
	and the needs.
	Mr. Jackson. You have hit a personal interest of mine on
	this one.
	Mr. Baird. We will work on it.
	Mr. Jackson. I would be happy to work with you. The problem
	is that we have 130 of these vessels, some in very poor
	condition, as you know, and they are on the East Coast, the
	West Coast, and in the Gulf. We have met as recently as this
	week with the deputy of the Environmental Protection Agency, to
	work out a method to move scrappage forward domestically,
	internationally, and also to work on reefing some of these
	vessels. We need to establish criteria whereby we pay to remove
	PCBs from the vessels and then use them for much needed reefing
	work.
	So I am cautiously optimistic that the bureaucracy has been
	sufficient stimulated that we will see some significant
	breakthroughs in the very near term.
	Mr. Baird. Terrific. I would love to follow up with you on
	that.
	Mr. Jackson. OK. I would be happy to.
	[The information referred to follows:]

	Mr. Jackson's Response to Mr. Baird's Question Regarding Ship Disposal

	The Maritime Administration (MARAD) plans to make great strides in
	the Ship Disposal Program, having received $31 million--$11 million
	directly and $20 million indirectly in the fiscal year 2003
	Appropriations Acts. To ensure continuity of this year-to-year
	responsibility, the President's Budget requests $11 million in fiscal
	year 2004.
	Through its Program Research & Development Announcement (PRDA)
	proposals, the Maritime Administration has requested innovative, cost-
	effective proposals from the ship disposal industry that represent best
	value to the Government. Proposals for ship disposal are evaluated for
	cost, technical, environmental, and worker safety factors.
	MARAD is also reviewing proposals for the removal and remediation
	of oils, fuels, and contaminated liquids, to minimize any potential
	environmental issues, while the ships await permanent disposal. Using
	the PRDA method, MARAD is initiating a pilot project for the removal of
	fuel from vessels in the James River Reserve Fleet. MARAD also issued
	invitations to bid for domestic dismantlement of the highest risk
	vessels in the fleet, and those contracts are expected to begin this
	spring.
	Concurrently with domestic awards and pursuing PRDA proposals,
	MARAD is working with coastal States to accomplish artificial reefing,
	and with the U.S. Navy to participate in their SINKEX program for the
	deep sinking of MARAD's obsolete vessels. Through the interagency
	efforts of Environmental Protection Agency (EPA), Navy, Coast Guard,
	National Oceanic and Atmospheric Administration (NOAA), et al.,
	national best management practices for environmentally safe reefing are
	being developed and will be completed this spring.
	MARAD continues its efforts with the EPA to allow export of vessels
	for recycling, considering not only environmental, but also, human
	safety and protection factors. MARAD has been in discussion with the
	EPA and the State Department regarding the possibility of dismantling
	capacity with England, China, and Mexico.
	Finally, MARAD actively participates in the Global Action Program,
	an international program to ensure environmentally responsible and
	sustainable ship disposal through partnerships of the Basel Convention
	countries, the International Maritime Organization, and the
	International Labor Organization.

	Mr. Baird. Thank you very much, Mr. Chairman.
	Chairman Nussle. Thank you. We welcome Mr. Vitter to the
	Budget Committee, and you may inquire.
	Mr. Vitter. Thank you, Mr. Chairman. And thank you, Mr.
	Secretary, for being here. I wanted to ask you a few things
	about two precise areas of interest to me. Last year
	Congressman Harold Rogers and I wrote the DOT and included
	language in the transportation appropriations bill for fiscal
	year 2003 to urge your Inspector General to thoroughly
	investigate and audit the DOT's Disadvantaged Business
	Enterprise (DBE) program administered at three New Orleans area
	agencies--Louis Armstrong International Airport, the Orleans
	Levee Board, and the New Orleans Regional Transit Authority.
	First of all, I want to thank you and Secretary Mineta and
	the whole department for being very responsive to that,
	devoting a number of full-time personnel which have been on the
	ground doing a very thorough investigation/audit beginning at
	the airport and are soon going to go to the other two agencies.
	So I really do want to thank you for that. We are looking
	forward to their report about those agencies.
	But as they have done their work, I have met with them, we
	have had discussions as they have gone along and it has already
	highlighted, apart from the specific clear abuses at those
	agencies, it has also highlighted some national sort of policy
	concerns. I wanted to get your reaction to that.
	First of all, there clearly seems to be a national problem
	of fronts being employed by prime contractors, DBE fronts,
	clear abuse of the DBE program. In several cases, the DBEs are
	leasing all of their equipment and all of their personnel for
	the DBE part of the contract from the prime. It is a pretty
	clear front. So that is one concern.
	Secondly, in 1999, some regulations were put in regarding
	limits on a DBE's net worth. At our airport, it is clear from
	this audit, and I think other facilities, there has been very
	little, if any, attempt to phase-in that new regulation which
	is now 4 years old and which put limits on net worth. So I
	think there are all sorts of improperly certified DBEs still
	benefiting under the program that are basically owned by people
	worth too much.
	And thirdly, even under those new regulations, there is a
	pretty big loop hole in terms of net worth. Net worth limit is
	$750,000 but, as I understand it, that does not count a house
	you can own up to $1 million, or stock in your company up to $1
	million. I think there is a real concern on my part and that of
	others that that is not a meaningful net worth limit.
	So let me ask a few questions with that background. One is,
	when is the last time the department has really had a major
	examination of DBE regulations, issues like I am bringing up?
	Mr. Jackson. We are actually undergoing a regulatory review
	of each mode right now in preparation of formulating our next
	regulatory agenda. The mandate from Secretary Mineta is to look
	at all outstanding rules, significant and non-significant, and
	find out why we are not moving off the dime on ones that have
	been delayed.
	This issue has come up in the context of a regulatory
	review and assessment of our outstanding regulatory process. So
	without prejudicing that, I will just say that we are looking
	at these rules, and we are eager to try to do the right thing
	and get them out of the department in an effective way. I want
	to thank you for your focus on this issue. If we have abuses in
	this system, it undermines an important tool of commerce that
	we want to use. We want to stimulate small business growth and
	development, and abuses of it cannot be tolerated. And Ken
	Mead, I will tell you, is all over this one like a blanket, and
	committed to working the specific issues of any allegation. I
	am working very closely with him in that regard.
	Mr. Vitter. Great. I appreciate that. But just to
	underscore, I personally would like to request that you all put
	this whole area on your regulatory review agenda. Many of the
	things I am talking about are not draft or proposed regulations
	in the works. They are existing regulations which, in my
	opinion, are inadequate because they are full of loop holes.
	And again, the first and the prime victim in these cases, it
	should be underscored, is a real Disadvantaged Business
	Enterprise. The first goal should be to direct the benefit of
	this program to the people for whom it was intended and not
	multimillionaires and not primes who are using people as
	fronts.
	Mr. Jackson. I understand. Yes, sir.
	Mr. Vitter. Thank you.
	Chairman Nussle. Thank you. Mr. Hulshof.
	Mr. Hulshof. Thank you, Mr. Chairman. Mr. Secretary,
	welcome. You certainly have an ambitious undertaking with the
	multi-year highway bill. We look forward to working with you
	not only to craft something that will meet the pressing
	infrastructure needs of the country, but also to do that in a
	fiscally responsible manner. It seems that we are all zeroing
	in on our little pet issues, so I would like to do the same;
	specifically, as it relates to the diesel fuel deficit
	reduction tax.
	This was a tax, a 4.3-cent per gallon excise tax on diesel
	fuel that was imposed in 1993, as you recall. In the last
	highway bill in 1998, we actually took the diesel fuel excise
	tax on the trucking industry and rolled that into the Highway
	Trust Fund so it is used for infrastructure. However, other
	competing transportation industries, specifically, railroads
	and waterway operators, barge owners, still pay a 4.3-cent
	excise tax into the general fund.
	I have in previous Congresses, beginning in the 105th
	Congress, sponsored legislation to actually repeal the 4.3-cent
	excise tax for the railway industry and for the barge
	operators, primarily because of the competitive disadvantage in
	which they find themselves as opposed to the trucking industry.
	In fact, in the last Congress when I introduced this bill, it
	is a tax issue, of course, and being also on Ways and Means,
	there are 41 members of our committee, 27 of them co-sponsored
	our bill, including the chairman of this committee, to repeal
	the 4.3-cent deficit reduction tax. In fact, in last year's
	budget that the House passed, there was language in the
	resolution that says, and I will just quote briefly, ``the 4.3-
	cent per gallon diesel fuel deficit reduction tax remains an
	issue which needs redress even though Congress has twice passed
	legislation to repeal this unfair and discriminatory tax. This
	tax is inconsistent with sound national transportation policy
	because it effectively singles out the Nation's railroads and
	inland waterway industry.''
	The only reason I mention this to you is because there is
	some discussion I think about creating some railway-highway
	crossing fund or maybe some other trust fund. Do you have a
	position as far as the 4.3-cent excise tax on the railway or
	barge industry, or not?
	Mr. Jackson. I think the answer today is no. But let me
	qualify that a little bit. In the President's budget, the
	money, which I believe is about $160 million in current revenue
	to the treasury, is included as revenue for the purpose of
	reducing the deficit. So the current budget that OMB has put
	forward does not propose to take it out.
	It is a Treasury issue, not particularly a DOT issue. But I
	have had visits from almost every railroad CEO and they have
	raised this issue. It is one that we are aware of as an issue
	to discuss. We have not made a proposal on this issue in our
	previous statements out of DOT. We are still looking at that
	issue, recognizing its affect on the deficit front. We also
	understand very clearly from the industry that relief from this
	would allow them to make the type of capital investments that
	they believe they need to improve their systems and provide the
	infrastructure necessary to support the railroad industry, in
	particular.
	Mr. Hulshof. And I appreciate that answer. I know that
	primarily the attention seems to be garnered with the railroad
	industry. I actually would like to also--and let me just in the
	interest of full disclosure as the co-chairman of the
	Mississippi River Caucus, we have no legislative fiat, but it
	is every Member, Republican and Democrat, whose district
	includes part of the Mississippi River. So this is really a
	forum for us to talk about competing interests as far as
	recreation, navigation, environmental issues. And the thing is
	that an Inland Waterway Trust Fund, there are already balances
	that are accumulating that are not being tapped. And so the
	idea to roll this into, for instance, the Inland Waterway Trust
	Fund, sufficient monies I believe are available already. The
	railway industry, yes, but also those inland waterway
	operators, too. And not to pick a fight with any of the other
	industries, but transporting grain, for instance, on a barge is
	the most environmentally friendly way of transportation. And
	when you take 800 trucks off the highways with one 15 tow and
	barge, there are some environmental implications there.
	So, again, I appreciate your answer. It is something that I
	have been focusing on in previous Congresses and we have
	generated a lot of bipartisan support. So I appreciate your
	keeping that in mind.
	Mr. Jackson. OK. I would be remiss not to acknowledge the
	barge part of this. I recently had a meeting with a very good
	collection of the barge industry, and they were quite explicit
	in their concern about this issue.
	Chairman Nussle. Thank you, and thank the gentleman for
	bringing up that issue. I am also a co-sponsor and associate
	myself with the gentleman's remarks.
	Mr. Scott.
	Mr. Scott. Thank you, Mr. Chairman. I would like to follow
	up with some of the remarks by the gentleman from Louisiana
	about minority business. The Department of Transportation has a
	full commitment to minority business enterprises, does it not?
	Mr. Jackson. Yes, it does.
	Mr. Scott. And you are not going to allow regulatory
	minutia to adversely affect that commitment, will you?
	Mr. Jackson. Sir, what I tried to make clear is that any
	abuse of this program undermines a program that has a very,
	very important role to play for helping stimulate small
	business investment in the country, and the department's
	program certainly recognizes that fact.
	Mr. Scott. Thank you. I am representative of several ports
	and you know that ports have been identified as vulnerable to
	terrorism. As I understand it, the TSA is presently in the
	Department of Transportation and will be moving when?
	Mr. Jackson. March 1, 2003.
	Mr. Scott. In the meanwhile, who is doing port security?
	Mr. Jackson. The responsibilities for our port security are
	shared among Coast Guard, MARAD, and TSA. We are working in a
	close partnership on these issues.
	Mr. Scott. Who covers port operations after all is said and
	done and shifted around?
	Mr. Jackson. Well, the Coast Guard's Captain of the Port is
	the principal point of focus for port operations, security
	issues, and safety inspections of vessels.
	Mr. Scott. Just normal operations?
	Mr. Jackson. Yes, sir.
	Mr. Scott. Not just security. OK. Now where is port
	security in the budget?
	Mr. Jackson. I think you may be asking about the grant
	program that was funded through TSA. We worked out a
	cooperative agreement between TSA and MARAD for MARAD to
	administer those grants. We had an initial grant of $92 million
	which we gave out to the ports, and we have another $105
	million that we are trying to get out to the ports now. We have
	submitted a Request for Proposal.
	Mr. Scott. What is in this budget?
	Mr. Jackson. There is no money in this budget for this. We
	have in 2003----
	Mr. Scott. Wait a minute. In the budget submission we are
	talking about----
	Mr. Jackson. Yes, sir?
	Mr. Scott. How much additional money is there for port
	security?
	Mr. Jackson. Funding is not requested for a port security
	grant program. In 2003, we hope to bring closure on an
	additional $105 million. So this split out----
	Mr. Scott. In the 2004 budget, there is no additional money
	for port security?
	Mr. Jackson. That is correct. That would be a Department of
	Homeland Security budget item.
	Mr. Scott. I am not concerned about where it is coming
	from. But there is no additional money in the budget for port
	security? You mentioned I think in your opening remarks the
	James River Ghost Fleet. Is it true that in the last 5 years we
	have spent $2.2 million cleaning up the mess that is caused by
	those boats sitting there?
	Mr. Jackson. I do not have that figure on the top of my
	head, but we have had to spend too much money in my view to
	remediate problems instead of getting the vessels scrapped.
	[The information referred to follows:]

	Mr. Jackson's Response to Mr. Scott's Question Regarding the James
	River Ghost Fleet

	In the past 5 years, there were oil spill clean-ups and fuel
	removals from five vessels in the James River Reserve Fleet at a cost
	of $2.8 million. The Maritime Administration (MARAD) estimated the
	costs and addressed the challenges and conditions of the obsolete
	vessels in the National Defense Reserve Fleet in their April 2001
	report to Congress. In that report, MARAD estimated the custodial costs
	of the obsolete ships as follows: $20,000 for annual maintenance,
	$200,000 for one-time fuel removal, and $900,000 for dry-docking once
	every 15 years.

	Mr. Scott. And if one of those ships actually broke apart,
	the cost could be $20 million per ship?
	Mr. Jackson. It could be high, and I would not hazard a
	guess on what it would be in a specific case.
	Mr. Scott. And the estimated cost to remove all of the
	ships from the James River is $177 million?
	Mr. Jackson. We have had various estimates on what the cost
	of the whole program is. I will just tell you, sir, I am not
	satisfied that we have a good program where you could estimate
	a unit price for the whole thing.
	Mr. Scott. And Congress ordered you to get it all done by
	2006?
	Mr. Jackson. Yes, sir.
	Mr. Scott. And we are adding more ships to the fleet than
	we are taking out of the fleet?
	Mr. Jackson. Exactly right.
	Mr. Scott. Title XI----
	Mr. Jackson. Sir, just one quick point on that, if I could.
	Mr. Scott. I want to get a Title XI question in while my
	time is still alive. I am going to ask you about Title XI, what
	happened to it. It is very important to the shipbuilding
	industry.
	Mr. Jackson. Yes, sir.
	Mr. Scott. So you can answer all of those.
	Mr. Jackson. OK. On the ship scrappage issue, it is an
	important environmental issue, it is an important business
	management issue, and it is an important management challenge
	for us. The cost of scrapping ships one by one in the way that
	we have done it recently is too high and we are working on
	multiple means of trying to do this more efficiently. We have a
	reefing program that we are working on with EPA; the Navy and
	others that we think can be a significant help here. We also
	have been working with EPA on a plan for a pilot project that
	would allow us to remediate the removable PCBs and other
	chemicals that need to be removed in order to scrap the vessel
	at a given location overseas. This will also allow domestic
	scrappage to operate more effectively. So I would say to you
	that this is a high priority issue of the department and I am
	very optimistic, frankly, that we are going to be able to break
	through the roadblocks that we have had in place.
	Mr. Scott. Title XI?
	Mr. Jackson. Title XI. We have had an IG report that is in
	the drafting stage. The budget requests for Title XI have not
	had a significant priority on new money into this program. In
	the last 10 years, we have had approximately $489 million worth
	of defaults in this program. The IG is doing an assessment of
	the program. He is making some recommendations that we are
	going to look at very closely about how to manage that
	vulnerability more effectively.
	Mr. Scott. Thank you, Mr. Chairman. I would just say the
	amount of money for removing the fleets is totally insufficient
	and we need to work on that. I appreciate your indulgence, Mr.
	Chairman.
	Chairman Nussle. Thank you. Mr. Shays.
	Mr. Shays. Secretary Jackson, greetings. I am very
	interested in the Aviation Trust Fund. The budget appendix on
	page 712 shows that the trust fund is going from about $10
	billion in fiscal year 2002 to $11 billion in fiscal year 2004.
	In this day and age with this economy and all the potential
	terrorist threats that are out there, is that a realistic
	number?
	Mr. Jackson. I think it is a prudent number. It does not
	reflect all of the investment that is being made on the
	security issue. We have money in the Transportation Security
	Administration budget for aviation security so all of that
	burden is no longer embedded in the FAA budget.
	Mr. Shays. Would you help us out, if there were a war in
	the Gulf or if there were a terrorist attack where a few planes
	were blown up, what would likely happen to that trust fund?
	Mr. Jackson. Well, I would not want to speculate too widely
	here. The trust fund has not been an insurance program for a
	catastrophic failure in the system. As you know, when we had
	the events of 9/11, Congress passed an additional $5 billion
	emergency supplemental to help address the airlines' immediate
	needs in the wake of that event and then created a $10 billion
	fund for loan guarantees. So it is not my sense that the AIP
	program is designed to manage catastrophic contingencies.
	Mr. Shays [presiding]. Thank you. I am going to finish my
	questions now so I can become acting chairman and recognize Mr.
	Meek.
	Mr. Meek. Thank you, Mr. Chairman. Mr. Secretary, how are
	you doing today?
	Mr. Jackson. Good, sir. Thank you.
	Mr. Meek. I could not help but notice--I took an
	opportunity to take a look at your budget, and I notice that on
	your minority business resource center overview--on page 38 of
	your budget, there was a decrease in the dollars from 2003 to
	2004. I really took strong point to that because I know that
	the President has made it a centerpiece of his budget to make
	tax cuts aimed at helping small businesses. Why did the
	department decrease these dollars from last year? I think you
	are budgeted for $18 million.
	Mr. Jackson. Yes, sir. If I could get back to you with a
	more detailed answer to that question, I would be grateful. I
	do not have the specifics on the program and what it covers.
	[The information referred to follows:]

	Mr. Jackson's Response to Mr. Meek's Question Regarding Minority
	Business Outreach

	The fiscal year 2004 funding for the Minority Business Resource
	Center (MBRC) and the Minority Business Outreach (MBO) is not
	decreasing. The fiscal year 2004 funding for MBRC and MBO is the same
	level as fiscal year 2003. For presentation purposes, the Budget in
	Brief combined the funding for MBRC, MBO, and the Office of Civil
	Rights into a single line. It is also important to note that the
	funding in the Budget in Brief is reflected in millions of dollars.
	For clarification, the following funding is in thousands of
	dollars:


	----------------------------------------------------------------------------------------------------------------
	Fiscal year 2003 request Fiscal year 2004 request
	----------------------------------------------------------------------------------------------------------------
	Minority Business Resource Center........................... 900 900
	Minority Business Outreach.................................. 3,000 3,000
	Office of Civil Rights...................................... 8,700 8,569
	Total MBRC, MBO, and Civil Rights........................... 12,600 12,469
	----------------------------------------------------------------------------------------------------------------

	The funding for the Office of Civil Rights is decreasing slightly
	to reflect the shift of minority employment and recruitment programs
	from the Office of Civil Rights to the Human Resources Office in the
	Office of Administration, and the transfer of three positions and
	related costs to the Department of Homeland Security.

	Mr. Meek. One other thing as it relates to the issue of
	port security. I am from Miami-Dade County and Broward where
	the cruise ship industry is located and homeland security is
	something that we hold in very high regard, as everyone does,
	but as it relates to transportation. I know that you responded
	in the best way you could to Representative Scott, but I just
	wanted to underscore that as we look at the department, as we
	look at homeland security, my local governments are asking what
	role will the Federal Department of Transportation play as it
	relates to the security of our ports and many other ports.
	Florida has I believe almost seven main deep water ports and
	eleven in total. What are the discussions within the department
	as it relates to that role?
	Mr. Jackson. I should start by saying that Florida has so
	much to be proud of in the way that they had done port
	contingency and security planning prior to 9/11. The State had
	made an important investment and really was a leader when we
	were looking around after 9/11 to see what sort of measures you
	had already investigated and adopted. You have much to be proud
	of and every reason to be concerned about making sure that you
	deal with these issues appropriately.
	The Department of Transportation will still work with the
	TSA when it moves to the new Department of Homeland Security on
	the operation of port security grants. We will have a
	significant interest in working with the Coast Guard in the
	same way. We view our role on these issues as changed but not
	taken away. We are planning a memorandum of agreement in
	essence with TSA to define the types of tasks that we will do
	in support of the TSA security mission. They have the core
	security mission, and we need to support them with that
	mission.
	Mr. Meek. Mr. Secretary, I am fresh and new to the Congress
	and I served on a select committee in Florida as it relates to
	homeland security, and it is almost devolution of
	responsibility when we look at it. We ask the local governments
	to pull their weight, be it financial or fiscal, and their big
	question of wanting to know, you have asked us, you have given
	us these requirements and guidelines that we should follow,
	they are constantly calling me, my city commissions and the
	counties that I represent, what role financially will the
	Federal Transportation Department play. That is the million
	dollar question. A lot of cities who have to balance their
	budget, a lot of counties who have to balance their budget are
	finding great heartburn as it relates to that. I think the
	rubber really meets the road as it relates to that.
	One of my questions, Mr. Chairman--and I would just put it
	in writing to you, Mr. Secretary, because I felt that it was
	really dealing with a local issue that needed a little more--
	but it was commending the department as it relates to Miami-
	Dade County's metro rail extension. As you know, they passed a
	transportation sales tax to support our local match for Federal
	dollars. So we look forward to working with you and your
	department on that.
	Mr. Jackson. We look forward to working with you too. And
	welcome to the world of people coming and asking you to help
	with dollars. I feel a sense of solidarity with you on that. On
	the port security front you can tell them we put $92 million
	out on the street last year and Florida got a good chunk of
	that money. And we have $105 million that is on the way now and
	I am certain that Florida will be applying for those funds as
	well.
	Mr. Meek. Thank you, Mr. Chairman. Thank you, Secretary.
	Mr. Jackson. Thank you, sir.
	Mr. Nussle [presiding]. If there are no other questions for
	this witness, I would like to thank the Secretary for coming
	here today and testifying on the transportation budget. And as
	we started off, please return our greetings to the Secretary
	and give him our best wishes as he goes toward a full recovery.
	We look forward to working with him and you and the department
	as we tackle these very difficult issues.
	Mr. Jackson. Thank you, Mr. Chairman. I am grateful for
	your hospitality. I know the Secretary will be grateful for the
	good wishes. I will certainly tell him today that you have sent
	them with great kindness. We appreciate your hospitality and
	look forward to working with you.
	Chairman Nussle. Thank you.
	That ends the first panel for today's hearing. We will
	await the second panel. We stand in a brief recess until that
	witness makes himself available.
	[Recess.]
	Chairman Nussle. To the second panel for today's hearing,
	we have the honor of welcoming back to the committee our
	distinguished colleague and friend Nick Rahall from West
	Virginia. He is a senior member of the Transportation and
	Infrastructure Committee and someone who has been able to
	demonstrate over his career in Congress, both with his
	expertise in the area of transportation infrastructure and also
	in his leadership, the importance of this issue as we move
	forward.
	We have a number of very important challenges, as the
	gentleman is well aware, and we appreciate your coming to
	testify today. Your entire statement will be made part of the
	record at this point and you may proceed as you wish,
	summarizing your testimony or delivering it, if that is what
	you would like to do. Welcome.

	STATEMENT OF HON. NICK J. RAHALL, II, A REPRESENTATIVE IN
	CONGRESS FROM THE STATE OF WEST VIRGINIA

	Mr. Rahall. Thank you very much, Chairman Nussle, for your
	kind comments, for the opportunity to present the
	Transportation and Infrastructure Committee's viewpoints here
	today, and for your leadership as chairman of our Budget
	Committee. Mr. Shays and Ranking Member Meek, good to be with
	you as well.
	As a senior member on the T&I Committee, I have reviewed
	the proposal for its impact on infrastructure matters. And I
	should thank also the actual ranking member, Mr. Spratt, at
	this point, I know he had to step out, but he has been very
	helpful to me and to the committee in providing information on
	these matters and other issues under the budget. But generally
	speaking, as I am sure the committee is aware, the budget
	request does propose a wholesale reduction of almost $11
	billion for programs within the T&I's jurisdiction. Simply put,
	the proposed cuts are a bad idea.
	The FHWA estimates that every $1 billion spent on
	infrastructure creates over 47,000 jobs--that is 47,000 jobs--
	and $6.1 billion--$6.1 billion--of economic activity in this
	country. Therefore, the proposed cuts would lead to a loss of
	almost a half a million jobs. And when you combine that with a
	failure to capitalize on over $12 billion of opportunity, the
	picture is pretty clear, at a time when we remain stuck in a
	weak economy, the proposed cuts would be devastating.
	Mr. Chairman, quickly I want to address three specific
	areas in the budget that do affect matters falling under our
	jurisdiction. The first is the Transportation Equity Act of the
	21st Century, otherwise known as TEA-21; the second is the
	Appalachian Regional Commission, known as ARC; and the third is
	Amtrak.
	This year the T&I Committee will take the lead on
	reauthorizing TEA-21. As we do so, it is absolutely necessary
	that we maintain the budget firewalls--it is absolutely
	necessary that we maintain the budget firewalls. Also, we must
	fully fund the baseline level for the Highway Trust Fund.
	Mr. Chairman, when President Eisenhower and Congress
	established the Highway Trust Fund in 1956, as you are well
	aware, they made a promise to the American people; motorists
	would pay a gasoline user fee into the Highway Trust Fund, that
	trust fund would provide for America's infrastructure. And as a
	result, the United States now possesses the greatest
	infrastructure network in the world. To protect that Highway
	Trust Fund, to keep faith in the trust fund, we had to
	establish the budgetary firewalls in TEA-21. That was necessary
	to prevent a practice that has grown common over the years. Too
	frequently, the Highway Trust Fund fell victim to the budget
	process and the gas tax revenues were not used for their
	intended purpose. It became a game of mirrors, smoke screens,
	et cetera, in which President-after-President, regardless of
	party, tried to mask the true size of the deficit.
	Now these firewalls need to be extended as we go forward.
	Looking over the budget proposal, I notice that the
	administration proposes budget caps for the next several years.
	I would say, Mr. Chairman, that it also is appropriate that we
	extend the firewalls for the Highway Trust Fund. By doing so,
	we can maintain the fiscal discipline while keeping the promise
	that President Eisenhower and the Congress made to the American
	people. Also, the proposal cuts the baseline funding in the
	Highway Trust Fund by about $2.5 billion. This one budget cut
	alone would translate into a loss of more than 115,000 jobs.
	Instead of cutting the Highway Trust Fund, we need to use the
	2002 level as a baseline so that we can grow the program to
	meet future needs.
	Moving on to the ARC, it does provide vital infrastructure
	investments in a historically depressed area of the country.
	The budget proposal currently before us calls for massive cuts
	in a critical program that spans 13 States, including all of my
	home State of West Virginia, the only State whose borders lie
	totally within the ARC map. In the 1960s, President Johnson
	carried out a promise to help raise the Appalachian region out
	of the crushing poverty when he formed ARC. For over 30 years
	it has provided the development and jobs throughout 410
	counties across a 210,000 square mile region. Yes, it has
	worked. Although the Appalachian region is dramatically
	improved, there remains more to be done.
	What is proposed would slash the ARC budget by over 50
	percent from its fiscal year 2000 levels. Mr. Chairman, doing
	so would simply gut this program upon which so many people
	across so many States rely. So I urge you to fully fund this
	program.
	And finally, Amtrak. The administration proposes $300-
	million less than what Amtrak says itself that it needs to
	continue working. I know I join with many of my colleagues from
	both sides of the aisle in both houses when I say that David
	Gunn should be commended for the fine job he is doing at
	instituting reforms. I think Mr. Gunn needs to be allowed to
	continue those efforts. And to help him do so, I would hope the
	committee would make the necessary funding of $1.2 billion
	available.
	In conclusion, Mr. Chairman, the T&I Committee has
	historically been among the largest, the most bipartisan, and
	the most diverse committee in all of Congress. The budget
	resolution will affect key issues that the T&I Committee will
	address this year and it will be crucial for our two committees
	to work together. We need to combine our efforts to craft
	legislation that allows us to reinvest in the Nation's
	infrastructure and provide good jobs, and the way to do so is
	by providing full funding rather than large wholesale cuts.
	That concludes my testimony, Mr. Chairman.
	[The prepared statement of Nick J. Rahall, II, follows:]

	Prepared Statement of Hon. Nick J. Rahall, II, a Representative in
	Congress From the State of West Virginia

	Chairman Nussle, Ranking Member Spratt, and members of the
	committee, thank you for the opportunity to testify before you today on
	transportation issues and the President's budget.
	As a senior member of the Transportation and Infrastructure
	Committee, I have reviewed the proposal for its impact on
	infrastructure matters. In addition, I want to thank Ranking Member
	Spratt for the information he has provided on these matters and other
	issues in the budget.
	Generally speaking, the budget request proposes a wholesale
	reduction of almost $11 billion for programs within the Transportation
	and Infrastructure Committee's jurisdiction. Simply stated, the
	proposed cuts are a bad idea. The Federal Highway Administration
	estimates that every $1 billion spent on infrastructure creates over
	47,000 jobs and $6.1 billion of economic activity. Therefore, the
	proposed cuts will lead to a loss of almost a half-a-million jobs.
	Combine that with a failure to capitalize on over $12 billion of
	opportunity. At a time when we remain stuck in a weak economy, the
	impact of these cuts will be devastating.
	Further, Mr. Chairman, I want to address three specific issues in
	the budget request that affect matters falling under the Transportation
	and Infrastructure Committee's jurisdiction.
	The first is the Transportation Equity Act for the 21st Century,
	also known as ``TEA-21;'' the second is the Appalachian Regional
	Commission; and, the third is Amtrak.
	This year the Transportation and Infrastructure Committee will take
	the lead on reauthorizing TEA-21. As we do so, it is absolutely
	necessary that we maintain the budgetary firewalls. Also, we must fully
	fund the baseline level for the Highway Trust Fund.
	Mr. Chairman, when President Eisenhower and Congress established
	the Highway Trust Fund in 1956, they made a promise to the American
	people. Motorists would pay a gasoline user fee into a Trust Fund. That
	Trust Fund would provide for America's infrastructure. As a result, the
	United States now possesses the greatest infrastructure network in the
	world.
	To protect the Highway Trust Fund, we had to establish budgetary
	firewalls in TEA-21. This was necessary to prevent a practice that had
	grown common over the years. Too frequently, the Highway Trust Fund
	fell victim to the budget process, and gas tax revenues were not used
	for their intended purpose.
	Now, these firewalls need to be extended as we go forward. Looking
	over the budget proposal, I noticed that the administration proposes
	budget caps for the next several years. Mr. Chairman, I would submit
	that it is also appropriate that we extend the firewalls for the
	Highway Trust Fund. By doing so, we can maintain fiscal discipline
	while keeping the promise that President Eisenhower and Congress made
	to the American people.
	Also, the proposal cuts the baseline level of funding in the
	Highway Trust Fund by about $2.5 billion. This one budget cut alone
	would translate into a loss of more than 115,000 jobs. Instead of
	cutting the Trust Fund, we need to use the 2002 level as a baseline, so
	that we can grow the program to meet future needs.
	Moving on to the Appalachian Regional Commission, the ARC provides
	vital infrastructure investments in a historically distressed area of
	the country. But the proposal calls for massive cuts in this critical
	program that spans 13 states--including all of West Virginia, my home
	state.
	In the 1960s, President Johnson carried out a promise to help raise
	the Appalachian region out of its crushing poverty when he formed the
	Appalachian Regional Commission. For over 30 years, the ARC has
	provided for development and jobs throughout 410 counties across a
	200,000 square mile region. Although the Appalachian region is
	dramatically improved because of this effort, there remains more work
	to be done to fulfill the promise made.
	What is proposed would slash the ARC budget by over 50 percent from
	its fiscal year 2002 levels. Mr. Chairman, doing so will simply gut
	this program that so many people across so many states rely on. So, I
	urge you to fully fund this program in the Budget Resolution.
	Finally, Amtrak. The administration proposes $300-million less than
	what Amtrak says that it needs to continue operating. I know I join
	with many of my colleagues from both sides of the aisle in the House
	and the Senate when I say that David Gunn should be commended for the
	fine job he is doing at instituting reforms. I think Mr. Gunn needs to
	be allowed to continue these efforts. To help him do so, I urge the
	committee to make the necessary funding of $1.2 billion available.
	In conclusion, the Transportation and Infrastructure Committee has
	historically been among the largest, the most bipartisan, and the most
	diverse committees in all of Congress. The Budget Resolution will
	affect key issues that the Transportation and Infrastructure Committee
	will address this year, and it will be critical for our two committees
	to work together. We need to combine our efforts to craft legislation
	that allows us to reinvest in our Nation's infrastructure and provides
	good jobs. The way to do that is by providing full funding rather than
	large, wholesale cuts.

	Chairman Nussle. I appreciate the gentleman's testimony. It
	will be made a part of the record in its entirety. I want to
	thank the gentleman for his work with our committee in the
	past, both you and Chairman Young and this committee have been
	able to deal with the last couple of years in a very
	straightforward way, difficult way, knowing that there are huge
	budget implications both by what we do together as well as the
	impact on the rest of the budget.
	Just I guess two comments and I would be interested in your
	viewpoint. RABA was meant to be a firewall, as you indicated
	there was a firewall, but it seems as though, for full
	disclosure purposes, it seems to work one direction only--in
	preventing trust fund dollars from leaving the trust fund. But
	as of late at least, we have been pouring quite a bit of
	general fund revenue into the trust fund in order to hold it
	harmless and to deal with the obligations. It is my
	understanding that you are proposing that that continue as you
	present your budgetary proposal and concerns here before this
	committee today.
	Mr. Rahall. Yes, Mr. Chairman, that is our committee
	proposal that we fund it at the fiscal year 2002 level of $31
	billion and establish that $31 billion as a baseline. I know
	the administration proposal calls for amending RABA so as to
	prevent the sudden drops in revenues that we have experienced
	in recent months.
	But RABA, as you so well know, and you were deeply involved
	in those negotiations with then Chairman Shuster, was a middle
	position, if you will, between our T&I Committee, who in a
	bipartisan fashion every year, including the full House, has
	voted in a bipartisan fashion to remove the Highway Trust Funds
	from budget so that we can have those revenues go back out for
	the intended purpose of spending on infrastructure. In order to
	reach that middle ground, RABA, the firewalls were established
	to say that future revenue coming into the Highway Trust Fund
	would go back out but the main surplus itself would stay on
	line, on budget.
	So that, as you know, is the background for RABA. I firmly
	believe that we should have the 2002 levels as a baseline and
	that money should be kept sacrosanct, if you will, for spending
	on infrastructure.
	Chairman Nussle. And it has been since RABA has been put
	into place, has it not?
	Mr. Rahall. Yes.
	Chairman Nussle. I mean all of the money coming in to the
	trust fund from the gas tax, which was the intended purpose
	behind all of our concern over that being used for other
	purposes, all of that money has been used and there is nothing
	in the proposals that you have seen that suggests it will be
	redirected is there? You have not seen anything that suggests
	those trust fund dollars will be redirected anywhere else, have
	you?
	Mr. Rahall. No, I have not seen anything that would say
	they would be redirected, Mr. Chairman.
	Chairman Nussle. So the point of both the President's plan
	as well as the plan last year from the Budget Committee and the
	T&I Committee as well as the proposal that moves us forward
	does not suggest that money that is coming into the trust fund
	from gas taxes be diverted, it suggests that general fund
	revenues continue to be diverted from the general fund to the
	Highway Trust Fund in order to meet our determined obligations
	for transportation in the future.
	Mr. Rahall. Yes, Mr. Chairman, our determined obligations
	for transportation in the future. And in my opinion, that means
	we must grow that infrastructure. Obviously, the status quo is
	not acceptable. We have ever-increasing demands on that
	infrastructure, especially in today's climate with homeland
	security being the buzz word.
	Chairman Nussle. And I will be sharing my list with you if
	not today then very shortly in the future.
	Mr. Rahall. We will be glad to receive that, Mr. Chairman.
	Chairman Nussle. Having said that, the difference is that
	in 2002, in 2001, and before, we were running surpluses both in
	the trust funds as well as in the general fund. Now that we are
	running deficits, every dollar that crosses that firewall to go
	back into the trust fund from the general fund comes from
	somewhere--it comes from deficit spending, it comes from
	borrowing, or it comes from lowering a priority in another
	area. So I am not going anywhere with this except to say that
	this was an easy lift when we were running surpluses. Now that
	we are not, we all have to get familiar with the trade-offs and
	priorities that are out there, including running deficits.
	And I would just caution, as I hear more and more Democrats
	take the floor and others take the floor and blaming others for
	deficits and blaming others for downturn in the surpluses, that
	every dollar that is requested over and above where we are
	today comes from deficits, it does not just come out of thin
	air. So you and I may share a priority for highway funding, in
	fact, we may share it very directly, but every dollar that
	crosses that firewall comes from the deficit, comes from
	borrowing, comes from some other priority; it does not come
	from thin air. So we all have to know that as we are making
	these determinations and these choices during the budget
	process.
	Mr. Rahall. Mr. Chairman, I do understand the point you are
	making. And I do not wish to get into the debate about the tax
	cuts and how the deficit was created and who is to blame, et
	cetera, et cetera. My main point here is to say that the
	Highway Trust Fund is a dedicated user fee.
	Chairman Nussle. Right. And every dollar of it----
	Mr. Rahall. Every dollar that has come into that trust fund
	is paid by the American people every time they go to the gas
	pump. They have paid it with the expectation and with the faith
	that that money does not go over to the general revenues but
	rather stays in that trust fund to go back out in expenditure
	on the roads that they are getting ready to drive out on after
	they pay into that fund. So that is the trust that I would like
	to see we maintain with that Highway Trust Fund.
	Chairman Nussle. We have that. And in fact, the
	administration is actually adding dollars because of the
	gasohol and ethanol provisions that they have put into their
	budget. I guess the bottom line question is, for every dollar
	we increase this, where is it coming from? Do you have a
	suggestion of where we should take it from?
	Mr. Rahall. We have detractions from that Highway Trust
	Fund, too, as far as the hydrogen car of the future. That is
	not necessarily going to mean increased revenues to the Highway
	Trust Fund. And with the threats we have pending today, less
	people are traveling, which means less revenues into the
	Highway Trust Fund. So, there are all kinds of pressures going
	counter to income producing into that Highway Trust Fund that
	certainly is not keeping faith with spending what is in that
	trust fund.
	Chairman Nussle. Well, I look forward to any ideas and
	proposals that anyone has for the increase to highway spending.
	And as I said, I make full disclosure that I may be one of
	those that is interested in doing that. But I look forward to
	proposals from folks who want to increase the funding of where
	that funding is going to come from. And I know that is going to
	be difficult. I have heard of those suggesting tax increases or
	user fee increases. The administration I think made it pretty
	clear they are not going to support that today. There may be
	other more creative measures. But other than taking it straight
	from the bottom line and borrowing, I am not sure I am aware of
	any that are available, or dollar for dollar cuts in other
	domestic discretionary programs.
	So we here at the Budget Committee will await your good
	work in coming up with some ideas, hopefully, your's and
	Chairman Young's, on how we can accomplish that.
	Mr. Meek.
	Mr. Meek. Thank you very much, Mr. Chairman. Thank you, Mr.
	Chairman, for being here. You elaborated on Amtrak some and you
	also talked about quite a few other things. But could you
	comment on the merits of infrastructure investment as it
	relates to being an economic stimulus tool.
	Mr. Rahall. Yes, Mr. Meek. Certainly, investment in our
	infrastructure is investment in growing the economy. I have
	referred to the number of jobs that investment in
	transportation spending means for our economy. Those jobs of
	course translate into tax-paying Americans that pay more money
	into our general revenues. It is all very related. It is truly
	what I think is a trickle down theory. When you have investment
	in infrastructure it just trickles down to revenue that comes
	into our economy from many different sources, whether it is
	good paying construction jobs, or whether it is the creation of
	new businesses.
	I truly believe in the philosophy that if you build it,
	they will come. We have seen that in so many parts of our
	country. And with cutbacks in other modes of transportation,
	our surface transportation is vital to getting people and goods
	around this country and growing our economy.
	Mr. Meek. Let me just for a moment, and I agree with you on
	that point, talk a little bit about what is the issue of today
	and tomorrow and has been for some time now as it relates to
	our transportation needs and pointing toward homeland security.
	When we look at Amtrak and we look at some of the fiscal issues
	that they are facing right now, it is very important, you
	mentioned that you commend the work that is going on as it
	relates to Amtrak, and when the airlines shut down everybody
	ran to the rails, but they are not necessarily where they need
	to be right now if we want to be able to continue our economy
	and travel throughout our land here. What are some of your
	recommendations as it relates to addressing the Amtrak fiscal
	issue? And second, do you have any suggestions for Amtrak
	reform that would allow the rail service to get more stable
	footing right now?
	Mr. Rahall. Well, Mr. Meek, I think the Amtrak Reform
	Commission has come up with some recommendations, and I leave
	that to their expertise as to those reforms that are necessary
	to get Amtrak back on track, so to speak. And I do hope that
	their intention, which we have to ensure that it is, is not to
	do away with the service, especially as it exists across rural
	America today.
	There obviously are reforms that are necessary. There are
	methods I think Amtrak could better conduct itself to running a
	business, like any business operation should be run. As any
	``mom and pop'' operation across America would conduct its
	operations, that is how Amtrak I think should set its sights.
	But the bottom line is it is a service to our people. As
	you said, when there are problems with airlines people flock to
	the rail lines, and that service should be there for the
	American people, not necessarily looking at the bottom line
	when it comes time to providing a vital transportation service
	to our people in times of national emergency or even in times
	of everyday life across rural America. I have many veterans,
	for example, senior citizens, for example, handicapped
	individuals that cannot move across the rural parts of my
	district were it not for the Cardinal, the Amtrak line that
	comes through there. To cut that service out to them is not
	improving our homeland security, is not improving services that
	I think Amtrak should be providing to our people without a
	regard to the bottom line.
	Mr. Meek. Let me just say I agree once again with you as it
	relates to that. But when we look at infrastructure investment,
	we look at stimulating the economy, we look at individuals that
	are blue collar that will have an opportunity to go to work, we
	look at business as being a part of the transportation pie,
	being able to stimulate our economy. And as we work on
	infrastructure, I am from Florida--South Florida, it is going
	to help quite a few small businesses to be reachable. Also as
	it relates to rural America, I could not see a better
	investment that this country should make in being able to work
	on an infrastructure.
	I want to thank you for coming before the committee today.
	Mr. Rahall. Thank you, Mr. Meek.
	Chairman Nussle. Mr. Shays.
	Mr. Shays. Thank you. It is good to see you here,
	Congressman Rahall. I have appreciated working on a number of
	issues with you, and I appreciate your contribution to the work
	of Congress.
	I served on this committee a few years ago, and after we
	came up with a balanced budget, we broke the budget when we had
	the debate and you had arguments on both sides about making
	sure we used all the trust funds for transportation. But the
	end result was we spent more on transportation and we really
	broke the budget agreement, in my judgement. But the argument
	was that the money should be spent that is in the trust fund.
	Now that we are borrowing from the trust fund in a sense,
	excuse me, now that the trust fund is borrowing money from the
	Federal Government because it did not have enough funds to meet
	the obligations, isn't there an obligation of the trust fund to
	pay back to the general fund?
	Mr. Rahall. Well, I will not deny there is an obligation
	there. But that has to be fulfilled in terms of where we are in
	today's economy and where we are in terms of transportation
	needs. And as we make the necessary improvements, let's face
	it, we have got deficient bridges that threaten Americans'
	lives everyday across America, hundreds of deficient bridges
	that could fall in, God forbid, any day. Those are items that
	have to be addressed immediately without regard to paying back
	obligations the Highway Trust Fund may incur. So, let us take
	care of our people and our infrastructure first, and then as
	the economy improves, hopefully it will, we will look at
	repaying that obligation.
	Mr. Shays. I am doing a lot of wrestling on this issue
	because I buy into your general argument that there is
	tremendous infrastructure needs. I do not like seeing the trust
	fund being used for operational expenditures as a general rule.
	I think we have some very real capital needs. What is your
	position on increasing the gasoline tax to bring more money
	into the trust fund?
	Mr. Rahall. Well, I have been on the T&I Committee for 26
	years now, so I have seen increases in that gas tax over my
	congressional career. The current proposal I know Chairman
	Young has put it on the table, and I commend him for doing
	that. On our side, having just organized, as we speak as a
	matter of fact, organized in our committee, we have not really
	addressed this issue and adopted a position as a Democratic
	position on the T&I Committee. But again, I go back to what I
	said in my opening comments, we are very bipartisan and I would
	expect that we would work together on this.
	Mr. Shays. Right. I realize that you would not be speaking
	for your conference, but what would your personal position be
	based on your years of experience and the need to spend more on
	infrastructure? What would you be advocating?
	Mr. Rahall. Well, what I would be after is, first of all,
	some type of ironclad commitment of where that increase, if it
	were to occur, would go. Of course, I would want it to go
	toward the purpose for which it would be collected--
	transportation.
	Mr. Shays. And if it did, would you advocate increasing the
	gasoline tax?
	Mr. Rahall. I would seriously consider that, yes.
	Mr. Shays. Thank you very much. I thank you, Mr. Chairman.
	Chairman Nussle. Thank you. Congressman Rahall, colleague
	and friend, we appreciate you coming to the committee today. We
	appreciate your testimony and will look forward to working with
	you and the members of the T&I Committee as we grapple with
	this very vexing challenge that we have before us.
	Mr. Rahall. Thank you, Mr. Chairman.
	Chairman Nussle. Thank you.
	With that, if there is no other business to come before the
	committee, we stand adjourned.
	[Whereupon, at 12:19 p.m., the committee was adjourned, to
	reconvene at the call of the Chair.]


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