[Senate Hearing 116-575]
[From the U.S. Government Publishing Office]
S. Hrg. 116-575
BUILDING INFRASTRUCTURE IN AMERICA:
OVERVIEW OF THE BUILD AMERICA BUREAU
AND THE U.S. DEPARTMENT OF TRANSPORTATION RURAL TRANSPORTATION
INITIATIVES
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HEARING
BEFORE THE
SUBCOMMITTEE ON TRANSPORTATION AND SAFETY
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 28, 2020
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
52-613 PDF WASHINGTON : 2023
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
ROGER WICKER, Mississippi, Chairman
JOHN THUNE, South Dakota MARIA CANTWELL, Washington,
ROY BLUNT, Missouri Ranking
TED CRUZ, Texas AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado TOM UDALL, New Mexico
MARSHA BLACKBURN, Tennessee GARY PETERS, Michigan
SHELLEY MOORE CAPITO, West Virginia TAMMY BALDWIN, Wisconsin
MIKE LEE, Utah TAMMY DUCKWORTH, Illinois
RON JOHNSON, Wisconsin JON TESTER, Montana
TODD YOUNG, Indiana KYRSTEN SINEMA, Arizona
RICK SCOTT, Florida JACKY ROSEN, Nevada
John Keast, Staff Director
Crystal Tully, Deputy Staff Director
Steven Wall, General Counsel
Kim Lipsky, Democratic Staff Director
Chris Day, Democratic Deputy Staff Director
Renae Black, Senior Counsel
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SUBCOMMITTEE ON TRANSPORTATION AND SAFETY
DEB FISCHER, Nebraska, Chairman TAMMY DUCKWORTH, Illinois, Ranking
JOHN THUNE, South Dakota AMY KLOBUCHAR, Minnesota
ROY BLUNT, Missouri RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas EDWARD MARKEY, Massachusetts
CORY GARDNER, Colorado TOM UDALL, New Mexico
SHELLEY MOORE CAPITO, West Virginia GARY PETERS, Michigan
TODD YOUNG, Indiana TAMMY BALDWIN, Wisconsin
RICK SCOTT, Florida
C O N T E N T S
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Page
Hearing held on January 28, 2020................................. 1
Statement of Senator Fischer..................................... 1
Statement of Senator Duckworth................................... 2
Statement of Senator Cantwell.................................... 11
Witnesses
Hon. Joel Szabat, Acting Under Secretary of Transportation for
Policy, U.S. Department of Transportation...................... 3
Joint statement.............................................. 5
Morteza Farajian, Ph.D., Executive Director, Build America
Bureau, U.S. Department of Transportation...................... 12
Hon. John McCarthy, Port of Tacoma Commission President and Co-
Chair, The Northwest Seaport Alliance.......................... 13
Prepared statement........................................... 15
Appendix
Response to written questions submitted to Hon. Joel Szabat by:
Hon. Maria Cantwell.......................................... 31
Hon. Tammy Duckworth......................................... 32
Hon. Tammy Baldwin........................................... 35
Hon. Tom Udall............................................... 36
Response to written questions submitted to Morteza Farajian,
Ph.D. by:
Hon. Maria Cantwell.......................................... 39
Hon. Tammy Duckworth......................................... 41
Response to written questions submitted to Hon. John McCarthy by:
Hon. Maria Cantwell.......................................... 43
BUILDING INFRASTRUCTURE IN AMERICA:
OVERVIEW OF THE BUILD AMERICA BUREAU
AND THE U.S. DEPARTMENT OF
TRANSPORTATION RURAL TRANSPORTATION INITIATIVES
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TUESDAY, JANUARY 28, 2020
U.S. Senate,
Subcommittee on Transportation and Safety,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10 a.m., in
room SH-216, Hart Senate Office Building, Hon. Deb Fischer,
Chairman of the Subcommittee, presiding.
Present: Senators Fischer [presiding], Wicker, Thune,
Moran, Young, Duckworth, Cantwell, and Blumenthal.
OPENING STATEMENT OF HON. DEB FISCHER,
U.S. SENATOR FROM NEBRASKA
The Chairman. The hearing will come to order. Good morning.
I am pleased to convene today's hearing as Chairman of the
Senate Subcommittee on Transportation and Safety. This hearing
will focus on the Department of Transportation's infrastructure
development programs housed within the Office of the Secretary
of Transportation. Specifically, we will examine the Build
America Bureau and the newly created rural opportunities to use
transportation for economic success, or the ROUTES initiative,
and the Railroad Rehabilitation and Improvement Financing, or
RRIF Express programs.
Everyone here can agree that the United States surface
transportation infrastructure is critical to public safety and
to the economy. It connects people across this country. Many of
us hear from our constituents about the poor state of American
infrastructure. Their concerns have been confirmed by numerous
studies, including the often-cited infrastructure report card
from the American Society of Civil Engineers, which gave U.S.
infrastructure a D+ in 2017. That is unacceptable. To ensure we
have the infrastructure we need for the future, the U.S.
transportation policy should focus on both improving the
infrastructure we currently have and building new assets to
accommodate increasing demand.
While infrastructure has always been a priority for this
Subcommittee, it is particularly important this year as we
consider the reauthorization of important Federal surface
transportation programs. That is why today we will examine OT
programs that affect both urban and rural transportation
infrastructure. As you know, Congress established the Build
America Bureau in the FAST Act in 2015. The idea was simple,
project sponsors should have a one-stop shop to access
information on DOT grants and financing, streamlined
application processes and technical assistance such as
permitting and procedural advice.
The FAST Act specifically directed the Bureau to administer
several programs, the Transportation Infrastructure Finance and
Innovation Act loan program known as TIFIA and the RRIF loan
program for rail, infrastructure for rebuilding America grant
program known as INFRA, and private activity bonds.
Today, we have the opportunity to learn more about DOT's
work to establish the Bureau, what the Bureau offers to aid
project sponsors, and how Congress could better support the
Bureau's work in a surface transportation reauthorization. In
particular, I look forward to hearing about the Bureau's vision
and strategy for how they plan to provide assistance and to
coordinate with project sponsors.
I also look forward to hearing specific details from the
witnesses about how DOT will implement the TIFIA rural project
initiative, RRIF Express, and the ROUTES initiative. As we have
seen, project sponsors especially in our rural areas may not be
aware of the resources available to them through DOT or they
simply may not have the means to access this assistance.
My colleagues and I often receive questions from
stakeholders asking how to access these important programs.
Many of my constituents will be interested to know what rural
project sponsors can expect if they reach out to DOT for
assistance. I hope today's witnesses can help us better direct
constituents to helpful resources that will guide them in their
efforts to improve our Nation's infrastructure, and I look
forward to the testimony of our panel.
At this point, I would like to invite my colleague and
Ranking Member Senator Duckworth for her opening comments.
STATEMENT OF HON. TAMMY DUCKWORTH,
U.S. SENATOR FROM ILLINOIS
Senator Duckworth. Thank you so much Chairman Fischer.
Thank you again for holding today's hearing. I want to thank
our witnesses for joining us today to highlight the
opportunities and challenges facing the DOT's Build America
Bureau and DOT's efforts to advance major infrastructure
projects in rural America.
As this Committee knows well, every sector of our economy
and every corner of the Nation benefits from reliable,
efficient transportation. I would go a step further and say
that our Nation's global competitiveness is dependent on our
safe, reliable, and efficient transportation network. Despite
this dependence however, investments in transportation
infrastructure have not kept pace with need and public
expenditures on infrastructure as a percentage of GDP has
declined to the lowest levels in a generation.
The American Society of Civil Engineers gives our
infrastructure a D+ rating and estimates that we must invest $2
trillion by 2025 to rebuild, maintain, and expand our
transportation infrastructure. In pursuit of reliability and
efficiency, Congress has established a variety of credit and
grant programs administered by DOT to invest in major projects
all across the Nation. For states, local governments, and other
stakeholders, the Build American Bureau is DOT's one-stop-shop
for Federal transportation funding and financing opportunities.
The Bureau's core responsibilities is administering finance
programs like RRIF program and TIFIA.
Meanwhile, the Office of the Secretary has taken the lead
on implementing INFRA grants to enhance our Nation's great
network and build grants to benefit projects of local or
regional importance. While many worthwhile projects have
advanced thanks to these programs, I do hope that today's
hearing will shed light on stakeholder concerns about
burdensome application processes, high front-end costs, and
extreme uncertainty in securing Federal support. For example, I
have heard from RRIF applicants who spent many months and more
than $1 million to not get a RRIF loan. Meanwhile, an opaque
project selection process for the INFRA and Build programs
undermines stakeholders' confidence and DOT's merit-based
decisionmaking.
For example, the portion of Build funding invested in rural
projects increased from 33 percent to more than 70 percent over
the past three years. Yet during that same period, transit
awards diminished from 27 percent to 8 percent. The Trump
Administration has made no secret of its focus on rural
investments and I agree that many rural communities face
stronger headwinds when applying for Federal resources than
their urban counterparts. That is why it is critically
important for DOT to ensure its practices and policies reflect
the transparency that Congress and the public require to make
informed decisions and ensuring a level playing field for all
stakeholders regardless of mode or geography.
I hope that today's witnesses will shed light on many of
these concerns and help this Committee identify opportunities
to further enhance DOT's credit and grant programs and maximize
outcomes for U.S. taxpayers. Thank you, and I yield back.
The Chairman. Thank you, Senator Duckworth. I would like to
ask the witnesses for their opening statements at this time. We
will begin with Mr. Szabat, who is the Assistant Secretary of
Aviation and International Affairs and performing the duties of
the Under Secretary for Policy. He has extensive experience
with transportation policy since joining the Department in
2002.
STATEMENT OF HON. JOEL SZABAT,
ACTING UNDER SECRETARY OF TRANSPORTATION
FOR POLICY, U.S. DEPARTMENT OF TRANSPORTATION
Mr. Szabat. Thank you, Chairman Fischer, Ranking Member
Duckworth, and members of the Subcommittee. We appreciate the
opportunity to share with you the steps this Administration and
the Department of Transportation have taken to facilitate
better transportation in America's rural communities. Safety is
the first priority of Secretary Chao and the entire Department.
Data shows that the Federal Government ought to increase
its focus on rural transportation safety. Rural transportation
networks are also vital to economic growth, creating
opportunity and ensuring that no one is left behind. Many rural
communities in the United States continue to face
transportation disparities. While only 19 percent of Americans
live in rural communities, 69 percent of highway lane miles are
in rural areas.
Truck drivers, essential, unheralded, and literally the
prime movers of our economy, spend roughly half their working
days and nights rowing across rural roads. And two-thirds of
all U.S. rail freight originates in rural areas. Consequently,
there are disproportionately more highway fatalities in rural
areas, 72 percent of large truck occupant fatalities, 67
percent of pick up occupant fatalities, and 58 percent of SUV
occupant fatalities occur in rural areas.
In fact 46 percent of total highway fatalities in our
country occur on rural roads, at a rate twice that of urban. So
it is vitally important not only to growth and competitiveness
but to safety that the transportation infrastructure needs of
rural communities be addressed. The U.S. Department of
Transportation is working hard to address these inequities in
several ways.
The Administration recognizes that rural transportation is
a lifeline for farmers, working families, seniors, veterans,
individuals with disabilities, and tribal residents among
others. For that reason, the Administration is placing
considerable emphasis on underserved communities, including
those in rural America. Here I'll spotlight two particular
initiatives.
The Rural Project Initiative allows more sponsors of
infrastructure projects in rural communities to tap into the
Department's major loan programs, enabling projects that might
not otherwise get done and the rural opportunities to use
transportation for economic success, or ROUTES initiative helps
rural communities access Federal transportation grant funding
and loan programs. It also improves data sharing to help rural
communities better analyze their transportation needs.
Access to rural transportation can be a significant
challenge for seniors, people with disabilities, and low-income
communities. So the ROUTES initiative will address the rural
public transit lifeline as well. We have exceeded our rural
transportation obligations as laid out in the 2015, FAST Act.
We continue pressing forward with new ways to improve rural
mobility because our whole Nation, including urban citizens and
businesses, depend on it. While we have increased focus on
rural areas, we remain intent on improving transportation
systems throughout the Nation. Connecting urban and rural
transportation networks are critically important for domestic
production and export of agriculture, mining, and energy
commodities, as well as the quality of life for all Americans.
The disparity in transportation conditions between urban
and rural communities are exacerbated because urban communities
often are better equipped to seek out Federal resources to
address their needs. Our initiatives work to redress the
balance. The most meaningful way to help rural America's
transportation infrastructure is through the discretionary
grant. Since Fiscal Year 2016, the rural share of discretionary
funds awarded nearly doubled in the nine transportation
programs that distinguish between rural and non-rural.
Just two months ago, Secretary Chao announced the latest,
better utilizing investments to leverage development or build
discretionary grant awards. In the last three rounds of Build,
an infrastructure for rebuilding America or INFRA grants, each
around $900 million, the rural share of the awards ranged
between 50 percent and 64 percent. As detailed in my written
testimony, key operating administrations in the Department,
transit, highway, and rail, also increased their focus on rural
safety and mobility as indicated by their Fiscal Year 2019
funding priorities.
These awards are only a sample of the Department's effort
in the past thirteen months to champion rural transportation
improvements to discretionary grant awards. In some, they total
over $2.4 billion. In addition to efforts by DOT operating
administrations, our innovative financing arm, the Build
America Bureau, has also played a key role in supporting
development of rural transportation infrastructure. Credit
programs such as TIFIA and RRIF, which Dr. Farajian will speak
to next, are powerful tools to better address rural
transportation needs.
Special thanks are due to Dr. Farajian, his staff, and his
supervisor, the Chief Infrastructure Funding Officer of the
Department, Dan DeBono, for their work with rural communities.
I also commend Secretary Chao's Senior Policy Advisor, Jannine
Miller, who has been the driving force in shaping our rural
initiatives. Thank you, and I look forward to your questions.
[The joint prepared statement of Mr. Szabat and Mr.
Farajian follow:]
Joint Statement of Joel Szabat, Assistant Secretary for Aviation and
International Affairs, Performing the Duties of Under Secretary for
Policy, Department of Transportation; and Morteza Farajian, Ph.D.,
Executive Director, Build America Bureau, Department of Transporation
Thank you, Chairman Fischer, Ranking Member Duckworth, and Members
of the Subcommittee. We appreciate the opportunity to share with you
the steps the Trump Administration and Secretary of Transportation
Elaine L. Chao have taken to facilitate better transportation in
America's rural communities.
Rural transportation networks are vital to the Nation's economic
growth, creating opportunity, and ensuring that no one is left behind.
Yet many rural communities in the United States continue to face
significant transportation challenges. For example, while only 19
percent of Americans live in rural communities, 69 percent of highway
lane miles are in rural areas, nearly half of all truck vehicle miles
traveled occur on rural roads, and two-thirds of all U.S. rail freight
originates in rural areas.
One result of these challenges is a disproportionate high rate of
highway fatalities in rural areas.
72 percent of large truck occupant fatalities,
67 percent of pickup occupant fatalities, and
58 percent of SUV occupant fatalities occur in rural areas.
In fact, 46 percent of total highway fatalities in our country
occur on rural roads--and the fatality rate on rural roads is twice
that of urban roads. This is of special concern because safety is the
Department of Transportation's Number One priority. So it is vitally
important not only to growth and competitiveness, but to safety, that
the transportation and infrastructure needs of rural communities be
addressed.
The U.S. Department of Transportation is working hard to address
these inequities through a number of initiatives, including:
Funds Administration. The Department distributes about $70
billion annually for infrastructure needs, much of which goes
to State governments via formula stipulated by law. Yet DOT has
several discretionary grant programs as well. Since FY 2016,
the rural share of discretionary funds awarded nearly doubled
in the nine transportation programs that distinguish between
rural and non-rural. And the number of awards made to rural
projects more than tripled.
Rural Project Initiative Implementation. This initiative
allows more sponsors of infrastructure projects in rural
communities to utilize the Department's major loan program,
which offers very generous financing and loan repayment terms.
ROUTES Initiative. The Rural Opportunities to Use
Transportation for Economic Success (ROUTES) initiative helps
rural communities access Federal transportation grant funding
and loan programs. It also improves data sharing to help rural
communities better analyze their transportation needs. As part
of this initiative, the Department established a ROUTES
Council, which supports rural communities to better identify
and assess their transportation needs, and re-balance DOT
discretionary grants to address those needs. Rural Transit.
Access to transportation can also be a significant challenge
for seniors, people with disabilities and low-income
communities in rural areas. Public transportation is a lifeline
for them. So the ROUTES initiative will be addressing public
transit in rural areas, as well. Addressing rural-urban
transportation disparities will help ensure a more inclusive
transportation network for the future. That's a goal that all
countries can and should incorporate into their national
transportation plans.
The Administration recognizes that transportation in rural areas
functions as a lifeline for farmers, working families, seniors,
veterans, individuals with disabilities, tribal residents, and others.
To that end, this Administration has placed considerable emphasis on
underserved communities like those in rural America. We have met and
exceeded our obligation regarding rural transportation in the 2015 FAST
Act, and we continue pressing forward with new ways to improve rural
mobility. In addition to efforts by DOT Operating Administrations, our
innovative financing arm, the Build America Bureau, has also played a
key role in supporting development of rural transportation
infrastructure. Of course, while we have increased focus on rural
areas, we are as intent as always on improving transportation systems
throughout the Nation.
Rural transportation networks
Rural transportation networks are critically important for domestic
production and export of agriculture, mining, and energy commodities as
well as the quality of life for all Americans. For example, two-thirds
of rail freight originates in rural areas, and nearly half of all truck
vehicle-miles-traveled (VMT) occur on rural roads. And, 70 percent of
America's road-miles are in rural communities.
At the same time, 90 percent of posted, or limited weight, bridges,
which heavy trucks cannot use, are in rural areas. Freight-hauling
truck drivers in rural areas often contend with lengthy detours to find
a bridge able to handle the weight; these detours consume fuel and
time. In addition to the problem of weight-limited bridges, 80 percent
of the bridges in the U.S. that are rated to be in poor condition are
in rural areas.
Not surprisingly, a disproportionate number of roadway fatalities
occur in rural areas based on exposure measures like population and
VMT. While only one-fifth of the Nation's population lives in rural
areas, in 2018, 46 percent of the Nation's highway fatalities occur on
rural roads. Breaking that down into deeper categories, in 2018, 72
percent of large truck occupant fatalities, 67 percent of pickup
occupant fatalities, and fifty-eight percent of SUV occupant fatalities
occur in rural areas. And, the highway fatality rate per 100 million
VMT in rural areas is more than twice that of urban areas. It is worth
noting that 44 percent of personal vehicle miles traveled on rural
roadways are driven by urban residents traveling to destinations
outside their home metro areas, so rural roadway safety matters for our
entire country.
Many people living in rural and tribal communities can ill-afford
to drive the considerable distances they must travel to work and other
destinations. That is why 81 percent of U.S. counties provide rural
transit service. The disparity in transportation conditions between
urban and rural communities are exacerbated because urban communities
are better equipped to seek out Federal resources to address their
needs. Rural areas often lack the capacity to fully compete for Federal
transportation infrastructure funding.
This Administration is working hard through the Department of
Transportation to ensure that rural and all other communities are
treated fairly and equitably.
The Department's Efforts and Achievements
ROUTES: Rural Opportunities to Use Transportation for Economic Success
Addressing these disparities calls for a sharper focus on our
investments in rural areas to meet national priorities such as
improving safety and economic competitiveness in all parts of the
country. That's why Secretary Chao launched the ROUTES initiative, in
October 2019. The ROUTES initiative will improve how the DOT considers
rural project applications in our discretionary grant programs,
including ensuring that project costs, local resources, and the
benefits to the American people and economy are appropriately
considered. Under this initiative, ROUTES will provide rural areas with
user-friendly information to improve planning and development of grant
applications. It will also give projects in rural communities due
consideration in grant programs, to assist in meeting their
transportation needs.
Under the initiative, the Department has already begun collecting
input from stakeholders on the benefits rural projects offer for safety
and the economy, as well as the types and degrees of assistance rural
projects require. The Department recently issued a Request for
Information (RFI) seeking input on a number of rural transportation-
related issues. This includes comments and data pertaining to current
unmet needs in rural transportation, barriers rural communities face in
addressing these transportation needs, stakeholders' experiences with
applying to and using DOT discretionary grant and credit programs, and
opportunities for the DOT to improve its services and technical
assistance to rural communities in relation to these grant and credit
programs, within the limits of statutory requirements. The RFI closed
yesterday, and, as of Friday January 24, we had already received input
from 130 respondents, and we expect this is just the beginning of an
effort to launch more data-driven approaches to better assess the need
for and benefits of rural transportation infrastructure projects.
Given the feedback we have been receiving, we are trying to make
DOT's discretionary grants easier for rural applicants to understand.
For instance, we are currently developing a Toolkit that will help
rural (and other) applicants identify which discretionary grant
programs could help fund their particular safety and infrastructure
priorities. We expect to make the Toolkit available this spring.
We have also established the ROUTES Council, an internal
deliberative body of DOT leadership that will review and use input from
the RFI as well as other public input to improve the alignment of the
Department's discretionary funding programs with the needs of rural
communities to address National transportation goals. The Council held
its first meeting in November 2019 and met again on-schedule in
January. It will review feedback received through the RFI and seek
additional input from stakeholders, starting with State DOTs, local
governments, and national organizations. The Council will identify
critical rural transportation concerns, coordinate efforts among DOT's
Operating Administrations, and shape the resources ROUTES avails to
rural stakeholders.
Other Efforts
In addition to the new ROUTES initiative, the Department is also
seeking other opportunities to benefit rural and other communities.
Just two weeks ago, for example, Secretary Chao announced an
interactive map application showing transportation infrastructure
against a background layer featuring the U.S. Internal Revenue
Service's designated Opportunity Zones and the U.S. Census Bureau's
Urbanized Areas. Using the map, potential investors can discover which
Qualified Opportunity Zones, many of which are in rural communities,
offer good transportation connectivity. At the same time, other
investors can identify rural Opportunity Zones that would benefit from
private investment in transportation.
Grants
As previously mentioned, a meaningful way to help rural America is
through discretionary grants. Just two months ago, in November 2019,
Secretary Chao announced the award of $900 million to 55 infrastructure
projects in 35 states through the Better Utilizing Investments to
Leverage Development (BUILD) Transportation Discretionary Grants
program. Fifty percent of that investment was awarded to 31 projects in
rural communities. In the previous year, the Department awarded $965
million--64 percent of its $1.5 billion appropriation--to 62 rural
projects.
Last July, the Secretary announced the award of $856 million in
Infrastructure for Rebuilding America (INFRA) grants. Fifty-four
percent of those awards, $465 million, went to rural projects, far
exceeding the FAST Act's statutory requirement of 25 percent. And, 10
percent of the FY 2019 INFRA investment was awarded to small projects
with costs between $5 million and $25 million, most of which were in
rural communities. Two weeks ago, the Secretary announced the Notice of
Funding Opportunity for the FY 2020 INFRA grants, and the Department
will continue to adhere to or surpass the statutory requirements.
The Department's Operating Administrations were also mindful of
rural America in their FY 2019 funding practices. For example, in FY
2019, the Federal Transit Administration (FTA) awarded $119 million in
Buses and Bus Facilities Discretionary Grants, 28 percent of the
program's total awards, to projects in rural communities. FTA also
awarded 41 percent of its Innovative Coordinated Access and Mobility
Pilot Program grants, $3.9 million, to rural projects, and a full 100
percent of its Tribal Transit Program awards, $5 million, went to rural
communities.
Also in FY 2019, the Federal Railroad Administration awarded $179
million in Consolidated Rail Infrastructure and Safety Improvements
(CRISI) awards to rural projects, 31 percent of its awards for that
year. And, in August 2019, the Federal Highway Administration awarded
$225 million in grant funding under the Competitive Highway Bridge
Program (CHBP) to 20 bridge improvement projects in 18 states, all of
which have population densities fewer than 100 persons per square-mile.
These awards alone, only a sample of the Department's effort in the
past 13 months to champion rural transportation improvements through
discretionary grant awards, total more than $2.4 billion. These grants
are a powerful tool the Department is using to address rural
transportation needs, in addition to the Operating Administrations'
formula grant funding, much of which is also targeted for rural
communities.
The Build America Bureau is developing products and processes
specifically tailored to rural communities
Authorized by the 2015 FAST Act and established in July 2016, the
Department's Build America Bureau administers the Transportation
Infrastructure Finance and Innovation Act (TIFIA) and Railroad
Rehabilitation and Improvement Financing (RRIF) credit programs,
administers the INFRA grant program, allocates Private Activity Bonds,
and serves as a one-stop shop for project sponsors to assist them in
navigating the complex regulatory, governance and financial processes
necessary in delivering successful transportation projects.
New Executive Director
The Bureau's Executive Director, Morteza Farajian, Ph.D., joined
the Department in April 2019. Formerly, he served as Acting Deputy
Secretary of the Virginia Department of Transportation (VDOT) and
Director of that State's Public-Private Partnership (P3) program
office.
Three Loans Issued During the Past 90 days
Dr. Farajian's experience as a practitioner is already paying
tangible dividends as three new loans have been issued by the Bureau in
just the past 90 days alone. These loans, totaling $1.6 billion, will
result in the delivery of $6 billion in new transportation
infrastructure The Bureau's participation in these projects alone has
generated more than $3 billion in non-Federal capital investment,
further leveraging Federal dollars.
The Bureau is implementing two overarching goals that will benefit
American transportation infrastructure in general and rural communities
in particular:
Enhance the pipeline of eligible projects to fully utilize
the capacity provided by Congress, and;
Diversify the pipeline of eligible projects by geography
(i.e., urban and rural, new States, etc.) size, and type (i.e.,
highway, transit, rail, port, etc.), to ensure an equitable
distribution of program benefits.
To achieve these goals, the Bureau is focusing on three key
activities that will enable increased utilization and a more diverse
pipeline of projects. They are:
Conduct active, focused outreach to prospective borrowers
that may not know of the Bureau, or of its new products and
services. This activity includes the development and delivery
of products that are best suited to underserved borrowers;
Enhance the scope and scale of technical assistance to
project sponsors, especially new, smaller borrowers, and;
Continue to streamline the credit process, improving
efficiency and reducing costs to borrowers.
The Bureau has considerable lending capacity and expertise to
significantly expand its loan portfolio, including loans to rural
borrowers.
Tailored Products
Historically, the TIFIA loan program has financed large, complex
highway, bridge and transit projects that largely serve urban
communities. We have the capacity to continue to support these
projects. However, the TIFIA and RRIF loan programs--with some
modifications (within our existing authorities)--can be tailored to
focus on helping other geographic areas and asset classes that have,
until now, not received Bureau assistance. One area of Bureau
innovation that has been particularly valuable for rural communities is
the effort to develop products tailored to the specific needs of these
communities.
TIFIA Rural Project Initiative
The first of these is the TIFIA Rural Projects Initiative (RPI),
which Secretary Chao announced in November, 2018. RPI represents a
targeted and significant easing of financial barriers to participation
in the TIFIA program--while maintaining robust creditworthiness
standards to protect taxpayers. By combining existing authorities, the
Bureau offers qualified borrowers a number of significant benefits.
An eligible RPI project is one that is not inside a U.S. Census
Bureau-designated urbanized area with a population greater than 150,000
persons and that has eligible project costs not greater than $100
million. For qualifying projects with total eligible costs between $10
million and $75 million, the usual application costs (e.g., the cost of
procuring independent financial and legal advisors) may be paid by DOT.
This often represents a savings of several hundred thousand dollars.
Eligible RPI may borrowers receive a 50 percent interest rate
reduction. As of mid-January, a rural project could receive a loan at a
fixed interest rate of slightly over one percent for 30 or more years.
Additionally, some rural borrowers may benefit from the Bureau's
flexibility--we can also provide short-term assistance at even further
reduced interest rates. In addition to the lower interest rate
available under RPI, eligible project sponsors under this program can
borrow up to 49 percent of a project's eligible costs instead of the 33
percent ceiling more typical of a TIFIA loan.
Currently, the Bureau is providing technical assistance to develop
12 RPI projects in eight states. This represents approximately 10
percent of the projects in the Bureau's pipeline.
RRIF Express
Small and medium-sized freight railroads represent a significant
opportunity for economic growth in rural communities. Even small
marginal savings in shipping costs for agricultural, mining, energy or
manufacturing goods can have a major impact in global competitiveness,
and about 80 percent of short line and regional freight railroads are
in rural America. As such, the Bureau has developed a pilot program
that focuses on improving the borrowers experience for short line and
regional railroads, called RRIF Express, which I announced in mid-
December, 2019.
Although the Bureau has, since its inception, closed four loans
under the Department's RRIF program, in its current form, RRIF is
significantly undersubscribed by smaller railroads. Like TIFIA RPI,
RRIF Express eases several financial barriers for prospective
borrowers. A qualifying RRIF Express borrower is a U.S. Class II or III
short line or regional railroad, seeking a loan up to $50 million that
meet the requirements set forth in the Notice of Funding Opportunity.
The cost of paying for the Bureau's external financial and legal
advisors and the Credit Risk Premium often poses a significant obstacle
for prospective RRIF borrowers. Under the RRIF Express initiative,
these costs are paid by DOT, using funds from appropriations. In
addition, RRIF Express also promises to expedite the credit process by
streamlining reviews and speeding the procurement of outside advisors.
The 90-day application window for RRIF Express opened on January
13, 2020 and we hope to receive a healthy number of qualified
expressions of interest.
Innovative Procurement Model--Short-Term Design Build Finance
The TIFIA loan program can provide loans of up to 35 years after
the date of substantial completion. However, we are learning that some
jurisdictions, including State DOTs, might benefit more from shorter-
term loans to increase efficiency and reduce the costs of projects they
otherwise would deliver in phases. A high proportion of these
jurisdictions are in rural America.
When projects are phased, costs and schedules can increase
considerably: multiple mobilizations, de-mobilizations, numerous
contracts and sequential construction all impact cost and schedule.
Future phases of construction also incur cost escalations, often
exceeding four percent annually.
Additionally, because rural projects often are not good candidates
for tolling, they often overlook Bureau credit as a financing option at
all.
To address these gaps, the Bureau has introduced an innovative
procurement concept that offers alternatives that allow project
sponsors to construct projects more quickly in a single phase,
potentially reducing costs due to single contract, single mobilization,
but also avoiding annual cost escalations incurred by future phases.
Under this concept, projects can proceed into construction of all
phases in a single procurement and utilize shorter-term loans, further
reducing costs. This procurement can take the form of a Design-Build-
Finance procurement, where the developer actually borrows from the
Bureau while also delivering into service new or upgraded
transportation options more quickly.
Because the Bureau can lend to the contractor and not the public
sponsor, this can be particularly useful for projects whose sponsors
lack borrowing authority, or those who typically use a pay-as-you-go
infrastructure funding model.
In short, the Bureau--in engaging jurisdictions that have not
typically borrowed from TIFIA and/or RRIF--is finding that a one-size-
fits-all approach to lending is not optimal and offering a wide variety
of financing options can help a far more diverse pool of applicants
deliver their projects more efficiently and at lower cost.
Education & Technical Assistance
Since April, 2019, the Bureau has increased its Outreach and
Project Development (OPD) team by 150 percent, adding six staff
members, all of whom bring considerable experience. This team has been
instrumental in performing more up-front planning with project sponsors
and providing more technical assistance to project sponsors earlier in
the project cycle.
This earlier and more active engagement will facilitate a faster
credit process with less re-work and inefficiency, especially for
smaller, first-time borrowers such as rural project sponsors. It also
will help project sponsors avoid inadvertently making the project
ineligible for a loan by taking actions such as initiating non-
qualified procurements, missing critical environmental review
requirements or not sourcing materials in the United States. Sponsors
of larger projects, typically urban or suburban, often avoid this type
of misstep thanks to experienced internal resources and to the
participation of outside consultants and advisors. Project sponsors
less experienced with Federal processes and less able to access the
valuable expertise of outside consultants cannot benefit from this
advantage, an inequity that earlier Bureau participation from a more
well-staffed OPD team will remediate. In addition to allowing the
Bureau to support more projects earlier in their development, a fully
staffed OPD team allows the Bureau to educate more prospective project
sponsors about the Bureau's products and services.
While the Bureau continues to represent itself at the larger, main-
stream infrastructure and public-private-partnership (P3) conferences
and events, we have also targeted the events that cater to smaller
jurisdictions, rural communities, towns and counties. To educate
potential project sponsors and access more prospective projects, the
Bureau is now focusing on these venues, including, for example, the 4th
National Technical Assistance Conference of the Rural Transit
Assistance Program this past October. We look forward to introducing
the Bureau, its products, and its services to the membership of the
National Association of Towns and Townships this March.
We have also participated in regional meetings sponsored by the
U.S. Department of Commerce's Economic Development Administration
(EDA), including sessions in West Virginia and southeastern
Massachusetts, where the EDA convenes planners from distressed
communities seeking technical assistance to develop the infrastructure
needed for economic growth.
The Bureau has also increased its work with like-minded
organizations such as the Association of American State Highway and
Transportation Officials, planning associations, contractors and
industry groups. This has borne considerable fruit already.
The Bureau's recent engagement with the American Short Line and
Regional Railroad Association was instrumental in the successful launch
this past December of the RRIF Express pilot program for Class II and
III short line and regional railroads.
State visits
Another important recent initiative is the Bureau's outreach to new
States. Under this initiative, the Bureau has reached out specifically
to States with little or no DOT credit experience or other Bureau
engagement. Many of these states are largely rural.
Bureau leadership visits the State capital for a full day of
meetings introducing the Bureau to the State DOT director or secretary,
participants from the Governor's office and congressional delegation,
key State legislators, administrators of the various State DOT
departments, economic development organizations, planners, and county
and municipal leaders. Many of the participants during these visits
indicate they had never heard of the Bureau or the Department's credit
programs and that they plan to utilize the Bureau and its products and
services in the future.
Since June 2019, the Bureau has visited with ten new states,
including Alabama, Mississippi, Wisconsin, Minnesota, North Dakota,
Montana, Nevada, Connecticut, Pennsylvania, and Louisiana. Those visits
have resulted in nearly two dozen prospective projects. Currently, the
Bureau has visits planned with Tennessee and New Mexico, and specific
discussions are underway with four other states: Arkansas, Arizona,
Maine, and Vermont.
Regional Infrastructure Accelerators
Another element in the Bureau's ongoing mission to provide more
technical assistance to rural communities is the Regional
Infrastructure Accelerator program. By pooling resources, regional
accelerators can assist local governments in developing improved
infrastructure priorities and financing strategies for the accelerated
development of projects, many of which would be eligible for TIFIA,
RRIF and other innovative programs. Accelerators will act as
multipliers of the Bureau's existing staff and resources, helping
develop infrastructure planning and delivery capacity in rural
communities and elsewhere.
As a result of last month's $5 million Congressional appropriation,
the Bureau is developing a Request For Information to seek input from
interested parties about the most effective, transparent and expedient
ways to structure and deliver the accelerator program. Upon receipt of
public feedback, we intend to issue a Notice of Funding Opportunity to
fund, through grants, a small number of Regional Infrastructure
Accelerators as a demonstration program that will continue to explore
more innovative and efficient ways to identify, finance and deliver
projects--especially in small town America.
Conclusion
The Department of Transportation and its Build America Bureau have
placed a long-overdue emphasis on Rural America. Through the ROUTES
Initiative, discretionary grant programs and the innovative solutions
offered by the Bureau, we have been focusing, and are continuing to
focus, all available resources and authorities on solutions for rural
communities. Focused Bureau outreach, tailored products such as TIFIA
RPI, RRIF Express, Build It Now and others, combined with technical
assistance and streamlining the process have already begun to produce
tangible dividends for small-town America.
We know we have much more work ahead as we continue the important
job of solving those challenges and improving the both the safety and
connectivity of transportation in rural America. We look forward to
working with the Committee and other partners to continue to remove
barriers to safety, economic growth and mobility for rural and urban
communities alike.
Thank you.
The Chairman. Thank you, Mr. Szabat. I see we have been
joined by the Ranking Member of our Committee, Senator
Cantwell. I would like to recognize you at this time for any
comments you would like to make.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Chair Fischer. Thank you so
much for you and Ranking Member Duckworth for holding this
hearing. There couldn't be anything more dear to our heart in
the Northwest than building infrastructure, and I would like to
welcome former Superior Court Judge McCarthy who is now in a
new role as the Co-Chair of the Northwest Seaport Alliance.
Judge McCarthy has done great work as a port Commissioner
and working on a lot of the issues on the waterfront because he
was also a longshoreman. So the perspective I hope that he will
bring to this morning's hearing is his diverse background on
these issues at a point in time when United States freight is
supposed to expand by 40 percent over the next decade. I think
we feel that on the Pacific coast as we are shipping so much
West coast product all the way to Asia--I mean so much Midwest
product all the way to Asia.
The throughput of these ports is essential and so is your
work here on the Subcommittee and helping us get a surface
transportation bill, and the key focus of this Committee which
is the infrastructure piece. So, thank you. I couldn't be more
thrilled that you are having his hearing this morning. I know
both of you and your states are committed to getting
improvements to freight mobility, so thank you so much, and
thank you to our witness, Mr. McCarthy, for being here this
morning.
The Chairman. Thank you, Senator Cantwell. Next, I would
like to recognize Dr. Farajian, who is the Executive Director
of Build America Bureau. Before he joined the Department in
April 2019, he served as Acting Deputy Secretary of
Transportation and was Director of Public Private Partnerships
at the Virginia Department of Transportation. Welcome, doctor.
STATEMENT OF MORTEZA FARAJIAN, Ph.D.
EXECUTIVE DIRECTOR, BUILD AMERICA BUREAU,
U.S. DEPARTMENT OF TRANSPORTATION
Mr. Farajian. Thank you, Chairman Fischer, Ranking Member
Duckworth, and members of the Subcommittee. We appreciate the
opportunity to share with you the steps that the Build America
Bureau has taken to facilitate better transportation in
America's rural communities.
As you know, under Secretary Chao's leadership, the entire
Department has placed an emphasis on rural America. In addition
to implementing the ROUTES initiative and the discretionary
grant programs that Mr. Szabat just talked about, we have been
working on new programs that directly support the
Administration and Secretary Chao's priorities for more
efficient transportation infrastructure investment in America.
In general, the Bureau is implementing two overarching goals:
enhance the pipeline of eligible projects to fully utilize the
existing capacity, and diversify the pipeline of eligible
projects to ensure an equitable distribution of program
benefits.
To achieve these goals, the Bureau is focusing on three key
initiatives: continuing to streamline the credit process,
improve efficiency, and reduce costs to borrowers, conducting
focus outreach the potential borrowers, and enhancing the scope
and scale of technical assistance to project sponsors,
especially new, smaller borrowers. There are 33 states that
have not taken advantage of the Bureau's credit programs in the
past 15 years. Some of them have shovel-ready projects and non-
Federal revenues that can be leveraged to deliver those
projects.
Since June, we have visited with ten of these states. These
visits have resulted in nearly two dozen perspective projects
that have been added or pipelined. During these visits, we
typically meet with a diverse audience from the Governor's
Office to State duty leadership and individual jurisdictions
such as Mayors, counties, and regional planners. Many of these
participants have never heard of the Bureau, but when they
learn about the opportunities that our programs provide, more
detailed conversations about specific projects tend to follow.
In addition to our outreach efforts, we are also developing
innovative products to create a more diverse pipeline of
projects. Historically, the TIFIA loan program has financed
large complex highway bridge and transit projects that
primarily serve urbanized and suburban communities. The
Bureau's other credit program, RRIF, is significantly
undersubscribed by smaller railroads.
About 80 percent of the track operated by these short-line
and regional freight railroads is in rural America and serves
as an economic engine for agriculture, mining, energy,
manufacturing, and other industries. While we will continue to
support the existing projects, we have tailored initiatives
under both TIFIA and RRIF programs to diversify our portfolio
and help new project sponsors who until now have not benefited
from Bureau's assistance to the same level. The first of these
is the TIFIA rural project initiative which Secretary Chao
announced in November 2018.
Under this initiative, qualified rural borrowers receive an
interest rate that is currently around 1 percent. This can be a
game changer for small communities, particularly when comparing
it to the savings from annual construction cost escalation,
which is currently around 4 percent. As of today, we have 13
projects under the rural project initiative in 7 different
states. This represents approximately 10 percent of our
existing pipeline. As we continue to visit new states, this
number will likely continue to climb. The second initiative is
RRIF Express that was announced last month to assist short
lines and regional railroads.
A qualifying RRIF Express borrower is a short line regional
freight railroad seeking a loan up to $50 million. RRIF Express
covers advisor fees and a substantial portion, if not all, of
the credit risk premium that has posed a significant obstacle
for small railroads. It also expedites the application and
review process.
In short, a one-size-fits-all approach to lending is not
optimal. Therefore, in support of the Administration and
Secretary Chao's infrastructure in rural priorities, the Bureau
will continue to diversify the pipeline of projects by
providing innovative financing programs and educating new
borrowers, especially those in rural America. We look forward
to working with the Committee--with the Subcommittee, to
eliminate obstacles, develop new products and services, and
continue to streamline our processes. Thank you.
The Chairman. Thank you, doctor. Next, I would like to join
Ranking Member Cantwell in welcoming Mr. McCarthy. It is so
nice to have you here. Mr. McCarthy is the Co-Chair of the
Northwest Seaport Alliance and a Commissioner at the Port of
Tacoma. He has previously served as a Pierce County District
and Superior Court Judge, a longshoreman, as well as a Member
of the Port of Tacoma Commission. Welcome, sir.
STATEMENT OF HON. JOHN McCARTHY, PORT OF TACOMA COMMISSION
PRESIDENT AND CO-CHAIR, THE NORTHWEST SEAPORT ALLIANCE
Mr. McCarthy. Good morning Chairwoman Fischer, Ranking
Member Duckworth, Ranking Member Cantwell, and members of the
Subcommittee. Thank you for the invitation to be here today.
The Northwest Seaport Alliance is the fourth largest container
gateway in North America, created to manage the joint marine
cargo facilities of the ports of Tacoma and Seattle. Our cargo
activity employs over 58,000 people, but our focus is much
bigger with hundreds of thousands of jobs across rural and
urban areas that depend on our facilities.
The Alliance does not view the world through our urban or
rural lands because our success is embedded in both. More than
a quarter of the U.S. GDP is a result of cargo that moves
through seaports. Truly seaports serve the entire Nation not
just the communities where they are located. Our port is a
great example of this. Nearly 60 percent of our imports move
beyond the region and our exports originate from all 50 states.
As the number two U.S. agricultural port, we are an
essential partner to our Nation's farmers. As it relates to
waterborne trade, for example, from Nebraska, 8 percent of the
state's containerized exports and 26 percent of its
containerized imports pass through the NWSA. And from Illinois,
we handle at least 10 percent of each of that state's top 10
containerized imports.
We are also an important gateway for Illinois's
containerized export products, including 12 percent of its
soybeans and 23 percent of its cereals. Beyond these examples,
the Alliance handles about 90 percent of containerized exports
from Montana, half of the container exports from Orgon and
Idaho, and at least 20 percent from Minnesota, the Dakotas, and
Iowa. All of these rural trade dependent commodities need
efficient and reliable infrastructure to move goods to market,
yet America's port infrastructure is OK, just OK.
The American Society of Civil Engineers gives us a low
grade, as mentioned by Senator Duckworth. Rapid advancements in
freight are driving ports to make significant changes. For
example, a tripling of the container capacity of ships in the
last decade requires billions of dollars in new investments.
And improving our port system requires that we also focus
outside seaport gates across the U.S. freight networks.
Bottlenecks and the cost of fixing them is often beyond the
means of the communities where projects are located.
I greatly appreciate the Subcommittee's efforts to increase
understanding among policymakers and the public because I do
not think our Nation has found the right approach to supporting
U.S. ports and moving us beyond a low grade. Before I close, I
would like to offer an example from the Northwest. NWSA's main
competitors are the Canadian ports of Vancouver and Prince
Rupert. We are struggling to compete because the government of
Canada has made the success of these ports a national priority
and is providing substantial financial support to them.
In the past two years, Canada awarded $384 million to just
these two ports, which is more than 75 percent of the two-year
total for U.S. Department of Transportation support
infrastructure development program. Canada is also investing in
its freight corridors all the way into the U.S. heartland. This
investment has resulted in a 15 percent reduction in our market
share in recent years, causing job losses and fewer carrier
costs that U.S. exporters depend on.
We are committed to maintaining a growing competitive
gateway through investments in our port and connecting freight
infrastructure, and we are leveraging hundreds of millions of
dollars in private sector funds to remain a premier gateway,
yet limited funding is a barrier to keeping pace with Canada.
And unfortunately, we have had little success securing
Federal funding for our projects. The success of Canadian
initiatives to enhance its freight network represents a
successful partnership between its ports and the Canadian
government. In closing, I would respectfully recommend that the
Subcommittee consider supporting increased funding for the Port
Intermodal Improvement Program, freight formula funds, INFRA,
and the elimination of the multimodal funding cap.
Thank you once again for the opportunity to share my
thoughts about the importance of DOT programs and the
interdependence of urban and rural areas as it relates to
freight mobility and goods movement. I would be happy to answer
any questions that you might have.
[The prepared statement of Mr. McCarthy follows:]
Prepared Statement of Hon. John McCarthy, Port of Tacoma Commission
President and Co-Chair, The Northwest Seaport Alliance
Introduction
Good morning, Chairman Wicker, Ranking Member Cantwell, Chairwoman
Fischer, Ranking Member Duckworth and members of the subcommittee. I am
John McCarthy, Port of Tacoma Commission President and Co-Chair of The
Northwest Seaport Alliance (NWSA). It is an honor to be with you today
to discuss the importance of ports to the nation, including rural
America, and the critical role Federal partnerships play plays in our
ability to effectively serve the Nation's economy. Thank you for the
invitation to testify and for the work you are doing to address the
challenges facing ports and our freight system.
Founded in 1918, the Port of Tacoma is an independent special
purpose government with directly elected commissioners representing the
people of Pierce County, Washington. The NWSA is a unique partnership
formed in 2015 between the ports of Tacoma and Seattle (a similar
special purpose government representing the people of King County,
Washington) to jointly manage our marine cargo facilities, including
the fourth largest container port complex in North America as well as
substantial breakbulk, auto, military, and project cargo operations.
The primary mission of a port authority is to create and support
economic activity by building transportation infrastructure and
managing operations at our facilities. In our region, NWSA cargo
activity employs over 58,000 people. But our job and our focus are much
bigger than the Puget Sound region. The State of Washington is the most
trade dependent state in the nation, with 40 percent of all jobs tied
to trade, including hundreds of thousands in both rural and urban areas
who work for importers and exporters that use our facilities.
These job impacts carry far beyond the Puget Sound region because
ports are not simply local assets in urban centers. Our port system is
a fundamental foundation of the U.S. economy, supporting every corner
of the country. At the NWSA we cannot view the world through an urban
or rural perspective because our economic success is deeply embedded in
both.
The investments ports are making create nationwide benefits, but
what we're able to do locally is insufficient if our goal is to build a
system that enables the U.S. economy to remain among the most
competitive in the world. And that should be our goal. It is critical
to view our ports and our freight system through the lens of national
economic competitiveness and as strategic assets. The modernization of
this critical transportation infrastructure should be a top Federal
government priority and focus of Federal investment by all grant
programs at the Department of Transportation (DOT), including those
managed by the Build America Bureau. And as a representative of ports
today, I want to highlight the important work the Bureau is doing with
ports to drive Federal investment through programs like TIFIA and
INFRA. On behalf of all ports we look forward to continuing to work
with the Build America Bureau and DOT to facilitate Federal investment
and support of our Nation's ports and trade corridors.
Seaports are Vital to the U.S. Economy
Every American depends on the success of our ports because seaports
are vital economic engines. Nearly all the country's overseas cargo
volume moves through seaports: 99 percent by weight and 64 percent by
value. International trade through seaports accounts for over a quarter
of the U.S. economy and supports over 31 million American jobs. In
2018, seaports generated nearly $5.4 trillion in total economic
activity and more than $378 billion in federal, state and local tax
revenues.
Seaports are critical to the success of U.S. businesses. For
agricultural shippers, ports often make the difference in whether their
products are competitive in global markets. Manufacturers depend on
highly efficient, reliable ports to get their goods to market and to
take advantage of the just-in-time processes that are common practice
in their industries. Strong ports provide critical advantages to
exporters, including lower shipping costs, more frequent calls by ocean
carriers serving more export markets, shorter time to market and
greater vessel capacity and container availability. If we hope to
increase U.S. exports and economic competitiveness more broadly,
enhancing our port system is essential.
Seaports serve the entire nation, not just the coastal and Great
Lakes states in which most seaports are located. Our port is a great
example of this. Nearly 60 percent of our containerized import volumes
are bound for the Midwest and other destinations outside the Pacific
Northwest. Our export cargo originates from all 50 states. While our
port is located in an urban area, we represent critical infrastructure
for the Nation's agricultural industry and the rural communities that
depend on it. In fact, according to the U.S. Department of Agriculture,
the NWSA is the second largest port in the country as measured by
agricultural trade tonnage.
In specialized agriculture markets the importance is even more
pronounced. For example, the NWSA is the Nation's leading export
gateway for refrigerated agriculture products, representing nearly 20
percent of national volumes. In the Northwest, among the top eleven
export markets for both apples and pears, nine of them depend on our
seaports. For Washington's potato industry 70 percent of the 10 billion
pounds of potatoes produced were exported, the vast majority of which
passed through NWSA seaport facilities.
The Washington state forage product industry is one of the best
examples of how competitive ports can affect jobs in an export-
dependent industry. Forage products like hay are the largest export by
volume through the NWSA. However, our state's hay exports have been
constrained by limited vessel capacity and container availability,
which have been exacerbated by our loss of market share to expanding
Canadian ports, as well as by congested freight infrastructure. Given
the relatively low margins, small increases in cost have serious
implications for the future of the animal feed industry in the Pacific
Northwest.
As it relates to Nebraska, 8 percent of the state's containerized
waterborne exports pass through the NWSA, as do 26 percent of its
containerized waterborne imports and 10 percent of total imports.
And in Illinois, the NWSA handles at least 10 percent of each of
the state's top ten containerized waterborne imports. We also are an
important gateway for critical export products, including 12 percent of
Illinois' containerized soybean exports, 23 percent of containerized
cereal exports, 15 percent of oilseed exports, 10 percent of meat
exports, and 15 percent of dairy exports.
Beyond these examples, the NWSA handles about 90 percent of
containerized cargo from Montana, half of containerized exports from
Oregon and Idaho, and at least 20 percent from Minnesota, the Dakotas,
and Iowa. Most U.S. soybeans are grown in the Midwest and 23 percent of
all U.S. soybean exports including those from Nebraska and Illinois are
shipped through bulk and container terminals in the Pacific Northwest.
All of these rural, trade-dependent commodities need well
maintained, efficient and reliable infrastructure to move goods to
market both in the U.S. and abroad. Currently, it costs two to three
times MORE to ship a container of apples from Washington state to the
East Coast than it does to ship it to China. And of that cost of
shipping to Asia, as much as 40 percent is the cost of moving it from
the packing facility to the port itself. These products cannot move
without sufficient port and freight infrastructure. This is why rural
America understands and supports ensuring ports and freight corridors
into and through urban areas are well maintained and efficient.
Our Port System's Infrastructure Challenges
Unfortunately, our ports and our freight system do not always get
the attention they deserve. I greatly appreciate the subcommittee's
efforts to increase understanding among policymakers and the public
because I do not think our Nation has found the right approach to
supporting its ports.
America's port infrastructure is OK. Just OK. The American Society
of Civil Engineers gives us a C+ in their Infrastructure Report Card.
Building a more modern port system requires that we address a long list
of shortcomings. Because the scope of this challenge is so great,
additional Federal investment and focus will be needed if we are to be
truly successful in this endeavor.
We need to not only maintain what we have in a state of good
repair, but also expand our ability to handle more cargo. This requires
ongoing and often significant investment, as many seaport terminals are
in need of major rehabilitation. In addition, ports need to increase
our capacity and efficiency to manage increased volumes. By 2045, DOT
estimates that container traffic at ports will be driven by a doubling
in the volume of imports and exports transported by our freight system.
Remaining competitive requires more than simply maintaining the
status quo. Rapid developments in our industry are driving ports to
make transformational changes. One of the most significant dynamics is
the dramatically increasing size of container ships. The average ship
calling at NWSA terminals about ten years ago could hold 5,000 to 6,000
twenty-foot containers. Today we receive calls on a weekly basis from
container vessels that can hold more than 13,000 containers, and
18,000-container ships are on the way soon. These vessels are longer
than five Boeing 747s and larger than an aircraft carrier.
Accommodating these larger ships require major investment at ports,
including deeper berths and navigation channels; larger cranes and
stronger docks to support them; electrical grid upgrades; additional,
high-efficiency cargo-handling equipment; and improvements to container
yards and intermodal facilities.
Alongside these projects, ports often must make investments to
mitigate the impacts of rising cargo volumes on neighboring
communities, which bear a disproportionate burden in supporting U.S.
trade flows. In addition, government regulations, community
expectations and customer demands increasingly require that we build
infrastructure in a more resilient and environmentally friendly
fashion. While necessary, this increases costs considerably.
Modernizing port terminal infrastructure at a pace sufficient to
remain competitive globally is already challenging enough for ports.
Yet improving our port system also requires that we look outside
seaport gates to the road and rail infrastructure that connects ports
to the rest of the national freight system. Upgrading this
infrastructure is even more costly than for marine terminals. An
additional challenge is that the roads, rails, bridges, tunnels, and
waterways that connect ports with the markets they serve are typically
outside port boundaries and thus are the responsibility of
municipalities, counties, states or the Federal government. Bottlenecks
in the supply chain can be found all over the country, but the cost of
prioritizing and fixing them is often beyond the means of the
jurisdictions in which the projects are located. Furthermore, building
a railroad overpass, for example, might be more important to an
exporter in a faraway state than it is to the local community that must
approve taxing themselves to pay for that overpass. This is why the
work of the DOT and Build America Bureau is important to ports. We need
Federal investment to bridge the gap through grant programs like INFRA
or loan programs like TIFIA to help communities bring to fruition these
critical infrastructure projects that provide nationwide benefits.
To that end, U.S. ports have identified $66 billion in needed
investments in terminal, road, rail and waterway infrastructure over
the next ten years.
Significant Near-Term Investment in Freight is Key to U.S.
Competitiveness--A Pacific Northwest Example
I would like to offer an example from the Pacific Northwest that
demonstrates the high stakes of the decisions our Nation faces about
how to prioritize ports and freight infrastructure and what role the
Federal government should play. To me it a case study for why
maintaining the status quo is not sustainable.
The port business is competitive, especially over discretionary
cargo bound for inland regions that can be shipped through any number
of ports. NWSA's main competitors are the nearby Canadian ports of
Vancouver and Prince Rupert, which in recent years have been
aggressively targeting U.S.-bound cargo. A key reason why we have
struggled to overcome the competitive threat from our neighbors to the
north is because the government of Canada has designated the
development of their West Coast ports to capture U.S. bound cargo as a
national priority and is providing substantial financial and policy
support to ensure they succeed.
Canadian Federal government funds have helped Vancouver and Prince
Rupert build highly competitive marine terminals and are continuing to
support their expansion. In the past two years the government of Canada
awarded $US 384 million to the ports of Vancouver and Prince Rupert
alone for projects that support goods movement through those ports.
Canadian Federal contributions in their trade gateways have been
mirrored by Federal investments along the entire trade corridor that
connects the ports to population centers in the Canadian and U.S.
heartland. Transport Canada has launched initiatives and adopted wide-
ranging policies to improve performance of their ports and the goods
movement system. Because of the high priority Canada has placed on
optimizing their goods movement system, they now offer an efficient and
lower-cost alternative to shipping through ports in the U.S. Pacific
Northwest. As a result, the NWSA lost 15 percent of our market share to
the British Columbia ports in the decade following the opening of
Prince Rupert's container terminal in 2007. In addition to continuing
to expand on the West Coast, Canada has plans to repeat this success on
the East Coast.
The diversion of cargo from our ports to ports in Canada has
resulted in the loss of U.S. transportation sector jobs. It also has
reduced ocean carrier calls and, critically, the supply of returning
containers that exporters depend on, which increases shipping costs and
erodes or eliminates the competitiveness of their products in
international markets--as demonstrated by hay growers in Washington
state. If the Canadian ports continue to realize their goals for growth
at the expense of U.S. ports, the economic consequences for our region
and the agriculture exports from rural America I highlighted previously
could be grave.
The NWSA is committed to maintaining a growing and competitive U.S.
trade gateway in the Pacific Northwest. The cornerstone of our strategy
to respond to the challenge from Canada is ensuring we have the high-
capacity, high-efficiency infrastructure we need to remain a preferred
port of call. The NWSA is making substantial investments to modernize
our marine terminals and deepen our waterways. And we are contributing
to projects in other jurisdictions that improve freight mobility
through our port, including evaluating intermodal yards to strengthen
our connectivity to rural communities.
Yet limited funding is a barrier to developing infrastructure at a
pace sufficient to keep up with Canada. We already are leveraging
hundreds of millions of dollars in direct private sector contributions
in support of our infrastructure efforts. Unfortunately, even though
our port is a critical economic asset for our nation, we have had
little success in obtaining Federal funding support for these
initiatives.
This resource challenge coupled with other cost drivers outside the
control of our ports increases the Canadian advantage. For example, the
major West Coast ports in the U.S. and Canada are blessed with
naturally deep harbors that do not require regular dredging. Yet U.S.
importers utilizing the ports of Tacoma, Seattle, Los Angeles and Long
Beach still are charged an ad valorem tax of .125 percent, known as the
Harbor Maintenance Tax (HMT), to maintain U.S. navigation channels. The
collections at just these four naturally deep harbors account for
approximately one-third of total HMT collections, but our ports receive
almost nothing in return. Conversely, Canadian West Coast ports do not
charge an equivalent tax, which creates a cost differential on average
of $125 per container that is driving U.S.-bound cargo to Canadian
ports. Similarly, rail rates to move containerized cargo from West
Coast ports to the Midwest are significantly higher than those charged
by the two Class 1 Canadian railroads.
How Can the Federal Government Help?
We need to rethink our Nation's approach to port and freight
infrastructure policy and funding. The success of Canadian initiatives
to enhance its West Coast ports and the infrastructure that supports
international trade demonstrates the positive returns a better
partnership between ports and the Federal government can bring,
including job growth and increased export competitiveness. A more
proactive stance by the U.S. Federal government is justified given the
importance of ports to the entire U.S. economy. And not only is greater
Federal government involvement justified, it is absolutely necessary to
overcome the policy and funding challenges ports are facing.
I recommend this subcommittee explore the following actions.
1. Increase funding for the Port Infrastructure Development Program/
Port and Intermodal Improvement Program
The NWSA and other U.S. ports were encouraged by the creation of
the Port Infrastructure Development Program, which is now known
as the Port and Intermodal Improvement Program, and I would
like to thank Chairman Wicker and Ranking Member Cantwell for
your efforts to authorize it. Congress appropriated $225
million for this program for Fiscal Year 2020. While this will
provide U.S. ports a tangible boost, it should be viewed as a
beginning. As I highlighted above, nearly this level of funding
was provided annually to just two Canadian ports by the
Canadian Federal government. We urge Congress to prioritize
this key program and to increase its authorized funding level
in the upcoming reauthorization.
2. Increase funding for the FAST Act's INFRA and freight formula
programs
U.S. ports view the INFRA and freight formula funding programs
created in the FAST Act as another step in the right direction.
Yet funding levels for these programs are not sufficient to
meet the needs of our gateways and trade corridors. The INFRA
program is oversubscribed. In the combined FY19 funding round,
DOT received $11 in unique requests for every $1 available.
State planning efforts required by the FAST Act have
demonstrated that the freight formula program also is
underfunded. With the FAST Act expiring this year, Congress has
an opportunity to increase funding levels for these programs.
3. Remove multimodal funding caps on the INFRA and freight formula
programs
Freight does not move by highways alone, as the Committee well
knows. Our freight system is multimodal, and our freight
programs should reflect that reality if they are to be
effective. The FAST Act funding programs currently have
limitations on the amount of funding that can go to non-road
projects. Funding for these multimodal projects is capped at
$500 million over five years in the INFRA program and 10
percent of freight formula funding. I recommend these caps be
removed. This will allow our Nation to more quickly modernize
our seaports, as well as the first and last mile projects that
connect us to the rest of the freight system to move goods,
which have often fallen through the cracks in traditional
Federal infrastructure funding programs.
In closing, I appreciate the opportunity to share my thoughts with
you about the importance of DOT programs and the interdependence of
urban and rural areas as it relates to freight mobility and goods
movement. It is essential that we embrace a wholistic view of the
supply chain to ensure that Federal freight investment is not viewed
simply through a rural vs. urban lens. Without enhanced Federal support
for freight we will continue to earn no better than a C+. And this
mediocrity will not allow us to overcome the challenges limiting our
export competitiveness, to support a modern global economy, or to
compete with our neighbors to the north or south that seek to supplant
U.S. ports as gateways to America's heartland and beyond, which will
result in grave consequences for rural agriculture communities
throughout our country.
I appreciate the Committee's continued leadership and the ongoing
commitment of Senator Cantwell specifically to help bring freight to
the forefront and drive economic growth.
Thank you for the invitation to testify today.
The Chairman. Thank you, Mr. McCarthy. We will begin with 5
minute rounds. So for our first round, I will start. Mr.
Szabat, one purpose of the ROUTES initiative is to provide
information to rural communities about available Federal
funding and financing options, as well as other technical
assistance. Can you provide more details about how the ROUTES
initiative will work for rural project sponsors? For example,
if a rural project sponsor calls or e-mails asking for
technical assistance, can you walk us through what they should
expect in response?
Mr. Szabat. Thank you, Senator, for the question. And
first, I will caveat my response for saying this is a brand new
program and initiative, and it is designed from the start to
evolve. So we will have a feedback loop with our the rural
communities which we work with and the goal is--so I will just
say the way in which we respond to an inquiry that comes in
today may not be the same process that we have six months from
now when we get their feedback.
But with that, I would say I can give an example of what we
are doing right now. We have just concluded a request for
information from rural communities and they have come in with
comments to say here is what we think, we the communities think
the Department ought to do different and do better. So those
communications have come to us and are being parsed by
dedicated staff that we have within the Office of Policy in the
Department, as well as within the our Build America Bureau.
And their responsibility is twofold. One, interactions and
communications directly back to the communities so that they
have somebody who they can deal with in the Department directly
and not have to wait weeks or months at a time for a response.
And second, they are kicking that upstairs to the leadership in
their offices and ensure that leadership is coordinated
intermodal so that we don't have things that are stuck in one
bucket, in a single silo of one mode. And our coordinating
office or organization is called the ROUTES Council. If you
have further questions about that, I would be happy to go into
more detail.
The Chairman. DOT's recent request for information
regarding the initiative ask for feedback--and that is to look
at the current unmet needs in rural transportation. How do you
think the DOT can work to better address them? How can the DOT
help rural areas in this country to be able to access even
right now the funds that would be available for them through
these initiatives?
Mr. Szabat. I appreciate the question, Chairman Fischer.
There are several ways and much of this is informed by the
feedback that we received from before the RFI and from what we
have received already. One is clarity of the world definition.
We have a collection of different programs that can serve rural
communities. Many of them have different statutory definitions.
So we find it is helpful for us to put that together in one
place and have a one-stop shop so that anybody who wants to
come and discover what program or programs may assist them,
that we can give them and not just say here is one example,
here is another example, but give them a comprehensive list.
The Chairman. Do people need to call in? Do managers need
to call in? Do they need to contact DOT in order to find that
information? Is it available in a clear way on a website?
Mr. Szabat. Yes. Well, yes to the first and we are
developing the second thing. I mean truly one of the issues
that we have identified was we need to have more information
and more up-to-date information and more quickly updated on our
website. That is one of the first--one of the initial actions
that we are taking.
The Chairman. When you are looking at different types of
proposals or resources that are out there, what does DOT expect
to provide as a result of the information that you get in? Is
it going to be available in that toolkit that you are going to
have out there?
Mr. Szabat. Yes----
The Chairman. User-friendly?
Mr. Szabat. Yes, user-friendly. So this is the intent.
Among the amount of feedback that we receive is how complex it
is to work through the range that we have, available grant sand
loan programs, and the associated effect of that is, it is
easier for communities that have a long history of working with
the Department and these tend to be larger communities and they
are better funded. They tend to have more success because they
know better how to work through these wickets.
So through the toolkit we want to help try to redress the
imbalance, level the playing field if you will, and provide
guidance to rural communities both on--and all underserved
communities, both on here is what you need, the information you
need to have in order to apply, here is how you should organize
it. The other thing that we can do is collect more, and we are
doing, is collect more data and share that with communities so
that they don't have to pay collect that information
themselves. That is a longer-term project that will not be part
of the initial toolkit, but we anticipate the toolkit coming
out later this quarter.
The Chairman. Thank you. I think that that is really
important when you look at the limited resources maybe those
underserved communities do face, and to make it easier for
those communities to access funds that are available for them
will be really helpful.
Usually larger communities, states, they have grant
writers, they have the ability to access grants where smaller
communities, underserved areas that definitely face long-term
needs are unable to do that. So I commend you on that being a
goal. Thank you. Senator Duckworth.
Senator Duckworth. Thank you, Chairman. Dr. Farajian, I was
a strong advocate for systems' approach to Federal
transportation policy. And to maintain our global
competitiveness in the 21st century, the U.S. will need to
break down the outdated and inefficient modal silos that have
developed over 75 years. Congress and DOT should do more to
reflect the realities of supply chains that stretch from
factories and shops in Illinois all the way across the world to
homes, all around the world.
To this end, I authorized a provision in the FAA
Reauthorization Act of 2018 that required DOT to study the
benefits of expanding TIFIA program to include eligible airport
related expenses. President Trump and I agree on very little,
but we did agree on this one thing. So Dr. Farajian, the FAA
Reauthorization Act required you to report to Congress within 9
months on the TIFIA airports study. That was 15 months ago.
Do I have your commitment that we will finally see the DOT
study by the end of this first quarter of 2020?
Mr. Farajian. Thank you very much, Senator, for that
question. If I may, I want to mention that this is an important
report for us and we have not taken it lightly. We have gone
through a lengthy process of collecting the necessary
information because we had to do a comprehensive market
analysis and engage different stakeholders.
We have gone through the steps. It was a national study
that we had to go through it and do a nationwide analysis of
the market to figure out what are the funding and financing
gaps in the market. We have also had to look at the impact to
the budget and impacts of the existing programs. That also is
something that we have spent a lot of time to look at those
impacts and reflect those in the report.
Finally, we had to make recommendations on whether to
expand eligibility under an existing program or establish an
entirely new program. So that also takes a lot of analysis.
There are a lot of details and we had to work through them. I
am glad to say that we are almost done with the report.
Senator Duckworth. So this quarter?
Mr. Farajian. We should be able to finalize the report and
put it in interagency clearance soon. Hopefully this quarter we
will be able to put it in interagency clearance. And as soon as
it is cleared, we will be happy to share that with the
Congress.
Senator Duckworth. I will be checking in with you on a
regular basis to get those results. Thank you. I also mentioned
in my opening statements, some stakeholders have spent seven
figures to not secure a loan and this is especially burdensome
for rural communities and small communities. While the Bureau's
new RRIF Express program is a step in the right direction, I
want to highlight that DOT approved only 6 loans in the last 8
years and less than 40 since the program's inception in 2002.
Clearly, the process is flawed.
To be fair, Congress enacted a credit risk premium
mechanism, more to appease a Congressional budget office and
hide the true cost of investing in rail infrastructure than
addressing the practical needs of rail stakeholders. In the
interest of time, I will be asking you to submit for the
record, Dr. Farajian, a list of recommendations for this
Committee to consider in the next reauthorization bill to
improve the RRIF program. Will you do that?
Mr. Farajian. Talking about the RRIF program, if I may, I
would like to also mention that as someone who used to be a
borrower of the programs that Bureau was providing in the past
when I was in Virginia, I completely understand some of those
concerns that you just mentioned.
The program, the RRIF program that you mentioned is
definitely a little bit challenging because the borrowers need
to go through the process with us in order to understand what
the CRP is going to be. And it requires a lot of studies, a lot
of analysis, gathering information to be able to provide them
with accurate information about what they should expect.
Senator Duckworth. I am sorry, I am running low on time.
Can you just send us a list of recommendations?
Mr. Farajian. Yes, we can do that.
Senator Duckworth. Thank you. Dr. Szabat, I have a very
short amount of time, but if you could tell me here and then
also in writing as a followup, can you tell me more about the
pilot program that Secretary Chao announced, the $38 million
multimodal First Responders safety technology pilot program.
Where is DOT putting the--where are you pulling the $38 million
from? When is DOT expected to begin accepting applications?
This is something that is very near and dear to my heart as
well as Senator Durbin and other Senators.
I think we have all lost public safety officials who have
been killed on the side of the road doing their jobs. And then
we want to make sure that our First Responders are protected.
Mr. Szabat. Thank you, Senator, for your interest in this
important initiative that we also care and Secretary Chao cares
very much about. This targeted investment about $38 million, we
intend it to build to demonstrate the benefits of a vehicle to
infrastructure technology for emergency response vehicles using
the 5.9 gigahertz safety band. We anticipate that the funding
opportunity will come out shortly and happy to give you more
details for record.
Senator Duckworth. Thank you. I am over time. Thank you.
The Chairman. Thank you, Senator Duckworth.
Senator Cantwell.
Senator Cantwell. Thank you, Madam Chair. And again, thank
you to the witnesses for being here. Mr. McCarthy mentioned the
juggernaut that Seattle and Tacoma are on moving product. In
Washington State we shipped $440 billion in freight products in
2018. That is a lot and I guess we are quite significant in the
total of U.S. agricultural products. One of the things that you
mentioned, which I wholeheartedly agree with, is that
communities are often left without the resources to take care
of moving all that freight.
I consider it to be almost like the last mile here. Ports
are the most critical aspect and they are right there, the last
mile. It is almost as if America's ports on local streets are
like clogged arteries. They are key to making it through the
system and yet they are clogged.
So, I wanted to ask our two DOT witnesses if they supported
lifting the multimodal cap on the INFRA program so we could put
more money into freight infrastructure so that we can solve
some of these problems of congestion that are taxing at the
last mile or in other aspects of building capacity, and
certainly in the rural communities< But this congestion problem
is certainly causing us great problems. So Mr. Szabat or----
Mr. Szabat. With your permission Senator, I will take first
crack at that question because you--I appreciate it very much.
You are addressing one of the most important challenges we
have. Safety is the Department's top priority but congestion
mitigation in all modes of transportation, getting that right
mix of multimodal use of transportation, are also high
priorities for us. And so you mentioned the challenge of the
possibility of raising the cap. We have got about $158 million
in INFRA funding that is still available to allocate to
multimodal projects or component projects in this current
fiscal year----
Senator Cantwell. So are you ready to give that to Mr.
McCarthy?
[Laughter.]
Senator Cantwell. Because he--and I don't mean to
interrupt. We are all short on time today. Mr. McCarthy just
said Canada, his competition is Prince Rupert, and the Canadian
government just gave, what did you say, $300 million?
Mr. McCarthy. $385 million.
Senator Cantwell. OK, and why? Because they want them to be
able to take business competitively from us. So their
government is making that investment and at the same time the
Chair's product, I guarantee you, is sitting too darn long
because it can't get through the congestion.
So we have to wake up, that this Nation's economy for the
future is very much based on the Pacific being able to move
export product to Asia and we have to make this investment.
Again, I'm glad that you have some extra left over money, but I
want to know how much are you willing to increase the
multimodal cap, because we are going to have this debate and I
am definitely going to be for lifting the cap.
Or doing are you for doing something else, if you don't
want to--if you want to leave the cap, what else can we do?
Because this is a problem. So are you for lifting the cap or
not?
Mr. Szabat. I am tempted to say, yes, to answer your
question of which you gave me the option of both yes or no, but
I will not give that as a formative an answer. The
Administration does not have the position on lifting the cap.
So we don't--the challenge that we have is the $158 million
that we have.
I suspect that the port or ports in Puget Sound could put
to good use every single dollar of that money and more but the
challenge of this is a national program because in there are
other ports and other transportation needs, multimodal
transportation needs across the country. So lifting the cap to
assist a particular project or mix of projects does not address
the overall need of transportation investment from all sources,
not just the Federal Government.
Senator Cantwell. I was illuminating the fact that other
countries are being more aggressive and that we pay the price
for the lack of that investment. I am sure that we can get a
very broad coalition of people who say we should be spending
more on freight. When you look at the numbers, you are going to
see a 40 percent increase in freight.
We should be celebrating that now we have on a global basis
for the first time in 2018, a tipping point. The majority of
the world's population is middle class. What does that mean?
They are going to eat and consume things that America can
produce and export to them. It is a tremendous market, but if
we can't get our products there because they are sitting
somewhere in traffic, it is going to be a problem for us.
So I guess I know DOT's position since you are the senior
person here, but we love the yes, and we look forward to
continue working with you in getting a robust administrative
decision on more freight investment. Thank you, Madam Chair.
The Chairman. Thank you, Senator Cantwell. And Dr.
Farajian, in my previous questions to Mr. Szabat, I was asking,
you know, how are you going to make it easier for stakeholders,
for managers to be able to access the grants that are
available, what is needed, especially those with limited
resources? I would ask you, in your testimony, you mentioned
state visits, which we would like to get you to Nebraska as
well. I noticed you haven't been there. But you mentioned state
visits is one thing but are there other actions that the Bureau
can take in order to inform states and localities about the
services that are available to them especially with regard to
the rural initiatives?
Mr. Farajian. Chairman Fischer, thank you for that
question. That is an excellent question. Since I joined the
Department, we have worked very hard to make sure that we have
a comprehensive outreach plan to reach out to those who have
not heard about their programs in the past or will have a
difficult time to understand how they can take advantage of
some of those programs.
So let me just explain to you briefly what are some of the
steps that we have taken. State visits is one of the successful
efforts that we have gone through, because when we go, we meet
with them face to face, we spend about a day with them at
different levels, as I mentioned in my oral testimony. We try
to meet with them at different levels, educate them about our
programs, answer their questions, and also explain to them how
the process works. That has been a very successful effort for
us.
But beside that, we have conference calls with them, we
have webinars for them, we go to different conferences and
industry gatherings, not only to the big ones that folks who
are familiar with our projects typically attend, but to those
that people from rural communities, counties, cities often go
and participate in those. So that is the outreach program that
we have in place. Our outreach team is very active in terms of
reaching out to people and answering any questions that they
may have.
Sometimes they reach out to us with questions. We will
spend time, walk them through the answers, walk them through
the process. Besides that, as I mentioned also in my oral
testimony, we have tried to tailor our products so that they
are not just benefiting larger projects the way that they were
being used in the past.
Some of the new projects that we have added to our pipeline
are smaller projects. They are not going for a 35, 40 year
loan. They actually are going for shorter type of loans. They
are simpler, not as complicated as some of the larger projects.
So we have put those also in the toolbox. So those who want to
take advantage of those tools also have access to those tools
as well.
The Chairman. Thank you. Also, Dr. Farajian and Mr. Szabat,
a question to you both. As you are developing these rural
transportation initiatives, have you or others at DOT
identified any statutory, regulatory barriers that may have
limited the Department's ability to support rural communities
or to carry out these initiatives?
Mr. Szabat. Senator, with your permission, I will take the
first crack at that answer. As we review the statutes and as we
identify areas and get feedback from the rural communities, we
intend to have a feedback loop with Congress, with these
members of this Committee who are interested, to inform you of
what those issues may be that we identify.
So for example, one thing that we know is almost certain to
come up, we have nine different programs that distinguish
between rural and urban and they have a range of different
definitions of what constitutes a rural and urban community.
There may be some advantage in having them more uniform or
there may be advantages in keeping some of these programs
defined the way they are. This is part of the conversation.
We have to have the rural communities before we make any
recommendations ourselves to our processes, the interagency
review, and then coming to you to talk to Members of Congress.
Similarly, on the regulatory side, I think this is one of the
main reasons we have the ROUTES Council established.
Take a look at what we are doing internal within the
Department of Transportation. What can we streamline and what
can we do quicker and better that would serve the communities,
and frankly, the best advice we are going to get on that is the
input we get from the communities themselves as opposed to us
looking at the tea leaves and trying to determine internally
what we are doing that that works well for the communities and
what we are doing that does not.
The Chairman. Thank you. Doctor?
Mr. Farajian. I just want to add to what Mr. Szabat just
mentioned that we actually think that within the existing
authorities and within the existing programs that we have there
are plenty of opportunities, and we are more focused on finding
where we can help rural communities to take advantage of those
programs in areas that were not explored in the past.
Maybe, for example, TIFIA rural project initiative is
something that I want to bring up. That is a program that, as I
mentioned in my oral testimony, is getting a lot of attention
especially from rural communities. We have 13 projects in seven
different states. It is a program that can greatly benefit
rural communities projects that are under $100 million, and it
is a program that doesn't require any modifications, any
changes to the existing requirements that we have. We can
easily implement it and we are going through that process with
our rural stakeholders.
The Chairman. I would ask that if both of you could follow
up with me on what this Committee should do to address any of
the concerns that are out there in the future so that we can
make sure that these efforts to help rural development are
going to happen.
So, I would appreciate that. I am going to keep going. Dr.
Farajian, Congress appropriated funding for RRIF credit
assistance, including $25 million in Fiscal Year 2018 to
address the cost of the RRIF credit risk premium. What impact
do you expect this assistance will have on the utilization of
the RRIF program?
Mr. Farajian. Chairman Fischer, that is an excellent
question. I was asked a question about some of the challenges
that currently the RRIF program is facing. That program, the
RRIF Express pilot program that you just refer to is our effort
to streamline our process and utilize the RRIF programs,
especially for short line and regional railroads.
If a project--if they have a project, short line and
regional railroads, who have a project that is less than $50
million, if it qualifies under the program, they can come to us
and borrow up to $50 million for their project costs, and we
with the money that you just mentioned has been appropriated to
us, are able to pay for credit risk premium of that loan as
well as some of the advising fees that typically they pay. We
have also streamlined our process to make it faster. We have
set up a team within the Bureau that is meeting on weekly
basis, looking at interests that we are receiving under that
program.
We have advisors that we can bring on board quickly to look
at the applications that we receive. Our goal is to make that
program streamlined and fast and efficient, as fast and
efficient as possible. We have received very good feedback so
far on that program.
As a matter of fact, just this afternoon at 2 p.m., the
American Short Line and Regional Association is hosting a
webinar to educate some of the potential borrowers on how they
can take advantage of the program. And the application period
has been open for 2 weeks. It is just the beginning of it.
So it will be open for another two and a half months, and
we are very optimistic that based on the feedback we have
received so far, that it is going to generate very good
results.
The Chairman. Thank you. Mr. McCarthy, I see you----
[Laughter.]
Mr. McCarthy. Well, it is really interesting to listen to
these two gentlemen. I am learning some things.
The Chairman. Well, we need to hear from you as well
because you represent an industry in an area that is extremely
important to our country, as was pointed out by Senator
Cantwell. You mentioned in your testimony that container
vessels are getting larger, noting that 18,000 container
vessels could be coming to port soon.
Mr. McCarthy. Yes.
The Chairman. What effect do these larger vessels have been
on port operations, and what actions are ports taking now to
mitigate any negative effects such as congestion at these
facilities? I have had the opportunity to visit ports on the on
the West coast and on the East coast, down to Florida. It is
fascinating what is going on at our ports and changes that are
being made, but no matter which port I have been at, there is
deep concern about the congestion problem.
Mr. McCarthy. Absolutely. It wasn't too many years ago that
most of our vessels were 6,000 to 8,000 equivalent unit
containers. And as you mentioned, we are looking at 18,000
TEUs, which is substantial. It creates a lot of activity over a
short period of time, which as you point out congest our roads,
rail, and other infrastructure.
So ports are struggling to develop that infrastructure
within the vicinity of the gateway. So, we are doing innovative
things like extended gate hours where we would operate on 24
hours a day if possible, which has a dual benefit. For example,
if I am not putting congestion on the roads when people are
commuting to and from work. So that is the type of innovation
that we are doing. Those come with expenses involved but our
cranes are getting bigger, our ships are getting bigger, but a
lot of it is the same activity.
But that expanded activity, as you say, does pose a
challenge with us that we are working through. We do need
assistance as local communities to bring those facilities so
that they are more than competitive with Canada, so that our
U.S. products will find their way to their markets outside of
the United States.
The Chairman. We have heard on this Committee about
technology and how technology can make some major changes. From
the Port of Long Beach, Dr. Hasegawa testified before the
Subcommittee about their work that they are doing on a port
optimizer and that provides all stakeholders with more clear
advanced information about the movement of freight. Is the
Northwest Seaport Alliance working on similar technologies or
practices to better utilize the current infrastructure you have
while we are waiting to build and not just maintain, but to
expand?
Mr. McCarthy. Yes. In the last couple of years, we have
expanded our efforts to track, for example, the length of time
that a truck is at the terminal and waiting for the terminal to
open up. And we have programs similar to those in Port of Long
Beach and Port of Los Angeles, although by a different name,
but for the record, I would like to provide some additional
details on those and provide them to you for the record, if I
could.
The Chairman. That would be wonderful. Thank you. I also
wanted to talk to you, sir, about concerns that I have heard
from shippers, particularly agriculture shippers, and that is
the result of the congestion and delays at port facilities. As
you know, the Federal Maritime Commission is currently
reviewing a proposal to clarify how it is going to assess the
reasonableness of the detention.
And what is the Northwest Seaport Alliance policy on the
fees that you have for detention? And do you have
recommendations for addressing the underlying issues which I
hope to receive from you on the port congestion and delays,
lack of clarity where the freight is, so that the port
facilities don't need to assess those fees in the first place?
My folks don't want to pay them. That is what I am saying to
you.
Mr. McCarthy. I understand. That is a fair question and one
that I have heard throughout our State. For example, we grow
about 10 billion pounds of potatoes and export about 70 percent
of them, apples and cherries, and other agricultural products.
And also we are huge exporter of hay.
And so I recently met with those that generate and compress
the hay for export and we have talked about those issues, and
the issue primarily centered around the fact that they have
certain number of trucks they sent over to our gateway. They
are tied up. They are unable to do, for example, two loads in a
different, you know, in the same work cycle. It expands their
costs. Those are the type of delays that are directly related
to our infrastructure issue problems.
As to the detention fees itself, that is another one of
those issues, if you don't mind, I would like to for the record
provide some additional information to you.
The Chairman. Thank you. Thank you so much. I understand
Senator Thune will be returning? Senator Thune will not be
returning. So I am just going to ask a couple more questions,
if I may.
Mr. Szabat, last year the Congressional Research Service
issued a report showing that several highways that are
projected to have the largest increases in truck traffic
between now and 2045, and that includes large portions of I-80
in my state of Nebraska as well as interstate portions in
Illinois and Texas and a handful of other States.
Can you tell me, does the DOT take into consideration
future increases in traffic demand or other similar metrics
when developing infrastructure policy? And should Congress
consider future freight demand, such as truck traffic demand
along Interstate 80, when developing surface transportation
infrastructure policy, particularly as it relates to the
National Highway Freight Program?
Mr. Szabat. I appreciate the question, Senator. The short
answer is yes to both aspects of your question. First, when we
look at applications for our discretionary grant program, one
of things that we are looking at is reduction and congestion
immediately, but also what is the forecast growth. And a second
aspect which plays into that is, what is the economic impact.
We try to measure benefit-cost analysis for each of these
projects----
The Chairman. When you look at the impact, do you look at
the impact within a state, within a locality, within a state,
within a region or nationally?
Mr. Szabat. So the--you will recall that when these
programs--the grandfather of all of our discretionary grant
programs was TIGER, and these were for projects of regional and
national significance.
And much of that remains within the criteria we have for
our programs today. So when we evaluate it, we look not just at
the local benefit, but for example, you know for highway
project like I-80 in Nebraska or from any of our rail or
highway projects, what is its benefit nationally to moving
freights, whether it is to the ports in the Pacific Northwest
or someplace else because investing in a highway just for the
sake of the people who live around that stretch rarely makes
sense. It makes sense for its impact on the Nation.
And then second, as you very much aware, we are working on
a national freight strategy and a national freight network. And
in both cases, in both of those, we are looking not just at a
snapshot in time as to where are the freight flows today, but
where are the opportunities to reduce congestion and develop,
if you will, shift freight flows to better utilize the network
so that we can get the maximum economic benefit at the least
infrastructure investment cost.
So I think all of that would flow into an answer of if you
are asking for a personal recommendation for should Congress
consider these factors going forward, I would give an emphatic,
yes.
The Chairman. Thank you. Also in Nebraska last year, we
experienced severe flooding that caused extensive damage to our
surface transportation infrastructure, including railroad
infrastructure. When a short line railroad in Nebraska had
significant damage, it had nowhere to turn to at DOT for grant
assistance. Congress has previously allocated grant funding to
repair critical short line infrastructure following disasters.
Mr. Szabat, would the Administration support Congressional
grant funding short line railroads could access to help recover
after disasters?
Mr. Szabat. Thank you, Senator. You have identified a
critical gap in how we, the Government, approach some modes of
transportation are not done unequally in certain circumstances.
As the Administration has not taken a position on the
legislation, I cannot say that we would or would not support. I
do say I would look very much forward to working with you,
members of your staff, other interested members in Congress to
provide whatever information or assistance that you need, both
in developing a proposal and possibly in developing the
Administration's position.
The Chairman. Thank you, sir. We will be in touch.
Additionally, Dr. Farajian, would the RRIF Express program,
including the credit risk premium assistance, be available for
short line railroads to use to repair infrastructure following
disasters?
Mr. Farajian. Thank you. Thank you for that question,
Senator. There are some eligibility criteria for different
types of projects that can use RRIF Express. Right now, I don't
know exactly what is the situation that you are describing, but
my staff will be happy to meet with any potential borrower and
answer their questions, look at the specific project that they
are trying to borrow, to develop--to spend money on it.
And if the project is eligible, yes, the answer is that
RRIF Express could be a source of financing for that project.
However, I should also mention that the duration that the
application period is open is as of now just for 3 months and
it is going to expire on April 13. So that is just something
that I wanted to have on record. A note that was published, it
specifically says that applications can be received between
January 13 and April 13.
The Chairman. Thank you very much, doctor. I would like to
thank all three of our panelists today. I appreciate you coming
in and sharing your expertise with us.
The hearing record will remain open for two weeks and
during this time Senators are asked to submit any questions for
the record. Upon receipt, the witnesses are requested to submit
their written answers to the Committee as soon as possible.
Again, thank you so much for your participation on this
very important subject. Thank you. The hearing is adjourned.
[Whereupon, at 11:05 a.m., the hearing was adjourned.]
A P P E N D I X
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Joel Szabat
INFRA and BUILD funding. The FAST Act provide $4.5 billion over
five years for the Nationally Significant Freight and Highways Grant
Program, also known as the INFRA program. In that same time period,
Congress has provided $4.4 billion for the National Infrastructure
Investments Grant program, also known as BUILD.
Question 1. Mr. Szabat, how much funding would be needed to support
all the applications received for INFRA and BUILD grants last year?
Answer. In 2019, eligible applicants for the INFRA and BUILD
program requested approximately $19.4 billion in grant funding from the
Department. The continued overwhelming demand for the Department's
discretionary grant programs demonstrates the significant unmet
infrastructure needs across the country. Eligible BUILD applicants
requested $9.6 billion, and eligible INFRA applicants requested $9.8
billion.
Question 2. How much funding would be needed to support all of the
applications subject to the multimodal cap under the INFRA program?
Answer. For the 2019 round, approximately $1.2 billion of $9.8
billion in requested grant funding would have been subject to the
multimodal cap. At the beginning of the round, approximately $200
million of the original $500 million was still available to be awarded.
Freight Infrastructure. The FAST Act required the Department to
develop a National Strategic Freight Plan by December 2017. The FAST
Act also required the Department to establish a National Multimodal
Freight Network to assist in the prioritization of Federal freight
investment. DOT was required to issue a final network by December 2016.
Question 3. How is the Department able to appropriately prioritize
Federal freight investment through programs like INFRA and BUILD when
these items are not yet completed?
Answer. The Department recognizes the importance of Federal freight
investment to the safe and efficient movement of freight throughout the
United States. Through discretionary programs, the Department has
included evaluation criteria that allow the Department to identify
priority freight projects. For example, in the most recent INFRA notice
of funding opportunity, the Department has included whether a project
primarily serves freight and goods movement as a factor in the economic
vitality criterion evaluation.
Question 4. When can we expect the Department to finalize these
items?
Answer. The Department has completed the National Freight Strategic
Plan and it is expected to be released in FY20.The completion of the
National Freight Strategic Plan will directly lead into the
identification of the National Multimodal Freight Network.
GAO Report. Last March the GAO issued a report titled Action Needed
to Guide Implementation of Build America Bureau and Improve Application
Process noting that the Build America Bureau lacks a plan to guide
ongoing and future efforts, as well as any kind of performance
indicators to assess its progress. A year later, all five of the GAO's
recommendations remain open.
In response to a recommendation calling for a detailed
implementation plan that sets goals and a timeline for the Bureau's
continued efforts and prioritizes work to carry out the multiple
responsibilities given to the Bureau in the FAST Act, DOT stated it did
not plan to create a detailed implementation plan as that would detract
from higher priority efforts.
Question 6. What are the Bureau's top priorities, and what steps
has the Bureau taken to establish goals or timelines for ensuring that
states and local governments are able to complete the application
process and receive necessary funding in a timely manner?
Answer. The Bureau top priorities are to:
Enhance the pipeline of eligible projects by providing
proactive educational outreach and technical assistance to
potential borrowers in utilizing the TIFIA and RRIF programs,
and their capacity to fill market gaps by leveraging
substantial local and private co-investment.
Diversify the pipeline of eligible projects by geography
(i.e., urban and rural, new States, etc.) size, and type (i.e.,
highway, transit, rail, port, etc.), to ensure an equitable
distribution of program benefits.
The FAST Act directs the Department to establish technical
assistance programs to educate borrowers on how to access the
Department's credit programs. In addition, the FAST Act made certain
changes to the TIFIA program set forth in Chapter 6 of title 23 and
established other programs to facilitate access to the Bureau's credit
programs. To meet these requirements, the Bureau has established
several programs as outlined below and initiated an effort to educate
state and local government officials on how they can identify potential
projects and innovative approaches to benefit from the Department's
credit programs. Also, the Bureau has taken several steps to ensure
that states and local governments can complete the application process
and receive necessary funding in a timely manner, and we continue to
refine and streamline our processes wherever possible. For example:
The Bureau has merged both the Letter of Interest (LOI) and
the loan Application forms so that a borrower can submit a
single version of each form for either a RRIF or TIFIA loan or
both.
The Bureau has implemented the FAST Act's new streamlined
process for TIFIA applicants with highly rated credits not
affected by project performance and the project is ready to go.
To address the needs of rural borrowers, the Bureau
implemented the TIFIA Rural Projects Initiative that educates
sponsors regarding the TIFIA program's statutory benefits for
eligible small, rural projects, including application fee
relief, ability to finance a larger share of eligible project
cost, and a reduced interest rate equal to half the rate
applicable to standard loans.
The Bureau launched the RRIF Express pilot program in
December, 2019. Eligible applicants will receive reduced fees,
Credit Risk Premium (CRP) relief and expedited loan processing.
In FY 2020, the Bureau will launch the Regional
Infrastructure Accelerator demonstration program that was
authorized under the FAST Act and funded under the Further
Consolidated Appropriations Act, 2020, aimed at helping project
sponsors develop capacity, obtain technical assistance and more
easily access the TIFIA loan program at the regional level.
______
Response to Written Questions Submitted by Hon. Tammy Duckworth to
Hon. Joel Szabat
Question 1. Secretary Chao recently announced a $38 million multi-
modal First Responder Safety Technology Pilot Program to equip
emergency response vehicles and transportation infrastructure, like
traffic signals and public transit, with ``V2X'' technologies using the
5.9-gigahertz safety band to enhance safety for emergency responders.
Per your commitment during the hearing, please provide additional
details about this pilot program, including but not limited to: the
specific source(s) of funding for the pilot program, the anticipated
timeline for issuing the Notice of Funding Opportunity and completion
of the application process, criteria that have been identified for
inclusion in the pilot program including, any specific requirements for
utilization of the 5.9 GHz band, as well as minimum and maximum grant
award limits.
Answer. The Department plans to invest up to $38 million for the
First Responder Safety Technology Pilot Program (First Responder)
through the Federal Highways Administration's Advanced Transportation
and Congestion Management Technologies Deployment (ATCMTD) Program (see
23 U.S.C. Sec. 503(c)(4)) and the National Highway Traffic Safety
Administration's vehicle safety research program (see 49 U.S.C.
Sec. 30182). This pilot program seeks to fund projects that equip law
enforcement, fire, and emergency medical services (EMS) vehicles, and
potentially other public vehicles (e.g., transit and tow trucks), and
related infrastructure (e.g., traffic control signals and highway-rail-
grade crossings signals) with vehicle-to-everything (V2X) communication
technologies. This pilot program seeks a creative and innovative
approach to adopt V2X technologies that will use the 5.9 Gigahertz
Safety Band of spectrum in a technology-neutral manner.
Question 2. One hundred people die every day on the roads in the
U.S. V2X technologies is expected to significantly improve the safety
and efficiency of our transportation system. How does FCC's proposal
for reallocating the 5.9 GHz spectrum impact the development and
deployment of V2X technologies, like advanced driver-assistance systems
(ADAS) such as Left Turn Assist (LTA) and Forward Collision Warning
(FCW)?
Answer. Many of today's vehicles use ``conventional'' sensors
(e.g., radar, camera, lidar) for Advanced Driver Assistance Systems
(ADAS), such as forward collision waring (FCW), blind spot warning
(BSW), automatic emergency braking (AEB), rear cross-traffic alert, and
others. Notably, left turn assist (LTA) is not available on vehicles
today as this application cannot be reliably implemented with
conventional sensors. Vehicle-to-everything (V2X) technology, with its
ability to detect other V2X vehicles beyond just line-of-sight, enables
new safety applications such as LTA, intersection movement assist
(IMA). In addition, V2X can also improve the performance of existing
safety applications (such as FCW, BSW, and AEB) by augmenting
conventional sensors to identify collision threats more reliably and
accurately.
To date, all development and deployment of V2X safety applications
are based on dedicated-short-range-communications (DSRC) technology
using channel 172 of the Safety Band for vehicle-to-vehicle (V2V) and
channels 174-184 for vehicle-to-infrastructure (V2I). If the FCC
proposal for reallocating 5.9 GHz spectrum were to be implemented,
these applications would need to be moved to channel 180 and radios and
roadside installations re-engineered for that channel. While the
applications should operate the same on channel 180, testing would also
be necessary to determine whether interference from Wi-Fi operations on
adjacent channels may impact the safety performance of the
applications. USDOT has completed initial testing. Additional analyses
are underway on unlicensed Wi-Fi effects on the remaining channels 182-
184 as well as with effects to other emerging technologies. Results are
provided on the Safety Band website as they are completed..
Question 3. Please describe which of the pilot deployments on
USDOT's map are actively using all 75 MHz today for the Dedicated
Short-Range Communication (DSRC) safety operations and what are the
specific DSRC safety operations? How many vehicles have these
technologies installed, and why do the pilot projects require more than
30 MHz of spectrum?
Answer. The Department surveyed the sites for channel usage
approximately a year ago. Approximately 35 percent of sites responded
to our survey. At that time, there were no sites using all 75 MHz of
spectrum. There was a total of seven sites using multiple channels.
Notably, New York City, which is one of USDOT's Connected Vehicle Pilot
sites, is using six of the seven available channels; while Michigan,
which has been hosting several deployments, is also using six of the
seven channels. The specific DSRC safety applications supported by
these sites include:
Curve Speed Warning
Dynamic Ridesharing and Shared Use Transportation
Eco-Approach and Departure at Signalized Intersections
Emergency Vehicle Preemption
Evacuation and Reentry Management
Freight Signal Priority
Integrated Multi-Modal Electronic Payment
Oversize Vehicle Warning
Parking Space Management
Pedestrian and Cyclist Safety
Queue Warning
Reduced Speed Zone Warning/Lane Closure
Restricted Lane Warnings
Road Weather Motorist Alert and Warning
Smart Park and Ride System
Signal Phase and Timing (Spat) messaging
Speed Warning and Enforcement
Transit Signal Priority
Basic Safety Message (BSM): Supports multiple V2V
applications that are being implemented in CV pilot sites such
as forward collision warning; blind spot warning; intersection
collision warning; and red light violation warning, and
emergency brake light warning
Work Zone Safety Monitoring
We estimate there are approximately 16,000 vehicles equipped with
V2X technology at these deployment sites with several thousand more in
the planning stages.
While most of the pilot sites are presently using less than 30 MHz
of spectrum, additional spectrum allows for anticipated expansion of
V2X services and applications into the future. Examples of applications
and services requiring additional spectrum include: vehicle-to-
pedestrian (V2P) safety applications; platooning and cooperative-
automation applications; and expanded vehicle-to-infrastructure
messaging.
Questions 4. The Government Accountability Office's (GAO) 2019
report, Surface Transportation: Action Needed to Guide Implementation
of Build America Bureau and Improve Application Process (GAO-19-279)
recommended that the USDOT Under Secretary of Transportation for Policy
ensure that the Build America Bureau develop and adopt a public
statement that outlines USDOT's and the Bureau's policy goals and
appetite for risk for the RRIF program. USDOT stated in their response
that they did not fully concur with this recommendation, but did not
provide any additional explanation for their reasoning. Please describe
the Department's appetite for risk related to the RRIF program.
Answer. In the Department's letter response to the GAO, we noted
that we do not believe that a risk appetite statement for the TIFIA or
RRIF loan programs would be feasible. In that letter, we noted the
following reason:
``The loan programs in the Bureau cover a diverse portfolio of
public, private, highway, transit, rail, intermodal, airport
and seaport projects that range widely in size, complexity,
location and financial structure. Given that diversity, a
single statement designed to cover the whole portfolio would,
by necessity, make the program inaccessible to some project
sponsors. Developing the significant number of separate
statements that would be necessary to address each project
scenario needs would not be feasible. The Bureau has a due
diligence process designed to appropriately vet the
creditworthiness and potential risk of projects seeking credit
assistance.''
Question 5. FMCSA recently announced a two-year delay in the
implementation of the entry-level driver training (ELDT) rule due to
information technology issues with the Training Provider Registry
(TPR). According to FMCSA, changes to in USDOT internal requirements
for cloud-based IT systems are primarily responsible for the delay in
the completion of the TPR technology platform. What is the current
status of the TPR? Has the Office of Management and Budget (OMB)
approved the Information Collection Request for ELDT? Please describe
the changes to USDOT's internal requirements that necessitated this
delay, when and why the determination to make those changes was made,
the estimated timeline for completing those changes, and whether other
USDOT rules or project deadlines have been--or are expected to be--
impacted by these changes. Additionally, please describe how this delay
will impact state driver license agencies (SDLA) or may otherwise
impact safety.
Answer. On June 4, 2020, FMCSA launched the TPR website, followed
by the release of the Web Services Handbook, which will allow the
SDLAs, training providers, and American Association of Motor Vehicle
Administrators to meet the IT technical requirements for interfacing
with the TPR. FMCSA is currently finalizing several components of the
TPR, including the TPR system testing tools for external users
interfacing with the TPR, the training provider registration and search
functionality, and the ELDT certification transmission and retrieval
functionality.
Based on our project plan, FMCSA estimates that SDLAs will begin
integrating the TPR functionalities with State-based systems to allow
them to begin receiving ELDT driver-specific information by the
beginning of 2021, and we are planning to allow training providers to
begin registering for the TPR in October 2021.
With regard to the details about the technical challenges in
initiating the IT development phase the Agency has shared this
information with stakeholders via the preamble of the February 4, 2020,
Interim Final Rule (IFR) to ensure interested parties were aware of all
the factors the Agency considered in making the decision to issue the
IFR, and they too could consider those factors in providing comments to
the rulemaking docket.
Finally, in response to the question about the status of the
Information Collection Request, OMB approved FMCSA's request on June
26, 2020.
Question 6. What concerns and impediments have States raised with
USDOT regarding the implementation of the entry-level driver training
rule? What is USDOT doing to assist States in addressing those concerns
and impediments? Has the FMCSA established any dates or deadlines for
states by which states must make decisions on the format of IT systems,
where to store data, and any other required steps for compliance?
Answer. Several SDLAs have raised important questions and concerns
regarding the transmittal of ELDT certification information to the
States through the Commercial Driver's Licensing Information System
(CDLIS) and the Commercial Skills Test Information Management System
(CSTIMS), as well as obtaining the information from the Training
Provider Registry. Further, States questioned the need for a second
verification that an applicant completed the required ELDT training
prior to the issuance of a CDL.
In response, FMCSA made clarifying changes to the ELDT rules,
eliminating what would otherwise have been a duplicative requirement
imposed on the States. The Agency revised the rules to clarify that the
State must verify an applicant's completion of required ELDT at the
point of testing, not issuance (and testing). Additionally, FMCSA
amended the rule by removing the requirement to perform CDLIS
inquiries, which would limit the State to one interface option for
accessing the TPR. FMCSA has worked closely with, and will continue to
work with, the American Association of Motor Vehicle Administrators
(AAMVA) and the SDLAs during the implementation phases to address these
issues in a way that minimizes the administrative burden on States to
the greatest possible extent.
We also encourage States to apply for funding through FMCSA's
Commercial Driver's License Program Implementation grant program to
help offset the costs of implementing the ELDT rule. Implementation of
the ELDT rule is important to the FMCSA, so much so that we offer 100
percent reimbursement for these mandated projects.
FMCSA has not established any deadlines for States, other than the
proposed compliance dates. However, the Agency has set a high priority
on the development of an IT environment by October 2020, for the SDLAs
to begin testing their connectivity to the TRP. We have also determined
that the ELDT certification information will be stored in the Training
Provider Registry. The Agency believes that storing the training
information in the TPR should further alleviate administrative burdens
on States. As we further develop the TPR, we will continue to
communicate the system requirements to the States to help assist them
with creating or modifying their existing IT systems.
______
Response to Written Questions Submitted by Hon. Tammy Baldwin to
Hon. Joel Szabat
Question 1. The Consolidated Appropriations Act of 2020 directed
the Department of Transportation to continue to partner with State
DOTs, metropolitan planning organizations, local and Tribal governments
and other entities to assess vulnerabilities and analyze opportunities
to improve the resiliency of federal, state and local transportation
assets. According to the report language, such partnerships should
include additional pilot projects and ensure geographic diversity.
Further, in that report language, DOT was directed to expand its
technical assistance and trainings to help these entities revise
current practices to develop reliable indicators of vulnerability and
actionable mitigation measures in all phases of transportation
planning, asset management, project-specific planning and development,
and operations toward improving resiliency and reducing lifecycle
costs.
Please provide me with the status of implementation of each item
above.
Answer. The Department of Transportation's Federal Highway
Administration (FHWA) continues to partner with States and metropolitan
areas to increase the longevity of the Nation's highways by assessing
vulnerabilities and incorporating resilience throughout all phases of
transportation decision-making. This includes funding pilot projects,
developing resources, facilitating information exchange among
transportation agencies, and providing technical assistance.
The FHWA continues to work with State DOTs, Metropolitan Planning
Organizations, and local agencies across the country to develop lessons
learned and share this information nationally through the development
of resources on incorporating resilience into all aspects of
transportation decision making.
FHWA is expanding its technical assistance and training workshops
to help State and local officials. For example, FHWA is currently
working with the National Highway Institute (NHI) to develop training
for addressing resilience in highway project development and
preliminary design. FHWA is also working to provide technical
assistance and identify resilience related impacts and opportunities in
the form of ``rapid resilience assessments'' to State DOTs following
various natural and other hazard events.
Question 2. On December 3, 2019, Senator Duckworth and I wrote to
Secretary Chao and Administrator Dickson about implementation of
Section 440 of FAA Reauthorization. We have not yet received a response
to our letter, which requested an update on the status of DOT's review
and revision of regulations related to training programs for air
carrier personnel, including contractors, who provide physical
assistance to passengers with disabilities to ensure that training
programs are offered annually and include hands on training. I look
forward to a response to that letter.
Please provide me with the status of implementation of Section 440
of FAA Reauthorization.
Answer. I have summarized below and included a copy of DOT's
response to your letter referenced above.
Section 440 requires the Department to review, and if necessary
revise, applicable regulations to ensure that passengers with
disabilities who request assistance while traveling receive dignified,
timely, and effective assistance from trained personnel. Section 440
also requires the Department to review, and if necessary revise,
applicable regulations related to covered air carrier training programs
for air carrier personnel, including contractors, who provide physical
assistance to passengers with disabilities to ensure that training
under such programs occurs on an annual schedule for all new and
continuing personnel charged with providing physical assistance, and
includes as appropriate, instruction by personnel with hands-on
training for employees who physically lift or otherwise physically
assist passengers with disabilities, including the use of relevant
equipment.
The Department has completed its initial review of the applicable
regulations related to assisting passengers with disabilities in
enplaning, deplaning, and connecting between flights, and to training
for employees and airline contractors who physically lift or otherwise
physically assist passengers to determine whether regulatory changes
may be needed. The Department's review of its regulations and complaint
data, pursuant to section 440, revealed that the Department receives a
significant number of complaints from consumers alleging that they did
not receive prompt or timely wheelchair or guide assistance at the
airport. This suggests that airlines may not fully understand their
obligation to provide prompt passenger assistance for passengers with
disabilities in moving within the airport. Accordingly, through
issuance of the Spring 2020 Unified Agenda, the Department announced
its plans to amend its regulation to clarify airlines' responsibility
to provide prompt assistance to passengers with disabilities who
request assistance in moving within the airport.
Also, the Department shared information regarding its review with
the Air Carrier Access Act Advisory Committee (ACAA Advisory Committee)
at its first meeting, which was held on March 10 and 11, 2020. The ACAA
Advisory Committee consists of representatives of passengers with
disabilities, airlines, airports, and others. It is tasked with
identifying and assessing the disability-related access barriers
encountered by passengers with disabilities.
The Department has established three subcommittees of the ACAA
Advisory Committee. They are the Subcommittee on Ticketing Practices
and Seating Accommodations, Subcommittee on Stowage of Assistive
Devices, and the Subcommittee on Assistance at Airports and Related
Training. The Subcommittee on Assistance at Airports and Related
Training will be focusing on the issues identified in Section 440 of
the FAA Reauthorization, and will report its findings to the full ACAA
Advisory Committee in a public meeting. The Department believes it
would be beneficial to engage the expertise of the ACAA Advisory
Committee as part of its review pursuant to Section 440 to help inform
the Department's decision.
______
Response to Written Questions Submitted by Hon. Tom Udall to
Hon. Joel Szabat
Question 1. As you are aware, visibility is limited on rural roads,
and poor conditions and obstacles are prevalent, some risks could be
mitigated by increasing the number of road signs to warn drivers of
potential, unforeseen dangers. Does the DOT support increasing road
signage to better communicate possible dangers such as fallen rocks and
boulders, wildlife crossings, and train tracks which may help decrease
high fatality rates on rural roadways?
Answer. The Department, through the Federal Highway Administration
(FHWA), establishes nationwide standards for traffic control devices,
including signs, in the Manual on Uniform Traffic Control Devices for
Streets and Highways (MUTCD). The MUTCD is incorporated by reference in
regulations found at 23 CFR part 655, and it applies to all roads open
to public travel. State and local agencies make decisions on the
appropriate traffic control devices to deploy, and compliance by State
and local agencies is required. The MUTCD contains many warning signs
for different types of road hazards, such as horizontal curves and
intersections and occasional hazards such as fallen rock, wildlife,
weather-related conditions, and road surface conditions. Some examples
include Fallen Rock, Fog Area, and Deer Crossing. At passive highway-
rail grade crossings (those without automatic gates or lights), a Stop
or Yield sign is required depending on the visibility of trains to
approaching drivers on the road. The Department currently promotes
several countermeasures for rural road safety and highway-rail grade
crossings to reduce crashes on rural roads, including Chevron signs
along curves, Intersection Warning signs, and Grade Crossing safety.
States may use Highway Safety Improvement Program (HSIP) funding to
install, replace, or otherwise improve signage, as long as it is to
address a highway safety problem, and is consistent with the State's
strategic highway safety plan.
Question 2. Costs to maintain and repair infrastructure in rural
areas is increasing at a higher rate than tax receipts used to cover
these costs, putting rural areas in a particularly difficult position.
Is there a plan to alleviate pressure on rural communities and help
address this imbalance of revenue to cost in rural communities?
Answer. The Department appreciates that rural communities face
unique challenges, and is working to address them through a number of
approaches, including the Department's ROUTES Initiative. The
Administration also has reinforced its commitment to meeting rural
needs through the President's Fiscal Year 2021 Budget Request.
To better address rural needs, Secretary Chao launched the ROUTES
Initiative in 2019. The ROUTES Initiative, which stands for Rural
Opportunities to Use Transportation for Economic Success, includes a
rural transportation infrastructure council and currently has three
focus areas: (1) collecting stakeholder feedback to identify rural
infrastructure project needs and challenges; (2) sharing user-friendly
information with rural communities to assist them in understanding and
applying for the Department's discretionary grants; and (3) improving
the Department's data-driven approaches to better assess needs and
benefits of rural transportation infrastructure projects. Modal
administrations including the Federal Highway Administration (FHWA),
the Federal Transit Administration (FTA), the Federal Railroad
Administration (FRA), and the Federal Aviation Administration (FAA)
will coordinate on the ROUTES Initiative.
Finally, the President's Fiscal Year 2021 Budget request calls for
a substantial increase in funding that could help address rural
infrastructure needs. For example, the Budget proposes $35 billion for
a new Bridge Rebuilding Program, including $12 billion to be allocated
by formula for use on ``off-system'' bridges--often locally-owned and
located in rural areas. The Budget also proposes another $25 billion
for a new Revitalizing Rural America program, which would help rural
communities deliver broadband, transportation, water, and other
infrastructure projects.
Question 3. Rural infrastructure is disproportionately impacted by
usage necessary to sustain economic activity in the area, specifically
within the agriculture and extractive industries that are more
prevalent in rural communities. These industries often use heavier,
oversized vehicles that increase wear and deterioration of
infrastructure and also lend to more dangerous traffic by causing
sudden decreases in speed, prompting other vehicles to pass them using
on-coming lanes, etc. These issues increase seasonally during peak
recreation seasons. What are some ways DOT plans to address these
issues?
Answer. In October 2019, Secretary Chao announced a major new
initiative to address disparities in rural transportation
infrastructure with the aim of improving safety and economic
competitiveness throughout the Nation. The Rural Opportunities to Use
Transportation for Economic Success (ROUTES) Initiative recognizes the
importance of rural transportation networks to the agriculture and
extractive industries, because transportation is essential for both
domestic uses and the export of agricultural, mining, and energy
commodities. As discussed in response to the previous question, the
ROUTES Initiative will begin work in three focus areas. One area
involves collecting ideas from stakeholders on the benefits rural
projects offer for safety and economic outcomes, as well as the kind of
assistance rural projects need. The other areas include providing rural
communities with information to assist them in applying for the
Department's discretionary grants and improving data-driven approaches
to evaluate needs and benefits of rural transportation projects. The
Department is open to other ideas for addressing impacts to rural
infrastructure resulting from economic activity.
Question 4. Insufficient rural broadband and wireless connectivity
is an issue across the country that needs to be addressed. Do you
support the ``dig once'' concept that pairs improvements in
infrastructure, specifically roads, with the installation and
improvement in wireless networks and broadband?
Answer. The Department agrees that it is important to expand access
to broadband connections, and has been supportive of the
Administration's work on broadband, including participation in the
American Broadband Initiative. Consistent with President Trump's
Executive Order 13821, ``Streamlining and Expediting Requests to Locate
Broadband Facilities in Rural America,'' the Federal Highway
Administration (FHWA) has been working with State transportation
officials to improve utility coordination and accommodation in the
highway rights-of-way to accelerate broadband infrastructure
deployment. Additionally, FHWA encourages States to work with service
providers on joint highway and utility planning, and to consider the
use of innovative practices and technologies to minimize roadway
excavation.
The FHWA is also developing a proposed rule to facilitate broadband
infrastructure deployment in the right-of-way (ROW) of applicable
Federal-aid highway projects. The proposed rule, which FHWA anticipates
publishing, in the coming months will implement provisions of the
MOBILE NOW Act (codified at 47 U.S.C. 1504) to ensure that States meet
specific registration, notification, and coordination requirements for
such broadband infrastructure ROW efforts.
Question 5. How is DOT working with rural communities to address
often times unique issues in the formulation and implementation of
infrastructure policy?
Answer. Planning policy and project development decisions are part
of the Statewide transportation planning process. Some States have
designated Rural Planning Organizations (RPO) or Rural Transportation
Planning Organizations (RTPO) that work directly with rural communities
to identify policy and planning needs. To assist in the formulation and
implementation of infrastructure policy, FHWA provides technical
support and expertise on design and construction specifications,
policies, and procedures. FHWA Division Offices work with State
Departments of Transportation in developing standard plans and
specifications, and local agencies and rural communities follow their
State's policies. The FHWA also develops resources to help small towns
and rural communities develop active transportation infrastructure that
is safe and comfortable for people of all ages and abilities. The
Department anticipates that the Rural Opportunities to Use
Transportation for Economic Success (ROUTES) Initiative described in
response to Questions 2 and 3 will build upon and enhance these
efforts.
Question 6. The unique challenges that rural areas face require
specific expertise in rural planning. The lack of such expertise leads
to reduced planning, which then negatively affects the application for
funding projects. According to officials in Sandoval County--a rural
county in New Mexico--creating a dedicated funding source for planning
and design of rural transportation needs could resolve this issue. Do
you agree with this assessment? What steps is DOT taking to assist
communities with technical assistance?
Answer. The Department agrees that planning is vital to
understanding transportation needs in rural areas. The Statewide
transportation planning process accounts for rural needs and offers
opportunities for identifying and prioritizing transportation
improvements in these areas. In some cases, the States have designated
Rural Planning Organizations or Rural Transportation Planning
Organizations that identify rural planning needs and priorities. In
other cases, States work directly with local officials. The needs and
priorities in rural areas can be different than those in non-rural
areas; therefore, approaches that are sensitive to the needs of rural
communities are important.
To assist communities, FHWA has produced resources to help rural
transportation planners increase their skillsets and abilities through
guidebooks and tools. For example, Regional Models of Cooperation, an
Every Day Counts initiative, helps regions pool resources to address
multi-jurisdictional transportation issues. Virtual Public Involvement
another Every Day Counts initiative, enhances and broadens the reach of
public engagement by making participation more convenient, affordable,
and enjoyable for greater numbers of people.
Question 7. Is DOT looking at ways to update the scoring of grant
applications in order to more fairly analyze the cost-benefit
assessments that are sometimes harder to quantify in rural communities?
Answer. Benefit-cost analysis is one of several factors that the
Department considers when evaluating grant applications. Such analyses
are intended to provide an objective and fair assessment of benefits
and costs for projects in both rural and urban areas. The Department is
consistently looking to update and improve its guidance on conducting
benefit-cost analysis, while being cognizant of the resource and
technical capacity constraints that potential applicants face,
particularly those in smaller communities. Our staff also works with
those applicants to help them better-articulate and quantify the
benefits of those projects through targeted webinars, debriefs,
technical assistance, and, in the case of rural communities,
initiatives such as ROUTES.
Question 8. Matching fund requirements are more challenging for
rural communities to meet due to often limited tax bases. What efforts,
if any, are being made to create information, support, and outreach
initiatives, to help rural communities learn about, and apply for
Federal options for matching fund sources? Additionally, are there any
efforts being made to allow non-DOT Federal funds to be used as
matching funds? If no such efforts are being made, would it be possible
to allow for rural areas to be required to match funds at a lower rate?
Answer. One of the main areas of activity for the ROUTES initiative
is developing easy-to-use information for rural communities to help
them better understand the Department's discretionary grant programs.
To that end, we are developing an Applicant Toolkit that provides an
overview of all the Department's discretionary grants and an
introduction to the application process. Some of our programs do
provide greater flexibility for rural applicants--for instance, BUILD
does not require a match for rural projects. In many cases, of course,
the rules for these programs are set by statute, but we are working
closely with the modes to identify programs where we may have authority
to provide useful flexibility for rural communities.
Question 9. Many rural communities have limited resources which
make it hard to hire technical assistance for grant writing, and grant
administration. In order to address this, do you think that DOT should
provide funding for a program specifically aimed at providing such
assistance and training to rural communities?
Answer. This is an area our ROUTES Council and Management Team are
examining. We are also examining options to leverage existing
Department programs that offer technical assistance to rural
communities, such as FHWA's Local Technical Assistance Program (LTAP)
and Tribal Technical Assistance Program (TTAP), as well as FTA's Rural
Transit Assistance Program (RTAP). We are also exploring ways to
partner with other Federal agencies such as USDA, who have extensive
presence in rural communities.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Morteza Farajian, Ph.D.
Railroad Rehabilitation and Investment Financing. The FAST Act
provided the Department of Transportation $35 billion in loan authority
for the Railroad Rehabilitation and Investment Financing (RRIF)
program. However, only four loans have been provided since the passage
of the FAST Act and only $6.2 billion in loans has been distributed.
Question 1. Outside of the RRIF Express program, what actions has
the Bureau taken to encourage eligible entities to apply for RRIF
loans?
Answer. Since establishing the Bureau in 2016, we have implemented
a number of measures aimed at helping project sponsors access both the
RRIF and TIFIA credit programs more easily. These range from
establishing the Outreach and Project Development team that serves as
the single point of contact for project sponsors and helps then
navigate the regulatory and financial processes. We implemented a more
formal and streamlined processes for the review of applications,
including weekly meetings of the staff-level Credit Review Team and
monthly meetings of the Council on Credit and Finance, both of which
have served to reduce the time that it takes for a qualified borrower
to obtain a loan. Additionally, we have harmonized the application
processes between the TIFIA and RRIF program to the extent we can. We
are also developing standardized loan agreement templates for corporate
borrowers to make it easier for borrowers to get to financial close by
saving time and reducing transaction expenses. We are providing
increased in-house technical assistance, including help with
environmental (NEPA) and permitting issues.
Question 2. What are the most common concerns that you hear from
applicants regarding the RRIF the application process and what are you
doing to address those concerns?
Answer. The three most common challenges we hear from prospective
borrowers, especially the smaller short line and regional railroads,
are:
The amount of time it takes to secure a RRIF loan;
The cost of the Credit Risk Premium (CRP) and that the CRP
cost is not known until late in the underwriting process; and
The expense that the borrower incurs in paying for Bureau
financial and legal advisors to review the loan application.
The RRIF Express pilot program was implemented to address each of
these concerns and we anticipate learning much from this pilot to help
us better understand how to serve the short line and regional railroads
following its close-out later in the year.
Question 3. How many applications have your received so far for the
RRIF Express Program and when do you expect to complete the application
process for those applications?
Answer. The open application period for RRIF Express closed in mid-
August, with ten initial Letters of Interest received at that point,
which we anticipate would not utilize all $25 million in budget
authority for credit subsidy that Congress appropriated. We are
considering options to expand eligibility and extend the deadline in
hopes of fully utilizing this budget authority. While it is difficult
to predict when projects will reach financial close because much of the
timing is driven by the prospective borrower's rate of progress, we
believe the application review process can be finalized within six
months of receiving a complete application. We will be happy to share
more details on the results of the pilot program and lessons learned
once we have the information available.
GAO Report. Last March the GAO issued a report noting that the
Build America Bureau lacks a plan to guide ongoing and future efforts,
as well as any kind of performance indicators to assess its progress. A
year later, all five of the GAO's recommendations remain open.
Question 4. What steps has the Bureau taken to implement each
recommendation and when can we expect each recommendation to be fully
implemented?
Answer. The Bureau responded to the GAO's report and
recommendations in a letter dated June 28, 2019. A copy of the letter
was provided to the Senate Subcommittee on Transportation, Housing and
Urban Development. The Bureau has completed actions to address three of
the five recommendations (Recommendations 3, 4 and 5), as of August 24,
and GAO has closed one (Recommendation 5). The Bureau is on track to
complete a deliverable that will address the two other Recommendations
(1 and 2) and provide them to GAO by October 1, 2020.
ROUTES and the Budget. The Build America Bureau's RRIF Express
program and Transportation Infrastructure Finance and Innovation Act
(TIFIA) loan program's Rural Project Initiative are key parts of the
Department ROUTES Initiative. Not only is tailoring infrastructure
programs to meet the needs of rural communities, but outreach and
technical assistance are vitally important to ensure rural communities
have access to these programs. The President's Budget proposes reducing
appropriations for the Build America Bureau by 15 percent to $4.25
million in FY 2021.
Question 5. How would this cut impact the Bureau's ability to
perform outreach and technical assistance to rural communities?
Answer. In addition to the resources appropriated to the Bureau for
administration, the Bureau also has access to the administrative
resources authorized in section 608 of title 23 for the TIFIA program,
which we envision will be reauthorized for Fiscal Year 2021. Together,
these funding sources for the Bureau's administrative expenses will
adequately support our rural and other initiatives. In addition, we
recently received an appropriation to conduct a regional infrastructure
accelerator demonstration program, which presents another opportunity
to provide technical assistance to rural and non-rural project sponsors
seeking TIFIA and other innovative financing. As such, the requested
funding level in the 2021 President's Budget for the Bureau's
administrative expenses will not negatively impact our ability to
conduct this outreach.
Question 6. What other impacts would this cut have on the Bureau's
activities?
Answer. We do not anticipate any negative impacts on the Bureau's
activities resulting from the 2021 President's Budget.
Question 7. At the hearing you testified that there were
approximately a dozen applications being considered pursuant to the
TIFIA Rural Projects Initiative. When do you expect to complete the
application process and make awards pursuant to that Initiative?
Answer. While it is difficult to predict when projects will reach
financial close because much of the timing is driven by the prospective
borrower's rate of progress and their timing needs, we do have a
growing pipeline of projects that are interested to use the TIFIA Rural
Project Initiative, mainly due to our expanded outreach and technical
assistance efforts to rural communities. We have two projects in the
final stages of the creditworthiness and negotiation phase, with
expected closing in September and October 2020. We also have a third
project which has entered the creditworthiness phase and is expected to
close by year-end 2020. We are closely working with the remainder of
the Rural Projects, but because they are less advanced in their
development, it is difficult to predict when they might reach financial
close, however, based on current participation, we believe it is likely
that all TIFIA subsidy funds set aside for rural projects will be used
by the end of FY 2021.
______
Response to Written Questions Submitted by Hon. Tammy Duckworth to
Morteza Farajian, Ph.D.
Question 1. Over the past five years, how many applicants
successfully completed the pre-application process for a Railroad
Rehabilitation and Improvement Financing (RRIF) loan. How many of these
applicants did USDOT invite to apply for a RRIF loan?
Answer. Over the past five years, a total of 10 projects have
completed the RRIF pre-application process, and USDOT invited all 10 to
submit a RRIF loan application.
Question 2. Stakeholders are frustrated with the time it takes, and
the associated costs, for USDOT to procure advisors for the RRIF pre-
application process. Please describe the process of identifying and
procuring USDOT advisors for the RRIF process? On average, how long
does it take for USDOT to procure advisors for the RRIF pre-application
process? Please describe any impediments to the timely identification
and procurement of these advisors.
Answer. Through a competitive procurement process, USDOT has
established a select pool of financial and legal advisors that have
demonstrated to USDOT the specialized expertise necessary to evaluate
potential RRIF loans. As a result, USDOT can typically procure its
financial and legal advisors within 4-6 weeks from the time the Bureau
has determined that a RRIF project sponsor's letter of interest has
offered sufficient information to begin the evaluation of the project.
Question 3. Many stakeholders have complained about the high cost
associated with the financial and legal advice required in the RRIF
pre-application process. Some applicants have spent hundreds of
thousands of dollars during the RRIF pre-application process, which can
deter future applicants from seeking Federal financing assistance. What
is the spectrum of costs (low to high) for finance, legal and
administrative advice for the RRIF pre-application process? For
applicants who considering the pre-application process, how does USDOT
establish expectations for applicants regarding these costs?
Answer. The characteristics of RRIF loan projects can vary greatly,
and therefore the costs of both USDOT's advisors and the prospective
RRIF borrower's advisors also vary greatly. These costs are not
necessarily driven by the RRIF loan amount itself, and are due to a
number of factors, including, but not limited to, compliance with
Federal requirements, the project's technical complexity, and the
evaluation of the potential borrower's ability to repay the RRIF loan.
As we receive information from the applicant, we develop a range for
the estimated expenses. Those estimates are usually as good as the
level of information that we receive from the applicant. At early
stages it may be a wide range, but as we make progress in the process
and more accurate information becomes available the range becomes
tighter. Also, sometimes new information may become available or
unknown issues may arise that may require adjustments to the initial
estimates. In all cases, we try our best to communicate realistic
expectations regarding the expenses and estimates.
Question 4. How does USDOT ensure that applicants' pre-application
costs and timeline are minimized? What mechanism does USDOT employ to
incentivize advisors appropriate and timely advancement of the pre-
application processes in a timely manner?
Answer. When USDOT releases a request for proposals for the
evaluation of a RRIF loan project to its pre-selected pool of financial
and legal advisors, USDOT evaluates all responsive proposals and
ultimately selects the proposal that offers the best value through a
combination of both the proposal's technical rating and total price.
This incentivizes USDOT's financial and legal advisors to submit
proposals that propose to analyze a RRIF loan project as efficiently as
possible.
Question 5. The Government Accountability Office's (GAO) 2019
report, Surface Transportation: Action Needed to Guide Implementation
of Build America Bureau and Improve Application Process (GAO-19-279),
highlights that the Build America Bureau (BAB) has a number of
prolonged vacancies. How many vacant positions currently exist at BAB?
How long have those positions been vacant? Please explain what
impediments exist to filling those vacancies? Please provide a list of
the vacant positions including, title and job description.
Answer. The Bureau has made several hires in the past year. The
Outreach and Project Development team has grown by six staff, the
Credit Programs team has added a Lead Underwriter, a Business Operation
Manager and two attorneys were hired. While there are a few remaining
vacancies in the process of being recruited, mainly to enhance
portfolio management and risk management functions, we are primarily at
the point that we are replacing staff as personnel turnover occurs.
Questions 6. In GAO-19-279, GAO recommended that BAB develop and
adopt a public statement that outlines USDOT's and the Bureau's policy
goals and appetite for risk related to the RRIF programs. USDOT stated
that it did not concur with the recommendation because a risk appetite
statement ``would not be feasible'' given the variety and diversity of
projects that may be funded by BAB's loan programs. USDOT indicated
that while it would be developing a strategy that outlined BAB's policy
goals, it did not intend to issue a public risk statement. Please
provide a timeline for when USDOT will be finalizing and releasing the
proposed strategy outlining BAB's policy goals, and describe USDOT's
appetite for risk specifically for the RRIF program. Additionally, if
USDOT or BAB have developed, or intend to develop, a private risk
appetite statement or other similar analysis for the RRIF program or
other programs under BAB's jurisdiction, please provide that statement
or the timeline for when such a statement will be completed.
Answer. As noted in our response to the GAO, we do not believe that
providing a risk appetite statement for either the TIFIA or RRIF
programs would be feasible and practical. In our response, we state
that; ``The loan programs in the Bureau cover a diverse portfolio of
public, private, highway, transit, rail, intermodal, airport and
seaport projects that range widely in size, complexity, location and
financial structure. Given that diversity, a single statement designed
to cover the whole portfolio would, by necessity, make the program
inaccessible to some project sponsors. Developing the significant
number of separate statements that would be necessary to address each
project scenario needs would not be feasible. The Bureau has a due
diligence process designed to appropriately vet the creditworthiness
and potential risk of projects seeking credit assistance.'' As an
alternative action, we have developed a risk approach statement which
provides a high-level overview of the Bureau approach within the
mandates and limitations of TIFIA and RRIF credit programs. This
document is going through final steps of internal review and will be
provided to the GAO by October 1, 2020.
In addition, we have posted the Bureau's policy goals for the TIFIA
and RRIF programs on our website in January, 2020, which are to:
Enhance the pipeline of eligible projects by providing
proactive educational outreach and technical assistance to
potential borrowers in utilizing the TIFIA and RRIF programs,
and their capacity to fill market gaps by leveraging
substantial local and private co-investment.
Diversify the pipeline of eligible projects by geography
(i.e., urban and rural, new States, etc.) size, and type (i.e.,
highway, transit, rail, port, etc.), to ensure an equitable
distribution of program benefits.
Question 7. Credit risk is generally considered the possibility of
a loss resulting from a borrower's failure to repay a loan. While it is
impossible to predict who will default on a loan, assessing and
managing risk is important to address the severity of a loss. However,
lenders charge interest as a reward for assuming that risk, and in the
case of the RRIF program, have the backing of the Federal government
and the authority provided by Congress. However, concerns have been
raised about USDOT's acceptance of risk in RRIF applications. For
example, some stakeholders have related that they have been required to
``let'' a project during the pre-application process. In layman's
terms, this is the equivalent of signing a contract to buy a house
without a financing contingency before securing a mortgage. Please
state whether this has occurred for any RRIF applications and cite to
USDOT's authority to compel applicants to let projects before a loan is
secured. Additionally, if this has occurred or if USDOT intends to
utilize such an approach in the future, please provide an explanation
of how this advances RRIF program goals of improving rail
infrastructure.
Answer. As required by statute and regulation, the interest rate on
a RRIF loan is equal to the rate on Treasury securities for a similar
term. The Treasury rate is a ``risk-free'' interest rate that only
compensates the Government for its time value of money. That is, the
RRIF loan interest rate does not account for the risk of a default on
the RRIF loan, and USDOT cannot charge a higher interest rate on a RRIF
loan to compensate for any potential loan default risk as other lenders
can.
As part of a RRIF loan evaluation, USDOT also analyzes a RRIF
project's construction and completion risk. USDOT does not require that
a potential RRIF borrower ``let'' a project during the pre-application
and application processes. However, USDOT does typically require that
final construction or other purchase contracts be executed before USDOT
can execute a loan agreement with a RRIF project sponsor to avoid
unanticipated increases in total project costs that could jeopardize
the project's completion, as well as the project's plan of finance,
including the RRIF loan.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. John McCarthy
Freight Data. Big data can help policy makers and transportation
planners with making important decisions about our transportation
networks. The FAST Act required the Bureau of Transportation Statistics
(BTS) to publish an annual Port Performance Freight Statistics report.
The report provides nationally consistence performance metrics to
measure capacity and throughput for the Nation's largest ports.
Additionally, BTS provides a number of freight related datasets in its
annual Freight Facts and Figures reports.
Question 1. How does the Northwest Seaport Alliance currently use
the information provided by BTS?
Answer. The Northwest Seaport Alliance does not use the performance
metrics for ports. They are too generic for decision making. We do
review the freight-related datasets BTS publishes to communicate with
partner agencies and the community at large. Our MPO, the Puget Sound
Regional Council (PSRC), uses Freight Analysis Framework (FAF) data to
some extent for its freight modeling efforts. Most (including our own)
consultants use the PSRC's model as the basis--with some adjustments--
to evaluate the impacts of roadway and freeway projects on freight
mobility.
Question 2. What additional freight related data would you find
useful for BTS to provide?
Answer. NWSA offers the following suggestions on data that would be
helpful to our organization.
Metrics and measures that support U.S. businesses and trade:
Data that support metrics that track freight system impacts on
our exporters' and importers' competitiveness, including
shipping cost, travel time and reliability.
Data that allow us to incorporate shipping costs into
freight system performance metrics within each mode, for these
reasons:
Cost is a reflection of freight system efficiency: The
cost of shipping can be directly affected by the efficiency
of freight systems, and therefore it is a useful metric to
compare like-modal investments.
Cost is critical for freight system users: Moreover,
shipping cost is of critical importance to those who depend
on the system. For exporters, it can make the difference in
whether their products are competitive in global markets.
It also is important to U.S. manufacturers, who depend on a
highly efficient system to get their goods to market and to
take advantage of the just-in-time processes that are
common practice in their industries.
Shipping cost can drive shifting trade routes: Cost
also is a factor that can influence significant shifts in
trade routes, a phenomenon that should be of concern to
policymakers and closely tracked. The port business is
extremely competitive, especially over discretionary cargo
bound for inland regions that can be shipped through any
number of ports.
Cost is the primary driver of the Canadian ports'
advantage: At the NWSA we are keenly aware of the role cost
plays in cargo routing decisions. Our main competitors are
the nearby Canadian ports of Vancouver and Prince Rupert,
which in recent years have aggressively targeted US-bound
cargo. In the decade that followed the opening of Prince
Rupert's container terminal in 2007, the NWSA lost 15
percent of our market share to British Columbia ports. In
addition to continuing to expand on the West Coast, Canada
has plans to repeat this success on the East Coast. The
NWSA competes well when it comes to efficiency, reliability
and transit time to inland markets. Yet the cost of moving
a container from Asia through the ports of Vancouver or
Prince Rupert can be $600 less than it is to move a
container through our port.
Data supporting other freight system performance metrics:
Recent efforts by FHWA's Office of Freight Management and
Operations to identify performance measures related to freight
in the areas of safety, maintenance/preservation, mobility
reliability, accessibility/connectivity and the environment
provide a robust first set of performance measures for trucks.
Truck travel time reliability, truck-based delays, and the
value of wasted time and fuel also are helpful measures that
could inform DOT's discretionary grant programs. However, some
issues that warrant further work include:
Currently, analysis focuses mostly on the Interstate
System and does not adequately cover state and/or local
facilities providing access to that system or rail
intermodal yards serving major freight intermodal
facilities such as our port's container terminals. High-
volume, last-mile facilities are often located in urban
areas that are severely congested, yet they are often
overlooked in the analyses.
Future performance measures must address the
performance of intermodal facilities, connectors and the
rail and truck corridors to which they provide access in a
way that addresses their role in the national freight
system. (The current port performance metrics don't support
this.)
Greater incorporation of environmental measures.
Data that allow us to benchmark the U.S. freight system with
that of other nations: The Federal government should utilize
international benchmarks and increase efforts to understand how
our freight system compares at a global level. This will help
ensure U.S. exporters retain the transportation-related
competitive advantages they have enjoyed over previous decades.
A comparison can utilize many of the metrics USDOT already is
tracking. Another good area to compare is public and private
spending on freight infrastructure.
Data that allow us to assess individual supply chains: It
may also be helpful for USDOT to assess individual supply
chains that are impacted by a project, set of projects or
performance of certain corridors to determine the impacts of
public investments on specific industries. For example, this
could be helpful in determining the benefits of port
improvements on the transportation costs of agricultural
exports that are critical to supporting rural economies. Such
an analysis should be performed based on end-to-end freight
trips rather than over a single segment or mode.
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