STATEMENT OF EMIL H. FRANKEL
ASSISTANT SECRETARY FOR TRANSPORTATION POLICY
BEFORE THE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
HEARING IN MEDFORD, OREGON
August 14, 2003

Senator Wyden, thank you for the opportunity to speak to you today about the importance of transportation to the economy. Secretary Mineta has stated that few things have as great an impact on our economic development, growth patterns, and quality of life, as transportation. This is equally true at the National, State, and local levels. A safe and efficient transportation system is essential to keeping people and goods moving and communities prosperous.

American households spent an average of $7,000 on transportation in 1999, nearly 20 percent of their income and second only to the amount they spent on housing. In 1999, the U.S. recorded about 4.6 trillion passenger miles of travel and 3.8 trillion ton-miles of domestic freight shipments. The U.S. freight transportation network moved over 15 billion tons of goods in 1998. In 2000, more than 10 million people were employed in transportation-related industries.

Construction and maintenance of highway facilities also can help National, State, regional, and local economies grow by attracting new businesses and by providing access to new markets. Studies from the Federal Highway Administration show that highway infrastructure investments generate important economic benefits by reducing production costs, increasing productivity, and fostering private capital investment.

Since the enactment of the Transportation Equity Act for the 21st Century (TEA-21) in 1998, combined investment in highway infrastructure, by all levels of government, has increased sharply. Total highway expenditures by Federal, State, and local governments increased by 25.0 percent between 1997 and 2000. The increased Federal funding levels for highway capital investment under TEA-21 through 2000 have been matched and exceeded by increases in State and local investment.

In addition to economic benefits, this increased investment is reflected in improvements in pavement ride quality and reductions in bridge deficiencies. Increased spending for system improvements is one of a number of factors that has aided in the reduction of the Nation's highway fatality rate. The fatality rate per 100 million vehicles has decreased from 3.3 fatalities in 1980 to 1.5 fatalities in 2002.

Despite this progress, our Nation's transportation systems face significant challenges in the areas of safety, security, congestion, intermodal connectivity, and timely project delivery. Building upon the principles, values, and achievements of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and TEA-21, the Administration's reauthorization proposal - the Safe, Accountable, Flexible, and Efficient Transportation Equity Act of 2003 or "SAFETEA" - addresses these challenges as it seeks to create a safer, simpler, and smarter Federal program.

SAFETEA builds upon the substantial funding increases under TEA-21 by calling for a record Federal investment in surface transportation, spending over $201 billion on highway and safety programs, and nearly $46 billion on public transportation programs, from fiscal year 2004 through fiscal year 2009. The Administration's proposal marks a 19 percent increase over the amounts provided in TEA-21.

These funding levels would be achieved by: 1) continuing the financial guarantees of TEA-21 that linked highway funding with the receipts generated by transportation excise taxes; 2) redirecting to the Highway Account of the Highway Trust Fund the 2.5 cents per gallon of the gasohol tax currently deposited in the General Fund; and 3) dedicating an additional $1 billion a year of Highway Trust Fund dollars over and above each year's estimated receipts into the Highway Trust Fund to improve highway infrastructure performance and maintenance.

One of the main focuses of our proposed legislation is transportation safety. Although we have made improvements in the rates of fatalities and injuries on our highways, the total numbers remain intolerable, and they are rising. In 2002, nearly 43,000 people lost their lives on our highways and roads. Families are destroyed and promise is lost. The economic costs are unacceptable as well. The total annual economic impact of all motor vehicle crashes exceeds $230 billion, a staggering figure.

For these reasons, the Administration has made saving lives an essential priority in SAFETEA. We have a moral, as well as an economic, obligation to address immediately the problem of transportation safety. The Bush Administration is committed to reducing highway fatalities, and SAFETEA offers proposals to take those actions that can make the achievement of this goal possible.

SAFETEA proposes the creation of a new core funding category dedicated to safety within the Federal-aid highway program. This new category will more than double funding over TEA-21 levels for highway safety infrastructure programs. The Administration also is seeking to consolidate and simplify the safety programs administered by the National Highway Traffic Safety Administration (NHTSA).

By enhancing their capacity and flexibility, State transportation and safety officials can target scarce Federal safety funds on the most relevant problems confronting their communities. Incentive bonuses will reward those States that achieve demonstrable safety results. Oregon should be commended for its stellar safety record, including an impressive 88 percent safety belt usage rate. In 2002, Oregon saw its total fatalities drop 12% from a year earlier. In fact, 2002 marks only the second time since 1956 that the annual number of fatalities has been less than 430. Considering that the State's population has doubled since 1956, this is a truly remarkable achievement.

Unfortunately, not every State has taken safety issues as seriously as Oregon has. The majority of States have not enacted primary safety belt laws, despite overwhelming evidence linking such laws to improved safety belt usage rates. Enactment of the safety provisions in SAFETEA would be an important step, we believe, in reducing highway fatalities and injuries, and providing greater flexibility to State and local governments to use these funds consistent with a comprehensive strategic highway safety plan.

Our Nation's transportation system faces significant challenges in other areas as well, such as timely project delivery, freight efficiency, congestion, and intermodal connectivity. Our proposal addresses transportation problems of national significance, while giving State and local transportation decision, makers more flexibility to solve transportation problems in their communities.

SAFETEA would increase State and local government flexibility by eliminating most discretionary highway grant programs and making these funds available under the core formula highway grant programs. States and localities have tremendous flexibility and certainty of funding under the core programs. SAFETEA also would establish a new performance pilot program under which States can manage the bulk of their core formula highway program funds on a performance basis, cutting across the programmatic lines by which the Federal-aid highway program is normally structured. Under the pilot program, States would work with the Department to develop and meet specific performance measures that reflect both State and National interests.

The Administration believes that we can and must protect our environment while improving the efficiency of transportation project delivery. To accomplish this goal, SAFETEA would clarify the role of States or project sponsors in expedited review procedures, particularly regarding the establishment of time periods for environmental reviews, the initiation of dispute resolution procedures, and the preparation of Environmental Impact Statements.

For States like Oregon, which are planning major system upgrades, streamlining the environmental process will be a key factor in keeping the projects environmentally sound, on-time and on-budget. SAFETEA will also revise the Congestion Mitigation and Air Quality Improvement (CMAQ) program to better address the new air quality standards; revise the High Occupancy Vehicle (HOV) lane provisions to encourage the use of cleaner and more fuel-efficient vehicles; and encourage the active consideration and implementation of context-sensitive design principles and practices in all federally aided transportation projects.

The health and productivity of our Nation's economy is increasingly tied to a domestic and international goods trade. The importance of the movement of freight is evident in Oregon. On an average weekday, Oregon's highways move nearly 800,000 tons of goods worth over $480 million. 1-5 is one of the most heavily traveled truck-freight corridors in the Western United States. Seattle to Portland truck tonnages rank among the top of Western metropolitan area truck trade interchanges. Oregon companies export over $10 billion worth of products to foreign nations, including Japan, Canada, South Korea, and Taiwan - Oregon's leading foreign trade partners.

SAFETEA attempts to enhance our Nation's freight transportation system in a number of ways. First, the bill invests National Highway System (NHS) Program funds in the often neglected, but critical "last mile" roads that connect the NHS to intermodal freight facilities. Although these roads do not represent a significant portion of total NHS mileage, their health is critical to intermodal freight activity in many parts of the country.

Second, SAFETEA makes several innovative financing tools available for private intermodal freight projects. Under the credit program authorized by the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA), the Administration's proposal lowers the project threshold to $50 million from $100 million and expands the program's eligibility to include freight projects involving the private sector. In addition, SAFETEA proposes that bonds issued to finance intermodal freight projects and highway facilities benefit from Federal tax-exempt, status, even though private entities operate the facilities.

SAFETEA also provides valuable new tools for States and localities to manage existing and new capacity more efficiently. These tools would be particularly beneficial in heavy trade corridors where congestion is both more likely and more costly. Our proposal would allow States to establish variable user charges or tolls on any highway, bridge, or tunnel, including the Interstate System, to manage congestion or improve air quality. It would father allow States to permit Single Occupancy Vehicles (SOVs) on HOV lanes as part of such a variable toll pricing program.

The Administration fully recognizes that tolling is neither appropriate nor necessary on many highway facilities.. However, we believe that States facing congestion crises should be permitted to explore all viable options to allocate scarce road capacity. In addition, tolling can provide a valuable revenue stream to speed up completion of a capacity expansion on the tolled facility. Empirical evidence regarding tolling, especially variable tolling, from parts of the United States and other parts of the world, strongly indicates that it can be a highly effective demand management tool and an important facility financing mechanism. The Federal Government should not be an obstacle to further innovation in this area.

In addition to the significant amount of funding provided through the core programs, all of these innovative proposals could be used to upgrade a major trade corridor like I-5. The Texas Transportation Institute (TTI) currently ranks the Portland/Vancouver metropolitan areas as the 12^th most congested in the nation, with 1-5 being one of the most congested facilities in the region. In addition, congestion is projected to worsen substantially with rapid population growth and increases in vehicle-miles of travel (VMT) per capita. For example, congestion at the I-5 Columbia River bridge is expected to create six- to seven-mile peak direction queues during the morning and afternoon peak periods in 2020, if no improvements are made.

Working with the Portland/Vancouver 1-5 Transportation and Trade Partnership and with our State partners in Oregon and Washington, USDOT is excited to begin the process of implementing the Partnership's comprehensive strategic vision of highway, transit and rail capacity expansion, better system management and environmental protection.

The proposal to reform the current Intelligent Transportation Systems (ITS) Program in SAFETEA will give incentives and flexibility to States that implement technology solutions to improve operations. As we increase total funding for capacity expansion, we must also look for ways to improve operational efficiencies. Few things offer more promise in this regard than technology.

In Oregon alone, vehicles drove over 34 billion miles on highways in 2001. In the preceding 10 years, vehicle miles of travel in the State grew 31 percent while lane miles of public roads in Oregon did not grow at all. As a consequence, traffic becomes routinely congested on nearly 500 miles of Oregon's highways, affecting in particular about two-thirds of the freeway mileage in Portland. Under SAFETEA, States will be rewarded for using technology to reduce delays caused by accidents, work zones, lack of intermodal integration, poor intersection signalization and lack of traveler information, among other things.

The State of Oregon and the City of Portland already have several Traffic Management and Operations Centers to monitor traffic, provide motorists with timely information, and respond to incidents. Truckers get immediate information on traffic delays through the Oregon Department of Transportation QuickFax service, which reaches over 150 trucking companies and 30 truck stops. SAFETEA will allow greater investments in approaches such as these to improve reliability, reduce travel times, and respond quickly to life-threatening situations.

SAFETEA also promotes common sense public transportation solutions by reducing the number of different program "silos" and formularizing all programs except the New Starts Program. This will give States and localities the flexibility they need to fund local priorities. We want States to maximize mobility and create a seamless community transportation network, not try to match projects to specific pots of money.

Here in Oregon, the success of the Portland Streetcar and the Portland Light Rail projects demonstrate how investments in public transportation can contribute substantially to the economic development of a city. Over $1 billion has been invested near the Streetcar alignment since 1997, including over 3,600 housing units and over 2 million square feet of office, institutional, retail and hotel construction. Since the Portland light rail system was constructed, more than $3 billion in new development and 10,000 housing units have been built along the tracks. More than 46% of downtown commuters use transit to get to work and the system eliminates 187,000 car trips every day. The most recent construction project, the Interstate Metropolitan Express (MAX) extension, generated 2,940 construction-related jobs, and is expected to relieve traffic on I-5.

Stable formula funds help agencies do more with limited resources because they give financial markets the confidence to support transit investments; give communities an incentive to commit long-term resources; and give community developers the confidence that the transit commitments necessary to support new development will be honored.

Under SAFETEA, New Starts would be expanded to provide capital assistance for new non-fixed guideway corridor systems and extensions that meet the New Starts criteria, as well as new fixed guideway systems and extensions. FTA has always funded meritorious public transit projects, but the current statute restricts New Starts funds to projects that utilize a fixed guideway. Fixed guideway projects are critical to public transportation and they will continue to be eligible for funding, but worthy projects that propose lower-cost non-fixed guideway solutions also deserve consideration. With today's technology - particularly bus rapid transit - a fixed guideway is often not the most cost-effective method of providing new or expanded corridor systems. The current rules encourage communities to choose a more expensive fixed guideway system in order to qualify for a New Starts grant.

Moreover, some small and medium-sized communities that would benefit enormously from the creation of new transit options simply cannot generate enough riders or travel-time savings to justify a more expensive fixed guideway system. We will work closely with Congress and with all of our stakeholders to ensure that, as we make room for these cost-effective, non-fixed guideway transit solutions, we do not compromise the intent of the New Starts program.

Finally, I would like to touch briefly on intercity passenger rail. As you know, the Bush Administration recently released the Passenger Rail Investment Reform Act of 2003, the first comprehensive proposal to fundamentally reform the Nation's intercity passenger rail system in thirty years.

The Administration's proposal would bring investment in intercity passenger rail in line with all other transportation modes by creating a system in which States and local communities, using capital investments supported by federal funds, operate rail service in their areas. The proposal builds on proven models of success in attracting riders and providing quality service for travelers, such as the Cascades service between Portland, Oregon, and Seattle, Washington, and other state-funded trains in California and Illinois.

The Administration's proposal replaces subsidy payments to the National Railroad Passenger Corporation (Amtrak) after a transition period, with direct federal matches for capital investment to be paid directly to the states. States and multi-state compacts would submit proposals for passenger rail capital investment and train operations to the U.S. Department of Transportation. Ultimately, States would be free to choose the train operations provider of their choice - whether a private company, a public transit agency or Amtrak.

At the rollout of the legislative proposal, Secretary Mineta cited the Cascades rail service, developed by Washington and Oregon, as a model for the support and innovative planning that results when communities and States take the lead in addressing their needs for passenger rail service. The two States have invested some $170 million in developing high-quality passenger rail service from Portland to Seattle. State funds have been used to improve track, purchase new trains and upgrade stations. Oregon and Washington have provided operational subsidies to support the service and have hired Amtrak to run it. Other States are exploring the potential of such multi-state coalitions for the planning of intercity passenger rail service and eventually high-speed rail service.

We believe this model for investment - reflecting the States' better understanding of local priorities for passenger rail - should be the driver of federal subsidies for intercity passenger rail. Oregon and Washington have done an outstanding, innovative job in building a service that works, but have had to do that without federal support for capital investment. The Administration's approach would finally bring that support to the table.

These are challenging and exciting times for USDOT, the Congress, and the entire transportation community. We must work together for a long-term reauthorization of surface transportation and intercity passenger rail programs. Enactment of these bills is critical not only for funding stability, but also to implement innovative reforms that will provide more revenue dollars without raising taxes and produce cost savings through more efficient investment of the dollars that are made available.

Senator Wyden, this concludes my statement. I again thank you for the opportunity to testify today and I will be pleased to answer any questions you may have.