DEPARTMENTS OF TRANSPORTATION, AND 

HOUSING AND URBAN DEVELOPMENT, AND 

RELATED AGENCIES APPROPRIATIONS FOR 2018 

HEARINGS

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND 

HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 

MARIO DIAZ-BALART, Florida, Chairman

CHARLES W. DENT, Pennsylvania 

DAVID P. JOYCE, Ohio 

JOHN ABNEY CULBERSON, Texas 

DAVID YOUNG, Iowa 

DAVID G. VALADAO, California 

TOM GRAVES, Georgia 

DAVID E. PRICE, North Carolina 

MIKE QUIGLEY, Illinois 

KATHERINE CLARK, Massachusetts 

PETE AGUILAR, California 

NOTE: Under committee rules, Mr. Frelinghuysen, as chairman of the full committee, and Mrs. Lowey, as 

ranking minority member of the full committee, are authorized to sit as members of all subcommittees. 

DOUG DISRUD, CHERYLE TUCKER,

CARL BARRICK, JENNIFER HOLLRAH, and MATTHEW ANDERSON

Subcommittee Staff 

PART 5 

Page

Members’ Day ........................................................................... 1

Oversight and Management .................................................. 101

Emerging Transportation Technologies ............................ 237

Department of Housing and Urban Development ........... 299

Department of Transportation ............................................. 415

( 

U.S. GOVERNMENT PUBLISHING OFFICE 

26–790 WASHINGTON : 2017 
COMMITTEE ON APPROPRIATIONS 

RODNEY P. FRELINGHUYSEN, New Jersey, Chairman

HAROLD ROGERS, Kentucky 1

ROBERT B. ADERHOLT, Alabama 

KAY GRANGER, Texas 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

JOHN R. CARTER, Texas 

KEN CALVERT, California 

TOM COLE, Oklahoma 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TOM GRAVES, Georgia 

KEVIN YODER, Kansas 

STEVE WOMACK, Arkansas 

JEFF FORTENBERRY, Nebraska 

THOMAS J. ROONEY, Florida 

CHARLES J. FLEISCHMANN, Tennessee 

JAIME HERRERA BEUTLER, Washington 

DAVID P. JOYCE, Ohio 

DAVID G. VALADAO, California 

ANDY HARRIS, Maryland 

MARTHA ROBY, Alabama 

MARK E. AMODEI, Nevada 

CHRIS STEWART, Utah 

DAVID YOUNG, Iowa 

EVAN H. JENKINS, West Virginia 

STEVEN M. PALAZZO, Mississippi 

DAN NEWHOUSE, Washington 

JOHN R. MOOLENAAR, Michigan 

SCOTT TAYLOR, Virginia 

—————

1 Chairman Emeritus 

NITA M. LOWEY, New York 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

DAVID E. PRICE, North Carolina 

LUCILLE ROYBAL-ALLARD, California 

SANFORD D. BISHOP, JR., Georgia 

BARBARA LEE, California 

BETTY MCCOLLUM, Minnesota 

TIM RYAN, Ohio 

C. A. DUTCH RUPPERSBERGER, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida 

HENRY CUELLAR, Texas 

CHELLIE PINGREE, Maine 

MIKE QUIGLEY, Illinois 

DEREK KILMER, Washington 

MATT CARTWRIGHT, Pennsylvania 

GRACE MENG, New York 

MARK POCAN, Wisconsin 

KATHERINE M. CLARK, Massachusetts 

PETE AGUILAR, California 

NANCY FOX, Clerk and Staff Director 

(II)
(1)

DEPARTMENTS OF TRANSPORTATION, HUD, 

AND RELATED AGENCIES APPROPRIATIONS 

FOR 2018 

THURSDAY, MARCH 9, 2017. 

MEMBERS’ DAY 

Mr. DIAZ-BALART. The subcommittee will come to order. Good 

morning and welcome to this year’s first subcommittee hearing. 

Today we welcome our distinguished colleagues to testify on their 

priorities for the Departments of Transportation, and Housing and 

Urban Development for both fiscal years 2017 and 2018. 

Now, under our full committee chairman, Mr. Frelinghuysen, we 

have brought back Member hearing days in order to give every 

Member the opportunity to express their priorities and concerns to 

this committee. We want every Member involved in the appropriations process. So I sincerely thank you for participating. Your views 

are crucial. They are important for us to begin this new appropriations season, and we look forward to hearing your testimony. It will 

help us put together a better bill. 

Mr. Chairman, I am glad that you are here. I know you are 

chairing your committee probably in the next few hours, Mr. Joyce 

has been recently named vice chairman of this subcommittee, and 

so we want to congratulate him. 

Now, with that, let me recognize the ranking member of this subcommittee, the gentleman from North Carolina, who I have enjoyed 

working with. And as ranking member, he has become an integral 

part of the team to make sure that we come up with a good bill, 

and that is obviously Mr. Price. 

You are recognized, Mr. Price. 

Mr. PRICE. Thank you, Mr. Chairman. I appreciate those words 

and want to reciprocate them. We have a good cooperative pattern 

of work established here, and I anticipate that we are going to have 

some challenges this year with some of the budget numbers we are 

hearing about, but we have to do our best, as always, on behalf of 

our institution and our power of the purse and the kind of priorities, a lot of which we are going the hear about today. We have 

got to do our very, very best to write an inclusive and robust bill. 

So I agree with you that it is a good way to start, to hear from 

our Members, and I commend Chairman Frelinghuysen for initiating this across all the subcommittees and look forward to today’s 

testimony. Thank you. 

Mr. DIAZ-BALART. Thank you, Mr. Price. 

And so we will begin with the gentlelady from American Samoa, 

Mrs. Radewagen. I will remind all of our colleagues who come in 
2

front of us that we have a very tight schedule. So we are going to 

have to stick to the 5-minute rule for testifying. Obviously, your 

written remarks will be included in the record. And so please do 

not forget to turn on your microphone, if you would. 

And, with that, ma’am, you are recognized. Thank you for being 

here.

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. AUMUA AMATA COLEMAN RADEWAGEN, A DELEGATE IN CONGRESS FROM THE TERRITORY OF AMERICAN SAMOA 

Mrs. RADEWAGEN. Thank you, Chairman Diaz-Balart and Ranking Member Price and members of the subcommittee. I very much 

appreciate the opportunity to speak to the subcommittee regarding 

some of the infrastructure needs in American Samoa. As you know, 

American Samoa lies in the middle of the Pacific Ocean south of 

the Equator. We the most remote U.S. Territory or State, and our 

infrastructure needs reflect that gulf of distance. 

Currently, any air traffic that flies into or out of American 

Samoa or even between the islands in my home district must do 

so under the air traffic authority of Independent Samoa due to the 

lack of an air traffic control tower in the territory. This includes 

the codel that was just there the week before last. 

A proposed solution that would also be budget-neutral would be 

to allow the money that FAA is requiring the American Samoa government to pay them, $15 million over the next 10 years, $2.5 million annually. It seems the 2014 FAA land-use audit report found 

that of approximately 865 acres of land approved by the FAA in 

1973 for airport use, 325 acres had been removed from the airport 

and used for other government—local government—purposes. To rectify this issue, the ASG has agreed to pay FAA $2.5 million 

a year for a 10-year period in exchange for FAA approval of a landuse change authorizing an interdepartmental change in jurisdiction 

for the 325 acres rather than a release for the disposal of airport 

property.

My proposal would be to allow the FAA to repatriate these funds 

back to the ASG for the specific purpose of building an airport 

tower at Pago Pago International Airport, as well as other improvements to the airport that are desperately needed. 

American Samoa is also suffering from dangerous roads and 

other traffic infrastructure safety issues that must be addressed 

soon. Because our small islands, which are roughly the same size 

as Washington, D.C., are hit with extremely powerful hurricanes 

every year, the infrastructure is in constant need of repair. A lack 

of sufficient funding in the past has caused many of the much 

needed repairs to go undone. 

To rectify this issue and improve the safety of the roads in American Samoa and the other territories, I am requesting that the subcommittee please consider a significant increase to the territorial 

highways account authorized through the FAST Act. As it stands, 

there is no formula for which these funds are distributed and are 

left in the hands of administration officials. This policy has not 
3

benefitted American Samoa, and I also request there be a study of 

how the funds in this account might be more fairly spread out 

among the territories. 

While I have only begun to touch on the many infrastructure 

needs in my home district, I wanted to take this limited time to 

highlight some of the most significant, and I look forward to working with the subcommittee in any way that I can to make sure that 

the people of American Samoa are being afforded the same resources as their counterparts in the States and other territories. 

So thank you again, Chairman Diaz-Balart and Ranking Member 

Price, for your time and consideration of these requests. Should you 

have any questions, my staff is happy to work with your staff, my 

LD, and get you any information you may need. Thank you, and 

I yield back the balance of my time. 

[The information follows:] 
4

T-HUD & Related Agencies Appropriations Subcommittee 

Members Dav Statement 

Congresswoman Radewagen (AS-At Large) 

March 9, 2017@ lOam in2358-A RHOB 

Thank you Chairman Diaz-Balart and Ranking Member Price, I appreciate the opportunity to 

speak to the subcommittee regarding some of the infrastructure needs in American Samoa. 

As you may know, American Samoa lies in the middle of the Pacific Ocean, south of the equator. 

We are the most remote U.S. territory or state and our infrastructure needs reflect that gulf in 

distance. 

Currently, any air traffic that flies into or out of American Samoa, or even between the islands in 

my home district, must do so under the air tratllc authority of Independent Samoa, due to the 

lack of an Air Traffic Control Tower in the territory ... This includes the CO DEL that was just 

there two weeks ago. 

A proposed solution that would also be budget neutral, would be to allow the money that the 

FAA is requiring the American Samoa Government (ASG) to pay them ($15 million over the 

next I 0 years I $2.5 million annually). 

It seems the 2014 FAA land use audit repoti found that of approximately 865 acres of land 

approved by the FAA in 1973 for airport use; 325 acres had been removed from the airport and 

used for other ASG purposes. To rectify this issue. the ASG has agreed to pay the airport $2.5 

million a year for a 10-year period in exchange for FAA approval of a "Land-Use Change", 

authorizing an interdepartmental change in jurisdiction for the 325 acres rather than a "release'' 

for the disposal of airport property. 

My proposal would be to allow the FAA to repatriate these funds back to ASG for the specific 

purpose of building and maintaining an airport tower at Pago Pago International Airport. I will 

be working with leadership on the T &I Committee to secure an authorization for this proposaL 

American Samoa is also suffering t!·om dangerous roads and other traftic infrastructure safety 

issues that must be addressed soon. Because our small islands. which are roughly the same size 

as Washington, D.C., are hit with extremely powerful cyclones every year, the infrastructure is in 

constant need of repair. The lack of sufficient funding in the past has caused many of the much 

needed repairs to go undone. 

To rectify this issue, and improve the safety of the roads in the territory, I am requesting that the 

subcommittee please consider a significant increase to the Territorial Highways Account 

authorized through the FAST Act. As it stands, there is no formula for which these funds are 

distributed and are left in the hands of administration oflicials ... this policy has not benefitted 

American Samoa, and I also request that there be a study of how the funds in this account might 

be more fairly spread among the territories. 
5

While I have only begun to touch on the many infrastructure needs in my home district, I wanted 

to take this limited time to highlight some of the most significant, and !look forward to working 

with the subcommittee in any way that I can to make sure that the people of American Samoa are 

being afforded the same resources as their counterparts in the states and other territories. 

Thank you again Chairman Diaz-Balart and Ranking Member Price for your time and 

consideration of these requests. Should you have any questions, my Legislative Director Casey 

Brinck is happy to work with your staff and get you any information you may need. 

Thank you and I yield back the balance of my time. 
6

Mr. DIAZ-BALART. Let me thank the gentlewoman for again always being on top of the issues that are important to American 

Samoa, and I look forward to continuing to work with you. Thank 

you very much. 

Mrs. RADEWAGEN. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Mr. Bridenstine, thank you for being here, sir. 

You have the floor. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. JIM BRIDENSTINE, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF OKLAHOMA 

Mr. BRIDENSTINE. It is my honor. 

Thank you, Chairman Diaz-Balart, Ranking Member Price, Mr. 

Culberson, and Mr. Valadao. It is an honor to be here. I wanted 

to bring up something regarding infrastructure that a lot of people 

don’t think about. We think about infrastructure. We think about 

roads and bridges, highways. We think about hospitals and schools. 

One piece of infrastructure that I think a lot of people don’t consider is launch. 

Space has transformed our way of life, the way we communicate, 

the way we navigate, the way we produce food, the way we produce 

energy, the way we provide security, do disaster relief, the way we 

do banking depends on GPS, for example. All of these capabilities 

require infrastructure, and as you look at how things are moving 

forward now, what used to be the domain of government, space, is 

now the domain of private operators and commercial operators, and 

when you think about things like remote sensing and imagery, the 

National Geospatial Intelligence Agency now uses a commercial 

space program in order to buy data from commercial providers for 

intelligence.

When you think about communications, the Department of Defense, for its routine communications, uses about 80 percent commercial satellites, satellites that are launched to provide broadband 

from space, DIRECTV, the internet, are now being leased by the 

Department of Defense to provide communication capabilities for 

the warfighter. 

When you talk about all different sorts of activities happening in 

space, commercial providers are now carrying a heavy load. What 

we need to do within the FAA Office of Commercial Space Transportation is make sure they are adequately funded for all of the upcoming launches. Everything I just described is historical. 

When you think about the future, we are talking about hundreds, if not thousands, of satellites in low Earth orbit for remote 

sensing and imagery. When you think about communications, we 

are talking about actually many, many thousands of satellites. Boeing has a program. OneWeb has a program. SpaceX has a program. 

Each one of these low Earth orbit communication constellations 

constitutes multiple thousands of satellites in low Earth orbit. All 

are going to require launch, and these companies are contracting 

overseas.
7

In fact, last week, an American company building imagery satellites for purposes that the Department of Defense will use, they 

launched 96 American satellites on a foreign rocket, an Indian 

rocket, to be precise. OneWeb has contracts worth billions of dollars with the Russians because we don’t have the capability here 

in the United States to deliver what they need. 

So the Office of Commercial Space Transportation, which is within the FAA, in my estimation, needs to be fully and adequately 

funded just so that we can go forward with these new programs 

that are going to change the way we think about space. And, of 

course, where does that begin? 

The Office of Commercial Space Transportation within the FAA 

is the regulatory body. That is true. But they are also the body that 

is necessary to promote and facilitate commercial space industry. 

Right now, they are funded under a continuing resolution at a level 

that I believe is inadequate. Last year, I came to this committee, and I requested $19.8 million, which doesn’t seem like a big number, but that was what was 

in the President’s budget request, and what the appropriations 

process came to was an amount less, and you guys delivered, and 

I thank you for that. 

The challenge is, operating under a continuing resolution, that $19.8 million never materialized. So I would ask this year, in order 

to take care of all of these needs that are transforming the way we 

think about space and assert the way it is transforming the human 

condition on Earth, I am requesting that the Office of Commercial 

Space Transportation within the FAA, sometimes called FAA AST, 

be funded to the tune of $23 million. With that, I will be open to 

any questions. 

[The information follows:] 
8

Rep Jim Bridenstine, OK-01 

Chairman Diaz-Balart, Ranking Member Price, members of the Subcommittee, thank you 

for allowing me to testify before you today. 

When most think of infrastructure, they think of roads, bridges, tunnels, ports, and 

airports. Without a doubt, those are important. But at this point in our nation's history, we are 

focused on maintaining those pieces of infrastructure. If we are to truly unleash innovation in 

this nation, we need to be thinking about infrastructure innovatively, and space is a component 

of that. 

Space has transformed our standard of living and has become so integral to modern life 

that many of the services we rely on could not function without space. It has changed how we 

do everything from navigation and banking to national security and disaster relief. In recent 

years, much of this transformation has been due the commercial space industry. 

The FAA's Office of Commercial Space Transportation, FAA/AST, is the entity responsible 

for both regulating and facilitating this industry. At present, this office does not have the 

adequate resources to effectively carry out these duties. This will only get worse as commercial 

space activity continues to grow thanks to the exceptionalism of the American people and 

entrepreneurs. 

Each year, millions of dollars flow overseas to foreign launch vehicles because the 

United States does not currently have the launch capacity to keep up with demand from 

commercial satellites. Only a few weeks ago, 96 satellites from two American companies were 

launched on an Indian launch vehicle. 
9

As constellations of hundreds or even thousands of communications and imagery 

satellites need to be launched, and new activities like human suborbital flight, commercial 

habitats, asteroid mining, lunar and Mars missions, and in-orbit satellite servicing begin to come 

on line, demand for launch will only increase. 

Fortunately, new launch vehicles from companies such as ULA, SpaceX, OrbitaiATK, Blue 

Origin, Virgin Galactic, Rocketlab, and others should be coming on line in the next few years. 

This is great news and should provide much needed capacity to our domestic launch base. 

However, this will also cause regulatory, resourcing, and practical restrictions. Those new, next 

generation vehicles will have to be certified for flight. FAA will also have to approve launch 

licenses for all those individual missions. If launch cadences increase, coordination among users 

of spaceports (including NASA and the Air Force), use of ranges and ground infrastructure, and 

use of air space will have to become more efficient. This means FAA/ASTwill need a regulatory 

streamlining as well as more people to adjudicate licenses and other reviews. This means more 

resources are critical. 

I have worked closely with your subcommittee over the past few years to plus up this 

office from the historical numbers Congress has appropriated, including last year when the 

Appropriations Committee reported an FY17 bill that matched the last President's Budget 

Request and provided $19.8 million for FAA/AST. I would like to commend you all for your 

recognition of the important role space plays in our economy. 

Unfortunately, since we are currently operating under a CR, the office has continued to 

be strained, and it is hampering the industry. As you begin working on FY 18 appropriations, I 

ask that you provide FAA/ AST with a funding level that allows the office to both dig out from 
10

under the backlog it is currently working under while also providing room to facilitate greater 

growth in the industry. To this end, I recommend the subcommittee appropriate $23 million for 

FAA's Office of Commercial Space Transportation in Fiscal Year 2018. Anything less could lead 

to costly delays in the granting of launch licenses, which could have detrimental effects on this 

industry. Thank you. 
11

Mr. DIAZ-BALART. Yes, Mr. Price. 

Mr. PRICE. Let me just ask—I thank the gentleman for his testimony. It is very convincing. Am I to conclude also that you will 

strongly back picking up the remaining 5 months of the current fiscal year so as to take advantage of the appropriations bill that 

would be included in an omnibus, as opposed to a yearlong CR? 

Mr. BRIDENSTINE. I will tell you, I don’t like doing CRs. I will 

also tell you that what we need to do is go through the appropriations process because, as I just described, the world has changed, 

and we need to make sure that what we are funding as a government reflects that change. I don’t want to do a CR. If we do an omnibus and the priorities in there are appropriate, I am certainly 

willing to consider it. 

Mr. PRICE. You are giving us a very good example of why a serious appropriations bill with the detailed work that goes into it is 

preferable to automatic pilot. 

Mr. BRIDENSTINE. Absolutely, yes, sir, and I fully appreciate you 

making that comment. 

Mr. PRICE. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, Mr. Price. 

And also, just for the gentleman, I will tell you: you have been 

very effective working with this subcommittee. 

Mr. BRIDENSTINE. Thank you. 

Mr. DIAZ-BALART. And we appreciate your involvement. We appreciate your hard work and look forward to continue doing so. And 

we agree with you: a CR a lot of folks don’t understand how devastating a CR is in so many ways. But, again, I would be remiss 

if I didn’t thank you for your hard work, particularly with your involvement with this subcommittee, and it is greatly appreciated. 

Mr. BRIDENSTINE. Thank you for your support. 

Mr. DIAZ-BALART. Thank you, sir. 

Mr. CULBERSON. Mr. Chairman? 

Mr. DIAZ-BALART. Yes. 

Mr. CULBERSON. If I may, I also want to thank you, Jim, for your 

support for NASA for the space program and your understanding 

of the changing times in which we live. The commercial sector is 

going to be getting us into low Earth orbit. Like stepping out in 

front of the Rayburn Building and catching a cab, you will be able 

to catch a commercial ride into low Earth orbit. 

And you are exactly right: this agency needs to be—this portion 

of the FAA needs to be fully funded. And I really appreciate your 

support for getting our detailed appropriations bills on the floor, 

not only this one but the Commerce, Justice, Science bill as well 

that has NASA. 

Mr. BRIDENSTINE. Would the gentleman yield for 15 seconds? 

Mr. CULBERSON. Yes, absolutely. 

Mr. BRIDENSTINE. When you think about NASA, this agency is 

critical for NASA to accomplish its mission because NASA is using 

commercial to get back and forth to the International Space Station. This agency could make that problematic if it is not adequately funded. 

It is not just NASA, though. It is also the Department of Defense. It is the National Oceanic and Atmospheric Administration. 
12

This agency touches all of those and more, which is why it is so 

important.

Mr. CULBERSON. I deeply appreciate your support for it, and I 

want to also wish Jim good luck. He has been—and I strongly support his application to become the new NASA Administrator. Jim 

would do a superb job with that position, and I want to strongly 

express my endorsement and support for your work, and I hope to 

see you become a new NASA Administrator and look forward to 

helping you—— 

Mr. BRIDENSTINE. Thank you. 

Mr. CULBERSON [continuing]. In that role. Thank you very much. 

Mr. DIAZ-BALART. With Mr. Culberson’s strong endorsement, I 

think the gentleman who was testifying in front of us has had a 

good day. Thank you. Thank you very up much. 

Mr. BRIDENSTINE. Thank you. 

Mr. DIAZ-BALART. Mr. Price, while we wait for some other folks 

to come and testify, why don’t we just take a little break, and let’s 

all stick around and see who wants to come and join us shortly. 

And, again, thank you all for being here. There is nothing more important than listening to our colleagues, and that is how we get a 

much better bill. 

So why don’t we just take a few minutes’ break, and we will 

gavel in as soon as our next witness approaches. Thank you. 

[Recess.]

Mr. DIAZ-BALART. Let me call the subcommittee to order once 

again. We are now joined by Mr. DeFazio, who, obviously, has a 

wealth of experience particular on infrastructure and transportation issues. And we thank you for being here and you are recognized, sir. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. PETER A. DEFAZIO, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF OREGON 

Mr. DEFAZIO. Thank you, Mr. Chairman, and thank you for this 

committee’s interest in transportation and related issues. The one, 

I think, really important point to make at the beginning, I mean, 

I will talk about the larger needs, but because we are under a continuing resolution we are realizing $1.5 billion less in transportation spending this year, below the FAST Act levels which were 

already pretty anemic given our needs. 

If we fully fund the FAST Act we will barely tread water. We 

will not significantly defray any of our accumulated balance of, you 

know, backlog for maintenance, repair, and replacement. So I 

would urge the committee to do all they can as we move through 

whatever continuing resolution or actual appropriations to get us 

fully up to the FAST Act levels. That would benefit the Nation as 

a whole. 

I would like also to share, I know there has been some members 

of this committee who have expressed skepticism, but I would like 

to share some of my concerns about the privatization of the air 

traffic organization, the ATC. First and foremost, when they start-
13

ed this discussion I said, well, you know, you have a constitutional 

issue, and they blew me off and said, no, there is no problem. And 

subsequent analysis showed, yes, indeed, there is a constitutional 

issue recently upheld by the Supreme Court, which is you cannot 

delegate regulatory or rate-making or taxation authority to a private entity which affects competitiveness without government involvement.

So I did not bring my flow chart, but I developed a flowchart of 

how this new streamlined organization after we cut the FAA in 

half and move ATO over there, leave safety certification, everything else over here subject to annual appropriations, sequestration, government shutdowns. Over here we will have the new private entity which is supposed to self-fund somehow, we are not 

sure.

And anything they propose, any route change, approach change, 

anything they approve, or certainly when they begin to want to assess fees against business aviation or general aviation or something 

else to pay for the system would have to then to go the Secretary’s 

office, and the Secretary would then have an expanded office to review these proposals, you know, which seems to me not exactly a 

tremendous improvement. And if the Secretary disagrees, then 

they go to court. Great way to run a critical government function. 

So that’s one major concern. 

I already mentioned the concern about us, you know, severing 

the agency in half. And, you know, there is a couple of other issues 

here. They are very critical and I have been critical over the years 

of procurement at the FAA, and some targeting reforms could benefit us there. Congress, in 1996, actually mandated procurement 

personnel reforms. Unfortunately, we did not exempt them from 

OMB and other political interference, and the reforms proposed by 

the administrator ended up being essentially the same system that 

we have. 

So, yes, we could benefit from reforms there, and we could certainly authorize the FAA administrator to do those things without 

OMB review and other review and get some needed reforms. But 

if you talk to Dr. Dillingham of the GAO, who has been very critical of their past acquisitions, he says now they are on a good 

track. They are implementing NextGen at a good pace. It is benefiting the industry tremendously with new fuel-efficient approaches, and they are rolling them out quite quickly now. So really, the whole complaint is about problems in the past. 

Administrator Huerta has been doing a good job. And should we 

move over to a private corporation one can imagine the interruptions that might happen. In Canada, it was a very rocky 8-year 

transition process. In England, actually, the government had to 

come back in and bail out the organization. Again, a rather rocky 

transition process. 

And another point which should be of concern is that in both 

Great Britain and in Canada, the only two privatized ATC operations in the world. All the other countries have gone to government corporations, which could work here, also. They had to pay 

for the assets. Under this plan we would give away tens of billions 

of dollars of assets to this new private corporation. Should the pri-
14

vate corporation fail, as it did in England, and we wanted to take 

it back, we would have to pay for it. 

So not only are we going to give away assets taxpayers have paid 

for, should this new experiment fail we are going to have to buy 

back the assets that we already paid for that we gave away. You 

know? An absolute absurdity. You know, and then there is a number of other issues regarding the magnitude of our system in comparison to others. 

One other quick point. We are downstairs holding a hearing in 

Water about how we can deal with, you know, the backlog of maintenance in our ports which is causing lines of ships far, far out into 

the Pacific in L.A. and other parts of the country, raising the costs 

of imported goods. One way to deal with it is to actually spend the 

Harbor Maintenance Trust Fund tax collections on harbor maintenance.

On a daily basis our 59 major harbors in the United States have 

35 percent availability of authorized depths, 35 percent. We could 

deal with that if we merely appropriated every year the full 

amount of the tax that is collected. About $1.8 billion a year is collected. We are spending, generally, half of that, and the rest of it 

goes into a theoretical account. 

So not only could we begin by just fully appropriating the tax 

that comes in to deal with our maintenance backlog, we could also, 

hopefully, access and spend down the $9 billion that is in a theoretical account. But anyway, they talked about that downstairs a 

little bit. 

But the other major focus downstairs is regulatory delays. Well, 

there is a new report. And I agree that there are sometimes over 

onerous regulations. But the principle cause of delays in projects, 

like the 140,000 bridges that need repair/replacement of the Federal system, National Highway System, none of those are going to 

have to go through NEPA, or virtually none of them, if they are 

just replacements. But the money is not there. Plain and simple, 

the money is not there. 

A major study done by AECOM, an independent firm, ordered by 

Treasury, has just come out and they looked at 40 major pending 

projects. And of the 40, 39 are challenged by inadequate funding; 

out of 40, 19 by increased capital costs, 20 by local opposition, and 

9 by regulatory issues. So, you know, money is at the heart of 

many of our infrastructure needs and problems in this country. 

I know that you realize that on this committee and I recommend 

to you to do whatever you can to help increase needed funds. With 

that, I—— 

[The statement of Mr. DeFazio follows:] 
15

THE HONORABLE PETER A. DEF AZJO 

4m DISTRICT OF OREGON 

STATEMENT BEFORE THE U.S. HOUSE COMMITTEE ON APPROPRIATIONS, 

SUBCOMMITTEE ON TRANSPORTATION, HOUSING, AND URBAN DEVELOPMENT 

MARCH 9, 2017 

Chairman Diaz-Balart, Ranking Member Price, and l'vfembcrs of the Subcommittee, thank 

you for the opportunity ro share my concerns \vith you about a proposal pending before the 

Committee on Transportation and Infrastructure to tear the Federal Aviation Administration (FAA) 

apart and devolve air traffic control-a critical safety and security function-to the private sector. 

This proposal is nothing new or imaginative. In fact, last year marked the 30'" anniversary of 

a similar proposal by the airline industry to take control of the air trafiic control system from the 

Ft\i\, which has operared the system since its creation. Congress and commissions have studied the 

idea three times since then, yet it has never taken flight because, each time, it was found to be 

unworkable, unproYcn, un\vise, and cxtTctnely controversial. 

That's why, last year, every Democrat and two Republicans on the Committee on 

Transportation and Infrastructure opposed a long-term F1\1\ reauthorization bill that included the 

privatization proposal. So did the bipartisan leadership of this Committee and your counterparts in 

the Senate. The Congressional Budget Office concluded the proposal would add $20 billion to the 

Federal deficit over the next 10 years and tens of billions more in decades thereafter. 

Last year, faced \vith this choice of conducting a science experiment \vith a risky 

privatization scherne, Congress enacted--not a long-tenn FA .. r\ reauthorization act-but yet another 

::~hart-tenD extension. 

I do not know how, if at all, this year's privatization proposal will differ from last year's; but 

I do know that ir will suffer from the same fundamental problems as any privatization proposal. 

1\ccording to a review of recent Supreme Court and D.C. Circuit Court of Appeals decisions, 

privatization of the air traffic control system is an unconstitutional delegation of regulatotT functions 

-nor even airline industry Ja,vycrs have disputed my analysis of that. 
16

In an attempt to work around these constitutional problems, the proposal keeps the 

Secretary of] 'ransportation intimately involved in every major decision of the privat~ A TC 

Corporation. This will require a huge new government bureaucracy within the Department of 

Transportation-and who ''~ll pay for that0-and would slow down, rather than speed up, 

important reforms and improvements. ln fact, last year, the GovernmenLAccountability Office 

(G:\0) reported that privatizing the air trafiic control system would bring innumerable challenges 

and could take up to sc,~en years even if done right. 

Stakeholders say the air traffic control system needs stable, predictable funding. But that's an 

Fr\A·wide need, a government-wide need, not just an air traffic control need. Moreover, severing 

the $11 billion air traffic control system from the Fz\/\ would leave the rest of the agencyespecially its critical safety-oversight offices and personnel-subject to the general risks of fiscal 

crises and political gridlock that have become commonplace in recent years, despite the hard work 

and dedication of this Subcommittee to keeping the lights on at the F :\A 

Stakeholders say the PAA has been too slow with NextGen implementation. You can count 

me among those in Congress who think the Fe\:\ could have managed past NextGen programs 

better. But the agency is due some credit: It has implemented more than 8,000 satellite-based 

navigation procedures, has installed the ground infrastructure for a satellite-based sysrcn1 of 

surveillance to replace radar, and has implemented 99 percent of the milestones jointly agreed upon 

by the FAl\ and industry stakeholders. The Fc\i\'s work on NextGen has already delivered $2.7 

billion in hencfits to go\"crnment and users, and is expected to provide more than $160 billion in 

benefits by 2030. 

No one can explain precisely how privatization would speed up NcxtGcn. 1\-ly natural 

intuition is that privatization would only slow NextGen down. It would create a three~to~five-year 

period of uncertaint:y for l'"\"\ employees who work currently on NcxtGcn projects, and jeopardize 

the expected benefits that I just described. 

Privatization would sever the thousands of threads between the Air Traffic Organization 

(~\TO) and other FAA offices that arc absolutclv necessary to keeping NextGen on course and on 

time. Certification is a prime example. The XfO may be ready to implement dozens of new 

2 
17

performance-based navigation procedures, but it's up to certification specialists in the Aviation 

Safety Office to veri~- that airplanes are capable of flying those procedures safely by certifying 

avionics and pilots and making sure airlines are on the same page. And it's up to the Ofiice of 

.\irports to collaborate with communities underneath new flight paths. 

The :\TO will soon be ready to switch on the automatic dependent surveillance-broadcast 

(,\DS-13) network en;rywhcre and for every aircraft, hut again it's up to the i\,·iation Safety Office to 

certify the ADS-B avionics necessary to make it happen. The list goes on. 

Some say other countries have successfully separated their air traffic control systems from 

ch·il a,·iation regulators. That's not entirely true. First, pri,·atization is the exception rather than the 

rule: At least 21 countries have separated air traffic control, but only two-Canada and the Cnited 

Kingdom-have privatized it, and then with extremely mixed results. 

i\nd, importantly, those countries are not the United States. The Department of 

Transportation Inspector General reported in 2015 that there are "significant" differences between 

those countries' systems and ours. For example: 

Ours is the biggest. Canada, the United Kingdom, France, and Germany combined control 

only 65 percent of the airspace controlled hy the United States. (The four countries' 

combined airspace comprises 48.57 million S<]uare kilometers; ours comprises 75.1 million 

square kilometers.) 

Ours is the busiest. If you add up the instrument flight rules (IFR) mo.-cments handled by 

controllers in Canada, the L;nitcd Kingdotn, France, and Ccrmany combined, you wouldn't 

come close to reaching the number of !FR movements handled by FAA controllers. (12.1 

million IFR movements in the four countries together versus 15.5 million in the United 

States.) 

We have a much larger general aviation presence. Nearly twice as many general aviation 

aircraft arc registered in the United States as in the four other countries combined. (209,034 

in the L'nitcd States ''ersus !09,435 in the four countries together.) 

3 
18

And we're writing the blueprint for NextGen; many of the others just buy NextGen 

technologies off the shelf. 

I would speculate that these are but some of the reasons that a distinct minority of the 

stakeholders whom G i\0 surveyed in 2014 said that spinning off the £\ir Traffic Organization 

would even be a viable option. 

;\s I have said many times before, privatization of air traffic control is a solution in search of 

a thousand problems. 

In its report on fiscal year 2017 Transportation, Housing and Urban Development 

appropriations, the Senate ,\ppropriatiom Committee described the privatization proposal as 

"fraught with risk", full of potential to "lead to uncontrollable cost increases to consumers" and to 

reduce aYiation access to rural ,\merica. I hope and tcspectfully urge this Subcommittee to recognize 

similarly these concerns in its fiscal year 2018 appropriations bilL 

Thank you again, Mr. Chairman, for allowing me the opportunity to testify today, and I 

stand ready to work together with l'vfembers of the Appropriations Committee to remove this 

poison pill from the F r\A reauthorization bill or any other legislation in which it may be included. 

4 
19

Mr. DIAZ-BALART. Let me thank you, sir, for your very on-point 

testimony. I would ask you, by the way, you talked about the flowchart, if you could bring it forward to the committee, we would love 

to submit that in the record. 

Mr. DEFAZIO. Sure. 

Mr. DIAZ-BALART. I think without objection. So, Mr. Price. 

Mr. DEFAZIO. Mr. Chairman, if I could, the first time when we 

were holding one hearing on this in the last Congress and I put it 

up on the screens and the chairman looked at it and he said, I have 

never seen that before. I said, yeah, well, your staff could have developed it. We just followed the legislation and it looks like a Rube 

Goldberg, so I would be happy to provide it. 

Mr. DIAZ-BALART. Thank you. Mr. Price. 

Mr. PRICE. Thank you. My colleague and I have been on this 

journey together since we were both elected some years ago, so I 

appreciate it. 

Mr. DEFAZIO. Do not say how many. 

Mr. PRICE. We will not say. So I appreciate your testimony on 

a number of fronts this morning, and actually, you are not the first 

member to testify this morning as to the harm we will suffer if we 

have a yearlong CR, if we cannot get off of this CR and into a regular appropriations, at least for the last 5 months of the year. So 

I appreciate you underscoring that. It is not just dollars that are 

involved. It is also how those dollars are directed. But thank you 

for being here. 

Mr. DEFAZIO. Thank you. 

Mr. DIAZ-BALART. Any further questions? 

Mr. DEFAZIO. Thank you, sir. Thank you very much. 

Mr. PRICE. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. We will now proceed. The gentleman from Arizona, Mr. Gosar, you are recognized for 5 minutes, sir. And, again, 

thank you for being here, sir. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF ARIZONA 

Mr. GOSAR. Thank you. I would like to first thank you, Chairman 

Diaz-Balart, Ranking Member Price, and the committee for their 

work on the appropriations process under their jurisdiction. I am 

Paul Gosar and I represent the 4th Congressional District of Arizona, and I appreciate the opportunity to provide testimony supporting the specific appropriation priorities for Arizona and the 

country as a whole. 

First, I would like to applaud the committee’s leadership and fiscal prudence in previous years that saved taxpayers money and 

protected the civil liberties of our constituents by preventing funds 

from going to the wasteful National Roadside Survey. As such, I request once again that the following language be retained in the 

next fiscal year Transportation Housing and Urban Development 

and related agencies appropriation that, quote, ‘‘None of the funds 

made available by this act may be used to obligate or award funds 
20

for the National Highway Traffic Safety Administration’s National 

Roadside Survey,’’ end of quote. 

Civil libertarians have raised legitimate concerns about the unconstitutionality of this program. Put simply, this survey looks like 

and acts like a police checkpoint and uses uniformed officers to pull 

cars over. Under the Fourth Amendment, the United States Supreme Court has ruled that a seizure occurs when a vehicle is 

stopped at a checkpoint. The question thus becomes whether such 

seizures are reasonable under the Fourth Amendment. 

More importantly, the courts have allowed police checkpoints 

only when there is compelling public safety justification, such as 

stopping and arresting drunk drivers. However, under the circumstances of this program there is no public safety jurisdiction. 

The surveys do nothing to make our communities safer because 

drivers who ultimately refuse to participate are free to drive away, 

even if the driver is impaired. This results in a wasteful program 

that is invasive in the least, and at worst is an abuse of power and 

the violation of our civil liberties. 

Let me be clear. I strongly support efforts which are proven to 

have actually contributed to the decrease in impaired driving since 

the 1970s, such as local law enforcement operations, effective State 

and municipal policings, curb abuse, and worthwhile education efforts from organizations like Mothers Against Drunk Driving, or 

MADD, and similar groups. 

I thank the committee for their previous support of the civil liberty language and ask that it be included again in the next appropriations bill. 

Another issue I would like to highlight for the committee’s support is funding for congressionally designated high-priority corridors, or HPCs. These corridors are critical to the economy and security of the United States. 

Last Congress I was proud to work with a bipartisan group of 

members and stakeholders to pass legislation which expanded the 

designation of the future Interstate 11 to extend from Mexico all 

the way to Northern Nevada. This interstate comprises two highpriority corridors: the CANAMEX Corridor and the Intermountain 

West Corridor. Since 1991, HBCs have been identified, updated, 

and funded in various transportation and appropriation bills. Although funding has been authorized, Congress has not recently appropriated funds specifically to these high-priority corridors. 

The statutory definition of these corridors found in 1105 of the 

Intermodal Surface Transportation Efficiency Act in 1991 clearly 

identifies HPCs as appropriation projects of national importance 

and appropriate recipients of Federal funding. As this committee 

works to identify spending priorities that will address truly national, multistate transportation needs, I would encourage support 

of the high-priority corridors. 

Now, I understand the monumental task this committee faces 

each year to appropriate scarce taxpayer dollars to national priorities, and I appreciate their hard work. As you well know, the conversation cannot always be about finding more money. We must 

also look for ways to spend money more efficiently. In that regard, 

I look forward to working with this committee as well as other leg-
21

islating and authorizing committees to institute reforms that will 

make our scarce transportation dollars go further. 

The high-priority corridors identified as a future interstate 

present an amazing opportunity to build truly 21st century infrastructure. Real policy reforms, such as streamlining NEPA process 

and simplifying Davis-Bacon preventing wage requirements, can 

reduce the costs of these projects by millions. These future interstates could serve as the pilot programs to test and demonstrate innovative policy reforms that save taxpayer money and better meet 

the infrastructure development we need to make American great 

again.

I appreciate the opportunity to testify before you. I would like to 

thank all of the members for all that you do and the important 

work that goes forward from this committee. I yield back. 

[The statement of Mr. Gosar follows:] 
22

Representative Paul A. Gosar, D.D.S. 

Arizona's 4'h Congressional District 

Testimony for members Day- House Committee on Appropriations Subcommittee on 

Transportation, Housing and Urban Development, and Related Agencies 

I would like to thank Chairman Diaz-Balart, Ranking Member Price and the Committee for their 

work on the appropriation process under their jurisdiction. I am Paul Gosar and I represent the 4'h 

Congressional District of Arizona. I appreciate this opportunity to provide testimony supporting 

specific appropriations priorities for Arizona and the country as a whole. 

First, I applaud the Committee's leadership and fiscal prudence in previous years that saved 

taxpayer money and protected the civil liberties of our constituents by preventing funds from 

going to the wasteful National Roadside Survey. As such, I request once again that the following 

language be retained in the next fiscal year Transportation, Housing and Urban Development, 

and Related Agencies Appropriations Act: 

"'SEC None of"rhefimds made available by this Act ma.v be used to obligate or award 

fimdsfor the National Highway Traf!ic Saf"ety Administration's National Roadside Survey." 

Civil libertarians have raised legitimate concerns about the unconstitutionality of this 

program. Put simply, this "survey" looks like and acts like a police checkpoint and uses 

uniformed officers to pull cars over. Under the Fourth Amendment, the United States Supreme 

Court has ruled that a "seizure" occurs when a vehicle is stopped at a checkpoint. The question 

thus becomes whether such seizures are "reasonable" under the Fourth Amendment. More 
23

importantly. the courts have allowed police checkpoints only when there is a compelling public 

safety justification-such as stopping and arresting drunk drivers. 

However, under the circumstances of this survey. there is no public safety justification that 

would warrant a checkpoint stop under this program. This wasteful and invasive survey docs 

nothing to curb impaired driving; it is an abuse of power and a violation of our basic civil 

liberties. While the National Highway Traffic Safety Administration (NHTSA) claims the survey 

is voluntary. the process begins-as the NHTSA describes-with a "police officer working with 

the survey team to direct the potential respondent into the survey site without speaking to the 

driver." Typically, a researcher then approaches the driver and takes a passive alcohol sensor 

reading before the driver agrees to participate in the survey. Passive alcohol sensors are small 

electronic units used to detect alcohol and are usually built into police flashlights or clipboards. 

The National Highway Traffic Safety Administration has previously reported that they obtained, 

without permission, "sensor readings from well over 90 percent of these drivers who did not 

provide actual breath tests" or agree to participate in the survey. The latest survey squandered 

almost $8 million in taxpayer money and did nothing to make our communities safer because 

drivers who ultimately refuse to participate are free to drive away even if the driver is impaired. 

Let me be clear, I strongly support efforts which are proven to have actually contributed to the 

decrease in impaired driving since the 1970's such as local law enforcement operations, 

effective state and municipal policies that curb abuse, and worthwhile education efforts from 

organizations like Mothers Against Drunk Driving (MADD) and similar groups. 
24

I thank the committee for their previous support of this civillibctiy language and ask that it be 

included again in the next appropriations bill. 

Another issue that l would like to highlight for the Committee's support is funding for 

congressionally designated High Priority Corridors or HPCs. These corridors are critical to the 

economy and security of the United States. Last Congress, I was proud to work with a bipartisan 

group of Members and stakeholders to pass legislation which expanded the designation of the 

future Interstate II to extend from Mexico all the way to Northern Nevada. This interstate 

comprises two High Priority Corridors, the CANAMEX Corridor and the Intermountain West 

Corridor. 

Since 1991 HPCs have been identified, updated and funded in various transportation and 

appropriations bills. Although funding has been authorized, Congress has not recently 

appropriated funds specifically to High Priority Corridors. The statutory definition of these 

corridors, found in Section 1105 of the lntermodal Surface Transportation Efficiency Act of 

1991, clearly identify HPCs as appropriate recipients of federal funding, stating: 

"It is the purpose of this section to identify highway corridors of' national significance .. and to 

provide increasedfimdingfor segments of these corridors that have been identified for 

construction .. ivfany regions oft he Nation are not now adequately served by the Interstate 

System of comparable highways and requirefi~rther highway development .. the development of 

transportation corridors is the most efficient and effective way of integrating regions and 

improving efJiciency and safety of" commerce and travel andfiwther promoting economic 

development. " 

3 
25

As this Committee works to identify spending priorities that will address truly national, multistate transportation needs, I would encourage support of High Priority Corridors. 

I understand the monumental task this committee faces each year to appropriate scarce taxpayer 

dollars to national priorities, and I appreciate their hard work. As you well know, the 

conversation cannot always be about finding more money. We must also look for ways to spend 

money more efficiently. In that regard, I look forward to working with this committee as well as 

other legislating and authorizing committees to institute reforms that will make our scarce 

transportation dollars go farther. 

The High Priority Corridors identified as a "future interstate'' present an amazing opportunity to 

build truly 21" Century infrastructure. Real policy reforms, such as streamlining the NEPA 

process and simplifying Davis-Bacon prevailing wage requirements can reduce the costs of these 

projects by billions. These future interstates could serve as pilot programs to test and 

demonstrate innovative policy refom1s that save taxpayer money and better meet the 

infrastructure development we need to make America great again. 

I appreciate the opportunity to testify today. I would like to thank all members of the Committee 

for your important work and with that, I yield back. 

4 
26

Mr. DIAZ-BALART. Mr. Gosar, thank you for your testimony, and 

we have been working for a long time on a lot of these issues. I 

appreciate you bringing up some very important issues, and I look 

forward to continue to working with you on those issues. 

Mr. Price. 

Mr. PRICE. Let me echo the chairman, say we appreciate your 

testimony and we will give it careful attention. 

Mr. GOSAR. Thank you, Ranking Member. 

Mr. DIAZ-BALART. Actually, before I recognize our next colleague 

I want to once again congratulate Mr. Joyce, who has been recently 

named as vice chairman of the subcommittee. Mr. Joyce, you are 

a heartbeat away from the chairmanship of this subcommittee. So 

I do not know why you keep giving me fatty goods all the time now 

and I am a little concerned about that. But, again, congratulations. 

Mr. JOYCE. Thank you very much and I apologize for being late, 

but there was somebody who slightly resembled you, not as goodlooking and not as well-dressed, named Diaz-Balart that I ran into 

on the way here who tied me up, so. 

Mr. DIAZ-BALART. Obviously—— 

Mr. JOYCE. Lincoln something or other. 

Mr. DIAZ-BALART [continuing]. Cannot be related to me. Cannot 

be related to me. Thank you. 

Now we will recognize the distinguished gentleman from California, Mr. Panetta. You are recognized. Thank you for your testimony.

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. JIMMY PANETTA, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF CALIFORNIA 

Mr. PANETTA. Thank you. I appreciate that, Chairman DiazBalart, Ranking Member Price, other members, and congratulations Mr. Joyce as well. Thank you for this opportunity to speak 

here this morning. 

I would like to talk about the important programs that are very 

critical to my district’s transportation infrastructure and its economy. I represent the Central Coast of California in the 20th Congressional District. And this winter, although we had been clamoring for it for quite a while, we got a lot of rain, a tremendous 

amount of rain, actually. And we were hit by a hard series of 

record-setting storms, storms that washed out major roads, highways. They isolate communities and they caused a tremendous 

amount of damage to individuals’ homes and properties. 

And because of these storms the Pacific Coast Highway, in my 

biased opinion, one of the most beautiful stretches of road in the 

world, remains temporarily closed in many places. And near the 

southern part of that highway, the Town of Lucia, debris from 

landslides have covered lanes of traffic and closed an 8-mile section 

of that road. The boulders, as said on some of these slides, are so 

big, literally truck-sized boulders, have had to be removed by explosive ordnance. They are that big. 
27

In Big Sur, on the main route, Highway 1, there is a bridge, a 

315-foot bridge, the Pfeiffer Canyon Bridge, that has suffered irreparable structural damage and has had to be taken down and replaced. Now, it is not that iconic Bixby Creek Bridge that you all 

see when you hear about Big Sur, but it is just as important of a 

venue, literally in the main part of Big Sur. And as you can see 

from this picture that I am holding up the slide occurred right here 

underneath this pillar, took out that pillar, caused the bridge to 

sink. No one can go on this bridge, you cannot walk over it, you 

cannot drive cars over it; it has got to be taken down and completely replaced. 

The residents who are in between this bridge and the slides are 

isolated. There are families who are separated, there are children 

who cannot go to school, and there are businesses who are absolutely shut down at this point because no one is driving on this 

highway. And just last week I took part in an airlift where pallets 

of food, supplies, and actually fuel were brought to these individuals, to these families, by helicopter. 

Repair crews are on the ground and they are trying to repair this 

all-American highway as quick as possible. However, with more 

rain in the forecast for the coming days many are concerned whether this work will have a lasting impact. 

To live in Big Sur you have to be tough, you have to be hardy; 

there is no doubt about it because they deal with these types of extreme weather situations. In 1982, parts of Highway 1 were closed 

for 13 months after a massive mudslide buried more than a quarter-mile of road. In the wake of this event 400 people lost their jobs 

and the tourist industry lost nearly $34 million. 

Now, hopefully, history will not repeat itself this year when it 

comes to the amount of losses. But if not replaced quickly, that 

bridge that you just saw, the fact that it won’t be replaced could 

devastate the economies of the communities of that Big Sur area. 

They rely on that influx of tourism during the spring and summer 

months. It is times like these when communities like mine look to 

the Federal Highway Administration’s Emergency Relief Program 

for assistance. 

So I appreciate the $1 billion supplemental appropriation included in last year’s continuing resolution and I encourage this 

committee to continue to provide the needed support for this critical program. Though we have not yet seen the President’s budget 

proposal for fiscal year 2018, it is my hope that he demonstrates 

his commitment to improving our roads, bridges, airways, transit 

systems, and railroads through a strong Federal investment with 

the understanding of the importance of a strong Emergency Relief 

Program.

Your subcommittee, Mr. Chairman, has the opportunity to make 

infrastructure investments that are desperately needed in districts 

all across the Nation so that we can ensure a modern transportation system that sustains economic growth. 

Thank you for the opportunity to advocate on behalf of these programs and thank you for the opportunity to be here to speak to you 

today.

[The statement of Mr. Panetta follows:] 
28

JIMMY PANETTA 

COMM1TIEEON 

,:,GRICUL TUAE 

COMMITTEE ON 

NAiUFIAL.RESOURCES 

C!tongre%% of tfJe ~niteb $tate% 

J!JoUil'r of i\cpre£ientatibtS' 

ltllilas'binrrton, IDIC 20515-0520 

128 CANNON HOUSE OFFIC[ 

BUILDING 

WASHINGTON. DC 20515 

120:?) 225-2861 

100 WEST AUSAt, 

SAUNAS, CA 93901 

!831) tJ2'4~2Ufl 

f01 OCEAN STRI:ET 

A00fl.t318 

SANTA CRUZ, CA 95050 

(831)<1:;>9-·1976 

Testimony before the House Appropriations Subcommittee on 

Transportation, Housing and Urban Development, and Related Agencies 

U.S. Representative Jimmy Panetta (CA-20) 

March 9, 2017 

Chainnan Diaz-Balart, Ranking Member Price, thank you for allowing me the opportunity to 

speak this morning. Although new to Congress, I am keenly aware of the Appropriations 

Committee's annual check on our nation's priorities through the power of the purse. I am 

grateful to appear before you today and talk about the important programs that are critical to 

my district's transportation infrastructure and economy. 

Department of Transportation 

My district has been hit hard by a series of record setting stonns during the last six weeks 

that have washed out major roads and highways, isolated communities and threatened homes 

and property. The Pacific Coast Highway remains temporarily closed in many places 

between Ragged Point and Carmel. Near Lucia, debris from a nearby landslide covered a 

lane of traffic and closed an eight-mile section of road. Boulders are being cleared with 

dynamite charges to make removal easier. Repair crews are on the ground in an attempt to 

repair this All American Road as quickly as possible, but with more rain forecast for the 

coming days many are concerned whether this work will have a lasting impact. Today, I want 

to highlight the importance of a strong Emergency Relief program. 

In addition to the debris blocking parts of Highway 1, the Pfeiffer Canyon Bridge in Big Sur 

has suffered irreparable structural damage and has started to sink into the mountainside. Last 

month, Caltrans, the State's transportation authority, closed the bridge to vehicles and 

pedestrians, cutting the Big Sur community in half and profoundly affecting residents and the 

local economy. This is not the first time Big Sur has suffered because of extreme weather 

events and our failing infrastructure. In 1982, parts of Highway 1 were closed for 13 months 

after a massive mudslide buried more than a quarter-mile of the road. In the wake of this 

event, four hundred people lost their jobs and the tourist industry lost nearly $34 million. 

We cannot allow for history to repeat itself. If not replaced quickly, the Pfeiffer Canyon 

Bridge closure could devastate the economies of communities in the Big Sur area, which rely 

on an influx of tourists during the spring and summer months. It is times like this when 

communities like mine look to the Federal Highway Administration's Emergency Relief 

Program (ER) for assistance. 

I appreciate the $1 billion supplemental appropriation included in last year's continuing 

resolution, and encourage the committee to continue to provide robust support for this critical 

program. 

PRiNTED ON RECYCLED PAPER 
29

I also would also like to take this opportunity to highlight an important program my 

predecessor, Sam Farr authored, the Small Transit Intensive Cities (STIC) program. Funded 

through a set-aside of Section 5307 formula funds, the STIC program has been used by 

smaller transit systems, like Santa Cruz Metro and Monterey Salinas Transit, to expand 

service and upgrade and modernize facilities to improve the quality of public transit service 

in smaller, rural communities. I encourage the Subcommittee provide robust funding to the 

Section 5307 formula program. 

Many of your districts may be experiencing unacceptable noise levels as a result of Next Gen 

route changes. In my district, the windows were shaking in homes in the flight path as planes 

prepared to land at San Francisco Airport. While the FAA says the noise is within the 

acceptable 65 Day Night Level (DNL), that standard was developed more than a decade ago. 

I believe the FAA needs to conduct an expedited review of the 65 DNL standard and 

incorporate actual noise sampling, not just rely on modeling and simulation. Therefore, I ask 

the Committee to include report language urging the FAA to expedite the DNL review and to 

provide the Committee with a report no later than 60 days after enactment of the ACT 

describing a pilot program for conducting actual noise sampling as part of the DNL review. 

Department of Housing and Urban Development 

While the goal of permanent housing is laudable, in some communities the difficulty of 

finding permanent housing is a challenge because of affordability and scarcity. I urge the 

committee to strengthen funding for transitional housing grants which continue to be heavily 

utilized in my district for homeless veterans housing. I also urge the Committee to fully fund 

the VASH-HUD program as not less than the FY17 level. 

Continuum of Care 

While we may have made great strides in reducing the nation's homeless population through 

sustained funding across multiple agencies, we need to continue our efforts. I urge the 

Committee to fully fund the CoC program as no less than the FY17 level. 

CDBG 

This is one of the most effective federal programs that provides critical economic support to 

more than 1,200 low- and moderate-income communities across the nation. CDBG touches 

the lives of virtually every American by funding affordable housing, public infrastructure 

improvements, employment training and economic development, while also providing public 

services for seniors, youth and the disabled. I urge the Committee to fund CDBG at no less 

than the FY 17 level. 

Though we have not yet seen the President's budget proposal for FY18, it is my hope that he 

is serious in his commitment to improving our transportation infrastructure through a mix of 

increased federal and private investments. Your subcommittee has the opportunity to make 

infrastructure investments that are desperately needed in districts all across the nation so that 

we can ensure a modem transportation system that sustains economic growth. 

The programs I have highlighted are critical to my home and the communities that depend on 

a robust public transportation infrastructure, affordable housing and resources for our most 
30

vulnerable populations. Thank you for the opportunity to advocate on behalf of these 

programs 
31

Mr. DIAZ-BALART. And let me thank the gentleman for his testimony, and for being here. I know I can speak for everybody in the 

subcommittee when we tell you that we look forward to working 

with you. 

Mr. JOYCE. I am sorry, sir, I might have missed it. For the bridge 

replacement, as I understood you, was there a cost estimate that 

you gave them? 

Mr. PANETTA. They have not come up with that. So I cannot give 

you that now, but I can assure you that Caltrans, the California 

Transportation Authority, is working on that. I actually spoke with 

one of the heads of Caltrans, they said that they are obviously 

going to have to do an emergency replacement and that is going 

to take—what they are saying, which I was actually surprised, 

could be 6 months, which I think is pretty quick for that long a 

bridge, that big a bridge, in that area that is on such a dangerous 

cliff like that. But I think that that is, though, the time that he 

gave me. I will get back to you in regards to a number as to what 

it is going to cost. 

Mr. JOYCE. Thank you. 

Mr. DIAZ-BALART. And I want to thank the members of this subcommittee because they have been very, very sensitive to making 

sure that we have that money there. And so, again, we look forward to working with you. Thank you. 

Mr. PANETTA. Thank you, sir. 

Mr. DIAZ-BALART. Thank you. 

Mr. AGUILAR. Mr. Chairman? 

Mr. DIAZ-BALART. Yes, sir. 

Mr. AGUILAR. It is a terrible place to live. Beautiful, you know. 

Very tough vistas as well. So if there is a, you know, a trip that 

needs to be seen, I am sure Mr. Panetta would host you, Mr. Chairman, to take a look at the seriousness of this issue. 

Mr. DIAZ-BALART. Well, Mr. Aguilar, you are always willing to 

sacrifice greatly to help our colleague here. 

Mr. AGUILAR. Yeah. As I shared privately I just want to be a 

team player, Mr. Chairman. 

Mr. DIAZ-BALART. I am getting choked up. I am getting choked 

up and emotional. But thank you, thank you very much. 

Mr. PANETTA. Open invitation. 

Mr. DIAZ-BALART. Thank you, Mr. Panetta. 

Mr. PANETTA. Thank you. 

Mr. DIAZ-BALART. We will now recognize The Honorable Sheila 

Jackson Lee. And thank you for your testimony and we know you 

have a number of different issues that you want to talk about. We 

might be able to give you a little bit more than the 5 minutes. If 

somebody else shows up, then I will have to cut you off, and if not, 

we might be able to give you a little more. So we will have to play 

that by ear, ma’am, but you are recognized. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. SHEILA JACKSON LEE, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF TEXAS 
32

Ms. JACKSON LEE. That may not be somewhat contentious, but 

I want to emphasize some points that I think are important. And, 

first of all, I want to thank this committee and thank the ranking 

member, thank the chairman. We admire and appreciate the bipartisan efforts of the Appropriations Committee as a whole, but, more 

importantly, Subcommittee on THUD, which I know you are very 

popular. And so I really appreciate there is a great need for both 

the protection and enhancement of our infrastructure. Let me quickly say I support $1.25 billion for transportation investment generating economic recovery. These are the TIDA 

Grants. TIDA Grants encourage cooperation between agencies and 

jurisdictions and often funds multimodal, multijurisdictional 

projects that are difficult to support through traditional transportation projects, and I think that is very important. I support $2.5 billion for New Starts Program. The New Starts 

Program provides funding for commuter rails, subway, light rail, 

ferries, and bus transit. And I want to make the point that Houston is a transit city, Harris County is a transit county. No one 

should suggest that the people of Houston do not advocate for transit. City government is a transit city government. Our metro is 

very responsive to the community, and we are eager to listen to 

members of Congress and community leaders on how best and how 

effective we can make this transit system. Harris County is a $4+ 

million metroplex area. The City of Houston is growing past a million and we need mass transit, and I would say that we need it 

now.

So we support the Starts Program. We are one of the New Starts. 

We want to continue to finish our work. We just finished celebrating an overpass for the Harrisburg Bridge that will help that 

community make transit more effective. And we invite any of you 

to see how we are using the transit system. Certainly the Super 

Bowl evidenced how important our transit was and I think the 

NFL, if I might say, went away and said that we are one of the 

best cities in their scheme of cities for the Super Bowl and it was 

because of the transit system. I support $120 million for the Federal Transit Authority, provides grant funding to State, local, and tribal governments, public 

and private operators, and other recipients. And I support the 

funding request because access to transportation is a civil right, 

and that full funding for transit is imperative. It is very important 

for those citizens that rely upon it. 

I support the $2.3 billion for the Amtrak passenger rail. I think 

that is a vital part of that corridor. 

I support $3.1 billion for capital systems for high-speed rail corridors and inner-city passenger rail service. We are in the midst of 

a high-speed rail system in Texas. It is mostly privately funded. We 

are going through some of our challenges, but I know that it is an 

important element of our transportation. 

The airport, the major airport, Bush Intercontinental Airport, is 

in my congressional district. I support $3.4 billion for an airport 

improvement program which provides grants to public agencies for 

planning and development of public use airports. We are growing. 

We are growing in our terminals, we are growing in the per passenger travel. And the improvements, we hope that we have been 
33

important fiscal agents of the Federal Government in using your 

money effectively and building on the national system of aviation. 

Now, I understand there is rumor that there may be a 14 percent cut in public housing, $6 billion. I don’t know whether to throw myself on the floor or the table or to show you to have mercy. And 

I know it all deals with your—I do not want to use the term ‘‘allotment,’’ but what you all have to work with. I am on the Budget 

Committee. We will be seeing that budget next week, and I hope 

to be bipartisan in my passion that that just cannot be. I support $3 billion for Community Development Block Grant. 

We have not seen fraud of any extensive form. This is down payment for homes, this is fixing roofs after hurricanes. And we are 

loaded, what we call blue tarps, with senior citizens in my district 

still from Hurricane Ike. They have never had their roofs fixed. We 

have a program in the city that we are trying to fix it, Mr. Chairman, and trying to use that money effectively. 

Parks and other forms of community development are lifelines to 

inner city and rural communities, which I support greatly, even 

though there is an Agricultural Rule Program that I have been involved in and support heavily. And so I hope that is not true. I support $120 million for housing for the elderly, and that is extreme in my community. I support $1.6 billion for the Home Investment Partnership Program, which is the largest combination for affordable housing. I 

worked with Habitat for Humanity. Our community helps build 

homes, but a lot of that is in partnership with Habitat for Humanity.I support $20 billion for the tenant-based rental assistance, $42 

billion for fair housing. I support $500 million for HUD–VASH program that is for our veterans; $87.5 million for housing counseling; $155 million for 

childhood lead poisoning. Just to comment that there is lead poisoning going on today in many of our communities and we cannot 

be less active in that program because our children are still getting 

lead poisoning. Finally, I support $355 million for housing opportunities for persons with AIDS. One of the first programs that I utilized as a 

member of the Houston City Council, still today is for housing for 

people living with AIDS, affected by AIDS, and it is an effective 

program.

So, Mr. Chairman, finally, you do great work. We want transit 

in Houston, Harris County; I want transit for the Nation. And, finally, I think that the HUD work for providing people access to 

housing is crucial and these are the programs that allow that to 

happen.

[The statement of Ms. Jackson Lee follows:] 
34

CONGRESSWOMAN SHEILA JACKSON LEE (TX -18) 

STATEMENT BEFORI' THE 

COMMITTEE ON APPROPRIATIONS 

SUBCOMMITTEE ON TRANSPORTATION, HOUSING AND URBAN DEVELOPMENf, AND 

RELATED AGENCIES 

MEMBER DAY HEARING ON 

TRANSPORTATION, HOUSING At"'D URBA.t"' DEVELOPMENT, AND RELATED 

AGENCIES APPROPRIATIONS Acr FOR FY2018 

WEDNESDAY, MARCH 8, 2017 

2358-ARAYBURc'\' 

!O:OOA.M. 

Chairman Diaz-Balart, Ranking Member Price and distinguished Members of the 

Subcommittee: 

As the Ranking Member of the Judiciary Subcommittee on Crime, Terrorism, 

Homeland Security, and Investigations, let me offer my appreciation and thanks to 

Chairman Diaz-Balart and Ranking Member Price for the difficult work and choices 

that must be made to produce a truly bipartisan Labor-HHS spending bill, and for 

their commitment to producing a bill that fairly reflects the interests and priorities of 

the American people. 

Mr. Chairman, I understand that my entire statement "ill be made part ofthe record 

so I "".j]] keep my remarks brief. 

In the few minutes allotted I wish to highlight the transportation and housing which 

warrant the Committee's continuing attention and support. 

I. TRANSPORTATION 

I support $1.25 billion for Transportation Investment Generating Economic 

Recovery. 

TIGER grants have helped to finance a wide variety of innovative projects building and 

repairing roads, bridges, public transit systems, ports, rail lines, and bicycle and 

pedestrian networks. Moreover, TIGER encourages cooperation between agencies and 

1-
35

jurisdictions and often funds multi-modal, multi-jurisdictional projects that are difficult 

to support through traditional transportation programs. 

I support $2.5 billion for New Starts Program Funding. 

The New Starts program provides funding for commuter rail, subway, light rail, ferries 

and bus rapid transit projects. New Starts transportation projects throughout the nation 

create jobs, spur economic development, ease congestion, expand our national 

transportation network, and foster the development of safer, more livable communities. 

I support $120 million for the Federal Transit Authority. 

The Federal Transit Administration (FT A) provides grant funding to State, Local, and 

Tribal governments, public and private transit operators, and other recipients to 

support public transit infrastructure and operations. I support the funding requested 

because access to transportation is a civil right and that full funding for transit is 

imperative in order to ensure that low-income and vulnerable communities have access 

to jobs, housing, grocery stores, and childcare, among other needs. 

I support $2. 'l billion for the Amtrak Passenger Rail Service. 

The $2.3 billion in funding requested for the Passenger Rail Service will provide grants 

to Amtrak and state corridors to ensure passenger rail assets are maintained to provide 

safe and reliable life-cycle service, as well as to continue operating long-distance train 

services. 

I support $3.1 billion for Capital Assistance for High Speed Rail Corridors 

and Intercity Passenger Rail Service. 

This program establishes a long-term partnership between States and the Federal 

Government to support intercity passenger rail. The program establishies the first-ever 

Federal-State partnership for intercity passenger rail investment along the model of 

those that currently exist for other modes of transportation such as for highways, 

airports, and transit systems. 

-2-
36

I support $3.4 billion for Airport Improvement Program. 

The Airport Improvement Program (AlP) provides grants to public agencies for the 

planning and development of public-use airports that are included in the National Plan 

of Integrated Airport Systems. Sponsors can use AIP funds on most airfield capital 

improvements or repairs and in some specific situations, for terminals, hangars, and 

non-aviation development. 

HOUSING 

I support $3.3 billion for Community Development Block Grants 

CDBG is the centerpiece of the federal government's efforts to help more than 1,100 

cities, urban counties, and states meet the needs of low- and moderate-income 

communities. It has proven to be one of the most effective federal domestic programs in 

revitalizing communities. 

I support $120 million for Housing for the Elderly (Section 202) Capital 

Advance Program. 

This funding facilitates construction, rehabilitation, or acquisition of structures that will 

serve as supportive housing for very low-income elderly persons. Section 202 provides 

rent subsidies for projects to help keep them affordable for these vulnerable 

populations. 

I support $1.6 billion for the HOME Investment Partnership Program 

The HOME Investment Partnerships Program is the largest Federal block grant to state 

and local governments designed exclusively to produce affordable housing for lowincome families. The requested funding will result in 14,014 units of affordable housing 

for new homebuyers; 13,264 units of newly constructed and rehabilitated affordable 

rental units; 6,576 units of owner-occupied rehabilitation for low-income homeowners; 

7,799 low-income households assisted with HOME tenant-based rental assistance; and 

533 affordable homeownership units with SHOP funds. 

-3 
37

I support $20.9 billion for Tenant Based Rental Assistance Program. 

HUD's Section 8 programs help low-income elderly, families \\ith children, and people 

with disabilities secure and maintain decent, affordable homes. In both urban and rural 

communities, Section 8 rental assistance provides the foundation for millions of 

individuals and families to live with dignity, maintain steady work, and improve the 

lives of their children. 

I support $42.5 million for Fair Housing Initiatives. 

FHIP is a competitive grant program and is the primary source of funding for fair 

housing education and enforcement activities at the local level. Local fair housing 

organizations funded by FHIP protect the housing rights of the public and educate 

people about their fair housing rights. Fair housing education and enforcement play a 

pivotal role in increasing housing choice and minority homeownership and combating 

predatory lending. 

I support $500 million for HUD-VASH Program 

HUD-VASH is the only program that supports the permanent housing and 

rehabilitation of homeless veterans. HUD-V ASH is a joint HUD and VA initiative that 

provides specially designated Section 8 "Housing Choice" vouchers, case management, 

and supportive senices to homeless veterans. Vouchers are used to assist with the 

payment of rent for veterans and their families. The goal of the program is to support 

veterans' permanent housing in the community. 

I support $87.5 million for Housing Counseling Assistance. 

We respectfully request $87.5 million for the Housing Counseling Assistance Program in 

the Fiscal Year 2014. The Housing Counseling Assistance Program is a ·dtally important 

resource for current and prospective homeowners. This funding supports HUDapproved housing counseling agencies that provide unbiased information and education 

-4-
38

for consumers on foreclosure mitigation programs, rental assistance, pre-purchase 

counseling, reverse mortgages, and homelessness assistance. 

I support $155 million for Childhood Lead Poisoning Prevention Programs 

and Office of Healthy Homes and Lead Hazard Control. 

Over the past two decades, HUD's Office of Healthy Homes and Lead Hazard Control 

Program has developed programs to address lead hazards in the home, successfully 

creating 165,000 lead-free units, ensuring that over 185,000 units are lead-safe, and 

upgrading 20,000 substandard housing units. Providing the Office of Healthy Homes 

and Lead Hazard Control with $120 million in FY 14 is critical to continuing this 

progress. 

I support $355 million for Housing Opportunities for Persons with AIDS. 

The requested funding for this important, effective and bipartisan program will pro,ide 

relief to the HIV/ AIDS community by providing much needed support to more 62,500 

households in need of housing assistance. 

CONCLUSION 

Mr. Chairman, I thank you and the Ranking Member for your leadership and for 

extending me this opportunity to share my major priorities with the Subcommittee. 

-5-
39

Mr. DIAZ-BALART. Let me first thank the gentlelady for your testimony.

Ms. JACKSON LEE. Thank you. 

Mr. DIAZ-BALART. For your hard work. And by the way, you have 

done an extensive testimony, you have done it in record time. So 

again, thank you very much. Thank you. Thank the lady from 

Texas.

Ms. JACKSON LEE. Thank you. 

Mr. DIAZ-BALART. We will now recognize The Honorable Congresswoman Plaskett. Thank you for being here. We look forward 

to your testimony. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. STACEY E. PLASKETT, A REPRESENTATIVE IN CONGRESS FROM 

THE VIRGIN ISLANDS 

Ms. PLASKETT. Good morning, gentlemen. Thank you, Chairman 

Diaz-Balart, Ranking Member Price, for the opportunity to testify 

on appropriations for the Departments of Transportation and Housing and Urban Development over the next fiscal year. This legislation will serve as a statement of the commitment from the Federal 

Government to address some of our most pressing local needs in 

the Virgin Islands. In the United States territories, despite being 

home to nearly 4 million Americans, we are too often left out of important programs or underfunded compared to benefits available to 

Americans living in the mainland United States. 

For example, in the Virgin Islands, despite benefits we bring to 

the United States, including enormous tourism commerce from airline visits, cruise ships, and other vessels, Federal transportation 

funding to the Islands falls behind other jurisdictions even though 

the traffic strain on our infrastructure is often greater due to the 

high number of visitors year round. We have approximately 

105,000 individuals, but have several million tourists that visit and 

strain our infrastructure every year. Territorial roads continue to 

be under stress from inadequate capacity. And in the Virgin Islands most of the Federal highways do not meet current standards. 

Because the territories are islands, most of the road construction 

is much more expensive than the mainland to accommodate due to 

supplier costs, costs of transportation. As a result of inadequate 

funds, crucial projects have been shelved, leaving only stopgap repairs to resolve maintenance issues, even on primary artery highways.

I would like to emphasize that this negatively impacts everything, from commerce to disaster relief management, emergency response, law enforcement capacity, and my own shock-absorbing 

bills that I have to pay for our vehicle on the road. 

Extreme weather during hurricane season annually demonstrates how fragile our infrastructure is and how much we depend on it. The territories are generally less well off than the 

States economically, partly due to lower per capita domestic product. And we pay higher prices for many basic necessities. We do not 
40

have local revenue means to provide for needed highway infrastructure without Federal assistance. 

Although the goal of bringing the territories into economic parity 

with the States has been a principle embraced by several acts of 

Congress over decades of partnership work, this has yet to be fulfilled in the area of transportation infrastructure. Each of the territories were acquired for specific strategic purposes and we continue 

to be of vibrant strategic value to the United States. 

Accordingly, I request full funding at or above current authorization levels for the territorial highway program over the next fiscal 

year. I also join others in calling for enhanced funding for TIGER 

Grants, preferably at or above the fiscal 2017 requested levels of 

$1.25 billion. TIGER Grants have been particularly important for 

our ports and transshipment projects in the Virgin Islands, which 

we believe will have adequate benefit to us in terms of growing our 

economies.

I also welcome recent statements from leaders in Congress on 

both sides of the aisle for new supplemental transportation infrastructure programs and decisions by the President for this to be 

part of his agenda. 

If and when this committee will be working with the Authorizing 

Committee on any new transport expenditure program, it is imperative that the territories be fully incorporated in the package. New 

infrastructure projects in the Virgin Islands will create much-needed immediate jobs as well as help promote safety and security in 

an economy that is heavily based on tourism. There are numerous 

examples of needs that we have that are out of reach right now due 

to current levels of funding, but which could be covered with new 

or supplemental assistance. 

Again, I would point to our desire to really beef up our transshipment, our ports, which would grow our economy exponentially, 

provide jobs, and much-needed capital in the area. The U.S. Virgin 

Islands was purchased specifically because of our transshipment 

and our strategic location as the most easterly point in the United 

States.

In addition, investment in airports and continued pressure on 

airlift is crucial to a place like the Virgin Islands. I urge that any 

discretionary program reforms expand eligibility in funding for the 

Airport Improvement Program, which has been very important for 

the necessary modernization of our airport on St. Thomas, Cyril 

King Airport. 

We also depend on well-funding maritime infrastructure. And I 

will be seeking fair inclusion of the Virgin Islands in the NHS and 

FTA Ferry Programs to assist in the purchase of much-needed vessels to accommodate heightened transit demands along the route 

from St. Thomas to St. Croix. We at this point have to have duplicative services in every area, hospitals, our generators, everything 

because of the distance between the two major islands. Individuals 

cannot travel by airlift because of the cost, and so a ferry system 

would be really important to us to drive the cost down, stop some 

of the duplication, and really make our economy a much more vibrant one. 

I also strongly support the inclusion of school construction and 

broadband expansion programs in any new infrastructure package. 
41

Many of the people living in the Virgin Islands do not have ordinary access to the computer connected to the Internet and this continues to have a negative impact on educational opportunities, 

workforce development for a growing isolated island economy. 

Lastly, I would like to touch on housing-related programs, which 

service antipoverty tools for low-income people. Greater investment 

in home and CDBG Block Grants, Section 8 rental assistance, are 

critical for the availability of decent affordable housing in the Virgin Islands. These resources are especially important amid higher 

costs facing my constituents in communities across our country and 

I urge that they be strengthened through the next fiscal year. 

Thank you for the opportunity to present my testimony today. 

[The statement of Ms. Plaskett follows:] 
42

<Cougrc1H> nf t11c ~luitcil §tufc£l 

Ittu.sl!inghlll, :0(!1: 2ll515 

March 5. 2017 

Testimony submitted by: Congresswoman Stacey E. Plaskett (VI) 

Thank you Chairman Diaz-Balart, Ranking l\·1ember Price. for the opportunity to testify on 

appropriations for the Dcpat1rnents of Transportation and Housing and Urban Development over 

the next tlscal year. This legislation will serve as n stntemcnt of the commitment from the federal 

government to address some of our most pressing local needs in the U.S. Virgin Islands. 

In the United States territories. there arc nearly 4 million Americans, and we are too often left out 

of important programs or underfunded comrared to bcnclits available to Americans living on the 

mainland United States. For example in the U.S. Virgin Islands, despite benefits we bring to the 

United States including enormous tourism L'onm1crcc from airline visits, cnlisc ships 

and other vessels. federal transportation funding to the Jslamls falls behind other jurisdictions even 

though the traffic straining our infrastructure is often much greater due to the high number of 

visitors year-round. 

Territorial roads continue to be under stress Jl·om inadequate capacity, and in the Virgin 

Islands, most of the federal highways do not meet current standards. Because the territories are 

islands, much of the road construction is more expensive than on the mainland to accommodate 

supplier costs. As a result of inackquate funds, crucial projects have been she I vcd, kaving only 

stO[J!;ap repairs to resolve maintenance issues, even on rrimary arterial highways. 

I would like to emphasize that this negativ dy impacts ererylhing !i·om commerce. to disaster relief 

management, to emergency response and law enforcement carabilities. Extreme weather during 

hurricane season annually demonstrates how fi·agilc our inli'astructure is and how much we depend 

on it. 

The territories are generally less well off economically than the states due to a lower per capita 

domestic product, and we pay higher prices for many necessities. We do not have local 

revenue means to rrovide for needed highway infrastructure without adequate federal assistance. 

Although the goal of bringing the territories into economic parity with the states has been a 

principle embraced by several Acts of Congress over decades of partnership work, this bas yet to 

be fulfilled in the area of transportation infi·astructure. Each of the territories were acquired for 

srecitlc strategic purposes, and we continue to be of vibrant strategic value to the United States. 
43

!\ccordingly, I request full funding at or above current authorization lewis Cor the Territorial 

Highway Program over the next fiscal year. I also join others in calling !'or enhanced funding for 

TIGER grants over the next fiscal year, prci'erably Dt or above the ilscal 2017 requested level of 

$1.25 billion. 

I also welcome recent statements from leaders in Congress on both sides or the aisle for new, 

supplemental transportation and infrastructure programs. and the decision by the President 

for this to be p:ui of his agenda. 

If <md when this committee will be working with the authorizing committees on any new 

transport expenditure programs, it is imperative that the territories be fully incorporated into the 

package. New infrastructure projects in the Virgin Islands will create mud1 needed, immediate 

jobs, as well as help to promote safety and security in an economy that is heavily based upon 

tourism. There are numerous examples or needs we have that are out of our reach right now due 

to current levels of funding but which could be covered with new or supplemental assistance. 

fn addition, investment in airports and continued pressure on airlitt is critical to a place like the 

Virgin Islands, and I urge that any new discretionary program reforms expand eligibility and 

funding for the Airport improvement Program, which has been cntcial to the muchneeded modernization of Cyril King Airport on Saint Thomas. We also depend on wellfunctioning maritime int!-astrucllirc, and I will be seeking fair inclusion of the Virgin lslands in the 

National Highway System and Federal Transit Administration ferry programs to assist in the 

purchase of necessary vessels to accommodate heightened transit demand along the route from 

Saint Thomas to Saint Croix. 

I also strongly support the inclusion of school construction and broadband expansion programs 

in any new infi·astructure-funding package. 1v!any of the people living in the Virgin Islands do not 

have ordinary access to a computer connected to the internet, and this continues to have negative 

impact on educational opportunities and workforce development to grow om economy. 

Lastly, I would like to touch on housing-related programs, which serve as critical anti-poverty 

tools for lower-income people. Greater investments in HOME and CDBG block grants. and 

Section 8 rental assistance, arc critical for the availability of safe, decent, and affordable housing 

in the Virgin Islands. These resources arc especially important amid higher costs facing my 

constituents and communities across our country. and I urge that they be strengthened over the 

next tlscal year. 

Thank you again for the opportunity to present my testimony today. 
44

Mr. DIAZ-BALART. Let me thank our colleague for bringing up 

very important issues. And it is important. And this is a subcommittee that has always been very sensitive to making sure that 

our territories are not only not forgotten, but they are emphasized. 

Ms. PLASKETT. Thank you. I appreciate that. 

Mr. DIAZ-BALART. So thank you. And now I know that Mr. 

Aguilar, he does not feel comfortable voting for things unless he 

sees it personally, so he might have to—but we will have to work 

on the potential. 

Mr. AGUILAR. You did not talk about Houston, though. 

Ms. PLASKETT. Mr. Chairman, you know the end of the month is 

our 100th anniversary as being part of the United States. So all of 

you can come down for the celebrations on March 31 and get a view 

of it yourself, particularly you, Pete. 

Mr. DIAZ-BALART. Thank you very much. We appreciate your testimony and we look forward to working with you. 

Why don’t we then now take a short recess and let us reconvene 

at 11:25, if there is no objection. Without objection. 

[Recess]

Mr. DIAZ-BALART. Committee will come to order. Welcome, Mr. 

Cartwright.

Mr. CARTWRIGHT. Thank you, Chairman. 

Mr. DIAZ-BALART. Love to hear your positions. You have 5 minutes.

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. MATTHEW CARTWRIGHT, A REPRESENTATIVE IN CONGRESS 

FROM THE STATE OF PENNSYLVANIA 

Mr. CARTWRIGHT. All right, and I want to thank all my fellow appropriators for having me here today. Today, I want to talk about 

three policy areas where I urge your subcommittee to give attention during the fiscal year 2018 appropriations process. 

First one is lead hazard control. I want to invite your attention 

to the persistent problem of lead in our communities and to advocate for full funding support for the Office of Lead Hazard Control 

and Healthy Homes in the Department of Housing and Urban Development. Citizens across the country are rightly concerned about 

the threat of lead to public health, and obviously that was something that was brought to the floor in Flint, Michigan. But in districts like mine, the threat of lead comes not just from the public 

drinking water systems, but also from old plumbing and paint in 

our houses. 

As you may know, in fiscal year 2014, the Centers for Disease 

Control and Prevention spent nearly $2 million as a part of a 3- 

year funding commitment to help some of the biggest cities in the 

country monitor lead exposure. The results were alarming. In 

Pennsylvania, nearly 10 percent of the more than 140,000 kids 

tested had elevated levels of lead in their blood. 

The major cities in my district, Scranton and Wilkes-Barre, have 

a high percentage of homes built before the 1940s when the use of 

lead-used paint was highly prevalent. That is why I strongly sup-
45

port robust funding for HUD’s lead prevention programs. The Office of Lead Hazard Control and Healthy Homes provides funds to 

State and local governments to develop cost-effective ways to reduce lead-based paint hazards. 

In addition, the Office enforces HUD’s lead-based paint regulations, it provides outreach and technical assistance, and conducts 

technical studies to help protect children and their families from 

health and safety hazards in the home. As the problem of lead in 

our homes and its impact on our health and our children’s health 

persists, we need to continue this important work, and I do ask the 

subcommittee to provide full funding for that office’s efforts. 

Secondly, rail. I urge the subcommittee to increase its support for 

our long-neglected national railway network. In many parts of the 

world, especially in Europe and in the emerging fast-growing 

economies of Asia, citizens enjoy advanced modern inner-city railway systems that improve their quality of life, drive business activity, and boost productivity. America has fallen behind the curve in 

this area. 

In Northeastern Pennsylvania, where I live and represent, for example, our cities would benefit tremendously from rail links that 

connect our region to New York and New Jersey. This would help 

bring companies and growth to our region, improve the lives of the 

thousands of people who make a grueling commute, particularly 

from southern Monroe County, Pennsylvania, to greater New York 

City every day by car and bus. 

In addition, investment in rail decreases road congestions, improved transportation safety, and curbs our emission of pollutants 

that contribute to climate change. And I know that Chairman 

Frelinghuysen has getting those cars off the road in northern New 

Jersey as one of his priorities. 

By laying new tracks and increasing connectivity for our workers, entrepreneurs, and visitors, we will send a powerful signal to 

the private sector that our rural regions and cities are places where 

businesses can thrive and have access to resources, talent, and new 

ideas. In short, restoring an efficient railway network will create 

jobs in the near term and make our economy more competitive in 

the long term. 

And finally, aviation. 

I want to begin by commending the subcommittee’s work in the 

area of aviation over the last 8 years. This committee has provided 

more than 99 percent of the FAA’s budget requests. Your support 

of the programs and activities of the FAA are a recognition that the 

United States operates the largest, most complex air traffic control 

system in the world. 

In that regard, I want to urge the subcommittee to continue its 

vigorous support for the FAA’s effort to modernize our air traffic 

control system. Transitioning from ground-based radar navigation 

to satellite-based navigation is a complicated endeavor and through 

your support, the FAA has made noteworthy progress in its 

NextGen program from the installation of automatic dependent satellite broadcast ground stations to the advancements in data communications. Investments in NextGen will not only create a more 

efficient system, but will yield additional capacity and safety benefits.
46

Finally, I want to urge the subcommittee to continue to support 

efforts to ensure that our pilots are adequately trained and rested, 

to ensure our Nation’s excellent record of safety. In that regard, I 

hope you will resist any efforts to weaken or eliminate regulations 

that put the flying public at risk. Our Nation’s ATC system is a 

public asset and your work is supported by the millions of passengers that pay into the Airport and Airway Trust Fund each and 

every time they fly. I do hope you will continue to make your effort 

to ensure that our ATC system remains under your careful oversight.

I thank you for your time and I yield back, Mr. Chairman. 

[The statement of Mr. Cartwright follows:] 
47

The Honorable Matt Cartwright (PA-17) 

Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development, and Related Agencies 

Member's Day Testimony 

March 9, 2017 

Thank you Mr. Chairman, Ranking Member, and members of the subcommittee for the opportunity 

to speak with you today. In my testimony, I will highlight three policy areas where I urge this 

subcommittee to gi,·e attention to during the FY18 appropriations process. 

LEAD HAZARD CONTROL 

I first call attention to the persistent problem of lead in our communities and to advocate for full 

funding support for the () ffice of Lead Hazard Control and Healthy Homes in the Department of 

I lousing and Urban Development (I-IUD). Citizens across the country arc rightly concerned about 

the threat of lead to public health-a concern highlighted by the crisis in Flint, J\!ichigan. But in 

districts such as mine, the threat of lead comes not from the public drinking water systems but from 

old plumbing and paim in our homes. 

c\s you may know, in FY2014 the Centers for Disease Control and Prevention spent nearly $2 

tnil.lion as patt of a three-year funding cotntnitment to help sorne of the biggest cities in the countty 

monitor lead exposure. The results were alarming. In Pennsylvania, nearly 10 percent of the more 

than 140,000 kids tested had elevated levels of lead in tbeir blood. The major cities of my districtScranton and \\'ilkes Barre-have a high percentage of homes built before 1940s, wben the use of 

lead-based paint was still common. 

This is why I strongly support robust funding for I IUD's lead prevention programs. The Office of 

Lead Hazard Control and Healthy Homes prm-ides funds to state and local governments to develop 

-1-
48

cost-effectjve ways to reduce lead-based paint hazards. In addition, the office enforces BUD's leadbased paint regulations, provides public outreach and technical assistance, and conducts technical 

studies to help protect children and their families from health and safety hazards in the home. As 

the problem of lead in our homes and its impact on our health and our children's health persists, we 

need to continue this important work, and I ask the Subcommittee to provide full funding for this 

office's efforts. 

Second, I urge the Subcommittee to increase its support for our long-neglected national railway 

network. In many parts of the world, especially in Europe and in the emerging, fast-growing 

economies of Asia, citizens enjoy advanced, modern intercity railway svstems that improve their 

quality of life, drive business acti,·ity, and boost productivity. America has fallen behind the cun·e in 

this area. 

In Northeast Pennsylvania, for example, our cities would benefit tremendously from rail links that 

connect our region to New York and New Jersey. This will help bring companies and growth to our 

region and improve the lives of the thousands of people who make this grueling commute already 

by car. In addition, irwcstn1cnt in rail decreases road cong-estion, improves transportation safety, 

and curbs our emission of pollutants that contribute to climate change. By laying new tracks and 

increasing connectivity for our workers, entrepreneurs, and visitors, '--Ve will send a po\verful signal to 

the private sector that our rural regions and cities are phtccs where businesses can thrive and have 

access ro resources, talent, and new ideas. In short~ restoring an efficient raihvay network \Vill create 

jobs in the ncar term and make our economy more competitive in the long term. 

-2-
49

AVIATION 

I begin by commending the Subcommittee's work in the area of aviation. Over the last eight years, 

this Committee has provided more than 99°/o of the Federal c\viation i\dministtation's budget 

request. Your support of the programs and activities of the FAA are recognition that the United 

States operates rhc largest, most complex air traffic control system in the world. 

In thar regard, I want to urge the Subcommittee to continue its vigorous support for the FAA's 

effort to modernize our air traffrc control system. Transitioning from ground-based radar 

nm·igation to satellite-based navigation is a complicated endca,·or and through your support, the 

FAA has made noteworthy progress in irs NcxtGcn program, from the installation of automaticdependent satellite broadcast ground stations to the advancements in data communications. 

Investments in NcxtCen will not only create a more eftlcient system but will yield additional 

capacity and safety benefits. 

Finally, T urge the Subcommittee to continue to support efforts to ensure that our pilots are 

adequately trained and rested to ensure our nation's excellent record of safety. In that regard, I hope 

that you will resist any efforts to weaken or eliminate anv regulations that might put the flying public 

at risk. 

Our nation's air traftic control S\'stcm is a public asset and your '>vork is supported by the millions of 

passengers that pav into the airport and airway trust fund each and every time they fly, I hope you 

will continue to make your effort to ensure that our air traffic control system remains under your 

careful oversight. Thank you for your time. 

-3-
50

Mr. DIAZ-BALART. Thank you, Mr. Cartwright. Your time has expired. Anyone have any questions? Thank you for your time here 

today.

Moving along. Recognized now, Congresswoman Diaz Barraga ́n.

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. NANETTE DIAZ BARRAGA ́ N, A REPRESENTATIVE IN CONGRESS 

FROM THE STATE OF CALIFORNIA 

Ms. BARRAGA ́ N. Yes, thank you very much. Thank you, Mr. 

Chairman, the ranking member, and members of the Transportation and Housing and Urban Development Subcommittee. I want 

to thank you for an opportunity to allow me to speak to you today. 

I am one of the new members of Congress. I represent California’s 

44th Congressional District. It includes the Port of Los Angeles and 

San Pedro, and then goes through areas like Compton and Watts, 

up into Southgate. 

Most notably, as I mentioned, is the Port of Los Angeles is in my 

district. It is North America’s largest seaport. It touches every single congressional district in this country. I am proud to represent 

the thousands of workers that are directly and indirectly associated 

with the Port of Los Angeles. The San Pedro Bay ports, which includes both the L.A. port and the Long Beach port, accounts for 

one-quarter of the Nation’s cargo and supports over 3 million jobs 

nationwide.

My message today is simple. I urge you to invest in our Nation’s 

freight transportation network, particularly on the multimodular 

transportation and on programs that provide comprehension solutions to combat homelessness. 

I want to start first with the freight transportation. With raising 

freight volumes, increasing population density, and growing international competition, we need to make sure to maintain and modernize and expand our infrastructure, including landslide freight 

connections that are necessary to move goods to and from our 

ports. A competitive grant program for freight and multimodular 

transportation, like fast-lane grants, will improve congestion, air 

quality, and helps goods get to where they need to go faster. 

In 2014, the FAST Act was enacted into law, making freight a 

national issue, and the first time that ports and freight were fully 

integrated into the surface transportation network. Now, the FAST 

Act also established dedicated freight programs, including discretionary grant programs known as FASTLANE, which authorized 

$4.5 billion over 5 years. The goals of the FASTLANE program are 

to increase the U.S. global economic competitiveness, reduce congestion and bottlenecks, increase efficiency and reliability of the 

highway network, and reduce the environmental impact of freight 

movement.

In keeping with these goals, one particular program that is of national significance is something that was just funded in 2017 for 

the—rather, an application for the fiscal year 2017 program at the 

Port of Los Angeles. We submitted an application known as America’s Global Freight Gateway Southern California Rail Project. This 
51

request represents only 29 percent of the project’s total cost. This 

investment is needed to accommodate more cargo via on-dock rail 

at the largest port complex in the Western Hemisphere while reducing community impacts inland by grade, separating high-priority railroad crossings. 

Now, the two Port of Los Angeles project components currently accommodate approximately $6 million for—rather, sorry, they accommodate approximately 6 percent of all waterborne containers 

entering and exiting the United States. 

So I urge the subcommittee to fund FASTLANE grants at the au- thorized amounts of $900 million for fiscal year 2018, and $850 

million for the fiscal year 2017. I also want to mention that Congress should consider raising or eliminating the $500 million lifetime cap for multimodule projects, like highway connectors and ondock rail, that are needed to move goods to and from our port. 

I will move on to homelessness. It is a issue that has just been 

exploding just throughout the country, more so in Los Angeles. And 

my district in Los Angeles County has the highest homeless population in the Nation with 47,000 homeless men, women, and children on any given night. It has reached epidemic proportions and 

I urge this body to support programs that will help break the silence, the cycle of homelessness. 

Just to highlight one of the programs is the Continuum of Care. 

It provides a comprehensive solution to homelessness epidemic 

which emphasizes housing first and provides supportive services. 

In Carson and Compton, both in my district, the L.A. County Continuum of Care has been crucial in preventing a return to homelessness by providing comprehensive solutions that previous efforts 

lacked. The funds can be used to provide transitional housing, 

rapid rehousing, permanent supportive housing, support services, 

and planning to improve program performance. It has been successful and I urge the subcommittee to support the $2.7 billion for 

homeless assistance grants for fiscal years 2018 and 2017, specifically, the Continuum of Care program at $2.4 billion for both fiscal 

years.

To maintain housing affordability and prevent people from becoming homeless in the first place, we should support key programs that ensure access to affordable housing, such as the Community Block Development Grants. Since fiscal year 2010, CDBG 

has been cut nearly 25 percent, amounting to roughly $1 billion annually. So just to get to the end here, I urge this committee to support things like HUD–VASH at a funding level of $75 million for 

both fiscal years 2018 and 2017. We do not have to accept homelessness. I think it is a solvable problem, and I thank this subcommittee for your time. 

[The statement of Ms. Barraga ́n follows:] 
52

U.S. Representative Nanette Diaz Barragan (CA-44) 

Testimony 

House Appropriations Subcommittee on Transportation, Housing and Urban Development 

March 9, 2017 

Chairman Diaz-Balart, Ranking Member Price and Members of the Transportation and Housing 

and Urban Development Subcommittee, I want to thank you all for allowing me the oppotiunity 

to provide testimony today. 

I am Nanette D. Barragan and I represent California's 44'11 congressional district which includes 

San Pedro, Wilmington, South Gate, Watts, Compton and North Long Beach. 

Most notably, the Port of Los Angeles, North America's largest seaport by container volume and 

cargo value. is in my district. 

I am proud to represent thousands of workers that are directly and indirectly associated with the 

Port of Los Angeles. 

The San Pedro Bay Pmis Complex, which includes both the Ports of Los Angeles and Long 

Beach. accounts for one quarter of the nation's cargo and it supports over 3 million jobs 

nationwide. 

My message today is simple: I urge you to invest in our nation's freight transportation network, 

particularly on multimodal transportation. 

The American Society of Civil Engineers has graded our entire infrastructure system, our pOlis, 

roads, bridges and rail system, with aD+, costing American families thousands of dollars each 

year. 
53

The Army Corps of Engineers estimates that 95 percent of overseas trade moves through our 

ports. 

With rising freight volumes, increasing population density and growing international 

competition, we need to maintain, modernize and expand our infrastructure, including landside 

freight connections that are necessary to move goods to and from our ports. 

Competitive grant programs for freight and multimodal transportation like the FASTLANE and 

TIGER grants will improve congestion, air quality and help goods get to market faster. 

In 2014, the FAST Act was enacted into law, making freight a national issue and the first time 

that ports and freight were fully integrated into the surface transpmiation network. 

The FAST Act also established dedicated freight programs, including the Nationally Significant 

Freight and Highways Program, a discretionary grant program also known as F ASTLANES 

which is authorized at $4.5 billion dollars over 5 years. 

The goals of the FASTLANE grams program are to increase U.S. global economic 

competitiveness, reduce congestion and bottlenecks, increase the efficiency and reliability of the 

highway network and reduce the environmental impact of freight movement. 

I urge the Subcommittee to fund F ASTLANE grants at the authorized amounts of $900 million 

dollars for Fiscal Year 2018 and $850 million for Fiscal Year 2017. 

I would also simply like to mention that Congress should consider raising or eliminating the 

$500 million dollar lifetime cap for multimodal projects like highway connectors and on-dock 

rail that are needed to move goods to and from ports. 
54

I also urge the Subcommittee to fund "national infrastructure investment'· also known as TIGER 

at $1.25 billion dollars for both Fiscal Years 2018 and 2017. 

TIGER is a multimodal, multi-jurisdictional competitive grant program that has leveraged $700 

million dollars for the freight network since 2009. 

The port-related f!·eight network is in need of $29 billion dollars. 

While we wait for Congress to consider an infrastructure package, we should invest to the fullest 

amount possible in the freight network, especially on multi modal projects. 

Thank you for your time. 
55

Mr. FRELINGHUYSEN. Thank you very much for your testimony 

here today. Appreciate it. Any questions? Hearing none, thank you. 

Now I have Congressman Johnson from the fine State of Louisiana.

THURSDAY, MARCH 9, 2017 

WITNESS

HON. MIKE JOHNSON, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF LOUISIANA 

Mr. JOHNSON. That is right, Mr. Chairman. Thank you and committee members. We will go from the other L.A. to the real L–A 

and that is Louisiana, right? 

I appreciate the opportunity to come before you today to consider 

funding priorities for the fiscal year 2018. I am grateful for your 

continued support of our Nation’s infrastructure and transportation 

priorities.

Given the importance of northwest Louisiana’s unique national 

security footprint and mixed infrastructure needs, I am truly 

thankful for the opportunity to bring important and noteworthy 

projects to your attention. I am going to try to speak quickly so I 

can get it all in. 

Today I share my support for providing adequate formula funding for the FAST Act, and specifically grant opportunities in the 

FASTLANE program to aid the national needs we have heard here 

today. My district, Louisiana’s Fourth Congressional, contains five 

of the nine Louisiana Department of Transportation State sectors, 

and that makes us the largest. Within that area, my district contains 3,403 bridges; a total of over 20,000 miles of local and interstate roadway. It is also home to four shallow draft port authorities 

with 485 miles of navigable waterways, 7 freight railroads, and 875 

miles of railroad track. Every single one of these areas are in need 

of immediate attention. 

We are a poor State and I know there are many needs in your 

own districts, as well. Long-term statewide transportation plans 

have identified incredibly significant amounts in transportation 

needs right now. And we demonstrated that without adequate 

funding of about $1.86 billion to address these critical infrastructure projects, efforts aimed to improve safety needs will go 

unaddressed.

Louisiana, despite maximizing and capturing available Federal 

dollars every year, sees a transportation budget that is only about 

6- to $700 million annually, and it puts us drastically short of our 

critical needs. 

Just as many of the other members have here stated, my State 

is in desperate need of immediate action. To provide just a few examples of the critical issues in this district, since January alone, 

we have had nine bridges that have been forced to shut down. According to official reports in recent years, northwest Louisiana’s 

economic health and our quality of life are at risk if these transportation and infrastructure funding challenges continue to go unanswered. Without the necessary funding, it will not be possible to re-
56

verse the damage done by previous year’s failures to address these 

economic challenges. 

In the Fourth Congressional District of Louisiana alone, our 

statewide plan identifies at least 13 category A through D 

megaprojects.

Given the realities of needing to maintain a fiscally balanced 

budget, we obviously accept that every infrastructure project cannot be met. But despite this fact, we have been presented with an 

opportunity to once again prioritize the most important and noteworthy projects. So in addition to advocating for adequate funding 

formula for the FAST Act, I would also ask that the committee support competitive grant opportunities and the FASTLANE program. 

I would like to provide some specific examples, very quickly, of 

the infrastructure and highway projects in my district that are critical for improving not only the local economy, but national security, 

as well. 

First, funding for the final portion of I–49. We have got 3.6 miles 

of the proposed new highway that will intersect Shreveport, our 

largest city, in order to connect to I–49, at the I–20 interchange 

with I–49 North near the I–220 interchange. This will add a seamless and helpful connection for a highway that extends all the way 

from Canada to New Orleans. This project will reduce travel time 

and travel distance for those remaining on I–49, and provide a 

more direct access to downtown Shreveport, as well as align needs 

for supporting current Air Force plans for our Air Force base at 

Barksdale.

A second example is with the interstate project of I–69. It has 

been named by the U.S. DOTD as one of the six corridors of the 

future. And construction of I–69 is critically important to provide 

exponential resources to the port of Shreveport Bossier, Barksdale 

Air Force Base, and a much-needed loop around the urban area of 

Shreveport and Bossier City. In northwest Louisiana, the sections 

of independent utility 14, 15, and 16 need to be completed in order 

for the project to continue. 

Third, we have a project that would greatly benefit from these 

programs, the interstate widening efforts for I–49 and I–20 in the 

Fourth Congressional District. The I–20 corridor is congested with 

vehicle traffic at several points with conditions expected to worsen 

in the coming years. And grant opportunities have the potential to 

allow for further development of these interstates. They are critical 

for the economies of the local regions and States. 

Bossier Parish is one of the fastest growing areas of our State, 

and this rapid growth has caused severe traffic congestion, especially on Highway 3 and Highway 3105, Benton Road and Airline 

Drive. And that congestion threatens future development in the 

area. We have to act now. We need funding for that. 

Last but not least, I would like to mention the Barksdale Air 

Force Base gate project. Barksdale is a key national security asset 

located in Bossier Parish that does not have sufficient direct access 

to the interstate system. It is an issue which is a hindrance to national Air Force priority, and I met with our four-star general there 

about this 2 weeks ago. 

The State is advancing a project to fix this, supporting DOD’s investment in our national security and in our State. The project will 
57

improve base security and connect the new public road extending 

from I–20 at the I–220 interchange to a new gate at Barksdale Air 

Force Base, moving the commercial vehicle inspection station away 

from aircraft approach. We think this is critical, especially for the 

future weapons storage and maintenance facility that will be there. 

And it has a preliminary cost estimate of 80- to $100 million. However, there is an immediate $11.8 million fiscal year 2019 MILCON 

request by the Air Force which has been briefed to the Secretary 

of Transportation and our State’s governor. 

Like each of you, I have got dozens of projects that I could go 

on about. I realize that I am quickly running out of time, but in 

addition to these new capacity projects, costs to maintain the transportation system we already have continue to grow. Providing the 

needed resources to competitive grant opportunities in the 

FASTLANE program to address longstanding challenges will serve 

as an economic generator and help protections for Louisiana, 

Texas, Arkansas, and our surrounding areas. It is my understanding that many of these top priority infrastructure projects 

have been raised to the President, as well as to our governor. 

I know I am out of time and I want to thank you again for your 

hard work and your diligent efforts on all these things. 

[The statement of Mr. Johnson follows:] 
58

Testimony of Congressman Mike Johnson (LA-04) 

Submitted to the Appropriations Subcommittee on Transportation, Housing and Urban 

Development, and Related Agencies 

March 9, 2017 

Thank you, Mr. Chairman, Mr. Ranking Member and members of the committee. 

I appreciate the oppottunity to come before you today as you consider funding priorities for the 

fiscal year of 2018. I ask for your continued support of our nation's infrastructure and 

transportation priorities. 

Given the importance of Northwest Louisiana's unique national security footprint and mixed 

infrastructure needs, I am very thankful for the opportunity to bring important and noteworthy 

projects to your attention. Today I share my supp011 of providing adequate formula funding for 

the Fixing America's Surface Transportation (FAST) Act, specifically grant opportunities and 

the F ASTLANE program, to aid the national needs we have heard here today. 

l recently learned that Louisiana's Fourth Congressional District contains five of the nine 

Louisiana Depattment of Transportation's (LA DOTD) state sectors, making it the largest. 

Within that area, my district contains 3,403 bridges and a total of over 20,000 miles of local and 

interstate roadway. lt is also home to four shallow draft port authorities, with 485 miles of 

navigable waterways, seven freight railroads and 875 miles of railroad track. Every one of these 

areas are in need of attention, as I am sure they are in many of your districts. 

Long-term statewide transportation plans have identified incredibly significant amounts in 

transportation needs, and demonstrated that without adequate funding, of $1.86 billion, to 

address critical infrastructure projects efforts aimed to improve safety needs will go unaddressed. 

Louisiana, despite maximizing and capturing available federal dollars every year, sees a 
59

transportation budget that is only about $600-700 million annually, putting it drastically short of 

its needs. 

Just as many of the other members here have stated, my state is in desperate need of immediate 

action. To provide just a few examples of the critical issues in my district, since January alone, 

nine bridges in my district were forced to shut down. According to ot1icial reports in recent 

years, Northwest Louisiana's economic health and quality of life may be at risk if these 

transportation and infrastructure funding challenges continue to go unanswered. Without the 

necessary funding, it will not be possible to reverse the damage done by previous years' failures 

to address economic challenges. 

[n the 4th congressional district of Louisiana alone. our statewide plan identifies at least 13 

category A through D megaprojects. Given the realities of needing to maintain a fiscally 

balanced budget, I am aware that every infrastructure project cannot be met. Despite this fact, we 

have been presented with an opportunity to once again prioritize the most important and 

noteworthy projects. In addition to advocating for adequate formula funding for the FAST Act, l 

would also ask that the Committee support competitive grant opportunities and the FASTLANE 

program. I'd like to provide some specific examples of infrastructure and highway projects in 

my district that are critical for improving national security and growing the local economy. 

>- First, funding of the final portion of I-49. The 3.6 miles of proposed new highway 

will intersect Shreveport in order to connect l-49 at the I-20 interchange with 1-49 

North near the l-220 interchange. This will add a seamless and helpful connection 

for a highway that extends from Canada to New Orleans. This project will reduce 

travel time and travel distance for those remaining on [-49 and provide a more 
60

direct access to downtown Shreveport as well as align needs for supporting 

current Air Force plans for Barksdale Air Force Base. 

> A second example is with the interstate project ofl-69. As named by the U.S. 

DOT as one of the six "Corridors of the Future", construction of 1-69 is critically 

important to provide exponential resources to the Port of Shreveport-Bossier, 

Barksdale Air Force Base and a much-needed loop around the urban area of 

Shreveport and Bossier City. In Northwest Louisiana, the Sections of Independent 

Utility (SIU) 14, 15 and 16 need to be completed in order for the project to 

continue. 

> A third example of a project that would greatly benefit from these programs is 

interstate widening efforts for I-49 and 1-20 in the 4th Congressional District. The 

1-20 corridor is congested with vehicle traffic at several points with conditions 

expected to worsen in the coming years. Grant opportunities have the potential to 

allow for further development of these interstates that are crucial to the economies 

of the local regions and states. 

> Bossier Parish is one of the fastest growing areas of our state. This rapid growth 

has caused severe traffic congestion, especially on Highway 3 (Benton Road) and 

Highway 3105 (Airline Drive). The increased congestion threatens future 

development in the area, and we must act now to ensure that new growth does not 

hinder further progress. Improvements and expansion of existing infrastructure on 

these roads will support further grow1h. 

> Lastly, I'd like to mention the Barksdale Air Force Base (BAFB) Gate Project. 

Barksdale AFB is a key national security asset located in Bossier Parish that does 
61

not have sufficient, direct access to the interstate system an issue which is a 

hindrance to a national Air Force priority. The state of Louisiana is advancing a 

project to tix this, supporting the Department of Defense's investment in our 

national security and in Louisiana. This project will improve base security and 

connect a new public road extending from the 1-20 at the 1-220 interchange to a 

new gate at Barksdale Air Force Base, moving the commercial vehicle inspection 

station away t!·om aircraft approach. According to the Air Force this 

transportation project will remove a current national security risk, and add in 

necessary Force Protection components for a future Weapons Storage and 

Maintenance Facility, as well as alleviate traffic congestion and delay. The project 

is currently in the environmental phase and has a preliminary cost estimate of 

$80-100 million. However, there is an immediate $11.8 million FY19 M!LCON 

request by the Air Force which has been briefed to Secretary of Transportation 

and Louisiana Governor. 

Like each of you, I could go on about the importance of dozens of projects. In addition to these 

new capacity projects, costs to maintain the transportation system we already have continue to 

grow. Providing the needed resources to competitive grant opportunities and the F ASTLANE 

program to address long-standing challenges will serve as an economic generator and help build 

protections for Louisiana, Texas, Arkansas and the surrounding states. 

It is my understanding that many of these top priority infrastructure projects have been raised to 

the president as well as to our governor. 

Thank you again for the ability to provide testimony on Louisiana's transpmtation and 

infrastructure priorities, many of which have a direct impact on our national security 
62

infrastructure and overall economy. The infrastructure needs I have raised today are of great 

importance to the future stability of my district and the economic strength of not only Louisiana, 

but our nation as a whole. 
63

Mr. DIAZ-BALART. Let me thank you, Congressman Johnson, for 

your testimony. You obviously know we are always here to continue 

to work with you. This subcommittee is anxious and willing to 

work with you on issues that are important to you, and we want 

to thank you for your testimony. And remember also if there is 

anything else you would like to put on the record, you are more 

than welcome to do so. We look forward to working with you. 

Mr. JOHNSON. Thank you very much. Appreciate that very much. 

Mr. DIAZ-BALART. Thank you, sir. I will now recognize Congressman Byrne from the great State of Alabama, somebody I have had 

the privilege of working with on a number of issues, so it is a privilege to have you here, sir. Thank you. You are recognized. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. BRADLEY BYRNE, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF ALABAMA 

Mr. BYRNE. Thank you, Mr. Chairman. I might say I am from 

the other L–A, lower Alabama. 

Mr. DIAZ-BALART. I always thought that was part of Florida, by 

the way, lower Alabama. 

Mr. BYRNE. It used to be at one time. We were the independent 

nation of West Florida for about 10 months in the 1810s, and neither the British nor the Americans thought that was a good idea, 

so we are part of America now. 

Mr. DIAZ-BALART. Well, it is a pleasure to have you here. Thank 

you, sir, and you are recognized. 

Mr. BYRNE. Thank you very much. It is a pleasure for me to be 

here today. I want to applaud the efforts of this committee which 

have resulted in steady progress towards improving our Nation’s 

infrastructure.

I was proud to support the Fixing America’s Surface Transportation, or FAST, Act back in 2015, and I support the financing necessary to ensure the bill’s implementation. 

Despite our best efforts, there are many areas across the country 

that continue to have major transportation needs. For example, we 

continue to have a real transportation problem on I–10 along the 

Gulf Coast. 

In my hometown of Mobile, I consistently and repeatedly experience delays at the George Wallace Tunnel. Due to the tunnel’s 

height and odd design, traffic accidents and incidents often occur. 

These result in people traveling around I–10 sitting in traffic for 

hours, pushing toward 3- to 4-hour delays in the summer months 

as people are traveling to and from the beaches. Some of those are 

Florida beaches, Mr. Chairman. 

This portion of I–10 is incredibly important to our area as well, 

given its close proximity to the Port of Mobile and the need to ensure the safe and expedient flow of commerce to and from the port. 

Just as important, I–10 serves as an evacuation route during 

hurricane season, and I know I do not have to tell you the importance of that, Mr. Chairman. The current traffic situation could re-
64

sult in Americans being left in harm’s way during a severe weather 

event.

We have made important progress over the last few years working together with local, State, and Federal officials to move forward 

with a new I–10 bridge across the Mobile River. Former Secretary 

of Transportation Foxx came to Mobile to see the project, and he 

saw the need firsthand. 

So, I ask the committee to fully fund the various transportation 

programs in the FAST Act in order to allow projects like the I–10 

bridge in Mobile to move forward. This project is a textbook definition of a nationally and regionally significant highway project. 

I am encouraged by President Trump’s commitment to improving 

infrastructure. I completely agree with the President. However, we 

must be smart about how we make these future investments to rebuilding and boosting our Nation’s infrastructure to ensure precious resources are not wasted on unnecessary or wasteful projects, 

which brings me to my other reason for sitting before you today. 

I want to urge the committee to avoid mistakes from the past, 

like funding for California high-speed rail. Looking back at 2009, 

the Obama administration spent $8 billion for transportation. Onequarter of that funding, $2 billion, went to California high-speed 

rail. This project was by no means ‘‘shovel ready.’’ In fact, more 

than 8 years later, the land has not even been fully procured to 

complete the project. Today, California has not met any of the obligations to match the Federal funding. Even worse, almost another 

billion dollars was given to California in 2010, and the project remains embarrassingly behind schedule. 

The Los Angeles Times reported that the project ‘‘will cost tax- payers 50 percent more than estimated, as much as $3.6 billion 

more, and that is just for the first 118 miles through the Central 

Valley, which was supposed to be the easiest part of the route between Los Angeles and San Francisco.’’ 

This is the definition of a boondoggle, Mr. Chairman. We all 

heard about the ‘‘Bridge to Nowhere.’’ It is safe to call this the 

‘‘Train from Nowhere to Nowhere.’’ 

This is one of the largest wastes of taxpayer money ever. Given 

the many serious transportation needs around the country, it is a 

shame so much funding was wasted on California high-speed rail. 

I hope the committee will use this disaster example of California 

high-speed rail to ensure funding is going, first and foremost, to 

nationally and regionally significant projects instead of boondoggles. We must make smart investments in our Nation’s most serious infrastructure needs. 

Thank you very much for your time today. I appreciate the opportunity to share my thoughts. 

[The statement of Mr. Byrne follows:] 
65

Appropriations Member Day Statement 

Transportation, Housing and Urban Development Subcommittee 

Representative Bradley Byrne 

Alabama's First District 

March 9, 2017 

Chairman Diaz-Balart, Ranking Member Price, distinguished members of the 

committee; it is my pleasure to appear before you today to testify on funding for 

our nation's transportation and infrastructure priorities. There is clear bipartisan 

interest in boosting infrastructure funding, and this momentum is very 

encouraging. That said, we must also make sure we get it right and that the focus 

remains on our nation's most pressing transportation needs. 

I applaud the efforts of this Committee, which have resulted in steady progress 

toward improving our nation's infrastructure, such as highways, bridges, airports 

and seaports. I was proud to support the Fixing America's Surface Transportation 

(FAST) Act back in 2015, and I support the continued funding necessary to ensure 

the bill's full implementation. 

This includes funding for projects focused on easing congestion and facilitating the 

movement of freight on the Interstate System. Specifically, I'm talking about 

projects like the National Highway Freight Program, FASTLANE Grants for 

Nationally Significant Freight and Highway Projects, and TIGER Grants. I know 
66

for a fact that programs such as these have had a significant impact in my district. I 

must also note the importance of striking a balance between projects in urban areas 

and the need to focus on rural projects that are sometimes overlooked. 

Despite our best efforts, there are many areas across the country that continue to 

have major transportation needs. For example, we continue to have a real 

transportation problem on I-1 0 along the Gulf Coast. In my hometown of Mobile, 

1-10 consistently and repeatedly experiences delays at the George Wallace Tunnel. 

Due to the tunnel height and odd design, traffic accidents and incidents often 

occur. These result in people traveling along 1-10 sitting in traffic for hours, 

pushing toward three to four hour delays in the summer months as people are 

traveling to and from the beaches. 

This portion ofl-1 0 is incredibly important area as well, given the close proximity 

of the Port of Mobile and the need to ensure the safe and expedient flow of 

commerce to and from the Port. Just as important, 1-10 also serves as an evacuation 

route during hurricane season, and the current traffic situation could result in 

Americans being left in harm's way during a severe weather event. 
67

We have made important progress over the last few years working together with 

local, state, and federal officials to move forward with a new 1-10 bridge across the 

Mobile River. Fonner Secretary of Transportation Foxx has been to Mobile to see 

the project and the need for a bridge firsthand. 

So, I ask the Committee to fully fund the various transportation programs in the 

FAST Act in order to allow projects like the 1-10 Bridge in Mobile to move 

forward. This project is a textbook definition of a nationally and regionally 

significant highway project. 

I am encouraged by President Trump's commitment to improving infrastructure. 

Just last week, during his address to the Joint Session of Congress, he was clear 

when he stated, "Crumbling infrastructure will be replaced with new roads, 

bridges, tunnels, airports and railways gleaming across our beautiful land." 

I completely agree with the President that infrastructure must be a priority in the 

near future. However, we must be smart about how we make these future 

investments to rebuilding and boosting our nation's infrastructure to ensure 

precious resources are not wasted on unnecessary or wasteful projects. 
68

This brings me to my other reason for sitting before you today. I want to urge the 

Committee to avoid mistakes from the past, like funding for California High Speed 

Rail. 

Looking back at 2009, the Obama Administration spent $8 billion for 

transportation. One quarter of that funding, $2 billion dollars, went to California 

High Speed Rail. This project was by no means "shovel ready.'' In fact, more than 

eight years later, the land is not even fully procured to complete the project. 

To date, California has not met any of the obligations to match the federal funding. 

Even worse, almost another billion dollars was given to California in 2010 and the 

project remains embarrassingly behind schedule. 

The Los Angeles Times reported last month that the project "will east taxpayers 

50% more than estimated as much as $3.6 billion more. And that's just for the 

first 118 miles through the Central Valley, which was supposed to be the easiest 

part of the route between Los Angeles and San Francisco." 

This is the definition of a boondoggle. Mr. Chairman, we all heard about the bridge 

to nowhere. Well it is safe to call this the train from nowhere to nowhere. This is 
69

undoubtedly one of the largest wastes of taxpayer money ever. Given the many 

serious and dire transportation needs around the country, it is a dire shame so much 

funding was wasted on California High Speed Rail. 

I hope the Committee will use the disastrous example of California High Speed 

Rail to ensure funding is going first and foremost to nationally and regionally 

significant projects instead of boondoggles. We must have a concentrated effort 

to make smart investments in our nation's most serious infrastructure needs. 

Thank you very much for your time today. I appreciate the opportunity to share my 

thoughts 
70

Mr. DIAZ-BALART. Let me take this opportunity to thank you, sir. 

Again, you know, you have demonstrated always in my working 

with you that you are thorough, you are serious, and you do your 

homework. So, I just want to thank you, and just know that we appreciate your testimony and look forward to continuing to work 

with you, sir. 

Mr. BYRNE. Thank you, Mr. Chairman. Good to be with you. 

Mr. DIAZ-BALART. Thank you. 

Mr. GRAVES. Mr. Chairman? 

Mr. DIAZ-BALART. Yes? 

Mr. GRAVES. If you are ever in California, I would love to take 

the opportunity to show you around on what they are doing out 

there in my part of the country. The Central Valley portion of it 

does touch my district, and it even comes to the point where we 

think it might even touch my own personal property. I would be 

happy to show you around and let you see from the perspective of 

those who are there what it is really like. 

During your testimony, I would say you were pretty accurate in 

your description. 

Mr. BYRNE. Thank you. 

Mr. DIAZ-BALART. Thank you. Seeing no further questions, we 

will now recognize the distinguished gentleman from New Jersey, 

Mr. Albio Sires, I think one of the hardest working members of 

Congress.

Mr. SIRES. Wow. 

Mr. DIAZ-BALART. Absolutely. Congressman Sires, it is a privilege 

to have you here, sir, and you have the floor. Make sure your 

microphone is on. 

Mr. SIRES. Is it on? Can you hear me? 

Mr. DIAZ-BALART. Yes. Thank you, sir. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. ALBIO SIRES, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF NEW JERSEY 

Mr. SIRES. Well, thank you for affording me the time to express 

my support for two critical programs that will be included in the 

fiscal year 2018 appropriations bill, the Community Development 

Block Grant Program and the HOME Investment Partnerships 

Program of the Department of Housing and Urban Development. 

As a former mayor, I understand how critical these programs are 

to communities across the country, especially our low-income communities. As you may know, President Gerald Ford signed this legislation creating the CDBG Program in 1974 to provide annual formula grants to local governments and States. 

Over 40 years later, the CDBG Program continues to provide 

funding for critical projects across our country that urban and rural 

communities would otherwise be unable to afford. These grants 

make investments in local and regional infrastructure, spur job creation, and fight poverty in communities that need it the most. 

Communities utilize this funding to rebuild streets, rehabilitate 

community centers, improve parks, and replace water mains that 
71

are badly in need of repair. These funds also support youth and 

homeless services, employment training, and projects to provide 

suitable living for the disabled. 

Importantly, these funds are flexible enough that local officials 

can direct them in areas that need them the most. The CDBG Program has been incredibly successful throughout its 40-year history, 

and I know firsthand it has made a lasting impression on towns 

and cities across America. 

Like the CDBG Program, the HOME Program supports projects 

that would not otherwise be feasible. Using HOME funds, communities partner with local nonprofits to fund projects renovating and 

building or purchasing affordable housing for lower income Americans. These projects provide shelters for veterans, senior citizens, 

and the working poor. 

As our Nation’s affordable housing infrastructure grows older, 

grants from the HOME Program become more and more critical to 

providing safe and affordable housing for those who need it most. 

On behalf of 1,000 cities in New Jersey’s congressional districts 

and the thousands of people impacted by these programs, I urge 

you to support both the CDBG Program and the HOME Program 

as you continue your appropriations process. Thank you very much 

for the time given to me today. 

[The statement of Mr. Sires follows:] 
72

1 

Rep. Albio Sires (NJ-08) 

Statement Before the Subcommittee on Transportation, Housing and Urban Development, 

and Related Agencies 

March 9, 2017 

Chairman Diaz-Balart, Ranking Member Price, and members of the Subcommittee: 

Thank you for affording me the time to express my support for two critical programs that 

will be included in the fiscal year (FY) 2018 T-HUD appropriations bill: the Community 

Development Block Grant (CDBG) Program and the HOME Investment Partnerships (HOME) 

Program at the Department of Housing and Urban Development (HUD). As a former Mayor, I 

understand how critical these programs are to communities across the country, especially our 

low-income communities. 

As you may know, President Gerald Ford signed legislation creating the CDBG Program 

in 1974 to provide annual formula grants to local governments and States. Over forty years later, 

the CDBG Program continues to provide funding for crucial projects across our country that 

urban and rural communities would otherwise be unable to afford. These grants make 

investments in local and regional infrastructure, spur job creation, and fight poverty in 

communities that need it most. 

Communities utilize this funding to rebuild streets, rehabilitate community centers, 

improve parks, and replace water mains that are badly in need of repair. These funds also support 

youth and homeless services, employment training, and projects to provide suitable living for the 

disabled. Importantly, these funds arc flexible enough that local officials can direct them in areas 

that need them the most. The CDBG Program has been incredibly successful throughout its 
73

2 

forty-three year history and I know first-hand that it has made a lasting impact on towns and 

cities across America. 

Like the CDBG Program, the HOME Program supports projects that would not otherwise 

be feasible. Using !lOME funds, communities partner with local nonprofits to fund projects 

renovating, building, or purchasing a!Tordable housing for low-income Americans. These 

projects provide shelter for veterans, senior citizens, and the working poor. As our Nation's 

affordable housing infrastructure grows older, grants from the HOME Program become more 

and more crucial to providing safe and affordable housing for those who need it most. On behalf 

of the towns and cities in New Jersey's 8th Congressional District and the thousands of people 

impacted by these programs, I urge you to support both CDBG Program and the HOME Program 

as you continue the appropriations process. 

Thank you for your time and I yield back. 
74

Mr. DIAZ-BALART. Let me just thank you, Congressman. Mr. 

Price.

Mr. PRICE. Thank you, Mr. Chairman. I want to join you in 

thanking our colleague for short but persuasive testimony about 

the two programs that I believe it is fair to say on the HUD side 

of our budget have had historically the broadest bipartisan support, 

and certainly support in our communities across the country. So, 

thank you for underscoring that. We appreciate you being here 

today.

Mr. SIRES. Thank you. 

Mr. DIAZ-BALART. Thank you, Congressman. Thank you for your 

testimony. We will now recognize, again, also from the State of 

New York—— 

Mr. ESPAILLAT It is hard to pronounce. 

Mr. DIAZ-BALART. It should not be for me. If I can ask you first 

to make sure your microphone is on. It is Espaillat? 

Mr. ESPAILLAT. Espaillat. 

Mr. DIAZ-BALART. Okay. I will never get that wrong again. 

Thank you, sir, it is a privilege to have you here in front of our 

subcommittee.

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. ADRIANO ESPAILLAT, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF NEW YORK 

Mr. ESPAILLAT. Thank you, Chairman, Ranking Member Price. 

Let me just start by congratulating the chairman on the recent 

award he got at the dinner with his brother, Lincoln Diaz-Balart, 

for the contributions of him and his family to public service. I was 

delighted to be there, where I found out the handsome level of 

funding that he will be impacting on for HUD. So, I hope to work 

very closely with him as we move forward. 

Mr. DIAZ-BALART. With his introduction, I think he is doing really well. I think it was brilliant and on point. 

Mr. ESPAILLAT. I hope to do better. 

Mr. DIAZ-BALART. Right, Mr. Price? 

Mr. PRICE. Yes. 

Mr. DIAZ-BALART. Thank you for your kind words, and again, you 

are recognized, and we thank you for being here. 

Mr. ESPAILLAT. Thank you for allowing me to testify during today’s subcommittee hearing to lay out my priorities as they relate 

to transportation, housing, and urban development. 

It is my hope that Congress will enact regular full-year fiscal 

year 2018 appropriations for HUD programs prior to the end of fiscal year 2017. It is my understanding that none of the fiscal year 

2017 regular appropriation bills were enacted before the end of fiscal year 2016, and Congress instead approved two continuing resolutions to provide temporary funding. This provides funding 

through April 28, 2017, which is just around the corner. 

When it comes to housing, this kind of insecurity is hardly acceptable. Moreover, a recent news report has revealed that the administration is proposing cuts to operational funds by $600 million, 
75

so 13 percent of the budget, and these are serious cuts, and for big 

ticket repair items for public housing, cuts in the amount of $1.3 

billion, or 32 percent. This is also a very serious level of cuts for 

public housing. 

Now, traditionally we think that infrastructure is just roads, 

bridges, and tunnels, but we as landlords, because public housing 

happens to be our housing—in fact, the President lives in public 

housing. The White House is public housing; we as members of 

Congress are the landlords, the owners of these housing units, and 

so is the President. 

We should own up to our responsibility to provide a safe, 

healthy, and sustainable life setting in these units, in over 1.2 million units of public housing. 

I am submitting testimony because I am concerned with reports 

stating that domestic discretionary funding may suffer at great 

cost. This is particularly concerning, as it relates to already poor 

and struggling communities, like Washington Heights, Harlem, 

Inwood, the Bronx, and East Harlem. 

The Housing Choice Vouchers Program and the Section 8 Rental 

Program are on the chopping blocks. My district has the most number of housing units in the City of New York and, therefore, the 

Nation, and has the second most residents in terms of population. 

Having been an organizer, I understand the effects of housing 

needs, the need to protect low-income renters from being displaced 

from their homes, and the importance and growing needs for increased funding for Section 8 housing. Now, the cuts that are being 

proposed also include cuts in Section 8 Housing Vouchers for people like homeless veterans at the tune of $300 million, or from $300 

million to potentially $19.3 billion. So, this is very concerning. 

New York City Housing Preservation and Development, HPD, 

and the New York City Housing Authority, NYCHA, collectively 

administer over 123,000 vouchers that provide critical rental assistance to families across the city. These vouchers are a lifeline for 

more than 294,000 families in New York City. Since the 2009 sequestration, New York City families have lost nearly 13,000 vouchers.

New York City is home to the country’s largest public housing 

authority, and its impact is monumental for low-income and working families in a high-cost city. Public housing is a valuable asset 

for more than 400,000 New Yorkers. That is bigger than many cities throughout the United States. This is an asset that needs to be 

fully funded to prevent the loss of even more public housing units 

in our Nation. 

Public housing operations and capital have been underfunded for 

many, many years, putting long-term viability of the units at risk, 

and resulting in health impacts for residents, including asthma, 

respiratory illnesses, which are a major public health concern for 

public housing residents throughout the Nation. 

New York City has a 5-year backlog of capital needs, nearing $17 

billion. This is the largest unmet need in the Nation, and a significant portion of HUD’s total capital backlog assessed at $26 billion 

in 2010. 

An increase in funding will be invested in capital repairs which 

could tackle the public housing needs and health concerns. Many 
76

of the public housing units in our country are in disarray, and with 

an added $600 million, units could address more remediation, including roof repairs, brick repairs, piping, asbestos removal, and 

other issues that lead to increases in health concerns for low-income residents. 

My time is about to expire, Mr. Chairman, but I do want to 

stress the importance of having funding channeled to public housing. In my opinion, infrastructure should include our public housing network, and we should provide adequate funding for families 

to have a safe and healthy environment in which they live. We as 

landlords have that responsibility. 

Thank you so much. 

[The statement of Mr. Espaillat follows:] 
77

Espaillat (NY-13) Testimony 

TESTIMONY 

CONGRESSMAN ADRIANO ESPAILLAT (NY-13) 

House Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development, and Related Agencies 

March 9, 2017 

Thank you for allowing me to testify during today's subcommittee hearing to lay out my 

priorities as they relate to Transportation, !lousing and Urban Development. It is my hope that 

Congress will enact regular full-year Fiscal Y car 2018 appropriations for HUD programs prior to 

the end of Fiscal Year 2017. It is my understanding that none of the Fiscal Year 2017 regular 

appropriations bills were enacted before the end of Fiscal Year 2016 and Congress, instead, 

approved two continuing resolutions to provide temporary funding. This provides funding 

through April28, 2017, which is just around the corner. When it comes to housing, this kind of 

insecurity is hardly acceptable. 

I am submitting testimony because I am concerned with reports stating that domestic 

discretionary funding might suffer at a great cost. This is particularly concerning as it relates to 

already poor and struggling communities, like Washington Heights, Harlem, Inwood, and the 

Bronx. 

Housing Choice Voucher Program, Section 8 Rental Assistance 

My district has the most number of housing units in the city and therefore the nation; and has the 

second most residents in terms of population. Having been a tenant organizer, I understand the 

1 
78

Espaillat (NY-13) Testimony 

effects of gentrification, the need to protect low-income renters from being displaced from their 

homes, and the importance of the growing needs for increased funding of Section 8 housing. 

New York City's Housing Preservation and Development (HPD) and the New York Housing 

Authority (NYCHA) collectively administer over 123,000 vouchers that provide critical rental 

assistance to families across the City. These vouchers are a lifeline for more than 294,000 

families in New York City. Since the 2009 sequestration, New York City families have lost 

nearly 13,000 vouchers. 

Therefore, I urge the Committee to increase funding for the Housing Choice Voucher 

Program, Section 8 Rental Assistance. 

Public Housing Capital Fund 

New York City is home to the country's largest public housing authority (PHA) and its impact is 

monumental for low-income working families in a high cost city. Public housing is a valuable 

asset for more than 400,000 New Yorkers. This is an asset that needs to be fully funded to 

prevent the loss of even more public housing in our nation. Public housing operations and capital 

have been underfunded for many years, putting long-term viability of the units at risk and 

resulting in health impacts for residents, including asthma and respiratory illness, which are 

major public health concerns for public housing residents throughout the nation. 

New York City has a five-year backlog of capital needs nearing $17 billion. This is the largest 

unmet need in the nation and a significant portion of f-lU D's total capital backlog, assessed at 

$26 billion in 20 I 0. An increase in funding would be invested in capital repairs, which would 

tackle the intersectionality of public housing and health concerns. 

2 
79

Espaillat (NY-13) Testimony 

Many of the public housing units in our country arc in disarray, and with an added $600 million, 

units could address mold remediation, including roof repairs. brick repairs, piping, and other 

issues that lead to increases in health concerns for low-income residents. 

Therefore, I would urge the Committee increase Public Housing Capital Funding. 

Rental Assistance Demonstration (RAD) Program 

HUD's Rental Assistance Demonstration Program (RAD) has also been helpful in providing 

reliable funding sources to make much needed improvements to public housing units, such as 

repairs to elevators, heating systems, and fayade. Put simply-- it is a tool that public housing 

agencies arc able to use to convert public housing units to project-based Section 8, and have 

since its first authorization in Fiscal Y car 2012 imposed zero additional costs to taxpayers. 

Conversion of these units, and having the Rental Assistance Demonstration Program as a tool, 

allows affordable housing units the ability to help keep homes affordable for tenants, and to fight 

against the creeping gentrification of nearby neighborhoods. This is especially important in one 

of the most expensive City's in the county. 

Unfortunately, Congress has yet to allocate any funding to this program; therefore, limiting the 

program to projects that must be able to undergo a cost-neutral conversion. Congress has also 

capped the number of units that may go through a RAD conversion to 185,000. Unless and until 

Congress eliminates this cap and funds this program, housing agencies are put on a waiting list 

for new units. This is not an effective or smart implementation of a program that, even bare 

bones, has proven useful and effective. 

3 
80

Espaillat (NY -13) Testimony 

Therefore, I would urge the Committee to fund the Rental Assistance Demonstration 

(RAD) Program and eliminate the RAD volume cap. 

Capital Investment Grants 

Finally, I would be remiss if I did not mention Capital Investment Grants, which provide critical 

resources for cities, regions, and states to improve and increase the capacity for public 

transpot1ation systems. New York City depends on these grants. 

For example. in my District, we have been pushing for a new transit line the city's first in over 

60 years- and without funding, the Second Avenue Subway will fail to live up to its full 

potential. 

As I mentioned earlier, East Harlem is a neighborhood that has the highest concentration of lowincome housing in New York City, and residents have to walk almost twenty minutes to get to 

the nearest train on I 16th and Lexington. Bringing additional subway service into this 

underserved area is expected to spur economic development and job creation. 

Therefore, I would urge the Committee to increase funding for Capital Investment Grants. 

Thank you so much for the opportunity to offer my concerns and priorities to the Committee. 

4 
81

Mr. DIAZ-BALART. Let me just thank you for your testimony, and 

please do know that this committee is looking forward to working 

with you. You obviously represent a part of the country that is very 

dynamic. So, just know that we look forward to working very, very 

closely with you in the coming months. 

Mr. ESPAILLAT. Thank you so much. I look forward to that opportunity.

Mr. DIAZ-BALART. Mr. Price. 

Mr. PRICE. Let me reiterate we are happy to have you as part 

of the Congress. I welcome you and thank you for your testimony 

today. We will pay very close attention to it. 

Mr. ESPAILLAT. Thank you so much. 

Mr. DIAZ-BALART. Thank you, sir. We will now recognize Mr. Visclosky, who has been patiently waiting back there, if he is ready. 

Then we will have Mr. Suozzi right after that, if he is ready as 

well.

Again, sir, thank you for being here, and thank you for sharing 

your testimony. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. PETER J. VISCLOSKY, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF INDIANA 

Mr. VISCLOSKY. Mr. Chairman, Mr. Price, and members of the 

committee, I appreciate the opportunity to testify before you today. 

I feel like I have come home. My mentor in another century was 

chairman of this great subcommittee, so it is good to be back. 

I am here today to emphasize my support and ask for your support for the Federal Transit Administration’s Capital Investment 

Grant Program and the New Starts, and Core Capacity Grants Program. All of you understand the importance of transit and its economic and beneficial impact throughout the United States. I want 

to give you a real world example in northwest Indiana. 

Lake County, Indiana, which is the most populous county I represent, is on Lake Michigan and it is contiguous to the City of Chicago. Lake County, Illinois, is on Lake Michigan and it is contiguous to the City of Chicago. Since 1970, the population of Lake 

County, Indiana, which I represent, has declined by 10 percent. 

The fact is, the population for Lake County, Illinois, has grown by 

83 percent. The median household income in Lake County, Indiana, 

in the similar period of time has declined by 12.5 percent. The median household income in Lake County, Illinois, has increased by 

17.7 percent. 

I would propose to you one of the fundamental differences is that 

on the Illinois side of the State line between our two great States 

there are over 470 miles of mass transit line, many of which go to 

Lake County, Illinois. On the Indiana side, it is as though someone 

built a great wall. There are 38 miles of mass transit in Indiana 

going to Michigan City. The line then extends to South Bend. We 

have been working for a generation to connect ourselves to the 

economy of Chicago, which is larger than the economy of Sweden, 
82

to not only access that economy, but to draw down its benefits to 

northwest Indiana. 

Over the past several years, we have had 16 of the 20 communities in Lake County make a long-term, 30-year commitment to 

meet and match Federal funding. I would point out that in his capacity as governor, Vice President Pence in 2015 signed State legislation for a long-term, 30-year commitment to meet that Federal 

program. This year in his budget, Governor Holcomb in the State 

of Indiana has included money to meet those Federal grant programs. We will apply in August. 

But all of this effort for a generation will be for naught if that 

capital investment grant program is not adequately funded. Currently in 2016, the appropriation was $2.17 billion, which was sustained due to the enactment of the continuing resolution. I would 

point out in this committee’s markup for the House you included 

$2.5 billion, obviously understanding the value of this program. 

It is not limited to the coast, it is not limited to northwest Indiana. You have projects in places like El Paso, Texas; Albuquerque, 

New Mexico; and Milwaukee, Wisconsin. I would strongly urge you, 

when we talk about infrastructure in this Congress and we talk 

about investing in the economy, to ensure that we preserve these 

programs, not just for the congressional district I represent, but 

recognizing that, since 2012, requests for these types of capital construction have increased from 37 to 63. Because communities 

throughout our great Nation understand the importance economically for good-paying job growth that this Federal investment of our 

taxes represent. And again, I appreciate the opportunity to be before you today. 

[The statement of Mr. Visclosky follows:] 
83

Congressman Visclosky Testimony 

House Appropriations Subcommittee on Transportation, Housing, and Urban 

Development 

FY 2018 

Thank you Chairman Diaz-Balart, Ranking Member Price, and my Appropriations Committee 

colleagues on the Transportation, Housing and Urban Development, and Related Agencies 

Subcommittee. I appreciate this opportunity to advocate for programs under this 

Subcommittee's jurisdiction. 

I am here today on behalf of my constituents in Northwest Indiana to express my strong support 

for the Federal Transit Administration's (FTA) Capital Investment Grant program, which 

includes New Starts and Core Capacity grants. The funding provided under this program 

supports transit projects across the country, including the expansion and recapitalization of the 

commuter train system in Northwest Indiana, known as the South Shore Rail Line. I urge you to 

support job creation and economic development by meeting the promise authorized under P.L. 

114-94, the FAST Act, and fully funding this program at $2.3 billion. 

Americans have shown a growing preference for using and living near public transit 

opportunities, with l 0.6 billion trips taken in 2015 alone. In fact, over the past 20 years, pub lie 

transit ridership has risen 39 percent, far outpacing the 21 percent increase in population over the 

same period. 

Page 1 of4 
84

The perceived value of living in a walkable community that offers transportation choices is 

ref1ected in increased property values near transit stations. A study prepared in coordination 

with the National Association of Realtors concluded that home values performed 42 percent 

better on average if they were located near public transportation with high-frequency service. 

And it is not just individuals that are demonstrating a preference for public transit. A report 

published by Smart Growth America examined more than 500 companies that moved between 

2010 and 2015 to downtown locations. often due to the availability of public transit. Good 

transit is a legitimate draw for talent and is becoming a critical economic development tool in 

today's competitive climate. 

Recognizing the job growth and economic development opportunities afforded by investments in 

public transit, my district has been adamantly supporting the expansion and recapitalization of 

the South Shore Rail Line. 

I believe that Northwest Indiana is one of the best places in the world to live, work, visit, and 

raise a family, and I regret that my district has seen a significant decline in population and 

median income over the past half a century. Between 1970 and 2015, the number of school age 

children in Nmihwest Indiana dropped by over 74,000 children. Further, the population of Lake 

County, Indiana, has decreased by I 0 percent, and the median income, adjusted for inf1ation, has 

decreased by 12.5 percent. Interestingly. the opposite is true in Lake County, Illinois, which has 

seen its population grow by 83.9 percent, and its median income increase by 17.7 percent. 

Page 2 of4 
85

Both counties are similarly located near the environs of Chicago and on Lake Michigan, the 

largest body of fresh water in the world. But Illinois' investment in the over 400 miles of 

commuter rail lines emanating from the Chicago Loop has allowed their residents to better 

access Chicago's economy, which is larger than the economy of Sweden. Northwest Indiana has 

only 35 miles of commuter rail. 

My district has come together in recognition that regional connection, through a meaningful 

mass transportation system, will allow us to better access the good paying jobs in Chicago and 

diversify our economy through transit oriented development. Within the last few years, 16 

communities have come together to dedicate a portion of their local economic development tax 

revenue towards the expansion of the South Shore Rail Line in Northwest Indiana. Vice 

President Pence, in his role as Governor oflndiana, signed legislation into law providing for 

dedicated state funding to support this endeavor. 

I would add that as we speak, the Indiana General Assembly is actively engaged at the 

statehouse, in a bipartisan fashion and with the assistance of Governor Holcomb, to approve 

legislation that would increase the availability of state and local resources for transportation 

infrastructure projects. State and local government entities in Indiana know how invaluable it is 

to be able to partner with the federal government and pool resources to make transformational 

investments in our future. They know that their communities and communities across our nation 

need to start thinking and acting like regions so that we can collaborate and collectively draw 

young talent and thriving new businesses to our communities. I strongly support the initiative at 

the Indiana General Assembly, and I urge you to keep the intent of their initiative and the 

Page 3 of4 
86

transformational impact that they and you can have in Northwest Indiana in mind as you proceed 

with the crafting of your legislation this year. 

Thank you for your time. 
87

Mr. DIAZ-BALART. Well, let me thank you, sir, and obviously you 

are somebody who understands the appropriations process as well 

if not better than anybody in this building and this facility. So obviously we look forward to working with you. Mr. Price, any comments or questions? 

Mr. PRICE. I want to thank our colleague and friend for being 

here and for taking note of the attention this committee paid in the 

current cycle to New Starts, and the importance of getting closer 

to that number, hopefully, with a 5-month omnibus bill for the remainder of 2017. In the meantime, you have given a very convincing rationale rooted in your own district’s experience for the 

importance of this going forward, so we appreciate that. 

Mr. VISCLOSKY. Appreciate your efforts very much. Thank you so 

much.

Mr. DIAZ-BALART. Thank you, sir. Now we will recognize Mr. 

Suozzi. And again, thank you for being here on time and, again, 

we look forward to working with you. The floor is yours, sir. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. THOMAS R. SUOZZI, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF NEW YORK 

Mr. SUOZZI. Thank you, Mr. Chairman, and thank you, Ranking 

Member Price, and the other members that are here today for the 

subcommittee. I want to thank you for the opportunity and the 

time to discuss my request for funding the health impacts of airplane noise at some of our busiest airports throughout the country. 

Recently, I was elected as co-chair of the Quiet Skies Caucus 

along with Congresswoman Eleanor Holmes Norton, and we are 

fortunate to have Congressmen Quigley and Lynch serve as co-vice 

chairs of the caucus. All of us, along with dozens of other members 

from both sides of the aisle, have constituents who are deeply impacted by unacceptable levels of airplane and aircraft noise. 

I am a new member of this distinguished body, but while exploring a run for this office, aircraft noise was one of the first issues 

I heard about from voters. At a town hall I had held last June, a 

constituent rose to ask about what I would do and could as a member of Congress to reduce aircraft noise over her home and in that 

neighborhood. In fact, she was interrupted twice during the conversation in less than 2 minutes by aircraft passing overhead. The 

noise was so loud, she had to pause and wait for planes to pass before she could continue asking her question. 

I represent New York’s Third Congressional District. The district 

stretches from northeastern Queens along Long Island’s north 

shore through Nassau County and Suffolk County. My constituents 

have two of the world’s busiest and biggest airport, LaGuardia airport and John F. Kennedy International Airport, that lie just beyond the district’s boundaries. Although both airports are outside 

the district, both rely on flight paths that traverse numerous neighborhoods in and around my district. This is not a discrete problem 

affecting a limited number of people, but a major issue impacting 

people across the country. 
88

Many of us rely on Reagan National Airport to return home each 

week. Congresswoman Holmes Norton’s district’s constituents, who 

call Washington, D.C., home, are impacted by travelers like ourselves, who come from our districts to engage in the people’s business or visit our Nation’s capital. Mr. Quigley’s constituents live 

near O’Hare International Airport, one of the world’s busiest airports, and suffer greatly under the volume of flights that land and 

depart every day. And Mr. Lynch’s constituents in and around Boston’s Logan Airport also suffer from unacceptable noise levels along 

with constituents of dozens of other members who are part of the 

Quiet Skies Caucus. 

This is not a partisan issue. Mr. Coffman of Colorado is a member of the Quiet Skies Caucus and works with us on behalf of his 

constituents to alleviate and reduce unacceptable noise levels. 

Our friends in the Senate also believe this is an important issue. 

Senators McCain and Flake of Arizona have championed this cause 

and have taken the lead in the Senate to help mitigate noise from 

aircraft in Arizona and across the country. I have tried to make the 

case that unacceptable noise levels is a bipartisan national issue of 

significance worthy of congressional attention. 

Today my primary goal is to impart the significance of the issue 

to you and my colleagues. One of the key takeaways was a realization from a town hall meeting I had that there is an ongoing failure to understand the seriousness of this issue. In other words, we 

still need to persuade the Federal Aviation Administration and others that this is not a subjective complaint of a bunch of cranks, but 

an objective problem harming human health. 

In order to legitimize concerns, I believe we need to federally 

fund health studies conducted by the leading universities of our 

country to demonstrate that this issue objectively raises health concerns. I have followed up with members of the Quiet Skies Caucus 

and found they agree with this conclusion and even relayed their 

own constituents’ frustrations that their complaints are often dismissed without due consideration. We believe these health studies 

which will objectively determine the impact on individuals and 

their families’ health will demonstrate the need for all stakeholders 

to address the issue. 

In addition to health studies, and while they are conducted, I believe other steps should be taken in the interim. Many districts are 

experiencing unacceptable noise levels as a result of the NextGen 

route changes. While the FAA says the noise is within the acceptable 65 day/night level, that standard was developed more than a 

decade ago. I believe that the FAA needs to conduct an expedited 

review of the 65 DNL standard and incorporate actual noise sampling, not just rely on the modeling and simulation. Therefore, I 

ask the Committee to include report language urging the FAA to 

expedite DNL review and to provide the Committee with a report 

no later than 60 days after enactment of the act describing a pilot 

program for conducting actual noise sampling as part of the DNL 

review.

On its face, this issue may appear to be one of mere annoyance, 

but I can assure you that it is not a trivial issue. The members and 

Senators I have mentioned above, and many more, can echo and 

expand upon the thoughts and points I have raised today. Our con-
89

stituents raise legitimate concerns because they are subjected to 

unacceptable noise levels at a volume and frequency that have dramatically impacted their quality of life and their health. My hope 

is that the subcommittee will join with us to assist from across the 

country by raising the profile of this issue and working with us towards results and getting things done for the American people. 

Thank you so much for your time. I cannot imagine what is like 

for you to listen to everybody’s different requests that come in here, 

but I am very grateful for the opportunity to be here. 

[The statement of Mr. Suozzi follows:] 
90

Congressman Thomas R. Suozzi 

Prepared Remarks: 

House Appropriations Transportation, Housing and Urban Development and Related Agencies 

Subcommittee Member Day 

Thursday, March gth 2017 

Good Afternoon Chairman Mario Diaz-Balart, Ranking Member David Price and fellow 

Members of the Subcommittee. Thank you for the opportunity, and the time, to discuss a 

critical issue to many of my constituents, some of your constituents and to many of our 

colleagues. 

Recently, I was elected co-Chair of the Quiet Skies Caucus, along with Congresswoman 

Eleanor Holmes Norton. We're fortunate to have Congressmen Quigley and Lynch serve as coVice Chairs of the caucus. All of us, along with dozens of other Members, from both sides of the 

aisle, have constituents who are deeply impacted by unacceptable levels of aircraft noise. 

I'm a new Member of this distinguished body, but, while exploring a run for this office, 

aircraft noise was one of the first issues I heard about from voters. At a town hall I held last 

June, a constituent rose to ask about what I would, and could do, as a Member of Congress, to 

reduce aircraft noise over her home and neighborhood. In fact, she was interrupted twice, in 

less than two minutes, by aircraft passing overhead. The noise was so loud she had to pause 

and wait for the planes to pass before she could continue asking her question. 

I represent New York's third Congressional district. The district stretches from 

northeastern Queens, along Long Island's north shore, through Nassau County and into Suffolk 

County. My constituents have two of the world's busiest and biggest airports, LaGuardia Airport 
91

and John F. Kennedy International Airport, that lie just beyond the district's bounds. Although 

both airports are outside the district, both rely on flight paths that traverse numerous 

neighborhoods in and around my district. 

This is not a discrete problem affecting a limited number of people, but a major issue 

impacting people across the country. Many of us rely on Reagan National Airport to return 

home each week. Congresswoman Holmes Norton's constituents, who call Washington D.C. 

home, are impacted by travelers, likes ourselves, who come from our districts to engage in the 

people's business or to visit our Nation's Capital. Mr. Quigley's constituents live near O'Hare 

International Airport, one of the busiest airport in the world, and suffer greatly under the 

volume of flights that land and depart every day. Mr. Lynch's constituents, in around Boston's 

Logan Airport, also suffer from unacceptable noise levels, along with the constituents of dozens 

of other Members who are part of the Quiet Skies Caucus. 

This is not a partisan issue. Mr. Coffman, of Colorado, is member of the Quiet Skies 

Caucus, and works with us, on behalf of his constituents, to alleviate and reduce unacceptable 

noise levels. Our friends in the Senate also believe this is an important issue. Senators McCain 

and Flake of Arizona have championed this cause and taken the lead in the Senate to help 

mitigate noise from aircraft in Arizona and across the country. 

I have repeatedly tried to make the case that unacceptable noise levels is a bipartisan, 

national issue of significance, worthy of Congressional attention. Today, my primary goal is to 

impart the significance of the issue on you and our colleagues. 

2 
92

I recently held a roundtable discussion with constituents who suffer from unacceptable 

noise levels. One of the key takeaways was a realization that there is an ongoing failure to 

understand the seriousness of the issue. In other words, persuasion remains an issue and, a 

continuing failure to inform has undermines the potential for serious action and policy changes. 

In order to legitimize concerns, I believe we need federally funded health studies, conducted by 

the leading universities in our country, to demonstrate that this issue objectively raises health 

concerns. 

I've followed up with Members of the Quiet Skies Caucus and found they agree with this 

conclusion and, even, relayed their own constituent's frustrations that their complaints are 

often dismissed without due consideration. We believe these studies, which will objectively 

determine the impact on individual's and their family's health, will demonstrate the need for all 

stakeholders to address the issue. 

In addition to health studies, and while they are conducted, I believe other steps should 

be taken in the interim. Many districts are experiencing unacceptable noise levels as a result of 

Next Gen route changes. While the FAA says the noise is within the acceptable 65 Day Night 

Level, that standard was developed more than a decade ago. I believe the FAA needs to 

conduct an expedited review of the 65 DNL standard and incorporate actual noise sampling, not 

just rely on modeling and simulation. Therefore, I ask the Committee to include report 

language urging the FAA to expedite the DNL review and to provide the Committee with a 

report no later than 60 days after enactment of the ACT, describing a pilot program for 

conducting actual noise sampling as part of the DNL review. 

3 
93

On its face, the issue may appear to be one of mere annoyance, but I can assure you this 

is not a trivial issue. The Members and Senators I have mentioned above, and many more, can 

echo and expand upon the thoughts and points! have raised today. Our constituents raise 

legitimate concerns because they are subjected to unacceptable noise levels, at a volume and 

frequency, that dramatically impact their quality of life, as well as their health. My hope is this 

subcommittee will join with us to assist from across the country, by raising the profile of this 

issue and working with use towards results and getting things done for the American people. 

4 
94

Mr. DIAZ-BALART. Well, let me first thank the gentleman. And I 

will tell you, obviously, on this subcommittee we have Mr. Quigley, 

who never lets us forget the issue that you have just brought up, 

and just know that we look forward to working with you. 

Mr. SUOZZI. Thank you so much. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Price. 

Mr. PRICE. Let me reiterate that receptivity. We have a history 

on this committee of trying our best to deal with what are often 

difficult situations, so we appreciate your testimony. 

Mr. SUOZZI. Thank you, Mr. Price. Thank you. 

Mr. DIAZ-BALART. Thank you, sir. We are not going to recognize, 

by the way, members of the subcommittee. Mr. Lawson will be our 

last colleague testifying in front of us today. 

While he gets ready, let me just tell you that Mr. Lawson is a 

freshman, but he has been involved in Florida politics. He and I 

served in the Florida legislature and so it is, frankly, a real personal—just it is wonderful to recognize him here now as a colleague as we were for many years in the Florida legislature and 

now in the United States Congress. So on a personal level, it is 

great to see you here, sir, and obviously as chairman let me recognize you for your testimony. 

THURSDAY, MARCH 9, 2017. 

WITNESS

HON. AL LAWSON, A REPRESENTATIVE IN CONGRESS FROM THE 

STATE OF FLORIDA 

Mr. LAWSON. Thank you, Mr. Chairman, and it is a real privilege 

for me to be here with you and I am real honored to be able to represent the Fifth Congressional District in Florida. I need to say 

that it runs all the way to Jacksonville, you know, from Gaston 

County to Jacksonville, to make sure to include it. 

There are a number of critical programs that I would like to discuss given the importance of our district. First, I would like to see 

full funding for the Capital Investment Grants Investment Program. These projects not only generate economic development, but 

also help to reduce energy consumption. I know the subcommittee 

has been very supportive of these programs and your work should 

be applauded for providing over $408 million in fiscal year 2017, 

the THUD bill more funding than the Senate bill. 

I would like to highlight one project for my district that is currently in the small start pipeline for funding. The Jacksonville 

Transportation Authority had begun implementing a 57-mile bus 

rapid transit, the BRT, network system called the First Coast 

Flyer. It is made up of five district lines, two of which are already 

operating. The fiscal year 2017 bill, there is currently $14.9 million 

pending for the First Coast Flyer East corridor and for fiscal year 

2018 budget, $37.9 million for the Southwest corridor. I would like 

to see both projects funded. 

The BRT is an important investment in Jacksonville public 

transportation system. It has provided us with a variety of options 

to develop safe, reliable, premium service in a cost-effective man-
95

ner. I would like to see the subcommittee continue to provide funding for the TIGER Grants program and bus facilities. 

Finally, I recently had the opportunity to visit Eureka Gardens 

Apartments, a privately owned, subsidized apartment community 

in Jacksonville. Like most Americans, the residents of Eureka Gardens want a clean, affordable, and safe place to raise their families 

and to call home. 

The conditions I saw really kind of broke my heart. Sadly, under 

the previous management company, Eureka Garden has fallen into 

a horrible state of disrepair where residents have to combat black 

mold, infestation, gas leaks, the loss of heat and hot water, no airconditioning, and persistent crime problems which is very prevalent. It is my firm belief that the people who pay rent, regardless 

of their income, neighborhood, or whether they live in privately 

owned or public housing, have the right to expect and get routine 

maintenance, and that no one should be forced to live in conditions 

that threaten health or safety. 

It is my hope that as the committee begins to put together the 

2018 budget that it would consider adding additional funding for 

oversight, renovation, and modernization of older public and private housing units. Not only that it was brought to my attention, 

it was also brought to the attention of Senator Rubio, who had the 

opportunity to visit that area. 

It is my hope that a separate line of funding could be made available for small, medium, and large communities. I would also ask 

that the committee consider providing low-income loans to owners 

of subsidized housing until—units to make necessary repairs to 

their facility. 

I want to thank you all for this opportunity to share with the 

subcommittee my thoughts on funding and thank you again for ongoing support of these programs. I really cannot say enough about 

the chairman’s commitment that he had in the State of Florida. I 

had the opportunity to work with him and it is truly an honor to 

be reunited with the chairman here, and I am sure that he remembers all of the good things that we did in the State of Florida, even 

though he was, in my opinion, the southern part of Florida, and we 

always thought they were separated from America. We were up 

there around Georgia and Alabama, but it was a big difference. 

So we were still able to work together and I am so honored to 

have the opportunity for the first time, to meet many of you all, 

and to realize that I have got 13 seconds, I want to thank you all 

for this great opportunity. 

[The statement of Mr. Lawson follows:] 
96

Rep. AI Lawson (FL -5) 

House Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development (THUD) 

THUD Appropriations FY18 

March 9. 2017- Talking Points 

Thank you, Chairman Diaz-Balarl and Ranking Member Price for the opportunity to testify before 

the subcommittee. I'm Congressman AI Lawson and I represent Florida's S'h District, which 

includes Jacksonville, Florida. 

There are a number of critical programs that I would like to discuss given their importance to my 

district. 

First, I would like to see full funding for the Capital Investment Grants program, particularly for 

those projects that fall into the Small Starts category. 

• As you know, this program is essential to building vital transit capital investment projects. These 

projects not only generate economic development but also help to reduce energy consumption. 

I know the subcommittee has been very supportive of this program and your work should be 

applauded for providing $408 million in the FY 20 17 THUD bill- more funding than the Senate 

provided. 

I would like to highlight one project from my district that is currently in the Small Starts pipeline 

for funding: 
97

2 

The Jacksonville Transportation Authority has begun implementing a 57-mile Bus Rapid Transit 

(BRT) network system, called the First Coast Flyer. 

It is made up of five distinct lines, two of which arc already operating. 

In the FY17 bill, there is currently $16.9 million pending for the First Coast Flyer East Corridor. 

I would like to see both projects funded- BRT is an important investment in Jacksonville's public 

transportation system. 

It has provided us with a viable option to develop safe, reliable premium service in a cost-effective 

manner. 

I would to like to sec the Subcommittee continue to provide funding for the TIGER grant program 

and Bus Facilities. 

Finally, I recently had the opportunity to visit the Eureka Gardens Apartments, a privately 

owned BUD-subsided apartment community in Jacksonville. 

Like most Americans, the residents of Eureka Gardens want a clean, affordable, and safe place to 

raise their families and to call home. The conditions I saw there broke my heart. Sadly, under the 

previous management company, Eureka Gardens had fallen into a horrible state of disrepair where 

2 
98

3 

residents had to combat black mold infestation, gas leaks, the loss of heat and hot water, no air 

conditioning, and a persistent crime problem. 

It is my finn belief that people who pay rent, regardless of their income, neighborhood, or whether 

they live in privately owned or public housing have the right to expect and get routine maintenance. 

And, that no one should be forced to live under conditions that threaten their health or safety. 

It is my hope that as the committee begins putting together its 2018 budget that it would consider 

adding additional funding for oversight, renovation and modernization of older public or private 

housing units. It is my hope that separate lines of funding could be made available for small, 

medium, and large communities. 

I would also ask the committee to consider providing low-interest loans for owners of subsidized 

housing units to make necessary repairs to their facilities. 

Thank you again for the opportunity to share with the subcommittee my thoughts on funding and 

thank you again for your ongoing support of these programs. 

### 

3 
99

Mr. DIAZ-BALART. Well, let me just again, for those of you, Mr. 

Price and others, as he said, he and I worked together, we conspired together on a lot of difficult issues. And just be forewarned, 

he will not let us forget the issues that are important to him. 

So thank you, sir, and, again, an honor. And you are right, for 

me, it is a personal moment of personal satisfaction to be able to 

be reunited with you, sir. Mr. Price. 

Mr. PRICE. Mr. Lawson, we are very happy to have you here. We 

can benefit, I think, from your years of experience and your political savvy as well as your attention to the needs of your part of 

Florida. So we look forward to working with you. 

Mr. LAWSON. Thank you so much, I look forward to it. 

Mr. DIAZ-BALART. Let me now just thank each and every member 

of the subcommittee, also those members who came to testify on 

their THUD priorities today. We appreciate the opportunity to hear 

their testimony and we are pleased to share this process with all 

of us. As I said earlier, everyone’s written testimony will be included in the record. 

And again, lastly, as a reminder, the member database to submit 

your appropriations requests for fiscal year 2014 bill is open and 

the deadline to submit THUD requests is April 4. So please be sure 

to submit your request by the deadline, again, so we may include 

them in the fiscal year 2018 process. And, Mr. Price, any closing 

remarks?

Mr. PRICE. No, thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Members, any closing remarks? Great. 

Well, again, our next hearing is next Thursday, March 16, where 

we will hear from the Inspector General at the Department of 

Transportation and of HUD. 

And with that, this hearing is adjourned. Thank you. 

(101)

THURSDAY, MARCH 16, 2017. 

OVERSIGHT HEARING—DEPARTMENT OF TRANSPORTATION AND DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT

WITNESSES

CALVIN L. SCOVEL III, INSPECTOR GENERAL, DEPARTMENT OF 

TRANSPORTATION

DAVID A. MONTOYA, INSPECTOR GENERAL, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Chairman DIAZ-BALART. I am going to call the meeting to order. 

But before we start, I do want to announce that, obviously, since 

we have two inspectors general today, I just want to announce that 

there is another inspector general here, and that is my personal inspector general, and that is my wife, Tia, who is here along with 

my son, Cristian. They do not get the opportunity to come up to 

Washington a lot, so it is great to have them here today. 

With that, today, we welcome Inspectors General, The Honorable 

Calvin Scovel from the Department of Transportation, and The 

Honorable David Montoya from the Department of Housing and 

Urban Development. So the oversight work, gentlemen, that you do 

for our committee, and for our country, frankly, is vital. Please 

know that we cherish what you do. You ensure that tax dollars are 

being well-spent and that those dollars are stretched as far as possible, whether it is for our Nation’s transportation or housing 

needs. We rely on your good work, on your judgment, on your dedication to find waste and fraud and abuse in agencies, and, obviously, that is something that you do not tolerate and we do not tolerate. So when we have concerns regarding the management and 

effectiveness within both departments, you know that we look to 

you for much-needed oversight and guidance, and the guidance 

that you provide through, again, your various audits and the investigations that you all do. So you help us get there, you help us get 

these agencies back on track as much as humanly possible and ensure that they are working as efficiently and as effectively as possible. We look forward to your testimony. 

With that, let me recognize the Ranking Member of this committee, a person who we work very closely together, the gentleman 

from the great State of North Carolina, Mr. Price, for any opening 

remarks that he might have. You are recognized, sir. 

Mr. PRICE. Thank you, Mr. Chairman. I join you in welcoming 

Mr. Scovel and Mr. Montoya here today. I will keep this statement 

relatively brief, because we will need to get to the questions, but 

I want to just underscore a few concerns. 

The oversight hearing is an important opportunity for us to examine the key management challenges facing the Departments of 

Transportation and HUD. Many of these issues are not new. For 
102

example, HUD has struggled to modernize its IT infrastructure, 

facing ongoing challenges associated with human capital management, and over the years, failed to establish sufficiently strong internal controls over how it obligates and controls funds. 

Meanwhile, the DOT Inspector General has highlighted ongoing 

challenges associated with the safe integration of new transportation technology, namely, unmanned drones and autonomous vehicles, as well as the department’s management of certain high-risk 

contracts. I look forward to exploring these topics in more detail 

this morning. 

I am also concerned with the Trump administration’s painfully 

slow pace when it comes to the appointments of deputy and assistant secretaries and other high-ranking officials. You simply cannot 

run a complex department without a strong leadership team in 

place beneath the Secretary. 

Compounding the problem is the recently announced Federal hiring freeze imposed by the Trump administration, which, I believe, 

could threaten core government functions if it is left in place. The 

GAO has noted that across-the-board hiring freezes are almost always counterproductive. 

Finally, the Trump administration to-date has shown a blatant 

disregard for addressing possible conflicts of interest, starting with, 

but limited to, the man at the top. Oversight is a key function of 

Congress, but it is especially integral to the work of the Appropriations Committee. Independent inspectors general enable this subcommittee to conduct effective oversight, make informed funding 

decisions to ensure our limited Federal dollars are spent wisely, 

and that most certainly includes exploring conflicts of interest. I 

will address that in our question period. 

So I look forward to learning more about how HUD and DOT are 

meeting their management challenges and where they stand to improve. Thank you, both, for being here today. Thank you, Mr. 

Chairman.

Chairman DIAZ-BALART. Thank you very much, Mr. Price. Today, 

we will begin with the Department of Transportation’s Inspector 

General, Mr. Scovel. Your full written testimony, sir, will be included in the record, and we look forward to listening to your testimony. You are recognized for five minutes. 

Mr. SCOVEL. Chairman Diaz-Balart, Ranking Member Price, 

members of the subcommittee, thank you for inviting me to testify 

today on the Department of Transportation’s (DOT) top management challenges. Every year, DOT invests more than $70 billion to 

operate and modernize our transportation infrastructure. My office 

supports these efforts through audits and criminal investigations 

that identify and help protect against fraud, waste, and abuse of 

taxpayer dollars. I greatly appreciate the subcommittee’s support 

and continued focus on the important work of government oversight performed by offices like mine and that of Inspector General 

Montoya.

My testimony today focuses on three critical challenge areas that 

we have identified for DOT for 2017: safety, stewardship, and completion of mandates and recommendations. As Secretary Chao has 

noted, safety remains at the forefront of DOT’s mission. The United 

States continues to have one of the safest transportation systems 
103

in the world. However, new technologies and industries bring new 

challenges.

For example, FAA recently issued a rule to help safely integrate 

small unmanned aircraft systems, known as UAS, into our airspace. However, the number of UAS sightings by pilots and others 

continues to go up, over 1,400 this past year, as compared to just 

over 200 in 2014. Many of these occurred at altitudes where other 

aircraft operate. Maintaining safety will require a strong risk-based 

oversight system by FAA and coordination with other agencies. 

Similarly, the emerging technology of driverless cars poses new 

safety challenges for DOT and NHTSA. Several companies are already developing, testing, and selling various iterations, and the 

number is expected to grow quickly. DOT and policymakers must 

clearly define the tools and standards necessary to oversee and regulate this industry and the technology underlying it. 

At the same time, NHTSA must continue to improve its processes for investigating vehicle safety defects. Most recently, a 

Takata air bag defect resulted in 11 fatalities and 180 injuries. Due 

in part to our investigative work, automobile makers recalled tens 

of millions of vehicles, and Takata Corporation was sentenced last 

month to pay $1 billion in criminal penalties. NHTSA is making 

progress towards addressing our recommendations to collect and 

analyze more comprehensive vehicle safety data, but must continue 

to improve internal controls within its Office of Defects Investigations.

With regard to stewardship, we have identified areas where DOT 

can improve how it manages and oversees the billions of dollars invested each year in our transportation infrastructure, from highways and bridges to air traffic control. 

For example, FAA faces ongoing challenges to deliver six programs that are essential to implement NextGen and modernize our 

outdated air traffic control systems. Expenditures since 2003 for 

these six programs now total over $5.7 billion, and their completion 

has been pushed to well beyond 2020. As a watch item, many requirements remain undefined, and FAA has yet to fully quantify 

how these programs will achieve expected benefits for the aviation 

industry.

Protecting our infrastructure also requires addressing increasingly sophisticated cybersecurity threats. However, DOT has not effectively implemented programs to actively monitor and mitigate 

security breaches immediately, during, or after an attack. Recent 

trends in mobile, cloud, and workplace technology also present new 

challenges to monitoring and securing DOT’s network. 

Finally, as it carries out its mission, DOT must develop strategies to efficiently carry out mandated and recommended improvements. These include provisions in the 2015 FAST Act, to improve 

investments in highway and transit projects, as well as key aviation safety mandates from the 2016 FAA Extension Act. Those 

mandates include, for example, requiring better records on a pilot’s 

training and background. DOT has also faced delays in addressing 

recommendations to improve pipeline and hazardous material safety from both our office and NTSB. 

In conclusion, my office will continue to assist DOT and Congress 

as we work to meet these and other challenges, including helping 
104

the department leverage its resources to promote safety and efficiency and prevent fraud in any forthcoming infrastructure investment plans. 

Mr. Chairman, that concludes my prepared statement. I am 

happy to answer any questions you or other subcommittee members may have. 

[The information follows:] 
105

Before the Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development, 

and Related Agencies 

United States House of Representatives 

For Release on Delivery 

Expected at 

10:00 a.m. EDT 

Thursday, 

March 16,2017 

CC20l7010 

Top Management 

Challenges Facing the 

Department of 

Transportation 

Statement of 

The Honorable Calvin L. Scovel III 

Inspector General 

U.S. Department of Transportation 
106

Chairman Diaz-Balart, Ranking Member Price, and Members of the Subcommittee: 

Thank you for inviting me here today to discuss the Department of Transportation's 

(DOT) top management challenges. Every year, the Department invests more than 

$70 billion in a wide range of programs to operate and modernize our transportation 

infrastructure. Our office supports these efforts through our audits' and criminal 

investigations, which identify and help protect against thud, waste, and abuse of 

Federal funds. 2 We look forward to working with the Secretary and this 

Subcommittee as we continue to assist DOT in improving its management of 

programs and resources. 

My statement today will focus on the challenges3 our work has identified along three 

cross-cutting areas: (1) addressing new and ongoing safety challenges, (2) enhancing 

stewardship of DOT's financial and growing infrastructure investments, and 

(3) effectively addressing existing mandates and recommendations. Regardless of 

whether the Administration and Congress commit to new investments in 

infrastructure, sustained oversight in these areas is vital to promote safety, efficiency, 

and effectiveness within DOT's programs and investments. 

SUMMARY 

As Secretary of Transportation Elaine L. Chao has affirmed, DOT's primary objective 

is safety. Meeting this objective requires addressing a number of new and ongoing 

challenges-from ensuring the safe integration of emerging technologies such as 

Unmanned Aircraft Systems (UAS) and driverless cars to promptly investigating 

passenger vehicle defects and pipeline safety violations. At the same time, DOT must 

protect its investments in its multibillion-dollar infrastructure and systems with 

careful fmancial scrutiny and sustained management attention. This includes stronger 

efforts to enhance the capacity and resilience of the National Airspace System (NAS), 

manage high-risk contracts and evolving public-private financing arrangements, and 

safeguard our information technology (IT) systems from increasingly complex 

cybersecurity threats. Finally, as it carries out its mission, DOT must develop 

strategies to more effectively address safety recommendations and congressional 

mandates. 

ADDRESSING NEW AND ONGOING SAFETY CHALLENGES 

Safety remains the Department's highest priority, and DOT is committed to 

improving how it oversees our Nation's airspace, roads, pipelines, and other critical 

1 For a list of our ongoing audits. see the exhibit 2 As a result of our work, we returned $54 to the Government for every dollar invested in our onice last fiscal year. For the 

past 5 fiscal years, our reh1m on investment has averaged $35 to $1. 3 Top Management Challenges for Fiscal Year 20/7, Department of Transportation (O!G Report Number PT20!7007), 

November 15.2016. OIG reports and testimonies are avallable on our Web site: https://\vww.oig.dot.gov. 
107

systems. Yet, emerging technologies, industry safety concerns, and enforcement 

issues pose challenges to DOT's safety mission. Key focus areas we have identified 

for DOT include ensuring its oversight keeps pace with the rapid rise of UAS and 

driverless cars, improving how it collects and uses vehicle safety recall data, and 

effectively addressing pipeline safety violations. 

Overseeing an Expanding and Dynamic Unmanned Aircraft Systems 

Industry 

Through a sustained focus, DOT, the Federal Aviation Administration (FAA), and 

industry have maintained a safe aviation system, with no fatal passenger accidents 

involving domestic commercial carriers in over 7 years. However, the growing 

demand for commercial UAS operations-for purposes ranging from pipeline 

monitoring and precision agriculture to package delivery and filmmaking-presents 

one of the most significant safety challenges for FAA in decades. FAA forecast 

1.9 million units in potential annual sales ofUAS in 2016, which could increase to 4.3 

million units sold annually by 2020. While this represents substantial opportunities for 

U.S. businesses, it also raises safety concerns, since FAA has not yet established a 

comprehensive oversight framework to ensure this evolving industry can operate 

safely in the same airspace with other private, commercial, and military aircraft. 

FAA took an important step forward to advance UAS integration in June 2016 with a 

new rule regulating the use of small UAS 4 (i.e., systems weighing less than 

55 pounds). However, the rule does not yet permit several high-profile aspects of 

potential UAS use, such as delivering packages beyond the line of sight of the pilot, 

underscoring the need for further regulatory efforts. Until then, FAA will continue to 

accommodate some UAS operations through regulatory waivers and exemptions. 

Moreover, as the number of UAS operations has grown, so has the number of UAS 

sightings by pilots and other sources. 5 In 2015, there were over 1,100 UAS events 

reported compared to just 238 in 2014, according to FAA's UAS event data. As 

shown in the figure below, 71 percent of sightings occurred at altitudes either at or 

above the 400-foot maximum FAA-authorized altitude for civil UAS-with 

29 percent of sightings reported at altitudes at or above 3,000 feet, approaching areas 

where other aircraft operate. 6 

4 14 CFR Part I 07 (June 2016). 5 While sightings are primarily reported by pilots, reports also come from air traffic controllers. law enforcement officers, 

and the general public. 6 1t is important to note that FAA has not verified the validity of the reports received by air traffic. but the data indicate that a 

number ofUAS operators may be flying their aircraft outside of FAA guidelines. 

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Figure. UAS Event Reports Above and Below 400 Feet 

111 UAS operating below 400ft 

111 UAS operating at or above 

3,000 ft 

111 UAS operating between 400 

and 3,000 ft 

Source: OIG analysis of FAA data reported between November 2014 and January 2016. 

Note: The 400-foot maximum altitude was a requirement of FAA-issued exemptions as well as the special rule 

for model aircraft prior to FAA's issuance of the Small UAS rule in June 2016. 

These events highlight the importance of establishing a risk-based system for UAS 

oversight, especially since the number of UAS sightings has continued to increasewith over I ,400 reported for the 9-month period ending in September 2016, according 

to FAA. However, FAA's efforts in this area are incomplete. For example, the 

Agency lacks a robust data reporting and tracking system for UAS activity. It also has 

provided only limited VAS-related training and guidance to safety inspectors. As a 

result, FAA is currently restricted to a reactive approach for addressing UAS incidents 

and issues as they arise, rather than proactively identifying and mitigating potential 

risks. 

As we recently reported/ to make progress FAA will need to establish the capacity 

for integrated UAS data and analysis and implement a process to verify UAS 

operators' compliance with regulations. Further, FAA must continue coordinating 

with other Government agencies to advance UAS detection technology. These steps 

are critical to ensure that FAA can meet UAS demand while maintaining the safety of 

the NAS. 

Preparing To Oversee Driverless Cars 

The emergence of driverless cars is another developing technology that will present 

significant regulatory and oversight challenges for DOT. While this is still in the early 

stages, several companies are already developing and testing driverless cars, and the 

7 I·AA Lacks a Risk-Based Oversight Process for Civil Unmanned Aircraft ,\)'stems, (OIG Report Number AV2017018) 

December 1, 2016. 

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number is expected to grow quickly over the next decade. In September 2016, DOT 

issued a Federal Automated Vehicles Policy, which sets the framework for the next 

50 years with guidance for the safe and rapid development of advanced automated 

vehicle safety technologies. Along with developing the tools and standards to oversee 

and regulate this new technology, DOT will need to consider the impact on several of 

its agencies and work to ensure they can adapt as needed to maintain DOT's 

commitment to both safety and innovation. For example, the National Highway 

Traffic Safety Administration (NHTSA) will have to consider whether new authority 

is needed to ensure that these new vehicles are as safe as standard motor vehicles. 

Similarly, for commercial motor vehicles, the Federal Motor Carrier Safety 

Administration (FMCSA) needs to identify any impact to its safety regulations and 

update operational procedures as required. However, further efforts in these areas will 

rely on the results of the Secretary's ongoing evaluation of the 2016 policy and any 

related updates. 

Enhancing Processes for Collecting and Analyzing Vehicle Safety Recall 

Data 

Recent large-scale recalls from auto manufacturers highlight a number of safety 

challenges for the Department. Since 2014, General Motors (GM) has recalled nearly 

9 million U.S. vehicles for a defect involving a faulty ignition switch that resulted in 

GM receiving more than 100 death claims and more than 200 injury claims. In 

addition, NHTSA is overseeing a recall of Takata airbags installed in tens of millions 

of U.S. vehicles due to a safety defect that led to II fatalities and approximately 

180 injuries in the United States. Due in part to our investigative work, Takata 

Corporation was sentenced last month to pay a total of $1 billion in criminal 

penalties. 8 

NHTSA's Office of Defects Investigation (ODI) is responsible for overseeing safety 

recalls and monitoring recall completion rates. The GM and Takata recalls and others 

have prompted congressional concerns over NHTSA's safety processes. We have 

issued numerous audit recommendations over the years to the Agency to strengthen 

its internal controls and use of safety data. NHTSA is working to address those 

concerns, but more work remains. For example, NHTSA recently completed work on 

14 of the 17 recommendations from our 2015 audit, which found ODI had insufficient 

processes for verifying that manufacturers submit complete and accurate early 

warning reporting data. 9 However, NHTSA has not completed three recommendations 

to enhance collection and analysis of early warning reporting data and the process for 

reviewing complaints. We also reported in February 2016 10 that ODI needed better 

8 Takata Corporation Pleads Guilty and Is Sentenced To Pay $1 Billion in Criminal Penalties for Airbag Scheme, Februai)' 

27, 2017. https://wmv.oig.dot.gov/library-item/35545 9 Inadequate Data and Ana(vsis Undermine ,VHTSA 's f~jfi1rts To ldem(fy and Investigate Vehicle Safety Concerns (OIG 

Report Number ST2015063), June 18.2015. 10 Additional Efforts Are Seeded To Ensure NHTSA ·s Full Implementation of OIG 's 20// Recommendations (0!0 Report 

Number ST201602l ). February 24. 20!6. 

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quality control mechanisms to comply with policies that NHTSA established in 

response to our 2011 recommendations involving documentation and testing 

weaknesses. 11 Two recommendations from our 2016 report remain open. 

Last month, we announced 12 an audit of ODI's recall processes as mandated by 

Congress in the Fixing America's Surface Transportation Act (FAST Act). 13 

Consistent with this mandate, and as agreed to with congressional staff, our audit is 

examining NHTSA's processes for monitoring manufacturers' proposed recall 

remedies and scope and overseeing safety recall implementation. We will keep 

Congress apprised of our progress in this area. 

Addressing Violations of Pipeline Safety Regulations 

A key DOT mission is mitigating the safety risks posed by the Nation's 2.5 millionmile pipeline transportation system. The Pipeline and Hazardous Materials Safety 

Administration (PHMSA) develops and enforces regulations for the safe and reliable 

operation of pipelines. However, PHMSA has faced challenges enforcing some key 

regulatory safeguards. There have been a number of serious pipeline-related incidents 

over the past several years. From 2012 to 2016, there were 144 serious pipeline 

incidents resulting in 63 fatalities. Many of these were due to violations of safety 

regulations required by the Natural Gas Pipeline Safety Act (PSA). 14 

Historically, however, it has been difficult to prosecute such violations due to 

language in Title 49 U.S.C. Section 60123(a), the criminal statute for pipeline safety 

violations. This section requires that the violation be committed "knowingly and 

willfully." Instead, the Department of Justice has had more success prosecuting cases 

under Section 5124 (the criminal statute for hazardous materials violations), which 

allows prosecutions for "reckless" violations (i.e., display of deliberate indifference or 

conscious disregard to the consequences of their conduct). In the past 10 years, 

Federal charges under Section 60 123(a) were brought against only four individuals 

and companies, and in only one case did a prosecution result in a guilty verdict of a 

utility company for violations of Section 60123(a)-the case against the Pacific Gas 

and Electric Company (PG&E). 

The case against PG&E arose after a natural gas pipeline ruptured in San Bruno, CA, 

in 2010, killing 8 people. It was investigated by the Department of Justice, our office, 

the Federal Bureau oflnvestigation, and local law enforcement. On August 9, 2016, a 

Federal jury found PG&E guilty of multiple knowing and willful violations of the 

PSA and of obstructing the National Transportation Safety Board's (NTSB) 

investigation. On January 26, 2017, the maximum sentence was imposed-5 years of 

11 Process Improvements Are Needed for Identifying and Addressing Vehicle Safety Defects (OIG Report Number 

MH2012001), October 6, 2011. 

'

2 Audit Initiated ofNHTSA 's Vehicle Safety Recall Process (OIG Project ID 17S3002SOOO). February 8. 2017. 

"Pub. L. No. 114-94 (2015). 

l4 Pub. L. No. 90-481 ( 1968). 

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probation and a $3 million fine. The court also ordered the company to announce in 

local and national media that it was found guilty of violating the PSA and obstructing 

a Federal investigation. While this sentence sends a message to the industry, as a 

policy matter, DOT and Congress may wish to consider whether the deterrent effect 

of prosecuting violations of the PSA might be enhanced by amending Section 

601 23(a) to include reckless violations. 

ENHANCING STEWARDSHIP OF DOT'S FINANCIAL AND 

INFRASTRUCTURE INVESTMENTS 

DOT receives billions of Federal dollars annually to fund projects to build, repair, and 

maintain our Nation's vast transportation infrastructure, ranging from air traffic 

control tools to roads and bridges and IT systems. Safeguarding these and future 

investments requires sound financial management and strong uptront risk mitigation 

strategies for increasing threats. Key challenges for the Department include enhancing 

the capacity and resiliency of the NAS; increasing oversight of high-risk contracts, 

highway and bridge infrastructure spending, and Departmentwide financial programs; 

and effectively addressing rapidly evolving cybersecurity risks. 

Enhancing the Capacity, Efficiency, and Resiliency of the NAS 

FAA operates the safest aviation system in the world and continues to work with 

stakeholders to implement new technologies that are providing near-term benefits to 

airspace users, such as fuel savings and increased airspace capacity and efficiency. 

However, FAA faces ongoing challenges with its investments to deliver specific 

capabilities and programs required to implement the Next Generation Air 

Transportation System (NextGen), which aims to modernize and replace 1950s-era 

ground radar and equipment. 

For example, FAA has worked with industry to identify and begin implementing the 

four highest priority NextGen capabilities: (1) advancing performance-based 

navigation (PBN), (2) improving access to closely spaced parallel runways, 

(3) enhancing airport surface operations, and (4) developing data communications for 

controllers and pilots. However, FAA is behind schedule in key areas and faces 

challenges achieving the full range of benefits, particularly with its top priority to 

develop new PBN procedures. These have faced delays due in part to community 

concerns over aircraft noise and the lack of automated tools to help controllers 

sequence and space aircraft. 

We also recently reported 15 that FAA has not fully identified the total costs, 

capabilities, or completion schedules for any of the six NextGen transformational 

!

5 Total Costs, Schedules, and Benefits of FAA's VextGen Tramformational Programs Remain Uncertain (OfG Report 

Number AV2017009). November 10.2016. 

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programs 16 that are required to implement NextGen and introduce key capabilities. 

Cost estimates for these six programs now total over $5.7 billion (increasing from a 

$2.1 billion estimate in 2012), and their completion has been pushed beyond 2020. 

Many of these programs' benefits remain unquantified as to how they will improve 

the t1ow of air traffic or controller workforce productivity. For example, FAA has 

mandated that all airspace users must purchase and install the Automatic Dependent 

Surveillance-Broadcast System (ADS-B) Out 17 equipment by 2020. However, the 

majority of benefits are expected from ADS-B In. which will enable display of 

information in the cockpit. Yet, ADS-B In's requirements and associated schedule 

and costs continue to evolve, making it uncertain when benefits from enhancing NAS 

capacity will be achieved. 

While working to increase capacity and efficiency through NextGen, FAA must also 

take steps to ensure that the NAS can quickly recover from catastrophic-sometimes 

intentional--events. For example, in September 2014, an FAA contract employee 

deliberately started a fire at FAA's Chicago Air Route Traffic Control Center that 

disrupted air traffic for more than 2 weeks and led to reported industry losses of over 

$350 million. The event highlighted weaknesses in FAA's current air traffic control 

infrastructure, which has limited flexibility to respond to system failures and quickly 

return to normal operations. We recently reported 18 that while FAA has begun to 

develop new contingency plans to better respond to such failures, the plans are still 

incomplete, and many of the key technologies, such as the new NAS Voice System, 19 

are years away from implementation. 

Enhancing NAS capacity and efficiency depends on ensuring adequate controller 

staffing levels at its critical air traffic facilities. In our 2016 report, 20 we found that 

when excluding controllers-in-training, six of eight large Terminal Radar and 

Approach Control (TRACON) 21 facilities (e.g., New York, Chicago, and Atlanta) had 

staffing levels below FAA's staffing range (as listed in its Controller Workforce 

Plan), while some en route facilities had more controllers than the Plan required. For 

example, New York TRACON had 137 fully certified controllers in December 2016, 

while FAA's staffing range was 174 to 213 controllers. Without better models, FAA 

will continue to face challenges in ensuring its critical facilities are well staffed. We 

recommended that FAA implement a methodology for determining en route staffing 

ranges. According to FAA officials, its staffing model has been updated and new 

16 The six transformational programs are Automatic Dependent Surveillance-Broadcast (ADS-H), System Wide Information 

Management (SWIM). Data Communications (DataComm), NAS Voice System (NVS), Common Support ServicesWeather (CSS-Wx). and Collaborative Air Trattic Management-Technologies (CATM-T). 17 ADS-BOut involves the broadcast ofinfonnation to FAA ground systems. 18 Although FAA Has Taken Steps To Improve its Operational Contingency Plans, Significant Work Remains To Aiitigate 

t"jfects of Major System Disruptions (O!G Report Number A V2017020). January II. 2017. 19 NAS Voice System (NVS) is expected to standardize the voice communication infrastructure among FAA air traffic 

facilities by replacing 11 aging analog voice communication systems \Vith a single digital technology. 2

n FAA Continues To Face Challenges in Ensuring Enough Ful(v Trained Controllers at Critical Facilities (OIG Report 

Number AV2016014) . .1anuary 11.2016. 21 TRACONs guide aircraft as they approach or leave airspace near a primary airport. 

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staffing targets will be available in the revised Controller Workforce Plan scheduled 

for issuance this month. 

Increasing Oversight of High-Risk Contracts 

DOT relies on billions of dollars in contracts each year to fund programs across all 

modes of transportation. In fiscal years 2015 and 2016, DOT spent over $6 billion in 

contracts annually. Our work has identified areas where the Department can improve 

its internal controls and accountability in managing its sizable investments, including 

strengthening oversight and planning for contracts and minimizing the use of contract 

types that present the greatest financial risks to the Government. 

For example, cost-reimbursable contracts are considered high risk because of the 

potential for cost escalation and the fact that the Government pays a contractor's costs 

of performance regardless of whether the work is completed. Our review22 of six 

Operating Administrations found that they did not (1) perform adequate acquisition 

planning and document their justifications23 for using this contract type or 

(2) consistently assess oversight risks, properly designate oversight personnel, or 

verify that contractors' accounting systems arc adequate to provide reliable cost data. 

Similarly, we found that FAA-which awards more contract dollars annually than any 

other Operating Administration-lacked basic internal controls and contracting 

practices for its sole-source and multiple-award contracts. Sole-source contracts are 

negotiated without the benefit of competition and carry the risk of overspending. Our 

work24 found that FAA did not do enough to reduce its use of sole-source contracts, 

as directed by OMB in 2009. Between fiscal years 2008 and 2014, FAA awarded 624 

sole-source contracts with a total value of about $2.2 billion. For most of the solesource contracts we reviewed, FAA had not conducted an adequate market analysis or 

developed independent cost estimates to ensure reasonable prices. We also found 

issues with FAA multiple-award service contracts. While multiple award service 

contracts are not by nature high-risk, the various task orders issued under them 

frequently lack sufficient oversight and competition. 

For example, for FAA's $1.1 billion Systems Engineering 2020 (SE-2020) 

contracts, 25 FAA did not ensure full competition or documentation for task orders or 

::

2 DOT Does 1Vot Fully Comply With l?evised Federal Acquisition Regulations on the Use and .~\Ianagement of CostReimbursement Awards (010 Report Number ZA2013118), August 5, 2013. 23 The Federal Acquisition Regulation states that a cost~reimhursement award may only be used when (1) circumstances do 

not allow the agency to define its requirements sufficiently to allow for a fixed-price award or (2) uncertainties involved in 

~ontract performance do not pem1it costs to be estimated with sufficient accuracy to use any type of tixed-price award . 

.A FAA Lacks Adequate Controls To Accurately Track and Award fls Sole Source Contracts (OIG Report Number 

ZA2016065). May 9. 2016. 

~ SE-2020 is a portfolio of contracts that FAA uses to obtain professional and technical services to support its development 

and implementation of NextGen-the Agency's effort to modernize and maintain the NAS. During our 2012 review of 

FAA's SE-2020 contracts. the Agcncy·s cumulative maximum value was $7.3 billion. When we initiated our 2016 followup review. FAA reported its current award baseline was $1.1 billion. 

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ensure contract oversight staff had the needed skills for their jobs. 26 This can increase 

the risk of cost overruns or payment for services that do not meet DOT's needs. 

Improving Stewardship of Credit Programs, Highway and Bridge 

Infrastructure Projects, and Delinquent Debt 

To be an effective steward of taxpayer dollars while financing large infrastructure 

projects, DOT must carefully manage the consolidation of credit programs that 

leverage private investment, such as the Transportation Infrastructure Finance and 

Innovation Act (TIFIA) and the Railroad Rehabilitation and Improvement Financing 

(RRIF). In 2014, DOT established the Build America Transportation Investment 

Center (BATIC) to streamline public-private coordination when planning and 

implementing infrastructure projects. Since BA TIC's inception, DOT credit programs 

have issued credit instruments totaling roughly $10 billion to 21 projects that support 

up to $26 billion in transportation infrastructure. Recognizing BA TIC's impact on 

funding for infrastructure projects, Congress mandated the restructuring of DOT 

credit programs to consolidate the TIFIA and RRIF programs with BATIC in 2015. 

This restructuring is ongoing; sustained management attention will be critical to 

complete and oversee these significant financial arrangements. 

Our work has also identified areas where DOT can enhance its stewardship of about 

$40 billion in annual Federal funding for highway and bridge infrastructure projects 

and better deter fraud, waste, and abuse. As DOT has previously reported to 

Congress, there is a significant funding gap between the amount needed to maintain 

and improve the conditions and performance of roads and bridges and the amount that 

Government agencies actually provide-making strong oversight especially vital to 

maintaining and expanding this infrastructure. For example, we recently found that 

FHW A is not enforcing a law27 requiring that States fully repay preliminary 

engineering (PE) funds to the Highway Trust Fund when a project does not acquire 

right-of-wa/8 or start construction within 10 years at1er the PE funds were made 

available. As a result, FHW A could not ensure that States repaid billions in PE funds 

or requested extensions when required. 

Managing DOT's financial commitments also includes establishing and maintaining 

internal controls to more effectively identify and collect delinquent debt. 29 Our audit 

work found 30 that weak internal controls at DOT contributed to an increase in 

lll FAA's Contracting Practices Are insufficient To Effectively Manage Its ""~ystems Engineering 2020 Contracts (OIG Report 

Number ZA2012082). March 28.2012. 27 23 U.S.C. * 102(b). 28 Right~of'-~ay is ne1.v real property that must be acquired in order to construct or complete a transportation project. 

:::9 A debt is an amount owed by an individual and/or a non-Federal entity. This includes direct and guaranteed l~ans, such as 

those provided to States for financing transportation projects. Administrative debts include civil fines and penalties and 

payroll overpayments. A debt becomes delinquent when payment is not made by the due date or end of the grace period 

established in an agreement or specified in the billing notice. 

;o Weak Internal Controls for Collecting Delinquent Debt Put Millions of DOT Dollars at Risk (O!G Report Number 

Fl2015065). July 9, 2015. 

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outstanding debt owed the Federal Government by individuals and non-Federal 

entities and an increased risk that these debts would not be collected and returned to 

DOT. From fiscal years 1999 to 2013, DOT's reported delinquent debt increased by 

over 300 percent, from approximately $170 million to $737 million. DOT-wide 

policies and procedures are needed to accurately identify and report delinquent debt 

and recoveries, collect debts in a timely manner, and ensure DOT has the requisite 

skills and internal controls for carrying out these programs. 

Coordinating Technological Initiatives and Extending Security 

Boundaries To Address Cybersecurity Risks 

As cybersecurity threats become increasingly sophisticated and more numerous, DOT 

faces the challenge of reevaluating and expanding traditional approaches to secure IT 

systems. DOT must work to fulfill existing requirements while also implementing 

new strategies to meet the additional security demands of mobile technology, cloudbased computing, and other technological developments. However, cybersecurity 

remains a significant challenge for DOT and its Operating Administrations. 

To its credit, DOT has supplied personal identification verification (PIV) cards to all 

its employees. However, DOT has not fully implemented the use of these cards 

Departmentwide for access to its facilities and information systems. In fact, only 140 

of its 460 systems (30 percent) can use PIV cards for access. In addition, 530 FAA 

facilities do not use PIV cards for physical access. DOT also has not effectively 

implemented other cybersecurity initiatives, such as programs to actively monitor and 

mitigate security weaknesses immediately during or after an attack. For example, we 

recently reported31 that DOT's continuous monitoring program lacks sufficient 

maturity to be effective, leaving the Department's systems vulnerable to exploitable 

hardware and software. 

Furthermore, recent trends in mobile, cloud, and workplace technology-such as the 

proliferation of smartphones and tablets and an increasing number of remote 

employees-present new challenges to monitoring and securing DOT's network. As 

the industry moves towards extending virtual desktop infrastructure 32 and cloud 

computing, 33 DOT will need to change how it stores and manages data in order to 

effectively respond to cybersecurity incidents. As we recently reported, DOT's 

current incident monitoring is incomplete due to lack of access to FAA's and cloud 

service providers' systems. 

"F!Sl•1A 2016: DOT Continues To Make Progress. but the Department's Information Security Posture Is Still Not Eflective 

(OlG Report Number Fl2017008). November 9. 2016. 32 Virtual desktop infrastructure enables a user to have a DOT server replicate his or her desktop on devices in addition to 

his or her Govemmcnt·issucd computer. 31 Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of 

contigurablc computing resources {e.g., networks, servers, storage. applications. and services) that can be rapidly 

provisioned and released with minimal management effort or service provider interaction. 

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EFFECTIVELY ADDRESSING EXISTING MANDATES AND 

RECOMMENDATIONS 

In recent years, DOT has faced a significant challenge to implement mandated and 

recommended improvements to its safety oversight and program management. These 

include highway and transit requirements from the 2012 MAP-21 and 2015 FAST 

acts, as well as reevaluating hours-of-service requirements as mandated in the 2015 

Appropriations Act. 34 In 2016, the FAA Extension, Safety, and Security Act 

(Extension Act) 35 also set out new requirements for DOT regarding pilot safety issues 

and oversight of foreign repair stations. At the same time, DOT has struggled to meet 

deadlines for mandates and recommendations regarding pipeline and hazardous 

materials safety. Going forward, it will be important for DOT to prioritize actions to 

meet statutory requirements, weigh which rulemakings will have the greatest safety 

merit and which existing regulations may require additional scrutiny, and assess steps 

needed to meet these or any future congressional directives. For example, DOT will 

need to improve its compliance with the Federal Information Technology Acquisition 

Reform Act (FITARA)/ 6 which is intended to improve agencies' IT acquisitions and 

enhance congressional monitoring. DOT recently received a failing grade on the 

House Committee on Oversight and Government Reform's FITARA Scorecard. 

Implementing Legislative Requirements for Highway and Transit 

Projects 

MAP-21 established requirements for States to employ performance-based 

management of DOT's highway and transit programs, including linking State 

transportation performance plans to Federal-aid highway funds through an asset 

management plan. As DOT finalizes rulemakings37 to meet these requirements, it will 

need to adjust its risk-based oversight to ensure that States consistently comply with 

the new rules and that the rules achieve desired outcomes. Additionally, MAP-21 

called for DOT to accelerate highway, bridge, and transit project delivery. These 

actions include rulemakings to streamline the environmental review process and 

required reports to Congress on environmental actions. DOT has implemented half of 

the actions it initially identified. However, DOT recognizes that it needs to revise a 

large number of its planned actions to comply with more recent FAST Act 

requirements that will affect these areas. This includes, for example, a rulemaking that 

allows States to assume FHWA responsibilities under the National Environmental 

34 Consolidated and Further Continuing Appropriations Act oj2nJ5. Pub. L. No. 113-235 (2014). 15 Pub. L. No. 114-190 (2016). 36 Federal Information Technology Acquisition Refonn provisions of the Carl Levin and ffoward P. "Buck" AfcKeon 

National Defense Authorization Actfor hsca/ Year 2015. Pub. L. No. 113-291. div.A, title VIII. subtitle D. 128 Stat. 3292. 

3438-3450 (Dec. 19. 2014). 37 For example, the Federal Highway Administration (fl-IWA) has established a process for development of a State risk· 

ba.'ied asset management plan, including defining minimum standards for developing and operating bridge and pavement 

management systems, and a rulemaking for setting perfOrmance targets and mea'iurcs covering bridges and pavement. 

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Policy Act38 for environmental reviews, consultation, and compliance for Federal 

highway projects. 

Furthermore, FHWA has not implemented key MAP-21 requirements to improve 

bridge safety programs or addressed several of our related recommendations. These 

include implementing a mandated final rule on improving bridge inspection and 

inventory standards and enforcing funding restrictions on States that do not meet 

requirements. Additionally, in 2015, we made five recommendations to improve 

FHWA's risk-based oversight of State bridge inspection programs, such as addressing 

gaps in program guidance and implementing a comprehensive national bridge safety 

risk management process. FHW A is working to address our recommendations. These 

actions, once completed, will help ensure the safety and integrity of the Nation's more 

than 600,000 bridges, of which approximately one-fourth are deficient. 

Leveraging Recent Efforts To Inform Research on Hours-of-Service 

Issues 

FMC SA issued hours-of-service regulations, which came into effect in 2013, to 

establish daily and weekly driving limits and required rest periods for commercial 

vehicle drivers. The regulations included two additional restart provisions. These 

provisions required that commercial drivers include at least two nighttime periods in 

restart breaks and limited usc of the restart provision to once every 168 hours. 

Congress raised concerns about the rule's unintended consequences, such as increased 

congestion during certain traffic hours, and suspended FMCSA's enforcement of the 

two provisions in the 2015 Appropriations Act. The act also required DOT to conduct 

a study of the operational, safety, health, and fatigue impacts of these regulations and 

mandated that we review the study. As we recently reported to this Subcommittee, we 

found that DOT's study, provided to us for review in January 2017, met the act's 

requirements, and we concurred with the Department's conclusion that the study did 

not explicitly identify a net benefit from the use of the two suspended provisions on 

driver operations, safety, fatigue, and health. 39 Going forward, the challenge for DOT 

and FMCSA will be determining how best to usc the study results to inform future 

research opportunities on driver schedules and fatigue. 

Managing New Safety Requirements From the FAA Extension Act 

FAA has several ongoing initiatives to enhance aviation safety but faces challenges to 

implement new requirements of the 2016 Extension Act. Several of the act's 

provisions also mirror recommendations from our office. For example, in line with 

our recent report, 40 the act includes requirements for new pilot training on monitoring 

38 Pub. L. No. 91-190 (1969). 39 Letter to the House and Senate Committees on Appropriations and the Secretary Regarding O!G 's Audit qf f~HCSA 's 

Hours o(Sen·ice Restart Study, (OIG Correspondence Number CC20!7007), March 2, 2017. 40 Enhanced fAA Oversight Could Reduce Ha=ards Associated With Increased Use a./Flight Deck Automation, (OIG Report 

Number A V20l60 13).January 7. 2016. 

12 
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flight automation systems and new inspector guidance for tracking and assessing pilot 

proficiency in manual flight. FAA will need to ensure that air carrier training 

programs address these provisions so that pilots maintain the skills needed to fly 

safely and recover from a failure with cockpit automated systems or an unexpected 

event, particularly in the critical phases of flight. 

A critical safety component reflected in the Extension Act is ensuring air carriers have 

the information they need on a pilot's training and background to make informed 

hiring decisions. To meet this goal, the act requires FAA to establish a pilot records 

database by April 30, 20 17. We have monitored FAA's efforts to develop and 

implement the database since it was first mandated, 41 and we reported in 2015 42 that 

FAA did not expect full implementation until 2023. In response to our 

recommendations, FAA accelerated efforts to launch its portion of the database and 

now expects it to be available to air carriers this spring. However, FAA has yet to 

decide how best to obtain and input air carrier records as far back as 2005 given the 

differences among carriers' data and recordkeeping systems. FAA is working on a 

rulemaking to address this problem and expects to issue it in 2018 at the earliest. 

Another aviation safety priority that we have reported on since 2003 is foreign repair 

stations. Currently there are approximately 840 repair stations located outside the 

United States. Under the Extension Act, FAA must ensure that its safety assessment 

system prioritizes inspections at foreign repair stations performing heavy maintenance 

for U.S. carriers, using risk-based oversight and data to track corrective actions. 

However, we continue to find weaknesses in FAA's ability to get the data it needs to 

assess risk and effectively monitor foreign repair stations covered under the United 

States and European Union (EU) Aviation Safety Agreement, which went into effect 

in 2011 and covers more than 400 FAA-certiticated repair stations in Europe. 43 Under 

this agreement, foreign authorities are only required to provide FAA with repair 

station inspection results pertaining to those FAA regulations that differ from the 

EU's-not complete facility inspection reports. In response to our recommendation in 

2015, FAA recently issued guidance to its inspectors to obtain these facility 

inspection reports, but it is too early to tell whether these procedures will actually help 

the Agency to better assess risk. 

41 The database was first mandated in the 2010 Airline Safety and Federal Aviation Administration Safety Act (Pub. L. No. 

111-216 (2010) in response to the 2009 Colgan Air accident. On February 12. 2009, Colgan Air Flight 3407 crashed in New 

York. leading to 50 fatalities. The accident highlighted the need for improvements to pilot hiring programs. 41 FAA Delays in Establishing a Pilot Records Database Limit Air Carriers' Access to Background Information, (OIG 

Report Number A V20 15079 ), August 20, 2015. 43 With this agreement, the United States expanded its aviation safety partnership fi-om 3 countries in 1999 (France. 

Germany. and Ireland) to 18 countries today (the original 3 plus Austria, Belgium. Czech Republic. Denmark, Finland. !tal). 

Luxembourg. Malta. the Netherlands. Poland. PortugaL Romania, Spain, Sweden, and the United Kingdom). While this 

agreement minimizes duplicative oversight and relieves FAA inspectors from perfOrming mandator)', annual inspections 

overseas, FAA still retains its responsibility to ensure its t()rcign repair stations comply with U.S. regulations. 

13 
119

Addressing Pipeline and Hazardous Materials Safety Recommendations 

and Mandates 

Given the number of pipeline and hazardous materials incidents over the last several 

years-more than 86,000 incidents between 2012 and 2016-PHMSA has received 

many mandates and recommendations to improve how it mitigates these safety risks. 

Specifically, since 2005, PHMSA has received 263 mandates and recommendations. 

To its credit, PHMSA completed nearly two-thirds of them but in doing so, missed 

about 75 percent of its mandated deadlines. Our work shows that PHMSA must focus 

on improving its processes, oversight, and project management to address the 

remaining or any future recommendations or mandates in a timelier manner. As we 

reported in October 2016, 44 20 of PHMSA's 81 mandates (25 percent) remain 

unimplemented, as well as about half of NTSB's 118 safety recommendations and 

7 recommendations from the Government Accountability Office. 

In addition, PHMSA is working to address our five recommendations to improve how 

the Agency implements mandates and recommendations and coordinates with other 

Operating Administrations involved with the transportation of hazardous materialsFAA, FMCSA, and the Federal Railroad Administration. For example, our work 

found that PHMSA has not adequately coordinated, as required by a DOT Order, 45 on 

rulemaking and international standards development with these agencies, limiting its 

ability to resolve disputes in a timely manner. PHMSA is working to address these 

issues through organizational changes. It is too soon to determine whether these plans, 

once finalized, will aid the Agency's ability to meet mandates and recommendations 

in full and on time. 

CONCLUSION 

The safe and efficient movement of people and goods is vital to our Nation's 

economic growth, global partnerships, and quality of life. We remain committed to 

assisting DOT and the Secretary as they work to improve DOT's management of 

programs and resources. Our office has a strong record of identifying weaknesses and 

recommending enhancements to DOT's internal controls to better oversee its 

programs and grants, particularly in large-scale infrastructure investments such as the 

American Recovery and Reinvestment Act of 2009 and Hurricane Sandy relief funds. 

We appreciate this Subcommittee's sustained support, which has allowed us to 

maximize our efforts to oversee such investments while maintaining our focus on 

other high-priority areas. We will continue to strive to find innovative ways to ensure 

the Department fully leverages the fraud detection and prevention resources at handsuch as mining and analyzing data to better predict high-risk areas for fraud, waste, 

-.~ lnsujficienl Guidance, Oversight, and Coordination Hinder P!IMSA 's Full Implementation of Mandates and 

Recommendations (OIG Report Number ST2017002). October 14. 2016. 45 DOT Order 1 I00.74A, Department of Transportation Organization Manual: Pipeline and Hazardous Materials SafCty 

Administration, September 2010. 

14 
120

and abuse. We look forward to providing you with any information you may require 

and pledge our support in promoting safety and efficiency and preventing fraud in any 

forthcoming infrastructure plans. 

This concludes my prepared statement. I will be happy to answer any questions you or 

other Members of the Subcommittee may have. 

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EXHIBIT. DOT OIG'S ONGOING AUDITS AS OF MARCH 16,2017 

Project Title Objectives Source/Requester 

DEPARTMENTWIDE 

DOT's Information Our audit objectives are to assess (1) how Self-Initiated 

Security Continuous DOT's !SCM program conforms to OMB and 

Monitoring (!SCM) National Institute of Standards and 

Program Audit Technology requirements and (2) the status 

and progress of DOT's implementation of its 

!SCM proqram. 

DOT's Use of Other Our audit objective is to evaluate DOT's use Self-Initiated 

Transaction and management of Other Transaction 

Agreements Agreements. 

DOT's Our audit objective is to determine whether Required by the Improper 

Implementation of the Department complied with IPERA's Payments Elimination and 

the Improper requirements as implemented by the Office of Recovery Act of 201 0 

Payments Management and Budget 

Elimination and 

Recovery Act of 

2010 During Fiscal 

Year2016 

DOTOCIO Our audit objectives are to determine whether Self-Initiated 

Cybersecurity DOT (1) adequately planned for ~s 

Funding cybersecurrty funding needs and (2) 

expended cybersecurity funds in accordance 

with congressional direction. 

OST's Benefit-Cost Our audit objective is to assess the Office of Self-Initiated 

Analysis of the the Secretary of Transportation's (OST) 

TIGER Grant policies and procedures for evaluating benefitApplications cost analyses in determining which TIGER 

grant applications are forwarded for further 

review. 

DOT's Our audit objectives are to assess DOT's (1) Self-Initiated 

Implementation of implementation of EVM policies, procedures, 

Earned Value and practices for its IT investments and (2) 

Management use of EVM data to plan, monitor, and report 

System the status of its IT investments and related 

security spending. We have contracted with 

KPMG LLP, an independent public accounting 

firm, to conduct this review, subject to OIG's 

oversight 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 16 
122

Project Title Objectives Source/Requester 

DOT's Our audit objectives are to (1) determine Self-Initiated 

Implementation of whether DOT has an effective enterprise 

Enterprise architecture program and (2) to assess its 

Architecture progress in developing its department-wide 

EA and an EA performance measurement 

system. We have contracted with KPMG LLP, 

an independent public accounting firm, to 

conduct this review subject to our oversight. 

DOT's Protection of Our audit objectives are to determine whether Required by FY 2005 

Privacy Information (1) DOT has established adequate consolidated appropriations 

procedures for the collection, use, and Act for Transportation, 

security of Pll; (2) DOT ensures compliance Treasury, Independent 

with its own privacy and data protection Agencies and General 

policies and applicable laws and regulations Government 

to prevent unauthorized access to or 

unintended use of Pll; and (3) DOT's 

Operating Administrations properly evaluate 

the necessity of using PII to process system 

data. OIG has contracted with KPMG LLP, an 

independent public accounting firm, to 

conduct this review, subject to OIG's 

oversight. 

DOT's Information Our audit objective is to determine the Required by the Federal 

Security Program effectiveness of DOT's information security Information Security 

and Practices for program and practices. Modernization Act of 2014 

Fiscal Year 2017 

DOT's Fiscal Years OIG has engaged an independent accounting Required by Chief Financial 

2017 and 2016 firm, KPMG, to conduct an audit of the DOT's Officers Act of 1990 

Consolidated consolidated financial statements for fiscal 

Financial years 2017 and 2016, subject to OIG 

Statements oversight. 

DOT's Compliance Our audit objectives are to assess (1) the Required by the Digital 

with the completeness, timeliness, quality, and Accountability and 

Requirements of the accuracy of fiscal year 2017 second quarter Transparency Act of 2014 

DATA Act for Fiscal financial and award data submitted for 

Year 2017 publication on USASpending.gov and (2) the 

Department's implementation and use of the 

government-wide financial data standards 

established by the Office of Management and 

Budget (OMS) and the Department of 

Treasury. 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 17 
123

Project Title Objectives Source/Requester 

DOT's SSAE-16 OIG contracted with KPMG, LLC, an Required by the American 

Review of the independent public accounting firm, to Institute of Certified Public 

Enterprise Services conduct the review of ESC subject to OIG's Accountant' Statement on 

Center oversight The audit objectives are to Standards for Attestation 

determine whether (1) management's Engagements No. 16 

descriptions of ESC's systems are fairly 

presented; (2) ESC's controls are suitably 

designed; and (3) ESC's controls are 

operating effectively throug haul the period of 

October 1, 2016, through June 30, 2017. 

KPMG will do additional testing and issue a 

follow-up letter to our office for the period July 

1, 2017, through September 30,2017. 

FEDERAL AVIATION ADMINISTRATION 

FAA's Fiscal Years OIG has engaged an independent accounting Required by Chief Financial 

2017 and 2016 firm, KPMG, to conduct an audit of the FAA's Officers Act of 1990 

Consolidated consolidated financial statements for fiscal 

Financial years 2017 and 2016, subject to OIG 

Statements oversight 

FAA's Runway Our audit objective is to evaluate FAA's Self-Initiated 

Safety Initiatives progress in implementing initiatives to improve 

runway safety. 

FAA's Oversight of Our audit objectives are to assess the Requested by the Ranking 

Suspected effectiveness of FAA's {1) process for Members of the House 

Unapproved Parts monitoring and investigating suspected Transportation and 

unapproved parts and (2) oversight of industry Infrastructure Committee 

actions to remove unapproved parts from the and the Subcommittee on 

aviation supply chain. Aviation 

FAA's Oversight of Our audit objectives are to assess the Requested by Senator 

the Safety of effectiveness of FAA's actions to (1) identify Dianne Feinstein 

Commercial Airline vulnerabilities to flight deck security and (2) 

Flight Decks mitigate identified flight deck vulnerabilities. 

FAA's Progress With Our audit objectives in this follow-up audit are Requested by the Chairmen 

Implementing High- to evaluate FAA's (1) process for identifying and Ranking Members of the 

Priority NextGen risks to implementing the four prioritized House Committee on 

Capabilities NextGen capabilities and (2) actions to Transportation and 

mitigate any identified risks. Infrastructure and its 

Subcommittee on Aviation 

FAA's Oversight of Our audit objectives are to (1) determine Required by the FAA 

ADS-8 Contract whether the ADS-B contract provides FAA the Modernization and Reform 

ability to monitor whether the contractor is Act of 2012 

providing required ADS-B products and 

services and (2) evaluate FAA's procedures 

for determining payments to the contractor. 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 18 
124

Project Title Objectives Source/Requester 

FAA Terminal Our audit objective is to assess FAA's Directed by the House 

Modernization at progress in ensuring STARS meets FAA Committee on 

Large TRACONs requirements at the 11 large TRACONs and Appropriations 

supports NextGen capabilities. 

FAA's Oversight of Our audit objectives are to evaluate FAA's Requested by the Ranking 

Regional Airlines process for (1) identifying periods of transition Members of the House 

and growth at regional carriers and (2) Committee on 

adjusting its oversight to respond to changes Transportation and 

in regional air carrier operations. Infrastructure and its 

Subcommittee on Aviation 

FAA's Actions To Our objectives are to (1) assess the causes of Requested by the Chairmen 

Address ERAM the recent ERAM outages and assess FAA's and Ranking Members of the 

Outages actions to address them and (2) determine House Transportation and 

whether tradeoffs were made to ERAM's Infrastructure Committee, 

design requirements to meet revised Aviation Subcommittee, and 

implementation schedules, and assess the the Chairman of the Senate 

delivery of new NextGen capabilities called for Committee on Commerce, 

in FAA plans. Science, and Transportation 

FAA's En Route Our audit objectives are to determine (1) Requested by the Senate 

Automation whether FAA has effectively implemented Committee on Commerce, 

Modernization security controls to address weaknesses Science, and Transportation 

Program Information identified during our prior review of ERAM and 

Security Controls (2) what other security weaknesses, if any, 

have developed. 

FAA's Controller Our audit objectives are to (1) determine House Appropriations 

Scheduling Policies FAA's progress in adopting and implementing Committee 

a scheduling tool and (2) identify any 

challenges that will need to be addressed to 

realize potential benefits. 

FAA's Process for Our audit objectives are to evaluate FAA's (1) House Appropriations 

Staffing and Placing methodology for determining maintenance Committee 

Maintenance technician staffing levels and (2) process for 

Technicians placing maintenance technicians. 

FAA's Management Our audit objectives are to assess FAA's House Appropriations 

of NextGen Pre- procedures for (1) selecting, justifying, and Committee 

Implementation measuring the outcomes of projects that 

Funding received developmental funding and (2) 

overseeing the execution of these projects. 

FAA's Oversight of Our audit objectives are to review FAA's Self-Initiated 

the Passenger oversight of (1) air carrier compliance with 

Facility Charge collection and remittance of PFC funds and 

Program (2) airport operator compliance with the use of 

PFC funds. 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 19 
125

Project Title Objectives Source/Requester 

FAA's Oversight of Our audit objective is to assess the Self-Initiated 

Air Carrier Check effectiveness of FAA's processes for 

Pilots approving and overseeing air carrier check 

pilots. 

FAA's Award and Our audit objectives are to evaluate FAA's Self-Initiated 

Oversight of eFAST processes for (1) awarding and (2) overseeing 

Procurements eFAST procurements. 

FAA's SE2020 Our audit objective is to assess whether Self-Initiated 

Program Task Order FAA's actions for awarding task orders and 

Award and overseeing the SE2020 acquisition program 

Oversight were sufficient to meet its program mission. 

FAA's Oversight of Our audit objective is to assess FAA's Self-Initiated 

Revenue Use at oversight of grandfathered airports' 

"Grandfathered" compliance with Federal law related to airport 

Airports revenue payments. 

FAA Controls Over Our audit objectives are to assess FAA's Self-Initiated 

Overflight Fees policies and procedures for (1) accurately 

computing overflight fees, (2) granting 

exceptions appropriately, and (3) collecting or 

referring fees to Treasury for collection in 

accordance with Federal laws and 

regulations. 

FEDERAL HIGHWAY ADMINISTRATION 

FHWA's Use of the Our audit objective is to assess FHWA's Self-Initiated 

Emergency Relief processes and guidance for incorporating 

Program To Improve resilience improvements into emergency relief 

Resilience projects to rebuild damaged highway 

infrastructure. 

FHWA Construction Our audit objectives are to (1) determine the Self -1 nitiated 

Force Account scope and magnitude of force-account 

Oversight projects funded through the Federal-aid 

Highway Program and (2) assess FHWA's 

processes for overseeing compliance with 

Federal force-account requirements. 

FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION 

Commercial Motor Our objectives are to (1) assess available Mandated by the Fixing 

Vehicle Loading and data on motor carrier loading and unloading America's Surface 

Unloading Delays delays and (2) provide information on Transportation Act of 2015 

measuring the potential effects of loading and 

unloading delays. 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 20 
126

Project Title Objectives Source/Requester 

FMCSA's Our audit objective is to assess FMCSA's Required by the 

Investigative processes for ensuring that reviews of motor Consolidated and Further 

Practices for High carriers flagged for investigation are timely Continuing Appropriations 

Risk Carriers and adequate. Act of 2015. Also requested 

by Senator Dick Durbin 

FEDERAL RAILROAD ADMINISTRATION 

FRA's Acquisition Our audit objectives are to assess (1) FRA's Self-Initiated 

and Use of acquisition of MTACs through the Volpe 

Men itoring and National Transportation Center and (2) FRA's 

Technical management and use of oversight services 

Assistance provided by MTACs for HSIPR projects. 

Contractors for High 

Speed Intercity 

Passenger Rail 

Grant Oversight 

FRA's Collection Our audit objective is to assess FRA's Self-Initiated 

and Management of collection and management of railroad safety 

Railroad Safety Data data. 

FEDERAL TRANSIT ADMINISTRATION 

FTA's Oversight of Our audit objectives are to evaluate FTA's (1) Self-Initiated 

Major Capital processes for identifying and assessing major 

Projects in the capital projects' financial risks, and reviewing 

Western Regions and approving grantee financial plans and 

reports and (2) oversight of grantees' 

mitigation of financial risks. 

FTA Grantee: the Our aud~ objective is to evaluate METRO's Mandated by House 

Metropolitan Transit financial condition and capacity, including its Appropriations Committee 

Authority of Harris ability to fund new services while maintaining Report 114-129 

County, Texas current operations. 

FTA's Oversight of Our audit objective is to assess FTA's policies Self-Initiated 

Integrity Monitors for for the use of integrity monitors and evaluate 

Recipients of the Agency's oversight of integrity monitors. 

Hurricane Sandy 

Disaster Relief 

Funds 

NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION 

NHTSA's Vehicle Our audit objectives are to assess NHTSA's Required by the Fixing 

Safety Recall processes for (1) mon~oring manufacturers' America's Surface 

Process proposed recall remedies and scope and (2) Transportation Act of 2015 

overseeing safety recall implementation, 

including the sufficiency of recall completion 

rates. 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 21 
127

Project Title Objectives Source/Requester 

OFFICE OF THE SECRETARY OF TRANSPORTATION 

Office of Small and Our audit objectives are to assess OSDBU's Self-Initiated 

Disadvantaged (1) processes for establishing the Centers and 

Business Utilization (2) oversight of the Centers' compliance with 

Oversight of Small cooperative agreements and achievement of 

Business program objectives. 

Transportation 

Resource Centers 

PIPEUNE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION 

PHMSA's Technical Our audit objective is to evaluate PHMSA's Required by the Protecting 

Assistance Grant award and oversight of TAG funds. Our Infrastructure of 

Program Pipelines and Enhancing 

Safety Act of 2016 

PHMSA's Workforce Our audit objectives are to determine (1) Required by the Protecting 

Management whether PHMSA has developed geographic Our Infrastructure of 

allocation plans, identified expected Pipelines and Enhancing 

retirement rates, and developed recruitment, Safety Act of 2016 

retention, and training strategies for OPS to 

address gaps and challenges, such as hiring 

and time-to-hire challenges, and (2) whether 

previous periods of macroeconomic and 

pipeline industry conditions impacted the 

ability to fill OPS vacancies and the degree to 

which special hiring authorities, including 

direct hiring authority authorized by the Office 

of Personnel Management, could have 

alleviated such difficulty. 

Exhibit. DOT OIG Ongoing Audits as of March 16, 2017 22 
128

Chairman DIAZ-BALART. Thank you very much, sir. We will now 

recognize HUD’s Inspector General, Mr. Montoya. Mr. Montoya, 

your full testimony also will be included in the record, and so, 

again, you are now recognized for five minutes, and thank you for 

being here, sir. 

Mr. MONTOYA. Thank you, sir. Chairman Diaz-Balart and Ranking Member Price and members of the subcommittee, thank you for 

the opportunity to discuss the Department of Housing and Urban 

Development’s top management and performance challenges for fiscal year 2017 and beyond and the oversight my office conducts. 

Just this past year my office’s contribution realized financial benefits to the government of nearly $8.5 billion, which represents a 

leading return on investment of $67 for every dollar spent on our 

work. We have a talented staff, and together through the years we 

have developed a culture of focusing on stewardship, accountability, and impactful oversight work. I want to share how proud 

I am of our team at HUD OIG and I am proud to serve them as 

their Inspector General. 

HUD’s key management and performance challenges are so 

interrelated and interconnected that our reviews indicate one impacts another to such a degree that in many cases HUD will not 

be able to remedy one without first correcting another. This becomes a taxing challenge to determine which needs to come first 

or whether several need to be accomplished simultaneously. 

Achieving HUD’s mission continues to be an ambitious challenge 

for its limited staff, given its diverse programs, the thousands of 

entities carrying them out, and the millions of citizens who receive 

benefits from them. HUD’s most significant challenge is reflected 

in it struggle to establish and implement effective and required financial management governance. 

In our fiscal years 2016 and 2015 (restated) financial statement 

audit report we expressed a disclaimer of opinion due to HUD’s inability to deliver principal financial statements in a timely manner 

and other unresolved audit matters. This marks 3 years in a row 

now that HUD has been unable to receive a clean opinion. 

The absence of having key financial staff with appropriate skills, 

background, and knowledge to oversee the preparation of Federal 

financial statements was best illustrated when we found several instances where rounding was performed to the nearest billion and 

hundred billion while OMB requires the highest level of rounding 

only to the nearest million. 

The result was that HUD had to withdraw it published agency 

financial report in December of 2016 in order to correct material 

errors. The Office of the Chief Financial Officer did not inform my 

office of changes it made after it submitted final financial statements for our review, and left the impression that certain sections 

of its published financial statements had been audited by my office 

when they had not been. 

HUD and the Office of Chief Financial Officer had failed to design and implement an adequate system of internal controls over 

financial reporting necessary to mitigate the challenges and risks 

in its complex financial reporting process, which will continue to 

contribute to the persistence of disclaimers in the Department’s annual financial statements for the foreseeable future. 
129

These challenges and risks were exacerbated by the Department’s New Core project that was to have transitioned HUD’s legacy general ledger application to an enterprise resource management application housed in a Federal shared service provider. Our 

audits have determined that HUD’s transition to a shared service 

provider did not improve the handling of its financial management 

transactions.

A year after the transition, HUD had inaccurate data resulting 

from the conversions and continued to execute 97 percent of its programmatic transactions using legacy applications. HUD also continues to face challenges and funding constraints in addressing outdated information technology systems, its ability to integrate updated application systems, and replace the legacy systems. 

The use of aging systems has resulted in poor performance and 

high operation and maintenance costs, and have also inhibited 

HUD’s ability to produce reliable, useful, and timely financial information. They also leave the Department’s financial systems and information at increased risk of unauthorized access and modification.

Ginnie Mae also continues to face challenges in its financial 

management accountability, managing counterparty risk, and monitoring nonbank issuers, which has grown by approximately 62 percent since 2010, and now represent a majority of issuances annually. By the end of fiscal year 2016, Ginnie Mae had made guarantees on loans with the remaining principal balance of approximately $1.7 trillion. 

In conclusion, HUD will continue to face challenges until it puts 

controls and adequate resources in place to address them. We remain committed, though, to working collaboratively with HUD and 

strive to provide best practices and reasonable recommendations 

that support HUD’s mission and responsibilities. 

We also are strongly committed to working with the Department 

and the Congress to ensure that these important programs operate 

efficiently and effectively and as intended for the benefit of the 

American taxpayers now and into the future. 

Mr. Chairman, this concludes my testimony and I would be 

pleased to answer any questions you or the committee may have. 

Thank you. 

[The information follows:] 
130

Testimony before the U.S. House of Representatives 

Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development, 

and Related Agencies 

"HUD Oversight and 

Management Issues" 

Testimony of 

The Honorable David A. Montoya 

Inspector General 

Office of Inspector General 

U.S. Department of Housing and Urban Development 

March 16,2017,9:00 a.m. 

Room 2358A, Rayburn House Office Building 
131

Chairman Diaz-Balart, Ranking Member Price, and Members of the Subcommittee, I am David A. Montoya, 

Inspector General of the U.S. Department of Housing and Urban Development (HUD). Thank you for the 

opportunity to discuss the Department's top management and performance challenges and my oftice's 

oversight of its programs and operations. As part of this written testimony we ask that the attached report 

entitled, ''Inspector General's Statement Summarizing the Major Management and Performance Challenges 

Facing the U.S. Department of Housing and Urban Development for Fiscal Year 2017 and Beyond." dated 

October 17,2016, be made part of the record. 

The Department's Primary Mission 

The Department's primary mission is to create strong, sustainable, inclusive communities and quality, 

affordable homes for all. It accomplishes this mission through a wide variety of housing and community 

development grant, subsidy, and loan programs. Additionally, HUD assists families in obtaining housing by 

providing Federal Housing Administration (FHA) mortgage insurance for single-family and multifamily 

properties. It also oversees HOD-approved lenders that originate and service FilA-insured loans and 

Government National Mortgage Association (Ginnie Mae) mortgage-backed security issuers that provide 

mortgage capital. HUD relies on many partners for the performance and integrity of a large number of diverse 

programs. Among these partners are financial institutions that have delegated authority to issue FilA-insured 

mortgages, cities that manage HUD's Community Development Block Grant funds, public housing agencies 

(PHA) that manage assisted housing funds, and other Federal agencies with which HUD coordinates to 

accomplish its goals. HUD also has a substantial responsibility for administering disaster assistance programs. 

The Office of Inspector General's Primary Mission 

The Office of Inspector General's (OIG) mission is to prevent and detect fraud, waste, abuse, and 

mismanagement in more than 300 programs and operations of the Department, but it also helps to promote 

economy, efficiency and effectiveness as well. We accomplish this by conducting independent, objective, 

and impactful audits, evaluations, and investigations. HUD O!G also plays a critical role in its information 

security, cybersecurity and program oversight for two HUD programs that contain sensitive private 

information relating to the multi-trillion dollar portfolios of the FHA and Ginnie Mae. Both programs have 

played imperative roles in supporting the national economy particularly during and after the economic 

downturn in 2008. 

Just this last year, HUD GIG's contribution rea/izedfinancial benefits to the government of nearly $8.5 

billion, which represents a leading return on investment of 67 to 1 for every dollar spent on our work. 

The work performed by our staff provides the means to keep the Secretary and the Congress fully and 

currently informed about the Department's problems and deficiencies while also highlighting best 

practices. We also make recommendations to improve operations and follow up with departmental 

officials on corrective actions. 

We are committed to reducing fraud at the outset or at least halting it at the earliest opportunity. 

Protecting taxpayer dollars is one of the Inspector General's highest priorities in order to account for 

money going to the right place, doing what it was supposed to do, and having the results it was intended 

to have. We actively pursue financial and other fraud schemes in all of HUD's programs that can have a 

significant economic impact often at the expense ofthe American taxpayer. 

Ke} tvlanagement and Performance Challenges !·acing the Department 

In October 2016, OIG reported on ten key management and performance challenges facing the Department 

for fiscal year 2017 and beyond. The Department's management challenges are so interrelated that, in many 

cases, the Department will not be able to remedy one without first correcting another. This becomes a taxing 

challenge to determine which corrective action needs to come first or whether several need to be addressed 

simultaneously. Achieving HUD's mission continues to be an arduous task for its limited staff, given the 

agency's diverse programs, the thousands of intermediaries assisting the Department, and the millions of 

beneficiaries of its housing programs. The report discusses our assessment often key management and 

performance challenges facing HUD, which are: 

2 
132

1 . Human capital management and financial management governance, 

2. Financial management systems, 

3. Digital Accountability and Transparency Act compliance, 

4. Weaknesses in information technology security control, 

5. Single-family programs, 

6. Community planning and development programs, 

7. Public and assisted housing program administration, 

8. Administering programs directed toward victims of natural disasters, 

9. Departmental enforcement, and 

l 0. Operational and financial reporting challenges affecting Ginnie Mae. 

For purposes of this testimony, however, I would like to highlight the most critical challenges which need to 

be corrected as soon as possible as they impact HUD's ability to address the remaining management 

challenges and ensure that the Department is operating effectively. 

Human Capital Management and Financial Management Governance 

For many years, one of HUD's major challenges has been to effectively manage its limited staff to 

accomplish its primary mission. HUD continues to lack a valid basis for assessing its human resource needs 

and allocating staff within program offices. Several studies have been completed on HUD's use of human 

capital by the U.S. Government Accountability Office (GAO) that point to a lack of human capital 

accountability and to insufticient strategic management as pervasive problems at HUD. To some extent, 

these human capital challenges have contributed to HUD's inability to maintain an effective financial 

management governance structure, which we have reported on for the last 3 years and which contributed to 

our issuing disclaimers of opinion as part of our annual audits of HUD's financial statements. 

HUD continues to struggle with issues such as (I) the General Schedule classification system, (2) missioncritical skills gaps, (3) performance management, and (4) employee engagement. More than 43 percent of 

HUD career permanent employees onboard as of September 30, 2014, will be eligible to retire by 2019. 

Given this statistic, HUD will need to ensure that it has steps in place to fill the critical skills gap needed to 

ensure continuity of business and mission fulfillment. 

Financial Management Governance of HUD 

HUD continues to struggle to establish and implement etfective financial management governance as 

required by the Federal Managers' Financial Integrity Act of 1982 and the Chief Financial Officers Act of 

1990. [n our latest financial statement audit report, we expressed a disclaimer of opinion due to HUD's 

inability to deliver its financial statements in a timely manner and other unresolved audit matters. In 

addition, in our report on internal control, we reported eleven material weaknesses, seven significant 

deficiencies in internal controls, and five instances of noncompliance with applicable laws and regulations. 1 

Several of the other material weaknesses and significant deficiencies had causes that were attributed in part 

to weaknesses in HUD's financial management governance structure. HUD has been unable to receive an 

opinion on its financial statements for the past three years. 

Weak Internal Controls Over Financial Reporting Led to Errors and Delays in the Preparation of 

Financial Statements and Notes 

The absence of key financial staff with appropriate skills, background and knowledge to oversee the 

preparation of HUD's financial statements continues to contribute to the persistence of disclaimers in the 

Department's annual financial statement audits and will do so for the foreseeable future until the skillset is 

1 Audit Report 2017-F0-0004, Fiscal Years 2016 and 2015 (Restated) U.S. Department of Housing and Urban 

Development Consolidated Financial Statements Audit, November 18, 2016. 

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on board. As a further consequence, this year the Department had to reissue its fiscal year 2016 and 2015 

consolidated financial statements due to material errors and other discrepancies. 

On November 15, 2016, we reported that HUD was unable to provide final financial statements and 

accompanying notes in time for OIG to obtain sufficient, appropriate evidence that they were free from 

material misstatement. The delays were due to insufficiently designed and implemented financial reporting 

processes and internal controls relating to HUD's transition of its core financial system to a shared service 

provider. Additionally, late restatements performed by HUD's component entities, FHA and Ginnie Mac, 

contributed to the delay in providing final consolidated financial statements. For these and other reasons, we 

were unable to provide an opinion on 1-!UD's t1scal year 2016 and 2015 financial statements. 

Despite having to disclaim on HUD's fiscal year 2016 and 2015 fmancial statements and notes, OIG 

continued its review of the financial statements and notes and identified additional material errors and 

misstatements. The results of that review are contained in a recently released report and provide updates to 

the material weakness reported previously. The financial statements and accompanying notes contained 

material errors totaling $557 million and $278.5 billion, respectively. We identified significant differences 

in amounts presented between what was submitted to us on November 10,2016 and certified by I-IUD as its 

"final" consolidated financial statements and what was published in HUD's 2016 Agency Financial Report 

(AFR) just five days later. 

We also identified differences of$19.5 billion in amounts presented in three note disclosures between what 

was submitted to us for audit and what was published in HUD's AFR. The errors occurred due to 

weaknesses in I-IUD' s internal controls over financial reporting. OIG notified HUD management in early 

December 2016 and requested that they perfonn their own review. HUD concluded their review and agreed 

with OIG that the errors contained in the financial statements warranted the need to reissue the statements in 

order to correct the errors. I-IUD withdrew its AFR and reissued its final AFR "as of March I, 20 17." While 

HUD attributed the reissuance to the need " ... to address presentation issues," in reality, the revisions to the 

financial statements were the result of the need to correct material and pervasive errors. 

We found that well over half of the financial statement notes contained errors with an approximate absolute 

value totaling $278.5 billion. Ofthe $278.5 billion in errors, $159.4 billion was due primarily to (I) 

incorrect data entry, (2) omission of restated balances, or (3) incorrect data provided by HUD' s component 

entities (FHA and Ginnie Mae). The remaining $119.1 billion were due to inappropriate rounding 

adjustments. We found several instances in which rounding was performed to the nearest billion and 

hundred billion instead of the nearest million as required. This practice caused amounts to not agree with 

supporting files or underlying FHA and Ginnie Mae information. Some of the errors identified flowed 

through to other note line items or note columns and caused errors in the totals presented. The absolute 

value ofthese additional errors was not included in our total. 

Transition to a Federal Shared Services Provider for Financial Management Services and a Policy 

and Procedure Framework 

The errors with financial audit reports described above occurred because of an inability to design and 

implement an adequate system of internal controls over financial reporting necessary to mitigate the 

challenges and risks in its complex financial reporting process. These challenges and risks were exacerbated 

with the transition of HUD's legacy general ledger application to a shared service provider. As discussed 

below in my testimony, this move replaced known processes with undefined or untested processes. The 

transition also increased the workload on 1-!UD's financial reporting division, and in an attempt to remedy 

the issue, HUD's management outsourced some of its roles to staff and contractors who were unfamiliar 

with HUD's financial reporting processes and did not receive adequate training. Rushed implementation in 

order to meet transition deadlines set by management and inadequate monitoring contributed to the 

problems despite warnings that processes were not proceeding well. 

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During 2016, GAO and OIG reported on a number of issues related to this transition and have attributed the 

cause of many of these issues to weaknesses in governance including outdated or incomplete policies and 

procedures and a lack of adequate information and communication among key groups. Program office 

accounting policies and procedures had at times been developed without adequate input from the Office of 

the Chief Financial Officer (OCFO) due to broad delegation to program office personnel. HUD also lacked 

documented policies to ensure the quality and consistency of program evaluations. To improve the 

continuity of accounting policies and procedures in a changing environment, policies and procedures should 

be centrally located and easily accessible to staff. The lack of a policy framework has hindered, and will 

continue to hinder, efforts to adapt to changes in a timely manner. 

Financial Management Systems 

Annually since 1991, OIG has reported on the lack of an integrated financial management system. including 

the need to enhance FHA's management controls over its portfolio of integrated insurance and financial 

systems. HUD has been working to replace its current core financial management system since fiscal year 

2003. The previous project, the HUD Integrated Financial Management Improvement Project (HIFMIP), 

was based on plans to implement a solution that replaced two of the applications currently used for core 

processing. In March 2012, work on HIFMIP was stopped, and the project was later canceled. This attempt 

to use a commercial shared service provider to start a new financial management system failed after more 

than $35 million was spent on the project. Our review determined that OCFO did not properly plan and 

manage its implementation of the project. 

New Core Project 

In the fall of2012, HUD started the widely publicized "New Core" Project to move its core financial system 

to a shared service provider at another Federal agency, the first cabinet-level agency to do so. We have 

completed four audits of this project. The most recent, published in February 2017, 2 found that HUD's 

transition to the federal shared service provider did not significantly improve the handling of its financial 

management transactions. Weaknesses identified with the controls over the New Core Interface Solution 

and the conversion to the federal shared service provider's procurement application contributed to this 

issue. A year after the transition, HUD had inaccurate data resulting from the conversions and continued to 

execute 97 percent of its programmatic transactions using legacy applications. The transition increased the 

number of batch processes required to record programmatic financial transactions and introduced manual 

processes and delays for budget and procurement transactions. In addition, the interface program that 

allowed for and translated the financial transactions between HUD and the federal shared service provider 

was not covered under HUD's disaster recovery plan. 

These conditions occurred because of funding shortfalls (due to delays because of a non-submission by 

HUD of an expenditure plan and to cuts in modernization and enhancement funding) as well as HUD's 

decisions to (1) separate phase 1 of the project into smaller releases, (2) move forward with the 

implementation despite unresolved issues, and (3) terminate the project before its completion. These system 

issues and limitations inhibited HUD's ability to produce reliable, useful, and timely financial information. 

While HUD management considered its New Core Project implementation successful, we differ in our 

assessment. HUD acknowledged that all of the originally planned capabilities were not deployed. 

Moreover, HUD will need to pursue new projects to address the functionalities that were not achieved, 

requiring additional time and funding. In April 2016, HUD ended the New Core Project after spending 

$96.3 million; however, the transition did not allow HUD to decommission all of the applications it wanted 

to or achieve the planned cost savings. 

Since 2003, HUD has spent more than $131 million on two separate projects to replace its core financial 

system. HUD encountered significant challenges with its transition to the shared service provider. Funding 

shortfalls as well as the impact of HUD's decisions regarding the project ultimately impaired the 

' Audit Report 20 17-DP-000 I, IIUD's Transition to a Federal Shared Service Provider Failed to Meet Expectations, 

February I, 2017 

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effectiveness of HUD's internal controls and the efficiency and effectiveness of its operations. Despite 

evidence that HUD was not prepared to transition key functions without putting departmental operations in 

possibility of disruption, financial management and information technology governance weaknesses led 

management to disregard or underestimate the risks at hand. As HUD assesses future financial management 

improvements, it needs to ensure that each project is properly planned and managed, its objectives are 

sequentially met during implementation, and additional funding spent is appropriate. Our findings were 

consistent with conclusions reached in two GAO reports, one issued in July 20163 and the other in February 

20174 

Outdated Information Technology Systems 

Overall, funding constraints diminished HUD's ability to integrate updated application systems and replace 

and deactivate legacy systems. Limited progress has been made in modernizing applications and enhancing 

capabilities to replace manual processes. As a result, many legacy systems remain in use. As workloads 

continue to gain complexity, it becomes challenging to maintain these legacy systems, which are 15 to 30 

years old, and ensure that they can support the current market conditions and volume of activity. The use of 

aging systems has resulted in poor performance, high operation and maintenance costs, and increased 

susceptibility to security breaches. As part of our annual review of infonnation systems controls in support of 

the financial statements audit, we continue to report weaknesses in internal controls and security regarding 

HUD's general data processing operations and specific applications. The effect of these weaknesses is that 

the completeness, accuracy, and security of HUD information is at risk of unauthorized access and 

modification. As a result, HUD's financial systems continue to be at risk of compromise. 

HUD's voucher and project-based Section 8 and public housing programs accounted for 78 percent of 

HUD's 2016 enacted discretionary budget authority of$47.2 billion. Also, HUD's FHA program has 

insured more than 33.5 million mortgages valued at more than $3.8 trillion since 1980. HUD has 20 major 

information systems supporting the management of those programs, and those systems contain in excess of 

300 million records on program recipients with data fields that include Social Security numbers; birth 

dates; address history; income; financial; dependent; and in those ca~es in which disability and medical 

status is considered, health-related data. In short, the management information systems supporting these 

four critically important HUD programs contain personally identifiable information for all American 

citizens who received HUD-sponsored housing assistance, lived in public housing, and obtained an FHAinsured mortgage, including such infonnation on all dependents within those households. 

We are also concerned about the current state of FHA 's information technology (IT) systems and the lack of 

systems capabilities and automation to respond to changes in business processes and the IT operating 

environment. In August 2009, FHA completed the Information Technology Strategy and Improvement Plan 

to address these challenges, which identified FHA's priorities for IT transformation. The plan identified 25 

initiatives to address specific FHA lines of business needs. Initiatives were prioritized, with the top five 

relating to FHA's single-family program. The FHA transformation initiative was intended to improve the 

Department's management of its mortgage insurance programs through the development and 

implementation of a modem iinancial services IT environment. The modem environment was expected to 

improve loan endorsement processes, collateral risk capabilities, and fraud prevention. However, to date. 

few initiatives have been completed because of a lack of funding. The transformation team is in operations 

and maintenance mode for the few initiatives that have been implemented and has limited capability to 

advance with the project due to the continued lack of funding. 

3 Report GA0-16-656, Financial Management Systems- HUD Needs to Address Management and Governance 

Weaknesses That Jeopardize Its Modernization Efforts, July 2016 

"Report GA0-17-281,1nformation Technology HUD Needs to Address Significant Weaknesses in Cost Estimating 

Practices. February 20 17 

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Digital Accountability and Transparency Act Compliance 

One of the Department's major emerging management challenges is compliance with the Digital 

Accountability and Transparency Act of20 14 (DATA Act). In our August 2016 DATA Act readiness 

review, we found that HUD was not on track to meet the DATA Act's requirements. 5 The DATA Act 

builds on agency transparency reporting requirements established by the Federal Funding Accountability 

and Transparency Act of2006 (FFATA) and has an implementation date of May 2017. BUD's efforts to 

comply with the DATA Act have been hindered by management turnover and indecision, resource 

limitations, and disparate IT systems that reside on different platforms with dissimilar data elements. 

Compliance Milestones and Human Resource Limitations 

Key HUD milestones have been delayed. Specifically, HUD had not completed its inventory of data 

elements or the mapping of agency data to the DATA Act schema as of December 16, 2016. To assist 

agencies with implementation, OMB and Treasury issued a playbook with eight key steps to help agencies 

fulfill the requirements of the DATA Act, and OMB issued a memorandum detailing key guidance. HUD's 

project plan dates for milestones, including completing an agency data element inventory or mapping 

agency data to DATA Act schema, significantly exceeded previous Treasury and OMB guidance, and 

according to GAO, HUD's project plan dates may not have been sufficiently reviewed and approved by 

OMB and Treasury. 6 HUD submitted updated implementation plans to OMB and Treasury in August 2016. 

Competing departmental priorities such as BUD's transition to a shared service provider for financial 

management services have worsened existing resource limitations. Human capital resources are limited 

compared to the level of effort required to modify systems and perform the required data inventory and 

mapping. While Treasury may provide resources to supplement BUD's resources and support BUD's 

compliance efforts, substantial challenges remain. 

Information System Weaknesses and Data Quality Issues 

HUD has experienced challenges with DATA Act (and FFATA) implementation due to the Department's 

reliance on many financial systems with differing technologies and data elements. To provide quality 

spending data, agencies will be required to make available financial obligation and outlay data and awardlevel data based on agency financial systems. As we have previously reported in our annual financial 

statement audit, HUD's legacy systems have hindered efficient and effective financial reporting. As the 

DATA Act requires the use of agency financial systems. many of the issues reported in the financial systems 

management challenge also apply. 

In addition, HUD has been unable to resolve data quality issues that have impeded the complete and 

accurate reporting of departmental contract, grant. loan, and other financial assistance awards in 

USAspending.gov. We concluded that data quality issues limited HUD's ability to map agency data to the 

established DATA Act schema, including assigning the Federal Award Identification Number. 

Weaknesses in Information Technology Security Controls 

As touched on briefly earlier in discussions of IT systems, HUD conducts hundreds of thousands of 

transactions with the American public daily and is responsible for safeguarding hundreds of millions of 

records containing the personal information of private individuals. However, HUD continues to face both 

long- and short-term challenges as it strives to modernize its legacy systems, adequately secure its IT 

infrastructure, and properly protect sensitive data. HUD has not adequately planned for its future IT and IT 

security needs. One of two primary HUD infrastructure services contracts was recently re-awarded using a 

long-term sole-source contract, while the second has been in a period of transition since fiscal year 2014. 

creating risk for HUD. Further, a significant number of critical HUD applications are legacy systems that 

'2016-F0-0802, Independent Attestation Review: U.S. Department of Housing and Urban Development, DATA Act 

Implementation Efforts, dated August 26,2015 

'' GA0-16-698, DATA Act Improvements Needed in Reviewing Agency Implementation Plans and Monitoring 

Progress, July 29, 2016 

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are increasingly difficult to maintain and present security risks that HUD will be challenged to mitigate 

without modernization. More than 400 HUD IT products are running on unsupported platforms, increasing 

the risk of unknown and unpatchable vulnerabilities. Legacy systems are difficult or unable to migrate to 

cloud technology, further complicating HUD's long-term efforts to modernize and secure its systems and 

data while creating efficiencies and cost savings. 

HUD has taken some initial steps to address these long-term challenges. HUD realigned the functions of the 

Office of the Chief Information Officer (OCIO) to better support the business of the Department and tilled 

several key positions. However, we are concerned that turnover in IT leadership roles, including that of the 

enterprise architect, the vacancy of the IT Chief Operations Ofticer position since December of2014, the 

retirement of the Chief Information Security Officer in March 2017, and the conclusion of the CIO's tenure 

in January 2017, will impinge HUD's momentum. Major HUD initiatives have been negatively impacted 

by recent turnover in key positions and loss of technical expertise. 

HUD has begun key initiatives, such as the development of several long-term plans, including an enterprise 

architecture roadmap aimed in part to guide modernization efforts; a Cybersecurity Framework to address IT 

security program deticiencies; and a recently implemented enterprise incident handling program to improve 

security incident detection capabilities. However, notable change and implementation of these initiatives 

are not anticipated to be fully realized until fiscal year 2017 and beyond with parts of the enterprise 

architecture road map being halted and re-planned. Successful implementation of these plans will be directly 

dependent upon HUD's ability to instill accountability, implement performance measures, and obtain 

adequate technical expertise and resources. In the process of outsourcing infrastructure and application 

maintenance and support. HUD has divested itself of much of its own technical expertise and continues to 

face significant staffing challenges. For example, an organizational chart provided to OIG during its tiscal 

year 2016 Federal Information Security Modernization Act (FISMA) evaluation showed that 16 of the 36 

key IT managerial and supervisory positions stationed at HUD headquarters were either vacant (II) or filled 

by temporary "acting" personnel (5) during fiscal year 2016 and continues to be the case in the first quarter 

of fiscal year 2017 This condition significantly challenges HUD's ability to manage and perform vendor 

oversight of its technology infrastructure and conduct technical assessments. It has also resulted in HUD's 

extensive dependence on decentralized IT contracts throughout the HUD IT environment. 

Our annual evaluation ofHUD's IT security program for tiscal year 2016, as mandated by FlSMA, revealed 

continual IT security improvements, but extensive noncompliance with Federal IT guidance continues. As 

shown in OIG's fiscal year 2016 FISMA report, HUD was 60 percent compliant with the FISMA metrics on 

which OIG reports to OMB, compared to 46 percent compliant in fiscal year 2015. HUD showed progress in 

several of the eight FISMA reportable domains, however, HUD continues to have an extensive lack of 

effectiveness (less than SO percent) in the risk management and contractor systems oversight programs. 

HUD is showing some progress in remediating these deficiencies, however, it has 59 open FISMA 

evaluation recommendations spanning several FISMA evaluations from 2013 through 2016. These 

recommendations need to be addressed to rectify longstanding security weaknesses. Further, the privacy 

program has an additional 21 open recommendations for the fiscal years 2013 through 2016 evaluation 

period, with no progress made on those recommendations within the last tiscal year. 

To ensure improvement in the above areas and reduce vulnerabilities to the IT security environment, all 

HUD program offices will need to collaborate effectively and establish ownership and oversight of IT 

security controls. HUD's fiscal year 2016 IT funding decreased 16.3 percent from fiscal year 2015 and 

again decreased another 16 percent for fiscal year 2017, which continues to impact agency modernization 

and IT security efforts. With the constrained budgets and the hiring freeze, HUD will be challenged to fund 

the operation of current systems while also initiating projects to upgrade legacy applications and improve 

security. 

Further, our evaluations have revealed a lack of enterprise risk management, which directly affects HUD's 

ability to manage alllT risks using a holistic framework and hinders HUD's IT modernization efforts. 

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HUD's OCIO had begun addressing this weakness by developing an IT Risk Management Office, but unless 

HUD develops an enterprise-wide risk management program with one management approach, it will not be 

able to appropriately prioritize all IT risks. 

Single-Family Programs 

FHA 's single-family mortgage insurance programs enable millions of first-time borrowers and minority, 

low-income, elderly, and other underserved households to benefit from home ownership. HUD manages a 

growing portfolio of single-family insured mortgages exceeding $1.2 trillion. Effective management of this 

portfolio represents a continuing challenge for the Department. 

Preserving the FHA Fund 

Before fiscal year 2015, FHA's insurance fund had been below its legislatively mandated 2 percent capital 

ratio for the previous 6 years. However, beginning in fiscal year 2015, the fund met its threshold target 

capital ratio once again.' According to the 2016 actuarial study, the fund had an estimated economic value 

of$35.27 billion. Based on the 2016 projections, the fund is expected to maintain a capital ratio above the 

threshold limit and will gradually build reserves over time if the forecasted trend continues. Restoring the 

fund's reserves and finances has been a priority for HUD, and it has increased premiums, reduced the 

amount of equity that may be withdrawn on reverse mortgages, and taken other steps to restore the financial 

health of the fund. 

The Department must make every effort to prevent or mitigate fraud, waste, and abuse in FHA loan 

programs. OIG continues to take steps to help preserve the FHA insurance fund and improve FHA loan 

underwriting by partnering with HUD, the U.S. Department of Justice, and multiple U.S. Attorney's offices 

nationwide in a number of FHA lender civil investigations. In some instances, these investigations involve, 

not only the underwriting of FHA loans, but also the underwriting of conventional loans and governmentinsured loans related to Federal programs other than FHA. For those investigations that involved OlG's 

assistance on the FHA-related part of the cases, the Government has reached civil settlements yielding more 

than $14.6 billion in damages and penalties in the last 5 fiscal years. 

For the FHA-insured loans, results in the last 5 fiscal years have shown that a high percentage of loans 

reviewed should not have been insured because of significant deficiencies in the underwriting. As a result, 

the Government has reached civil settlements regarding FHA loan underwriting totaling $4.9 billion for 

alleged violations of the False Claims Act; the Financial Institutions Reform, Recovery, and Enforcement 

Act; and the Program Fraud Civil Remedies Act. Nearly $3.2 billion of the $4.9 billion is of direct benefit 

to the FHA insurance fund. Ongoing investigations are expected to lead to additional settlements that will 

significantly help recover losses to the FHA insurance fund. 

Monitoring Lenders and FHA Claims 

In spite of some positive steps, we remain concerned about HUD's resolve to take the necessary actions 

going forward to protect the FHA insurance fund. HUD is often hesitant to take strong enforcement actions 

against lenders because of its competing mandate to continue FHA 's role in restoring the housing market 

and to ensure the availability of mortgage credit and continued lender participation in the FHA program. 

Down payment Assistance and Premium Pricing 

As a result of a referral from the Department and through the course of four audits, 8 we learned about, and 

continue to be concerned with. a funding arrangement for downpayment assistance to FHA borrowers, 

7 Our calculation of the capital ratio was based the information we obtained from FHA's final actuarial report, 

published in November 2015, and using the amortized insurance-in-force as the denominator. 8 Audit Report 2015-LA-1010, LoanDepot's FHA-lnsured Loans With Golden State Finance Authority Downpayment 

Assistance Gifts Did Not Always Meet !IUD Requirements, September 30, 2015; Audit Report 20 15-LA-1009, 

LoanDepot's FHA-Insured Loans With Downpayment Assistance Funds Did Not Always Meet HlJD Requirements, 

September 30, 2015; Audit Report 2015-LA-1005, NOVA financial & Investment Corporation's FHA-lnsured Loans 

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which we believe violates the National Housing Act regarding prohibited sources for downpayment 

assistance. Specifically, we learned that NOVA and loanDepot had entered into triparty agreements among 

the FHA lender, a housing finance agency (HFA), and U.S. Bank, a Ginnie Mae issuer. These agreements 

were part of a seheme in which the HF A would provide downpayment assistance in a grant or loan to the 

borrower. The FHA lender would provide the primary financing to the borrower in the form of an FHAinsured loan, which included the downpayment assistance at closing. Upon origination, the FHA loan 

would be sold to U.S. Bank, which would reimburse the FHA lender for the downpayment, securitize the 

mortgage loan through Ginnie Mae security, and service the mortgage. Although not a party to the FHA 

loan, the HF A required the FHA lender to inflate the interest rate on the loan. 

The I-IF A providing the downpaymcnt assistance had previously determined what interest rate above the 

market interest rate would be necessary on the fHA loan to net a premium payment from the investor when 

the loan was securitized. The HFA uses funds generated from the sale of the security to reimburse U.S. 

Bank for the downpayment and pay other program-related fees. The HFA, U.S. Bank, and the FHA lender 

agreed to charge the borrower additional securitization, administration, and tax fees as part of the origination 

totaling $300-$600, which would not have otherwise been paid on the lower interest rate mortgage. We 

determined that U.S. Bank had similar agreements with FHA lenders and HFAs around the country. 

Since the issuance of the first and later similar audits, we have attempted to resolve the findings and 

recommendations with the Department to no avail. HUD has failed to recognize disturbing parallels to the 

seller-funded downpayment assistance arrangements practiced from the late 1990s to 2008, which caused 

wide-scale problems for FHA that continue to be felt today (see earlier discussion relating to the FHA 

fund's capital ratio going below statutorily mandated levels and it's multi-year effort to recover). On May 

25, 2016, the Department issued its decision regarding our disagreement over the HF A's downpayment 

assistance and premium pricing in the NOVA audit. The decision relied heavily on a HUD, Office of 

General Counsel, legal opinion released publicly by HUD in the middle of our audit work that did not 

review the specit1c details or funding structure of borrower-financed downpayment assistance arrangements. 

Instead, the legal opinion was meant to opine on HFAs as permissible sources of downpayment assistance 

since they are government entities. The opinion also failed to provide what would give HUD the legal 

authority through rulemaking and policy interpretation to ignore specific congressionally enacted statutory 

requirements. While HFAs are permissible sources, we continue to strongly disagree with HUD's opinion 

because it ignored the main issue that downpayment assistance provided or reimbursed directly or indirectly 

by a party that benetits financially from the transaction is expressly prohibited under statute and negatively 

affects the borrower. 

HUD's requirements, guidelines, and interpretations on downpayment assistance from government entities 

allow for increased risk to the FHA Single Family Mortgage Insurance program and have enabled the 

creation and gro.,.,th of questionable borrower-financed downpayment assistance schemes. Current 

requirements and guidelines provide little oversight and give HF As broad access to the FHA program that 

other entities do not have. For example, a comparison of Handbook 4155.1 provisions in effect at the time 

oft he OIG audits to the provisions in Handbook 4000.1, which were modified during the pendency of the 

OIG audit work, reveals major changes in policy. Handbook 4000.1 was modified to strictly define 

premium pricing and eliminated the prohibition on premium pricing as a source of funds for the borrower's 

minimum required investment that was previously in Handbook 4155.1. 

With Downpayment Assistance Gifts Did Not Always Meet HUD Requirements, July 9, 2015; and Audit Report 

20 17-LA-0003, HUD Failed To Adequately Oversee FHA-Insured Loans With Borrower-Financed Downpayment 

Assistance, March 3, 2017 

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Public and Assisted Housing Program Administration 

Environmental Review Requirements 

HUD has a duty to ensure that its projects are free of environmental hazards. As a result of recent OIG 

reports, 9 HUD began providing more training to staff and grantees and implemented processes to improve 

its training program and curriculum to better support all program areas. Also, HUD was piloting a recently 

developed electronic data system, HUD's Environmental Review Online System (HEROS). which is part of 

HUD's transformation oflT systems. HEROS will convert HUD's paper-based environmental review 

process to a comprehensive online system that shows the user the entire environmental process, including 

compliance with related laws and authorities. It will allow HUD to collect data on environmental reviews 

performed by all program areas for compliance. HUD's Office of Environment and Energy has also 

implemented an internal process within HEROS to track findings, which will allow the program areas to 

focus training on recurring issues. Risk-based compliance monitoring by HUD's field staff will target the 

highest risk PHAs and responsible entities based on identified factors and will result in improved 

compliance with environmental review requirements as well as align Public and Indian Housing with 

previously O!G-endorsed models within HUD. 

While HUD has made improvements, it faces several challenges, including a lack of resources, unclear 

guidance, and a perceived lack of authority to impose corrective actions or sanctions on responsible entities. 

Until HUD fully addresses these needed improvements, inadequate environmental reviews may contribute 

to an increased risk in the health and safety of the public and possible damage to the environment. For the 

five Office of Public Housing field offices we visited, PHAs spent almost $405 million for activities that 

either did not have required environmental reviews or had reviews that were not adequately supported. 

We are auditing HUD's oversight of safe water requirements for FI-lA-insured loans nationwide. We're 

conducting the audit because recent news reports have identified elevated levels of lead contamination in 

water across the country and our recent audit of HUD's oversight of FHA-insured loans on properties in 

Flint, Ml determined that HUD did not ensure that lenders verified that properties in Flint that were 

approved for FHA mortgage insurance had a continuing and sufficient supply of safe and potable water. 

Our audit objective is to determine whether HUD provided sufficient guidance and oversight to ensure that 

properties approved for mortgage insurance had a continuing and sufficient supply of safe and potable 

water. As part of the audit, we are reviewing federal guidance regarding water quality issues and the 

requirements for public notifications, relevant news reports, relevant reports from GAO and Environmental 

Protection Agency, and publicly available information about water systems that have found elevated levels 

of lead in tap water. We also plan to review a sample of loan files for properties that are served by seven 

water systems for which we identified publicly available notifications of water contamination. Our review 

will determine whether the files contain evidence of water testing or other discussion related to the water 

quality. 

Operational and Financial Reporting Challenges Affecting Ginnie Mae 

Managing counterparty risks and strengthening Ginnie Mae's financial management accountability have 

been and continue to be the major challenges affecting Ginnie Mae in fiscal year 2016 and in the coming 

9 Audit Report 2015-FW-0001, HUD Did Not Adequately Implement or Provide Oversight To Ensure Compliance 

With Environmental Requirements, June 16, 2015; Audit Report 2014-FW-0005, Improvements Are Needed Over 

Environmental Reviews of Public Housing and Recovery Act Funds in the Detroit Office, September 24, 2014; Audit 

Report 2014-FW-0004, Improvements Are Needed Over Environmental Reviews of Public Housing and Recovery Act 

Funds in the Greensboro Office. July 14, 2014; Audit Report 2014-FW-0003, Improvements Are Needed Over 

Environmental Reviews of Public Housing and Recovery Act Funds in the Columbia Office, June 19, 2014; Audit 

Report 2014-FW-0002, Improvements Are Needed Over Environmental Reviews of Public Housing and Recovery Act 

Funds in the Kansas City Office, May 12, 2014; and Audit Report 2014-FW-0001, The Boston Office of Public 

Housing Did Not Provide Adequate Oversight of Environmental Reviews of Three Housing Agencies, Including 

Reviews Involving Recovery Act Funds, February 7, 2014 

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years. Key factors that contributed to these challenges include the rise of non banks, lack of resources, 

inadequate financial systems, and lack of a fully functioning financial management governance framework. 

Managing Counterparty Risks 

Ginnie Mae mortgage-backed securities (MBS) are the only such securities to carry the full faith and credit 

guaranty of the United States Government. If an issuer fails to make the required pass-through payment of 

principal and interest toMBS investors, Ginnie Mae is required to assume responsibility to do so. 

Monitoring of Nonbank Issuers Presents Challenges for Ginnie Mae 

By the end of fiscal year 2016, Ginnie Mae had made guaranties on loans with a remaining principal balance 

(RPB) of approximately $1.73 trillion. Through these guaranties, Ginnie Mae facilitates capital inflows to 

the U.S. housing market. Since 2010, Ginnie Mae's RPB has grown by approximately 62 percent. During 

this time, Ginnie Mae's business has increasingly relied on non banks, which now represent a majority of 

issuances annually. 10 As OIG and Ginnie Mae have previously noted, the increase in the number of 

nonbank issuers and their complexity present a challenge for monitoring efforts. We are highlighting 

monitoring challenges in a recently issued Topic Brief so HUD leadership is aware ot: and can be better 

prepared, to address them. It is imperative that Ginnie Mae has the appropriate starting with the skills, 

knowledge, and abilities to monitor non banks. OIG is focusing on Ginnie Mae's capacity to monitor 

non banks with an ongoing audit. 

Financial Reporting Challenges 

Although Ginnie Mae has made progress in financial management governance issues in fiscal year 2016, 

there remain significant issues. For the third year in a row, our annual financial statement audit resulted in a 

disclaimer of opinion due to Ginnie Mae's nonpooled loans assets being unauditable. In 2016, Ginnie Mae 

acknowledged that these asset balances are not supportable and not in accordance with generally accepted 

accounting principles. Ginnie Mae has reengaged its financial reporting and audit readiness contractor to 

assist in the development of its loan-level accounting system and related infrastructure. 

With the approval of OMB and Congress, Ginnie Mae has significantly increased its management capacity. 

The total number of Ginnie Mae full-time employees increased from 89 in fiscal year 2012 to 140 at the end 

of fiscal year 2016. However, Ginnie Mae continues to have issues with staffing. Ginnie Mae continues to 

rely heavily on third-party contractors to perform almost all key operating loan servicing, pool processing, 

and other functions. It is vital to the country's larger financial health that Ginnie Mae be able to 

significantly increase starting and benefit from a pay structure that will allow it to attract and hire 

individuals with the needed skills, knowledge, and abilities to manage a multi-trillion-dollar program. 

The underlying accounting problems that are preventing Ginnie Mae from obtaining an unqualified audit 

opinion will continue until accounting policies and procedures have been finalized and fully implemented 

and Ginnie Mac is appropriately staffed with the needed skills to manage its accounting requirements. 

Ginnie Mae will continue to face challenges in this dynamic environment due to the shift in its business 

model. Ginnie Mae and HUD have yet to adequately respond to this new concept and properly mitigate 

these risks by implementing a sound infrastructure and control environment. Ginnie Mae has stated that it 

would require a significant investment in technology, infrastructure, and people spanning multiple years to 

make its significant financial assets auditable. HUD and Ginnie Mae need to engage with Congress to lay 

out priorities, accelerate needed human capital and infrastructure improvements, and mitigate risks faced by 

Ginnie Mae. 

'

0 GAO has defined banks as ''bank holding companies, financial holding companies, savings and loan holding 

companies, insured depository institutions, and credit unions, including any subsidiaries or affiliates of these types of 

institutions." Nonbanks are any other entities, 

12 
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Work Where the Department and the OIG Collaborate to Ensure Oversight and Compliance with 

Rules and Regulations 

OIG Public and Indian Housing (PIH) Collaboration: Monitoring Small and Very Small Housing 

Agencies 

HUD faces challenges in monitoring PH As when more than 2,000 of its 3,000 PHAs are small or very 

smalL Since these PHAs receive approximately 12 percent (or an estimated $732 million) of HUD's $6.1 

billion in low-rent authorized funding, it creates oversight burdens and costs for both HUD and PHAs that 

are disproportionate to the number of families these PH As serve. In a recent report, 11 we found that a 

significant cause of the deficiencies identified in small and very small PHAs was that executive directors 

and boards of commissioners either chose to ignore requirements or lacked sufficient knowledge to properly 

administer their programs. In 2015, HUD launched an online training course, Lead the Way, which is 

designed to help PHAs' boards and staff fulfill their responsibilities in providing effective governance and 

oversight. However, we remain concerned that the administrators, board members, and local officials do not 

have the resources or information available to them to properly administer their programs. Further, we are 

concerned that without additional oversight or outreach, there is increased risk of fraud, waste, and abuse 

going undetected at these entities. 

In an effort to promote awareness and enhance our collaborative work with Ms. Lourdes Castro-Ramirez, 

then Principal Assistant Secretary, PUt HUD OIG has issued several industry advisories that highlight areas 

of risky and illegal activities that jeopardize the integrity of otherwise legitimate housing programs. The 

advisories are posted on our Web site at www.hudoig.gov/fraud-prevention. Several advisories were 

directly related to PHAs and were emai1ed to executive directors. A letter also introduced Lead the Way, as 

a training module for board members and executive staff. 

OIG-Community Planning and Development (CPD) Collaboration: Monitoring Grantees and SubGrantees 

Recently, OIG and CPO began a joint collaboration to assist grantees and subgrantees in the areas in which 

OIG reported that grantees and subgrantees were most vulnerable. The work group determined that 

assistance should be provided in the following areas: procurement and contracting; subrecipient oversight; 

conflicts of interest; internal controls; documentation and reporting, and financial management. 

In addition, the Inspector General coauthored a joint letter with Ms. Harriet Tregoning, then Principal 

Assistant Secretary, CPO, to State and local governments communicating our collaborative effort to 

encourage efficient operations and effective accountability for the best use of limited resources. We 

developed a series of''integrity bulletins" aimed at providing the grantees and subgrantees with information 

to help safeguard program funds and ensure that communities get the full benefit of awarded funding. The 

bulletins on procurement and contracting, conflicts of interest, and subrecipient monitoring and oversight 

were sent to grantees and subgrantees during fiscal year 2016, and we continue to draft remaining bulletins. 

In addition, the published bulletins are posted on our Web site at www.hudoig.gov/fraud-prevention. 

Audit Disagreements and the Former Deputy Secretary 

Another area of concern that we hope can be resolved with the Department relates to the sharp increase in 

disagreements with our audit recommendations that were referred to former Deputy Secretary, Nani 

Coloretti for resolution (under departmental rules the Deputy Secretary is designated to resolve audit 

disagreements). This occurs when OlG and the responsible HUD assistant secretary or program cannot 

agree on the actions needed to address our audit recommendations. For a three-year period, from 

approximately 2012 to 2014, prior to the arrival of former Deputy Secretary Coloretti, the OIG recorded 

nine audit disagreements. Of those, two were resolved consistent with the OIG's recommendations and 

11 Audit Report2015-FW-0802, Very Small and Small Public Housing Agencies Reviewed Had Common Violations 

of Requirements. September 16,2015 

13 
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seven were ultimately resolved at the lower assistant secretary level, which never required the Deputy 

Secretary to make a final decision. 

In contrast, for a two-year period, from approximately 2015 to 2016, after the arrival of former Deputy 

Secretary Coloretti until her departure, the number of disagreements sky rocketed to sixteen. Only one was 

resolved consistent with the OIG's recommendations. In seven cases, the former Deputy Secretary rejected 

our recommendations and we continue to disagree with the decisions. Only two were resolved at the 

assistant secretary level and six, which were before the former Deputy Secretary for decision before her 

departure, remain unresolved. It's noted that two of the disagreements were resolved by the former Deputy 

Secretary in HUD's favor on the evening before inauguration day of the new administration. I have asked 

the new administration to revisit the decisions where we continue to disagree. The troubling part is that 

many of these recommendations are at the heart of addressing HUD's top management and performance 

challenges. 

It is my opinion that the spike in disagreements resulted from a negative culture created by former Deputy 

Secretary Coloretti and some of her staff that appeared to produce a distrust of the OIG and an atmosphere 

where career staff were not allowed to work with OIG, as we had always done, to resolve disagreements. 

These actions took on the appearance of impeding O!G activities by the former Deputy Secretary including 

denying or delaying us access to needed information. Former Deputy Secretary Coloretti did not honor 

former Secretary Julian Castro's commitment to the OlG, as reflected in a joint letter signed by both the IG 

and former Secretary Castro, to work with the OIG and to provide timely records. On at least two 

occasions, l was forced to advise the former Deputy Secretary that her decisions would require me to issue 

the former Secretary a seven-day letter" for her failing to provide requested documents and records. If not 

for the intervention of former Secretary Castro and his team, the OIG would have had to issue them. I would 

like to acknowledge former Secretary Castro for honoring his commitment to good governance, working 

with the OIG and for seeing to it that records the OIG requested, that were not timely produced, were 

received for us to complete our oversight responsibilities. 

Conclusion 

The Department will continue to face the challenges we have described until it puts controls and resources 

in place to address these issues. We remain committed to working collaboratively with HUD and will 

continue to strive to provide best practices and reasonable recommendations that support HUD's mission 

and responsibilities. My office is also strongly committed to working with the Department and the Congress 

to ensure that these important programs operate efficiently and effectively and as intended for the benefit of 

the American taxpayers now and into the future. In closing, I want to share how proud I am of our 

professional team at the WJD-OIG. We have highly-talented staff covering many varied disciplines that 

have produced enormous results. Together through the years, we have developed a culture of focusing on 

impactful and meaningful oversight that has made significant contributions to the American taxpayer and 

the nation's fiscal interests. It has been an honor for me to serve as HUD's Inspector General. 

12 The Inspector General Act authorizes an inspector general to report "immediately" to the agency head when the 

inspector general becomes aware of"particularly serious or flagrant problems, abuses~ or deficiencies relating to the 

administration of programs and operations." In tum. the agency head must transmit the report, along with any 

comments, to the appropriate committees or subcommittees of Congress within seven calendar days. In practice, this 

so-called "seven-day Jetter" is a powerful tool available in compelling circumstances requiring immediate 

congressional attention. 

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Inspector General's Statement 

Summarizing the Major Management 

and Performance Challenges Facing 

the U.S. Department of Housing and 

Urban Development for Fiscal Year 

201 7 and Beyond 

October 17,2016 
145

Memorandum 

TO: Julian Castro 

Secretary, s 

U.S. DEPARTMENT OF 

HOUSING AND URBAN DEVELOPMENT 

OFFICE OF INSPECTOil GENERAL 

October 17, 2016 

FROM:~Jt~~ Inspector General, G '- U 

SUBJECT: Management and Performance Cballenges for Fiscal Year 2017 and Beyond 

In accordance with Section 3 of the Reports Consolidation Act of 2000, the Office of 

Inspector General is submitting its annual statement to summarize its current assessment of the 

most serious management and performance challenges fuclng the U.S. Department ofHousing 

and Urban Development (HUD or Department) in fiscal year 2017 and beyond. Through our 

audits, evaluations, and Investigations, we work with departmental managers to recommend best 

practices and actions that help address these challenges. More details of these efforts are 

included in our Semiannual Reports to Congress. 

The Department's primary mission is to create strong, sustainable, Inclusive communities and 

quality, affordable homes for all. HUD accomplishes this mission through a wide variety of 

housing and community development grant. subsidy, and loan programs. Additionally, HUD 

assists families in obtaining housing by providing Federal Housing Administration (FHA) 

mortgage insurance for single-family and multifamily properties, oversight ofHUD-approved 

lenders that originate and service FHA·insured loans, and Government National Mortgage 

Association (Ginnie Mae) mortgage-backed security issuers that provide lllOrtgage capital. HUD 

relies on many partners for the performance and integrity of a large number of diverse programs. 

Among these partners are financial institutions that Q&ve delegated authority to issue FHA-insured 

mortgages, cities that manage HUD's Community Development Block Grant funds. public housing 

agencies that manage assisted housing fimds, and other Federal agencies with which HUD 

coordinates to accomplish its goals. HUD also has a substantial responsibility for administering 

disaster assistance programs. 

Achieving HUD's mission continues to be an ambitious challenge for its limited staff, 

given the agency's diverse programs, the thousands of intermediaries assisting the Department, 

and the millions of beneficiaries of its housing programs. The attachment discusses our 

assessment often key management and performance challenges facing HUD: 
146

I. Human capital management and financial management governance, 

2. Financial management systems, 

3. Digital Accountability and Transparency Act compliance, 

4. Weaknesses in information technology security control, 

5. Single-family programs, 

6. Community planning and development programs, 

7. Public and assisted housing program administration, 

8. Administering programs directed toward victims of natural disasters, 

9. Departmental enforcement. and 

I 0. Operational and financial reporting challenges affecting Ginnie Mae. 

Attachment 
147

Table of Contents 

Introduction and Approach .................................................................................... ! 

Human Capital Management and Financial Management Governance ............ 2 

Financial Management Systems ............................................................................. 6 

Digital Accountability and Transparency Act Compliance ................................. 9 

Weaknesses in Information Technology Security Control ................................ ll 

Single-Family Programs ........................................................................................ l3 

Community Planning and Development Programs ............................................ l9 

Public and Assisted Housing Program Administration ..................................... 23 

Administering Programs Directed Toward Victims of Natural Disasters ....... 29 

Departmental Enforcement.............................................................................. 32 

Operational and Financial Reporting Challenges Affecting Ginnie Mae ..... 33 

Conclusion ............................................................................................................... 35 
148

Introduction and Approach 

Introduction 

The U.S. Department of Housing and Urban Development's (HUD or Department) primary 

mission is to create strong, sustainable, inclusive communities and quality, affordable homes for 

all. HUD accomplishes this mission through a wide variety of housing and community 

development grant, subsidy, and loan programs. Additionally, HUD assists families in obtaining 

housing by providing Federal Housing Administration (FHA) mortgage insurance for singlefamily and multifamily properties, oversight of HUD-approved lenders that originate and service 

FHA-insured loans, and Government National Mortgage Association (Ginnie Mae) mortgagebacked security issuers that provide mortgage capital. HUD relies on many partners for the 

performance and integrity of a large number of diverse programs. Among these partners are 

financial institutions that have delegated authority to issue FHA-insured mortgages, cities that 

manage HUD's Community Development Block Grant (CDBG) funds, public housing agencies that 

manage assisted housing funds, and other Federal agencies with which HUD coordinates to 

accomplish its goals. HUD also has a substantial responsibility for administering disaster assistance 

programs, which has evolved substantially over the years. 

Approach 

HUD's Office of Inspector General (OIG) is one of the originall2 Offices of inspector General 

established by the Inspector General Act of 1978. While part of HUD, OIG provides 

independent oversight ofHUD's programs and operations. Planning OIG's audits, evaluations, 

and investigations is a continuing process to focus resources on areas of greatest priority and 

benefit to the taxpayer and HUD. The broad goal for OIG is to help HUD resolve its major 

management challenges while maximizing results and providing responsive work. 

The process is dynamic in order to address requests and other changes throughout the year. OIG 

identifies audits, evaluations, and investigations through discussions with program officials, the 

public, and Congress; assessments of previous audits, evaluations, and investigations; and 

reviewing proposed legislation, regulations, and other HUD issuances. It also conducts audits, 

evaluations, and investigations that HUD and Congress request, as well as those identified from 

OIG's hotline. We work with departmental managers to recommend best practices and actions 

that help address the management and performance challenges through our audits, evaluations, 

and investigations. 
149

Human Capital Management and Financial Management 

Governance 

---------------··-------··-------------

For many years, one of HUD's major challenges has been to effectively manage its limited staff 

to accomplish its primary mission. HUD continues to lack a valid basis for assessing its human 

resource needs and allocating staff within program offices. Several studies have been completed 

on HUD's use of human capital by the U.S. Government Accountability Office (GAO) that point 

to a lack of human capital accountability and insufficient strategic management as pervasive 

problems at HUD. To some extent, these human capital challenges have contributed to HUD's 

inability to maintain an effective financial management governance structure, which we have 

reported on for the last 3 years and which contributed to our issuing disclaimers of opinion as 

part of our annual financial statement audits of HUD' s financial statements. 

Human Capital Studies 

In May 2015, GAO issued a report based on testimony of GAO work issued from January 2014 

through February 2015 and ongoing work related to employee engagement. The testimony 

focused on key human capital areas in which some actions had been taken but attention was still 

needed by the Office of Personnel Management (OPM) and Federal agencies on issues such as 

(I) the General Schedule classification system, (2) mission-critical skills gaps, (3) performance 

management, and (4) employee engagement. The report provides the retirement rate of Federal 

civilian employees. In HUD, more than 43 percent of career permanent employees on board as of 

September 30,2014, will be eligible to retire by 2019. Given this statistic, HUD will need to 

ensure that it has steps in place to fill the critical skills gap to ensure the continuity of business 

and that it fulfills its missions. 

In August 2016, GAO issued a report examining HUD's efforts to (1) meet requirements and 

implement key practices for management functions, including financial, human capital, 

acquisition, and information technology (IT) management, and (2) oversee and evaluate 

programs. GAO found that HUD had made progress in developing new human capital plans and 

mostly followed key principles and practices for strategic workforce planning, succession 

planning, and training planning. However, HUD has struggled to maintain current plans as 

required by OPM regulations. For example, HUD's previous strategic workforce plan expired in 

2009, and HUD did not complete the next plan until2015. HUD has been unable to maintain 

current plans in part because it lacks a process to help ensure that it reviews and updates the 

plans before existing plans expire. Regularly assessing and updating these plans would help 

ensure that HUD has a strategic vision for managing its workforce and addressing human capital 

challenges. 

Financial Management Governance of HUD 

HUD's significant management challenge continued in fiscal year 2016 as it struggled to 

establish and implement effective financial management governance as required by the Federal 

Managers' Financial Integrity Act of 1982 and the Chief Financial Officers Act of 1990. In our 

fiscal years 2015 and 2014 financial statement audit report, we issued a disclaimer of opinion 

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due to unresolved audit matters. In addition, in our report on internal control, we reported nine 

material weaknesses, eight significant deficiencies in internal controls, and six instances of 

noncompliance with applicable laws and regulations. One of the material weaknesses directly 

addressed the shortcomings in HUD's financial management governance, and several of the 

other material weaknesses and significant deficiencies had causes that were attributed in part to 

weaknesses in HUD's financial management governance structure. 

Senior Management Council 

A National Academy of Public Administration (NAPA) study' supported the longstanding OIG 

recommendation that HUD establish a Chief Financial Officer (CFO) council to enhance its 

financial governance structure. While HUD had historically resisted recommendations to create 

a senior management council, the updated Office of Management and Budget (OMB) Circular 

No. A-123 has changed the establishment of a senior management council from a best practice to 

a requirement. HUD has indicated that plans for the structure of an enterprisewide oversight 

group are nearing completion. This is an important step toward addressing HUD's significant 

financial management governance weaknesses. 

Transition to a Federal Shared Services Provider for Financial Management Services and a 

Policy and Procedure Framework 

The NAPA study team also identified challenges in a number of areas and recommended that 

HUD take action to address concerns related to HUD's impending transition to a Federal shared 

services provider (FSSP) for tlnancial management services. OIG followed up with HUD 

management to follow HUD's progress in addressing study recommendations and found that 

HUD had not formally evaluated NAPA recommendations and did not have an adequate tracking 

mechanism in place for recommendations or planned actions. During 2016, GAO and OIG 

reported on a number of issues related to HUD's transition to an FSSP for tlnancial management 

services. Both GAO and OIG have attributed the cause of many of these issues to weaknesses in 

governance. 

The governance weaknesses that HUD experienced during its transition to an FSSP for financial 

management services were due in part to persistent financial management challenges that 

included outdated or incomplete policies and procedures and a lack of adequate information and 

communication among key groups. Program office accounting policies and procedures have at 

times been developed without adequate Office of the Chief Financial Officer (OCFO) input due 

to broad delegation to program office personnel. HUD also lacks documented policies to ensure 

the quality and consistency of program evaluations. To improve the continuity of accounting 

policies and procedures in a changing environment, policies and procedures should be centrally 

located and easily accessible to staff The lack of a policy framework has hindered and will 

continue to hinder efforts to adapt to changes in a timely manner. 

Information and Communication 

HUD's information and communication among departments and offices has been a consistent 

challenge. For example, BUD's current financial management structure relies on the delegation 

of several key financial management functions to HUD's program offices, including review and 

1 Department of Housing and Urban Development, Office of Chief Financial Officer, Organizational Assessment, 

March 19.2015. http://napawash.org/images/reports/20!5/HUD _ OCFO _Study_Final_ Report. pdf 

3 
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approval of vouchers, reviews of unliquidated obligations, and various budgetary accounting 

functions. However, we have found that program-related issues, concerns, and decisions cannot 

be made without adequate consultation with subject-matter experts, including OCFO, and 

appropriate consideration of accounting standards. We have attributed the root cause of 

significant deficiencies and material weaknesses identified in our audits to inadequate 

consideration of key accounting and financial rules and regulations. For example, we have 

attributed the material weaknesses cited in our financial statement audit reports related to the 

Office of Community Planning and Development's (CPO) budgetary accounting for grants and 

the Office of Public and Indian Housing's (PIH) net restricted asset process to inadequate 

collaboration with OCFO. 

While HUD has taken initial steps to address these issues, substantial work remains. HUD's 

initial remediation efforts have included memorandums of understanding between OCFO and 

program offices to improve collaboration and a quarterly management review process chaired by 

the Deputy Secretary. As noted above, to comply with the updated OMB Circular No. A-123, 

HUD will also need to establish a senior management council and undertake additional 

governance efforts. 

Enterprise Risk Management 

HUD needs to implement processes and procedures to ensure an effective system of internal 

control, not only for financial management governance, but across the Department within all 

programs. Effective for fiscal year 2016, HUD will be responsible for implementing OMB's 

updated Circular No. A-123 and GAO's Standards for Internal Control in the Federal 

Government' (The Green Book). These standards provide the criteria for designing, 

implementing, and operating an effective internal control system and define specific principles 

that are integral to an entity's internal control system with a greater focus on operational risks 

and controls. To effectively implement an enterprise risk management framework, HUD will 

need to identify operational risks and controls and address the financial management governance 

challenges identified above. 

HUD's Use of Intergovernmental Personnel 

Since 2009, HUD has entered into 21 temporary assignments of non-Federal personnel to 

positions within the Department under the Intergovernmental Personnel Act (IPA). HUD faces 

challenges in executing and managing the assignment agreements because its processes and 

responsibilities are divided among program areas of the Department and there is no central point 

of authority over these agreements. We have already reported on an inherent conflict-ot~interest 

situation and overpayments' and a potential Antideficiency Act (ADA) violation involving two 

IPA assignees.' In February 2015, Inspector General Montoya testified at the hearing on 

''Exploring Alleged Ethical and Legal Violations at the U.S. Department of Housing and Urban 

Development" before the House Oversight and Investigations Subcommittee regarding one of 

our IPA assignments. The Inspector General's testimony provided examples of serious 

2 Audit Report GA0-14-704G, Standards for Internal Control in the Federal Government, September 20 I 4 3 Memorandum number 2015-FW-080!, Intergovernmental Personnel Act Appointment Created an Inherent 

Conflict oflnterest in the Office of Public and Indian Housing, May 30,2014 4 Memorandum number 20 14-FW-080 1. Potential Antideficiency Act Violations Intergovernmental Personnel Act 

Agreements, May 30, 2014 

4 
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violations of ethical, lobbying, and hiring violations at HUD in which senior HUD officials had 

been involved in an effort to mask these embarrassing and questionable activities. Further, 

investigations revealed the hiring of convicted criminals into key housing positions. 

Due to deficiencies identified in the two prior IPA assignments, OIG initiated an audit ofHUD's 

implementation and oversight of the IPA mobility program.' We found that HUD failed to 

ensure that its IPA agreements met the purpose of the Act and were complete and properly 

reviewed and executed. Also, HUD did not properly manage IPA assignees onee they began 

working at HUD or properly outprocess them when they departed. We are continuing to work 

with the Department to reach management decisions to resolve all of the recommendations from 

report 2016-FW-0001. As of July 2016, HUD had issued Handbook 750.1 on its revised policy 

regarding assignment agreements under the IP A. The policy had been in draft form since 2014. 

HUD is making sweeping changes to the way it operates. While new process and technology 

changes always increase operational risk, HUD's restructuring and reorganization of 

management and employee roles and responsibilities will further increase that risk. Since a high 

percentage of employees are nearing retirement eligibility, HUD needs to continue to effectively 

implement and maintain ongoing and planned human capital management improvements. 

Summary of 0/G w·ork 

We continue to monitor the status of progress made in establishing an effective human capital 

management program at HUD. In addition, we continue to report on the need for improved 

financial governance. We also reported on an inherent conflict-of-interest situation and 

overpayments6 and a potential ADA violation involving two IPA assignees.' Inspector General 

Montoya testified before the House Oversight and Investigations Subcommittee regarding one of 

our IPA assignments. Our investigative activities revealed the hiring of convicted criminals into 

key housing positions. 

Looking Ahead 

We will continue monitoring the status of progress made in establishing an effective human 

capital management program, evaluating HUD's progress in improving financial management 

governance, and monitoring the resolution of our work regarding IPA agreements. In 2016, the 

number of material weaknesses, significant deficiencies, and instances of noncompliance is 

likely to remain elevated, and the 2016 financial statement audit opinion is unlikely to change 

due to the continuing impact of these issues. There remains room for significant improvement in 

financial management governance. 

5 Audit Report 2016-FW-OOOL HUD Did Not Effectively Negotiate, Execute. or Manage Its Agreements Under the 

Intergovernmental Personnel Act. March 30.2016 6 Memorandum number 2015-FW-0801, Intergovernmental Personnel Act Appointment Created an Inherent 

Conflict oflnterest in the Office of Public and Indian Housing, January 20,2015 7 Memorandum number 20 14-FW-080 1, Potential Antideficiency Act Violations Intergovernmental Personnel Act 

Agreements, May 30,2014 

5 
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Financial Management Systems 

Annually since 1991, OIG has reported on the lack of an integrated financial management 

system, including the need to enhance FHA' s management controls over its portfolio of 

integrated insurance and financial systems. HUD has been working to replace its current core 

financial management system since fiscal year 2003. The previous project, the HUD Integrated 

Financial Management Improvement Project (HIFMIP), was based on plans to implement a 

solution that replaced two of the applications currently used for core processing. In March 2012, 

work on HIFMIP was stopped, and the project was later canceled. This attempt to use a 

commercial shared service provider to start a new financial management system failed after more 

than $35 million was spent on the project. Our review determined that OCFO did not properly 

plan and manage its implementation of the project. 

New Core Project 

In the fall of2012, the New Core Project was created to move HUD to a new core financial 

system that would be maintained by a shared service provider, the U.S. Department of the 

Treasury's Bureau of Fiscal Services (BFS). Through its New Core Project, HUD was the first 

cabinet-level agency to transition some of its core accounting functions to an FSSP. The transfer 

of its financial management to an FSSP was widely publicized. 

We have completed three audits ofHUD's implementation of the New Core Project. In the first 

audit, published in June 2015,8 we found that weaknesses in the planned implementation of 

release 3 of phase I in the New Core Project were not adequately addressed. We determined that 

HUD did not follow its own agency policies and procedures, the policies established for the New 

Core Project, or best practices. If HUD was not successful in this implementation, it could reflect 

negatively on OMB's mandate to use FSSPs. The weaknesses identified in this report related to 

requirements and schedule and risk management areas that are significant to the project plan. We 

concluded that the effectiveness with which HUD manages them was critical to the project's 

success. 

Our second audit, published in September 2015,9 found that HUD's implementation of phase I, 

release I, was not completely successful. Due to missed requirements and ineffective controls, 

interface processing of travel and relocation transactions resulted in inaccurate financial data in 

HUD's general ledger and BFS' financial system. As a result, processing continued for more 

than 6 months with unresolved errors, leaving HUD's general ledger and BFS' financial system 

with inaccurate financial data and discrepancies in the balances between HUD' s general ledger 

and Treasury's Government Wide Accounting System. We concluded that the implementation of 

release I confirmed the concerns we cited in our initial review of the phase I, release 3, 

8 Audit Report 20 15-DP-0006, Weaknesses in the New Core Project Were Not Adequately Addressed, June 12, 

2015 

9 Audit Report 2015-0P-0007, New Core Release! of Phase I Implementation Was Not Completely Successful, 

September 3, 2015 

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implementation. Although HUD had taken action to mitigate some of the problems that occurred 

with release I and address some of the issues we highlighted, we were concerned that HUD was 

moving too fast with its implementation plans and would repeat these weaknesses. 

Our third audit, published in September 2016, 10 found that HUD had unresolved data conversion 

errors and inaccurate funds management reports and lacked a fully functional data reconciliation 

process following the implementation of phase I, release 3, of the New Core Project on 

October I, 2015. In addition, the New Core Interface Solution's performance was not monitored, 

tracked, or measured, and controls over processing errors within Oracle Financials were routinely 

bypassed. These conditions occurred because HUD rushed the implementation of the release. 

Specifically, HUD did not move the implementation date when issues were identified during 

system testing to allow time to resolve the issues, development of the custom reports was not far 

enough along to allow full system testing, development of the reconciliation tool could not be 

completed before the scheduled implementation date, and time did not permit the establishment 

of performance metrics. As a result, in June 2016, unresolved data conversion errors were 

estimated at an absolute value of more than $9 billion, HUD's funds management reports 

contained inaccurate data, and the newly completed status of funds reconciliation report indicated 

that there was an absolute value of $4.5 billion in differences between the HUD Centralized 

Accounting and Processing System and Oracle Financials. 

The New Core Project program charter identified 14 financial management systems capabilities 

that would have to be delivered with the program to meet its financial management needs, replace 

the Department's legacy systems, and achieve the expected benefits. HUD accomplished 4 of the 

14 items with releases I, 2, and 3 of the New Core Project. This included transitioning the 

following functions: travel and relocation, time and attendance, core accounting, and 

procurement. Since 1991, OIG has reported on system limitations and deficiencies within HUD's 

legacy financial management systems and the Department's lack of an integrated financial 

management system. In fiscal year 2015, the issue was a material weakness. Program offices 

have compensated for the system limitations by using manual processes to meet financial 

management needs. 

These system issues and limitations have inhibited HUD's ability to produce reliable, useful, and 

timely financial information. Complete and reliable financial information is critical to HUD's 

ability to accurately report on the results of its operations to both internal and external 

stakeholders. The implementation of release 3 did not alleviate these issues, as confirmed by 

GAO in a report issued in July 2016. 11 For fiscal year 2015,97 percent of the Department's 

budget was allocated to HUD's program areas (that is, public and Indian housing and community 

planning and development). Following the implementation of release 3, BUD's core program 

functions were still being controlled and processed through HUD's legacy applications. In April 

of2016, after spending $96.3 million, BUD ended the New Core Project with the closeout of the 

release 3 implementation. HUD decided that it would continue to use BFS's systems and services 

for the capabilities that had already been delivered but would not transition to shared services as a 

10 Audit Report 2016-DP-0004, HUD Rushed the Implementation of Phase 1, Release 3, of the New Core Project, 

September 20,2016 11 Report GA0-16-656, Financial Management Systems- HUD Needs to Address Management and Governance 

Weaknesses That Jeopardize Its Modernization Efforts, July 2016 

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means of achieving the remaining New Core Project capabilities. HUD did not transfer all of the 

functionality that was originally planned and in some cases, simply shifted the uncompleted 

segments of the New Core Project to new projects. Additional time and funding will be needed to 

complete these projects. HUD has not fulfilled its plan to move to an FSSP in order to implement 

financial management systems capabilities that would have been delivered with the New Core 

Project to meet its financial management needs. replace the Department"s legacy systems, and 

achieve the expected benefits. 

Outdated Information Technology Systems 

Overall, funding constraints diminished HUD's ability to integrate updated application systems 

and replace and deactivate legacy systems. Limited progress has been made in modernizing 

applications and enhancing capabilities to replace manual processes. However, many legacy 

systems remain in use. Another concern is the ability to maintain the antiquated infrastructure on 

which some ofthe HUD and FHA applications reside. As workloads continue to gain 

complexity, it becomes challenging to maintain these legacy systems, which are 15 to 30 years 

old, and ensure that they can support the current market conditions and volume of activity. The 

use of aging systems has resulted in poor performance, high operation and maintenance costs, and 

increased susceptibility to security breaches. As part of our annual review of information systems 

controls in support of the financial statements audit, we continue to report weaknesses in internal 

controls and security regarding HUD's general data processing operations and specific 

applications. The effect of these weaknesses is that the completeness, accuracy, and security of 

HUD information is at risk of unauthorized access and modification. As a result, HUD's financial 

systems continue to be at risk of compromise. 

HUD's voucher and project-based Section 8 and public housing programs accounted for 78 

percent ofHUD's 2016 enacted discretionary budget authority of$47.2 billion. Also, HUD's 

FHA program has insured more than 33.5 million mortgages valued at more than $3.8 trillion 

since 1980. These four program areas alone have 20 major information systems supporting the 

management of those programs, and those systems contain in excess of 300 million records on 

program recipients- with data fields that include Social Security numbers; birth dates; address 

history; income; financial; dependent; and in those cases in which disability and medical status is 

considered, health-related data. In short, the management information systems supporting these 

four critically important HUD programs contain personally identifiable information for all 

American citizens who received BUD-sponsored housing assistance, lived in public housing, and 

obtained an FHA-insured mortgage, including such information on all dependents within those 

households. 

We are also concerned about the current state ofFHA's IT systems and the lack of systems 

capabilities and automation to respond to changes in business processes and the IT operating 

environment. In August 2009, FHA completed the Information Technology Strategy and 

Improvement Plan to address these challenges, which identified FHA's priorities for IT 

transformation. The plan identitied 25 initiatives to address specific FHA lines of business 

needs. Initiatives were prioritized, with the top five relating to FHA's single-family program. 

The FHA transformation initiative was intended to improve the Department's management of its 

mortgage insurance programs through the development and implementation of a modem 

financial services IT environment. The modem environment was expected to improve loan 

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endorsement processes, collateral risk capabilities, and fraud prevention. However, to date, few 

initiatives have been completed because of a lack of funding. The transformation team is in 

operations and maintenance mode for the few initiatives that have been implemented and has 

limited capability to advance with the project due to the continued lack of funding. 

Summary o.fOlG Work 

Annually since 1991, OIG has reported on the lack of an integrated financial management 

system, including the need to enhance FHA's management controls over its portfolio of 

integrated insurance and financial systems. We have completed three audits on HUD's 

implementation of the New Core Project. In the first audit, published in June 2015, we found 

that weaknesses in the planned implementation of release 3 of phase I of the New Core Project 

were not adequately addressed. Our second review, published in September 2015, found that 

HUD's implementation of release I of phase I was not completely successful. Due to missed 

requirements and ineffective controls, interface processing of travel and relocation transactions 

resulted in inaccurate financial data in HUD's general ledger and BFS. Our third review, 

published in September 2016, found that HUD had unresolved data conversion errors and 

inaccurate funds management reports and lacked a fully functional data reconciliation process 

following the implementation of phase I, release 3, of the New Core Project on October!, 2015. 

In addition, the New Core Interface Solution's performance was not monitored, tracked, or 

measured, and controls over processing errors in Oracle Financials were routinely bypassed. 

Looking Ahead 

OIG will continue evaluating HUD's activities related to the implementation of the New Core 

Project and integrating its financial management systems. 

Digital Accountability and Transparency Act Compliance 

One of the Department's major emerging management challenges is compliance with the Digital 

Accountability and Transparency Act of 2014 (DATA Act)." In our August 2016 DATA Act 

readiness review, we found that HUD was not on track to meet the DATA Act's requirements." 

TheDA TA Act builds on agency transparency reporting requirements established by the Federal 

Funding Accountability and Transparency Act of2006 (FFATA) and has an implementation date 

of May 2017. HUD's efforts to comply with the DATA Act have been hindered by management 

turnover and indecision, resource limitations, and disparate IT systems that reside on different 

platforms with dissimilar data elements. 

DATA Act Leadership Turnover and Delayed Decisions 

BUD's DATA Act team has been hindered by management turnover and indecision. HUD has 

had three ditlerent senior accountable officials in a 6-month span, and the conclusion that the 

DATA Act applied to FHA and Ginnie Mae was not made until approximately May 2016. These 

"Digital Accountability and Transparency Act of2014, Pub. L. No. 113-101 

"20 16-F0-0802, Independent Attestation Review: U.S. Department of Housing and Urban Development. DATA 

Act Implementation Efforts, dated August 26, 2015 

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conditions have delayed implementation efforts and precluded the reasonable expectation that 

the deadline would be met. While HUD has taken steps to implement the DATA Act, the lack of 

a constant senior accountable official prevents adequate oversight of the project and workgroups, 

which would ensure implementation by the statutory date. 

Compliance Milestones and Human Resource Limitations 

In addition to management turnover and the delays related to the FHA and Ginnie Mae 

components, key HUD milestones have been delayed. Specifically, HUD had not completed its 

inventory of data elements or the mapping of agency data to the DATA Act schema as of July 

15,2016. To assist agencies with implementation, OMB and Treasury issued a playbook with 

eight key steps to help agencies fulfill the requirements of the DATA Act, and OMB issued a 

memorandum detailing key guidance." HUD's project plan dates for milestones, including 

completing an agency data element inventory or mapping agency data to DATA Act schema, 

significantly exceeded previous Treasury and OMB guidance, and HUD's project plan dates may 

not have been sufficiently reviewed and approved by OMB and Treasury." HUD submitted 

updated implementation plans to OMB and Treasury in August 2016. 

Competing departmental priorities like HUD's transition to a shared service provider for 

financial management services have worsened existing resource limitations. Human capital 

resources are limited compared to the level of effort required to modify systems and perform the 

required data inventory and mapping. While Treasury may provide resources to supplement 

BUD's resources and support HUD's compliance efforts, substantial challenges remain. 

Information System Weaknesses and Data Quality Issues 

HUD has experienced challenges with DATA Act (and FFA T A) implementation due to the 

Department's reliance on many financial systems with differing technologies and data elements. 

To provide quality spending data, agencies will be required to make available financial 

obligation and outlay data and award-level data based on agency financial systems. As we have 

previously reported in our annual financial statement audit, HUD's legacy systems have hindered 

efficient and effective financial reporting. As the DATA Act requires the use of agency financial 

systems, many of the issues reported in the financial systems management challenge (see page 6) 

also apply. 

In addition, HUD has been unable to resolve data quality issues that have impeded the complete 

and accurate reporting of departmental contract, grant, loan, and other financial assistance 

awards in USAspending.gov. 

Summary ofOIG Work 

While the statutory date for final implementation of the DATA Act is May 2017, we have issued 

one of two planned preimplementation attestation reports that are designed to determine whether 

HUD is on track to meet the implementation deadline. In August 2016, we issued a review 

attestation report on HUD's efforts to comply with OMB and Treasury DATA Act Playbook 

steps 1-4. While HUD's assertions reasonably represented the status ofdepartmentwide 

compliance efforts, we reported that HUD was not on track to provide complete, departmentwide 

14 https://www. whitehouse.gov/sites/default/files/omb/memoranda/20 15/m-l5-l2.pdf 15 GA0-16-698, DATA Act Implementation Plans, http://gao.gov/assets/680/678765.pdf 

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reporting by the May 2017 deadline. Additionally, we provided recommendations to the 

Department to address compliance impediments. 

Looking Ahead 

We will continue to perform pre implementation work as I-IUD works to implement the DATA 

Act, and we plan to issue our first statutorily required report during fiscal year 2017. 

Weaknesses in Information Technology Security Controls 

I-IUD conducts hundreds of thousands of transactions with the American public daily and is 

responsible for safeguarding hundreds of millions of records containing the personal information 

of private individuals. However, I-IUD continues to face both long- and short-term challenges as 

it strives to modernize its legacy systems, adequately secure its IT infrastructure, and properly 

protect sensitive data. I-IUD has not adequately planned for its future IT and IT security needs. 

One of two primary I-IUD infrastructure services contracts was recently reawarded using a longterm sole-source contract, while the second has been in a period of transition since fiscal year 

2014, creating risk for I-IUD. Further, a significant number of critical !-IUD applications are 

legacy systems that are increasingly difficult to maintain and present security risks that HUD will 

be challenged to mitigate without modernization. More than 400 I-IUD IT products are running 

on unsupported platforms, increasing the risk of unknown and unpatchable vulnerabilities. 

Legacy systems are difficult or unable to migrate to cloud technology, further complicating 

HUD's long-term efforts to modernize and secure its systems and data while creating efficiencies 

and cost savings. 

I-IUD has taken some initial steps to address these long-term challenges. I-IUD filled several key 

positions, including the CIO, chief information security officer, and chief technology officer. 

However, we are concerned that turnover in IT leadership roles, including that of the enterprise 

architect and the conclusion of the CIO's tenure at the end of calendar year 2016, will deflate 

HUD's momentum. Major I-IUD initiatives have been negatively impacted by recent turnover in 

key positions and loss of technical expertise. 

HUD has begun key initiatives, such as the development of several long-term plans, including an 

enterprise architecture roadmap, aimed in part to guide modernization efforts; a Cybersecurity 

Framework to address IT security program deficiencies; and a recently implemented enterprise 

incident handling program to improve security incident detection capabilities. However, notable 

change and implementation of these initiatives are not anticipated to be fully realized until fiscal 

year 2017 and beyond. Successful implementation of these plans will be directly dependent 

upon HUD's ability to instill accountability, implement performance measures, and obtain 

adequate technical expertise and resources. In the process of outsourcing infrastructure and 

application maintenance and support, HUD has divested itself of much of its own technical 

expertise and continues to face significant staffing challenges. For example, an organizational 

chart provided to OIG during its fiscal year 2016 Federal information Security Modernization 

Act (FISMA) evaluation showed that 16 of the 36 key IT managerial and supervisory positions 

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stationed at HUD headquarters were either vacant (II) or filled by temporary "acting" personnel 

(5) during fiscal year 2016. This condition significantly challenges HUD"s ability to manage and 

perform vendor oversight of its technology infrastructure and conduct technical assessments. It 

has also resulted in HUD's extensive dependence on decentralized IT contracts throughout the 

HUD IT environment. 

Our annual evaluation ofHUD's IT security program for fiscal year 2015, as mandated by 

FISMA, revealed some IT security improvements, but extensive noncompliance with Federal IT 

guidance continues. As shown in OIG's fiscal year 2015 FISMA report, HUD has extensive 

deficiencies in 5 ofthe 10 program areas on which 010 reports to OMB, compared to 9 of 10 in 

fiscal year 2014. HUD is showing some progress in remediating these deficiencies; however, it 

has 45 open FISMA evaluation recommendations spanning several years that have been open 

from 300 to 800 days. These recommendations need to be addressed to rectify longstanding 

security weaknesses. Further, the privacy program has an additional 21 open recommendations 

for the fiscal years 2013 through 2015 evaluation period. 

To ensure improvement in the above areas and reduce vulnerabilities to the IT security 

environment, all HUD program offices will need to collaborate effectively and establish 

ownership and oversight of IT security controls. HUD's fiscal year 2016 IT funding level has 

decreased 16.3 percent from fiscal year 2015, which continues to impact agency modernization 

and IT security efforts. With the constrained budgets, HUD will be challenged to fund the 

operation of current systems while also initiating projects to upgrade legacy applications and 

improve security. 

Further, our evaluations have revealed a lack of enterprise risk management, which directly 

affects HUD's ability to manage all IT risks using a holistic framework and hinders HUD's IT 

modernization efforts. HUD's Office of the Chief Information Officer (OCIO) had begun 

addressing this weakness by developing an IT Risk Management Office, but unless HUD 

develops an enterprisewide risk management program with one management approach, it will 

not be able to appropriately prioritize all IT risks. 

Summary 1~(0/G Work 

OIG's work has been focused on assessing mandated requirements and other IT evaluations to 

assist HUD in identifying IT risks and vulnerabilities in addition to prioritizing efforts to 

improve the cybersecurity posture and IT infrastructure and secure HUD data. Many areas and 

deficiencies remain to be reviewed and assessed to independently identity and provide 

recommendations for improving the cybersecurity posture. 

Looking Ahead 

We will continue to evaluate HUD's IT infrastructure, policy, and processes, while also 

continuing to provide oversight on the progress of HUD's IT security program, modernization 

efforts, and ability to implement IT security long-term plans. We will do this through mandated 

assessments and targeted evaluations, while instilling a collaborative environment with HUD. 

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Single-Family Programs 

FHA's single-family mortgage insurance programs enable millions of first-time borrowers and 

minority, low-income, elderly, and other underserved households to benefit from home 

ownership. HUD manages a growing portfolio of single-family insured mortgages exceeding 

$1.2 trillion. Effective management ofthis portfolio represents a continuing challenge for the 

Department. 

Preserving the FHA Fund 

Before fiscal year 2015, FHA' s fund had been below its legislatively mandated 2 percent 

capital ratio for the past 6 years. However, beginning in fiscal year 2015, the fund met its 

threshold target capital ratio once again." According to the 2015 actuarial study, the fund had 

an economic value of $23.8 billion. Based on the 2015 projections, the fund is expected to 

maintain a capital ratio above the threshold limit and will gradually build reserves over time if 

the forecasted trend continues. Restoring the fund's reserves and finances has been a priority for 

BUD, and it has increased premiums, reduced the amount of equity that may be withdrawn on 

reverse mortgages, and taken other steps to restore the financial health of the fund. 

The Department must make every effort to prevent or mitigate fraud, waste, and abuse in FHA 

loan programs. OIG continues to take steps to help preserve the FHA insurance fund and 

improve FHA loan underwriting by partnering with HUD, the U.S. Department of Justice, and 

multiple U.S. Attorney's offices nationwide in a number of FHA lender civil investigations. In 

some instances, these investigations involve, not only the underwriting of FHA loans, but also 

the underwriting of conventional loans and government-insured loans related to Federal 

programs other than FHA. For those investigations that involved OIG's assistance on the FHArelated part of the cases, the Government has reached civil settlements yielding more than $14.6 

billion in damages and penalties in the last 5 fiscal years. 

For the FHA-insured loans, results in the last 5 fiscal years have shown that a high percentage of 

loans reviewed should not have been insured because of significant deficiencies in the 

underwriting. As a result, the Government has reached civil settlements regarding FHA loan 

underwriting totaling $4.9 billion for alleged violations of the False Claims Act; the Financial 

Institutions Reform, Recovery, and Enforcement Act; and the Program Fraud Civil Remedies 

Act. Nearly $3.2 billion of the $4.9 billion is of direct benefit to the FHA insurance fund. 

Ongoing investigations are expected to lead to additional settlements that will significantly help 

recover losses to the FHA insurance fund. 

Monitoring Lenders and FHA Claims 

In spite of these positive steps, we remain concerned about HUD's resolve to take the necessary 

actions going forward to protect the fund. HUD is often hesitant to take strong enforcement 

actions against lenders because of its competing mandate to continue FHA's role in restoring the 

16 Our calculation of the capital ratio was based the infonnation we obtained from FHA's fmal actuarial report. 

published in November 2015, and using the amortized insurance-in-force as the denominator. 

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housing market and ensure the availability of mortgage credit and continued lender participation 

in the FHA program. 

For example, FHA has been slow to start a rigorous and timely claims review process. OIG has 

repeatedly noted in past audits and other types of lender underwriting reviews HUD' s financial 

exposure when paying claims on loans that were not qualified for insurance. Two years ago, 

OIG noted HUD's financial exposure when paying claims on loans that were not qualified for 

insurance. Adding to this concern, HUD increased its financial exposure by not recovering 

indemnification losses and extending indemnification agreements when appropriate. 

Based on the results of an August 2014 audit, 17 we determined that HUD did not always bill 

lenders for FHA single-family loans that had an enforceable indemnification agreement and a 

loss to HUD. The audit identified 486 loans with losses of $37.1 million from January 2004 to 

February 2014 that should have been billed and recovered. HUD needs to ensure continued 

emphasis on indemnification recoveries, especially for newer FHA programs, such as 

Accelerated Claims Disposition or Claims Without Conveyance of Title (CWCOT). We referred 

three recommendations to the Assistant Secretary for Housing FHA Commissioner on January 

8, 2015. The three recommendations asked HUD's Deputy Secretary for the Office of Finance 

and Budget to initiate the billing process, including determining lender status for loans that (I) 

were part of the CWCOT program and (2) went into default before the indemnification 

agreement expired. Further, we recommended initiating the billing process for five refinance 

loans on which HUD incurred losses. Due to continued disagreements on the appropriate action, 

we elevated the recommendations to the Deputy Secretary on March 31,2015. We continue to 

wait for the Deputy Secretary's request for further discussions or her decision on the matter. 

FHA program regulations at 24 CFR (Code of Federal Regulations) Part 203 do not establish a 

maximum period for filing a claim, and they do not place limitations on holding costs when 

servicers do not meet all foreclosure and conveyance deadlines. In addition, HUD reviews only 

a small percentage of claims to ensure that servicers meet required deadlines. In July 2015, 

HUD submitted a proposed rule for public comment in the Federal Register (FR-5742) to 

establish a maximum period for servicers to file a claim for insurance benefits and curtail 

servicers' claims for property preservation and administrative costs occurring after the date on 

which the servicer should have filed a claim. HUD proposed to allow servicers 12 months from 

the expiration of the reasonable diligence time line to convey the property. HUD stated that the 

proposed rule would improve its ability to protect the FHA insurance fund. However, the 

proposed rule was not finalized because mortgage servicers expressed concern that such changes 

were not realistic, citing unavoidable delays in the foreclosure process. HUD needs to continue to 

pursue changes to FHA program regulations and work with industry leaders to reissue proposed 

changes to adequately protect the fund from unnecessary and unreasonable costs incurred when 

servicers do not convey properties in a timely manner. Further, in its 2015 actuarial report, HUD 

projected that it may incur future losses because of servicers' delayed foreclosures and 

conveyances. HUD reported concern that delayed foreclosures limited its ability to identify 

current and future risks to the FHA insurance fund. 

17 Audit Report 20 14-LA-0005, HUD Did Not Always Recover FHA Single-Family Indemnification Losses and 

Ensure That Indemnification Agreements Were Extended. August 8. 2014 

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Based on an audit report issued in October 201618 covering FHA's monitoring and payment of 

conveyance claims, we found that HUD paid claims for nearly 239,000 properties that servicers 

did not foreclose upon or convey on time. Servicers missed their foreclosure and conveyance 

deadlines and did not report the self-curtailment date of their debenture interest. As a result, 

HUD paid at least $2.23 billion in unreasonable and unnecessary costs. Without regulatory 

authority, HUD has few options to compel servicers to convey and file a claim. Program 

regulations allow HUD to disallow mortgage interest when a servicer misses a foreclosure 

deadline, but HUD has no further recourse to protect itself from paying holding costs incurred 

after servicers have missed conveyance deadlines. Therefore, if a servicer missed its deadline to 

initiate foreclosure, it forfeited its mortgage interest and had no further financial or regulatory 

incentives to meet its remaining deadlines. 

Further, in another audit," we found that HUD did not always collect on partial claims due upon 

termination of the related FHA-insured mortgages. HUD failed to collect an estimated $21.5 

million in FHA partial claims that became due last fiscal year. HUD's contract with its national 

loan servicing contractor lacked a performance requirement measuring partial claims collection. 

In addition, HUD's monitoring reviews of the contractor did not improve the contractor's 

performance in collecting partial claims. HUD should require the contractor to identify all 

partial claims that were due and payable, prepare the paperwork needed for debt collection, and 

transfer the claims to the Financial Operations Center. The Financial Operations Center should 

collect the $21.5 million in uncollected partial claims from fiscal year 2015 from the borrowers, 

or if it is not possible to collect from the borrowers due to lender error, it should collect those 

funds from the lender. HUD also needs to strengthen contract and monitoring review procedures 

to ensure that partial claims are properly collected. 

Loss Mitigation 

FHA requires that its servicers use loss mitigation tools to assist homeowners facing default and 

as a way to minimize losses to the FHA insurance fund. However, despite the intended purpose, 

FHA has difficulty ensuring that its program guidance is clearly written for effective 

implementation. We have conducted two audits20 ofFHA's Home Affordable Modification 

Program (HAMP). HAMP allows homeowners to modify their FHA-insured mortgages to 

reduce monthly mortgage payments and avoid foreclosure. The program allows the use of a 

partial claim of up to 30 percent of the unpaid principal balance as of the date of default, 

combined with a loan modification. One audit found that HUD did not have an effective 

postclaim review function and did not have clear program guidance for the FHA-HAMP partial 

claim option. HUD's policies allowed servicers to determine partial claim amounts in different 

ways, which resulted in some claims that were higher than necessary. This condition occurred 

because HUD and its contractors did not produce timely quality postclaim review reports and 

18 Audit report 20 17-KC-000 1, FHA Paid Claims for Properties That Servicers Did Not Foreclose Upon or Convey 

on Time. October 14, 2016 19 Audit report 2016-KC-000 I, HUD Did Not Collect an Estimated 1.361 Partial Claims Upon Tennination of Their 

Related FHA-Insured Mortgages, August, 17, 2016 

'

0 Audit Report 20 15-LA-0003. HUD Did Not Have Effective Controls or Clear Guidance in Place for the FHAHAMP Partial Claim Loss Mitigation Option. September 18,2015, and Audit Report 2015-LA-000 I, HUO's Claim 

Payment System Did Not Always Identify Ineligible FHA-HAMP Partial Claims. April 20, 20 I 5 

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failed to adequately monitor FHA-HAMP. As a result, FHA overpaid at least $177 million in 

partial claims due to servicer miscalculations. Management decisions have been reached for 

recommendations with varying target closeout dates. The other audit found that HUD's claim 

payment system did not always identify ineligible FHA-HAMP partial claims. The system 

allowed payment of (l) more than one claim with a previous modification or FHA-HAMP option 

in a 24-month period, (2) duplicate claims, (3) partial claims in excess of 30 percent ofthe 

unpaid principal balance at the time of default, and ( 4) non-HAMP partial claims after HUD 

discontinued this claim type. This condition occurred because I-IUD did not design and 

implement sufficient claim payment system controls. As a result, I-IUD spent approximately 

$22.5 million on potentially ineligible claims. 

Departmental Clearance Process 

Departmental clearance is a necessary and important process to ensure required agreement by 

applicable HUD leadership on the subject matter and content of a directive or policy change. 

This action requires a review by I-IUD offices that have expertise, policy or legal, with the 

subject matter of the change and that there is no conflict with other HUD or administration 

policies. The originating I-IUD office places a directive to implement a specific policy change of 

departmental clearance by completing these four steps: (l) execute an intraoffice agreement, (2) 

execute a form HUD-22, (3) launch the clearance process, and then (4) manage the clearance. 

All directives must be cleared, at a minimum, by the following six offices within headquarters: 

Office of the Chief Human Capital Officer, Office of General Counsel, OIG, OCFO, OCIO, and 

Office of Policy Development and Research. 

At a time when FHA is working to restore confidence in the housing market, we have concerns 

that when the Department is making program, policy, or procedural changes, it is not (l) 

identifying the significant changes in its notice, (2) following the formal clearance process and 

instead opting for a more informal method, or (3) avoiding the process altogether and making 

changes unilaterally. We have noted that HUD failed to follow departmental clearance protocols 

for FHA programs, policies, and operations by not (I) ensuring that key officials reviewed 

directives before issuance and (2) following required departmental clearance procedures when 

issuing directives or Paperwork Reduction Act documents. These actions were contrary to the 

directives policies in Handbook 000.2, REV-3, HUD Directives System. Below are examples of 

policies that were not properly vetted through the clearance protocols. 

• Loan Quality Assessment Methodology (defect taxonomy)- This methodology discusses 

significant policy and procedural guidance related to FI-lA's lender monitoring process 

and enforcement of FHA loan origination defects. I-IUD posted this document on its 

Drafting Table Web site on September 16, 2014, before completing a limited clearance 

process on May I, 2015. Posting in dratt form for public comment will indicate to the 

public that, although in draft, the policy and legal positions in the draft form are accurate 

and reflect the direction that the Department is interested in pursuing. However, the 

public cannot be assured that draft directives will be pursued unless the draft is approved 

through departmental clearance. The defect taxonomy remains in draft with no 

implementation date set. 

Addendum to Uniform Residential Loan Application (form HUD-92900-A)- This 

document was used for establishing the eligibility of proposed mortgage transactions for 

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FilA's insurance endorsement. It revised a previously cleared Paperwork Reduction Act 

document; therefore, departmental clearance was required. Clearance was also required 

because this document removed certification language that could potentially impact 

FHA's enforcement efforts. A controversial memorandum issued from Edward Golding, 

HUD's Principal Deputy Assistant Secretary for Housing, and a U.S. Department of 

Justice responsive press release highlighted the significance of the document changes. 

Excerpt from FHA posting, March 15,2016 

In this final loan-level certification. FHA is clearly identifying what lendm will be held 

accountable for only those mistakes that would have altered the decision to approve the loan. 

This important move makes it very dear that minor mistakes that do not affect the decision to 

!approve a loan are not the focus of our compliance efforts. 

Excerpt from U.S. Department of Justice press release, March 15, 2016 

The department will continue these enforcement efforts by using the False Claims Act, and will continue to 

· ba guided by the language of the act that prohibits the submission of knowing and material false daims. In 

the FHA context, this means that no lender will face False Claims Act enforcement based on an unknowing 

mistake or an immaterial requirement But, at the same time, the department will not hesitate to bring an 

action where a lender- or ~ny other individual or entity who would defraud the federal taxpayer- submits 

false statements and daims at the expense of the federal fisc. 

HUD posted the document on its public Drafting Table Web site on May I, 2015; 

however, it did not complete the departmental clearance process until August II, 

2015. In addition, the 60-day Federal Register notice relating to this document was 

improperly issued before it went through departmental clearance. The Federal Register 

notice was issued on May !5, 2015. 

Downpayment Assistance and Premium Pricing 

Through the course of three audits,21 we learned about and continue to be concerned with a 

funding arrangement for down payment assistance to FHA borrowers, which we believe violates 

the National Housing Act regarding prohibited sources for downpayment assistance. 

Specifically, we learned that NOVA and LoanDepot had entered into triparty agreements among 

the FHA lender, a housing finance agency (HFA), and U.S. Bank, a Ginnie Mae issuer. These 

agreements were part of a program in which the HFA would provide downpayment assistance in 

a grant or loan to the borrower. The FHA lender would provide the primary financing to the 

borrower in the form of an FHA-insured loan. Upon origination, the FHA loan would be sold to 

U.S. Bank, which would securitize the mortgage loan through Ginnie Mae security and service 

Audit Report 2015-LA-1010, loanDepot's FHA-Insured Loans With Golden State Finance Authority 

Down payment Assistance Gifts Did Not Always Meet HUD Requirements, September 30. 20 15; Audit Report 

20 15-LA-1 009, loanDepot's FHA-Insured Loans With Downpayment Assistance Funds Did Not Always Meet HUD 

Requirements, September 30, 2015; and Audit Report 2015-LA-1005, NOVA Financial & Investment Corporation's 

FHA-lnsured Loans With Downpayment Assistance Gifts Did Not Always Meet HUD Requirements. July 9, 2015 

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the mortgage. Although not parties to the FHA loan, the HFA and U.S. Bank required the FHA 

lender to inflate the interest rate on the loan. The HF A providing the downpayment assistance 

and U.S. Bank had previously determined what interest rate above the market interest rate would 

be necessary on the FHA loan to net a premium payment from the investor when the loan was 

securitized. The HF A, U.S. Bank, and the FHA lender agreed that the premium payment would 

reimburse the HF A for the downpayment and pay other program-related fees. The increased rate 

was up to 1.5 percent above the market rate tor FHA loans (for example, 4.5 percent for HFA 

downpayment assistance versus 3 percent for nonassisted FHA loans). The HFA, U.S. Bank, 

and the FHA lender also agreed to charge the borrower additional securitization, administration, 

and tax fees as part of the origination totaling $300-$600, which would not have otherwise been 

paid on the lower interest rate mortgage. We determined that U.S. Bank had similar agreements 

with FHA lenders and HFAs around the country. 

Since the issuance of the first and later similar audits, we have attempted to resolve the findings 

and recommendations with the Department to no avail. HUD has failed to recognize disturbing 

parallels to the seller-funded downpayment assistance arrangements practiced from the late 

1990s to 2008, which caused wide-scale problems for the program that continue to be felt today. 

On May 25, 2016, the Department issued its decision regarding our disagreement over the HFA's 

downpayment assistance and premium pricing in the NOV A audit. The decision relied heavily 

on a HUD, Office of General Counsel, legal opinion that did not review the specific details or 

funding structure of borrower-financed down payment assistance programs. Instead, the legal 

opinion was meant to opine on HF As as permissible sources of downpayment assistance since 

they are government entities. We strongly disagree with this position because downpayment 

assistance provided or reimbursed indirectly by a party that benefits financially from the 

transaction is prohibited under statute and negatively affects the borrower. 

HUD's actions enabled questionable downpayment assistance programs. HUD's requirements, 

guidelines, and interpretations on downpayment assistance from government entities allow for 

increased risk to the FHA Single Family Mortgage Insurance program and have enabled the 

creation and growth of questionable borrower-financed down payment assistance programs. 

Current requirements and guidelines provide little oversight and give HFAs broad access to the 

FHA program that other entities do not have. For example, a comparison of Handbook 4155.1 

provisions in effect at the time of the OIG audits to the provisions in Handbook 4000.1 reveals 

major changes in policy. Handbook 4000.1 was modified to strictly define premium pricing and 

eliminated the prohibition on premium pricing as a source of funds for the borrower's minimum 

required investment that was in Handbook 4155.1. 

Summary iifO/G Work 

Audits conducted over the last 5 fiscal years related to FHA-insured loans have shown that a 

high percentage of loans reviewed should not have been insured because of significant 

deficiencies in the underwriting. OIG has noted HUD's financial exposure when paying claims 

on loans that were not qualified for insurance. Based on the results of an August 2014 audit, 

OIG determined that HUD did not always bill lenders for FHA single-family loans that had an 

enforceable indemnification agreement and a loss to HUD. In addition, OIG conducted two 

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audits22 of FHA-HAMP. One audit determined that HUD did not have an effective postclaim 

review function and did not have clear program guidance for the FHA-HAl\1P partial claim 

option. The second audit reported that HUD's claim payment system did not always identify 

ineligible FHA-HAMP partial claims. OIG's audit of delayed conveyances23 found that HUD 

paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey 

on time because it did not have adequate controls in place to ensure that servicers complied with 

Federal regulations. As a participant in the departmental clearance process, OIG noted that FHA 

did not always follow required departmental clearance procedures when issuing directives. In 

addition, with the update to the consolidated Handbook 4000.1, FHA made changes regarding 

premium pricing during the course of several OIG audits, which continues to raise concerns for 

OIG. Further, OIG issued three audit reports" on lenders' allowance of ineligible downpaymcnt 

assistance, highlighting HF As' use of a premium pricing structure that does not comply with 

FHA requirements and negatively impacts borrowers. 

Looking Ahead 

We continue to take steps to help preserve the FHA insurance fund and improve FHA loan 

underwriting by partnering with HUD, the U.S. Department of Justice, and multiple U.S. 

Attorney's offices nationwide in a number of FHA lender civil investigations; while continuing 

to monitor the FHA program. 

Community Planning and Development Programs 

Integrated Disbursement and Information System 

Due to HUD's continued use of the FIFO (first-in, first-out) method as an accounting 

methodology for appropriated funds 25 for committing and disbursing obligations for community 

planning and development formula grant programs for fiscal year 2014 and earlier grants, which 

does not comply with accounting standards, resulted in a material misstatement ofHUD's 

financial statements. BUD's plan to eliminate FIFO from its Integrated Disbursement and 

Information System (!DIS) Online was applied to fiscal year 2015 and future grants and not to 

grants for fiscal years 2014 and earlier. Since 2013, we have also reported that !DIS Online, a 

22 Audit Report 2015-LA-0003, HUD Did Not Have Effective Controls or Clear Guidance in Place for the FHAHAMP Partial Claim Loss Mitigation Option, September 18,2015, and Audit Report 2015-LA-0001, HUD's Claim 

Payment System Did Not Always Identify Ineligible FHA-HAMP Partial Claims, April 20, 2015 23 Audit Report 2017-KC-0001, FHA Paid Claims for Properties That Servicers Did Not Foreclose Upon or Convey 

on Time, October 14, 20 16 24 Audit Report 2015-LA-1010, loanDepot's FHA-Insured Loans With Golden State Finance Authority 

Down payment Assistance Gifts Did Not Always Meet HUD Requirements. September 30, 20 15; Audit Report 

20 15-LA-1 009, loan Depot's FHA-Insured Loans With Downpayment Assistance Funds Did Not Always Meet HUD 

Requirements, September 30, 2015; and Audit Report 2015-LA-1005, NOVA Financial & Investment Corporation's 

FHA-lnsured Loans With Downpayment Assistance Gifts Did Not Always Meet HUD Requirements, July 9, 2015 25 The FIFO method is a way in which CPD disburses its obligations to grantees. Disbursements are not matched to 

the original obligation authorizing the disbursement, allowing obligations to be liquidated from the oldest available 

budget fiscal year appropriation source. This method allows disbursements to be recorded under obligations tied to 

soon-to-be-canceled appropriations. 

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grants management system, was not designed to comply with Federal financial management 

system requirements and support the U.S. Standard General Ledger at the transaction level. We 

continue to take exception to not removing the FIFO methodology retroactively, which will 

continue the departures from generally accepted accounting principles and result in material 

misstatements on the financial statements. Use of the FIFO methodology contributed to the 

qualified audit opinion on HOD's financial statements in fiscal year 2013 and the disclaimer 

audit opinion issued in fiscal years 2014 and 2015, respectively. Therefore, lack of retroactive 

implementation will have implications on future years' financial statement audit opinions until 

the impact is assessed to be immaterial. Due to funding problems, completion of the elimination 

plan will be delayed until May 2017. Despite the changes made to !DIS thus far, additional 

modifications are necessary for the system to fully comply with the Federal Financial 

Management Improvement Act (FFMIA). 

Grant Accounting 

In fiscal year 2016, HOD's inability to provide data to monitor compliance with the HOME 

Investment Partnership Act (HOME statute) requirements for committing and spending funds 

will remain a concern until appropriate system changes in !DIS Online are implemented and 

regulatory changes are fully implemented. The HOME Investment Partnerships Program is the 

largest Federal block grant to State and local governments designed to create affordable housing 

for low-income households. Because HOME is a formula-based grant, funds are awarded to the 

participating jurisdictions noncompetitively on an annual basis. 

In 2009, OIG challenged HUD's cumulative method" for determining compliance with section 

218(g) of the HOME statute, which requires that any uncommitted funds be reallocated or 

recaptured after the expiration of the 24-month commitment deadline. After a continuous 

impasse with HUD, OIG contacted GAO in 2011 and requested a formal legal opinion on this 

matter. In July 2013, GAO issued its legal opinion, affirming OIG's position and citing HUD for 

noncompliance. In its decision, GAO repeated that the language in the statute was clear and that 

HOD's cumulative method did not comply with the statute. Accordingly, GAO told HUD to 

stop using the cumulative method and identify and recapture funds that remain uncommitted 

after the statutory commitment deadline. 

The effects of the GAO legal opinion require extensive reprogramming and modification to !DIS 

Online in addition to regulatory changes. However, these system and regulatory changes, which 

are already underway, will apply only to new grants awarded going forward and will not be 

changed retroactively. Therefore, HOD's plan does not comply with the GAO legal opinion and 

allows grantees to spend HOME program funding that would normally be recaptured if the 24-

month commitment timeframe was not met. 

Compliance with GAO's opinion would enable HUD to better monitor grantee performance in a 

more timely, efficient, and transparent way. It also would strengthen internal controls, bring 

26 HUD implemented a process, called the cumulative method, to determine a grantee's compliance with the 

requirements of section 218(g) of the statute and determine the amount to be recaptured and reallocated with section 

217(d). HUD measured compliance with the commitment requirement cumulatively, disregarding the allocation 

year used to make the commitments. 

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HUD into compliance with HOME statutory requirements, and accurately and reliably report 

financial transactions. 

On June 16,2015, we issued a memorandum to HUD regarding potential ADA violations due to 

the noncompliance issues noted above. In the memorandum, we requested that the Chief 

Financial Officer (I) open an investigation and determine the impact of FIFO and the cumulative 

method for commitments for the HOME program on HUD's risk of an ADA violation; (2) as 

part ofthe violation, obtain a legal opinion from GAO and OMB to determine whether 

maintaining the cumulative method for determining compliance with the HOME statute results in 

noncompliance with the statute and potential ADA violations; and (3) ifHUD incurred an ADA 

violation, comply with the reporting requirements at 31 U.S.C. (United States Code) 1351 and 

1517(b) and OMB Circular No. A-ll, Preparation, Submission. and Execution of the Budget, 

section 145 (June 21, 2005). HUD opened an ADA investigation in response to our 

memorandum with a target completion date of September I, 2016, which was later revised to 

October 24, 2016. 

We will continue to report that HUD is not in compliance with laws and regulations until the 

cumulative method is no longer used to determine whether commitment deadlines required by 

the HOME Investment Partnership Act are met by the grantees. 

Subgrantee Monitoring 

In fiscal years 2014 through 2016, at least 15 of our audits have found that in some instances, 

little or no monitoring occurred, particularly at the subgrantee level. HUD focuses its monitoring 

activities at the grantee level through its field offices. Grantees, in tum, are responsible for 

monitoring their subgrantees. HUD should continue to stress the importance of sub grantee 

monitoring to its grantees. OIG has concerns regarding the capacity of sub grantees receiving 

funding from HUD programs, including grantees receiving Community Development Block 

Grant Disaster Recovery (CDBG-DR) funds. Therefore, audits of grantees and their sub grantee 

activities will continue to be given emphasis this fiscal year as this continues to be a challenge 

for HUD and its grantees. 

Section 108 Loan Guarantee Program 

The Section I 08 Loan Guarantee program allows grantees of the CDBG program to borrow 

federally guaranteed funds for community development purposes. Section I 08 borrowers obtain 

up to five times the amount oftheir annual CDBG grants by pledging to repay Section I 08 loans 

with future CDBG grants in the event of a default. Section I 08 thus enables grantees to 

undertake substantially larger community development projects than CDBG grants alone would 

support. In May 2015, HUD conducted a public offering of Section I 08 guaranteed participation 

certificates in the amount of approximately $391 million. The offering consisted of 136 notes 

from 85 Section I 08 borrowers. 

HUD considers the program to be a success because there are no reported Section 108 loan 

defaults. However, this view provides a false sense of success about the Section 1 08 loan 

program. There are no reported defaults because borrowers generally use CDBG funds to make 

loan repayments when funded projects default, when no other source of project income is 

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available, or when there is a delay in the payment. As a result, the Federal Government bears 

100 percent of any losses, regardless of the success of the funded activity. 

Audits conducted by OIG for the period 2012 through 2016 identified serious deficiencies in the 

administration ofthe Section l 08 loan program that affected the effectiveness of the program. 

We found five Section 108loans in which Joan agreement provisions and HUD requirements 

were not followed, which resulted in more than $35.97 million in questioned funds. Borrowers 

did not ensure that Section 108-funded activities met a national objective of the CDBG program 

and fully provided the intended benefits. As a result, projects were incomplete or abandoned, 

and funds were used for ineligible and unsupported efforts. For example, one borrower 

transferred more than $6 million in Section I 08 loan proceeds to its general fund account as 

loans for its operations. In addition, loan proceeds were not disbursed within the established 

timeframe, borrowers did not provide HUD the required loan collateral, borrowers did not 

establish a financial management system in accordance with HUD requirements, and investments 

were not fully collateralized. Although HUD was aware of some of these deficiencies, none of 

the loans were declared in default. In one case, HUD allowed the noncompliance issues to 

continue for more than II years without raising a finding and providing corrective actions or 

imposing sanctions. 

OIG is concerned that these issues, in which more than $35.97 million was questiom:d because 

the loan provisions and HUD requirements were not followed, could have a negative impact on 

the CDBG program and an adverse effect on the Section 108 Loan Guarantee program 

objectives. Specifically, the use of HUD funds for efforts not related to the approved activities 

and projects that did not provide the intended benefits result in a waste of funds. 

OIG-CPD Collaboration 

Recently, OIG and HUD CPO began a joint collaboration to assist grantees and subgrantees in 

the areas in which OIG reported that grantees and subgrantees were most vulnerable. The work 

group determined that assistance should be provided in the following areas: 

• Procurement and contracting, 

• Subrecipient oversight, 

• Conflicts of interest. 

• Internal controls, 

• Documentation and reporting, and 

• Financial management. 

In addition, the Inspector General coauthored a joint letter with Harriet Tregoning, Principal 

Assistant Secretary, CPO, to State and local governments communicating our collaborative effort 

to encourage efficient operations and effective accountability for the best use oflimited 

resources. The work group began meeting to develop a series of "integrity bulletins'' aimed at 

providing the grantees and sub grantees with information to help safeguard program funds and 

ensure that communities get the full benefit of awarded funding. The bulletins on procurement 

and contracting, conflicts of interest, and subrecipient monitoring and oversight have been sent 

to grantees and subgrantees during fiscal year 2016, and the work group continues to draft the 

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remaining bulletins. In addition, the published bulletins are posted on our Web site at 

www.hudoig.gov/fraud-prevention. 

Summary (!f"OIG Work 

OIG took exception to HUD's not removing the FIFO methodology retroactively, which will 

continue the departures from generally accepted accounting principles and result in material 

misstatements on the financial statements. HUD's use of the FIFO methodology contributed to 

the qualified audit opinion and consecutive disclaimers of audit opinion issued on HUD's 

financial statements in fiscal years 2013,2014, and 2015, respectively. 

In fiscal years 2014 through 2016, at least 15 of our audits have found that in some instances, 

little or no monitoring occurred, particularly at the subgrantee level. HUD focuses its monitoring 

activities at the grantee level through its field offices. We have concerns regarding the capacity 

of subgrantees receiving funding from HUD programs, including grantees receiving CDBG-DR 

funds. 

Audits conducted by OIG for the period 2012 through 2016 identified serious deficiencies in the 

administration of the Section I 08 loan program that affected the effectiveness of the program. 

Further, HUD lacked assurance that funds were adequately accounted for, safeguarded, and used 

for authorized purposes and in accordance with HUD requirements. 

In an effort to assist grantees and subgrantees in the areas in which OIG audit reports determined 

the grantees and subgrantees were most vulnerable, HUD OIG has issued several integrity 

bulletins aimed at providing the grantees and sub grantees with information to help safeguard 

program funds and ensure that communities get the full benefit of awarded funding. OIG will 

continue to work with Harriet Tregoning, Principal Deputy Assistant Secretary, CPO, to 

encourage efficient operations and effective accountability for the best use of limited resources. 

Looking Ahead 

We will continue to monitor these issues and conduct audits as appropriate, related to HUD' s 

community planning and development activities. We are working with HUD through the 

management decision process to resolve the FIFO methodology and cumulative method 

recommendations. 

Public and Assisted Housing Program Administration 

·----·-------

HUD provides housing assistance funds under various grant and subsidy programs to public 

housing agencies (PHA) and multifamily project owners. These intermediaries, in tum, provide 

housing assistance to benefit primarily low-income households. PIH and the Office of 

Multifamily Housing Programs provide funding for rent subsidies through public housing 

operating subsidies and the tenant-based Section 8 Housing Choice Voucher and Section 8 

multifan1ily project-based programs. More than 3,300 PH As provide affordable housing for 1.1 

million households through the low-rent operating subsidy public housing program and for 2.2 

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million households through the Housing Choice Voucher program. Multifamily project owners 

assist more than 1.2 million households. The following challenges highlight the various issues 

faced by the Department: 

• Monitoring the Housing Choice Voucher program, 

• Central office cost centers, 

• Cash management requirements, 

Monitoring Moving to Work (MTW) agencies, 

• Overincome families in public housing, 

• Environmental review requirements, 

• The Indian Home Loan Guarantee program, 

Monitoring small and very small housing agencies, and 

• The physical condition of Housing Choice Voucher program units. 

Monitoring the Housing Choice Voucher Program 

HUD has a challenge in monitoring the Housing Choice Voucher program. The program is 

electronically monitored through PHAs' self-assessments and other sett:.reported information 

collected in PIH' s systems. Based on recent audits and HUD' s onsite confirmatory reviews, the 

self-assessments are not always accurate, and the reliability of the information contained in PIH 

systems is questionable. Due to its limited funding for new systems development and staffing 

constraints, PIH employs a risk-based approach to monitoring using its Utilization Tool and 

National Risk Assessment Tool. HUD will continue to face challenges in monitoring this 

program until it has fully implemented a reliable, real-time, and all-inclusive monitoring tool. 

Central Office Cost Centers 

PIH has a challenge in balancing its responsibility to protect HUD funds and streamlining 

activities to provide relief for PHAs. PHAs using a fee-for-service model pay a central office 

cost center for certain costs rather than allocating overhead costs. This practice impacts Housing 

Choice Voucher, Public Housing Operating Fund, and Public Housing Capital Fund program 

funds. Once paid to the central office cost center, the funds are defederalized and are no longer 

required to be spent on these programs. Ensuring that only the funds that are needed are 

transferred to the central office cost center will allow more funds to be used directly for the 

programs. HUD will develop rulemaking to ensure that Housing Choice Voucher, Public 

Housing Operating Fund, and Public Housing Capital Fund program funds are not defederalized 

when paid to the central office cost center. This measure will ensure that excess fees paid into 

the account will remain available to the program. HUD has also agreed to establish a process to 

regularly assess the reasonableness of the asset management fees. However, we continue to be 

concerned that we have not received justification regarding the need for an asset management 

fee. 

Our 2014 report27 found that HUD could not adequately support the reasonableness of operating 

fund management, book-keeping, and asset management fees and Public Housing Capital Fund 

management fee limits. In addition, HUD lacked adequate justification for allowing PH As to 

27 Audit Report 20 14-LA-0004, HUD Could Not Support the Reasonableness ofthe Operating and Capital Fund 

Programs' Fees and Did Not Adequately Monitor Central Office Cost Centers. June 30.2014 

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charge an asset management fee, resulting in more than $81 million in operating funds being 

unnecessarily de federalized annually. HUD continues its desire to maintain the fee-for-service 

model, which is similar to the model used by the Office of Multifamily Housing Programs. 

Cash Management Requirements 

In fiscal year 2012, PIH implemented procedures to reduce the amount of excess funds 

accumulating in PHAs' net restricted asset accounts in accordance with Treasury's cash 

management requirements as directed by a congressional conference report. By that point, a 

significant amount of reserves had accumulated with the PHAs. As of2015, most of the 

traditional PHA funds had been transitioned back to HUD, but HUD faced an additional 

challenge of quantifying and transitioning excess funds from its MTW program PHAs. This 

process was complex and time consuming because the composition of these balances included 

funding from other HUD programs and was not being tracked separately by HUD or the PHAs. 

During fiscal years 2015 and 2016, PIH worked with MTW PHAs to determine their 

accumulated balances. Through PIH's confirmation and validation process, MTW PHAs 

reported holding $466.5 million and $425.6 million, as of September 30, 2015, and March 31, 

2016, respectively. However, several PHAs reported that the amount they confirmed should not 

be transitioned for a variety of reasons, such as that the PHA used the accumulations as 

collateral, owed funds to other programs under the MTW program, or had upcoming 

commitments before the planned August transition. HUD evaluated each reason provided by the 

PHA to determine the proper amount available for transition and had transitioned $218 million 

back to HUD as of September l, 2016. We are in the process of evaluating the amount 

transitioned to determine whether it is adequate to satisfy cash management requirements. 

Adding to this challenge, HUD continues to lack an automated process to complete the 

reconciliations required to monitor all of its PHAs and ensure that Federal cash is not maintained 

in excess of immediate need. Reconciliations are prepared manually on unprotected Excel 

spreadsheets for more than 2,200 PHAs receiving approximately $17 billion annually. This 

process is time consuming and labor intensive and does not allow for accurate financial reporting 

at the transaction level as required by FFMIA. It also increases the risk of error and fraud and 

causes significant delays in the identification and offset of excess funding. We recommended 

that HUD automate this process during our 2013 financial statement audit, and the matter was 

elevated to the Deputy Secretary for a decision on March 31, 2015. We are still awaiting a 

response. 

Monitoring MTW Agencies 

HUD's monitoring and oversight of the 39 PHAs participating in the MTW demonstration 

program is particularly challenging. The MTW program provides PHAs the opportunity to 

develop and test innovative, locally designed strategies that use Federal dollars more efficiently, 

help residents become self-sufficient, and increase housing choices for low-income families. 

However, in the more than 20 years since the demonstration program began, HUD has not 

reported on whether the program is meeting its objectives. HUD is experiencing challenges in 

developing programwide performance indicators that will not inhibit the participants' abilities to 

creatively impact the program. In 2013, HUD management developed new metrics to help 

measure program performance and stated that new contracts would allow it to better evaluate 

each agency's performance. According to HUD, it has extensively engaged with the 39 MTW 

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PHAs to extend their agreements through 2028. In December 2015, the 2016 Consolidated 

Appropriations Act authorized HUD to expand the program to include an additional I 00 

participants over 7 years without knowing whether participating agencies are reducing costs to 

gain increased housing choices and incentives for families to work. We continue to believe that 

HUD could benefit from a fommlized process for terminating participants from the 

demonstration program for failure to comply with their agreement. 

Overincome Families in Public Housing 

HUD is challenged in addressing families having excessive income being allowed to continue 

to reside in public housing units, since HUD regulations require families to meet eligibility 

income limits only when they are admitted to the public housing program. Neither public law 

nor regulations limited the length of time that families could continue to reside in public 

housing regardless of their income. In December 2004, HUD issued a final rule giving PHAs 

discretion to establish and implement policies that would require families with incomes above 

the eligibility income limits to find housing in the unassisted market. Our 2015 audit found 

that as many as 25,226 families, whose income exceeded HUD's 2014 eligibility income limits, 

lived in public housing. The PHAs that we contacted during the audit chose not to impose 

limits based on the notice. 

As result of our work and after much public and congressional concern, legislation passed 

unanimously in both the U.S. House and Senate to address the issue, and the legislation was 

signed into law by President Obama in July 2016. The legislation requires PHAs to either evict 

overincome families after 2 consecutive years of exceeding the applicable income limitation or 

raise their rent to the applicable fair market rent for a unit in the same market area of the same 

size or the amount of the monthly subsidy of operating funds and capital funds used for the 

unit. It also requires PHAs to submit an annual report that specifies the number of families 

residing in public housing that had incomes exceeding the applicable income limitation and the 

number of families on the PHA's waiting lists for admission to public housing. HUD's Office 

of General Counsel is developing a plan for implementation that will include the creation of 

regulations through public involvement in the rulemaking process. 

Environmental Review Requirements 

HUD has a duty to ensure that its projects are free of environmental hazards. As a result of 

recent OIG reports,'' HUD began providing more training to staff and grantees and implemented 

processes to improve its training program and curriculum to better support all program areas. 

Also, HUD was piloting a recently developed electronic data system, HUD's Environmental 

Review Online System (HEROS), which is part ofHUD's transformation of IT systems. 

28 Audit Report 2015-FW-0001, Ht:D Did Not Adequately Implement or Provide Oversight To Ensure Compliance 

With Environmental Requirements, June 16, 2015; Audit Report 2014-FW-0005, Improvements Are Needed Over 

Environmental Reviews of Public Housing and Recovery Act Funds in the Detroit Office, September 24, 20 14; 

Audit Report 2014-FW-0004, Improvements Are Needed Over Environmental Reviews of Public Housing and 

Recovery Act Funds in the Greensboro Office. July 14. 20!4; Audit Report 2014-FW-0003, Improvements Are 

Needed Over Environmental Reviews of Public Housing and Recovery Act Funds in the Columbia Office, June 19. 

2014; Audit Report 2014-FW-0002. Improvements Are Needed Over Environmental Reviews of Public Housing 

and Recovery Act Funds in the Kansas City Office. May 12, 2014; and Audit Report 2014-FW-0001, The Boston 

Office of Public Housing Did Not Provide Adequate Oversight of Environmental Reviews of Three Housing 

Agencies, Including Reviews Involving Recovery Act Funds, February 7, 2014 

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HEROS will convert BUD's paper-based environmental review process to a comprehensive 

online system that shows the user the entire environmental process, including compliance with 

related laws and authorities. It will allow BUD to collect data on environmental reviews 

performed by all program areas for compliance. BUD's Office of Environment and Energy has 

also implemented an internal process within HEROS to track findings, which will allow the 

program areas to focus training on recurring issues. Risk-based compliance monitoring by 

BUD's field staff will target the highest risk PI-lAs and responsible entities based on identified 

factors and will result in improved compliance with environmental review requirements as well 

as align PIH with previously OIG-endorsed models within BUD. 

While BUD has made improvements, it faces several challenges, including a lack of resources, 

unclear guidance, and a perceived lack of authority to impose corrective actions or sanctions on 

responsible entities. Until BUD fully addresses these needed improvements, inadequate 

environmental reviews may contribute to an increased risk in the health and safety of the public 

and possible damage to the environment. For the five Office of Public Housing field offices we 

visited, PHAs spent almost $405 million for activities that either did not have required 

environmental reviews or had reviews that were not adequately supported. 

The Indian Home Loan Guarantee Program 

With annual increases in funding and the number of loans guaranteed, the Section 184 Indian 

Home Loan Guarantee program continues to be an area of concern. The Section 184 program is 

a great resource for the Native American community. However, the lack of controls, oversight, 

and enforcement increases the risk to the program. OIG recently completed an audit" detailing 

how the Office of Loan Guarantee did not provide adequate oversight of the Section 184 

program, resulting in an increased overall risk to the program. We found that BUD did not 

identify underwriting deficiencies in 3,845 guaranteed loans totaling more than $705 million. 

Given the lack of enforcement and the Office of Native American Programs' acknowledgement 

that there is significant room for improvement, there is continued risk for fraud, waste, and abuse 

within the Office of Loan Guarantee and at the lender level. This lack of oversight and high 

incidence of poorly underwritten loans has the potential to negatively impact the financial 

standing of Native American communities. BUD agrees that new or revised policies for its 

program would allow it to better track and monitor the loan guarantees. PIH is working to find 

an automated solution. 

Monitoring Small and Very Small Housing Agencies 

BUD faces challenges in monitoring PHAs when more than 2,000 of its 3,000 PI-lAs are small or 

very small. Since these Pl!As receive approximately 12 percent (or an estimated $732 million) 

of BUD's $6.1 billion in low-rent authorized funding, it creates oversight burdens and costs for 

both HUD and PHAs that are disproportionate to the number of families these Pl!As serve. In a 

recent report, 30 we found that a significant cause of the deficiencies identified in small and very 

small PHAs was that executive directors and boards of commissioners either chose to ignore 

requirements or lacked sufficient knowledge to properly administer their programs. HUD uses a 

29 Audit Report 2015-LA-0002. HU'D Did Not Provide Adequate Oversight of the Section 184lndian Home Loan 

Guarantee Program, July 6. 2015 30 Audit Report 2015-FW-0802, Very Small and Small Public Housing Agencies Reviewed Had Common 

Violations of Requirements. September 16,2015 

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national risk-based approach to identify PHAs that may have governance issues to provide direct 

support. In addition, in 2015, HUD launched an online training course, Lead the Way, which is 

designed to help PHAs' boards and staff fulfill their responsibilities in providing effective 

governance and oversight. However, we remain concerned that the administrators, board 

members, and local officials do not have the resources or information available to them to 

properly administer their programs. Further, we are concerned that without additional oversight 

or outreach, there is increased risk of fraud, waste, and abuse going undetected at these entities. 

In an effort to promote awareness, HUD OIG has issued several industry advisories that 

highlight areas of risky and illegal activities that jeopardize the integrity of otherwise legitimate 

housing programs. The advisories are posted on our Web site at www.hudoig.gov/fraudprevention. Several advisories were directly related to Pl{As and were emailed to executive 

directors. In addition, the Inspector General coauthored a joint letter with Lourdes M. Castro 

Ramirez, Principal Deputy Assistant Secretary, PIH, to PHAs communicating our collaborative 

effort to encourage efficient operations and effective accountability for the best use of limited 

resources. The letter also introduced Lead the Way, a training module for board members and 

executive staff. 

The Physical Condition of Housing Choice Voucher Program Units 

In response to a 2008 audit report," HUD developed a plan to monitor the physical condition of 

its Housing Choice Voucher program units. HUD is testing a system of inspections similar to 

the model used for its public housing units and multifamily projects. However, this testing, with 

an initial target completion date of September 30, 2014, is taking considerably longer than 

expected. HUD has performed initial inspections of more than 30,000 voucher units. However, 

it needs resources to continue developing the new protocol and related software for its 

comprehensive monitoring system. A demonstration program has been developed to implement 

the revised protocol. Meanwhile, we continue to identify PHAs with inspection programs, which 

do not ensure that voucher program units comply with standards. 

Our 2008 audit report found that HUD did not have adequate controls to ensure that its Section 8 

housing stock was in material compliance with housing quality standards. This condition 

occurred because HUD had not fully implemented its Section 8 Management Assessment 

Program. As a result, it could not ensure that the primary mission of the Section 8 program, 

paying rental subsidies so that eligible families can afford decent, safe, and sanitary housing, was 

met. In addition, HUD's lack of knowledge regarding the condition of its Section 8 housing 

stock resulted in inflated performance ratings for PHAs administering the program. As a result, 

HUD routinely rated some agencies as being high performers when a significant percentage of 

the units they administered were in material noncompliance with housing quality standards. We 

also continue to audit the physical condition of Housing Choice Voucher program units. 

Summary t~lOIG Work 

In recent audit reports, we demonstrated that PIH continues to face challenges in ( 1) monitoring 

the Housing Choice Voucher program, (2) balancing its responsibility to protect HUD funds and 

streamlining activities to provide relief for PHAs, (3) fully implementing cash management 

31 Audit Report 2008-AT-0003, HUD Lacked Adequate Controls Over the Physical Condition of Section 8 Voucher 

Program Housing Stock. May 14, 2008 

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requirements, (4) developing programwide perfom1ance indicators that will not inhibit the MTW 

participants' abilities to creatively impact the program, (5) addressing families having excessive 

income being allowed to continue to reside in public housing units, (6) ensuring that PHA 

projects are free of environmental hazards, (7) providing adequate oversight of the Section 184 

program, (8) monitoring small and very small PHAs, and (9) ensuring that its Section 8 housing 

stock was in material compliance with housing quality standards. 

In an effort to promote awareness, HUD OIG has issued several industry advisories that 

highlight areas of risky and illegal activities that jeopardize the integrity of otherwise legitimate 

housing programs and will continue to work with Lourdes M. Castro Ramirez, Principal Deputy 

Assistant Secretary, PIH, to encourage efficient operations and effective accountability for the 

best use of limited resources. 

Looking Ahead 

We will continue to work with and monitor HUD's actions to address challenges in these areas. 

We will continue to audit PHAs to identify other areas of concern that may arise. 

Administering Programs Directed Toward Victims of Natural 

Disasters 

Congress has frequently provided supplemental appropriations through BUD's CDBG program 

to help communities recover from natural and man-made disasters. The CDBG program is 

flexible and allows CDBG-DR grants to address a wide range of challenges. Congress has 

appropriated more than $4 7 billion in supplemental funding to HUD since 1993 to address longterm recovery in the wake of the attacks of September II, 200 I; Hurricanes Katrina, Rita, and 

Wilma in 2005; Hurricanes Ike and Gustav and Midwest flooding in 2008; and Hurricane Sandy 

in 2012. Most CDBG-DR funding is available until spent, with the exception ofthe Hurricane 

Sandy funding, which must be obligated by the end of fiscal year 2017. 

Although HUD has made progress in recent years with assisting communities recovering from 

disasters, it faces several management challenges in administering these grants. Based on our 

prior and current audits, we identified the following challenges for the Department regarding the 

disaster recovery program: 

• Ensuring that expenditures are eligible and supported, 

• Certifying that grantees are following Federal procurement regulations, 

• Conducting consistent and sufficient monitoring efforts on disaster grants, and 

• Keeping up with communities in the recovery process. 

Ensuring That f:xpenditures Are IWgible and Supported 

The Department faces significant challenges in monitoring disaster program funds provided to 

various States, cities, and local governments under its authority. This challenge is particularly 

pressing for HUD because of the limited resources to directly perform oversight, the broad 

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nature ofHUD projects, the length of time needed to complete some of these projects, the ability 

of the Department to waive certain HUD program requirements, and the lack of understanding of 

disaster assistance grants by the recipients. HUD must ensure that the grantees complete their 

projects in a timely manner and use the funds for their intended purposes. Since HUD disaster 

assistance may fund a variety of recovery activities, HUD can help communities and 

neighborhoods that otherwise might not recover due to limited resources. However, oversight of 

these projects is made more difficult due to the diverse nature of HUD projects and the fact that 

some construction projects may take between 5 and I 0 years to complete. HUD must be diligent 

in its oversight to ensure that grantees have identified project time lines and are keeping up with 

them. HUD also must ensure that grantee goals are being met and that expectations are 

achieved. 

OIG has completed 23 audits and I evaluation as well as investigation-related actions relating to 

CDBG-DR funding for Hurricane Sandy and other eligible events occurring in calendar years 

2011, 2012, and 2013. We have identifted $3.8 million in ineligible costs, $482 million in 

unsupported costs, and $5.2 billion in funds put to better use. There are a number of other audits 

and evaluations as well as investigative work, which are currently underway. Before Hurricane 

Sandy, OIG had extensive audit and investigative experience with HUD's CDBG-DR program, 

most notably with grants relating to recovery after Hurricane Katrina and the terrorist attacks of 

September II, 2001. While over the years, HUD has gained more experience and has made 

progress in assisting communities recovering from disasters, it continues to face challenges in 

administering these grants. 

HUD faces a significant management challenge to ensure that funds disbursed for disaster 

recovery programs are used for eligible and supported items. We have highlighted three audit 

reports that illustrate these challenges for HUD in administering disaster recovery programs. 

In our review of New York State's Small Business Grants and Loans program," we 

determined that State officials did not establish adequate controls to ensure that CDBGDR funds were disbursed for eligible costs. As a result, the State disbursed $272,459 in 

CDBG-DR funds for ineligible costs and $152,703 for unsupported costs. In addition, 

State officials did not adequately ensure that $300,000 was disbursed to eligible 

businesses and that ineligible costs could be promptly recaptured. 

• In our review of Luzerne County's Disaster Recovery grant program, 33 we determined 

that County officials did not ensure that subrecipients followed procurement requirements 

and lacked documentation to support funds disbursed for a building rehabilitation project. 

As a result, HUD and County officials did not have assurance that $227,243 disbursed for 

contracts related to street improvements and flood drainage facilities was spent for costs 

that were fair and reasonable and that $109,423 disbursed for a building rehabilitation 

project was used in accordance with HUD and Federal requirements. 

30 Audit Report 20 16-NY -1006, New York State Did Not Always Disburse Community Development Block Grant 

Disaster Recovery Funds in Accordance With Federal and State Regulations, March 29.2016 33 Audit Report 2016-PH-1004, Luzerne County, PA, Did Not Always Use Disaster Funds in Accordance With 

HUD and Federal Requirements. June 18, 2016 

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In our review of Rhode Island's Disaster Recovery grant program,34 we found that State 

officials generally obligated and disbursed Sandy funds in a timely manner in accordance 

with HUD rules and regulations. However, State officials obligated $127,750 for one 

project without performing an adequate duplication of benefits analysis and cost analysis 

before procuring rehabilitation services. 

W c attributed these conditions to the grantees' weaknesses in maintaining file documentation, 

unfamiliarity with HUD rules and regulations, and failure to follow State and Federal 

procurement regulations. 

CertifYing That Grantees Are Following Federal Procurement Regulations 

We continue to have concerns about HUD's ability to ensure that disaster grantees are following 

Federal procurement regulations. Grant recipients ofHUD CDBG-DR funds must provide a 

copy of their procurement standards and indicate the sections of their procurement standards that 

incorporate the Federal standards. The State and its subgrantees may follow their own State and 

local laws, so long as the procurements conform to applicable Federal law and standards. 

Further, a State must establish requirements for procurement policies and procedures based on 

full and open competition. In addition, all subgrantees of a State are subject to the procurement 

policies and procedures required by the State, so long as the procurements conform to applicable 

Federal law and standards. In our recent audit of the State of New Jersey's CDBG-DR 

Superstorm Sandy Housing Incentive Program,35 auditors found that the State did not prepare an 

independent cost estimate and cost analysis before receiving bids or proposals and awarding the 

contract. These conditions occurred because the State did not have adequate controls in place to 

administer its contract and monitor contract performance. Further, it was not fully aware of 

applicable Federal procurement and cost principle requirements. As a result, HUD did not have 

assurance that the $43.1 million disbursed under the contract was for costs that were reasonable 

and necessary. 

Our audits of disaster programs found CDBG procurement violations and other contracting 

problems. For example, in a recent internal audit of HUD's controls over its certifications of 

State disaster recovery grantee procurement processes, 36 we found that HUD did not always 

provide accurate and supported certifications of State disaster grantee procurement processes. 

Specifically, HUD (I) allowed conflicting information on its certification checklists, (2) did not 

ensure that required supporting documentation was included with the certification checklists, and 

(3) did not adequately evaluate the supporting documentation submitted by the grantees. As a 

result, HUD did not have assurance that State grantees had sufficient procurement processes in 

place, and the Secretary's certifications did not meet the intent ofthe Disaster Relief 

Appropriations Act of 20 l3. 

·

14 Audit Report2016-B0-1001, The State of Rhode Island Generally Administered Its Community Development 

Block Grant Disaster Recovery Assistance Grant in Accordance With Federal Regulations, March 09,2016 

"Audit Report 2016-PH-1009, State ofNJ's CDBG DR "Superstorm Sandy Housing Incentive Program." 

September 30,2016 

Audit Report 2016-PH-0005, HUD Certifications of Disaster Procurement Processes, September 29,2016 

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Conducting Consistent and Sufficient Oversight F:fforts on Disaster Grants 

Another area of concern is HUD's ability to properly monitor all disaster grant recipients. Based 

on our fiscal year 2015 financial statement audit, we communicated to HUD that it did not 

always monitor disaster grants in accordance with its policies and procedures. Specifically, 

monitoring reports were not issued in a timely manner, and followup on monitoring findings was 

not performed consistently or in a timely manner. As reported in prior years, HUD faces 

difficulties in timely report issuance and monitoring of disaster program funds because of limited 

resources to perform the oversight and an aggressive monitoring schedule for Hurricane Sandy 

grantees. The inconsistent nature of the disaster recovery programs and HUD's intense workload 

continued to surpass its efforts to mitigate its challenges and conduct its work in a timely 

manner. Since HUD disaster assistance may fund a variety of recovery activities, HUD can help 

communities and neighborhoods that otherwise might not recover. However, HUD must be 

diligent in its oversight duties to ensure that grantees have completed their projects in a timely 

manner and that they use the funds for their intended purposes. Untimely resolution of grantee 

performance and financial management issues increase the programs' susceptibility to instances 

of fraud, waste, abuse, and mismanagement of funds. 

Challenges in Administering I>isaster Programs 

Keeping up with communities in the recovery process is challenging for HUD. Congress has 

appropriated $47 billion to HUD since fiscal year 1993 for disaster assistance. Of the active 

disaster grants, HUD has more than $36 billion in obligations and $33 billion in 

disbursements. Although in some cases, many years have passed since the specific disaster 

occurred, significant disaster funds remain unspent. Thus, HUD must ensure the timely 

expenditure of funds, compliance with procurement requirements, and timely oversight efforts. 

Summary ofO/G Work 

Our audit reports exposed the challenges for HUD in administering disaster recovery programs. 

They highlighted CDBG procurement violations and other contracting problems. Also, the 

reports illustrated grantee control problems with ineligible and unsupported cost items. As 

reported in prior years, HUD faces difficulties in timely report issuance and monitoring of 

disaster program funds because of limited resources to perform the oversight and an aggressive 

monitoring schedule for Hurricane Sandy grantees. 

Looking Ahead 

We will continue our audit, investigative, and evaluation work regarding HUD's disaster 

recovery activities, including (I) the timely expenditure of funds, (2) compliance with 

procurement requirements, and (3) timely oversight etTorts. 

Departmental Enforcement 

A common thread underlying several of the issues discussed earlier is the lack of a cohesive 

departmental approach to monitoring, risk management, and follow-through for OIG findings 

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and recommendations. In an evaluation" we conducted on the effectiveness of the 

Departmental Enforcement Center (DEC). we found that the Department does not have an 

enterprise risk management approach to monitoring. Its monitoring is, for the most part, 

contained in each program office, and the approaches and results differ greatly. 

While there were some successes, a much greater task lies ahead. DEC, working with the 

Office of Multifamily Housing Programs and the Real Estate Assessment Center, had improved 

housing physical conditions and financial management of troubled multifamily properties. 

Although some other program offices had taken steps toward risk-based enforcement, they had 

not taken full advantage ofthe benefits demonstrated when programs allow DEC to assess 

compliance and enforce program requirements. DEC proved that it can remedy poor 

performance and noncompliance when programs are willing to participate in enforcing program 

requirements. 

DEC was established in part to overcome a built-in contlict of roles. The HUD management 

reform plan stated that program offices had a conflicting role in getting funds to and spent by 

participants versus holding them accountable when fraud or mismanagement of the funds 

occurs. However, memorandums of understanding between DEC and the program offices, for 

the most part, limit DEC's ability to monitor, report, and take action to end noncompliance. 

While the Offtce of General Counsel disagreed with much of our report, it is working with the 

program offices to strengthen the memorandums of understanding. However, we emphasize 

that new agreements need to give DEC clear and increased enforcement authority for it to be 

effective as a separate entity. 

Summary ofOIG Work 

We conducted an evaluation of the effectiveness of DEC and found that the Department does not 

have an enterprise risk management approach to monitoring. Its monitoring is, for the most part, 

contained in each program office, and the approaches and results differ greatly. 

Looking Ahead 

We will continue to evaluate the Department's approach to monitoring, risk management, and 

follow-through for oro findings and recommendations. 

---------·----------

Operational and Financial Reporting Challenges Affecting Ginnie 

Mae 

Managing counterparty risks and strengthening Ginnie Mae's financial management 

accountability have been and continue to be the major challenges affecting Ginnie Mae in fiscal 

year 2016 and in the coming years. Key factors that contributed to these challenges include the 

37 Evaluation Report 20 15-0E-0004, Comprehensive Strategy Needed To Address HUD Acquisition Challenges, 

February 2, 2016 

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rise of nonbanks, lack of resources, inadequate financial systems, and lack of a fully functioning 

financial management governance framework, 

Managing Counterparty Risks 

Ginnie Mae mortgage-backed securities (MBS) are the only securities to carry the full faith and 

credit guaranty of the United States Government. If an issuer fails to make the required passthrough payment of principal and interest to MBS investors, Ginnie Mae is required to assume 

responsibility for it. In the aftermath of the 2008 financial crisis, a number of regulated banks 

have retreated from securitizing mortgages, and in this vacuum, the ranks of nonbank institutions 

have increased. As of today, 7 of 10 Ginnie Mae issuers are nonbanks. Unlike regulated banks, 

these entities lack a primary prudential regulator to ensure their safety and soundness. Also, 

these entities are not as well capitalized as regulated banks. Thus, Ginnie Mae has to mitigate 

these risks with greater oversight and resources dedicated to nonbank compliance, resources 

Ginnie Mae does not have. In the near term, these changes have strained both its operating and 

financial resources. 

Historically, Ginnie Mae issuer defaults have been infrequent, involving small- to medium-size 

issuers. However, major unanticipated nonbank issuer defaults, like Taylor, Bean & Whitaker 

Mortgage Corporation in 2009, have led to a multi-billion-dollar rise in Ginnie Mae's mortgage 

servicing as well as its repurchase of billions of dollars in defaulted loans to meet its guarantee to 

the MBS investors. In 2016, Ginnie Mae was exposed to a 5-year, $7.5 million mortgage fraud 

scheme executed by a small long-term issuer. The issuer exploited a flaw in the issuer buyout 

program by defaulting loans it serviced, buying the delinquent loans out of the pool, and 

resecuritizing them. 

Financial Reporting Challenges 

Although Ginnie Mae has made progress in financial management governance issues in fiscal 

year 2016, there remain significant issues that warrant the attention of Ginnie Mae's 

stakeholders. 

For the third year in a row, our annual financial statement audit of Ginnie Mae received a 

disclaimer of opinion due to its nonpooled loans assets (NPA) being unauditable. This year, 

Ginnie Mae acknowledged that the NP A balances are not supportable and not in accordance with 

generally accepted accounting principles. Ginnie Mae has reengaged its financial reporting and 

audit readiness contractor to assist in the development of its loan-level accounting system and 

related infrastructure. 

With the approval ofOMB and Congress, Ginnie Mae has significantly increased its 

management capacity. The total number of Ginnie Mae full-time employees increased from 89 

in fiscal year 2012 to 130 at the end of fiscal year 2015. However, Ginnie Mae continues to have 

issues with staffing. Some personnel were hired in 2016 on a rolling basis. Of the 17 positions 

identified during the fiscal year, 7 were still unfilled as of mid-August. Ginnie Mae continues to 

rely heavily on third-party contractors to perform almost all key operating loan servicing, pool 

processing, and other functions. It is vital to the country's larger financial health that Ginnie 

Mae be able to significantly increase staffing and benefit from a pay structure that will allow it to 

34 
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attract and hire individuals with the needed skills, knowledge, and abilities to manage a $1.6 

trillion program. 

In fiscal year 2016, Ginnie Mae revamped a majority of its existing accounting policies and 

procedures, which have not been updated for many years, to comply with changes in generally 

accepted accounting principles among other things. Ginnie Mae has not finalized all of its 

accounting policies, and the accounting procedures are still in process. Currently, 5 of the 20 

policies have been finalized. The remaining guidelines are in various stages of development. 

Therefore, the underlying accounting problems that are preventing Ginnie Mae from obtaining a 

clean audit opinion will continue until the accounting policies and procedures have been 

finalized and fully implemented and Ginnie Mae is appropriately staffed with the needed skills to 

manage its accounting requirements. 

Summary ofOIG Work 

We identified significant financial governance issues within Ginnie Mae. In fiscal year 2015, 

Ginnie Mae failed to maintain a governance framework that allowed appropriate policies, people, 

systems, and controls to ensure the reliability and integrity of Ginnie Mae's financial and 

accounting information. 

Looking Ahead 

Ginnie Mae will continue to face challenges in this dynamic environment due to the shift in its 

business model. Ginnie Mae and HUD have yet to adequately respond to this new concept and 

properly mitigate these risks by implementing a sound infrastructure and control environment. 

Ginnie Mae has stated that it would require a significant investment in technology, infrastructure, 

and people spanning multiple years to make its significant financial assets auditable. HUD and 

Ginnie Mae need to engage with Congress to lay out priorities, accelerate needed human capital 

and infrastructure improvements, and mitigate risks faced by the entity. 

Conclusion 

HUD will continue to face the challenges we have described until it puts controls and adequate 

resources in place to provide the necessary oversight and enforcement ofHUD's programs and 

operations. We remain committed to working collaboratively with HUD and will continue to 

strive to provide best practices and reasonable recommendations that support HUD's mission and 

responsibilities. 

35 
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Chairman DIAZ-BALART. Thank you very much, sir. We, obviously, have many issues to talk about and I know that a lot of 

members have questions. 

Members, we will proceed in the standard 5-minute rounds, alternating sides, recognizing members in order of seniority as they 

were seated at the beginning of the hearing. We will try to move 

quickly so everyone can get their questions in. 

Be mindful of your time. Obviously, the 5 minutes includes not 

only your questions, but also the answer time. And I will, by the 

way, adhere to that as well. So I will be mindful of that as well. 

Let me start, Inspector Montoya, with you. For several years 

now, and you mentioned it right now in your testimony, that your 

office has been—well, frankly, has had to express disclaimers on 

HUD’s consolidated financial statements. Every Federal agency 

should be able to produce financial statements that meet audit 

standards, but this is, obviously, especially important for a financial institution like HUD. 

As simply as you can, if you can please provide the committee 

with an update on the state of financial grievances and governance, 

the governance issue at HUD, if you would? 

Mr. MONTOYA. I will do my best to keep it under an hour and 

a half. 

Chairman DIAZ-BALART. And simple, right? 

Mr. MONTOYA. And simple. I will do my best. 

Chairman DIAZ-BALART. Of course. 

Mr. MONTOYA. Thank you, Mr. Chairman. I think I would sort 

of roll this all up into one quick phrase and that is a failure of leadership at all levels. Having said that, this is a good example of the 

interdependencies and interrelationships of the many programs 

that HUD faces. 

Let us start with human capital. They do not have the appropriate skills, knowledge, and expertise to prepare Federal financial 

statements. That is different from budget process. You couple that 

human capital concern that HUD has had for a number of years, 

and you overlay that onto the dependency on IT systems that, in 

many cases, were never designed to handle financial management 

processes, they are aging, and you end up with a confluence of the 

problems that you see, right, lack of internal controls and then lack 

of systems that can provide the relevant information that they 

need. That is the shortest answer I can give you. 

With regards to the failure of leadership, I do not think for several administrations now there has been a real look at prioritizing 

the type of skill sets and the personnel they need to get to address 

these many issues, not only in the financial management internal 

controls area, but also in their IT, security, and infrastructure. 

Chairman DIAZ-BALART. Let me try to see if I can get you to specifically, if you can, comment on HUD’s use of internal controls regarding its financial statements. 

Mr. MONTOYA. Well, the problem with the Department is it is 

heavily siloed. So most of the financial accounting processes are not 

centered into the Chief Information Officer. They are basically left 

to the various programs, and in many cases these programs do not 

understand general accounting principles, if you will. 
184

And so often they are putting systems into place that do not comport with Federal financial management. And so when you go to 

roll the systems up for the financial statements, we see a number 

of areas where there are mistakes, if you will. 

Chairman DIAZ-BALART. You know, that is, obviously, extremely 

disappointing and it is not the first time that we have heard this 

kind of thing. It is a persistent problem at HUD. Now, I think most 

of us would agree that what makes it more difficult, actually more 

alarming, is that HUD has been without a Chief Financial Officer 

(CFO) for more than 18 months. So, you know, I do not know how 

an agency can deal with all these issues without having a qualified 

CFO.

And so can you briefly discuss what is happening there, and also 

what gaps do you think HUD needs to fill to tackle some of these 

problems that you have mentioned? 

Mr. MONTOYA. Yes, sir. They have, in fact, have been without a 

CFO for quite some time. I would say that out of their nine senior 

accounting positions only two of them, at best, have an accounting 

background, let us say a certified public accounting type of certification. A lot of them are budget-related type backgrounds. But, 

again, that is different from Federal financial management. And so 

that is problem number one and goes back to my earlier statement 

that they do not understand the intricacies of the systems they 

oversee.

The best example is this idea that somebody could approve to 

round to the nearest billion and hundred billion when all that is 

allowed is a million. 

Chairman DIAZ-BALART. Yeah, that is insane. 

Mr. MONTOYA. So you understand how the numbers get crazy. 

Chairman DIAZ-BALART. That is insane. 

Mr. MONTOYA. Yes, sir. 

Chairman DIAZ-BALART. And I am trying to be kind. 

Mr. MONTOYA. I would not disagree with you, sir. And that goes, 

again, to the lack of experience and knowledge that you need in a 

CFO’s office to prepare the statements. 

I will give you an example, if you will bear with me for a second 

here. So the assistant chief financial officer for accounting has an 

MBA in finance, but that does not necessarily relate to the accounting principles that individual needs to know. So I think that would 

be my biggest concern is, again, the failure of leadership to get 

these positions filled and get them filled with the appropriate 

skilled staff. 

Chairman DIAZ-BALART. In the 14 seconds that I have, the fact 

that they have not prioritized filling the CFO position, to me, does 

it take 18 months usually? 

Mr. MONTOYA. I would not think so, sir. But apparently it has 

here.

Chairman DIAZ-BALART. Thank you, sir. 

Mr. Price, you are recognized, sir. 

Mr. PRICE. Thank you. I would like to ask both of you to address 

conflicts of interest and how your offices deal with them, what your 

responsibility is, and a couple of more detailed aspects of that. Of 

course, this is especially a challenge as we start a new administration, hundreds of new personnel come into the departments to fill 
185

important positions. These individuals bring experience from outside government. 

With that comes, of course, the risk of conflicts of interest. Such 

conflicts become a focus of Senate confirmation hearings, so Cabinet-level nominees. But the scrutiny, of course, has to go beyond 

that and that is where, I assume, your offices come in. 

So what role do the inspector general offices play in investigating 

conflicts of interest, assessing the effectiveness of the Department’s 

existing processes to deal with conflicts of interest? How are these 

concerns brought to your attention, typically? What responsibility 

do you have to deal with them? Are you free to initiate inquiries 

before a complaint is registered? And then how do you handle potential conflicts of interest after a senior officer is confirmed? Do 

you proactively review ethics filings? You see where I am going? I 

would appreciate your elaborating as much of this as time permits. 

Mr. SCOVEL. Thank you, Mr. Price. Let me take a stab at it from 

the perspective of the Department of Transportation. Our Office of 

Inspector General (OIG) takes its responsibility to investigate allegations of conflict of interest most seriously, and over the years we 

have done so with some notable successful investigations and prosecutions.

We receive allegations from many different sources, oftentimes 

through our Hotline, oftentimes through information that is presented by other Federal employees, frankly, to our field officers, our 

field investigative offices. And in some instances our field offices 

are colocated with other Department offices, and so staff get to 

know staff and generates that kind of understanding and trust so 

that we will come by interest might exist. 

Through our investigative resources we will pursue as quickly 

and as thoroughly as possible any allegation of a conflict that rises 

potentially to the level of a crime. We are under obligation as well, 

as an OIG, to inform the FBI in every case where public corruption—and that is one of the acknowledged and longstanding focuses 

of interest on the part of the FBI—where any allegation of public 

corruption might be involved. And together we will investigate 

these cases. 

I have referred to a couple of notable examples, one dating back 

some years now, but it involved the Deputy Administrator at the 

Federal Railroad Administration (FRA), and allegations that she 

had improper business relationships with other associates in the 

industry, business and personal relationships. 

Much more recently than that we investigated and arrested and 

secured a conviction, with the assistance of the U.S. Attorney’s Office in the District of New Jersey, of the number-two Federal Highways official for the State of New Jersey. He was alleged to have 

engaged in conduct that amounted to a conflict of business interest 

between what he was supposed to be doing for the Department and 

the government and what he was doing on the side as well. 

We also review with the Department, and the Department has 

a standing obligation, the Department’s agency ethics officials have 

a standing obligation, to refer to us any matters that they have 

questions about. And occasionally we will get information through 

those sources, too. 
186

So, to sum it up, sir, we take it most seriously. We have a proven 

track record. We will continue to keep our eyes open, and, in fact, 

we have a couple of inquiries open at the moment that I am not 

at liberty to discuss in a setting like this. But I hope I can reassure 

you that we do understand that to be one of our prime responsibilities.

Mr. PRICE. Thank you. Mr. Montoya? 

Mr. MONTOYA. Yes, Mr. Price. We, like Inspector General Scovel, 

do take the matters seriously. We have a proven track record as 

well at looking at conflicts of interest. On several occasions we 

have found that they are unfounded and we move on. Several cases 

we have found issues. 

One in particular had to do with the deputy secretary some years 

ago on a lobbying issue. I believe in that case he was ill-served by 

the Office of Ethics for the Department. And I think that within 

the Office of Ethics in the Department I would not have any confidence in them, sir. They have proven time and time again that 

they do not have, I guess, the ability to speak truth to power, if 

you will, and to make the tough calls when necessary. 

As an example, they referred a matter to us of an ex-employee 

who may be lobbying, if you will, back into the Department, having 

business with the Department that they should otherwise not have. 

When we go back to them with our findings and the results, because they are the ones that have to make the determination as 

to whether there has been an ethics violation, they do not want to 

make that determination and that troubles me that they will not 

want to make the determination. 

We had another example having to do with the interpersonal act, 

hiring appointments, where an individual from the regulated community was brought into the Department in a high-level position, 

and the Office of Ethics was nowhere to be found when it came to 

not only this individual’s financial disclosure reports, but talking to 

the Secretary and the Deputy Secretary about what this person 

should or could do while they were in the Department. 

Now, in fairness to them, I think any Office of Ethics within a 

department or agency should have some degree of organizational 

independence. It is that organizational independence, maybe not so 

much like an IG, but certainly some independence that would keep 

them from having concerns of fear of reprisal and conflicts themselves with the folks that they have to serve. 

I think in our case, they do not ask the relevant questions. They 

do not dig deep. They take at face value what the individual says 

and they leave it at that. 

Chairman DIAZ-BALART. If I may? 

Mr. MONTOYA. Yes, sir? 

Chairman DIAZ-BALART. Because our time has run out. But, Mr. 

Price, I think you have touched on a very important issue that we 

need to further look into. Thank you. 

Mr. PRICE. Yes. We will pick it up later. Thank you very much. 

Mr. MONTOYA. Absolutely. Thank you, sir. 

Mr. PRICE. Absolutely. 

Chairman DIAZ-BALART. Mr. Young, you are recognized, sir. 
187

Mr. YOUNG. Thank you, Mr. Chairman, Ranking Member Price, 

and my colleagues. Good morning. Gentleman, thanks for coming 

today.

Mr. Montoya, thanks for your testimony. And the issue of the financial statements, the auditing, the lack of understanding key information that should be there, the human capital issue, I appreciate the chairman’s attention to this and I know my other colleagues on both sides want to try to get to the bottom of this and 

fix this because it is a very frustrating situation. 

In your testimony you shared since 1991 the OIG has reported 

a lack of a integrated financial management system. How long 

have they been using the same integrated financial management 

system? And how does that dovetail with the computer systems as 

well? So you have a process and then you have, I guess, a product. 

Do they match up? Just talk a little bit about that. 

Mr. MONTOYA. So a lot of their IT systems are 15 to 30 years old. 

Mr. YOUNG. Okay. Wow. 

Mr. MONTOYA. Many of them were not designed to handle Federal financial management processes. That is the first troubling 

part.

The other issue, I would say, and I have a great example here— 

well, let me talk about the fact that these problems, not all the IT 

issues, but the human capital and the financial management processes, are problems that are going to take years to correct, sustained leadership not only from Congress, but the administration, 

a commitment to really correct these problems. And absent any 

kind of a budget shortfall or cut, these are still things that are 

going to be resonating and still issues that they are going to have 

to deal with. 

Probably one of the best examples I can give you is just the lack 

of systems to handle some of these financial management processes. It is within the Office of Public and Indian Housing there is 

a lack of an automated process to complete the reconciliations required to monitor the public housing authorities and to ensure Federal cash, mind you, that is not maintained in excess of the immediate need. These reconciliations are prepared manually on unprotected spreadsheets. So for over 2,200 public housing authorities receiving $17 billion annually, they manage this on an Excel spreadsheet.

So you can see that when we talk about implementing IT systems that can handle these types of accounting issues, it becomes 

very critical. 

Mr. YOUNG. I want to get to a few of your recommendations. 

Would you recommend having an integrated technology system 

that was up to date, but as well when it comes to the human capital issue and the Office of the CFO, ensuring that the people coming in there—like you said, I think there was only 2 of the 10 

maybe had accounting backgrounds. Is that what you said? 

Mr. MONTOYA. Yes, sir. 

Mr. YOUNG. Okay. What can Congress do to help you with that? 

To help ensure that those who are coming into those positions have 

the appropriate backgrounds. I mean, do we go as far as not just 

recommending, but mandating that those within that office have 

an accounting degree? I mean, how far do we go? Because we have 
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to make this work. This is not about attacking HUD. This is about 

ensuring the taxpayer dollars are spent wisely and the programs 

are effective. 

Mr. MONTOYA. Yes, sir. Thank you. Well, to be clear, I think in 

some of these high-level positions, high-leadership positions, you do 

not necessarily have to have the accounting degree, but you should 

surround yourself with people that have the requisite skills. You 

should be willing to listen to them and to provide you advice and 

counsel.

In the area of let us talk about Ginnie Mae, the General National 

Mortgage Association or the Government National Mortgage Association. They are handling a $1.7 trillion portfolio. By the end of 

the year that will be about $2 trillion. They do not have the infrastructure, again the IT systems or the personnel, to handle the security processes they have to handle in the markets that they have 

to deal with every single day. I think in their particular case, I 

think Congress and the administration need to think about a different pay scale, quite frankly, not one consistent with Fannie Mae, 

for example, where the CEO makes $1 million a year, but maybe 

something on the order of what the Federal Housing Finance Agency or CFPB or the SEC and some of these other governmental 

agencies make in order that the salaries are high enough to entice 

the right type of personnel. Often Ginnie Mae loses good candidates 

to higher paying banks and financial institutions, so it is very difficult for them to compete. So that is on the one hand. 

On the other hand, with regard to these systems, HUD continues 

to be so heavily siloed that even within the IT environment and the 

financial environment, each program office could do its own thing 

from an accounting standpoint and an IT standpoint that does not 

relate to another office’s accounting and IT functions, so the two do 

not talk. And that was one of the biggest problems in the New Core 

program that they tried to implement. These systems do not talk 

because the data is not the same, the systems are not the same. 

And so I do not know that New Core would have ever worked quite 

frankly.

Mr. YOUNG. This is frustrating and I imagine it frustrates you, 

too, but you are helping us get to the bottom of the human capital 

needs. The systems are not integrating together. They are very old 

as well as maybe the structure. You talked about all the silos, but 

I would like to have further conversations with you on this. Mr. 

Chairman, I yield back. 

Chairman DIAZ-BALART. Thank you, sir. Mr. Aguilar. 

Mr. AGUILAR. Thank you, Mr. Chairman, Mr. Ranking Member. 

Thank you, gentlemen, both for being here. Picking up on what my 

colleague was just talking about, I mean, Mr. Montoya, some of the 

key words you mentioned is something anyone who has been in a 

public financing realm never wants to hear, which is lack of internal controls, something that is deeply troubling. Specifically to follow up on what Mr. Young was saying, HUD has on two different 

occasions taken steps to implement new systems and it has not 

worked. Additionally, outsourcing data entry and financial management activities have raised oversight concerns from your office. 

Can you talk a little bit about the centralization of these procedures versus outsourcing some of those activities, and what the ef-
189

fect of budget reductions could do on our ability to deliver accurate 

financials in the future? 

Mr. MONTOYA. Yes, sir, Mr. Aguilar. Thank you for the question. 

With regard to internal controls, it boils down to the lack of policies 

and procedures. Now, they are getting better at updating their policies and procedures. These are accounting policies and procedures. 

And, yes, it has to be centralized in the chief financial officer position and that should flow then to the rest of the programs. So that 

is the biggest problem when you talk about internal controls. 

With regard to the collaboration between all these programs, 

there is difficulty there in sort of talking to each other before they 

created a separate financial management structure, for example, or 

even their IT structures. And, yes, it is frustrating that for years 

these things have been going on, and I will say that some of the 

stuff is not new. On the order of 23 years ago, GAO had testimony 

on these very same issues and yet we are here 23 years later talking about the very same things: the IT systems, the ageing systems, and some of the financial systems. 

That is troubling for me as an IG and that is why I make the 

statement that I think it is a failure of leadership at all levels, and 

even at the IG level, that maybe as IGs, my predecessors and I, 

have not been forceful enough and outspoken enough to say do we 

need to wait 23 more years? You have two financial institutions sitting with this Department, the Federal Housing Administration 

and Ginnie Mae. Together their portfolio is about $3 trillion. If one 

of those has a major breakdown, if you will, that is going to affect 

the national economy. And these two organizations are really not 

prioritized.

When you talk about human capital, for example, hiring a CFO 

for Ginnie Mae is not any more important than hiring a typist. The 

president of Ginnie Mae and I had a pretty good relationship. We 

talked often. He would tell me stories where he wanted to pull his 

hair out because when he would send up a request to hire a chief 

financial officer, it took a back seat to whatever was in front of him 

in the queue: a typist, a general staff person. There is no 

prioritization to put everything aside and let us get the CFO hired 

first. After that person is hired, we will hire whatever else we 

need. That is the kind of stuff that is most frustrating to me, and 

that is a leadership issue. That is a basic, fundamental governance 

and management issue. 

Mr. AGUILAR. With fewer resources will that get better or will 

that get worse, with fewer resources, centralization versus in-house 

work? I mean, how is that going to look? 

Mr. MONTOYA. You know, I do not know that it is going to get— 

I do not think the budget really has anything to do with it, quite 

frankly, sir, because whether you have everything you could possibly want or not, if you do not prioritize the staff, the systems, the 

processes that you need first, it does not really matter how much 

money you have, and I think they have shown that. They have not 

had this kind of a severe budget cut, whatever is anticipated, for 

years and yet they have chosen not to prioritize it. 

So will they prioritize it with a budget cut? I am hopeful because 

with any kind of budget cut, you really have to prioritize and do 

what is important first. 
190

Mr. AGUILAR. Appreciate it. Mr. Scovel, I will try to get this out 

quickly to give you a little bit of time. In your testimony you indicated that more needs to be done to ensure that high-risk contracts 

are managed well and you also indicate that many of the issues 

with contract management could be avoided if the contracts were 

properly specified and properly scoped. How is DOT working to improve those specifications and limiting the use of high-risk contract 

vehicles in the future and what can we do to make this acquisition 

piece a little better? 

Mr. SCOVEL. Thank you, sir. It is a concern of ours. We have 

identified a number of issues across the Department, including 

even at the Department level. We focused a lot of our efforts, however, on the Federal Aviation Administration (FAA) and its contract practices, and we have gotten into all of that through our 

work when we are called on to review the NextGen Air Traffic Control Modernization Program. 

High-risk contracts, cost-reimbursable contracts, of course, leave 

the door open to a contractor billing the Department, excessively 

perhaps, for costs. We have found instances where the Department 

did not sufficiently check on a contractor’s cost-accounting systems 

to ensure that the costs that were actually advanced by the contractor to the Department for reimbursement were backed up within that contractor’s accounting system. 

With regard to sole-source contracts, particularly on the FAA 

side, those have been a consistent concern of ours. FAA tends to 

acquire a lot of proprietary technology through sole-source contracts. That means it is locked in in future contracting cycles to a 

particular contractor. Oftentimes those contracts are let without 

conducting the sufficient market research and the independent government cost estimate that is required in order to properly let a 

sole-source contract. 

Mr. AGUILAR. I appreciate it, Mr. Scovel. My time is up. 

Mr. SCOVEL. Thanks. 

Mr. AGUILAR. And it is my first real hearing and I do not want 

the chairman to get upset with me. 

Mr. SCOVEL. I understand. 

Mr. AGUILAR. So I will cut you off there and we will restart this. 

Mr. SCOVEL. Thanks. Thanks very much for your question. 

Mr. AGUILAR. Thank you. 

Chairman DIAZ-BALART. Thank you again, Mr. Aguilar. Mr. 

Joyce, you are recognized, sir. 

Mr. JOYCE. Thank you, Mr. Chairman. I just want to follow up 

on a couple of the questions here and have you put on your hat of 

a private citizen who has all this intel as to what has been taking 

place. How do you fix those problems? You said money is not necessarily the issue. How do you get to the bottom of this and cure 

these issues? 

Mr. MONTOYA. I think just getting the right people in the right 

seats and looking at the right things. 

Mr. JOYCE. That is easy to be said, but, I mean, we need to get 

down to it—we cannot continue to do the same thing year after 

year. You said you have been following through now on 30 years 

of this and have the same issue. This is ridiculous. 
191

Mr. MONTOYA. So I think like many organizations, HUD in particular does very well at looking outward, managing its programs 

outward. They do not do a very good job at looking inward. And 

if they do not get to that soon, they might not be able to do their 

job looking outward. 

I will give you an example again where the IT systems and financial management accounting sort of interplay. HUD relies heavily on IT to deliver and manage its services throughout its own organization and externally. 

Mr. JOYCE. One question. Are these old legacy systems that continue to be patched that we have invested a lot of money in, so, 

therefore, we think we should keep them versus something that is 

obviously better? I mean, you and I probably grew up when they 

had a plastic phone that you would dial and now we have these. 

Is the agency keeping up with the technology? 

Mr. MONTOYA. They are not. In fact, many of their systems cannot even be patched. Some of their systems do not even have application support. And the example I was going to give you was the 

Tenant Rental Assistance Certification System, TRACS as it is 

known. It satisfies the Multifamily Housing Program. It accounts 

for 78 percent of HUD’s housing subsidies, about $10 billion annually.

And I want to quote something the Department, the staff folks, 

told us when we were doing this review, and I am going to quote: 

‘‘TRACS has no vendor support agreement. Therefore, when the old 

system catastrophically fails, there is no means to manage 

Housing’s rental assistance programs and/or pay subsidy payments 

of approximately $9.8 billion annually.’’ My point to that is when 

this thing fails—and it is not a matter of if, it is a matter of 

when—there is no manual way to get $10 billion out to the general 

public who need these funds. That is the kind of critical point or 

mass that we are at. 

And so to your question, no, some of these cannot even be 

patched anymore and some of them do not even have vendors that 

keep up with them, quite frankly. 

Mr. JOYCE. Which is something that you brought up as well, the 

fact that some of these things are being allowed without any vetting of the people who are getting these contracts. So these are ageold contracts that continue to stay in place, yet they cannot keep 

up with the system that they are allegedly trying to maintain? 

Mr. MONTOYA. Yes, sir. I was just passed a note, 87 percent are 

past their end-of-life system. These systems, 87 percent of them, 

are past end of life. And that is the other problem within the Department. Yes, we are heavily reliant on contractors. The problem 

is that the Department has divested itself of its own internal expertise, background and experience, that we do not even have staff 

that can properly manage these contracts. So we do not have staff 

that can manage an IT contract from the standpoint that if an IT 

contractor says you need $1 billion over here, that we would know 

to say yes, no, or that is not $1 billion. It should be $1 million. And 

that is another concern that we keep seeing. 

And I am driving the point home with these systems because, 

again, the Department has—I think we tend to forget—has two fi-
192

nancial institutions in it, and these institutions are reliant on the 

same systems that the rest of HUD is. 

Mr. JOYCE. I am outraged that we would be in a position where 

you do not have an IT department that can make a judgment on 

whether or not these systems that are being implemented are 

worthwhile or even cost-effective, and there is no way to get to the 

bottom of that? I am a former prosecutor, so I am sort of a brass 

tacks guy. I want to get down to how do we fix the problem? 

Mr. MONTOYA. You know, so the CIO’s position at the Department is a politically appointed position. The gentleman who was 

there, I have to give him credit. I think he was really advanced the 

ball, but he left. He was there 2 years and he leaves. So you are 

absent the CFO. You are absent, I think, is the Chief Security Officer. We are also absent the Chief Architect for these systems. So, 

again, much like in the financial arena and the IT arena, we are 

absent key staff. The only one that is a political appointee is the 

CIO, Chief Information Officer. The rest are careerists. So, again, 

even there we lack very critical positions being filled. 

So, again, with the lack of leadership—now look, do not get me 

wrong. The Department is made up of really hardworking, dedicated staff. I want to make sure we are clear about that; 99.9 percent of them, like any environment, are hardworking, dedicated, 

and they are committed to an honorable mission. The problem is 

they are not given the tools, the resources, to do it well and to do 

it efficiently and eventually not even effectively when these systems break down. 

Mr. JOYCE. The crazy part is that we are spending money but not 

giving them the tools that they need so they can operate in a 2017– 

2018 setting. 

I realize I have gone beyond my time, Mr. Chairman, and I will 

yield back. I guess I do not have any time to yield back. 

Chairman DIAZ-BALART. Thank you. Ms. Clark, you are recognized.

Ms. CLARK. Thank you, Mr. Chairman, Mr. Ranking Member, 

and thank you to our witnesses for being here today. As part of the 

accountability, the Whistleblower Program is an important piece of 

that. Mr. Scovel, I missed that from your status update, but I did 

see, Mr. Montoya, that there has been training going on. Could you 

both update me on where that is? Are there challenges that you 

see? And do they have sufficient resources to carry out the mission? 

Mr. SCOVEL. Let me start, Ms. Clark. Thanks very much for the 

question. I appreciate your interest in this important topic. Whistleblowers and other insider reports are key areas for us to be able 

to explore in order to effectively protect the Department’s programs 

and the taxpayer dollar. 

In our Office of Inspector General we have an individual whom 

we call our whistleblower protection ombudsman. He has been in 

charge of our whistleblower protection and the training within our 

office for a number of years now. We have a training effort to educate all of our OIG staff, so that should they come in contact with 

individuals who express an interest in perhaps revealing information and could be characterized as whistleblowers, that all of our 

staff know the procedures to refer them to the proper person. 
193

Our whistleblower ombudsman has handled several dozen cases 

during the time that he has been with us and since he has been 

appointed. Seventeen of those cases have been referred to the Office of Special Counsel, which has primary jurisdiction to investigate and resolve whistleblower complaints raised by Federal employees. Within our office we have got six open investigations currently, one involving a Federal employee, another five involving 

Federal contractors, and we have primary responsibility for those. 

We have closed four, and let me give you a taste of how those 

have been resolved over the last couple of years. One individual 

took our report of investigation and deemed it worthy of pursuit in 

District Court in the District of Columbia; another was denied at 

the Department level. One, we have determined we had no jurisdiction because the whistleblower allegation was lodged under the Recovery Act, and it turned out there were no Recovery Act dollars 

implicated in this particular contractor employee’s case. 

One we substantiated; it was a whistleblower matter that was 

submitted by an employee of WMATA, the Washington Metropolitan Area Transit Authority. He was alleging contract improprieties 

within the agency and he entered into settlement negotiations and, 

in fact, resolved the case and received a settlement from WMATA 

based on that. 

Ms. CLARK. Do you see any challenges specifically to this program?

Mr. SCOVEL. We do, most certainly. The whistleblower protection 

ombudsman is a specific designation that we are required to have 

only through November, I believe, of this year. We would consider 

it an important designation to maintain by law. We are prepared 

to do it, notwithstanding a requirement. So, we will continue it in 

our office because we deem it that important. 

However, we find that we are strapped for resources. We have 

one attorney investigator who not only doubles as our whistleblower ombudsman, but also as an investigator for some, if not 

most, of the matters alleged in these whistleblower communications.

So, should we have more resources? Of course we could do more. 

In the meantime, I am reasonably satisfied that we are doing all 

we can with what we have got. 

Ms. CLARK. Great. Thank you. Mr. Montoya, I wanted to talk to 

you in my remaining time, about some of what you highlighted in 

your report of September 30th about prosecuting civil fraud. Specifically with financial institutions there is quite a list: Wells 

Fargo, 1.2 billion; Freedom Mortgage, 133 million; seven major 

cases.

It does not look like it is the first time that you have gone after 

some of these bad actors. How many financial institutions have 

been debarred from participating in HUD programs since 2008? 

Mr. MONTOYA. Thank you for your question, Ms. Clark. I do not 

believe any have been debarred from doing business with the Department or FHA. 

Ms. CLARK. And is there a reason why? Is that part of your calculus with disbarment, is repeated violations? 

Mr. MONTOYA. Well, it certainly could be, that is actually up to 

the Department to make a determination as to whether that would 
194

happen; highly unlikely. You know, many of these failures are, if 

you will, lack of appropriately ensuring that folks could actually 

pay for these loans occurred years and years ago, and I think a lot 

of that conduct has really changed over the last 5 years. 

So, could that have happened 5 years ago? Maybe. I think it 

would be highly unusual to debar a bank or an institution that 

could otherwise, you know, provide mortgages to low- to moderateincome families. I think, in fairness to the Department, we work 

jointly with them, with the Department, my office and the Department of Justice, to address these issues. I think the Department 

took it seriously. But again, yeah, it would be a question for the 

Department, whether they actually ever considered debarment. 

Ms. CLARK. Thank you, Mr. Chairman. 

Chairman DIAZ-BALART. Thank you. Before I recognize Mr. 

Valadao, let me announce I am going to have to be in a markup 

on budget on the Health Care Act. So, I am going to ask the vice 

chairman if he could take over. 

And with that, I recognize the distinguished gentleman from 

California, Mr. Valadao. 

Mr. VALADAO. Thank you, Mr. Chair. Mr. Montoya, I understand 

your office published an audit back in July 2015, which concluded 

that over-income tenants blatantly abused the public housing system. It has been reported that thousands of people across the country receiving HUD benefits despite earning incomes greater than 

the eligibility threshold. The audit report also indicated with more 

than 300,000 qualified families that are stuck on waiting lists. 

For example, I am aware of cases in my own district in which families making over $100,000 were receiving public assistance 

from HUD. Audits like these provide HUD the opportunity to reevaluate policies and initiatives, make improvements to take sufficient steps to reduce abuse such as over-income families in public 

housing.

Can you please describe steps HUD has taken to negate flagrant 

abuse by tenants who make more than the low-income threshold? 

Mr. MONTOYA. Yes, sir. Thank you, Mr. Valadao, for the question. Well, yeah, so the subject our work took on, not only a lot of 

public interest, but obviously a lot of congressional interest, and 

legislation was passed unanimously about a year ago. It was called 

the Housing Opportunity Through Modernization Act, and it requires public housing authorities to evict over-income families after 

2 consecutive years of exceeding applicable income limitations. The 

key will be the oversight that HUD provides to that process and 

whether public housing authorities are actually doing it. 

It is unfortunate, but the Department really does not have the 

resources to provide that level of oversight. We, at some point, will 

probably come in some several years later to do a follow-up audit 

or evaluation to see if we find any extreme outliers. But really it 

is going to fall to the Department to provide that oversight. 

Mr. VALADAO. So, my next question then is to Mr. Scovel. In 

2015, Congress passed the FAST Act, the largest transportation 

package in more than a decade. With the FAST Act it was reported 

that the inspector general submit an assessment to the Department of Transportation on the impact of delays, and the pick up 

and delivery of goods by motor carriers and drivers. To my knowl-
195

edge the report has not been submitted to the Department of 

Transportation.

Do you know when the Department will have the ‘‘Delays in 

Goods Movement Report’’ completed to submit to the Transportation Committee? And do you mind providing this Committee with 

an estimated timeframe for the completion? 

Mr. SCOVEL. Yes, sir. In fact, I may be able to answer all aspects 

of your question right now. The Department, as required, did complete its study—I am sorry, you were referring to a study on freight 

delays?

Mr. VALADAO. Yes. 

Mr. SCOVEL. Yes. I am sorry. I mistook your question for one regarding hours of service for motor carriers. I do not have a timeframe for you on the freight delay study. I understand that we will 

be auditing it, and we will be happy to follow up with more information to you and your staff when we have that available. 

Mr. VALADAO. Okay. And then on the hours of service, you were 

going to say? 

Mr. SCOVEL. Yes. I was going to say that in the Appropriations 

Act, the Department’s imposition of suspended hours of service for 

motor carrier drivers, the Department was required to conduct a 

study, and then, in the meantime, suspend the imposition of those 

aspects of the rules, often called the restart provisions of the rule. 

That study was completed. My office was required under the Appropriations Act to certify, in effect, the methodology that was used 

in the study. We did that. We completed that review and communicated to both the Congress and the Secretary on March 2nd that 

the study had met all requirements. 

The Secretary, I believe, has already submitted her report to the 

Congress. If not, then it should happen any day, because that matter had been in her office the last we were informed. Thanks. 

Mr. VALADAO. Thank you. I yield back. 

Mr. JOYCE. Thank you very much, Mr. Valadao. There is no time 

to yield back, but that is fine; just kidding. Starting, I hate to be 

rude, but I guess I’ll start this round and then we will continue to 

go through the questions. 

Inspector Montoya, first, both of you gentlemen, I notice your 

lovely green ties, so thank you for keeping it in honor of St. Patrick’s Day; my birthday, too. 

As you know Ginnie Mae has had problems with tracking and 

hiring staff that have the right skill sets to perform mission-critical 

jobs. What are the effects of not having employees with the necessary skills in Ginnie Mae’s financial accounting management and 

overall management capacity? 

Mr. MONTOYA. Well, sir, I think the first problem you see is disclaimers of audit opinions, and so that is the first part. 

The second part is that, you know, with these nonbanks that 

they are starting to see a huge influx of, there is really no oversight body to them. Maybe the Consumer Financial Protection Bureau, but there is not an oversight body like you would have like 

if it was a bank. 

These nonbanks are not capitalized as a bank would be, and so 

it is going to be incumbent upon Ginnie Mae to do that oversight. 

If they do not have the appropriate accounting skills, financial-type 
196

background, it is going to be even more difficult for them to do the 

proper oversight of these nonbanks. And so those are two areas 

where I think it could be very detrimental to Ginnie Mae. 

Mr. JOYCE. Following up on that, is it a significant issue that individuals with the necessary skill sets are extremely well paid in 

the private sector, so it becomes nearly impossible for Ginnie Mae 

to compete. What would make the agency more competitive? 

Mr. MONTOYA. Well, as I stated earlier, sir, I think what would 

make it more competitive is that the Department, the administration, and Congress get together to consider a different pay structure for at least Ginnie Mae. And by that I am not even advocating 

for all of Ginnie Mae employees, and they have got about 140, but 

there is a small cadre that you could probably look at that are paid 

a higher salary. 

And again, consistent with other Federal agencies, like the Federal Finance Housing Agency, CFPB, even makes a higher salary. 

So, consistent with that, it gives you a little bit more latitude, if 

you will, to attract folks. 

Mr. JOYCE. With a portfolio of 1.7 trillion in outstanding principal balance, Ginnie Mae is a big and important financial institution, needless to say. What are the potential consequences if they 

do not get their financial house in order? 

Mr. MONTOYA. Well, we saw it in the case of TBW when they had 

to take over these portfolios when these organizations, you know, 

tank, in essence. They do not have the infrastructure to handle 

that. So if you get a lot of these issuers that cannot do what they 

need to, well, Ginnie Mae is guaranteed that there is—you know, 

through the good faith and credit of the U.S., you know, that these 

payments are going to be made. That means they have got to take 

it on, they have got to service, they have got to operate these 

things. They do not have that infrastructure. Without that you 

have major problems. 

And they do have contractors, they use a lot of contractors. In 

fact, most of the work is done by contractors. But therein lies, still, 

the problem with the lack of actual onboard expertise. They do not 

have the proper skills to oversee the contractors who are overseeing all these things that need to be overseen. 

Mr. JOYCE. Yes. I would like to recognize Ranking Member Price. 

Mr. PRICE. Thank you. I actually want to continue this line of 

questioning, but first I want to return briefly to the previous discussion of conflicts of interests and ethics. I am impressed with the 

testimony both of you gave as to the authority and responsibility 

you have to pursue conflicts of interest at all levels. Especially 

caught my attention, Mr. Montoya, with your comments about the 

disabilities of the Ethics Office within HUD. You are responsible 

for overseeing that office for making those critiques public inside 

and outside the agency. You have the ability to be proactive and 

I take it you have the ability and the responsibility to do a postconfirmation review of the ethics filings of senior officials. All of 

those things true? 

Mr. MONTOYA. No, we do not do a post review of the filings of 

the ethics official per se. 

Mr. PRICE. What would it take to trigger such oversight? 
197

Mr. MONTOYA. Well, we have an allegation of a conflict of interest.

Mr. PRICE. An allegation from some credible source of a conflict 

of interest? 

Mr. MONTOYA. Right. So, for example, in the matter where they 

hired somebody through an IPA that really should not have been 

there, at that point, we asked for this information. The irony there 

is they had not made or produced it. 

Mr. PRICE. All right, fine. Let me turn to this line of questioning 

having to do with financial management. Mr. Montoya, you cited 

over two decades of challenges in this regard and you provided a 

rather generic explanation, failure of leadership. It seems to me if 

you have got two decades of failures of leadership, you might look 

beyond that. And actually, the more you talk, the more I think you 

have, in fact, looked beyond that, that that generic explanation 

may not be your entire explanation because you are citing the ability to attract and compensate and motivate first-rate personnel. 

This Ginnie Mae case seems like a case in point. So if administration after administration, if decade after decade you are observing a failure of leadership, it looks like you certainly want to 

scratch beneath that generic explanation and see if there are systemic or system problems that make leadership difficult or impossible as you define it. 

So that takes me to the Ginnie Mae case. And you have just 

talked about what I take to be an overreliance, certainly a heavy 

reliance, on third-party contractors to perform key functions, the 

inability inside the agency to oversee those contracts. You have 

cited the pay structure that makes it hard to attract the right 

kinds of employees and to have them exercise authority effectively. 

It is hard to imagine that a budget like we have seen in the last 

24 hours or a hiring freeze makes any of this easier. You say it is 

not budgetary, but surely budget and personnel cuts of a drastic 

sort do not help. I do not understand your statement that this is 

not, in any way, budgetary. So you see where I am coming from 

in terms of wishing you to elaborate. Give us a little fuller, more 

satisfying explanation. 

And then, Mr. Scovel, if we have time, I would like for you to— 

I assume DOT does not have problems of this magnitude. I would 

like to have your attempting to compare here what maybe is going 

right or at least differently in that agency. But, Mr. Montoya. 

Mr. MONTOYA. At some point, somebody has got to make these 

decisions that you are going to find the right people to put them 

in the right place, in the right seat. You are going to look at those 

things that are a priority to the Department, and that is what I 

am getting at. Yes, we have done a lot of behind-the-scenes reviews, audits, investigations. We relate that to the Department 

through our recommendations for best practices. I will give you the 

best example I have. 

In the first 3 years I was at the Department, we had maybe six 

or seven disagreements with the Department senior leadership. 

Eventually, we were able to figure those out and come to some resolution. So these things never went to the Deputy Secretary for a 

decision, i.e., where she is playing—you know, having to make a 
198

decision between us as the IG and the assistant secretary for the 

program.

In the last 2 years, with the prior administration, particularly 

the Deputy Secretary, those skyrocketed to 16 disagreements. And 

in those occasions, really what it related to was an atmosphere that 

was created that was to not listen to the IG, they do not have anything to provide, and many of these recommendations went to 

these core management and performance challenges that I am talking to. So when you have leadership who fails to see that these recommendations are going to hopefully help them and yet they discount them out of turn, that is troubling to me. 

As I have often said, as IGs, we are not there to make those Departments look bad. We are part of those Departments. It is our 

job to help them succeed. It is our job to help them reach their mission assignments and their responsibilities, not the opposite. And 

there was a culture created for the last 2 years that was to not 

trust the IG. Slow them down as much as you can. I had to, on several occasions, I had to threaten to come to Congress with 7-day 

letters because there was a failure of cooperation, failure to give us 

the documentation we needed to do our audits, our investigations. 

If it had not been for the Secretary and his team to come in to say 

to the Deputy Secretary, no, you will give them that information, 

we would not have done it. We would have had to come to Congress.

So listen, I want to credit publicly Secretary Castro for honoring 

his commitment when he signed a joint letter with me that his 

staff would cooperate with our office. But if not for him, the Deputy 

Secretary would have allowed these things to basically go by the 

wayside. That is what I mean by a failure of leadership. 

Mr. PRICE. My time has expired. We will return to this. Thank 

you for elaborating that. 

The question remains, though, given stellar leadership or outstanding leadership, what kind of measures, what kind of policies 

are required here? And, of course, we need to get to that as well. 

That is where I think this Ginnie Mae case is troubling and, at 

least for me and I think many others, raises questions about the 

wisdom of such across-the-board measures as hiring freezes. And 

certainly, the kind of budget cuts we are looking at here, that pertains, by the way, to your own offices and the kind of ability you 

are going to have to perform your functions as well, of course, as 

Ginnie Mae and other offices who have these severe management 

challenges. So we will return to this. Thank you. 

Mr. MONTOYA. Thank you, sir. 

Mr. JOYCE. Thank you, Ranking Member Price. And I think I 

speak on behalf of this whole committee that if you feel compelled 

that you need our help at any time, come before this committee. 

With that, I recognize Member Young. 

Mr. YOUNG. Thank you, sir. Mr. Scovel, I want to talk about unmanned aerial aircraft systems, what we call drones commonly. 

You released a report in December 2016, finding that the FAA has 

not established a comprehensive oversight framework for the use 

of drones overseeing the UAS industry. Can you share some of the 

key recommendations from this report and what, if any, steps are 

being done to implement those findings? 
199

Mr. SCOVEL. Yes, thank you, sir. Key area, it is one of—probably 

the top one in terms of emerging technologies that keeps me awake 

at night; a significant safety threat, as anyone who flies can appreciate.

FAA is working, in my view, deliberately in an effort to integrate 

Unmanned Aircraft Systems (UAS) into the national airspace. A 

key part of that will need to be developing this comprehensive oversight framework that we mentioned in our report. And by way of 

oversight framework we would start first with consolidated data, 

relevant data, that right now is spread between three different offices within FAA. It is not integrated, it is not analyzed comprehensively; it is spread between different silos within FAA to the detriment, we think, of the Agency’s ability to understand the threat 

to safety posed by UAS and also to deal with it. 

Mr. YOUNG. Are they moving on that recommendation about consolidating their data, do you know? 

Mr. SCOVEL. They have agreed, but they are holding off. They 

have a target action date and they are working to complete, I understand. However, I think that within the minds of many there 

is a question mark related to what will happen should air traffic 

control be separated from FAA proper. 

Right now, responsibility for UAS integration is spread between 

the Air Traffic Organization, ATO—the safety organization that is 

separate from but also within FAA, of course—and then there is a 

UAS Integration Office. All three of those entities are responsible 

for collecting some data, but it is not all integrated. Some of those 

entities may remain within FAA should air traffic control be separated.

Mr. YOUNG. Do you know if in your findings, recommendations, 

and within the folks at FAA looking at this, if they are taking into 

account proprietary information by private citizens? Particularly in 

agriculture, we have a lot of farmers and producers who use 

drones, UASs, for many reasons, and I am just wondering regarding that proprietary information and privacy if that is being addressed.

Mr. SCOVEL. Yes, FAA does not have a primary responsibility for 

privacy, that is, you know, in the classic sense of a drone hovering 

over your backyard or whatever the nature of the perceived intrusion might be. However, FAA has agreed with the National Telecommunications and Information Administration that has, by designation of President Obama at the time, primary responsibility to 

develop a Government-wide framework regarding privacy concerns—to address privacy concerns. 

The role that FAA has taken on for itself has been that of education. So when applicants register their UAS with FAA, they receive a packet regarding privacy and the best practices there. 

The other aspect that you mentioned, sir, specifically with regard, say, to precision agriculture and other specific uses, FAA— 

and I do want to give them good credit for this—FAA has undertaken stakeholder communication and collaboration most diligently, and it has a Drone Advisory Committee, for instance, that 

is helping the Agency understand better how to integrate beyond— 

what is called in the industry and the Agency—beyond line-of-sight 

operations, which would include many agricultural applications as 
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well. That is a key area that both industry and the Agency realize 

they need to focus on. There need to be some technological improvements in order to facilitate that. 

Mr. YOUNG. Well, that is encouraging. 

Mr. SCOVEL. But they are keyed onto it. 

Mr. YOUNG. That is encouraging because it is always good, I 

think, when you take into account who this affects and the opinions 

and needs, wants, comments of the stakeholders. 

My time is about up, Mr. Chairman, but will there be a third 

round?

Mr. JOYCE. Yes, sir. 

Mr. YOUNG. Thank you. 

Mr. JOYCE. Thank you, Mr. Young. The Chair recognizes Ms. 

Clark.

Ms. CLARK. Thank you, Mr. Chairman. I want to follow up on a 

point from our ranking member. And as we are looking at conflicts 

of interest, as we are looking at personnel issues, I think, Mr. Montoya, your testimony was that 43 percent of HUD career permanent 

employees will be eligible to retire by 2019. What is the impact of 

a blanket hiring freeze? 

Mr. MONTOYA. Well, there certainly will be an impact with a 

blanket hiring freeze because it goes back to my concerns that they 

then are very limited in who they can hire and, of course, it slows 

the process down in hiring some of these key roles and positions 

they need to fill. With regards to the retirements, the troubling 

part there is much of the expertise that the Department currently 

holds will leave with it. And that goes again to what limited staff 

we do have to provide the contract oversight, if you will, and the 

financial management governance side and the IT side will be gone 

and so we will even have less internal. So from the standpoint of 

making sure the Department has it right with the limited hires 

they will get, assuming they get any, they have got to make the 

right hires and they have got to prioritize those hirings. 

Ms. CLARK. I also want to go back to our discussion about disbarment. And in your testimony you raised that HUD is often hesitant 

to take strong enforcement actions against lenders because it has 

a competing mandate to continue FHA’s role in restoring the housing market. Do you believe this is part of why we have not seen 

financial institutions with multiple violations being disbarred? And 

if so, what kind of recommendations do you have around this tension between the mission of HUD? 

Mr. MONTOYA. So that is probably a question best for HUD. 

Whether that is their reasoning, it certainly could be. With regards 

to the tension, you know—— 

Ms. CLARK. But that was your testimony, right, you do believe 

that?

Mr. MONTOYA. Oh, yes, I do. 

Ms. CLARK. Yeah. 

Mr. MONTOYA. I do believe that. But with regards to why they 

do not disbar, I think part of that is, you know you do not—and 

in fairness, they do not really want to lock down the economy. They 

do not want to lock down the ability for people to get homes. You 

just want—— 
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Ms. CLARK. But even if we took disbarment away, if we are just 

looking at repeated violations and pursuing those—— 

Mr. MONTOYA. Right. 

Ms. CLARK [continuing]. Do you think that would be—is there a 

way to address this tension that might ease that problem? 

Mr. MONTOYA. So they do have an MRB, a board that is supposed to look at these actors who continuously do these things. And 

at that level, they can impose financial penalties, they can disbar 

at that level. And so they do have a mechanism outside of a civil 

case, for example, the DOJ, to take strong enforcement. Often it is 

very weak. 

We did some work on that, on the MRB, the Mortgagee Review 

Board, about 10 or 12 years ago. I have asked my staff to do another review. But even back then, we saw very weak penalties were 

doled out even for some of the most egregious things; very low penalties, if any. Usually they will walk away with a slap on the hand. 

And, again, I think that goes to they are really reticent to try to 

do the carrot and the stick. You know, they are there as regulator, 

encouragers, you know, open up the market. 

Ms. CLARK. Yeah. 

Mr. MONTOYA. But they also have that role of overseer to say, 

well, look, yes, we want you to open up the market, we want you 

to provide, you know, loans for housing, but we do not want you 

to defraud us in the process. So there has got to be that balance 

and, unfortunately, they lack a lot of that stick side. Right? They 

leave it to me in a lot of ways to do that. 

Ms. CLARK. All right, thank you. I want to get a quick question 

in for Mr. Scovel about the Merchant Marine Academy and the sexual harassment and assault. You said in your testimony they had 

completed 29 of the 44 action items suggested in the 2014–15 action plan. Can you give me an update? 

Mr. SCOVEL. Still working on the remaining items, Ms. Clark. As 

we informed the committee, and we have also worked with the Department and the Maritime Administration (MARAD) and the 

Academy on these, the 42 action items were those that had been 

identified by the Academy itself as a result of its last full-fledged 

survey of students. The Academy had made good progress on those, 

and we reported to this committee back in August that they had 

completed 29 in our view. They claimed credit for having completed 

a few more. We pointed out that, in our view and reasonably, their 

count could not be accurate, and they ended up fully agreeing with 

us.

I think they are completely focused on those areas that demand 

the most attention and that is, to use Inspector General Montoya’s 

terms, proper leadership at the top, continued engagement at that 

level, incident reporting. The last survey from the 2014/2015 time 

period indicated a completely unrealistic number of reported incidents compared to those students who, in an anonymous survey, 

had reported instances of sexual harassment themselves. That and 

coordination with the industry on the Sea Year program where cadets from the Academy are especially vulnerable when they take 

their many months at sea with the shipping industry. Working 

with the industry on that and also preparing cadets for that Sea 

Year experience, the school realizes that those are the key ele-
202

ments that will bring them to success. Important area, of course, 

especially this week in light of testimony from the Marine Corps 

over on the Hill, so, you know, the services themselves are wrestling with it. 

Just yesterday I saw a media report that the other service academies, too, had reported an increase in reports of sexual harassment as well. So the Merchant Marine Academy knows that it has 

still a lot of work to do, but I am confident that they are focused 

in the right directions. 

Ms. CLARK. Thank you. Thank you, Mr. Chairman. 

Mr. JOYCE. Ms. Clark. Mr. Aguilar. 

Mr. AGUILAR. Thank you, Mr. Chairman. Nice tie. Happy birthday, again. 

Mr. Scovel, your testimony notes that more than $6 billion was 

spent in contracts annually for fiscal years 2015/2016. Specifically, 

you note that cost-reimbursable contracts may be considered high 

risk because contractors are paid whether work is completed or not. 

We have also heard examples where the product delivered by a 

vendor may have included services not designed within the contract 

or needed by the Department of Transportation. This may result in 

additional costs to the overall completion of the project. 

So my question is, does the DOT have a mapping tool that tracks 

in real time the progress infrastructure projects are making toward 

completing the work required within the Federal grant process— 

Federal contract process? And if not, are there standards in place 

to collect information that could be used to aggregate this tool utilized by the agency? I believe that mapping tools that organize and 

display the progress of these infrastructure projects across the 

country can support the agency’s efforts better and help them manage assets and investments. 

Mr. SCOVEL. Absolutely, and I would entirely agree. I think you 

are right, those are critical tools in order to ensure success for the 

Department’s mission. 

I would distinguish between those aspects of the Department’s 

funds that are allocated to grants and the individual operating administrations, especially the Federal Transit Administration (FTA) 

and Federal Highways. While they do track or map their grants 

within their divisions, in the case of Federal Highways that would 

be 52, so each State is its own—has its own division and office 

under Federal Highways, plus the District and Puerto Rico. I would 

need to get back to you to see how far Federal Highways’ headquarters is on integrating and comprehensively analyzing, across 

the Nation, how all of those particular grants might map out. But 

I do know that division-by-division they are tracked and followed 

through that tool. 

The Federal Transit Administration is organized by region. They 

do attempt to do the same thing. We have worked in the past with 

the Federal Transit Administration at the headquarters level to try 

to identify best practices between its regions on how they can track 

and monitor and assess the progress of their grants. And FTA has 

made pretty good progress in that area. 

Mr. AGUILAR. So you can work with them on best practices, but 

it is really left up to each office as to how they administer? 
203

Mr. SCOVEL. Most certainly, but that has been a consistent 

theme with us when we have audited both FTA and Federal Highways. And that would be greater oversight at the headquarters 

level of what the division offices are doing within Federal Highways; what the regional offices are doing within Federal Transit to 

ensure greater consistency and better understanding at the headquarters and the Secretary level, and at the congressional level, of 

what those two operating administrations are doing. The $6 billion figure, sir, that we cited in our written testimony 

has to do with contracts that are let by the Department as opposed 

to grants. And it is that cost-reimbursable aspect that we highlighted by way of finding some particular audit that we completed 

as posing a particular danger, a special danger to the Department. 

And the Department has agreed with our recommendations on that 

and is making some progress in executing on those. 

Mr. AGUILAR. I appreciate it. Mr. Montoya, by statute, FHA is required to maintain a capital ratio of 2 percent or more in the reserve fund. In fiscal years 2015 and 2016, the capital ratio was 

2.07 and 2.32. It is projected that the fund will continue to be 

above the threshold limit. President Obama issued guidance to 

lower the FHA premiums, partly because the FHA Reserve Fund 

achieved the capital ratio that surpassed its legally required 

threshold 2 years in a row. 

On January 20th, President Trump suspended the guidance and 

eliminated the opportunity for homeowners to take advantage of 

the lower FHA premiums. Does the OIG have any data to demonstrate that increasing FHA premiums is necessary to maintain 

the 2 percent capital ratio threshold in the FHA Reserve Fund? 

Mr. MONTOYA. Well, we do not have any data, per se. I think 

what we have looked at with regards to the actuarial report is they 

seem to be on track, assuming nothing goes wrong in the mortgage 

market, to continue to add to that MMI Fund. You know, our concern is that the Department does not make decisions that could 

negatively impact it. We have an ongoing body of work that we 

were in major disagreement with the Department having to do 

with down payment assistance and the fact that mortgages are 

being given to low- to moderate-income families with very high interest rates. And if those homeowners cannot eventually afford 

those higher interest rates, if we have a downturn in the market, 

you could have defaults. So it is really incumbent upon FHA itself 

to make the right decisions on risk versus reward, and we understand they have got to do that. 

In this particular case, our disagreement is that we think they 

are in violation of the Housing Act in allowing these sort of what 

we call borrower-funded down payments to occur and so sometimes 

FHA can be its own worst enemy. But what we know now with regards to our review of the actuarial is that they are above the 

threshold and they seem to be on track to continue to add to that. 

Mr. AGUILAR. Appreciate it. Thank you, Mr. Chairman. 

Mr. JOYCE. Thank you, Mr. Aguilar. And here we are at the end 

of the second round and we recognize Mr. Dent. 

Mr. DENT. Thank you, Mr. Chairman. Good morning. 

Mr. Scovel, I would like to ask you just a question on MAP–21. 

On March 6th, your office issued an audit report on DOT’s progress 
204

in implementing initiatives under MAP–21, which are designed to 

accelerate project delivery. While the report detailed certain initiatives that had a low level of State participation, during your office’s 

examination of this issue, were there any programs that you found 

that had a high level of State participation? 

And two, if Congress is going to be considering a transportation 

infrastructure package at some point in the near future, it would 

be helpful to understand what programs may be working to expedite project timelines so that Congress can, you know, best direct 

its efforts and ensure that any resources provided for infrastructure have a real and immediate impact. I think that is one of the 

frustrations we have all seen with infrastructure, that we are not 

in the 1930s and the 1950s anymore. When we said we were going 

to go build a road, we used to go out and build it, and now we 

spend a hell of a lot of time and money on preconstruction activities and we do not have a whole lot of stimulative effect because 

there is not much shovel-ready. So have at it. 

Mr. SCOVEL. Okay, thanks, sir. Yes, we did recently release— 

very recently release—our audit report to fulfill our obligation in 

the act to audit the progress or the successes under Subtitle C of 

MAP–21. This had to do specifically with a thought that shifting 

responsibility from Federal Highways especially to the States— 

should they decide to take it for environmental reviews—might, in 

fact, speed things up. While I think to most laymen it would make 

sense, for many of us, we see the requirement for an environmental 

review to be a significant showstopper. 

In fact, I was rather surprised that our audit report did not substantiate my supposition. And that is because, generally, the States 

declined to accept the invitation, if you will call it that, to take 

from Federal Highways the responsibility to conduct these environmental reviews for a number of reasons. Primarily, there was no 

financial incentive for them. Many States are resource- and budgetstrapped at this point. Some States identified to us—when we 

questioned why not, you know, you might be able to get your 

projects underway sooner—they said, well, our lawyers are telling 

us that we will be required to waive sovereign immunity, which we 

are loath to do because we know that in many of these instances, 

we are going to get sued. 

So one State especially stood out as an example of being willing 

to take that step, and that was the State of Texas. And they indicated to us that they were willing and the legislature was willing 

to waive sovereign immunity, and it required an act of the legislature, of course. And furthermore, they considered their budget picture and resource-staffing picture to be sufficient to allow them to 

take it on. They did. They achieved some successes in moving some 

projects a little bit quicker than others, developing some innovative 

approaches on other projects, but the other States that we questioned did more detail. Oregon, Georgia, Pennsylvania was one, 

they tended to hang back, so we would characterize it very much 

a mixed bag. 

I do not know that there is any particular silver bullet, frankly, 

to make a huge progress in accelerating projects. The changing nature from project to project, State to State, and what resources the 

States are able to develop make it difficult to say that there is any 
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universal method to achieving accelerated project delivery that 

would be the hope for all of us. 

Mr. DENT. Well, thank you. And I would like to turn to Mr. Montoya. On January 20th, your office issued a report that found HUD 

program participants may be receiving multiple subsidies through 

both multifamily housing programs and Public and Indian Housing 

programs. And according to these findings, you provided recommendations for HUD to address these issues. These recommendations required public housing agencies to better utilize 

the Enterprise Income Verification system, which contains resident 

information. Given the constrained fiscal climate in which we are 

operating, it is imperative that all appropriated funds are put to 

qualified and proper uses. 

Could you tell us if, one, if HUD has begun to implement the recommendations in your report to prevent future waste? And two, if 

your office believes there are any other areas where HUD could 

prevent duplicative awards by utilizing information or verification 

systems that are readily available to them? And my time is almost 

up.

Mr. MONTOYA. Yes, Mr. Dent. Thank you for the question. I 

would have to get back to you on whether they have actually implemented or are working on the recommendations. I think other 

areas where there is duplication of benefits is the Disaster Program, and that is really not only within the Department, but as it 

relates to SBA and FEMA money. We are doing a body of work in 

that arena to see where there might be duplications of benefits and 

maybe where there could be some legislation that could help correct that. 

Mr. DENT. Thank you. I see my time has expired. 

Mr. JOYCE. Thank you, Mr. Dent. We will start on the third 

round of questions and continue on as long as the committee people 

have questions to ask. I will start off myself. 

Mr. Scovel, one of the things that has troubled me is the local 

metropolitan transit system, WMATA. Incidents this year included 

a track fire, a derailment, a flooded station, and one-day emergency 

shutdown of the entire system. These incidents have unveiled a 

massive extent of disarray to WMATA’s infrastructure and repair 

process.

Additionally, it was announced that nearly half of the Track Inspection Department is under review, discipline, suspension, or at 

risk of being fired after investigation into the July 29th derailment 

at East Falls Church suggested it was a widely accepted practice 

within the department to complete reports for inspections that had 

not been performed. 

In light of these developments, I am curious what recommendations your office has, if any, to WMATA that would help ensure the 

safety of the riders, the cost-effective use of taxpayers’ dollars in 

repair efforts, and that these projects are completed in a timely 

and efficient manner? 

Mr. SCOVEL. Thanks, sir. This is a significant question for all of 

us in the Washington area and has broader implications for transit 

agencies across the country, of course. Our office has not undertaken any specific review of WMATA proper. WMATA has its own 

Office of Inspector General and for that reason and others, we have 
206

not looked at WMATA. I can say that GAO, however, was asked 

by Congress to look at WMATA’s specific implementation of its current SafeTrack effort and recently reported out and recommended 

to WMATA that it engage in far better project management practices than it had undertaken when it first initiated the SafeTrack 

surge.

As I understand it, WMATA’s reply was, yes, but we felt we were 

under the gun for significant safety challenges and we wanted to 

get started; realizing that, of course, we had not completed every 

mark on the checklist by way of project management expertise, but 

we will get to it. 

Where our office, where DOT OIG has focused our efforts has 

been on FTA’s oversight of transit agencies, and specifically with 

regard to WMATA, the process by which FTA decided to exercise 

its recently granted safety oversight authority that came to that 

Agency from 2012 legislation. We issued an audit report immediately upon enactment and suggested to FTA that it may wish to 

consider a number of best practices that we had gleaned from regular audits of other safety oversight agencies. FTA had embarked 

on that, had been making pretty good progress in our estimation. 

However, then it had to pull the trigger and assume direct safety 

oversight of WMATA itself. 

We initiated another audit and have completed that one that reported that FTA, in exercising that safety oversight authority, had 

a number of challenges. One had to do with staffing. Did it have 

the right expertise and the right number of staff to enable it to do 

that?

The other was, what kind of data was it collecting? It is not 

going to be able to focus its efforts without the right data. 

The final one was oftentimes, as in the case of WMATA, FTA will 

be pulled into a direct oversight role, but it has to have a way to 

pull out. It needs to have an exit strategy too, which it had not 

been able to do sufficiently at the time we conducted our audit with 

regard to WMATA itself. 

So that is the area where our office has been working with FTA 

and indirectly with WMATA on its current woes. 

Mr. JOYCE. Well, it would appear it is a tetra-headed monster, 

if you will. All the different agencies that are involved, but no one 

really claiming oversight—— 

Mr. SCOVEL. Mm-hmm. 

Mr. JOYCE [continuing]. Or taking it—and that there are too 

many people on the Metro rail every single day with potential for 

disaster. Do you believe in its current structure WMATA is internally equipped to efficiently manage and execute the necessary repairs?

Mr. SCOVEL. Clearly, room for improvement, and I would cite the 

GAO report in that, particularly with regard to SafeTrack. This is 

the most significant rehabilitation effort that this transit agency 

has ever undertaken. GAO found some noteworthy areas where the 

planning and execution could be far better achieved. It is up now 

to the board of directors and to the chief executive officer to put 

those into play. We can see—and I ride Metro myself, every single 

day. We can see how it is working out and not working out over 

the course of SafeTrack. Clearly, WMATA has a ways to go. 
207

Mr. JOYCE. Well, I hope you continue to ride in a safe fashion. 

Mr. SCOVEL. Thanks. 

Mr. JOYCE. Thank you. Moving now to Ranking Member Price. 

Mr. PRICE. Thank you, Mr. Chairman. Mr. Scovel, I belatedly 

have consulted your resume here, and note the bachelor’s degree 

from UNC-Chapel Hill and the law degree from Duke University. 

As a former Marine, I assume you have a more courageous answer 

to this question than I do as to who you root for in ACC tournaments.

Mr. SCOVEL. Oh, absolutely, and I appreciate the question, sir. 

And thank you for your able representation of the Triangle Area. 

It is going to be Carolina all the way. 

Mr. PRICE. That is a more courageous answer, yes. 

Mr. DENT. Villanova. 

Mr. SCOVEL. I love Duke. When they are not playing Carolina, 

Duke is my team, but when they are going head to head, it is Carolina, so. 

Mr. PRICE. Very good. Well, as opposed to ducking, that is a good 

answer. And, of course, when they are not playing each other, it 

is a very easy answer. 

Well, I do want to turn to you because we perhaps have a point 

of comparison here in terms of DOT’s financial management, things 

that might have occurred to you in terms especially of the factors 

that go into better performance. 

I also want to turn to the question of these new challenges and 

the budget implications of them. Autonomous vehicles, unmanned 

aircraft going to need to communicate with other users in the national airspace and on our roads and highways. And as you have 

said repeatedly here this morning, this is a daunting task. It requires new skills, new tools for the Department to safely integrate 

these technologies into the transportation network. It will likely require additional resources and skill sets at DOT and, for that matter, in your own office to carry out and oversee these efforts. 

So, that is my question. If you have reflections on financial management generally, but then, in particular, when we are talking 

about hiring freezes, the budget cuts of the magnitude we are looking at here, how on Earth are we going to get on top of this new 

challenge?

Mr. SCOVEL. Thanks, Mr. Price. Yes, just listening to General 

Montoya relate his woes at the Department of Housing and Urban 

Development, I count myself lucky to be at the Department of 

Transportation in terms of its financial management. And I say 

that even remembering that within 2 weeks after my taking office 

as Inspector General in 2006, my office issued a qualified opinion 

to the Department, the only time, certainly within my tenure as Inspector General, that we saw the necessity to do that. And the reason at the time had to do with how FAA was accounting for its capital, if you will, its plants and equipment, and how it was accounting for depreciation and all of that. 

FAA is a big enough part of the Department that it rose to be 

a material deficiency. And our contract accountants at the time, 

KPMG, told us that they would be required to issue a qualified 

opinion and, of course, we did. 
208

I will give the Department and FAA great credit for immediately, 

upon that problem, setting about correcting it, and within the following year, had it nailed. And while it has been a watch item for 

us and our contract auditors in the years since, it has not risen to 

the point again where it threatened the integrity of the financial 

operation.

We have had other problems that have arisen. I would have to 

cite Federal Highways. They had a significant problem with regard 

to unobligated balances for specific projects. The Department created a working group and immediately set upon that when we informed them early on that this was a potential problem. 

We have also had more recent questions with regard to how FTA 

has been cooperating with our contract auditors, and the Department has taken the stick to FTA on that. So, I am very much encouraged by it. 

With regard to an overall budget picture for the Department, I 

will leave it to the Secretary and her team to figure out how to do 

that with some of the emerging technologies that you cited, UAS, 

autonomous vehicles—a key for the agencies now trying to work 

through that problem. What will become even more significant 

going ahead will be engagement with stakeholders, keeping in 

mind, of course, the danger, if you will, or the specter of takeover 

of the regulator. But I think between us and the Secretary and the 

Congress, of course, we will be able to guard sufficiently against 

that.

In my own office, I do have concerns about our budget. The hiring freeze is one thing for the next number of months, but a much 

longer concern and more immediate problem will be the hiring or 

the budget picture for our office. 

I respect General Montoya’s 60-to-1 return on investment. In the 

last year, we had a 54-to-1 return on investment, meaning for 

every single appropriated dollar that our office received, we were 

able to return to the Government and the taxpayer $54. 

Together, I think we stand very near the top, certainly within 

the top five or six among all OIGs in Government. 

Seventy-five percent of my budget, sir, is allocated to personnel 

salary and expenses, because that is how we accomplish our mission. We have no programs. We have no hardware. We have no 

grants. We have no loans. We deliver reports of investigation to 

prosecutors so that they can try to nail the bad guys. We deliver 

audit reports to you and to the Secretary, so that together we can 

figure out how to improve efficiency, economy, and effectiveness for 

the Department’s programs. 

I need people to do that, and most of my budget dollars go to pay 

them. If I cannot do that, then my ability to keep you and the Secretary fully and currently informed, and that is my mission by way 

of the IG Act, my ability to accomplish that mission will be threatened.

I used the phrase earlier, sir, that elements in the Department 

do all they can with what we have. We are at the top of that list 

in terms of our OIG. I do not tell our people that we are going to 

do more with less, because that is a sure-fire method to drive people into the ground, but what I do tell them every day, I expect 

them to come to work and do all we can with what we have got. 
209

It will be up to the Congress and the administration to determine 

what our sum might be, but I want to assure this committee that 

you will have our 100-percent effort every day. Thanks. 

Mr. PRICE. Thank you. Thank you, Mr. Chairman. 

Mr. JOYCE. Thank you. Mr. Young? 

Mr. YOUNG. Mr. Montoya, the Mutual Mortgage Interest—Insurance Fund, I’m sorry, Insurance Fund, there is an issue out there 

regarding the implication of this fund. The Property Accessed 

Clean Energy, or PACE loans as they call them, they are attached 

to the property rather than the borrower, have high interest rates, 

and are repaid by an assessment. 

So, there are concerns that allowing HUD to insure mortgages on 

properties with PACE loans because this puts them in a second 

lien position, and thereby increases the risk for the MMI Fund and 

taxpayers.

As you know, the Federal Housing Finance Agency prohibits 

Fannie Mae and Freddie Mac from insuring properties with PACE 

loans. So, there are concerns that the PACE loan problems echo the 

subprime mortgage issue that we had years ago. Creditworthiness 

does not matter, some say. No down payment is required. Contractors function as loan brokers. Often homeowners may not know 

what they are getting into. I am sure that all of us do not want 

to go back to the 2008 crisis, and avoid another $1.7 billion bailout. 

So, would you agree that allowing FHA funds to take a second 

lien position creates a greater risk to the MMI Fund and to taxpayers? And just talk about the implications of this policy and 

what you found. I would like your insights. 

Mr. MONTOYA. Yes, sir. Thank you for the question, Mr. Young. 

It goes to the point I made earlier that sometimes FHA is its own 

worst enemy, and we would agree. Putting the FHA mortgage in 

a second lien position to these PACE loans could very well be detrimental to the MMI Fund if homeowners default. And you are absolutely correct. Often, these homeowners do not understand the obligations of these loans, that these are assessments, they are not 

part of a loan, the traditional loan. And, in fact, we are not even 

sure that these PACE loans or these homeowners are actually 

going to benefit from any energy measures, and so that increases, 

obviously, the liability. 

It is a concern for me that back in 2015, we thought FHA was 

on pace to maybe not sort of back this idea. Something changed 

within the year, and they decided to go ahead and put out guidance 

that said they would insure these types of loans, with certain caveats that people needed to know that the loan should not be put in 

a second position, but they do not really have that say so because 

that is a State issue as to lien position on loans. 

So, we are troubled by it. We are appreciative that you brought 

this to our attention, to my attention. I actually did not realize 

this, but my audit staff has a proposed audit on these PACE loans, 

so I would commit to you that when we get done with that body 

of work and even maybe before that, we would love to give you an 

oral briefing, and certainly give you the report when it is done. 

Mr. YOUNG. When do you anticipate that that audit may be 

done? We do not want to rush it, but just maybe a timeline. 
210

Mr. MONTOYA. Well, sure. So it was an audit proposal in this 

year’s audit planning stage. So I obviously jumped into the fray 

and said that is going to be one of them, so it will be starting, 

hopefully, some time in the next several months. 

And so certainly, what we want to determine is the adequate 

controls that might mitigate the risks associated with insuring 

these loans, sir. 

Mr. YOUNG. Thank you for that, appreciate that. 

Mr. MONTOYA. Thank you, sir. 

Mr. YOUNG. I yield back, Mr. Chairman. 

Mr. JOYCE. Thank you, Mr. Young. Mr. Aguilar? 

Mr. AGUILAR. Thank you. Mr. Montoya, picking up a little bit on 

that, and maybe go back and forth between the MMI Fund and 

also, as you mentioned, some of the down payment assistance programs that present problems to your office. 

Just thinking about it from the perspective of underserved communities, in 2015, the top four home lenders scaled back on FHA 

lending in 2015, prioritizing conventional loans, while 39 percent of 

all mortgages issued were government insured, 63 percent of 

Latinos took out government-insured mortgage loans. So this is 

something that affects the community that I represent. Down payment assistance is crucial for families who would like to buy a 

home.

In your office report on the FHA-insured loans published recommendations that HUD consider a position allowing some borrower-financed down payment assistance programs to also participate in the FHA program. 

So I guess my question is how do we ensure that proposed reforms do not create barriers to homeownership that disproportionately affect the Latino community? 

Mr. MONTOYA. Yes, sir. Thank you for the question, and it is a 

valid question. What we are sort of mandated to do and what we 

want to ensure we do is that the home borrower, the loan borrower, 

the homeowner, goes into these loans fully aware of what they are 

getting into, and that has been the problem all along is they are 

not fully informed of what these loans really mean, what this 

down—now, just to be clear, we do not have a problem or disagree 

with down payment assistance programs, generally speaking. 

We have a contention and a concern over a particular program 

where these premiums are raised often without the borrower knowing, so that when they get into the loan, they are going to have a 

higher premium interest rate on the loan. So that is the troubling 

part of this. 

Certainly, with regards to homeowners going into these loans 

fully informed, fully aware, fully understanding that they can or 

cannot pay for it, that should not close any community from accessing the loans. Our main purpose here is to ensure these borrowers 

are fully informed and aware of what it really means and what 

those numbers are going to really look like when they get into 

these loans. 

Mr. AGUILAR. Can that be done through added disclosures? Or 

how can we further the goal of informing consumers so they know 

what they are getting into? 
211

Mr. MONTOYA. Absolutely, sir, added disclosure, and that was 

one of our recommendations. We had several recommendations on 

the down payment assistance audits that we did. And part of that 

is they have to fully disclose that, and you have to disclose that 

very overtly. You have to get a certification that you did disclose 

it.

The Department does not even track these types of loans, which 

is even more troubling. They do not track them separately. So 

there is no real history on whether these things track well or not, 

you know, the higher premium interest rate of these loans as compared to general down payment assistance. 

These down payment assistance loans were initially designed to 

receive a grant or money to get people into the homes, right? With 

no expectation that the money would be paid back. Well, these 

higher interest loans are designed so that the money is paid back, 

and it is paid back on the back of the borrower. That is what the 

borrower does not understand. This is not, you know, a grant that 

is going to get you into a home and help you. They are going to 

pay for it themselves. 

So absolutely it goes to disclosing and to ensuring that occurs. 

And so that has been the biggest point of contention on this particular down payment assistance program. 

Mr. AGUILAR. Right, okay. But your office is not expressing disagreement that offering the increasing affordability and access to 

these programs is a worthy goal. The question is how do we get 

there? What disclosures do we offer in order to protect consumers, 

and how do we ensure the program is legal moving forward as 

well?

Mr. MONTOYA. Absolutely. It is a worthy goal and, as I said earlier, the mission of the Department is an honorable mission. What 

we want to ensure is that these individuals who are receiving these 

loans are fully aware and they are not taken advantage of. 

In the case of the PACE loan that we were just talking about, 

these contractors are pushing these loans, right? So it becomes this 

idea that you are not really protecting the consumer, and it really 

becomes sort of predatory lending, right? 

And so that is what our focus is, is to ensure that that sort of 

thing does not happen to these individuals, these families. 

Mr. AGUILAR. I appreciate it. And, Mr. Scovel, I just wanted to 

let you know that I am sure I cannot speak for Mr. Montoya, but 

I am sure if you really felt some sympathy for his position, there 

are plenty of vacant positions at HUD, CFO as we have heard and 

others. So feel free to jump in with two hands and help out. 

Mr. SCOVEL. Ah, great. 

Mr. AGUILAR. Thank you, Mr. Chairman. I yield back. 

Mr. JOYCE. Thank you, sir. Okay, I’m going to—any more questions? Well, I have got on here of local interest. Mr. Montoya, if you 

would not mind, the point-in-time count, are you familiar with 

that?

Mr. MONTOYA. Generally familiar with it, yes, sir. 

Mr. JOYCE. Okay. As you know, it requires communities receiving funds through the homeless assistance grants to conduct annual PIT counts, of people experiencing homelessness. 
212

The counts are to occur 1 day during the last week of January. 

The data collected on this day is then often used a model for total 

homelessness in a given area, and this has been problematic for 

communities that I represent, specifically Ashtabula County, Ohio. 

Located in the most northeast corner of the State, the county represents both rural and urban areas, and its proximity to Lake Erie 

leads to some of the most extreme weather patterns in the country, 

especially this week. 

Local homelessness assistance program directors have expressed 

concern that the PIT data collection method for which they must 

abide is problematic in obtaining an accurate count of homelessness in this region. For one, homeless individuals in rural areas 

take shelter in hard-to-locate and spread-out locations, making it 

difficult to pinpoint and register individuals in the timeframe 

given.

Additionally, it is a safe bet at this time of year you are going 

to see some extreme weather, during which many homeless individuals take shelter in local businesses, such as laundromats, fast food 

restaurants, making it even harder to account for a large population of the vulnerable. 

Has your office evaluated any ways by which the assistance programs can collect more accurate data? And if so, what are your recommendations for doing so? 

Mr. MONTOYA. Thank you for your question, Mr. Joyce. We have 

not done any body of work on this particular program. I would be 

interested, and I have asked my staff to look into it, as to whether 

the systems that HUD uses to collect this data is something we 

could do analysis on to figure out where these accounts are occurring.

Recognizing they do do this one night every year, and every other 

year I think they go to those populations who are not in shelters 

in very specific areas. I think it would be difficult in all cases to 

sort of make sure you are not missing anybody. But we have not 

done any body of work. I certainly would be interested into looking 

into that a little bit deeper for you to see what we might be able 

to ask with regards to how complete this program really counts. 

Mr. JOYCE. Well, thank you very much. Mr. Price? 

Mr. PRICE. Thank you, Mr. Chairman. I, in this final round, 

would like to turn to an issue that is extremely important and 

needs to be addressed. And I hope that in the time remaining you 

can at least give a cursory update on your progress. Both departments, of course, have critical and sensitive information, technology 

systems, air traffic control, processing of federally insured mortgages, and on and on. And cyber attacks are a very real and a serious threat in all these areas. 

Every day outdated legacy information systems perform these 

critical tasks and yet pose unique information security challenges. 

And they are often fragile. They often lack the resiliency of their 

modern counterparts. So, just to take HUD alone, you note, Mr. 

Montoya, that the fiscal 2016 IT funding decreased 16.3 percent 

from the previous year, and then decreased another 16 percent in 

2017. So, constrained resources is a euphemism, I think, for how 

these agencies are operating in this area. And then looking ahead, 

maybe even more constraints. 
213

So, could you give us an update on what work remains to be done 

in improving the security and resiliency of legacy IT systems in 

each of your departments? Give us an idea of whether or not this 

can be achieved within existing resources. 

Mr. MONTOYA. Yes, Mr. Price. So, with ours, just to give you a 

sense, I think there is over 400 HUD IT products that are running 

on unsupported platforms. So, again, that goes to the critical need 

for that. 

To the extent that any budget cut will certainly have an impact 

on how quickly they can get to these security concerns and issues, 

but really for them, it is not even a matter of patching and security 

awareness, it is about creating new IT systems that can take over 

where these aging systems will eventually just—will stop. So, that 

is naturally the more critical aspect. 

So, even with any budget cut, I think it is going to have to be 

a real focus on the priorities, what has to come first and what 

should come first. And I think that would be my simplest answer, 

that even when it comes to our Department, at some point security 

patches really are not going to work on these things. So, it is beyond patching these things. It is really about moving them on to 

new systems. 

Mr. SCOVEL. Thank you, sir. For DOT, I would say somewhat 

much the same thing. There needs to be, certainly, prioritization of 

replacement for those key of the 460 or so IT systems that the Department of Transportation relies on. With regards specifically to 

your point about cyber attacks and vulnerabilities, of course we do 

the required FISMA audit every single year. 

We have highlighted across all the domains of cybersecurity 

areas where the Department needs to make progress. With regard 

to continuous monitoring, for instance, last year we found that with 

regard to one of the Department’s major networks, the monitoring 

tool had detected 110,000 weaknesses at the time, yet the Operating Administrations that rely on that network had not been informed where those weaknesses were, so that they could undertake 

remediation at that level. 

With regard to incident handling and reporting, we found similar 

shortcomings. The committee may remember that in 2014 there 

was a fire caused by a contract employee in the En Route Air Traffic Control Center near Chicago. The center had to be shut down 

for several weeks. The aviation industry reported losses of upward 

of $350 million as a result. Yet that significant incident had not 

been reported. Everyone knew about it because it was in the news, 

but it had not been reported officially to the Department, because 

the Department views FAA as separate and apart in its incidentreporting requirements. Neither FAA nor the Department had reported it to the Department of Homeland Security, to the U.S. 

Computer Emergency Readiness Team. Glaring, glaring deficiency. 

With regard to contingency planning, this is mentioned specifically in our longer statement. Of the Department’s 460 systems or 

so, we determined last year that 86 percent had not experienced recent or comprehensive contingency testing of its recovery plans 

should the inevitable cyber attack occur. 

So, those would be three areas where the Department clearly 

needs to prioritize its efforts. Longer range, ultimate fixes, like at 
214

HUD, may rely on upgrading, as financial resources permit, updating the networks themselves. But clearly in the meantime, there is 

much work to be done. 

Mr. PRICE. Thank you. Thank you, Mr. Chairman. 

Mr. JOYCE. Thank you, Mr. Price, Mr. Young. Well, I just want 

to thank both of you gentlemen, along with your staff, for all the 

answers and your participation here today. The committee staff 

will be in contact with the budget officers regarding questions for 

the record. I know I have a number of questions to submit, and I 

would imagine other members of the subcommittee do as well. And 

if you would work with the OMB to return the information for the 

record to the committee within 30 days from Friday, we will be 

able to publish a transcript of today’s hearing. 

Mr. Price, any final comments? 

Mr. PRICE. No, it was a very useful hearing. Thank you both for 

being here. 

Mr. JOYCE. Yes, thank you both. As a former prosecutor, I appreciate exactly what you are doing. And keep up the great work. 

Mr. MONTOYA. Thank you, Chairman. 

Mr. JOYCE. With that, this hearing is adjourned. 

Mr. MONTOYA. Thank you, sir. 
215

Mr. Culberson #I 

CDBG-DR Funding Remaining Unspent Years After Disasters 

This year will be the 9 year anniversary of Hurricane Ike's landfalL Last year, Mr. Culberson 

submitted a Question for the Record (QFR) inquiring about the local housing authority still using 

Ike disaster relief funds to build subsidized housing. The answer to the QFR stated that the $6.5 

billion in Disaster Recovery funds was to remain available until spent. As oflast year, $1.4 

billion of the funds remained unspent, and the answer to last year's question indicated that there 

is no mechanism available to recapture the unused funds. 

Question: What prevents the Department of Housing and Urban Development from recapturing 

disaster recovery funds that years after a disaster have not been disbursed? 

RESPONSE: Generally, the appropriations contain a timeframe, specified disaster, or location 

for which funds are to be provided. In allocating Community Development Block Grant Disaster 

Recovery (CDBG-DR) funds, the Department analyzes available data from the Federal 

Emergency Management Agency, the Small Business Administration, and other sources to 

determine the (I) estimated costs of unrnet recovery needs and (2) grant amounts. 

We have no authority to recapture CDBG-DR funds from grantees with remaining DR grant 

balances if there are no violations of program requirements or the terms of the grant agreement 

and the grantee continues to make eligible expenditures. Congress identified the existing 

CDBG-DR funds as "x year" or "no year" money, meaning that there is no expenditure timeline 

or deadline. The exception is the CDBG-DR funds awarded under Public Law 113-2, which 

requires a 2-year expenditure deadline for each obligation, a final obligation deadline, and a final 

expenditure deadline of2022. 

The Department has implemented (and is implementing) several actions that allow it to address 

open grants, including (I) hiring a staff member specifically focused on CDBG-DR grant 

closeout and grant tracking, (2) establishing target (not mandatory) closeout dates for CDBG-DR 

grants, (3) producing a monthly report of spending that identifies "slow spenders" based on the 

target (not mandatory) closeout dates, and (4) working with HUD field offices and grantees to 

establish voluntary closeout actions to meet the target closeout dates. In this fiscal year, HUD 

said that it closed CDBG-DR grants for Nebraska, Kentucky, Texas, and Florida, and there are 

other grantees for which it anticipates reaching grant closeout this year. 
216

HUD recognizes that there may be circumstances that affect closeout, including the capacity of 

the grantee, program launch challenges, litigation, and subsequent disasters and said it takes 

those reasons into account as part of the analysis of the progress of long-term recovery. 

However, we have also found that despite the time limit placed on newer disaster funds, HUD 

has been reluctant to enforce the time limit and has instead provided waivers to several grantees, 

such as Connecticut, North Dakota, and Tennessee. Further, for disaster funds, HUD started 

using a cumulative process 1

, which allowed some grantees not to hit the 2-year expenditure 

deadline when they otherwise would have. We has also found insistences ofHUD's failure to 

recapture funds in relation to other programs, such as the American Recovery and Reinvestment 

Act of2009 and the HOPE VI Program. In these cases, HUD's Offiee of Public Housing and 

Offiee of General Counsel redefined force account labor, obligations, and program income to 

support the claim that the funds do not need to be recaptured. 

1 Cumulative Disbursement Process: Under the new cumulative disbursement process, DRS! will 

continue to create the budget tables to be included in the grant conditions. The only difference in the new 

budget tables will be the elimination of the Program/Project Level descriptions within the grant 

agreement. Funds obligated under each grant agreement will be recorded separately with the respective 

2-year disbursement deadline associated with the amount of funds obligated. With implementation of the 

cumulative disbursement process, an amended grant agreement will be issued to each grantee, including a 

cumulative disbursement table (called the Cumulative Expenditure Schedule in the grant 

agreement). Grantees will be required to sign an acknowledgement statement accepting the revised tenns 

and conditions and return it to HUD in order to implement the new process. 
217

CDBG-DR Funding Remaining Unspent Years After Disasters 

Ouestion: In my district, the local housing authority is still using disaster relief funds from 

Hurricane Ike to build subsidized housing, including $26 million of CDBG-DR funding for one 

project that has an estimated per unit cost of $240,000. They are demolishing an office building 

to build the project. It is questionable to suggest that demolishing a functional office building to 

build subsidized housing is associated with hurricane destruction from 2008. Based on the most 

recent semi-annual report to Congress, $1.1 billion of obligated funds from Hurricanes Ike, 

Gustav, and Dolly have not been disbursed. Seeing as how Texas has had several major disasters 

in the past year, is HUD able to de-obligate these funds and re-allocate them for actual disaster 

recovery from storms that have impacted the area in the past two years? 

RESPONSE: No. HUD does not have the authority to recapture CDBG-DR funds awarded to 

grantees from previous appropriations and reallocate those funds to grantees for current disasters. 

Each CDBG-DR appropriation statute specifies the disaster(s) that can be funded; for example, 

2016 disasters, Hurricane Katrina, the State of Louisiana for the Road Home, etc. 
218

Mr. Graves #1 

Moving to Work Program 

1 am aware that HUD's Moving to Work program has had a number of challenges. Ideally, I 

think we all would want to see our public housing programs helping the most vulnerable people 

in society. We also want to see that we don't condone a cycle of dependency for folks to stay on 

government assistance-so it seems that this program makes a lot of sense. The best cure for 

joblessness and poverty, after all, is employment. 

Question: Could you summarize some of the challenges faced by the Moving to Work program 

and what lessons you and your team have learned through oversight and audits in recent years? 

RESPONSE: As noted in our management challenges, HUD's monitoring and oversight of the 

public housing agencies (PHA) participating in the Moving To Work (MTW) demonstration 

program are particularly challenging. The MTW program provides PHAs the opportunity to 

develop and test innovative, locally designed strategies that use Federal dollars more efficiently, 

help residents become self-sufficient, and increase housing choices for low-income families. 

However, in the more than 20 years since the demonstration program began, HUD has not 

reported on whether the program is meeting its objectives. 

In 2013, HUD developed crosscutting standard metrics to address the U.S. Government 

Accountability Office's (GAO) and our recommendations. HUD is just beginning to see results 

from those indicators and should soon be able to tell whether they are effective so it can start 

monitoring the progress ofPHAs with similar strategies. In addition, as the 39 MTW PHAs' 

contracts carne close to expiration, HUD could not agree with the current MTW PHAs on 

changes to the contract. ln the 2015 Consolidated Appropriations Act, Congress required HUD 

to extend the contracts until 2028 so no new reporting requirements could be added. This Act 

also prevented HUD from correcting a funding error that overfunds several PHAs. This 

overfunding of 11 PHAs will continue until2028. In December 2015, the 2016 Consolidated 

Appropriations Act authorized HUD to expand the program to include an additional100 

participants over 7 years without knowing whether participating PHAs are reducing costs to gain 

increased housing choices and incentives for families to work. These new participants will be 

added in cohorts or groups that 'hill be assigned to test one specific policy each. This should 

allow HUD to better obtain results regarding the initiatives it would like to test. 
219

Mr. Graves #2 

Moving to Work Program 

Question: Is the program achieving the goals envisioned when it was enacted? 

RESPONSE: In the more than 20 years since MTW became a "demonstration program", HUD 

has not reported on whether the program is meeting its objectives and it continues as a 

demonstration program. According to a 2012 GAO review, HUD has increased its efforts to 

monitor MTW PHAs' compliance with the program's statutory purposes and requirements. The 

GAO report concluded that HUD's recent initiatives were moving in the right direction in terms 

of ensuring MTW PHAs' compliance with statutory requirements, but it also concluded that 

without standard definitions and a systematic process, HUD could not effectively evaluate 

whether MTW PHAs are in full compliance with the statute. We also performed an audit several 

years ago and believe not enough has been done to define me tries and measure the success of the 

program. HUD missed the opportunity to gather baseline metrics when it began the program 

with the initial 39 PHAs. Since these two reports came out, HUD has developed crosscutting 

standard metrics to address this lack of data. As results become available over the next year or 

two, it will be clear whether it is collecting the data it needs to adequately monitor the MTW 

PHAs. 

In the expansion program authorized by the 2016 Appropriations Act, HUD will take a more 

proactive role in controlling the initiatives undertaken and information gathered. Law requires 

that new PHAs be added to the program in cohorts or groups of PHAs that target one specific 

policy change. By narrowing the focus to one policy and trying it at several different PHAs, it is 

possible to gather the needed data to properly analyze the policy being tested. As the expansion 

program is implemented, we may have an opportunity to reevaluate the program and HUD's 

efforts to better monitor the outcome of the MTW demonstration program. 
220

Mr. Graves #J 

Moving to Work Program 

Question: What are some other ways we could improve public housing to prevent a cycle of 

dependency? 

RESPONSE: Some examples are below. 

• HUD could improve how it promotes, tracks, and enforces the community service and 

self-sufficiency requirement. This would include taking action against individuals who 

do not meet the requirements and taking action against PHAs that do not adequately 

promote, track, and enforce the requirement. 

• HUD could perform better research of and enforce the income reporting requirements of 

tenants reporting $0 income (by possibly requiring an additional level of review, although 

more would need to be done to better identify what that could be). 

• HUD could provide incentives (reductions in rent) for families that have individuals 

spending more than 40 or 50 hours per week working, pursuing schooling, receiving job 

training, etc., so that those who are working to improve their situations are better able to 

save (this would be different from the Family Self-Sufficiency program and would be 

more focused on identifying those who are involved in greater work or educational 

hours). 

• HUD could provide incentives (reductions in rent) for families that need childcare in 

order to work, pursue schooling, receive job training, etc. 

In response to a HUD Office of Inspector General (OIG) audit that centered on overincome 

families continuing to reside in public housing, Congress was quick to act by drafting the 

Housing Opportunity Through Modernization Act which was signed into law by President 

Obama on July 2016. Section 103 of the Act requires PHAs to either evict overincome families 

after 2 consecutive years of exceeding the applicable income limitation or raise their rent to the 

applicable fair market rent for a unit in the same market area of the same size or the amount of 

the monthly subsidy of operating funds and capital funds used for the unit. It also requires PHAs 

to submit an annual report that specifies the number of families residing in public housing that 

had incomes exceeding the applicable income limitation and the number of families on the 

PHAs' waiting lists for admission to public housing. However, the implementation has been 

delayed. In November 2016, HUD published a Federal Register notice for comment regarding 

its implementation of Section I OJ of the Act. The notice sought comment on HUD's 

methodology for setting the overincome limit for areas where HUD has discretion to set higher 

and lower income limits based on local housing market conditions. The comment period expired 

on January 30, 2017. HUD received nine relevant comments and was reviewing them and 

preparing responses. The new administration was briefed on Section I OJ of the Act and 

provided a summary of the comments received. Action to issue a Federal Register notice making 
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Section 103 effective has been placed on hold pending further discussion concerning the impact 

of Presidential Memorandum 1 and Executive Order 13771 on implementation. 
222

Mr. Graves #4 

Moving to Work Program 

Question: I am aware of some of the laws that prevent implementation of work requirements in 

public housing programs; however, do you think implementing work requirements would be 

helpful? 

RESPONSE: Yes, work requirements for those other than the elderly and disabled can be 

implemented; however, work requirements can also be costly to the individual. There need to be 

considerations for overcoming barriers to working, such as transportation, childcare, education, 

and training. Other considerations could include rent reform policies that would create stronger 

financial incentives for tenants to engage in work and move toward self-sufficiency. However, 

HUD could better promote, track, and enforce the community service and self-sufficiency 

requirement. This would include taking action against individuals who do not meet the 

requirements and taking action against PHAs that do not adequately promote, track, and enforce 

the requirement. 
223

Mr. Joyce #I 

Section 8 Housing Program 

In two recent reports, one dated September 30,2016, and one as recent as March 3, 2017, the 

department cited abuse and mismanagement within the Section 8 Low-Income Housing Program. 

In the September 30, 2016 case, your office noted that the authority in question did not manage 

the financial operations of its program in accordance with HUD rules and requirements. 

Specifically, it"(!) disbursed $796,186 in program funds for unsupported transactions, (2) 

misclassified program fraud recovery proceeds, (3) did not terminate program assistance to 

noncompliant participants, and (4) did not void or reconcile its outstanding checks in a timely 

manner." In response to these findings, your office provided four recommendations to the public 

housing entity. 

In the March 3, 2017 case, which took place in another jurisdiction, your office found a 

management agent did not properly verify tenant eligibility, that the management agent 

requested subsidies for ineligible tenants and tenants not living in units, and among other 

alarming violations, did not retain tenant files. As a result, it received $144,556 in ineligible and 

$726,399 in unsupported housing assistance payments and could not account for at least $16,687 

in project rents owed by tenants. In this case, you also provided a series of recommendations, 

including that the management agent return the misused tax dollars. 

Question: In either ofthese cases, have you seen your recommendations fully implemented and 

has HUD been reimbursed for the taxpayer funds lost by these housing entities? If not, when do 

you expect to see these program safeguards implemented and the funds repaid? 

RESPONSE: Our recommendations have not yet been fully implemented in either of these 

audits. Specifically, for the September 30, 2016, audit, while $190,572 of the disbursed funds 

has been recovered, the final action target date for the support or reimbursement of the remaining 

$604,614 is June 30,2017. Additionally, our recommendations regarding the development and 

implementation of adequate internal controls over its financial management of program funds, 

ensuring that staff is available to monitor and enforce repayment agreements, and ensuring 

compliance with HUD rules and requirements regarding the Authority's current and future cost 

allocation plans have final action target dates of June 30, 2017, and September 30, 2017. The 

recommendation to obtain HUD training and technical assistance to ensure that the financial 

management of the Authority's program complies with HUD rules and requirements was closed 

as of April 6, 2017. 
224

The March 3, 2017, audit report was just issued. A proposed management decision 

(documenting the corrective action necessary to respond to the recommendation and the final 

action date when the corrective action would take place) would not be due from the Department 

for a minimum of 120 days after report issuance. 
225

Mr. Joyce #2 

Section 8 Housing Program 

Question: One of these instances of abuse was discovered after your office responded to a 

complaint. Does your agency have any other complaints of this nature pending an investigation? 

If so, how many? 

RESPONSE: HUD OIG often investigates allegations of waste, fraud, and mismanagement in 

government subsidized housing programs. After HUD OIG Office of Investigations (01) 

conducted a query of its criminal investigations covering Public and Indian Housing Programs 

and Multifamily Programs, which cover the subsidized housing programs, 01 determined it has a 

total of 498 open cases, 466 being opened pursuant to a complaint. 
226

Mr. Joyce #3 

Section 8 Housing Program 

Question: In each instance reported, nearly a million dollars were misused by just two single 

entities. Do you have reason to believe these cases are isolated or that the structure of the 

Section 8 program makes it vulnerable across the country to this gross abuse of taxpayer dollars? 

RESPONSE: Section 8 mainly involves multifamily subsidized properties and the Housing 

Choice Voucher program. The two reports mentioned are two of many reports issued regarding 

Section 8. While these issues arc not isolated, we work with IJUD to identify properties and 

PHAs that mismanage their programs. These arc often targets of OIG audits. 

Multifamily properties are governed by a regulatory agreement or HAP contract. This program 

is most susceptible to mismanagement and abuse by owners or management agents. Regular 

reviews by HUD or its contractor administrators are the best deterrents and tools for identifying 

improper actions. Referrals are also an excellent source for OIG to audit or investigate a 

property. 

The Housing Choice Voucher program is more complex in that the PHA has to work with both 

the tenant and landlord to provide housing. Both large and small PHAs face struggles, but the 

types of struggles ditTer. While large PHAs have economies of scale that can produce more 

excess cash, small PHAs usually have fewer people to check on each other (separation of duties), 

and theft can go undetected for longer periods. In smaller PHAs, executive directors also may 

not make much money and grant themselves perks to compensate, which hurts the tenants. 

In the example cited in your question, the property was managed by an identity-of-interest 

management agent2

, which allowed the fraud to occur without the buffer independent 

management would provide. The board was also not an effective governance structure as it 

consisted of the owner and her children. And the owner had a personal relationship with the 

HUD multifamily director. who had recently served a jail/prison sentence for fraud. Also, this 

property had abnormally high housing assistance payment amounts, which allowed the dollar 

amounts to add up more quickly. Most Section 8 properties usually don't have all of these 

characteristics. 

Two additional examples: 

In a March I 0, 2017, report, we noted that the allegations in a complaint regarding serious 

financial and operational mismanagement were valid regarding Irvington Housing Authority 

(audit report 20 17-NY-1 008). Authority officials spent program funds for unsupported and 

ineligible costs, excessive compensation was provided to the former executive director, HUD 

was not notified about litigations, deficiencies were noted in rent collection, program income 

was spent for ineligible and unsupported costs, and controls over procurement were inadequate. 

We questioned $95,240 in ineligible expenditures and $1.1 million in unsupported expenditures. 

2 A management agent is a person or company hired by a multifamily owner that operates the property on the 

owners behalf. 
227

In a September 28, 2016, report, we noted that the Housing Authority of the City of Rock Island, 

IL (audit report 2016-CH-1 007), did not comply with HUD's conflict-of~interest requirements 

when it did not obtain the services of an independent third party to perform housing quality 

standards inspections and rent reasonableness determinations for units it substantially controlled. 

As a result, the Authority inappropriately (I) paid nearly $454,000 in housing assistance to the 

entities and (2) earned nearly $44,000 in administrative fees. Further, HUD lacked assurance 

that the Authority acted in the best interests of its program households. 

One way the Office of Public and Indian Housing (PIH) can better manage the Housing Choice 

Voucher program is to focus on the modernization of its systems. Enterprise Voucher 

Management System (eVMS) will replace BUD's Central Accounting and Program System for 

vouchers. The new VMS system based on PIH Information Center data will allow HUD to fund 

the voucher program using more recent, actual expense data at the household level, versus at the 

PHA level. Uniform Physical Conditions Standards (UPCS) is the current physical standards 

used to measure the condition of public housing and multifamily units. UPCS-V is an inspection 

protocol and supporting information technology system that is currently in the demonstration 

phase (237 PHAs to participate) which replaces HQS for the Housing Choice Voucher program. 

The new voucher unit inspection protocol incorporates the pass or fail of housing quality 

standards into the rigor ofUPCS, thus unifying the inspection standards for all HUD affordable 

housing. 
228

Mr. Quigley #1 

Chicago Housing Authority and Moving to Work Programs 

Chicago, like most major cities, has significant demand for low income housing assistance. In 

the past, HUD has given the Chicago Housing Authority a great deal of flexibility when it comes 

to meeting the needs of the thousands of Chicagoans currently looking for housing help. 

Specifically, CHA [Chicago Housing Authority] is one of the nearly 40 PHA's given a Moving 

to Work designation. I strongly support the Moving to Work program and favor its expansion. 

Flexibility in providing housing opporttmities is important. 

However, Congressman Quigley believes there are some issues regarding oversight and 

transparency for this program. 

You may be aware that CHA seems to have developed quite a stockpile of unused funding. This 

January, the Chicago Tribune published and expose that claimed that CHA has paid down a great 

deal of its agency debt and funded its pension progran1s, while at the same time more than 

119,000 people remain on waitlists for housing assistance. 

The Tribune reported that between 2008 and 2013, the CHA issued 14,000 fewer low-income 

housing vouchers than the number provided by HUD and between 2005 and 2015, CHA's cash 

reserves grew 250% to $379 million and its bond debt fell from $346 million to $18 million. 

Question: Do you believe that this is an issue and HUD should have an active role in ensuring 

that federal housing dollars are used for housing purposes? 

RESPONSE: HUD does have a role in ensuring that funds are used as intended. In addition, 

we believe that growth of cash reserves at MTW PHAs is an issue in which HUD should have an 

active role in ensuring that Federal housing dollars are used for housing purposes. However, 

HUD gives the MTW PHAs a great deal of freedom and flexibility. As long as a PHA performs 

according to the programs and requirements laid out its MTW plan(s) and its MTW agreement, 

HUD is reluctant to take action against the PHA. 

In fiscal year 2012, PIH implemented procedures to reduce the amount of excess funds 

accumulating in PHAs' net restricted asset accounts, based on the results of our audit work. As 

of2015, most of the traditional PHA funds had been transitioned back to HUD, but HUD faced 

an additional challenge of quantifying and transitioning excess funds from its MTW PHA. This 

process was complex and time consuming because the composition of these balances included 

funding from other HUD programs and was not being tracked separately by HUD or the PHAs. 
229

During fiscal years 2015 and 2016. PIH worked with MTW PHAs to determine their 

accumulated balances. However, several PHAs reported that the amount should not be 

transitioned for a variety of reasons, such as that the PHAs used the accumulations as collateral 

and owed funds to other programs under the MTW program. IIUD had transitioned $218 million 

back as of September 2016. We are in the process of evaluating the amount transitioned to 

determine whether it is adequate to satisfy cash management requirements. 

Adding to this challenge, HUD continues to lack an automated process to complete the 

reconciliations required to monitor all of its PHAs and ensure that Federal cash is not maintained 

in excess of immediate need. We recommended that HUD automate this process during our 

2013 financial statement audit, and the matter was elevated to the Deputy Secretary for a 

decision on March 31, 2015. Two years later, we are still awaiting a response. 

In the case of the Chicago Housing Authority, in 2014, CHA opened its waitlists after they had 

been closed for more than 4 years. More than 282,000 people registered for the waitlist, which 

was the greatest number of people to have ever applied. This is an indication of the need for 

affordable housing in Chicago. In 2000, CHA implemented its plan for transformation. Under 

this plan, it was supposed to renovate or build 25,000 units of affordable housing. However. as 

of20!7, the plan had not been completed. Although CHA is required to report to HUDon its 

plans and use of Federal funds, the reports should be more detailed to allow for complete 

transparency. 
230

Mr. Quigley #2 

Chicago Housing Authority and Moving to Work Programs 

Question: What oversight does HUD provide in instances such as this and what actions might 

HUD take to ensure that the most people receive housing assistance possible? 

RESPONSE: During fiscal years 2015 and 2016, PIH worked with MTW PHAs to determine 

their accumulated balances. However, several PHAs reported that the amount should not be 

transitioned for a variety of reasons, such as that the PHAs used the accumulations as collateral 

and owed funds to other programs under the MTW program. HUD had transitioned $218 million 

back as of September 2016. We are in the process of evaluating the amount transitioned to 

determine whether it is adequate to satisfy cash management requirements. 

Adding to this challenge, HUD continues to lack an automated process to complete the 

reconciliations required to monitor all of its PHAs and ensure that Federal cash is not maintained 

in excess of immediate need. We recommended that HUD automate this process during our 

2013 financial statement audit, and the matter was elevated to the Deputy Secretary for a 

decision on March 31,2015. Two years later, we are still awaiting a response. 

Some additional actions HUD could take: 

• HUD could impose additional requirements for MTW PHAs to limit the amount of funds 

that PHAs can maintain (maybe a percentage of the amount awarded each year). It could 

also impose and enforce recapture requirements and penalties for PHAs that fail to use a 

certain percentage of the funds awarded each year for XYZ. 

• In addition to providing a maximum number of vouchers, HUD could provide a 

minimum number of vouchers that must be issued (unless there is no waiting list). It 

would also need to impose and enforce penalties for PHAs that fail to award the 

minimum number of vouchers in order for such a requirement to be adequately 

implemented and followed. 

In the case ofCHA, it is required to report on its program activities and the use of Federal funds. 

However. the reports should be sufficiently detailed, with support, to allow for complete 

transparency. HUD should revisit how it determined the baseline for the number of persons 

served. For instance, according to CHA's 2008 amended and restated Moving to Work 

agreement, CHA is required to assist substantially the same total number of eligible low-income 

families under MTW as it would have served without the demonstration. CHA entered into a 

Moving the Work agreement with HUD in 2000. Therefore, CHA's baseline for its program is 

based on the number of families served at the time it entered into the agreement back in 2000. 

The population of low-income families in Chicago has increased, and the housing prices have 

also increased, impacting the need for housing assistance, as demonstrated by the more than 

280,000 that applied for CHA's waiting list. 
231

Mr. Quigley #3 

Lead Contamination in East Chicago, IN 

Residents of a certain area of East Chicago, Indiana, including many public housing residents, 

were recently informed that the ground around their homes contained levels of lead that exceed 

safe limits. It is possible that the lead in this land has been present for decades, yet residents 

were permitted to live and recreate on the land during the intervening time, risking their health. 

Question: Will HUD OIG investigate the issue of when was HUD informed by the EPA 

[Environmental Protection Agency] or other agencies of the serious lead and arsenic 

contamination of the West Calumet Housing Complex, a public housing family development 

within the boundaries of a Superfund site. What steps did HUD take in response to this 

information to ensure the safety of the families and children who live there? When did HUD 

take those steps? 

RESPONSE: The Office of Audit initiated an internal review ofHUD's oversight of lead-based 

paint reporting and remediation in public housing in March 2017. At this time, the audit will not 

involve determining when HUD was informed by EPA or other agencies of the serious lead and 

arsenic contamination of the West Calumet Housing Complex, but we address your question 

below. However, if a child that resided in the housing development was reported as having 

elevated blood levels, the audit would involve determining the steps that HUD took in response 

to ensure the safety of the households and the remediation of the situation. 

Based on documentation that we received from PIH, it appears that the initial discussion 

regarding lead contamination and the impact on the residents of West Calumet Housing Complex 

occurred on June 1, 2016, through a series of conference calls between EPA and U.S. 

Department of Justice (DOJ) representatives and the Indianapolis Public Housing Director and 

Associate Regional Counsel. HUD's Office of Healthy Homes and Lead Hazard Control and 

Office of Community Planning and Development (CPD), Environmental Review Division and 

Administrative Law Division, were notified of this matter on June 2, 2016. PIH headquarters 

was briefed on the situation in early July 2016. 

Between June 2 and July 7, 20!6, staff from CPO environmental section and PIH's Office of 

Field Operations and Special Application Center in headquarters continued discussions with 

EPA and DOJ regarding tenant protection vouchers. the demolition and disposition process, and 

environmental review records. 

In a memorandum, dated June 28, 20!6, HUD's Indianapolis Public Housing Director notified its 

General Deputy Assistant Secretary that the East Chicago Housing Authority (ECHA) intended 

to apply for 346 housing choice vouchers for replacement housing at West Calumet Complex. 

On July 25, 2016, HUD's Office of Special Application Center received ECHA's application for 

the demolition of 1!2 dwelling buildings at West Calumet Complex so it could safely house 

residents living in the lead-contaminated site. PlH's Indianapolis office concurred with ECHA's 

request and forwarded it to HUD headquarters for approval. 
232

HUD developed options to assist the residents of West Calumet around July 15. The options 

included priority relocation for families with children under the age of 6 and women who were 

pregnant, assisting ECHA with relocating families to other public housing units that were not in 

West Calumet, and using existing vouchers under its current budget. Regarding the voucher 

issuance, HUD assisted with counseling for the families and ensured that ECHA followed the 

Lead Safe Housing Rule for units selected by the families. For those families that included 

children with elevated blood lead levels, HUD followed up with the health department on those 

children. 
233

Lead Contamination in East Chicago, IN 

Mr. Quigley #4 

Question: Will any such investigation include determination of what steps HUD took to ensure 

that the West Calumet public housing residents arc relocated, on a temporary or permanent basis, 

to housing that did not also contain lead (water, soil, paint) or other harmful environmental 

contaminants? 

RESPONSE: The audit will potentially address the action(s) undertaken by HUD, when it 

received knowledge that a child residing in the housing development had an elevated blood lead 

level. 

However, according to the Department, HUD assisted with counseling for the families, ensured 

compliance with the Lead Safe Housing Rule for new units, and followed up with the health 

department on children that had elevated blood levels. Voucher units received visual 

assessments for lead paint hazards, and public housing units received risk assessmentsinspections and lead hazard control abatement if it had not already been completed. If the home 

selected was in an area identified with soil hazards (as tested by EPA), ECHA required landlords 

to ensure that bare soil was covered until it was abated. Health departments in Indiana, Chicago, 

and Cook County provided risk assessments and case management for families of children with 

elevated blood lead levels. 

EPA managed all temporary relocations. 
234

Lead Contamination in East Chicago, IN 

Mr. Quigley #5 

Question: Will HUD OIG also investigate when East Chicago Housing Authority was informed 

by the EPA or other agencies of the serious lead and arsenic contamination of the West Calumet 

Housing Complex? What steps did ECHA take in response to this information to ensure the 

safety of the families and children who live there? When did ECHA take those steps? 

RESPONSE: The audit will involve the actions taken by ECHA when it became aware that a 

child residing in a housing unit had an elevated blood lead leveL 
235

Lead Contamination in East Chicago, IN 

Mr. Quigley #6 

Question: Will any such investigation include any determination of what effort ECHA has 

made to help the West Calumet public housing residents relocate, on a temporary or permanent 

basis, to housing that does not also contain lead (water, soil, paint) or other harmful 

environmental contaminants? 

RESPONSE: This question is best answered by HUD. The audit will not involve determining 

the effort ECHA had made to help the residents relocate, unless a residence reported a child with 

an elevated blood lead level. 

(237)

THURSDAY, MAY 18, 2017. 

EMERGING TRANSPORTATION TECHNOLOGIES 

WITNESSES

NIDHI KALRA, PH.D., SENIOR INFORMATION SCIENTIST FOR THE 

RAND CORPORATION 

PROFESSOR MYKEL KOCHENDERFER, STANFORD UNIVERSITY DEPARTMENT OF AERONAUTICS AND ASTRONAUTICS 

DAVID STRICKLAND, COUNSEL AND SPOKESPERSON FOR THE SELF– 

DRIVING COALITION FOR SAFER STREETS 

BRIAN WYNNE, PRESIDENT AND CEO OF THE ASSOCIATION OF UNMANNED VEHICLE SYSTEMS INTERNATIONAL 

Mr. DIAZ-BALART. Good morning. Let us call the subcommittee to 

order. Today we are here to discuss how new technologies are 

changing our transportation system, not to mention our entire 

world. We are going to focus our time today on two specific technologies: on Unmanned Aerial Vehicles, or what is commonly 

known as UAVs, and Automated Vehicles, also known as AVs, 

which those, in essence, are self-driving cars and trucks. 

I do not have to tell anybody that these are interesting and exciting times when it comes to technology that will make, whether its 

freight or travel, far more efficient and convenient; we hope, we 

think. It will clearly change the way we live and the way we work 

and, frankly, it is hard to imagine what we may be looking at in 

10 years, not to mention 20 or 30 years from now. 

Even more exciting is the potential for a much safer and a much 

more reliable and potentially more efficient transportation system. 

Last year there were over 40,000 deaths from auto accidents and 

90 percent of those were due to human error. By removing this 

human factor, the automated vehicles could theoretically one day 

save tens of thousands of lives every single year, and it is difficult 

to imagine what an incredible achievement that would be for our 

country and for mankind. 

On the unmanned vehicle aircraft side, I should say it appears 

that the future is, frankly, already here. The promise of drone and 

that technology is already beginning to transform our day-to-day 

lives. Together we need to figure out, to support innovation, how 

do we make sure that we continue to be on the forefront of innovation in our skies while also maintaining a world-class safety 

record? And I know all of us are proud of having the safest airspace 

on the planet. 

To realize those benefits of these new technologies we must 

strike a balance between obviously the promotion of innovation, of 

private innovation, and also of protecting the public interest and 

the safety of the public so these potentially disruptive technologies 

offer a world of new possibilities. But, the safety of the American 
238

people obviously has to always come first, and that is the balance 

that we have to deal with. 

All levels of government are going to play a role in safeguarding 

the public as these technologies come to market, and there is no 

doubt that agencies funded by this subcommittee will play a very 

active role in research and regulation of both UAVs and AVs. And 

in addition, to try to understand how these technologies will 

change the marketplace, the transportation networks, et cetera, we 

must also understand what is the appropriate role for government, 

and for the different agencies. 

So to help explore all of that, we are here today. I want to thank 

the members of the panel, this wonderful panel that I am, frankly, 

really, really, really, really looking forward to hearing from. 

But with that, let me recognize Mr. Price, the ranking member 

of the committee, and thank you, Mr. Price. You are recognized. 

Mr. PRICE. Thank you, Mr. Chairman. I join you in welcoming 

this distinguished panel of witnesses here today and look forward 

to receiving their testimony. This hearing is an important opportunity for us as appropriators to examine the emerging technologies in the transportation sector, particularly unmanned aerial 

systems and automated vehicles. 

In many respects these technologies have already arrived, as the 

chairman stressed. Drones are being used to help farmers inspect 

crops; utility companies check their power lines in remote or hardto-reach areas. Car manufacturers have already rolled out semiautonomous systems designed to help drivers detect and avoid 

crashes before they occur. I actually have one on my own vehicle, 

a remarkable cruise control system which does it for me when a car 

slows down in front. 

As these technologies mature they have the potential to provide 

enormous benefits to our transportation network and to society at 

large by enhancing efficiency and safety. But before this technology 

becomes ubiquitous, technologies from industry, academia, and government will need to grapple with a lot of issues, policy, regulatory, 

operational concerns. 

For example, as unmanned aerial system begin flying over population centers how do we ensure the safety of those on the ground 

as well as other aviation users in the airspace? How can we quickly 

identify drones when they fly into restricted or sensitive areas? 

As more and more cars on our roadways have semiautonomous 

driving features, how do we account for human behavior which 

both experience and research tell us can be far from rationale? 

Automated systems already generate immense amounts of sensitive 

user data. When these technologies proliferate in our transportation network, how can we use that data to improve our underlying technology while respecting privacy and keeping data safe 

from those who would abuse it? 

As appropriators we especially want to make sure that the Department of Transportation and its various component agencies not 

only have the resources they need to facilitate innovation and fulfill 

their critical safety oversight responsibilities, but that they are 

using these resources most effectively and with a full knowledge of 

the emerging technologies they are dealing with. 
239

I believe this hearing will provide an excellent platform to discuss these issues and inform our subcommittee’s work as we assemble our bill for the coming fiscal year. So, Mr. Chairman, I appreciate your calling this hearing and look forward to the testimony. Thank you. 

Mr. DIAZ-BALART. Thank you, sir. Let me introduce our distinguished panel. Professor Kochenderfer from Stanford University, 

the Department of Aeronautics and Astronautics, that is correct? 

Thank you, sir. 

Mr. Brian Wynne, president and CEO of the Association of Unmanned Vehicle Systems International. Thank you, sir. 

Nidhi Kalra, Ph.D. and senior information scientist for the 

RAND Corporation. 

And also then Mr. David Strickman, counsel and spokesperson 

for the Self-Driving Coalition for Safer Streets. 

I want to again, as I said before, thank each and every one of 

you for joining us this morning and we all really, really look forward to hearing from you. So with that, we will today begin with 

Professor Kochenderfer. 

Professor, your full written testimony will be included in the 

record and, with that, we look forward to hearing your 5 minutes. 

Mr. KOCHENDERFER. Thank you. Good morning, Chairman DiazBalart, Ranking Member Price, and members of the subcommittee. 

Thank you for the opportunity to discuss the integration of unmanned aircraft systems, or UAS, also commonly called drones, 

into the airspace. 

I am a professor in the Department of Aeronautics and Astronautics at Stanford University and a third-generation pilot. I am 

speaking solely for myself. 

For research over 10 years, it has involved statistical estimation 

of risk and development of technology for enhancing aviation safety 

and the safety of other transportation technologies. While at MIT 

Lincoln Laboratory, I developed a collection of airspace models directly funded by the FAA, DHS, and the Air Force. These models 

have been since used to estimate collision risk for manned and unmanned aircraft by government, academic, and commercial organizations around the world. 

My work has also led in part to the technology underlying the 

FAA’s next-generation Airborne Collision Avoidance System X, 

called ACAS X; the FAA is developing and flight testing a version 

of for unmanned aircraft. My students at Stanford University have 

been supporting this effort and the effort of NASA to build a UAS 

traffic management system, or UTM. 

I will begin by outlining the motivation for building a system for 

enabling the safe and efficient operation of drones. This new wave 

of unmanned aircraft technology has the potential to save lives and 

create jobs, as mentioned by Mr. Price. 

Drones are able to assist in the inspection of infrastructure, 

search-and-rescue operations, agricultural surveillance allowing 

famers to increase yields, more effectively use water resources, and 

reduce crop damage. In the medical space drones can enable the 

swift transport of organs for transplants and the delivery of medicine.
240

The transformative nature of unmanned aircraft technology on 

the benefits they bring to society are difficult to deny. However, 

there are significant worries about the reckless use of drones and 

the risks they pose to other air traffic participants as well as people and property on the ground. There are also concerns about the 

violation of privacy given that many drones are equipped with cameras and landowner rights to the airspace immediately above their 

property. These are all valid concerns, but I will focus my opening 

remarks on the challenges associated with the airspace integration. 

The airspace in the United States is the safest and most complex 

in the world. The FAA is charged with the responsibility for ensuring that this impeccable safety standard is maintained even with 

the proliferation of new airspace users, platforms, and applications. 

The UTM appears to be the best way forward for integrating 

these new users, allowing for the flexible use of the airspace while 

preserving the ability of the FAA to regulate the traffic as needed 

to preserve safety. The UTM is an air traffic management ecosystem for uncontrolled airspace. NASA has led the effort in developing the concept and prototype in the system with broad participation from industry, government and academia along with coordination with the FAA and the FAA test sites. 

The development of the UTM has aimed to identify the relevant 

services, responsibilities, information architecture, data exchange 

protocols, and so forth. The vision that has emerged from these research activities over the past few years is that the FAA maintains 

regulatory and operational authority for airspace and traffic operations.

The UTM would be used by the FAA to issue directives, impose 

constraints, and modify air space confirmations. But air traffic controllers are not required to actively control drones in controlled airspace. The FAA maintained situational awareness through the 

UTM. The FAA manages the Flight Information Management System, or FIMS, which interacts with various UAS service suppliers. 

A private entity can apply to become a USS, a UAS service supplier, and the various service suppliers coordinate with each other 

to—oh, thank you—coordinate with each other to provide service 

such as real-time position information and notification to drone operations and operators. The concept is that participation in UTM 

may allow, with FAA concurrence, exceptions from the current part 

107 requirements. 

I would like to conclude by saying that there is an opportunity 

for the United States to be a leader in the development of the UTM 

and ushering in the next generation of aviation bringing with it the 

benefits I mentioned earlier. Thank you for this opportunity and I 

am happy to be a resource to this subcommittee. 

[The information follows:] 
241

STATEMENT OF 

MYKELJ.KOCHENDERFER,PROFESSOR 

STANFORD UNIVERSITY 

HEARING BEFORE THE COMMITTEE ON APPROPRIATIONS, SUBCOMMITTEE ON 

TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES: 

EMERGING TRANSPORTATION TECHNOLOGIES 

Good morning, Chairman Diaz-Balart, Ranking Member Price, and Members of the Subcommittee. 

Thank you for the opportunity to discuss the integration of unmanned aircraft systems (UAS), also 

commonly called drones, into the United States airspace. 

I am a professor in the Department of Aeronautics and Astronautics at Stanford University and a 

third-generation pilot. In this testimony. I am speaking solely for myself. 

My research for over ten years has involved statistical estimation of risk and the development of 

technology for enhancing aviation safety and the safety of other transportation technologies. While at 

MIT Lincoln Laboratory, I developed a collection of airspace models, jointly funded by the FAA, DHS, 

and the Air Force. These models have since been used to estimate collision risk for manned and 

unmanned aircraft by government, academic, and commercial organizations around the world. My work 

has also led, in part, to the technology underlying the FAA's next generation airborne collision avoidance 

system called ACAS X that is currently undergoing international standardization. The FAA is developing 

and flight testing a version for unmanned aircraft. My students at Stanford have been supporting this 

etTort and the etTort of NASA to build a UAS Traffic Management (UTM) system. In addition, my 

graduate students have also been involved in advancing the theory and application of technologies 

relevant to automated driving. 

I will begin by outlining the motivation for building a system for enabling the safe and etlicient operation 

of drones. This new wave of unmanned aircraft technology has the potential to save lives and create jobs. 

Drones are able to assist in the inspection of infrastructure, such as communications towers, wind 

turbines, and bridges, with the potential to save worker lives every year. They are also able to assist in 

search-and-rescue operations, where finding victims is time critical. They support agricultural 

surveillance, allowing fanners to increase yields, more efficiently use water resources, and reduce crop 

damage. Amazon, Google, and other companies have been exploring the possibilities of using drones for 

package delivery. In the medical space, drones can enable the swift transport of organs for transplants and 

the delivery of medicine and defibrillators in emergencies. 

The trans formative nature of unmanned aircraft technology and the benefits they bring to society are 

difficult to deny. However, there are significant worries about the reckless usc of drones and the risks they 

pose to other air traffic participants as well as people and property on the ground. There are also concerns 

about the violation of privacy, given that many drones are equipped with cameras, and landowner rights 
242

to the airspace immediately above their property. These are all valid concerns, but I will focus my 

opening remarks on the challenges associated with airspace integration. 

The airspace in the United States is the safest and most complex in the world. The FAA is charged with 

the responsibility for ensuring that this impeccable safety standard is maintained, even with the 

proliferation of new airspace users, platforms, and applications. The FAA required the registration of 

small drones by February 2016, and by June 2016 there were 495,000 registered, considerably higher than 

the 320,000 registered piloted aircraft. Many of these aircraft are hobbyist. The FAA forecasts that the 

commercial drone sector will continue to accelerate. with the commercial fleet growing by a factor of ten 

from where it was in 2016. 

The UTM appears to be the best way forward for integrating these new users, allowing for the flexible use 

of the airspace while preserving the ability of the FAA to regulate the traffic as needed to preserve safety. 

The UTM is an air traffic management ecosystem for uncontrolled airspace. NASA has led the effort in 

developing the concept and prototyping the system with broad participation from industry, government, 

and academia, along with coordination with the FAA and the FAA test sites. The focus has been on the 

band of uncontrolled airspace between 200 ft and 500 ft above ground, high enough to avoid buildings 

and privacy concerns, but low enough to avoid interference with manned aircraft. The development has 

also focused on flights within line of sight, but the UTM can provide the capability for enabling 

beyond-visual-line-of-sight operations. The UTM may also be able to provide future support for other 

areas of uncontrolled airspace, such as above 60,000 ft, as well as support for passenger-carrying, 

mobility-on-demand concepts. 

The development of the UTM has aimed to identifY the relevant services, responsibilities, information 

architecture, data exchange protocols, software functions, infrastructure, and performance requirements. 

The vision that has emerged from these research activities over the past few years is that the FAA 

maintains regulatory and operational authority for airspace and traffic operations. The UTM would be 

used by the FAA to issue directives, impose constraints, and modifY airspace configurations, but air 

traffic controllers are not required to actively control drones in uncontrolled airspace. The FAA maintains 

situational awareness through the UTM. Operational concepts for drones that must transition into 

controlled airspace is an area of future research. 

The FAA manages the Flight Information Management System (FIMS), which interacts with various 

UAS Service Suppliers (USS). A private entity can apply to become a USS, and the various service 

suppliers coordinate with each other to provide services such as real-time position information and 

notifications to drone operators. The concept is that participation in UTM may allow, with FAA 

concurrence, exceptions from the the current Part l 07 requirements, enabling operations above 400 feet, 

beyond line of sight, or within 5 miles of an airport. 

I would like to conclude by saying that there is an opportunity for the United States to be a leader in the 

deployment of the UTM and ushering in the next generation of aviation, bringing with it the benefits I 

mentioned earlier. Private industry has played an important role in developing the UTM concept and 

prototype, and many of the development activities have been supported by their own investment. Many of 

2 
243

the air traffic research concepts that NASA has been exploring for decades are making their way into the 

UTM system. NASA should continue to be funded to work with the FAA to transition this research 

prototype to a deployed system. In addition, appropriate resources should be allocated to the FAA to 

support the interface with UTM. There are still open research questions related to establishing risk-based 

separation standards, micro-weather prediction. communication standards, and robust algorithms for 

sequencing and spacing. Addressing these research questions will require close collaboration between 

government, industry, and academia. It is in the interest of our nation to support the research needed to 

ensure aviation safety and efficiency as our technology evolves. The future of unmanned aviation is bright 

and has the potential to flourish into an entirely new industry with applications yet to be imagined. 

Thank you for this opportunity, and I am happy to be a resource to this subcommittee. 

3 
244

Mr. DIAZ-BALART. Thank you very much, Professor. We now recognize Mr. Wynne for your opening testimony. And as I said before, 

your written testimony will also be included in the record. You are 

recognized, sir, for 5 minutes, and thank you for being here. 

Mr. WYNNE. Thank you, Chairman Diaz-Balart, Ranking Member Price. I really appreciate the opportunity to be here this morning to testify at this hearing, speaking on behalf of the Association 

for Unmanned Vehicle Systems International, the world’s largest 

nonprofit organization dedicated exclusively to the advancement of 

unmanned systems and robotics, UAS, and the resources needed to 

fully integrate UAS safely and efficiently into the national airspace 

system.

As you know, UAS are regulated by the Federal Aviation Administration, which has taken several positive steps in the past few 

years. I hope to take a few minutes today to tell you about where 

the unmanned systems aircraft industry is going and how an appropriately funded FAA is necessary to help the industry reach 

new heights and create enormous economic value for the country. 

The FAA implemented the small UAS rule also known as part 

107 last August. It was the result of years of collaboration between 

industry and government that established a flexible, risk-based approach to regulating UAS. These regulations have been in effect for 

more than 8 months and there is strong evidence the commercial 

UAS market is poised for a significant growth. 

As of this month, there are more than 820,000 UAS registrations 

with the FAA, the vast majority of which are hobbyists. Of those 

about 62,000 platforms have been registered for commercial use. 

The FAA expects more than 400,000 UAS could be flying for commercial purposes over the next 5 years, a more than sixfold increase from today. 

An economic analysis by AUVSI projects the expansion of UAS 

technology will create more than 100,000 high-paying jobs and generate more than 82 billion to the economy in the first decade following full integration into the national airspace. These figures will 

likely go higher under the right conditions. 

In addition to part 107. an FAA extension measure was signed 

into law last year which would advance UAS research, expand commercial operations, and enhance the safety of the national airspace 

for all aviation systems manned and unmanned. While this extension measure will provide some short-term stability through September 2017, it is critical that Congress pass a long-term bill this 

year. A vital prerequisite for advancing UAS is an adequately funded FAA that can meet the employment and staffing needs required 

of the future as well as provide the necessary resources to update 

and automate the FAA’s infrastructure to support this new technology.

To safely manage the hundreds of thousands of UAS anticipated 

to operate in American skies, the FAA needs first and foremost to 

automate its UAS processes. Automation will also be important beyond part 107 for more complex operations. Many of its important 

management tools and processes which facilitate safer and more 

seamless UAS operations currently operate by manual data input 

or processing. 
245

If the UAS wants to remain a global leader in UAS innovation 

manual processes and out-of-date technology will not suffice. The 

FAA also needs additional employees who are dedicated to future 

UAS rulemakings to move us beyond part 107 and allow for more 

complex operations. More resources to advance UAS regulations 

will help enhance the safety and security of the annual airspace. 

We recognize that the recent budget agreement that this Congress passed and President Trump signed into law made some additional investments in the FAA. I would like to personally thank 

this committee’s leadership for providing resources to expedite UAS 

innovation. It is definitely a step in the right direction. 

I want to hasten to add that industry is not relying on the FAA 

and government alone to advance UAS. Industry is currently shouldering much of the R&D costs, finding solutions to make UAS fly 

higher and farther more safely and efficiently. Industry has also 

been a close partner with government in advancing a UAS traffic 

management system known as UTM and in developing standards 

for remotely identifying operators and owners of UAS. 

The UAS industry is primed for incredible growth thanks to industry representatives and government regulators nurturing innovation. Vital to these efforts, however, is an FAA that is appropriately funded and empowered to engage meaningfully in the process alongside industry stakeholders. 

Thank you again for the opportunity this morning. I will look forward to answering the committee’s questions. 

[The information follows:] 
246

UVSI PREPARED STATEMENT OF BRIAN WYNNE 

PRESIDENT AND CEO, ASSOCIATION FOR UNMANNED VEHICLE SYSTEMS INTERNATIONAL 

U.S. House of Representatives 

Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development and Related Agencies 

"Emerging Transportation Technologies" 

May 18,2017 

Chairman Diaz-Balart, Ranking Member Price and members of the subcommittee, thank you very much 

for the opportunity to participate in today's hearing. I'm speaking on behalf of the Association for 

Unmanned Vehicle Systems International, the world's largest non-profit organization devoted exclusively 

to advancing the unmanned systems and robotics community. AUVSI has been the voice of unmanned 

systems for more than 40 years, and currently we have more than 7,500 members, including many small 

businesses that support and supply this innovative industry. 

My comments today will specifically focus on unmanned aircraft systems, or UAS, and the resources 

needed to fully integrate UAS safely and efficiently into the National Airspace System. As you know, UAS 

are regulated by the Federal Aviation Administration, which has taken several positive steps in the past 

few years to help American businesses and individuals across the United States realize the potential of 

UAS. 

The potential for UAS in business is great. From inspecting pipelines to surveying bridges to filming movies, 

UAS help save time, save money and, most importantly, save lives. It is no wonder why thousands of 

businesses-small and large-have already embraced this technology, and many more are considering 

integrating it into their future operations. 

For years, AUVSI has been urging the FAA to use all available means to establish a regulatory framework 

for UAS, starting with finalizing the small UAS rule. We now have initial regulations governing civil and 

Page 1 of 6 
247

commercial UAS operations, which means even more businesses are cleared for takeoff. These regulations 

have been in effect for a little more than eight months, and there is strong evidence that the commercial 

UAS market is poised for significant growth. 

Much has been accomplished so far because government and industry has banded together to advance 

UAS. The collaborative process in which we have engaged, and the goals we share of supporting 

innovation and ensuring the safety of the national airspace, have made for a working relationship that is 

defined by both productivity and mutual respect. This has led to a more flexible and nimble approach to 

regulating UAS as well as to more businesses adopting the technology. The Unites States was once falling 

behind the rest of the world in embracing UAS; now our country is leading the way. 

There is still much more we need to accomplish, however, and I hope to take a few minutes today to tell 

you about where the unmanned aircraft industry has been, where we hope it will go, and how an 

appropriately funded FAA is necessary to help the industry reach new heights. 

looking back at other historical transformations in technology and transportation, on June 29, 1956, thenPresident Dwight D. Eisenhower signed "The Federal-Aid Highway Act of 1956," which authorized the 

construction of the national interstate and highways system. The 41,000-mile project came with an 

authorization of $25 billion dollars over a 10-year period, and it was the largest public works project in 

American history at that time. 

Per a February 2016 CBO report, "[i]nvestment in highways has made a significant positive contribution 

to economic growth. Studies of the economic returns from public investment in highways have found that 

the construction of the Interstate System was associated with sizable gains in productivity, especially for 

industries that use the road system relatively intensively."' With the past as prologue, I believe we are at 

a similar moment in time regarding the integration of UAS into the National Airspace System. 

In August of 2016, the FAA implemented the small UAS rule, also known as Part 107. The rule was the 

result of years of collaboration between government and industry that established a flexible, risk-based 

1 Congressional Budget Office, February 2016, "Approaches to Make Federal Highway Spending More Productive", 

https:/ /www. cbo.gov/ sites/ d efa ult/files/114th -congress·2015-2 016/reports/50150-Federa I_ Highway_ SpendingOneCo!. pdf 

Page 2 of 6 
248

approach to regulating UAS. This new regulatory framework helped reduce many barriers to low-risk civil 

and commercial UAS operations. In reducing those barriers, the rule allows businesses and innovators to 

harness the tremendous potential of UAS and unlock the many economic and societal benefits the 

tech no logy offers. 

It is clear American businesses are eager to take off and the demand for commercial UAS has exploded 

across a variety of industries. As of this month, there are more than 820,000 UAS registrations with the 

FAA, the vast majority of which are hobbyists. Of those, about 62,000 platforms have been registered for 

commercial use. The FAA expects more than 400,000 UAS could be flying for commercial purposes over 

the next five years-a more than six-fold increase from today. 

Part 107 has paved the way by allowing anyone who follows the rules to fly. Generally speaking, operators 

need to fly under 400 feet, within visual line of sight and only during daylight hours. However, recognizing 

the need for the rule to be flexible, the FAA created a waiver process under Part 107 that allows for 

expanded types of operations with the approval of the agency. 

To date, the FAA has granted more than 800 waivers to Part 107. An AUVSI analysis of the first 300 found 

that companies in 44 states were already taking advantage of the process. The vast majority of these 

companies are small businesses with fewer than 10 employees. More than 97 percent of waivers allow 

for nighttime operations, while others allow for flights over people, operating multiple UAS and operating 

UAS from moving vehicles. High profile use of these waivers includes the most recent Super Bowl halftime 

show, which featured an aerial light show made possible by Intel's waivers to operate multiple UAS at 

night. BNSF Railway received a waiver to conduct inspections of its sprawling rail network beyond line of 

sight. Other practical applications of these waivers include nighttime search and rescue operations and 

filming after sunset. 

Part 107 and its waiver process were just the first steps in creating a regulatory framework for full UAS 

integration. An economic analysis by AUVSI projects that the expansion of UAS technology will create 

more than 100,000 jobs and generate more than $82 billion to the economy in the first decade following 

full integration in to the national airspace. After witnessing the growth of the industry over the last few 

years and now with Part 107 in place, these figures will likely go higher under the right conditions and 

once we achieve full integration. 

Page 3 of 6 
249

In addition to the implementafion of the small UAS rule and the waiver process, Congress passed and the 

president signed an FAA extension measure which will advance UAS research, expand commercial 

operations and enhance the safety of the national airspace for all aviation systems-manned and 

unmanned. Notably, the extension calls for the creation of a comprehensive UAS research and 

development roadmap to coordinate industry and government R&D initiatives. The extension also 

outlines a pilot program for UAS Traffic Management (UTM). 

While this extension measure will provide some short-term stability through September 2017, it is critical 

that Congress pass a long-term bill this year that will set the industry and the country on a glide path to 

reap all the benefits of UAS. A vital prerequisite for advancing UAS is an appropriately-funded FAA that 

can meet the employment and staffing needs required for the future, including the federal rulemaking 

processes to achieve full UAS integration, as well as provide the necessary resources to update and 

automate the FAA's infrastructure to support this new technology and the growing demand for UAS 

services. 

The recent budget agreement that this Congress passed and President Trump signed into law made some 

significant investments for the FAA's UAS-related activity. I would like to personally thank this 

Committee's leadership for providing real resources to help expedite the integration of unmanned 

systems. It is a step in the right direction. 

At the same time, there is much more work to be done to help pave the way for a true, holistic plan for 

full UAS integration that includes beyond line of sight operations, flights over people, access to higher 

altitudes and platforms above 55 pounds. 

To safely manage the hundreds of thousands of UAS anticipated to operate in American skies over the 

next year, the FAA needs, first and foremost, to automate its IT systems to meet the growing demand for 

UAS services. Automation will also be important beyond Part 107 for more complex operations. The 

agency envisions creating a single online portal for all types of UAS users; automating its waiver and 

airspace authorization requests that allow access to certain segments of the airspace beyond Part 107; 

and automating its accident reporting and how it shares low-altitude data with non-federal agencies. 

Page 4of6 
250

These important management tools and processes, which facilitate safer and more seamless UAS 

operations, currently operate by manual data input or processing, requiring manpower and man-hours 

that the FAA simply does not have to spare at its current funding levels. With the new Congressional 

investments provided, hopefully the FAA will be able to adopt new automation technology into their backend systems. If the United States wants to remain a global leader in UAS innovation, manual processes 

and out-of-date technology will simply not help achieve that aim. 

The FAA also needs employees who are dedicated to future UAS rulemakings to move us beyond Part 107 

and allow for more complex operations. More resources to advance UAS regulations will help enhance 

the safety and security of the national airspace. 

Moreover, the industry is not relying on the FAA and government alone to advance UAS. Industry is 

currently shouldering many of the research and development costs to spur innovation, finding solutions 

to make UAS fly higher and farther more safely and efficiently. 

Industry has also been a close partner with government in advancing UAS Traffic Management (UTM) 

system, beginning with Low Altitude Authorization and Notification Capability (LAANC). It has also been a 

partner in developing standards for remotely identifying operators and owners of UAS, building on earlier 

registration efforts with real-time tracking of UAS operators. AUVSI recently collected papers on remote 

identification solutions for UAS from industry stakeholders to help the FAA meet its congressional 

directive under the 2016 FAA reauthorization extension to develop consensus for such standards. 

Another key example of collaboration is the Drone Advisory Committee, of which I am a member. RTCA is 

the supporting organization for this Federal Advisory Committee and it "was formed to provide an open 

venue for the FAA and key decision-makers supporting the safe introduction of UAS into the National 

Airspace System. Members of the Committee work in partnership with the FAA to identify and propose 

actions to the FAA on how best to facilitate the resolution of issues affecting the efficiency and safety of 

integrating UAS into the NAS." Through its Drone Advisory Subcommittee and three Task Groups, the DAC 

is working on providing consensus-based recommendations to the FAA on the issues of roles and 

responsibilities for federal, state and local governments, access to airspace, and short-term funding for 

the FAA's budget. These important collaborative measures will continue to be important to the growth 

and security of the UAS industry. 

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251

The UAS industry is primed for incredible growth, thanks to industry representatives and government 

regulators nurturing innovation that helps more businesses be more competitive in the marketplace than 

ever before. We hope that these efforts can be sustained and that we continue to reach new historic 

milestones in integrating this technology into the national airspace. Vital to these efforts, however, is an 

FAA that is appropriately funded and empowered to engage meaningfully in the process, alongside 

industry stakeholders. 

Thank you, again, for the opportunity to speak today. I look forward to answering any questions the 

committee might have. 

Page 6of6 
252

Mr. DIAZ-BALART. Thank you, Mr. Wynne. We now recognize Ms. 

Kalra. Again, your opening statements and your full testimony will 

be submitted into the record. And you are recognized. Thank you 

so much. 

Ms. KALRA. Chairman Diaz-Balart, Ranking Member Price, and 

distinguished members of the subcommittee, thank you for the opportunity to testify today on important emerging opportunities and 

risks created by autonomous vehicles. 

Now, in the interest of full disclosure, I want to let you know my 

spouse is the co-founder of a Silicon Valley startup working on autonomous vehicles, though his work has no bearing on my testimony or vice versa. 

Now, today, first I would like to talk about safety, and then I will 

briefly talk about mobility. Now, as you know, traffic crashes pose 

a public health crisis in the United States, and autonomous vehicles have the potential to mitigate this crisis, and as a society we 

want them to become as safe as possible, as quickly as possible. 

But they probably will not eliminate all crashes and may introduce 

new safety risks, particularly in the near term. 

So, please let me describe several challenges that stand in the 

way of managing the safety risks and realizing the safety potential, 

and then I will propose some solutions. 

The first challenge is that there is not yet a practical way to 

prove that autonomous vehicles are safe prior to allowing them on 

the roads for consumer use. 

Second, there is no consensus about how safe autonomous vehicles should actually be before they are allowed on the road. This 

means we neither know what test autonomous vehicles should have 

to take nor what would constitute a passing grade. 

Now, resolving these questions is urgent, because real-world 

driving experience is actually crucial for improving autonomous vehicle safety, but this presents a third problem, while in the realworld setting presents risk to early adopters and to other road 

users.

It is a lot like allowing a teenager driver on the road. They may 

not be good drivers yet, but they need experience to become good 

drivers. Until then, they pose risks to themselves and to others 

which we try to limit with learner’s permit restrictions. And we 

might need some policies for autonomous vehicles in their teenage 

years.

And there is a clear and essential role for sound policymaking, 

and I will make three recommendations. 

First, I recommend that we rapidly develop methods of testing 

autonomous vehicle safety. 

Second, I recommend that that these methods be used to shape 

a flexible, adaptive, regulatory framework that defines what safety 

thresholds must be met in order to put autonomous vehicles on the 

road.

A lower threshold of safety might be okay for demonstration 

projects designed to improve autonomous vehicle performance in 

controlled environments, but a higher threshold of safety would be 

warranted for widespread consumer use in uncontrolled environments.
253

Such new approach could, for example, be built into the changes 

that are being considered to exemptions to the Federal Motor Vehicle Safety Standards. Some autonomous vehicle developers are 

seeking a potential increase from today’s 2,500 vehicles per year to 

100,000 vehicles per year. But this is risky given the difficulty of 

assessing autonomous vehicles safety prior to widespread deployment.

Now, a two-phased approach might help. For example, initially 

allowing a small number of exemptions, and then after safety is 

demonstrated increasing the cap on exemptions, could be a viable 

path to deploying innovative vehicle designs while also managing 

risks.

Now, such a framework would likely fall under NHTSA’s jurisdiction, but NHTSA and Federal policymakers should work with industry, State and local policymakers, and the public. NHTSA has 

already released Federal policies for autonomous vehicles, but 

these do not specify testing methods or performance requirements, 

or yet develop such a framework. There also are not yet requirements, but industry guidelines for technology development and use. 

And a regulatory framework like the one I describe will take 

time, so in the interim I thirdly suggest that pilot studies and datasharing can help manage risks while encouraging technology development.

And before I conclude, I would like to briefly talk about mobility. 

Autonomous vehicles could improve mobility for millions of Americans who are elderly, young, have disabilities or live in poverty. 

But policies may be needed to make autonomous vehicles affordable, available, and accessible to these groups. Policymakers can 

incentivize developers to reach these markets faster than they 

might otherwise or integrate them into public transit. 

Policymakers may need to help developers make them accessible, 

for example, by complying with ADA Guidelines and building payment systems for these technologies. 

And while the cost of shared autonomous vehicles is expected to 

be low, policymakers could extend transit and peer-transit reduced 

fares to these technologies. 

To conclude, we cannot forecast the impact that autonomous vehicles will have on transportation safety and mobility in the decades to come, but we can shape that trajectory with well thoughtout policies. 

Thank you very much. I look forward to your questions. 

[The information follows:] 
254

Challenges and Approaches to Realizing 

Autonomous Vehicle Safety and Mobility 

Benefits 

Nidhi Kalra 

CT-475 

Testimony presented to the House Appropriations Committee, Subcommittee on Transportation, Housing and Urban Development, 

and Related Agencies on May 18, 2017. 
255

For more information on this publication, visit www.rand.org/pubs/testimonies/CT475.html 

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256

Challenges and Approaches to Realizing Autonomous Vehicle Saje(v and Mobility Benefits 

Testimony ofNidhi Kalra1 

The RAND Corporation" 

Before the Committee on Appropriations 

Subcommittee on Transportation, Housing and Urban Development, and Related Agencies 

United States House of Representatives 

May 18,2017 

C hainnan Diaz-Balart, Ranking Member Price, and distinguished members of the 

subcommittee, thank you for the opportunity to testify on the important emerging 

opportunities and risks related to autonomous vehicles. Autonomous vehicles have the 

potential to change transportation profoundly around the world. Today, I would like to discuss 

two important questions about the future of autonomous vehicles and how policies can shape that 

future. First, what can policy makers do to promote the safe deployment of autonomous vehicles? 

Second, how can autonomous vehicles improve mobility for Americans who currently may have 

limited mobility? I will focus most of my remarks on fully autonomous vehicles-those that can 

operate without a human driver some or all of the time-rather than on vehicles that require a 

human driver behind the wheel. 

Autonomous Vehicles Present Benefits and Risks to Safety 

As you know, traffic crashes present an enormous public safety crisis in the United States. 

Autonomous vehicles have the potential to significantly mitigate this crisis by eliminating many 

of the mistakes that human drivers routinely make.3 To begin with, autonomous vehicles cannot 

1 The opinions and conclusions expressed in this testimony are the author's alone and should not be interpreted as 

representing those of the RAND Corporation or any of the sponsors of its research. 

' -The RAND Corporation is a research organizlltion that develops solutions to public policy challenges to help make 

communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, 

nonpartisan, and committed to the public interest. 

3 James M. Anderson, Nidhi Kalra, Karlyn D. Stanley, Paul Sorensen, Constantine Samaras, and Oluwatobi A. 

Oluwatola, Autonomous Vehicle Technology: A Guide for Policymakers, Santa Monica, Calif.: RAND Corporation, 

RR-433-2-RC, 2014; and Daniell. Fagnant and Kara Kockelman, "Preparing a Nation for Autonomous Vehicles: 

Opportunities, Barriers and Policy Recommendations," Transportation Research Part A: Policy and Practice, Vol. 

77, July 2015, pp. 167-181. 
257

be drunk, distracted, or tired; these factors are involved in 29 percent, I 0 percent, and 2.5 

percent, respectively, of all fatal crashes: Autonomous vehicles could also perform better than 

human drivers because of better perception (e.g., no blind spots), better deeisionmaking (e.g., 

more accurate planning of complex driving maneuvers), and better execution (e.g., faster and 

more precise control of steering, brakes, and acceleration). 

However, autonomous vehicles likely will not eliminate all crashes. For instance, inclement 

weather and complex driving environments pose challenges for autonomous vehicles, as well as 

for human drivers, and autonomous vehicles might be worse than human drivers in some eases, 

particularly at early stages of testing and deployment.5 Autonomous vehicles also could pose 

new and serious crash risks-for example, cyber attacks could cause crashes.6 Clearly, 

autonomous vehicles present both potential benefits and risks to transportation safety. Several 

challenges stand in the way of managing those safety risks and maximizing the benefits. 

There Is Currently No Proven, Practical Way to Determine Autonomous Vehicle Safety 

Prior to Widespread Use 

A road test at the Department of Motor Vehicles assesses whether a person can perform a 

specific set of driving skills under regular traffic situations. Passing the test does not prove that 

the person will be a safe driver, but it is nevertheless viewed as an adequate basis for granting a 

permit or a license. Such road tests could similarly demonstrate that an autonomous vehicle can 

perform basic driving skills, but such a test would not be able to assess its safety performance. 

A logical alternative is to test-drive autonomous vehicles extensively in real traffic and 

observe their performance before making them commercially available. Even though the number 

of crashes, injuries, and fatalities from human drivers is high, the rate of these failures is low in 

comparison with the number of miles that people drive. Americans drive nearly 3 trillion miles 

every year.7 The 35,092 fatalities and 2.44 million injuries in 2015 correspond to a failure rate of 

1.12 fatalities and 78 injuries per I 00 million miles driven. Given that current traffic fatalities 

and injuries are rare events compared with vehicle miles traveled, fully autonomous vehicles 

would have to be driven hundreds of millions of miles and sometimes hundreds of billions of 

miles to demonstrate their reliability in terms of fatalities and injuries. Even with aggressive 

testing, this would take tens and sometimes hundreds of years for existing test fleets to drive 

these miles-an impossible proposition if the aim is to demonstrate autonomous vehicle 

4 This does not mean that 41.5 percent of all fatal crashes are caused by these factors; a crash may involve, but not 

be strictly caused by, one of these factors, and more than one of these factors may be involved in a single crash. 

National Highway Traffic Safety Administration, 20 16; and National Highway Traffic Safety Administration, 

"Drowsy Driving," Traffic Safety Facts: Crash Slats, Washington, D.C.: National Center for Statistics and Analysis, 

U.S. Department of Transportation, DOT HS 812 449, March 2011. 

5 Lee Gomes, Hidden Obstacles for Google 's Se(FDriving Cars: Impressive Progress Hides Major Limitations of 

Google 's Quest for Automated Driving, Massachusetts Institute ofTechnology, August 28,2014. 

6 Anderson et al .. 2014. 

7 Bureau of Transportation Statistics, 2015. 

2 
258

performance prior to releasing them on the roads for consumer use.8 In the meantime, human 

drivers would continue to cause avoidable crashes and enormous harms to people and property. 

Developers of autonomous vehicles and third-party testers need to develop innovative 

methods of demonstrating safety and reliability. This is a rapidly growing area of research and 

development. There are promising ideas. but no demonstrated and accepted methods of proving 

safety. 

There Is No Consensus on How Safe Autonomous Vehicles Should Be 

There is also no consensus on how safe autonomous vehicles should be. Some will insist that 

anything short of totally eliminating risk is an unacceptable safety compromise; it is acceptable if 

humans make mistakes, but not if machines do. However, waiting for autonomous vehicles to 

operate nearly perfectly misses opportunities to save lives, as it means the needless perpetuation 

of the risks of human drivers. It seems sensible to allow autonomous vehicles on America's 

roads when they are judged safer than the average human driver, allowing more lives to be saved 

while still ensuring that autonomous vehicles do not increase risk. It is even possible that some 

policymakers might choose to allow autonomous vehicles even when they are not as safe as 

average human drivers if developers use early deployment as a way to rapidly improve vehicle 

safety. The lack of consensus on this point is not a failure but rather a genuine expression of 

Americans' different values and beliefs when it comes to humans versus machines, but it 

complicates the challenge of developing safety benchmarks for the technology. 

Real-World Dn"ving Experience Is Needed for Safety but Poses Risks 

Resolving the above challenges is urgent because real-world driving experience may be one 

of the most important tools for improving autonomous vehicle safety and, by extension, road 

safety. Autonomous vehicle developers use the driving experience of individual vehicles to 

improve the state of the art in autonomous vehicle safety. The machine learning algorithms that 

govern autonomous vehicle perception, decisionmaking, and execution rely largely on driving 

experience to improve. Therefore, the more (and more diverse) miles that autonomous vehicles 

drive, the more potential there is for improving the state of the art in autonomous vehicle safety 

performance. 

Yet having autonomous vehicles learn from real-world driving experience presents its own 

problem: Learning in real-world settings implies risks to early adopters or to other road users. 

This is analogous to the risk of allowing teenage drivers on the road: They may not be good 

drivers yet, but they need experience to become good drivers. However, until then. they pose 

risks to themselves and to others. We have policies in place to try to limit risks from 

inexperienced young drivers, such as a minimum driving age and restrictions on Ieamer's 

permits. Those policies seek to balance the goal of long-term improvement with the need for 

near-term experience. 

8 Nidhi Kalra and Susan M. Paddock, Driving to Safety: How Many Miles qf Driving Would It Take to Demonstrate 

Autonomous Vehicle Reliability? Santa Monica, Calif.: RAND Corporation, RR-1478-RC, 2016. 

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The same will be true for autonomous vehicles. Choices made now about when and how 

autonomous vehicles are introduced for public use will affect not only safety in the near term but 

also how quickly the vehicles improve, at what near-term cost. and how safe they ultimately 

become in the future. 

What Can Policymakers Do to Promote Safety? 

First, feasible and sound methods of testing safety are urgently needed. These methods can 

be developed and proposed by industry, researchers and academics, or federal regulators. The 

methods need to be validated rigorously, objectively, and independently both to assess their 

statistical soundness, relation to existing safety and performance standards, and engineering and 

social considerations and to build confidence in the methods among diverse stakeholders. 

Second, testing methods should be used to develop a regulatory framework that articulates 

what safety performance thresholds must be met in order to put autonomous vehicles on the road. 

Importantly, the framework should balance the need for real-world autonomous vehicle testing 

with the need to protect the public from undue risk. For example, a lower threshold of safety may 

be acceptable for early demonstration projects intended to improve autonomous vehicle 

performance in controlled environments. A higher threshold of safety would be warranted for 

widespread consumer use in uncontrolled environments. Developing the appropriate thresholds 

of safety should be informed by research on levels of tolerable risk in automotive and other 

contexts, historical safety regulation and performance criteria, stakeholder values and 

preferences, and an assessment of how different safety levels could shape the evolution of 

transportation safety over the long term. Thus, establishing these thresholds requires a 

combination of objective evidence and subjective values. 

Such a framework could, for example, be built into the changes that are being considered to 

exemptions to the Federal Motor Vehicle Safety Standards (FMVSS). Manufacturers can seek 

exemptions from the FMVSS on the basis that their nonconforming vehicle designs are as safe as 

or safer than conforming vehicles and must provide evidence of this safety. Currently, no more 

than 2,500 vehicles can be sold annually per each safety-based exemption,9 but autonomous 

vehicle developers are seeking, and policymakers are considering, a potential increase up to 

I 00,000 vehicles per year. 10 However, this is risky given the difficulty of assessing autonomous 

vehicle safety prior to widespread deployment. A two-phased approach of initially allowing a 

smaller number of exemptions and then, after safety is demonstrated through deployment, 

increasing the cap on exemptions could provide a viable path to deploying innovative vehicle 

designs while managing risk. 

In the interim, the industry should be allowed to continue technology development with 

safeguards in place. A first step is to conduct real-world, lower-risk pilot studies of autonomous 

9 Exemptions may be granted on other bases, but the safety bases are likely most appropriate for autonomous 

vehicles. 49 CFR 555.6 

10 Greg Rogers. "Washington Preparing for Action on Automated Vehicles," Eno Transportation Weekly, April 27, 

2017. 

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vehicles for limited uses and in constrained environments. A second consideration is sharing 

driving data across the industry and with policymakers. 11 There are certainly serious concerns 

about protecting trade secrets, but these concerns could be addressed and must be balanced with 

the societal need for safe, autonomous vehicle technology. Data-sharing should also involve 

regular information about the number of miles driven, crashes, failures, and other information 

that can help provide early evidence of safety and security concerns. 

How Can Autonomous Vehicles Improve Mobility for Americans Who 

Currently May Have Limited Mobility? 

Mobility is essential for a rich, productive, and healthy life. Even with the increasing ability 

to interact online, the ability to get to work, visit friends and family, access health care and other 

services, participate in civic activities, and generally be connected to the outside world remains 

vital. Despite mobility's importance, many Americans have limited, sometimes very limited, 

mobility as a result of advanced age, youth, disabilities. or lack of means. Autonomous vehicles 

could help these people overcome the obstacles of limited mobility. 

The number of Americans 65 and older will increase from 48 million in 2015 (15 percent of 

the population) to 74 million in 2030 (23 percent). Driving is important to many ofthese adults' 

quality of life. Of adults over 65, 90 percent say they intend to age in place-and 80 percent live 

in car-dependent areas. 12 Eighty-five percent of adults aged 65 to 84 hold licenses, and almost 60 

percent of adults over 85 hold licenses. 13 

However, driving is risky for many older Americans. A recent study found that, when 

compared with drivers aged 55 to 64, drivers over 75 were more than 2.5 times as likely to die in 

a car crash, and drivers over 85 were almost four times as likely .

14 This increased risk of death is 

due both to increased likelihood of accidents and greater vulnerability to injuries. But giving up 

driving has risks as well. Driving cessation almost doubles the risk of increased depressive 

symptoms and is correlated with (though not strictly a cause of) cognitive, social, and physical 

declines and higher rates of entry into long-term care. 15 

In addition to older people, people with disabilities, adolescents, and people living in poverty 

face mobility challenges. In 2010,56.7 million individuals (18.7 percent of the population) 

11 The kind of data that are shared must be carefully considered. Different developers have very different 

autonomous vehicle technology designs, which may limit the lessons that can be learned from data-sharing across 

fleets. 

12 David Dudley, "The Driverless Car Is (Almost) Here." AARP The Magazine, December 2014/January 2015. 

13 Policy and Governmental Affairs Office of Highway Police Information, "Distribution of Licensed Drivers 

2014 By Sex and Percentage in Each Age Group and Relation to Population," web page, U.S. Department of 

Transportation, September 2014. 

14 AAA Foundation for Traffic Safety, "Drivers Over 65 Almost Twice as Likely as Middle-Aged Drivers to Die in 

Car Crashes, According to AAA Foundation Study," February 18, 2004. 

15 Stanford Chihuri, Thelma J. Mielenz, Charles J. DiMaggio. Marian E. Betz, Carolyn DiGuiseppi, Vanya C. Jones, 

and Guohua Li, "Driving Cessation and Health Outcomes in Older Adults," American Geriatric Society, Vol. 64, 

2016. pp. 332-341. 

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identified as having a disability. 16 Only 65 percent of individuals with disabilities drive. 

compared with 88 percent of individuals without disabilities. 17 Notwithstanding the Americans 

with Disabilities Act. which mandates that transit authorities operating a fixed route system 

provide paratransit or a comparable service to individuals with a disability, 18 individuals with 

disabilities often have limited mobility because of a lack of availability or access to services. 

There arc also 25 million Americans between the ages of 12 and 17 who have mobility needs 

but are not yet old enough to drive or are novice drivers. 19 Increased mobility can improve their 

educational. employment, and volunteer opportunities. 

Americans living in poverty also face mobility challenges. About 43.1 million people (13.3 

percent of the population) live in poverty.20 This includes older adults and many individuals with 

disabilities. In 2014, 10 percent of older adults and 28.5 percent of individuals with a disability 

had a yearly income below the poverty line.21 About 24 percent of households below the poverty 

line do not own a vehicle, compared with just 2 percent of households with incomes over 

$100,000. Individuals living in poverty are about three times as likely to take transit and 1.5 

times more likely to walk.22 Walking and transit can take much more time and limit travel to 

destinations that are accessible by these modes. Autonomous vehicles may provide more 

efficient transportation, which in turn provides the access to education, training, and work that 

helps people in poverty achieve upward economic mobility.23 

Affordability, Availability, and Accessibility Are Keys to Realizing Mobility Benefits 

Autonomous vehicles offer a promising solution for these mobility-challenged groups. Fully 

automated vehicles would allow many older adults, adolescents, and individuals with disabilities 

to travel by car without having to drive. They could increase their mobility, with all ofthe 

associated social and economic benefits, while mitigating much of the safety risk. Such vehicles 

may also provide access to automobile transportation for those who cannot afford taxis. 

Yet simply bringing autonomous vehicles to market might not fully solve the mobility 

challenges Americans face. Autonomous vehicles, like other transportation options, must also be 

16 Matthew W. Brault, Americans with Disabilities: 2010. U.S. Census Bureau, July 20!2. 

17 U.S. Department of Transportation, freedom to Travel, Washington D.C.: Bureau of Transportation Statistics. 

2003. 

18 U.S. Department of Justice, Information and Technical Assistance on the Americans with Disabilities Act, 2016. 

19 Federal Interagency Forum on Child and Family Statistics, ·'POP! Child Population: Number of Children (in 

Millions) Ages 0-17 in the United States by Age, 1950-2015 and Projected 2016- 2050," 2016. 

20 Bernadette D. Proctor, Jessica L. Semega, and Melissa A. Kollar, Income and Poverty in thE United States: 2015, 

Washington, D.C.: U.S. Census Bureau, September 2016. 

21 C. De Navas-Walt and B. D. Proctor, Income and Poverty in the United States: 2014. Washington D.C.: U.S. 

Census Bureau, 2015. 

22 Federal Highway Administration, "Mobility Challenges for Households in Poverty: 2009 National Household 

Travel Survey," FHWA NHTS Brief, 2014. 

"

3 Raj Chetty and Nathaniel Hendren, "The Impacts of Neighborhoods on lntergenerational Mobility: Childhood 

Exposure Effects and County-Level Estimates," Harvard University, 2015. 

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262

affordable, available, and accessible. Fortunately, autonomous vehicles may have advantages 

over conventional transit, taxi, or vehicle-sharing services that require human drivers. 

For many older adults, individuals with disabilities, and people living below the poverty line, 

the costs of a personally owned vehicle are prohibitive. The costs of a personally owned 

autonomous vehicle are expected to be substantially higher, particularly initially. Shared 

autonomous vehicles will be the key to affordability. Shared conventional vehicles are available 

for many people to use, either on demand or through a reservation system. and are typically payper-use. Some estimates suggest that the per-mile cost of using a shared autonomous vehicle 

service could be 30 percent to 90 percent less than owning a conventional vehicle or using 

conventional taxis, depending on the nature of the service?4 In other words, per-trip costs could 

be comparable to public transit, but with greater convenience and speed. Such fleets are likely to 

be privately owned and operated, but it there is potential for them to be integrated into a public 

transit system, particularly if the vehicles are multi-occupancy (e.g., autonomous vans and small 

buses). 

Second, shared autonomous vehicles must be available where people live. Car-sharing 

vehicles and taxis are not readily available in most small towns and rural communities because 

there are too few people to support the services. Poor urban areas are another underserved 

segment in today's mobility market. Public transit may not offer complete solutions, and taxis 

have historically been scarce because of low demand compared to wealthier urban areas.Z5 The 

lower cost of shared autonomous vehicles may increase mobility in these underserved regions, 

but only if the cars are available there. 

Third, shared autonomous vehicles need to be accessible, with vehicle design, websites, and 

technology interfaces consistent with the Americans with Disabilities Act and other accessibility 

standards and guidelines. Shared autonomous vehicles will also need diverse payment systems 

that do not require smart phones or credit cards. Meeting these design goals can be expensive. 

For example, the National Highway Traffic Safety Administration estimates that the cost of a 

new vehicle with adaptive equipment (e.g., mechanical hand controls, power transfer seats, and 

lifts and raps) can be $20,000-$80,000.26 However, creating an accessible autonomous vehicle 

may be cheaper than creating an accessible traditional vehicle, as it only needs to be modified for 

passenger use and not for driving. 

24 Lawrence 0. Burnes, William C. Jordan, and Bonnie A. Scarborough, Tran~forming Personal Mobility, New 

York: The Earth Institute, Columbia University, January 27, 2013; and Tasha Keeney, "What lfUber Were to Adopt 

Shared Autonomous Vehicles (SAVs)?" ARK Invest, June 22,2015. 

25 Mark W. Frankena and Paul A. Pautler. An Economic Analysis '!{Taxicab Regulation, Bureau of Economics, No. 

1103, May I984; Nelson \Nygaard, Boston Taxi Consultant Report, October II, 2013; and Hara Associates Inc., Best 

Practices Studies ofTaxi Regulation: Taxi User Surveys, prepared for San Francisco Municipal Transportation 

Agency, 2013. Today's ride share services may be helping provide better service in these underserved populations 

(see the Uber-funded study by Rosanna Smart, Brad Rowe, Angela Hawken, Mark Kleiman. Nate Mladenovic, Peter 

Gehred, and Clarissa Manning, Faster and Cheaper: How Ride-Sourcing Fills a Gap in Low-Income Los Angeles 

Neighborhood<, BOTEC Analysis Corporation, July 2015). 

26 National Highway Traffic Safety Administration, Adapting Motor Vehicles for People with Disabilities, June 

2015. 

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What Can Policymakers Do To Promote Mobility? 

All of this suggests that autonomous vehicles may increase mobility for historically 

underserved populations in a way that is more affordable, available, and accessible than existing 

transportation options. However, if policymakers choose to prioritize the realization of these 

benefits, certain policy options could be considered. 

First, policymakers could create incentives for manufacturers and service providers to 

prioritize these markets and reach them sooner than they might otherwise. Incentives could 

include cost-sharing programs, subsidies, or other financial levers. They could also include 

partnerships to integrate both public and private shared autonomous vehicles into existing transit 

and paratransit services so that they are complementary rather than competing. This might 

involve making payment seamless across modes, providing easy transfers across modes, and 

integrating scheduling. Private ride-sourcing services like Uber and Lyft are already working 

with transit agencies to provide connections to existing transit services, but primarily in urban 

areas. 

Second, policymakers could incentivize technology developers to ensure that accessibility for 

diverse populations is a priority when designing these vehicles. This could include facilitating 

collaboration between developers, health care providers. independent living centers and other 

facilities, and, most importantly, the users themselves. Participatory design would be key. 

Third, while the cost of shared autonomous vehicles may be lower than some transportation 

alternatives, public assistance may still be warranted. In many regions, seniors and individuals 

with disabilities use public transit at a discounted rate or even for free. Policies might be needed 

to extend these discounts to shared autonomous vehicle services. 

Conflict of Interest Statement: Nidhi Kalra 's spouse, David Ferguson, is co:founder and 

president ofNuro, a machine learning and robotics startup engaged in autonomous vehicle 

development. He previously served as a principal engineer for Google 's driverless car project. 

This written testimony was carefully reviewed by subject-matter experts within the RAND 

Corporation; the research quality assurance team for the RAND Justice, Infrastructure, and 

Environment division; and the RAND Office of Congressional Relations. However, the opinions 

and conclusions expressed in this testimony are the author's alone and should not be interpreted 

as representing those of the RAND Corporation or any of the sponsors of its research. 

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Mr. DIAZ-BALART. Thank you, Ms. Kalra. I am sorry I got that 

wrong. We now recognize Mr. Strickland. And again, your statement, your entire testimony, will be submitted for the record. We 

look forward to your testimony as well. Thank you, sir. 

Mr. STRICKLAND. Thank you. Mr. Chairman, Ranking Member, 

and members of this august committee, I thank you for the subcommittee’s interest in exploring the tremendous potential benefits 

provided by fully automated vehicles. I am a partner at Venable 

LLP, and testifying here today as counsel to the Self-Driving Coalition for Safer Streets. 

Additionally, I served as NHTSA administrator from 2010 to 

2014, when the agency issued its first testing guidance in 2013. 

The Coalition, whose members are the Ford Motor Company, 

Waymo, Lyft, Uber, and Volvo Cars, is focused on enabling the development and the deployment of level 4 and level 5 self-driving 

cars.

Despite these companies’ different backgrounds, they came together because of their commitment to bring the tremendous safety 

benefits of self-driving to consumers in the safest and the swiftest 

manner possible. 

The Coalition believes fully autonomous vehicles have a great potential to make our road safer and more accessible. In 2015, 35,092 

people died in motor vehicle crashes. The early estimates from 

NHTSA in the first half of 2016 suggest a 10.4 percent increase in 

roadway fatalities compared to the same period last year. 

Since an estimated 94 percent of all crashes are the result of 

human error, such as drunk driving, reckless driving, distracted 

driving, all your variance, fully autonomous vehicles may reduce 

these crashes because they remove human error from the driving 

process.

In addition, self-driving vehicles hold the promise to enhanced 

mobility for the disabled and the elderly, reduce congestion, and 

improve productivity. As you are aware, in 2016 NHTSA released 

voluntary guidance regarding the testing and deployment of autonomous vehicles. 

The Coalition supports NHTSA’s effort to construct a voluntary 

framework that would promote the expeditious and safe introduction of self-driving vehicles as a means of improving safety and mobility.

Today, I want to discuss three areas where we believe that the 

Congress can play a key role in promoting the safe and expeditious 

deployment. The Coalition first wishes that the FMVSS, or the 

Federal Motor Vehicle Safety Standards, be updated and modernized.

We feel that the development of an updated FMVSS to which, according to the automated vehicle policy, manufacturers could certify HAVs that do not have controls to permit operation by a 

human driver, i.e., no steering wheels, pedals, et cetera, the potential safety benefits of such vehicles would vastly reduce crashes 

caused by human drivers are enormous. 

Second, we will ask that NHTSA be granted the authority to expand testing and deployment. The Coalition supports NHTSA’s proposal in the policy to extend its statutory exemption authority. 
265

Limitations that currently exist under law are insufficient to 

achieve efficient and thorough testing. 

Current authority permits NHTSA to exempt not more than 

2,500 vehicles per year for a 2-year period on the basis of equivalent safety. There are other lesser flexibilities in the code, but none 

of them are sufficient to the task. To increase the exemption cap 

in a significant manner, the Coalition supports eliminating or raising the exemption cap to a level that will help facilitate meaningful 

commercial deployment of HAVs. 

To achieve this, the Coalition supports the NHTSA’s proposal to 

be provided new authority to ‘‘grant incrementally increasing exemptions of the same manufacturer, progressively relaxing the numerical limits on annual production volume and exemption duration over time, or even eliminating those limits altogether while following incremental one-step-at-a-time approach with a preference 

for the latter.’’ 

To be clear, the Coalition believes expanded exemptions should 

be conditioned on a demonstration to NHTSA of equivalent safety 

for the FMVSS for which an exemption or exemptions are sought. 

We strongly believe that the Congress should act to provide this 

authority to the agency immediately to fully enable the potential 

lifesaving innovations of level 4 and level 5. 

Third, and finally, to promote uniformity at the State and local 

levels. In the FAVP, NHTSA encourages States to focus on traditional areas of jurisdiction, such as licensing, traffic enforcement, 

and setting insurance requirements. However, we are concerned 

that the FAVP still provides a leeway for States to fill in gaps and 

build their own regulatory framework for automated vehicles. 

Recent and ongoing legislative activity in the States across the 

country has demonstrated the importance and the urgency of this 

concern. We encourage the Congress and NHTSA to signal to State 

and local authorities against rushing into legislating simply because the subject matter is new and novel. 

With that, I conclude my remarks, and I am open to any questions that the panel may have. Thank you so much, Mr. Chairman. 

[The information follows:] 
266

Testimony of: 

David Strickland 

U.S. House of Representatives 

Committee on Appropriations 

Subcommittee on Transportation, Housing and 

Urban Development, and Related Agencies 

Thursday, May 18,2017 

10:00 AM in 2358-A Rayburn 

Counsel, Self-Driving Coalition for Safer Streets 

Partner, Venable LLP 

Chaim1an Diaz-Balart, Ranking Member Price, good morning. It's an honor to appear 

before you today. I thank you for the subcommittee's interest in exploring the tremendous 

potential benefits provided by fully automated vehicles, more commonly referred to as 

self-driving cars. I am a Partner at Venable LLP and testifying here today as Counsel to the 

Self~ Driving Coalition for Safer Streets. The Coalition, which was founded in April of last year 

by Ford Motor Company, Waymo (formerly Google's self-driving car project), Lyft, Uber, and 

the Volvo Car Group, is focused on enabling the development and deployment of Level 4 and 

Level 5 self-driving cars. 

This cross section of companies demonstrates the widespread interest in developing this 

technology across different sectors-technology, automobile, and transportation networking. 

Despite their different backgrounds, the companies came together to form the Coalition because 

of their commitment to bring the tremendous potential safety benefits of self-driving cars to 

consumers in the safest and swiftest manner possible. 

The Coalition believes fully autonomous vehicles have great potential to make our roads 

safer and more accessible. In 2015, 35,092 Americans died in motor vehicle crashes. Early 

estimates from the National Highway Traffic Safety Administration (NHTSA) from the first half 
267

of2016 suggests a 10.4 percent increase in roadway fatalities compared to the same time period 

last year. Since an estimated 94 percent of all crashes are the result of driver error, fully 

autonomous vehicles may reduce fatal traffic crashes because they remove human error from the 

driving process entirely. In addition, self~driving vehicles hold the promise to enhance mobility 

for the disabled and elderly, reduce congestion, and improve productivity. 

As you arc aware, in 2016 NHTSA released voluntary guidance regarding the testing and 

deployment of autonomous vehicles. The Coalition supports NHTSA' s effort to construct a 

voluntary framework that would promote the "expeditious and safe introduction" of self-driving 

vehicles as a means of improving safety and promoting mobility. Today, I want to discuss three 

areas where the Coalition believes that Congress can play a key role in promoting the safe and 

expeditious deployment: 

1. Update the Federal Motor Vehicle Safety Standards ("FMVSS"). NHTSA should 

work with industry stakeholders to amend the relevant FMVSS to reflect that Level 4 and 

5 autonomous vehicles do not require human operations. 

2. Revise NHTSA's exemption authority to allow for a greater number of vehicles to 

be allowed on the road for testing and deployment of HA Vs. While the current 

exemption limits an exempted fleet for a manufacturer to up to 2,500 vehicles for up to 

two years, the need to accumulate results for autonomous vehicles in an expedited 

timeframe would require a significant increase in the fleet size and a longer exemption 

period for the fleet. This flexibility would provide multiple avenues for manufacturers 

and innovators to safely test and deploy a number of vehicle changes that would advance 

autonomous vehicle safety. 

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268

3. Encourage a single voluntary national framework for HA Vs focused on safety 

assurance. States should be discouraged from creating a patchwork of inconsistent laws 

and regulations that will stifle this emerging industry. The Model State Policy articulated 

in NHTSA's guidance has not, in the opinion ofthe Coalition, adequately achieved this 

objective. 

I would like to address each of these items in turn. 

1. Update and modernize the FMVSS. 

The FMVSS act as an impediment to autonomous vehicle testing and deployment 

because they require the design and inclusion of clements that are not applicable to or necessary 

for the operation of an autonomous vehicle without a human driver, yet nonetheless must be 

incorporated to comply with federal law. 

The Coalition strongly supports the development of updated FMVSSs to which, in the 

words of the Federal Automated Vehicle Policy (FAVP), •·manufacturers could certify HAYs 

that do not have controls to permit operation by a human driver (i.e., no steering wheel, brake 

pedals, turn signals, etc.)." We think such updated FMVSSs, which would provide for the 

self-certification of vehicles that would allow fully self-driving operation without the presence 

of, or capability to use, human operator controls in SAE Levels 4 and 5 vehicles, is an essential 

step to facilitate the widespread deployment of vehicles designed from the ground up to be fully 

self-driving. The potential safety benefits of such vehicles-which would vastly reduce crashes 

caused by human drivers-are enormous. 

In our comments on the FA VP guidance, the Coalition called upon NHTSA to pursue 

narrow rulemakings to amend the FMVSS that currently mandate human operator controls in 
269

L4-L5 HAYs. We urge NHTSA to give this rulemaking a high priority, and look to Congress to 

provide its necessary oversight role in ensuring that this rulemaking is timely undertaken. The 

Coalition will support the effort to amend and update the FMVSS by submitting to NHTSA 

suggestions for a new FMVSS. 

2. Grant NHTSA authority to permit motor vehicle safety innovation. 

The Coalition supports NHTSA's proposal in the FAVP to expand its statutory 

exemption authority. A broader exemption would enable manufacturers and technology 

companies to expand and improve the pathway to test and ultimately deploy. 

Limitations that currently exist under law are insufficient to achieve the goal of rapid, 

safe deployment and to attain the real benefits to consumers described above. Current authority 

permits NHTSA to exempt not more than 2,500 vehicles per year for a two-year period, on the 

basis of equivalent safety. Existing authority concerning "general exemptions" (49 USC 30113) 

provides some leeway for development and field evaluation of innovative features but its 

limitations on duration (two years) and vehicle numbers (2,500 in any 12-month period) do not 

provide for full deployment. 49 USC 30114 ("special exemptions") is limited to research, 

investigations, demonstrations, training, competitive racing events, show, or display. The 

recently enacted section 49 USC 30112(b)(IO) permits introduction of vehicles into commerce 

that do not comply with the FMVSS "solely for the purposes of testing or evaluation." 

To increase the exemption cap in a significant manner, the Coalition supports eliminating 

or raising the exemption cap to a level that will help facilitate meaningful commercial 

deployment of HAYs. To achieve this, the Coalition supports NHTSA 's proposal to be provided 

new authority to "grant incrementally increasing exemptions to the same manufacturer, 

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270

progressively relaxing the numerical limits on annual production volume and exemption duration 

over time, or even eliminating those limits altogether (following an incremental 

one-step-at-a-time approach)," with preference for the latter. To be clear, the Coalition believes 

expanded exemptions should be conditioned on a demonstration to NHTSA of equivalent safety 

for the FMYSS or FMYSSs for which an exemption or exemptions is/are sought. 

We strongly believe that Congress should act to provide this authority to the agency 

immediately, to fully enable the potentially life-saving safety innovations of Level 4 and Level 5 

systems and mitigate the safety risks of legacy controls unnecessary for such systems. This new 

authority would allow the deployment of innovative safety technologies that meet or exceed the 

level of safety required by existing federal standards, while ensuring a prompt and transparent 

process. The Coalition does not see expanded exemptions as a long-term replacement for 

industry-wide standards. Rather, we see such exemptions as a necessary measure to ensure that 

safety innovations do not have to await completion of rulemaking actions, which can consume 

several years. 

If granted by Congress, NHTSA' s new exemption authority would supplement existing 

NHTSA authorities, to expedite the safe introduction of life-saving HAYs. 

3. Promote uniformity at state and local levels. 

Congress must take a strong leadership position in clearly defining the federal and state 

responsibilities when it comes to HAYs. The federal government's exclusive mandate to 

promulgate and enforce motor vehicle safety standards has been observed for decades, and we do 

not believe HAYs present a reason to deviate from that well established precedent. 
271

In the FAVP, NHTSA encourages states to focus on their traditional areas jurisdiction, 

such as licensing, traffic enforcement, and setting insurance requirements. However, we are 

concerned that the FA VP still provides leeway for states to fill in gaps and build their own 

regulatory framework for HA Vs. Recent and ongoing legislative activity in states across the 

country-attempting to set forth varied and competing regulatory regimes for HA V testing and 

deployment, illustrates the importance and urgency of this concern. We encourage Congress and 

NHTSA to signal to state and local entities against rushing into legislating simply because the 

subject matter is new and novel. 

Inconsistency at the state and local levels will harm innovation and slow the deployment 

of this technology that has the potential to save thousands oflives. Should states and local 

governments move to enact disparate regulatory frameworks, it would reduce federal 

policymakers' ability to ensure that this country can move forward on safety. The success of 

autonomous technologies depends on access to public roads; states and municipalities play a 

great role, and we look forward to working with them to achieve scalable solutions. To the extent 

states wish to act in this area, the Coalition strongly urges them to examine and address existing 

laws and regulations that may serve as an impediment to testing and deployment, rather than 

implementing restrictive requirements that may, in fact, lead to more barriers to operations. 

The Coalition encourages opportunities to collaborate with local, state, and federal 

governments to ensure thoughtful and uniform testing and deployment, including through 

public-private partnerships, which will be integral to successful deployment of self-driving cars. 

Early engagement will ensure that the public sector's efforts are in sync with technological 

developments. Given the Coalition's enthusiasm for fully autonomous vehicles and our strongly 

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272

held view that self-driving vehicles have the potential to change the country for the better, we 

support efforts at the state level to facilitate the rapid testing and deployment of fully 

autonomous vehicles. Likewise, we have concerns with legislation in any state that unduly limits 

or impedes the advancement and public use of this technology. 

The Coalition appreciates the Subcommittee's proactive approach to understanding the 

future of self-driving cars and their potential to help consumers across the country. As the 

Subcommittee continues to explore this area, the Coalition looks forward to serving as a resource 

concerning both technical and policy questions and working with you to make fully self-driving 

cars a reality. 

l would be pleased to answer any questions you may have. 

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Mr. DIAZ-BALART. Thank you very much for your testimony. We 

are going to begin with the rounds as usual. Remember, as always, 

leave time for not only your questions, but the answers within that 

5 minutes. 

Let me start with a question to you, Professor. So you have 

worked with NASA, EFA, and UTM. 

Mr. KOCHENDERFER. Yes, sir. 

Mr. DIAZ-BALART. And so what are your observations regarding 

the relationship between the two in developing the UAS Traffic 

Management System? And we have heard a lot about that. So what 

is that relationship like? 

Mr. KOCHENDERFER. Yes. So, fortunately, NASA Ames is just 

down the street from Stanford, and so I have been able to participate in many of the meetings between NASA and FAA as well as 

industry. NASA in particular has been very successful in engaging 

industry in participation, and many of them have brought their 

own resources and investment to build up this UTM prototype. 

Both NASA and the FAA have worked together to put together 

some research transition teams, and that they have put together a 

Joint Management Plan. I think it is a very good relationship because the FAA in this context is the regulator and NASA is serving 

the role as a research organization and facilitating the connection 

with industry. 

And I would say that so far this has been very successful, but 

we do need to makes sure that the FAA is fully equipped to act 

upon the recommendations and so forth that have emerged during 

the development of the system. 

Mr. DIAZ-BALART. Professor, is there a timeframe for the actual 

deployment of the UTM system, and have NASA and FAA established milestones and goals? 

Mr. KOCHENDERFER. Yes, they have. I actually reviewed the report last night. They do have milestones. And it is important to understand that this is a very complex engineering problem. And in 

order to really address it, you need to take these baby steps and 

validate every step along the way. And so they have set appropriate milestones and so forth that will bring us closer to the goal 

of flexible airspace access. 

Mr. DIAZ-BALART. Thank you. Mr. Wynne, I would love to hear 

your comments on how the UTM effort is using public-private partnerships. How is that working? Is it working? 

Mr. WYNNE. I think it is. The concept of operations that the professor laid out in his testimony I think are extremely important; 

the FAA obviously needs to continue its role in managing the airspace. I think increasingly what we are developing, and industry 

is bringing to the table, is the ability to potentially offer services 

that offload that from the government and make it more widely 

available, and, more importantly, do so very, very quickly and 

interoperable with the existing air traffic control system. 

Mr. DIAZ-BALART. How can the FAA and industry, for example, 

cooperate or collaborate on research activities? 

Because the issue is, you know, they need to be flexible enough, 

to respond to issue changes and challenges. And so how do you see 

that happening? 
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Mr. WYNNE. Well, I think that a massive change inside of the 

FAA is—they have embraced this technology, recognizing that we 

are working on technologies that will scale much faster in unmanned systems, but will also benefit manned systems. So that is 

a very, very important step forward in mentality. And they also understand that the technology is advancing very quickly. So it is 

very difficult without the help of industry to understand how to leverage this, but I think that is happening. It is happening from Michael Huerta, the administrator, on down. 

Mr. DIAZ-BALART. Great. Mr. Price, I have some time left, but my 

questions are a little bit longer than that, so I will go to you now. 

Mr. PRICE. All right. Thank you, Mr. Chairman. Well, let me 

turn to our AV group and pose some questions that your testimony 

raises, especially yours, Mr. Strickland, but happy to have either 

of you chime in. 

You have referred to the NITSA Initiative here and the kind of 

guidance that has been offered for about a year now, I think, since 

that was issued. There have been about 50 bills, I understand, 

however, introduced in over 12 States affecting autonomous vehicles. Most of them were introduced before the NITSA guidelines 

were published. And I have imperfect information, incomplete information as to how much has actually been enacted in the State 

level, much less what kind of range of proposals, how wise they 

are, how consistent they are, what those look like. 

I wonder, Mr. Strickland, if you maybe for the record could furnish any inventory you or anyone else has of this, but here I would 

appreciate either of you characterizing these rudimentary regulatory efforts at the State level. Presumably, what we do not need 

is a patchwork of legislation that makes it impossible for these 

technologies to thrive for that matter, for there to be a consistency 

State to State that achieves the basic objectives of safety and efficiency.

So could you say more about this and the kind of guidance you 

believe is necessary beyond what NITSA has done, particularly, of 

course, the Federal role? 

Mr. STRICKLAND. Mr. Price, your assessment of what is going on 

in the States is correct. We have seen activity; over, you know, over 

50 bills in a number of States and they address a variety of number of issues, some of them that are well within the purview of 

what the States regulate, such as rules of the road issues, registration, financial responsibility. Those are all the appropriate State 

roles. The concerns are that the States may step in and become a 

non-Federal motor vehicle safety regulator. And that is incredibly 

problematic in terms of the motor vehicle manufacturing market 

consistency and the regulatory patchwork. 

For us, some of the—all the legislation from our perspective we 

do not think is entirely necessary for there to be safe deployment 

and testing of these vehicles. However, there are some issues that 

need to be taken care of at the State level. We would encourage the 

Congress and NITSA to really try to fill that space. Unfortunately, 

NITSA does not have a rule which they can then have the opportunity to preempt any inconsistent Federal motor vehicle safety 

standard or standard out in the States. So it really is going to be 

incumbent to really use the bully pulpit to really show Federal 
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leadership to encourage the States to really focus on those areas 

which are very necessary in order for us to have safe deployment. 

Ms. KALRA. Now, if I may add, you know, since those policy 

guidelines were laid out, you know, States do not actually want to 

pass technical regulations. They recognize that this is not something they necessarily know how to do well, it is not going to help 

the industry. So they were trying to, I think, fill in a gap. But since 

the indications are out that NITSA is rapidly working on this, I 

think we are going to see less of that. 

Now, to be clear, we already have a patchwork of different, you 

know, insurance rules and rules of the road. So the question is, can 

we not add to that particularly with a technical design? And I 

think we are seeing States back away from particularly those aspects of regulation now that NITSA is showing a lot of activity 

here.

Mr. PRICE. So both of you are saying that NITSA is on track? 

Mr. STRICKLAND. Yes. I would say NITSA at this point in trying 

to fulfill its leadership role is very much on track, recognizing the 

limitations of its being able to fill the space with a rule. It just does 

not have the time to do that and the market is moving so quickly 

that it is using all of its tools necessary to fill that leadership role, 

but it does have limitations. 

Ms. KALRA. I do not know if NITSA is on track. I do not underestimate the difficulty of the task that NITSA has, but I do think 

that there are areas that need serious attention, again related to 

how will we know how safe autonomous vehicles are and how safe 

should they be. 

Mr. PRICE. Thank you. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Valadao. 

Mr. VALADAO. Thank you, Chairman. I appreciate all of you taking some time to be here today. 

In addition to unmanned aircraft systems or drones simply being 

a hobby for many Americans, drones have various business applications in a variety of industries, including agriculture, which is obviously important to me and my district. Accordingly, Congress provided more than $20 million over the requested amount in fiscal 

year 2017 to further support and accelerate the safe integration of 

drones into national air space, including funds to support continued 

development of unmanned traffic management system. 

Mr. Wynne, why do you think the unmanned traffic management 

system implementation is so important to the long-term success of 

the United States drone industry, and in particular, how will it ensure safety, security, and most importantly for a lot of us, privacy? 

Mr. WYNNE. Yes, that is an excellent question, Congressman. I 

think that UTM first and foremost needs to be viewed on sort of 

an evolutionary basis, that NASA talks in terms of build, build 1, 

build 2, build 3, et cetera. And some of the technologies that are 

needed to fully implement that system are being developed as we 

go. So we are speccing those out. Ultimately what UTM envisions 

is the ability to do the most complex operations in urban areas, in 

congested airspace. There is a lot airspace out there that is not 

being efficiently utilized, and I think it offers tremendous opportunities for us to deliver the massive number and increasing number 

of packages under 5 pounds, just as an example, taking a very com-
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plex application and moving it forward. And that would take cars 

off the road, that would take trucks off the road, that would, you 

know, help us alleviate some of the congestion problems we have 

just as one of the externalities that are associated with this. 

All of these questions of what data is being utilized on the back 

end of that are being developed as we speak. I think the UTM system would allow us, for example, to segregate certain airspace that 

drones would naturally just go around. That will be extremely important from both a privacy and a security perspective, as well as 

safety.

Mr. VALADAO. So reading even just this morning about a prison 

in the U.K., this sky fence that is being built, I mean, how much 

is something like this going to play a role into—I do not know if 

you guys read this story. I mean, it is something I guess happens 

quite a bit where they are always trying to find ways to smuggle 

in drugs, cell phones, and things. There are some examples in the 

U.K. where they are using drones to drop them in over the fence 

lines, and the first place I guess in the world where they are actually installing a sky fence. It should be operational soon. And does 

something like that play a role in the future of this, especially from 

the privacy perspective? And how affordable can something like 

this possibly be if you are trying to protect, let us say, your home 

or your business from people coming and invading your privacy? Or 

even the prison system, where there—I represent a lot of prisons, 

too. I mean, is this something that they are looking into as well? 

Mr. WYNNE. Absolutely. The community that I have the good fortune to represent includes tracking, identification, counter solutions as well. Our foundations are fundamentally in the military 

and we have been expanding that into the commercial sector and 

into the civil sector. So the concepts that you were describing, obviously this will not be successful unless we do all of this flying safely and responsibly. The kinds of things that you are describing are 

already against the law. So anything that we can do to help individuals or organizations keep their property safe will obviously be 

brought to bear as well. 

Mr. VALADAO. All right. And one more question. Dr. Kalra, am 

I saying that right? 

Ms. KALRA. Good enough. 

Mr. VALADAO. Thanks. In your testimony you made the point 

that autonomous vehicles could pose a new and serious crash risk, 

for example, cyber attacks. Last fall the Department of Transportation released guidelines for the development of self-driving cars 

and made cybersecurity part of the 15 point assessment for autonomous vehicles. 

In your opinion, what role should government regulators play in 

keeping self-driving cars from hackers and what more could manufacturers be doing to secure vehicles against such threats? 

Ms. KALRA. You know, I mean, the issue of cybersecurity in autonomous vehicles really cannot be understated because these are 

large cyber-physical systems that if hacked could cause serious 

harm to people and property. The challenge, I think, and the challenge for the role of government is—I mean, part of is to create the 

right incentives, but the incentives are already there, so I think it 

is largely a question of best practices being followed in the indus-
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try. I mean, you know, cybersecurity cannot be sort of shrinkwrapped on top. You cannot make a car and then be like, oh, let 

us, you know, tape it up so no one can get in. It really has to be 

baked into the very design of the vehicle because the vehicle is not 

made by one manufacturer, it is made by many, many manufacturers. And so the industry may need to rethink cybersecurity as a 

supply chain issue as our vehicles become more connected rather 

than icing on the cake. 

Mr. VALADAO. All right. Well, my time is up. Thank you. 

Mr. DIAZ-BALART. Thank you, sir. Ms. Clark, you have a question?

Ms. CLARK. Thank you, Mr. Chairman and Ranking Member 

Price, and thank you to the panelists for being here. It is really a 

breathtaking technology and the changes that we are talking about 

that comes with many challenges. I cannot even picture AVs in 

Massachusetts. And we do a lot of things well, driving is not one 

of them, and the challenges you are going to have with our rotaries 

and our drives. 

But I wanted to talk to you about a challenge that I see coming 

with automated driverless cars. And I was looking at Census Bureau occupational data. Almost 3 percent of all working Americans 

are employed as drivers of some sort, truck drivers, cab drivers, 

bus drivers. And, in fact, truck driver is the most common job in 

29 of our States. In total, 4.4 million Americans age 16 and over 

earn their living driving a vehicle. So just for a comparison, that 

is more than 36 times the 121,000 jobs the coal industry has lost 

since 1985 when that industry’s employment peaked. 

So, Mr. Strickland, do you have a sense of how many of those 4.4 

million jobs will be replaced by autonomous vehicles and what role 

does the industry have in helping transition Americans to different 

employment, and what steps are being taken? 

Mr. STRICKLAND. Well, Ms. Clark, it is an excellent observation 

about the potential of disruption. And I do not need to tell you 

about the, you know, transitions in history which have changed 

employment prospects. This is nothing new for us. But what we 

can do is think about this prospectively and work in partnership 

with not only the private sector, but with the government, and sort 

of think about how we prepare the possibility of this transition and 

not knowing the exact scale of it. I think that is still to be determined.

One thing I just want to note, especially on the commercial truck 

driving side of the question, right now we are looking at about a 

shortfall of 50,000 drivers. They are constantly looking and constantly advertising. And one of the issues in the truck driving industry is that younger people are not interested in the profession 

and the current constituents that are in these professions are getting older. So in some ways this is a situation where, frankly, some 

levels of automation will probably help the industry maintain its 

productivity.

Second, probably in delivery, I mean, in the commercial driving 

industries, because it is not just a federally regulated concern, it 

is both State regulations, there is operator regulations from the 

Federal Motor Carrier Safety Administration, there is Hazmat with 

EPA, and all these other issues. Just to be blunt, you may not actu-
278

ally be able to have a fully unmanned truck driving universe just 

because of the risks with heavy-duty, over-the-road trucking. So 

that may be a situation where automation may assist, but may not 

necessarily fully replace. 

In the livery situation, however, to be determined on how it may 

impact. You may see in taxis in highly urban areas possibly have 

the diversity of unmanned transportation being available, but I 

think that is incumbent upon us as an industry and, frankly, the 

government, State and local, and Federal, to be able to work and 

think through these transitions so that we are prepared for that 

eventuality.

Ms. CLARK. So you said that the scale is sort of hard to know, 

but do you think that the timing—I have seen estimates that the 

timing really is 5 to 10 years when we are going to see big impacts. 

Does that timing sound right to you? 

Mr. STRICKLAND. I would say, Ms. Clark, that I do not think necessarily in terms of a wide-scale deployment that will actually 

cause displacement. I do not see that between a 5 to 10-year period. I think what you will probably be seeing is smaller deployments in more discreet areas. And this is just me speaking individually, not necessarily for the Coalition. Lots of our members have 

sort of different business plans. But I think when you are talking 

about rotating the fleet or rotating livery vehicles of that massive 

scale, it will take a long time to have a full replacement that is 

necessarily, say, a one-to-one replacement for taxis and black cars 

for self-driving. So I think you will probably see some aspects of it 

in smaller pieces, but it will be a much longer time before you 

probably see the type of job impacts that some people are estimating.

But I do not necessarily think that may be the case. 

Ms. CLARK. Ms. Kalra, I wondered—I only have a few seconds 

left—if you have anything briefly to add on this? 

Ms. KALRA. Yes. I would add that what is often not talked about 

in the job prospects is that adding access to transportation, to 

physical mobility, is often an incredible driver of economic mobility, 

and I think that should not be underestimated. The questions policymakers ask, on the one hand, while we are going to lose some 

jobs, how do we make sure that this technology is used so that people can actually get to better training, better education, jobs that 

they otherwise would not be able to get into so that we can create 

benefit, economic and job benefit to the same people that might be 

losing their jobs? 

Ms. CLARK. Thank you. 

Mr. DIAZ-BALART. Mr. Graves. 

Mr. GRAVES. Thank you, Mr. Chairman. Appreciate the panelists 

being here. This is a great discussion. And I think we can all in 

this room really appreciate the benefits here of the mobility and 

safety and technology and excitement of the advances that we are 

discussing.

I have basically two questions, but the first one is I am curious 

because I believe this technology, from an autonomous vehicle perspective, is driven mainly as a result of safety, safer roads. And I 

have not really heard any—and I came in a little bit late—any statistics that might indicate what the incident statistics might be, 
279

autonomous versus nonautonomous, and where is that going as an 

industry.

We hear a lot about flaws here and there, but I think we can all 

admit that sometimes we are distracted drivers in many cases. But 

what are some statistics that we are seeing? And I do not quite 

know who to direct the question towards, but if you could help us 

with that, incident statistics. 

Mr. STRICKLAND. Certainly. I am happy to start off and hand it 

over to Nidhi. 

As the Federal safety regulator for 4 years, the human tragedy 

that I had to deal with on an everyday basis is just astounding. 

And nobody really thinks about it because it is one our top 10 killers of our youngest people. It has been that way for a very long 

period of time. 

I am the chairman of Mothers Against Drunk Driving. Drunk 

driving crashes kill one-third of all traffic fatalities combined. Distraction, the numbers are not as good. About 3,500 people die because of distracted driving. And the numbers go up because of 

speed, because of all these issues we are talking about. If you 

eliminate human error, which 94 percent of all crashes have that 

element in it, you are going to make a huge improvement to safety. 

In terms of actually having a study of what a self-driving vehicle 

does and compare it to a regular driver, we do not have hard numbers as to, you know, the actual reductions because that is ultimately going to be a road-user data question. But I think from 

what we see from the technology of the vehicles being able to maintain the driving task, we are sure that we are going to be able to 

directly drive down human error significantly and ultimately we 

will be able to know those numbers as we get more testing on-road 

and we see more limited deployments. 

But the bottom line, sir, is that what we see and the 2 years of 

increases that we have seen in traffic fatalities is that our successes in eliminating bad driving behavior through the behavioral 

programs, you know, Click It or Ticket or all the drunk driving programs, they have gotten us to a point, but we are going to need 

this next technological evolution for us to really drive these numbers down to where we are seeing that maybe some time in the future, 30, 40, 50, 60 years from now, people are going to be wondering why we lost so many people to traffic crashes in the first 

place.

Ms. KALRA. I, too, am optimistic about the safety benefits, perhaps not quite as optimistic, though. Let me say two things. 

One is I caution about the use of the 94 percent statistic on 

human errors because often that is looking at the last line of defense before a crash occurs, and there are many things that lead 

to a crash. So, I absolutely agree that, you know, drunk driving, 

these kinds of obvious human errors, autonomous vehicles will 

never make those mistakes. 

We have to ask ourselves what new mistakes would they make? 

Basically, the fact that humans kind of stink at driving does not 

mean that a machine necessarily will be better. So, I caution about 

inferring that we are going to get rid of 94 percent of crashes. 

The second part is about statistics. The challenge is that although we have so many tragedies, so many fatalities on our road-
280

ways, we also drive an enormous amount. Americans drive 3 trillion miles a year, and that translates to, I am going to loosely approximate, 1 fatality per 100 million miles driven. 

What that means is, for example, say you had a 20 percent improvement in your fatality rate with autonomous vehicles, so they 

only have 0.8 fatalities per 100 million miles. To prove that with 

statistical confidence would require driving 5 billion miles, which 

is like going to Neptune and back and back again. That is way too 

many miles to drive with a test fleet where you have trained drivers behind the wheel. It is not going to happen. It would take hundreds of years. 

The thing is, once we get people on the road that is going to be 

easy because Americans drive 8 billion miles every single day. So, 

that is the conundrum: how do we determine the safety of the vehicles before we let our friends and our families in them? And I do 

not have an answer to that, and I think that is an urgent question. 

Mr. GRAVES. Thank you. I have just a few seconds, but from 

what I hear the purpose of this clearly should be safety. And what 

I hear is that even where technology is today, there is an indication 

that it is possible that autonomous vehicles can provide additional 

safety measures and prevent incident. We just do not know quite 

what the number might be. 

What I would be interested in in the future, Mr. Chairman, is 

how do insurance companies factor all of this in, and would my 

rates go down if I had an autonomous vehicle versus my own personal driving? And that might indicate where the safety measures 

are. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Mr. Aguilar. 

Mr. AGUILAR. Thank you, Mr. Chairman. Thank you, Mr. Ranking Member. 

Dr. Kalra, if we could continue down this safety path discussion 

with you and Mr. Strickland for a moment. You just said from a 

recommendation standpoint we just do not know enough yet. So, 

when will we know enough from a deployment perspective of 

whether a fleet of, let us just say autonomous ride-share vehicles, 

you know, when they will be safe enough to be deployed? And what 

recommendations from a policy perspective do you think we should 

consider?

Ms. KALRA. I think the reality is we will not know before the 

public starts—I think given the state of methods we have for testing, we may not know with the certainty we would like how safe 

these technologies are. We do not have a crash-test dummy or fuel 

economy testing standards. We do not have the analogy for this 

space.

What that means to me is that we would want to deploy the 

technology in ways that manage the risk even if we cannot quantify it. So, deploying it in favorable conditions, in well-designed environments with an informed public, informed participants, and 

doing our very best to make sure that there are things being done 

in the vehicle and outside the vehicle that address these risks. 

For example, having vehicles that drive at lower speeds or only 

in certain conditions where everyone is required to buckle up inside; they have the highest internal and external safety tech-
281

nologies. I think these are methods of managing the risk until we 

better understand what it is. 

Mr. AGUILAR. Mr. Strickland, if we can pick up on this, and let 

me add a component to it. I think from the folks that you represent 

they are going to be a little bit more potentially vertically integrated, right? So, they are going to be some of the manufacturers 

as well that can control more things. So, when we talk about the 

cyber risks that Mr. Valadao brought up, which are very real, it is 

a little easier when you are vertically integrated if they are designing, they are building, they are doing all this, they are not buying 

something else and then putting autonomous technology into it; 

they are developing it themselves and then building it from 

scratch.

So, can you talk about the safety component from that lens of 

kind of vertical integration, as well as when we know a fleet could 

be ready? 

Mr. STRICKLAND. Certainly, sir. Safety by design, especially in 

cybersecurity, and, frankly, all of the vehicle systems is a must. 

You can never think about safety after the fact because, as Ms. 

Kalra made note, it is an unsuccessful pathway. And if you are 

thinking about vehicle automation specifically or just cars in general, being a Six Sigma engineering prospect, making sure that you 

are 99.999 percent sure that the vehicle or the component is going 

to operate within its tolerances as it is designed is essential. 

The ease in terms of whether you have a company that is better 

integrated to do that or not is, frankly, to be blunt, not the important issue. The issue is to create the signal for all players on the 

marketplace that you have to comport and have safety by design. 

Now, there are going to be some combination of companies that can 

do that better because of its organization, but that should not be 

the driver of how you do it. 

But to circle back to when we are going to know when the cars 

are going to be safe enough to be used within some scales, I think 

a number of issues that Ms. Kalra brought up are very important. 

But I also want to contrast to the fact of how we think about design and test new systems on vehicles today, things like adaptive 

cruise control, I think the Ranking Member says he has on his vehicle, or Crash Imminent Braking systems or Electronic Stability 

Control. There was no special construct or limited environment for 

any of these technologies as they were deployed, and they were 

very, very important. 

Now, what you had was two things. You had manufacturers and 

component designers that, frankly, looked at their own particular 

risks in terms of deploying new technologies for possible commercial deployment, which is a huge limiter on how much risks are 

being taken. That is number one. Number two, you have NHTSA, 

which uses its defect authority, which is whether or not something 

on the vehicle poses an unreasonable risk to safety. 

The combination of these two things have allowed for us to have 

numerous vehicle innovations without there having to be any new 

Federal motor vehicle safety standard established beforehand. I do 

not think that we need to think about self-driving vehicles. There 

are some different variances because we are talking about full control of the vehicle. 
282

But we should not stray away from the native way that we have 

done this for, frankly, over 50 years in vehicle design. And I think 

that it has proven to be very successful and that we have gotten 

these things that are life-saving on the road. For example, Electronic Stability Control was invented by Mercedes in 1990. That 

technology now deployed throughout the fleet and mandated in 

2012 saves tens of thousands of lives a year. That is what we are 

so concerned about. If we slow this technology down, we lose the 

opportunity to save lives. 

Mr. AGUILAR. Thank you. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Mr. Dent. 

Mr. DENT. Thank you, Mr. Chairman, and thanks for putting on 

this hearing. 

Dr. Kalra, a small business in my district, Royal Truck and 

Equipment, has developed the world’s first autonomous truckmounted attenuator, or ATMA. You see them on the backs of 

trucks, if an errant vehicle crashes into it, so not to hurt the construction workers. You see them in the work zones, they are placed 

in the construction zone to absorb the impact of that errant vehicle. 

Currently, these vehicles must have a driver who is understandably placed in a dangerous situation. By developing an autonomous 

version of this vehicle the driver can be taken out of harm’s way. 

The technology is being tested in London. It will be tested next 

month for use in Colorado by their DOT. 

Given the dangerous environment that these TMA truck drivers 

operate in, it seems to me that making such operations autonomous could help save lives while still performing the important 

tasks that those trucks carry out for construction crews. Would you 

agree with that? And if so, what do you see are the biggest impediments toward further exploring and implementing such technologies?

You have seen them on the backs of trucks, you have seen them 

on highways, they make them in my district. But they want to 

have an autonomous vehicle because the guy who is driving that 

truck obviously is there to take the impact of the errant vehicle. 

It seems like this technology might make sense. But you see them 

on the roads. 

Ms. KALRA. I hope you will forgive me, but I am simply not familiar enough with either the problem or the solution that is being 

proposed to have an informed opinion. So, anyone else. 

Mr. DENT. Okay. Maybe Mr. Strickland or somebody who is familiar with it. 

Mr. STRICKLAND. I am familiar with it, but just basically as an 

adjunct to improve crash protection on commercial heavy-duty 

trucks. I think the bottom line being for the entire heavy-duty and 

medium-duty fleet any technology that, frankly, helps reduce this 

driver error issue, number one, but also, frankly, makes it more 

protective for others when you are in the eventuality of a crash is 

always a good thing. 

And, you know, there are a number of technologies that are, 

frankly, being put on the trucks now, such as Electronic Stability 

Control for heavy-duty systems, things of that nature. So, yes, I am 

familiar with it and, yes, it would be an improvement. 
283

Mr. DENT. I have been seeing these demonstrations. I see them 

on the highways and I thought, well, this would be great. You put 

a driver in one of those trucks, and to take the impact, well, that 

would be a great use for a driverless vehicle. So, okay. Well, 

thanks. Maybe we will follow up with you on that. 

Professor Kochenderfer, I am supportive of the UAS Traffic Management, UTM, work being carried out by NASA and the FAA, and 

I would like to see how those initiatives move forward in a manner 

that allows for the safe, efficient integration of the UAS as soon as 

possible. The recently enacted fiscal year 2017 Appropriations bill 

provided additional funds for NASA’s UTM efforts to help ensure 

the safe integration of UAS into the national airspace system. 

Looking at our current work on fiscal year 2018, do you feel that 

a continued emphasis on promoting UTM will help to fulfill the 

goals of establishing a system that safely manages diverse UAS operations in the airspace in both suburban and urban areas in a 

timely manner? 

Mr. KOCHENDERFER. Yes, it is definitely helpful. As you know, 

there are a number of challenges that need to be addressed in the 

near term, and those dollars will be extremely helpful in addressing things like communication and data challenges. It will be important in hiring the right people with the right areas of expertise. 

It will help in terms of transitioning the UTM to a deployable system.

I think another priority is continuing with these pilot programs. 

As I mentioned before, this needs to be an incremental process, and 

this will be another important area of research over the next few 

years.

Mr. DENT. If I could follow up, I understand there are many individuals, both in the government and the general public, who would 

view UAS more as a threat to public safety than as an innovative 

technology to generate positive change. 

What are some of the most effective initiatives that the UAS industry has undertaken to help alleviate some of those concerns, 

and how can Congress help to facilitate further collaboration and 

cooperation between the FAA, NASA, and UAS industry and other 

Federal agencies, like DHS and FBI? 

Mr. WYNNE. Actually, in those conversations, very immediately 

we have a meeting on Monday to discuss this as well with many 

of the key law enforcement agencies. 

I think a simple example, sir, is right now, most of the drones 

are flying somewhat anonymously, as it were. We need remote 

identification technologies, and our organization put out a call for 

papers on that on behalf of the FAA, and we got almost 50 papers 

back from some very sophisticated organizations inside of 2 weeks. 

This technology needed to be developed. It is in the concept of operations for UTM. We just moved it up very, very quickly, and are 

working on that, and we are doing that with DHS, with members 

of the Department of Defense, et cetera, and with the Department 

of Justice. 

Again, industry collaboration while we are bringing the solutions 

to the table. 

Mr. DENT. Thank you. 

Mr. DIAZ-BALART. Mr. Joyce. 
284

Mr. JOYCE. Thank you, Mr. Chairman. Thank you all for being 

here today. Mr. Strickland, I would like to ask you, since you have 

some expertise in NHTSA, being familiar with the research centers 

the agency utilizes, including the Transportation Research Center 

in Ohio, what role have these sites played in helping develop HAV 

technologies, and how can Congress assist these centers to expedite 

the deployment of HAVs onto our roadways? 

Mr. STRICKLAND. Well, you gave me a moment to brag about my 

old staff. They really are some of the best and brightest in the 

world in terms of automotive research and especially in the safety 

space.

The TRC in East Liberty, Ohio, is a fantastic facility, but I believe they would be helpful in deployment if they had more resources to address a number of these issues, specifically their ability for simulation training—simulation testing, I should say. 

I think also their work in battery research would be very essential because there seems to be a strong nexus with having automated vehicles have a high level of electrification, but it is not necessarily individually set. You could have a regular internal combustion engine and the car would also be an AV. 

I think an important aspect of resources is, frankly, of all the not 

sexy things, is the Counsel’s Office. They are a fantastic group of 

lawyers, but, frankly, thinking about the evaluation of exceptions, 

a number of these other issues that are going to be coming to the 

office making decisions about testing, they need more resources 

there to help expedite these requests across a variety of things, but 

specifically for automated vehicles. Being able to get these decisions out quicker would help get thoughtful decisions being made 

and get these vehicles deployed quicker. 

Mr. JOYCE. You may not be aware, but the State of Ohio has also 

recently put money into that center. 

Mr. STRICKLAND. I know very well. 

Mr. JOYCE. Since the time you left. We would like to continue to 

see some of the testing done there, and any expertise you could 

lend to that would be quite helpful. 

Mr. STRICKLAND. Mr. Joyce, I would be happy to help in any way 

I can. 

Mr. JOYCE. Great. Thank you very much. Nothing further, Mr. 

Chairman.

Mr. DIAZ-BALART. Mr. Joyce never misses an opportunity to push 

for Ohio. Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chairman. This issue goes out to 

anybody who wants to try to dive into it. I have asked my colleagues to think about this as well. As we are talking about within 

Congress, infrastructure and making some serious investments in 

our infrastructure, roads and bridges, should we be looking at 

roads and bridges in traditional transportation systems in a new 

way when we are looking at unmanned and autonomous vehicles? 

If we are entering that new age and new dawn of mobility in 

traveling and delivery, what considerations or applications should 

we take into account when we are making those serious investments to ensure that this new age of transportation is fluid, it fits, 

it is functional, it is safe? 
285

Does it run parallel with sensor towers, some kind of grid relay 

system, new materials in the roadways, or what I believe to be traditional roadways, some kind of positioning system? 

What should we be looking into as we go forward with this infrastructure bill? What considerations would you be wanting to see 

possibly included as we dip our toe into this new world here? 

Mr. STRICKLAND. Mr. Young, I am just going to make a general 

statement about vehicle safety, which would include AVs. Better 

infrastructure helps everyone. Better road design helps everyone. 

For automated vehicles, once again, I am going to go into the 

realm of unsexy and talk about more resources for Counsel’s Office 

at NITSA, the real fantastic unsexy for road work, better line 

paint. That would be a huge, huge deal for automated vehicles. 

The bottom line being the manufacturers are building a vehicle 

for the road environment today. They are not building vehicles anticipating needed road improvements in the future. Frankly, the 

most rudimentary improvements to road safety and road building 

would, frankly, benefit not only AVs, but it would benefit all drivers.

The one thing I would suggest, it is not necessary, but thinking 

for road efficiency in the future, better communication between the 

road and vehicles in the future has shown huge benefits, and in 

this work that was done by the Department of Transportation and 

my old agency. 

It would be beneficial, not necessarily for automated vehicles, but 

I think making those investments and having the infrastructure 

communicate to vehicles and being able to collect data for a better 

understanding of congestion and how to mitigate it, I think benefits 

us all. 

Mr. YOUNG. That is the point I kind of wanted to dive into, having the infrastructure communicate to vehicles, and what is needed 

to do that. I do not know. 

Mr. STRICKLAND. Mr. Young, I am happy to get back to you on 

that. There are a number of things that could be done, all the way 

to right now the National Highway Traffic Safety Administration 

has a pending proposed rule for having DSRC, dedicated shortrange communications, chipsets being placed in every vehicle, so 

that vehicles can communicate with each other transmitting safety 

messages. Somebody has run a light, you should slow down, all 

these other types of things, ultimately tying the infrastructure 

being able to communicate with vehicles so you can let road users 

know of changes for congestion, being warned about hazards, being 

able to pre-plan or even providing a benefit. 

You are driving home late at night and there is no oncoming 

traffic, and you are sitting at a red light and nobody is coming. You 

could actually have the vehicle being communicated to by the road 

saying, well, since there is nobody coming, we are going to automatically change the degree so you can keep moving. 

There are a variety of things that the Department is working on, 

and I could circle back on some of the things that we know internally, but certainly connect you to the folks at NITSA as well that 

can give you a longer explanation than that. 

Mr. YOUNG. Thank you. 
286

Ms. KALRA. If I could add just briefly, I completely agree with 

David that basic stuff, lane stripes, better signage, these things 

will improve safety for absolutely everyone. 

I think it is too soon to begin investing in vehicle-to-infrastructure communication on a large scale because if it is going to take, 

let us say, 10 years for there to be widespread vehicle-to-infrastructure communication, in 10 years, so much happens in the communication industry, if we think back 10 years ago, we were on like 

2Gs or something. Even now there is a debate about whether 

DSRC is correct or 5G or something else. 

It may be, in my view, premature for the public sector to make 

massive investments in vehicle to infrastructure communication, 

but to monitor and know this may be something that is needed in 

the future, I think, would be the right move at this time. 

Mr. YOUNG. Thank you very much, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you. Mr. Wynne, a couple of things. I 

can envision, and that is why today has been so interesting, we are 

potentially looking at a different world, and not in 50 years, but 

in relatively short order. 

Does the FAA have the right level of engagement with the industry to ensure that this is a public-private partnership, for example? 

Is the organizational structure appropriate at the FAA for the task 

of integrating UASs? 

Mr. WYNNE. I think so. They have been evolving very, very 

quickly. As you know, the UAS Integration Office only became a 

line of business at the end of last year, I think. They have been 

building that process, and now they are getting properly funded. 

It is difficult, even the question Mr. Young asked about, how do 

you future proof? UTM, in some respects, is a future infrastructure 

that we are building, but we are building it a piece at a time, as 

it were, very rapidly. We are reiterating very, very rapidly. 

There is a vision now for how do we do that, and I would say 

if the FAA was not able to keep up with that, we would be in a 

lot of trouble. And for a while, I think that was the case, but I 

think they have now gotten caught up, and now they are trying to 

get ready for that future. 

Just to add an interesting part between these two, the automated vehicles on the ground and the automated vehicles in the 

sky, as it were, we have Uber Elevate, which had a meeting 3 

weeks ago in Dallas, where they had some of the stalwarts of both 

the electric vehicle community as well as the aviation community 

coming together to develop this ‘‘Jetsons’’ vision, as it were, of people being able to dial up a device on their phone that they would 

be able to get into and fly from one place to another. As a 25-year 

pilot, that got my attention. 

That, I think, is going to continue to push this envelope, but 

there again, good representatives from the FAA, Wes Ryan from 

the Small Airplane Directorate was there, they are paying attention. They are looking for how do we support this into the future? 

Mr. DIAZ-BALART. Mr. Wynne, again, we tend to think of the 

FAA as air traffic, big airplanes, small airplanes, going from one 

airport to another. We are now potentially looking at something totally different. We are looking at, in essence, airspace, not only 
287

being in the corridors we are used to, but, frankly, over urban 

areas and over rural areas. 

Do you think the FAA is the right setup to deal with all that? 

Mr. WYNNE. Well, again, it is difficult to future proof. What I 

have seen from the FAA, Mr. Chairman, is not only are they bringing some of the highest, the best talent into the Unmanned Office, 

but I think they are reaching into every element of every department, every office of the FAA, and it is a very, very large organization, as you know, with many different tasks and many different 

responsibilities. So I think there has been a serious effort from the 

top down to develop collaboration with industry and to communicate throughout the organization and pull resources and quality 

thinking from all elements of the agency. By no means have we figured it all out yet. 

Mr. DIAZ-BALART. The concept, for example, of segregating, one 

of the main aspects, this is now totally different and separate from 

the FAA. Separate from parts of the FAA, just from what I have 

heard today, it would seem to me that would be kind of just the 

opposite of what we want to hear. 

I keep hearing you all talk about integration and communication 

as opposed to just the opposite. Am I wrong there? 

Mr. WYNNE. It is an excellent point. I view it as we have been 

working on the air side, we have been working for accommodations 

in the airspace. Eventually, that will start to become integration 

into the airspace, and then ultimately the evolutionary part is, is 

that interoperable with the ATC? 

Air traffic controllers are not standing still either. They are in 

the process of moving forward with NextGen. How do those things 

move in parallel? These are very, very active discussions right now 

between the industry and the regulators. 

Mr. DIAZ-BALART. Thank you. Mr. Price? 

Mr. PRICE. We will just continue in this vein because we are 

dealing with a mind-bending reality here. I do not know how far 

along we are toward the day when human-piloted flights are a minority of air traffic, but we are surely going to get there. Is that 

correct? And that would seem to have profound implications for 

how we do air traffic control, the kind of areas we are covering 

with what kind of technology, what kind of techniques, and also 

the human factors involved here, major adaptation, retraining required for pilots, controllers. 

So, let me just bring it back to the previous line of discussion 

with the account—the rather optimistic account, I would say both 

of you were giving—about the UTM development thus far. I think, 

Professor, you talked about the baby steps that have been taken, 

but you described it, basically, an incremental process that you felt 

was on track. Can you say more about that and about—this cannot 

be incremental forever. There will be points at which we are doing 

what, certainly, would now look like radical changes in the way we 

manage air traffic, airspace, the kind of personnel we deploy, with 

what kinds of training, and, for that matter, the implications for 

pilots as well, the human beings who are now operating in the airspace.
288

So, I am basically just giving an opportunity to talk further 

about this UTM process. Any kind of counsel you have as we go 

forward as to what that should look like? 

Mr. KOCHENDERFER. Yes. So, actually, in preparation for this 

hearing, I spoke with a number of members of industry—from 

FAA, from NASA—and one of the themes that emerged in these 

discussions is that the FAA will, just due to scalability issues, 

mean to delegate some of their authority for certification. You also 

see this inherent in NASA’s prototype and vision of UTM with 

these UAS service suppliers, which would be run by industry members, but, of course, with oversight and so forth by FAA. 

Mr. PRICE. All right. That does elaborate. It is not terribly conclusive in terms of the specifics we might be looking for as we oversee this process and evaluate it. 

Mr. Wynne, you have anything to add? 

Mr. WYNNE. Well, I would start with where we are. Where we 

are today is the FAA has provided us with rules that allow us to 

fly with very little risk in the airspace that already improve safety 

on the ground; that improve our ability, actually, to look at bridges 

and do bridge inspections when we get around to addressing the infrastructure challenges that are before us. And there have been 

some great examples of using a drone to survey a bridge and decide 

we do not need to spend $20 million on rebuilding that bridge, we 

just need to handle these particular parts of the roadway that are 

deficient for a much less amount of money. 

I say nothing of the people who no longer have to hang from harnesses doing that bridge inspection and other kinds of vertical infrastructure where, essentially, we are providing people with tools 

that allow them to do things more safely. To get to more complex 

operations, we need to work collaboratively with NASA, with the 

FAA, and build these things in such a way that in stark contrast 

to the carnage on the ground, we have extremely high safety rates 

in the air and we need to maintain those. Clearly, we want to use 

unmanned systems and automated technologies to improve the 

safety record on the ground as well; and, I think, the part that is 

fascinating to me is that, ultimately, some of these technologies, 

like near-field collision technologies or collision avoidance technologies, will scale across these domains. So, there is a lot of learning that will be gained from efforts on both sides of this equation. 

Mr. PRICE. Thank you. My time has expired. Let me just flag, 

though, for future reference, a related question that if you have 

thoughts you might supply to the committee, and that has to do 

with the implications of all of this for the NextGen program. We 

know that it is integrated; we know that it is implicated. As you 

well know, the NextGen program is under intense scrutiny from 

both the appropriators and authorizers up here, so this, for me, and 

I think for other members, is a relevant issue. Is this being adequately addressed amid the myriad of other issues that are on the 

table?

Mr. DIAZ-BALART. Mr. Dent. 

Mr. DENT. Thank you, Mr. Chairman. I just have one question 

for Mr. Wynne. As this hearing has demonstrated, the committee 

holds a great deal of interest in supporting efforts that will allow 

the United States to gain and maintain a lead in the research, de-
289

velopment, and the eventual integration of UAS. This sentiment is 

shared by a number of our colleagues on the authorizing side in the 

Transportation and Infrastructure and also on the Science, Space, 

and Technology Committees. In light of such broad congressional 

support for these efforts, do you feel that UAS issues in the FAA’s 

UAS integration office are receiving sufficient attention and support from within the FAA? 

Mr. WYNNE. I do. I do, sir, and I appreciate the question. And, 

yes, there has been phenomenal support here on Capitol Hill, and 

we are grateful for that and I think with good reason. I think the 

challenge, of course, is the FAA has an extremely important job to 

do. This is adding to their burden as well. And as you point out, 

we need to stay along, in addition to just addressing the potential 

safety issues if we do not regulate properly—and industry and government are working to make sure that we get those regulations 

done properly—we will miss a trick or two as an economy if we do 

not take advantage of this technology. So, I think, it is worth leaning in, and I appreciate, again, the leadership of this committee in 

investing in this particular technology and all unmanned system 

technologies.

Mr. DENT. Thank you. 

Mr. DIAZ-BALART. Ms. Clark. 

Ms. CLARK. Thank you, Mr. Chairman. Mr. Wynne, this drone 

technology really has the potential to revolutionize the way we 

move goods, maybe even in our ‘‘Jetson’’-like fashion move people 

someday. But since coming to Congress, I have worked a lot on 

technologies and their unintended consequences: the cellphone app 

that allows an abuser to secretly track their victim; the Twitter 

game that allowed people to own social media profiles of people 

that then became a target of harassment; the webcam that can be 

appropriated remotely by someone else. None of these technologies 

was invented for nefarious purposes and yet that is what the result 

was. And I loved the imagery that you used, that you cannot think 

about privacy and law enforcement afterwards and sort of shrinkwrap it around a product. 

So, I am hoping you can share with me what the industry is 

looking at as far as taking steps to address and work with law enforcement in the development of this technology before its widespread adoption. And, specifically, do you see a need to be developed to identify the operator of a drone that is used for criminal 

purpose? Are you thinking about putting those sorts of protections 

in?

Mr. WYNNE. Indeed. I think you have put your finger on an extremely important thing. For me, personally, over the last, I think, 

8 months, this has been one of my top priorities. Law enforcement, 

public safety officials, generally, really wants to benefit from this 

technology. They see tremendous benefits from this technology to 

do things as simple as an accident investigation on a busy highway 

or fire fighters, or search and rescue, et cetera. 

So, the law enforcement community is a great partner for the industry, and we are working with them very, very closely to figure 

out what are the standards that need to be done, and how do we 

help them do their jobs, not just with the technology, but in enforcing the laws that might be violated with the technology. 
290

Ms. CLARK. Right. 

Mr. WYNNE. And let us be clear, most of the laws pertain to this 

technology whether it is specific to this technology or not. So, all 

laws pertaining to privacy also pertain to drones. You cannot use 

a drone any more than you can use a telescope to, you know, to 

spy on someone. So, I think that is really important. 

A specific example, tomorrow I will be up working with the folks 

that are in charge of law enforcement or safety at the Tappan Zee 

Bridge project in New York. They are using drones to build that, 

to do that multibillion dollar construction project. Very, very important that they be able to do that for safety reasons and for efficiency. But they need to be able to—the law enforcement need to 

know that those are authorized drones. 

Ms. CLARK. Right. 

Mr. WYNNE. So, I am not a fan anymore of no-drone zones because we use drones in many different places. But I am a big fan, 

increasingly, of authorized drones only. And so, that begs the question that you are raising, how do we remotely identify the people 

that are flying that? I leaned in on the registration process. I personally supported that with former Secretary Foxx when he gave 

the administrator of the FAA the task to get that done inside of 

about 2 months before Christmas of 2016, and we did it. The FAA 

did it with the collaboration of industry. Now we need to take the 

next step of how do we remotely identify—and, once again, industry is leaning in here to provide those technologies. 

Ms. CLARK. That is great. I wondered, specifically, we have Federal law right now that criminalizes video voyeurism only within 

special jurisdictions in the United States where State laws do not 

apply: national parks, Federal government buildings. Do you believe we should extend similar technologically-neutral criminal 

statutes to the rest of the United States in anticipation of more 

widespread drones? 

Mr. WYNNE. I am not familiar with that, ma’am, so, I would not 

be able to take a position on that, but I would be happy to provide 

an answer for the record. 

Ms. CLARK. Thank you. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chairman. Public transit—and we 

have been kind of talking a lot in our minds thinking about personal use of these autonomous vehicles in deliveries—you know, 

commercial applications—but public transportation, are you engaging at all with any transit authorities? I know that Des Moines, 

which is in my district, the regional transit authority is really excited about trying to get engaged on this to do some kind of pilot 

project and is working with the Department of Transportation on 

this. How do you see this fitting into the public transportation? 

Mr. STRICKLAND. Oh, Mr. Young, once again, I have an interesting intersection in my career. 

Mr. YOUNG. Do tell, David. 

Mr. STRICKLAND. I know. I am one of the Federal voting members for WABATA. So, in addition to—so I think about this personally a lot, but, frankly, I think that the self-driving industry, in addition to thinking about the way that self-driving can help support 

the disabled and the elderly, which is a hugely underserved com-
291

munity which relies upon public transit, it is the opportunity for 

automated vehicles, and a variety of types, too, frankly, to be an 

extension of public transit and help support it. So, I think, as for 

having last-mile solutions as being part of it, being able to have the 

36 million people that are disabled, and the 20 million of them that 

are of working age, being able to have solutions that are more tailored in order to be able to get to public transit pipelines. 

So, yes, I think there are a lot of folks that are thinking about 

this individually, and I know that I have had a number of conversations through APTA and others about how we better work together. But I think you are right. I think, once again, as I think 

that both of us stated earlier, this is the opportunity to think ahead 

so that we build a system that is thoughtfully integrated so that 

we can have automated driving help support public transit and increase those efficiencies. 

Mr. YOUNG. And do you view this in the context, and differently, 

I would imagine, in between rural transportation needs and urban 

transportation needs as well? Because I have a very rural district 

in some areas, and there are some unique transportation needs 

that are needed there in public transit. 

Mr. STRICKLAND. That is absolutely right. I think that is a reason why thinking about, again, last-mile issues. I think, especially 

in rural communities, that is a big issue, making public transportation more efficient. One of the keys to it is because the configuration of rural communities, it is really tough to be able to get those 

efficiencies of scale. Automation could help build those efficiencies 

because you can have last-mile solutions to get to the main trunks 

for bus lines, and et cetera. 

So, I think you are absolutely right, Mr. Young, in thinking 

about this prospectively that this is not just simply an urban solution. I think that automation could be supportive of public transportation in a variety of aspects in our communities across the 

country and I think it is a real opportunity for all of us. 

Mr. YOUNG. Mm-hmm, and then you just mentioned on your 

own, and I was going to touch on this, that the opportunities that 

this can bring for our folks with disabilities and who are kind of 

homebound sometimes and not able to get out to where they need 

to be sometimes. Are you taking into account working with the disability community to make sure that there is access, and that there 

is safety, you know, and confidence in that system, too, to allow 

them to participate in this as well? 

Mr. STRICKLAND. Mr. Young, actually we have a number of partners in our coalition that represent folks that are disabled. But, 

more specifically, and Ms. Kara mentioned this earlier, is that— 

you know, one of the things when you think about economic opportunity, the one thing that automated vehicles, self-driving could do 

is those 20 million folks that are disabled that have the capability 

to work, but may not have the possibility to do so because of their 

transportation choices, one of the great things that we can look at 

is having those people being involved in the economy, being able 

to work because we have solutions for them. 

So, the short answer is, yes, we are working very hard with those 

communities and thinking about making sure vehicles that are 

being designed in the beginning to support people that are dis-
292

abled, not thinking about retrofitting vehicles that are already in 

assistance, which is very expensive for those communities, which I 

know that you are aware of. 

Mr. YOUNG. Well, thank you for engaging with them because 

there is a lot of opportunity there in the folks with disabilities, and 

then just making sure that there is confidence with that community and those people because, you know, something new like this, 

you know, you think about vulnerabilities in these systems, and 

anything that you can do to just really keep that pipeline open in 

communication, and alleviate and bring confidence to that system 

for them, it will be awesome. Thank you. 

Mr. DIAZ-BALART. Thank you, Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chair. 

Mr. DIAZ-BALART. Those 20 seconds that you have, if I may take 

them.

Mr. YOUNG. Take them, 18, 17. 

Mr. DIAZ-BALART. You know, some of these projects that we fund 

are 20 years out; massive transit projects. Are we funding, in essence, the equivalent of the horse and buggy as opposed to is there 

a possibility that some of what you all are looking at could replace 

those large systems? 

Mr. STRICKLAND. I do not think you are talking about horse and 

buggy. I think you are thinking about spoke and wheel. I think 

that, frankly, public transportation is still necessary in a centerpiece, but I think what you really think about in terms of automation is how we can make those transit systems more efficient and 

thinking about, as I said to Mr. Young, how do we have an efficient 

usage of last-mile solutions? And I think that is where automation 

comes in. 

Mr. AGUILAR. Mr. Chairman, do you need any more time? Okay. 

For Mr. Wynne and Mr. Kochenderfer, Mr. Wynne first, you talked 

about the registry. We know the importance of training and educational play in the UAS system. The educational component requires for the registry only an acknowledgment of bullets of safety 

guidance. I understand that there are six UAS test sites throughout the United States meant to collect data to help inform decisions 

on how to integrate the systems. What role do these test sites provide in developing educational programming for operators? Additionally, is industry playing a role in the development of training 

for the UAS operators and, if so, how? Are there ways that we can 

work better with FAA and the industry to help on the training and 

education side? 

Mr. WYNNE. Yeah, that is a very big topic right now. AUVSI recently launched a Remote Pilots Council since the advent of part 

107, we now have certificated operators under part 107 and we 

have just finished I call it a whistle stop tour, where we had nine 

meetings around the country gathering those folks together in a 

room with the FAA in many instances. Actually, in all instances, 

we had an FAA representative talking about what they saw as the 

needs from a training perspective to make certain that remote pilots maintain the highest levels of airmanship and standards of operations.

So we are in the process of figuring out what that is going to require and backing up to how do we at least get an alignment on 
293

that, because I think that is one more thing that industry can do 

that we do not necessarily need to burden the FAA with today. As 

far as everyone else that is flying out there, the people that are not 

necessarily commercial operators, which requires a part 107 certificate, hobbyists as it were, AUVSI has been pressing forward with 

the Academy of Model Aeronautics and the FAA and a hundred 

now plus supporters with our Know Before You Fly campaign, 

which is information that is increasingly right in the boxes for a 

device. So if you walk into an electronics store and walk out with 

a drone to fly, and we love people doing that, you know, people love 

things that fly. They have the information at the ready hand to 

know, you know, how to get the information, the latest app, et 

cetera, to know am I flying in the right place, am I flying responsibly.

Mr. KOCHENDERFER. Yes, so I would have to applaud the efforts 

of AUVSI and AMA and FAA on the Know Before You Fly program 

and the success in the registration. So you mentioned that they 

only had to demonstrate knowledge in a limited area. But keeping 

that test simple for the hobbyists, I think, was critical in the success of the registration. So the required registration started February 2016 and then by June 495,000 registered. And if you increase the burden of that training, I think that would decrease the 

registration. But, of course, you do, for the commercial operators 

under 107, they do need to take a much more comprehensive FAA 

exam. And I feel that is appropriate. 

Mr. AGUILAR. And the test sites discussion, are we doing enough? 

Mr. WYNNE. Yes, the test sites I think are extremely important 

and one that I am aware of, for example, one of the largest broadcasting organizations in the country, Sinclair, does all of the training of their pilots to capture news at one of the test sites. So that 

is an easy, that is one of many examples of how the test sites are 

being used. Probably more appropriately, the test sites are set up 

to do more advanced things and collect data on flying beyond visual 

line of sight and such, things that we are trying to prove out with 

more complex operations with additional risks. 

Mr. AGUILAR. Thanks, I will yield back, Mr. Chairman, give you 

some more time. 

Mr. DIAZ-BALART. Thank you. I think we can do one more round, 

if that is all right and you all are willing. Thank you. Obviously, 

we have a lot of interest in this committee. Ms. Kalra, and kind 

of what I was asking before is, this subcommittee allocates funds 

for projects that not only take years to build, but are supposed to 

be there for decades and decades. And so, looking ahead, how disruptive potentially is the AV technology going to be? When should 

the transportation planners start factoring in this disruption or 

this addition, whatever you want to call it, for these large-scale, expensive, long-term projects? 

Ms. KALRA. You know, it would not be an overstatement to say 

that it will be as disruptive as the automobile was for the horse 

and buggy. But similarly, it is also as uncertain. I do not think 

anyone who is riding around in their buggy could say, oh, the car 

is coming, here is what it is going to look like in 50 years. So it 

is extremely important for transportation planners to think now 

about the changes that are coming. But that is extremely difficult 
294

to do because there is deep uncertainty about what those changes 

will mean. And so I think attention needs to be paid to identify investments, investments that are vulnerable to making no sense in 

a particular future or that cannot be repurposed, readapted, you 

know, the designs are fixed. 

Mr. DIAZ-BALART. Well, for example, let us look at something like 

hard rail, you know, rail? 

Ms. KALRA. Yes. 

Mr. DIAZ-BALART. Which is exceedingly expensive, it is inflexible, 

you know. Is that something that we should now be looking at? Are 

there different alternatives? Should it be an alternative that can 

later be transferred over to, unmanned vehicles, I mean that kind 

of thing? 

Ms. KALRA. Rail has, you know, but rail also has enormous advantages. And so the question needs to become is a particular 

project vulnerable to changes, and I do not think there can be 

wholesale dismissal, I think this is important. But certainly to say 

okay, we are going to, even if we think of light rail, we are going 

to build an extension from point A to point B, to think does that 

make sense in the future that may have people with better lastmile connectivity, it may become even more important actually in 

a world where there is last-mile connectivity. So the question I do 

not see as being asked enough because it is a difficult question to 

answer, but I think it needs to be asked now. 

Mr. DIAZ-BALART. Yes, sir? 

Mr. STRICKLAND. Mr. Chairman, I will say the one thing that I 

think is a certainty is that we will always be capacity constrained 

on the ground. You cannot build your way out of a congestion problem. The more roads you build, the more capacity you build, the 

more people use it. So ultimately transit and rail are always going 

to be important components of, frankly, our transportation system. 

I think that Ms. Kalra made a fantastic point is really sort of looking at the individualized project level about whether or not that 

particular investment in this specific macro point works. But I do 

think that in general, the specific continued investment in transit, 

frankly, it future proofs us for a number of things, not only congestion, but who knows what the cost of fuel is going to be in the future, and all those other types of things which we, frankly, face 

every single day. 

And I think automation has a real opportunity, if done right to 

help public transit. But I do not think that this is an offset to transit or an offset to rail. We just have to be much smarter about 

where we invest it and how. 

Mr. DIAZ-BALART. Let me talk a little about how it has been on 

the forefront of helping consumers make decisions right, better, 

and whether it is things like seatbelts. So, I do not know who 

wants to deal with this or what we should be doing to make sure 

that drivers understand what their cars either do, and the technology that is already here and that is already coming and, more 

importantly, maybe what they do not do. And are there opportunities for NHTSA to educate consumers through traditional awareness campaigns or product reviews? Anybody looked at that and 

thought about that? 
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Mr. STRICKLAND. I have thought about this for a long time, and 

when I was administrator and even post my service. The issue of 

consumer education is not only a governmental function. Frankly, 

it has to be fully participatory of everybody in the industry, especially when you are talking about those that are at points of sale, 

the folks that are selling you the car. Right now, I will just be 

blunt because I purchased a new car recently. Most dealerships do 

a very poor job in describing active safety technologies that are on 

the road today because they do not understand them. It is not 

something that is visible, too, because it is usually—it intervenes 

when you are about to have a crash, so nobody really sees it. There 

are some manufacturers that work very hard and try to get their 

dealerships trained up. 

I think the New Car Assessment Program has been a wild success in incentivizing manufacturers to raise the bar of safety, which 

ultimately they go and try to sell and educate the consumers. I 

think thinking about a more robust effort as part of the new car 

assessment in the future to help teach people about if you have an 

automated vehicle, what it can and cannot do. But I think it is incumbent upon, frankly, the private sector and those at points of 

sale, and then continuing efforts to make sure people truly understand what environments this vehicle can and cannot operate in. 

Ms. KALRA. I completely agree, but I will. 

Mr. DIAZ-BALART. My time is up. 

Ms. KALRA. Oh, I am sorry. 

Mr. DIAZ-BALART. But it is good to be chairman. Go ahead. No, 

please, please proceed. 

Ms. KALRA. I think that is absolutely right and the one thing we 

want to avoid is using engineering terminology to communicate to 

the public. And we have adaptive cruise control, smart cruise, there 

is a million ways, and consumers are confused. And I think that 

is a role for NHTSA to play. 

Mr. DIAZ-BALART. Mr. Price, thank you. 

Mr. PRICE. Well, these last exchanges have opened up a really 

important set of questions, I think, having to do with congestion 

and capacity. And I would think this is an important consideration 

in both areas. I would like to have our UAS folks comment on this. 

But I first want to go to the more obvious questions maybe about 

transit and about the implications of what you are saying. 

We have had, I would say it is fair to say this morning, we have 

had a rather expansive view of the possibilities of both of these 

technologies and it will improve our lives. And as far as the need 

for some kind of regulatory regime is concerned, it has been overwhelmingly focused on safety. That is appropriate. But I would 

think that the collective good questions apply in this area as they 

do in all areas, and that there are questions about how much of 

a good thing we can deal with and what is the capacity, what are 

the tradeoffs in terms of congestion and how do we deal with that. 

And I am especially impressed by what you say, Mr. Strickland, 

about transit. 

You know, one can imagine roads just as clogged with autonomous vehicles as they are clogged with ordinary vehicles, and the 

solution of simply putting on more lanes would be equally probably 
296

counterproductive. So one can readily appreciate the need for mass 

transit for all sorts of reasons. 

But I think what you are saying is really exciting as well, 

though, because that last-mile problem is really a problem, connecting the shut in, the people in rural areas, the people with special needs, collecting those folks to transit is a huge issue. And 

then you think about the future of Park and Ride, and we would 

not need huge tracks of land in valuable areas devoted to Park and 

Ride, maybe remote parking becomes much more feasible. I think 

there are lots of implications. So I think we really need to think 

this through, and I appreciate any further comments you have 

about this, about that set of issues, congestion and capacity, and 

how we can anticipate and deal with this. 

Mr. STRICKLAND. I will touch on it very quickly, Ranking Member, is that the ability to have automated vehicles to be a mixture 

in the fleet really does give us a number of models on opportunities. As you said, car share, ride share, where you have a resource, 

which is an owned car, which sits 90, 95 percent of the day, is only 

utilized for a small percent of the day to actually have increased 

utilization of vehicles so that you would need fewer of them, could 

be an implication which happens in the future and helps address 

congestion.

And the other issue which I think you touched upon greatly is 

how do you re-reclaim living space, green space, from the roadway? 

And I think that thinking about capacity issues and self-driving 

could impact of how cities are thinking about it. The city of Beverly 

Hills in California is very aggressive right now in thinking about 

its future, about possibly having Beverly Hills being an AV city, 

where they can reclaim the parking and turn it into retail, they can 

turn that into housing, they could turn it, they can free green space 

and more pedestrian space. 

So I think that is very much, I think, the larger, broader thinking, but it does take long-reach thinkers as well. 

Ms. KALRA. I would add that I think for parts of our transit, 

which we normally think of like large buses, fixed routes, there is 

an opportunity to reimagine that, because many of the goals of 

transit include it is public, it is sustainable, it reduces congestion, 

it reduces air pollution, it is equitable. Some of these goals can be 

achieved in portions of our current transit system more efficiently 

with autonomous vehicles that are better sized and more convenient on demand, so that instead of just, well, do we have private 

vehicles connecting us to main transit hubs, we reimagine how we 

can meet the goals of transit more efficiently and with greater effectiveness.

But the other side of it, any time the cost of driving goes down, 

people drive more. There is a latent demand. And so I think these 

cost reductions that we hope to see need to be offset by policies like 

congestion pricing that send the right market signals, that internalize the externalities that we currently largely ignore in our 

transportation system. 

Mr. PRICE. Mr. Chairman, can we ask our aviation guests to 

chime in briefly? 

Mr. WYNNE. If I might, yes, thank you, Mr. Price. I think, we 

think of Washington airspace, for example, as very congested. It is 
297

complicated airspace for a whole bunch of reasons, security being 

among them. But, you know, all large metropolitan areas generally 

are—the airspace is dominated by airports, we have many here. 

But that airspace is almost empty at night for noise abatement reasons alone; that airspace is available at night. 

I go back to my milkman analogy years and years ago. The milkman would come in the dead of night and bring you your milk. 

There are a lot of opportunities for us to use what we normally 

think of as very congested, complex airspace at night to do deliveries that are currently being done in the middle of the day. And 

that is a good example of how capacity, this world of the way we 

think about congestion and capacity, can change very radically 

with this technology. 

Mr. KOCHENDERFER. And just to add to that, our national airspace is a national resource and it is important that it be used efficiently. On the drone side, you can imagine a contention for some 

areas of the airspace, especially as we begin to have drone operations in urban environments where maybe both Google and Amazon want to deliver to the same areas, and resolving those kinds 

of conflicts is something that UTM is poised to do. 

Mr. YOUNG. Thank you, Mr. Chairman and Ranking Member, a 

privilege to be with you today. This is a very exciting issue and we 

have had a good two or three of these kind of issues hearings. And 

so you are obviously experts on your issue, and obviously, you probably are looking around the world at what other countries are up 

to and are we on par. When we are looking at the world right now, 

and the United States, are we on par with the other countries, are 

we ahead of them, are we behind them? And is our testing and operating this framework ready to launch compared to other countries? And then as well, where are we in terms of the public acceptance of the reality that this is coming and to get ready for it? 

And please, each one of you, I would like hear where you think 

we are in regards to our peers around the world. 

Mr. KOCHENDERFER. So maybe I can start. So, Stanford is pretty 

much adjacent to Google, so we see the Waymo vehicles on our 

streets all the time. 

In terms of drones, for a long time, many of the drone startups 

and companies would do their testing in other countries with more 

flexible airspace regulations. But I think we are starting to catch 

up and we have the potential to be a leader in this area. 

Mr. WYNNE. I agree. I think part 107 was an enormous step forward and many of our colleagues internationally are paying attention to that; UTM, which we have been discussing today. ICAO has 

just announced an initiative on—that is the International Civil 

Aviation Organization in Montreal. Again, they are inviting NASA 

and the FAA to come, because a number of the member States of 

ICAO do not want to have to try and figure this out for themselves, 

and as an industry, we are very much in favor of harmonization 

around the world. 

So I think we are in very, very good shape. I think we could easily lose that lead quickly. The advantage that we always have in 

America, of course, is that we have the largest market and many 

of the technologies are going to be pulled through here by the huge 

numbers of vertical sectors that are going to use this technology. 
298

So I think we have that advantage if we can keep up from a regulatory standpoint. 

Mr. YOUNG. So when you say lose the lead, it is because of the 

regulatory standards that we have not met yet or are not out there 

for us to meet? 

Mr. WYNNE. That is the potential that we worry about. 

Mr. YOUNG. Okay. Please. 

Ms. KALRA. You know, I think from a technological standpoint, 

I would argue that we are ahead and I think we have the intellectual and investment powerhouse, you know, whether it is in Silicon 

Valley or Detroit or really in many parts of our country. I will leave 

it to David to speak about what the deployment is happening 

abroad. But in terms of public acceptance, people are becoming— 

particularly if you diversify by age, the public is very interested in 

this technology and particularly younger people. They do not want 

to drive. They are looking forward to this technology. Many of them 

do not know how to drive. I think particularly if the benefits of this 

technology in terms of safety and convenience are truly realized, I 

do not really see this as being a problem in the same way that we 

do not need regulations to encourage people to, like, buy an iPhone 

or buy another gadget that makes their lives better or more fun. 

I think this could be one of those technologies where we do not 

need to encourage the public to adopt it too much. 

Mr. YOUNG. Thank you. 

Mr. STRICKLAND. I absolutely concur in terms of our technological capacity. I think that as a country, I think that we are very 

much in the lead because of the diversity of manufacturers and Silicon Valley companies. But I literally just got back from Korea yesterday, and I will say that I think both our AUV folks captured it. 

We have a technological advantage, but we have regulatory uncertainty which, frankly, certain countries do not have, like the People’s Republic of China. If they want something to happen, it just 

happens. And we do not have that flexibility here. 

And so my biggest concern is that we may lose our advantages 

in terms of development and capacity and technology to, frankly, 

a country that could just simply just put a rubber stamp and then 

it is free open season for any manufacturer that wants to deploy. 

I think that that has probably always been our concern. Consumer 

acceptance, I think, talking back to the chairman’s question about 

what can be done to help consumer acceptance, people are very interested in technology, but I do think there are questions because 

people have concerns about automation, and they have a greater 

sense of their own ability to drive. I am a great driver, everybody 

else stinks. And that is a problem and I think ultimately for us to 

be able to encourage people to use and try the technology is going 

to be a long reach effort, it is going to take lots of effort to make 

sure that we get this done right. 

Mr. YOUNG. Thank you for educating us and thank you for helping us navigate our way to this new world. And so, Mr. Chairman 

and Ranking Member, thank you very much for the opportunity. 

Mr. DIAZ-BALART. Thank you. Mr. Young closed it out marvelously well. Thank you all very much, it has been exceedingly interesting. Thank you very much. 
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THURSDAY, JUNE 8, 2017. 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

WITNESS

HON. BEN CARSON, SECRETARY, DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

Mr. DIAZ-BALART. We will now call the subcommittee to order. 

Good morning, everyone. Today we welcome Secretary Ben Carson 

from the Department of Housing and Urban Development to discuss the fiscal year 2018 budget request. 

Mr. Secretary, I know that I do not have to tell you that you 

have one of the most difficult and important jobs in Washington. 

You have said several times that HUD can and should provide a 

ladder of opportunity to those hardworking families that can obtain 

social and economic upward mobility and pursue the American 

dream. HUD’s mission is to create strong, sustainable, inclusive 

communities and, frankly, quality, affordable homes for folks. 

Achieving this mission is an ambitious challenge. 

HUD has many diverse programs, thousands of entities that 

carry out the programs, and millions of citizens who have received 

benefits and who, in many cases, depend on HUD. And frankly, 

HUD is a very large financial institution as well. Ginnie Mae and 

the Federal Housing Administration together hold a portfolio of $3 

trillion. And safeguarding the financial health of these institutions 

is essential for, frankly, our national economic health. 

HUD is requesting a total of 40.7 billion and new budgetary resources in fiscal year 2018 which is 15 percent below 2017. The 

budget request proposes to eliminate a number of programs that 

are important to our mayors, and I am sure you have heard and 

will hear from them as well, cities, towns, and, for example, community development block grant programs, the HOME Investment 

Partnership programs, in particular are some of those. So I am 

sure, Mr. Secretary, that we are going to have a robust conversation and discussion about these programs and many other things. 

And again this is a long process that I look forward to, all of us 

look forward to working with you on. 

In addition, the budget includes cost-saving proposals and reforms across its rental assistance programs. Now, however, most of 

those reforms are outside this committee’s jurisdiction and must be 

addressed first by the authorizing committee. Some of the reforms 

are to provide public housing authorities benefits such as flexibilities and regulatory relief from administrative burdens. The budget 

would also set a mandatory minimum rent and increase tenant 

rent contributions, and it would suspend rent increases for privateowned units. 
300

Mr. Secretary, your budget states that these policies would result 

in additional resources that would allow more homes to be available to more households. You know, Mr. Secretary, because you 

were recently in the district that I am privileged to represent, that 

I represent low-income and urban areas, and I support the spirit 

of HUD’s mission and the desire to operate more efficiently obviously and to do more. My mayors, my city council, my community 

leaders, and constituents, all rely on HUD programs and this is 

why it is so important that we work together to explore the implications of any reforms and cost-saving proposals in our communities. It is not the intent to impose additional undue burdens onto 

our most at-risk populations or to reduce our affordable housing 

stocks or its conditions. That said, I agree that it is critical that 

HUD be a good steward of its resources as nearly all of what HUD 

oversees helps the most vulnerable in our society. 

So yet I continue to receive reports that HUD has tremendous 

difficulty with basic management. The number of and seriousness 

of those negative inspector general reports is astonishing, and I 

know that you share that concern. Poor financial controls, possible 

Antideficiency Act violations, lax program oversight, major risks to 

IT systems, gaps in cybersecurity, the list goes on and on. These 

core management challenges have plagued HUD now for 24 years, 

a quarter of a century. 

The HUD IG has indicated that the problem boils down to lack 

of leadership or management attention issues and, unfortunately, 

those are challenges, Mr. Secretary, that you are inheriting. And 

so we are grateful that you have decided to take on this very difficult task. So, Mr. Secretary, I ask you to take a fresh look at 

these core issues and prioritize them. I know you are interested in 

doing that. I want to work with you, with the administration, to 

make HUD the high-quality, high-functioning organization, you 

know, that it has to be to oversee these crucially important programs.

Mr. Secretary, you know, you have come from humble beginnings 

and are exceedingly sensitive to people who are experiencing poverty and hardship. Together, we have to work together to strive to 

make HUD programs more effective, more efficient for the American people. I look forward to working with you, sir, as we make 

the hard choices, and they are hard choices, necessary to meet our 

Nation’s housing and economic development needs, all while obviously being accountable to the taxpayer. 

Before we get to your opening statement, Mr. Secretary, I want 

to recognize the ranking member of this subcommittee. The gentleman from North Carolina and I have developed a great relationship.

So with that, Mr. Price, you are recognized for your opening 

statement.

Mr. PRICE. Thank you, Mr. Chairman. I, too, look forward to 

working with you as we navigate this challenging budget cycle. 

And I want to join you in welcoming our Secretary of Housing and 

Urban Development, Dr. Ben Carson. Welcome, sir, to our subcommittee.

Nearly all of HUD’s affordable housing and community development programs are at this moment underfunded and have been un-
301

derfunded compared to demonstrated need. I think we have to honestly acknowledge that at the outset. These are programs that 

serve some of the most vulnerable people in our country: the elderly, the disabled, children, veterans, single parents trying to make 

ends meet. 

It is not an exaggeration to say that America, the most prosperous nation in the world, is in the midst of an affordable housing 

crisis. More and more families are struggling to pay rent; meanwhile, only one of four people eligible for Federal rental assistance 

can actually receive it because of funding constraints. We should 

not be comfortable with this reality. In fact, it should force us to 

ask tough questions about our values and priorities. 

Unfortunately, the Department’s fiscal 2018 budget request before us today would make these daunting problems even worse. 

The request includes $36.3 billion in funding offset by 91⁄2 billion

in receipts. The total budget authority provided in the request 

would be lower than last year’s level by about $71⁄2 billion, 17 percent.

Since more than three-quarters of HUD’s budget is devoted towards simply maintaining current resident and housing cuts of this 

magnitude will disproportionately affect a community development 

and other targeted housing programs, for example, community development. Let’s look at that, a flexible source of funding of hundreds of urban and rural communities to help meet the needs of 

low- and moderate-income people, a program that is remarkable for 

its bipartisan support over many years. That program is proposed 

for complete elimination. The home program, complete elimination. 

That is the largest Federal block grant to State and local governments designed exclusively to produce affordable housing for lowincome families. 

My colleagues and I have heard from hundreds of local elected 

officials and housing practitioners that these programs play a critical role. They are the most flexible programs in your portfolio. 

They play a critical role in helping address affordable housing 

shortages and other pressing community needs. 

Mr. Secretary, in your Senate confirmation you spoke about addressing housing instability and poverty in what you called a comprehensive manner. And that would include providing greater access to healthcare, economic opportunity, so that there is a kind of 

comprehensive approach with people in need. And I think it is fair 

to say that we widely share those goals, but I, for the life of me, 

cannot find in this budget any evidence of taking that vision seriously.

It is especially troubling that your budget would eliminate the 

Choice Neighborhoods Initiative. This program helps transform 

aging public housing developments into vibrant, mixed-income communities, and it does leverage non-Federal funding to promote 

small businesses, to bring other services into the community. It is 

the very epitome of a comprehensive approach, the best example in 

your portfolio, yet you are proposing to totally eliminate it, totally 

eliminate choice neighborhoods. 

Even the Self-Help Home Ownership Opportunity Program, 

SHOP, and Section 4 capacity-building would be zeroed out. SHOP 

is used by Habitat for Humanity, other nonprofits to help create af-
302

fordable housing. It has a huge multiplier effect in the kind of 

funding and the kind of support it brings forward. They use the 

sweat equity model in Habitat. But any Habitat local or national 

leader will tell you that SHOP is essential, essential seed money 

for what they are doing; same for Section 4, which expands their 

capabilities and their technical expertise. 

Finally the National Housing Trust Fund, that does not even 

constitute discretionary budget authority, yet you are proposing 

that it be eliminated. This is a real head scratcher because these 

are mandatory funds, they are derived from contributions by 

Fannie Mae and Freddie Mac. The Housing Trust Fund has only 

recently been tapped by the States, but it is already being used to 

finance the development and rehab of affordable housing for lowincome people. Why would we want to see that go away? 

These sweeping program eliminations, I must say, fail to demonstrate the surgical precision, if I may say so, that we might expect from you. They are the equivalent of taking a meat axe to the 

HUD budget, which has already faced steep reductions in recent 

years. This budget request says that State and local governments 

should pick up the slack, but how? How? It is incomprehensible, it 

is unacceptable. 

And there are many reductions as opposed to outright eliminations. There are many, many damaging reductions in this budget. I will not go into them in detail except just to note that tenantbased Section 8 is cut by 5 percent. We are talking here about 

265,000 people nationwide back out onto the streets, public housing 

cut across the boards, massive cuts: housing opportunities for people with AIDS, 7 percent cut; homeless assistance grants, 6 percent 

cut; housing counseling, 15 percent. The list goes on. Without sustained increases in funding commensurate with need, people will 

lose housing and they will lose the supporting services that they 

rely upon. 

I would also want to register my concerns with the Department’s 

so-called rent reforms, which would essentially shift HUD programs’ costs onto residents, raising minimum rents, eliminating 

utility allowance reimbursements, ending higher payments for new 

enhanced vouchers. These could have serious repercussions for people who rely on housing assistance. If changes are needed here that 

is best left to the authorizing committees, they should not be loaded onto a budget proposal. 

And why on Earth roll out these reforms first in places like 

project-based rental assistance? The 202 housing program, rental 

housing program for the elderly, 811 program for the disabled. Why 

on Earth start there? These are programs that serve vulnerable, elderly, and disabled individuals. It just sounds counterintuitive at 

best and just terribly mistaken at worst. 

As I said at the beginning the current state of housing in America should force us to ask tough questions. Unfortunately, looking 

at this budget proposal raises many unsettling questions. Does this 

administration care about the most vulnerable among us? And 

have you been appointed, do you find yourself in this position only 

to preside over the demise of HUD? I think that is not too severe 

a question to pose. 
303

Before I close I want to remind my colleagues that although in 

the beginning of June we still have no budget resolution, no top 

line spending number, no subcommittee allocations, and the debt 

limit is rapidly approaching. 

So without another bipartisan budget deal, we will also be forced 

to cope with the devastating return of sequestration and, of course, 

the numbers proposed in the Trump budget are below sequestration for HUD and for other critical agencies. In the past years we 

know this has been a recipe for disaster. It is simply a formula for 

not being able to appropriate and having a crisis at the end of the 

fiscal year. We do not need, our country does not need this kind 

of breakdown this year. We should anticipate this. We should do 

a budget deal. We should have a more comprehensive approach 

that will let us write our appropriations bills on budget and on 

time.

Mr. Secretary, I look forward to hearing your testimony today. 

We have some really important questions to explore. We have got 

to work together to ensure that vital housing and community development programs are adequately funded and continue to rest the 

crying needs that we see in our communities. 

I thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, Mr. Price. Now it is a deep honor 

for me to be able to recognize the leader of this committee, the 

chairman of the full committee, the gentleman from New Jersey, 

Chairman Frelinghuysen. 

Mr. FRELINGHUYSEN. Well, thank you, Chairman Diaz-Balart, 

and Mr. Price and Ms. Lowey and I, we all welcome you here to 

the appropriations process. Today’s hearing is an important part of 

the oversight duties of the committee now that we have formally 

received the administration’s budget request, yours in particular, 

this committee will undergo, given a thorough analysis. Today’s 

hearing is part of the process we follow to determine the best use 

of taxpayers’ dollars after all the power of the purse lies in this 

building. It is the constitutional duty of Congress to make these 

types of spending decisions. 

As the chairman said, HUD provides critical resources to some 

of our most vulnerable populations in our country in need of housing, including seniors, homeless veterans, and those with disabilities and those with very limited incomes. I am sure you would 

agree, Mr. Secretary, it is completely unacceptable that even one 

veteran in our country should be reduced to homelessness as they 

struggle with post-traumatic stress syndrome or drug and alcohol 

abuse or a lot of other things. 

In my neck of the woods we have an incredible facility at the 

Lyons VA Hospital in northern New Jersey which provides 62 affordable housing units to homeless and at-risk vets. Of these 62 

units, 50 are supported by HUD–VASH vouchers, so we need to 

take a look at that, make sure that we make the right decisions 

on their behalf. 

Throughout my time in Congress, I have been a strong advocate 

for those with disabilities. As has been said by others on the panel 

here, your budget proposal calls for cutting housing for persons 

with disabilities, the Section 811 program, by 18 percent. I think 

we are all curious to understand how the Department plans to 
304

serve those families given such a cut. And like others I am concerned about the proposed cut of a billion dollars to Section 8 tenant-based rental assistance and would like to know how the Department plans to honor all existing vouchers with such a sharp reduction.

And lastly, I join with my colleagues in being concerned about, 

and we are all concerned about, waste, fraud, and abuse, but the 

fate of the community development block grants. These have had, 

I think you know well, bipartisan support for decades. In fact, they 

were created under President Nixon’s administration to give power 

back to the people to make decisions locally to focus on community 

needs. So I share with my colleagues my concern about a lot of the 

programs you are reducing and I look forward to hearing your answers. And may I say I will be working very closely with the chairman and the ranking member to make sure we get a budget across 

the finish line for all of our departments that meets the needs of 

the American people. 

Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, Mr. Chairman. It is also a privilege to be able to now recognize the ranking member of the full 

committee, the gentlewoman from New York, Mrs. Lowey. 

Mrs. LOWEY. Thank you, Mr. Chairman. And I would like to 

thank Chairman Diaz-Balart and Ranking Member Price for holding this hearing, and, Secretary Carson, thank you so much for 

joining us. 

Simply put, Mr. Secretary, your budget is inadequate at best and 

unconscionable at worst. It would eliminate community development block grants which Congress funded at more than $3 billion 

in the recently passed bipartisan fiscal year 2017 Omnibus, the 

HOME Investment Partnerships, which leverages Federal funding 

to build affordable housing and receive bipartisan support for a 

$950 million investment. 

Your budget would also cause great suffering and harm, including cutting housing opportunities for persons with AIDS by $26 

million; increase homelessness by slashing homeless assistance 

grants by $130 million and rental assistance by $64.9 million; decrease lead hazardous control, a program that I have been working 

on for a very long time, but the need is still clear to most everyone. 

It keeps our children safe from lead-based paint and other hazards 

in their home. That was a cut of $15 million. 

Secretary Carson, there is no justification for this drastic approach. And given your public statements, I have really serious 

doubts about your grasp of the difficulties that millions of Americans face and the resources available to give people a hand up. I 

say that because when I worked in the State with Mario Cuomo 

a long time ago, I ran the anti-poverty program and most people 

want a hand up. They do not want a hand out. So cutting these 

programs is just unconscionable. 

You have suggested that the government has made things too 

comfortable for people living in public housing and that poverty is 

merely ‘‘a state of mind.’’ In fact, I visit all our public housing and 

one of the major problems we have, people are there too long because there is not enough affordable housing so in many instances 
305

we cannot move people out of public housing into affordable housing, not enough resources to do that either. 

Perhaps you have not really studied the people your Department 

is assisting to realize that this budget would result in millions of 

Americans, many of whom are senior citizens, veterans, children, 

people with disabilities, and the working poor, living in homeless 

shelters or on the streets. These cuts, Mr. Secretary, do not exist 

in a vacuum and would end up costing taxpayers even more than 

if we invest now in the very types of assistance you propose to severely cut or entirely eliminate. 

Housing must play a big role in strengthening and growing the 

middle class, empowering hardworking Americans, providing economic opportunity for all Americans, providing economic opportunity for all Americans. 

And I just want to say, Mr. Secretary, I know you just assumed 

these responsibilities, I really look forward to a productive discussion. I hope we can have it today and I hope we will continue the 

discussion, because we are people, Democrats, Republicans, and on 

Appropriations we really try to work together. 

So, I hope you will be listening to our concerns, which come really from the bottom of our hearts and based on the experience many 

of us have had in our communities, and I do hope that working together, we can make some changes. 

Thank you and thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, Mrs. Lowey. 

Mr. Secretary, your full testimony will be included in the record. 

We look forward now to hearing from you, and so, sir, you are recognized for 5 minutes. 

Secretary CARSON. I am delighted to hear the passion and the 

compassion from all the speakers, because that means that it will 

be much easier to work with you. Thank you for inviting me to discuss the Department of Housing and Human Development proposed budget for fiscal year 2018. 

The first Secretary of HUD, Robert C. Weaver, said that we must 

look for human solutions, not just policies and programs. I want 

our efforts to assist those in need, but also to support a path to 

self-sufficiency. At the same time, we are keenly focused on efficiency throughout the agency with a mindset of doing more with 

less.

Of course we continue our mission. The budget reflects the President’s commitment to support HUD’s critical functions, such as to 

provide rental assistance to low-income and vulnerable households; 

to promote decent, safe, and affordable housing for Americans, and 

to have access to home ownership; and to help work-eligible families achieve independence, freedom from regulations and bureaucracy, and the ability to govern themselves. 

The President’s 2018 budget also continues to provide rental assistance for 4.6 million households, while recognizing a greater role 

for State and local governments and the private sector to address 

community and economic needs. 

We also support borrowers through the FHA on their path to 

home ownership. This is very important for first-time home buyers 

and those on limited incomes. But again, it is a part of the path 
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forward to wealth creation through investments, equity, and responsibility.

For 2018, the budget proposes a set of policies in its core rental 

assistance programs to reduce cost. At the same time, we continue 

to assist current residents, encourage work, and promote self-sufficiency. The budget also seeks to provide administrative flexibilities 

and to streamline the complex and administratively burdensome 

calculation of income and rent. 

I am particularly interested in creating healthy homes. Now, as 

a physician I can tell you any amount of lead in our children is too 

much. The budget promotes healthy and lead-safe homes by providing $130 million for the mitigation of lead-based paint and other 

hazards in low-income homes, especially those in which children reside. We also fund enforcement education and research activities to 

further support this goal, all of which contributes to lower health 

care costs and increased productivity. 

Turning to community development and the homeless population, 

this is where our humanity must be evident and our commitment 

steadfast. Our programs must reach out and so must our hearts. 

We must be compassionate, yet wise. HUD’s homeless assistant 

grants serve vulnerable individuals and families who are homeless 

or at risk of becoming homeless through a wide variety of service 

and housing interventions, including homelessness prevention, 

emergency shelter, rapid rehousing, transitional housing, and permanent supportive housing. 

These programs are the vehicles used by HUD to promote evidence-based approaches leading to more effective use of resources. 

The budget would provide $2.25 billion for homeless assistance 

grants and supports the renewal of over 240,000 beds. 

HUD will continue to work closely with our State, local, and nonprofit partners who are close to this issue to help continue to find 

efficiencies and to work to end homelessness. We continue to make 

progress in eliminating chronic homelessness. 

The American housing market must remain stable, secure, and 

safe, FHA mortgage insurance programs, along with the mortgagebacked security guarantee Ginnie Mae, will continue as a path for 

responsible home buyers to have access to credit so they can build 

wealth through ownership. 

The budget includes 400 billion in loan guarantee authority for 

FHA mortgage, insurance programs, and 500 billion in authority 

for Ginnie Mae’s secondary market guarantees. These programs 

would generate approximately $9.5 billion in receipts in 2018. 

In summary, the President’s budget is fiscally responsible and 

meets the requirements of my Department. It reflects commitment 

to fiscal responsibility while supporting critical functions. It also 

administers programs to help low-income and vulnerable households. It helps work-eligible families achieve self-sufficiency and 

supports a path for borrowers to upward mobility. 

Thank you for your time today, and I look forward to answering 

your questions, and most importantly working with this committee 

to find appropriate solutions. 

[The information follows:] 
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WRITTEN TESTIMONY 

DR. BEN CARSON 

SECRETARY OF 

HOUSING AND URBAN DEVELOPMENT 

BEFORE THE 

HOUSE APPROPRIATIONS COMMITTEE 

SUBCOMMITTEE ON TRANSPORTATION, HOUSING AND URBAN 

DEVELOPMENT, AND RELATED AGENCIES 

THURSDAY, JUNE 8, 2017 

Introduction 

Chairman Diaz-Balart, Ranking Member Price, members of the Subcommittee- thank you for 

inviting me to discuss the Department of Housing and Urban Development's (HUD's) Proposed 

Budget for Fiscal Year (FY) 2018. 

The first Secretary of I-IUD, Robert Weaver, said that we must look for "human solutions," not 

just policies and programs. I want our efforts to assist those in need and to support a path to selfsufficiency. At the same time, we are keenly focused on efficiency throughout the agency with the 

mindset of doing more with less. 

Of course, we continue our mission. The Budget reflects the President's commitment to support 

HUD's critical functions, such as providing rental assistance to low-income and vulnerable 

households; promoting decent, safe, and affordable housing for Americans; supporting access to 

homeownership; and helping work-able families achieve independence, freedom from 

regulations and bureaucracy, and the ability to govern themselves. 

The President's 2018 Budget requests $40.7 billion in gross discretionary funding for I-IUD, a 

$7.4 billion, or 15 percent decrease from the 2017 enacted level. The Budget request reflects the 

Administration's commitment to fiscal responsibility, careful and prudent spending, targeted 

funding to continue HUD's core support of our most vulnerable households, and cutting back on 

funding for programs that have not consistently demonstrated results or are ancillary to HUD's 

core mission. 

This Budget is aligned around three principles: First, serve the most vulnerable while expecting 

work from those able to work. Second, find the proper role for the federal government in housing 

and community development. Finally, operate efficiently and effectively without displacing 

families. 

The President's 2018 Budget continues to provide rental assistance for over 4.5 million 

households, while recognizing a greater role for State and local governments and the private 

sector to address community and economic development needs. 
308

Through the Federal Housing Administration (FHA), we support borrowers on their path to 

homeowners hip. This support is very important for first-time home buyers and those on limited 

j n('omes. This is part of the path forward to wealth creation through investment, equity, and 

de vel oping and maintaining sound household financial practices. 

Rental Reform 

An examination of the Budget demonstrates our important efforts at rental reform. 

Approximately 80 percent of HUD's budget authority is dedicated to rental assistance. We need 

to get rental assistance right. For years, we have heard our renters question aspects of the 

program. The time has come for all of ns to take a hard look at how rental assistance is provided. 

We must ask ourselves: Does it help or hurt? In what situations? Is it fair? Is it well targeted to 

the most vulnerable? How much should the Federal government contribute versus State and local 

governments? Could we make the subsidy programs less complex? Can we make rent policies 

that encourage rather than discourage work? With this Budget, we are proposing greater tenant 

contributions and greater flexibility while we begin a discussion with Congress on these larger 

policy questions. 

The Budget provides $35.2 billion for HUD's rental assistance programs and proposes reforms 

that reduce costs while continuing to assist low-income households. These reforms cover 

Tenant-Based Rental Assistance, Public Housing Operating Fund, Public Housing Capital Fund, 

Project Based Rental Assistance, Housing for the Elderly (Sec. 202), and Housing for Persons 

with Disabilities (Sec. 811 ). 

As we reduce costs, we continue to assist current residents, encourage work, and promote selfsufficiency. The Budget also seeks to provide administrative flexibilities, and to streamline the 

complex and administratively burdensome rent and income calculations. The Budget also asks 

tenants to contribute more for their housing. We look forward to working with the Congress on 

proposals to determine what is the fair and compassionate amount tenants should pay across its 

rental assistance programs. 

Over the past several decades, program funds have not been sufficient to provide long-term 

sustainability. The Administration's 2018 Budget provides funding flexibilities and reduces the 

burden on PHAs administering the program. It encourages PHAs to seek private, state, and local 

partnerships to leverage oppmtunities for additional investment and to transition these properties 

to more sustainable funding platforms. 

I am again reminded of a comment by Secretary Robert Weaver. He said we must find local 

solutions to local problems. Public/Private Partnerships can be extremely effective in addressing 

the complexity and variations of local needs. That is our measurement of policies: do they 

work? 

So often there is too much bureaucracy, too many unhelpful hands, and too much unnecessary 

regulation, which drains our fiscal resources. The 2018 Budget includes general provisions that 

would provide administrative relief to PHAs, including waiver authority that would allow HUD 

and PHAs to reduce or eliminate annual requirements that are administratively burdensome. It 

also proposes flexibility in how PHAs can utilize their Capital and Operating Funds so that 

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PHAs could use their funds, regardless of funding account, for any eligible public housing 

purpose, and target those funds to their highest priorities, 

HUD continues to support the Rental Assistance Demonstration (RAD) Program, which petmits 

PHAs to transition public housing to a more sustainable funding and rational regulatory 

environment that permits debt and promotes other non-Federal leveraging, The RAD program 

relies on significant leverage of every dollar of HUD funding. It has leveraged more than $4 

billion in capital investment in order to make critical repairs and improvements to this segment 

of the nation's affordable housing stock. 

Protecting Vulnerable Populations, and Promoting Healthy, Lead-Safe Homes 

I am particularly interested in creating healthy homes. For example. as a doctor, I can tell you 

that lead exposure for children has serious effects and I know how important it is to prevent 

exposure and to act quickly once it has been identified. HUD issued a new rule to align its 

standards to the CDC's recommendation ofresponse when a child has a blood-lead level of five 

micrograms per deciliter or more in January 2017. This standard is beyond what most State and 

local health departments have implemented, and l am proud that HUD has now set a consistent 

Federal standard for requiring an environmental investigation for elevated blood lead levels in 

children living in its public and assisted housing. 

The Budget promotes healthy and lead-safe homes by providing $130 million for the mitigation 

of lead-based paint and other hazards in low-income homes, especially those in which children 

reside. We also fund enforcement, education, and research activities to further support this goal, 

all of which contribute to lower healthcare costs and increased productivity. 

I also want to thank you for your continued support for this program to help us mitigate the risk 

and support healthy, lead-free housing for our most vulnerable. The additional grant funds 

provided in FY 2017 for the Office of Lead Hazard Control and Healthy Homes will be put 

toward the elimination of lead-based paint hazards and protect the health of unassisted, lowincome homes. 

Also, we look forward to implementing and evaluating the results of the $25 million provided for 

competitive grants to address lead-based hazards in public housing. 

I now tum to the Budget's funding for homeless citizens. This is where our humanity must be 

evident and our commitment steadfast. Our programs must reach out; so must our hearts. We 

must be compassionate, yet wise. HUD's homeless assistance grants serve vulnerable 

individuals and families who are homeless or at-risk of homelessness through a wide variety of 

service and housing interventions. These include homelessness prevention, emergency shelter, 

rapid re-housing, transitional housing, and permanent supportive housing. 

These programs are the vehicle used by HUD to promote evidence-based approaches, leading to 

a more effective use of resources. The Budget would provide $2.25 billion for Homeless 

Assistance Grants, and supports the renewal of over 240,000 beds. HUD will continue to work 

closely with our State, local, and non-profit partners who are close to this issue to help continue 

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to find efficiencies, and work to address homelessness. I am particularly anxious that we 

continue to make progress in eliminating chronic homelessness. 

Last year's changes to the formula for Housing Opportunities for Persons with AIDS (HOPWA) 

was a great step towards efficiency, shifting funding to areas with higher numbers ofHIV/AIDS 

cases, rather than historical incidents. This is the kind of targeted efficiency that will help us do 

the most with limited Federal resources. We provide a phased-in approach to the new formula to 

provide communities time to adjust. The additional funding in 2017 also will help provide 

communities more time to adjust to the new formula. The 2018 Budget provides $330 million 

forHOPWA. 

Homeownership 

Stability in the American housing market is important. Federal Housing Administration 

mortgage insurance programs, along with the mortgage-backed security guarantee of Ginnie 

Mae, will continue as a path for responsible homebuyers to have access to credit so they can 

build wealth through homeownership. The Budget includes $400 billion in loan guarantee 

authority for the FHA Mutual Mortgage Insurance programs, and $500 billion in authority for 

Ginnie Mae secondary market guarantees. These programs will generate approximately $9.5 

billion in receipts in 2018. 

The Mutual Mortgage Insurance program plays a critical role in supporting homeownershipserving over 3.3 million families over the past three fiscal years. There is over $1.1 trillion in 

outstanding loan guarantees, which are subject to economic risk and uncertainty. I take the 

responsibility for financial stewardship seriously. This is one of the reasons the Administration 

decided to halt the proposed reduction in insurance premiums earlier this year in order to assess 

the cunent conditions and risk management needs. 

I look forward to bringing on an FHA Commissioner to get their perspective on the state of the 

Fund. Additional actions may be warranted so that we can put households on a path to success 

and provide upward mobility for bonowers. 

Program Eliminations 

The Administration's Budget reflects tough choices--eliminating or reducing funding for certain 

programs, and applying funds to other priorities. However, HUD's overarching mission remains 

the same: that all Americans have access to decent and safe housing. We will use lessons learned 

from eliminated programs and look to work with State and local governments and other partners 

to further economic development goals and support households on their path to sustainability. 

The Budget docs not include new funding for the Community Development Block Grant 

(CDBG) or HOME programs in 2018. The CDBG program is not well-targeted to the poorest 

populations and has not demonstrated a measurable impact on communities. While the HOME 

program has played a part in affordable housing production, the Budget recognizes a greater role 

for State and local governments. The Department is committed to making the most of existing 

funding, consistent with the goals of these two programs. 

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The Budget also does not include funding for the Housing Trust Fund, Choice Neighborhoods, 

the Self-Help Homeownership Opportunity Program, or Capacity Building (also known as 

Section 4 ). The Department looks forward to working with our State, local, and private partners 

to support them in playing a greater role in local community and economic development. 

Efficient and Effective Operations 

The Department has had public management challenges over the years that make it difficult to 

make the most of our resources and deliver on our mission in a transparent manner. The Budget 

recognizes that strong operations play a critical role in effective program delivery, with some 

initial steps to generate efficiencies in operations as we work towards the longer-term plan under 

the Administration's Executive Orders designed to streamline regulations and restructure 

agencies. 

There are several current managerial and operational issues that our Inspector General and the 

Government Accountability Office have identified, as well as opportunities for efficiencies found 

in our own internal reviews. We are aware that these important issues need to be addressed and 

we are undertaking steps to lay out a path to address them. Many of the findings cannot be 

corrected by simply putting them into operational, financial and technological categories, but 

instead each requires an integrated solution to ensure that we are implementing the fix that is 

most efficient and effective, and avoids recurrence of the same problem. 

I am building a leadership team with financial, operational and technological expertise that will 

work collaboratively to solve tough problems. I believe this integrated approach will put the 

Agency on a strong managerial and operational track. The 2018 request will support the 

agency's modernization and restructuring to align our core mission and policy priorities. 

Modernizing the Department's IT is critical to finding efficiencies that will allow us to more 

effectively deliver on our mission and we need to take steps towards replacing legacy systems 

with secure and reliable functionality. Achieving these efficiencies is about more than just the IT 

platform. We also need to transform service delivery and retool the HUD workforce to support 

these modernization efforts. To that end, the Budget includes the Working Capital Fund fee-forservice model that was fully enacted this year. The Budget also requests administrative 

flexibilities, so that we can target funding to the right blend of IT systems, human capital, and 

business processes to achieve our goals. 

Summary 

In summary, the President's Budget is fiscally responsible and reflects a commitment to 

supporting critical functions. It also administers programs to help low-income and vulnerable 

households. Further, this Budget incentivizes work-able families to achieve self-sufficiency and 

supports a path for borrowers to upward mobility. I look forward to working with this 

Committee to build programs to support these goals. 

#### 

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Mr. DIAZ-BALART. Thank you very much, Mr. Secretary. Mr. Secretary, as I mentioned before, and as you mentioned, your budget 

represents a 15 percent reduction from fiscal year 2017, the enacted level, and it bases that funding level in part on rental reforms that depend on changes to statute, which, by the way, as I 

mentioned before, that is outside the subcommittee’s jurisdiction. 

So it is going to depend on the authorizers working with you and 

buying in on these issues. 

So just what is your plan to engage with the appropriate committees of jurisdiction? If you have any idea of timelines for these reforms to receive full consideration and being implemented. 

And because here is my concern, and let us assume for argument’s sake that if some of those things are not done, you know, 

would that require modification of your budget, or what alternatives then would you be willing to look at? To just kind of throw 

that in your direction. 

Secretary CARSON. All right. Well, thank you, Mr. Chairman. 

And thank you for the incredible work that you have been doing 

in your district. I have had a chance to visit there with you, and 

really appreciate that. 

The authorizers have, in fact, requested that we meet with them, 

and we are extremely happy to do that and making arrangements 

to do so. You know, this is very much a collaborative process, and, 

you know, in the multitude of counselors is safety. 

COMMUNITY DEVELOPMENT BLOCK GRANT

Mr. DIAZ-BALART. Let me go now to the Community Development 

Block Grant issue, and also the HOME issue. We are obviously 

hearing great concerns from local leaders on the proposed elimination of CDBG and HOME programs. Is the administration contemplating ways to address the loss of that reduction of community 

or loss of community development in affordable housing funding? 

For example, will there be a potential housing and community 

development funding portion in the infrastructure proposal? You 

know, this subcommittee deals with both infrastructure and housing. So, you know, how would you respond to that, and what do you 

think the administration is looking at? 

Secretary CARSON. Well, certainly we have been advocating for 

housing to be included in the infrastructure bill, and things do 

seem to be moving in that direction. But obviously I cannot comment on that because it has not been formulated yet. You know, 

the community development block grant program, in its original intent, was really to provide flexibility to State and local governments to be able to use Federal fundings in the way that they saw 

most appropriate for the community development in their particular area. And that was a good mission; particularly worked well 

with the mission of HUD to provide safe and affordable housing 

with a particular focus on those individuals of low income. 

Over the course of time there has been significant mission creep, 

and only about 20 percent of CDBG dollars are used for housing. 

It does not mean that the other things are not good things, but, you 

know, about 15 percent is used for State and local administrative 

purposes.
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And we have to say within the budgetary constraints that we 

have what is critical. We have to prioritize very much like a family, 

who discovers that there are 12 major problems with their house 

that they only have enough money to fix six of them. How are they 

going to prioritize? You know, it is really hard to say to the other 

six, well, you are going to have to wait. 

But the fact of the matter is, the main purpose here is to be able 

to provide safe and appropriate shelter for millions and millions of 

American households and, therefore, that goes to the top of our priority list. And again, that does not mean that other things are not 

important, but it is critical that we be able to do that. 

It is also important to recognize that there is over $8 billion in 

the CDBG pipeline, 3 billion of which was appropriated for the 

2017 cycle. We are looking at ways to make sure that that money 

will be used in the most efficient and effective way, as we are with 

all the pipeline monies for the different programs. 

Mr. DIAZ-BALART. Mr. Secretary, I try to lead by example. My 

time is up. So now I will recognize Mr. Price. 

OVERSIGHT

Mr. PRICE. Mr. Secretary, there have been reports, I am sure you 

are aware, that the White House has ordered agencies, including 

yours, to ignore Democratic oversight requests. Now, the administration seems to be saying that Democratic oversight has no legitimacy, that oversight is only the prerogative of the majority party. 

That seems to be the position. And if so, it is a new level of partisanship that is unprecedented, totally unacceptable, and can only 

worsen our gridlock. 

So, I want to ask you some questions about this, so the way it 

affects you. What is the policy of your Department with respect to 

responses to congressional inquiries? More specifically, do you have 

policy or do you have guidance that would prohibit or delay responses to ranking members of congressional committees or subcommittees with jurisdiction? 

Thirdly, is there a policy or guidance that would prohibit or delay 

responses to Democratic members of Congress? 

And finally, if such policies or guidance are in place to prohibit 

or delay responses to ranking members or to all Democratic members, was such a policy developed in consultation with the White 

House or the Office of Management and Budget? 

Secretary CARSON. Thank you, Mr. Ranking Member, and particularly for your extreme concern about your constituents. As far 

as transparency is concerned with the operations at HUD, as far 

as I am concerned, that is high priority, and has nothing to do with 

the person’s political party. I would be extremely opposed to withholding information based on party. And, you know, one of the reasons that I accepted this position is because I was horrified by the 

level of partisanship that exists in our country. 

You know, a house divided against itself cannot stand. And the 

problems that the poor in our country face are not partisan issues, 

and I am delighted that many have expressed the desire to work 

together, and I will certainly be doing that and will not be withholding any information. 
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Mr. PRICE. Thank you. I am glad to hear you say that. I was glad 

to hear your colleague, Secretary John Kelly, make a similar declaration yesterday. I want to ask you to be a bit more specific, 

though.

Of course we appreciate the offer of cooperation. We are talking 

here, though, about inquiries, requests, that sometimes take a very 

specific form and that require extensive follow up, that require a 

timely response. Are you saying that when those responses come 

from the minority side, as well as the majority side, that you would 

give them equal priority? In other words, you would not honor 

what the administration seems to be saying about the oversight 

being only a majority prerogative? 

Secretary CARSON. Yes. I hope that is a misinterpretation of 

what the administration is saying, but I can tell you at HUD, we 

will treat all inquiries equally. 

Mr. PRICE. Have you had any directives to the contrary? 

Secretary CARSON. I have not had any such directives. 

Mr. PRICE. All right. I will take you at your word. And we appreciate that commitment. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Chairman. 

Mr. FRELINGHUYSEN. Thank you, Mr. Chairman. I suspect I am 

the only one on the panel that actually has ever met Secretary 

Weaver. He was a friend of my late father’s and I ran into him on 

several occasions. And he often said, I would be happy to come up 

to your congressional district to be helpful or stay away from your 

congressional district if it would not be helpful. But he was a good 

man, and he was committed to the same endeavor you are here. 

SECTION 811

I would like to—and I am concerned about the fate of people with 

disabilities in your budget proposal. Certainly, Section 811, I am 

particularly concerned about Section 8. Those who are nonelderly 

oftentimes in the Section 8 program, older Americans, I won’t say 

crowd out those with disabilities, developmental disabilities, mental disabilities. I want to make sure, and may I just say for the 

record, you may not know it, but in that nonelderly area, there is 

actually something called housing vouchers, and I have an amount 

of pride in making sure that people with a variety of disabilities 

continue to get the services they need and the housing they need. 

Would you talk more about your commitment, your Department’s 

commitment, to those with a variety of disabilities? There is a 

broad spectrum, but certainly the optics of cutting a billion dollars 

here and the 18 percent out of Section 811, those are not very good 

optics.

Secretary CARSON. Well, thank you. Thank you for particularly 

your concern about the disabled. As you know, I spent 36 years in 

medicine, most of that as a neurosurgeon and most of that as a pediatric neurosurgeon, and had to deal with a lot of disability 

and——

Mr. FRELINGHUYSEN. That is exactly why I am—knowing of your 

background, it is important for you to—— 

Secretary CARSON. So, obviously I am going to fight for that 

group of people. I am going to fight for everybody, but with particular interest. What we have discovered, and particularly in the 
315

whole rental reform package, is that we are able to find a lot of 

inefficiencies and improve the way that services are rendered. And 

in continual care for permanent supportive housing we are getting 

basically 14.8 percent more households per dollar spent on that 

program, just through examining what was going on with waste 

and inefficiencies. That is being applied to virtually all of the programs.

And again, for those families or those individuals who have particular hardships, we have waivers available for them, so any 

changes to the program that adversely affect them in a way that 

would impact upon their ability to maintain our goal of safe housing and secure housing, we have waivers. 

Mr. FRELINGHUYSEN. Well, respectfully, and I know my time is 

limited, individuals with disabilities, families with disabilities, I 

am sure we are all focused on inefficiencies, but in many of their 

cases, the potential for sharp reductions would put those families 

and individuals in a very bad position. 

I hope that as we move towards a completion of this bill, that 

you will, hopefully, be working with both the ranking member and 

the chairman to address the needs of this very diverse and important community. 

Secretary CARSON. We will not allow that community to be adversely affected. 

Mr. DIAZ-BALART. Mrs. Lowey. 

Mrs. LOWEY. Thank you, Mr. Chairman. Mr. Secretary, while 

thousands in Flint were tragically exposed to lead through drinking 

water, historically paint has been the most prevalent source of lead 

exposure, and much of the success we have had in reducing the exposure to lead has come from a partnership between HUD, the 

EPA, and the CDC, each providing expertise and resources. In the 

fiscal year 2017 Omnibus, Congress provided an increase to $145 

million, and just a month later we received your proposal to cut 

that bipartisan investment by $15 million. 

LEAD

Your own budget estimates that similar lead hazard control programs have a return on investment of at least 17-to-1 at a value 

of over $30 billion. Given the tremendous needs, why do you propose this cut? And at the current levels, how many grant applications are turned away due to the lack of funding? 

Secretary CARSON. Okay. Thank you for your concern about lead. 

That is something that, obviously, I am very concerned about having worked for 36 years in Baltimore and seeing the effects of that 

lead exposure. It is approximately 310,000 children per year are 

adversely affected, and those are the ones that we know about. 

You know, we have altered the considerations for lead action to 

make them consistence with the CDC at 5 micrograms per deciliter, helping to establish a national standard for the first time. 

In terms of the funding, based on the previous two cycles we suggested a $20 million increase, so from $110 million up to $130 million. At that time we did not know that you would recommend $145 

million, which we will happily accept, but we did not have the ability to do that at the time of the budget. So that does not reflect 
316

disconcert. It reflects just the opposite and we feel very strongly 

about that. 

SHOP

Mrs. LOWEY. Well, that is good news. Thank you very, very much 

and I look forward to working with you on that. 

In the couple of minutes I have left I wanted to talk about the 

SHOP program, which awards grants to national and regional nonprofits to purchase home sites and develop or improve housing for 

those with low incomes. 

It is a really good program because I have visited them. The 

home owners are required to put in sweat equity towards the construction or rehabilitation of their homes, and in fiscal year 2017 

Congress funded SHOP at $10 million. We have heard from advocacy groups who would like to see the program funded at $15 million, not eliminated. 

Mr. Secretary, you have spoken about the importance of home 

ownership to our country and our economy, so why should we 

eliminate a program that increases home ownership among the 

low-income and first-time home buyers? 

And I also want to say SHOP grantees have raised a significant amount of private leverage, bringing in more than $2 billion of investment into communities. So when you take away the Federal 

dollars, you take away that ability to leverage and create these investments. I am hoping that we can work together on this program 

as well. 

Secretary CARSON. Well, I would be delighted to work with you 

on the whole concept of home ownership. It is so critical and it is 

the principle mechanism whereby family wealth is generated in 

this country. 

Again, we have to work within the constraints of what we have, 

but I am always happy to work with you on that. 

Mrs. LOWEY. Well, I thank you so much. I will even give you 

back 45 seconds. Working with you on these programs would really 

be a privilege, so I thank you—— 

Secretary CARSON. Thank you. 

Mrs. LOWEY [continuing]. Very much for your commitment. 

Thank you. 

Mr. DIAZ-BALART. Mr. Dent, you are recognized. 

Mr. DENT. Thank you, Mr. Chairman, and good morning. Mr. 

Secretary, thank you for your service to our country. 

Secretary CARSON. Thank you. 

CDBG AND HOME

Mr. DENT. Just a few things. As others have already mentioned 

here on this panel, the President’s budget does call for eliminating 

both the CDBG program and the HOME program, among others. 

In the communities that I represent I have seen the importance of 

affordable housing developments and other programs that have 

been made possible for leveraging both the CDBG and HOME 

funds.

Just earlier this week, on Monday actually, before I came down 

I attended the grand opening of an affordable senior living center 

in Allentown, Pennsylvania, my home town, that made use of home 
317

funds and Federal housing vouchers to bring in private capital to 

finance this particular project. As demonstrated by the project, 

Federal funds can serve as a real catalyst and leverage private investment for development. 

Its justification for eliminating funding for CDBG and HOME 

programs the administration stated, in part, that it recognized that 

State and local governments are better positioned to address overall economic development needs, and that evolving affordable housing activities to State and local governments would be a more appropriate solution to addressing these challenges. 

While certainly I agree that the State and local stakeholders 

should have the most control possible over their needs and decision 

making, eliminating these Federal funds would seriously eliminate 

their ability to bring capital, to bring in private and State and local 

government investment for these important projects. So these 

funds will be eliminated. 

How does the administration expect that the States and localities 

would be able to attract the needed private investment for affordable housing and other projects? And while the budget states that 

State and local governments should be the ones to address these 

challenges, it does not provide any sort assistance relief or other 

mechanism to replace the programs taken away. 

Secretary CARSON. Thank you, sir. I would draw your attention 

to RAD. 

RAD

Mr. DENT. To what? I am sorry. 

Secretary CARSON. RAD, Rental Assistance Demonstration— 

Mr. DENT. Yes. 

Secretary CARSON. Here is a program that does a tremendous 

amount of leveraging of public dollars at a national average of 

about 19-to-1, and is able to rehabilitate many of these multifamily 

public housing situations, convert others. And those are the kind 

of things that we are very much behind. 

And, again, I do not want to give people the impression that I 

do not like the things that have been done before. I think that the 

effort that people have put into these and some of the benefits are 

very laudable. 

But we are working within a different framework here, and I 

know it has been talked about for years and years, fiscal responsibility. We have to get on track, but compassion, I think, also involves thinking about future generations and what we are doing to 

them if we just continue to think about what is going on in the 

here and now. 

So I am very happy to work with people on ways that we can 

use the funding that we do have. But it is absolutely essential that 

we do not allow the most vulnerable people in our society to be discarded and thrown out on the streets as we look at all the other 

programs.

Mr. DENT. I would agree, Secretary. I just want to convey to you 

the concerns that I have heard from the leaders in cities like Allentown, Bethlehem, and Lebanon, Pennsylvania, Republican and 

Democrat, that these two programs in particular have real value 

to them. 
318

HCAP

Another issue, too, that I am very concerned about is the Housing Counseling Assistance Program, and that provides housing 

counseling services to home owners and tenants, both pre and post 

purchasing, and can help struggling home owners prevent foreclosure and assist them in avoiding difficulties in the first place. 

In the case of pre-purchase counseling, these services are able to 

teach a person to fish, so to speak, instead of only providing a single instance of monetary assistance. And the services have had a 

demonstrable, positive impact for those who participated. 

In the wake of the national housing and foreclosure crisis, Congress created the National Foreclosure Mitigation Counseling Program in 2007, to provide counseling to struggling home owners. 

Many entities that made use of these housing counseling funds also 

then received funding from the NFMC. 

And as the country has obviously recovered quite a bit from the 

housing crisis, the NFMC has been phased out. Bottom line is I 

was encouraged to see that they finally had requested level funding 

with the Further Continuing Appropriations Act of 2017 for the 

Housing Counseling Assistance Program. Could you please elaborate a little bit on the administration’s decision to support funding 

for this particular program? 

And finally, do you think it may be prudent to increase funding 

for this program in light of the NFMC’s winding down, so that buyers are prepared for the responsibilities of home ownership and divert a future crisis? 

Mr. DIAZ-BALART. Mr. Secretary and Mr. Dent, I fear that we are 

going to have to get to that question later. I apologize to Mr. Dent. 

Mr. DENT. Well, I will ask it in the second round. 

Secretary CARSON. I had a dynamite answer for it. 

Mr. DIAZ-BALART. There you go. 

Mr. DENT. I am here for the second round. Yield back. 

Mr. DIAZ-BALART. Thank you, Mr. Dent. Mr. Quigley. 

Mr. QUIGLEY. Thank you, Mr. Chairman. Thank you, Mr. Secretary. Speaking as someone well-acquainted with the medical 

issues, Doctor, I appreciate you being here. 

HOPWA

The HOPWA program, Housing Opportunities for Persons with 

HIV/AIDS, is facing a 7 percent cut. Your reaction to that just 

given the understanding of what the program means for Americans 

living with HIV. 

In Chicago, about 23,000 people were living with HIV in 2015. 

The viral suppression rate for others, that means the viral load is 

so low that the person cannot transmit HIV, was 48 percent in 

Chicagoans. That is about 18 percent higher than the national average. We have worked hard to achieve this rate. 

It is interesting, a sample of persons who lived in HOPWA housing in Chicago, 66 percent were virally suppressed. That is much 

higher as well. You seem to be today merging passion, compassion, 

and efficiencies. The HOPWA program seems to be doing all those 

as well. Your reaction given that to the proposed cut? 
319

Secretary CARSON. Sure. First of all, I am, along with you, happy 

to see the tremendous progress that has been made in the treatment of HIV/AIDS. And many people are able to lead completely 

normal lives now, so things are changing for the better in that 

sense.

I had an opportunity on my listening tour to visit a HOPWA facility. It was beautiful. The people there were extraordinarily 

happy. And one of the things that impressed me the most was the 

executors who were telling me that at first there was a lot of opposition, and now they have reached a point where they almost have 

to turn away people in the community who are trying to help. And 

that facility was built through public-private partnerships. 

Those are the kinds of things that represent sort of the new 

model. The old model was the government came in with a whole 

bunch of money and said build this facility for people with AIDS, 

build this facility for low-income people in this area, et cetera. The 

new model is the government sees a program and then facilitates 

public-private partnerships by creating win-win situations. And I 

think that is going to provide much better footing for allowing people to develop to their full potential, so that we do not actually 

need so much aid for people. But we have to lay the foundation to 

do that. 

Mr. QUIGLEY. Well, according to your own agency there are about 

390,000 people eligible for HOPWA through this program that can 

currently only service about 60,000 households, and a 7 percent cut 

only makes that worse. 

Secretary CARSON. And the same can be said about affordable 

housing in general. We have three to four times as many people in 

need of it as we are able to provide. But if we continue along the 

same kinds of ways that we have been doing it for the last several 

years, we are treading water. 

Mr. QUIGLEY. Well, you mentioned—— 

Secretary CARSON. We need to do something that—— 

Mr. QUIGLEY. Respectfully—— 

Secretary CARSON [continuing]. Will expand. 

Mr. QUIGLEY. Respectfully, though, you talked about priorities 

being those most vulnerable. Every study I have seen indicates 

that one of the most important factors in suppressing the viral load 

of HIV-positive Americans is stable housing, as you would imagine, 

for a variety of reasons. 

So, to your earlier point, this seems to be working against helping those most vulnerable, most exposed from a passion, compassion point of view, but clearly from a dollars point of view. Because 

people who are HIV-positive go off their medication, they are going 

to be an extraordinary cost as well given that their treatment is 

upset and they are going to get sick. 

Secretary CARSON. I do not—— 

Mr. QUIGLEY. And they are going to potentially make others sick. 

Secretary CARSON. I do not disagree with you. But, again, the pie 

is only so big. We need to make the pie bigger. If we can make the 

pie bigger, we can make more slices. 

Mr. QUIGLEY. Well, now we are talking the same thing, making 

the pie bigger. Thank you. 

Secretary CARSON. Okay. 
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Mr. DIAZ-BALART. Thank you, sir. Mr. Vice Chairman, Mr. Joyce, 

you are recognized. 

Mr. JOYCE. Thank you, Mr. Chairman, and Mr. Secretary, pleasure to see you today. Thank you for being here. As you are well 

aware, many of our districts still see the effects of the housing crisis, and they are still struggling to cope with the aftermath a decade later. 

FORECLOSURES

A particular concern in my district is home foreclosures and, subsequently, vacant properties that have caused blight throughout 

once thriving communities. Cities end up owning a large percentage of these properties and, therefore, have the responsibility of 

maintaining or demolishing them, but this has proven overly burdensome, so these abandoned properties often remain vacant and 

in a dilapidated state. Consequently, they are devaluing nearby 

homes and serving as sanctuaries for criminal activity. 

Does your Department have any plans to complement the initiative taken by the Department of Treasury through the Hardest Hit 

Fund, refurbish these communities? And secondly, do you have any 

recommendations as to how the fund can operate more effectively 

and efficiently? 

Secretary CARSON. Well, I am glad you brought that up. Thank 

you. Yes, we are working hand-in-hand with Treasury and with 

several of the departments, quite frankly. The blight issue is severe 

because a lot of those houses are used for criminal activity, and 

they promote disease as well. So the long-term cost of them is quite 

significant.

And we are looking for ways to better use all the dollars and to 

more rampantly authorize the demolition of these kinds of facilities. There has been previously a lot of red tape involved in getting 

that done, and we are trying to reduce that very significantly so 

we can quickly move to take care of that program. 

Mr. JOYCE. I would like to help you to that extent, but the other 

part, obviously, is when these abandoned homes become city property, they have to be boarded up. Boarding up is a telltale sign to 

a criminal that here is a place that you can continue to do your 

criminal activity, whatever that may be. 

There is a clear boarding requirement in lieu of plywood for vacant and abandoned properties that have been expanding across 

the Nation through Fannie Mae, Freddie Mac, and the VA. They 

have begun reimbursing for the full cost of clear boarding given its 

cost efficiency and its long-term benefits. 

Has your Department done any recent assessments on the benefits of clear boarding technology in preserving vacant and abandoned homes? 

Secretary CARSON. I believe that is something that is being 

looked at, but I have not been given a full appraisal on that yet. 

We will look into that. 

Mr. JOYCE. Please. It is something that as you go through these 

neighborhoods you would have no idea which—— 

Secretary CARSON. It makes sense. 

Mr. JOYCE [continuing]. One is a residence. Yes. Thank you. 
321

Secondly, I will move on quickly since I see I have a little bit of 

time remaining here, as you know, earlier this spring our subcommittee had the pleasure of meeting with Inspector General 

Montoya.

Secretary CARSON. Yes. 

Mr. JOYCE. His testimony is insightful and I appreciate the work 

that both of you are doing to ensure the efficient and proper use 

of our taxpayer dollars. 

HUMAN CAPITAL

I would like the opportunity to follow up on an issue that he 

raised during the hearing that is an ongoing concern to me, and 

that is HUD’s human capital. A 2015 survey by HUD stated that 

fewer than half of HUD employees felt their training needs have 

been addressed. A July 2016 GAO report further echoed those findings.

Can you please elaborate on the initiatives HUD is currently carrying out to better equip its employees, and has the Department 

implemented a new strategy for its hiring authority to better target 

qualified candidates for employment? 

Secretary CARSON. Yes. Our Department of Human Capital is in 

the process of being beefed up, so to speak, as are several of our 

departments. Many of the findings that Inspector General Montoya 

found, there were 11 material weaknesses, very, very legitimate. I 

have looked at it, I have talked to him about him, and we are going 

to address all of them, but want to really do it in a more holistic 

manner rather than just pinpoint things at a time. So we have 

hired a COO because you need an operator. That is one of the 

things that I have discovered in my many years in the corporate 

world, and we are going to be nominating a CFO and a CIO. 

And we will be able to really merge our effort to solve each of 

those 11 material weaknesses. 

Mr. JOYCE. Well, I wish you Godspeed to that end. Thank you, 

Mr. Chairman. I have no further questions at this time. 

Mr. DIAZ-BALART. Thank you, sir. Congresswoman Clark, you are 

recognized.

Ms. CLARK. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being with us today. I was struck by some things in your 

testimony. One was your statement that we must be compassionate, but wise, and also that as you are looking to reduce costs, 

you would assist current residents, encourage work, and promote 

self-sufficiency.

HOUSING VOUCHERS

So I am hoping you can help me put together those goals with 

a quarter of a million Section 8 vouchers that would be lost under 

this budget proposal. I am sure you are aware the vast majority 

of rental assistance in this country goes to households that are 

composed of children, elderly, and the disabled. 

Secretary CARSON. Yes. 

Ms. CLARK. And by ‘‘vast majority’’ I mean in Massachusetts, 

that is 90 percent of the households that receive Federal rental assistance. In the chairman’s home State of Florida, that is 91 percent. In the ranking member’s home State of North Carolina that 
322

is 92 percent. So a vulnerable population makes up, overwhelmingly, closing in on 100 percent of the assistance recipients. 

And I want to tell you about a constituent in my district. She is 

76 years old. She has a gross income from Social Security of 

$18,025 a year. She receives a $5,000 deduction for her medical expenses, which means under the current formula using adjusted income she pays $188 per month in rent. 

Under your reforms she would pay $450 a month. That is an increase of over $3,100 a year or 17 percent of her entire gross income. Never mind the vouchers that we are just going to lose, that 

every housing group, whether at home or nationally, has said there 

is absolutely no way attrition can make up for that. 

So, how does this square? I have been thinking, like, how does 

this square with your statements about being compassionate and 

wise and taking care of our current residents and self-sufficiency? 

And when you say the pie needs to be bigger, I guess my question to you, is it ultimately you are being held to constraints by 

this administration, that you are forced to make these sort of draconian and heartless cuts that are so damaging? 

Secretary CARSON. Well, it is a back-and-forth process to try to 

reach a compromise on where things should be. Obviously, you 

know, my goal is to use with the great efficiency anything that we 

have. As far as the specific example of the woman you gave, there 

are cutoffs in terms of the formula that is used so that people do 

not experience what you said she is going to experience. 

If that, in fact, is happening, there is a problem, and we also 

have hardship exemptions, particularly for the elderly and for the 

disabled.

Ms. CLARK. I am curious about that statement with the hardship 

waivers because as these programs already do not have sufficient 

funding, they are serving the very lowest income people in our 

country. So the idea of a hardship waiver around that seems to beg 

the point, I just do not see the efficiency that we are gaining in this 

when we are cutting off a quarter of a million vouchers that are 

such a lifeline for such a vulnerable population. 

Secretary CARSON. Okay. 

Ms. CLARK. And if we are looking at that like building that path, 

as you said, to self-sufficiency, but then we are taking away the 

community development block grants, the Choice Program, the 

SHOP program, in fact, every incentive that helps create robust, 

public-private partnerships. Where are those incentives in this 

budget?

Secretary CARSON. Well, I do understand what you are saying 

and do recognize that we have carefully looked at who would be impacted to make sure that we did not displace any of those most vulnerable people. 

Ms. CLARK. How are you going to choose who losses their voucher?

Secretary CARSON. People who already have vouchers and who 

are already sheltered—when you talk about 250,000 people losing, 

you are talking about people who are on a waiting list. You are not 

talking about people who are already being sheltered. That is a different population. 
323

Ms. CLARK. Well, that is not my understanding from my housing 

communities, but I see my time has expired. 

Mr. DIAZ-BALART. Thank you, very much. Mr. Culberson, you are 

recognized, sir. 

Mr. CULBERSON. Thank you, Mr. Chairman. Mr. Secretary, thank 

you for your service to the country. I admire you immensely and 

the work that you have done throughout your life. 

Mr. Price, our ranking member, pointed out quite correctly that 

we need to have a more comprehensive approach to appropriations 

when we look at the Federal budget, and I wanted to give you an 

opportunity to talk about that bigger picture and the more comprehensive approach because as many of the folks in this panel 

have been talking about their concern about recommended reductions in different programs that do a great deal to help people that 

are most in need. And obviously, we have to have a safety net for 

people that are the most fragile and in need. 

BALANCING THE BUDGET

But in order to do so, I wanted to give you an opportunity to talk 

about the urgency of balancing the Federal budget and the bigger 

problem, and that is that 70 cents out of every Federal dollar that 

comes in, every one of our taxpayers’ very precious, scarce, and 

hard-earned tax dollars, 70 cents immediately goes out the door to 

the automatic pilot mandatory spending programs: Social Security, 

Medicare, Medicaid, the Affordable Care Act, veterans benefits, 

principal on the debt and interest on the debt, which leaves the annual operating expenses of the Federal Government under the jurisdiction of appropriations 30 cents on the dollar. Yet 15 of that 

30 cents goes to the Defense Department, which has been so badly 

underfunded that half of the Marine Corps planes—excuse me, half 

of the Navy planes cannot fly for lack of spare parts. Seventy percent of our young men and women in the Marine Corps, the airplanes, 70 percent of their planes cannot fly because of a lack of 

spare parts. 

We face great threats around the world. We are going to need to 

dramatically increase defense spending. So we are left with the 15 

cents on the dollar to try to spread around all the other vital functions of the Federal Government. 

Now, you were very eloquent during the presidential campaign 

in talking about the urgency of balancing the Federal budget. 

Would you talk to us a little bit about the need for members of 

Congress to be honest with our constituents and tell them how urgent it is that we rescue Medicare and Social Security for insolvency, and the amount of money that will free up while ensuring 

that Americans that paid into those programs received the benefits 

that they have paid for. 

Secretary CARSON. Well, thank you. I cannot tell you how refreshing it is to know that somebody actually cares about this. I 

mean $20 trillion in national debt, just back it back to $18 trillion, 

if you tried to pay that off at a rate of $10 million a day, 365 days 

a year, it would take over 5,000 years. And this is what we are putting on the backs of our citizens. Every one of those thousands of 

babies that are born today will come with a debt of $60,000 on 
324

their head. This does not go away. So we have to work within that 

reality.

Almost every society had an opportunity to do this. You go back 

to 17th century Spain, 18th century France, 19th century Great 

Britain, ancient Egypt, ancient Rome. Every one of them knew that 

there was a problem. They did nothing about it and they collapsed. 

Are we going to face the same thing or are we going to be smart 

enough to learn from their examples? 

And again, I want to emphasize the programs that we are talking about, the things that have been done, they are wonderful 

things. And if we had the funding, we should do them all; we 

should do them, take care of everybody. It would be a wonderful 

thing. But we cannot. Therefore, we have to do the most responsible things that we can do and we have to try to lay the groundwork for, you know, economic growth and to be able to take care 

of people. If we destroy these programs because we are fiscally irresponsible, we won’t be able to take care of anybody. 

Mr. CULBERSON. Absolutely. And is it possible, logically, to even 

begin to balance the budget by only looking at 15 cents on every 

Federal dollar? 

Secretary CARSON. I do not think so. 

Mr. CULBERSON. Impossible. So I really welcome the help of my 

Democratic colleagues. I know my Republican colleagues are committed to paying off that national debt, which is a terrible thing to 

pass on to our children and grandchildren. 

Secretary CARSON. But we can still do it if we start now. 

Mr. CULBERSON. But we can still do it. If we start right now, people who are 45 years of age or younger, Social Security will not be 

there for them. If you are 54 years of age or younger, Mr. Secretary, the Medicare hospital fund can only pay 50 cents on the 

dollar. These are hard realities that we in Congress, the Republican majority—this is why I believe Donald Trump was elected, because people are sick and tired of the debt, of the deficit, of the inaction, the refusal of the Congress and the President to deal with 

reality. The country expects us to get her done and balance the 

budget and accomplish these things so that you have the money 

that you need to take care of the most vulnerable and fragile in our 

society. Would you agree? 

Secretary CARSON. I would agree and I thank you for your willingness to talk about it. I think a lot of people, of your colleagues, 

actually understand this, but it is not a popular thing to say. 

Mr. DIAZ-BALART. Thank you, Mr. Culberson. Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chairman. Secretary Carson, thank 

you for being here today. 

Secretary CARSON. Thank you. 

Mr. YOUNG. I am just going to have a conversation with you. 

There are a lot of challenges that you are going to be facing with 

this Department and you have probably already realized a lot of 

that.

Secretary CARSON. Yes. 

Mr. YOUNG. Why did you accept this job? 

Secretary CARSON. Well, you know, I spent my entire professional career trying to give children a second chance, only to see 

many of them go back into an environment that was not healthy. 
325

And this is an opportunity to try to do everything I can to improve 

that environment for them, so it is a continuation of my work. 

Mr. YOUNG. Do you have just a handful of real goals that you 

want to accomplish with this Department? To leave it not necessarily as a legacy with your name on it, but we are talking about 

the people that are impacted within the programs of this Department. What kind of goals do you have for them? 

HUMAN CAPITAL

Secretary CARSON. Well, the real goals for me are to recognize 

that our people, all of them, are human capital. And when it comes 

to our Nation and the future, we have to compete with China and 

India, nations that have three to four times as many people as we 

do, which means if we do not develop our people, we will not be 

able to compete into the future. So, I want to see us take a much 

more holistic look at the problems that we have rather than pinpointing things and having our little special groups. We need to 

take a holistic view of America and what we must do in order to 

stay strong into the future. 

Mr. YOUNG. And speaking of America, I urge you to spend as 

much time as possible outside of the district, being on the ground 

in our neighborhoods, in our communities, not just in urban areas, 

but as well in some of our very rural areas. I represent a district 

that is very rural and very urban at the same time. I represent Des 

Moines and then 16 very rural counties, parts of those. And so with 

the challenges, though, that you have, there are two things I think 

could be a hurdle. But if you hire the right people and have the 

right accountability, I am hoping that you can get to where you 

want to get. 

And you talked about hiring a Chief Information Officer and a 

Chief Financial Officer. We have had some hearings in this committee when we have had the Inspector General before us and talking about the real challenges with the different networks, technology networks and systems that you have at HUD. 

Secretary CARSON. Yes. 

Mr. YOUNG. And if some of them went now, there would not be 

anybody who was trained to replace some of the parts, or that software would not even be available today, and also really getting a 

grasp on the financial management of the Department as well. I 

hope you really challenge your employees to make those goals, just 

so that the Department can run better, and also you have got to 

have accountability for the taxpayer. 

Secretary CARSON. Yes. 

Mr. YOUNG. Make sure that the hardworking folks in America, 

the taxpayer dollars they send out here, they are used in a good 

manner.

Secretary CARSON. That is a huge goal, basically, to run it like 

a business. And, you know, I have spent 18 years on Kellogg’s 

board and 16 years on Costco’s board as well as started a national 

nonprofit and I have had, despite what the media will tell you, a 

great deal of experience in business and how to do things. And I 

have already seen enormous savings that can be realized by doing 

things in a rational way. 
326

Mr. YOUNG. Well, I want you to know that many of us here on 

the committee, we want to work with you for the benefit of the 

American people and to help those who are struggling to get that 

opportunity to just reach that higher ladder of self-worth and economic worth as well, and to be able to give back to this great country some day. Thank you. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Valadao. 

Mr. VALADAO. Thank you, Chairman. Thank you, Secretary, for 

your time today and your testimony. 

REGULATIONS

In your testimony, you highlighted that HUD is weighed down 

by too much bureaucracy and unnecessary regulations. This is evident in my district where a public housing agency was awarded a 

grant of over $3 million last December. Six months have passed 

since the announcement of this award and the agency is still yet 

to see those funds. How are you proposing to reduce regulation and 

bureaucracy in order to ensure your Department is able to appropriately and efficiently direct these funds to the individuals who 

are desperately in need? 

Secretary CARSON. Thank you so much for that question. That 

has been a pet peeve of mine for a long time, bureaucracy. And, 

you know, I define bureaucracy as people who care more about the 

rules than the goals. But we have appointed a task force, as has 

been asked for by the President in Executive Order 13777, and we 

are looking at every single regulation. And also, we have open comment period and during my national tour, which will be continuing, 

listening particularly to our local HUD employees and to the people 

who administer the programs, finding out from them what are the 

things that keep you from being able to move efficiently and effectively, and dealing with those directly. 

COMMUNITY PROGRAM CUTS

Mr. VALADAO. All right. And then in my district, my district has 

many small communities with a very limited tax base. These communities depend on Federal community development funding for 

housing, infrastructure, community facilities. For example, in unincorporated areas, like Del Rey, Earlimart, Richgrove, and Lamont, 

all within my district there in California, developers of affordable 

rental housing utilize a combination of funding sources in addition 

to the private equity they raise through the low-income tax credit, 

especially in small towns or rural areas. Very often, these include 

key HUD funding programs like HOME and Community Development Block Grant. And I know you touched on it a little bit earlier 

with the chairman’s questions, but I did not really hear a substitute. So I would like to know what your substitute—or what do 

you propose to keep these projects viable for low and very low-income wage earners? 

Secretary CARSON. Okay. Well, first of all, keep in mind that 

many of those projects that have been set in motion through some 

of those grants will be continuing. The CDBG funding is not really 

meant to take care of the debt service. It is more like collateral. 

And the effect of those projects will extend, in many cases, for dec-
327

ades and will generate funds which can then be used for the debt 

service.

But in terms of the public-private partnerships, the use of things 

like the low-income tax credits, you know, we are working with the 

Treasury Department and across multiple silos to make sure that 

no matter how we end up we will have programs that encourage 

the public-private partnerships because there is so much more 

money in the private sector than there is the government, particularly considering the conversation that we just had about national 

debt.

RURAL COMMUNITIES

Mr. VALADAO. I guess I have got time for just one more. HUD 

is tasked with supporting housing needs across America in urban, 

suburban, and rural communities alike. However, the previous administration and Federal policymakers and Congress often overlooked the needs of rural America, including the rural communities 

like my district and many of those represented up here. How much 

of HUD’s funding goes toward supporting housing needs specifically in rural communities and how can HUD programs be improved to make the most of those funds and ensure consistent practical support is provided to rural communities? 

Secretary CARSON. Well, obviously, we are very concerned about 

the rural communities and of working with the Agriculture Department. We have combined programs to deal with housing needs in 

the rural communities. 

But the other thing about rural communities I think is incredibly 

important is the use of internet. In many cases, it is nonexistent. 

I have went into a lot of places when I was campaigning, I was absolutely shocked about the communication. And of course, that 

makes a big difference for the opportunities that are available for 

those young people. And now that we have reached the point in our 

society where a lot of work can be done from home, it makes it 

even more important. 

So, yes, we are paying attention to that, very much so. 

Mr. VALADAO. Well, I appreciate that and I appreciate you bringing up the internet, too. So, thank you, Chairman, my time is up. 

PACE LOANS

Mr. DIAZ-BALART. Thank you, sir. Mr. Secretary, last summer 

HUD began allowing FHA to ensure mortgages on properties with 

what is known as PACE loans, property assessed clean energy 

loans, on them, which potentially puts them in a second lien position. The second lien position potentially increases the risk for the 

MMI funds and taxpayers. Now, the MMI fund was forced to draw 

$1.7 billion from Treasury 4 years ago to cover the projected losses 

on loans that are guarantees, and it reached its statutory research 

level just 2 years ago. The Federal Housing Finance Agency prohibits Fannie Mae and Freddie Mac from insuring properties with 

PACE loans. Do you believe, Mr. Secretary, that a second lien position actually could create a greater risk to the MMI fund and to 

taxpayers?

Secretary CARSON. Well, I think it is a potential problem and one 

that I had a number of conversations with some of your colleagues 
328

in Congress and one which we are looking at very carefully. A lot 

of the people who get involved in those PACE loans do not really 

understand them. They do not understand what they are getting 

involved with. And at the very least, there has to be mandatory 

counseling before someone gets into something like that, but it does 

create real problems. 

Mr. DIAZ-BALART. So you are going to be looking; I am assuming 

and I am hoping, that you are going to be reevaluating. 

Secretary CARSON. Absolutely. 

Mr. DIAZ-BALART. Reevaluating the policy? 

Secretary CARSON. Absolutely. 

Mr. DIAZ-BALART. And I do not know if you have had a chance 

to see there is a bill, the PACE Act, Protecting Americans from 

Credit Exploitation. 

Secretary CARSON. Yes. 

Mr. DIAZ-BALART. All right. So you are looking at that as well? 

Secretary CARSON. Yes. 

Mr. DIAZ-BALART. Great, I am glad to hear that, Mr. Secretary. 

Let me change the subject. 

VOUCHER FLEXIBILITIES

Over 71⁄2 million Americans depend on either public housing or 

private vouchers to afford a place to live, and I am speaking quickly. I always speak quickly, and I am doing it quicker now because 

I have got a lot of questions. And obviously, helping these people 

remain in stable housing is one of HUD’s fundamental commitments, and so I appreciate you taking a hard look at these programs, Mr. Secretary. 

We obviously have to do everything that we can to address unnecessary costs. You have spoken about that. The budget requests 

a broad authority, a broad authority to provide waivers and other 

flexibilities to the PHAs, public housing authorities, to cut costs. 

Can you provide some specifics on what some of these flexibilities 

might mean and how much potentially they could save? 

Secretary CARSON. Well, you know, the PHAs right now have 

their hands tied when it comes to operating funds versus capital 

funds. If they just had the ability to shift money from one to the 

other as needed, it would take care of a lot of the problems that 

they have, that one thing. 

Mr. DIAZ-BALART. And I know that you have visited a lot of locals 

and so I am assuming that you have gotten some feedback, potentially some good feedback, right, as to some of the things that they 

need to be helpful? 

Secretary CARSON. It has been actually quite wonderful to sit not 

only with the HUD employees, and most HUD employees are outside of Washington, D.C., by the way, but also to talk with the tenants, the beneficiaries. And one of the things that has been very 

enlightening is that those communities that have tenant associations tend to do much better, tend to work much better with the 

people who manage, and tend to have a much higher quality of life. 

So we are encouraging the establishment of those in all of the 

units.
329

NEGATIVE RENTS

Mr. DIAZ-BALART. Thank you, Mr. Secretary. I do not have a lot 

of time, so I had a question which I am going to have to kind of 

reword. The issue of what is known as negative rent payments, 

which, you know, some people say that it is, well, it is, you know, 

you are paying people to live in public housing, but I would tell you 

that obviously I believe that certain costs like electricity, et cetera, 

I know that those are real costs. Your budget makes some proposals and I just look forward to working with you because I believe we should probably not be treating folks whose utilities are 

not paid in HUD programs differently than those that are because 

obviously those are real costs. And I just had some questions, but 

I just wanted to throw that your way as an issue of concern and 

something that I look forward to continue to working with you. 

Secretary CARSON. It is a big issue of concern for a lot of the tenants, also, and people who are on the waiting list and who are looking for some equity and some fairness. So I look forward to working 

with you to make sure that we do things in a fair and equitable 

way.

Mr. DIAZ-BALART. Thank you, Mr. Secretary. One of the reasons 

I get such great cooperation from the members of the subcommittee 

to keeping on time because I try to do the same thing. So anyways, 

Mr. Price. 

PUBLIC/PRIVATE PARTNERSHIP

Mr. PRICE. All right. Thank you, Mr. Chairman. Mr. Secretary, 

you have referred to your listening tour, glad to see you doing that, 

going around the country to communities and HUD field offices. I 

know you went to your native Detroit, you went to Jacksonville, 

Miami, Columbus, Ohio, other places. You have said some things 

along the way and I want to know about how they relate to this 

budget proposal. You said you want a housing policy that delivers 

more bang for the buck, partly by encouraging, leveraging more 

State and local support as well as private sector investment. You 

also have spoken often of partnerships, one of the best tools we 

have to revitalize the communities, public-private partnerships, 

partnerships among levels of government. And I am going to say 

that is music to our ears in the Research Triangle area of North 

Carolina. That has been our stock in trade. 

I am not sure the notion of partnership, though, and of 

leveraging is brought out by this budget. And so I do want to ask 

you, on your tour did anybody suggest that it was a good idea to 

totally eliminate the seed money? Did anybody suggest it was a 

good idea to totally eliminate community development block grants, 

for example, or did anybody suggest that we should get rid of the 

HOME program or did anyone suggest we should get rid of the 

SHOP program? You know, it is one thing to have Federal seed 

money, it is one thing to make sure Federal money leverages other 

monies. But how does that work if the Federal money is totally 

eliminated?

Secretary CARSON. Well, the Federal—— 

Mr. PRICE. And let me just zero in a little bit more on SHOP because it has been mentioned here this morning. One example of the 
330

kind of partnership that presumably you are talking about is the 

kind of work we do with Habitat for Humanity. The first time, I 

am sure you do not remember this, the first time I met you was 

in Raleigh, North Carolina, at a meeting involving Habitat for Humanity. There are three pillars for Habitat, three sources of the 

partnership that the Federal Government has with Habitat: CDBG, 

which often does the infrastructure for these communities; SHOP; 

and the section for capacity building. Every one of those programs 

is eliminated in this budget. So did anyone suggest that? Did anyone suggest that that is the way to an effective kind of catalytic 

role for the Federal Government? 

Secretary CARSON. What has been suggested in all of these 

places that I go is that we do everything that we can to facilitate 

the public-private partnerships and working across silos with other 

departments, including Treasury. We are looking for ways to do 

that. I very much believe in Habitat for Humanity. I very much believe in self-sufficiency. But there are ways to do that and we are 

going to be working on those ways. 

Mr. PRICE. Well, the Habitat folks that I am talking to are just 

baffled by this because you know what else this budget does is 

eliminate AmeriCorps. Who do you think organizes those Saturday 

morning builds that bring all these volunteers in and makes sure 

that goes in an orderly way? AmeriCorps, national service. I just 

do not get it. I certainly get the idea of partnership and seed 

money. I mean, that is really the best way to spend Federal funds, 

not just total Federal financing of these efforts. But when you totally remove the core funding, that just seems like a formula for 

making these things go away. 

Secretary CARSON. Well, do keep in mind that there is billions 

of dollars in the pipeline already in these programs as we work on 

ways to effectively and efficiently utilize the money and with the 

principle in mind that public-private partnerships are the way to 

go. So that is all on the plate for things that we are proceeding to 

do

Mr. PRICE. Well, presumably, that means future budgets would 

not be as destructive in this respect. 

I just have a minute left here, but, you know, you have talked 

about hard choices, you have talked about the kind of things we 

want to give more emphasis to, knowing we cannot do everything. 

But I, for the life of me, do not see what is strengthened in this 

budget. One thing I thought we might see would be, for example, 

bringing back the kinds of partnerships we used to have with religious communities. 

SECTION 202

My district is peppered with 202 housing for the elderly: St. Joseph’s AME in Durham, First Baptist in Chapel Hill, Cosmopolitan 

Baptist in Raleigh. These are congregations that took on the formation of, you know, an NGO and worked with HUD to build rental 

housing for the elderly, and those are wonderful communities. Is 

that the sort of thing you might want to bring back? I mean, what 

are we strengthening in this? 
331

Secretary CARSON. Well, you know, there are probably a lot of 

things you do not see in the budget that do not necessarily reflect 

what we are going to be doing. 

Mr. PRICE. That is why I am asking you. 

Secretary CARSON. You know, for instance—— 

Mr. DIAZ-BALART. Mr. Secretary, I apologize, but I am going to 

have to cut both of you off. 

Secretary CARSON. Okay. 

Mr. DIAZ-BALART. But we will, hopefully, get back to that. Mr. 

Valadao?

MANAGEMENT CHALLENGES

Mr. VALADAO. Mr. Secretary, the Inspector General states that 

your key management and performance challenges are so interconnected that it is difficult to remedy one without first correcting 

the other. One significant challenge is to establish and implement 

effective and required financial management governance. HUD has 

not had a clean opinion on its financial statements in 3 years, and 

HUD has not had a CFO for 2 years running. Financial leadership 

starts at the top. Where are you in the process of filling the CFO 

position you mentioned earlier and can you give us a timetable of 

when you expect to have a CFO? 

Secretary CARSON. Yes. Obviously addressing these issues, as I 

said before, holistically, is important and you have to have a CFO 

in order to do that because many of the material weaknesses dealt 

with financial weaknesses. We have been doing a diligent search 

looking for people who are highly qualified. We have a number of 

them and we are just in the process right now of paring that list 

down and presenting it to Congress. 

HUD FINANCIAL STATEMENTS

Mr. VALADAO. The IG has noted that HUD’s key financial staff 

do not have the appropriate skills or background to oversee the financial statements. The most significant example was rounding to 

the nearest billion or hundred billion in the fiscal year 2016 financial statements. What is your plan to address the lack of financial 

knowledge at HUD and not only ensure that you are hiring people 

with the right skill sets? 

Secretary CARSON. We have already addressed that issue. We are 

already staffing up with the people who have the requisite knowledge to deal with that. That has been a big concern of mine from 

the first week I was there. 

HOUSING SERVICES

Mr. VALADAO. All right. And then there are nonprofits in my district that provide a variety of home ownership services to low- and 

moderate-income home buyers, including housing counseling and 

education for purchase and resale of HUD homes, providing essential secondary financing to enable families to purchase their first 

home in a sustainable fashion. These nonprofits provide a valuable 

service by building stable home owners who have become an important part of the infrastructure in their communities. Routinely 

these nonprofits complain about the onerous nature of the HUD 
332

certification process to provide such services, creating bureaucratic 

and sometimes invasive oversight that adds cost and complication 

to the organizations who should actually be treated as trusted partners. What will you do to streamline such processes? 

Secretary CARSON. We have recently undertaken a comprehensive program to review that very issue and are making very significant and rapid progress on that. There is 2,100, you know, such organizations around the country. We are looking at that and moving 

rapidly.

Mr. VALADAO. All right, thank you. Chairman, I yield back. 

Mr. DIAZ-BALART. Thank you. Mr. Quigley, you are recognized, 

sir.

Mr. QUIGLEY. Thanks again. Thanks again, Mr. Secretary. Let’s 

talk about something that does not cost any money. 

Secretary CARSON. All right. 

LGBTQ

Mr. QUIGLEY. Complying with existing law of rules and regulations. When Senator Brown asked you a question during the confirmation process, she asked if you believed that HUD currently 

provides, and I will quote, ‘‘extra rights to the LGBTQ people,’’ I 

am quoting, ‘‘that need to be withdrawn.’’ I believe your answer 

was that you did not. But either in the last couple weeks or 

months, the Department has purged at least six documents that involved training to emergency shelters and other housing that keep 

particularly sensitive teenagers, transgender teenagers, from getting kicked out on the street, how to comply with these things. The 

timing seems odd and why would they be removed without being 

replaced with substantially the same, if you felt they needed to be 

better or something, materials? 

Secretary CARSON. Well, you may be referring to the survey that 

was pulled back dealing with LGBT youth homelessness. 

Mr. QUIGLEY. No, I am sure this is just training materials given 

to these facilities so that the staff at the emergency shelters and 

the housing facilities can make sure that they are not discriminating against LGBTQ and particularly transgender youth. 

Secretary CARSON. We have a policy of making sure that no one 

is discriminated against and are looking at all of our policies across 

the board for everybody when it comes to discrimination. 

Mr. QUIGLEY. Well, not everybody is discriminated against. There 

are particular groups that have been discriminated against more 

than others obviously and that is why you have the training materials. That is why you have these materials available so that these 

shelters can comply with the rules. So why would you remove anything if your goal is not to discriminate against anyone? 

Secretary CARSON. The only reason that we would remove anything is so that we can look at it and determine whether its effective in turn. And some of the things, we have discovered, were not 

effective and were not providing good data. We want to make all 

of our decisions based on evidence, not on ideology. 

Mr. QUIGLEY. I go back to my original point, though. If these 

shelters, if these facilities need to know how to comply, just removing the existing instructions does not help. I mean, at the best of 

circumstance, when would you tell me that they would—are they 
333

going to be replaced and are they going to be designed to protect 

LGBTQ?

Secretary CARSON. All the policies will be designed to protect 

LGBQ and everybody else. 

Mr. QUIGLEY. Why would you remove these and not replace them 

at the same time or at least wait until you have got a suitable replacement, if indeed there is a suitable replacement? 

Secretary CARSON. As I have said, if anything has been removed, 

it is being removed in order to be looked at and improved. 

Mr. QUIGLEY. And what would your timeline be to be replaced? 

Secretary CARSON. Well, I need a specific—— 

Mr. QUIGLEY. On those six materials that were purged from the 

website?

Secretary CARSON. As soon as possible. 

Mr. QUIGLEY. Well, I guess the bigger picture here no one has 

really gotten into it, your discussion, and I guess maybe this is germane, of poverty, and I am sure your words were different, being 

a state of mind. Let me just ask if your sense of poverty being a 

state of mind applies to particular groups or excludes particular 

groups given that about 14.5 million Americans live in poverty that 

are under the age of 18 and about 10 percent, 4.2 million, are over 

the age of 65. And clearly those were all groups that live in CHA 

housing. Would those be included in those where poverty is a state 

of mind? 

Secretary CARSON. Well, I appreciate you asking that question. 

Because, first of all, I said partly, so it is a part—— 

Mr. QUIGLEY. Well, I will let you—— 

Secretary CARSON [continuing]. Of the state of mind. 

Mr. QUIGLEY [continuing]. Draw the parameters. 

Secretary CARSON. And secondly, recognize that the human brain 

is extraordinarily complex and it is programmed throughout the 

course of a person’s life, and that programming determines how a 

person faces things. For instance, if you are a minor league baseball player, you come up for the first time at bat and you see Nolan 

Ryan, you say, oh, no, Nolan Ryan. He has got a 100 mile an hour 

fastball and I am probably never even going to see the ball. You 

are probably going to approach it differently than another minor 

leaguer who comes up and says Nolan Ryan, he is an old man, I 

am going to knock the cover off this ball. 

So the way that one approaches things makes a very big difference, and I think everybody knows that. Some people always, 

you know, take advantage of a situation to distort the meaning, but 

the fact of the matter is America is a very special place. And I 

know there was a New York Times article last week that said, you 

know, it is just the other way around in terms of the mindset and 

that America is the most difficult place for anybody to rise. And if 

that were the case, why would so many people be risking life and 

limb to get here? We have something very special. We need to preserve it. And the can-do attitude is a big part of what made America a great Nation. 

Mr. DIAZ-BALART. On that note, Mr. Quigley, I hate to interrupt 

you, but I think we should have time for another quick round. And 

so, Mr. Dent. 
334

HOUSING COUNSELING

Mr. DENT. Yes, thank you, Mr. Chairman, and the Secretary. 

You did not get a chance to give me your blockbuster answer that 

you said you were going to give me on housing counseling, on the 

question that I had posed to you earlier. You know, we were talking about how, you know, housing counseling assistance was important and that obviously there is still a demonstrated need for services, particularly for people before they buy homes. But you were 

going to give me an answer, as I had mentioned, level funding, you 

know, for the housing counseling assistance program and feel free 

to answer. 

Secretary CARSON. Well, I think I have already answered it with 

one of your colleagues, but we have placed an enormous amount of 

emphasis on this, recognizing that, you know, there used to be a 

time when people in this country actually knew about housing. Everybody when I was a kid growing up knew that you do not pay 

more than two and a half times your annual income for a house. 

That kind of information has been lost and that makes counseling 

ever more important at this time. So we have concentrated a great 

deal of effort on all of those housing counseling centers, all 2,100 

of them, to try to bring consistency and to educate the people who 

are actually doing the counseling. 

But also, we are looking at the use of the internet to create tutorials for people because it has to be done at different levels. People 

operate at so many different levels in this country and the average 

American operates at about the 8th to 9th grade level. But a lot 

of the material is not at that level so we need to have it at various 

levels so that people can use it at their own pace, in addition to 

taking advantage of the housing counselors. 

Mr. DENT. Well, thank you. I have seen some real value to the 

housing counseling programs in my community. I saw it during the 

financial crisis and I have seen it since, so I just wanted to put a 

plug in for that. 

VASH PROGRAM

And I am just going to return to another issue that Chairman 

Frelinghuysen had discussed as it related to the VASH program, 

the HUD Veterans Supportive Housing program. My staff tells me 

that these programs have been very effective in reducing homelessness among veterans. In fact, in my community we have the Street 

Medicine Program, which you might actually find interesting, run 

by one of the hospitals, where we actually go out on the streets 

with medical professionals and, you know, sit on the streets down 

by the railroad tracks, along the river, you know, where people are 

living. A really impressive program and it is not just treating veterans, but all sorts of folks. 

Secretary CARSON. Sure. No, I have seen it. 

Mr. DENT. And, well, I invite you to come up to our community 

in Allentown, it is really impressive. 

Secretary CARSON. Can I do neurosurgery on the street? 

Mr. DENT. Well, I would never try to tell you where you can and 

cannot do surgery, Doctor. But just so my main question is the 

budget request seeks additional support, as you know, for the 
335

HUD–VASH program. If HUD awards all of the potential new 

vouchers, I believe the HUD–VASH program would be supporting 

a total of approximately 93,000 vouchers as of late 2017. 

Secretary CARSON. That is correct. 

Mr. DENT. And then the VA cannot move forward with providing 

social services for a veteran’s housing with HUD vouchers until in 

2018 without new HUD vouchers, which the budget request appears to propose stopping the issuance of. And as you know, these 

vouchers are used to provide rental assistance for homeless veterans along with case management, and clinical services provided 

by the VA at the medical centers and clinics. 

Should I assume from your budget request that you intend to 

support the 93,000 vouchers that will be in place at the end of this 

year, but that you do not intend to add additional vouchers in the 

coming year? 

Secretary CARSON. All the vouchers will be supported. As you 

correctly mentioned there is about 90,000, a little under that. 

About 8,000 of those are not being utilized and the $40 million that 

was added in the 2017 budget brings that to 13,000. That is an 

adequate number to take care of the needs currently, but we will— 

this has been a very important alliance between the Veterans Administration and HUD. And we feel extremely strongly about this 

and recognize that the HUD–VASH program has been at the leading edge of what is responsible for reducing homelessness in veterans by 47 percent. That is not good enough, obviously. We want 

to get it to 0 percent, but we will continue to work on that. 

Mr. DENT. So I will take that answer as a yes. 

Secretary CARSON. Yes, absolutely. 

Mr. DENT. And if you would like to elaborate further on your rationale for, you know, what appears to be cuts to the HUD–VASH 

program and your plans to assist the homeless veterans population, 

feel free. 

Secretary CARSON. We will always provide what is necessary, 

but, as I said, we have got 13,000 unused vouchers at this stage. 

Mr. DENT. Okay. Thank you. I yield back. 

Mr. DIAZ-BALART. Thank you, sir. Thank you, Mr. Secretary. 

Mr. DENT. Seven seconds to go. 

Mr. DIAZ-BALART. Ms. Clark, you are recognized. 

HEALTHY HOMES

Ms. CLARK. Thank you, Mr. Chairman. Mr. Secretary, you have 

said you are particularly interested in creating healthy houses and 

healthy homes. In 2010, your Department estimated nationwide 

there was a deferred maintenance backlog of 26 billion and that 

was going to grow 3.4 billion a year. But in this budget you are 

proposing to cut funding to address this maintenance backlog by a 

combined 1.8 billion. Practically speaking, these cuts are really 

going to harm efforts that are underway to not only modernize, but 

address existing health hazards. 

One example that has been getting some press recently are the 

Red Hook houses in New York, where the mold levels, the asthma 

rates are three times that of surrounding communities. How is the 

New York City Housing Authority, and around the country, how 
336

are we going to remediate that particular health hazard and maintain our public housing with these funding cuts? 

Secretary CARSON. Thank you, that is a very good question. The 

Rental Assistance Demonstration program has been able to leverage Federal dollars and bring in an additional $4 billion recently. 

And if we lift the cap on that RAD program and allow it to expand 

even further, the incentives are already there to bring in those 

public-private partnerships. We find that those are remediating 

these kinds of problems much faster than the capital funds ever 

did.

Ms. CLARK. So is that the solution that you see expansion of the RAD, lifting the $185,000 cap? Because—— 

Secretary CARSON. That appears to be working. 

Ms. CLARK [continuing]. One of my concerns is that I think that 

RAD has been a valuable option. It certainly has been in Cambridge housing in my district. They have taken advantage of it, but 

I have never seen it used without having corresponding CDBG 

funds. Ever. Do you have an example where that has ever happened?

Secretary CARSON. I can supply you with some examples for that. 

We can send them over to you. 

Ms. CLARK. That would be great. Because, you know, it is of 

grave concern that these programs work as an ecosystem. 

Secretary CARSON. Yes. 

ELIMINATIONS

Ms. CLARK. And as we take out CDBG, if we take out SHOP, 

HOME, the HOME program alone, every dollar leverages $4.20 in 

local and private funds. 

Secretary CARSON. You are speaking to the choir on that and we 

would never do anything to harm what we see as something that 

is the solution. The solution is the public-private partnerships and 

we are going to be working assiduously to make sure that we actually expand on those regardless—— 

Ms. CLARK. So then why are you eliminating them? 

Secretary CARSON [continuing]. Regardless of under what name 

we do it. 

Ms. CLARK. Well, I am getting more puzzled as we go. If you 

agree and I am preaching to the choir, why are you wholesale 

eliminating HOME, Choice, SHOP? I am confused. 

Secretary CARSON. I again go back to my initial statement. We 

have a certain amount of pie and we have a number of people who 

are very much depending on a large portion of that pie in order to 

stay sheltered. If we do some peripheral things, a lot of those people will lose their housing. 

Ms. CLARK. So I think this brings me back to the discussion you 

were having around the deficit. The best way to address the deficit 

and the best way to—you know, is to build a robust economy. 

Secretary CARSON. Right. 

Ms. CLARK. And to make sure that we are getting people to work 

and that we are investing— 

Secretary CARSON. Agreed. 

Ms. CLARK [continuing]. But that comes with investments. And 

as I look across this entire administration’s budget, we are seeing 
337

dramatic cuts in work training programs—we just met with Secretary of Labor yesterday—in apprenticeships, in vocational 

schools, and career and technical education, afterschool programs, 

college affordability student loans. This budget as a whole is a recipe for killing our economy. And when you are saying I get the importance of leveraging private dollars to help us solve our housing 

crisis, but you are taking away all the incentives necessary to leverage those dollars, I am baffled at how you think—— 

Secretary CARSON. I think it depends—— 

Ms. CLARK [continuing]. This is going to work. 

Secretary CARSON. I think it depends on which set of data you 

want to look at in terms of what is happening with the economy, 

whether it is improving or whether it is getting worse. 

Ms. CLARK. Well, there will be no pipeline of ideas, innovation, 

or an educated work force if we put this budget in place. And I 

think we can look at any data that we want and you will find that 

that is the dangerous truth for the American people with your 

budget and the rest of the administration’s budget. 

Secretary CARSON. Well, the only thing I can assure you is that 

we are going to work extremely hard to use every dollar in this 

budget to get the biggest bang for the buck, and we are happy to 

work with all of you to make sure that that happens. 

Mr. DIAZ-BALART. Thank you. We do not have a lot of time, so 

what I would like to do then, Mr. Price, is I am going to be very 

brief. We will go to you and maybe with that we end it. Is that all 

right, Mr. Price? 

HOMELESS ASSISTENCE PROGRAMS

Okay. Mr. Secretary, again, since I do not have a lot of time, let 

me talk. This committee has been really supportive of HUD’s performance-based focus on homeless assistance programs. As I am 

sure you know, the Department shifted its emphasis from a transitional housing approach to a housing first approach. And by the 

way, I need to thank some of your team, your staff, who have 

worked with, for example, Miami providers, and you were there. 

Secretary CARSON. Right. 

Mr. DIAZ-BALART. And I think some great progress has been 

made. But it goes without saying that this shift, you know, there 

are some growing pains and some folks and some areas have been 

hit. We recognize that in our 2017 bill and provide resources to 

communities that lost some funding through this approach. And I 

do not know, I do not expect you have it with you, but it would be 

great if you could provide us with a status of additional emergency 

solution grant funding provided in—of that 2017 funding for communities that lost funding in the grant application, you know, the 

status of some of that. It would be great and I do not know if you 

would happen to have it there, I doubt it, but if not—— 

Secretary CARSON. I do not have it with me at this moment. 

Mr. DIAZ-BALART. All right. Any idea of how you would envision 

some of those resources would be used to move homeless providers 

towards more performance-driven programs? Because that is key. 

Secretary CARSON. Yes. 

Mr. DIAZ-BALART. The performance is key. 
338

Secretary CARSON. Well, yes, homelessness is a big issue. Over 

the last few years it has gone from 800,000 to just over 500,000 so, 

you know, a lot of progress has been made in that area. And a lot 

of the things that we have been doing have helped with that, but 

it is an interagency issue and there has been a lot of private people 

who have been interested in it, too. 

I think the whole housing first concept is a good concept in the 

sense that if you leave somebody sleeping out under the bridge, 

they are going to end up in the emergency room and frequently end 

up getting admitted. A week of admission costs more than a year 

of shelter, you know. We have to, you know, look at the numbers 

and do things wisely for that reason, but I do not think we should 

stop at housing first. We should then move on to housing second 

and housing third. Housing second is diagnosing why they are in 

that condition and housing and third is treating it. Because if we 

truly want to be compassionate, then we do everything we can to 

put people back on their feet. 

HOMELESS ASSISTANCE GRANTS

Mr. DIAZ-BALART. Mr. Secretary, I wanted to bring up, and, 

again, I am sensitive to the time constraints, I have concerns about 

the budget, the reduction of funds for homeless assistance grants, 

but it is something that we will have ample opportunity to speak 

about in the future. And with that, and thanking everybody for 

being cooperative with me on the time issues, let me recognize the 

ranking member to finish up. 

Mr. PRICE. Thank you, Mr. Chairman. Mr. Secretary, I do want 

to give you a chance to finish your answer if there is more to say 

beyond what you said in response to the other members, about 

what the positive side of these hard choices looks like. In other 

words, that hard choices are being made, it implies that some 

things are being cut, but others are being strengthened, that there 

are tradeoffs. I do not see much other than just indiscriminate 

meat axe cutting, to tell you the truth. And we were talking about 

maybe some things that were not immediately evident just for the 

budget numbers, so I want to give you a chance to respond on that. 

BUDGET CUTS

I also want to say something, though, about the broader budget 

situation we face. And what I would think is a kind of all-purpose 

explanation we want to avoid. 

We know that we need to get our country’s fiscal house in order 

and most people I think know that that requires a comprehensive 

approach. We have two examples from the 1990s about balancing 

the budget, about paying off a good chunk of the national debt. It 

is not too hard to know how that was achieved, but it did involve 

some political pain. It involved some tax increases, it involved some 

entitlement reductions, and it involved discipline in discretionary 

spending. We, for reasons that are very well known, cannot seem 

to get back to that today. But I tell you just simply saying we are 

under fiscal constraints and we simply have to whack away at the 

discretionary domestic budget, there are two things wrong with 

that. It is the worst of both worlds. 
339

Number one, you will never balance the budget that way. We can 

eliminate your budget entirely and still have a fiscal problem, so 

it is fraudulent as a formula for achieving fiscal discipline. 

And number two, it is destructive in terms of the things a great 

country must do to build its economy and to build its future. It is 

a formula for disinvestment across the entire Federal Government. 

So worst of both worlds and it gives us the budget that is before 

us today. 

So I will take a back seat to no one in terms of wanting to confront that larger fiscal picture, but I do not accept that the HUD 

budget before us is a necessary product of fiscal responsibility. Far 

from it. It really is a disinvestment budget without redeeming features that are evident to me. 

I hope we can do better, I hope we can work with you and with 

the administration to, first of all, get the overall budget numbers 

in a better place and then within those numbers write a housing 

bill that really addresses our country’s needs. But you were cut off 

in mid-answer and I want to give you a chance to—— 

Secretary CARSON. Sure. 

Mr. PRICE [continuing]. Give us a little more, a glimmer of hope, 

if you will. 

Secretary CARSON. Well, tell us how you really feel about it. But 

no, I was saying that there was some things that are not in the 

budget that are very important. For instance, the concept of our vision/opportunity centers that we want to put in the proximity of all 

public housing. These are places usually that are boarded up right 

now, but the buildings will be repurposed and we will be putting 

into them people who can help the people have a vision about what 

actually goes on in the world. 

COMMUNITY OUTREACH

If you go to a lot of disadvantaged communities, you ask the kids 

what do you want to do when you grow up, you get about five answers. But there is 1,000. We need somebody to expose them to the 

other 995 and talk about how to get there. 

We need to have daycare. And the reason that that is so important is because a lot of women who have babies out of wedlock, 

their education stopped at that first baby, and they need a safe 

place to put that baby so they can get their GED or their associate’s degree or their bachelor’s or their master’s and learn how to 

take care of themselves and, more importantly, teach that to their 

children. That is the only way you break those cycles. 

And also, mentorship programs have been demonstrated to have 

a profound positive effect in terms of people being able to finish 

high school. Why is that important? You look at the Brookings 

study on poverty. It said that there were three things that a person 

could do that would reduce their likelihood of living in poverty to 

2 percent or less: number one, finish high school; number two, get 

married; number three, wait until you are married to have children. So things that we can do to sort of address the data, not the 

ideology, so that we can get people moving in the right direction. 

Those are things that will be sponsored completely by the private 

sector.
340

I have already talked to people in the business world. They are 

very happy to sponsor these just like you sponsor stadiums all over 

the country because we live in a country of people who actually are 

very compassionate. And it has been very different from other 

parts of the world and we need to take advantage of that. 

Mr. PRICE. Thank you. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, Mr. Secretary. Mr. Secretary, 

again, let me first thank you for your time and your staff. I would 

ask the Secretary to—the committee staff will be in contact with 

your budget officer regarding questions for the record. I know that 

I have some questions and I know that other members will also 

submit those questions as well. If you would please ask OMB to return the information for the record to the subcommittee within 30 

days from Friday, that would allow us to publish the transcripts of 

today’s hearing and make obviously informed decisions when we 

are crafting the fiscal year 2018. 

Mr. Secretary, as you saw today, you have in this subcommittee 

folks who are knowledgeable and interested in these issues and, 

frankly, to a great degree, even to the details, and I know you have 

had the opportunity to see that. And obviously it is also clear that 

a lot of us, including I, have a lot of concerns about and disagreements with your budget, but there is no disagreement or concern 

on my part as to why it is that you are doing what you are doing 

and your service to the country, and so that makes me feel good. 

I am comforted in the fact that you have volunteered for this job 

and we know that it is a very difficult job in the fact that you are 

giving up a lot to do this, so just know that and I think all of us 

look forward to working very closely with you. 

Secretary CARSON. It is going to be a pleasure to work with all 

of you. I appreciate that. 

Mr. DIAZ-BALART. Thank you, Mr. Secretary. Mr. Price, any closing thoughts? 

Mr. PRICE. Thank you, Mr. Secretary and Mr. Chairman. Look 

forward to the weeks ahead. We have some serious challenges. We 

are ready to take them on. 

Secretary CARSON. Amen. 

Mr. DIAZ-BALART. Thank you. With that the meeting is adjourned.

Secretary CARSON. Okay. 
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Chairman Diaz-Balart 

Chairman Diaz-Balart #1: Rental Reform- Project-Based Rental Assistance 

Your budget proposes to freeze operating cost adjustment factors and budget based adjustment 

increases for private owners that participate in HUD assisted housing programs. This means that 

building owners would not be able to make adjustment to reflect operating or budget-based 

increases. More and more of project-based contracts have moved to the !-year contract renewal 

cycle, and these owners can leave the PBRA program more easily. 

Question: What effect with this policy have on the stability of the PBRA program? 

Answer: HUD is requesting one-year authority to freeze operating cost adjustment factors and 

budget-based adjustments for PBRA properties as it works towards a long-term goal of consistent 

rent reform across all BUD rental assistance programs. This approach will provide BUD 

leadership the opportunity to examine if current rent adjustment policies are effective in 

compensating owners for increased annual costs. The overall Rental Reforms proposed for PBRA 

provide shared sacrifice for owners and residents. 

Question: What effect will this policy of freezing the OCAF and budget based adjustment have 

on the maintenance of properties? Will it be harder for owners to keep their properties in good 

repair? 

Answer: 0\\ners should already be projecting and reserving funds for their property's capital 

needs and can utilize owner-level reserves for replacement funds as a source to keep projects well 

maintained and in good repair. 
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Chairman Diaz-Balart #2: Rental Reform Proposal- Negative Rent 

Mr. Secretary, one of your rental reforms eliminates what is called the "negative rent" payments. 

Some have said that negative rent payments equate to "paying people to live in public housing", 

but in reality, it is assistance for utility costs (heat, air, and water). 

Question: Would you elaborate on your justification of the negative rent proposal, and what 

implication will this have on HUD's vulnerable populations? 

Answer: In all of HUD's rental assistance programs, due to rent and utility inf1ation, the cost to 

assist roughly the same number of households increases each year. Without reforms to slow the 

growth, these programs will require more and more Federal resources over time. To slow the 

growth in the program and to ensure that PHAs and owners have adequate resources to operate 

their programs, HUD is proposing to undertake several rental reforms, including the elimination 

of utilities reimbursement payments. However, to ensure that impacts on vulnerable populations 

are minimized, hardship exemptions will be available to assist households facing difficult 

situations. 

Question: Do you believe this proposed change will create an inconsistency - treating tenants 

differently by eliminating utility subsidies for households where utilities are not included as part 

ofthe rent and are tenant-paid? 

Answer: This provision, were it to be enacted, would establish consistent rules across HUD's 

programs regarding the rent paid by families in HUD's rental assistance programs. However, the 

outcome of this provision on different families will vary depending on several factors including 

the types of utilities paid by the family, the location and characteristics of the unit, and the income 

of the family. Further, hardship exemptions will be available to assist households facing difficult 

situations. 

Question: It seems to me that this policy could hurt the poorest of the poor, especially those that 

live areas with the largest utility bills, like the northern and southern parts of the country. Is this 

the case? 

Answer: The outcome of this provision on different families will vary depending on several 

factors including the types of utilities paid by the family, the location and characteristics of the 

unit, and the income of the family. Further, BUD is proposing a hardship exemption for this 

provision for any family that is unable to afford utilities payments due to the elimination of the 

reimbursement from HUD. HUD's analysis shows that this proposal would largely impact nonelderly, non-disabled tenants. Approximately 10 percent of households affected would be headed 

by an elderly or disabled person. 

Question: How much does HUD pay in negative rent per year? 
343

Answer: Approximately $390 million is paid to approximately 460,000 households in the form 

of "negative rent" each year. 
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Chairman Diaz-Balart #3: HUD Information Technology 

Many of the financial challenges and risks were exacerbated by the Department's Information 

Technology systems. Since 1991, the IG has reported that HUD lacks an integrated financial 

management system. Since 2003, HUD has been working to replace its current core financial 

management system, with minimal amounts of success. HUD spent $96.2 million to move to a 

New Core financial system maintained by Treasury. This effort only accomplished 4 of the 14 

financial management systems capabilities when it ended the project in 2016. 

Question: What are your plans to build a modem IT infrastructure at HUD? 

Answer: HUD is in the process of implementing a unified vision to support improved outcomes 

for HUD's mission. The vision includes tying our financial, operational and technological 

outcomes into a comprehensive actionable plan, with the office of the COO, CIO, and CFO all 

working together to identifY improved solutions that draw on technology, improved business 

operations, and human capital together, to address HUD challenges, and execute in an efficient 

manner. 

Specifically, HUD has initiated major infrastructure improvement initiatives to develop enterprise 

wide solutions that address legacy and aging IT systems and technology. HUD has been 

transitioning its IT infrastructure since fiscal year 2014, to a more agile, modem, mobile-friendly 

environment that utilizes a federal shared service provider. This transformation effort is known as 

the HUD Enterprise and Architecture Transformation (HEAT) initiative and is scheduled to be 

completed in fiscal year 2018. HEAT is extensive and includes five key areas: 

Cloud Migration 

Cloud computing is a more flexible, cost-effective, sustainable and secure than traditional 

methods. The migration to the cloud will increase reliability, reduce expensive "on premise" 

hardware, offer greater mobility capabilities and automatically update applications to the latest 

versions. 

Mobile Services 

HUD has initiated a project to move HUD from Blackberries to more capable smartphones to 

improve functionality, reduce costs, strengthen security and enhanced mobility as well as institute 

multifactor authentication that will allow users to safely connect to the HUD network from any 

mobile device or personal computer at any time. 

Network Operations 

Leveraging the GSA Networx contract vehicle for all network operations will make it easier to 

move, add and change HUD network services. This benefits HUD by eliminating the "middleman" 

and establishing a direct relationship with the network provider. 

Data Center 
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The Office of Management and Budget's Data Center Optimization Initiative requires agencies to 

consolidate data centers and transition to more efficient infrastructure, such as the cloud and shared 

services. As HUD moves to a shared, multi tenant data center and reduces the number of centers 

from four to two, we'll see direct benefits: savings from reduced hardware and software costs, 

significantly less environmental impact, and a more robust disaster recovery and backup strategy. 

System Integrator/End User 

Business needs are ever-evolving and rapidly changing, so HUD needs a modern, agile, and 

flexible platform to adequately address all its IT needs. HUD will benefit from an enhanced Help 

Desk experience with the ability to get quick, accurate answers via phone, chat, or email. 

HEAT has successfully completed transition to enterprise software agreements and FedRarnp 

cloud solutions; implementation of GSA strategic sourcing contracts that include Networx and 

FSSI for Mobile Services; migration of HUD Data Centers into two multitenant shared data 

centers; and migration of enterprise applications to the cloud. These efforts have resulted in a costeffective IT environment that is delivering enhanced security, augmented internal monitoring and 

management capabilities, and optimized IT Infrastructure services. 

Completed Activities Timeline: 

Mobile Services March 2016 

Office 2016- June 2016 

Skype for Business- September 2016 

Email Archive Migration- October 2016 

Data Center Migration November 2016 

The benefits that HUD has experienced with the HEAT implementation includes reduced data 

center footprint, reduced O&M costs, improved operational efficiency and more robust disaster 

recovery and continuity of operations strategy. 

The transformation ofHUD's IT infrastructure will continue. HUD is conducting the final phases 

of the HEAT initiative to transition from the current end user support contract to a new enterprise 

System Integration and End User contract. In addition, the HEAT project will conduct a thorough 

analysis of all HUD's IT systems and applications, including a cloud compatibility assessment. Its 

goal is to provide valuable and actionable insights to reduce operating costs, optimize existing IT 

assets, modernize applications, and provide better IT service capabilities. 

Question: How will you ensure the implementation will be successful and that the dollars this 

Committee provides you will be well spent? 

Answer: With the team of the COO, CIO, and once confirmed the CFO, HOD's model for 

operations management is focused on coordinating across siloes to identify and implement 

business solutions, including IT . HUD is developing a holistic IT Management (ITM) Framework 

that will establish a means for evaluating progress toward institutionalizing integrated management 

and control of its IT investments. The ITM Framework will promote uniform handling of similar 

activities and ensure quicker decisions. HUD will ensure institutionalization by measuring over 
346

time to help provide continuous assurance that the objectives of the Framework arc being met. The 

!TM Framework is planned for completion by the end ofFY 2017. 

Additionally, HUD has taken additional steps to institutionalize management and control of its IT 

investments by implementing a solution, HUD's Portfolio and Project Lifecycle Utilization 

Solution (HUD PLUS) that integrates information in a single repository used to analyze and inform 

management decisions, and monitor performance of IT investments. HUD PLUS is the source to 

capture information related to business needs and business cases, project and investment decisions, 

and oversight of project and investment risk and performance. HUD PLUS is planned to serve as 

a one-stop source for IT investment portfolio information. 

Further, HUD has tiered governance in place for IT investment management. The governance 

encompasses the structures, policies, procedures, standards, and guidelines that guide IT 

management decision making within IIUD. The governance includes the roles and responsibilities 

of various HUD IT governance boards, including the Executive Operations Council (EOC), the 

Customer Care Committee (CCC), the Investment Review Committee (IRC), and the Technical 

Review Sub-Committee (TRC). In addition to the governance, HUD conducts Project Health 

Assessments to monitor and evaluate the health of project performance. 
347

Chairman Diaz-Balart #4: Government National Mortgage Association 

Ginnie Mac's portfolio is $1.7 trillion, and by the end of the year it will be $2 trillion. It continues 

to face challenges in its financial management accountability managing counterparty risk and 

monitoring nonbank issuers, which now represent a majority of its book of business. 

Question: How can we make sure Ginnie Mae as an organization is up to the task of managing 

this portfolio? 

Answer: Ginnie Mae has a robust process for managing its $1.8 trillion portfolio of guaranteed 

MBS, which includes managing counterparty risk and monitoring bank and nonbank issuers, the 

entities that issue the Ginnie Mae guaranteed MBS and service the underlying loans. Ginnie Mae 

manages the associated risks by enforcing strict financial and operational standards and actively 

monitoring and evaluating the credit quality, financial strength, and performance of its approved 

issuers. Ginnie Mae has the authority and clearly defined policies and procedures to effect orderly 

transfers of loan servicing from a troubled Issuer to a stronger servicing counterparty, without 

market disruption and at minimal cost, which works to effectively reduce exposure to any issuer 

failure. 

Once entities are approved to issue Ginnie Mae backed securities, their continued participation in 

the program is contingent upon ongoing evaluation and approval, which most issuers undergo 

several times a year. Issuers are evaluated and graded against their peers according to an 

operational metrics scorecard and financial analytic tools. In-house financial reviews are 

supplemented by rating agency reports, subscription service material, and issuer-supplied data. 

Higher risk profiles are categorized to receive greater attention from account management 

specialists. Servicing portfolio transfers and certain other financing transactions are subject to 

Ginnie Mae review and approval, which will consider the financial health of the parties involved 

in the deal. To ensure Ginnie Mae evolves >Vith the market, it continually reviews and refines its 

resolution process to manage cases where troubled issuers threaten the Ginnie Mae guaranty. 

These ongoing efforts require an experienced and expert workforce, supplemented by contractors, 

who oversee and manage the risks to Ginnie Mae's guaranty, which is backed by the full faith and 

credit of the U.S. taxpayer. The president's budget proposes an increase of $2.4 million to cover 

working capital fees, and add approximately nine new permanent staff for Ginnie Mae to further 

the work that Ginnie Mae is doing to improve financial management and oversight. With 

additional staff, strong training, and strategic use of attrition, Ginnie Mae is working to make sure 

it has the appropriate depth of skill sets in critical areas. 

Question: How many contractors are working for Ginnie Mae? How much are total contractor 

costs per year? 

Answer: Per a 2016 study on Ginnie Mae staffing and operations completed by KPMG, contractor 

utilization across all business offices totaled 718.8 Full Time Equivalent staff. Total cost for 

contractors and program expenses was $166.2 million in FY16. 
348

HUD continues to evaluate the activities outsourced and will diligently monitor the work of 

contracting partners. Over time, while Ginnie Mae may bring more activities in-house, there are 

some activities that are cost effective and best fulfilled by outside parties. Ginnie Mae's contractors 

generally fall into two categories. The first are those that provide onsite or virtual consultative and 

advisory services, many of which could be performed internally by Ginnie Mae, if determined to 

be the best use of resources. The second are those that perform highly technical, behind the scenes 

processing and fiduciary functions. These are well-developed, efficient, and effective functions in 

the private sector and may be challenging, overly costly, and unnecessary to in-source. 

Question: What are your thoughts on a different pay scale for some GNMA staff? 

Answer: This is something that the Administration will evaluate. Ginnie Mae does have 

challenges attracting and retaining staff due, in part, to the competition posed from both the private 

sector and its counterparts within the federal government that are exempt from the GS pay scale; 

however, this is not unique to Ginnie Mae. In other areas of the Federal sector, particularly for 

large credit programs, agencies face the same challenges. HUD, including Ginnie Mae, plans to 

take a holistic approach to reviewing these human capital challenges, recruiting on strengths, and 

working together with the Administration to find ways to best attract, hire, and retain the highlyspecialized staff needed to most effectively run its business. 

Ginnie Mae will also be looking at other creative options to potentially help build a talent pipeline, 

such as partnering v.ith business schools or other academic programs to develop a targeted PMF 

like program to attract young talent. 

Question: Would a different pay scale have any effects on FHA or other parts ofHUD? 

Answer: The Federal pay scale is a complex issue that requires close analysis to understand the 

implications. HUD plans to look at staffing holistically to ensure any proposed solutions are 

effective at addressing the hiring and retention problems faced by Ginnie Mae and do not lead to 

negative impacts. As the new Ginnie Mae President and FHA Commissioner are confirmed by the 

Senate and brought on board, this will be an important issue for their attention, consideration, and 

discussion. 

Question: Are there any management reforms you are considering for Ginnie Mae? 

Answer: Yes. Ginnie Mae is working to identify and implement efficiencies in a variety of areas. 

Counterparty Issuer Monitoring Initiative 

Ginnie Mae is re-engineering how it manages its relationship with Issuers, to support their 

participation in the MBS program and prevent problems from arising within the Ginnie Mae 

Mortgage Backed-Securities (MBS) portfolio. The goal of this work is to better align operations 

to business needs, improve Ginnie Mae efficiency, and improve Ginnie Mae's capacity to identify 

and address risk and other Issuer-related issues effectively. 
349

Ginnie Mae is also re-engineering how it manages segments of the Mortgage Servicing Rights 

(MSR) portfolio where problems have occurred, to ensure that servicing is performed by capable 

institutions and losses are avoided/minimized, with a goal to minimize disruptions and losses 

resulting from troubled portfolios. This includes clarifying roles and responsibilities of troubled 

asset management, and building the appropriate infrastructure for improved decision making and 

accountability. 

On the IT front, Ginnie Mae is partnering with HUD OCTO to pursue a strategy of collapsing its 

IT infrastructure and migrating approved platforms to a cloud hosting environment to increase IT 

agility, scalability, control costs and align with Federal Government mandates and direction. 

Currently, Ginnie Mae has technology infrastructure, services, and operations deployed and 

supported across multiple contracts, which hamper the organization's ability to add new IT 

capability when needed or otherwise adjust when current IT capacity is not sufficient to meet user 

demands. 
350

Chairman Diaz-Balart #5: Staffing 

In May 2015, GAO issued a report on HUD's human capital where more than 43% of career 

permanent employees onboard as of September 30, 2014 would be eligible to retire by 2019. We 

are quickly approaching this date 

Question: What is HUD doing to ensure it retains proper staffing levels in order to fulfill its 

missions? 

Answer: The appropriate staffing level is more than about the number of staff, it is about making 

sure that there are the right skill sets in place, with appropriate technology and other resources. 

This is why the Department is building a very strong operations leadership team, with a new COO 

and CIO on board, and working to nominate a strong CFO. Together, these leaders will work 

together to identify holistic solutions that truly address the Department's challenges while allowing 

the Department to operate in an efficient and effective manner. 

Specifically, with respect to staffing, the Department is evaluating the skill sets of HUD's current 

team and needed skill sets to modernize HUD and fulfill its mission in an effective and efficient 

manner. There are multiple aspects to this effort. First, HUD is looking very strategically at hiring. 

As there is attrition, rather than just backfill, the Department senior leaders are identifying critical 

priorities and filling those positions first. HUD is working with our shared service providers to 

make sure there are quality candidates for these hires-with both the needed technical skills, and 

the soft skills tor strong communication and coordination across the Department. HUD is also 

looking at the staff on board and making sure they have the right training and development 

opportunities, and strong performance management in place to create the right incentives, and deal 

with poor pertormers effectively. This will help retain and make the best use of the talent. Also, 

HUD can utilize phased retirement to allow time for experienced senior members to pass along 

their knowledge to the rest of the team. 

In addition to these strategic approaches, the Department is requesting $6.5 million for 

management data reporting-to provide timely, automated reports and inform data-driven, 

proactive management so HUD can better respond to emerging risks and take advantage of 

opportunities. 

Question: Is HUD in a good position to prepare for a significant number of potential retirements 

in 20!9? 

Answer: HUD's aging worktorce docs pose risks for the Department, and the Department is 

taking steps to prepare as part of its Workforce Planning. Further, HUD has implemented programs 

aimed at promoting knowledge management and minimizing the risk of Joss oflegacy knowledge, 

which include a mentoring program, Rotational Assignment Program, Phased Retirement 

Program, and piloting the knowledge management technology. 

Question: Your budget request reduces total staffing by about 200 FTE how do you plan on 

implementing these reductions? 
351

Answer: HUD will manage the reduction of the 200 FTE through attrition. Historically, HUD has 

experienced an attrition rate of approximately eight percent of staffing each year. Based on this 

rate, HUD expects approximately 575 personnel to leave the Department in fiscal year 2018, which 

would equate to approximately 290 FTE. The Budget would allow for targeted hiring in mission 

critical areas. HUD is strategically managing attrition, prioritizing critical needs and skill sets for 

new hires instead of direct backfill. The Department is also working on a workforce restructuring 

plan consistent with the Presidential Executive Order on a Comprehensive Plan for Reorganizing 

the Executive Branch, which will inform future requests and strategies. 
352

Chairman Diaz-Balart #6: Manufactured Housing 

Question: Mr. Secretary, given your personal connection and understanding of the need to 

increase home ownership in America -- is manufactured housing a priority in your work at HUD? 

How will you ensure that manufactured housing has a seat at the table at HUD in discussions about 

affordable housing? For example, are there any plans to elevate manufactured housing to the level 

of an Assistant Deputy Secretary at HUD? 

Answer: Manufactured Housing is the largest source of unsubsidized affordable housing in 

America and a critical component of housing rural America. The importance of Manufactured 

Housing will certainly be taken into account when considering any reorganization. 
353

Ranking Member Price 

Ranking Member Price #1: CDBG/Home 

Users of the Low-Income Housing Tax Credit have explained that the program costs far more 

today despite producing fewer affordable housing units. One reason for this is the cumulative cuts 

to CDBG and other federal programs. The funds from those programs are often used for "soft" 

subsidies/gap financing for affordable housing projects. 

Question: How does the nation address a growing rental housing crisis while cutting or 

eliminating those programs? 

Answer: The Administration's Budget reflects tough choices, and proposes no new funding for 

CDBG and HOME, to apply these funds to other priorities. However, HUD's mission remains the 

same, and we will support successful elements of past programs and look to work with state and 

local governments and other partners to further economic development goals and support 

households on their path to sustainability. The Department is also committed to efficient and 

effective use ofthe uncommitted HOME and CDBG funds. 

The Administration's FY 2018 Budget proposals for CDBG and HOME are predicated on 

devolving responsibility for housing and community development activities to state, local, and 

private sector partners-enabling those entities at the local level that best understand the 

communities and their needs to drive the solutions that work for them. 

Affordable housing a complex issue, and one where state and local governments and private sector 

partners must all play a key role in identifying the appropriate solutions for their communities. 

Rents are growing at a faster pace than renter income, and this problem is most severe in markets 

where local land use choices and regulations both limit the supply of land and increase the cost of 

development, leading to unsustainable market rents. The Federal government has played a large 

role in addressing this problem through production programs, like LIHTC, and increasing per unit 

subsidies for assisted tenants. However, this effort alone is not enough. BUD needs a new way of 

thinking about addressing the affordable housing shortage, and looks forward to working with the 

Congress to discuss the local, state, and federal combined strategy for addressing the needs of!owincome households. 
354

Ranking Member Price #2: HOME 

Question: The HOME program has proven effective in securing sustainable affordable housing 

opportunities across our country. HOME's flexibility ensures that the program is a workhorse that 

demonstrates ongoing measurable results, including the substantial leveraging of private resources 

and local public funds. Given the continued need for decent shelter for low-income persons, 

including seniors, veterans, those with disabilities and low-income working individuals and 

families, what is the Administration's justification for proposing the elimination of this established 

program? 

Answer: The Budget reflects the choice to discontinue funding for HOME in favor of locally 

driven public-private programs with even stronger private leverage. As discussed above, HUD 

looks forward to working with the Congress to discuss the local, state, and federal combined 

strategy for addressing the needs of low-income households. 

Affordable housing a complex issue, and one where state and local governments and private sector 

partners must all play a key role in identifying the appropriate solutions for their communities. 

Rents are growing at a faster pace than renter income, and this problem is most severe in markets 

where local land use choices and regulations both limit the supply ofland and increase the cost of 

development, leading to unsustainable market rents. The Federal government has played a large 

role in addressing this problem through production programs, like LIHTC, and increasing per unit 

subsidies for assisted tenants. However. this effort alone is not enough. HUD needs a new way of 

thinking about addressing the affordable housing shortage, and looks forward to working with the 

Congress to discuss the local, state, and federal combined strategy for addressing the needs of lowincome households. 

Question: What alternative resources are the Administration prepared to add to ensure that the 

broad range of low-income individuals and families that HOME would have benefited will be 

served? 

Answer: The Administration intends to seek broader involvement of faith-based and other nonprofits to not only close the funding gap but to establish a more flexible framework that is highly 

responsive to local needs. These non-governmental resources have been underutilized in the past 

and HUD is prepared to work closely with them to promote opportunity in the nation's low income 

communities. 

Question: Is the Administration also prepared to add resources to other programs, such as health 

care, that inevitably will see demand increase due to fewer sustainable housing opportunities? 

Answer: The Administration is not proposing any expansion of I-IUD efforts in these areas. 

However, I-IUD will work closely with Federal, state, local, and private sector partners to leverage 

resources to maximize progress on policy goals. 

Question: HOME is one of the few programs to reach Americans with incomes typically below 

60% of the area median. Given that hardworking low-income working persons often do not earn 

sufficient wages to cover the costs of area market rents or the market repair costs to maintain 
355

decent housing conditions, what would the Administration propose for those low-income 

individuals who do not meet the extremely low income eligibility criteria? 

Answer: Low Income Housing Tax Credits will continue to provide a stable financing source for 

housing that is affordable to low-income individuals without requiring use of appropriated Federal 

dollars. 

Question: HUD funding for programs like the HOME Investments Partnership Program often 

provides essential gap funding for projects in rural areas of states. These funds leverage other 

resources to create much-needed housing for low-income families in rural communities. In 

addition to addressing housing problems, the positive outcomes of these programs are that they 

increase the local tax base, provide jobs, and spur more economic development. Many states 

simply do not have the resources to fill these gaps in funding if federal funds were to be reduced. 

Have you studied the potential impact on rural communities of cutting these important housing 

assistance programs? If so, please share those impacts? 

Answer: HUD has not studied the specific impacts of eliminating the HOME program on rural 

areas. While HUD recognizes that HOME has made significant contributions in rural and metro 

areas alike, the Administration believes that local communities are better positioned than HUD to 

determine their affordable housing needs. With less funding available for HUD programs, it is 

incumbent upon local elected officials to address these priorities in a manner that makes the most 

sense for those communities. HUD is committed to working together with State, local, and private 

sector partners to support these efforts within appropriated funding levels. 
356

Ranking Member Price #3: CDBG 

Question: Are there specific sources of funding at the state and local level that you believe will 

be available to fill the gaps that would be created by cuts in CDBG? Please identify these sources 

and explain how they can be redeployed from their current uses without a detrimental impact. 

Answer: The Administration's Budget reflects tough choices, and proposes no new funding for 

CDBG and HOME, to apply these funds to other priorities. However, HUD's mission remains the 

same, and we will support successful elements of past programs and look to work ·with state and 

local governments and other partners to further economic development goals and support 

households on their path to sustainability. 

State and local governments are better positioned to serve their communities' needs. This Budget 

recognizes a greater role for state and local governments and the private sector in addressing 

affordable housing needs. Local revenues, tax abatement policies, land donation, bonds, state and 

local tax credits, private investment, volunteer labor, and private philanthropy are all resources 

available and routinely used. 

Question: How would you measure success for a CDBG project? 

Answer: HUD measures direct benefits from a CDBG project through counting jobs, services, 

facilities, or housing provided for income-qualified persons or families. However, the ultimate 

success of an investment depends on whether the locality meets its community development 

objectives and the needs described in its Consolidated Plan. 

Due to the flexibility of the program, IIUD's ability to measure the overall effectiveness ofCDBG 

is limited. The Government Accountability Office found that such information was limited, and 

cited their previous work that identified the difficulties of evaluating the impact of block grant 

programs that do not have uniform activities or outcomes, and the difficulty in attributing outcomes 

to the program, or to other factors. (GAO 12-575R. Effectiveness of Block Grants). 
357

Ranking Member Price #4: Homelessness 

Question: Reducing the supply of affordable rental housing will create pressure on rental housing 

units available to families at the lowest end of the income scale. This will almost certainly push 

more families into homelessness. There has been measurable progress toward reducing 

homclessncss in recent years: is the current administration prepared to see a surge in homelessness 

in the coming years? 

Answer: HUD has been working closely with its public and private partners to use existing 

resources as efficiently as possible. As HUD is engaged in this collaboration it has encouraged 

communities to partner with homeless assistance and mainstream benefits providers within their 

communities. These relationships broaden the communities' understanding of the scope of the 

homeless community and what housing and services they need to end their homeless experience. 

At the same time. HUD has created tools and incentives to help communities shift resources from 

lower performing activities to those that are more cost effective and achieve better outcomes. As 

a result, HUD's homeless assistance programs are housing many more households per dollar than 

before. The end result is that individuals and families experiencing homelessness receive more 

tailored housing and services. 

As previously discussed, State and local governments and private sector partners must all play a 

key role in identifying the appropriate solutions for affordable housing in their communities. The 

Federal government's production programs and subsidies are not enough to solve this complex 

issue. HUD needs a new way of thinking about addressing the affordable housing shortage, and 

looks forward to working with the Congress to discuss the local, state, and federal combined 

strategy for addressing the needs of low-income households. 
358

Ranking Member Price #5: 202/811 

Question: You have claimed publicly that the President is requesting sufficient funding to renew 

all existing project-based rental assistance contracts (PRACs). However, the numbers for Section 

811 do not appear to add up. If Congress were to adopt the President's budget for 811, do you have 

a contingency plan for dealing with a shortfall in PRAC renewal funding for a full 12 months? 

Answer: The Department is confident that there is no need for a shortfall contingency plan for 

Section 811. In addition to the budget request, HUD's funding plan includes currently anticipated 

carryover funds and residual receipt collections to support the program. These amounts, coupled 

with prompt implementation of rent reforms, will ensure that all 81 I PRAC renewals are fully 

funded. Further, the Department is proposing flexibility to shift funding between 202 and 811, to 

ensure ability to utilize unanticipated resources to where they are most needed. 

Question: Is the proposal in the budget to transfer up to $35 million between 202 and 811 not an 

implicit concession that the Administration's budget short funds PRAC renewals across both 

programs? 

Answer: No. The proposal for transfer authority does not mean there is a shortfall in either 202 

or 811. The precise timing and distribution of rent reforrn savings between the two accounts is 

difficult to estimate for a variety of reasons beyond HUD's control. The transfer authority simply 

allows HUD to adequately support both 202 and 8ll, as needed, during budget execution. In 

addition, residual receipts and recaptures used to supplement the budgets are unpredictable, so this 

authority allows the Department the needed flexibility to ensure funding is available for all contract 

renewals and amendments on a timely basis. 
359

Ranking Member Price #6: Housing Choice Vouchers 

Question: Your request indicates that the request for Housing Choice Vouchers assumes a 

reduction in the number of households assisted via attrition (i.e. not reissuing vouchers when 

families exit the program). How many fewer households would be assisted in 20!8 under the 

request, relative to recent months - that is, how many vouchers would be eliminated through 

attrition? 

Answer: The number of vouchers that would not be supported in 2018 is ultimately dependent 

on the PHAs' actual leasing and costs in calendar year (CY) 2017. If we assume PHAs spent 100 

percent of the 2017 enacted funding (accounting for inflation and other adjustments), HUD 

projects that the funding difference between that projected cost in 2018 and the President's Budget 

would represent approximately 177,000 vouchers based on the estimated voucher per unit cost for 

2018. 

However, that does not mean that 177,000 vouchers will not be reissued upon turnover in CY 

2018. The actual number v-iii depend on several factors. For example, some PHAs will have 

reserves that v.ill permit the PHA to continue to lease vouchers that turn over. The Budget also 

provides HUD v.ith the authority to waive or specify alternative requirements for statutory and 

regulatory provisions over areas including allowable rent levels, payment standards, and reporting 

requirements. PHAs may utilize these flexibilities to help reduce per unit eosts, which in turn will 

lessen the number of vouchers where reissuance upon turnover must be suspended or delayed. 

Question: Who would be impacted by this attrition? Nearly all program participants are very lowincome seniors, people with disabilities, families with children, and assisted households that have 

incomes of only about $14,000 per year. Isn't it fair to say that these are the households that would 

lose vouchers under such an attrition plan? 

Answer: Approximately 200,000 families leave the voucher program for a variety of reasons 

every year. This normal attrition is not the result of funding shortfalls, and it is reasonable to 

assume that families v.ill continue to leave the program at the same rate in 2018. The savings 

associated with this attrition do not come from terminating existing program participants but rather 

from not reissuing the vouchers that are freed up when families leave the program. Unassisted 

fan1ilies on a PHA's waiting list may face longer waits if the PHA stops or delays reissuing 

vouchers. 

Question: What would be the impact of such losses in communities? Communities such as 

Durham, North Carolina and Los Angeles use turnover vouchers to help homeless individuals and 

families to move from the streets or shelters into stable homes, and such vouchers are an essential 

part of community plans to reduce homelessncss. Wouldn't reducing vouchers via attrition result 

in extending the length and severity ofhomclessness in such communities? 

Answer: The impact will vary from community to community. If a PHA stops reissuing turnover 

vouchers, that resource is not available to address housing problems by assisting families off the 

waiting list. However, the extent and degree to which the PHA may need to impose a freeze or 

delay on the reissuance ofturn-over vouchers will vary from agency to agency. It will depend on 
360

factors such as the PIIA's per unit costs and available reserves, the local rental market, and the 

individual flexibilities that the PHA may choose to utilize under the Budget's waiver proposal, as 

well as existing cost savings measures that the PHA may choose to employ. Those PI-lAs that are 

still able to lease vouchers may choose to further prioritize their use to those most in need, such as 

by establishing a selection preference for homeless families. 

Question: HUD's 2018 request for voucher renewals is $771 billion below the enacted 2017 

funding level. After taking into account inflation and adjustments for new vouchers issued to 

homeless veterans, for RAD conversions, etc., it seems likely that the request will be roughly $2 

billion below what will be needed to renew all vouchers in use. Wouldn't the request force some 

PHAs to terminate vouchers for large numbers of seniors, people with disabilities, and families, in 

addition to making cuts through attrition? 

Answer: The Budget's objective for the Housing Choice Voucher (HCV) program is to reduce 

costs while continuing to assist current residents. I-IUD believes the budget provides the necessary 

cost savings, offset authority, and administrative flexibilities for public housing agencies (PI-lAs) 

to meet their budget targets without having to terminate existing families. 

The Budget would provide HUD with the authority to waive or specify alternative requirements 

for statutory and regulatory provisions over areas including allowable rent levels, payment 

standards, and reporting requirements during this transition. This proposal will provide PHAs with 

a variety of options to help them manage their programs within their funding limits while 

preventing the displacement of current participants. This approach is designed to empower PI-lAs 

by giving them the flexibility to employ those relief measures that make the most sense in relation 

to their local needs and priorities. I-IUD is also proposing changes that will ensure that participating 

families arc making modest contributions toward their share of the rent while reducing program 

costs. For example, families would pay a minimum rent of $50 and utility reimbursements in the 

HCV program would be eliminated, except in cases where families would qualify for hardship 

exceptions. 

I-IUD will also continue to deploy our Shortfall Prevention Team (SPT) to identify agencies that 

are at risk and work with those agencies to mitigate that risk, using existing tools such as the 

Housing Assistance Payment (HAP) renewal set-aside funding. PHA reserves, and cost savings 

measures that are available to the PHA. I-IUD will utilize our existing offset and reallocation 

authority to reallocate excess PHA reserves to other PI·!As to prevent funding shortfalls. As part 

of this budget, I-IUD is asking Congress to remove the restrictions that have limited the 

Department's ability to apply the offset to the excess reserves held by the MTW agencies. 
361

Ranking Member Price #7: Rental Reform 

The budget proposes a series of rent policy changes and justifies them by saying that the goal is to 

help those with the greatest need for assistance. Yet, using BUD's estimates, the proposed policy 

changes would increase rent burdens tor assisted tenants by over $1 billion in FY 2018 (and 

probably by a much larger amount in later years, after all the proposed changes were fully 

implemented for vouchers and public housing). And it seems likely that these rent increases would 

hit the poorest households hardest. For instance, the budget proposes to impose mandatory 

minimum rents and eliminate utility reimbursements tor some assisted tenants. 

Question: Wouldn't these changes primarily affect the poorest tenants, including people who are 

formerly homeless? 

Answer: The fiscal year 2018 Budget's objective for rental reforms program is to reduce costs 

while continuing to assist current residents. The 20 18 proposals are a first step towards a holistic 

rental reform package for 2019. HUD looks forward to working with Congress to ensure that we 

are able to provide efficient and efl'ective support to the most vulnerable families while also 

helping families achieve economic self-sufficiency. BUD believes the budget provides the 

necessary cost savings, offset authority, and administrative flexibilities for public housing agencies 

(PHAs) to meet their budget targets without having to terminate assistance to families currently 

receiving it. 

Question: How do you justifY higher minimum rents and increased tenant contributions from 

non-elderly people with disabilities below 100% of the federal poverty level? 

Answer: For the vast majority of families, this increase in rent is very small compared to the 

differential between their subsidized rent and the cost of renting in the private market. Households 

receiving housing assistance receive benefits averaging more than $600 in subsidy per month 

relative to private market rents. The proposed increases in tenant contributions, averaging less than 

$90 per month for households affected by the proposed change in the income calculation, still 

leaves most households with a monthly subsidy in excess of $500 relative to market rents. In 

addition, hardship exemptions will be available to assist households facing difficult situations. 
362

Ranking Member l'rice #8: Choice Neighborhoods Initiative 

Question: You propose that all recaptured funds in the Choice Neighborhoods Initiative and its 

predecessor program HOPE VI be transferred to the Public Housing Capital Fund. Congress 

appropriated those funds in previous acts of legislation. Please clarify the intention of this 

provision. Would unobligated FY 17 funds be subject to the language of the general provision? 

Answer: The 2018 President's Budget requests no funding for the Choice Neighborhoods 

program. In a General Provision, the Budget proposes that in FY 2018 all unobligated and 

recaptured funds in both the Choice Neighborhoods program and its predecessor program, HOPE 

VI, may be directed to the Public Housing Capital I'und to help address the $25 billion capital 

needs backlog. Under this provision, the Department would have authority to award unobligated 

FY 2017 funds as Choice Neighborhoods grants, transfer them to the Public Housing Capital Fund, 

or a combination thereof. However, HUD is currently operating with the intent of awarding the 

FY 2017 Choice Neighborhoods grant funds under the Planning NOFA published on June 28, and 

the Implementation NOF A to be published later this summer. 

Question: When does the HUD expect to publish the NOFA for the 2017 Choice Neighborhoods 

initiative program? 

Answer: HUD published the FY 2017 Choice Neighborhoods Planning NOFA on June 28 and 

applications are due on August 28, 2017. HUD expects to publish the Choice Neighborhoods 

Implementation NOF A in late summer. With the FY 2017 appropriations, HUD expects to award 

6-7 Planning Grants and 4-5 Implementation Grants. 

Question: When does the HUD expect to obligate funds for the 2017 Choice Neighborhoods 

initiative pro gram? 

Answer: HUD expects to obligate the FY 2017 Choice Neighborhoods Planning funds in 

February 2018 and the FY 2017 Choice Neighborhoods Implementation funds in July 2018. For 

Planning grants, the application deadline will be approximately 60 days after NOF A publication, 

and awards are typically announced five months after application deadline. For Implementation 

grants, as in past years, HUD anticipates announcing finalists. conducting on-site visits with each 

finalist, then making grant awards. Finalists are typically selected approximately 4-5 months after 

application deadline, and awards are typically announced three months after finalist selection. 
363

Ranking Member Price #9: Public Housing Capital Fund Backlog 

Question: There is a growing capital needs backlog, estimated at $26 billion as of 20 I 0 and 

increasing by an average of$3.4 billion each year, imperiling the future of public housing. What 

effect will the budget request have on the public housing capital backlog and what steps will HUD 

take to reduce the backlog? 

Answer: The capital needs of public housing can only be met by leveraging private funding with 

the available Federal funds. To that end, the Department has focused on utilizing the Rental 

Assistance Demonstration (RAD) as the best vehicle to address this backlog. This Administration 

continues to support RAD and advocates for its expansion so that RAD can address this issue to 

the fullest extent possible. 

Even with reduced funding for the Capital and Operating Funds in fiscal year 2018, RAD can 

remain successful. Some existing awardees and PHAs receiving awards due to the recent 40,000-

unit increase that anticipated using Capital Funds as a source in their recapitalization transactions 

may need to find alternative resources. In addition, lenders and investors may impose higher 

property reserve requirements given that the initial year funding for conversions is reliant on public 

housing funding levels. Upon conversion, rent levels are dependent on a property's public housing 

funding levels even though RAD does not receive appropriated funds. If the Capital and Operating 

Funds are consistently funded at the proposed fiscal year 2018 levels in the long term, it would 

reduce overall the number of public housing properties that could participate in and benefit from 

RAD. In the future, should the RAD cap be lifted, HUD looks forward to working with Congress 

and local governments on how to fund these future conversions. 

In the absence of a RAD participation cap, HUD will be able to streamline the processing 

requirements of RAD transactions, eliminating the need to monitor requirements that are tied to 

the stewarding of scarce resources. For example, the RAD Notice currently limits the number of 

times a PHA can pursue competitive 9 percent LIHTC resources so that, ifthey don't secure a tax 

credit award, they are not sitting on RAD authority that others would be able to use. HUD staff 

spend time monitoring whether the PHA has applied for their tax credits and pressing them for 

their backup financing plans. In the absence of a cap on authority, HUD would eliminate the need 

for this kind of up-front monitoring. This is just one example, and HUD has also done significant 

work to standardize and streamline the RAD process already. In the last few years, HUD has 

dramatically increased the volume of RAD conversions each fiscal year, operating with the same 

staff. At some point, as production continues to increase, IIUD may need to review staffing 

capacity and/or realigning other staff resources. Finally, the streamlining efforts in the last year 

have significantly clarified roles and responsibilities. including decision-making, among offices. 

HUD can continue this effort to streamline processes by, automating some steps, further clarifying 

the roles of various offices, and training and streamlining to accelerate substantive underwriting, 

fair housing, relocation, and environmental reviews. 

Question: How does HUD plan to ensure resident health in public housing, for example- lead, 

mold, and other toxins- that are currently remediated through the Public Housing Capital Fund? 
364

Answer: The Department currently requires all PHAs to first address health and safety issues in 

advance of any major rehabilitation in its public housing developments. This includes lead paint 

remediation and other health-related items. 

In addition, HUD appreciates the funding provided in 2017 to mitigate lead hazards in public 

housing. The Department is moving expeditiously to implement the $25 million competitive grant 

program-building off of existing requirements and platforms to avoid undue administrative 

burden and ensure timely awards in 2018, and ensure that we can apply lessons learned to such 

activities going forward. 

Question: The Administration asserts that flexibility proposals contained in the budget request 

will enable PHAs to focus scarce funds on local priorities. Yet, an environment with scarce 

resources, as shown by the budget request, coupled with rolling back standards that were put in 

place to ensure that public housing is well run and safe could lead to unanticipated consequences. 

What problems do you anticipate and how would you mitigate the problems that could emerge 

from these flexibilities? 

Answer: The Department does not anticipate that the flexibilities contained in the Budget will 

increase risk for the public housing program, primarily because HUD's budget does not seek to 

roll back progranunatic standards. Specifically, the flexibility to use Capital and Operating Funds 

interchangeably is a flexibility already available to most small PHAs and HUD has not seen a 

discernable difference in the administration of the program by these PHAs compared to their larger 

counterparts. This is, in large part, because HUD has longstanding programmatic requirements and 

an oversight structure for these funds that were established to minimize risk. Further, the broad 

waiver authority included in the budget would require HUD review of such requests, so HUD will 

be able to tailor oversight of any changes in operations made available through an approved waiver 

to assure that increased risk is mitigated. 
365

Ranking Member Price #10: Response to Congressional Inquiries 

Question: What is the policy at the Department with regard to responses to congressional 

inquiries? 

Answer: The Department takes the oversight responsibility of Congress seriously, and will 

respond to any and all inquiries in a timely manner. 

Question: More specifically, is there a policy or guidance that would prohibit or delay responses 

to Ranking Members of Congressional Committees or subcommittees of jurisdiction? 

Answer: No. 

Question: Is there a policy or guidance that would prohibit or delay responses to Democratic 

Members of Congress? 

Answer: No. 

Question: If such policies or guidance are in place to prohibit or delay responses to Ranking 

Members or all Democratic Members, was such developed in consultation with the White House 

or the Office of Management and Budget? 

Answer: There has been no such guidance. 
366

Ranking Member Price #11: Tenant-Based Rental Assistance 

Question: Please provide a list of all PH As that have turned back HUD-V ASH or any other 

special purpose vouchers in each of the past 3 fiscal years. 

Answer: The only special purpose vouchers that have been returned to HUD in the past 3 fiscal 

years are HUD-VASH vouchers that were awarded through the project-based set-aside. Those setaside voucher awards were contingent on the PHAs meeting certain deadlines to put the units under 

HAP contract that were designed to ensure that the PBV set-aside funding would be used in an 

expeditious manner. The return of these vouchers was a function of failing to meet the funding 

award requirements the PHA agreed to, and does not reflect the PHA's willingness or 

unwillingness to continue to administer HUD-V ASH vouchers. 

PHAName State FY 2013-

2016 PBV 

Set-Aside 

Rescinded 

County of Los Angeles CA 38 

City of San Buenaventura CA 4 

City of Long Beach CA 75 

Jacksonville FL 75 

HawaiiPHA HI 25 

NYCHPD NY 58 

I Fairfield Metro OH 5 

Douglas County OR 54 ~-

San Antonio TX 12 

Milwaukee County WI 13 

San Luis Obispo CA 10 

County of Wake NC 10 

Chester County PA 35 

State of Montana -- MT 40 

State of Massachusetts MA 43 

County of Los Angeles CA 52 

County of Riverside CA 15 

MadisonCDA WI 25 

Oceanside CA 25 

City of Salem OR 25 

San Francisco CA 21 

f--;:;--:----

Seattle WA 21 
367

Question: Please provide a list of all PHAs that have terminated or consolidated their tenantbased Section 8 programs in each of the past 3 fiscal years. 

Answer: Please see the below table that lists the 92 housing agencies that have ceased operations, 

either through voluntary transfers or consolidations, in the past 3 fiscal years. 

Consolidated or Transferred PHAs: 2014-2017 

Name State 

Mountainair Housing Authority NM -- YoakumHA TX 

Winchester HA CT 

New London HA CT 

Roanoke Total Action Against Poverty VA 

HA of the City of Hartford AL 

Marshall County HA IN 

HA of the City of Oren MO 

Bradford HA PA 

The Center for People with Disabilities co 

Sellersburg HA IN 

Community Housing Network MO 

Illinois Department of Commerce and Economic IL 

Development 

East Prairie Public Housing Agency MO 

HA of the City of Hutchinson KS 

Junction City Housing Authority KS 

Navasota Housing Authority TX 

Marfa Housing Authority TXHousing Authority of McKinney TX 

City of Willmar MN 

Piedmont Housing Alliance VA 

Saco Housing Authority ME 

Town of Oyster Bay HA NY 

DelCityHA OK 

Eau Claire HA WI 

Taylor County HA WI 

Henderson County HA IL 

New Madrid County MO 

Taos County HA NM 

New Berlin HA WI 

Waukesha County HA WI 

City of Middletown OH 

Tempe HA AZ 
368

Mid IowaRHA IA 

Livingston County HA IL 

Marion HA IN 

Lackawanna County HA PA 

HA of Delkalb GA 

Brockton Area Multi-Services MA 

HA of Beckville TX 

Galveston HA TX 

Housing Partnership, Inc. FL 

Town of Poughkeepsie NY 

KalamaHA WA 

~ity of Hollister CA 

City of Marietta HA GA 

Yuba County CA 

HA ofthe City of Corry PA 

CommerceHA TX 

Fulton County HA IN 

East Grand Forks MN 

Saint Albans City Housing Authority (SACHA) VT 

Ferry County Joint Housing Authority WA 

Martinsville RHA VA 

Buckhannon HA wv 

Corsicana HA TX 

Rice Lake HA WI 

Virginia Housing Development Authority VA 

Troy HA NC 

Fairfield Alabama HA AL 

Ogdensburg HA NY 

ABCD Housing Authority MO 

Wakulla County Board of Commissioners FL 

Transitional Services of New York for Long Island NY 

Family & Children's Association NY 

Grapevine HA TX 

Town of Horseheads NY 

Alamo Area Council of Governments TX 

NYS Housing Trust Fund Corporation NY 

South St. Paul HRA MN 

Bridgewater HA MA 

Polk County HA FL 

Clearwater County HRA MN 

Clark County HA IL 
369

Kauai County HA HI 

Monroeville Housing Authority AL 

Tarrant Housing Authority AL 

Cumberland County Housing Authority IL 

Athens Housing Authority TN 

Housing Authority of the City of Pasadena CA 

LaMarqueHA TX 

Venango Countv HA PA 

f-.:-- - Village of Mount Kisco NY 

Municipality of Jayuya HA RQ 

Burlington County Board of Social Services PHA NJ 

St. Michaels Housing Authority MD 

Grant Housing Authority NM 

Housing Development Corporation PA 

Duxbury Housing Authority MA 

Moorhead BRA MN 

Upland HA CA 

Independence HA LA 

Question: How many IIUD-VASH vouchers are currently available for use? 

Answer: As of March 31, 2017, 92 percent of the 87,864 HUD-VASH vouchers funded prior to 

fiscal year 2017 were leased or issued (or were in the process of being issued), leaving over 8,000 

HUD-VASII existing vouchers available for use from prior year appropriations. Additionally, the 

Consolidated Appropriations Act, 2017 provides an additional $40 million for HUD-V ASH, and 

$7 million for Tribal-V ASH. The $40 million will support approximately 5,000 new HUD-VASH 

vouchers, in addition to the 8,000 available vouchers from prior year appropriations. 

Ranking Member Price #12: IT Modernization 

Question: Please provide a list of all IT systems, subsystems or IT contracts decommissioned or 

terminated in FY 2017. Provide the cost of each system, subsystem or contract in each of the past 

3 fiscal years. 

Answer: 
370

HUDS >ystems D ecommJsswne d. m FY 2017 

System System System Name FY2014 FY 2015 FY 2016 

Code Acronym Cost Cost Cost 

Total Estimation & Allocation 659.114 0 0 

D91a TEAM Mechanism - Resource Estimation & 

Allocation Process 

E08A TEAPOTS Title Eight Automated Paperless Office 0 0 0 

Tracking System 

H09 LR2000 Labor Relations 2000 0 0 0 

P096 LASS Lender Assessment Sub-System 286.721 45,172 46,527 

Note: All systems listed above will have completed the decommission process and been removed 

from HUD's Inventory of Automated Systems (lAS) by the end of FY 2017. 
371

Question: Please provide a list of all IT systems, subsystems or IT contracts planned for 

decommissioning or termination in FY 2018. Provide the cost of each system, subsystem or 

contract in each of the past 3 fiscal years. 

Answer: 

Planned HUD Systems Decommission for FY 2018 

System System System Name FY 2014 FY2015 FY 2016 

Code Acronym Cost Cost Cost 

D091 CAPS WebFocus CAP Reports System 0 0 0 

E04 SCTS Section 3 Complaint Tracking 0 0 0 

System (Cold Fusion) 

F51 IMF Institution Master File 377,062 73,525 73,731 

F51Q QDLS Quality Assurance Document 75,760 0 0 

Library System 

P273 HIAMS HUD Integrated Acquisition 2,795,508 1,618,319 809,059 

Management System 

VOlA ECIS Enforcement Center Information 143,131 0 0 System 

V02A DECMS Departmental Enforcement Center 113,517 0 0 

Management System 

V03A ECPCIS Enforcement Center Program 154,560 0 0 

Compliance Integration System 

D77B SFGIS Single Family GIS Locator 0 0 0 

D77C HOM HUDGIS Maps 0 0 0 

P294 OMS Grants Management System 527,327 449,096 34,900 .. Note: Planned decomnusstonmg zs contmgent upon recezvmg the full FY18 Preszdent's Budget 

Request. 
372

Ranking Member Price #13: PHAs in Receivership 

Question: How many PHAs in receivership does the department plan to return to local control in 

FY 2017? 

Answer: Two. The Housing Authority of the City of Lafayette (Louisiana) was returned 

November 16, 2016. East St. Louis (Illinois) is proposed for return on before the end of this fiscal 

year. 

Question: How many PHAs in receivership did the department return to local control in FY 20 16? 

Answer: None. 
373

Ranking Member Price #14: Next Generation Management System (NGMS) Status Update 

Question: What is the status of the NGMS project? 

Answer: The Next Generation Management System (NGMS) was comprised of projects that 

support the management of the Housing Choice Voucher (HCV) programs: Budget Formulation 

and Forecasting (BFF) project, Portfolio and Risk Management Tool (PRMT), and Pil-I 

Information Center-Next Generation (PIC-NG). Based on requirements identified during the 

development of the NGMS projects listed, HUD is planning a development effort to improve the 

HCV cash management process that would replace the current Voucher Management System 

(VMS). The VMS is the system of record upon which the current payments to the Public Housing 

Authorities (PHAs) are calculated. The Budget includes a proposal for $10 million to support HUD 

modernization efforts, including investments in conjunction with agency realignment under the 

Executive Order. These efforts will be coordinated with the COO, the CIO, and the BUD CFO 

(once confirmed). 

The BFF project is currently used by Pil-I staff to validate HCV data from the PHAs. All further 

development of the BFF project ceased in 2016. 

Both headquarters and field staff currently use the PRMT tool. The system was enhanced in July 

2017 to have the PHA level dashboards in PRMT reflect data regarding a PHA's Rental Assistance 

Demonstration (RAD) Conversions. 

HUD is currently re-platforming the current PIC system to the PIC-Next Generation (PIC-NG) 

system. This project, will move the system to the Azure cloud, add additional data fields to capture 

data at the household level, and upgrade the legacy system to a more robust model. PIC-NG tenantlevel data will be used in the new VMS to calculate a PHA 's monthly Housing Assistance Payment 

(HAP) need. 

Question: Please provide a detailed accounting ofDM&E expenditures. both planned and actual, 

for the FY 2014, FY 2014, FY 2016 and FY 2017 that directly support NGMS. 

The table below provides the NGMS project DME expenditures. 
374

NGMS DM&E Expenditures by Source Year1 

($ in thousands) 

Portfolio & 

Risk 

Management $812 $812 $0 

Tool 

(PRMT) 

Phase 2 

$0 

$2,475 $2,075 $552 

$0 $0 $0 

$0 $0 $0 

$0 I $0 $0 $0 $0 

$0 $0 $0 $0 $0 

$552 $0 $0 $0 $0 

$0 $0 $0 $0 $0 

$0 $0 $0 $0 $0 

11 Funding for NGMS is awarded by vendor and multiple vendors work on multiple NGMS 

modules; obligations by module as provided in the table are estimates. 

2/ Planned obligations include $400K from FY 2014 expenditure plan and $4.072 million from 

No Year funds. 

3/ Actual obligations include $552K of No Year funds and $391 of carryover from FY14. Systems 

showing $0 in the table are in operations and maintenance with no DME funding required. 
375

Ranking Member Price #IS: Working Capital Fund 

Question: Please provide a list of transfers into and out of the working capital fund. For each, 

provide the office charged and the intent of the transfer. 

Answer: Please see the table below. For FY 2016, the first column reflects charges for each 

office's portion of shared services as appropriated in the appropriations Act. The second column 

reflects transfers under the authority to transfer up to $10 million, to provide liquidity and fund 

unforeseen costs/investments to improve systems or services. The third column reflects anticipated 

charges for each office's share of shared service agreements funded through the Working Capital 

Fund, consistent with enacted 2017 appropriations and billing estimates per the Interagency 

Agreements with HUD's shared service providers. 
376

SoiU'Ce of 

F..ds!Oflice 

EO 

OCFO 

OGC 

ADMIN 

OCHCO 

FPM 

OCPO 

ODEEO 

OSPM 

OCIO 

ASO Subtotal 

Pill 

CPO 

HOUSING 

PDR 

FHEO 

LHCHH 

POSE Subtobl 

BUD Total 

GNMA 

Gr.md Total 

WCF Re,·euue Totals 

in $thousands 

FY2016 FY2016 

TraJisfer illto Additioual 

WCFforF\:'16 TraJisfers illto 

u .... \s WCF 

27,206 552 

16,476 520 

360 

900 

43,682 2,332 

2,400 

680 

3,768 

645 

175 

- 7,668 

43,682 HI,OOO 

43,682 10,000 

FY 2017 

Allticipated 

Tra11sfers illto 

WCFforFY17 

IAAs 

783 

3,659 

1,585 

971 

1,122 

1,285 

1,356 

246 

273 

1,995 

12,492 

9,533 

4,123 

10,642 

1,183 

1,863 

576 

27,921 

41,196 

823 

42,019 

The amounts of$43,682k and $42,019k transferred mto the fund for FY 2016 and FY 2017 are 

directly applied to Interagency Agreements for the following Services: 
377

FY 2016 FY2017 

Shared Sen-ice Prm-ider and Agreement Agreement 

Agreement Totals Totals 

ARC- Financial :\.fanagement, 

Pro=ement, and Trff\'el Services 2i,206 24,190 

ARC - Human Resources Services 12,830 12,i96 

TSSP - Human Resources Systems 3,646 3)91 

1>.-:F C - Pa]ToU Processing - 1,242 

Total 43,682 42,019 
378

Representative Culberson 

Representative Culberson #1: CDBG-DR 

This year will be the 9-year aoniversary of Hurricane Ike's landfall. Last year, you submitted a 

Question for the Record (QFR) to the HUD IG inquiring about the local housing authority still 

using Ike disaster relieffunds to build subsidized housing. The answer to the QFR stated that the 

$6.5 billion in Disaster Recovery funds was to remain available until spent. As of last year, $1.4 

billion of the funds remained unspent, and the answer to last year's question indicated that there is 

no mechanism available to recapture the unused funds. 

Question: In my district, the local housing authority is still using disaster relief funds from 

Hurricane Ike to build subsidized housing, including $26 million of CDBG-DR funding for one 

project that has an estimated per unit cost of over $240,000. They are demolishing an office 

building to build the project. It is questionable to suggest that demolishing a functional o±1ice 

building to build subsidized housing is associated with hurricane destruction from 2008. Based on 

the most recent semi-annual report to Congress, $1.1 billion of obligated funds from Hurricanes 

Ike, Gustav, and Dolly have not been disbursed. Seeing as how Texas has had several major 

disasters in the past year, and the Texas General Land Office is facing a $2 billion shortfall for 

disaster relief from the past two years, can HUD de-obligate these funds and re-allocate them for 

actual disaster recovery from storms that have impacted the area in the past two years? 

Answer: Congress appropriates CDBG-DR funds with specific instructions regarding the use of 

funds, including the effects of which disasters each grant may address. HUD lacks the authority to 

re-allocate the funds for other purposes including addressing the effects of events not covered by 

the language of the specific appropriation. HUD also notes that the state of Texas has reduced the 

unexpended balance of the 2008 funding below $600 million as of May 31, 20 17. 
379

Representative Culberson #2: Fountain View 

The per unit cost of the Fountain View project is estimated to be over $240,000, considerably 

higher than other similar developments have cost. Fountain View was advertised to have amenities 

such as a courtyard swimming pool with gazebos and seating, barbecue grills and picnic tables, a 

fitness center. business center, and cyber cafe. 

Question: The cost per unit of the housing project in question has a cost per unit of over $240,000. 

The fact sheet for the project advertised that the project would have a courtyard swimming pool 

with gazebos and seating, barbecue grills and picnic tables, a fitness center, business center, and 

cyber cafe. Only 20 percent of the units in the complex will be rented at market value. In such a 

tight budget environment, are these amenities for low-income housing an effective use of taxpayer 

dollars? 

Answer: The primary objective is to provide decent. safe and sanitary housing units at reasonable 

cost. The Fountain View project has had several project cost estimates; the estimate is now below 

$240,000 per unit, and is within the range of reasonableness for comparable developments in 

similarly priced areas. To the extent that housing authorities or developers wish to incorporate 

certain amenities at a nominal cost. such actions are statutorily and regulatory permissible. 
380

Representative Culberson #3: Houston Housing Authority/OIG 

On December 27, 2016 the BUD IG released an audit report on the Houston Housing Authority's 

public housing and Housing Choice Voucher Programs. 

The report found that "The Authority did not follow BUD's regulations or its own policies when 

contracting for goods and services and paying for miscellaneous expenses. This condition occurred 

because the Authority did not implement adequate internal controls over its procurement and 

financial operations. The Authority also did not always use correct payment standards or perform 

annual tenant recertifications for its voucher program tenants in a timely manner and in accordance 

with HUD regulations and its administrative plan. This condition occurred because the Authority 

lacked written procedures for applying payment standards and its staff did not understand BUD's 

regulations. Further, its staff turnover and caseloads were high. As a result, the Authority paid 

more than $3.2 million in Federal funds for ineligible and unsupported costs." 

As a result, they recommended "that HUD require the Authority to (I) repay more than $183,000 

in ineligible expenditures; (2) support or repay more than $3 million in questionable costs; and (3) 

implement adequate internal controls, including written procedures, to ensure that its procurement 

and expense payments comply with HOD's regulations and its own policies." 

A Houston Chronicle investigation titled "Lost Money" on Houston's affordable housing fund 

(locally collected money) found that nearly half of the $96 million spent since 2007 has gone 

towards "administrative costs, federal fines, or keeping projects moving after the city lost state and 

federal grants." Additionally, while the city thought they had $7 million in the account, it was later 

discovered that they had lost track of $17 million, and had not properly accounted for taxes 

collected since 2012 and actually should have $46 million in the account. 

Question: Late last year, the Inspector General released are report on the Houston Housing 

Authority that found they did not implement adequate internal controls over procurement and 

financial operations, resulting in $3.2 million in Federal funds being spent on ineligible and 

unsupported costs. Additionally, an investigation by our local newspaper, the Houston Chronicle, 

found that the City lost track of $39 million oflocally collected funds that were designated for low 

income housing due to "sloppy record keeping." Is HUD doing enough to work with local entities 

that receive federal funding to ensure they have proper controls in place to be good stewards of 

taxpayer funding? 

Answer: Public Housing Authorities (PHAs) expending more than $750,000 in federal funds 

during a given fiscal year arc required to conduct an audit by an Independent Public Accountant 

in accordance with the 2 CFR Part 200, Subpart F. Among its objectives, an audit considers 

whether internal controls are in place and effective. !IUD reviews each audit submission for 

completeness, adherence to accounting standards, and the presence of material weaknesses and 

findings. HUD issues a Management Decision Letter on all audit findings and works with PIIAs 

to correct any identified deficiencies, tracking each audit finding to closure. Further, HUD 

analyzes the content of the audits to identify long-term trends, programmatic findings, and the 

level of severity of the findings; this information is incorporated into HUD's overall risk 

assessment and monitoring strategy. 
381

PIH has adopted a national risk-based approach to providing oversight and monitoring of its over 

3,700 housing authorities to more effectively utilize its staffing resources for field staff. Through 

this approach, PIH focuses its efforts on PHAs that are very high risk and high risk as determined 

by a myriad of measures. These controls are designed to ensure, among other things, that PHAs 

have proper controls in place to be good stewards of taxpayer funding. 
382

Representative Valadao 

Representative Valadao #1: Expansion of Moving to Work 

Under the previous administration, HUD established criteria for the first phase of the expansion of 

the Moving to Work program, which provides flexibility for housing authorities to explore and 

test new and innovative methods of delivering housing and supportive services to low income 

families. Unfortunately, the criteria set by HUD excluded nearly all of the California housing 

authorities, such as those that serve my co~stituents. 

Question: What assurance can you provide that the next phase of Moving to Work expansion will 

include California housing authorities? 

Answer: The selection criteria for the cohorts of the Moving to Work (MTW) expansion will be 

based on the 2016 Consolidated Appropriations Act (the Act) under which the expansion was 

established. The Act sets forth specific size requirements for the I 00 new MTW public housing 

agencies (PHAs) to be selected, including that: no less than 50 PHAs administer 1,000 or fewer 

aggregate voucher and public housing units, that no less than 47 PHAs administer 1,001-6,000 

aggregate public housing and voucher units, and that no more than 3 PHAs administer 6,001-

27,000 aggregate voucher and public housing units. PHAs with more than 27,000 aggregate 

voucher and public housing units are not eligible. Further, the Act requires that PHAs selected be 

high performers in either the Public Housing Assessment System (PHAS) or the Section Eight 

Management Assessment Program (SEMAP). The Act also requires HUD to consider geographic 

diversity in its selection, which the Department will implement through the competitive selection 

process. In addition to these selection requirements set forth directly in the Act, HUD may need to 

establish other selection criteria for the cohorts of the MTW expansion to ensure that it can meet 

the evaluative requirements of the Act. For example, it may be necessary to set minimum threshold 

performance criteria or select specific sized PHAs for certain cohorts to ensure that HUD is able 

to carry out the rigorous type of evaluation required by the Act. PHAs in California, as well as in 

other states, will be able to apply to participate in the MTW program. 
383

Representative Valadao #2: Disparate Impact 

Mr. Secretary. the previous administration significantly broadened the scope and interpretation of 

"disparate-impact evidence" far beyond that outlined in the Supreme Court decision in Texas Dept. 

of Housing and Community Affairs v. Inclusive Communities Project, Inc. 

This overzealous approach has resulted in HUD weakening local ordinances designed to further 

protect residents and communities from criminal activity. Unfortunately, the zeal of the department 

to impose its will on local government has had a chilling impact upon local housing authorities 

and municipalities. 

Question: Mr. Secretary, will you review and report back to this committee within 90 days all 

ongoing complaints issued and/or investigations of State law and/or municipal ordinances alleged 

by the Department, to have violated The Fair Housing Act (FHA) under the guise of "disparate 

impact evidence?" Include in your report, any ordinances that have been adjudicated and found 

discriminatory under the Fair Housing Act by a court of competent jurisdiction prior to the 

department initiating an investigation or filing a formal complaint. 

Answer: The Department processes thousands of civil rights inquiries each year and hundreds of 

civil rights complaints. As the Fair Housing Act requires, the Department accepts and investigates 

jurisdictional Fair Housing Act complaints filed by aggrieved persons. The Department 

investigates and considers the evidence under all theories of liability, including disparate treatment 

and discriminatory effects. Staff do not designate cases by type of legal theory or method of proof, 

and as such, HUD would not be able to provide a count of "Disparate Impact" evidence. Although 

the Department accepts cases alleging discriminatory land use ordinances. HUD does not 

adjudicate them, rather, pursuant to statute. HUD refers them to the Department of Justice. 

HUD notes that the Supreme Court's 2015 decision in Inclusive Communities is entirely consistent 

with HOD's 2013 discriminatory effects regulation. In fact, the Supreme Court quoted HUD's 

regulation twice in support of its analysis. In addition, the Second Circuit Court of Appeals and 

several lower courts have held that HUD's 2013 regulation is consistent with Inclusive 

Communities and provides the correct framework for evaluating disparate impact claims. 
384

Representative Graves 

Representative Graves #1: Manufactured Housing 

Manufactured homes are regulated by the Department of Housing and Urban Development, and 

are the only form of non-subsidized housing regulated by HUD. You have said that you want to 

shift the HUD focus to empowering individuals to make their way out of poverty, rather than on 

the simple provision of housing subsidies. Given its affordability manufactured housing is part of 

the solution to non-subsidized affordable housing. 

Manufactured housing provides safe and affordable homes for more than 22 million Americans, 

many of whom have low to moderate incomes. It provides a path from poverty to home ownership 

- representing self-reliance and wealth creation for its customers. 

The median annual income of manufactured homeowners is just under $30,000 per year, nearly 50 

percent less than that of all homeowners. Nearly 60% of all new manufactured homes sell for less 

than $70,000, and the costs of manufactured homes are between I 0 to 35 percent less than the cost 

of comparable site-built homes. 

Programs through HUD now allow those in public housing to use their vouchers to transition from 

public housing rental units into ovmership of a manufactured house. 

These are precisely the sorts of impacts and results that we in Congress and the President are 

focused on. 

Additionally, manufactured housing employs close to 39,000 people in factories arotmd the United 

States. Obviously, job creation is number one on both the Congress' and the President's agenda, 

and we are working particularly hard to restore manufacturing jobs. Manufactured housing is just 

that- manufactured in American plants by American workers. 

Manufactured homes also are particularly important in rural areas. ln fact, about two-thirds of all 

occupied manufactured homes in the U.S. are located outside of metropolitan statistical areas 

(MSAs), and 14 percent of the homes in non-MSA counties are manufactured homes. 

Manufactured housing is critical in addressing housing needs in rural communities where multifamily options are limited and impracticaL 

Question: Given your personal connection and understanding of the need to increase home 

ownership in America, will you commit to making manufactured housing a priority in your work 

at HUD? What will you do to ensure that manufactured housing has a seat at table at HUD in 
385

discussions about affordable housing? Will you commit to looking at elevating manufactured 

housing to the level of an Assistant Deputy Secretary at HUD putting it on par with multi family 

housing? 

Answer: HUD's work in manufactured housing will remain a priority. With respect to any plans 

for reorganization, it is understood and fully appreciated that manufactured housing is the largest 

source of unsubsidized affordable housing in America and a critical component of housing rural 

America. The importance of manufactured housing will certainly be considered in any 

reorganization. 

Question: Much of the discussion about the need for affordable housing is focused on inner cities. 

However, rural areas of this country have acute affordable housing needs as well. Manufactured 

housing has proven to be a critical source of affordable housing in rural America. Can you describe 

your plans about addressing the affordable housing needs in rural America and how manufactured 

housing will play a role in this effort? 

Answer: The Department recognizes that manufactured housing constitutes one of every five 

homes in rural America. To that end, HUD's Office of Manufactured Housing Programs recently 

conducted an internal communications campaign that informed HUD personnel and visitors about 

the critical role manufactured housing plays in providing affordable housing in rural communities. 

The Department has two FHA financing programs, Title I and Title II, that are available for 

manufactured home financing which the Department is working on making more accessible for 

manufactured home purchasers in rural America. Currently, the Title 1 handbook is being revised 

to address concerns with this program. In addition, multifamily housing is responsible for the 

207(m) program, which is a source of financing for manufactured housing community 

development and rehabilitation across the country. 

Question: Under the administration of President Obama, HUD consistently overreached in its 

regulation of manufactured housing, imposing burdens on the industry that made housing less 

affordable and less accessible. Will you work to ease these burdens to make certain that this form 

of housing is available to more of our low to moderate income citizens? 

Answer: The Department recently received almost 500 public comments on regulatory reform. 

Using those comments as well as working with the HUD Regulatory Reform Task Force, the 

Department is committed to trying to lessen the regulatory burden of all of its programs. 

Question: To maintain housing affordability, it is absolutely imperative that HUD conduct 

adequate cost-benefit analyses of all potential new regulations on manufactured housing. As it 

stands, HUD has not undertaken the appropriate analysis, testing and research required to update 

the HUD Code. This pushes up costs without a clear justification that the new regulations will lead 

to improvements that are in the best interest of consumers. Can you ensure that HUD properly 

takes into account the economic impacts of and necessity of new requirements when issuing 

regulations about the construction and installation of manufactured housing? 

Answer: The Department's approach to evaluating economic impacts of new manufactured 

housing regulations is guided by the Regulatory Flexibility Act and the Unfimded Mandates 
386

Reform Act and The National Manufactured Housing Construction and Safety Standards Act, as 

amended by the Manufactured Housing Improvement Act of 2000. Within the context of these 

guiding statutory and regulatory requirements, the Department administers a rigorous process for 

vetting new or revised manufactured housing standards and regulations that includes cost benefit 

analysis in the interest of maintaining aftordability while serving to protect and provide quality, 

durable, and safe housing. The Department's process includes internal cost benefit analysis as well 

as review of all standards and regulations and associated cost impacts by the Manufactured 

Housing Consensus Committee (MHCC). The MHCC is a 21-person committee comprised of 7 

consumer representatives, 7 industry representatives, and 7 general interest and public official 

representatives. The MHCC considers such regulatory changes through public meetings that not 

only ensure transparency and accountability of the process, but also affords opportunities for 

public discussions of cost and affordability related to the regulations and standards under 

consideration. 

Question: HUD needs to create an environment that fosters innovation and enables the 

manufactured housing industry to deliver quality, affordable homes. This is not what is currently 

happening. Can you look at what can be done to improve the way HUD regulates manufactured 

housing? Will you undertake an effort to comprehensively review all the regulations impacting 

manufactured housing and direct your team to utilize this information so that any new regulations 

do not have unintended cost consequences? 

Answer: The Department, through the MHCC's Administering Organization (AO)'s online 

recommendation submission process, is always open to any recommendations of industry 

stakeholders and the public in general regarding manufactured housing standards and regulations. 

In fact, in December 2016, the Department proposed to the MHCC eliminating the burden of 

manufacturers and retailers to provide a Health Notice regarding formaldehyde with every home 

upon its implementation of the EPA formaldehyde final rule. Also, see response to the question 

above. 
387

Representative Graves #2: FHA Admin Fee 

Mister Secretary, the subcommittee certainly recognizes that HUD and its technology systems are 

in need of an upgrade -- particularly for purposes of quality control and risk management. The 

FYI? budget package included $4M for IT upgrades at FHA. 

The President's FYIS request for HUD continues to include the prior administration's request for 

authority to levy an administrative fee to participating lenders based on the annual volume ofloans 

insured to raise the $30 million per year needed for FHA to better conduct quality control and 

manage risk in the program. It is important to note that this approach has been rejected by the 

Congress the past several years. 

Question: For how long would the fee be levied, and how much would it raise? 

Answer: One of the changes in the current proposal is to include a sunset for the fee. The fee 

would be levied for three years (starting after the completion of a notice and comment process and 

pro-rated in the first year). HUD proposed $30 million in collections for 2018, and the amount 

collected each year will be set by the annual appropriations act. 

Question: How can we be assured the fee won't become a permanent levy? 

Answer: The fee would automatically sunset after 2020. 

Question: Would HUD commit to work with the industry to ensure that the right initiatives are 

prioritized and funded? 

Answer: Absolutely. In fact, the language requires a process for notice and comment prior to 

implementation. If enacted, in addition to that formal process, FHA would also seek input through 

interactive discussion with industry. 

Question: Should there be an advisory board to oversee this? 

Answer: As with any large-scale investment, rigorous management and oversight ofthe initiative 

would be required. Our proposal would include a rigorous internal project management 

framework, with leadership from senior executives and a steering committee including the highest 

levels of the Department. While we do not believe a formal advisory board would provide 

additional value, we welcome external insights and would be open to sharing periodic progress 

updates with our stakeholders. We would also note that HUD has hired a CIO, a position that will 

be instrumental in providing professional leadership to HUD technology projects. 
388

Representative Quigley 

Representative Quigley #1: LGBT Housing Issues 

Starting in 2012, HUD began to implement "policy to ensure that its core programs are open to all 

eligible individuals and families regardless of sexual orientation, gender identity, or marital 

status." This final rule was developed after HUD published a proposed rule on January 24, 2011 

that cited "evidence suggesting that LGBT individuals and families do not have equal access to 

housing." 

In spite of the HUD rule, housing discrimination remains a major concern in the LGBTQ 

community. According to a 2016 Williams Institute study, LGBT people still file housing 

discrimination complaints as often as people of color and women. A recent report noted that 48% 

of older same-sex couples face discrimination when they apply for senior housing. Nearly 20 

percent of respondents in a national survey of transgender people reported facing housing 

discrimination. 

LGBT inclusion is important in efforts to combat discrimination as well as in the provision of 

services that are supported by HUD. Homelessness among LGBTQ youth is one example. Of the 

roughly 1.6 million youth who experience housing instability each year, 40% of them identify as 

LGBTQ. Yet, they represent about 7% of youth overall. According to Chicago Public Schools, 

18,831 students experienced housing instability during the 2015-2016 school year and 12.7% of 

them were unaccompanied youth. Yet there are fewer than 400 shelter beds for youth. 

Question: Secretary Carson, under your administration, will HUD continue to implement policies 

that provide equal access to housing in HUD programs regardless of sexual orientation or gender 

identity and monitor adherence to those policies by entities that receive HUD funding? 

Answer: Yes. HUD's policies on this point are unchanged. All individuals are entitled to equal 

treatment and equal access to housing in HUD programs, regardless of their sexual orientation or 

gender identity. 
389

Representative Quigley #2: US Interagency Council on Homelessness 

I have long been a supporter of the mission and purpose of the US Interagency Council on 

Homelessness (USICH). Homelessness, in any amount, among any population, is unacceptable in 

a modem, wealthy, and prosperous society and I believe we should do whatever we can to ensure 

that every American has a place to call home. 

USICH is not part of HUD, instead it serves as an interagency convener, ensuring that policies and 

procedures across the government are coherent and in sync and working with localities to establish 

and employ best practices when it comes to reducing homelessness. 

The President's FY 18 Budget has proposed completely zero-ing our funding for USICH and if the 

program is eliminated, its responsibilities would almost certainly fall to HUD. 

Question: Given that HUD has not requested any additional funding or personnel to take over for 

USICH, is HUD prepared to step in as the interagency group coordinating and catalyzing the 

federal response to homelessness across the 19 federal member agencies that USlCH currently 

works with? 

Answer: HUD is committed to working across agencies and state, local, and private partners to 

leverage other programs to end homelessness. One of the United States Interagency Council on 

Homelessness' (USICH)'s biggest accomplishments was the promotion of interagency 

collaboration to combat homelessness. USICH helped pave the way for collaboration across 

agencies, and now such collaboration across agencies has become more common place and can 

continue without a distinct Council. 
390

Representative Quigley #3: Lead Exposure 

Prior to the finalized Lead Safe Housing Rule earlier this year, the federal threshold for action in 

housing for children containing lead was four times the CDC's recommendation for a "elevated 

blood lead level." That forced families to choose between forgoing HUD housing assistance and 

exposing their children to unsafe levels to lead in homes. 

In order to address this serious concern, I joined colleagues in both the House and the Senate last 

congress to introduce the Lead Safe Housing for Kids Act and HUD released the "The Lead-Safe 

Homes, Lead-Free Kids Toolkit" and developed the new Lead Safe Housing Rule. As a result, for 

the first time in decades, BUD's definition of toxic lead exposure now aligns with CDCs. This has 

been a big win for vulnerable children across the country. 

However, given HUD's recent notice on regulatory reform which may consider eliminating certain 

regulations, I am concerned this hard work to protect children who live in HUD assisted housing 

from the permanent damage caused by lead exposure will be lost 

Question: Will you commit not to repeal these regulations? Will you also agree that the CDC, 

and not HUD, should set the standard for what is an elevated blood lead level? 

Answer: HUD has a strong commitment to protecting the health of our most vulnerable through 

mitigating hazards from lead-based paint. HUD issued its elevated blood lead level amendment 

to its Lead Safe Housing Rule, which covers lead safety in older (pre-1978) assisted housing 

covered by the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-

4856), known as "Title X." 

This amendment adopts, as the elevated blood lead level that triggers a broad environmental 

investigation in assisted housing covered by the Lead Safe Housing Rule and, if lead-based paint 

hazards are identified, control of those hazards, the confirmed blood lead level in a child under age 

6 for which U.S. Department of Health and Human Services, on behalf of the Centers for Disease 

Control and Prevention's (CDC), recommends that an environmental investigation be conducted. 

HUD recognizes that, over time, CDC may change the blood lead level at which it recommends 

an environmental investigation. Accordingly, to respect the potential burden placed on assisted 

property owners before adjusting its elevated blood lead level standard in the Lead Safe Housing 

Rule, and to provide transparency in its decision-making, HUD will provide for public notice and 

comment, as described in the amendment, so that potentially affected parties will have the 

opportunity to provide comments on proposed changes. 

This amendment, issued on January 13, 2017, will begin its compliance phase after a six-month 

transition period, on July 13, 2017. My Administration reviewed this amendment and determined 

that it was an appropriate part of BUD's effort to reduce childhood lead poisoning. 

BUD is establishing a Regulatory Task Force in accordance \V:ith Executive Order 13777 (82 

Federal Register 22344-22346, May 15, 2017) to evaluate existing regulations and identify those 

that may merit repeal, replacement, or modification. Through that Federal Register notice, BUD 

sought public comments, and, in response, received 12 comments about its lead safety regulations, 
391

the Lead Safe Housing Rule and the Lead Disclosure Rule. The Task Force's evaluation of these 

regulations will include consideration of these comments. 
392

Representative Quigley #4: Lead Exposure in East Chicago, Indiana 

Dr. Carson, as I'm sure you're aware, just across the Illinois border, in East Chicago, Indiana I, I 00 

individuals were forced to relocate from the West Calumet Housing Complex after being exposed 

to lead content 228 times the maximum permitted level. 

It took half a century to identify this issue, exposing countless individuals to toxic lead levels in 

and around their homes. 

Question: Can you please update the committee on the status of the relocation of the families 

impacted in East Chicago? 

Answer: As of June 16, 2017 all 333 families have been relocated from the West Calumet 

property in East Chicago. 

Question: Will HUD relocate families to safety by conducting risk assessments in replacement 

housing before move in? 

Answer: For families with children under 6 with elevated blood lead levels who previously 

resided in the East Chicago Housing Authority's (ECHA) West Calumet Housing Complex, BUD 

staff worked with state and local health departments in Indiana, Illinois and other states to arrange 

for risk assessments in their new homes. Many health departments also conduct case management 

for children with elevated blood levels in their jurisdictions which will now include any impacted 

West Calumet families. Also, prior to resident moves undertaken as part of the West Calumet 

emergency transfer process, ECHA ensured that alternate public housing provided to families 

either already had a lead inspection or received a new one. For units not previously inspected and 

abated, ECHA conducted a combination lead risk assessment and inspection for lead-based paint 

hazards, performed lead hazard interim controls of identified hazards, and achieved clearance of 

the unit before occupancy. Work in the common areas, if not completed prior to move-in, was 

completed within 90 days after the evaluation in compliance with lead safe requirements. 

Question: What measures will you take to identify lead hazards before children are exposed? 

Answer: All HUD-assisted units receive housing inspections and must meet HUD's relevant 

standards prior to occupancy. The requirements for identifying lead-based paint hazards, however, 

vary by program. PIH field offices and the Office of Lead Hazard Control and Healthy Homes 

ensure that PHAs completed lead-based paint testing and abatement in Public Housing units. 

HUD's Real Estate Assessment Center (REAC) checks for lead inspection reports for units 

constructed prior to 1978 as part of the physical inspection process. In cases where REAC 

inspectors arc unable to verify the documents, Pil-l field offices work with PI!As to locate the 

documentation or complete new lead-based paint inspections and lead hazard control for identified 

hazards. For the Housing Choice Voucher program, PHAs perform enhanced visual inspections to 

identify deteriorated paint in units constructed prior to 1978 and where a child under are six is 

expected to reside before occupancy by the family. Deteriorated paint must be controlled prior to 

occupancy by the family. 
393

Question: Are you committed to ensuring oversight, compliance, and enforcement of federal 

regulations to prevent harm to children in federally assisted housing? 

Answer: HUD is committed to ensuring compliance with the Lead Safe Housing Rule, including 

the new amendments for response to children with elevated blood lead levels. HUD has increased 

its oversight in all programs, and in the upcoming year will increase technical assistance to all 

PHAs to help them comply with the updated requirements. 
394

Representative Quigley #5: Climate Change 

Dr. Carson, on June I st, President Trump announced his intention to withdraw the United States 

from the Paris Agreement. The Agreement, which I believe is a crucial framework for achieving 

the carbon pollution reductions necessary to tackle man-made climate change, is an unprecedented 

display of global will towards addressing climate change. 

In response to the President's decision, HUD issued a statement praising the withdrawal and 

specifically mentioned the need to protect the "most vulnerable Americans." 

There is ample evidence, however, that truly protecting the most vulnerable Americans requires 

responding to the threats and challenges posed by climate change. For instance, a number of studies 

late last year concluded that nearly 2% of all homes in the United States are at risk of being deemed 

uninhabitable due to flooding from sea level rise by 2100- impacting major cities like New York, 

Boston, New Orleans. and, in the Chairman's home state, Miami- where nearly I in 8 homes may 

be impacted. 

In addition, as you well know, poorer communities tend to be centralized in inner cities, where 

they are more susceptible to heat waves and increased levels of urban air pollution. When lowincome Americans have to spend more of their limited income on healthcare and energy to keep 

cool, they can't devote the resources necessary to housing. 

Question: From a HUD and housing point of view, should addressing climate change and its 

impacts be a high priority? Does HUD have a plan in place to address and increase in demand for 

affordable housing from Americans if climate impacts are allowed to continue unabated? 

Answer: The mission ofHUD is to strive to ensure every American has access to safe, clean and 

decent housing. HUD is not the lead department with respect to the environment, and has no 

authority over these issues. 
395

Representative Quigley #6: Low-Income Housing Tax Credit 

In a recent PBS Frontline piece on LIHTC, for example, one of the reason users of LIHTC 

explained the program today costing far more though is producing far fewer affordable housing 

units over time is because of the cuts to CDBG other federal programs that are most used for "soft" 

subsidies/gap financing for affordable housing projects. 

Question: How does the nation address a growing rental housing crisis or the 50-year low in the 

homeownership rate with federal investment in affordable housing in full retreat? 

Answer: The Department will continue to work with localities to encourage private-public 

partnerships, to continue to develop affordable housing. Additionally, this budget recognizes a 

greater role for state and local governments and the private sector in addressing affordable housing 

needs. 

In addition, the fiscal year 2018 Budget lifts the cap on the Rental Assistance Demonstration 

(RAD), which has been a critical preservation program. RAD allows PHAs to transition public 

housing to a more sustainable funding and regulatory environment, while also leveraging debt and 

other non-Federal funding. An early evaluation of the RAD program found that it leverages nearly 

$9 for every $1 of PHA funding. More recent analysis by program staff, after several larger 

projects closed, show that the leverage ratio is now $18 for every $1 of PHA funding. 

Even with reduced Federal funding in fiscal year 2018, RAD can remain successful. Some 

existing awardees and PHAs receiving awards due to the recent 40,000-unit increase that 

anticipated using Capital Funds as a source in their recapitalization transactions may need to find 

alternative resources. Should the RAD cap be lifted, HUD looks forward to working with 

Congress and local governments on how to fund future conversions. 
396

Representative Quigley #7: Miscellaneous Questions 

Quigley #7a: Housing First 

Chronically medically ill, homeless individuals are frequent users of costly medical services, 

especially emergency department and inpatient hospital services and nursing homes. By 

implementing a "Housing First" model of permanent supportive housing with intensive case 

management services for homeless individuals living with chronic illnesses, government spending 

can be reduced: evidence suggests every I 00 chronically homeless individuals housed will save 

nearly $1 million in public funds per year. 

Question: Will you commit to investing in these types of programs and not cut cost efficient and 

effective programs that save the government money and people's lives? 

Answer: The Department is committed to finding creative solutions that have a demonstrated 

success and are cost effective. As Secretary Carson stated in his hearing, the Department supports 

Housing First, and strongly believes that it's critical to follow up with a diagnosis and treatment 

for the underlying issues that lead to homelessness. HUD is committed to working with Federal, 

State, local, and private sector partners to leverage available resources and build on existing efforts 

to maximize the effectiveness ofHUD resources. 

Quigley #7b: Housing Funding/Chronic 

Question: Understanding that housing is a key social determinant of health, what will you do to 

ensure adequate funding for HUD programs [i.e. HOPW A, homeless] serving people living with 

chronic health conditions? 

Answer: Persons Jiving with HlV/AIDS are highly vulnerable to homelessness and housing 

interventions improve their stability and connection to care. Through steady budget requests for 

the HOPW A and Homeless Assistance Grants Programs, the Budget demonstrates the 

Department's continued commitment to these special needs populations, homeless as well as those 

living with HIV. Both programs allow HUD to serve vulnerable individuals who are homeless or 

at risk of homelcssness with assistance that allows them to become stably housed and maintain 

housing during times of medical crises. 

!IUD recognizes the importance of housing and its role in ensuring that individuals have a place 

to maintain health care. Without stable housing, it is impossible for an individual to fully 

participate in the healthcare system. The 2018 Budget request prioritizes HOPW A and Homeless 

Assistance Grants Programs, requesting steady funding in a time of fiscal constraint, to ensure that 

people living with chronic health conditions have the housing they need to participate in medical 

care, not only for their own health but for the overall community's health as well. 

Quigley #7c: Ending Homelessness HIV 

Question: What are HUD's strategies to end homelessness in the United States, including for 

people living with HIV? 
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Answer: HUD has made great strides in reducing homelessness and especially in reducing veteran 

homelessness, which of course includes many disabled subpopulations including People Living 

with HIV. The most recent Annual Homeless Assessment Report (November 2016), shows that 

homelessness continues to decline. The number of people experiencing homelessness on a single 

night decreased by 3 percent between 2015 and 2016. While HUD and our federal, national, and 

local partners have learned a lot about what works to solve homclessness, it still affects nearly 

550,000 men, women, and children on any given day. 

HUD works closely with our grantee communities to encourage strategic public-private 

partnerships that develop strong resources for people experiencing homelessness. HUD also works 

closely with our federal partners like HRSA's HIV/AIDS Bureau, to make sure resources are 

maximized and not duplicated, and will continue to enhance those practices to ensure we maintain 

progress in ending homelessness. HUD has strengthened the annual process for homeless 

assistance funds to incentivize communities to use funds on proven strategies such as permanent 

supportive housing and rapid rehousing, and is committed to providing technical assistance to 

communities and grantees to implement best practices. In addition, the HOPW A program sustains 

transitional and short-term households with homeless prevention efforts and coordination with 

local homeless Continuum of Care efforts to prevent and end homelessness. 

Quigley #7d: Affordable Housing 

Question: Major metropolitan areas, including Chicago, are in the midst of an affordable housing 

crisis. What are BUD's priorities to ensure all people have access to safe. decent and affordable 

homes? 

Answer: Affordable housing a complex issue, and one where state and local governments and 

private sector partners must all play a key role in identifying the appropriate solutions for their 

communities. Rents are growing at a faster pace than renter incomes, and this problem is most 

severe in markets where local land use choices and regulations both limit the supply of land and 

increase the cost of development, leading to unsustainable market rents. The federal government 

has played a large role in addressing this problem through production programs, like LIHTC, and 

increasing per unit subsidies for assisted tenants. However, this effort alone is not enough. HUD 

needs a new way of thinking about addressing the affordable housing shortage, and looks forward 

to working with the Congress to discuss the local, state, and federal combined strategy for 

addressing the needs oflow-income renters. 

Quigley#7e: HOPWA 

Question: Secretary Carson you said, "You know Americans are industrious people. That's how 

America got to be a great place. We're not a little feeble people who have to be spoon-fed." Do 

you understand that providing quality, affordable housing access is not "spoon-feeding people" 

that housing is health care access? That housing such as HOPW A helps people engage in their 

community and become economic drivers in their neighborhoods? If so, why are you cutting 

HOPW A by $26 million dollars? 
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Answer: HUD recognizes the importance that housing plays in health care access and in driving 

local neighborhood economies. HUD plays a key role in ensuring affordable housing across the 

country, and HUD cannot do this alone. While HUD must make difficult budget decisions, the 

Administration places priority on maintaining current service levels under HOPW A, and is seeking 

mechanisms to operate efficiently, while working together with Federal, State, local, and private 

sector partners to fully address the affordable housing crisis. The Department appreciates the 

additional funding provided to the HOPWA program in the fiscal year 2017 Appropriations Act. 

Quigley #7f: l.GBT-Fair Housing 

Question: Secretary Carson, under your administration, will HUD continue to implement policies 

that provide equal access to housing in HUD programs regardless of sexual orientation or gender 

identity and monitor adherence to those policies by entities that receive HUD funding? 

Answer: Yes. HUD's policies on this point are unchanged. All individuals are entitled to equal 

treatment and equal access to housing in HUD programs, regardless of their sexual orientation or 

gender identity. 

Quigley #7g: Tiny Homes 

Question: Secretary Carson, under your administration, will HUD endorse tiny homes by adding 

them to the menu of affordable housing options? 

Answer: The Department is open to studying any effective and cost efficient affordable housing 

model. 

Quigley 7h: HOPW A 

Congress knows the importance of HOPW A funding. For FY17 they voted to increase HOPW A 

by $21M. This increase is because of the efficiency of HOPWA, the low administrative rate of 

HOPW A, and the important modernization of the HOPW A formula which puts money in 

jurisdictions that need it the most. Further, according to HUD, there are approximately 390,000 

persons eligible for HOPW A while the program can currently only serve about 60,000 households. 

In the president's proposed budget, he based the $5 M cut off the I 7CR and made clear his budget 

was not taking into account the 1 7 budget that was yet to be passed. 

Question: Do you still stand by this significant cut and how do you propose implementing this 

cut to HOPW A so that people are not kicked out of their homes and the spread of HIV does not 

rise? 

Answer: The Department appreciates the additional funding provided to the HOPW A program in 

the fiscal year 2017 Appropriations Act. HUD will look at streamlining services offered under 

HOPW A, and work together with our partners to target our resources to avoid displacement of 

currently served households. In addition, the recent HOPW A formula modernization helps 
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advance the program's ability to target funding to the areas of highest need and incorporates local 

housing costs and poverty rates. HUD is already in the process of providing technical assistance 

to communities to develop long-term strategies for managing changes due to the HOPW A formula 

modernization. In addition, HUD is committed to focusing more time and energy toward ensuring 

the development of developing public-private partnerships, to fully address the housing needs of 

homeless and unstably housing individuals. It, as it is only through public-private partnerships that 

communities will be able to address the need. 

Quigley #7i: HOPW A 

Question: For every HOPWA dollar granted by the federal government, $1.42 is leveraged by 

state and local communities for about 70.5 million leveraged every quarter. Are you concerned 

about the impact a cut to HOPW A would have on local economies and the housing industry? 

Answer: The 2018 request for HOPW A reflected a commitment to meeting current service levels, 

requesting steady funding with anticipated 2017 funding, and assuming continued work to identify 

and implement efficiencies to maximize the resources available to avoid displacement of currently 

served households. HUD is working to streamline programs, reduce duplication of services, and 

develop stronger public-private partnerships. These actions will benefit local economies, as well 

as maximize available resources and better meet the needs of persons living with HIV I AIDS. 

Quigley #7j: Fair Housing 

President Trump's budget proposes cut funding for the Office of Fair Housing and Equal 

Opportunity (FHEO) by 3 percent, which could result in the agency failing to handle 225 

complaints of housing discrimination. Funded at $72 million in FY 2016, this office leads the 

nation in the enforcement, administration, development, and public understanding of federal 

housing policies and laws.ln 2016, the FHEO employed 514 full-time equivalent staff to carry out 

its programs, including overseeing more than 8,500 complaints filed through the office and 

implementing the new Affirmatively Furthering Fair Housing rule. The proposed budget cut may 

force the FHEO to reduce its staff to 499 full-time equivalents. 

Question: How would a smaller staff address this large of complaints in a timely manner to 

prevent additional harm? 

Answer: HUD is working towards reforms and efficiencies that will allow the Department to 

deliver on HOD's mission more efficiently. While details will be part of subsequent Budgets, any 

efficiency effort will recognize the fact that HUD' s fair housing enforcement work is driven by 

statute and public demand as evidenced through complaints. HUD is pursuing efficiencies in 

information technology so staff have the needed tools, in staffing, to ensure that there are the right 

stafT and skill sets in place, and in procurement-making sure the Department gets the most value 

for each dollar spent. HUD is also looking at the alignment of roles and responsibilities, so that 

staff in each office are targeted to the work of that oftice. HUD believes the request, with the 
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administrative flexibilities proposed at the Department level, will allow the Office of Fair Housing 

and Equal Opportunity to continue to address its mission in a timely manner. 

Quigley #7k: Fair Housing 

In a 2015 op-ed in the Washington Times, you recognized that "private and public housing policies 

such as redlining, restrictive covenants, discriminatory steering by real estate agents and restricted 

access to private capital ... exacerbated the suburban segregation in the 1970s and '80s." As you 

know, the Fair Housing Act made such policies illegal and charged HUD with the responsibility 

to affirmatively further fair housing goals in its programs. 

Question: Do you believe HUD should play a role in combating the continuing housing 

segregation created by these policies? What should HUD do? Will you require recipients of HUD 

funding to comply with the AFFH rule? Has HUD analyzed how zeroing out CDBG and reducing 

other funding will undermine communities' efforts to affirmatively further fair housing? 

Answer: The courts have consistently found that the Fair Housing Act of 1968 requires HUD to 

take an active role in "affirmatively furthering fair housing," including specifically combatting 

housing segregation. The AFFH obligation is shared between HUD and its grantees as required by 

the Fair Housing Act. The grantees' obligation spring from a variety ofHUD funding sources, the 

largest being low-income rental assistance under public housing and Section 8. The AFFH Rule 

outlines compliance with this obligation for BUD's grantees, and grantees must comply with the 

Rule. 

Quigley #71: Fair Housing 

Question: In that same op-ed, you took issue with the Supreme Court's 2015 decision recognizing 

that discrimination can be proven under the Fair Housing Act with evidence of disparate impact, 

even without proving a discriminatory intent. Is it your opinion that people engaging in racial 

discrimination generally provide overt evidence of that discrimination? 

Answer: The HUD Secretary does not have an opinion about what "people engaging in racial 

discrimination generally provide" as evidence of discrimination. The Administration does believe 

that no American should face housing discrimination. 

Quigley #7m: Fair Housing 

Question: As a medical practitioner examining racial disparities in health care, you noted in an 

editorial that "Discrimination may not be overt but frequently consists of making assumptions 

about a person ... The resultant disparities are unintended, but nevertheless quite real." Can such 

subtle discrimination in housing have similarly real impacts? As HUD Secretary, would you work 

to eradicate it? Would you enforce the Fair Housing Act's prohibition on this kind of disparate 

impact discrimination? 
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Answer: There is no place for housing discrimination of any kind in this nation. It goes against 

everything we as Americans believe. HUD will continue its work to eradicate it. not only because 

it's the law. but also because it is the right thing to do. 

Quigley #7n: Fair Housing 

Question: In that same editorial. you wrote that an HHS report on health care disparities 

"appropriately outlines the actions mandated by the government to reduce and eliminate those 

disparities." Do you believe the government should play a similar role in reducing and eliminating 

racial disparities in access to housing? 

Answer: Yes. the Government has a similar role to play in housing. Housing is not the same as 

healthcare, but the analogy does hold to some extent. Access to the housing of one's choice, in the 

community of one's choice, is part of the American Dream. Addressing disparities, be they racial 

disparities or other forms of disparities, is appropriate and necessary, to uphold the law and our 

American values. 

Quigley #7o: Moving to Opportunity 

Question: In a recent speech, you mentioned a desire to create "ladders of opportunity" so that 

people can move out of poverty. Are you familiar with HUD's Moving to Opportunity program, 

which helped Section 8 voucher recipients move to lower-poverty areas? Are you familiar with 

the recent Harvard study of that program demonstrating that young children whose families 

participated in the program earned 30% more as young adults than peers whose families did not 

participate? How would you build on this success? 

Answer: HUD does intend to use the information from the recent MTO study, and other available 

evidence, to inform the development of policies to further economic mobility and access to 

opportunity. This is an important study that should be looked at in the context of the totality of the 

research. That totality of research indicates (i) that neighborhood safety is a high priority for 

households eligible for HUD assistance; and (ii) that mobility is good for some members of the 

family, but can be bad for others. Accordingly. HUD will place additional focus on neighborhood 

safety, whether that is through mobility or efforts to improve safety within the communities' 

families currently live; and HUD recognizes the need to be thoughtful about mobility. 

When MTO was established, the number one reason families wanted to move was for safety. And 

when they received a housing voucher and counseling on mobility they tended to settle in a lower 

crime neighborhood. That move to safety had significant positive health impacts for mothers. 

As you note, the recently published Harvard study by Raj Chetty, Lawrence Katz. and Nathan 

Hendren found there was a long-term benefit for children that moved from high poverty to low 

poverty when under age 13. That study also found, however, that the children who moved to low 

poverty who were older than I3 experienced negative impacts on their long-term well-being 

compared to the control group. Additionally, the MTO research of Ron Kessler, also of Harvard, 

found that moving to low poverty communities had a positive effect on the mental health or girls 

but a negative effect on the mental health of boys. 
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MTO research also shows that mobility alone is not a panacea for many of families' immediate 

challenges, and that families faced many obstacles to relocation. For instance, those with jobs and 

children often needed the kinship networks and the better public transportation of the poorer 

neighborhoods to help them keep their jobs. MTO holds many lessons and HUD will consider all 

of those lessons as it seeks better ways to serve the housing needs of low-income families with 

children. 
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Representative Clark 

Representative Clark #1: Region 2 Director 

It has been reported that President Trump has appointed Lynne Patton to lead the Department's 

region that oversees New York and New Jersey. According to press reports Ms. Patton has no 

experience working in housing and has falsely claimed to hold a law degree. 

Question: What work experience does Ms. Patton possess that qualities her to lead HOD's New 

York and New Jersey region? 

Answer: As someone who has lived in New York, Ms. Patton understands the unique housing 

challenges and opportunities that exist in the region. She also has a keen interest in housing and 

community development, and the energy and enthusiasm for executing HOD's mission. Ms. Patton 

will be a supported by a tremendous team of housing experts in both the HOD Region II office, 

and at HOD Headquarters, many of whom have extensive knowledge of the area's housing issues 

and have served the region for years. 

Previously, Ms. Patton served as a senior executive of a large non-pro tit, which has given her 

insight into how to run an organization and work with others to most efficiently help those in need. 

More recently, Ms. Patton served as a senior advisor to Secretary Carson. In this role, she 

spearheaded his national listening tour and identified potential reforms to HOD's Section 3 

program, which provides a mechanism for low-income families to receive job training and 

employment with HOD-funded projects. 

Question: What criteria was used to evaluate Ms. Patton's suitability for this position? 

Answer: When selecting Regional Administrators, Secretary Carson looked for a person who 

understands the region where they will serve, has a passion for the work HUD does, and has the 

skills that allow them to effectively oversee the delivery of HUD programs. 

Question: What is the Department's policy on employing individuals who fabricate their 

qualifications? 

Answer: HOD's hiring process is consistent with that of all other federal agencies. Ms. Patton's 

qualifications as stated on social media were not formally considered as part of that process. 
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Representative Aguilar 

Representative Aguilar #1: Federal Housing Administration Loan Limit 

The Federal Housing Administration (FHA) loan limit program is meant to help many families 

secure affordable housing and build equity. However, HOD's current FHA loan limit policy is 

locking consumers out of competitive FHA loan programs. Specifically, HUD is implementing a 

flawed interpretation of the Housing Economic Recovery Act that affects how FHA loan limits are 

calculated. As you know, FHA loan limits are based on median home prices and the multiplier of 

115 percent, which is set in statute by the Housing Economic Recovery Act (HERA). Prior to the 

implementation of HERA, HUD utilized a long-time policy that calculated FHA loan limits by 

using the highest median home price of a Metropolitan Statistical Area (MSA) available, 

regardless of the year. However, when HERA went into effect, HUD changed that policy. Instead 

of using median home prices from 2007 to calculate FHA loan limits, which was the highest 

median price available in most regions, HUD changed the baseline year to calculate FHA loan 

limits to 2008 or later. 

This change after the implementation of HERA has contributed to the plateau of the housing 

market in San Bernardino County, CA. Between 2014 and 2017, the FHA loan limit has only risen 

from $255,350 to $379,500. This has locked consumers out of competitive FHA loan limits 

available in nearby cities that have higher FHA loan limits. For example, the City of Upland in the 

County of San Bernardino has a median home price of roughly $448,750. Therefore, if a consumer 

hopes to purchase a home in Upland through the FHA loan program, their options are limited, but 

if they go just a few minutes down the road to the next city over in LA County, their FHA loan 

limit rises to $636,150. This is a trend not only experienced in the City of Upland, but in a variety 

of cities within San Bernardino County. 

Question: Is HUD open to reconsidering its policy to utilize median home prices from 2008 or 

later to calculate FHA loan limits? What type of relief can HUD provide communities in which 

FHA loan limits are below median home prices? 

Answer: Aside from the effective date of HERA, which HUD considers to be a binding statutory 

constraint on the date range of median house prices eligible for consideration as the basis for the 

FHA loan limits, HUD does not have widely available high quality data from which to calculate 

median house prices for years prior to 2008. 

The statutory definitions by which HUD sets FHA loan limits, as designed by Congress to limit 

FHA's share of the mortgage market, prevent HUD from basing the loan limit on anything other 

than the median house price for the highest priced county in a metropolitan area, and from 

designating loan limits for anything but entire metropolitan areas and non-metropolitan counties. 

In the case of the Riverside-San Bernardino, CA MSA, consisting of Riverside and San Bernardino 
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Counties, the median house price in Riverside County of$330,000 controls the metropolitan area 

loan limit of $379,500, which is 138 percent of the median house price of $275,000 in San 

Bernardino County. Despite the higher loan limit of$636, \50 in Los Angeles County, this is only 

116 percent of the median house price of$550,000 there (the Los Angeles loan limit is controlled 

by Orange County, where the median house price is $710,000, above the maximum allowable 

FHA loan limit). 
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Representative Aguilar #2: Federal Housing Administration Multifamily Program 

The Federal Housing Administration Multifamily programs are critical to the growth and operation 

of affordable multifamily housing. The FHA Multifamily office recently restructured its office by 

consolidating more than 50 field offices into 12 offices. 

Question: I understand the office was restructured in an effort to improve efficiency, but will you 

maintain the existing number of staff and offices? Will services remain consistent? 

Answer: The Office of Multifamily Housing Programs was consolidated to a five-region field 

structure through HUD's Multifamily for Tomorrow (MFT) reorganization. Each of the five 

regions have one hub office and one or two core satellite offices. The hub and core satellite 

locations, by region, are as follows: 

1. Central Region: Fort Worth (Hub Office) and Kansas City (Core Satellite Office) 

2. Midwest Region: Chicago (Hub Office), Detroit, and Minneapolis (Core Satellite Offices) 

3. Southeast Region: Atlanta (Hub Office) and Jacksonville (Core Satellite Office) 

4. Northeast Region: New York (Hub Office), Boston, and Baltimore (Core Satellite Offices) 

5. Western Region: San Francisco (Hub Office) and Denver (Core Satellite Office) 

Although Office of Asset Management and Portfolio Oversight employees continue to remain in 

pre-MFT field offices, future staffing will be limited to the five hub offices and seven core satellite 

offices. 

FHA Multifamily mortgage insurance application processing times have improved for all 

multifamily loan insurance products due to the MFT reorganization. ln fact, FHA Multifamily 

Production staff process loan applications 60 to 70 percent faster than before MFT. In the Office 

of Asset Management and Portfolio Oversight, the reorganization has allowed for better 

consistency across regions as well as an increased focus on troubled projects to allow for riskbased and proactive interventions. The default rate on Multifamily properties has fallen to 0.1% as 

of May 2017, with only 11 delinquent loans out of over 11,000 total FilA-insured loans. 
407

Representative Aguilar #3: Federal Housing Administration Premium Payments 

In 2013, the Federal Housing Administration (FHA) published a mortgagee letter that required 

FHA borrowers to pay mortgage insurance premiums for the entire life of the loan. Before this 

policy was implemented, FHA automatically cancelled insurance premiums for FHA borrowers 

that had paid at 78 percent of the original property value. Currently, private mortgage insurance 

lenders are required to drop private mortgage insurance when a borrower's balance on the loan 

drops to 78 percent of the home's initial appraised property value. Maintaining FHA insurance 

premiums on the life of the loan is a burden on borrowers. Borrowers may decide to refinance their 

FHA mortgage to avoid paying premiums. This may leave the Mutual Mortgage Insurance Fund 

(MMIF) in a more vulnerable and risky position. 

Question: Would you reconsider the position of requiring FHA borrowers to pay premiums on 

the life of the loan? 

Answer: Currently, the Single Family loan products that require Annual Mortgage Insurance 

Premiums (MIP) for the life of the loan are those with an initial loan to value (LTV) of greater 

than 90%. Other products with an initial loan to value of less than 90% have an !!-year term for 

MIP. 

HUD is always considering options to ensure our programs are properly balanced to serve the 

public while remaining fiscally responsible. Reverting back to FHA's long standing policy for 

charging premiums for the life of the loan is a recognition that FHA insurance also exists for the 

life of the loan, meaning that unlike private mortgage insurance, the FHA insurance fund and 

ultimately ta'(payers retain liability no matter the loans' LTV ratios. The policy to charge premiums 

for the life of the loan contributed substantially to the growth in the economic health of the MMIF. 

HUD notes the importance of ensure fiscal sustainability as FHA was only able to rebound to its 

mandated 2 percent Capital Ratio for the MMI Fund in FY 2015 and the FHA portfolio has grown 

to exceed $1.1 trillion. 
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Representative Aguilar #4: Federal Housing Administration Condominium Policy 

Last year, Congress passed H.R. 3700, the Housing Opportunity Through Modernization Act. The 

bill includes a provision that is meant to streamline the process for condominiums to apply for 

approval from the Federal Housing Administration (FHA) to participate in the FHA loan program. 

Question: What is the timeline for BUD to publish a final rule on the FHA condo policy? 

Answer: On September 28, 2016 BUD published a Proposed Rule in the Federal Register to 

solicit feedback on revised condominium policy that aims to provide guidelines that are more 

flexible, less prescriptive, and more reflective of the current market than FI-lA's current policies. 

FHA wants to reduce red tape for mortgagees while maintaining the necessary safeguards and 

monitoring that protect borrowers and FHA's Mutual Mortgage Insurance Fund. The Department 

received many comments to the Proposed Rule, and is currently preparing responses. This process 

will be completed soon, and any revisions to the Proposed Rule in response to the public feedback 

will be made after that time. The Administration and BUD is weighing every regulation carefully, 

but the Condo Rule is a top priority for the Department. 
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Representative Aguilar #5: HOME Program 

The HOME Investment Partnership Program (HOME) is critical to building stable neighborhoods. 

A local organization in San Bernardino, the Neighborhood Housing Services of the Inland Empire 

(NHSIE), has utilized HOME funds to rebuild communities. They have also leveraged HOME 

funding to educate prospective hornebuyers on best practices and to buy their dream homes. The 

City of San Bernardino's median household income is $37,047, which is $24,771 less than the 

household median income in California. The HOME program provides financial flexibility to 

organizations, such as the NHSIE, to rebuild blighted properties and help prospective home buyers 

to purchase a horne. The HOME program is critical to improving low horneownership rates, which 

is currently 63.6 percent 

Question: How does HUD plan to address low horneownership in light of the FY 2018 budget's 

proposal to eliminate the HOME program? 

Answer: The HOME program has played a part in helping communities expand their supply of 

affordable housing. HUD plans to incorporate successful clements of the HOME Program into 

future aspects of the Agency's work, as well as working with state and local governments to find 

ways to make it less burdensome to allow for more affordable housing to be developed through 

public and private partnerships. HUD will also manage and oversee the around $1.3 billion in 

uncommitted HOME program funds, including recently appropriated FY 2017 funds, and work 

towards finding the most efficient way to use these funds to provide affordable housing, including 

activities that promote horneownership. 

Further, the Department will continue to support homeownership through its other programs, with 

Housing Counseling to facilitate informed choices for housing and homeownership, and the 

support that FHA provides through the Mutual Mortgage Insurance Fund to help credit-worthy 

first time homebuyers. 
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Representative Aguilar #6: Reducing Homelessness and Community Development Block 

Grants 

Los Angeles County's most recent homeless count on May 31, 2017 revealed that the homeless 

population has increased by 23 percent over the last year, despite increased resources and 

investments put into placing individuals in homes. Although 14,000 people were permanently 

placed in homes, there are still 58,000 homeless individuals living in Los Angeles County. 

Home1essness is also a persistent issue in San Bernardino County, which only improved by one 

percent between 2016 and 2017. 

Question: What policies does HUD plan to implement to reduce rates of homelessness? What 

steps does the agency plan to take in light of the proposal to eliminate funding through the 

Community Development Block Grant (CDBG) program? What data is available to demonstrate 

that HUD's strategy under the Trump Administration will reduce homelessness at a faster rate than 

previous administrations? 

Answer: HUD has been working strategically with its Federal, state, and local partners to identify 

how to more efficiently use existing resources. As HUD is engaged in this collaboration it has 

encouraged communities to also forge strategic partnerships with homeless assistance and 

mainstream benefits providers within their communities. These relationships broaden the 

communities' understanding of the scope of the homeless community and what housing and 

services they need to end their homeless experience. This kind of cooperation allows communities 

to use existing resources in a more efficient and strategic manner by shifting resources from lower 

performing projects and to focus on better prioritization of resources. The end result is that 

individuals and families experiencing homelessness receive more tailored housing and services. 

In addition to encouraging communities to build robust local partnerships, HUD will continue to 

promote evidence-based policies. Housing First follows a basic principle-that everyone needs 

housing, regardless of the complexity or severity of their needs. Not only is there a strong body of 

research supporting it, HUD has seen that those communities demonstrating the greatest success 

in ending homelessness consistently report that they have implemented and received broad 

community support for a Housing First approach. 

Another proven strategy is targeting permanent supportive housing resources to individuals and 

families experiencing chronic homelessness. Research indicates that using permanent supportive 

housing to support the chronically homeless results in more long term stability for clients and costs 

savings for communities from lowering the use of public systems such as jails and hospitals. 

HUD will continue to use performance to drive results as well. As communities use data to inform 

decisions about what projects to fund, for which homeless populations, and where those funds 

should be spent, they are able to better usc limited resources to serve individuals and families 

experiencing homelessness in a more meaningful way. 

The policies mentioned above are all rooted in evidence and have proven to be helpful for 

communities to better serve those experiencing homelessness in their areas, while using resources 

in the most efficient manner. HUD will look to accelerate these strategies and continue to look for 

other evidence-based practices. 
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HUD also has a long history of creative public-private partnerships. Many of the projects today 

have a healthy blend of public and private supportive service options that often rely on local and 

state health and mental health services coupled with privately funded housing and employment 

specialists. Similarly, assistance with housing is often done in partnership with public housing 

authorities and other state and city resources along with non-profit housing developers and 

providers partnering to identify how to prioritize the housing and service resources to best meet 

the needs of individuals and families experiencing homelessness in their communities. These 

partnerships create critical leverage for maximizing the use of resources. 
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Representative Aquilar #7: Reducing Veteran Homelessness 

Nationwide, there were nearly 40,000 homeless veterans in 2016. San Bernardino County has 

greatly reduced the rate of homeless veterans in the county. Within the last six months of 2015, 

the County housed more than 500 homeless veterans. In total, San Bernardino County's Veteran 

Housing Initiative has assisted more than 730 homeless veterans. The County has been able to 

keep the rate ofhomelessness among veterans consistently low. Currently, San Bernardino County 

has a rate of homeless veterans that averages 20 to 30 veterans per month and house approximately 

15-20 veterans per month. The HUD Veteran Affairs Supportive Housing (HUD-V ASH) program 

has been instrumental in the County's efforts to reduce veteran homelessness. San Bernardino 

County is a success story that demonstrates how HUD-V ASH vouchers can be used successful to 

address homelessness within the veteran population. The proposed budget eliminates new 

vouchers for veteran housing through the Veteran Affairs Supportive Housing (HUD-V ASH) 

program. 

Question: What policies, if any, does the Trump Administration plan to implement to provide 

housing assistance to veterans? How do you estimate these cuts would affect the homeless veteran 

population? 

Answer: The HUD-V ASH program remains HUD's primary initiative designed to reduce veteran 

homelessness. Both HUD and the VA remain committed to this program, which combines rental 

assistance from HUD with VA supportive services to assist homeless veterans. We will continue 

to work with local PHAs and their Veterans Affairs Medical Center partners to build upon the past 

success of the program and to address existing challenges. 

The Administration's decision to not request additional HUD-VASH vouchers in 2018 does not 

reflect a lack of confidence in the program or that addressing the needs of our veterans does not 

remain a priority for this Administration. It simply reflects that currently existing HUD-V ASH 

resources are available to increase the number of veterans served without requesting additional 

funding in FY 2018. As of March 31, 2017, of the 87,864 HUD-VASH vouchers funded prior to 

FY 2017,92 percent were currently leased or issued (or were in the process of being issued). In 

other words, there are over 8,000 HUD-V ASH vouchers currently available for use. The FY 2017 

Appropriations provided an additional $40 million for HUD-V ASH (not including Tribal-V ASH), 

which will support approximately 5,000 new HUD-VASH vouchers, in addition to the 8,000 

existing vouchers available for use. 

HUD has been working strategically with its federal, state, and local partners to identify how to 

more efficiently use existing resources. HUD's relationship with the VA has grown stronger in the 

past several years and BUD will continue to work with VA to improve coordination of resources 

for veterans experiencing homelessness and their families. As HUD is engaged in this 

collaboration it has clearly communicated to communities that they should forge similar 

partnerships locally. Most communities today report that they work in partnership with their local 

VA partners and other homeless service agencies that focus resources on ending veteran 

homelessness. These partnerships have allowed communities to use VA resources to focus on 

veterans who are eligible for VA services and to target other funding, including HUD's CoC and 

ESG program funding, to veterans that are not eligible for VA services. 
413

Representative Aguilar #8: Public Housing Administrations and Community Partnerships 

The lack of stable, affordable housing leads to overcrowding and homelessness, exacerbating 

health problems, such as exposure to environmental toxins and stress. This undercuts efforts by 

school districts and educators to serve low-income children and young adults. National 

Community Renaissance (National CORE), is one of the largest national affordable housing nonprofits and is located in my congressional district. National CORE has a long track record of 

linking up supportive services with public housing and other HUD affordable housing units- an 

approach that is consistent with your stated agenda of breaking down silos between HUD and other 

agencies to serve families in a more holistic manner. 

Question: What program changes might HUD and Congress make to break down these silos, in 

order to make it easier for entities like National CORE to provide these critically-needed 

supportive services? As budget constraints continue to put pressure on Public Housing Agencies 

(PHA), what more can HUD do to promote the use ofPHA partnerships with qualified non-profit 

affordable housing developer/managers in areas such as Rental Assistance Demonstration (RAD), 

Move to Work (MTW), and usc of housing tax credits? 

Answer: At the direction of OMB, each Federal agency has been asked to examine its programs 

to create efficiencies with the goal of delivering services better to the American people. As part of 

this reform, OMB will work with agencies and key stakeholders on crosscutting initiatives to 

develop synergies that involve multiple Federal agencies. HUD looks forward to working with 

other Federal agencies to break down silos and better deliver supportive services. 

With budget constraints, HUD encourages PHAs to seek private, state and local partnerships to 

leverage opportunities for additional investment. HUD continues to support the Rental Assistance 

Demonstration (RAD), which permits PHAs to leverage private debt to transition public housing 

to the Section 8 funding platform through partnerships with qualified non-profit affordable housing 

developer/managers and other partners. Similarly, PHAs partner with qualified non-profit 

affordable housing developer/managers in the rehabilitation or new construction of public housing 

using Low Income Housing Tax credits. Lastly, HUD looks forward to expanding the Moving to 

Work (MTW) program by 100 agencies over the next several years to afford more PH As the ability 

to creatively utilize their funds, to partner with affordable housing developers/managers, and to 

leverage private and other public resources to create affordable housing and provide supportive 

services. 

(415)

THURSDAY, JUNE 15, 2017. 

DEPARTMENT OF TRANSPORTATION 

WITNESS

HON. ELAINE CHAO, SECRETARY, DEPARTMENT OF TRANSPORTATION 

Mr. DIAZ-BALART. Before I begin, I know that all of our minds 

are a little bit, in many ways, elsewhere because of the incidents 

yesterday at the baseball practice field. And I just wanted to, once 

again, mention how all of us are praying for, obviously, the Whip, 

Mr. Scalise, the two brave police officers that were injured along 

with a member of the staff, and a former member of the staff, who 

were injured. So we cannot forget them and we do not forget them, 

and we wish their full recoveries. 

With that, this morning we welcome Secretary Chao to testify on 

the fiscal year 2018 budget for the Department of Transportation. 

I do not have to tell any of you that Secretary Chao comes to this 

position with, frankly, one of the most impressive records of public 

service that anyone will ever see. 

Having served as chair of the Federal Maritime Commission, 

Deputy Secretary of the Department of Transportation, director of 

the Peace Corps, and Secretary of the Department of Labor, and, 

you know, not to mention a number of leadership positions in the 

private sector and the not-for-profit sectors. 

Madam Secretary, you have led large and complex organizations, 

and I will tell you that I think all of us agree that we are fortunate 

to have someone of your expertise, of your experience, of your 

knowledge as heading DOT, as we are facing some challenges of 

course. We always face challenges, but nobody is more prepared 

than you. So we are grateful that you have agreed to, once again, 

come back to public service, as you always have. 

Thank you for your service to our Nation. I look forward to working with you to maintain and improve the safety of our transportation system, all the while ensuring that our infrastructure investments lead to economic growth and really to improve the day-today lives of the American people, which is really what we are talking about. 

The budget request for the Department of Transportation is 16.3 

billion in discretionary budget authority, and a total of 75 billion 

in total resources, including obligation limitations for service transportation and aviation programs. 

Now, safety is this committee’s top priority for DOT. I am 

pleased that the budget request places priority on safety programs, 

Madam Secretary, funding several programs consistent with the 

FAST Act and continuing many of the safety priorities in the previous 17 bills. So I think that is, frankly, very good news, in addition to focusing on safety of our transportation network. 
416

Now, we obviously must ensure that we grow our economy and, 

yes, through fiscally responsible transportation investments. And 

in doing so we must make sure that we do not leave rural America 

and economically distressed areas behind. As we make the tough 

decisions that face us for the 2018 budget and beyond, I want you 

to know that I want to work with you, that we want to work with 

you to make sure that we continue, for example, air service to 

small towns and remote communities, and I want to make sure 

that we address the passenger rail needs for our rural communities.

I also want to take a careful look at transit as an important component of our transportation network. We can and we must make, 

obviously, tough choices in Federal spending. We all have to do 

that, we have to be willing to do that. 

I have some concerns about the administration’s proposal to terminate the Department’s work with local governments on several 

dozen transit projects, but I look forward to working with you and 

through all of those very difficult issues. 

I look forward to a spirited discussion about the administration’s 

proposal to transfer air traffic control operations and facilities to a 

corporate nongovernmental entity. We are dealing with a monopoly, whether it is the monopoly controlled by the government or a 

monopoly controlled by somebody else, it will still be a monopoly. 

I have not been shy of saying that I believe that we should maintain the air traffic control system that is accountable to the public. 

It is owned by the public and it should be accountable to the public, 

and I do not see any other way to achieve this than to continue our 

congressional oversight role. 

And I believe that preserving the public’s voice, frankly, is the 

only way to maintain our airspace as a national asset and protect 

access to all users, commercial aviation, general aviation, and, this 

is key, new entrants, such as drones and commercial space operators. And frankly, in many cases we do not even know what they 

are, but we know that it is going to happen now, it is starting to 

happen now. So we must, to the maximum extent possible, protect 

the right of the traveling public as well. 

It is not a secret, our airspace is the most complex in the world 

with an unmatched safety record. We can work together to build 

on that safety record, and I look forward to it, and open the airspace to more and more users. Also make sure that we are not limiting it, but that we open it to more and more users as technology 

changes, some of which are beyond our current imagination, but 

that are starting to happen right now. 

So, Madam Secretary, just know that I look forward to discussing 

this issue with you today, and for not only today, but continuous 

conversations in the weeks and the months ahead. Secretary, I appreciate your attention and the attention the President has given 

to infrastructure last week. Improving our Nation’s infrastructure 

is an area where we can find common ground and make real improvements to the daily lives of the American people, not only in 

their ability to get around, but also, frankly, to help our economy. 

So, I really, really look forward to working with you, and my colleagues with this subcommittee to make smart investment, to go 

after waste, to cut red tape, and to protect the taxpayers. So, again, 
417

first thank you for your service to the Nation, thank you for appearing before us today. 

And with that, I would like to yield now to my ranking member. 

Mr. Price, you are recognized, sir. 

Mr. PRICE. Thank you, Mr. Chairman. Welcome, Madam Secretary, we are glad to have you here this morning. I want to, first, 

associate myself with the chairman’s remarks about yesterday’s 

tragedy, and the concern we all have for our colleague Steve Scalise, of course. And in particular, I want to acknowledge David Bailey, one of the police officers who was injured, and we are very 

proud of him. He is a North Carolina Central University graduate, 

and we have followed his progress over the years. 

We really have come together, as we must come together, as an 

institution and as a country, I believe, in face of this. And I hope 

some good will come of it, but, in the meantime, we are dealing 

with real personal difficulties, tragedies that command our attention and our good wishes. 

We are here this morning to examine the 2018 budget request 

for the Department of Transportation. This system that we are 

funding facilitates the flow of commerce and impacts every American. We know that investing in transportation infrastructure 

keeps us safe and improves our economy, it creates jobs. 

Unfortunately, we also know that we are not doing so well, according to objective observers such as the American Society of Civil 

Engineers, whose 2017 report card gives America’s infrastructure 

a grade of only D+. The report concludes that we need to invest 

nearly $4.5 trillion just to bring our infrastructure from poor to 

good condition. 

We have heard a lot recently about the need to reduce bureaucratic red tape to encourage more private investment in transportation projects. These are laudable goals, but they will not deliver 

the transformative results we need without a core of robust Federal 

funding. To maintain and modernize and improve our Nation’s 

transportation system, we must take bold steps to reduce the backlog of deferred maintenance to move our transportation infrastructure back to a state of good repair. 

And we must make strategic investments in new technologies to 

make transportation safer and more efficient. The challenge before 

us is clear, and it will only get worse without action on the part 

of Congress and this administration. I have to say, I think this 

budget proposal falls short of that mark. The result largely adheres 

to the funding levels agreed upon in the FAST Act for programs 

that rely on trust fund dollars, but overall budget authority will be 

cut by $3.1 billion, or 16 percent. 

The brunt of these reductions falls upon discretionary accounts 

designed to advance public transit rail and other multimodal 

projects that are critical to our Nation’s transportation future. For 

example, the highly competitive Capital Investment Grants Program would be discontinued for all projects that currently lack full 

funding grant agreements despite the fact that funding for this program was increased just 2 months ago in the bipartisan Omnibus 

package.

Ending the CIG program would completely upend dozens of badly 

needed transit projects across the country, including two in my 
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home district in North Carolina. In most cases existing funding 

amendments from State and local governments would no longer be 

enough to move forward with construction, dooming many projects 

to failure. We should be encouraging more State and local investment in transit, Elimination of the Federal-matching dollars will 

have exactly the opposite effect. 

Equally concerning is the proposal to zero out TIGER funding. 

Here, too, I could point to successful projects in my district, in my 

State, that leverage funds from other sources, so this is a very successful grant program. It supports innovative projects, multijurisdictional projects of regional and national significance. They are 

difficult to fund through traditional Federal programs. TIGER 

grants are awarded on a competitive basis, and every member here 

knows how competitive that process is, how far the demand for 

funding exceeds the current supply. 

Congress provided 500 million for another round of TIGER 

grants in the Omnibus package; it is zeroed out in this budget. Passenger rail also fairs poorly. The Department seeks to end Amtrak’s national routes by slashing investment in the national network of Amtrak by more than 50 percent. 

The request also proposes a 28 percent cut, incredibly, for the 

heavily traveled Northeast Corridor. Meanwhile Amtrak is breaking ridership records, and more Americans are looking to rail to 

meet their traveling and commuting needs. Support for a robust 

national rail system has been reaffirmed by members of both parties, including the most recent long-term Transportation reauthorization bill. 

And again, we have strong validation from North Carolina where 

traveling from Charlotte to Raleigh, or the other way, has become 

a model of efficient and pleasant transportation. 

Madam Secretary, you stated on several occasions that safety 

must remain a top priority of the Department, yet the budget request would cut funding in several critical safety accounts. I will 

just quickly tick them off: the operations and research account at 

NHTSA, the safety and operations account at Federal Railroad Administration, the pipeline safety account, the Pipeline and Hazardous Material Safety Administration, and aviation safety activities within the FAA’s operations accounts. 

I am puzzled by these cuts. I hope they do not represent a lack 

of commitment to key safety functions. We need to know how the 

Department plans to maintain safety with fewer resources at its 

disposal.

Quickly, briefly, I want to shift gears and address air traffic control. The administration has endorsed the outlines of Chairman 

Shuster’s privatization proposal. I have grave concerns about this. 

I have said that repeatedly. This would sever FAA’s aviation safety 

and air traffic control components. The government-sponsored corporation model envisioned by Chairman Shuster and President 

Trump would reduce transparency and oversight, while allowing 

for fee increases, diminished access to the national airspace for 

many aviation stakeholders. 

It would also represent an unprecedented giveaway of taxpayerfunded assets to an untested private entity. And it would threaten 

the progress we are making, threaten FAA’s ongoing efforts to 
419

modernize air traffic operations under NextGen. That process has 

accelerated in recent years, delivering billions in savings to airlines 

and customers. So, the budget request not only unrealistically assumes the quick transition to a private ATC entity, it also defers 

capital investments in FAA’s air traffic control infrastructure for 

the upcoming fiscal year. That seems to be directly at odds with 

the notion of improving ATC operations. 

Of course the major transportation put forward by the administration is the much-discussed infrastructure initiative, and this is 

something that has potential I believe for bipartisan support. But 

we do not have enough to work with. It is a six-page document. 

Rather, they mention 200 billion in Federal outlays that supposedly would leverage 800 million in private and non-Federal investment, and, of course, we would need more details about this to 

even begin to assess it. 

Before I close, we need to acknowledge that we still have no 

budget resolution, no topline spending number, no subcommittee 

allocations. There is talk of rushing to assemble a Republican-only 

Omnibus package. I think that is a recipe for failure. It would represent a complete abandonment of the regular order. 

Even if we reject the administration’s draconian cuts to nondefense discretionary spending, the appropriations process is at 

risk of completely breaking down if we are forced to write our bills 

to sequestration levels. We have seen this happen in the past year 

when we lacked bipartisan budget agreements. Bipartisan budget 

agreements are required given the requirements of the Budget 

Control Act if we are going to have workable allocations so that we 

can cooperatively write the Transportation, HUD, and other appropriations bills. I know we want to work in this cooperative fashion, 

but we also know what is going to happen to enable us to do that. 

Madam Secretary, I look forward to your testimony today, working with you to ensure that vital transportation programs are adequately funded. So, thank you. And thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, Mr. Price. Now I am particularly 

honored and pleased to welcome one of the busiest leaders in this 

entire process, and that is chairman of the full committee, Mr. 

Frelinghuysen.

Mr. FRELINGHUYSEN. Thank you very much, Mr. Chairman, Mr. 

Diaz-Balart. It is a pleasure to welcome back Secretary Chao to another stint serving our public so well. Thank you very much for 

being here, Madam Secretary. We look forward to your testimony. 

Let me just add on to both Dr. Price and Mr. Diaz-Balart, I think 

many of us were shocked to the core yesterday. Obviously, we pray 

for the quick recovery of those that were badly wounded, and, may 

I say, we have raised the profile of the important role of our Capitol Police. 

But may I say, a lot of what you do, Secretary, is you have within your purview, or just outside your purview, the men and women 

who protect our harbors, our tunnels, our airports, our train stations. Sometimes we pass by them, we acknowledge them, but 

sometimes we do not expect that at some point they might have to 

put their lives on the line. I would just like to take this opportunity 

to recognize their role and raise their profile. 
420

Today’s hearing is an important part of our oversight duties to 

the committee. After all, the power of the purses resides here on 

Capitol Hill. As Secretary of Transportation, you are responsible 

for maintaining and improving our Nation’s infrastructure and protecting it. As we pursue policies and programs to grow our economy, so, too, we must grow our infrastructure to support it. 

In that context, I would like to bring up a critical project for our 

national economy, the Gateway Project and the Hudson Tunnel 

Project. As you may know, the Northeast Corridor Regional Rail, 

encompassing over 50 million people between the District of Columbia and Boston, produces over $3 trillion in output, equal to 20 

percent of our gross national product. 

Safe and reliable passenger rail service is essential to that economic opportunity, whether it be the East Coast, the West Coast, 

or somewhere in between. 

Rebuilding the Hudson Tunnel is of vital importance to our region, and certainly to my home State of New Jersey. Given the 

clear benefits of these projects and the disastrous consequences of 

inaction, I am concerned about the fiscal year budget provision limiting funding for capital investment grants, what we commonly 

refer to on the committee as New Starts. I am eager to hear, either 

in this setting or outside this room, how the Department plans to 

support this vital infrastructure proposal for the New York/New 

Jersey region. 

I have also taken note of the administration’s proposal to spend 

$200 billion on targeted Federal investments to leverage private 

sector resources so that the end result is at least $1 trillion in total 

infrastructure spending. I would like to hear more about the specifics for this proposal, and how it will improve our infrastructure 

planning for State and local governments. 

We welcome you, Madam Secretary. And thank you, Mr. Chairman, for the time. 

Mr. DIAZ-BALART. Thank you, Mr. Chairman. Madam Secretary, 

obviously your full written testimony will be submitted, included in 

the record. You are recognized now for 5 minutes. Thank you so 

much.

Secretary CHAO. Good morning and thank you for being here to 

discuss the President’s fiscal year 2018 budget request for Transportation. My colleagues and I share your thoughts and prayers for 

those injured in yesterday’s incidents, and we are so grateful that 

the Capitol Police were there. 

On transportation, we all share the same goal: to ensure that our 

country’s transportation systems are safe, dependable, and ready to 

adapt to transformational new technologies. The President’s 2018 

budget represents a bold vision for our transportation infrastructure. The administration has carefully studied our current spending patterns, and it has taken a closer look at programs that may 

not be meeting their intended purposes, have outlasted their usefulness, or could be replaced with new initiatives that will better 

address future transportation needs. 

The President is requesting $76 billion for transportation. This 

request fully funds surface transportation programs included in the 

FAST Act and provides steady State funding for the majority of 
421

other transportation programs. The budget provides new policy direction in several key areas. 

First, our transportation infrastructure is crumbling and in urgent need of attention. To address this concern the President has 

proposed long-term reforms to change the way infrastructure 

projects are regulated, funded, delivered, and maintained. The 

President’s plan will create incentives for additional State, local, 

and private funding and will ensure that Federal funding is leveraged to maximize infrastructure investment. The President has 

identified a total Federal commitment of $200 billion for infrastructure improvements, of which a portion will be directed towards 

rural America. 

Next, the President’s fiscal year 2018 budget also includes a proposal that represents a major shift for the FAA. Despite spending 

billions of taxpayers’ dollars, over decades of effort the government 

has not been able to fully implement state-of-the-art air traffic control technology. Air traffic controllers still use paper strips to keep 

track of flights and pilots are guided using 1960s technologies, 

radar, for example. Congestion and delays cost more than $25 billion annually in higher fuel costs, lost productivity, not to mention 

our quality of life. By 2020, air passenger traffic will soar to over 

1 billion annually. Air freight is expected to more than double over 

the next three decades. Drones and unmanned aircraft systems will 

have to be integrated into the national airspace. Without change, 

the current air traffic control system will be unable to keep up. 

So this administration has proposed moving air traffic control operations to a nonprofit, nongovernmental, independent cooperative. 

The safety regulatory oversight functions will remain at FAA. And 

this would also involve and solve a longstanding conflict of interest 

issue with the operating entity, air traffic control, regulating its 

own safety. More than 50 countries worldwide currently have this 

structure of separating out air traffic control and air safety regulations.

Finally, the President calls for reforming some of our other transportation programs, like FTA’s capital investment grants programs, 

the discretionary portion of the Essential Air Service, and Amtrak’s 

long distance routes. The President also recommends that we revisit the TIGER grant programs. 

The infrastructure principles outlined by the President will highlight alternative ways to fund worthy projects using a different 

funding formula moving forward. It also will recognize the administration’s commitment to rural America as we revitalize our transportation infrastructure. 

Thank you very much for the opportunity to appear before you 

today to discuss the President’s budget. I am actually 20 seconds 

ahead of time. [Laughter] I will be more than glad to answer your 

questions.

[The information follows:] 
422

STATEMENT OF 

THE HONORABLE ELAINE L. CHAO 

SECRETARY OF TRANSPORTATION 

BEFORE THE 

APPROPRIATIONS SUBCOMMITTEE ON 

TRANSPORTATION, HOUSING, AND URBAN DEVELOPMENT AND 

RELATED AGENCIES 

UNITED STATES HOUSE OF REPRESENTATIVES 

June 15,2017 

Introduction 

Chairman Diaz-Balart, Ranking Member Price, and members of the Subcommittee thank 

you for the opportunity to meet today to discuss the President's Fiscal Year 2018 Budget request 

for Transportation. I am deeply honored to serve as the 18'h Secretary of Transportation, and I 

look forward to working with all of you to address America's transportation needs. I know that 

together, we share a commitment to ensuring our transportation systems are safe, effective, and 

ready to adapt to new technologies. 

The President's FY 2018 Budget represents a bold change of course for our Nation and 

challenges all of us to rethink the way we are setting our priorities. It calls on us to reexamine 

our current spending and our continuing commitment to programs that may not be meeting their 

intended purpose, have outlasted their usefulness, or simply need to be replaced with new 

initiatives that will better address our requirements for the future. Some funding reductions are 

in recognition that our resources are limited and that we have an obligation to future generations 

to keep our spending under control. 

The President's Budget requests $76 billion to support transportation programs in FY 

2018. The request fully funds surface transportation programs included in the Fixing America's 

Surface Transportation (FAST) Act and provides levels of funding for the majority of other 

Transportation programs roughly in line with FY 2016 levels. But just as important, the budget 

promises a renewed focus on the state of our infrastructure-- targeting ways to streamline 

approvals, encourage cost-sharing, and prioritize projects with the greatest value to Americans. 

A New Infrastructure Initiative 

Our transportation infrastructure is aging. We need a focused approach to address this 

problem. The President proposes to tackle these problems by seeking long-term reforms on how 

infrastructure projects are regulated, funded, delivered, and maintained. The President's plan 

proposes reforms that will incentivize additional state, local, and private funding and will ensure 

that Federal funding is leveraged to maximize and significantly increase total infrastructure 

investment. The President has identified a total Federal commitment of$200 billion for 
423

infrastructure improvements. These resources will work in tandem with reforms so that progress 

can be achieved quickly. 

While transportation specific infrastructure needs will be a key element of the President's 

plan, the entire initiative will encompass other Federal programs as well. The infrastructure plan 

will involve 13 Federal Departments and Agencies working in concert to address the following 

key principles: 

• Make targeted Federal investments on the most transformative projects. These will 

be high priority projects from the perspective of the Nation or the region, or projects 

that will change the nature of how infrastructure is designed, built, and maintained. 

• Encourage states, localities, and tribes to take their own action to improve their 

infrastructure. Because Federal resources are not unlimited, and the needs are great, 

waiting for Washington to fund repair and renovation projects only delays the 

improvements even longer. State and local efforts can be helped by streamlined 

Federal permitting and regulatory processes. 

• The private sector has capital that could and should be utilized to improve our 

infrastructure. We can make Federal and state dollars stretch further by leveraging, 

and we can tap into the management benefits offered by the private sector, such as 

procurement methods, market discipline, and long-term maintenance protocols. The 

Administration does not believe public-private partnerships are the answer to all 

infrastructure needs, but they can play a much stronger role in fixing America's 

infrastructure. 

• We should also align infrastructure investment with the entities best suited to carry it 

out and maintain it. The Administration will look for opportunities to divest from 

certain functions that the private sector could do more effectively. The Federal 

government can also be more efficient about disposing of underused capital assets, 

ensuring that those assets are put to their best use. 

With these reforms and principles in mind, I am confident that the Federal Departments 

and Agencies working together will be successful in developing an infrastructure improvement 

initiative that will achieve the President's vision. 

Charting a New Course 

The President's call for reforms includes changes affecting some of our traditional 

transportation programs. One of these areas is the Federal Transit Administration's Capital 

Investment Grants program. The Capital Investments Grants program supports projects that 

have primarily local direct benefits. While the President's Budget honors commitments to 

projects with existing full funding grant agreements, it does not recommend funding for new 

projects. The Administration is reexamining programs where significant Federal resources are 

spent on activities that have primarily local benefits- including what fiscal and other tools might 

be the most appropriate to encourage investment in those jurisdictions. 

Along the same lines, the President's budget request does not include funding for the 

discretionary portion of the Essential Air Service (EAS). EAS was originally proposed as a 

temporary program nearly 40 years ago at about $50 million. Today, two budgetary accounts are 
424

funding the EAS program at a total cost of $280 million. Yet, many EAS flights are not full and 

have high subsidy costs per passenger, calling into question the afTordability of this program. 

But this poses a conundrum for all of us, because we recognize how critical the EAS progam is 

to rural areas. 

To address this situation, the President's Budget requests support for a redesigned 

program known as the Transportation Aviation Assistance to Remote Areas (TAARA) program. 

This new program will be funded exclusively by mandatory overnight fees at $119 million. By 

reworking the old EAS program, we will help reset the path for remote air assistance going 

forward. The objective is to sustain air service to rural locations most in need, and to establish 

relevant objective criteria for making those determinations. 

Funding for Amtrak's long distance routes is another area where Federal investments do 

not match the level of usage. Amtrak's long distance services are used by a relatively small 

number of passengers. These trains are very expensive to operate and maintain; and account for 

much of Amtrak's operating losses. The President's budget recognizes this is an area with a low 

return on investment and instead asks us to concentrate our resources on other portions of 

Amtrak's system. 

The President also recommends an end to the Transportation Investments Generating 

Economic Recovery (TIGER) grant program at a savings of nearly $500 million. With the 

passage of the FAST Act and the creation of a new competitive grant program, the Department 

has other opportunities for funding those projects that have nationally or regionally significant 

characteristics. Grant programs that meet the objectives of the new infrastructure initiative will 

also be considered for future investments. 

FAA Modernization 

The President's FY 2018 budget also includes a bold shift in the operational model used 

for the Federal Aviation Administration (FAA). First, I would like to recognize the dedicated 

individuals of the FAA who safely and efficiently guide thousands of aircraft carrying millions 

of passengers and tons of cargo to destinations around the country. However, while the FAA has 

established a tremendous safety record while operating the world's most complex air traffic 

system, it has been hindered by the continued use of old technology. 

After billions of dollars invested and years of effort to modernize our air traffic control 

system, our air traffic controllers are still dependent on paper strips to manage the airspace. And 

while we have stayed stuck in an old-fashioned approach, many other countries throughout the 

world have successfully implemented new models for delivering safe and reliable air traffic 

control services using non-governmental structures. The President's budget request asks 

Congress to enact FAA modernization legislation based on the principles he has just announced. 

This legislation would, begin a multi-year modernization effort that will transfer the day-to-day 

air traffic control services provided today by FAA to a new non-government cooperative. The 

Federal government would retain its role in regulating aviation safety, just like it does for all 

other modes of transportation. As we begin this modernization effort, we will be working to 

structure the new organization around the following principles: 

• A non-profit, non-governmental cooperative is the best model to deliver air traffic 

services in a safe. efficient, and innovative manner. 
425

• A board of directors that represents all users of the National Airspace System will 

better align air traffic services to customer demands. No one stakeholder group 

would control the Board. 

• A fee structure would be put in place to allow aviation users to pay the cost of the 

services of the air navigation provider with the understanding that the provider would 

not charge any more than necessary to recover its costs. Any surplus would be 

plowed back in to the entity; there are no shareholders that would profit. 

When completed, this modernization effort will deliver an organization that uses modem 

business tools and management flexibilities that are comparable to those used in the private 

sector. This flexibility would speed up the implementation of new, state-of-the-art technology 

for air traffic control that will allow for greater precision in managing the airspace, thus 

enhancing safety and alleviating flight delays that have become an increasingly aggravating 

element of air travel. The Nation that invented air travel should surely do better. 

Thank you again, for the opportunity to appear before you today to discuss the 

President's Fiscal Year 2018 budget. l will be happy to answer your questions. 

***** 
426

Mr. DIAZ-BALART. Thank you, Madam Secretary. And we try to 

keep on time here. So we will proceed with the standard 5-minute 

rounds, alternating sides. I want to thank the members of the subcommittee. We are pretty strict here, Madam Secretary, in trying 

to keep to the timeline and, of course, I get a lot of help from the 

subcommittee chairman in doing so. 

With that, Madam Secretary, as I mentioned in my opening remarks, I have drawn a very bright line to really my opposition to 

transferring air traffic control systems to what in essence is a corporate monopoly. It is a monopoly that will remain a monopoly, the 

question of who is going to run it. And so I am obviously wide open 

to finding ways to improve the way that FAA makes decisions and 

investments. And I welcome, by the way, working with you and 

your suggestions as to how I can even do my job or our job better. 

We are always subject to doing a better job. 

The problem, though, is that I am concerned that the proposal 

would reduce or even eliminate, frankly, the public’s voice in something as critical as our national air traffic controller. While I am 

open, and I have for decades been open, to privatization and competition, this is not privatization. This is a monopoly that will remain a monopoly except that all the assets that have been paid by 

the taxpayer will be transferred over to this other group. And I 

think it potentially could, frankly, create great risk if we were to 

hand decisions over to an unaccountable corporate board. And so 

that is the only level of accountability that I am hearing in this bill 

through this board of directors. But I just do not see how a board 

of directors made up of good people, but from different industries, 

are going to do anything other than support the issues of their industries, of their special interests. 

So, yes, I agree that our current system, like everything else, is 

imperfect, but it does give a guaranteed voice to the public interests. And so that is one of the issues, Madam Secretary, that I 

want to continue to talk with you about. 

In addition to basic accountability to the public, I also want to 

make sure that we preserve our Nation’s airspace as a place of innovation. I know that is something you are committed to as well. 

You know, we are seeing an explosion of new entrants into the 

space, as you mentioned, drones, commercial space operators, new 

general aviation technologies. And in this next generation we will 

be moving people and goods through the air in ways that are beyond what we see today. And so that is why, again, handing that 

decision to a board controlled by special interests, I am sure they 

will be good men and women, to me would be like handing the 

streets over to the taxicab commission right at the time when Uber 

and Lyft were entering into the marketplace. 

But I do want to say where one of my greatest concerns is. Right 

now the FAA has extensive engagement with communities when 

new airline routes are planned that could bring, for example, higher levels of noise over neighborhoods, and we hear that in this subcommittee all the time. So right now the public can go to Congress 

if the FAA is unresponsive. But the corporation would have no such 

obligation when they create new routes or when they change the 

frequency of those routes. So this goes to the health, the home values, the basic quality of life. So, you know, how do we address this 
427

issue with a board that has no direct public accountability? None 

whatsoever.

So, again, I have other concerns and we will talk about those at 

a future time, Madam Secretary. I just wanted to, again, start that 

conversation, and we are going to have many more, but to just 

throw some of the issues that are concerning to me. So I would like 

to ask a couple of questions about it. I do not have a lot of time. 

So would the traveling public have any say on new fees charged 

by this new entity? And I know it is in the early stages, so I do 

not know if it is even fair to throw these things at you right now, 

but, you know, any idea about, for example? Would the public have 

any say, any input as to any new fees that would be charged? 

Secretary CHAO. The public would have the same recourse to appeal to their congressmen and to their senators on fees like they 

do now. That part will still be the same. What we are seeing now 

is a very congested airspace. Our airspace is the safest in the 

world, but delays and congestion plague air travel. And with increased traffic, with new entrants like drones and unmanned aircraft having to be integrated into the national airspace, we need to 

upgrade the technology to ensure that new entrants and that there 

is a system that can respond to all this new traffic and congestion 

and delays. 

And this is not a new idea. It has been proposed decades ago by 

the Clinton administration. What we are trying to do is to allow 

the air traffic control system to have the latest technology with 

which to manage the airspace. So for noise, for example, noise regulation would still remain at the FAA. So what we are doing is actually addressing one of the major issues that has been longstanding, and a conflict of interest of the air traffic control system 

regulating its own safety. We are separating that out. There will 

be a safety component which stays with FAA, the air traffic component will be independent and separate. 

And on noise, that still stays with FAA. So citizens will—the new 

air traffic control system has to respond to the same regulations, 

the pollution regulations, noise regulations. And if people are 

unsatisfied, they would have the same recourse. They can go to 

their congressmen, their senators as well. 

Mr. DIAZ-BALART. Madam Secretary, I try to keep myself on time 

as well, but we will continue this conversation. 

Mr. Price. 

Mr. PRICE. Thank you, Mr. Chairman. Madam Secretary, I want 

to first ask for your assurance on a matter that includes the entire 

appropriations process, and it has to do with the reports that the 

White House has ordered agencies to ignore Democratic oversight 

requests. The administration seems to be saying that Democratic 

oversight has no legitimacy, that oversight is the prerogative of the 

majority party. That is a new level of partisanship that is unprecedented. It is unacceptable, will only worsen gridlock in Washington. 

So I want to just ask for your assurance on this. What is your policy? What is the policy—it is your Department with response to—— 

Secretary CHAO. I will be more than glad to answer that, but I 

would like—— 

Mr. PRICE. Let me ask you a couple of related questions—— 

Secretary CHAO. Sure. 
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Mr. PRICE [continuing]. About your policy in your Department. Is 

there any policy or guidance that you know of that would prohibit 

or delay responses of ranking members of congressional committees 

or subcommittees? Is there any policy or guidance that would prohibit or delay responses to Democratic members of Congress? And 

if such policies are in place to prohibit or delay responses to ranking members or other Democratic members, was that developed in 

consultation with the White House or the OMB? 

Secretary CHAO. There are a lot of questions. So let me say, first 

of all, it has always been my policy to work on a bipartisan basis 

with members of Congress. Having said that, I think it is worthwhile clarifying that previous administrations’ policy regarding 

oversight requests has always been to work with the majority 

chairman. And I will quote from a DOJ opinion, ‘‘The executive 

branch’s longstanding policy has been to engage in the established 

process for accommodating congressional requests for information 

only when those requests come from a committee, subcommittee, or 

chairman authorized to conduct oversight.’’ 

This opinion also says, with regard to responding to a request 

from individual, ‘‘Members who are not committee chairs, the executive branch has historically—historically—exercised its discretion 

in determining whether and how to respond following a general 

policy of providing only documents and information that are already public, or would be available to the public, through the Freedom of Information Act.’’ 

So in terms of requests from members who are not committee 

chairs, regardless of party, the DOJ opinion makes clear in its final 

paragraph that the response depends on the circumstances. I am 

reading obviously from the recent opinion that has been made public. It probably puts into writing what has always been the established precedent. 

I am not here to anger anybody and I will say that from my point 

of view, to the extent that I can, it is my intent to work fully with 

both sides of the aisle. 

Mr. PRICE. Well, that statement of intent that you just appended 

to the other things you said is the kind of assurance that I have 

gotten, and other ranking members have gotten, in asking your 

counterparts across government. So for you to revert to some kind 

of supposed precedent that there is some kind of unique channel 

to the chairs of the—who represent the majority party, the way I 

asked the question represents my historical understanding and my 

experience in numerous committees and in numerous administrations. I have never heard what you articulated made explicit or, for 

that matter, as just—it just does not reflect my experience. And so 

there is something new here. 

And what does your assurance mean? I mean, you say where possible you will respond. What kind of—— 

Secretary CHAO. Well, I do not want to get into an argument, 

and I am not being disrespectful, but I have been in the Federal 

Government before, in the executive branch, and this has been the 

precedent before regarding oversight. I am not talking about information relevant to policy making, but rather investigations inquiries.
429

So, but having said that, there are circumstances—I can say to 

you I will work with both sides of the aisle the best that I can. And 

there will be some issues on oversight that it must come from the 

chairman, whether it is Democrat or Republican. That has been a 

longstanding practice. And I have been in government in the executive branch when the majority in Congress was Democrat. 

Mr. PRICE. Well, I must say it has not been my experience. And 

the kind of issues the chairman just raised, the kind of things that 

are our day-to-day grist for the mill here, airport noise, you know, 

the kinds of bureaucratic snafus that develop, I mean, we have so 

many things that we need to bring up with you in these hearings 

and questions for the record. 

Secretary CHAO. And we welcome that. The issue is oversight. 

This is not a blanket policy of not answering requests. It is an 

issue specifically related to oversight. So we, of course, will help 

members on both sides of the aisle with technical assistance, with 

information, with constituent services. You will find that in my 

record, you know, we always are very, very responsive. But I think 

in this particular case it refers to oversight. 

Mr. PRICE. Well, oversight is about oversight of executive performance, agency performance. The Appropriations Committee is 

the epitome of congressional oversight and it has historically been 

nonpartisan, bipartisan. That the administration is called to account no matter who the president is, no matter what the party division is, the administration is called to account by this committee. 

That is the American system, the power of the purse. 

Secretary CHAO. I totally agree with you. 

Mr. PRICE. And the notion that that would somehow in your 

mind be segmented—— 

Secretary CHAO. It is not only in my mind, sir. 

Mr. DIAZ-BALART. Well, it looks like it is in the administration’s. 

Secretary CHAO. This is a memo that we have received. 

Mr. PRICE. Yes, that is right. And I—all right. 

Secretary CHAO. Yeah. And it is public. 

Mr. PRICE. You have made it much more explicit than other secretaries have and we certainly will need to explore this further. 

Mr. DIAZ-BALART. Thank you, Mr. Price. 

Mr. Culberson. 

Mr. CULBERSON. Thank you, Mr. Chairman. Secretary Chao, I 

appreciate your service to the country and I can confirm that that 

has indeed been the policy under President Obama. And when he 

was first elected, under the 4 years when the Democrats were in 

the majority here, the administration followed that exact same policy that you just read. So you are exactly right. 

And, of course, we all work together. I know Mr. Price works 

very well, we all work together very, very well on any oversight or 

concerns that, Mr. Price, the minority have. I know our chairman 

would work with them arm-in-arm to make sure that the appropriate oversight is conducted. 

But I wanted to focus on a superb speech that President Trump 

gave with the Secretary at the Department of Transportation, 

Madam Secretary, where he pointed out that it only took 4 years 

to build the Golden Gate Bridge and only 5 years to build the Hoover Dam, and less than 1 year to build the Empire State Building, 
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but that today it can take 10 years and far more just to get the 

approvals and permits needed to build a major infrastructure 

project. He pointed out that, for example, in highway permitting it 

includes 16 different approvals, including 10 different Federal 

agencies, being governed by 26 different statutes. And in the case 

of an 18-mile road in Maryland, they had to build—excuse me, get 

approval and permitting. They spent $29 million for an environmental report weighing 70 pounds and costing $24,000 per page. 

President Trump quite correctly said at that speech, and he is 

absolutely right about this, I was not elected to continue a failed 

system. I was elected to change it. All of us in government service 

were elected to solve the problems that have plagued our Nation. 

We are here to think boldly, we are here to think big, and rise 

above petty partisan squabbling. It is time to start building our 

country and we are here to take action. 

He is absolutely right. I am tremendously proud of the bold agenda that he has taken to cut through all the red tape when it comes 

to transportation. And I wanted to ask specifically, much of this 

lies within your authority. I wondered if you could talk to us about 

what you have done and what you can do with the authority that 

you already have as Secretary to combine the party process, to let 

them make sure they go in parallel to accomplish what the President has asked. 

And then, number two, this committee is better equipped than 

any other to help the President achieve his agenda with our authority over the power of the purse. That, as James Madison said, 

is the single most powerful check and balance on the executive 

branch.

So, number one, what can you do and have you done to speed up 

the permitting process? And then, secondly, what can the chairman 

and this subcommittee, working arm-in-arm in a bipartisan way, 

do to help simplify the permitting process for the critically needed 

infrastructure projects that President Trump is so correctly focused 

on?

Secretary CHAO. The administration issued an executive order 

very early in the administration coming on board. And this executive order takes a look at the regulatory aspects that delay infrastructure projects, and so—— 

Mr. CULBERSON. It is to set up the council that was designed to— 

is that the council that the President set up? 

Secretary CHAO. Yes, that is the infrastructure council, number 

one; deregulatory council as well. 

Mr. CULBERSON. To examine the process and come up with a report and recommendations? 

Secretary CHAO. Right. And, as you mentioned, it talks about 

ways in which the permitting process can be streamlined: if there 

are sequential processes, whether they can be made to occur concurrently; if there are duplicative regulatory processes, whether 

that can be collapsed or consolidated. And this is also an effort 

throughout the government. So in the Infrastructure Task Force 

there are about 16 different Federal agencies. And so the Department of Transportation is also working with EPA and with Department of Defense, Army Corps of Engineers, with Fish and Wildlife, 

and many other departments in an effort to see how we can work 
431

better together to facilitate and speed along some of these infrastructure projects. 

Mr. CULBERSON. I guess really what I am driving at, and you are 

right, of course, it does need to be carefully examined and thought 

through, but the President’s right that he was elected to think big, 

act boldly. What could be done to speed that up? I mean, we have 

had a lot of councils and commissions before to study things, but 

you have the authority, I believe, already to cut through a lot of 

this red tape and create parallel permitting, and no committee in 

Congress is better equipped than the Appropriations Committee to 

support you in that effort. The chairman has got your back, we 

have got your back. What can we do to help speed that up in order 

to really act quickly and boldly. 

Secretary CHAO. Well, the President has also made it very clear 

that he would like to reduce the infrastructure regulatory process 

from 10 years to 2 years, and so he is very results-oriented, and 

we are looking at that. 

Mr. CULBERSON. I look forward to working with you on that. I 

know the chairman is as well, and Mr. Price. And please come to 

us with specific suggestions so that we can help that process along 

as quickly as possible. Thank you very much. 

Secretary CHAO. Thank you. 

Mr. DIAZ-BALART. Thank you, Mr. Culberson. We are honored to 

have the ranking member of the full committee. I know you have 

been running around between hearings, Ms. Lowey. 

Mrs. LOWEY. Thank you very much, and I am sorry but we have 

a defense hearing, EPA hearing, and I have the privilege and 

pleasure of attending them all. 

Madam Secretary, we have had the opportunity to meet before, 

and I congratulate you on taking this position. But I am truly 

shocked with the report I just received while I was in another committee. I understand there was a question from Mr. Price that you 

have referred to the Department of Justice guidelines about responding to oversight requests, and that you stated that you will 

respond to committee chairs and work with the minority when possible. I have known you for a long time. I have been in this Congress for 28 years; I cannot believe that this is true. Does this 

mean if I have a request and I send you a substantive request you 

may or may not, or your Department may or may not respond? You 

could not have said that. 

Secretary CHAO. I have always worked across the aisle, and I 

want to reassure the members on the dais that I will always work 

with the committee, and if there are specific incidences where you 

have not received a response, please come to me. I will be more 

than glad to work with you. 

Mrs. LOWEY. So, you are saying, you said to the committee, but 

you would respond to my request as ranking member of the minority, as well as you would to our distinguished chair, which, frankly, 

with whom I work very closely and I have enormous respect? And 

I just want to make this clear that on Appropriations, we always 

say there are Democrats, Republicans, and appropriators. So, I just 

want to hear you say you will respond to requests whether we are 

a Democrat or a Republican. You do not have to agree with me, 
432

but, I think, each of us—Democrat, Republican—deserve a response. Could you respond again? 

Secretary CHAO. I will try my best. 

Mrs. LOWEY. I will take that as a yes, you will respond to—I do 

not understand when you say you will try your best. 

Secretary CHAO. I will try my best and I have some discretion 

under the OLC opinion. You know me. 

Mrs. LOWEY. I do. 

Secretary CHAO. And my history, I have always worked—— 

Mrs. LOWEY. So, just say yes, of course, I will respond to you. 

Secretary CHAO. I cannot quite say that with regard to investigatory document requests. It is a narrow category. 

Mrs. LOWEY. Then that leaves a question, Madam Secretary. So, 

think about it while I ask another question because I am really 

surprised that you would not say, of course, Congresswoman, you 

know me, I will respond whether it is a Democrat or a Republican. 

One more chance. 

Secretary CHAO. It has always been my history to work with both 

sides. I have always done it that way and will continue to do so. 

But there is precedent that oversight questions are handled in a 

certain way. Again, we are not talking about requests for data or 

information needed for developing legislation or any information a 

member needs to help constituents. 

Mrs. LOWEY. Let me just say this and I will get on to another 

substantive question because the chairman is being very generous 

with me. You do not have to agree with me, you do not have to 

agree with my distinguished colleagues, and we could have healthy 

debates because that is what Congress is all about. But I am really 

shocked that you would not just say, of course, I will respond, 

whether it is a Democrat or Republican or a citizen. 

So, I’ll go on to the next question, and I would like to follow-up 

on Mr. Price’s infrastructure plan question. I am concerned that 

the President’s plan lacks actual funding and, instead, would put 

a burden on State and local taxpayers to pay for those programs. 

This would be particularly catastrophic in a State like New York, 

which gives more in Federal tax dollars than it receives from the 

Federal Government. You remember hearing that from Senator 

Moynihan who documented that many years ago. 

So, if New York is getting less in tax dollars and giving more, 

already pays some of the highest taxes in the country, it would be 

unfair, in my judgment, to force New Yorkers to pay for even more, 

particularly when many infrastructure developments and economic 

gains in New York benefit the economy of the entire Nation. Do 

you have more details about how President Trump plans to pay for 

his infrastructure plan, and how will you ensure this infrastructure 

plan does not force States and localities to raise taxes to pay for 

federally directed projects? 

Secretary CHAO. The President has always emphasized the need 

for new infrastructure, and he has talked about a trillion dollars, 

$200 billion of that will be direct government funding. Some of the 

monies will come from sale of public assets, and then the remainder will be a combination of partnerships and cooperation between 

the public and the private sector and through leveraging the Federal dollars, which will be used like a seed capital that will allow 
433

more innovative, more creative financings. And that leveraging 

through public-private partnership is actually seen more often. But, 

right now we have certain States that do not allow the private sector to fund public infrastructure, and so, we want to be able to let 

the private sector come in and, if they want to, fund public sector 

infrastructure projects. And if there are ways in which they can 

participate that will help alleviate the burden on taxpayers, I think 

that’s something that we should welcome. 

Mrs. LOWEY. Mr. Chairman, thank you for your generosity of 

time. I will just conclude by saying I am a strong supporter of public-private partnerships, but I am strongly opposed to a proposal 

when President Trump has emphasized infrastructure, and without 

help from the Federal Government for the new Tappan Zee Bridge, 

as you know, that is going up; and without redevelopment of 

LaGuardia Airport and Kennedy Airport. A lot of these infrastructure programs create real jobs and if the private sector wants to 

contribute, that is great. But I know you know the town of Harrison, and I know that my constituents would be very upset if their 

taxes are going up to pay for responsibilities of the Federal Government. It just does not make sense to me. 

So, I would like to continue this discussion because most people 

today who responded to President Trump were people who said, I 

am tired of paying taxes that keep going up and up, and President 

Trump was very forceful about infrastructure, creating jobs. So I do 

not think they knew when they responded to his comments that 

they are going to pay for those infrastructure projects. 

Secretary CHAO. They are going to pay either way. If it is a trillion dollars in direct government funding, that is taxes. 

Mrs. LOWEY. That is taxes, but it is the Federal responsibility, 

and when you see all these cuts that we have in the domestic side 

of the budget, there is a real concern. 

Secretary CHAO. Which is why we need the private sector to be 

involved so we can leverage their input and their participation as 

well.

Mrs. LOWEY. I am delighted to have the private sector involved, 

but I do not want, frankly, the responsibility for these major infrastructure programs that the President talked about, and how he 

was going to create jobs, fall on the tax base of our local citizens. 

Thank you. Thank you, Mr. Chairman, for your generosity. 

Mr. DIAZ-BALART. Thank you. Thank the gentlelady. I am going 

to ask the members, obviously, the ranking member of the full committee is always going to have some leeway, but I will ask the 

members now to please adhere to, as much as possible, to the 5- 

minute rule. 

Mrs. LOWEY. Let me thank you again for your generosity and 

your constant willingness to work together on this committee in a 

bipartisan way. 

Mr. DIAZ-BALART. Thank you, Madam. Thank you, Ms. Lowey. 

Mr. Young will have to be a little bit less lenient than we were 

with the chairman and the ranking member. 

Mr. YOUNG. You just took 5 seconds off my time. 

Mr. DIAZ-BALART. No, you can have those. We have not started 

the clock yet. And for being so nice, I will give you 5 minutes and 

5 seconds. How is that? 
434

Mr. YOUNG. All right. Thank you, Mr. Chairman. Secretary 

Chao, thank you for being here today. Thank you for your past 

public service in other departments, and what you are doing today. 

I have already admired your bipartisan approach, your fair approach to your role in leadership and administration, so thank you 

for that. 

I want to talk about infrastructure. In your statement, you say, 

‘‘Our transportation infrastructure is aging,’’ and I think we can all 

agree with that, and ‘‘that we need a focused approach to address 

this problem.’’ I think we also need a focused approach to address 

new advancements in transportation, new technologies, new vehicles, when it comes to taking a look at what an infrastructure looks 

like when you have autonomous vehicles; when you have artificial 

intelligence.

Should we be looking at a different approach or a different way 

to ensure that the next transportation grid is ready to go for the 

22nd century and not be stuck in kind of an analog approach as 

we have in the past? Do we need different surfaces, different tracks 

within roads? Do we need sensors out there? Will all the vehicles 

be talking to each other? I just want to make sure that we are all 

thinking about this as we go into the new century. 

And the future is here. It really is. How do you see these new 

technologies influencing an infrastructure package? 

Secretary CHAO. All that you are discussing is currently being 

examined and reviewed in various aspects of the transportation infrastructure proposal. The infrastructure proposal does not just 

have transportation. It includes other departments, other areas, for 

example, energy, water, veteran affairs, and possibly broadband; 

that is yet to be determined. But what you say about autonomous 

vehicles on the ground and in the air is partly a reason why the 

air traffic control system is being considered in terms of the need 

for upgrade and the need to be kept abreast of state-of-the-art technology. And on the roads, we are, obviously, thinking more about 

how do we accommodate the concerns with autonomous vehicles on 

the ground in terms of traffic, but also in terms of safety, security, 

and privacy. 

So, all those issues are part of the national dialogue that needs 

to occur as we talk about this infrastructure proposal. It will be, 

actually, probably three different phases, meaning it will be short 

term, medium term, and long term. Right now, we are talking 

about the short term, which is a trillion dollars over 10 years; it 

cannot be funded as our friends on the other side of the aisle would 

like, by direct Federal funding. That would create a tremendous 

adverse impact on our deficit and also introduce potential havoc 

with the private sector markets with such a large injection of Federal funding. 

So, there are States I mentioned that do prohibit public-private 

partnerships. While that is not the only solution, public-private 

partnerships should not be discriminated against, and the private 

sector, if capable, should be allowed to invest in public infrastructure.

So, all of that is going on and there is a short-term and a longterm consideration of all of these issues. 
435

Mr. YOUNG. We have had some very interesting hearings already 

with the private sector on the new technologies, autonomous vehicles, what it means, how can we adapt to it. The Department and 

this committee, we need to keep being engaged on this issue. But, 

more importantly, for us and for you and your Department, I think, 

it is imperative that we are really engaging the private sector every 

day because they are driving this, and with consumer demand, as 

well.

I have about 35 seconds. If you add the 5 seconds, I have 40. The 

Highway Trust Fund, you know, it has not been self-sustaining 

since 2007. Because of advancements, again, in technologies, innovation, with new vehicles out there, new fuels, and ways to power 

vehicles, how do we ensure those using our roads and bridges are 

paying their fair share? You know, kind of pay-to-play on our 

roads, and are not getting away with not contributing? We want to 

make sure that we have an up-to-date transportation infrastructure program for our roads and bridges. Because there could be disparity out there because, I think, more and more with technology, 

you are going to have vehicles who are not paying into the Highway Trust Fund, but are using the system. 

What ideas does the DOT have that we all should consider? And 

if you cannot name any, just give me some sense of confidence that 

you are thinking about this because we need to think about it. 

Secretary CHAO. Well, there are various ways to fund the infrastructure proposal. There is a working list of 13 to 17 under discussion. None of them are attractive. We all want the benefits, but 

there will be groups that will not like one or another financing solution. But the longstanding problem of the Highway Trust Fund 

has been resolved until 2020. 

But as we prepare for fiscal year 2019 budget, which is going to 

be coming up this summer, and as we talk about the infrastructure 

proposal, we have to—and I am underscoring your point, that funding the Trust Fund exclusively with the gasoline tax is not going 

to be sustainable. So, we do have to take a look at other options. 

And we have not yet made any decisions, nor any conclusions, nor 

any agreement among ourselves as to how to do that yet. But, suffice it to say, that nothing is off the table. 

Mr. YOUNG. Thank you for your testimony and being with us 

today. Mr. Chairman. 

Mr. DIAZ-BALART. Thank you. Mr. Quigley. 

Mr. QUIGLEY. Thank you, Mr. Chairman. Thank you, Madam 

Secretary, for being here. I do not see the boldness. I think you 

look at what you talked about, an aging infrastructure, but who is 

using what? In our urban areas, we are about an $85 billion state 

of good repair. The Chicago Transit Authority carries more people 

than Amtrak nationwide in a month. And when you combine the 

state of good repair there and with METRA, the numbers are staggering. These are not conducive to public-private partnerships. I 

am all for those. For to use it as we have, this bold new idea, we 

are going to do this, is extraordinarily limited with where people 

are going. 

Millennials are not buying cars. They are doing rideshares, they 

are riding bikes, and, thank God, they are using public transpor-
436

tation. But I have an antiquated, 100-year-old, rickety transit system that is carrying more people all the time. 

In this budget, the grants, the capital investment grants, are cut 

in half. So, what are we saying? We are going to have a bold new 

idea to transport people the way we did 50 years ago. Where is the 

boldness? How does public-private partnerships work? And how can 

you assure that they are going to rebuild or provide positive train 

control in all of our light rail systems and around the United 

States as a whole? 

Secretary CHAO. The infrastructure proposal is going to address 

four principles: One is to target Federal investments on most transformative projects. Two is to encourage States and localities to take 

their own action, with Federal aid coming in terms of streamlining 

regulations and permitting. Three is to tap into the private sector 

capital and management methods. And four is to align the infrastructure with the entity best suited for operation and maintenance. We are going to give the States a great deal of flexibility, 

and they are going to have a lot of say in how all of this is to be 

spent.

Mr. QUIGLEY. Look, METRA and the Chicago Transit Authority 

are not worried about permitting. They are not worried about the 

State getting in their way, increasing demand. And the fact that 

public-private partnerships are not going to help them at all, some 

of this just takes Federal dollars. So, you have outlined four things 

that do absolutely nothing for those two entities, and take away 

half of the funding to make them continue to have rolling stock. 

And let me tell you, these folks are Democrats and Republicans. 

My metro trains come through Chicago, but they go out to my 

friend Peter Roskam’s district. 

These are all people who, right now, these are entities that need 

resources, at some point in time, you have got to rebuild track and 

you have got to repurchase rolling stock. They do not have that. 

Nationally, the backlog on repairs is extraordinary. So, outlining 

four things that will help private sector entities or States move forward with permitting means almost nothing to them and their 

most vital need. 

Secretary CHAO. Approximately 84 percent of transportation dollars come from the State and local funds. I am not saying that we 

are not going to participate. What I am saying is, under the infrastructure proposal, the States and localities will have great freedom and great flexibility. 

Mr. QUIGLEY. Let us just say you put more money into a trilliondollar infrastructure package. You just took away half the funding 

for the Direct Grant Program, and the States matched those dollars, so you have done nothing. Right now you have cut them in 

half; this is absolutely vital. So, let us just say, you come back and 

say, well, we are going to have this trillion-dollar package and 

some of that is going to include—you will have just taken it from 

one spigot and put it into another. That is assuming that you even 

do this. 

Secretary CHAO. Well, obviously we disagree with some of the 

priorities and some of the missions and some of the purposes. 

Mr. QUIGLEY. And where is—— 
437

Secretary CHAO. So, what we are doing is repurposing it. So, we 

are basically going to—— 

Mr. QUIGLEY. So, you are taking money, in a sense, from mass 

transit and putting it where? 

Secretary CHAO. That is going to be in the details of the infrastructure which will be coming out—proposal which will be coming 

out in the fall of this year. 

Mr. QUIGLEY. We have just got to have some inclination. You 

have given us the lead on this that we do not care as much about 

public transportation. 

Secretary CHAO. No, I did not say that. 

Mr. QUIGLEY. But you cut it in half, so you have got to—it cannot 

be a priority if you cut it in half. 

Secretary CHAO. It will be reshifted, repackaged, and repurposed 

in the infrastructure proposal. 

Mr. QUIGLEY. For what? 

Secretary CHAO. And the details of which have not come out yet, 

but states and localities will have the freedom to apply for grants 

to address their individual infrastructure needs whether that is 

transit systems or something else. 

Mr. QUIGLEY. Where would you send it if it is not for public 

transportation?

Secretary CHAO. Well, that decision has not been made yet, but 

states and localities will have flexibility. 

Mr. QUIGLEY. Okay. Thank you. 

Mr. DIAZ-BALART. Again, also we are thrilled to have chairman 

emeritus. And by the way, Chairman Rogers is the one who gave 

me this chairmanship originally. So, for those of you that are 

happy that I am chairman, you thank him. Those that are not 

happy, he is the one to blame. 

Mr. Chairman? I apologize. 

Mr. ROGERS. Thank you, Mr. Chairman. And you are doing a 

great job and I am glad I had the wisdom name you to this post. 

Madam Secretary, good to see you. Welcome to the Hill. Good to 

see you outside of Kentucky, although we love you back there as 

well.

Secretary CHAO. Thank you. 

Mr. ROGERS. Infrastructure, of course, is the name of the game 

this year. We are all tired of traveling on old streets, bridges that 

are falling, waterways that are not being traversed properly, and 

the like. So, we share your enthusiasm for doing something big on 

infrastructure improvement. 

I noticed on page 2 of your statement where you list the key elements, the key principles of the infrastructure plan that will involve 13 Federal departments and agencies in concert. The first 

principle that you list is that the monies would be spent on the 

most transformative projects. Tell me what that means. 

Secretary CHAO. I think the President would like something that 

is bold, that is innovative, something that will really speak to the 

future and address the concerns of the future. Having said that, I 

understand your question, and that is you are concerned about 

rural America. 

Mr. ROGERS. Yes. 
438

Secretary CHAO. And I come, as you know, from a State that is 

a very rural, so I am concerned about access, ridership, and the 

ability of rural America to be part of the American dream as well. 

There will be a separate title to the infrastructure proposal that 

will address rural America. The dollar amount has not yet been decided, but we are very cognizant of the needs of rural America. 

Mr. ROGERS. Where is the center of the effort to finance, the 

study how to finance the infrastructure improvements? Where is 

that research going on? Is that in your Department? 

Secretary CHAO. I think you asked how will this all be paid for? 

Mr. ROGERS. Yes. I am asking, who is studying that portion of 

the problem? 

Secretary CHAO. At the White House? 

Mr. ROGERS. Yeah. 

Secretary CHAO. All of us. Prior to your arrival here, we talked 

about various different ways, that there is a plethora of ways, 13 

to 17, very commonly discussed ways to pay for infrastructure. As 

of yet no decision has been made-, no agreement, I should say, has 

reached a consensus. None of the payment forms are ideal. At this 

point, suffice it to say that nothing is off the table. And as you 

mentioned, there are about 16 different government agencies in the 

infrastructure task force that are grappling with how to pay for all 

this.

Mr. ROGERS. Well, given the financial situation of the country 

and of the States and localities, it is pretty plain the money to do 

whatever we are going to do has got to come from somewhere else, 

i.e., private sector. Do you agree with that? 

Secretary CHAO. Yes. And again, in an effort to be bipartisan, I 

understand that our colleagues—our friends on the other side 

would prefer 100 percent Federal funding of $1 trillion, and I had 

just said that, unfortunately, that would increase our deficit quite 

a bit, and it would actually also create some havoc within the private markets because it would be such a large presence of Federal 

dollars.

So, the President is looking more toward using $200 billion in direct Federal funding, in infrastructure using that as seed money, 

and selling off some public assets, and using the Federal amount 

to entice or to partner with the private sector in some creative, innovative public-private partnerships, which we have seen in the 

past.

Mr. ROGERS. Yes. There are examples of this. For example, Indiana, 10 years ago or so, sold the cross-State toll road for billions 

of dollars, and then used those proceeds to build the roads around 

the rest of the State. Is that a possible way to go here? 

Secretary CHAO. Toll roads certainly are an increasingly popular 

way to finance infrastructure, but I understand both sides, that 

some people might not like toll roads, but it is very effective to finance new roads. 

Mr. ROGERS. All of us do not like toll roads, but some of us may 

tolerate tolls. But the selling, what I am talking about is the selling of the asset. And I assume the buyer of that highway would 

need to enact tolls in order to pay off the purchase price. 

Secretary CHAO. This actually is a big issue, whether we sell off 

these public assets. And actually there is a discussion going on 
439

about concerns about selling public infrastructure to foreign interests, and whether there is sentiment that that is not desirable. And 

so we are thinking about some lease and buyback. I mean, these 

are one of many, many ideas that are being surfaced as to how we 

can finance it. 

Mr. ROGERS. Good luck to you. And thank you. I yield back. 

Mr. DIAZ-BALART. Thanks, Mr. Chairman. Representative Clark. 

Ms. CLARK. Thank you, Mr. Chairman. And we are delighted by 

your appointment, and I want to thank Chairman Rogers for that. 

And thank you, Madam Secretary, for being with us today. 

And I also want to thank you for your commitment on the Green 

Line Extension in Massachusetts, and for being up in Boston recently. A lot of hard work has gone into that project, and it would 

not have been possible without the assistance of your Department. 

And so, we thank you for that. 

And I have lots of substantive questions, but I really was struck 

by your comments earlier in response to Ranking Member Price, 

especially today, the day after such horrifying events and attacks 

on our colleagues yesterday. So, I just want to make sure that I 

understand what you are saying. 

There was a Letter of Counsel to the President on May 1, 2017. 

Is that the opinion that you are citing from DOJ? 

Secretary CHAO. What I am trying very, very hard to say—I am 

not trying to anger anybody—especially as you mentioned, ‘‘after 

what happened yesterday.’’ But this is DOJ reiterating established 

precedent, and I do not seem to be given credit for that. It is. I 

have been in the government before, it is—— 

Ms. CLARK. So, just precedent or not, there is a line in that note 

that also says it is established precedent, but it reads, ‘‘Individual 

members of Congress, including ranking minority members, do not 

have the authority to conduct oversight in the absence of a specific 

delegation by a full House committee or subcommittee.’’ Is that 

your understanding of the law? 

Secretary CHAO. That has always been the case with every executive branch oversight defined narrowly—documents requested for 

investigations, not for policy evaluation or review. 

Ms. CLARK. So that is a yes? 

Secretary CHAO. I am committed to working with those members 

of this committee—— 

Ms. CLARK. No, I just want to know if that is your understanding, that individual members do not have any authority to 

conduct——

Secretary CHAO. That has always been precedent regarding investigatory document requests. That has been the precedent. 

Ms. CLARK. Okay. So that is your understanding of the law and 

the policy of Department of Transportation? 

Secretary CHAO. It is not just Department of Transportation, this 

has been executive branch precedent for previous administrations——

Ms. CLARK. But you are the Secretary of Transportation. That is 

your understanding and policy? 

Secretary CHAO. It is throughout government, yes. 

Ms. CLARK. Okay. And your understanding is that is throughout 

the executive branch? 
440

Secretary CHAO. Yes. I said that is the—the executive branch, it 

has always been that way. 

Ms. CLARK. All right. I am going to move on. 

Secretary CHAO. Through every administration. 

Ms. CLARK. I am going to move on to positive train control. 

Secretary CHAO. Yes. 

Ms. CLARK. Which is a big issue back in States like Massachusetts, and really across the country. As the FAST Act authorized 

$199 million out of the mass transit account to create this grant 

program, but States like mine, are trying to meet the deadline for 

implementation, but have struggled to find the financing to complete the installation. 

My understanding is that the application for this grant program 

has not yet been fully implemented. As a result, you have to complete two different applications: one for TIFIA, one for, is it RIF, 

RIFR, I am not exactly sure I have that right. Can you give us an 

update on how this implementation is going and whether there has 

been progress in streamlining this application process? 

Secretary CHAO. I can speculate, but let me do my due diligence 

and get you, specifically, information, and I will be pleased to work 

with you on that. 

Ms. CLARK. Okay. That would be helpful, because I think it has 

become a redundant application process. It is really causing some 

problems in meeting the deadlines. 

Secretary CHAO. I will look into it. 

Ms. CLARK. On the State maritime academies, they are essential 

to a vibrant U.S. Merchant Marine, and ensuring America’s sealift 

capacity and, frankly, they are key to our national security. These 

academies rely on training ships to fulfill their education mission. 

The TS Empire State at SUNY Maritime College is now 56 years 

old. Its lifetime is expected to end in 2019. The TS Kennedy at the 

Massachusetts Maritime Academy is 51 years old and its useful 

service life is estimated to end in 2025. 

The 2017 NDAA directed DOT to complete the design of replacement vessels. And I am hoping that you can tell me, has the design 

of the national security multi-mission vessel been completed? And 

can you give me an update of the replacement of these ships? 

Secretary CHAO. The Mass Maritime and SUNY Maritime are 

two great maritime academies, universities, and they graduate outstanding young men and women every year. I am familiar with 

this. These two ships are the oldest. They need to be replaced at 

some point. Unfortunately, it is an issue of cost as well. One ship 

will cost $300 million. For all the maritime academies that will be 

about over a billion dollars in direct outlay. 

So we are looking at this issue. And I just recently spoke with 

the Mass Maritime president, and also New York Maritime president, so this is an issue that has to be somehow addressed. Perhaps one way is to find a renovated vessel, but then there are 

waivers required because it would not be U.S.-built, but that could 

possibly be $15 million per ship. So, we are looking at different 

ways to address this problem. 

Mr. DIAZ-BALART. Congressman Valadao. 

Mr. VALADAO. Thank you, Chairman. Thank you, Madam Secretary, for your time today. 
441

Madam Secretary, last month the Department of Transportation 

approved a $647 million Federal grant arranged during the last 

days of the previous administration to the Caltrain Electrification 

Project. The power equipment will eventually be used by the 

State’s bullet train from Los Angeles to San Francisco. The grant 

requires that the State match the official’s—requires that a State 

match that officials have indicated will come from Proposition 1A, 

approved by voters specifically for California’s High-Speed Rail 

Project.

With the use of Prop 1A funds, it is being challenged in court. 

If these funds do not become available, what happens to the Federal grant? And reports indicate that California high-speed rail is 

very unlikely to secure private funding. Do you have any confidence in them being able to match the Prop 1A funds going forward?

Secretary CHAO. That is actually a concern that Caltrain needs 

to consider very carefully themselves. The timing of this particular 

contract was very sensitive. It was signed off on January 17, 2017, 

3 days before the end of the previous administration. However, 

there is a process by which that goes up to the Congress for 30 

days, disputes or rebuttals or challenges can occur. That really did 

not happen. 

And when the Omnibus basically inserted $170 million into this, 

it made the cut for full funding agreement, and the Department 

signed it. So, for those that are involved in the project, they have 

the funding for 2017. For future years, they do need to be thinking 

ahead as to what they want to do. 

Mr. VALADAO. How do you plan on holding them accountable for 

spending those Federal dollars, to make sure that they are properly 

accounted for, but also properly spent? I mean, the whole HighSpeed Rail Authority has faced a lot of scrutiny. All 14 members 

of the Republican delegation from California signed a letter to you 

specifically asking you not to, at least until they did an audit and 

gave us some sort of background. 

So, I will go with my second question. Prior to the approval of 

this Federal grant, all 14 members of the California Republican 

delegation sent a letter to you regarding high-speed rail being an 

infeasible, counterproductive project, but it also cited that the 

project’s cost increased, reductions in its scope, and its failure to 

secure State and private funding. Our request was to block any 

pending Federal funding until the State High-Speed Rail Authority 

completes an audit of the project and its finances, and those findings be made public. Do you think that was too difficult a request 

on our part? 

Secretary CHAO. I am very much aware of that letter. In fact, we 

tried very hard to work with both sides of the aisle to come to some 

resolution, but when that Omnibus bill came through with the full 

consent of both Houses of the Congress, there was no choice. It was 

$170 million we were obligated to award. They had to proceed. 

Now, going forward—— 

Mr. VALADAO. And there were some statements from your office 

that you were planning on sending more, depending on the future 

appropriations——
442

Secretary CHAO. I do not have any money. If there are future appropriations and it is dictated by Congress, of course, I have to 

send it. But there is a natural process of monitoring that goes on 

for every single one of these projects, and so those natural processes will be in place and there will be monitoring of this project 

to see that monies are not wasted and that they are aptly applied. 

Mr. VALADAO. Madam Secretary, as you are undoubtedly aware, 

California has received $3.55 billion in Federal funding. Our finance report from the Federal Railroad Administration admits that 

the High-Speed Rail Authority is unlikely to meet spinning deadlines established by the grants, and would, therefore, be forced to 

forfeit upwards of $220 million back to the Federal Government. 

And I am concerned that the authority will start to use the grant 

money as a slush fund, spending on frivolous projects outside the 

high-speed rail’s project. 

Does the Department of Transportation require detailed reports 

on how the California High-Speed Rail Authority is spending those 

Federal dollars? And do you feel that the Department has proper 

oversight over where those funds are being spent? 

Secretary CHAO. I do. I have only been there 4 months, but according to what I have seen so far, it is a very professional organization and there are processes in place to monitor how funds are 

spent. This is really a matter before the Congress. We execute the 

law as it comes from the Congress, and so the money was mandated and it needed to go out. 

Mr. VALADAO. All right. Thank you. I yield back. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Aguilar. 

Mr. AGUILAR. Thank you, Mr. Chairman. I appreciate it. And just 

to follow up on that, Madam Secretary. There was a difference of 

opinion, as you mentioned, on that Caltrain issue, and our office 

and I personally heard from business leaders in California who 

were concerned. 

When you talked earlier in your answer about seed capital, you 

talked about making sure that the Federal Government has seed 

capital as a priority to spur investment. I think conflating highspeed rail and Caltrain is not fair. This is a line that is already 

operating, that is hundreds of millions of dollars of planned investment that those individuals have taxed themselves to do. And I 

think electrification is something that is helpful for the environment, will reassure that line, and push more commuters through 

that transit mode, which should be our responsibility to help. So 

I appreciate the consideration that your agency put forward in 

making that award. 

I did want to shift briefly to TIGER grants. In my community we 

were awarded an $8 million TIGER grant. That is a Redlands Passenger Rail Program. It connects a popular transit center and terminates at a local university. In between the two are job centers, 

as well as a local VA healthcare facility, and will create thousands 

of jobs connecting low-income residents with alternative and affordable transit routes. And I heard your comments and read your testimony about TIGER previously, but given the benefits of this program in my district and in other districts around the country, what 

did the DOT use to rely on to decide that the elimination or phas-
443

ing out of this program would be beneficial to our national infrastructure system? What type of data was used? Yeah. 

Secretary CHAO. I think the purpose was to basically—there was 

a basic philosophical disagreement on whether to retain an unauthorized program from the Stimulus act that are used in an earmark-like way to fund certain projects. But having said that, it is 

the will of the Congress and so you certainly have every prerogative to restore what you think is beneficial. This is a new administration, so the President may have different priorities. 

Mr. AGUILAR. Are you saying that TIGER grant funding was earmarks? Is that what I heard you say? 

Secretary CHAO. Earmark-like. 

Mr. AGUILAR. Earmark-like, okay. I think—— 

Secretary CHAO. But, again, this is a matter before—— 

Mr. AGUILAR. I am new to the committee. I defer to the ranking 

member and the chairman to describe the program and those who 

helped craft the language in prior administrations or in prior Congresses, and then there clearly are prohibitions against that. So I 

think I would take issue with that characterization. 

But I will say that creating programs that help our communities 

is exactly our role here in Congress. None of us, to my knowledge, 

inserted, you know, any language specific to a project. We are prohibited from doing that. 

Secretary CHAO. You are right, it is competitively bid. 

Mr. AGUILAR. It is competitively bid and the administration is responsible to decide. 

Secretary CHAO. But that should be in the corpus, you know. We 

would prefer that it be authorized rather than have it kind of like 

siphoned aside for some specific purpose. 

Mr. AGUILAR. Yet your—— 

Secretary CHAO. But having said that, we are willing to work 

with you. And for those that—obviously, this is a very popular program. Members of Congress like it and so we will respond to the 

will of Congress. 

Mr. AGUILAR. So you disagree with our ability to siphon aside 

funding or take issue with it. The administration may take issue 

with it, but you are creating something that you are going to roll 

out in the fall that would siphon aside hundreds of millions—hundreds of billions of dollars in projects that would be up to the administration to suggest. 

Secretary CHAO. No, we are not saying that at all. We have yet 

to unveil our infrastructure proposal. So that is to say that we do 

not know whether distribution of the funds will occur one way or 

the other. That is still under advisement and discussion. 

Mr. AGUILAR. How do you view—and back to your comment before about seed capital, because I do think, as you mention, and in 

your transit document, as your transportation document mentioned 

in your factsheet that so much investment is occurring at the local 

level. Local voters in my community have taxed themselves to build 

infrastructure projects. As a local mayor, I was on the authority 

that allocated those funds. 

How do you differentiate the seed capital, as you mentioned, for 

some projects, yet in TIGER and other projects you do not view 
444

that as seed capital that is helpful to the creation of jobs and the 

movement of goods and bodies? 

Secretary CHAO. Well, the TIGER grants, you know, I know that 

they are very popular, but they were created as an aside in the 

2009 Stimulus bill, kind of like a separate aside, pool of funds. And 

I think it would make much more sense if they were all put together in a large pool where they could be leveraged for projects 

proposed by States. 

Mr. AGUILAR. Thank you, Mr. Chairman. Thank you, Madam 

Secretary.

Mr. DIAZ-BALART. Thank you, sir. Mr. Joyce, you are recognized. 

Mr. JOYCE. Thank you, Mr. Chairman. Good afternoon, Madam 

Secretary, and thank you for being here today. 

I have heard from a number of constituents and local leaders in 

my district who are worried about the scope of the metropolitan 

planning organizations, or MPOs; that they have grown too big and 

that they have begun to impede on surrounding communities. 

While I appreciate their directive in providing cohesive regional 

planning, it is important to me that we do not continue down a 

path of federalizing community planning. 

Can you shed any light on the administration’s view on this and 

if there might be some push now or in the future to alter this range 

of authority? 

Secretary CHAO. We have heard from a number of members on 

both the Senate and the House, and we actually are—I think we 

have actually rescinded all that, and I will check on that for you, 

the metropolitan planning authorities. Yeah. 

Mr. JOYCE. That is good news. Moving right along, as you notice, 

and I understand there have been some questions asked prior to 

this, but this subcommittee recently met with field experts working 

on emerging transportation technologies, including autonomous vehicles. And I am encouraged by this research thus far that indicate 

these vehicles have extreme potential to make our roadways safer. 

So I wanted to make sure we are doing everything we can to support further development of these vehicles and, hopefully, one day, 

their widespread use. 

You recently visited the Transportation Research Center located 

in my home State of Ohio. Nearby TRC, along Route 33, the Ohio 

Department of Transportation has initiated underground installation of 35 miles of high-capacity fiber optic cable. As you know, this 

cable will help provide researchers with the data necessary to further develop autonomous vehicles and design roadways that are 

compatible with their use. Now, call me biased, like my chairman 

does, but I believe the Buckeye State given everything from varying weather conditions to innovative centers like TRC, is uniquely 

positioned to test and rapidly deploy these technologies. 

I might ask you what role of support to our safety-making agencies, such as NHTSA, do you see these proving grounds playing? 

And how can this committee or your Department best equip them 

to carry out the work you think valuable to the safe deployment 

of autonomous vehicles? 

Secretary CHAO. These proving grounds are very popular. And 

the last administration, a few days prior to departure, had issued 
445

sort a Good Housekeeping, seal to about 10 proving grounds. We 

are in the process of looking at all of that. 

What I hear, actually, from major automotive manufacturers and 

other entrepreneurial entities that deal with autonomous vehicles 

is actually that they are going to Australia. They are going to other 

countries where there is much less regulation that governs how 

they are to test, where they are to test, and under what circumstances. So I do not think the issue is which State gets these 

proving grounds. The issue is how do we make the whole United 

States more open to innovation while respecting the safety regulations that we have? But how do we make it more welcoming of 

these new technologies rather than have these companies, American companies, go overseas to test their products? 

Mr. JOYCE. Well, I certainly agree with you and I applaud your 

efforts to keep them here. But in Ohio, as you well know—— 

Secretary CHAO. You have one in particular that did not make 

it.

Mr. JOYCE. Correct, and one that the State has invested a lot of 

money in, as well, and it is—— 

Secretary CHAO. I actually went there to visit. 

Mr. JOYCE. I know. 

Secretary CHAO. Yes. 

Mr. JOYCE. That is why I mentioned that in my notes and we are 

very happy that you went there and had the opportunity to visit 

and, hopefully, that in review of this you take that into consideration. Because as you are well aware, you know, Ohio had these 

two brothers named Wright that created flight. And we had a guy 

named John Glenn, who was in the Senate with your husband, who 

flew around the world for the first time in a capsule. And Neil 

Armstrong, an Ohioan, was the first one to step foot on the moon. 

So we like to be out front in these technologies and we certainly 

think that we have invested a lot of money in TRC and would appreciate you giving it your look. Because we do not want to lose 

any business to Australia. 

Thank you very much, Mr. Chairman. 

Secretary CHAO. Well, thank you for bringing that up again. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Dent. 

Mr. DENT. Thank you, Mr. Chairman. Good afternoon, Madam 

Secretary.

I represent a large portion of the Lehigh Valley of Pennsylvania. 

And in recent years, we have seen a growth in freight traffic and 

operations, which includes truck, rail, and air modes of transportation. This trend is expected to continue and industry is expected 

to grow even more. Part of this growth is the result of increased 

online commerce and changing customer expectations about the 

speed of delivery. This kind of growth presents economic and employment opportunities, but it will also require that our infrastructure keeps pace with these types of developments. 

As the transportation system assumes a growing role of supporting commerce, how does your Department anticipate addressing the increased needs to maintain our Nation’s roads, bridges, 

railways, and airports, specifically in the areas that are seeing increased freight activity? 
446

Secretary CHAO. Freight is very important. We sometimes forget 

that, but it is a lifeline for the economic vitality of our country. So 

part of the infrastructure proposal will also include consideration 

of freight. There are passenger rail issues with freight lines, and 

intermodal efficiencies that are desirable to facilitate the rapid 

movement of freight. So we are very much aware of those. And I 

do not want to—I cannot say too much about specifics yet, but 

freight is obviously a very big concern. 

Mr. DENT. Can I ask, I will ask you, too, just about the infrastructure package and how we might pay for this? I understand the 

public-private partnership nature of this whole thing, which I certainly think is important, but there is probably going to be a public 

component, as well. And a durable, sustainable revenue source will 

be important. Has the administration taken a position on how 

through maybe tax reform we might be able to find that durable, 

sustainable source? And are you open to the user fee, the highway 

user fee? 

Secretary CHAO. In the beginning part of our discourse internally, there was discussion about having this be part of the—having some portion of tax reform be involved in funding infrastructure. Those discussions, it seems, have ebbed. It may come back 

again, but as of now, I think Secretary Mnuchin has already said 

that tax reform will not be part of the funding of infrastructure. 

But that, again, may change. 

And the second issue you mentioned was? 

Mr. DENT. No, that was mostly it. That was mostly it, these user 

fees.

Secretary CHAO. Everything is still on the table. 

Mr. DENT. How to fund—— 

Secretary CHAO. As a gasoline tax you mentioned. 

Mr. DENT. How to fund it. Yeah, the user fee. 

Secretary CHAO. Yeah. 

Mr. DENT. The highway user fee. 

Secretary CHAO. The user fees are—and the gasoline taxes, I 

mean, that obviously is a very quarrelsome issue among some 

quarters. And so what I can say is that nothing is off the table. 

Mr. DENT. Okay. Final question. The administration and Congress, as we consider this infrastructure and transportation package, I believe that we have an opportunity to begin integrating 

some new technologies that will greatly benefit Americans in their 

daily lives. One of these technologies, of course, is hydrogen fuel 

cells, and they have the potential to be a clean alternative energy 

to power vehicles with no carbon emission, only water vapor. 

As you may know, a number of States have made commitments 

to adopt zero-emission vehicle standards for the auto industry. And 

as Co-Chair of the Hydrogen Fuel Cell Caucus, I know that fuel 

cells, hydrogen fuel cell vehicles are just one technology option that 

automakers are pursuing to meet these obligations. So I guess how 

is your Department working with the industry to remove any possible barriers to entry and ensure a successful rollout of hydrogen 

infrastructure?

And I know that the previous administration was not particularly supportive of hydrogen. Just wanted to hear your thoughts. 
447

Secretary CHAO. We are looking at all new technologies. The 

basic principle is that we want to encourage innovation and entrepreneurship, and this is a new area that we are looking at. We 

have just gotten into office, so we do not have a conclusion on that 

yet, but we are looking at it. 

Mr. DENT. Thank you. I will yield back with 20 seconds to spare. 

Mr. DIAZ-BALART. Thank you, Mr. Dent. Madam Secretary, there 

is a lot of interest, so what I am thinking is let us do another 

round. We will limit it to 3 minutes per question and answer. 

We have had multiple hearings, Madam Secretary, regarding 

NextGen programs and I think there have been some great successes in this partnership with the private sector, whether it is 

issues like Automated Dependent Surveillance Broadcast (ADSB) 

or Datacom development or the NextGen weather programs. I 

think those are programs and I may submit some questions, but 

those are issues that I think are looking like really good successes 

and I want to get some feedback from you, but I do not think we 

have enough time to do that today. 

I do want to briefly talk about the NextGen Advisory Committee. 

This committee has been set up as a public-private partnership to 

guide the NextGen decision-making. Do you think that that body, 

this body, is an effective body to help guide our air traffic investments for the future? 

Secretary CHAO. It is an advisory committee? 

Mr. DIAZ-BALART. Yeah. 

Secretary CHAO. I have not met with them. I have met individual 

members. I have not met with the committee in total yet. It is 

about 35 members and they meet about 3 times a year. They certainly offer a great deal of assistance. They are people are steeped 

in various aspects of the aviation industry. And I think it is always 

good to get a diversity and variety of opinions and advice. 

Mr. DIAZ-BALART. And I do not know if you have had the opportunity to look at some of the stakeholders and determine if that is 

the appropriate list of stakeholders represented. I do not know if 

you have had the opportunity to look at that yet. 

Secretary CHAO. I have a list here. I always think it is always 

helpful to get as broad a representation of industry stakeholder 

groups wherever possible, whenever possible. 

Mr. DIAZ-BALART. Yeah. And also, Madam Secretary, if there are 

ways that you think we can improve that, improve the effectiveness 

of that, that is one of those things that, you know, I would like to 

be in touch with you. I do not know if you have any ideas at this 

stage.

Secretary CHAO. Of course. I do not say this enough, but we want 

to work with the committee, we want to work with the Congress, 

and we are very open to your ideas. 

Mr. DIAZ-BALART. Well, Madam Secretary, you have a history of 

doing that and so, again, thank you for saying that. But more important than the words, you have a history of doing that, which is 

why I think all of us are thrilled that you accepted to do this and 

to once again serve here. 

Have you been able to see the benefits that we have seen to date 

regarding the ADSB, which is the Automated Dependent Surveillance Broadcast? Catchy name. Now that it has been completed 
448

have you had the opportunity to see how that is doing and the benefits?

Secretary CHAO. It is actually one of the successes of the whole 

NextGen effort. I commend FAA and I commend the men and 

women at the FAA who are doing a tremendous job despite difficult 

circumstances. They have been able to maintain the system, work 

through the air traffic control, despite challenging circumstances. I 

mean, the system is as safe as it is and it is as good as it is not 

because of the current government structure, but in spite of it. And 

so I think it says a lot about the men and women who work there, 

but we want to do better. 

And as I mentioned earlier, we are going to disagree on this, is 

that we are thinking about the future—— 

Mr. DIAZ-BALART. Well, we will be working through these issues. 

Secretary CHAO. You know, we are thinking about the future: increased traffic, increased congestion. When we talk about the 

NextGen, the project that you mentioned, it is ADB, you know, we 

are talking radar here. With radar it is a sweep, once in 6 seconds, 

and within 12 seconds an airplane travels 1 mile. So we need to 

be in a GPS system and not still tied to 1960 technology of using 

radar. We have the technology now. 

That is just one example and there are many other examples of 

where the new technological advantages which are available to us, 

we are still not—FAA, air traffic control—we are still not quite up 

to speed on, and that is what we need to improve on. 

Mr. DIAZ-BALART. Madam Secretary, and again, this is a conversation we will continue to have. I do want to note that the U.S. 

has deployed the ADSB GPS technology. The issue is not that the 

technology is not available. The issue is that the airlines need to 

equip themselves with it. But anyway, those are conversations that 

I look forward to having with you. 

Secretary CHAO. Okay. 

Mr. DIAZ-BALART. And again, I am thrilled that—— 

Secretary CHAO. I have an answer to that one, too, but we can 

discuss——

Mr. DIAZ-BALART. We will continue. 

Secretary CHAO. Yes, we will continue this. 

Mr. DIAZ-BALART. This is a long conversation. And again, Mr. 

Price.

Mr. PRICE. Thank you, Mr. Chairman. Madam Secretary, I want 

to quickly achieve some closure on your earlier conversation with 

me and Ms. Lowey and Ms. Clark, saying that the reason you obviously took us aback is that your answer departs from what we have 

heard, what I have personally heard from other cabinet secretaries 

about this matter, in my personal case, Carson, Kelly, Mnuchin. 

Secondly, I assure you it is not a question of your good will. We 

do not doubt your good will. The question is a matter of policy, the 

obligation that anyone in your position has to respond to oversight 

inquiries from duly elected members of Congress, and particularly 

the committees charged with funding and overseeing your Department.

Let me ask you about capital investment grants, New Starts. 

Your budget request upends the precedent of Federal support for 

transit projects, specifically the budget would cut off Federal fund-
449

ing for new transit projects and those currently in the CIG pipeline, and spare only those projects with full funding grant agreements already in place. I want to ask you about that in particular, 

that pipeline. 

I applaud you for advancing projects like Phoenix, Pittsburgh. 

They went into project development. The New York Canarsie Line 

went into engineering. Going forward are you going to continue to 

rate, review, and move projects through the pipeline? 

And B, what about Small Starts? The fiscal 2017 Omnibus provided funding for 10 Small Starts projects. When do you expect to 

sign Small Start grant agreements for those projects and award the 

funds to the sponsors? 

Secretary CHAO. It is actually a more complicated answer which 

I do not think you will appreciate, but the current guideline from 

the administration is that for New Starts, that there is going to 

be—if there is not funding, then I cannot sign the full funding 

agreement. And if I cannot sign the full funding agreement, obviously there is no funding. But it really depends on the Congress. 

Right now, for those that do not having funding, I will not be 

able to sign it. 

Mr. PRICE. There are some that do not have the full increment, 

as you say. As I understand it, there is through the fiscal 2017 bill 

there is full funding for six of those. 

Secretary CHAO. Yes, and they are actually listed. So if you are 

on that list, you will get funding. If you are not on that list, then 

you will not. 

Mr. PRICE. All right. Can you tell us about the pipeline going forward, since our time is limited? What about the continuation of—— 

Secretary CHAO. There will not be any New Starts. 

Mr. PRICE [continuing]. Rating and reviewing and moving 

projects through? 

Secretary CHAO. Yeah, the administration does not support New 

Starts.

Mr. PRICE. Well, on what basis did you advance Pittsburgh and 

Phoenix and New York Canarsie? 

Secretary CHAO. I think they were already defined as New 

Starts.

Mr. PRICE. They are moving into—— 

Secretary CHAO. There is actually a list, so. 

Mr. PRICE. They are moving into project development. They are 

moving into engineering. That is a process that is ongoing. Is that 

process going to stop? 

Secretary CHAO. I do not think so. I mean, these cities, they will 

have to now consider what they want to do. If they do not have the 

funding beyond 2017, what will they do? So that is a question and 

I cannot answer it for them. They may go to public-private partnerships. They may find other sources of funding, but that is something they are going to have to consider. 

Mr. PRICE. You have no answer for them. You are going to continue to move them into these various phases, these early phases, 

but there is no—— 

Secretary CHAO. I think we are pretty—— 

Mr. PRICE [continuing]. But there is no—— 

Secretary CHAO. The good part—— 
450

Mr. PRICE [continuing]. Resources. 

Secretary CHAO. But the good part is if you are on that list, as 

I mentioned, of fiscal year 2017 or for that is for the fiscal year 

2018, if you are on that list, you can be assured of some certainty. 

If you are not, it is probably not going to be funded. So it is pretty 

clear.

Mr. PRICE. Well, there are—— 

Secretary CHAO. And then alternative plans have to be made, obviously.

Mr. PRICE. All right. My time has expired. There are projects in 

this kind of—— 

Secretary CHAO. Let us discuss that offline. 

Mr. PRICE [continuing]. Betwixt and between discussion. 

Secretary CHAO. Okay. 

Mr. PRICE. It is a situation, so we do need to have some understanding of that. 

Secretary CHAO. Yes, then let us discuss this further and see. 

Mr. PRICE. All right. Thank you. 

Secretary CHAO. Thank you. 

Mr. PRICE. Thank you, Mr. Chairman. 

Mr. DIAZ-BALART. Thank you, sir. Mr. Valadao. 

Mr. VALADAO. Thank you, Chairman. Madam Secretary, livestock 

haulers in my district and across the country have a challenging 

task of balancing both the safety of motorists and the health and 

welfare of animals being transported. Unfortunately, the impending December 18, 2017, electronic logging device, ELD, enforcement 

date and existing hours of service rules do not adequately accommodate this subject of the trucking industry. Industry members 

and authorities have expressed the need for delayed implementation of the rule to address concerns and provide sufficient training 

and education for the uniformed compliance and enforcement. 

While motorists safety remains a top priority, so does the welfare 

of our animals. What long-term solutions do you recommend to ensure both motorist safety, as well as animal welfare? Probably not 

one you spend a lot of time on. 

Secretary CHAO. I am sad to hear that. Of course we want to protect our pets, our livestock. 

Mr. VALADAO. It is mostly geared to livestock. 

Secretary CHAO. Yes. I will look into that. 

Mr. VALADAO. All right. 

Secretary CHAO. I do not have the answer to that. 

Mr. VALADAO. In your opinion, are ELD devices able to accurately distinguish between the times that a truck may be running, 

but not yet on the road? For livestock haulers this would include 

time to the initial loading location, time spent waiting, and time 

loading. In the future, would the Federal Motor Carrier Safety Administration be willing to work with the livestock and insect industry to provide further exemptions or flexibility for them under the 

hours of service rule? 

Secretary CHAO. I am not familiar with this subject as you mentioned, but I look forward to working with you and your constituents.

Mr. VALADAO. Thank you. I really do appreciate that. 

Chairman, under my time limit, so I yield back. 
451

Mr. DIAZ-BALART. You know, I was very proud of how this committee always sticks to the timeline. Today we have not been doing 

that great, but it is okay. 

Ms. Clark. 

Ms. CLARK. Thank you, Mr. Chairman. Madam Secretary, I 

would like to return to the maritime academies. We talked about 

their essential role in sealift capacity, our national security, but 

there have also been very troubling recent reports of sexual misconduct at the Merchant Marine academies that really allege a hostile culture for the female midshipmen. And these reports of unwanted sexual advances, harassment, and assault have caused the 

academy to suspend its Sea Year Program. 

So I have two questions for you. How is your Department going 

to handle these allocations? And also, how is your budget and your 

proposed expenditures going to ensure the safety of female midshipmen during their Sea Year when most of these incidents occur? 

Secretary CHAO. I am obviously very concerned about these 

issues, as are my colleagues at the Department of Transportation 

and at MARAD, so we are investigating this. And the dollar 

amount that you specifically mentioned, it has been increased from 

$380,000 for education, advocacy, counseling, to almost a million 

dollars now. But we are very concerned about this issue and obviously we need to do something about it because, as you mentioned, 

it is connected to the accreditation issue and it is a safety issue. 

Ms. CLARK. Right. We had the Inspector General in several 

weeks ago and we were talking about this issue. Are you working 

closely with them on this issue? 

Secretary CHAO. Yes, and I say yes although he has the lead on 

the investigation, of course. 

Ms. CLARK. Yeah, yeah. 

Secretary CHAO. We are kept apprised and he will give recommendations and we will see where we go from there. But obviously, we are very concerned about it and so if you have suggestions, we would love to work with you, as well. 

Ms. CLARK. All right. We will welcome that opportunity. Thank 

you. One minute back to you, Mr. Chairman. 

Mr. DIAZ-BALART. Mr. Aguilar. 

Mr. AGUILAR. Thank you, Mr. Chairman. I will not take Representative Clark’s minute. I will stick to my own. 

Madam Secretary, as a member of the committee one of our 

areas of responsibility is to make sure that these funds are invested wisely, and I know that you share our concern about that 

issue. And one of the ways that some agencies have sought to utilize technology is by using geospatial analysis and technology. 

FEMA has done this, has utilized this technology. 

Do you think that it would be beneficial for the Department of 

Transportation to employ technology to apply a more kind of realtime view of where we are with our transportation infrastructure 

system, with the projects that DOT is funding, where they are in 

the process, what is getting complete at what stage, or are those 

being completed? Would you be more open to looking at how we use 

technology in the Department in order to advance the priorities, to 

make sure that the American public, similar to what was done with 

the stimulus years ago, in a tracking fashion that individuals can 
452

track what projects are being awarded and where they are within 

the pipeline? Is there more than we can do and help you with? 

Secretary CHAO. That is very interesting. 

Mr. AGUILAR. Yeah. 

Secretary CHAO. Yeah, I do not know. That is—— 

Mr. AGUILAR. You have—I know you discussed—— 

Secretary CHAO. I understand your concern. Yeah, that is an interesting concept. I would be more than willing—— 

Mr. AGUILAR. And I know you discussed before your reluctance 

to support siphoning aside money, but one of the ways—one of the 

areas——

Secretary CHAO. The transparency and it allows people to find 

out what is going on, yeah. 

Mr. AGUILAR. Absolutely. 

Secretary CHAO. Yeah, sure. 

Mr. AGUILAR. And one of the ways that Congress has asked you 

to prioritize the budget and the agency has accepted, obviously, and 

there is funding within fiscal year 2017, as well as the fiscal year 

2018 request, is transportation planning and development. So I just 

wanted to know your thoughts on how we do a better job of managing those projects, having a more, you know, real-time analysis 

of where we invest or funds. 

Secretary CHAO. The real-time analysis is the key because I believe that the Transportation Department has a good handle on 

monitoring funds, how it is being used, whether the funds are 

being used for the purpose they were intended, all that. 

Mr. AGUILAR. Sure, sure, absolutely. 

Secretary CHAO. So I think we have a good monitoring system. 

I mean, after all, we are grant makers—— 

Mr. AGUILAR. That is correct. 

Secretary CHAO [continuing]. And so we need to monitor for distribution.

Mr. AGUILAR. Yeah. No, no, no, no, and I am not questioning—— 

Secretary CHAO. But your—— 

Mr. AGUILAR. Yeah. 

Secretary CHAO. So you are saying on real time—— 

Mr. AGUILAR. Yeah, yeah. 

Secretary CHAO [continuing]. Which is very interesting. 

Mr. AGUILAR. No, I am not questioning—— 

Secretary CHAO. Yeah. 

Mr. AGUILAR. Yeah, I am not questioning the ability of your staff. 

Secretary CHAO. So we like to—— 

Mr. AGUILAR. Right. 

Secretary CHAO. So I would like to hear more about that. 

Mr. AGUILAR. Yeah, I am not questioning the ability of—— 

Secretary CHAO. And maybe we are doing that already, but that 

is a very interesting thought. 

Mr. AGUILAR. Sure, sure. No, and I think your ability to provide 

oversight is totally fine from the grant side. I am just saying, yeah, 

as you mentioned, from a transparency perspective, you know, is 

there more that we can do to show the American public, you know, 

where the investments are occurring? 

Secretary CHAO. Well, if you have ideas, again, we are very open 

to discussing them with you. 
453

Mr. AGUILAR. Sure. I appreciate it. Thank you so much. 

Mr. DIAZ-BALART. Thank you, sir. Let me recognize the vice 

chairman of the subcommittee, Mr. Joyce. 

Mr. JOYCE. Thank you, Mr. Chairman. In trying to go through 

with the question I asked you about the MPOs to begin with. There 

was a bill, 496, that the President signed that talked about the 

merger aspect, but I was talking more about the expansion aspect 

of the MPOs. And I do not see it addressed in there, the fact that 

they are going into neighborhoods and telling or dictating to communities how they should grow forward. Is that something we can 

address with you offline as we move forward? 

Secretary CHAO. Of course. 

Mr. JOYCE. Okay. 

Secretary CHAO. Let us talk about that. Our rulemaking last 

spring dealt with mandatory MPOs. 

Mr. JOYCE. Great. Thank you very much. 

Mr. DIAZ-BALART. Thank you, sir. Madam Secretary, let me first 

thank you and also your staff for your participation here this afternoon. The committee staff will be in contact with your budget office 

regarding questions for the record. I know that we will all have a 

number of questions to be submitted and I would imagine that, 

again, all of us would do that. If you could please work with OMB 

to return the information for the record to the subcommittee within 

30 days from tomorrow, that way we will be able to publish the 

transcripts of today’s hearings and make obviously informed decisions when crafting the fiscal year 2018 bill. 

I would be remiss, Madam Secretary, if I did not say, you know, 

obviously you are a well-known entity for those of us who have 

been here, and your reputation has always been one of obviously 

talent, but also responsiveness and accessibility. And I just want 

to tell you that you have proven that that has been the case; that 

you have been exceedingly responsive to our requests and you have 

been accessible. So just know that that does not remain unnoticed 

and that we do appreciate your continuing willingness to work with 

us.

And I will tell you that I for one, and all of us, look forward to 

a very close working relationship. You know, we have to be working very closely. And again, I think all of us are thrilled that it is 

you, not only because of your history, but because you have demonstrated already in the short time that you have been there and 

that you remain as accessible and as responsive as anybody. 

So thank you for your service. We look forward to continuing to 

work with you. 

Mr. Price, any closing remarks? 

Secretary CHAO. Thank you. 

Mr. PRICE. Well, thank you, Mr. Chairman. I also thank you for 

your discussion here with us this morning. We will all have further 

questions that we want to explore for the record, but I join the 

chairman in gratitude for your appearance and a desire to earnestly work on these transportation issues. You are leading a department that is at the forefront of our country’s economic 

wellbeing, the quest for new and better jobs. And it has a history 

of relatively bipartisan cooperation and support—— 

Secretary CHAO. Yes. 
454

Mr. PRICE [continuing]. Both in the Congress and in the various 

stakeholders that you work with. That will be very important going 

forward in divisive times to find some way to invest in our country’s transportation future. So thank you so much. 

Secretary CHAO. Mr. Chairman, Ranking Member Price, thank 

you so much for the opportunity because I want to reinforce again 

I have been in this Department before. It has always been bipartisan and that is the spirit with which I proceed, and I look forward to working with all members of the committee. 

Mr. DIAZ-BALART. Thank you, Madam Secretary. The meeting is 

adjourned.

Secretary CHAO. Thank you. 
455

FTA Transit Assault Rulemaking 

Question: Section 3022 of the FAST Act requires the Federal Transit Administration (FTA) to 

issue a Notice of Proposed Rulemaking on protecting transit operators from the risk of assault. 

Specifically, the FTA was to issue the rulemaking within 90 days of the publication of its 

Review of Public Transportation Standards (section 3020 ofFAST).l understand the FTA 

Review was published in January of2017. Can you inform the Committee on the status of this 

transit safety rulemaking? What is the Department's timeline for completing this rulemaking? 

Answer: The Department currently is developing a Notice of Proposed Rulemaking (NPRM) 

addressing protection of transit operators from the risk of assault. This rulemaking is subject to 

Executive Order 13771 (Reducing Regulation and Controlling Regulatory Cost) and Executive 

Order 13777 (Enforcing the Regulatory Reform Agenda), and will be evaluated by the 

Department's Regulatory Review Task Force. The Department anticipates that the NPRM will 

be published later this year. 
456

FMCSA 's Lease and Interchange Rule 

Questions: On May 27, 2015, FMCSA published a final rule (80 Fed. Reg. 30164) on the lease 

and interchange of passenger vehicles. In response, the industry filed petitions for 

reconsideration in August 2015. On August 31,2016, FMCSA published a notice of intent to 

revise the rule concerning four specific areas, as raised in the industry petitions. On Friday, June 

16, 2017, FMCSA published a notice, again expressing its intention to revise the regulations and 

seeking comment, but only referenced revisions for two areas of concern; along with a notice 

postponing the final rule compliance date to January 1, 2019. The Committee is seeking 

clarification on the following: 

1. Can you advise the Committee if the notice published on June 16, entitled "Proposal in 

response to petitions for reconsideration; request for comment," constitutes a notice of 

proposed rulemaking to revise the rule? 

2. If the June 16 notice constitutes a notice of proposed rulemaking, is FMC SA limiting the 

scope of revisions only to those matters addressed in the notice i.e. excluding chartering 

from the lease requirements and extending the emergency 48-hour delay in preparing 

lease documents? Will the Agency consider additional revisions based on the original 

four areas of consideration, outlined in the August 31, 2016 notice? 

3. Can you provide an estimated timeframe for FMCSA to complete this rulemaking? 

Answers: FMC SA plans to initiate a new notice-and-comment rulemaking preceding to address 

the passenger-carrier industry's concerns about the May 27,2015, final rule on the lease and 

interchange of passenger-carrying commercial motor vehicles. The rulemaking notice would 

present (1) the Agency's proposed amendments and/or revisions to the May 27, 2015, final rule, 

and (2) regulatory analyses of the estimated impact of the proposed changes on the industry in 

terms of costs savings from the reduced regulatory burden that we anticipate. 

The June 16, 2017, notice did not constitute a proposed rule. It was intended as a reiteration of 

the Agency's intent to make changes to the May 27, 2015, final rule in response to the concerns 

raised by the passenger-carrier industry. On June 16, the Agency also issued a final rule 

extending the compliance date for the May 27,2015, final rule from January I, 2018, to January 

l, 2019, to ensure sufficient time to complete the rulemaking process before any of the regulated 

carriers incurred costs to comply with the 2015 final rule. 

We understand that despite our attempt to simplify this rule, there has been considerable 

confusion. We further understand that there is significant interest in doing a new notice of 

proposed rulemaking (NPRM) and that is the direction the Department is currently moving. We 

intend to address all four issues listed in our August 31, 2016, notice of intent. 

With regard to the tirneframe for the forthcoming rulemaking, the Agency will work with the 

leadership team of the Department to prepare a schedule for publication of the NPRM. 
457

Drunk Driving 

Drunk driving fatalities account for approximately one-third of all the deaths on our nation's 

highways. Drunk driving fatalities on our roadways have decreased by 51% since 1982 while 

total traffic fatalities declined by approximately 20%-- so clearly some of the steps we've taken, 

improved technologies, and law enforcement efforts have had an impact. Unfortunately, the 

downward trend line for drunk driving fatalities changed course in 2015, rising 3.2% over 2014, 

and reportedly have continued that deadly trend in 2016. In addition, drunk driving arrests and 

enforcement efforts are down. Madam Secretary, all roadway fatalities are a tragedy and we 

know that NHTSA has worked hard at impacting distracted driving, but your own Department's 

statistics show that drunk driving kills three times as many people on our highways as all forms 

of distracted driving combined. 

Question: With such a preponderance of fatalities in this category -- and with those sharply 

increasing -- what additional resources and initiatives are identified or available in your budget 

request to reverse the incidence of drunk driving and the increase in alcohol-related fatalities on 

our highways?" 

Answer: The Department supports, and will continue to support, a number of proven programs 

to combat impaired driving. The FY 2018 budget request includes approximately $190 million 

for research activities, grants to States, media campaigns such as the national "Drive Sober or 

Get Pulled Over" campaign, law enforcement, prosecution and judicial training and education, 

and State ignition interlock programs. The proposed FY 2018 funding also supports the 

following new and continuing initiatives: 

• Developing and promoting advanced training programs on impaired driving 

countermeasures for State and community highway safety specialists; 

• Developing impaired driving technical assistance teams to assist States to strengthen 

impaired driving programs; 

• Promoting a specialized training course for the medical community on techniques for 

counseling patients on the risks associated with alcohol and driving; 

• Providing technical assistance to States to increase the number of offenders using ignition 

interlocks; 

• Accelerating the development of a passive and voluntary alcohol detection technology. 
458

Elimination of Amtrak's Long Distance Service 

Secretary Chao, your budget proposes to eliminate Amtrak's long distance service and estimates 

an associated saving of $642 million when compared to the FYI7 enacted level. 

Question: Eliminating long distance service would tum off revenues immediately. However, 

costs would continue to accrue, especially those costs associated with contractual agreements. Is 

that correct? 

Answer: The Department recognizes that there are many cost, revenue, and operational impacts 

related to shutting down Amtrak's long distance routes. Nevertheless, funding for Amtrak's long 

distance routes does not provide the country with the return on investment we deserve. These 

trains are expensive to operate and maintain and account for much of Amtrak's operating losses 

while carrying only a small proportion of Amtrak's ridership. Amtrak is in the best position to 

provide a complete analysis of Amtrak's responsibilities under its contractual agreements. The 

Department looks forward to continue working with Congress and Amtrak to eliminate Federal 

subsidies for long distance routes and mitigate any related effects and costs. 

Question: Amtrak states that elimination will actually cost $423 million the first year and 

estimates a cost of $1 billion over 5 years. How is it that you estimate an immediate savings? 

Answer: The President's FY 2018 Budget proposes to eliminate Federal subsidies for Amtrak 

long distance routes, and does not speak to the transition costs associated with this action. The 

Administration strongly believes that Federal investments should be directed to where it 

produces the greatest benefit. Under this proposal, Amtrak would be able to improve its 

efficiency across the network and focus its funding towards those investments that will provide 

the most return and value. 

Question: What effect would the elimination of long distance service have on the cost of statesupported routes and the Northeast Corridor? Wouldn't the costs of services associated with 

these lines increase? By how much? 

Answer: The Department recognizes that there are many cost, revenue, and operational impacts 

related to shutting down Amtrak's long distance routes. This includes potential impacts to 

Amtrak's Northeast Corridor and state-supported routes due to shared network costs that will 

remain but no longer be allocated to long distance trains. Refocusing Amtrak's attention and 

Federal investment to the areas of the network that are most successful-state-supported routes 

and the Northeast Corridor-will benefit those users. The Department looks forward to 

continuing to work with Congress and Amtrak to increase the return on Federal investment and 

to mitigate any potential adverse effects to the changes required. 
459

Rural Communities and Transportation 

The elimination oflong distance service and the elimination of the discretionary portion of the 

essential air service program would severely impact rural communities. 

Question: Did you consider the reduction of transportation options on those that live in rural 

communities? 

Answer: Rural communities are an essential part of our country and economy, and 

transportation access programs are essential to ensuring that these vital communities are fully 

connected to the larger economy. In an environment of constrained funding and resources. the 

FY 2018 President's Budget works to reform transportation access programs to ensure the 

programs operate efficiently and are sustainable for future generations. 

The Essential Air Service (EAS) program has been important to its stakeholders because it has 

provided a link to the national air transportation system for many small communities. However, 

over the years, the EAS program has drifted away from its original purpose of subsidizing 

transportation access for truly remote communities. The lack of appropriate sized aircraft and 

qualified pilots, coupled with an oversubscribed waiver process, have made the program 

inefficient. As a result, program costs have ballooned in excess of !50% over the last ten years, 

subsidizing numerous localities that have access to major airports close in proximity. Under the 

President's FY 2018 budget, overflight fees will fund a new Transportation Aviation Assistance 

to Remote Areas (TARRA) program. The TARRA program will continue the original intent of 

the EAS program by focusing on transportation assistance for communities demonstrating the 

greatest need. 

Long-distance rail services have also proved inefficient and incur the vast majority of Amtrak's 

operating losses. The FY 2018 budget request's proposal to re-evaluate federal support for long 

distance trains will allow the Department to allocate limited resources to areas where passenger 

rail makes sense today. However, DOT continues to offer other programs that support the surface 

transportation needs of rural and remote communities. The Nationally Significant Highway and 

Freight Projects discretionary grant program, also known as Infrastructure For Rebuilding 

America (INFRA) Grants, provides DOT the ability to award competitive grants to projects of 

national or regional significance and is authorized at $4.5 billion through 2020. The INFRA 

notice released on June 29 includes several provisions that account for the unique needs of rural 

areas. 
460

Maritime Administration and National Security Multi-mission Vessel (NSMV) 

The State Maritime training vessels for the six schools are aging. The oldest one is 55 years old 

and is reaching the end of its useful life. The State Maritime Academies will not be able to 

continue meeting the demand for seaman training without vessels. 

Over the past two years, we have provided funds for the common-hulled ship design for a 

National Security Multi-mission Vessel (NSMV), which would be configured for humanitarian 

aid, disaster relief, and mariner education. 

Question: Your budget does not continue funding for the NSMV. Mariners must log 300 days 

of sea time. What is your proposal for ensuring the pipeline of Coast Guard-credentialed 

licensed maritime officers? 

Answer: The Department is committed on working to ensure we find a solution to the aging 

training ship fleet issue at the State Maritime Academies. At the Secretary's direction, the 

Maritime Administration is analyzing options for training vessel replacement or other 

alternatives. 
461

DAR-56, MAG-6 Programs 

Madam Secretary, the FAA has implemented a successful "transition" program, the DAR-56 

program, to make more efficient the U.S. aviation industry's implementation of Maintenance 

Annex Guidance, Revision 6 (MAG-6) to the Bilateral Aviation Safety Agreement between the 

European Union and the U.S. 

We are concerned that this successful program expires on September 30, 2017. and are hopeful 

that the FAA will continue this program so long as MAG-6 is in effect. Failure to extend the 

DAR-56 program will result in billions of dollars of US industry investment being wasted for no 

reason other than a new paperwork requirement, the reduced availability of aircraft parts, 

increased parts costs and likely delays in returning commercial aircraft to service. 

Question: Madame Secretary, can you confirm with the FAA that they will continue the DAR56 program so long as MAG-6 is in effect? 

Answer: The Federal Aviation Administration created the DAR-56 program to give accredited 

distributors a limited time to generate FAA 8130-3 Authorized Release Certificate, 

Airworthiness Approval Tags, on parts held in their inventory. We established the temporary 

program in October 2016 for products that did not have an 8130-3 tag that the European Aviation 

Safety Agency (EASA) was requiring beginning at the end of last year in accordance with EASA 

Maintenance Annex Guidance (MAG) Rev 6. The FAA does not intend to extend the program 

after September 2017 because it was always intended to be a temporary measure and because it 

does not provide the level of conformity oversight we desire for a permanent process. 
462

FAA Safety 

As we discuss the future of the FAA's safety function, I would like to focus on the work our air 

traffic controllers are currently doing within the FAA 

As I understand it, air traffic controllers work hand in hand with the FAA's safety office in a 

collaborative process to ensure technologies and procedures place safety at the forefront 

It seems to me this is one of the advantages of FAA's current organizational structure. 

Question: Could you comment on the current collaborative process between controllers, FAA's 

safety managers, and industry partners to ensure safe operations? 

Answer: The collaborative processes that now exist between controllers, safety managers, and 

industry partners have made significant contributions to the exemplary safety record of U.S. 

aviation. Historically, aviation safety used a forensic approach or post-accident/incident 

investigation techniques to determine causal factors and issues. In some cases, precursors to 

safety issues went umeported until they resulted in a significant loss. Now, a predictive 

approach has been introduced into air traffic safety; built directly on safety management 

principles to proactively address emerging safety risks by taking advantage of the growing 

availability of safety data and the development of powerful analytical tools. 

One key collaborative process has been the Voluntary Safety Reporting Program. An adaptation 

of the successful airline program, this has proven highly effective in providing a singular source 

to report any safety concerns, non-compliance, deficiency, or deviation for all air traffic 

organization operational employees. Relevant and actionable information from this program is 

also shared with our industry partners. 

Another important area is the congressionally mandated improvements in Runway Safety Areas. 

This program included partners across government, airlines and industry, resulting in 

significantly improving the margin of safety for the aircraft they serve. Additionally, Runway 

Status Lights effectively prevents runway incursions by providing direct indication to pilots and 

vehicle operators that it is unsafe to enter or cross a runway or begin a takeoff. 

Question: Has this collaboration brought us safety benefits? 

Answer: Yes, the collaboration between the Aviation Safety and Air Traffic Organization Lines 

of Business has contributed to the safety record of U.S. aviation. For example, our Voluntary 

Safety Reporting Programs, which includes reports from pilots, controllers, and technicians, has 

become a component of our Safety Strategy. One specific example of the benefits of the 

Voluntary Safety Reporting Program is the on-going collaboration between pilots, controllers, 

technicians, and safety experts to reduce the instances of serious runway incursions. Voluntary 

safety reporting has provided valuable insights into improving data collection to assist with 

mitigating the complex array of potential hazards to reduce the number of serious runway 

incursions. 
463

Further, the FAA has formalized a collaborative partnership between controllers and managers 

known as Partnership for Safety (PFS). It puts system and facility-centric data in the hands of 

the facility's safety teams to solve its issues. Through this partnership, Safety Awareness for 

Excellence (SAFE) discussions provides a platform for local and national safety-related 

conversations. An added benefit is that facilities can share proven safety best practices and 

information. These are just a sample of our efforts that are implemented collaboratively and 

drive our overall safety culture. 
464

FAA Procurement Reforms 

Secretary Chao, as you know, Since the 1990s the FAA has had significant flexibilities in its 

procurement processes, where it is free from many of the requirements that are imposed on other 

Agencies. 

Question: Putting aside the debate on FAA's organizational structure or governance, what can 

we do right now- this year, next year to make further improvements to FAA's ability to 

procure the best technology in the fastest way possible? 

Answer: The Administration believes that the best manner Congress can ensure state-of the-art 

technology is procured, is to pass legislation in accordance with the President's principles for 

reforming air traffic control. Among these principles is the establishment of a not-for-profit, nongovernmental entity that will facilitate modernization of the nation's air traffic control system. 

Part of this modernization effort will include the new entity's streamlined ability to procure 

goods and services, as well as bond or pledge future revenues to fulfill the terms of financial 

agreements. These factors will all ensure that the best aviation technology is procured in the 

fastest way possible. 
465

Transit 

Secretary Chao, you just received $2,4 billion in FY17 to execute projects in the Capital 

Investment Grants (CIG) pipeline, including $667 million for new projects. 

Question: Do you plan on funding each project as directed by the Committee? This includes the 

10 Small Starts projects. 

Answer: The Department will continue to implement the Capital Investment Grants program in 

accordance with program provisions as authorized in statute. As it applies to appropriation bills, 

the Department will execute and allocate appropriated Capital Investment Grants funding in 

accordance with enacted bill language and accompanying bill reports. 

Question: A few of the small starts projects anticipate a 2 year commitment from the Federal 

government. Will you still plan to execute these projects, as specified in our most recent bill? 

Answer: The Department will sign Small Starts agreements listed in FY 2017 Congressional 

Appropriations reports when those projects have fulfilled all the statutory requirements and are 

ready to execute a construction grant agreement. llowever, for those projects where grant 

agreements may be put in place but the project is not fully funded, project sponsors should 

recognize that funding for projects in FY 2018 and beyond is subject to appropriation. The 

Administration has not requested funding for any Small Starts projects in the President's 

FY 2018 Budget. 

Question: If the will of Congress does not align directly with the priorities of the 

Administration, how do you plan on reconciling the differences? 

Answer: The Department will continue to implement the Capital Investment Grants program in 

accordance with program provisions as authorized in statute. As it applies to appropriation bills, 

the Department will execute and allocate appropriated Capital Investment Grants funding in 

accordance with enacted bill language and accompanying bill reports. 

Question: If Congress decides to continue funding the program this year, and put forward new 

projects for FFGAs, will you be willing to work with us to execute FFGAs? 

Answer: The Department will continue to implement the Capital Investment Grants program in 

accordance with program provisions as authorized in statute. As it applies to appropriation bills, 

the Department will execute and allocate appropriated Capital Investment Grants funding in 

accordance with enacted bill language and accompanying bill reports. 

Question: Will you continue to work with the project sponsors to move new projects through the 

project development and engineering stages, regardless of the funding discrepancies? 
466

Answer: Yes. Consistent with Federal law, FTA is advancing CIG projects through the steps in 

the program as they meet the statutory criteria requirements for advancement. This includes 

advancement into Project Development and Engineering. 
467

FAA- Next Ge11 

I have been hearing from some of the industry partners who are working on Next Gen programs, 

and there is growing concern that, in the debate on FAA's future, we have lost sight of some of 

the progress that has been made modernizing the airspace, 

I think once you look at the efforts of our private partners in developing technologies, it becomes 

clear the U.S. is a global leader. Further, I don't think FAA is broken. I've been impressed by the 

collaboration between air traffic controllers and industry partners. 

This doesn't mean we shouldn't keep a watchful eye on progress, or stop holding FAA's 

leadership accountable. 

Can you give us a status update on some of the NextGen programs, including progress to date, 

and work that Jay ahead: 

Question: What is the status ofDataCornrn development and the schedule for deployment? 

Answer: The Data Communications program- or Data Cornrn -has been deployed to 55 air 

traffic control towers, 29 months ahead of schedule and under budget. The operators and 

controllers have quickly adopted the service with over 32,000 Data Comrn Tower operations per 

week currently being conducted in the National Airspace System (NAS), which is a 428 percent 

increase in the last year. The program has exceeded its equipage goals over two years ahead of 

schedule, with more equipped aircraft corning into the operation every month. 

Data Cornrn services for high-altitude airspace (called the En Route environment) are being 

deployed in two phases. For the first phase, the FAA developed a deployment strategy in 

October 2014, is currently testing and evaluating software enhancements, and is conducting 

demonstrations to ensure that services meet operational requirements. The FAA is on track to 

deliver Initial Services starting in FY 2019. 

For the second phase, the program reviewed requirements this past March and continues to 

identizy future software development, testing, and deployment strategies. 

Question: What about Next Gen Weather programs? 

Answer: The FAA is implementing two complementary programs to modernize and improve 

aviation weather: Common Support Services-Weather (CSS-Wx) and NextGen Weather Processor 

(NWP). Initial deployment of these systems will begin in FY 2019. 

These weather programs will provide greater access to advanced aviation-specific weather 

information to reduce weather-related delays, airline operating costs, and aviation accidents, 

increasing operational safety and efficiency. The weather programs are meeting their acquisition 

milestones on or ahead of schedule. 

These milestones include Critical Design Review (CDR) for CSSX-Wx in June 2016 and for NWP 

in November 2016. Software development and testing is continuing this year, with key site 
468

installation scheduled for FY 2018 and Initial Operational Capability (IOC) at the key sites and InService Decision in FY 2019. 

By FY 2022, NextGen weather capability will be available at 2 central facilities, 21 Air Route 

Traffic Control Centers (ARTCCs), the Air Traffic Control System Command Center (ATCSCC), 

33 Terminal Radar Approach Control (TRACONs), 3 Combined Center Radar Approach Control 

(CERAPs), and 60 Airport Traffic Control Tower (A TCTs). 

Question: How do you ensure that air traffic controllers collaborate on the development of these 

technologies? 

Answer: The FAA and the National Air Traffic Controllers Association (NATCA) have developed 

a constructive and collaborative relationship aimed at advancing NextGen. The FAA engages 

NA TCA in the Pre-implementation and Implementation phases of all NextGen programs. 

PRE-IMPLEMENTATION 

• Assist in defining the scope and priorities of projects that we undertake 

• Participate in program/project management reviews and technical interchange 

meetings as needed 

• Participate laboratory activities such as Human-In-The-Loop Simulations and field 

demonstrations 

• Participate in the development and validation of operational concepts, requirements 

and the planning and execution of shadow and operational evaluations 

IMPLEMENTATION 

As members of National Operational (Ops) Team, controllers are involved with the design and 

development ofNextGen systems and technologies as subject matter experts (SME) as follows: 

• Participate in system design reviews (SDR) 

• Participate in detailed design reviews 

• Participate in operational evaluation activities 

• Participate in system test and key site activities 

• Participate during safety review and are part of the safety review board 

• Engage as part of the team to develop airspace procedures for field implementation 

By focusing together with NA TCA on milestones related to our programs we are on or ahead of 

schedule with many of our large investment programs. 
469

Responses to Congressional Inquiries 

Question: What is the policy at the Department with regard to responses to congressional 

inquiries? 

Answers: The policy of the Department is to be responsive to members of Congress. 

Question: More specifically, is there a policy or guidance that would prohibit or delay 

responses to Ranking Members of Congressional Committees or subcommittees of jurisdiction? 

Answers: Both as Secretary of Labor and as Secretary of Transportation, I have tried to be as 

responsive as I can be to the legislative branch, and I value the conversations I have had with 

members of Congress on both sides of the aisle. As a Department, we will continue to be as 

responsive as possible to all reasonable requests. 

As the Department Of Justice (DOJ) opinion itself makes clear, it is a legal interpretation about 

the relative role of committee chairs as opposed to other members, which is based on the 

consistent practice over a long period of time. 

Here is a quote from first paragraph of the DOJ opinion: 

.. ... the Executive Branch's longstanding policy has been to engage in the 

established process for accommodating congressional requests for i71(ormation 

only when those requests come from a committee. subcommittee, or chairman 

authorized to conduct oversight . .. 

The DOJ opinion also says with regard to responding to requests from individual members who 

are not committee chairs: 

" ... the Executive Branch has historically exercised its discretion in determining 

whether and how to respond. following a general policy of providing only 

documents and iiformation that are already public or would be available to the 

public through the Freedom of Information Act". 

In terms of requests from members who are not committee chairs, regardless of party, the DOJ 

opinion makes clear in its final paragraph that the response depends on the circumstances. 

"Whether it is appropriate to respond to requests from individual members will depend on the 

circumstances. In general, agencies have provided i71formation only when doing so would not be 

overly burdensome and would not interfere with their ability to respond in a timely manner to 

duly authorized oversight requests. In many instances, such discretionary responses furnish the 
470

agency with an opportunity to correct misperceptions or inaccurate factual statements that are 

the basis for a request. " 

Question: Is there a policy or guidance that would prohibit or delay responses to Democratic 

Members of Congress? 

Answers: No. 

Question: If such policies or guidance are in place to prohibit or delay responses to Ranking 

Members or all Democratic Members, was such developed in consultation with the White House 

or the Office of Management and Budget? 

Answers: There is no such policy or guidance in place. 

Question: Please provide the Department's definition of oversight activities. 

Answers: The policy of the Department is to be responsive to members of Congress. 
471

Air Traffic Control 

Question: Please provide a list of all environmental liabilities associated with air traffic control 

assets and an estimate for the cost to remediate each environmental liability. Please provide 

estimates in 2017 dollars. If estimates in 2017 dollars are unavailable, please provide the year of 

the estimate. If individual estimates are unavailable, please provide an aggregate estimate and 

the methodology used to arrive at such estimate. 

Answer: The FAA's annual Performance and Accountability Report (PAR) includes the 

environmental liability estimate which is calculated as the sum of the environmental remediation 

liability, and the environmental cleanup and decommissioning liabilities. 

The FY 2016 report estimates FY 2016 environmental remediation of$491,767,000 and the 

environmental cleanup and decommissioning liability of$458,392,000 for a total environmental 

liability of$950,159,000 in FY 2017 dollars. As for the specific liabilities, Attachment llists 

the basis of the FY 2016 environmental remediation liability estimate and Attachment 2 lists the 

basis of the FY 2016 environmental cleanup and decommissioning liability estimate. 

See Attachments 1 and 2 [tables] at the end of the document 

Question: Please provide a list of all radio spectrum associated with the air traffic control system 

and an estimate for the cost to relocate ATC systems to a different spectrum band. Please 

provide estimates in 2017 dollars. If estimates in 2017 dollars are unavailable, please provide 

the year of the estimate. If individual estimates are unavailable, please provide an aggregate 

estimate and the methodology used to arrive at such estimate. 

Answer: The attached chart [attachment 3) provides an inventory of radio spectrum that 

currently supports the aviation system. Providing a cost estimate for relocating A TC systems to a 

different spectrum band would be extremely challenging. Since relocating spectrum is an 

opportunity to consolidate functions and generate efficiencies in the spectrum being vacated as 

well as the systems being relocated, generating a cost estimate would depend on the specific 

project. Currently, the FAA is tmdertaking one such project, the Spectrum Efficient National 

Surveillance Radar (SENSR) program, to make available the band 1300- 1350 MHz for 

reallocation to shared Federal and non-Federal use through updated radar technology, in 

collaboration with the Department of Defense (DoD), Department of Homeland Security (DHS) 

and National Oceanic and Atmospheric Administration (NOAA). 

The FAA will generate a cost estimate for executing the activities specified in the Spectrum 

Pipeline Plan for the SENSR program. The estimate will leverage guidance provided in the 

Government Accountability Office's Cost Estimating and Assessment Guide as well as FAAspecific guidelines for cost estimating. The Lifecycle Cost Estimate will describe all costs 

associated with the planned activities, by system, year, type of activity, and agency office or 
472

bureau. An independent government cost estimate, focused on vendor cost requirements, will 

also be developed to support acquisition activities. 

Though the SENSR Program is currently refining cost estimates, a rough order of magnitude 

(ROM) Solution Implementation cost estimate of $12 billion was developed for the Office of 

Management and Budget using 2016 dollars. This cost estimate, however, was developed 

without the industry feedback on requirements (currently in process) and the follow-on DownSelect process (not yet in process). It was also based on previous investment analysis associated 

with a ground-based radar solution and was limited to performance requirements largely in 

support of FAA, but not necessarily DoD, DHS, and NOAA mission needs. Further, this 

estimate does not imply a pre-supposition on any particular industry solution, only includes 

Solution Implementation costs and does not cover fulllifecycle costs (e.g., recurring operations, 

maintenance). 

See attachment 3 [chart) at the end ofthe document. 

Question: Secretary Chao's testimony asserts that a new air traffic control structure will "allow 

for greater precision in managing the airspace, thus enhancing safety and alleviating flight 

delays". Delays under the operational control of the air traffic control system have declined from 

more than a third of all delay-minutes in 2004 to less than a quarter of delay-minutes in 2016. 

During the same time period, delays under the operational control of airlines have increased. 

How will a new air tratlic control structure reduce flight delays? Please differentiate between 

delays within the control of airlines and delays within the control of the air traffic control system. 

Answer: The proposed air traffic control structure may help reduce flight delays by allowing 

deployment of the new capabilities under development at the FAA earlier than would be possible 

under the current budget and acquisition processes. Many of these new capabilities are dependent 

upon the airlines and other stakeholders equipping their fleets with advanced avionics compatible 

with emerging technology; airlines would need to accelerate their avionics upgrade investment 

for the public to experience reduced delays earlier than currently planned. 

The FAA records operational flight delays by facility, which is different from but 

complementary to the Bureau of Transportation statistics quoted in the question. In general, the 

FAA does not attribute delays to either air tratlic control or airlines. 

The two largest categories of air traffic delay are weather (67%), and volume (24%). Most of the 

remaining delays (9%) are attributable to events associated with lack of runway availability (e.g., 

construction, or other types of obstructions), and other events (e.g., security and VIP movements, 

etc.). 

Weather, which is beyond the control of either air traffic or airlines, reduces airport and airspace 

capacity. New technology that the FAA is developing might alleviate some of the weather 

related delays, such as those associated with low visibility that make up 15% of all delays; 

however, other forms of disruptive weather such as thunderstorms, wind, snow/ice, or hurricanes 

are not addressed with technology, and delays associated with those types of events will likely 

persist. 
473

Volume related delays are a result of too much air traffic demand for the available airport or 

airspace capacity. Volume delays occur at high-demand destinations like New York, but also as a 

result of air carrier business models such as relying on hubs to connect passengers between 

flights with sharp peaks and valleys of activity rather than spreading out flights to different 

airports and different arrival and departure times. During these periods of compacted demand, 

minimal disruptions to normal operations can result in extended delay periods. 

Question: Under the Administration's proposal, would the FAA retain responsibility for 

equipage mandates and/or incentives? 

~ An equipage mandate would require rulemaking, which, as with other rulemakings, 

would remain FAA's responsibility. As with any rulemaking, this effort would involve 

stakeholder input, such as from the proposed not-for-profit air navigation service provider, 

aircraft operators, and the international community. 

The Secretary would be responsible for ensuring access to all airspace, air traffic services, and 

airport users. Therefore, any type of incentives for equipage under consideration that could have 

implications on access would fall under the Secretary's responsibilities. As in the case of a 

rulemaking, implementing equipage incentives would also involve input from the stakeholder 

community. 

Question: Please provide a list of offices or sub-offices at the FAA that the Administration 

believes perform inherently governmental duties. 

~ According to the FAA's FY 2017 FAIR Act Inventory recently submitted to the Office of 

Management and Budget, the FAA has 12,608 Full-Time Equivalents (FTE) that are classified as 

Code I- Inherently Governmental. This represents approximately 27 percent of the FAA's 46,000 

total FTE. These Inherently Governmental FTE reside in every office in the FAA, although their 

distribution varies widely by office. 
474

~ ~~fgrealiout ... ; ·· . .< ·''"' .;', ;;.s.:.:;, ' > · ..·. TQtal 

.··.'' ; .•"~':•.::,,.:.· '·•>"< •• >.>.> ····,> ,.· •. · 

ATO 1,979 18,752 11,306 32,037 

AVS 6,844 644 7,488 

AST 100 4 104 

AFN 1,919 95 1,229 3,243 

ANG 149 727 36 912 

AHR 274 44 229 547 

AOAAAE 34 10 44 

ACR 12 68 80 

AGI 10 10 

AOC 34 34 

AGC 107 129 236 

APL 122 33 155 

ASH 474 46 520 

ARP 550 60 610 

Total 12,608 19,733 13,679 46,020 
475

FAA, Piston Aviation Fuels Initiative (PAFI) 

Question: Congress has funded the P AFI process at $7 million per year since it began. Why 

does the FAA consistently request less funding for P AFI than what Congress provides? 

Answer: The Piston Aviation Fuel Initiative (PAFI) was originally established at the request of 

a broad cross section of aviation and petroleum industry and consumer representatives to develop 

a path forward for the identification, evaluation, and deployment of unleaded fuel replacements 

for current low lead aviation fuel. At the beginning of the PAFI program, the FAA agreed vvith 

its industry partners that it would be a 5-year program for approximately $5.6 million per year. 

We have based our annual budget requests on this original agreement. 

Question: Does the FAA require fleet-wide certification authority in order to make unleaded 

avgas available to General Aviation? If so, has the FAA relayed that request to authorizing 

Committees? 

Answer: Yes, the FAA requires fleet-wide certification authority. Existing certification 

procedures are constrained by the need to conduct an evaluation and approval of each engine and 

aircraft model to use the new fuel, whereas the PAFI program plan relies on evaluation of the 

new fuels for use on broad populations of engines and aircraft. With this additional authority, the 

Administrator would be able to authorize these existing populations of engines and aircraft to 

operate on the new unleaded fuels. The Department's understanding is that draft language for 

this authority exists within both the House and Senate proposals for the FAA Reauthorization. 

Question: At the conclusion of P AFI, is it necessary for a rulemaking process to take place? If 

so, would the FAA seek expedited rulemaking authority from Congress? 

Answer: Rulemaking will not be necessary to permit aircraft and engines to operate with the 

new unleaded avgas, but will be necessary to require aircraft owners and operators to use the 

new unleaded avgas. The FAA can authorize broad populations of aircraft to operate with the 

new fuels once the FAA Administrator is granted the additional authority we have requested in 

the FAA reauthorization language. However, it is widely accepted that transition to unleaded 

avgas will not take place without some form of federal requirement to ban the use oflead in 

aviation fuel. 

The Environmental Protection Agency (EPA) has been petitioned to evaluate, under the Clean 

Air Act, whether emissions of lead from aircraft operating on leaded fuel are reasonably 

anticipated to endanger public health. If the EPA makes a positive finding of endangerment, the 

FAA will be required to regulate the physical or chemical properties of avgas to eliminate these 

harmful emissions. This activity would entail regulatory activity by the FAA, which would, in 

effect, ban the use of leaded avgas. 
476

Question: Does FAA foresee any obstacles that could prevent the timely conclusion of the PAFI 

program by the end of2018? 

Answer: The P AFI test program is proceeding largely according to schedule, although some 

testing is being delayed by technical issues and industry company resource availability. Some 

findings from the test program to date have identified impacts that will require mitigation 

strategies to minimize disruptions to the production/distribution infrastructure, and to the general 

aviation fleet transition upon introduction of the P AFI fuels. The impact on the PAFI program 

schedule will depend on how many ofthese issues the program uncovers, and the extent of 

testing necessary to identifY suitable mitigations. The extent of these impacts is dependent on the 

properties of the PAFI fuels themselves, and will be different for each PAFI fuel. While we 

currently anticipate that the program can be completed on time, significant testing remains and 

further impacts could be identified which will require additional evaluation. The program has 

already been expanded to accommodate additional testing based on test results to date. 

Question: Does the FAA have the authority to order and enforce a ban on unleaded avgas? 

~ No, the FAA does not currently have authority to order and enforce a ban on leaded 

avgas. Under the Clean Air Act, if the Environmental Protection Agency (EPA) determines that 

lead emissions from General Aviation aircraft endanger public health, the FAA will be required 

(will then have the authority) to regulate avgas. Without an endangerment finding by the EPA, 

the FAA does not have this authority. The EPA has been petitioned to evaluate whether 

emissions oflead from aircraft operating on leaded fuel are reasonably anticipated to endanger 

public health, but has not yet made this determination. 
477

FTA, Capital Investment Grants 

Question: On June 1, 2017, FTA accepted projects in Pittsburgh and Phoenix into project 

development and advanced the Canarsie Line project in New Y ark into engineering. Will FTA 

continue to rate, review and advance projects into the project development and engineering 

phases? What does FTA plan to do with projects in the engineering phase that have met the 

statutory requirements for a full funding grant agreement? 

Answer: Consistent with Federal law, FTA is advancing CIG projects through the steps in the 

program as they meet the statutory criteria requirements for advancement. This includes 

advancement into Project Development and Engineering. As proposed CIG projects become 

ready for a funding agreement commitment, FTA will review current and future year funding 

resources, coordinate with the project sponsor, and determine next steps. 

Question: For each small starts project that received funding in the Consolidated Appropriations 

Act, 2017, please provide an estimate of when funds will be awarded to each project sponsor. 

Answer: FTA will award construction grants for all Small Starts projects appropriated CIG 

funds in FYI7 and prior years when the projects meet the requirements for such an award. 

Providing an exact timeframe for these awards is difficult given the sometimes iterative nature of 

determining all requirements have been met. Below is list of tentative time frames for each 

award. 

AZ Tempe, Tempe Streetcar Fall2017 

CA Sacramento, Downtown Riverfront Streetcar Early 2018 

CA San Raphael to Larkspur Regional Connector Fall2017 

FL Fort Lauderdale, Wave Streetcar Summer 2017 

FL Jacksonville, First Coast Flyer East Corridor BRT Fall2017 

IN Indianapolis, Red Line All-Electric BRT Fall2017 

MI Grand Rapids, Laker Line BRT Fall2017 

MO Kansas City, Prospect MAX Fall2017 

NM Albuquerque, Rapid Transit Project Fall2017 

WA Everett, Swift II BRT Fall2017 

WA Seattle, Seattle Streetcar Center City Connector Late 2017 

Question: Does the Department plan to issue updated policy guidance for the Capital Investment 

Grants program? If so, when will the updated policy guidance be published? 

Answer: The Fixing America's Surface Transportation (FAST) Act specifies that FTA must 

issue policy guidance regarding each time significant changes are made to the process and 

criteria, but not less frequently than once every 2 years. FTA most recently issued policy 

guidance in June 2016. To comply with the requirements of FAST, FTA intends to issue policy 

guidance again in 2018. 
478

OST, National Infrastructure Investments (TIGER) Grants 

Question: Please provide an estimate of when the Administration will issue a notice of funding 

availability for National Infrastructure Investments (TIGER) grants funded under the 

Consolidated Appropriations Act, 2017. 

Answer: Addressing our crumbling infrastructure is a top priority of this Administration. That 

is why the Department recently completed the development and release of a revised Notice of 

Funding Opportunity (NOFO) seeking applications for approximately $1.5 billion for the 

Infrastructure for Rebuilding America (INFRA) discretionary grant program. Additionally, the 

Department is actively working to finalize the new TIGER selection criteria and release the 

updated TIGER NOFO in the upcoming weeks. 
479

FRA, Rail Grants 

Question: Please provide an estimate of when the Administration will issue a notice of funding 

availability for the Federal-State Partnership for State of Good Repair, Consolidated Rail 

Infrastructure & Safety Improvements, and Restoration & Enhancement grants funded under the 

Consolidated Appropriations Act, 2017. 

Answer: The Federal Railroad Administration is currently drafting Notices of Funding 

Opportunity for the three competitive grant programs appropriated funds in FY 2017- FederalState Partnership for State of Good Repair, Consolidated Rail Infrastructure and Safety 

Improvements, and Restoration and Enhancement Grants. The Department intends to issue these 

notices in the fall. 

Question: Please provide a description of the Administration's plans for the Gateway Project. 

Please include a finance plan for each component. 

~ The Department of Transportation is currently working with Gateway Program 

sponsors including Amtrak, the Gateway Development Corporation, and other Northeast 

Corridor stakeholders- to evaluate funding and financing needs and identify measures to 

streamline the project delivery process to complete projects in a more cost-effective manner. 

Additionally, the Department recently approved the Record of Decision for the North Portal 

Bridge, released the Draft Environmental Impact Statement for the Hudson Tunnel project, 

issued its Northeast Corridor Record of Decision and approved a $500 million TIFIA loan for the 

Moynihan Station project. 

Question: Please provide an update on the Southeast Corridor Rail Commission. 

Answer: In 2016, the Federal Railroad Administration (FRA) initiated a multi-state planning 

study to develop a 40-year vision for a high-performing passenger rail network in the Southeast 

region of the U.S. FRA strongly believes that developing rail plans in the context of a broader 

regional framework can yield many benefits, including: 

• Better integrating rail projects with other transportation modes; 

• Promoting greater involvement by affected stakeholders and building consensus; 

• Identifying priorities that support both the logical sequencing of implementing projects 

and the efficient use of limited funding; and 

• Resulting in more cost-effective investments. 

A major component of FRA's Southeast Regional Rail Planning Study is the identification and 

development of a governance framework to guide the implementation and refinement of the 

Southeast stakeholders' 40-year vision. During the study's June 2017 stakeholder workshop, 

FRA met with representatives from the states of Virginia, North Carolina, South Carolina, 

Georgia, Florida, Tennessee, and the District of Columbia specifically to discuss the funding 

provided in the FY 2017 Consolidated Appropriations Act for the Southeast Rail Commission. 

Over the coming months, the stakeholders agreed to begin implementing a more formal 
480

governance structure to continue collaborating on mutually-beneficial projects and identify 

further areas of study in the regional rail planning process. FRA and the Southeast stakeholders 

plan on releasing the Southeast Regional Rail Planning Study in early 2018. 

Question: Please provide an update on the implementation of projects contained in the NEC 

Future program. 

Answer: The NEC FUTURE Program identifies key passenger rail improvements required to 

repair and grow capacity on the Northeast Corridor to accommodate future demand and maintain 

the economic competitiveness and vitality of the Northeast. The next step is to issue the Record 

of Decision (ROD) which will identify an investment program for the Northeast Corridor but 

will not supply or direct funding for particular projects. 

FRA's release of the NEC FUTURE ROD will not result in construction. NEC FUTURE is a 

Tier I or programmatic study of the Northeast Corridor. It will be up to individual project 

sponsors, whether states, Amtrak, or others, to move forward with specific projects identified in 

the ROD. Following the release of the ROD, Tier 2 or project-level studies of specific 

improvements are necessary for many of the proposed projects. Each Tier 2 project will require 

further analysis, design, and environmental review, as well as funding, before construction can 

occur. 
481

Amtrak Long-Distance Trains 

Question: Please provide a list of the termination costs for each of Amtrak's long-distance 

trains. If a liability extends into multiple fiscal years, please provide the cost in each fiscal year. 

Answer: While the Department has summary data regarding long-distance operations and 

finances, Amtrak will be able to provide a comprehensive detailed response regarding this 

information. 

The operation of long-distance rail services has proved inefficient and incurs the vast majority of 

Amtrak's operating losses. The FY 2018 budget request's proposal to re-evaluate federal support 

for long distance trains will allow the Department to allocate limited resources in areas where 

passenger rail makes sense now. 

The Department looks forward to continuing to work with Congress and Amtrak to increase the 

return on Federal investment and to mitigate any potential adverse effects to the changes 

required. 

Question: Please provide an estimate ofthe changes in ridership patterns and financial support 

required for each state-supported rail route as a result of the termination of long-distance trains. 

Answer: While the Department has summary data regarding long-distance operations and 

finances, Amtrak will be able to provide a comprehensive detailed response regarding this 

information. 

The operation of long-distance rail services has proved inefficient and incurs the vast majority of 

Amtrak's operating losses. The FY 2018 budget request's proposal to re-evaluate federal support 

for long distance trains will allow the Department to allocate limited resources in areas where 

passenger rail makes sense now. 

The Department looks forward to continuing to work with Congress and Amtrak to increase the 

return on Federal investment and to mitigate any potential adverse effects to the changes 

required. 
482

Reorganization Plans 

Question: Please provide an update on any plans or planning the Department has to reorganize 

the Department. 

Answer: The President's Executive Order (EO) on Reorganizing the Executive Branch requires 

all agencies to submit a plan on how they will address the requirements of the EO to streamline 

the government and reduce duplication and waste. The Department is diligently working to 

complete the draft plan to address these requirements and meet the deliverable deadline with the 

goal of finalizing the plan for the September 2017 submission. 
483

Technology in Infrastructure Construction 

I am excited about President Trump's recent announcement DOT will be moving forward with a 

regulatory relief effort to streamline approval processes in order to build projects at an expedited 

rate. I would appreciate your feedback on how this effort could help to speed adoption of 

precision GPS applications that deliver infrastructure projects on time and on budget. 

McAninch Corporation of Iowa was an early adopter of precision technologies. McAninch has 

demonstrated that integrating these technologies benefits taxpayers by delivering cost effective, 

and higher quality roadways; benefits roadway users with improved safety (as a result of better 

engineering) and reduced traffic congestion. Unfortunately, regulations and bureaucracy are 

preventing us from realizing the full benefit of these precision technologies. For example, 

equipment operators used to get instructions from stakes in the ground that had to be moved and 

reset as the work unfolded. Now with GPS technology, the work can be done without the stakes, 

but outdated specifications and regulations will still sometimes require these stakes to be set as 

part of the permitting process. These outdated regulations create a disincentive for innovation. 

Question: Why use precision GPS technology if you still have to set the stakes anyway? Will the 

regulatory relief effort underway at Department of Transportation consider how regulations 

should be updated to reflect and promote the benefits of cutting edge technologies? 

Answer: The Department is committed to removing barriers to new technologies. That is why 

we are fully vetting current and proposed regulations and guidance as part of the overall 

Regulatory Reform effort, with a specific intent to eliminate overly burdensome requirements 

and reduce barriers preventing teclmological efficiency. DOT's current Federal standards for 

highway construction allow the Automated Machine Guidance (AMG) method, which uses data 

from sources such as 3D engineered models to guide construction equipment during earth work 

and paving operations. The use of AMG improves construction efficiency, quality, and safety 

while reducing schedule, cost, and the environmental impacts. AMG equipment also has the 

potential to achieve designed grades on the first pass, reducing impacts on budgets and schedules 

compared with traditional staking. Using data from technologies such as 3D modeling in 

combination with GPS, automated machine guidance can increase productivity by up to 50 

percent on some operations and cut survey costs by as much as 75 percent. DOT does not 

currently have permitting standards that require the setting of surveying stakes. As part of the 

Regulatory Reform effort, the Department will assess where state and local laws present barriers 

to technology adoption, and will continue to encourage our state and local partners to revise their 

laws and standards, as appropriate. 
484

Caltrain 

I have concerns regarding the Peninsula Corridor Electrification Project, otherwise known as 

"Caltrain". As you know, before a Full Funding Grant Agreement (FFGA) is signed by the 

Secretary, it must go to Congress for a 30 day review period. On January 18, 2017, the Caltrain 

FFGA was sent to Congress for review. In your budget hearing, you testified that during that 

time period "disputes, rebuttals and challenges can occur, and that really did not happen." 

However on January 24, 2017, a mere 6 days later after receiving the FFGA, the 14 Members of 

the California Republican delegation sent you a letter requesting no additional money be granted 

to the California High Speed Rail Authority or to the State of California until an audit can be 

done on the projects and its finances. 

Furthermore, in your hearing, you said you had "no choice" but to sign the FFGA. However, 49 

USC 5309(k)(2)(B) specifies "The Secretary shall enter into a full funding grant agreement 

based on the evaluations and ratings required under subsection (d), (e), or (i), as applicable, .... " 

Question: Did our letter raise no concerns regarding the local financial commitment? The 

Proposition I A funding is currently being litigated, and if it is decided that the Authority cannot 

use that money for the project, they will have to find another source of local funding. If that is 

the case, what will be your plan for the financial future of the project? 

~ Your letter was taken quite seriously by US DOT. Federal Transit Administration 

(FT A) is required by law to evaluate the local financial commitment of projects seeking CIG 

funding. As part of its evaluation, FT A ensures that all non-CIG funding is committed before 

proceeding with award of a Full Funding Grant Agreement. The Proposition lA funding for the 

Caltrain commuter rail project was approved by voters and committed to the project through 

enacted state legislation on three separate occasions. Most recently, State Assembly Bill 1889 

was passed in October 2016, which reconfirmed the funding could be used on the Caltrain 

project. 
485

UAS 

In addition to recreational usage, Unmanned Aircraft Systems, or drones, have various business 

applications in a variety of industries including agriculture, supports many businesses within my 

Central California Congressional District. Accordingly, Congress provided more than 20 million 

dollars over the requested amount for FY17 to further support and accelerate the safe integration 

of drones into the national airspace, including funds to support the continued development of an 

unmanned traffic management system. 

Question: Secretary Chao, do you believe unmanned traffic management system implementation 

is important to the long-term success of the United States drone industry? In particular, how will 

it ensure safety, security, and privacy? 

Answer: Yes, the implementation of an unmanned traffic management (UTM) system is 

important for building capacity and protecting safety. The UTM system leverages industry 

capabilities to provide management services for UAS operations in congested airspace where 

there is significant traffic, such as class B airspace in major metropolitan markets. In this 

airspace, there is already significant existing traffic, and future U AS traffic flying in that same 

airspace will need to be carefully managed to ensure there is no negative impact on current 

capacity or safety. It is envisioned that an unmanned traffic management system will manage the 

exchange of information required to ensure safe operations and will support and implement the 

policies and requirements established for safety, security, and privacy by: 

• Maintaining a real-time connection between small UAS and a database of static and 

dynamic airspace restrictions. 

• Maintaining authorized areas of operations for small liAS operators based on the ability 

of their individual systems to meet the performance requirements for the proposed type of 

operation, e.g. communications, navigation (the ability to remain within a defined geofence), provision of required intent for proposed operations, and the recording of a liAS's 

position during operations. 

• Providing the ability to access any or all of the above information and correlate it with a 

required individual vehicle identification system. 
486

Gross Vehicle Weight Limits 

Our baseline Gross Vehicle Weight limit for federal interstate highways has not been updated 

since 1982. Recent DOT studies, in 2016 but also dating back to 2002, have noted the absence of 

Gross Vehicle Weights and axle configuration information on accident reports for large 

commercial trucks as a gap for determining whether or not we can update limits for federal 

interstate highways in a safe way. 

Question: Would the department or administration be opposed to Congress creating a program 

that would enable DOT to have access to that information they have said is not available? 

Answer: Inclusion of truck weight and axle configuration information on crash reports, if 

possible to collect, may help identifY trends. Nevertheless, that information will not be sufficient 

to allow a determination regarding the safety of higher weight trucks or the linkage between 

truck weight and the cause of a crash. 

FHW A is currently working with the Transportation Research Board (TRB) to develop a Truck 

Size and Weight Research Plan to identifY research and data solutions, timelines, costs, and other 

components of a robust research framework relating to data deficiencies in the Comprehensive 

Truck Size and Weight Limits Study. The resulting research plan is expected in FY 2019. 

Under such a research program, future assessments of truck size and weight limits and potential 

alternative configurations could be aided by improved data and models. 
487

Autonomous Vehicles 

While Autonomous vehicles have the potential to reduce the number of accidents, it is inevitable 

that there will still be accidents. Particularly, when you have human-operated and self-driving 

vehicles sharing the road. Today, when determining liability for an auto accident, authorities are 

able to use first-hand accounts from witnesses to determine what happened. 

As driving becomes increasingly automated, it will be necessary to determine what automated 

driving technology was engaged and how the vehicle was being operated at the time of an 

accident. 

Question: Secretary Chao, what do you think is the best way to make sure that those who need 

to investigate an accident, like law enforcement and insurance claims adjusters, have access to 

necessary information? 

Answer: Event data recorders (EDR) capture important crash-related data to aid in the 

investigation of a crash. While EDRs are optional, manufacturers have installed EDRs in over 

99% of the latest model year vehicles. If EDRs are installed on vehicles, they must be consistent 

with NHTSA standards, 49 CFR Part 563, including the requirement to make commerciallyavailable tools capable of accessing and retrieving the EDR data. It is likely that automated 

vehicle manufacturers will also choose to install EDRs. 

However, at present, there are no standardized data recording parameters specific to automated 

vehicle technology. Because of the unique features and operations of highly automated vehicles, 

updated standards for EDRs may be necessary to benefit crash investigations involving highly 

automated vehicles. In the coming months, following the release of the Department's new 

Autonomous Vehicle Guidance, DOT anticipates working with SAE International and 

stakeholders to begin the necessary work to establish uniform data elements for automated 

vehicle technology crash reconstruction purposes. If data elements for automated vehicle 

technology are included in EDRs, access to that data by law enforcement or insurance companies 

is subject to State law, but NHTSA standards ensure that the tools are commercially available for 

use if allowed under State law. 
488

Electronic Stability Control 

The NHTSA budget estimates for 2018 indicate that the Agency is considering deregulatory 

activities on a number of final rules including Federal Motor Vehicle Safety Standards and other 

regulations. The regulations specifically outlined in budget estimate for potential deregulatory 

action include electronic stability control (ESC) for heavy trucks. This rule was originally 

published after vehicle safety technologies such as ESC were found to mitigate vehicle accidents 

and to save lives. 

Question: Please outline for the Committee the Department's rationale for considering a 

deregulatory action on the electronic stability control rule. 

Answer: In June 20\5, NHTSA issued a final rule that requires truck tractors and certain buses 

over 26,000 pounds to be equipped with electronic stability control systems to help these 

vehicles avoid losing control in curves or slippery roads and rolling over. After the final rule 

was published, NHTSA received several petitions for reconsideration, including among other 

things concerns from industry about the appropriateness of the compliance test for certain types 

of vehicles. NHTSA is in the process of evaluating the issues raised in those petitions for 

reconsideration. As part of that process and any process for deregulatory action, NHTSA would 

consider compliance cost savings and the impact to safety. 
489

Budgets Cuts to TJGER,Army Corps etc 

Secretary Chao, we all understand that America's infrastructure is in a woeful state of disrepair. 

The American Society of Civil Engineers has, rather generously I think, given us an overall 

grade of D+ and it is crystal clear that we need to commit ourselves as a government to 

addressing the many varied needs of our transportation and infrastructure systems. 

Though we disagree on many, many things, I have been pleased to hear the President repeatedly 

call for a large investment in infrastructure. 

However, I cannot understand how on the one hand, the Administration can decry the state of our 

infrastructure system and call for as much as $1 trillion to address its shortcomings, while on the 

other hand calling for the complete elimination or severe cut of many of the infrastructure 

programs we have today. 

Question: What sense does it make to reduce funding for the Army Corps of Engineers or 

completely eliminate the $500 million (and already underfunded) TIGER program at a time 

when we all know roads, bridges, locks, dams, rail systems and public transit are in dire need of 

capital? 

Question: What sense does it make for the President to simultaneously advocate for increased 

funding for infrastructure while cutting existing funding at the same time? 

Answers: The Department takes a holistic approach when considering how best to make national 

infrastructure investment decisions. The TIGER program, first enacted as part of the Recovery 

Act in 2008, has not been formally authorized a~ part of a long-term surface transportation bill. 

Many projects funded by TIGER are also eligible under DOT's other mandatory highway and 

transit formula programs. Furthermore, the Infrastructure for Rebuilding America (INFRA) 

discretionary grant program provides DOT the ability to award competitive grants to projects of 

national or regional significance and is authorized at $4.5 billion dollars through 2020. DOT's 

credit and finance programs also have additional capacity for financing many transportation 

projects. Therefore, the Department will continue to use all Congressionally funded programs to 

meet our national infrastructure needs. Given the fact that Congress has appropriated $500 

million in FY 2017 for the TIGER program, the Department will execute this program in 

accordance with Congressional requirements to seek the best possible transportation outcomes 

for our nation. 
490

Public Private Partnerships 

Secretary Chao, the President and yourself have long spoken about the need to address our 

country's crippled infrastructure system. However, the President has been reluctant to commit 

the kind of public funding that is needed to invest in all sorts of vital infrastructure; instead, he 

and you have discussed incentivizing public-private partnerships to encourage private dollars to 

be more involved in the process. 

Given the lack of funding the President provided in this budget for direct investment and the 

failure of this Administration of to present any type of independent infrastructure bill or plan, it 

seems that public private partnerships are a key piece of the plan to address our many 

infrastructure challenges. 

While P3's are undoubtedly important and have helped produce great results in the past, many 

people have loudly objected to an overemphasis on P3's because they only make sense in places 

where a private firm could make a profit. 

For example, carrying more than half of the country's transit riders nationwide, the large urban 

transit systems serve a critical roll in the country's economic welfare. However, these systems 

collectively have a state of good repair need of more than $85M over the next decade. In 

Chicago, Metra's SOGR need is more than $13B alone. 

Question: How does the Administration's infrastructure proposal plan to address this need given 

that most of these old assets do not lend themselves to private investment? 

Answer: The Department is committed to protecting the interests of taxpayers in the 

development and delivery of public-private partnerships (P3s). There is a broad spectrum of 

potential opportunities for potential private investment in infrastructure and it is important to 

recognize that there is not a one-size-fits-all approach. The various P3 models vary with respect 

to the degree of asset ownership, development integration, risk transfer, extent of private 

financing, and types of funding sources. In some cases, a P3 financing may rely on a projectspecific revenue source, such as toll revenues or dedicated fees. However, successful P3s for 

other types of projects, such as public transit systems, do not necessarily require a projectspecific revenue source. These types ofP3s may rely upon an Availability Payment structure, in 

which regular payments are made from the public-sector partner to the private partner, in 

accordance with an established formula in the P3 contract, and these payments can be reduced if 

the private partner does not meet asset performance targets. This type of P3 is a potentially 

attractive option for many transit systems. 

Transit systems that are interested in exploring potential P3 options are encouraged to contact the 

Department for technical assistance. The Department, through its Build America Bureau, 

develops and promotes best practices in innovative finance and P3s and provides extensive 

technical resources for states, municipalities, and other public and private sector entities that seek 

to leverage private sector funding for infrastructure development. The Bureau offers P3 

resources and best practices for a variety of different transportation project types, including 
491

public transit projects. This includes P3 toolkit educational materials, training opportunities, 

project-specific technical assistance, peer knowledge exchanges, value for money evaluation 

tools, and other expert resources to support the knowledgeable implementation of P3 projects to 

address a wide variety of infrastructure needs. The Department seeks to ensure that state and 

local government decision-makers have access to the expertise and resources needed to 

responsibly and thoroughly evaluate the feasibility of various P3 and other innovative finance 

structures. 
492

Streamlining and FAST -41 

Last week, the President spoke about the need to streamline transportation and infrastructure 

projects already in the pipeline and framed this as a key but overlooked piece of the puzzle in 

fixing our infrastructure mess. 

However, the FAST Act includes a provision to speed up project permitting, provision known as 

FAST -41 calls for the creation of a steering council to work on project streamlining. 

Question: For all his talk about efficiency and streamlining, isn't the President's recent 

executive order expediting DOT reviews duplicative and redundant with FAST -41? Doesn't that 

redundancy make the process more confusing and less efficient? 

Answer: The President's recent Executive Order continues to push the Federal government 

toward a series of common sense measures, such as concurrent environmental reviews, improved 

technology tools, and publicly available and transparent project databases. These measures 

compliment the initiatives Congress put in place with FAST -41, and will further improve the 

efficiency of the environmental and historic preservation review process. 

In an article in the Hill last week, it was reported that you and the President were considering 

instituting page limits for environmental impact statements for DOT projects under review. 

It strikes me that a blanket page limit on EIS', without regard to type, location, or complexity of 

specific project being considered is exactly the type of one-size-fits all, arbitrary bureaucratic 

restriction the President rails against. 

Question: How will you ensure that environmental impact statements, which are crucial to 

ensuring that our transportation and infrastructure projects don't irreparably harm the 

communities in which they take place, continue to be a key and useful part of the project 

planning process? 

Answer: The President supports using the most efficient methods available for conducting 

environmental reviews. The President's Council on Environmental Quality (CEQ) regulations 

direct that Environmental Impact Statement documents should "normally be less than !50 pages 

and for proposals of unusual scope or complexity shall normally be less than 300 pages," and the 

Administration is committed to encouraging agencies to follow these guidelines. The regulations 

also make clear that the responsibly ofthe agency in preparing the EfS is to be concise, clear, 

and to the point, focusing on significant environmental issues and reducing paperwork and the 

accumulation of extraneous background data. Documents that meet these requirements will result 

in more timely decisions and improved project outcomes. 
493

Budget cuts' impact on grant disbursement 

Here on this committee, we work hard to ensure that programs like Core Capacity, TIGER, and 

others are funded to the fullest extent possible. After that, it's largely DOT's job to disburse 

grants to transit agencies all over the country, like CTA in Chicago, for a variety of uses. 

Question: If, as we have heard, DOT is the subject of substantial budget cuts, particularly in 

areas such as FT A that have relatively small staffs as is, how do you foresee that impacting the 

speed and efficiency with which infrastructure projects are analyzed and cleared? And how to 

propose to remedy any resulting slowdowns? 

~ 'While the FY 2018 President' Budget request does reallocate resources, the budget 

proposal ensures that the Department is efficiently allocating transportation funding, and works 

to increase the performance of Departmental programs. 

With this in mind, the Department does not anticipate that this performance-based budget will 

result in programmatic "slowdowns" or impede Modal Administrations' continued coordination 

with State and local grantees. Overall, the President's Budget request for DOT maintains 

virtually the same staffing level in FY 2018 as in FY 2016, with funding requested for more than 

55,000 employees. 
494

Airplane Noise 

I hear frequently from my constituents about the impacts of airplane noise from planes landing 

and taking off. In my district, at o·Hare airport, the noise impacts have become worse since the 

start of the O'Hare Modernization Program shifted approach routes over neighborhoods that had 

not previously been exposed to noise impacts. 

ln addition, NextGen technology, which has made the final few miles before an airplane lands 

more efficient, has also served to exacerbate noise impacts on nearby residents by concentrating 

the areas affected. In essence, fewer people are impacted by noise, but those that are under the 

flight paths suffer a lot more. 

Along with other members of the Quiet Skies caucus, I have asked this committee to consider 

appropriating funds for a health impact study on airplane noise. Noise, and the stress, 

sleeplessness, and anxiety it can produce is without a doubt a public health concern and should 

be treated as one. 

Question: Would you support a study conducted by leading researchers from universities and 

government agencies around the country into the potential adverse health impacts of airplane 

noise? 

Answer: The FAA has been conducting research on both cardiovascular health and sleep 

disturbance over a number of years and would support continued studies on these topics. 

The FAA's research is being conducted through the agency's Center of Excellence for 

Alternative Jet Fuel and the Environment (ASCENT). The work builds on FAA-sponsored work 

that was previously done in the FAA Center of Excellence for Aircraft Noise and Aviation 

Emissions Mitigation (PARTNER). In December 2015, PARTNER completed its Center of 

Excellence mandate and research. Specific information regarding the cardiovascular health and 

sleep disturbance projects can be found at: 

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!illill;:i,'asccnt.aero/pn>jcctinois<;:-impac:t:hcalth-rcsearch' 

!H!P://par[~r,mitcdu/projcds/noisc-exposurc-rcsponse-sleep-distUI:bang_e 

h!tpdpar1 !1Q .miL cd u/pro j eels 1 a vi~JlQI!- rc lJ!J&<:l:!lo_ise-c ITe~ts-el derh: 

The cardiovascular health research utilizes existing cohort studies and modeled participant noise 

exposure levels to understand whether or not aviation noise has an impact on cardiovascular 

health. If a link is established, then this effort will also quantify the impact at varied noise 

exposure levels. 

Research on sleep disturbance has been focused on the development and testing of a low cost and 

low intrusion methodology to gather sleep disturbance information. An initial pilot study was 

used to test the methodology. This led to improvements that are currently being tested in a 

second pilot study. These pilot studies have paved the way for a national study, which is 

currently being developed. 
495

The research community recognizes that long term exposure to environmental noise may affect 

human health. Most, if not all, research conducted to date has been unable to determine the 

magnitude of how aircraft noise impacts human health. The FAA hopes that the continuation of 

its research efforts will provide the necessary information to determine whether and to what 

extent aircraft noise impacts human health. 
496

Long Distance Train Routes 

Long distance Amtrak train routes are vital for many Americans located in rural or far flung 

places. Thousands of people depend on them daily, especially in the Mid-West. In fact, in the last 

10 years, ridership on the eight long-distance train routes in the Mid-West increased by 16%. 

Moreover, many of the tracks and other infrastructure used and paid for by long distance Amtrak 

service are necessary for local and short distance trains across the country. 

It is also important to note that a majority of these long distance routes start of end in Chicago's 

Union Station, providing a critical commercial influx for the city. In fact, Amtrak own Union 

Station and the increase in ridership across Amtrak and Metra is a major impetus for the $1 

billion in station improvements that are currently being planned. 

However, the Administration's FY 18 budget completely eliminates all of Amtrak's long 

distance trains- something that would have devastating consequences for my constituents in 

Chicago and millions more across the country, in both Red and Blue districts. 

Question: Isn't the private commercial development in Chicago around Union Station and 

Amtrak customers exactly the type of thing this Administration purports to want to incentivize? 

How then can the Administration justify cutting all Amtrak long-distance rail service? 

Answer: Chicago Union Station supports approximately 80,000 passengers a day, a majority of 

which are Metra commuter rail passengers. This station is also served by multiple Amtrak statesupported routes. As such, customers would continue to drive the private commercial 

development in Chicago around Union Station. 

Question: How will DOT ensure that the thousands of customers that depend on long distance 

rail are able to travel where they need to go? 

Answer: Current Amtrak ridership is a key indicator of transportation demand across the United 

States. Amtrak long distance trains have relatively low ridership - 15 percent of Amtrak 

passengers in FY 2016. The President's Budget's focuses on areas where Americans are telling 

us they want to go-where ridership is strong on state-supported routes across the entire country 

and on the Northeast Corridor. 
497

Miscellaneous Questions 

Question: Secretary Chao, FHW A Illinois Division has threatened to withhold Federal funds 

from the state of Illinois if the Illinois Department of Transportation tries to increase its usage of 

Recycled Asphalt Shingles or RAS in its asphalt projects. This effort by FHW A Illinois to 

maintain the status quo is refuted by years of solid performance and credible research showing 

that increased RAS usage is as effective as virgin materials, and it is being pushed despite the 

fact that using RAS creates Illinois jobs, keeps millions oftons of waste out oflandfills, and 

saves taxpayer money without compromising quality. I'm interested to know if you are aware of 

this issue and what plans you have to ensure that FHW A and its division offices are working 

cooperatively with stakeholders and promoting the use of recycled materials in accordance with 

Congressional directive, FHWA policy, and documented research? 

Answer: Significant advances in technology over the past decade have increased the types of 

recycled/reclaimed materials used in highway projects. lbe Federal Highway Administration 

(FHW A) supports research, field trials, and project demonstrations using recycled/reclaimed 

materials if the material does not adversely affect the performance, safety or the environment of 

the highway system. A number of State departments of transportation have reported premature 

cracking in relatively new asphalt pavements where recycled asphalt shingles (RAS) were used 

to replace a portion of the total asphalt binder in new pavements. 

Although Illinois leads the country in RAS usage according to a recent industry survey, the 

Illinois Department of Transportation (IDOT) highlighted performance concerns with RAS in a 

July 3, 2014, memo stating that "caution needs to be used when incorporating hard recycled 

asphalt binders as they contribute to brittleness and increased cracking". FHWA's Illinois 

Division sent a letter on July 29, 2014 acknowledging lOOTs concerns, made several 

recommendations to address the performance issues and emphasized that compliance with 

lOOT's statewide special provision on the use ofRAS was necessary to ensure that projects 

remained eligible for Federal-aid funding. IDOT agreed with the FHW A recommendations, 

including the formation of an independent task force. Today, FHW A and IDOT continue to 

work together to monitor the performance of pavements as evidenced by the development of new 

performance testing protocols to determine the optimal use of recycled materials. 

Due to nationwide performance concerns with the use of RAS, FHW A issued a memo 

(h!1!21il2cnn~:Jhwa.dot.gQ:-,jJ2llli~!mlt~sJ!.n?id c56J 4) in December 20 I 4 recommending States 

follow AASHTO provisional standard PP 78-14 when designing projects with RAS. When there 

are known performance concerns with the use of RAS within a State, the use of this provisional 

standard is required for Federal-aid participation. Provisional standard PP 78-14 has now been 

revised, approved by all States, and will be published as provisional standard PP 78-16 in August 

2017. Also, FHWA is conducting a nationwide survey on State usage ofRAS. which will be 

published later this summer. The results ofthe survey will help shape future FHWA RAS 

guidance, technical assistance, and research. 
498

Question: Secretary Chao, the state of Illinois recently passed local flexibility legislation 

mirrored on Section 1404(b) of the FAST Act in order to promote local innovation and control 

by allowing localities to choose alternative Federally-recognized design publications. This effort 

is stalled, however, by the Federal Highway Administration's cramped interpretation of Section 

l404(b) as the agency has only accepted two publications related solely to bicycle and pedestrian 

projects. What plans do you have to fully implement this section so that it applies to all road 

projects, not just a limited subset, and when can we expect these additional publications to be 

recognized? 

Answer: The FAST Act Section 1404(b) has been fully implemented. To be eligible for 

consideration under this section of the law, the local jurisdiction must be a direct recipient of 

Federal funds for a specific project, and the project must be on a roadway under the ownership of 

the local jurisdiction and not be on the Interstate System. The local jurisdiction must obtain 

approval from the State in which it resides to use a publication that is different from the 

publication used by the State. The FHW A must also recognize such publication. 

The design publications that FHW A currently recognizes are those listed in either the FHW A 

Memorandum dated August 20,2013, regarding Bicycle and Pedestrian Facility Design 

Flexibility (available at 

www.fhwa.dot.gov/environment/bicycle pedestrian/guidance/design flexibilitv.cfm) or the 

related Questions and Answers (available at 

www.fhwa.de>hgll\".'cm·ironment/bicvcle peJcstrian'guidancc/dcsign tlcxibilitv qa.cfm). The 

list of additional recognized design publications will grow as qualified local jurisdictions submit 

their requests in compliance with section 1404(b) requirements. Once these conditions are met, 

the local jurisdiction must adopt the design publication and ensure that designs fully comply with 

all applicable Federal laws and regulations. For other questions and answers related to Section 

1404(b ), please visit: https:/ /www.fhwa.dot.gov/design/standards/161 006ga.cfm 

Question: Do you agree that every mode of transportation is subsidized by the federal 

government? Why is intercity passenger rail singled out for elimination of federal funding in the 

Administration's budget? Shouldn't intercity passenger rail receive the same treatment as other 

forms of transportation in the Administration's budget? 

Answer: The President's FY 2018 Budget represents a bold change of course for our Nation and 

challenges a!l of us to rethink the way we are setting our priorities. It ca!ls on us to reexamine 

our current spending and our continuing commitment to programs that may not be meeting their 

intended purpose, have outlasted their usefulness, or simply need to be replaced with new 

initiatives that will better address our requirements for the future. Some funding reductions are in 

recognition that our resources are limited and that we have an obligation to future generations to 

keep our spending under control. 

Question: Passengers do not draw a distinction between "long-distance" or "state-supported" 

trains; they simply take the train that best fits their travel schedule and destination(s). There are 
499

80 station stops served by long-distance passenger rail serve across the Midwest, many of them 

in rural communities not served by other forms of intercity transportation. Elimination of long 

distance routes would result in at least 50 of those Midwestern towns and cities losing Amtrak 

service entirely. What happens to passengers in these cities and towns, many with no air or bus 

service? 

Answer: The relatively low ridership of long distance routes is an indicator that the current 

service is not meeting Americans' expectations. We need to ensure that all Americans have 

transportation options that are based on a sound return on investment. The President's Budget 

refocuses our attention and funding across all Federal programs so we can ensure we have the 

most efficient use of Federal funds, can better leverage resources from the private sector and 

states and local partners, and provide efficient mobility for all Americans. 

Question: How do you reconcile the President's stated admiration of other countries' modem 

transportation systems, including their intercity passenger rail systems, and the Administration's 

plans to cut funding for intercity passenger rail? Does the federal government have no interest, or 

role to play, in developing a viable national passenger rail system? 

Answer: The President's FY 2018 Budget represents a bold change of course for our Nation and 

challenges all of us to rethink the way we are setting our priorities. It calls on us to reexamine 

our current spending and our continuing commitment to programs that may not be meeting their 

intended purpose, have outlasted their usefulness, or simply need to be replaced with new 

initiatives that will better address our requirements for the future. Some funding reductions are in 

recognition that our resources are limited and that we have an obligation to future generations to 

keep our spending under control. 

Question: Eight long-distance Amtrak trains serve the Midwest. Altogether, these routes have 80 

station stops across the Midwest, many of them in rural communities not served by other forms 

of intercity transportation. Ridership growth on long-distance trains in the Midwest is a longterm trend, despite service delays or cancellations due to flooding or other weather issues, 

construction, or issues with the host railroad: According to Amtrak ridership data compiled by 

the Midwest Interstate Passenger Rail Commission, ridership on long-distance trains that serve 

the Midwest grew 3 percent over the past five years (FY 20 II to FY 20 16), and grew 16 percent 

over the past I 0 years (from FY 2006 to FY 20 16). Why cut a service that is growing in use and 

popularity? What would you say to our citizens who are demanding and relying on rail service 

for their transportation needs about the Administration proposing to eliminate that service? 

Answer: While ridership has grown in some segments, the number of riders serviced compared 

to the large losses incurred is not acceptable. The relatively-low ridership of long distance routes 

is an indicator that the current service is not meeting Americans' expectations. We need to 

ensure that all Americans have transportation options that are based on a sound retwn on 

investment. The President's Budget refocuses our attention and funding across all Federal 

programs so we can ensure we have the most efficient use of Federal funds, can better leverage 
500

resources from the private sector and states and local partners, and provide efficient mobility for 

all Americans. 

Question: For the year-to-date through April, ridership from FY 2016 to FY 2017 increased 

between 1 and 4.5 percent on four of six long-distance trains in the Midwest. For the two trains 

that had decreased ridership, the drops were miniscule - 0.2 percent and 1.2 percent. Meanwhile. 

ticket revenue on all long-distance trains in the Midwest increased during that same period, 

between I percent and almost 7 percent. Again, why cut a service that is growing in use and 

popularity, and what would you say to our citizens who are demanding and relying on rail 

service for their transportation needs about the Administration proposing to eliminate that 

service? 

Answer: While ridership has grov.n in some segments, the number of riders serviced compared 

to the large losses incurred is not acceptable. The relatively-low ridership of long distance routes 

is an indicator that the current service is not meeting Americans' expectations. We need to 

ensure that all Americans have transportation options that are based on a sound return on 

investment. The President's Budget refocuses our attention and funding across all Federal 

programs so we can ensure we have the most efficient use of Federal funds, can better leverage 

resources from the private sector and states and local partners, and provide efficient mobility for 

all Americans. 

Question: The Passenger Rail Investment and Improvement Act of 2008 required states to 

assume financing intercity passenger rail "corridor" services of 750 miles or less. These use the 

same tracks and stations, and the same ticketing/reservation systems, as the long-distance trains. 

Those fixed asset costs remain even if you remove the long-distance service. Iflong-distance 

trains are eliminated, will states be required to further stretch their own transportation budgets 

and pick up more of those costs? Will the federal government help them to cover those costs? 

Answer: The Department recognizes that there are many cost, revenue, and operational impacts 

related to shutting down Amtrak's long distance routes. This includes potential impacts to 

Amtrak's Northeast Corridor and state-supported routes due to shared network costs that will 

remain but no longer be allocated to long distance trains. Refocusing Amtrak's attention and 

Federal investment to the areas of the network that are most successful-state-supported routes 

and the Northeast Corridor-will benefit those users. The Department looks forward to 

continuing to work with Congress and Amtrak to increase the return on Federal investment and 

to mitigate any potential adverse effects to the changes required. 

Question: States provide nearly 50 percent of annual Amtrak revenue ($500 million). Do you 

agree that states should be consulted before any changes are made to long-distance service? 

~ Amtrak's annual revenue was over $3.2 billion in FY 2016, with state-supported train 

revenues and associated payments from state sponsors totaling over $900 million. However, 

states do not directly support the operations of Amtrak's 15 long distance routes. The FY 2018 
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President's Budget works to re-evaluate and assess current programs to ensure that they are 

effective investments of transportation funding. The Department looks forward to continuing to 

work with Congress and Amtrak to increase the return on Federal investment and to mitigate any 

potential adverse effects to the changes required. 

Question: Despite repeated statements that this Administration would not sign any new fullfunding grant agreements for Capital Investment Grant projects, you recently signed an FFGA 

for the Caltrain project in California. This program has been key to the Red and Purple 

Modernization Phase One project in Chicago. Will you likewise move forward with FFGAs for 

other projects that are key for communities across the country? 

Answer: As proposed CIG projects become ready for a funding agreement commitment, FTA 

will review current and future year funding resources, coordinate with the project sponsor, and 

determine next steps. 

Question: You and this administration have stated that the full cost-burden of Capital 

Investment Grant projects should fall to local communities. While some local communities have 

voted to raise transportation revenues, they did so with a promise that they would have a federal 

partner. What do you have to say to the American public about breaking faith with the voters, 

who raised local revenues with the promise that they would have a federal partner? 

Answer: The Capital Investment Grants (CIG) are an important funding mechanism for the 

Department and the budget requests $1.2 billion for this transit program, and an overall transit 

spending level of$11.2 billion. As proposed CIG projects become ready for a funding agreement 

commitment, FTA will review current and future year funding resources, coordinate with the 

project sponsor, and determine next steps. 

Additionally, DOT continues to offer other programs that support surface transportation needs. 

The Nationally Significant Highway and Freight Projects discretionary grant program, also 

known as Infrastructure For Rebuilding America (INFRA) Grants, provides DOT the ability to 

award competitive grants to projects of national or regional significance and is authorized at $4.5 

billion through 2020. DOT's credit and finance programs also have additional capacity for 

transit projects. 

Question: Why should federal taxpayer dollars be used to fund local roadway interchange and 

intersection improvements but not the regional BRT system in Indianapolis that supports the 

regional economy? How is a local roadway intersection improvement project of greater national 

importance than a regional transit project? 

~ Infrastructure improvement priorities and projects arc state and locally driven 

decisions. Projects must meet eligibility requirements for a specific category of federal aid and 

must be reflected in the overall transportation improvement plan that ha~ emerged from state and 

local planning process. Local roadway interchange and intersection improvements are typically 
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funded with Federal Aid Highway formula funds while regional BRT systems that supports the 

regional economy seek Federal Transit discretionary funds. 

Question: How does this administration justify that our interstate highway system is of national 

importance, but our long-distance passenger rail service is not? 

Answer: Strong transportation options are certainly of national importance. That is why it is so 

vital that we allow Amtrak to focus on the successful state-supported and Northeast Corridor 

routes. The President's budget focuses on reducing the need for Federal support on some routes 

and supporting the successful segments of our passenger rail services. 

Question: The administration has called for federal dollars to be spent in ways that leverage 

non-federal funding for a ratio of I :5 in an infrastructure package. Both the Capital Investment 

Grants program and TIGER program have proven success in leveraging non-federal funding. 

The TIGER program averages a I :3.5 ratio, meaning that every federal dollar spent leverages an 

average of$3.5 non-federal dollars. Is that correct? 

Answer: When considering both construction and planning projects, we are reviewing past 

grant performances, and plan to offer a proposal that would improve on this. 

Question: Despite these programs' proven track record of success, the administration's FY 20 18 

budget significantly reduces or eliminates their federal funding support. Do you support 

continued funding for these programs, which successfully leverage non-federal dollars? 

~ It is important that we review all infrastructure needs to ensure that funding is 

allocated efficiently and effectively to maximize returns on infrastructure investments. The 

administration views metropolitan transit projects as investments best lead by the States and 

localities these projects will benefit. 

Question: If not, what assurance can you give Congress and the American people that investing 

their tax dollars through an unproven, new program will achieve better results in leveraging nonfederal dollars than existing programs? 

Answer: The Administration is looking to maximize non-federal leverage in several ways. 

First, we are taking every opportunity to revise existing discretionary programs to ensure 

leveraging non-federal dollars is highlighted as a key priority in the selection criteria. The new 

Infrastructure For Rebuilding America (INFRA) Grants Notice of Funding Opportunity that was 

recently published is an example of this Administration's commitment to broadening the federal 

government's ability to afford more investment in infrastructure. Secondly, we are looking at 

best practices and lessons learned from past infrastructure investments to craft a new initiative 

that achieves innovative improvements while also retaining leverage strategies that have proven 

successful. The Department believes that awarding projects that leverage non-federal sources, 
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will expand the overall pool of resources being used to build and restore our nation's 

infrastructure. 

Question: As we all know, the TIGER program is one of the only programs where locals can 

come directly to the federal government to seek funding for their projects. What is your position 

on local communities having access to federal dollars? Should locals have direct access to 

federal dollars or should all transportation funding decisions be put under state control? If the 

funding for the TIGER program is eliminated, what are the other ways that locals can seek direct 

federal funding? 

Answer: The recently released Infrastructure for Rebuilding America (INFRA) Notice of 

Funding Opportunity promotes leverage of more non-federal funding, by seeking greater state, 

local, and private sector partnering. Local entities are eligible to directly seek INFRA grants 

through a competitive application process similar to TIGER. In addition, DOT's credit and 

finance programs also have additional capacity for financing many transportation projects, and 

local entities are eligible to seek credit and financing from these programs. The Department will 

continue to use all Congressionally funded programs to meet our national infrastructure needs as 

well as develop new and innovative approaches that improve the way transportation 

infrastructure projects are financed, developed, operated, and maintained. 
504

Tiger Grants and the Redlands Passenger Rail Project 

The TIGER grant program is a highly popular program that provides funding to infrastructure 

projects that will significantly improve public transportation services. In the district that l 

represent in California, the Redlands Passenger Rail Project (RPRP) was awarded $8.7 million 

through the TIGER grant program in 2016. The project will create a rail extension that will run 

between the San Bernardino Transit Center and the University of Redlands. The line stops at 

important locations, such as the VA Health Care center, educational facilities and job 

centers. The project will help alleviate congestion along the I-10 highway, which is one of the 

most congested highways in the country. Additionally, the project will create 3,000 jobs in the 

region. This project will contribute to our economy and provide low-income residents with an 

alternative and affordable transit route. The Redlands Passenger Rail Project is just one of many 

projects that the TIGER grant will support. 

Question 1: Given the clear benefits of this program in my district alone, I wantto ask 

you: What data did the Department of Transportation rely on to decide that the elimination of 

the TIGER grant program would be beneficial to our national infrastructure system? 

Answer: The Department has taken a holistic approach when considering how best to make 

national infrastructure investment decisions. The TIGER program, first enacted as part of the 

Recovery Act in 2008, has not been formally authorized as part of a long-term surface 

transportation bill. Many projects funded by TIGER are also eligible under DOT's other 

mandatory highway and transit formula programs. Furthermore, the Infrastructure for 

Rebuilding America (INFRA) discretionary grant program provides DOT the ability to award 

competitive grants to projects of national or regional significance and is authorized at $4.5 

billion dollars through 2020. The recently released INFRA Notice of Funding Opportunity 

promotes leverage of more non-federal funding, by seeking greater state, local, and private sector 

partnering. 

In addition, DOT's credit and finance programs also have additional capacity for financing many 

transportation projects. Together, these different infrastructure finance programs and innovative 

approaches represent important parts of the President's overall Infrastructure Initiative that will 

leverage additional non-federal resources. The Department will continue to use all 

Congressionally funded programs to meet our national infrastructure needs as well as develop 

new and innovative approaches that improve the way transportation infrastructure projects are 

financed, developed, operated, and maintained. Given the fact that Congress has appropriated 

$500 million in FY 2017 for the TIGER program, the Department will execute this program in 

accordance with Congressional requirements to seek the best possible transportation outcomes 

for our nation. 
505

Capita/Investment Grants and the Red/and Passenger Rail Project 

The Redlands Passenger Rail Project has been approved entry into the Small Starts Program. 

have concerns about reports that the Department of Transportation will only grant funds to those 

projects that already have signed a Full Grant Agreement with the Department. This project will 

provide transportation to previously underserved communities, thereby providing opportunities 

in a region of California that continues to struggle economically in the wake of the Great 

Recession. The Redlands Passenger Rail Project has completed several stages ofthe Capital 

Investment Grant review process. Specifically, the project has been granted entry into the 

project development stage and has submitted a ratings package to the department. Preparing the 

necessary documents to complete the evaluation process required to receive reimbursements 

through the Capital Investment Grant program. For example, preparing a ratings package 

requires a significant amount of time and dedication from local transportation agencies. 

Question 2: Did the Department of Transportation conduct a full cost-benefit analysis to 

determine how reducing the budget for the Capital Investment Grant Program might affect 

employment numbers? If a cost-benefit analysis was conducted, did it include information on 

how withholding awards from projects that have not entered full-funding grant agreements 

would affect the local economy of those projects? If Congress appropriates funds for the Capital 

Investment Grant program for FY 2018, will the Department still refuse to sign Full Funding 

Grant Agreements for projects, such as the Redlands Passenger Rail Project? If grant 

agreements will not be awarded, what is the Department's justification for refusing funds for 

projects that have undergone an expensive and thorough review process? 

Answer: While the administration views future metropolitan transit projects as investments best 

lead and managed by States and localities, the Department recognizes signed appropriation bills 

as enacted law. The Department will continue to implement the Capital Investment Grants 

program in accordance with program provisions as authorized in statute. As it applies to 

appropriation bills, the Department will execute and allocate appropriated Capital Investment 

Grants funding in accordance with enacted bill language and accompanying bill reports. 
506

Capital Investment Grants and Jobs in the Manufacturing Industry 

The policy justification in President Trump's budget states the Capital Investment Grant Program 

only benefit local communities and should therefore be paid for locally. The grant program 

supports commuter rails that allow the workforce to travel to work. There are thousands of 

manufacturing jobs throughout the United States that benefit from projects that are in the 

pipeline to receive Capital Investment Grants. Many of these manufacturing jobs are located in 

rural areas. 

Question 4: President Trump has stated that a priority for his administration is to support the 

creation of more manufacturing jobs. How do you justify the elimination of a program that 

stimulates job growth in the manufacturing industry? 

Answer: The administration views future metropolitan transit projects as investments best lead 

by the States and localities these projects will benefit. Several large metropolitan regions have 

recently passed measures that create dedicated revenue streams for transit infrastructure 

improvements. Dedicated revenue streams allow these regions to utilize innovative financing 

arrangements, such as the Department's TIFIA program or public-private partnerships, to 

advance local transit plans. Using dedicated revenue streams to leverage private investment 

serves as one of many strategies for financing future transit development. 

Additionally, the President and his infrastructure team are currently reviewing the country's 

pressing infrastructure needs. In the coming months, the infrastructure team will develop a 

comprehensive proposal that will accelerate project delivery, spur private sector innovation and 

investment, and ensure that the Government effectively invests Federal infrastructure funding. 
507

Return on Infrastructure Investments and Geospatial Technology 

As a member of this Committee, I believe that we have a responsibility to ensure that funds we 

provide to the Department of Transportation are being invested wisely and that project outcomes 

are successful. To my understanding, the Department of Transportation currently does not have 

the capability to evaluate the progress of all infrastructure projects in real-time and across project 

types, such as bridges, roads, and airports. There is technology available that can help the 

Department of Transportation to better track the progress of specific infrastructure projects. For 

example, FEMA utilizes geospatial technology for its flood mapping, which provides the public 

with nearly real-time updates on floods throughout the United States. I believe it would be 

beneficial if DOT could employ similar geospatial technology that provides the public with 

updates on infrastructure projects within their region. This technology would be beneficial to 

commuters at the local level. However, it would also help the DOT to better understand the 

development of projects in designated regions and the rate of return on investments. For 

example, this technology could help us better understand how infrastructure projects improved 

congestion after the project is completed, which may guide the agency in future investment 

decisions. 

Question 4: Do you think that DOT may be open to looking more into this type of technology? 

Answer: The Department of Transportation utilizes geospatial technology in a wide range of 

applications. Examples include: 

• The Department's National Transportation Atlas Database, authorized under 49 USC 

6309, which is a series of geospatial databases that depict transportation networks; flows 

of people, goods, vehicles, and craft over those networks; and social, economic, and 

environmental conditions that affect, or are affected, by those networks; 

• The development of flight route I enroute navigation charts, pipeline inspection 

boundaries, railroad networks and grade crossings, and more. 

Furthermore, DOT participates in the National Spatial Data Infrastructure (NSDI) and serves as 

the lead for the Transportation Theme of the NSDI, maintaining a number of National Geospatial 

Data Assets (NGDAs) and coordinating with other key Federal agencies on non-DOT data that 

covers the transportation system. DOT also serves as the co-lead of the newly created Address 

Theme of the NSDI, alongside the Census Bureau. 

Even with these large investments in geospatial data and technology, the Department continually 

seeks ways to improve its data sets and analyses in support of the Department's mission. In years 

past, authorizing legislation has sought to increase transparency of infrastructure projects. Most 

recently, the Moving Ahead for Progress in the 21st Century (MAP-21) (Pub. L. 112-141) 

required the Department to publicly report on funding status of infrastructure projects funded 

under apportioned and allocated programs (23 USC 1 04(g) ). In support of this requirement, both 

the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) 
508

upgraded their grants management systems to facilitate the granular tracking and reporting 

required under this provision. FHW A upgraded its Fiscal Management Information System 

(FMIS) to collect detailed geospatial information from the States, which will help facilitate the 

kind of tracking that is pondered under this request. 

While the Department does have the necessary technology to support transparency and 

geospatial visualization considered as part of this question, the primary barrier to realizing this 

vision is the States' and transit agencies' ability to provide the necessary data to communicate 

project lifecycle status. If Congress were to require this level of transparency, the Department 

would likely need to make some information technology investments in its own systems, as well 

as provide technical assistance to State and local agencies, to ensure the quality of data flowing 

into Departmental systems. 
509

Infrastructure Priority List 

Earlier this year, President Trump published a list of fifty infrastructure projects throughout the 

U.S. that he will prioritize. The plan invests $137.5 billion in these projects. The DOT's FY 

2018 fact sheet notes that the DOT will partner with entities that can provide the most efficient 

results on infrastructure projects. 

Question 5: What measures were taken to determine that specific projects would be completed 

more efficiently than others? What data does DOT have available to demonstrate that the 

priority projects in President Trump's list would be completed more efficiently than projects 

sponsored by local transportation and infrastructure agencies? 

~ The Administration has not developed a prioritized list of infrastructure projects. 

However, on January 24, the President signed the Executive Order on EXPEDITING 

ENVIRONMENTAL REVIEWS AND APPROVALS FOR HIGH PRIORITY 

INFRASTRUCTURE PROJECTS that does seek to expedite high priority infrastructure projects. 

Upon request by the Governor of a State, or the head of any executive department or agency, or 

on his or her own initiative, the Chairman of the White House Council on Environmental Quality 

(CEQ) shall, within 30 days after a request is made, decide whether an infrastructure project 

qualifies as a "high priority" infrastructure project. This determination shall be made after 

consideration of the project's importance to the general welfare, value to the Nation, 

environmental benefits, and such other factors as the Chairman deems relevant. 

Additionally, the Administration has released high level principles regarding infrastructure 

development as part of the FY 2018 President's Budget. The Department has communicated its 

desire to change the way project sponsors think about delivering transportation projects, and 

believes that with the right incentives, project sponsors across the country can make dramatic, 

long-term improvements in the way we deliver and maintain our transportation infrastructure. 

The Department has placed a strategic focus on improved performance and accountability, 

innovation, streamlined permitting processes, and an increased share of non-federal funding in 

infrastructure investment. Lastly, the Department believes that local agencies play a vital role in 

developing and restoring our nation's infrastructure in the most efficient way possible, and the 

Department will work closely with state and local agencies as a strong and responsible partner. 
510

Transportation lnfrastructure and Economic Mobility 

Research has demonstrated that commute times can be a critical predictor of economic 

mobility. The Census has found that more than 125,000 people from San Bernardino County 

commute to Los Angeles on a daily basis. By car, the commute is more than one hour. The City 

of San Bernardino, which I represent, has a median income of $3 7,04 7 per household, which is 

$24,77lless than the median income in California. 

Question 6: How will the DOT ensure that investments are made in projects that support states 

and localities to promote economic mobility for their residents? 

Answer: The vast majority of Federal highway funds are distributed to States by formula. State 

departments of transportation and their local partners typically make the decisions on how to 

invest those funds. This happens through the Federally mandated Statewide and metropolitan 

transportation planning processes, which require public involvement. The U.S. Department of 

Transportation offers tools and technical assistance to help State and local governments identify 

gaps in their transportation systems and services. FHWA developed the Connectivity Evaluation 

Resource to demonstrate the concept of connectivity and highlight examples of how practitioners 

are communicating connectivity measures within their communities and identifying 

improvement strategies. 

The resource can be found at https://www.fhwa.Jot.gsl\' li\·ability/toolslcer/. In addition, the 

recently enacted performance management rules will ensure the most effective investment of 

Federal transportation funds, and including carrying out the goals of congestion reduction, 

improving the efficiency of the surface transportation system, and supporting regional economic 

development. 

The Department also offers States and localities the flexibility to design transportation systems 

that focus on connecting people to their desired destinations. All of this helps States and 

localities promote economic mobility for their residents. 
511

Pipeline and Hazardous Materials 

The FY 20 18 budget proposal reduces the budget for the Pipeline and Hazardous Materials 

Safety Administration by $2 million. The Safety Administration is meant to ensure that 

maintenance requirements for oil pipelines are met. In 2016, there were 636 reported oil leaks, 

which killed 17 people and injured 84. Reducing the budget for this program will limit the 

funding opportunities available to mitigate risk associated with pipelines that transfer hazardous 

materials, such as oil and natural gas. In 2015, there was a natural gas leak in Aliso Canyon, 

which is about an hour away from the district that I represent. The leak at Aliso Canyon was the 

largest methane gas leak in United States history. 

Question 7: How does DOT plan to ensure that proper safety precautions are taken to avoid oil 

leaks? 

Answer: Safety is our top priority and the President's Budget ensures the Pipeline and 

Hazardous Materials Safety Administration (PHMSA) can meet its mission to protect people and 

the environment by advancing the safe transportation of energy and other hazardous materials 

that are essential to our daily lives. 

PHMSA' s mission is to ensure safe operation of liquid and gas pipelines as well as underground 

natural gas storage. With over 2. 7 million miles of pipeline infrastructure crossing the country 

and approximately 400 underground natural gas storage sites, PHMSA must work closely with 

pipeline and underground natural gas storage operators. Together we ensure that pipelines and 

underground natural gas storage sites are well designed, constructed, operated, and maintained. If 

a leak occurs, PHMSA 's safety standards require operators along with first responders to quickly 

safeguard people and the environment. 

PHMSA's request accomplishes all of this with investments in programs and people, safety 

oversight, and new technology and innovation as discussed below: 

Programs and People 

PHMSA, along with its certified state pipeline safety programs, invest in people and 

training to ensure that pipeline facilities -both oil and natural gas- are operated safely. 

In response to the growth of the energy sector over the past two years, PHMSA has 

significantly increased the number of safety inspectors. PHMSA inspectors complete 

intensive training at our Training and Qualification Center as part of a three-year training 

plan that prepares them for the challenging review of complex facility construction and 

operation. 

• PHMSA certifies the quality and reimburses state partners' pipeline safety programs up 

to 80 percent of their costs for safety inspections of the pipeline facilities they manage. 

• PHMSA awards more than $47.0 million in grants to reimburse state pipeline safety 

programs' cost to respond to pipeline incidents, conduct inspections, and enforce pipeline 

safety regulations. 

Safety Oversight 
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• PHMSA and its state partners routinely conduct risk-based inspections on pipeline 

facilities in the United States, including oil, natural gas, and liquefied natural gas 

facilities. PHMSA and its state partners verify that pipelines and facilities are operated 

safely by conducting frequent field visits to the facilities. 

• PHMSA uses pipeline operating information to assign safety inspectors to the operators 

and facilities that pose the greatest potential risks to people and the environment. These 

inspections and resulting corrective actions ensure problems are identified before they 

occur so the pipeline industry can move energy to market uninterrupted by leaks or 

incidents. 

• PHMSA and its state partners inspect pipeline companies in the design phases of pipeline 

projects to help prevent safety problems. PHMSA's engineers review construction 

documents, materials specifications, and construction and operation safety assurance 

plans prior to and during construction. to make sure new pipelines can safely move high 

volumes of energy products to market. 

• PHMSA issues safety standards and advisories to help pipeline operators move energy 

products safely to market. PHMSA issued new safety standards and will conduct safety 

checkups for underground storage fields, preventing leaks, like the 2015 Aliso Canyon 

leak. 

• PHMSA issues enforcement cases to pipeline, liquified natural gas, and underground 

natural gas storage companies when needed to ensure they operate safely and requires 

them to correct unsafe conditions. 

• PHMSA ensures pipeline companies have oil spill response plans that reduce the 

economic, health and environmental impact of any oil discharged into navigable waters 

in the U.S. 

New Technology and Innovation 

• PHMSA promotes the development and use of new technologies that improve pipeline 

safety. PHMSA's research and development program invests in research to solve 

pipeline safety challenges. 

• PHMSA advances pipeline-related technology and innovation through its Competitive 

Academic Agreement Program (CAAP) directing research funding to universities 

specializing in Science, Technology, Engineering and Mathematics (STEM) to solve 

highly specialized pipeline safety problems. 
513

WMATA Safety Concerns 

On May 12, 2017, John P. Rowley III was the victim of an attack in the Washington 

Metropolitan Area Transit Authority Gallery Place subway station. This is one of an alarming 

number of incident~ in recent months that have led to growing concern over rider safety. His 

testimony, which follows, has also been submitted to the Senate Appropriations Subcommittee 

on Transportation, Housing and Urban Development, and Related Agencies: 

The DC Metro subway system is unsafe. On Friday May 12, 2017, I was attacked by a 

group of"juveniles" in an unprovoked and vicious assault on the Gallery Place subway 

platform during rush hour. I was thro\\-n into a moving train and sustained serious 

injuries from which I am still recovering. This was no robbery attempt, and although the 

assailants said nothing whatsoever before attacking, their "high-fiving" and laughter as I 

lay bleeding, showed that this was just their way of having a good time on a Friday night. 

I left my law office that day in downtown Washington, D.C. to meet a friend after work. 

We had been planning to attend a Washington Nationals baseball game together, but 

because the game had been rained out, we agreed to meet anyway. Just before 6:00p.m. I 

traveled on Metro's Red Line to the Gallery Place stop where my friend's office is 

located. I departed the train and walked do\\-n the platform with the intention of heading 

towards the exit. As I came to the end of the platform, I noticed a group of 6 or more 

young men loitering at the point I intended to make the turn from the platform into the 

station. As I approached, I was viciously attacked by 5-6 (according to eye witnesses) 

'juveniles" who, without saying anything to me, blocked my way and knocked me to the 

ground. For the next several minutes, I was punched, thrown down onto the subway 

platform, kicked in the face, and then pushed into the train I had just exited- and which 

by that point had begun to accelerate out of the station. 

I sustained a number of injuries including a broken hand, a deep laceration to my finger, 

and bruises to my face, head and other parts of my body. The investigating detective told 

me that surveillance camera videotape showed that my head either hit the moving train or 

came within inches of doing so. I would have been even more severely injured had it not 

been for a Good Samaritan- a GW law student named Andrew Miller who tried to 

intervene and suffered injuries including a concussion that required his ov.n visit to the 

hospital. (Dozens of people were on the platform this was Friday rush hour after all 

but, with the exception of a few kind women who screamed for the attackers to stop, did 

nothing to help.). Local Washington media has covered our story, including my meeting 

with Andrew to thank him in person for stepping in and possibly saving my life. The two 
514

primary assailants have been identified, arrested, and are being prosecuted due to the 

excellent, determined, investigative work of Metro Detective Barlow. In so far as I know, 

the others in the group have not been identified. 

Following the immediate attention I needed for my injuries, including undergoing general 

anesthesia to have four pins inserted into my broken hand, I began to turn my attention to 

the incident itself and the circumstances that enabled it to occur. I learned that this assault 

was not that unusual in Metro stations and that people are attacked on a regular basis by 

'~uveniles" and other miscreants who hang out in or near stations including, notably, 

Gallery Place. According WMAT A's own crime statistics as reported on its webpage, 

two aggravated assaults occur on Metro every week. These are reported and, I assume 

prosecuted incidents. Since all assaults are not reported or successfully prosecuted, the 

actual level of violence in the Metro system likely is even higher. A similar attack on 

Metro passengers occurred on April 29 at the SW Waterfront station. According to media 

reports, surveillance video from that attack shows assailants knocking a woman to the 

ground and viciously kicking her in the face. A group of"juveniles" is seen on the video 

and, seconds later, one of them commits another assault, this time sucker punching a 

woman in the head from behind and knocking her to the ground. The group is then seen 

running away and laughing. 

This situation would be an outrage anywhere but it is especially unacceptable in our 

nation's capital. Commuters are not safe, and tourists, such as your constituents, and 

indeed, your own staff traveling to and from work, may not appreciate the threats they 

face from riding Metro. I know I didn't. WMATA has not devoted sufficient attention 

and resources to the safety of passengers, and it will be a long time before my wife and I 

or our children ever use the Metro system again. 

As the investigation into my attack has proceeded through the criminal justice system, I 

have been impressed with the dedicated, hard-working, and committed members of 

Metro's police force and detectives. They have worked hard to find my assailants and 

bring them to justice, However, WMA T A clearly has inadequate resourcing- or is not 

competently using existing resources to address the level of demonstrated risk posed by 

the current situation. As anyone who regularly rides Metro can attest, there is an 

inadequate number of uniformed police on Metro trains and in Metro stations. There were 

no officers on the platform when I was attacked, and by the time they arrived, the attack 

wa~ over, and the assailants had dispersed. I have since learned that the surveillance 

can1eras at the Gallery Place station are not state-of-the-art and, in my case, that made it 

difficult to identify the attackers. I also wonder why the Metro stations are so poorly 

lighted. Is that intentional? 

Again in this year's FY18 budget request U.S. taxpayers are being requested to fund $150 

million in a special appropriation for physical improvements to Metro that are required 

after years of neglected or deferred maintenance. I agree that these infrastructure 

improvements are critical in order to sustain the system's operation and prevent addition 

serious and life-threatening fires that have become all too commonplace. However, 

Operation Safe Track will not rectify the safety and security issues that I encountered. 
515

Personal safety will remain an extremely serious issue, resulting in the real possibility of 

significantly decreasing ridership and in tum significantly reducing needed fares to 

support Metro's operation unless visitors and residents of the nation's capital region 

can regain confidence that they may travel Metro without being assaulted, raped, or 

robbed. 

Therefore, I request that in the FY 18 appropriations bill, you require WMA T A to conduct 

a study concerning the levels of police presence and additional safety enhancements 

required to deter criminals who so brazenly attack Metro riders. The study should include 

a review of what other large subway systems, such as New York City, have done to 

reduce crime on their systems, including cost estimates and a multi-year plan for funding, 

should resources be constrained. 

While the study is being conducted, and until additional recommendations are presented 

to your subcommittee, I encourage you to provide the necessary resources in this year's 

appropriation for adding police to the WMA T A force and directing that Metro employ its 

police officers in ways that have been proven to effectively reduce crime. Much data 

confirms that police patrols serve as deterrents to crime, and I am convinced that a visible 

police presence would have prevented the attack I suffered. Further, I encourage you to 

direct Metro to turn its lights back on in all of the stations across the system. While 

dimming lights for energy conservation and to save money is a worthwhile goal, it should 

not serve as another factor that encourages crime and makes it harder for cameras to 

capture the incidents that do occur. Finally, I request that resources be committed to 

purchasing state-of-the-art video equipment in all Metro stations so that when criminals 

do act, the best technology can be utilized to confirm their identity and bring them to 

justice. 

Thank you for your consideration of my request. With your support, it is my sincere hope 

that no one else will endure the trauma of being assaulted simply because they decided to 

take Metro to see a friend on a Friday night in our nation's capital. 

Question: In light of these growing and senseless crimes, I request the Department provide the 

House Appropriations Subcommittee on Transportation, Housing and Urban Development, and 

Related Agencies with an overview of any Federal Transit Administration plans to address these 

safety threats, as well as any present challenges - technical, funding, or personnel related that 

could delay swift implementation of enhanced security measures. 

~ FTA's safety authority does not extend to personal security of transit patrons. An 

assault against a transit patron is a crime, which is within the purview oflocallaw 

enforcement. In addition, the Transportation Security Administration (TSA) has the prerogative 

and responsibility for all rulemakings on security in public transportation. While FTA's safety 

authority focuses primarily on the safety of operations and infrastructure, some of the steps that a 

rail transit agency takes to ensure the personal safety and security of its riders and employees 

may overlap with any security requirements that the TSA may impose. 
516

With respect to funding, the Transit Security Grant Program (TSGP) is one of the Department of 

Homeland Security's grant programs that directly support transportation infrastructure security 

activities and is currently the primary vehicle providing funding assistance for security 

enhancements to eligible domestic mass transit and passenger rail agencies and employs riskbased prioritization for funding decisions. A rail transit agency's capital expenses for passenger 

and employee safety and security, such as security cameras, also are eligible for reimbursement 

under the Federal transit program. 
WITNESSES 

Page 

Barragan, Ron. N. D ............................... .. .......................... ...... .... ....... ................... 50 

Bridenstine, Ron. Jim . ....... ............... .... .... .... ............................ ... .. .... ..................... 6 

Byrne, Ron. Bradley .... ....................................... ............................ .... ........ ............. 63 

Carson, Ron. Ben ........... .... ... ....................... .... ......................................... ............... 299 

Cartwright, Ron. Matthew ....................................... ....................................... ........ 44 

Chao, Ron. Elaine .................................................................................................... 415 

DeFazio, Ron. P. A .................................................................................................. 12 

Espaillat, Ron. Adriano ........................................................................................... 74 

Gosar, Ron. P. A ...................................................................................................... 19 

Jackson Lee, Ron. Sheila .. . .. .. ...... .... ... .... .... .. . . . . . . . .. . . .. .. ... . ... .. .. ............. .. .. .... ... .... .... 31 

Johnson, Ron. Mike ................................................................................................. 55 

Kalra, Nidhi ............................................................................................................. 237 

Kochenderfer, Professor Mykel ............................................................................... 237 

Lawson, Ron. Al .. ............. ................. ... .... ...... .......................... ................................ 94 

Montoya, D. A .......................................................................................................... 101 

Panetta, Ron. ,Jimmy .. ................. ......... .... ................................ ..... ........... .............. 26 

Plaskett, Ron. S. E .......................................... ............................... .... ..................... 39 

Radewagen, Ron.A. A. C ...................................... .... ............................................... 2 

Scovel, C. L., III ....................................................................................................... 101 

Sires, Hon. Albio ...................................................................................................... 70 

Strickland, David ......... ....................... ... ...... .... .................... ...... .. ............................ 237 

Suozzi, Hon. T. R ..................................................................................................... 87 

Visclosky, Hon. P. J ................................................................................................. 81 

Wynne, Brian ........................................................................................................... 237 

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