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[Senate Hearing 107-671]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 107-671
 
                 TEA-21 REAUTHORIZATION: FREIGHT ISSUES

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

                             JOINT HEARING

                               BEFORE THE

       SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE

                                 OF THE

                              COMMITTEE ON
                 COMMERCE, SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                                AND THE

   SUBCOMMITTEE ON TRANSPORTATION, INFRASTRUCTURE AND NUCLEAR SAFETY

                                 OF THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                   ON

                               __________

                           SEPTEMBER 9, 2002

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                            Transportation 
           and the Committee on Environment and Public Works

                                 ______

                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
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           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

              ERNEST F. HOLLINGS, South Carolina, Chairman

DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
Virginia                             CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
MAX CLELAND, Georgia                 GORDON SMITH, Oregon
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida

               Kevin D. Kayes, Democratic Staff Director

                  Moses Boyd, Democratic Chief Counsel

      Jeanne Bumpus, Republican Staff Director and General Counsel

                                 ______

       Subcommittee on Surface Transportation and Merchant Marine

                  JOHN B. BREAUX, Louisiana, Chairman

DANIEL K. INOUYE, Hawaii             GORDON SMITH, Oregon
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
Virginia                             CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
RON WYDEN, Oregon                    OLYMPIA J. SNOWE, Maine
MAX CLELAND, Georgia                 SAM BROWNBACK, Kansas
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JEAN CARNAHAN, Missouri              JOHN ENSIGN, Nevada
JOHN EDWARDS, North Carolina

                                 ______

                                     

                                     

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                  JAMES M. JEFFORDS, Vermont, Chairman

MAX BAUCUS, Montana                  BOB SMITH, New Hampshire
HARRY REID, Nevada                   JOHN W. WARNER, Virginia
BOB GRAHAM, Florida                  JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     CHRISTOPHER S. BOND, Missouri
BARBARA BOXER, California            GEORGE V. VOINOVICH, Ohio
RON WYDEN, Oregon                    MICHAEL D. CRAPO, Idaho
THOMAS R. CARPER, Delaware           LINCOLN CHAFEE, Rhode Island
HILLARY RODHAM CLINTON, New York     ARLEN SPECTER, Pennsylvania
JON S. CORZINE, New Jersey           PETE V. DOMENICI, New Mexico

                 Ken Connolly, Majority Staff Director

                 Dave Conover, Minority Staff Director

                                 ______

   Subcommittee on Transportation, Infrastructure and Nuclear Safety

                      HARRY REID, Nevada, Chairman

MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
BOB GRAHAM, Florida                  JOHN W. WARNER, Virginia
JOSEPH I. LIEBERMAN, Connecticut     CHRISTOPHER S. BOND, Missouri
BARBARA BOXER, California            GEORGE V. VOINOVICH, Ohio
RON WYDEN, Oregon                    LINCOLN CHAFEE, Rhode Island

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

                             JULY 24, 2002
                           OPENING STATEMENTS

Breaux, Hon. John B., U.S. Senator from the State of Louisiana...     1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     6
Jeffords, Hon. James M., U.S. Senator from the State of Vermont..     4
Reid, Hon. Harry, U.S. Senator from the State of Nevada..........     2

                               WITNESSES

Caruthers, John D., Jr., Chairman, I-69 Mid-Continent Highway 
  Coalition......................................................    30
    Prepared statement...........................................   131
Dusenberry, Katie, Chairman, Arizona Department of Transportation 
  Board..........................................................    20
    Prepared statement...........................................    70
Hamberger, Edward R., President and Chief Executive Officer, 
  Association of American Railroads..............................    24
    Prepared statement...........................................    91
    Responses to additional questions from:
        Senator Jeffords.........................................   119
        Senator Reid.............................................   118
Hecker, JayEtta, Director, Physical Infrastructure Group, U.S. 
  General Accounting Office......................................     9
    Prepared statement...........................................    51
    Responses to additional questions from:
        Senators Reid and Jeffords...............................    65
        Senator Reid.............................................    62
Huerta, Michael P., Senior Vice President and Managing Director, 
  ACS State and Local Solutions, on behalf of the Coalition for 
  America's Gateways and Trade Corridors.........................    28
    Prepared statement...........................................   126
    Responses to additional questions from:
        Senator Jeffords.........................................   130
        Senator Reid.............................................   128
Larrabee, Rick, Director of Port Commerce, Port Authority of New 
  York and New Jersey............................................    26
    Prepared statement...........................................   120
    Responses to additional questions from Senator Reid..........   123
Shane, Jeffrey N., Associate Deputy Secretary and Director, 
  Office of Intermodalism, U.S. Department of Transportation.....     7
    Prepared statement...........................................    39
    Responses to additional questions from:
        Senator Jeffords.........................................    49
        Senator Reid.............................................    46
Wickham, Michael W., Chairman and Chief Executive Officer, 
  Roadway Express, Inc., on behalf of American Trucking 
  Associations...................................................    22
    Prepared statement...........................................    73
    Responses to additional questions from:
        Senator Jeffords.........................................    90
        Senator Reid.............................................    87

                          ADDITIONAL MATERIAL

Statements:
    Evaluation of Transportation Research Board Special Report 
      267, Gerard J. McCullough..................................   102
    Los Angeles County Economic Development Corporation..........   138
    Magtube, Inc., Jim Fiske.....................................   135
    McGovern, Hon. James P., U.S. Representative from the 
      Commonwealth of Massachusetts..............................   144

                 TEA-21 REAUTHORIZATION: FREIGHT ISSUES

                              ----------                              

                       MONDAY, SEPTEMBER 9, 2002

                                     U.S. Senate,  
      Committee on Commerce, Science, and Transportation,  
Subcommittee on Surface Transportation and Merchant Marine,

         Committee on Environment and Public Works,
Subcommittee on Transportation, Infrastructure, and Nuclear 
                                                    Safety,
                                                    Washington, DC.
    The subcommittees jointly met, pursuant to notice, at 2:38 
p.m. in room SR-253, Russell Senate Office Building, Senator 
Breaux [chairman of the Subcommittee on Surface Transportation 
and Merchant Marine] presiding.
    Present for the Committee on Commerce, Science, and 
Transportation: Senator Breaux.
    Present for the Committee on Environment and Public Works: 
Senators Reid, Jeffords, and Inhofe.

 OPENING STATEMENT OF HON. JOHN BREAUX, U.S. SENATOR FROM THE 
                       STATE OF LOUISIANA

    Senator Breaux. The committee will please come to order. I 
would like to welcome our colleagues from the Environment and 
Public Works Committee who are with us this afternoon for this 
very important hearing, particularly Senator Reid and Senator 
Inhofe and also Senator Jeffords and others who I know will be 
attending. This is a joint hearing of the Subcommittee on 
Surface Transportation and Merchant Marine and the Subcommittee 
on Transportation, Infrastructure, and Nuclear Safety. I also 
thank all of our witnesses for being with us.
    I would just make a brief comment to point out that one of 
our fastest-growing segments of our economy, and our gross 
domestic product for this country, is international trade. This 
segment of our economy is completely dependent on our 
transportation sectors and on the intermodal transportation of 
the goods that are engaged in commerce.
    Today we are going to look at what has become one of the 
backbones of our entire Nation's economy, the infrastructure 
for the intermodal transportation system of the United States. 
I think all of us who represent port areas are familiar with 
the importance of an intermodal, interconnected, transportation 
system, that without it we will not continue to be one of the 
great trading nations of the world.
    Intermodal containers, for instance, in the ocean shipping 
area, are increasing dramatically. It used to be that a ship 
that had 2,000 containers on it was considered one of the 
largest in the world. Today we have ships carrying 7,000-plus 
containers. If those containers were lined up one behind the 
other on rail cars, it could extend over 35 miles, just from 
the containers on one large container ship.
    So we want to look at the problems associated with 
intermodal transportation. I am delighted that our leader on 
the Democratic side, Senator Reid, who has been so active in 
these transportation measures from an appropriations standpoint 
and others, is with us to help with this hearing this 
afternoon. Senator Reid, any comments?

  OPENING STATEMENT OF HON. HARRY REID, U.S. SENATOR FROM THE 
                        STATE OF NEVADA

    Senator Reid. Thank you very much, Mr. Chairman. I am very 
happy that we have here with us the chairman of the full 
committee, Senator Jeffords, who has been so good at allowing 
us to do things on the committee. As chairman of this 
subcommittee, I appreciate his allowing us to do this joint 
hearing.
    Senator Breaux, you being from a State where you see these 
ships come in all the time, you are used to them. But for me, 
every time I go to a place where we have freight that comes by 
ship I am stunned how big these are. I cannot imagine a ship 
could stay afloat with 35 miles of railroad cars in it. It is 
just hard for me to comprehend that we have vessels that can do 
all of that.
    I am happy to co-chair this hearing with you, Senator 
Breaux. The subcommittee that you chair, Surface Transportation 
and Merchant Marine, is extremely important and, even for those 
of us who are not in ports, we all understand or should 
understand that solving America's freight and passenger 
transportation problems will require a comprehensive intermodal 
and flexible approach.
    Jurisdiction over surface transportation programs is 
divided between our committee and your committee. We have to do 
everything we can to coordinate our efforts. You and I have 
been around long enough that it is a question of what we can 
get done and do it as quickly as we can. Once we get something 
done, there is a lot of credit to pass out. We do nothing, and 
I think we'll get discredit for that.
    We need to work not only with our committees, but we have 
to work in Finance, Budget, and Appropriations. So we have to 
do a lot to set the policy agenda. We can do that. We cannot 
begin to address the significant problems facing our Nation's 
transportation system unless we have adequate funding. Each of 
these committees I have mentioned will be an important partner 
in our efforts to secure the additional funding and budget 
protection necessary to write a transportation bill that 
addresses our Nation's significant highway, transit, and rail 
infrastructure needs.
    Funding problems--today we will deal with freight 
transportation. Efficient transportation of freight is 
essential to our Nation's economic growth and global 
competitiveness. Nearly $10 trillion worth of freight is 
transported each year on our roads, railroads and waterways. We 
depend on our transportation system to get everything from food 
and other agricultural products to consumer goods to 
construction materials to coal to their destinations.
    Freight transportation will double in the next 20 years. 
This growth in freight will vastly outpace the growth of our 
road and rail system and it can simply overwhelm our 
transportation infrastructure. Already, bottlenecks exist at 
border crossings with Canada and Mexico and in metropolitan 
areas. The next transportation bill will have to address these 
capacity issues and improve access to intermodal facilities.
    In addition, we have to address operational issues that 
impact the reliability of our transportation system. 
Intelligent transportation systems will play a critical role.
    We are fortunate to have a number of distinguished 
witnesses today. I especially look forward to Katie Dusenberry, 
who chairs the Arizona State Transportation Board, to talk 
about the traffic bottleneck at Hoover Dam. As a result of the 
closure of Hoover Dam, we have had to divert traffic--2,100 
trucks a day now are detoured 23 miles or more.
    Senator Breaux, you have heard me talk about my home town 
of Searchlight. That is where they go, 2,300 trucks every day. 
It is dangerous. It is the busiest two-lane highway in Nevada 
and it is extremely dangerous and it is only going to get 
worse. This bridge is essential to freight movements on the 
Cana-Mex corridor and is a top priority for our entire region 
of the country.
    Senator Breaux, one of the things that we have to keep in 
mind also is if you look at a chart, on numbers, trucks haul 
most of the stuff and we want to do what we can to make sure 
that our highways get the attention they need. But it is kind 
of a misleading figure to look simply at numbers, because the 
trucks cannot haul most of the stuff until it gets to them and 
most of that comes with rail or through ocean traffic, barge 
traffic. So we have a lot to do to make sure that we better 
understand the freight system. If there were ever an area where 
we cannot be provincial, that is, we in Nevada have to care 
about Louisiana even though we do not have--in Las Vegas, four 
inches of rain a year. You get that much in a couple of hours--
we have to be concerned because if we are going to keep Las 
Vegas economically sound, we are going to have to figure a way 
to get the traffic from Long Beach, New Orleans, and other 
places.
    [The prepared statement of Senator Reid follows:]
  Statement of Hon. Harry Reid, U.S. Senator from the State of Nevada
    Welcome to today's hearing on freight transportation issues. I am 
pleased to co-chair this hearing with Senator Breaux and the Commerce 
Subcommittee on Surface Transportation and Merchant Marine he chairs. 
Solving America's freight and passenger transportation problems will 
require a comprehensive, intermodal, and flexible approach. 
Jurisdiction over surface transportation programs is divided between 
the Environment and Public Works Committee, the Banking Committee, and 
the Commerce Committee, and we will have to closely coordinate our 
efforts. This joint hearing is an important example of that 
cooperation, and I look forward to working closely with Senator Breaux 
and our other partners throughout the TEA-21 reauthorization process.
    In addition to working with the Commerce and Banking Committees on 
policy issues, I intend to work closely with the Finance, Budget, and 
Appropriations Committees on funding issues. While we have a lot of 
important policy work ahead of us, we cannot begin to address the 
significant problems facing our nation's surface transportation system 
without adequate funding. Each of these committees will be an important 
partner in our efforts to secure the additional funding and budget 
protection necessary to write a transportation bill that addresses our 
nation's significant highway, transit, and rail infrastructure needs.
    One particular funding need that we will address at our hearing 
today is freight transportation. The efficient transportation of 
freight is essential to our nation's economic growth and global 
competitiveness. Nearly 10 trillion dollars worth of freight is 
transported each year on our roads, railroads, and waterways. We depend 
on our transportation system to get everything--from food and other 
agricultural products to consumer goods to construction materials to 
coal--to its destination.
    Freight transportation is expected to double in the next 20 years, 
as the economy grows and international trade increases. This growth in 
freight traffic will vastly outpace the growth of our road and rail 
systems and threatens to overwhelm our transportation infrastructure.
    Already, key bottlenecks exist at road and rail connections to 
major U.S. seaports, at border crossings with Canada and Mexico, and in 
metropolitan areas where roads and rail infrastructures are stretched 
beyond their capacity.
    This next transportation bill will have to address these capacity 
issues and improve access to intermodal facilities if we are to keep 
our economy moving and maintain our leadership in international trade.
    In addition, we must address operational issues that impact the 
reliability of our transportation system. Intelligent Transportation 
Systems will play a crucial role in improving the reliability of our 
transportation infrastructure and ensuring the flow of up-to-the-minute 
information to users and managers.
    We are fortunate to have a number of distinguished witnesses with 
us today to provide our committees with insights into the freight 
challenges we face and, we hope, some proposed solutions to these 
problems.
    One witness I would like to particularly thank for making the trip 
to be here is Katie Dusenberry, who chairs the Arizona State 
Transportation Board. Ms. Dusenberry will be testifying on an issue 
that is of vital importance to my State and the entire Southwestern 
region--the closure of the Hoover Dam to truck traffic due to post-
September 11th security concerns.
    As a result of the closure of the Hoover Dam bridge to freight 
traffic, over 2,100 trucks per day are now detoured 23 miles or more. 
To address this problem, the States of Arizona and Nevada are working 
together, and with the Federal Government, to build a Hoover Dam Bypass 
Bridge. This bridge is essential to freight movements on the CANAMEX 
corridor and is a top priority for my State. The Department of Interior 
has identified the Hoover Dam bypass project as its No. 1 national 
security priority.
    I am pleased that Ms. Dusenberry has joined us to provide her 
expert testimony on this project.
    Again, thank you to all of our witnesses for your participation 
today. Our first panel will consist of Associate Deputy Transportation 
Secretary Jeffrey Shane, who is also the Director of the Office of 
Intermodalism, and Jay Etta Hecker from the U.S. General Accounting 
Office. Thank you for agreeing to be with us today and I look forward 
to your testimony.
    Senator Breaux. Thank you very much, Senator Reid.
    In order of appearance, I recognize the chairman of the 
full Environment and Public Works Committee, our friend Jim 
Jeffords.

 OPENING STATEMENT OF HON. JIM JEFFORDS, U.S. SENATOR FROM THE 
                        STATE OF VERMONT

    Senator Jeffords. Thank you. Senator, I appreciate all the 
work you have done along with Senator Reid in putting this 
hearing together. Coordinating two committees is not an easy 
task. It is so essential, and I applaud your efforts.
    Today's hearing lays important groundwork for the TEA-21 
reauthorization next year. The proper and efficient handling of 
freight is absolutely critical to the American economy. It is 
that simple. Without this, consumer prices would skyrocket, 
factories would have temporary shutdowns, businesses could not 
function, and families would even worry about food shortages in 
the land of plenty.
    I care about freight issues. They are important to me in 
Vermont and to every county and every State in the Union. 
Chairmen Reid and Breaux have highlighted some important facts. 
I will repeat one: The U.S. transportation system carried over 
15 billion tons of freight valued at over $10 trillion during 
1998. Trucks carry about 80 percent of that value.
    Now for the most critical point: The volume of freight that 
needs to be carried in the United States will more than double 
by the year 2020. Thus, the transportation bill for the next 
generation of Americans, which we are currently crafting and 
will pass next year, must address this issue in a positive 
manner.
    America needs to invest in vital intermodal freight 
infrastructure so that American businesses have competitive 
choices and more opportunities. For example, our international 
ports should offer multiple options, such as train and truck, 
to move incoming freight or to efficiently load ships with 
American products. Careful strategic investments near urban 
areas, factories, border crossings, ports or elsewhere can 
greatly help. Of course, I understand that regional needs vary, 
which is why the new law must embrace flexibility and local 
decisionmaking. For example, Vermont has a strong tradition of 
moving heavy freight by rail to the St. Lawrence Seaway. 
Freight moves through Vermont north to the Province of Quebec 
and south to the Eastern Seaboard. Vermont's granite and marble 
quarries, its dairy farms and its timber industries produce 
relatively heavy products, and its high-tech industries such as 
IBM produce high value but low weight products. Allowing 
flexibility, local decisionmaking, and competitive choices will 
provide for efficient intermodal freight movement.
    Those who ship and receive freight in America are concerned 
with efficiency and timeliness. We need intelligent freight 
systems in addition to intelligent transportation systems. The 
buyer's cry is: I want it on time and unbroken. Yet this week's 
New Yorker magazine, in an article entitled ``Stuck in 
Traffic,'' explains how congestion threatens efficiency on our 
highways. The article wonders if the world will end, not with a 
bang, but with a traffic jam.
    America has spent hundreds of billions of dollars building, 
improving, and repairing our massive highway transportation 
systems. I will push for a similar revitalization of our rail 
system. We need a modern rail equivalent to our highways.
    Rail will yield strong benefits throughout our Nation. 
First, movement of goods onto rail can usually reduce 
congestion on our roads and permit truck freight to move faster 
and safer. Second, it will make our highways last longer as the 
heavy freight is moved by rail. Truck shipments exert a 
tremendous toll on our Nation's highways.
    Third, more targeted, strategic, less costly investments 
can help move huge volumes of freight while offering businesses 
another viable option. For example, much of the truck traffic 
on Route 7 in Vermont could be handled by rail through 
precisely targeted strategic investments in rail corridors, 
instead of through expensive road-building projects. Each 
Senator in this room probably has similar examples for their 
States.
    In closing, let me again emphasize my interest in working 
with everyone in this room on these critical freight issues. I 
look forward to hearing the testimony here today. Thank you, 
Mr. Chairman.
    Senator Breaux. Thank you, Senator Jeffords. Senator 
Inhofe.

 OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM 
                     THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you, Mr. Chairman. I think you are 
aware that this committee is having a scheduling conflict with 
Senator Armed Services. So I will not be able to stay.
    I did want to come down and express myself on a couple of 
things. The significance of a reliable freight transportation 
system is always imperative, although it is more so now in 
times of war. As the ranking member of the Transportation and 
Infrastructure Subcommittee, I now have the opportunity to work 
more closely on making sure that transportation needs are met.
    I believe there is still much that needs to be done in 
accomplishing our goals. I am pleased to be meeting today in 
conjunction with the Commerce Subcommittee and discussing the 
matters at hand. We face many challenges with our current 
transportation system concerning the consequences on our 
economy and our environment. While I understand the focus on 
improving our important border infrastructures to handle 
increasing traffic volumes in the future, my concern is 
committing to the enhanced safety and security of commercial 
vehicle operations at our borders.
    Mr. Chairman, when you and Senator Reid talked about the 
ports, a lot of people are not aware that Oklahoma is a port. 
We are the home of America's most inland port. So we have 
extensive operations there.
    I am certain it is possible to have a transportation system 
that is safe and secure, as well as efficient and productive. 
The past two reauthorization acts developed and promoted by 
this committee have been instrumental in stimulating surface 
transportation policy. As the committee considers 
reauthorization proposals, it is necessary to review whether 
changes need to be made. I would be interested to hear our 
witnesses. I believe it is necessary to define what program 
changes might need to be implemented in reauthorization to aid 
the improvement of intermodal connections surrounding ports, 
railheads, and other intermodal transfer facilities.
    Mr. Chairman, I ask unanimous consent to insert testimony 
for Mr. Jim Fisk of MagTube Incorporated and Charlotte Thorton 
on innovative approaches for freight transportation issues, if 
I might.
    Senator Breaux. Without objection, it will be made a part 
of the record.
    Senator Inhofe. Thank you, Mr. Chairman.
    [The prepared statement of Senator Inhofe follows:]
   Statement of Hon. James M. Inhofe, U.S. Senator from the State of 
                                Oklahoma
    Thank you Mr. Chairman. Today's hearing on freight and intermodal 
transportation is exceptionally important to me. A reliable freight 
transportation system is always imperative, although it is particularly 
important these days during times of war.
    As the ranking member of the Transportation and Infrastructure 
Subcommittee, I now have the opportunity to work more closely on making 
sure that transportation needs are meet. I believe there is still much 
that needs to be done in accomplishing our goals.
    We face many challenges with our current transportation system that 
causes concerning consequences on our economy and environment.
    While I understand the focus on improving our port and border 
infrastructures to handle increasing traffic volumes in the future, my 
concern is committing to the enhanced safety and security of commercial 
vehicle operations at our borders. I am certain it is possible to have 
a transportation system that is safe and secure, efficient and 
productive.
    A better understanding of freight demands and similar issues helps 
us to analyze the increasing demand for freight transportation, 
assessments of the implications of freight demands for the entire 
surface transportation system and improvements in freight efficiency 
and security.
    The past two reauthorization acts developed and promoted by this 
committee have been instrumental in stimulating surface transportation 
policy. As the committee considers reauthorization proposals, it is 
essential to review whether changes need to be made.
    I will be interested to hear if our witnesses believe it is 
necessary to define what program changes might need to be implemented 
in reauthorization to aid the improvement of intermodal connections 
surrounding ports, railheads and other intermodal transfer facilities 
near our ports and borders.
    Mr. Chairman, I ask for unanimous consent to insert testimony from 
Jim Fiske, from Magtube, Inc. and Charlotte Thorton on innovative 
approaches for freight transportation issues.
    Mr. Chairman, I look forward to today's hearing and want to welcome 
all of our witnesses.
    Senator Breaux. Thank you. We have that waterway all the 
way up to Oklahoma from Louisiana.
    Senator Inhofe. We do, we do.
    Senator Breaux. Thank you very much, colleagues.
    I would like to welcome and am pleased to have Mr. Jeffrey 
Shane, who is Deputy Secretary for Policy at the Department of 
Transportation, back before the committee; also, Ms. JayEtta 
Hecker, who is with the General Accounting Office and has just 
done an extensive report on some of these issues, particularly 
in the marine transportation area, to present testimony.
    Mr. Shane, Mr. Secretary, we have your testimony. We note 
it is an extensive document. If you could help us summarize it, 
we will proceed to questions. Ms. Hecker, the same for you.

 STATEMENT OF JEFFREY N. SHANE, ASSOCIATE DEPUTY SECRETARY AND 
DIRECTOR, OFFICE OF INTERMODALISM, UNITED STATES DEPARTMENT OF 
                         TRANSPORTATION

    Mr. Shane. Chairman Breaux, Chairman Reid, Chairman 
Jeffords, and Ranking Member Inhofe: Thank you very much for 
allowing me to represent Secretary Mineta today and testify on 
freight transportation intermodalism. These are issues that 
affect our economy, as we have just heard, in profound ways and 
both committees are to be commended for the leadership you have 
shown in this area.
    Mr. Chairman, you referred to my longer statement. I assume 
it will be placed in the record. I would appreciate that.
    Senator Breaux. Without objection, it will be.
    Mr. Shane. Thank you very much, and I will try to summarize 
within the time allotted.
    With the possible exception of our obligation to ensure for 
our citizens a safe and secure transportation system, DOT has 
no higher priority than facilitating the seamless 
transportation of goods throughout our country and in 
international trade flows. Congestion, bottlenecks, choke 
points, and all the consequences of insufficient capacity and 
inefficient intermodal connections impede that growth, raise 
costs to consumers, and impair our economic well being in ways 
that are simply too often overlooked.
    Ensuring smooth global supply chains has become of even 
greater importance as companies increasingly shift to just-in-
time manufacturing techniques, and ability to move freight and 
cargo quickly across the different modes of our transportation 
system serves as the linchpin of that manufacturing revolution.
    The growth of international trade, particularly as the 
world moves toward a far more liberal framework for trade, 
represents another key challenge to our transportation system. 
While we have included a wide range of trade and transportation 
statistics in the longer statement that I have submitted for 
the record, I would like to draw your attention again to just 
one, the one cited by both Chairman Reid and Chairman Jeffords: 
that the volume of shipments into and out of the United States 
is expected to double between now and 2020.
    It is essential that our ports and our airports and border 
entry points have the capacity to accommodate these increases, 
especially with the more aggressive security procedures that 
will have been put in place in response to September 11.
    ISTEA and TEA-21 have created a solid framework for 
addressing the transportation and logistics needs of our 
country. As we move forward with the reauthorization of TEA-21, 
however, one thing is clear. The demand on our Nation's 
transportation system is growing faster than supply. Statistics 
show that population growth combined with substantial increases 
in vehicle miles traveled and freight tonnage moved have 
resulted in rising levels of congestion on our Nation's 
highways, despite increased Federal investments under ISTEA and 
especially under TEA-21. Projected future growth in all of 
these areas will only worsen congestion without a strong 
commitment to make our infrastructure far more robust and far 
more efficient than it is today.
    Imagine, if you will, what travel on our highway system 
would be like today if our freight rail system were suddenly 
shut down. By the year 2010, you will not have to imagine it, 
because expected increases in truck traffic over current levels 
will be equal to the entire volume of freight that is carried 
on our Nation's rail system today. That is why Secretary Mineta 
believes that the administration and Congress have to work 
together to make increasing the efficiency of freight 
transportation a central feature of our surface transportation 
reauthorization legislation next year. Coordination between the 
modes and enhanced private involvement in the system are two 
themes that need to be emphasized in that effort because, 
although much has been accomplished over the last decade based 
on improvements put in place by ISTEA and TEA-21, the promise 
of intermodalism, more efficient movement of passengers and 
freight throughout all parts of our transportation system, and 
the potential for private sector participation in 
infrastructure expansion have yet to be fully realized.
    In conclusion, it is clear that the commercial movement of 
freight was successfully woven into a number of TEA-21's 
programs, especially in the areas of funding flexibility, 
border and corridor planning, and the application of new 
technologies. We will need to think carefully about all of 
these issues as we build on TEA-21 by enhancing existing 
programs and, where appropriate, developing new ideas to ensure 
that our freight transportation system can meet future 
challenges.
    As you know, earlier this year Secretary Mineta outlined a 
series of principles that will guide us through the 
reauthorization process. Using those principles as our base, we 
have been carefully examining proposals put forward by 
stakeholders as we develop our reauthorization proposal. For 
example, we will work with our partners in the States and in 
metropolitan planning organizations to achieve wider 
application of innovative financing programs.
    We will consider changes to the Borders and Corridors 
program that will encourage broader transportation planning and 
integrate infrastructure investments with national and 
international business developments. We will continue to apply 
innovative technologies through the ITS program and in 
collecting data on freight movements and trade flows, and we 
will work closely with the private sector to formulate 
innovative transportation solutions that develop new ways to 
utilize public-private partnerships that leverage scarce 
Federal funds.
    I am confident that, working together, the administration, 
Congress, and our stakeholders can expand our transportation 
infrastructure to ensure increased mobility, security, and 
prosperity for years to come.
    Thank you very much again for the opportunity to appear 
here today. I look forward to answering any questions you may 
have.
    Senator Breaux. Thank you, Mr. Secretary.
    Next, from the General Accounting Office, Ms. Hecker.

STATEMENT OF JAYETTA HECKER, DIRECTOR, PHYSICAL INFRASTRUCTURE 
         GROUP, UNITED STATES GENERAL ACCOUNTING OFFICE

    Ms. Hecker. Thank you, Mr. Chairman, Senator Reid, and 
Senator Jeffords. We are really honored to be here today. We, 
as you noted, are releasing the report on marine transportation 
financing and a framework for infrastructure investments today. 
But because of the focus on the freight issue, I will broaden 
my remarks to focus more on the broader context of freight 
issues.
    I will cover four areas: first, the background, which will 
include this review of the growth that people have talked 
about; the new data that we collected for you on expenditure 
and direct receipts from users of the different modes; some 
data on Customs fees that you particularly wanted us to gather; 
and finally, the framework for review of critical decision 
points in evaluating investments in transportation.
    The scope of our work, in addition to this work on 
maritime, is focused on a long body of work on capital 
budgeting, needs estimates, and, Federal highway R&D. We have 
work, not yet released, in response to requests from the 
Environment and Public Works Committee on mobility challenges, 
innovative finance, State capacity and project delivery. In 
addition, there is a wide range of expert studies that date 
back to 1994, a major commission on intermodal freight 
challenges, the TRB report, the intermodal freight connectors 
report, and many other technical reports.
    The background issue that I would just like to cover is 
really putting the issue on the table that you have all stated, 
and that is, the enormous increase in projected freight 
tonnage. According to the Federal Highway Administration's 
updated figures, freight tonnage by all modes will increase by 
41 percent in the next 10 years and 76 percent by 2020.
    [Chart.]
    This shows the different growth rates for the different 
modes. As can be seen in the chart, it is estimated that there 
will be a 43 percent increase in the 20-year period for freight 
transported by water, a 55 percent increase by rail and an 84 
percent increase by truck.
    Now, this really obscures the new challenges, because the 
key of intermodal transportation is really figuring out ways 
that the intersection and connections between these modes are 
addressed as well.
    [Chart.]
    The second point is the history of the funding approaches 
and receipts from the different modes. This chart depicts the 
average amounts collected and expended by mdoe for fiscal years 
19992001. As can be seen, the maritime users, or the 
expenditures in the maritime sector, are about $4 billion a 
year, with user assessments covering about $1 billion. The 
aviation expenditures are about $10 billion a year, with $11 
billion of user assessments and the highway area has about $25 
billion of expenditures, with the average for the same period 
being $34 billion in user assessments.
    The key difference here is that the marine system largely 
relies on general revenues, whereas the aviation and highway 
systems have historically relied almost exclusively on 
collections from users.
    [Chart.]
    I turn now quickly to the third area that you asked us to 
address and that is the amount of duties that are collected on 
imported goods transported by the different modes. This 
basically is in pie chart form and shows that a little over 75 
percent of the import fees are collected on goods that come in 
through the maritime sector. As you see, almost $4 billion 
comes in through aviation Customs fees and less than $1 billion 
comes over the land borders of Canada and Mexico.
    Now, what is important about the Customs duties is that 
clearly these are duties or taxes on the value of selected 
imported goods. This, of course, is a traditional source of 
revenue for the general fund. It is paid by importers of the 
taxed goods and varies based on where our trade agreements are 
and the type of commodity.
     Therefore, it is not really a good proxy as a tax on users 
of the marine system. Although we recognize there is a proposal 
and discussions to designate Customs duties for the marine 
transportation system, this is clearly a policy call by the 
Congress. However, some funds, actually about 30 percent of 
Customs fees, are already designated for specific uses by the 
Government, and that includes such areas as agriculture and 
food programs, migratory land conservation, aquatic resources, 
reforestation. So some of those duties are already earmarked.
    The other thing about the potential for designating Customs 
duties is that they really are not a new source of capital for 
the Federal Government. It is money that is already coming in, 
already accounted for, already spent, and therefore, the notion 
or the proposal that somehow you can draw on that would amount 
to a draw on the general fund of the U.S. Treasury.
     The fourth area--and I am sorry to see the yellow light go 
on because this is the most interesting contribution that we 
are trying to make--is a framework for developing national 
freight policy for consideration of transportation investment 
decisions. As you see, we basically outline four key steps: 
defining national goals, defining the roles of the different 
levels of Government, developing approaches and tools that 
promote cost-sharing and efficiency, and finally, evaluating 
performance.
    The key thing about the goals issue is that it needs to be 
intermodal and it has not been. This other whole issue of the 
so-called ``orphan'' status of the intermodal freight 
connectors. We still have a very stove-piped system and we need 
a conception of national goals for transportation that are 
integrated, intermodal, and freight-oriented.
    Another element about the goals involves developing 
Government commitment to performance and results. Therefore, 
another key indicator of the goals is having performance-
oriented measures for system performance and efficiency.
    Defining roles, as I said earlier, is about the relative 
roles of the different levels of Government. The role of MPOs 
is a key thing here. They have not really paid attention or 
placed priority on freight. It is rational on their part to do 
so because while they do not benefit, they bear most of the 
costs. So there are some structural issues about the relative 
roles of Government.
    The third area, on determining appropriate tools, really is 
driven by the roles issues. As you define the relative roles, 
you implement and effectuate those by using the appropriate 
tools that leverage Federal funding and promote accountability 
and efficiency. A key thing that I think several of you already 
alluded to is that in appropriate tools, we also have non-
investment and non-capital tools to improve the efficient use 
of the existing system. That would involve tools such as demand 
management and congestion pricing; technology improvements 
which include the ITS area that several of you mentioned; 
enhanced maintenance and rehabilitation, and improved 
management and operations.
    Quickly, the final area is basically evaluation. We need to 
understand how current policies work and we need to track the 
performance of proposed policies. The more it is framed as 
performance of the efficiency of the system, the more likely we 
will be able to determine whether we are really getting the 
improved efficiency in the performance of the transportation 
system instead of focusing on capital or completed projects. 
Evaluations allow us to determine the outcome we want to 
achieve.
    That concludes--I am sorry about the red light--my remarks. 
The key is that the freight intermodal focus is clearly a 
cornerstone of the next generation of transportation 
legislation.
    Senator Breaux. Thank you, Ms. Hecker and Mr. Secretary.
    I take it, Ms. Hecker, to start with you--and I want Mr. 
Shane to comment on it--the fact that you are proposing what 
you have labeled a framework for developing an effective 
Federal investment strategy indicates that in GAO's opinion we 
do not have that now?
    Ms. Hecker. We continue to have policies and legislation 
specific to different modes. Certainly the maritime legislation 
has never been integrated in a systematic way with highway 
authorization. Furthermore, the whole issue of freight has not 
been systematically examined. For example, our railroad 
policies and the effect of some of those policies on the 
freight infrastructure and the tradeoffs between different 
modes has not been systematically explored.
    So yes, I think there is real value in moving toward a more 
systematic view of transportation requirements.
    Senator Breaux. Mr. Secretary, we have an office over in 
DOT that is an Intermodal Office. Is that not what they should 
be doing?
    Mr. Shane. That is right, and as a matter of fact, Mr. 
Chairman, I head that office. So that I like to think that we 
are doing some of that.
    I do not disagree, however, with Ms. Hecker that there is 
certainly more room for further integration. We all know that. 
To some extent there is an element of stovepiping in the 
legislation that we have and that we continue to work on. But 
it would be unfair to characterize ISTEA, for example, the 
Intermodal Surface Transportation Efficiency Act, and the 
Transportation Efficiency Act for the Twenty First Century, 
TEA-21, as completely oblivious to the importance of further 
integration and intermodal planning.
    I think there has been an awful lot of that and there have 
been some very powerful results as a result. Programs like the 
CMAQ program, the congestion mitigation program, TIFIA, an 
assortment of other elements of TEA-21, have indeed funded more 
integrated approaches to transportation and encouraged 
intermodal planning at the State and local and regional level.
    So I am interested in what GAO has been doing and we would 
certainly look forward to consulting more and finding out, 
particularly as we move through the reauthorization process 
with Congress, where there might be further opportunities for 
improvement. But I do not think it is fair to characterize the 
system as totally stove-piped even today.
    Senator Breaux. Are you all working on the reauthorization 
from a conceptual standpoint as far as recommendations to the 
Congress?
    Mr. Shane. We are, Mr. Chairman, and I would go further and 
to say we are beyond the conceptual standpoint. We have been 
organized--we have got 200 people at the Department of 
Transportation organized into functional groups, cross-modal, 
cross-cutting, working with stakeholders in all elements of the 
transportation sector, working with each other, and thinking 
great thoughts, if I might say, about the future of these 
programs, such that by early next year, once we have gone 
through an exercise with OMB--as you know, that is always 
required as the administration puts a proposal together for the 
Congress--we hope to transmit a bill which will be, I think, 
hopefully, the center of gravity for Congress's deliberations 
over the reauthorization of TEA-21.
    Senator Breaux. Are we likely to see from those 
recommendations any type of thinking outside of the box, so to 
speak? Or are we talking about pretty much the same type of 
planning and recommendations that we have had in the past?
    Mr. Shane. I hope you are going to see some out-of-the-box 
thinking, Mr. Chairman. I have been impressed probably more 
than any other aspect of TEA-21 with the effectiveness of those 
parts of the program which have been able to leverage Federal 
money, that is to say to encourage private sector 
participation, to encourage State governments and other levels 
of Government to really step up to the plate in a more 
important way.
    In an era of scarce resources--I mean, the era of cheap 
money is all over and we all know that--it is critical that we 
find even more effective ways of doing that. Programs like 
TIFIA, the intermodal connectors program, a variety of others, 
have produced I think disproportionate gains for relatively 
small expenditures, and we need to pursue as many opportunities 
of that sort as we can going forward or we are simply not going 
to have the resources solely at the Federal level to really 
meet the demands that we all have acknowledged here this 
afternoon. Senator Breaux: My final question is in what 
timeframe are we likely to have a completed package of 
recommendations from a conceptual standpoint?
    Mr. Shane. Our intention, of course subject to OMB's 
process, but I cannot imagine that that is going to be an 
impediment because we have been working with OMB already, is to 
get the bill, the administration bill, to the Congress very 
shortly after it returns in January or February of next year.
    Senator Breaux. Senator Reid.
    Senator Reid. Would both of you give me your thoughts on 
what we can do when we reauthorize TEA-21 to get the most 
efficient use out of the transportation infrastructure? Not 
theory; I mean actual things that we can do.
    Ms. Hecker. I think the four areas that I mentioned in 
terms of focusing on operations and not just construction----
    Senator Reid. Give me specific things, because all this 
theory is good, but we have to do something specific.
    Ms. Hecker. ITS and the lack of integration of ITS is a 
specific example. We have not really taken full advantage of 
the technology to streamline the flow of traffic to have a 
single standard for ITS. There is a lot more research that is 
promising about the role of technology.
    The focus on operations is another area. It goes precisely 
to your point.
    Senator Reid. Tell me what you mean by that? ``Focus on 
operations,'' what does that mean?
    Ms. Hecker. The efficient performance and utilization of 
the existing system, that it is underutilized----
    Senator Reid. How do we legislate that?
    Ms. Hecker. Well, there has been a comprehensive study that 
I would rather defer to, that has talked about their permeating 
all aspects of the Federal relationship----
    Senator Reid. Ms. Hecker, the only reason I pin you down a 
little bit is it is easy to get all these theories, that we 
should evaluate performance, establish goals, develop 
approaches, but when it comes down to it, this subcommittee 
that I am responsible for, next year we have to do real 
specific things and we are not going to sit around and say, 
``We are going to evaluate these goals and evaluate 
performance.''
    We do not have the benefit of doing that and that is why we 
need experts like you and Mr. Shane to tell us specifically 
what we can do to make this new transportation bill meet the 
modern needs of this clogged transportation system we have.
    Ms. Hecker. Well, I think the programs that we talked 
about, the Border and Corridor programs and the connector 
programs, it shows that they have not received adequate 
attention. So some shift of either the funding available or the 
restrictions will be missing to bring attention to these 
intermodal links.
    Senator Reid. You have the time to think about some of the 
things that we should do. This is your opportunity to give us 
some specific ideas of things that we could do in the next 
bill.
    You have mentioned the intelligent transportation system, 
but be more specific. This does not mean we are going to follow 
everything that you are recommending, but at least it will give 
us some direction and insight as to what you think we could do 
to improve the intelligent transportation system.
    An example of that is the new Amber Alert that works so 
well. People really look up on those road signs to get some 
idea what is going on. So we will leave the record open for a 
couple weeks for you to give us some specific ideas as to what 
we can do to improve TEA-21.
    Senator Reid. Mr. Shane, do you have any ideas?
    Mr. Shane. Yes, Senator, I have a few ideas. I think what I 
said before is my main--one of my main ideas, the notion that 
we need to leverage our Federal funds much more effectively. 
That is not a theory; that is something that we need to find 
ways of doing along the lines that were explored in TEA-21, I 
think quite successfully. By leverage, I mean--if you look at 
the national highway system intermodal connectors, that is a 
tiny fraction of the mileage on the national highway system. 
Yet, according to the report that we submitted to Congress that 
was requested in TEA-21, in the year 2000 the physical quality 
of those portions of the national highway system is far 
inferior to the national highway system generally, and the 
consequences of that inferior quality have a disproportionate 
negative impact on the efficiency of our whole freight 
transportation system.
    So by attacking a tiny little fraction of the overall 
mileage on the national highway system through a program of 
that kind, we extract disproportionately huge benefits. It is 
that sort of opportunity that we need to pursue.
    I mentioned the CMAQ program. You have got real intermodal 
success stories coming out of CMAQ, including rail success 
stories, because States have been able to use that money in 
very creative ways. The TIFIA program, which is a loan 
guarantee program, it actually requires the expenditure----
    Senator Reid. I am very familiar with that.
    Mr. Shane [continuing]. Of relatively little money. Again, 
it stimulates private sector interest in infrastructure 
expansion in ways that we have not seen before. We need to find 
more ways to exploit tools like that.
    Finally--and I do not mean by any means, last or least; it 
is not the least; it may be the most important--the Corridors 
and Borders program. There is so much interest in trying to 
facilitate the movement of freight through regional planning, 
including sometimes very complicated assemblages of Government 
entities and private sector entities, in order to really 
streamline the flow of freight in our system, that if the 
Borders and Corridors program is not big enough we need to 
figure out ways of either making it bigger or making it more 
creative such that it has the effect.
    Senator Reid. It has not worked very well. In theory it 
should have worked better than it has worked. I think we have 
to do some things to change it, because I think theoretically 
it is a great program.
    Mr. Shane. I agree, and there is a huge amount of pent-up 
interest in it; and the results of solving that problem in the 
reauthorized program I think will be huge and of enormous 
benefit to the economy.
    Let me just add one last thing if I may, and that is that 
working with all of these programs one thing that continues to 
impress me--and I am not just talking about the surface 
transportation programs; I am talking about all of our 
programs--when the private sector comes in and wants to do 
business with us, whether it is to expand highway 
infrastructure or airport infrastructure or anything else, 
particularly if it is a program that actually makes some 
Federal money available, they find themselves in a Faustian 
bargain. Even when there is enormous interest in trying to 
build infrastructure in ways that will respond to the demands 
that we have in the system today, sometimes our procedures can 
be counterproductive.
    One of the things I would like to see us do in the 
reauthorization process--and I am not here to make any 
announcements of bright new ideas; these are in process now--is 
to find ways of really streamlining our own clearance process 
for these projects. I am talking about all of the 
transportation projects that are funded or stimulated in any 
way by the Federal level.
    If I may go on for a second, I can give you an example of 
the sort of thing I mean. We have a security program which has 
been a huge success. It actually began, Senator Jeffords, in 
Vermont, called Operation Safe Commerce--a public-private 
partnership emerging more or less spontaneously in order to 
test the security of container transportation in our system in 
international transportation.
    Nobody at the Federal level suggested it, nobody approved 
it. It just happened. Well, we began to think that it was a 
good idea and we set up an executive steering committee. In 
fact, I co-chair the executive steering committee with the 
Deputy Commissioner of Customs, Don Browning. It is an example 
of how much interest there is in Washington in something that 
really works.
    But now I am noticing something that worries me. Now that 
we have an executive steering committee, suddenly it has become 
a Government program. In a funny way, one of the worst things 
that happened was that they got an appropriation of $28 
million. Now we have to be really responsible. Now we have to 
have procedures and accountability and we have to have, you 
know, the Inspector General looking at things, and all of a 
sudden a spontaneous effort to set up a test bed for container 
security could, unless we are very careful--and I want to 
assure you that we are trying to be very careful--if we are not 
very careful, we will stymie it. It'll grind to a halt just by 
virtue of the fact that the Federal Government has now applied 
all of its usual procedures and safeguards and everything else.
    We need to get past that mentality in our transportation 
infrastructure programs or we will not meet the demand that our 
country will face in 2020 for sure.
    Senator Breaux. Senator Jeffords.
    Senator Jeffords. Well, thank you very much. I appreciate 
your testimony. Thank you for your comprehensive testimony, I 
should say. I look forward to working with you in the TEA-21 
reauthorization effort.
    Later in this hearing Mr. Huerta on behalf of the Coalition 
for America's Gateways and Trade Corridors will ask for funding 
of $2 billion annually for the Borders and Corridors program. 
You may have just referred to that. But Mr. Wickham of the 
American Trucking Associations will explain that the congestion 
at the 7 busiest border crossings costs the trucking industry 
about 2.6 million hours in delay time per year. Also, Mr. 
Larrabee of the Port Authority of New York and New Jersey will 
explain the estimate that trade in all types of cargo will not 
double, but triple, by the year 2020. Just this weekend, as I 
rode to New York I enjoyed a visit from Amtrak, letting us know 
how they feel about the importance of moving more and more of 
the cars off the highways and onto the railroads and to work in 
that direction.
    So we have a tremendous need here to understand exactly how 
all of this is going to happen. I hope that you are working in 
a way that you can assist us in finding the means and the ways 
that we can accommodate all these changes that are needed. It 
is going to be huge in the sense of the cost to be able to 
orderly transfer our transportation systems between the freight 
and airways and all of that, to do the best job we can do.
    So I just believe you will be doing that, but would like 
for you to tell me you will. Mr. Shane?
    Mr. Shane. I will, Senator.
    [Laughter.]
    Senator Jeffords. Thank you. I thought that might smooth 
things down a little bit.
    Also, Ms. Hecker, I appreciate the detailed report the GAO 
submitted to our two committees.
    You point out the need for significant improvements to our 
marine transportation system and note that the marine 
transportation system is generating billions of dollars of 
revenue. The report discusses aging infrastructure, changes in 
the shipping industry, and increased concerns about security.
    It has been said that the footnotes often contain either 
the most boring or the most intriguing points in the study. 
Footnote 12 of your report notes that under current law 30 
percent of the gross receipts from Customs duties, about $15 
billion per year, is reserved for agricultural and food 
programs. Your report further notes that congestion challenges 
often occur where transportation modes connect, such as in 
ports.
    You also note that if there is an enhanced Federal role, 
you recommend that the enhanced Federal participation 
supplement participation by others rather than just replacing 
it.
    Your report has drawn a picture for us, but you have not 
connected the dots, which indeed may be our job. But can you 
give us a rough estimate of the cost of addressing the aging 
infrastructure and the new security concerns?
    Ms. Hecker. I will try to answer directly, but the direct 
answer is, ``No, I cannot give you the number.'' We have 
actually done some of this work, and I think there was 
testimony before you, Senator Reid, on reviewing all of the 
estimates of the needs of the different modes. They cannot be 
added up. They are done with inconsistent assessments. Most of 
these assessments do not assume capacity constraints. 
Therefore, if they are not capacity-constrained, these 
assessments cannot tell you whether it can grow that much and 
many of these studies do focus on opportunities for more 
efficient management and utilization of the system.
    So there really is not a single estimate of the cost of 
addressing the aging infrastructure and security concerns. It 
is a comprehensive challenge of the whole performance of the 
system, that we need some initiatives to build, but we need 
efficient, leveraging financing methods that, as you said 
precisely, do not supplant or replace State, local, private 
funds, but supplement entice, and trigger additional 
expenditures by other parties. Then we need some of those 
efficiency-inducing operations.
    So there really is not a single number. I apologize; I like 
to answer questions directly, but the answer is no, there is 
not one single number.
    Senator Jeffords. Thank you.
    Thank you, Mr. Chairman.
    Senator Breaux. I would like to ask one final question on 
this. They tell me that 75 percent of goods that enter and exit 
the United States, imports and exports, by volume, and about 60 
percent I guess by value, come through the ports around the 
country. But to get to the ports, a lot of it is coming by 
truck, by rail, and what have you. So it really is all 
interrelated.
    The report from Ms. Hecker points out that about 80 percent 
of the funding for the ports comes from the general treasury; 
and the opposite is true, almost 100 percent of the aviation, 
trucks, and highways is really coming from user fees.
    The question is is the administration talking or looking at 
ways to increase the funding for the ports? The ports as I have 
traveled around the country are horribly congested. The trucks 
cannot get in, the railroads cannot. It is very difficult to 
coordinate because of the volume and the congestion at the 
ports. These are very expensive propositions.
    Is the administration looking at any different 
recommendations on how we raise the money for ports, which are 
going to affect rail and trucks as well?
    Mr. Shane. Yes, Mr. Chairman, we are. Captain Bill Shubert 
of the Maritime Administration has certainly been speaking with 
me and with Secretary Mineta at some length about the 
possibility of coming back to Congress with some proposals. 
Unfortunately, I cannot suggest any detailed programs right 
now, but I am hoping that in the not too distant future we will 
engage in a more specific discussion of that very important 
issue.
    Senator Breaux. I hope this discussion is going on, because 
if we have intermodalism each mode is being financed in a 
different fashion and yet they are all totally interrelated. To 
the extent that you can think outside of the box in trying to 
figure out ways that all of these fees can be coordinated for 
all methods of transportation, I think that that is going to be 
very, very helpful.
    The Customs duties for the ports are not going to the 
ports; they are going to the general treasury and they finance 
agriculture and other good things out of the general treasury. 
But I think that most of the users like to see the users' fees 
targeted to the services that they are getting. Now, if that 
happened we may have a little less funding out of the general 
treasury for the ports, if it is offset by user fees. But I 
think we really need some in-depth thinking about how we are 
going to be financing the intermodalism forms of 
transportation. I hope you would address that specifically.
    Senator Reid. Mr. Chairman, would you yield?
    Senator Breaux. Absolutely.
    Senator Reid. People go to the gas pump and that goes to 
highways. We get all kinds of user fees to take care of our 
airports. But as you say--and that money goes directly to the 
airports and to the highways, whereas the problem you have with 
ports, as you indicated, that money can be used for anything 
else.
    So I think we need some help on that.
    Senator Breaux. Then we have got the 4.3 cent gas tax and 
we know all the debate on that, with the railroads still, I 
take it, still, and barges as well, still paying it for deficit 
reduction; trucks, highways are not paying it. I mean, is there 
a consistency here or is there an inconsistency here?
    Do you envision any recommendation on that?
    Mr. Shane. All of this is being examined. I know this is a 
waffle, Mr. Chairman, but it is all being examined. We have to 
get on top of these issues, and I am hoping that we will come 
back to you very shortly.
    Senator Breaux. That is important, because I think what I 
am hearing from GAO is, when we are talking about trying to 
coordinate all of this, that it has to be better coordinated if 
we are going to have an intermodal transportation system. How 
we help finance it, how we address the problems associated with 
each one of them has to be interconnected. I think there is 
room for improvement in that particular regard, and that is 
what we hope we see in the new recommendations.
    Senator Reid. Mr. Chairman, the other problem we have is 
that typically, even though you say you think you have things 
worked out with the Office of Management and Budget, you do 
not, believe me. The problem we have is they are focused on a 
1-year plan. All they care about is what this year looks like. 
They do not care about what it looks like next year or the year 
after or the year after.
    We have got to pass a 5-year bill here. So we have to do 
something that takes into consideration more than 1 year. That 
is why the suggestion of Senator Breaux is so important. We 
need somebody to help us on this. Otherwise we are going to do 
some things that they really may not like. We could use some 
help. That is why I was so direct with Ms. Hecker. We need more 
than generalities and we need more than theories. We need some 
real specific things that we can do to make this 5-year program 
we are going to promote and pass next year one that is good for 
5 years.
    Mr. Shane. If I could just comment very briefly, the reason 
I said what I said about OMB was that typically----
    Senator Reid. Do not worry. We will cover for you.
    [Laughter.]
    Senator Breaux. We will not tell them you said it.
    Mr. Shane. I am not going to even go there.
    [Laughter.]
    Mr. Shane. Typically we have a procedure whereby the bill 
is submitted to OMB, it is all wrapped up tidily, and that will 
be sometime later in the fall, and then we find out what they 
think about it and then we have a big argument with them. What 
we determined to do this time at DOT was to actually give them 
a fairly detailed preview of the direction of some of our 
thinking, because we did not want to be surprised. We did not 
want to do a lot of work and then have it just ``offed'' by OMB 
at some late stage.
    They for their part were interested in knowing whether we 
really were doing something. So we had a reciprocal reason for 
wanting to meet. I have to say it was a very positive meeting. 
I think there was a lot of mutuality in terms of the way both 
OMB and DOT were looking at the importance of being creative 
about these programs going forward.
    So it is not a political statement when I say I think we 
will do OK with OMB. Funding levels are obviously going to be a 
struggle. They always are. That is the game. But in terms of 
the actual shape of the programs, the content, and thinking out 
of the box and that sort of thing, OMB is prepared to be quite 
creative and they have been quite cooperative.
    We would be prepared to even sit down with staff and 
provide the same kind of preview, so that you do not just 
receive a black box sometime early next year and open it and 
see for the first time what it is we have in mind. We really do 
want to work cooperatively and creatively as we move forward. 
That is the only process that is going to produce the kind of 
benefits we need.
    So I offer that and we are prepared to come up.
    Senator Breaux. And do not be afraid of new ideas.
    Gentlemen, thank you. Ms. Hecker, thank you very much. Both 
of you are excused.
    We would like to welcome up the next panel of witnesses and 
thank them for being with us: Ms. Katie Dusenberry, who is 
chairman of the Arizona Department of Transportation Board; Ms. 
Michael Wickham--Mr. Michael Wickham, chairman and CEO of 
Roadway Express; Mr. Ed Hamberger, who is President of the 
Association of American Railroads; Mr. Rick Larrabee, the 
Director of Port Commerce for the Port Authority of New York 
and New Jersey; Mr. Michael Huerta, Coalition for America's 
Gateways and Trade Corridors; and Mr. John D. Caruthers, who is 
chairman of the I-69 Mid-Continent Highway Coalition and one of 
my constituents from Shreveport.
    We thank all of you for being with us and are anxious to 
receive your testimony. Ms. Dusenberry, we have you listed 
first and we would love to hear from you first.

STATEMENT OF KATIE DUSENBERRY, CHAIRMAN, ARIZONA DEPARTMENT OF 
                      TRANSPORTATION BOARD

    Ms. Dusenberry. Good afternoon, Senator Reid, Senator 
Breaux, and the other members of the committee. Thank you for 
the opportunity to present to you the views of the Arizona 
Department of Transportation Board and the freight industry 
regarding the Hoover Dam Bypass Bridge.
    I am Katie Dusenberry, as you said, chairman of the Arizona 
Department of Transportation Board and chairman also of 
Arizona's CanaMex Task Force Subcommittee on Transportation. 
You probably are wondering why I am testifying before you in 
dealing with concerns of commercial vehicles. You see, I am in 
the trucking business. My husband, our son, and I own and 
operate a 78-year-old family owned trucking company with 
offices and warehouses in five Arizona cities. We employ over 
250 hardworking people and have almost 300 pieces of commercial 
vehicles. So I have a keen understanding of hauling issues.
    As has been mentioned before, the freight business is 
rapidly changing, from distribution of farm-to-market and 
domestic products to delivery of export and import goods to and 
from entry ports to consumers everywhere in our country and in 
the world. If you live in the city, everything you wear, 
everything you eat, even what you are sitting on, comes to you 
by truck.
    One of those important port-to-port transportation 
corridors is the CanaMex corridor which runs from Mexico City, 
Mexico, through five U.S. States and into Edmonton, Alberta, 
Canada. This is an essential north-south trade route for 
commercial vehicles and their products. The biggest functional 
failure in this north-south corridor is the restriction of 
commercial vehicles across Hoover Dam.
    This brings me to sharing with you the importance of 
completing full Federal funding for the Hoover Dam Bypass 
Bridge across the Colorado River. Prior to the terrorist 
attacks on September 11th, 2001, the only highway for freight 
and passenger vehicles to go between two large metropolitan 
areas, the cities of Phoenix, Arizona, and Las Vegas, Nevada, 
an important link in the CanaMex corridor, was to cross the 
Colorado River on a two-lane road, one in each direction, atop 
the Hoover Dam.
    This dam, built almost 60 years ago, reached its road 
capacity more than 10 years ago. Envision the steep grades of 
the approach roads, with their sharp hairpin turns, turns so 
sharp that freight trucks could not pass on the turns and would 
come to a complete stop before entering the turn to allow any 
oncoming truck to navigate that turn. Speeds on those approach 
roads ranged from 5 to 18 miles per hour. If accidents 
occurred, delays of 2 to 5 hours were very common, and one 
accident a few years ago resulted in an 18-hour delay. Cars and 
trucks would be backed up for miles.
    So planning for the bridge began long before September 11. 
But since then, commercial vehicles are restricted from 
crossing the dam. They are now diverted 23 miles at a cost of 
$30 million per year in fuel costs alone, to another inadequate 
river crossing, down a winding mountain road where some trucks 
in the last few months have lost control, resulting in serious 
accidents.
    The Hoover Dam crossing is the only highway in the country 
that has not been reopened to commercial traffic since 9-11. 
This is not surprising since the dam is a high security risk 
and any breach of the dam would flood more than 250,000 people 
and cutoff electric power to over 1.3 million in California, 
Nevada, and Arizona.
    The project to build the dam and its approaches in Nevada 
and Arizona will cost $234 million. Through commitments from 
the States of Nevada and Arizona, together with Federal moneys 
from the TEA-21 Borders and Corridors discretionary funds, we 
have pieced together $126 million. The environmental impact 
statement is finalized. The record of decision for the project 
approval is in hand. With the money we have, design and 
construction of the approach roads in Nevada and Arizona are 
under way.
    $108 million is needed to complete this nationally needed 
project. We are asking you to give this project your highest 
priority in discretionary funding to ensure full funding of 
this bypass bridge and meet our anticipated completion date of 
2007.
    Thank you for allowing me to testify this afternoon. If you 
have any questions I would be pleased to answer them.
    Senator Breaux. Thank you very much.
    Senator Reid.
    Senator Reid. Mr. Chairman, thank you.
    I am going to ask Ms. Dusenberry, have you ever been to 
Searchlight?
    Ms. Dusenberry. No.
    Senator Reid. You have never been to Searchlight, Nevada?
    Ms. Dusenberry. No.
    Senator Reid. Oh, boy.
    Ms. Dusenberry. Where is Searchlight, Nevada? I travel a 
lot in Arizona, but I am sorry I have not been to Searchlight.
    Senator Reid. Have you been to Laughlin?
    Ms. Dusenberry. Yes.
    Senator Reid. Just a few miles from Searchlight. You should 
get up there sometime.
    Ms. Dusenberry. I need to get up there.
    Senator Reid. Yes.
    Ms. Dusenberry. Do they have gambling--no.
    [Laughter.]
    Senator Reid. You realize that is where all the traffic is 
going, is through Searchlight?
    Ms. Dusenberry. Ah, the traffic now, the truck traffic now.
    Senator Reid. Mr. Chairman, I have a series of questions 
that I would like to submit to each of these witnesses. I would 
ask if they within a couple weeks would get back to us with 
responses to those questions. Is that OK with you?
    Senator Breaux. Without objection. I know that Senator 
Reid, because of his other duties, is going to have to be 
departing before perhaps everyone finishes. But that would be 
totally acceptable. He has worked very hard on getting these 
witnesses here and I know he is going to look forward to your 
responses.
    Senator Reid. Thanks, Mr. Chairman.
    Senator Breaux. With that, our next, Mr. Wickham.

 STATEMENT OF MICHAEL W. WICKHAM, CHAIRMAN AND CHIEF EXECUTIVE 
OFFICER, ROADWAY EXPRESS, INC., ON BEHALF OF AMERICAN TRUCKING 
                          ASSOCIATIONS

    Mr. Wickham. Chairman Reid, Chairman Breaux, thank you for 
the opportunity to testify on behalf of the American Trucking 
Association and Roadway Corporation. Having spent my entire 
career at Roadway, I am most proud of the fact that we continue 
to improve our safety record year after year, mile after mile, 
and today our trucks and drivers are the safest on the road.
    When moving freight, whether modally or intermodally, 
safety is the No. 1 priority. The trucking industry, ATA, and 
Roadway believe the one thing that we can and must do to 
improve the efficient movement of freight is to refocus our 
traffic laws to prevent excessive speeding. Excessive speed 
simply is a factor in nearly one-third of all fatal accidents 
and more than one-fifth of accidents involving trucks. We ask 
Congress to provide specific funding for speed enforcement for 
both truckers and motorists and section 402 and the MCSAPS 
program.
    Trucks move 67 percent of the freight tonnage, 86 percent 
measured by value. This is freight that moves by trucks alone. 
It does not touch any other mode. While the intermodal movement 
of freight can and does play an important part and should be 
encouraged, the potential for rail intermodal transportation to 
slow the growth of truck traffic is limited by market forces 
beyond the control of Congress, the States, and to some extent 
the modes themselves. Today, just 1.2 percent of the freight 
moves in rail intermodal shipments. Despite anticipated growth 
in this sector, which will exceed trucking growth, by 2014 rail 
intermodal shipments will capture only 1.5 percent of the 
freight market, while trucking's market share as measured by 
tonnage will expand to 69 percent.
    It is not constructive to assume that the business 
logistics trends of the past half century, which have made 
trucks the dominant mover of freight, will somehow reverse 
themselves and that our Nation's reliance on trucks will 
subside. Congress should focus its attention and resources 
where they are needed most and will pay the greatest dividends 
for our country, and that is on improving the efficiency of the 
highway system and the productivity of the trucking industry.
    Efficient highways have allowed trucks to deliver freight 
on time. This has allowed manufacturers to substantially reduce 
their inventories through the use of just-in-time logistics, 
saving the U.S. economy hundreds of billions of dollars and 
creating thousands of jobs. Unfortunately, congested and 
unreliable highways threaten to reverse these gains. Congress 
should not allow the performance of critical highway corridors 
to continue to deteriorate, nor should highway money be further 
diverted under the false notion that investing in other modes 
will negate the need for highway investments.
    The national highway system carries 75 percent of all truck 
traffic. Yet 40 percent of travel on urban national highway 
system routes takes place under such congested conditions that 
even a minor incident can cause severe traffic disruptions. We 
strongly urge Congress to make improving the national highway 
system its priority during highway reauthorization through 
significantly higher dedicated funding. Congress should also 
consider innovative ideas such as the construction of voluntary 
truck-only highways.
    Improving the national highway system connections to 
intermodal terminals is of primary concern to all freight 
modes, including the trucking industry. They should receive 
dedicated funding. However, if we focus our attention on the 
2,000 miles of connector highways and ignore the 160,000 miles 
of other national highway system highways that tie the 
intermodal facilities together, the efforts at the ports and 
points will be pointless.
    ATA supports the expansion of the Borders and Corridors 
program. Along with representatives of other freight modes, we 
are a member of the Coalition for America's Gateways and Trade 
Corridors and we associate ourselves with the Coalition's 
remarks. We hope that Congress will ensure that in the future 
the program focuses on the most critical corridors and border 
crossings and that funding eligibility is not expanded.
    While infrastructure improvements are essential, we 
recognize that highway capacity expansion cannot itself solve 
all of our problems. Nor is there sufficient funding available 
to address our many needs. Fortunately, there are ways to 
improve the freight system's efficiency beyond adding highway 
capacity. Congress can take a significant step by granting 
States the authority they need to reform their truck size and 
weight regulation. Using fewer trucks to move goods would 
reduce congestion significantly and would improve important 
safety, air quality, and economic benefits and lower pavement 
costs.
    Congress and the States should achieve--could achieve for 
free what they would otherwise have to invest billions of 
dollars in expanding transportation capacity to accomplish. 
Missing or ignoring such opportunities would be shortsighted.
    I realize that there are misgivings about the safety 
implications of reforming size and weight regulations. However, 
the best available evidence indicates that increasing trucks' 
capacity can actually produce safer highways. A DOT study found 
that triples and other longer combinations have an accident 
rate which is half that of other trucks.
    This evidence reflects our company's own experience with 
triples. Since 1990, Roadway triples have been involved in 
exactly one fatality. That is one fatality over 155 million 
miles of travel. Triples are the safest trucks in our fleet by 
far and there is no practical or scientific basis for the 
Federal law that restricts States from determining where they 
should operate.
    Neither ATA nor any of us in the industry is interested in 
seeing these trucks operate except where they can be run safely 
and where their operation does not produce additional 
infrastructure costs. ATA strongly recommends that Congress 
look to the recently completed TRB study on truck size and 
weight as a guide toward responsible implementation of size and 
weight reform. Next year Congress has the opportunity to decide 
whether the American people will share the road with a safer, 
more productive truck or a lot more trucks. That choice is 
critical.
    Thank you for the opportunity to share the industry's 
ideas.
    Senator Breaux. Thank you, Mr. Wickham.
    From the railroads' perspective, Mr. Hamberger.

STATEMENT OF EDWARD R. HAMBERGER, PRESIDENT AND CHIEF EXECUTIVE 
           OFFICER, ASSOCIATION OF AMERICAN RAILROADS

    Mr. Hamberger. Thank you, Mr. Chairman, for the opportunity 
to be here today. I am particularly pleased to participate in 
this unprecedented joint committee hearing. I think it is 
appropriate that the committees recognize the importance to 
coordinate transportation public policy, much as carriers 
coordinate the transportation of America's goods outside of the 
Beltway.
    Rail intermodal freight transportation has been the fastest 
growing segment of traffic for the U.S. freight rail industry 
over the past 2 decades, growing from 3.1 million trailers and 
containers in 1980 to nearly 9 million in 2001. It now accounts 
for approximately 20 percent of revenue for class 1 carriers 
and moves seamlessly throughout the North American rail 
network.
    There are numerous reasons why rail intermodal 
transportation has become such a vital part of the U.S. and 
indeed North American freight transportation mix. One, it saves 
shippers and customers money by combining the door to door 
convenience of trucks with the long haul efficiency and cost 
effectiveness of rail.
    Two, it saves fuel. In fact, on average a railroad can 
carry a single ton of freight 400 miles on one gallon of fuel, 
the equivalent of Baltimore to Boston.
    Rail intermodal improves air quality. According to the EPA, 
for every ton-mile, a typical locomotive emits roughly three 
times less nitrogen oxide and particulate matter than a typical 
truck.
    Four, rail intermodal reduces highway congestion. An 
intermodal train can take approximately 280 trucks from the 
highways or the equivalent of 1,100 automobiles.
    We have heard a lot about the increased demand that is 
going to be out there for freight transportation, and clearly 
to meet that demand freight railroads will have to invest 
heavily in projects that increase efficiency and capacity. 
Railroads are incredibly capital-intensive, as you know, Mr. 
Chairman. In the year 2000, railroads put almost 18 percent of 
their revenues into capital expenditures, more than four times 
as much as the average for manufacturing.
    In terms that Congress often deals with, if that had been 
translated into a per-gallon excise tax it would have equaled 
$2.05 for every gallon of fuel burned by the industry 
reinvested back into that industry, our industry, the freight 
railroads.
    Unlike my good friend Jeff Shane, let me not waffle, Mr. 
Chairman. We need that 4.3 cents back. It is $170 million a 
year, $2 billion since it was enacted, that would go back into 
the industry and back into the infrastructure.
    We have joined the Freight Stakeholders Coalition and in my 
testimony we have outlined nine specific recommendations. Let 
me just highlight four of those: one, dedicate funds for the 
NHS connectors to the intermodal freight facilities.
    Two, develop ways to increase available funds without new 
user fees and taxes, through innovative financing options. We 
have identified two of those. One would be to institute tax 
incentives and tax-exempt financing for companies that invest 
in intermodal freight infrastructure. Examples of qualified 
assets would include track and roadbed located on intermodal 
corridors and intermodal transfer facilities and related 
equipment. The second option would allow the funding of rail 
infrastructure through tax-exempt indebtedness, which would 
include track, bridges, tunnels, terminal facilities, signals, 
and computer systems.
    Let me just digress for 1 second because I cannot let Mr. 
Wickham's statement go unanswered when he said that it would 
not cost the Government anything to increase the size and 
weight of trucks. You realize, of course, that the Secretary, 
the Department of Transportation, has issued a report that 
indicates that at 80,000 pounds trucks pay approximately 60 
percent of the damage that they do to roads and bridges. At 
100,000 pounds that number falls below 50 percent. So indeed it 
is not at no cost at all and in fact it would merely exacerbate 
the already uneven playing field on which we find ourselves 
competing.
    Three, significantly increase funds for an expanded 
corridor, border, and gateway program. We belong to Mr. 
Huerta's coalition and he will talk about that.
    Four, increase funding and promote the use of the CMAQ 
program to reduce congestion and improve air quality.
    In addition to the Freight Stakeholders Coalition agenda 
items, we have two additional others: one which we discussed at 
length with the Environment Committee some time ago, to 
increase funding of the section 130 grade crossing program and 
clarify that the funds may be used for maintenance; and two, 
expand the rail rehabilitation and financing program and remove 
the restrictive program requirements. This committee has 
already endorsed that by a vote of 17 to 3.
    As you mentioned in your opening comments, Mr. Chairman, 
our Nation's global supremacy is derived in large part from a 
transportation system that is second to none. Freight railroads 
are an indispensable part of that system. We are confident that 
we can continue to play a major role in meeting our Nation's 
future transportation needs. As you know, we move 40 percent of 
the Nation's goods by ton-mile right now.
    But for those needs to be met efficiently, it is imperative 
that the intermodal push initiated by ISTEA and TEA-21 be 
developed further. We look forward to working with both these 
committees, others in Congress and others in the private sector 
to see that this can occur.
    Thank you.
    Senator Breaux. Thank you, Mr. Hamberger.
    Next we have Admiral Larrabee. I am particularly glad to 
have you with us today, Admiral. I know that a year ago 
tomorrow you were in the World Trade Center in obviously 
extreme difficult circumstances and situation. We are very 
delighted to have you with us today and look forward to hearing 
your testimony.

  STATEMENT OF RICK LARRABEE, DIRECTOR OF PORT COMMERCE, PORT 
              AUTHORITY OF NEW YORK AND NEW JERSEY

    Mr. Larrabee. Thank you, Mr. Chairman. Mr. Chairman, thank 
you for the invitation to be here today to testify on matters 
of intermodal transportation and port access. The work of your 
committees demonstrates the importance of considering how 
separate modes of transportation operate as part of a total 
system. My hope is that this hearing will heighten your 
interest in this subject, further your understanding of how the 
efficient movement of intermodal cargo is a matter of national 
interest, and convince you that improvements in the Federal 
policy and the level of assistance are warranted.
    The Port Authority of New York and New Jersey is a bi-State 
public authority whose mission on behalf of the States is to 
identify and meet the critical transportation infrastructure 
needs of our region and provide access to the rest of the 
Nation and to the world. We operate the region's major aviation 
and marine facilities, as well as PATH, the commuter transit 
system, ferry and bus terminals, the interstate tunnels and 
bridges, and other facilities.
    Our airports are responsible for roughly 20 percent of all 
U.S. international cargo, which, combined with domestic cargo, 
totaled nearly 2.9 million tons in 2000 and a value of $150 
billion.
    The seaport serves 35 percent of the U.S. population and 
over 200 nations. The terminals in New York and New Jersey 
handled over 3 million containers last year and $80 billion of 
general bulk and breakbulk cargo moved through the port in 
2001. Another 1 million containers arrive in our region via 
rail from the West Coast.
    Meanwhile, 250 million vehicles traveled annually over our 
bridges and through our tunnels and 2.5 million buses used our 
two bus terminals in New York City.
    These statistics attest to the vitality of the trade and 
the economic activity of the Nation and our region. But it also 
hints at a major challenge we and other regions face: to make 
sure American gateways and freight corridors have the capacity 
to keep up with the growth in trade and a larger economy. To be 
clear, this is not a case of ``build it and they will come.'' 
It is a matter of build it because the cargo is already coming. 
In fact, it is already here, resulting in even greater 
congestion.
    Addressing these challenges will require investing in the 
infrastructure and adjusting policies to foster smart solutions 
for long terms. Partnerships are coming together locally and 
regionally to support projects and we need a strong Federal 
partner to accelerate these activities.
    The Port Authority is coordinating with the States of New 
York and New Jersey and is in the process of developing 
specific recommendations for future legislation. Therefore, I 
will devote the remainder of my statement to some general 
observations for your consideration. These are in no particular 
order.
    First, we and other ports greatly appreciate the attention 
that Congress and the administration are giving the maritime 
transportation system. It is our hope that the Federal 
Government will act affirmatively on identifying MTS 
infrastructure requirements.
    Second, congestion can be found throughout the country, but 
it is especially severe in major gateways and metropolitan 
areas that are essential elements of the Nation's economic 
infrastructure and security. These areas, including the New 
York-New Jersey region, deserve special attention and face 
unique challenges to upgrade aging facilities, new, modern 
standards to accommodate larger and heavier container freight 
movements.
    Third, expanding capacity should not mean that trucking 
alone will have to bear the brunt of the growth. Clearly, 
trucking will be an essential part of the transport strategy in 
the decades to come, carrying more and more freight, but in our 
region and others trucking and the highways on which they 
depend are not expected to have the capacity to handle the 
growing population and anticipated doubling and tripling of 
domestic and international cargo. Therefore, a greater share of 
our future transportation needs needs to be addressed by other 
modes, which leads me to my fourth point.
    Your committee should consider to foster the development of 
other modes to accelerate increased demand. Rail certainly is 
one part of the answer. We are building three new intermodal 
rail yards at our maritime terminals in order to dramatically 
expand our capacity to move containers on rail. In addition, 
the Port Authority is working with the railroads and public 
agencies to identify specific rail regional projects that will 
improve line and terminal capacity.
    Another answer can be found off our shores. We are 
undertaking a program to encourage intermodal cargo to move by 
water wherever possible. There is tremendous underutilization 
of capacity on the water that can bring new capacity to 
intermodal transportation along major corridors with less 
investment. It is not the solution, but if examined for 
associated capital, energy, and environmental costs, it can be 
part of a solution with Federal support.
    Fifth, innovations approved by Congress in TEA-21, such as 
Congestion Mitigation Air Quality and national corridor 
planning and development programs, were very worthwhile policy 
steps to take. These innovative programs could be improved and 
expanded even further, especially to add to the capacity of 
major gateways.
    Sixth, investments in freight movements could also benefit 
passenger services. These include TEA-21 projects intended to 
divert freight from heavily traveled automobile routes to 
dedicated freight corridors, whether on land or water. We have 
undertaken a comprehensive look at how intermodal freight 
improvements can be strategically planned and implemented to 
stitch together freight corridors. Already underway is a 
project to bring intermodal rail to Howland Hook Marine 
Terminal on Staten Island, a significant step to improving 
direct rail service to New York City.
    Another project referred to is the Port Authority's Port 
Inland Distribution Network, PIDN, which would mitigate against 
growing congestion at marine terminals and highways by 
transshipping cargo via railroads and barges destined for 
Northeast locations. There is a strong interest in PIDN among 
Northeast States as alternatives to congested corridors like I-
95.
    Federal interest and support could help such initiatives 
demonstrate how water transportation can manage part of the 
freight growth. Flexibility in Federal programs can be a way to 
support these initiatives.
    Last, the use of intelligent technology has proved very 
worthwhile in our region for managing the flow of our busy 
highways and crossings.
    I think your committee can benefit greatly by the 
thoughtful attention that has been given to these issues by my 
counterparts here today as well as in Government and the 
private sector, including a number of transportation and 
freight-related associations identified in my written 
testimony. Federal freight transportation policy is still in 
its adolescent stage, which means there is great opportunity 
for improvement to meet the challenges I have described.
    Thank you again for allowing the Port Authority of New York 
and New Jersey to participate.
    Senator Breaux. Thank you very much, Admiral.
    Mr. Michael Huerta.

   STATEMENT OF MICHAEL P. HUERTA, SENIOR VICE PRESIDENT AND 
MANAGING DIRECTOR, ACS STATE AND LOCAL SOLUTIONS, ON BEHALF OF 
    THE COALITION FOR AMERICA'S GATEWAYS AND TRADE CORRIDORS

    Mr. Huerta. Good afternoon, Chairman Breaux. It is my 
pleasure to be with you today to review our Nation's freight 
transportation system and needs. I would like to briefly 
summarize my formal statement and would welcome the opportunity 
to respond to any questions that you might have.
    As you know, my name is Michael Huerta. I am a Senior Vice 
President and Managing Director of ACS State and Local 
Solutions. ACS is a premier provider of business process and 
information technology outsourcing solutions to world-class 
commercial and Government clients. We provide travelers with 
time and money-saving transportation technologies, including 
the operation on behalf of several agencies of EasyPass, the 
electronic toll collection system in the Northeast, which is 
actually fully interoperable from Maryland to Massachusetts, 
and the PrePass waste station preclearance system at more than 
200 locations in 24 States coast to coast.
    From 1993 to 1997, I served as Associate Deputy Secretary 
of Transportation and was the Director of the Office of 
Intermodalism.
    I appear today on behalf of the 23 groups that comprise the 
Coalition of America's Gateways and Trade Corridors. The 
coalition's sole interest is to encourage adequate Federal 
investment in our Nation's intermodal freight infrastructure. 
Our members include motor carriers, railroads, ports, and 
freight corridors--in short, the men and women that move 
America's freight.
    International trade is the key to America's economic 
future. The imports and exports that fuel our economy are 
doubling every 10 years and freight traffic within the U.S. 
borders will increase 100 percent by 2020. You have heard from 
all the witnesses about the tremendous growth in international 
trade. Any way you cut it, freight transportation is growing 
dramatically.
    This growth in freight is good for all of us, in fact very 
good. Rapidly accelerating trade, combined with domestic 
growth, have created a $10 trillion U.S. commodity flow that 
produced millions of new job opportunities and a higher 
standard of living for Americans.
    However, these benefits will only last as long as we can 
keep the freight moving. As part of the reauthorization 
process, we must rethink the portion of TEA-21 that was devoted 
to freight-related projects. The facts are the current port and 
trade corridor system is at the present time very pressed to 
accommodate the traffic we have today. That infrastructure is 
failing. Intermodal connectors currently have up to twice as 
many engineering deficiencies and pavement deterioration issues 
as the national highway system routes, and at the same time 
demands on intermodal connectors are expected to double by 
2020.
    Recognizing the growing freight needs, as part of TEA-21 
Congress established the National Corridor Planning and 
Development Program and the Coordinated Border Infrastructure 
Program, commonly referred to as the Borders and Corridors 
programs. The legislation also provided $140 million annually 
for these programs combined.
    Unfortunately, the current Borders and Corridors programs 
have fallen short of the intended goals for two reasons. First, 
the programs were funded at levels far less than necessary to 
meet freight transportation and intermodal connector needs. As 
witness to that, since the beginning of the programs, requests 
from the States and metropolitan planning organizations have 
exceeded Federal funds available by a ratio of 15 to 1.
    Second, the Borders and Corridors programs have been 
extensively earmarked in the annual appropriations process, 
frequently allocating funds to projects that may or may not 
have been those with the greatest national significance to the 
movement of freight.
    With respect to the reauthorization of TEA-21, the 
coalition strongly recommends that the programs be continued, 
but bolstered to ensure that the original goals are met. The 
coalition respectfully commends several recommendations to the 
committee for your consideration.
    First, to meet the high level of demand, funding for the 
Borders and Corridors programs must be increased and increased 
dramatically. The coalition believes that a minimum of $2 
billion is needed annually. The distribution of funds should be 
freight-specific. There should be a qualification threshold 
based on freight volumes and freight-related congestion to 
ensure that the limited dollars that are received reach the 
corridors, the borders, and the gateways of the greatest 
significance to trade.
    Third, the designation of entities eligible should be 
expanded to include other public and quasi-public organizations 
that may not today be qualified to receive funds under the 
program.
    Fourth, the Borders and Corridors program should be 
redefined to address the needs of all trade gateways, not only 
the land corridors and gateway-connected trade corridors. Many 
gateways that handle huge volumes of freight are not eligible 
for funding because they may not be at so-called borders. For 
example, we do not think of Illinois as being a border State, 
but one-third of the Nation's freight passes through Chicago 
and it is the largest intermodal hub in the Nation. Similarly, 
inland ports are also important gateways that enable the 
efficient movement of goods throughout the entire country.
    The designated high priority corridors available for 
funding under the Borders and Corridors programs need to be 
reexamined to ensure freight-intensive areas can apply for 
funding. Currently there are many important projects in need of 
funding that do not fall in one of the 43 priority corridors 
designated under TEA-21. In conclusion, I would like to say 
that America's freight is America's future. We must keep the 
infrastructure that underpins the movement of freight strong. 
That means additional Federal investment. Every dollar invested 
in the highway system yields $5.70 in economic benefits to the 
Nation, but at the same time investment in the freight 
infrastructure is also critical for national defense. Ports and 
their connectors have always been the point of embarkation for 
defense material and this role is even more important in the 
wake of the terrorist attacks of a year ago.
    Thank you for the opportunity to offer the coalition's 
views and I look forward to responding to your questions.
    Senator Breaux. Thank you very much, Mr. Huerta.
    Next we will hear from my friend John Caruthers, who is 
chairman of the I-69 Highway Coalition. I kind of use the names 
``Caruthers'' and ``I-69'' interchangeably now. It is like you 
are one and the same thing. So we are delighted to have you 
with us, John, and pleased to receive your testimony.

    STATEMENT OF JOHN D. CARUTHERS, JR., CHAIRMAN, I-69 MID-
                  CONTINENT HIGHWAY COALITION

    Mr. Caruthers. Thank you, Mr. Chairman, and thank you for 
the compliment, and thank you for the opportunity to discuss 
with you the importance of I-69 to the efficient movement of 
the Nation's freight.
    I-69 when finished will span the Nation's heartland from 
the Canadian border to the Mexican border, traversing 9 
States--Michigan, Illinois, Indiana, Kentucky, Tennessee, 
Mississippi, Arkansas, Louisiana, and Texas. Two sections of 
this system are already existing and open to traffic. The first 
one starts at Port Huron, Michigan, on the Canadian border and 
extends to Indianapolis. The second, Interstate 94, extends 
from Port Huron southwest to Detroit and west to Chicago.
    The rest of I-69 is under development, from Indianapolis 
south to Memphis, Tennessee; Shreveport; Bossier City, 
Louisiana; and Houston, Texas; to the Lower Rio Grande Valley 
and Laredo at the Mexican border. Completion of I-69 will not 
require an entirely new facility. In some areas it will link 
existing interstates or upgrade and link other existing 
highways. Work is under way along the entire I-69 corridor.
    While I-69 traverses 9 States, it is important to the 
Nation as a whole. Trade has shifted, particularly since NAFTA, 
from an east-west to a north-south trend. Canada and Mexico are 
now our two largest trading partners. Last year, 2001, 80 
percent of the U.S. trade with Mexico and 67 percent of U.S. 
trade with Canada went by truck and I-69 corridor accounted for 
63 percent of the Nation's truck-borne trade with both Canada 
and Mexico.
    The Michigan border points of Detroit and Port Huron 
account for 48 percent of our truck-borne trade with Canada and 
the Texas border between Laredo and the Lower Rio Grande, 
Brownsville and McAllen, accounts for over 49 percent of our 
truck-borne trade with Mexico.
    Looking at freight flows nationwide, not just with Canada 
and Mexico, approximately half of the total freight shipped in 
the United States in 1997, over 5 billion tons, passed through, 
originated, or terminated in the I-69 corridor. Freight is 
entering and leaving the I-69 corridor by truck, rail, air, and 
water. 17 of the Nation's top 25 seaports are in this corridor. 
13 inland waterway ports and 15 of the Nation's top 25 air 
cargo airports are directly served by I-69.
    Every major eastern and western rail carrier and both 
Canadian carriers have terminal operations on the I-69 
corridor. There are truck-rail intermodal facilities in every 
major city along the corridor. I-69's port of Houston leads the 
Nation in foreign waterborne tonnage, and container traffic in 
the Gulf of Mexico ports served by I-69 is growing faster than 
the national average or faster than traffic at Atlantic or 
Pacific ports.
    Trade entering I-69 from all modes of transportation is 
growing faster than in the rest of the Nation. Trade tonnage 
moving through I-69 points of entry from 1990 to 1999, 
including land, sea, and air, grew 18.3 percent, or more than 
twice as fast as the national average of 8.3 percent.
    A Federal Highway Administration study suggests that the 
recent growth in freight traffic will continue through the year 
2020. The vast majority of the new growth will be in the 
trucking industry, with the dominant movement on the Southwest 
to Northeast direction, a movement ideally suited for the I-69 
corridor.
    Yet there is no direct interstate-level highway from 
Indianapolis to the Mexican border. When the interstate system 
was initially designed, it was laid out generally east-west, 
reflecting the demographics, trade patterns, and defense needs 
at the time. When the interstate was completed in 1995, some of 
the newer north-south sections like I-69 were left unfinished. 
The premise of the Corridors and Borders program was the 
recognition that within the 160,000 mile National Highway 
System there were unfinished corridors essential to the 
Nation's trade and economic growth that needed to be completed 
and merited a separate program. The program, however was only 
funded at $140 million a year nationwide and many of the 
projects that qualified or were earmarked for funding were of 
local, not national, interest.
    Despite insufficient funding, the I-69 corridor made such 
significant progress that all of I-69 can go to construction 
during the period of the TEA-21 reauthorization. Much of it can 
be completed if dedicated funds are available to do so.
    Having built the interstate system, we cannot rest on our 
laurels. We must invest our resources in those unfinished 
corridors that serve today's and tomorrow's 21st century trade 
flows, such as I-69. There are a number of mechanisms to 
accomplish this: limiting the Borders and Corridors program to 
major trade corridors and increasing its funding, dedicating 
program funds to complete unfinished interstate links, or 
funding freight corridors. Any of these options would work, 
whether alone or in combination.
    The point is we must recognize the need for and build the 
infrastructure to serve our Nation's freight flows. The traffic 
is there. The intermodal connections, rail, water, and air, are 
also there. The trade is surging at Houston, Detroit, and 
Laredo. Yet the interstate-level facility to transport these 
products safely, efficiently, and economically, I-69, remains 
unfinished.
    Thank you very much.
    Senator Breaux. Perfect timing, John. Thank you very much, 
and thank all of the witnesses for being here. I think the 
discussion today has been good. It is going to give a lot of 
our professional staff some ideas and thoughts as we approach 
the reauthorization of TEA-21.
    Obviously, I heard my questions to the Assistant Secretary 
to start thinking outside the box about what we need to be 
doing in these areas. I realize that in the private sector it 
is awfully difficult to bring about a great deal of cooperation 
because all of you--not all of you at the table, but railroads 
and truckers and ocean-bearing traffic and aviation--are all 
financially competitors. So it is hard for you to sit down and 
figure out what is good for the whole country when you have a 
responsibility to your independent modes of transportation, 
with railroads and the trucking industry and aviation industry 
and ocean-bearing traffic for the ports.
    Mr. Huerta, in the coalition that you have, how difficult 
is it to get these various competitive modes to sit down and 
say, all right, what are we going to do to make it work? I 
mean, we have got congestion at the ports. We do not have 
enough railroads coming into the ports, we cannot get enough 
trucks in to pick up the containers. We are going to double the 
amount of containers coming in and going out in the foreseeable 
future.
    How difficult is it to try and bring about cooperation? 
What needs to be done in that area? I am sure each one of these 
segments would like to do it all by themselves, and that is not 
going to happen. So how do we get them to work together to come 
up with some recommendations that can make sense for the 
Congress?
    Mr. Huerta. Mr. Chairman, one thing that we hear in our 
coalition meetings and that I think you heard today is that 
there is unanimity among all the modes of surface 
transportation that we are not doing enough about freight 
transportation. The discussions that we have had at the 
coalition focus on the fact that, while there are many ways 
that you can fund freight programs under the current categories 
through which the surface program is reauthorized, generally it 
is very hard to build the level of support for freight 
programs, because they may extend beyond the borders of a 
particular State or a particular metropolitan area.
    These are national needs that are out there and when you 
are looking at something from the point of view of a particular 
region, it is sometimes hard to put that national lens on and 
look at the world that way. What you have heard from all of us 
is that international trade is extremely important, the growth 
of the economy domestically is extremely important, and moving 
the freight through the system is going to be essential in the 
coming years.
    So we all agree on things like the Borders and Corridors 
program. It was a terrific concept. It has worked very well. 
There just is not enough money.
    Likewise, there are many other ways that you can get 
freight projects identified. What we would like to see is how 
do you give them the priority. We are looking for more than 
just, yeah, you can spend money on a freight project. We would 
actually like to see some funds designated for freight 
projects. Senator Breaux: Address a question that is a concern 
to me about the congestion at the ports of our Nation. We have 
got 75 percent of the traffic by volume either going out or 
coming into ports internationally, and of course NAFTA has 
brought a lot more by trucks through Canada and through Mexico. 
But that traffic coming in and out of the ports which are so 
congested is going to be coming by rail, it is going to be 
coming by trucks, and if we do not have a system in these ports 
to make it work better, we are just going to have some ports 
that are so congested you are not going to get railroads coming 
in or trucks coming in or anything going in and out, in the 
timeframe that we need it, to be effective and to be efficient 
in the world community.
    So I mean, tell me a little bit about what they did to the 
Alameda corridor? Is that helpful in looking at possible 
solutions, what they were doing out there?
    Mr. Huerta. It is helpful and it in fact has been used as a 
model for many other port access projects around the country. 
But let us step back and look at Alameda in terms of what it 
involved. The project had something like a 13-year history 
before it actually got into construction and it was an 
extremely complicated thing to try to move through the 
traditional funding process.
    Ultimately, it was funded through a combination of user 
fees and local funds that were generated by the two port 
authorities in Los Angeles and Long Beach. Then the Federal 
portion, the largest piece of the Federal portion, was actually 
a Federal loan. But we did not have the authority to do that 
project when the loan idea was first proposed. It required 
special legislation that was enacted by Congress as part of the 
national highway system designation.
    That success at Alameda, though, became the model for the 
TIFIA program, which works for large infrastructure projects 
such as this, where there is a user fee that can perhaps repay 
the costs of the loan and other funds that might be in place. 
However, a loan program is not going to work all the time. 
There are major corridor and access projects at rail terminals, 
at trucking terminals, and at ports around the country that 
might not be able to support a user fee, and that does not make 
them any less important in terms of elevating their profile for 
funding.
    But they have the added complexity that a port access 
project, for example, in the State of Washington or in the 
State of New York, benefits people far into the interior of the 
country. Under the current planning and funding framework, it 
really falls to the State or the metropolitan area where that 
project is located to lead that project through the overall 
funding mechanism and to make it a priority in that region.
    What we need is a way for these big mega-projects to assume 
the national profile that they really have, such that they are 
not the responsibility of a single State or a single 
metropolitan area to carry them out and fund them.
    Senator Breaux. Maybe, Admiral, you can get in on this. But 
if we have needs at all of the ports--and I am talking about 
ports, but I am really talking about making it more efficient 
for railroads to serve ports, for the trucking industry to 
serve the ports, as well as the ships taking the goods and 
services in and the containers in and out of the ports to 
operate more efficiently.
    So give me some discussion on the concept of port user 
fees. I know there is all this, all right, we are going to be 
noncompetitive if we have to have user fees. Well, user fees 
are paid by the ultimate consumers of the product. I have 
always had the concept that if they are the same across the 
board no one has an unfair advantage, if everybody is paying 
the same user fee that is dedicated for port development and 
infrastructure in those seaports around the country.
    Is that concept a viable concept as a means of getting 
extra funds for fixing the ports and eliminating some of the 
congestion, or is it a bad idea? We have got to find out where 
we have the money and it is not going to be easy and somebody 
is going to be unhappy. Talking about taxes, they are unhappy. 
Talking about fuel taxes, they are unhappy. Talking about user 
fees, they are unhappy. Do we need more money? Yes.
    Admiral
    [Laughter.]
    Senator Breaux. The shippers are behind you.
    Mr. Larrabee. There are a lot of people behind me, Senator.
    I do not know. To me it goes back to I think the testimony 
given for GAO today, and that is what are our real needs, what 
are the benefits that we can look at, and then I think the 
question of where do we get our funding. For us, as we spend--
in my particular port over the next 3 years, we will spend 
nearly $2 billion on improving channels, on improving 
terminals, and on improving rail infrastructure. We are going 
to spend about $290 million just to create a greater capacity 
to handle cargo by rail. We think that in the next 10 years we 
can shift, at least in our port, what now constitutes about 14 
percent of our cargo going out by rail to about 24 percent. We 
can shift barge traffic by from 2 percent to about 21 percent. 
I am not suggesting that we are going to change the fact that 
trucks are still going to be a predominant feature in our 
region, but the notion that there is great public benefit by 
looking at this system in a smarter way to me has value, and I 
think the issue of who pays for it can be a lot easier when you 
have figured out a better way to handle this.
    The issue of who pays for this right now, of course, and 
things like the harbor maintenance tax, there is a great deal 
of controversy over that and I do not know that you can get 
anybody to agree on a rational approach. That is a decision the 
Federal Government is going to have to make.
    Senator Breaux. We cannot even decide whether it is a fee 
or a tax.
    What about the concept of moving some of the traffic in the 
ports to staging areas away from the ports? I mean, most of our 
ports are right in the urbanized areas. The port of New Orleans 
is right downtown. The port of Houston is right downtown. Your 
ports in New Jersey and New York are right in the middle of the 
greatest urban area probably in the world. Los Angeles, they 
all have it.
    We all have the same problem, which is the port is right in 
the middle of urbanized areas. That was fine 100 years ago, but 
today how do you get the trains in, how do you get the trucks 
in, how do you handle all that volume going right down in the 
middle of an urbanized area in order to pick it up or to take 
it there? It does not work anymore.
    So the concept by some is to move, I guess, the staging 
area further away from the actual port facility in an urbanized 
area, so you can get the stuff to an area and put it on the 
rails and put it on the trucks, instead of having to do it 
right in the middle of New Orleans or right in the middle of 
New York City, for instance. Does that make any sense?
    Mr. Larrabee. We have over the last couple of years looked 
at where all of our freight goes. I can tell you by zip code 
where every container that comes into the port ultimately is 
destined for. We know that about 90 percent of the cargo that 
goes outside the immediate New York-New Jersey region goes to 
one of 7 or 8 load centers, places like Albany, New York, and 
Buffalo, New York, places like Camden, New Jersey, and 
Providence, Rhode Island. Once we have identified the fact that 
a lot of that cargo goes to those places, the next thing we 
have looked at is how do you get it there in a more efficient 
way. Dedicated rail and dedicated barge service has become the 
way that we have begun to look at it. We think that we can move 
cargo more efficiently, at a cheaper price, in about the same 
amount of time, with a greater degree of reliability, by using 
dedicated rail and barge.
    As I suggested before, we think we can improve the 
intermodal split from what now is an 85 to 87 percent truck-
only operation to something that closely approaches 50 percent 
by truck and the rest by other modes. That is an approach that 
is gaining interest in all the Northeast States. It reduces 
traffic and congestion and air quality problems. It reduces 
maintenance on the roads, and in our mind is going to 
dramatically increase the productivity of the Port of New York 
and New Jersey.
    Senator Breaux. Mr. Wickham, let me have your comments and 
thoughts about that? I am not suggesting this is a way of 
lessening traffic overall, but only in the immediate vicinity 
of the downtown urban ports around the country, to have a 
staging area, I would take it, where trucks would come in away 
from the actual port sites. Do these ideas have any merit or 
what are your thoughts?
    Mr. Wickham. I think they do. That freight ends up on a 
truck sooner or later anyway. When it goes to Albany, the 
container is unstuffed and it becomes a trucking shipment at 
that time.
    When I look at the national transportation system that we 
have, I think some of the fights that modes have over 
productivity are silly, because at the end of the day the whole 
system is more productive if every element of the system is as 
productive as it can be safely. So some of the debate that goes 
on I think does not serve any good purpose.
    I think the way to look at this system is to maximize the 
productivity of every participant in the transportation system. 
That takes away the need for more capacity in a lot of cases. 
Productivity is capacity. So that concept that you are talking 
about, consolidating farther away from the port to reduce the 
transportation out of the port, does not bother me at all.
    Senator Breaux. I am glad to hear you say that. It seems to 
me--I am just thinking offhand, which is what I normally do--is 
the fact that these ports around the country are trying to 
build all these staging areas where you come in with your 
trucks, and it is like--how you do it I will never understand. 
You have got this big yard of containers and the trucks are 
coming in, picking them up, taking them out, and trying to do 
all of this in the middle of a city.
    It seems to me that if you had a dedicated rail line 
leaving that port facility and just running these container 
cars out further away from the port outside the city, and then 
having their trucks come in, because all these containers 
cannot go to every little town and destination in America by 
rail because they are not there. But you could have the 
dedicated rail line taking it outside of the port to a central 
staging area where the trucks could come in.
    It seems to me that that certainly helps the congestion and 
makes it more efficient as far as the ports are concerned.
    Mr. Wickham. Well, it is one of the reasons that you have 
as many containers in Chicago as you do. They originated in 
Alameda and came through on a rail leg to be distributed in the 
Midwest. That I think is maximizing the efficiency of the whole 
system.
    Senator Breaux. I was interested in your comments, Mr. 
Wickham, on safety and speed and also the recommendations on 
the States having greater authority again on the size and 
weights. All of these are arguments we have been through on 
will continue, and I appreciate your recommendations on those 
areas.
    On speed, I thought in the old days all the trucks had 
Governors on them that would restrict the amount of speed. They 
do not do that anymore, or do they?
    Mr. Wickham. Oh, yes, we do. Our fleet does. Most big 
fleets do. But my point was not just the truck speed; it is the 
automobile speed as well. The statistics indicated that in a 
large percentage of the accidents involving trucks the other 
vehicle was speeding. We want to see very strict enforcement of 
speed for cars and trucks, because I think that is the lowest-
hanging fruit we have in the safety area right now.
    Senator Breaux. Well, those are things that we are going to 
be discussing, I know, in the reauthorization and they are good 
suggestions.
    Mr. Hamberger, on the question about rails in the ports, I 
take it, am I correct, that the cost of the rails serving the 
ports is a port cost, not a railroad cost? And if you are 
building something to do business, should not the rails be 
picking up the costs of the equipment?
    Mr. Hamberger. I am not precisely sure what you are asking. 
It is my understanding that the intermodal yards that are 
built, for example just 18 miles outside of L.A., are those 
built, maintained, and run by the railroad companies. I know 
that each of our members has spent hundreds of millions of 
dollars in the last 2 years building intermodal yards, in some 
cases, establishing partnerships with ports on facility 
improvements. Two of them right outside of Chicago, both UP and 
BN-SF; down in Georgia, Norfolk Southern. I know they have done 
some work in Harrisburg to take intermodal shipments from New 
York-New Jersey as well.
    Senator Breaux. Admiral, is that your understanding about 
who bears the costs of the rails within the port system? Is 
that the port or is that the railroads?
    Mr. Larrabee. Senator, typically the formula that I am 
familiar with is that the port builds the intermodal rail 
facility inside the port. But as you build capacity in a port 
like New York and New Jersey, you have to look down that system 
to make sure that you are not creating a bottleneck someplace 
else.
    So we have been working very closely with all of our 
railroads to make sure that as we build the capacity in the 
Port of New York and New Jersey that their systems are able to 
handle that increase in activity. So I think that there is a 
balance as you get further away from the port.
    Senator Breaux. So the current system, I take it, from a 
port perspective is working all right as far as the intermodal 
railroads? I mean, you would like the railroads to pick it all 
up, I am sure.
    Mr. Larrabee. My agency is unique in that we are required 
to be financially self-sufficient. So when I propose a project 
like ``ExpressRail,'' which will grow our rail capacity in one 
terminal from about 25,000 lifts to a million lifts in the next 
5 years, I have got to find a way to get a return on that 
investment. And I will charge a user fee or a tariff for those 
movements. We have used that formula very successfully.
    Senator Breaux. Do you have the authority to do that as the 
port?
    Mr. Larrabee. Yes. We have bonding authority that covers 
all of our lines, and that is where all of our capital money 
comes from, paid back to investors. But I have got a 
responsibility as a business line to make sure that that money 
is recovered.
    Senator Breaux. Ms. Dusenberry, thank you. I know that 
Senator Reid was very much wanting to hear what you had to say 
and was very aware of the project that you spoke to. With 
regard to that project, what does Congress need to do to help 
in getting it implemented? Is it a funding question or is it--
what is it?
    Ms. Dusenberry. It is a very definite funding question. The 
shortfall in the amount of funds we have been able to 
accumulate is $108 million and we feel this needs to come in a 
stream from the Federal Government, either a stream that we can 
borrow against, or one lump sum would be very nice if you 
wanted to give it to us in one lump sum.
    Senator Breaux. But I take it your people say that under 
the existing highway formulas that you do not get adequate 
funding to do the type of project that you suggested?
    Ms. Dusenberry. That is true. Both Nevada and Arizona have 
contributed $20 million, each State, toward this project out of 
our regular flow of HRF funds that come into our State, and we 
feel from this point on that it is a Federal highway, it is on 
Federal land, it is going to be run by FHWA, and we feel our 
contribution cannot be any more.
    Senator Breaux. Well, I think you have made a good point. I 
think Senator Reid has been a big supporter of this project. My 
only suggestion is that I think you ought to go visit 
Searchlight, Nevada.
    Ms. Dusenberry. I will need to go to Searchlight.
    Senator Breaux. If you could just drive through 
Searchlight, I think it would make----
    Ms. Dusenberry. I think I can drive through it very 
quickly.
    Senator Breaux. Oh, yes, it will not take a lot of time.
    [Laughter.]
    Ms. Dusenberry. We would like to invite you to the 
groundbreaking of our bypass bridge approaches.
    Senator Breaux. Well, I would like to come.
    Ms. Dusenberry. On October 21st, if you can. It is going to 
be on the top of Hoover Dam, so you can see what the congestion 
is.
    Senator Breaux. I will go there right after----
    Ms. Dusenberry. We will go to Searchlight.
    Senator Breaux. I will go there right after I go to the I-
69 groundbreaking.
    [Laughter.]
    Senator Breaux. Mr. Caruthers, thanks, John, for being with 
us. I've never seen--I have been in this business almost 30 
years this month and I do not think I have ever seen a 
coalition nationally on a project like this that you have been 
able to put together. I think that is what really has made it 
successful, because it has really involved not just one State, 
but all the States along the route, and that is not easy 
because everybody has different ideas about how to do it. But 
it has been really important.
    I guess one of the things that--I do not know why, but when 
we built the interstates back starting in the Fifties it really 
was an east-west bias, was it not? We were building highways 
east and west, but north-south sort of to a large port of the 
country really got left out.
    How much more important is that north-south highway now 
since NAFTA was passed? It seems like you talked about we have 
had huge numbers of increase in amount of trade from Canada and 
from Mexico going north-south.
    Mr. Caruthers. That is right. I believe I mentioned that 
Louisiana exports to Mexico have tripled. Texas has doubled. 
Truck-borne freight I am talking about, travel, now. Even as 
far north as Indiana--and for example, Illinois' trade exports 
to Mexico by truck have tripled. Their trade with Canada has 
doubled. So this is going on in every State in the I-69 
corridor.
    Senator Breaux. Mr. Wickham, how important is that type of 
a corridor? It seems to me when you are going north-south 
through the central part of the country you are really on--you 
do not have a lot of interstates that you can travel over.
    Mr. Wickham. That is correct, and it is becoming more 
important. You can obviously see the east-west bias. I think it 
was done for the defense reasons, that the highway system was 
put in place. But it is apparent that the north-south direction 
was lacking and it is becoming more and more important.
    We have subsidiaries in Canada and in Mexico and we can 
connect ourselves operationally and information systems-wise, 
but the crossings become problematic and then transportation 
north and south after you make the crossing is a little more 
difficult than it is east and west. But it is obviously 
becoming more and more important because of NAFTA and the 
growth.
    Senator Breaux. Thank you.
    Mr. Caruthers, what is the most important priority that we 
should be doing from a congressional standpoint? I guess maybe 
the reauthorization for I-69. Where are we in terms of--what 
are the priorities now? Where are we now?
    Mr. Caruthers. Well, it seems to me--and I am thinking like 
you, from off the cuff right now--the freight bottlenecks are 
at the borders and in the corridors, and the Borders and 
Corridors program seems to me to be the simple structure 
already in effect that needs only one thing, and that is 
funding.
    Senator Breaux. I-69, if we had more funding in it, would 
be able to benefit directly from that.
    Mr. Caruthers. That is right. That is right. We can finish 
it almost within the TEA-21 reauthorization of 6 years if the 
funding is provided.
    Senator Breaux. Ms. Dusenberry, you had a comment?
    Ms. Dusenberry. I mentioned in my testimony that the Hoover 
Dam Bypass Bridge was a part of the CanaMex corridor. Mexico is 
a--the western part of Mexico, west of the Sierra Nevada 
mountains, which are hard to traverse across in Mexico, is the 
largest producer of produce that comes into the United States. 
That border crossing--those border crossings in Arizona are 
extremely important.
    We are working on a study now, we are calling it ``The 
CyperPort,'' in Nogales, Arizona, where we are looking at 
electronically serving all of the trucking so there is no paper 
exchanged. We are working on a uniform bill of lading so that 
the trucking across the border can run paperless and seamless 
across the border.
    We hope that this technology that we are developing will 
transfer to other border crossings, both in Canada--Canada has 
been interested in what we are doing--in Canada and the other 
Mexican ports when we get this seamless system developed.
    Senator Breaux. Well, I think the committee has had some 
good ideas and some good suggestions. I think it is good that 
we were able to start talking about this before the fact. We 
have TEA-21 coming up, but I think with Senator Reid and 
Senator Jeffords and Senator Inhofe all wanted, and our staffs, 
to get some discussion now so we get these ideas being thought 
about as to what we need to be doing. I think that your points 
are all well taken.
    Admiral, good luck to you and all the people at the port 
for the rest of the week. I know it is a particularly trying 
time, but we appreciate your service and being with us today.
    With that, the committees will stand adjourned.
    Whereupon, at 4:37 p.m., the hearing was adjourned.]
    [Additional statements submitted for the record follow:]
  Statement of Hon. Jeffrey N. Shane, Associate Deputy Secretary and 
  Director, Office of Intermodalism, U.S. Department of Transportation
    Chairman Breaux, Chairman Reid, Ranking Members Smith and Inhofe, 
and Members of the Committee: Thank you for inviting me to testify 
today on the topic of ``Freight and Intermodalism.'' I would like to 
commend your committees for their continued leadership on these 
important issues and in supporting our efforts to ensure the seamless 
transportation of goods throughout our country. I believe that ISTEA 
and TEA-21 have created a solid framework for addressing the 
transportation and logistics policy issues currently facing our Nation, 
and the lessons we have learned will serve as important guideposts 
during the upcoming reauthorization debate.
    Demands on our nation's transportation system are growing faster 
than supply. While statistics show that since 1970 our population has 
grown 40 percent and vehicle miles traveled have doubled, the Federal 
Highway Administration's Highway Statistics Manual indicates that our 
highway physical infrastructure has increased by only 6 percent during 
that timeframe. In fact, according to the Texas Transportation 
Institute, the costs associated with congestion in the 68 urban areas 
they studied totaled $67.5 billion for 2000, including 3.6 billion 
hours of extra travel time and 5.7 billion gallons of fuel burned by 
vehicles sitting in traffic. Even after the significant investments in 
surface transportation infrastructure under ISTEA and TEA-21, our 
transportation system is still experiencing rising levels of congestion 
that adversely impacts the free movement of freight on our nation's 
roadways.
    In 1998 (the latest year for which data are available), the U.S. 
transportation system carried nearly 4 trillion ton-miles of freight 
valued at over $9 trillion. Of this, shipments totaling $7.8 trillion 
were primarily domestic movements, with an additional $1 trillion 
representing international merchandise. By the year 2020, forecasts 
predict that the U.S. transportation system will handle cargo valued at 
over $28 trillion, of which $24 trillion will be domestic movements and 
over $4 trillion will pass through our nation's gateways.
    Truck shipments accounted for 71 percent of total tonnage and 83 
percent of the value of U.S. shipments based on the 1998 data. Trucks 
also make the vast majority of local deliveries, although the industry 
also carries large volumes of freight between regional and national 
markets. Water and rail also carry significant shares of total U.S. 
tonnage, but much smaller shares when measured on a value basis. Air 
cargo shipments, on the other hand, moved less than 1 percent of total 
tonnage but carried 12 percent of the value of freight shipments during 
1998.
    To put these figures into a broader context and provide a better 
sense of the challenges we must face, the increase in the volume of 
freight being shipped on our nation's highways will, by the year 2010, 
equal the total volume of freight currently carried on our entire rail 
system in the average year.
    One of Congress' principal goals in establishing a unified, Federal 
Department of Transportation (DOT) in 1967 was to facilitate 
coordinated transportation services across all modes while encouraging 
these services to be provided by private enterprise whenever possible. 
Another goal was to ensure that the connections between and among the 
transportation modes function smoothly while facilitating international 
trade and economic development. The Department provides a common 
framework that meets the various needs of our highway, marine, aviation 
and rail systems by ensuring greater coordination among programs 
affecting different modes of transportation while increasing the 
connectivity of these modes.
    The landmark Intermodal Surface Transportation Efficiency Act of 
1991 (ISTEA) increased funding flexibility and emphasized intermodal 
planning. The financial reforms of the Transportation Equity Act for 
the 21st Century (TEA-21) gave States and local governments vastly 
greater resources and the flexibility with which to implement the 
intermodal solutions fostered by ISTEA. Together, they have laid a 
sound framework for future Federal surface transportation programs and 
the intermodal strategies needed to leverage and improve system 
management and utilization.
    Although much has been done over the past decade, the promise of 
intermodalism--the efficient movement of freight and passengers through 
all modes of our transportation system--has not yet been fully 
realized. As bottlenecks grow and system congestion worsens, the 
Department increasingly will be asked to facilitate projects that 
enhance freight transportation efficiency. Also, in the aftermath of 9/
11 participants in the transportation system have been called upon to 
integrate security measures into their operations, and the Department 
has initiated several programs to encourage that integration. For the 
freight industry, this will require strong private sector involvement 
with the Federal Government empowered to foster cooperation across all 
modes through new public/private partnerships.
Freight Movement and International Trade
    Understanding future freight activity, both foreign and domestic, 
is important for matching infrastructure supply to demand and for 
assessing investment and operational strategies. The U.S. economy 
depends upon a wide variety of products that move within State 
boundaries, through interstate commerce, and to and from various parts 
to the world. Using data from its Freight Analysis Framework (FAF), the 
Department has developed information on current and projected freight 
flows, including a forecast of activity through the year 2020.
    FAF projects annual domestic freight volumes will nearly double 
between 1998 and 2020, increasing from 13.4 billion tons to over 22.5 
billion, which raises the question of which modes will carry these new 
shipments. The FAF forecast assumes that growth in freight activity 
will be captured largely by increases in air and truck shipments. 
Domestic air cargo tonnages are projected to double, although its share 
of total tonnage would remain fairly small. Movements by truck are 
expected to almost double over the 1998 to 2020 period, capturing a 
larger share of total traffic. Finally, while both rail and domestic 
water shipments are projected to increase, their volumes are not 
expected to grow as dramatically over the forecast period, mainly 
because of slower demand growth in many of the key commodities carried 
by these modes.
    Since the 1970's, international trade has emerged as a major 
component of the U.S. economy, as imports of consumer goods, petroleum, 
and manufactured products have increased along with exports of raw 
materials, agricultural products, and manufactured goods. This trend 
toward increased international trade is expected to continue, as 
suggested by DRI/WEFA's projection that over 30 percent of the U.S. 
economy will be tied to international trade in goods and services by 
the year 2020, up from 23 percent in 1998.
    This projected growth in trade has led to concerns over congestion 
at U.S. ports, airports, and borders entry points. International trade, 
expressed in tons, is forecasted to grow at an annual rate of 2.8 
percent and more than double by 2020. While increases are expected for 
all regions of the world, the largest growth will likely come in our 
trade with Mexico, Canada, Asia and South America. Cargo trade with our 
NAFTA partners moves primarily by truck and/or rail, and most 
international shipments of water and air cargo are transferred to or 
from trucks, rail cars or barges after arriving in the United States or 
before heading to export markets. Given the importance of trade to our 
nation's economy, identifying ways to more efficiently move freight 
across our borders will be critical in the years ahead.
NHS Intermodal Connectors
    The condition of the existing transportation system and its 
connections directly affects the efficient movement of cargo. When 
Congress created the National Highway System (NHS), it recognized the 
need to provide adequate highway access to intermodal freight 
terminals. Intermodal passenger terminals are generally well served by 
NHS connectors but infrastructure connecting freight terminals to 
primary NHS routes is often in need of improvement.
    NHS connectors are typically short, averaging less than two miles 
in length, and are usually local, county or city streets that have 
lower design standards than mainline NHS routes. They typically serve 
heavy truck volumes moving between intermodal freight terminals and 
mainline NHS routes, primarily in major metropolitan areas. Despite the 
fact that connectors are less than 1 percent of total NHS mileage, they 
are the ``front door'' to the freight community for a broad array of 
intermodal transport services and options.
    TEA-21 directed the Secretary of Transportation to conduct a review 
of the NHS connectors that serve intermodal freight terminals and 
submit a report to Congress. The objectives of the review were to: (1) 
evaluate the condition of NHS connector highway infrastructure to major 
intermodal freight terminals; (2) review improvements and investments 
made or programmed for these connectors; and (3) identify impediments 
and options to making improvements to the intermodal freight 
connectors.
    The findings of our report to Congress, dated July 2000, are 
especially relevant as we consider reauthorization of TEA-21:

      Intermodal connectors that primarily serve freight 
terminals have significant mileage with pavement deficiencies and 
generally exhibit inferior physical and operational performance than 
other similar NHS facilities;
      An analysis of investment practices shows a general lack 
of awareness and coordination for freight improvements within the State 
departments of transportation and metropolitan planning organizations 
(MPO) planning and programming process; and
      Given the pressing needs for passenger-related projects 
and the fact that many of the benefits from an increased freight 
investment are received outside of the investing jurisdiction, there is 
little incentive for local investment in freight projects.

    The ability to recognize and effectively address connector needs 
within the context of our overall intermodal freight system are 
important elements in preserving and promoting the substantial 
productivity gains we have witnessed as a result of better supply chain 
management.
Multi-State and Cross-Border Transportation Planning
    End-to-end movements of commercial freight must be viewed within 
the context of a transportation system that is not bounded by State or 
international borders. A regional perspective and decisionmaking 
capability is required to provide effective coordination for the 
infrastructure planning and investments that support these commercial 
activities. Recognizing that the health of their economies depends upon 
efficient movement of goods along regional transportation system 
segments that often lie beyond their immediate responsibility, several 
State and Provincial Departments of Transportation have joined together 
to promote regional transportation consortia. The following examples 
illustrate this coordinated and complementary approach to regional 
transportation planning and infrastructure development:
      I-95 Corridor Coalition (I-95CC): The geographic region 
represented by the I-95CC consists of 12 States (ME, VT, NH, MA, CT, 
RI, NY, NJ, PA, DE, MD, VA) and the District of Columbia. With a 
population of just over 67 million people, it is home to nearly a 
quarter of the nation's inhabitants and a quarter of the nation's jobs, 
but contains only 6 percent of the landmass of the Nation. The 
population density of the region makes efficient goods movements both 
essential and extremely challenging in this largely urbanized 
environment. DOT representatives from the 12 States and the District of 
Columbia have developed an intermodal strategic plan for the I-95CC 
that is addressing freight transportation needs within the context of 
the region's social, economic, and environmental goals.
      Gulf/Rivers Intermodal Partnership (G/RIP): In a 
cooperative effort of seven southeastern and Gulf State departments of 
transportation, regional planning entities and four public port 
authorities, G/RIP works to improve waterside/landside infrastructure 
investments through education programs for public planners. The 
partnership uses the region's ports as classrooms in addition to 
periodic forums with senior regional public and private sector 
policymakers to discuss topical infrastructure issues.
      International Mobility and Trade Corridor (IMTC): The 
IMTC is a coalition of over 60 U.S. and Canadian business and 
government entities whose mission is to identify and pursue 
improvements to cross-border mobility in the ``Cascade Gateway'', which 
includes four land border crossings between British Columbia and 
Washington State. Two-way trade at the Blaine, WA, border crossing 
alone was valued at more than $35 million per day in 2000. Congestion 
and processing delays at the Blaine border crossing result in over $40 
million in additional operating costs annually--losses that exceed 1 
day's revenue generated by this commercial traffic. IMTC-sponsored 
projects are funded through bi-national financial partnerships at 
Federal, regional, and local levels.
TEA-21's Record
    congressional support for the commercial movement of freight was 
woven into many parts of TEA-21, helping to strengthen the nation's 
transportation system through: enhanced stability and flexibility of 
funding; the borders and corridors programs; and increased application 
of new information technologies.
Stability and Flexibility of Funding
    TEA-21 revolutionized transportation funding through its budgetary 
firewalls and innovative financing provisions as well as by providing 
record amounts for surface transportation programs. The budgetary 
firewalls that were introduced created confidence among grantees 
regarding program funding. As a result, States and localities have 
relied upon these assurances and increased their funding levels to 
match or even exceed Federal commitments made in TEA-21. The Department 
sees its role as one of exercising leadership in convening public and 
private sector parties to undertake innovative financing of major 
transportation projects.
    One of the most impressive intermodal success stories is the 
Alameda Corridor freight project. The Alameda Corridor is a multi-modal 
project that uses a mix of private funds and public programs, including 
a $400 million loan from the Department of Transportation, to improve 
rail and highway access and to reduce traffic delays in the critically 
important area of the Ports of Los Angeles and Long Beach. The recently 
completed $2.4 billion project, which opened for revenue service on 
April 15, 2002--on time and within budget--will have far-reaching 
economic benefits that extend well beyond Southern California.
    The funding flexibility created under ISTEA and continued in TEA-21 
allows States and communities to tailor their transportation choices to 
meet their unique needs. It enables State and local decisionmakers to 
consider all transportation options and their impacts on traffic 
congestion, air pollution, urban sprawl, economic development, and 
quality of life.
    TEA-21's innovative credit program has further augmented both the 
highway and transit programs. The Transportation Infrastructure Finance 
and Innovation Act (TIFIA) has provided almost $3.6 billion in Federal 
credit assistance to 11 projects of national significance, representing 
$15 billion in infrastructure improvements. These loans, loan 
guarantees, and lines of credit for highway, transit, rail, and 
intermodal projects have encouraged private investment to strengthen 
transportation infrastructure.
    Despite these successes, there are still areas where we can 
improve. For example, while freight transportation projects are often 
regional or multi-State in scope, funding is typically distributed 
through States and localities. Also, conventional financing programs 
have provided funding for a wide variety of projects focused on 
individual modes of transportation, but when dealing with major 
intermodal projects these programs have often proven insufficient. 
Finally, because TEA-21's programs are oriented toward the public 
sector, it can be difficult to truly incorporate the needs of private 
sector transportation carriers and shippers in the planning process.
The Borders & Corridors Program
    TEA-21 established the National Corridor Planning and Development 
and Coordinated Border Infrastructure Program (also known as the 
``Borders and Corridors'' program). Both programs are financed by one 
funding source, which is authorized at $140 million annually from 
fiscal year 1999-2003. Due to the obligation limitation provisions of 
TEA-21, awards the first 3 years averaged about $123 million, but based 
on the law's RABA provisions and congressional direction awards for the 
fourth year (FY 2002) will be nearly $480 million.
    congressional designation (or ``earmarking'') of projects in the 
Borders and Corridors program increased from 0 percent in fiscal year 
1999 to about 50 percent in fiscal year 2000 and 65 percent in fiscal 
year 2001. Given this trend and the cost of preparing full 
applications, in May 2001 the FHWA solicited 'Intent to Apply' for 
fiscal year 2002 in place of full applications with a provision that 
full applications would only be requested if warranted based on that 
year's DOT Appropriations Act. When Congress designated 100 percent of 
the funding for fiscal year 2002, FHWA did not solicit full 
applications and instead requested abbreviated applications for 
projects designated by Congress. As a result, congressional earmarking 
has prevented the Department from taking a strategic approach and using 
the program to facilitate trade through targeted transportation 
investments that maximize system efficiency.
    Awards under the Borders and Corridors program have been as 
follows:
                        FY 1999--$123.1 million
                        FY 2000--$121.8 million
                        FY 2001--$123.6 million
                        FY 2002--$478.0 million
    For some projects construction is nearly complete or underway. One 
project that has essentially been completed is near the World Trade 
Bridge between Laredo, Texas and Nuevo Laredo, Mexico. Before this 
bridge was opened, traffic queues up to 4 miles long were common on an 
existing bridge and traffic was grid locked for several miles along I-
35. Subsequent to its opening, trucks were diverted to the new bridge 
leaving the existing bridge to serve autos, buses and pedestrians. The 
gridlock has now disappeared and travel time has been reduced 
dramatically for trucks, autos and pedestrians while improving safety 
and creating jobs.
    Some construction projects currently underway that are likely to be 
completed in the next two or 3 years include the FAST (Freight Action 
Strategies) corridor in Washington State and the Bridge of the Americas 
and the Paso del Norte Bridge between El Paso, Texas and Ciudad Juarez, 
Mexico. In the FAST project, replacing a number of highway/rail grade 
crossings with grade separations will improve safety, relieve 
congestion and improve operation of the water ports and the rail lines. 
In El Paso, a modest expenditure (about $3 million for each bridge) 
will improve physical inspection capacity on each bridge by as much as 
40 percent.
    Other projects are at least three or more years from completion 
including such important bottleneck relief projects as: the Ambassador 
Bridge Gateway in Detroit, Michigan; the SR 905 connector to the border 
crossing south of San Diego, California; and the Hoover Dam Bypass 
between Arizona and Nevada. Finally, the future I-69 between Michigan 
and the Texas lower Rio Grande Valley, which is more of a new access 
and economic development project, is probably more than a decade from 
completion.
Application of New Information Technologies
    Any seamless transportation system--present or future--relies 
heavily on information technology. The same information revolution that 
has swept through the private sector and increased our nation's 
productivity must also be applied to our transportation systems. 
``Smarter'' systems have the potential to dramatically reduce the 
barriers and costs that currently limit the ability of passengers and 
freight carriers to operate across modes. They also will help us to 
ensure safer and more secure freight transportation networks.
    TEA-21 authorized a total of $603 million for Intelligent 
Transportation Systems (ITS) research for fiscal years 1998 through 
2003, which has funded important research projects that support freight 
movements by focusing on system optimization and more effective use of 
existing infrastructure. These efforts also facilitate the integration 
of the operational aspects of all of our transportation systems, while 
system construction projects address their physical connectivity. 
Intermodal freight is a major emphasis of DOT's ITS efforts, and the 
Department is currently conducting several ITS operational tests 
designed to improve the efficiency and security of the inter-modal 
movement of freight.
    For example, the Chicago O'Hare cargo project uses a ``smart card'' 
and biometric identifiers to identify the shipment, vehicle and driver 
during transportation from the shipper to and through the air cargo 
terminal. Another project, Cargo-Mate, has particular applicability to 
port and container security, in addition to enhancing the efficiency of 
freight movement. This system is designed to perform real-time 
processing of asset and cargo transactions, provide for the 
surveillance of cargo movement to and from ports, and provide an 
integrated incident and emergency response capability.
    In a cooperative venture between Washington State and British 
Columbia, under the auspices of the International Mobility and Trade 
Corridor (IMTC), electronic cargo seals are being deployed to 
demonstrate the use of low cost disposable technology to track cargo 
movements and monitor the security of containerized freight. This test 
will examine the use of a Congestion Notification System to improve 
truck access to the Port of Tacoma. When these and related projects are 
completed and the technologies deployed, the IMTC will have the first 
fully operational bi-national electronic commercial vehicle operations 
(CVO) border crossing system in North America.
    The Department also is participating in the International Trade 
Data System (ITDS), which will create a single Federal data base for 
all international trade and transportation transactions. Expected to 
become operational in FY2004 at the nation's busiest land borders, and 
at all land, sea and air ports of entry by 2006, ITDS will extend the 
benefits of customs modernization across the entire Federal Government. 
The ITDS and Customs' Automated Commercial Environment (ACE) are being 
jointly developed so that taxpayers and Federal agencies will have a 
single system for processing international trade and transportation 
information that will also serve as an important tool in facilitating 
the transport of cargo.
    Continued Federal, State and local investment in the development of 
new transportation technology has the potential to yield enormous 
operational benefits and give transportation professionals much greater 
capacity to manage increasingly complex systems.
Security Issues
    The events of 9/11 have made us all realize that transportation 
planning must also make the security of freight shipments a top 
priority, in addition to the system's safety and efficiency. As freight 
moves from one mode to another, from ship to rail to truck for example, 
we must ensure that these modes and the public are protected from 
terrorist attacks. The Transportation Security Administration (TSA) now 
oversees transportation security across all modes, with the most 
prominent of course being the new requirements for aviation. However, 
TSA is also concentrating on sea, rail and land shipments and the links 
between these modes when assessing possible security threats. 
Intermodal connectivity is critical for national security, and TSA is 
coordinating with the other modes in DOT, other Federal agencies, and 
industry to achieve the highest possible security levels for the 
transport of goods.
    Operation Safe Commerce (OSC) is an innovative public-private 
partnership dedicated to enhancing security throughout international 
and domestic supply chains while facilitating the efficient movement of 
legitimate commerce. The overall objective is to provide valid 
recommendations and workable solutions to legislators, regulatory 
agencies, the International Maritime Organization and the World Customs 
Organization on how best to address the critical issue of international 
cargo security. I serve as co-chairman of the Executive Steering 
Committee that directs the OSC initiative along with the Deputy 
Commissioner of the U.S. Customs Service, and have been very pleased 
with the substantial progress we have made so far.
    A recently completed initial pilot test applied available 
technology to analyze the supply chain security of a shipment from 
Eastern Europe to New Hampshire by equipping a cargo container with 
onboard tracking, sensor and container door seals. This shipment was 
monitored as it was transported through numerous countries, and the 
jurisdictions of several Customs administrations, using various 
transportation modes. I11OSC proposes to develop and test security 
practices to govern the packing, loading and movement of cargo 
throughout several international supply chains. This effort will seek 
to prototype various solution sets in order to test combinations of 
physical, technological and logistical security practices that will 
best secure domestic and international supply chains.
    Operation Safe Commerce will attempt to do this by addressing three 
key components to secure supply chain management. First, it will 
demonstrate what is needed to ensure that a shipper exerts reasonable 
care and due diligence in properly packing, securing and manifesting 
the contents of a shipment of goods. Second, it will demonstrate 
various methods to ensure that the electronic documentation 
accompanying a cargo shipment is complete, accurate and secure from 
unauthorized access. Third, it will test supply chain security 
procedures and practices, and implement enhanced manifest data elements 
and container sealing procedures, to determine which applications of 
information and technology are most effective in securing international 
and domestic shipments.
    Operation Safe Commerce will serve as a technology and business 
practice ``laboratory'' to vet innovate solution sets that support the 
objectives of other Federal initiatives such as the Department of 
Transportation Container Working Group, the U.S. Customs Container 
Security Initiative and Customs--Trade Partnership Against Terrorism, 
and the Department's Intelligent Transportation System and the Borders 
and Corridors Programs.
    These efforts will continue once TSA and the United States Coast 
Guard transfer their missions and functions to the proposed Department 
of Homeland Security. Secretary Mineta fully supports these efforts to 
improve our Nation's homeland security, and if approved by Congress the 
Secretary has pledged to fully cooperate with the new Department to 
ensure that security over all modes of transportation is enhanced.
Building on TEA-21
    As we consider the reauthorization of TEA-21, we continue to face 
many of the same challenges that confronted the authors of ISTEA and 
TEA-21. Applying an intermodal approach to these challenges enables us 
to extract the maximum amount of capacity from our existing 
infrastructure through creative programs and wise investments.
    Accordingly, intermodalism plays a large role in the core 
principles and values that motivate the Department's preparation for 
TEA-21's reauthorization. We will seek to do the following:

      Preserve funding flexibility to allow the broadest 
application of funds to transportation solutions, as identified by 
States and local communities.
      Strengthen the efficiency and integration of the Nation's 
system of goods movement by improving international gateways and points 
of intermodal connection.
      Focus more on the management and performance of the 
system as a whole rather than on ``inputs'' or functional components.
      Develop the data and analyses critical to sound 
transportation decisionmaking.
      Foster the development and deployment of technology, to 
support intermodal freight security, productivity, and safety.
      Expand and improve innovative financing programs, in 
order to encourage greater private sector investment in the 
transportation system, and examining other means to augment existing 
trust funds and revenue streams.

    Supporting the efficiency of commercial freight transportation 
continues to be a cornerstone of the Department's vision for America's 
transportation system. ISTEA and TEA-21 legislation gave us many tools 
to bring this vision to reality, and our experience has given us new 
ideas for programs that will get us even closer to our goal of a 
seamless transportation network. Greater investments in transportation 
infrastructure and wider use of information technology will certainly 
be required to achieve this goal.
    The Department looks forward to working with our partners in State 
DOTs, metropolitan planning organizations, and private industry to 
apply innovative funding strategies such as TIFIA and State 
Infrastructure Banks to develop large-scale projects that might 
otherwise be beyond the financial means of the individual stakeholders.
    We will also consider possible changes to the Borders and Corridors 
Program that would encourage broader transportation planning on the 
basis of economic regions and export markets to ensure that our 
infrastructure investments are truly integrated with regional and 
national business developments.
    Private industry has made it clear to the Department that reliable 
information on product shipments is of critical importance to them. If 
our transportation system is to provide adequate levels of service for 
the freight industry and their customers, we must continue to apply 
innovative technologies through the ITS Program and collect information 
on commodity movements to provide a firm foundation for transportation 
planning.
    The Department will also work with the private sector to formulate 
innovative approaches to providing transportation solutions and develop 
the professional capacity to apply these solutions to the challenges 
that confront us. We will consider new ways to develop public-private 
partnerships that can leverage public infrastructure investments and 
ensure that the private sector is more engaged in our planning 
processes.
    I am confident that working together, the Administration, Congress, 
States and localities, and the private sector can preserve, enhance, 
and establish surface transportation programs that will result in 
increased mobility, security and prosperity, as well as more 
transportation choices for all Americans.
    Mr. Chairman and members of the committee, thank you again for the 
opportunity to testify before you today. I look forward to responding 
to any questions you may have.
                                 ______
                                 
Responses by Jeffrey N. Shane to Additional Questions from Senator Reid
    Question 1. Freight transportation is expected to double in the 
next 20 years. This increase in freight traffic will occur at the same 
time that congestion on our roads is already at levels many of us 
consider unacceptable. Clearly capacity issues have to be at the top of 
our list as we begin to reauthorize our surface transportation 
programs. However, in addition to building new physical capacity, we 
will need to seek ways to squeeze more out of our existing 
transportation infrastructure through intelligent transportation 
systems, better operations, and perhaps a more efficient mix of 
transportation choices. For example, to move passengers and freight 
from congested roads to rail. Please give your thoughts on what we can 
do when we reauthorize TEA-21 to get the most efficient use out of our 
transportation infrastructure.
    Response. Improving intermodal freight efficiency will involve both 
public agencies and private freight companies. In particular, we must 
focus on:
    (1) improvements to the NHS freight connectors, providing for 
greater opportunities to use truck/water and truck/rail options to move 
freight in and out of terminals;
    (2) greater deployment of Intelligent Transportation Systems to 
improve system operations and to ensure intermodal conveyance of 
critical freight information for efficiency and security-this should 
include not only an ITS backbone for information exchange between the 
roadside and vehicles, but should also include other transport modes, 
and agencies involved in trade facilitation and security;
    (3) continued development of international standards for cargo 
security, to enable efficient and secure trade among NAFTA partners, 
and with other international trading partners;
    (4) enhanced use of innovative finance to leverage additional 
investment for freight transportation improvements; and
    (5) additional emphasis on intermodalism to make better use of all 
modes for freight transport.

    Question 2. We clearly have significant freight transportation 
needs across our Nation. How do we determine what our freight 
priorities should be? Do we have sufficient information to determine 
which freight corridors, border crossings, port, intermodal facilities 
and connector should be our top funding priorities? Where is our 
freight infrastructure least efficient and where is the growth expected 
to occur?
    Response. Since 2000, the Department has engaged in a comprehensive 
effort to (1) improve our understanding of freight flows; (2) define 
and analyze trends that might affect the demand, supply, and 
distribution of future freight transport requirements; and (3) work 
with State and local governments, other Federal agencies, and the 
private sector to define public policy strategies to enhance the 
planning, finance, and operation of the Nation's intermodal freight 
network. As part of this effort, we continue to work with major trade 
associations and governmental organizations to devise strategies that 
appropriately address freight efficiency, along with the national 
objectives of safety, security, and environmental awareness.
    As part of this effort, we have developed the Freight Analysis 
Framework (FAF), a multimodal analytical system that enables us to map 
domestic and international freight movements and, when linked with 
transport network information systems, to match and compare systems 
demands with supply, both under current conditions and under future 
scenarios. When combined with other information systems developed to 
track maritime and rail movements and cross border freight flows, the 
FAF provides a powerful data/analytical system to determine the 
relative importance of corridors, gateways and border crossings, and 
regional freight movements.
    The FAF, validated by extensive meetings with State and local 
officials and the private sector, suggests that major freight transport 
challenges form around: (1) major trade transport gateways, including 
certain maritime ports of entry, land crossings with Canada and Mexico, 
and significant trade hubs; (2) long distance multistate and 
international trade corridors; and (3) State and local freight 
concerns. Future trade forecasts suggest that volumes will increase at 
all major gateways and along trade corridors. This growth is likely to 
vary by region, however, as population and economic growth continues to 
shift and international trading patterns change in response to 
variations in market conditions.
    Domestic freight demand is expected to increase by approximately 67 
percent from 1998-2020 while international freight is expected to 
increase by approximately 85 percent. For example, US-Canada trade is 
expected to double over that time period, and US-Mexico trade is 
expected to increase by more than 200 percent. These increases in trade 
will require an emphasis on gateways, hubs, border crossings, and long 
distance trade corridors as we prepare to reauthorize our nation's 
surface transportation programs next year.
    The FAF, in combination with stakeholder documentation of need, can 
be used to quantify the relative magnitude of growth along major 
corridors, and has been used extensively as we define the Department's 
surface transportation reauthorization initiatives. Mapping current and 
future freight flows is a valuable first step in defining the geography 
and magnitude of freight movement but is not, in itself, sufficient to 
define where our resources and attention should be focused. When 
overlaid on system condition information, however, the combination of 
demand and supply provides valuable insight into the freight 
bottlenecks that we need to address in this reauthorization package.
    With freight transportation primarily the responsibility of the 
private sector, Federal transportation policies offering near term 
solutions to these problems are limited in their effectiveness. Longer 
term, federally led strategies to identify and deal with these 
problems, however, can have significant effects on future efficiencies. 
Advanced Federal policies and programs to strengthen intermodal 
capacity at gateways and along major trade corridors can result in 
important improvements to the Nation's trade transport network.
    As we look to the future, we are evaluating institutional, 
financial, and technology enhancements that would enable State and 
local governments, in partnership with the Federal Government, to 
identify bottlenecks, establish priorities, and develop comprehensive 
funding strategies to mitigate the freight bottlenecks that can 
threaten our economic well-being if they are not properly addressed.

    Question 3. The Borders and Corridors Program has not worked very 
well. One improvement we should consider is to revise this program to 
encourage public-private partnerships through a greater emphasis on 
innovative finance and other creative incentives. How else can we 
improve the Borders and Corridors program to target the highest 
priority freight corridors and intermodal facilities.
    Response. It is difficult to judge exactly how well the National 
Corridor Planning and Development and Coordinated Border Infrastructure 
(NCPD/CBI) discretionary grant program, as set forth under the 
Transportation Equity Act for the 21st Century (TEA-21), has performed. 
This is due, in part, to the fact that projects funded under the 
program have increasingly been earmarked during the appropriations 
process rather than selected through a competitive application process 
as originally intended by Congress. From fiscal year 1999 to fiscal 
year 2002, over two thirds of all NCPD/CBI funds went to projects 
identified in appropriation act report language (the percentage was 100 
percent in fiscal year 2002), thereby severely limiting the Department 
of Transportation's ability to administer these programs in a strategic 
way. Moreover, the amounts made available often are not sufficient to 
fund an entire project, further limiting the program's usefulness in 
enhancing our nation's primary border crossings and trade corridors.
    With respect to your suggestion ``to encourage public-private 
partnerships through a greater emphasis on innovative finance and other 
creative incentives'', the Department agrees that a greater emphasis on 
innovative finance should be a part of any future program.
    The Department also agrees that projects should ``target the 
highest priority freight corridors and intermodal facilities.'' One way 
to accomplish this is to emphasize the importance of having proposed 
projects be consistent with the continuing, cooperative, and 
comprehensive transportation planning process required by sections 134 
and 135 of title 23 United States Code.

    Question 4. One way to squeeze more capacity out of existing 
infrastructure is through more rapid deployment of ITS and an increased 
focus on the operations and management of regional transportation 
systems. How much potential do ITS initiatives have for improving the 
efficiency of freight operations and what can we do to promote the 
development of a freight-friendly ITS infrastructure?
    Response. Freight oriented ITS provides a direct benefit by linking 
improvements in systems operations to supply chain logistics and 
domestic and international cargo security. Following 9/11, various 
Federal agencies have developed cooperative agendas designed to promote 
more secure domestic and international cargo movement, combining the 
resources of ITS with trade facilitation functions (Customs, INS, USDA, 
etc.), and our international trade partners. Cooperative efforts with 
the private sector, through the Intermodal Freight Technology Working 
Group (IFTWG) have identified opportunities, currently deployed and 
under evaluation, to use ITS to enhance ``end to end'' supply chains. 
Programs like Operation Safe Commerce and the Container Working Group 
are identifying best practices in technology deployment, standards, and 
interoperability, and the lessons being learned will provide valuable 
guidance on the use of ITS to better integrate improvements in safety, 
security, and freight productivity.
    ITS and systems operations strategies have enormous potential to 
effect capacity improvements and enhance freight flow. Whether the ITS 
initiative is focused on passenger movement or transportation more 
generally, freight movement can be enhanced. For example, advanced 
traveler information systems or incident management systems provide for 
better system utilization through improvements in real time information 
and the management of recurring and non-recurring types of delay. While 
passenger transportation clearly benefits from such ITS initiatives, 
trucking--both long distance shipments through metropolitan areas and 
local runs handling pick up and deliveries, also benefit from improved 
network utilization.
    Advanced technology through the expanded use of ITS is widely 
regarded, both within government and by the private sector, as perhaps 
the most cost-effective strategy to improve both trade transport 
efficiency and security.

    Question 5. What can we do to promote better regional freight 
planning and how do we ensure that planning agencies take a 
comprehensive, intermodal approach to infrastructure planning and 
development? In particular, when it comes to freight, how do we bring 
the private sector into the public planning process?
    Response. Traditionally, the metropolitan planning process has 
primarily focused on the movement of passengers, with the movement of 
freight generally treated as secondary. The general public typically 
views freight as a necessary evil, with people complaining about 
waiting at rail crossings or sharing roads with trucks and public 
agencies complaining about the damage trucks cause to a region's 
roadways. While existing Federal regulations stipulate that freight is 
to be considered in local transportation planning, relatively few 
regions have successfully implemented freight projects through 
traditional planning approaches.
    Development of a better regional freight planning process requires 
both a mutual understanding of public and private sector perspectives 
and outreach by State and local transportation planners to the freight 
industry. Freight operators generally believe that the transportation 
planning process is too slow to address their short-term, bottom-line 
needs, and therefore not worth their time and effort. Local 
transportation planners can help overcome this perception by soliciting 
the involvement of local freight operators in planning operational 
changes as part of Congestion Management System (CMS) initiatives. They 
can also do so through timely implementation of small, non-
controversial improvements like turning radii or signal timing at key 
intersections identified by local freight operators.
    In addition, there is a need to provide strategic data, analysis, 
and information for decisionmakers in both the public and private 
sectors. In this regard, the work of the Freight Analysis Framework 
(FAF) serves as a bridge between the two groups. The private sector, 
which may be unwilling to share detailed commodity information or 
operational strategies, can use the FAF to highlight the need for 
increased focus on freight, while the public sector can use the FAF to 
understand the growth of freight movements and its potential impact on 
both the local economy and its infrastructure. Maps generated using the 
FAF have been very useful in redirecting the discussion from an ``Us 
versus Them'' mentality to a ``We'' based on a shared perception of the 
need to improve freight productivity.
                                 ______
                                 
  Responses by Jeffrey N. Shane to Additional Questions from Senator 
                                Jeffords
    Question 1. Mr. Shane, in your testimony you mention a project 
involving the monitoring of containers from overseas as they travel to, 
and in, the United States.
    I assume that this relates to putting electronic devices which can 
be tracked by satellite onto sealed containers coming into the U.S. 
either by water, rail, or on trucks. These devices could be placed on 
the containers overseas or in other countries, or at entry into the 
United States after inspection of the contents. Under this approach a 
container packed anywhere in the world and certified safe at that point 
can be tracked and delivered to a consignee in the U.S. with assurance 
it has not been tampered with enroute.
    The objective is to have a ``real-time solution'' that can be 
monitored in the appropriate marine, rail, or other intermodal 
terminal. At first, this approach could be integrated into an overall 
regional approach where marine and rail terminals are interconnected 
and where appropriate governmental agencies such as Customs can also be 
connected. As other regions come on line this could expand to national 
coverage. These devices could be built into the locking device and 
could also indicate whether the container was opened prior to intended 
delivery.
    From a security standpoint the idea is, if an emergency situation 
arises, that law enforcement would be able to obtain a history of how 
containers were moved within the U.S., or to be able to locate a 
particular container in the U.S. In addition, this information could be 
very useful to the shipper and the intended recipient if there were 
unexpected delays.
    Would you explain your views on this approach? What would be the 
cost and lead time necessary to implement this concept to all 
containers entering or leaving the U.S.?
    Response. DOT has co-chaired with U.S. Customs two significant 
efforts to address the vulnerability posed by marine containers and 
other freight, also pulling together the expertise of other 
governmental and private sector stakeholders. Most notably have been 
our joint efforts on the Container Working Group (CWG) and Operation 
Safe Commerce (OSC), two important efforts that support the President's 
National Strategy for Homeland Security.
    The Container Working Group has been an ongoing effort since 
December 2001. The working group explored the problem of improving 
container security through solutions offered by business practices, 
security technology, information technology, and international 
activities. They produced a report with a number of recommendations in 
March, and they continue to pursue these recommendations. Key to these 
efforts will be the continued development of Intelligent Transportation 
Systems, the International Trade Data System, the U.S. Customs 
Automated Commercial Environment (ACE) System, and the implementation 
of G-7/WCO standardized messages and data sets.
    Operation Safe Commerce will complement the CWG by testing 
technology or process solutions offered by the private sector to 
improve supply chain security. OSC was initiated by a test of off-the-
shelf technology to seal, track, and monitor a single container shipped 
from Slovakia to New Hampshire This is the test I mentioned during my 
testimony. It would be premature to assume, however, that this approach 
is the best answer since we haven't yet embarked upon the more 
comprehensive set of OSC tests that we hope to fund in the coming 
months.
    We intend to continue rapid progress on both the CWG and OSC, and 
wherever possible, encourage multi-use systems that improve service 
quality for the transportation system as well as security and safety.
    The costs for developing and implementing a secure container regime 
have yet to be determined given that we must first test what does or 
doesn't work in real operating environments. By encouraging the private 
sector to test out solution sets for container security through the OSC 
initiative, we will be able to identify what in fact works and what is 
cost effective to the government and the industry. Accordingly, the 
lead-time must be viewed as a series of incremental steps over a period 
of time as we incorporate security proven solutions into the world 
fleet of over 14 million containers in active use today.

    Question 2. Since 9/11 there have been numerous studies and 
articles that have been written on the lack of knowledge we have on the 
contents and travel paths of goods in our country. Do you see this as a 
problem that needs to be rectified? What can be done to make sure, at 
the very least, hazardous materials are being tracked?
    Response. Judicious application of emerging technology for certain 
high-risk hazardous materials, including technology designed to track 
and monitor shipments, can be an important security tool. Indeed, we 
have encouraged hazardous materials shippers and transporters to 
investigate the use of tracking or monitoring systems for enhancing 
hazardous materials transportation security.
    In a Security Advisory published in the Federal Register on 
February 14, 2002, DOT's Research and Special Programs Administration 
(RSPA) identified a number of actions that persons involved in the 
transportation of hazardous materials could take to enhance security 
and recommended actions commensurate with the level of threat posed by 
the specific hazardous material being transported. To improve en route 
security, RSPA recommended that shippers and carriers consider 
utilizing advanced technology to track or protect shipments en route to 
their destinations. Such tracking technology could include satellite 
tracking or surveillance systems or could be as simple as frequent 
checks with drivers by cell phone to ensure everything is in order.
    In a May 2, 2002 NPRM RSPA proposed that shippers and carriers 
develop and implement security plans for certain high-risk shipments of 
hazardous materials. The security plan would be based on a risk 
assessment performed by the shipper or carrier to identify security 
risks and develop appropriate measures to reduce or eliminate risk. As 
proposed, a security plan must include measures to improve en route 
security, and such measures could include shipment tracking or 
monitoring systems. In addition, we proposed revisions to current 
shipping documentation requirements to assist law enforcement personnel 
to promptly ascertain the legitimacy of hazardous materials shipments 
during routine or random roadside inspections and to identify 
suspicious or questionable situations where additional investigation 
may be necessary.
    On July 16, 2002, RSPA and DOT's Federal Motor Carrier Safety 
Administration (FMCSA) issued a joint ANPRM inviting comments on the 
feasibility of specific security enhancements and the potential costs 
and benefits of deploying such enhancements. Security measures being 
considered include: escorts, vehicle tracking and monitoring systems, 
remote vehicle shut-offs, direct short-range communications, and 
notifications to State and local authorities.
    Finally, DOT has also undertaken an operational evaluation of 
cutting-edge communications and tracking technology, electronic seals, 
and biometric identification to evaluate their potential for enhancing 
security.
    If we find tracking or other methods to be effective, we will 
consider initiating appropriate regulatory actions.

    Question 3. Has the Department undertaken, or do you know of any 
studies that could be provided to the committee that discuss the 
benefits of improving rail corridors to freight movement?
    Response. There has been growing interest in the possibility of 
alleviating regional transportation problems by improving rail 
corridors and eliminating critical rail bottlenecks.
      AASHTO has prepared a ``Freight Bottom Line'' report that 
considers the national implications of such an approach and finds that 
the benefits of public sector investment in rail corridors could be 
substantial. The report should be available from AASHTO soon.
      The city of Chicago, all the major railroads and several 
other groups are developing a plan to alleviate rail congestion in 
Chicago while also reducing highway congestion due to blocked grade 
crossings. This study is expected to identify a number of critical 
projects that will establish several high volume corridors through 
Chicago.
      The Mid-Atlantic Rail Operations Study identified a $6.2 
billion program of public and private investments to address choke 
points limiting the capacity of the rail system between Virginia and 
New York.
      The State of Virginia has done a study of the potential 
for upgrading the rail lines that parallel I-81 to alleviate the need 
to rebuild and expand that highway that is now very congested with 
trucks. In cooperation with the Federal Railroad Administration and the 
State of Tennessee, that study is being expanded to consider marketing 
issues so as to better estimate the service requirements and diversion 
potential from a rail improvement program.
    Question 4. We have heard that the Department does not have 
sufficient personnel to effectively handle important issues of the 
freight community. I would be willing to work with DOT on this 
important matter. How can Congress assist the Department in ensuring 
that the mission and personnel of DOT are suited not only to providing 
mobility to the general public but to the freight community as well?
    Response. The Department is committed to ensuring that freight has 
a ``voice'' in policy deliberations, legislative initiatives, and in 
resource commitments. Congress can further assist the Department in 
effectively handling issues important to the freight community by 
acting on the Administration's request to establish an Under Secretary 
of Transportation Policy position as part of an overall restructuring 
of the Department's policy apparatus. Within this new and elevated 
structure, we would be able to combine and enhance resources to ensure 
that freight issues are accorded their rightful attention and 
visibility, and are addressed on an even par with passenger issues.
                               __________
Statement of JayEtta Hecker, Director, Physical Infrastructure Issues, 
                       General Accounting Office
    Mr. Chairmen and Members: We are pleased to be here today to 
discuss challenges in defining the Federal role with respect to freight 
transportation issues. There are concerns that the projected increases 
in freight tonnage for all transportation modes will place pressures on 
the marine, aviation, and highway transportation systems. As a result, 
there is growing awareness of the need to view various transportation 
modes, and freight movement in particular, from an integrated 
standpoint, particularly for the purposes of developing and 
implementing a Federal investment strategy and considering alternative 
funding approaches. An intermodal perspective appears especially 
important as the Nation reacts to the increased security needs for 
transportation networks and as it plans for better, more efficient 
transportation for the future. At your request, we have done work 
focusing on the marine component of the national transportation system.
    My testimony today, which is based on our report\1\ that is being 
issued today, addresses three topics: (1) the Federal funding 
approaches used for the marine transportation system as compared with 
the aviation and highway systems, (2) the amount of customs duties on 
imported goods shipped through the marine, aviation, and highway 
systems, and (3) a framework to assist the Congress as it considers 
future Federal investment decisions. Our recently completed work on 
marine transportation is based on our analysis of data collected from 
15 Federal agencies that expended revenue on the various transportation 
systems and/or collected funds from users of the systems during fiscal 
years 1999 through 2001. We also collected data from the U.S. Customs 
Service on the amount of duty collected on commodities imported by the 
various transportation modes. We applied the estimates developed by the 
U.S. Census Bureau on the percent of collections attributable to water, 
sea, and land transportation modes to total customs duties collected by 
the U.S. Customs Service during fiscal years 1999 through 2001. To 
develop a framework to assist the Congress in making decisions about 
the Federal role in financing the marine transportation system, we 
built on prior GAO work on Federal investment approaches and managerial 
best practices and interviewed U.S. Army Corps of Engineers and 
Department of Transportation officials. See appendix I for a more 
detailed explanation of our scope and methodology.
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     \1\U.S. General Accounting Office, Marine Transportation: Federal 
Financing and a Framework for Infrastructure Investments, GAO-02-1033 
(Washington, DC.: Sept. 9, 2002).
---------------------------------------------------------------------------
    In summary:

      The Federal approach for funding the marine 
transportation system relies heavily on general revenues, while the 
approach for funding the aviation and highway systems relies almost 
exclusively on collections from users of the systems. During fiscal 
years 1999 through 2001, funding for about 80 percent of the average 
$3.9 billion expended each year on the marine transportation system 
came from the U.S. Treasury's general fund. During the same period, 
nearly all of the $10 billion in Federal funds expended each year for 
the aviation system and the $25 billion in Federal funds expended each 
year for the highway system came from revenues generated by users of 
those two systems.
      During fiscal years 1999 through 2001, customs duties on 
imported goods transported through the transportation systems averaged 
$15 billion each year for the marine transportation system, $4 billion 
each year for the aviation system, and $900 million each year for the 
highway system. Customs duties are taxes on the value of imported goods 
and have traditionally been viewed as revenues to be used for the 
support of the general activities of the Federal Government. Unlike the 
collections based on the use of the highway and aviation systems, 
customs duties are paid by the importers of the taxed goods. Revenues 
from these duties are deposited into the U.S. Treasury's general fund, 
and the majority of these revenues are used for the general support of 
Federal activities. To help finance improvements to the marine 
transportation system, some maritime stakeholders, such as port 
authorities, have suggested earmarking a portion of revenues generated 
from customs duties. Some customs duties are currently earmarked for 
specific purposes, such as agriculture and food programs. However, in 
that case, a portion of the duties on imports must be used to encourage 
the export and the domestic consumption of farm products and to 
reestablish farmers' purchasing power--that is, for assisting markets 
that are arguably adversely affected by the importation of goods. 
Further earmarking of customs duties for new spending would have 
significant budget ramifications in an already constrained Federal 
budget environment.
      Diverse industry stakeholders believe that substantial 
new investments in the maritime infrastructure may be required from 
public and private sources because of an aging infrastructure, changes 
in the shipping industry, and increased concerns about security.\2\ A 
systematic framework would be helpful to decisionmakers as they 
consider the Federal Government's purpose and role in providing funding 
for the system and as they develop a sound investment approach to guide 
Federal participation. In examining Federal investment approaches 
across many national activities, we have identified four key components 
of such a framework--establishing national goals, defining the Federal 
role, determining appropriate funding tools, and evaluating 
performance--could potentially be applied to all transportation 
systems.
---------------------------------------------------------------------------
     \2\We did not systematically evaluate the claims regarding new 
infrastructure investments. Recent work has recognized the as yet 
undefined financial requirements for enhancing the security of ports. 
See U.S. General Accounting Office, Port Security: Nation Faces 
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T 
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
      The first component--establishing national goals for the 
system--requires an in-depth understanding of the needs of the system 
and the relationship of the system to other transportation modes. For 
example, the efficient movement of freight often involves using several 
different transportation modes, making investment decisions, and 
developing coherent freight policies would logically need to occur 
while focusing on the entire transportation system rather than a single 
mode.
      The second component--clearly defining the Federal role 
relative to other stakeholders--is important to help facilitate the 
planning and implementation of improvements across modes and to better 
ensure that Federal participation supplements and enhances 
participation by others, rather than simply replacing their 
participation.
      A third component--determining the funding tools and 
other approaches that will maximize the impact of any Federal 
investment--is important to help expand the capacity to leverage 
funding resources and to promote shared responsibilities. For example, 
in the $2.4 billion Alameda Corridor Program, State and local 
stakeholders had both a financial incentive to relieve congestion and 
the commitment and ability to bring financial resources to bear.
      The final component ensures that a process is in place 
for evaluating performance and accountability periodically so that 
defined goals, roles, and approaches can be reexamined and modified, as 
necessary.
Background
    The nation's surface transportation systems facilitate mobility 
through an extensive network of infrastructure and operators, as well 
as through the vehicles and vessels that permit passengers and freight 
to move within the system. Maintaining the systems is critical to 
sustaining America's economic growth. This is especially important 
given that projected increases in freight tonnage will likely place 
pressures on these systems. According to the Federal Highway 
Administration, domestic and international freight tonnage across all 
surface modes will increase 41 percent, from 14.4 billion tons in 1998 
to 20.3 billion tons in 2010. According to the forecasts, by 2010, 15.6 
billion tons are projected to move by truck, a 44 percent increase; 3 
billion tons by rail, a 32 percent increase; and 1.5 billion tons by 
water, a 27 percent increase.\3\ Some freight may be moved by more than 
one mode before reaching its destination, such as moving by ship for 
one segment of the trip, then by truck to its final destination.
---------------------------------------------------------------------------
     \3\The Federal Highway Administration's maritime freight 
projections do not include international trade of bulk products and 
some inland domestic bulk shipments.
---------------------------------------------------------------------------
    Over 95 percent of the U.S. overseas freight tonnage is shipped by 
sea. The United States accounts for 1 billion metric tons, or nearly 20 
percent of the world's oceanborne trade. As the world's leading 
maritime trading nation, the United States depends on a vast marine 
transportation system. In addition to the economic role it plays, the 
system also has an important role in national defense; serves as an 
alternative transportation mode to roads and rails; and provides 
recreational value through boating, fishing, and cruises.
    Traditionally, Federal participation in the maritime industry has 
been directed mainly at projects related to ``waterside'' issues, such 
as keeping navigation channels open by dredging, icebreaking, or 
improving the system of locks and dams; maintaining navigational aids 
such as lighthouses or radio systems; and monitoring the movement of 
ships in and out of the nation's coastal waters. Federal participation 
has generally not extended to ``landside'' projects related to ports' 
capabilities, such as building terminals or piers and purchasing cranes 
or other equipment to unload cargo.\4\
---------------------------------------------------------------------------
     \4\One exception has been intermodal connections, such as rail or 
highway connections. The Federal Government has traditionally 
participated in funding such projects.
---------------------------------------------------------------------------
    These traditional areas of Federal assistance are under pressure, 
according to a congressionally mandated report issued by the Department 
of Transportation in 1999,\5\ which cites calls to modernize aging 
structures and dredge channels to new depths to accommodate larger 
ships. Since this report, and in the aftermath of September 11, the 
funding focus has further expanded to include greater emphasis on port 
security. Many of the security improvements will require costly outlays 
for infrastructure, technology, and personnel. For example, when the 
Congress recently made $92.3 million in Federal funding available for 
port security as part of a supplemental appropriations bill,\6\ the 
Transportation Security Administration received grant applications 
totaling almost $700 million.\7\
---------------------------------------------------------------------------
     \5\U.S. Department of Transportation, An Assessment of the U.S. 
Marine Transportation System: A Report to Congress (Washington, DC.: 
September 1999). GAO did not verify the accuracy of the information 
contained in this report.
     \6\Although $93.3 million was made available in the supplemental 
appropriations bill, $1 million was authorized for administrative 
expenses. As of June 17, 2002, 77 grants for 144 ports security 
projects were awarded.
     \7\The Transportation Security Administration, the Coast Guard, 
and the Maritime Administration reviewed applications under the Port 
Security Grants Program, which is based on the seaport security 
provisions contained in the Department of Defense and Emergency 
Supplemental Appropriations for Recovery from and Response to Terrorist 
Attacks on the United States Act of 2002 (Pub. L. No. 107-117, H.R. 
Conference Report 107-350). An additional $105 million was appropriated 
for the Port Security Grant Program as part of another supplemental 
appropriation act passed August 2, 2002 (Pub. L. No. 107-206).
---------------------------------------------------------------------------
    With growing system demands and increased security concerns, some 
stakeholders have suggested a different source of funding for the 
marine transportation system. For example, U.S. public port authorities 
have advocated increased Federal funding for harbor dredging. 
Currently, funding for such maintenance is derived from a fee on 
passengers and the value of imported and domestic cargo loaded and 
unloaded in U.S. ports. Ports and shippers would like to see funding 
for maintenance dredging come from the general fund instead, and there 
was legislation introduced in 1999 to do so.\8\ Regarding funding for 
security, ports are seeking substantial Federal assistance to enhance 
security in the aftermath of the events of September 11. In other work 
we have conducted on port security,\9\ port and private-sector 
officials have said that they believe combating terrorism is the 
Federal Government's responsibility and that, if additional security is 
needed, the Federal Government should provide or pay for it.
---------------------------------------------------------------------------
     \8\H.R. 1260 was introduced, but not enacted, in the 106th 
Congress to repeal the Harbor Maintenance Tax and return to funding the 
costs of operating and maintaining Federal navigation channels from 
general revenues.
     \9\U.S. General Accounting office, Port Security: Nation Faces 
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T 
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
Federal Approach to Financing the Marine Transportation System as 
        Compared with the Aviation and Highway Systems
    Unlike the funding approach used for the aviation and highway 
transportation systems, which are primarily funded by collections from 
users of the systems, the commercial marine transportation system 
relies heavily on general tax revenue. For all three transportation 
systems, most of the revenue collected from users of the systems was 
deposited into trust fund accounts. Figure 1 summarizes the expenditure 
and assessment comparisons across the three transportation systems.

    During fiscal years 1999 through 2001, Federal agencies expended an 
average of $3.9 billion each year on the marine transportation system 
with about 80 percent of the funding coming from the general revenues. 
During the same period, Federal agencies expended an average of $10 
billion each year on the aviation system and $25 billion each year on 
the highway system. The vast majority of the funding for these 
expenditures came from trust fund accounts. (See app. II.):
    Federal agencies collected revenue from assessments on users of all 
three transportation systems during fiscal years 1999 through 2001.\10\ 
Collections from assessments on system users during this period 
amounted to an average of $1 billion each year from marine 
transportation system users, $11 billion each year from aviation system 
users, and $34 billion each year from highway system users. Most of the 
collections for the three systems were deposited into trust funds that 
support the marine, aviation, and highway transportation systems.\11\ 
(See app. III.) Trust funds that support the marine transportation 
system include the Harbor Maintenance Trust Fund and the Inland 
Waterways Trust Fund. Trust funds that support the aviation and highway 
transportation systems include the Airport and Airway Trust Fund and 
the Highway Trust Fund.
---------------------------------------------------------------------------
     \10\Such assessments include both user fees and excise taxes. User 
fees are charged to users for goods or services provided by, or 
activities regulated by, the Federal Government. User fees generally 
apply to activities that provide benefits to identifiable recipients 
and are normally related to the cost of the goods or services provided. 
They may be paid into the general fund or, under specific statutory 
authority, may be made available to an agency carrying out the 
activity. User fees may also be collected through a tax such as an 
excise tax. Since these collections result from the government's 
sovereign powers, the proceeds are generally recorded as budget 
receipts, not as offsetting collections. Excise taxes can also be 
dedicated to specific programs and agencies.
     \11\Collections are deposited into the U.S. Treasury and can be 
used for the general support of Federal activities or may be earmarked 
by law for specific purposes and credited to a trust fund. A Federal 
trust fund is an accounting mechanism used to link earmarked receipts 
with the expenditures of those receipts. It is designated in law as a 
``trust'' fund.
---------------------------------------------------------------------------
Comparison by Transportation Modes of the Amount of Customs Duties 
        Collected
    The Federal Government assesses customs duties on goods imported 
into the United States and the majority of these collections are 
deposited into the U.S. Treasury's general fund to be used for the 
support of Federal activities. As can be seen in figure 2, the amounts 
from customs duties levied on imported goods carried through the marine 
transportation system are more than triple the combined amounts 
collected from customs duties levied on the goods carried through the 
aviation and highway systems. During fiscal years 1999 through 2001, 
customs duties on imported goods shipped through the transportation 
systems averaged $15.2 billion each year for the marine transportation 
system, $3.7 billion for the aviation system, and $928 million for the 
highway system. (See app. IV for details on customs duty collections by 
year.):

    Some maritime stakeholders, particularly port owners and operators, 
have proposed using a portion of the customs duties for infrastructure 
improvements to the marine transportation system. They point out that 
the marine transportation system is generating billions of dollars in 
revenue, and some of these funds should be returned to maintain and 
enhance the system. However, unlike transportation excise taxes, 
customs duties are taxes on the value of imported goods paid by 
importers and ultimately their consumers--not on the users of the 
system--and have traditionally been viewed as revenues to be used for 
the support of the general activities of the Federal Government.
    Notwithstanding the general trend, a portion of revenues from 
customs duties are currently earmarked for agriculture and food 
programs, migratory bird conservation, aquatic resources, and 
reforestation.\12\ It should be noted, however, that in these cases, 
some relationship exists between the goods being taxed and the uses for 
which the taxes are earmarked. Designating a portion of the remaining 
customs fees for maritime uses would not represent a new source of 
capital for the Federal Government, but rather it would be a draw on 
the general fund of the U.S. Treasury. This could lead to additional 
deficit financing, unless other spending were cut or taxes were 
increased.
---------------------------------------------------------------------------
     \12\Under Section 612c of Title 7, 30 percent of the gross 
receipts from customs duties are designated for agricultural and food 
programs. Pursuant to 16 U.S.C. 3912, all duties on guns and 
ammunitions are credited to the Migratory Bird Conservation Fund and 
pursuant to 26 U.S.C. 9504, duties on fishing tackle and yachts and 
pleasure craft are credited to the Sports Fish Restoration Account of 
the Aquatic Resources Trust Fund. In addition, tariffs from wood and 
certain wood products are credited to the Reforestation Trust Fund up 
to a total of $30 million (16 U.S.C. 1606(a)).
---------------------------------------------------------------------------
Systematic Framework Could Help Guide Decisions When Making Investment 
        Choices for the Marine Transportation System
    Some maritime industry stakeholders have suggested that substantial 
new investments in the maritime infrastructure by Federal, State, and 
local governments and by the private sector may be required because of 
an aging infrastructure, changes in the shipping industry, and 
increased concerns about security.\13\ These growing and varied demands 
for increased investments in the maritime transportation system 
heighten the need for a clear understanding about the Federal 
Government's purpose and role in providing funding for the system and 
for a sound investment approach to guide Federal participation. In 
examining Federal investment approaches across many national 
activities, we have found that issues such as these are best addressed 
through a systematic framework. As shown in figure 2, this framework 
has the following four components that potentially could be applied to 
all transportation systems:
---------------------------------------------------------------------------
     \13\We did not systematically evaluate these claims regarding new 
infrastructure investments. Recent work has recognized the as yet 
undefined financial requirements for enhancing the security of ports. 
See U.S. General Accounting Office, Port Security: Nation Faces 
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T 
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
      Set national goals for the system. These goals, which 
would establish what Federal participation in the system is designed to 
accomplish, should be specific and measurable.
      Define clearly what the Federal role should be relative 
to other stakeholders. This step is important to help ensure that 
Federal participation supplements and enhances participation by others, 
rather than simply replacing their participation.
      Determine which funding tools and other approaches, such 
as alternatives to investment in new infrastructure, will maximize the 
impact of any Federal investment. This step can help expand the 
capacity to leverage funding resources and promote shared 
responsibilities.
      Ensure that a process is in place for evaluating 
performance periodically so that defined goals, roles, and approaches 
can be reexamined and modified, as necessary.

Establish National Goals to Guide Federal Participation
    An initial decision for Congress when evaluating Federal 
investments concerns the goals of the marine transportation system. 
Clearly defined national goals can serve as a basis for guiding Federal 
participation by charting a clear direction, establishing priorities 
among competing issues, specifying the desired results, and laying the 
foundation for such other decisions as determining how assistance will 
be provided. At the Federal level, measuring results for Federal 
programs has been a longstanding objective of the Congress. The 
Government Performance and Results Act of 1993\14\ has become the 
primary legislative framework through which agencies are required to 
set strategic and annual goals that are based on national goals, 
measure performance, and report on the degree to which goals are met 
and on what actions are needed to achieve or modify goals that have not 
been met. Establishing clear goals and performance measures for the 
marine transportation system is critical to ensuring both a successful 
and a fiscally responsible effort.
---------------------------------------------------------------------------
     \14\Pub. L. No. 103-62.
---------------------------------------------------------------------------
    Before national goals for the system can be established, however, 
an in-depth understanding of the relationship of the system to other 
transportation modes is required. Transportation experts highlight the 
need to view the system in the context of the entire transportation 
system in addressing congestion, mobility, and other challenges and, 
ultimately, investment decisions. For example, congestion challenges 
often occur where modes connect or should connect, such as ports where 
freight is transferred from one mode to another. The connections 
require coordination of more than one mode of transportation and 
cooperation among multiple transportation providers and planners. A 
systemwide approach to transportation planning and funding, as opposed 
to focus on a single mode or type of travel, could improve the focus on 
outcomes related to customer or community needs.
    Meaningful goal setting also requires a comprehensive understanding 
of the scope and extent of issues and priorities facing the marine 
transportation system. However, there are clear signs that certain key 
issues and priorities are not yet understood well enough to establish 
meaningful goals for the system. For example, a comprehensive analysis 
of the issues and problems facing the marine transportation system has 
not yet been completed.\15\ In setting goals for investment decisions, 
leading organizations usually perform comprehensive needs assessments 
to obtain a clear understanding of the extent and scope of their 
issues, problems, and needs and, ultimately, to identify resources 
needed. These assessments should be results-oriented in that they 
determine what is needed to obtain specific outcomes rather than what 
is needed to maintain or expand existing capital stock.\16\ Developing 
such information is important for ensuring that goals are framed in an 
adequate context. The call by many ports for Federal assistance in 
dredging channels or harbors to 50 feet is an example. Dredging to 50 
feet allows a port to accommodate the largest of the container ships 
currently being constructed and placed in service. However, developing 
the capacity to serve such ships is no guarantee that companies with 
such ships will actually choose to use a port. Every port's desire to 
be competitive by having a 50-foot channel could thus lead to a 
situation in which the Nation as a whole has an overcapacity for 
accommodating larger ships. The result, at least for the excess 
capacity, would signal an inefficient use of Federal resources that 
might have been put to better use in other ways.
---------------------------------------------------------------------------
     \15\The 1999 marine transportation system report identified a 
number of issues and problems facing the marine transportation system. 
These included increased dredging requirements to accommodate larger 
container ships, aging and limited capacity of lock and dam systems on 
inland waterways, and congestion due to ineffective intermodal 
connections. In January 2000, the Secretary of Transportation chartered 
the Marine Transportation System National Advisory Council to help 
implement the recommendations contained in a report issued by the 
Department of Transportation entitled An Assessment of the U.S. Marine 
Transportation System: A Report to Congress. An interagency committee 
was also established to facilitate implementation of the 
recommendations in the report. Recognizing the need to thoroughly 
analyze the issues and problems facing the marine transportation 
system, the interagency committee is in the process of seeking contract 
support for a comprehensive analysis assessing the future needs and 
funding of the marine transportation system.
     \16\U.S. General Accounting Office, U.S. Infrastructure: Funding 
Trends and Federal Agencies' Investment Estimates, GAO-01-986T 
(Washington, DC.: July 23, 2001).
---------------------------------------------------------------------------
Define the Federal Role Relative to Other Stakeholders
    Establishing the roles of the Federal, State, and local governments 
and private entities will help to ensure that goals can be achieved. 
The Federal Government is only one of many stakeholders in the marine 
transportation system. While these various stakeholders may all be able 
to share a general vision of the system, they are likely to diverge in 
the priorities and emphasis they place on specific goals. For example, 
the Federal Government, with its national point of view, is in a much 
different position than a local port intensely involved in head-to-head 
competition with other ports for the business of shipping companies or 
other businesses. For a port, its own infrastructure is paramount, 
while the Federal Government's perspective is focused on the national 
and broader public interest.
    Since there are so many stakeholders involved with the marine 
transportation system, achieving national goals for the system hinges 
on the ability of the Federal Government to forge effective 
partnerships with nonFederal entities. Decision makers have to balance 
national goals with the unique needs and interests of all nonFederal 
stakeholders in order to leverage the resources and capabilities that 
reside within State and local governments and the private sector. 
Future partnering among key maritime stakeholders may take on a 
different form as transportation planners begin focusing across 
transportation modes in making investment decisions instead of making 
investment decisions for each mode separately. The Alameda Corridor 
Program in the Los Angeles area provides an example of how effective 
partnering allowed the capabilities of the various stakeholders to be 
more fully utilized. Called the Alameda Corridor because of the street 
it parallels, the program created a 20-mile, $2.4 billion railroad 
express line connecting the ports of Los Angeles and Long Beach to the 
transcontinental rail network east of downtown Los Angeles. The express 
line eliminates approximately 200 street-level railroad crossings, 
relieving congestion and improving freight mobility for cargo. This 
project made substantial use of local stakeholders' ability to raise 
funds. While the Federal Government participated in the cost, its share 
was only about 20 percent of the total cost, most of which was in the 
form of a loan rather than a grant.
    Just as partnerships offer opportunities, they also pose risks 
based upon the different interests reflected by each stakeholder. While 
gaining the opportunity to leverage the resources and capabilities of 
partners, each of these nonFederal entities has goals and priorities 
that are independent of the Federal Government. For the Federal 
Government, there is concern that State and local governments may not 
share the same priorities for use of the Federal funds. This may result 
in nonFederal entities replacing or ``supplanting'' their previous 
levels of commitment in areas with new Federal resources. For example, 
in the area of port security, there is a significant funding need at 
the local level for overtime pay for police and security guards. Given 
the degree of need, if more Federal funding was made available, local 
interests might push to apply Federal funding in this way, thereby 
transferring a previously local function to the Federal arena. In 
moving toward Federal coverage of basic public services, the Congress 
and Federal officials would be substantially expanding the Federal 
role.
Develop Funding Tools and Other Approaches That Maximize the Federal 
        Return
    When evaluating Federal investments, a careful choice of the 
approaches and funding tools that would best leverage Federal funds in 
meeting identified goals should be made. A well-designed funding 
approach can help encourage investment by other stakeholders and 
maximize the application of limited Federal dollars. An important step 
in selecting the appropriate approach is to effectively harness the 
financial capabilities of local, State, and private stakeholders. The 
Alameda Corridor Program is a good example. In this program, State and 
local stakeholders had both a financial incentive to relieve congestion 
and the commitment and ability to bring financial resources to bear. 
Some other ports may not have the same level of financial incentives or 
capabilities to undertake projects largely on their own. For example, 
in studying the extent to which Florida ports were able to implement a 
set of security requirements imposed by the State, we found that some 
ports were able to draw on more financial resources than others, based 
on such factors as size, economic climate, and funding base.\17\ While 
such information would be valuable in crafting Federal assistance, it 
currently is largely unavailable. Relatively little is known about the 
extent of State, local, and private-sector funding resources across the 
country.
---------------------------------------------------------------------------
     \17\U.S. General Accounting Office, Port Security: Nation Faces 
Formidable Challenges in Making New Initiatives Successful, GAO-02-993T 
(Washington, DC.: Aug. 5, 2002).
---------------------------------------------------------------------------
    The Federal Government has a variety of funding tools potentially 
available for use such as grants, direct loans, loan guarantees, tax 
expenditures, and user fees. Through cost sharing and other 
arrangements, the Federal Government can use these approaches to help 
ensure that Federal funds supplement--and not supplant--funds from 
other stakeholders. For example, an effective use of funding tools, 
with appropriate nonFederal matches and incentives, can be valuable in 
implementing a national strategy to support Federal port investments, 
without putting the government in the position of choosing winners or 
losers.
    Federal approaches can take other forms besides those that relate 
specifically to making funding available. These following approaches 
allow increased output without making major capital investments:

      Demand management. Demand management is designed to 
reduce travel at the most congested times and on the most congested 
routes. One demand management strategy involves requiring users to pay 
more to use congested parts of the system during such periods, with the 
idea that the charge will provide an incentive for some users to shift 
their use to a less congested time or to less congested routes or 
transportation modes. On inland waterways, for example, congestion 
pricing for locks---that is, charging a toll during congested periods 
to reflect the additional cost of delay that a vessel imposes on other 
vessels--might be a way to space out demand on the system. Many 
economists generally believe that such surcharges or tolls enhance 
economic efficiency by making operators take into account the external 
costs they impose on others in deciding when, where, and how to travel.
      Technology improvements. Instead of making extensive 
modifications to infrastructure such as locks and dams, it may be 
possible to apply Federal investments to technology that makes the 
existing system more efficient. For example, technological improvements 
may be able to help barges on the inland waterways navigate locks in 
inclement weather, thereby reducing delays on the inland waterway 
system.
      Maintenance and rehabilitation. Enhancing capacity of 
existing infrastructure through increased maintenance and 
rehabilitation is an important supplement to, and sometimes a 
substitute for, building new infrastructure. Maintenance and 
rehabilitation can improve the speed and reliability of passenger and 
freight travel, thereby optimizing capital investments.
    Management and operation improvements. Better management and 
operation of existing infrastructure may allow the existing 
transportation system to accommodate additional travel without having 
to add new infrastructure. For example, the U.S. Army Corps of 
Engineers is investigating the possibility of automating the operation 
of locks and dams on the inland waterways to reduce congestion at 
bottlenecks.
Examining Outcomes to Determine the Effectiveness of Investments
    Regardless of the tools selected, results should be evaluated and 
lessons learned should be incorporated into the decisionmaking process. 
Evaluating the effectiveness of existing or proposed Federal investment 
programs could provide decisionmakers with valuable information for 
determining whether intended benefits have been achieved and whether 
goals, responsibilities, and approaches should be modified. Such 
evaluations are also useful for better ensuring accountability and 
providing incentives for achieving results.
    Leading organizations that we have studied have stressed the 
importance of developing performance measures and linking investment 
decisions and their expected outcomes to overall strategic goals and 
objectives.\18\ Hypothetically, for example, one goal for the marine 
transportation system might be to increase throughput (that is, the 
volume of cargo) that can be transported through a particular lock and 
dam system on the nation's inland waterways. A performance measure to 
gauge the results of an investment for this goal might be the increased 
use (such as number of barges passing through per hour) that results 
from this investment and the economic benefits associated with that 
increase.
---------------------------------------------------------------------------
     \18\U.S. General Accounting Office, Executive Guide: Leading 
Practices in Capital Decision-Making, GAO/AIMD-99-32 (Washington, DC.: 
Dec. 1998).
---------------------------------------------------------------------------
    In summary, Mr. Chairmen, the projected increases in freight 
tonnage will likely place pressures on the nation's surface 
transportation systems. Maintaining these systems is critical to 
sustaining America's economic growth. Therefore, there is a need to 
view various transportation modes from an integrated standpoint, 
particularly for the purposes of developing and implementing a Federal 
investment strategy and alternative funding approaches. In such an 
effort, the framework of goals, roles, tools, and evaluation can be 
particularly helpful--not only for marine transportation funding, but 
for other modes as well.
    Mr. Chairmen, this concludes my testimony. I will be happy to 
respond to any questions you or other Members may have.
                                 ______
                                 
                   Appendix I: Scope and Methodology
    To determine the amount of Federal expenditures to support the 
commercial marine,\19\ aviation, and highway transportation systems and 
the amount of collections from Federal assessments on the users of 
these systems for fiscal years 1999, 2000, and 2001, we reviewed prior 
GAO reports and other relevant documents, and interviewed officials 
from the Office of Management and Budget and various industry 
representatives. On the basis of this determination, we contacted 15 
Federal agencies and asked them to provide information on the 
expenditures\20\ and collections\21\ that were specific to the 
transportation systems, relying on each agency to identify expenditures 
and collections related to activities that support the transportation 
systems. In addition, we also received data from the U.S. Customs 
Service on the amount of duty collected on commodities imported by the 
transportation modes. The U.S. Customs Service provided estimates, 
developed by the U.S. Census Bureau, on the percent of collections that 
were attributable to water, sea, and land transportation modes. We 
applied these percentages to the total customs duties collected for 
fiscal years 1999, 2000, and 2001 provided by the U.S. Customs Service 
to compute the amount of total customs duties collected by the marine, 
aviation, and highway transportation systems each year.
---------------------------------------------------------------------------
     \19\Noncommercial activities, to include Coast Guard missions such 
as search and rescue and drug and migrant interdiction, as well as 
recreational activities, were excluded from our review as our focus was 
on the commercial marine transportation system.
     \20\For the purposes of this report, expenditures are outlays to 
pay Federal obligations identified by the agency for each fiscal year 
to support these systems, but may include payments for obligations 
incurred in previous fiscal years.
     \21\Assessment collections are fees and taxes paid by users of a 
system that were identified by the agencies and may include revenues 
credited to Federal funds, offsetting collections, and offsetting 
revenue.
---------------------------------------------------------------------------
    We performed limited reasonableness tests on the data by comparing 
the data with the actual trust fund outlays contained in the budget of 
the U.S. Government for fiscal years 2001, 2002, and 2003. Although we 
had each agency validate the data provided, we did not verify agency 
expenditures and collections.
    To identify initial considerations that could help the Congress in 
addressing whether to change the scope or nature of Federal investments 
in the marine transportation system, we conducted a review of prior GAO 
reports and other relevant studies to identify managerial best 
practices in establishing strategic plans and Federal investment 
approaches. We also interviewed U.S. Army Corps of Engineers and 
Department of Transportation officials to obtain information on the 
current state of the commercial marine transportation system, the 
ability of the system to keep pace with growing demand, and activities 
that are under way to assess the condition and capacity of the 
infrastructure. Our work was carried out from January 2002 to September 
2002 in accordance with generally accepted government auditing 
standards.
                                 ______
                                 
    Appendix II: Expenditures for the Marine, Aviation, and Highway 
   Transportation Systems by Source of Funds (Fiscal Years 1999-2001)
    Federal agencies spent an average of $3.9 billion annually on the 
marine transportation system, $10 billion annually on the aviation 
system, and $25 billion annually on the highway system. Whereas the 
primary source of funding for the marine transportation system is 
general tax revenues, the vast majority of Federal funding invested in 
both the aviation and highway systems came from assessments on users of 
the systems. During the 3-year period, general revenues were the 
funding source for 80 percent of the expenditures for the marine 
transportation system. In contrast, assessments on system users were 
the funding source for 88 percent of the amount spent on the aviation 
system and nearly 100 percent of the amount spent on the highway 
system.

    Table 1: Total Expenditures for the Marine, Aviation, and Highway
 Transportation Systems Summarized by the Source of Funds (Fiscal Years
                               1999--2001)
                           dollars in millions
------------------------------------------------------------------------
        Sources of funds            1999      2000      2001     Average
------------------------------------------------------------------------
  Marine Transportation System
General revenues................    $3,250    $2,994    $3,117    $3,120
Revenue from system users\1\....       467       902       876       748
                                 ---------------------------------------
    Total Marine Transportation     $3,717    $3,896    $3,993    $3,868
     System.....................

 Aviation Transportation System
General revenues................      $969    $1,007    $1,070    $1,015
Revenue from system users\1\....     8,410     9,438     9,963     9,270
                                 ---------------------------------------
    Total Aviation                  $9,379   $10,445   $11,033   $10,285
     Transportation System......

  Highway Transportation System
General revenues................       $90       $68      $116       $91
Revenue from system users\1\....    22,730    25,031    27,231    24,997
                                 ---------------------------------------
    Total Highway Transportation   $22,820   $25,099   $27,347   $25,088
     System.....................
------------------------------------------------------------------------
Note: Figures are nominal and have not been adjusted for inflation.
\1\Includes trust fund and reimbursable agency accounts.
Source: GAO analysis of data provided by agencies that expended funds

                                 ______
                                 
   Appendix III: Distribution of Amounts Collected from Users of the 
            Transportation Systems (Fiscal Years 1999-2001)
    Federal agencies collected an average of $1 billion annually from 
users of the marine transportation system, $11.1 billion annually from 
users of the aviation system, and $33.7 billion annually from users of 
the highway system. For all three transportation systems, most of the 
collections were deposited into trust fund accounts. During the 3-year 
period, 85 percent of the amounts collected from marine transportation 
system users, 94 percent of the amounts collected from aviation system 
users, and nearly 100 percent of the amounts collected from highway 
system users were deposited into trust fund accounts.

      Table 2: Amounts Collected from Marine, Aviation, and Highway
    Transportation System Users and Accounts Receiving the Collection
                        (Fiscal Years 1999--2001)
                           dollars in millions
------------------------------------------------------------------------
         Source of funds            1999      2000      2001     Average
------------------------------------------------------------------------
  Marine Transportation System
General fund....................       $93       $97       $99       $96
Trust fund accounts.............       741       857       891       830
Reimbursable agency acounts.....        41        51        54        49
                                 ---------------------------------------
    Total Marine Transportation       $875    $1,005    $1,044      $975
     System.....................

 Aviation Transportation System
General fund....................      $421      $437      $466      $441
Trust fund accounts.............    11,663     9,860     9,581    10,368
Reimbursable agency acounts.....       236       255       265       252
                                 ---------------------------------------
    Total Aviation                 $12,320   $10,552   $10,312   $11,061
     Transportation System......

  Highway Transportation System
General revenues................        $1        $2        $2        $2
Trust fund accounts.............    32,255    35,134    33,683    33,691
Reimbursable agency acounts.....        24        24        22        23
                                 ---------------------------------------
    Total Highway Transportation   $32,280   $35,160   $33,707   $33,716
     System.....................
------------------------------------------------------------------------
Note: Figures are nominal and have not been adjusted for inflation.
Source: GAO analysis of data provided by agencies that expended funds

   Appendix IV: Amount Collected From Customs Duties on Commodities 
   Transported on the Transportation Systems (Fiscal Years 1999-2001)
    Unlike the fees and taxes on users that are earmarked to support 
the transportation systems, customs duties are not an assessment on the 
system; rather, duties are assessed on imported goods transported by 
the systems. The majority of customs duties collected are deposited in 
the U.S. Treasury's general fund for the general support of Federal 
activities.\22\ On average, the Customs Service reported $19.8 billion 
collected annually for commodities imported by the transportation 
modes, with nearly 80 percent collected from the marine system.
---------------------------------------------------------------------------
     \22\Under Section 612 of Title 7, about 30 percent of the gross 
receipts from customs duties are designated for agricultural and food 
programs. In addition, pursuant to 16 U.S.C. 3912, all duties on guns 
and ammunitions go to the Migratory Bird Conservation Fund and pursuant 
to 26 U.S.C. 9504, duties on fishing tackle and yachts and pleasure 
craft go to the Sports Fish Restoration account of the Aquatic 
Resources Trust Fund. Also, tariffs from wood and certain wood products 
are transferred to the Reforestation Trust Fund up to a total of $30 
million (16 U.S.C. 1606(a)).

  Table 3: Amount of Customs Duties Collected for Commodities Transported on the Marine, Aviation, and Highway
                             Transportation Systems, Fiscal Years 1999 through 2001
                                               dollars in millions
----------------------------------------------------------------------------------------------------------------
                                                      1999               2000          2001
            Transportation System             ------------------------------------------------ Percent   Average
                                                Amount   Percent   Amount   Percent   Amount             Amount
----------------------------------------------------------------------------------------------------------------
Marine.......................................   $14,310       75   $15,624       76   $15,637       79   $15,190
Aviation.....................................     3,577       19     4,053       20     3,371       17     3,667
Highway\1\...................................     1,168        6       880        4       735        4       928
    Total custom duties collected............   $19,055  .......   $20,557  .......   $19,743  .......   $19,785
----------------------------------------------------------------------------------------------------------------
Note: Figures are nominal and have not been adjusted for inflation.
\1\Includes amounts collected by rail.
Source: GAO computations based on data provided by the U.S. Customs Service.

                                 ______
                                 
 Responses by JayEtta Hecker to Additional Questions from Senator Reid
    Question. In your statement, you emphasize the importance of a more 
system-wide approach to Federal transportation programs-and in 
particular, focus on promoting intermodal approaches to meeting the 
rapidly growing requirements for freight infrastructure. You also 
proposed use of a framework to assist in refining Federal 
transportation policies focusing on national goals, defining roles of 
the many public and private stakeholders, selecting appropriate 
government tools to best leverage Federal resources, and evaluating 
performance of programs and policies. Can you discuss how this 
framework might assist the Congress in defining and developing a 
coherent national freight policy-and challenges and options that should 
be considered during the forthcoming reauthorization of the 
Transportation Equity Act for the 21st Century (TEA-21)?
    Response. Moving toward a coherent national freight policy requires 
solutions that cut across modes and better prepare the Nation for the 
ever-expanding growth of international trade. Responding to that 
challenge requires evaluating the performance of existing legislation 
and programs in promoting an efficient intermodal freight 
transportation industry, establishing the promotion of an efficient 
intermodal freight industry as a national goal, defining the Federal 
role relative to other stakeholders, and developing funding tools and 
other approaches that maximize the return on the Federal investment. An 
elaboration of each component of this framework follows:
Evaluation of Performance of Existing Legislative Framework and 
        Programs in Promoting an Efficient Intermodal Freight 
        Transportation Industry
    Evaluating the results of Federal investment programs and 
incorporating lessons learned into the decisionmaking process could 
provide decisionmakers with valuable information for determining 
whether intended benefits have been achieved and whether goals, 
responsibilities, and approaches should be modified. Such evaluations 
are also useful for better ensuring accountability and providing 
incentives for achieving results. For example, one goal for the marine 
transportation system might be to increase throughput (the volume of 
cargo) that can be transported through a particular lock and dam system 
on the nation's inland waterways. A performance measure to gauge the 
results of an investment for this goal might be the increased capacity 
that results from this investment and the economic benefits associated 
with that increase. Assessing progress in achieving this goal is, 
therefore, dependent on carrying out analyses of accurate and complete 
data.
Establishing Promotion of an Efficient Intermodal Freight Industry as a 
        National Goal to Guide Federal Participation
    There appears to be substantial consensus that promoting an 
efficient intermodal freight industry should be a central national goal 
for reauthorization of the core transportation legislation. The 
challenge is how to make such language more integral to the future 
structure and performance of transportation programs. One shift would 
be to consider articulation of a national goal related to freight/
intermodal transportation in performance terms--and to structure 
revised or new programs around specific performance goals.
    Clearly, in setting national goals and defining outcomes, the 
explicit focus would be on a system-wide, rather than mode-specific 
approach to transportation planning and funding and could include a 
focus on outcomes that users--both freight and passengers, both 
intercity and local--desire from the transportation system.\1\ The key 
for achieving the goals, regardless of how detailed, is to align the 
goal with the roles of the various stakeholders and the funding 
approaches selected. For example, a performance oriented funding system 
could be developed in which the Federal Government would first define 
certain national interests of the transportation system--such as 
identifying freight corridors of importance to the national economy--
then set national performance standards for those systems that States 
and localities must meet. Federal funds would be distributed to those 
entities that are addressing national interests and established 
standards. Any Federal funds remaining after meeting the performance 
standards could then be used for whatever transportation purpose the 
State or locality deems most appropriate to achieve State or local 
mobility goals.
---------------------------------------------------------------------------
     \1\U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility: A 
National Challenge, GAO-02-775, (Washington, DC: Aug. 2002).
---------------------------------------------------------------------------
    Another feature of performance goals could include a focus on 
congestion, which is increasingly affecting travel times and the 
reliability of transportation systems. In the aggregate, congestion 
results in thousands of hours of delay every day, which can translate 
into costs such as lost productivity and increased fuel consumption. In 
addition, a decrease in travel reliability imposes costs on the 
traveler in terms of raising the cost of moving goods resulting in 
higher prices for consumers. While there is some evidence that freight 
transportation costs related to managing business operations have 
decreased as a percentage of gross national product (indicating that 
producers and manufacturers adjust to transportation supply by 
switching modes or altering delivery schedules to avoid delays and 
resulting cost increases), these adaptations by businesses represent 
economic inefficiencies that can be very costly. Increasing congestion 
can cause businesses to avoid a substantial number of trips that might 
result in a corresponding loss of the benefits of those trips.
    National goals for the transportation system could also recognize 
that the concept of capacity is broader than just the physical 
characteristics of the transportation network (e.g., the number of 
lane-miles of road or locks on a waterway). The capacity of 
transportation systems is also determined by how well they are managed 
and operated. Evidence has mounted that congestion on highways was in 
part due to poor management of traffic flows on the connectors between 
highways and poor management in clearing roads that are blocked due to 
accidents, inclement weather, or construction. For example, in the 75 
metropolitan areas studied by the Texas Transportation Institute, 54 
percent of annual vehicle delays in 2000 were due to incidents such as 
breakdowns or crashes. In addition, the Oak Ridge National Laboratory 
reported that, nationwide, significant delays are caused by work zones 
on highways; poorly timed traffic signals; and snow, ice, and fog.\2\
---------------------------------------------------------------------------
     \2\S.M. Chin, O. Franzede, D.L. Greene, H.L. Hwang, and R. Gibson, 
Temporary Losses of Capacity Study and Impacts on Performance, Report 
No. ORNL/TM-2002/3 (Oak Ridge, TN: Oak Ridge National Laboratory, May 
2002).
---------------------------------------------------------------------------
    Another dimension of sound and efficient transportation systems 
that could be defined in national goals is the recognition of full 
life-cycle costs and benefits of various transportation programs, and 
building that concept into system-wide transportation planning and 
funding. Cost-benefit frameworks that transportation agencies currently 
use to evaluate various transportation projects could be more 
comprehensive in considering a wider array of social and economic costs 
and benefits, recognizing transportation systems' links to each other 
and to other social and financial systems. A model worthy of 
exploration is the Federal Transit Administration New Starts Program, 
where projects compete nationally, and are all scored not only for 
their projected transportation benefits but also for their 
effectiveness in assuring provisions are made to cover the long term 
operational costs of the system.
Defining the Federal Role Relative to Other Stakeholders
    A central challenge of developing and refining national 
transportation policies and programs, particularly relative to freight 
transportation, is the intersection of public and private interests. A 
specific role issue surrounding development and refinement of a 
national freight transportation policy is the Federal vs. the State and 
local role in selecting and prioritizing freight projects. The 
structure of the core highway and transit programs since passage of the 
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) is to 
delegate decisionmaking and project prioritization to States and 
metropolitan planning organizations (MPOs). Because control of 
transportation investment decisions has been delegated to State and 
local governments, freight projects funded through programs such as the 
Congestion Mitigation and Air Quality Program (CMAQ), the National 
Highway System (NHS), and the Surface Transportation Program (STP) have 
to be identified as priorities within the State and MPO planning 
processes. In contrast, Federal discretionary grant programs such as 
the National Corridor Planning and Development and Coordinated Border 
Infrastructure programs (Borders and Corridors programs) provides funds 
over and above the annual State highway apportionment. Therefore, to 
address the role issues, congressional action could be guided by 
assessment of the relative strengths and weaknesses of programs that 
require freight projects to be identified as priorities within the 
State and MPO-led planning processes (CMAQ, NHS, and STP) relative to 
the experience with programs funded with resources over and above the 
regular formula allocations to the States (Borders and Corridors 
programs).
    The diverse proposals put forth by various freight interests range 
from expanding eligibility and funding of any or all of these existing 
programs to numerous proposals for new freight set-aside programs. 
Thus, a central decision point for the Congress in defining a national 
freight policy is determination of the extent to which incentives can 
be refined sufficiently to enable local transportation planning to 
reflect national interests and priorities for intermodal freight needs 
or whether a directly federally administered program holds greater 
promise to efficiently meet the critical needs of this key segment of 
the transportation industry.
Developing Funding Tools and Other Approaches That Maximize the Return 
        on the Federal Investment
    Our recent mobility report on strategies for enhancing mobility 
identified the need for using a full range of tools to achieve desired 
mobility outcomes, providing more financing options, and developing 
additional revenue sources.\3\ While new construction may hold some 
promise to ease congestion in certain bottlenecks, it is not always a 
viable solution due to cost, land, regulatory, or administrative 
constraints. Thus, balanced attention and priority needs to be given to 
using noncapital alternatives to meet capital investment needs. In 
December 1998, GAO reported that leading private sector and public 
organizations consider just such alternatives in their capital 
decisionmaking process.\4\ These alternatives can include (1) improving 
the management and operation of the existing system by increasing 
corrective and preventative maintenance and rehabilitation and (2) 
managing or reducing travel demand through pricing incentives. For 
example, capacity can be enhanced by performing needed maintenance on 
existing transportation systems to improve the speed and reliability of 
passenger as well as freight travel. In addition, investing in 
Intelligent Transportation Systems--technologies that enhance the 
safety, efficiency, and effectiveness of the transportation network--
can serve as another way of increasing capacity and mobility without 
making major capital investments.\5\ Finally, instituting tolls or fees 
during peak travel times may lead people to schedule recreational trips 
or move freight during less congested times or by alternate routes.
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     \3\U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility: A 
National Challenge, GAO-02-775, (Washington, DC: Aug. 2002).
     \4\U.S. General Accounting Office, Executive Guide: Leading 
Practices in Capital Decision-Making, GAO/AIMD-99-32, (Washington, DC: 
Dec. 1998).
     \5\Intelligent transportation systems include technologies that 
improve traffic flow by adjusting traffic flow on highways; 
facilitating traffic flow at toll plazas; alerting emergency management 
services to the locations of crashes; increasing the efficiency of 
transit fare payment systems; and other actions.
---------------------------------------------------------------------------
    Regarding financing, the current system of financing surface and 
maritime transportation projects limits options for addressing mobility 
challenges. Separate funding for each mode at the Federal, State, and 
local level can make it difficult to consider possible efficient and 
effective ways for enhancing mobility. Providing more flexibility in 
funding across modes could help address this limitation. Transportation 
experts have also expressed concern that ``earmarking'' or designation 
by the Congress of Federal funds for particular transportation projects 
bypasses traditional planning processes used to identify the highest 
priority projects, thus potentially limiting transportation agencies' 
options for addressing the most severe mobility challenges. Bypassing 
transportation planning processes can also result in logical 
connections or interconnections between projects being overlooked.
    The public sector could expand support for alternative financing 
mechanisms to access new sources of capital and stimulate additional 
investment in surface and maritime transportation infrastructure. These 
mechanisms include both newly emerging and existing financing 
techniques such as providing credit assistance to State and local 
governments for capital projects and using tax policy to provide 
incentives to the private sector for investing in surface and maritime 
transportation infrastructure. However, these mechanisms currently 
provide only a small portion of the total funding that is needed for 
capital investment and are not, by themselves, a major strategy for 
addressing mobility challenges. Furthermore some of these mechanisms, 
such as Grant Anticipation Revenue Vehicles, could create difficulties 
for State and local agencies to address future transportation problems, 
because agencies would be reliant on future Federal revenues to repay 
the bonds.\6\
---------------------------------------------------------------------------
     \6\U.S. General Accounting Office, Transportation Infrastructure: 
Alternative Financing Mechanisms for Surface Transportation, GAO-02-
1126T, (Washington, DC: Sept. 25, 2002). In addition, a broad review of 
the performance of Innovative Finance alternatives has recently been 
released by a FHWA contractor. See Performance Review of U.S. DOT 
Innovative Finance Initiatives, Cambridge Systematics, Inc., July 2002.
---------------------------------------------------------------------------
    Finally, a key issue is how Federal revenues are raised and what 
level of funding is targeted. New or increased taxes or other fees 
imposed on the freight sector, while never an attractive option, could 
also help fund mobility improvements. For example, one way to raise 
revenue for funding mobility improvements would be to increase taxes on 
heavy trucks that move freight. According to FHWA, heavy trucks 
(weighing over 55,000 pounds) cause a disproportionate amount of damage 
to the nation's highways and have not paid a corresponding share for 
the cost of pavement damage they cause.
    Better aligning sources of revenues or user fees with actual use 
and damage, including contributions to congestion and pollution, hold 
promise to not only provide a source of revenue, but to promote more 
efficient use of congested infrastructure. Congestion is in part due to 
inefficient pricing of the infrastructure because users--whether they 
are drivers on a highway or barge operators moving through a lock--do 
not pay the full costs they impose on the system and on other users for 
their use of the system. If travelers and freight carriers had to pay a 
higher cost for using transportation systems during peak periods to 
reflect the full costs they impose, they would have an incentive to 
avoid or reschedule some trips and to load vehicles more fully, 
resulting in less congestion.
                                 ______
                                 
 Responses of JayEtta Hecker to Additional Questions from Senator Reid 
                          and Senator Jeffords
    Question 1. Freight transportation is expected to double in the 
next 20 years. This increase in freight traffic will occur at the same 
time that congestion on our roads is already at levels many of us 
consider unacceptable. Clearly, capacity issues have to be at the top 
of our list as we begin to reauthorize our surface transportation 
programs. However, in addition to building new physical capacity, we 
will need to seek ways to squeeze more out of our existing 
transportation infrastructure through intelligent transportation 
systems, better operations, and perhaps a more efficient mix of 
transportation choices. Please give your thoughts on what we can do 
when we reauthorize Transportation Equity Act for the 21st Century 
(TEA-21) to get the most efficient use out of our transportation 
infrastructure.
    Response. Our recent work on surface and maritime transportation 
mobility provides insight on several strategies that offer promise for 
enhancing the efficiency of the transportation infrastructure and 
addressing mobility challenges, especially growing congestion.\7\ We 
developed these strategies based upon expert opinion drawn from two 
panels of surface and maritime transportation experts that we convened 
in April 2002. These strategies include:
---------------------------------------------------------------------------
     \7\See U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility: A 
National Challenge, GAO-02-775 (Washington, DC: Aug. 30, 2002) and U.S. 
General Accounting Office, Surface and Maritime Transportation: 
Challenges and Strategies for Enhancing Mobility, GAO-02-1132T 
(Washington, DC: Sept. 30, 2002).
---------------------------------------------------------------------------
    Strategy 1: Encourage the development of transportation planning 
and funding systems that focus on the entire surface and maritime 
transportation system rather than on specific modes or types of travel 
to achieve desired mobility outcomes. Some examples of alternative 
planning and funding systems include the following:

      Performance-oriented funding system. The Federal 
Government would define certain national interests of the 
transportation system, set national performance standards for those 
systems, and distribute Federal funds to entities that address national 
interests and meet the performance standards.
      Federal financial reward-based system. Federal support 
would reward those States or localities that apply Federal money to 
gain efficiencies in their transportation systems, or tie 
transportation projects to land use and other local policies to achieve 
community and environmental goals, as well as mobility goals.
      System with different Federal matching criteria for 
different types of expenditures that might reflect Federal priorities. 
For example, if infrastructure preservation became a higher national 
priority than building new capacity, matching requirements could be 
changed to a 50 percent Federal share for building new physical 
capacity and an 80 percent Federal share for preservation.
      System in which State and local governments pay for a 
larger share of transportation projects, which might provide them with 
incentives to invest in more cost-effective projects. Reducing the 
Federal match for projects in all modes may give States and localities 
more fiscal responsibility for projects they are planning. If cost 
savings resulted, these entities might have more funds available to 
address other mobility challenges. Making Federal matching requirements 
equal for all modes may avoid creating incentives to pursue projects in 
one mode that might be less effective than projects in other modes.

    Strategy 2: Use a full range of techniques to achieve desired 
mobility outcomes. The techniques that offer promise for achieving more 
efficient use of the transportation infrastructure are as follows:

      Increase infrastructure maintenance and rehabilitation. 
An emphasis on enhancing capacity from existing infrastructure through 
increased corrective and preventive maintenance and rehabilitation is 
an important supplement to, and sometimes a substitute for, building 
new infrastructure. Maintaining and rehabilitating transportation 
systems can improve the speed and reliability of passenger and freight 
travel, thereby optimizing capital investments.
      Improve management and operations. Better management and 
operation of existing surface and maritime transportation 
infrastructure is another technique for enhancing mobility because it 
may allow the existing transportation system to accommodate additional 
travel without having to add new infrastructure. For example, the Texas 
Transportation Institute reported that coordinating traffic signal 
timing with changing traffic conditions could improve flow on congested 
roadways. Shifting the focus of transportation planning from building 
capital facilities to an ``operations mindset'' may require a cultural 
shift in many transportation institutions, particularly in the public 
sector, so that the organizational structure, hierarchy, and rewards 
and incentives are all focused on improving transportation management 
and operations.\8\
---------------------------------------------------------------------------
     \8\Joseph M. Sussman, ``Transitions in the World of 
Transportation: A Systems View,'' Transportation Quarterly 56 (2002): 
21-22.
---------------------------------------------------------------------------
      Increase investment in technology. Increasing public 
sector investment in Intelligent Transportation System (ITS) 
technologies that are designed to enhance the safety, efficiency, and 
effectiveness of the transportation network, can serve as a way of 
increasing capacity and mobility without making major capital 
investments. ITS includes technologies that improve traffic flow by 
adjusting signals, facilitating traffic flow at toll plazas, alerting 
emergency management services to the locations of crashes, increasing 
the efficiency of transit fare payment systems, and other actions. 
Other technological improvements include increasing information 
available to users of the transportation system to help people avoid 
congested areas and to improve customer satisfaction with the system.
      Use demand management techniques. Another approach to 
reducing congestion without making major capital investments is to use 
demand management techniques to reduce the number of vehicles traveling 
at the most congested times and on the most congested routes. One type 
of demand management for travel on public roads is to make greater use 
of pricing incentives. In particular, some economists have proposed 
using congestion pricing that involves charging surcharges or tolls to 
drivers who choose to travel during peak periods when their use of the 
roads increases congestion. These surcharges might help reduce 
congestion by providing incentives for travelers to share rides, use 
transit, travel at less congested (generally off-peak) times and on 
less congested routes, or make other adjustments. The surcharges may 
also lead businesses to move freight during less congested times or by 
alternate routes. At the same time, congestion pricing generates more 
revenues that can be targeted to alleviating congestion in those 
specific corridors. In addition to pricing incentives, other demand 
management techniques that encourage ride-sharing through carpools and 
vanpools may also be useful in reducing congestion. We note, however, 
that demand management techniques on roads, particularly those 
involving pricing, often provoke strong political opposition and raise 
equity issues that arise from the potentially regressive nature of 
these charges (i.e., the surcharges constitute a larger portion of the 
earnings of lower income households and therefore impose a greater 
financial burden on them).

    Strategy 3: Provide more options for financing mobility 
improvements and consider additional sources of revenue. There are 
three potential elements to this strategy, as follows:
      Increase funding flexibility. The current system of 
financing surface and maritime transportation projects limits options 
for addressing mobility challenges. For example, separate funding for 
each mode at the Federal, State, and local level can make it difficult 
to consider possible efficient and effective ways for enhancing 
mobility. Providing more flexibility in funding across modes could help 
address this limitation.
      Expand support for alternative financing mechanisms. The 
public sector could also expand its financial support for alternative 
financing mechanisms to access new sources of capital and stimulate 
additional investment in surface and maritime transportation 
infrastructure. These mechanisms include both newly emerging and 
existing financing techniques such as providing credit assistance to 
State and local governments for capital projects and using tax policy 
to provide incentives to the private sector for investing in surface 
and maritime transportation infrastructure.\9\ These mechanisms 
currently provide a small portion of the total funding that is needed 
for capital investment and some of them could create future funding 
difficulties for State and local agencies because they involve greater 
borrowing from the private sector.
---------------------------------------------------------------------------
     \9\See U.S. General Accounting Office, Transportation 
Infrastructure: Alternative Financing Mechanisms for Surface 
Transportation, GAO1-02-1126T (Washington, DC: Sept. 25, 2002).
---------------------------------------------------------------------------
      Consider new revenue sources. A possible future shortage 
of revenues may limit efforts to address mobility challenges, according 
to many of the panelists that we consulted. For example, some panelists 
said that because of the increasing use of alternative fuels, revenues 
from the gas tax are expected to decrease, possibly limiting funds 
available to finance future transportation projects. One method of 
raising revenue is for counties and other regional authorities to 
impose sales taxes for funding transportation projects. A number of 
counties have already passed such taxes and more are being considered 
nationwide. However, several panelists expressed concerns that this 
method might not be the best option for addressing mobility challenges 
because (1) moving away from transportation user charges to sales taxes 
that are not directly tied to the use of transportation systems weakens 
the ties between transportation planning and finance and (2) counties 
and other taxing authorities may be able to bypass traditional State 
and metropolitan planning processes because sales taxes provide them 
with their owns funding sources for transportation.
    New or increased taxes or other fees imposed on the freight sector 
could also help fund mobility improvements, for example, by increasing 
taxes on freight trucking. The Joint Committee on Taxation estimated 
that raising the ceiling on the tax paid by heavy vehicles to $1,900 
could generate about $100 million per year.\10\ Another revenue raising 
method would be to dedicate more of the revenues from taxes on 
alternative fuels, such as gasohol, to the Highway Trust Fund rather 
than to Treasury's general fund, as currently happens. However, this 
would decrease the amount of funds available for other Federal 
programs. Finally, pricing strategies, mentioned earlier in this 
statement as a technique to reduce congestion, are also possible 
additional sources of revenue for transportation purposes.
---------------------------------------------------------------------------
     \10\See U.S. General Accounting Office, Highway Financing: Factors 
Affecting Highway Trust Fund Revenues, GAO-02-667T (Washington, DC: May 
9, 2002).

    Question 2. We clearly have significant freight transportation 
needs across our Nation. How do we determine what our freight 
priorities should be? Do we have sufficient information to determine 
which freight corridors, border crossings, ports, intermodal 
facilities, and connectors should be our top funding priorities? Where 
is our freight infrastructure least efficient and where is the growth 
expected to occur?
    Response. GAO has not performed work in this area. Therefore, we 
are unable to directly address your questions concerning the nation's 
freight priorities. We believe, however, that the Federal programs 
established in core transportation legislation should be evaluated to 
determine the extent to which these programs are enhancing freight 
transportation. As such, we are currently working with your staffs to 
undertake such work.
    It would be prudent to evaluate the results of Federal programs to 
determine if programs are enhancing freight transportation. There 
appears to be substantial consensus that the reliability and 
effectiveness of the nation's freight transportation system is being 
constrained because of increasing demand and capacity limitations. 
Projected increases in the volume of freight being transported over the 
nation's transportation infrastructure and changes in the freight 
industry, such as just-in-time delivery and e-commerce, are placing new 
demands on the transportation system by requiring more freight to be 
shipped more frequently over the system. Furthermore, capacity and 
mobility limitations of the existing infrastructure-such as the need 
for deeper harbor channels to accommodate bigger ships, terminal 
capacity/expansion limitations, congestion on intermodal connectors, 
and aging and limited low-capacity locks on our nation's rivers-could 
potentially pose threats to our ability to move goods efficiently. 
While system stakeholders have maintained that demand and capacity 
limitations have not received the attention necessary to meet projected 
needs, these issues have not been evaluated on a system-wide basis.
    Although the Intermodal Surface Transportation Efficiency Act 
(ISTEA) and TEA-21 allowed transportation planners to consider freight 
transportation requirements when developing transportation plans and 
making investment decisions, freight carriers and users have questioned 
whether the mandate set forth in core transportation legislation has 
been successful. Because control of transportation investment decisions 
has been delegated to State and local governments, freight projects 
funded through most of the programs have to be identified as priorities 
within the State and metropolitan planning organization (MPO) planning 
processes. States and MPOs, however, must weigh the need for freight 
transportation projects against priorities for other transportation 
projects. Furthermore, freight systems are global in scope whereas the 
perspective of State and local planners is limited to the area over 
which they have jurisdiction.
    In our recent report on maritime finance,\11\ we provide a 
framework for national infrastructure investment. The first component 
of this framework calls for evaluating results and incorporating 
lessons learned into the decisionmaking process. We are currently 
working with your staffs to evaluate many of these freight 
transportation issues.
---------------------------------------------------------------------------
     \11\U.S. General Accounting Office, Marine Transportation: Federal 
Financing and a Framework for Infrastructure Investments, GAO-02-1033, 
(Washington, DC: Sept. 9, 2002).

    Question 3. The Borders and Corridors programs have not worked very 
well. One improvement we should consider is to revise this program to 
encourage public-private partnerships through a greater emphasis on 
innovative finance and other creative incentives. How else can we 
improve the Borders and Corridors programs to target the highest 
priority freight corridors and intermodal facilities?
    Response. In your question, you raised concern that the Borders and 
Corridors programs have not worked well and inquired about approaches 
(other than innovative finance and incentives) that might improve the 
programs. Absent an evaluation of the programs, we are not able to take 
a position on whether the programs have been successful in advancing 
freight projects. We can, however, provide information on noncapital 
alternatives to meet capital investment needs based on our recent work 
on surface and maritime transportation mobility.\12\
---------------------------------------------------------------------------
     \12\U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility: A 
National Challenge, GAO-02-775, (Washington, DC: Aug. 30, 2002).
---------------------------------------------------------------------------
    According to a report issued by the Federal Highway Administration 
(FHWA),\13\ since States and MPOs must balance competing priorities for 
scarce transportation funding, the project prioritization process 
established in ISTEA and TEA-21 may serve to detract focus from freight 
projects within the State and MPO decisionmaking process. A common 
complaint of freight carriers and users of the system is that freight 
issues cannot compete with other politically popular projects, such as 
passenger projects. The Borders and Corridors programs, established in 
TEA-21, addressed this difficulty by providing funds over and above the 
annual State highway apportionment.
---------------------------------------------------------------------------
     \13\Federal Highway Administration, Freight Financing Options for 
National Freight Productivity, (Washington, DC: Apr. 2001).
---------------------------------------------------------------------------
    The FHWA report also notes that although the programs have been a 
good source of funding for freight projects, the programs have 
purportedly been oversubscribed and much of the program funds have been 
earmarked for non-freight projects. The apparent demand for funds under 
these programs suggests that there is a need for such programs. As 
previously noted, we are not able to take a position on whether the 
programs have been successful. We can, however, provide strategies that 
could be considered when developing the legislative reauthorization 
package.
    In our recent mobility report on strategies for enhancing mobility, 
we identified the need for using a full range of tools to achieve 
desired program outcomes. While new construction may hold some promise 
to ease congestion in certain bottlenecks, it is not always a viable 
solution due to cost, land, regulatory, or administrative constraints. 
Therefore, noncapital alternatives to meet capital investment needs 
should also be considered. These alternatives can include improving the 
management and operation of the existing system through corrective and 
preventative maintenance and rehabilitation and/or managing or reducing 
travel demand through pricing incentives. Another alternative we 
proposed in our mobility report involves instituting tolls or fees 
during peak travel times which may lead people to schedule recreational 
trips or move freight during less congested times or be alternate 
routes.
    Question 4: One way to squeeze more capacity out of existing 
infrastructure is through more rapid deployment of Intelligent 
Transportation Systems and an increased focus on the operations and 
management of regional transportation systems. How much potential do 
Intelligent Transportation System initiatives have for improving the 
efficiency of freight operations and what can we do to promote the 
development of a freight-friendly ITS infrastructure?
    Response. We have not done any recent work to evaluate Intelligent 
Transportation Systems (ITS) initiatives or to identify strategies for 
promoting ``freight-friendly'' ITS infrastructure. As noted in our 
response to question 1, however, our recent work on strategies for 
addressing mobility provides information about Intelligent 
Transportation Systems (ITS). The Department of Transportation's ITS 
program applies proven and emerging technologies-drawn from computer 
hardware and software systems, telecommunications, navigation, and 
other systems-to surface transportation. In fiscal year 2001, nearly 50 
percent of FHWA's $387.2 million research and technology budget was 
allocated to intelligent transportation systems.\14\ A number of 
intelligent transportation systems offer promise for improving the 
efficiency of freight transportation. For example, highway-rail 
intersection systems are being developed to coordinate traffic signal 
operations and train movement and notify drivers of approaching trains 
using in-vehicle warning systems. Also, commercial vehicle intelligent 
transportation systems are being developed that will apply technologies 
to improve the safety and productivity of commercial vehicles and 
drivers, reduce commercial vehicles' operations costs, and facilitate 
regulatory processes for the trucking industry and government agencies.
---------------------------------------------------------------------------
     \14\U.S. General Accounting Office, Highway Research: Systematic 
Selection and Evaluation Processes Needed for Research Program, GAO-02-
573 (Washington, DC: May 24, 2002).

    Question 5. What can we do to promote better regional freight 
planning and how do we ensure that planning agencies take a 
comprehensive, intermodal approach to infrastructure planning and 
development? In particular, when it comes to freight, how do we bring 
the private sector into the public planning process?
    Response. GAO has not reviewed the freight planning process. We are 
therefore unable to proffer suggestions on how the process can be 
improved. At this time, we are planning to undertake work that would 
allow us to more fully address this question.
    We can provide the following observations based on our recent work 
on surface and maritime transportation mobility and expert panels we 
convened to discuss major transportation issues:
      Planning with a regional focus. Experts participating in 
a conference we sponsored on June 14, 2001 to discuss major 
transportation issues raised concerns about integrating freight needs 
into transportation planning and investment decisions.\15\ Conference 
speakers supported more planning with a regional focus-with 
participation by Federal, State, and local entities-to make better use 
of Federal transportation assistance.
---------------------------------------------------------------------------
     \15\U.S. General Accounting Office, Physical Infrastructure: 
Crosscutting Issues Planning Conference Report, GAO-02-139, 
(Washington, DC: Oct. 1, 2001).
---------------------------------------------------------------------------
      Modal limitations. Experts participating in a conference 
we sponsored on January 26, 1999 noted that freight stakeholders must 
become full partners in making transportation policy so that surface 
transportation investments are linked to freight needs.\16\ 
Facilitating freight users' and suppliers' involvement in 
transportation policy will enhance the nation's ability to move freight 
seamlessly across different transportation systems. In addition, 
manufacturers and freight companies regard the Department of 
Transportation's ``stovepipe'' organization as a major obstacle to 
working with the Federal Government. They find it difficult to discuss 
intermodal projects or emerging issues with a single DOT agency that is 
responsible only for highway or maritime issues.
---------------------------------------------------------------------------
     \16\U.S. General Accounting Office, Surface Transportation: Moving 
into the 21st Century, GAO/RCED-99-176, (Washington, DC: May 1, 1999).
---------------------------------------------------------------------------
      Knowledge/expertise. The January 26, 1999 conference 
participants also noted that the public sector must better understand 
the needs and problems of moving freight nationally and regionally. 
State transportation departments and MPOs, however, may not have 
sufficient expertise, or in some cases, authority to effectively 
identify and implement mobility improvements across modes or types of 
travel.\17\
---------------------------------------------------------------------------
     \17\U.S. General Accounting Office, Surface and Maritime 
Transportation: Developing Strategies for Enhancing Mobility: A 
National Challenge, GAO-02-775 (Washington, DC: Aug. 30, 2002).
---------------------------------------------------------------------------
      Research. The January 26, 1999 participants noted that 
Federal policymakers should renew their commitment to funding 
nationally important research. While TEA-21 substantially increased 
States' research funding, it considerably reduced funds for Federal 
research. State research programs focus on short-term practical 
problems whereas Federal research focuses on long-term and high-risk 
research, intermodal problems, and transportation policies.
      Best practices. In our recently issued mobility report, 
experts offered the Alameda Corridor as an example of successful 
cooperation and coordination of freight needs. The Alameda Corridor is 
designed to improve cargo movement from California's ports of Los 
Angeles and Long Beach to the rest of the country. Its planning, 
financing, and building required cooperation among private railroads, 
the local port authorities, the cities of Los Angeles and Long Beach, 
community groups along the corridor, the State of California, and the 
Federal Government.

    Question 6 (from Senator Jeffords). I have a hypothesis that if 
more was done to provide strategic investment in rail infrastructure, 
we could reduce congestion on our highways and improve the quality air 
we breathe. For instance, in Chicago, it is my understanding that a 
majority of the truck traffic in the metro area is a result of cargo 
being off loaded from one rail line and being shipped to another part 
of town to be loaded on another train to continue its journey. If 
funding were made available for improving rail-to-rail connections in 
the Chicago area, what kind of effect would consolidating rail yards 
and rail lines in the Chicago area have on truck traffic on the highway 
system?
    Response. GAO has not conducted work on rail-to-rail connections in 
the Chicago area and therefore, we are unable to comment on the effect 
consolidating rail yards and lines in the Chicago area would have on 
truck traffic.
                               __________
    Statement of Katie Dusenberry, Chairman, Arizona Department of 
                          Transportation Board
    Good morning Mr. Chairman and members of the committee. Thank you 
for the opportunity to present to you today the views of the Arizona 
Department of Transportation Board regarding the Hoover Dam Bypass 
Project and the impact on commercial trucking.
    For the record, my name is Katie Dusenberry, and I am the Chairman 
of the Arizona Department of Transportation Board. The Board is 
responsible for a variety of transportation activities prescribed by 
Arizona statute.
Introduction
    Over the past 10 years, there has been a significant growth in 
freight due to improvements in manufacturing processes and new 
technologies. This growth, while important for economic vitality, 
stresses our trade gateways and corridors. U.S. DOT has estimated that 
freight traffic will double over the next 20 years making the condition 
of these trade corridors even more critical. Our economic growth and 
ability to maintain a competitive edge in international markets depends 
on the condition and capacity of these trade corridors to accommodate 
the ever increasing freight traffic.
History
    U.S. Highway 93 is part of the major transportation network in the 
western United States and is the primary, direct north-south connecting 
highway linking two major metropolitan cities, Phoenix, Arizona and Las 
Vegas, Nevada, in two of the fastest growing States in the United 
States. U.S. 93 is one of the highway segments that makes up the route 
from Mexico City, Mexico to Edmonton, Canada known as the CANAMEX 
Corridor. This corridor was formally designated as a high-priority 
trade corridor by the National Highway System Designation Act of 1995. 
The Corridor runs from Mexico City to I-19 in Nogales to Tucson, I-10 
from Tucson to Phoenix, US 93 in the vicinity of Phoenix to the Nevada 
Border, US 93 from Arizona to Las Vegas and I-15 from Las Vegas through 
Montana to Edmonton, Canada.
    The CANAMEX Corridor represents an opportunity for economic 
development that facilitates trade and encourages economic growth 
throughout the region. The interest in developing this Corridor is to 
facilitate transportation distribution, commerce and tourism. A 
preliminary study of the potential positive economic impact if the 
CANAMEX Corridor is fully developed suggests over a 30 year period:

      Economic development (value added) of $1.2 billion;
      Economic efficiencies of $509 million;
      Approximately 1,900 new permanent jobs.

    These figures reflect completion of a number of projects within the 
Corridor including the Hoover Dam Bypass project.
    Prior to the terrorist attacks on 9/11/01, the direct route for all 
traffic, including commercial trucks, to reach either Arizona or Nevada 
was a road across the top of Hoover Dam consisting of two lanes of 
traffic, one in each direction. The approach from Arizona to the Hoover 
Dam consists of approximately 1.2 miles of roadway and from Nevada, 2.2 
miles of roadway. On the approach to Hoover Dam from both Arizona and 
Nevada, steep grades, hairpin turns, and inadequate sight distance are 
encountered by freight and passenger traffic reducing speeds to between 
8 to 18 MPH. Commercial trucks are often too large to pass each other 
on the extreme hairpin curves and must come to a complete stop. On both 
the Arizona and Nevada approaches, the grades are greater than 6 
percent. The existing 6.3 miles north and south of the Dam requires an 
average of 16.5 minutes to cross due to the nature of the road and the 
traffic on the Dam itself. To remedy the inadequacy of this route, the 
Federal Highway Administration (FHWA) in cooperation with the States of 
Arizona and Nevada and other affected Federal and State agencies has 
taken a leadership role in developing plans to construct a new bridge 
to cross the Colorado River in the vicinity of Hoover Dam. This bridge 
is entirely on Federal property and therefore should be largely a 
Federal financial responsibility.
    Since 9/11/01, the road across the Hoover Dam has been closed to 
commercial trucking and over 2,100 trucks per day are now detoured to 
other highways. Commercial truck traffic must now route through 
Laughlin, an additional 23 miles or I-40 an additional 70 miles, adding 
dozens of travel miles to each trip. This creates a negative financial 
impact of $30 million per year, based on only the additional mileage, 
which is ultimately passed on to the consumer. The detours currently 
being used by commercial trucks are not designed to handle this traffic 
volume and weight. The Hoover Dam crossing is the only major highway in 
the Nation with ongoing restrictions as a result of the terrorist 
attack.
Purpose of Project
    The purpose of the project, a joint effort among Arizona, Nevada 
and the Federal Government is to significantly reduce traffic on the 
road atop the Hoover Dam and will accomplish the following objectives:

      Remove a major bottleneck to interstate and international 
commerce and travel by reducing traffic congestion and accidents in 
this segment of the major commercial route.
      Separate tourist and commercial traffic to reduce 
congestion.
      Improve efficiency and reduce cost to the shippers of 
freight by reducing travel time.
      Replace an inadequate federally owned highway river 
crossing, first constructed over 60 years ago, with a new bridge that 
meets current roadway design criteria and improves both vehicle and 
truck capacity on U.S. 93 in the area of the Dam.
      Minimize the potential for pedestrian--vehicle accidents 
on the Dam crest and on the Nevada and Arizona approaches.
      Protect the Hoover Dam, visitors, employees, equipment, 
and power generation capabilities and Colorado River waters while 
enhancing the visitors' experience at Hoover Dam.

    The FHWA recommended the Sugarloaf alignment as the best location 
to construct the bridge. This location is approximately 1,500 feet 
downstream from Hoover Dam. This site requires constructing 2.2 miles 
of highway approach in Nevada and approximately 1.2 miles of highway 
approach in Arizona and a 2,000-foot long bridge.
Travel Times
    The current travel time across the top of the Hoover Dam averages 
16.5 minutes up to 60 minutes during peak hours. The proposed bypass 
bridge and approaches would reduce the travel time to only 6 minutes.
    When accidents occur on and near the Dam, significant traffic 
backups of over ten to 15 miles result. Since there are no alternative 
routes to which traffic can shift, this results in delays ranging from 
two to 5 hours for motorists. There have been incidents of up to 18 
hours delay.
Accident Statistics
    The number of tourists traveling to the Lake Mead Recreational Area 
and Hoover Dam was 1.03 million in 1997 and was projected to increase 
to 1.6 million in 1999. Since 1964 more than 500 accidents have 
occurred in the 3.4 mile stretch of highway on or near the Hoover Dam. 
Commercial trucks were involved in 96 of these accidents. Forty-three 
accidents between 1985 and 1991 involved one or more personal injuries, 
including two fatalities. In each accident, the cause was partially 
attributable to sharp curves, narrow highway widths, insufficient 
shoulder widths, poor sight distance and slow travel speeds. Especially 
in regards to freight traffic, the previous configuration of putting 
trucks across the Hoover Dam with two-lane traffic, steep approaches, 
sharp curves at the entrances and heavy pedestrian traffic, the Hoover 
Dam was a serious accident location.
    One mile of the Hoover Dam road reflects a much higher accident 
rate than the three-mile adjoining segments. The half-mile segments of 
US 93 approaching the Dam have an accident rate of 3.97 per million 
vehicle miles traveled. That rate is over three times the Nevada 
average of 1.15 per million vehicle miles traveled for rural principal 
arterial routes.
    Traffic on the road across the Hoover Dam was 5,500 vehicles per 
day in 1993 and currently is 11,500 vehicles per day. 18 percent to 20 
percent was truck traffic prior to 9/11/01. Future traffic is projected 
to be 21,000 in 2017 and 26,000 in 2027. As the average annual daily 
traffic across the Dam continues to increase, the number of accidents 
is increasing accordingly as congestion on the Dam also increases.
Security
    Since Hoover Dam holds the waters of Lake Mead, the largest water 
reservoir in the Nation, the U.S. Department of Interior has identified 
the Hoover Dam Bypass Project as its No. 1 national security priority. 
The massive Dam provides vital flood control for more than a quarter 
million people living in the Colorado River region and generates four 
billion kilowatt-hours of energy for 1.3 million people in the tri-
State regions of California, Arizona and Nevada.
Project Status
      Hoover Dam Bypass Project received its record of decision 
for project approval in April 2001. The Environmental Impact Statement 
has been finalized.
      This project is the No. 1 priority of the States of 
Arizona and Nevada. Only an additional $108 million is needed to ensure 
full funding for this project.
      The design is over 95 percent complete for the Arizona 
approach. Nevada's approach is 60 percent complete. The bridge design 
is 30 percent complete.

                                 Funding
------------------------------------------------------------------------
                                                         Current
------------------------------------------------------------------------
Nevada & Arizona State funds...................              $40,000,000
Federal Funds previously committed.............              $86,000,000
Additional Federal Funding needed..............             $108,000,000
    Total Project Budget.......................             $234,000,000
------------------------------------------------------------------------

    We are requesting $108 million to complete the Hoover Dam Bypass 
Project. Because there are no complex interchanges and only one small 
area of roadway on either side of the bridge to construct, we are 
confident that the bridge as designed will be completed within the 
entire project budget of $234 million dollars. The bridge's design 
ensures that it will accommodate anticipated traffic volumes including 
increased freight that will be generated due to the north-south trade 
from Mexico to Canada well into the future.
GARVEE Bonds/Innovative Financing
    Because of the great need to construct the Hoover Dam Bypass, Grant 
Anticipation Revenue Vehicles (GARVEEs) are being considered as a 
mechanism to provide immediate funds to complete the construction of 
the Hoover Dam Bypass through the issuing of bonds. Even though bond 
financing incurs interest and other debt-related costs, delaying the 
project would create greater costs such as inflation, lost driver time, 
freight delays, and wasted fuel. Both Arizona and Nevada are interested 
in pursuing this as an option to allow construction to begin 
immediately, while allowing Federal funding to occur over time. This 
allows for completion of the Hoover Dam Bypass by mid 2007 and thereby, 
providing a safe and efficient route for commercial trucking.
Conclusion
    Mr. Chairman and members of the committee, we urge you to consider 
providing an additional $108 million dollars to fully fund the Hoover 
Dam Bypass. The bypass project is vital to the efficient movement of 
commercial freight and will substantially reduce the additional miles 
and travel times that commercial trucks are currently experiencing. 
This project is also a critical part of the development of the CANAMEX 
Corridor which runs from Mexico to Canada and will provide economic 
growth and safer transportation by increasing commercial freight, 
commerce and tourism.

                               __________
Statement of Michael W. Wickham, Chairman and CEO, Roadway Corporation, 
              for the American Trucking Associations, Inc.
    Chairmen Reid and Breaux, Senators Inhofe and Smith, members of the 
Subcommittees, thank you for the opportunity to express the trucking 
industry's perspectives regarding freight transportation. I am Michael 
Wickham, Chairman of the Board and Chief Executive Officer of Roadway 
Corporation. Roadway is headquartered in Akron, OH. The company was 
founded in 1930, and today we are one of the Nation's leading providers 
of less-than-truckload (LTL) freight transportation services. Roadway 
provides seamless service between all 50 States, Canada, Mexico, and 
Puerto Rico, with international freight services for 140 countries. We 
have subsidiaries in Canada and Mexico, and we operate 379 terminals 
throughout North America. Roadway employs more than 26,000 people. 
Roadway's Mexican and Canadian operations connect our neighbors with 96 
percent of the U.S. population through seamless cross-border operations 
and services. In addition, Roadway ships over three billion pounds of 
truckload freight annually. Through Roadway Air, our company provides 
time-definite air freight delivery services.
    I am appearing before the Subcommittees today on behalf of the 
American Trucking Associations, Inc. (ATA) and Roadway Corporation. ATA 
is the national trade association of the trucking industry. We are a 
federation of affiliated State trucking associations, conferences, and 
other organizations that together include more than 37,000 motor-
carrier members, representing every type and class of motor carrier in 
the country. We represent an industry that employs nearly ten million 
people, providing one out of every 14 civilian jobs. While we are a 
highly diverse industry, we all agree that a good highway system is 
crucial to our Nation's economy, to the safety of all drivers, and to 
our bottom line. This includes the more than 3 million truck drivers 
who travel over 400 billion miles per year to deliver to Americans 86 
percent of their transported food, clothing, finished products, raw 
materials, and other items.\1\
---------------------------------------------------------------------------
     \1\87.3 percent by revenue. American Trucking Associations, U.S. 
Freight Transportation Forecast to 2013, 2002.
---------------------------------------------------------------------------
    American industrial and commercial enterprises are able to compete 
more effectively in the global marketplace due to the benefits of safe 
and efficient trucking. Truck transportation is the most flexible mode 
for freight shipment, providing door-to-door service to every city, 
manufacturing plant, warehouse, retail store and home in the country. 
For many people and businesses located in towns and cities across the 
United States, trucking services are the only available means to ship 
goods. Trucks are the only providers of goods to 75 percent of American 
communities. Five percent of the Nation's GDP is created by truck 
transportation. Actions that affect the trucking industry's ability to 
move its annual 8.9 billion tons of freight have significant 
consequences for the ability of every American to do their job well and 
to enjoy a high quality of life.
    building on success: making our nation's highways safer for all 
                               motorists
    Having spent my entire career in the trucking industry, I am most 
proud of the fact that we continue to improve our safety record, year 
after year, mile after mile. Safety must be paramount in our 
consideration of future reauthorization programs and policies. ATA 
takes safety concerns very seriously. Our industry has strongly 
promoted many safety improvements that have made trucking safer today 
than it has ever been in the past. Between 1985 and 2000, the fatal 
accident rate involving trucks has fallen 44 percent. Furthermore, 
research by the AAA Foundation, and a study done by the University of 
Michigan at the request of the USDOT, found that in about three-
quarters of accidents involving a passenger vehicle and a truck, the 
actions of the truck driver were not a factor leading to the 
accident.\2\In fact, today's truck driver is the safest driver--
passenger or commercial--in our Nation's recorded history.
---------------------------------------------------------------------------
     \2\``Driver-Related Factors in Crashes Between Large Trucks and 
Passenger Vehicles,'' Federal Highway Administration, April 1999; 
``Identifying Unsafe Driver Actions that Lead to Fatal Car-Truck 
Crashes,'' AAA Foundation, April 2002.
---------------------------------------------------------------------------
    Even though the trucking industry is taking proactive steps to 
improve our safety record, ATA is very concerned about America's 
overall highway safety experience. Each year, more than 40,000 people 
lose their lives as a result of a traffic accident. This is an 
unacceptable loss of life and an economic tragedy. As Secretary of 
Transportation Norman Mineta announced earlier this year, the economic 
impact of motor vehicle crashes is over $230 billion per year. This 
represents an annual economic loss of $820 for every American. 
Investing additional resources in projects and programs that improve 
highway safety produces more than human benefits; it has positive 
economic consequences as well. However, we should also spend our money 
wisely, directing precious resources toward those activities that will 
produce the greatest safety benefit, based on sound scientific 
evaluation of the causes of crashes and appropriate remedies.
    It is clear that truck safety has improved over the last 20 years. 
An interesting question, however, is ``What has caused the 
improvement?'' This is a tough question to answer for both industry and 
government officials. It's fairly clear that some programs that have 
been implemented in the last 10 to 20 years have contributed to the 
overall positive picture. The industry-supported Federal-State truck 
safety inspection grant program (known as the Motor Carrier Safety 
Assistance Program or MCSAP) has had an impact by improving trucks' 
condition; the Commercial Driver's License (CDL) program has 
contributed by raising the bar for driver entry into the industry; and 
the implementation of voluntary drug testing by the industry and a 
mandatory Federal drug and alcohol testing program have also 
contributed in a positive way. It is very likely that the increase in 
seat belt use by truck drivers and other motorists have also had a 
positive impact. Many other industry and government initiatives are 
likely to have had some benefit as well. The point here, however, is 
that we still need to have a better understanding of what has worked 
and why. Additionally, we still do not understand thoroughly how and 
why truck crashes occur.
    Section 224 of the Motor Carrier Safety Improvement Act of 1999 
(MCSIA, P.L. 106-159) required the Secretary of Transportation to 
conduct a comprehensive study to determine the causes of, and 
contributing factors to, crashes involving large trucks and buses. The 
primary purpose of this study requirement was to have a comprehensive 
analysis and report that would yield information to help FMCSA and the 
States identify activities and safety measures that would likely lead 
to significant reductions in the frequency, severity and rate per mile 
traveled of crashes involving large trucks and buses. ATA fully 
supported this study concept during the truck safety debate in 1999 
that resulted in the passage of MCSIA.
    FMCSA initiated this study in 2000 with the assistance of the 
National Highway Traffic Safety Administration (NHTSA), and the State 
agencies involved in commercial vehicle safety efforts. The study will 
not be complete until the end of 2003 at the earliest. However, a FMCSA 
official recently confirmed that preliminary information suggests that 
driver actions--both passenger and commercial--appear to be a more 
significant factor in accident causation than previously thought, and 
that enforcement resources may have to be redirected to reflect these 
findings.\3\
---------------------------------------------------------------------------
     \3\``FMCSA Crash Data Analyst Says Study May Alter Inspections,'' 
Transport Topics, Aug. 26, 2002, p. 2.
---------------------------------------------------------------------------
    Other studies and data confirm these preliminary findings.\4\ 
Congress and the U.S. DOT have traditionally taken different approaches 
to improving traffic safety versus truck safety. NHTSA's traffic safety 
programs have included education and outreach, traffic enforcement 
programs aimed at changing driver behavior, and crash data analysis. 
FMCSA's truck safety programs, on the other hand, have focused on 
increasing the number of regulatory requirements on drivers and 
carriers, enforced through on-road safety inspections and facility 
compliance audits. Since so much of truck safety is rooted in overall 
traffic safety, Congress should seriously consider much more of a 
traffic safety approach to improving truck safety.
---------------------------------------------------------------------------
     \4\``Driver-Related Factors in Crashes Between Large Trucks and 
Passenger Vehicles,'' Federal Highway Administration, April 1999; 
``Identifying Unsafe Driver Actions that Lead to Fatal Car-Truck 
Crashes,'' AAA Foundation, April 2002.
---------------------------------------------------------------------------
    Earlier this year, ATA's President and CEO, William Canary, 
challenged our State and Federal partners to seriously address one of 
the most pervasive and dangerous violations of the law that drivers 
encounter every day--speeding. FMCSA reports that speeding (exceeding 
the speed limit or driving too fast for conditions) was a contributing 
factor in 22 percent of fatal crashes involving a truck in 2000. Since 
the majority of fatal truck crashes are multi-vehicle crashes involving 
one or more passenger vehicles, this 22 percent figure includes 
speeding on the part of the truck driver, or speeding on the part of 
the other driver, or speeding by both parties. Also, according to a 
recent FMCSA study, driving at an unsafe speed was the second most 
frequent unsafe driving act committed by passenger vehicles in the 
vicinity of large trucks. Following too closely was the most frequently 
cited unsafe driving act by motorists.
    Additionally, NHTSA reports that speeding was a contributing factor 
in 29 percent of all fatal crashes in 2000. This means that more than 
12,000 people lost their lives in 2000 in part due to speed-related 
crashes. This is simply unacceptable. The time has come to combat 
excessive speeding. There are four words that every motorist and every 
commercial vehicle driver needs to remember when they buckle up and 
take the wheel of their vehicle: Safe Speeds Save Lives!
    The Section 402 Highway Safety Grant Program administered by the 
NHTSA supports many outreach and enforcement programs, including the 
priority programs to encourage the proper use of occupant protection 
devices and reduce drug and alcohol impaired driving. While these 
programs clearly deserve a high priority for NHTSA, ATA is concerned 
that strong, visible speed enforcement may not be getting the focus, 
attention and funding it deserves by NHTSA.
    Additionally, the Motor Carrier Safety Assistance Program (MCSAP) 
administered by FMCSA focuses on priority truck and bus safety 
initiatives that, for the most part, do not address speeding truck and 
bus drivers, or other motorists. The MCSAP program, a generally 
successful truck and bus safety inspection program, is simply not 
putting enough emphasis on traffic enforcement activities. Strong speed 
enforcement aimed at commercial vehicle drivers, as well as other 
motorists with which commercial drivers share the road, needs to take 
on a much greater role in the MCSAP program. In fact, there is 
currently an artificial constraint that keeps the amount of speed 
enforcement activity in the MCSAP program small. FMCSA's regulations 
require that all speed enforcement stops (as well as all other types of 
traffic enforcement stops) of trucks include an appropriate North 
American Standard Inspection of the truck or the driver, or both, for 
the activity to be eligible for MCSAP funding. This inspection 
requirement, found at 49 C.F.R. 350.111, is unnecessary and 
unwarranted. Additionally, since speeding and other unsafe driving 
behaviors of non-commercial drivers play an even greater role in truck-
involved crashes than do the actions of the commercial driver, the 
MCSAP program must include traffic enforcement efforts aimed at unsafe 
motorist behavior.
    ATA recommends that Congress authorize additional funding for the 
Section 402 Highway Safety Grant Program administered by NHTSA, and the 
MCSAP truck safety grant program administered by FMCSA, specifically 
for increased traffic and speed enforcement efforts in the upcoming 
highway reauthorization. ATA further recommends that Congress make it 
clear in legislative language that MCSAP funding may be used for State 
speed enforcement efforts aimed at both commercial and non-commercial 
drivers, and that speed enforcement activities aimed at commercial 
drivers do not have to be linked to a North American Standard 
Inspection. Additional funding, additional emphasis, and greater 
Federal leadership is needed on this issue to reduce the speed of all 
drivers on our highways and to save lives.
    ATA is also a firm believer in the life-saving benefits of seat 
belts. ATA recommends that Congress continue to support and fully fund 
the occupant protection programs of NHTSA, including the ongoing 'Click 
It or Ticket' grant program.
      improving the safety and efficiency of intermodal equipment
    Mr. Chairman, while we try to cooperate with our intermodal 
partners in many areas, and will do so during this reauthorization 
cycle, there is one area on which we disagree, and I am afraid that the 
footdragging by Federal agencies and by many in the rail and ocean 
carrier industries to work with us to resolve the ``roadability'' issue 
is having serious safety and economic impacts. Since the advent of 
containerized shipping in the 1970's, a serious safety loophole has 
crept into the Federal Motor Carrier Safety Regulations (F.M.C.S.R.s).
    As containerized intermodal freight has evolved over the decades, 
the Federal safety regulations have not kept pace. As a result, 750,000 
intermodal chassis are operating in a safety loophole. These frame-like 
trailers are used exclusively to haul intermodal containers, and are 
interchanged between steamship lines, railroads, and motor carriers. 
The chassis are also classified as commercial motor vehicles by the 
USDOT. However, they evade USDOT safety oversight.
    The F.M.C.S.R.s fundamentally assume that motor carriers have daily 
management control over all commercial motor vehicles they take onto 
public roadways. Based on that assumption, the regulations read, 
``Every motor carrier shall systematically inspect, repair, and 
maintain . . . all motor vehicles subject to its control.''\5\
---------------------------------------------------------------------------
     \5\49 CFR Part 396.3. Inspection, repair, and maintenance
---------------------------------------------------------------------------
    USDOT's interpretation of systematic maintenance is,``. . . a 
regular or scheduled program to keep vehicles in a safe operating 
condition.''\6\It explains that the agency does not specify maintenance 
intervals, leaving that decision to motor carriers, based on fleet and 
vehicle considerations. So how does USDOT know if a motor carrier is 
failing to ``keep vehicles in a safe operating condition?'' When 
roadside safety inspections, typically conducted by State police, drive 
a motor carrier's SAFESTAT (violation) numbers above a certain 
threshold, the agency and State police send an envoy to the motor 
carrier's place of business to audit the maintenance and employee 
training records, inspect the carrier's equipment, etc.
---------------------------------------------------------------------------
     \6\Regulatory Guidance to the Federal Motor Carrier Safety 
Regulations, at 49 CFR 396.3; emphasis added.
---------------------------------------------------------------------------
    While railroads and foreign-owned steamship lines (collectively 
called ``providers'') own or lease the intermodal chassis,\7\ and 
control its daily disposition, they claim not to be motor carriers, 
thus not technically responsible for the condition of their equipment 
under Federal safety regulations. However, they do affix the annual 
inspection sticker on their equipment, which constitutes an act of 
certification that the equipment was inspected in detail at least once 
a year. Providers conduct the annual inspection pursuant to the 
F.M.C.S.R.s, but many do not conduct systematic maintenance on the same 
equipment, which is likewise mandated by the F.M.C.S.R.s. In fact, 
providers are generally unaware of the existence of the Federal 
systematic maintenance requirement. This explains the poor condition of 
intermodal chassis and points to USDOT's failure to close their own 
regulatory loophole to hold the controlling party accountable for the 
safety compliance of their own chassis.
---------------------------------------------------------------------------
     \7\While this is the general practice, some ports have different 
arrangements.
---------------------------------------------------------------------------
    SAFESTAT is the USDOT's computer analysis of their data base 
containing motor-carriers' accumulated violations. They use it to judge 
how safely a motor carrier maintains the commercial vehicles under its 
control. By contrast, it is impossible to assess providers' adequacy in 
performing systematic maintenance because USDOT resists including them 
in the SAFESTAT program. Ironically, USDOT says the reason it has not 
moved forward to close the intermodal equipment safety loophole is 
because they do not have the data to indicate a problem with the 
providers' chassis!
    A new study\8\ conducted jointly by the Federal Motor Carrier 
Safety Administration and the University of Maryland at College Park 
provides support to ATA's position on the Roadability issue. This study 
looked at 11 sectors of the trucking industry, one of which was 
intermodal operations. Researchers used nine safety performance 
measurements and other data managed by the USDOT to analyze the safety 
performance of each sector. One significant finding is that intermodal 
trucking operations were found to be average or better-than-average in 
six of the nine measurements. However, in the two measurements relating 
to vehicle condition, and the one relating to accidents, the intermodal 
sector ranked poorly. Specifically, among the 11 sectors, intermodal 
operations ranked last for vehicle safety condition, second-to-last 
(tenth) for accumulating vehicle out-of-service violations, and ninth 
for reportable accidents. Thus, the latest research findings from FMCSA 
confirm what intermodal trucking executives have been saying for years 
( that the equipment controlled by steamship lines and railroads, and 
subsequently provided to motor carriers for brief periods of time, are 
not maintained by those controlling parties as required by the Federal 
Motor Carrier Safety Regulations.
---------------------------------------------------------------------------
     \8\Motor-Carrier Industry Profile Study Evaluating Safety 
Performance by Motor Carrier Industry Segment: by Thomas P. Keane of 
the Federal Motor Carrier Safety Administration (USDOT); Dr. Thomas 
Corsi of the University of Maryland, College Park, and Kristine N. 
Braaten of Econometrics, inc, April 1, 2002. This study was published 
in the Proceedings of the International Truck and Bus Safety Research 
and Policy Symposium on April 3-5, 2002 in Knoxville, TN, an event 
hosted by the Center for Transportation Research at the University of 
Tennessee.
---------------------------------------------------------------------------
    In summarizing the roadability issue, providers claim they are not 
motor carriers, thus they are not responsible for maintenance of their 
chassis. Providers say the motor carriers are responsible. The motor 
carriers point out that they do not control the providers' equipment; 
they neither own it, lease it, control its maintenance treatment, 
conduct annual or periodic inspections on it, nor do they control its 
daily disposition. The regulations reasonably require truckers to 
maintain only the equipment they actually control. In the meantime, 
USDOT has acknowledged that it has jurisdiction over the issue, but has 
failed to place safety responsibility. That places the 750,000 chassis 
squarely in a safety loophole, which the USDOT has yet to close.
    Enforcement needs to be redirected from the motor carriers, who are 
powerless to include interchanged intermodal equipment in their 
periodic maintenance programs, and placed on the parties who decide 
every day whether to repair a chassis, or hand it off to a motor 
carrier without the benefit of this USDOT-mandated maintenance benefit. 
Therefore, ATA is recommending that Congress pass legislation which 
forces the USDOT to equitably enforce laws designed to ensure the safe 
condition of all regulated equipment, including intermodal chassis.
    the national highway system: the backbone of america's freight 
                         transportation system
    Trucks move 67 percent of freight tonnage, 86 percent measured by 
value.\9\ This is freight that moves by truck alone; it does not touch 
another mode. Truck freight is a vital component of America's economy. 
Trucks are the only providers of goods to 75 percent of American 
communities. For every $20 spent on freight transportation, $17 will 
accrue to trucks.\10\ This pre-eminence is likely to grow. According to 
the Federal Highway Administration (FHWA) the demand for freight 
transportation services will increase by 87 percent by 2020.\11\ The 
trucking industry will be asked to transport nearly 2.7 billion more 
tons of freight in 2014 than we carry today.\12\ This increase of 2.7 
billion tons alone is more than 500 million tons greater than the total 
volume of freight that the railroads will carry in 2014 (See Appendix 
A). To accommodate this higher demand level, the number of trucks will 
increase over the next 12 years by 31 percent, adding 1.9 million more 
trucks to the road, over 157,000 trucks each year. The largest 
increase, 58 percent, will be among smaller trucks, which tend to 
operate mostly in urban areas and are not subject to competition from 
other modes. Overall, truck vehicle miles traveled (VMT) will increase 
by 36 percent, or 60 billion miles, by 2013.\13\ Thus, more trucks will 
be traveling more miles on a highway system that will see very little 
capacity expansion over the next dozen years.
---------------------------------------------------------------------------
     \9\American Trucking Associations, U.S. Freight Transportation 
Forecast to 2013, 2001.
     \10\Ibid.
     \11\Federal Highway Administration, National Freight Trends/
Issues, System Flows, and Policy Implications, 2000.
     \12\Based on unpublished data from ATA's Economics and Statistics 
Group.
     \13\American Trucking Associations, U.S. Freight Transportation 
Forecast to 2013, 2001.
---------------------------------------------------------------------------
    This is not a sustainable trend, and it should not be allowed to 
continue. While the growth in truck demand is inevitable, limiting 
highway capacity growth is not. Congress has the ability to ensure that 
the growth in highway capacity matches the growth in vehicle travel.
    The intermodal movement of freight can play an important role and 
should be encouraged. Roadway relies heavily on the railroads for a 
large portion of our long-distance movements. Last year, one-quarter of 
my company's delivery miles were on a train. This saved Roadway nearly 
24,000,000 gallons in fuel use. However, we believe that we have 
reached the limit of our railroad utilization potential.
    The ability of rail intermodal transportation to slow the growth of 
truck traffic is limited by market forces beyond the control of 
Congress, the States and, to some extent, the modes themselves. Today, 
just 1.2 percent of freight moves in a rail intermodal shipment.\14\ 
Despite anticipated growth in this sector that will exceed trucking 
growth, by 2014 rail intermodal shipments will capture just 1.5 percent 
of the freight market, while trucking's market share, as measured by 
tonnage, will expand to 69 percent.\15\
---------------------------------------------------------------------------
     \14\Ibid.
     \15\Based on unpublished data from ATA's Economics and Statistics 
Group.
---------------------------------------------------------------------------
    It is not constructive to assume that the business logistics trends 
of the past half-century which have made trucks the dominant mover of 
freight will somehow reverse themselves, and that our Nation's reliance 
on trucks will subside. Congress should focus its attention and 
resources where they are needed most and will pay the greatest 
dividends for our country--on improving the efficiency of the highway 
system and the productivity of the trucking industry. Although the past 
two reauthorization acts developed and promoted by these Subcommittees 
have been instrumental in revitalizing Federal surface transportation 
policy, there is still a distance to go, with some longstanding 
obstacles and some new challenges to face.
    One of these challenges is basic highway infrastructure. At a time 
when many stakeholders, including those appearing at this hearing, have 
legitimate concerns about the future of intermodal connectivity, 
alternative transportation, and transportation enhancements, there 
often is a loss of focus on the original purpose of Federal involvement 
in surface transportation: namely, to help the States build and 
maintain a national system of highways. As the Subcommittees consider 
their reauthorization proposals, it is imperative to review whether 
this goal is still being met. According to the Department of 
Transportation's 1999 Conditions and Performance report, even with the 
high levels of funding authorized by the Transportation Equity Act for 
the 21st Century (TEA-21), there is still a shortfall in Federal 
funding of over $25 billion each year just to maintain current 
conditions on our highways and bridges. While it is inconceivable under 
current economic conditions to consider completely eliminating the 
shortfall during this upcoming reauthorization cycle, serious thought 
must be given to reducing the shortfall.
    As America's economy becomes even more dependent on trucks, so too 
will the economy be affected by the impacts of congestion on the 
trucking industry's ability to meet shippers' needs. While 
manufacturers and distributors demand ever more speed and reliability 
from the trucking industry, our ability to meet those demands are being 
challenged by growing highway congestion.
    For businesses whose livelihoods depend on road transportation, 
these costs are particularly heavy. No industry is as negatively 
affected by congestion as trucking. It used to be possible for truckers 
to schedule their deliveries through congested urban areas at off-peak 
times. However, increasingly, such times do not exist. Current 
congestion levels are now compelling revisions to the language of 
congestion itself. It is no longer proper to discuss the ``rush hour,'' 
when it lasts for 3 hours, twice a day. On the Interstate System, for 
example, more than half of peak-hour travel on urban Interstates occurs 
under congested conditions.\16\ Under such circumstances, it is 
becoming almost nonsensical to employ terms such as ``peak'' and ``non-
peak.'' In years past, it was possible to schedule deliveries outside 
of the rush hour window; increasingly, that is no longer possible.
---------------------------------------------------------------------------
     \16\Federal Highway Administration and Federal Transit 
Administration, 1999 Status of the Nation's Highways, Bridges, and 
Transit: Conditions and Performance, May 2, 2000.
---------------------------------------------------------------------------
    Our highway capacity was perhaps adequate for our Nation's economic 
and social functioning a generation ago, but today it is increasingly 
stressed. Over the past 30 years, the nation's population has risen by 
32 percent, truck registrations have risen by 45 percent, truck 
vehicle-miles traveled (VMT) has risen by 145 percent, but road mileage 
has only increased by 6 percent.\17\ This has led to unprecedented 
levels of congestion across the country.
---------------------------------------------------------------------------
     \17\Federal Highway Administration, Highway Statistics, 1999.
---------------------------------------------------------------------------
    Through new innovations such as just-in-time delivery, the trucking 
industry has played a vital role in improving U.S. productivity. This 
would have been difficult, if not impossible, to achieve without an 
efficient network of good roads that connect markets, centers of 
industry, and multi-modal transportation facilities. These productivity 
improvements let U.S. industry sell more goods and services at lower 
prices, both at home and abroad. As a result, more people can be 
employed at higher wages. Since salary increases are firmly tied to the 
increase in the amount of goods and services each worker produces, 
living standards are improved. In addition, these real wage increases 
result in elevated tax revenues. However, if congestion cannot be 
effectively managed, it will be difficult for industries to meet these 
foreign and domestic challenges. The resulting productivity losses will 
take a severe human toll as stiff competition from abroad wipes out 
existing jobs and reduces the ability of our economy to create new jobs 
for a rapidly expanding population.
    The National Highway System (NHS), which carries 75 percent of the 
Nation's truck traffic, is the backbone of the trucking industry. Yet 
it is also critical to the efficient movement of rail, waterborne and 
air freight. No matter how efficient these other modes become on an 
individual basis, their speed and reliability will ultimately be 
limited by the efficiency of the trucks that they rely on for part of 
their intermodal movements.
    Unfortunately, the performance of the NHS has deteriorated to the 
point where nearly half of urban Interstate miles are congested during 
peak periods. Forty percent of travel on urban NHS routes takes place 
under such congested conditions that even a minor incident can cause 
severe traffic flow disruptions and extensive queuing.\18\ Average 
annual investment requirements just to maintain conditions on NHS 
highways and bridges were $26.8 billion in 1997.\19\ The actual capital 
outlay was $22.5 billion, a $4.3 billion, or 19.1 percent shortfall. 
This was despite the fact that the 160,000-mile NHS carries 40 percent 
of all traffic and 75 percent of truck traffic.\20\ Continued funding 
shortfalls will only harm road and bridge conditions, further 
exacerbating congestion levels. We urge Congress to reevaluate the 
current distribution of Federal highway funds during the next 
reauthorization period and consider whether a greater emphasis should 
be placed on the NHS.
---------------------------------------------------------------------------
     \18\Federal Highway Administration and Federal Transit 
Administration, 1999 Status of the Nation's Highways, Bridges, and 
Transit: Conditions and Performance, May 2, 2000.
     \19\Ibid.
     \20\Ibid.
---------------------------------------------------------------------------
    We are also extremely concerned about the condition of the Nation's 
bridges. According to a recent study by The Road Information Program 
(TRIP), approximately one in four of the country's major, heavily 
traveled bridges is deficient and in need of repair or replacement.\21\ 
However, some States have conditions that are much worse than the 
national average indicates. Thirty-four percent of bridges that are 20 
feet or longer in Louisiana are either structurally deficient or 
functionally obsolete. Oklahoma has the highest percentage of deficient 
bridges in the country. Approximately one-third of the State's bridges 
20 feet or longer are in need of immediate repair or replacement 
because of deterioration or because they no longer meet current design 
standards. However, the worst news is reserved for Oregon, where more 
than 350 bridges will have to be replaced in the near future and 
several major truck routes, including sections of the State's 
Interstate Highway System, have been load-posted. Additional Federal 
funds must be dedicated to the Bridge Program to prevent this type of 
situation from permeating throughout the country.
---------------------------------------------------------------------------
     \21\``Showing Their Age: The Nation's Bridges at 40.'' The Road 
Information Program, May 2002.
---------------------------------------------------------------------------
    Perhaps nowhere are the effects of many years of neglect and under-
funding of the NHS more pronounced than with the situation facing NHS 
intermodal connectors. In its report to Congress,\22\ the U.S. 
Department of Transportation found that connectors to ports were found 
to have twice the percentage of mileage with pavement deficiencies when 
compared to non-Interstate NHS routes. Furthermore, DOT found 
significant physical and geometric deficiencies that made it difficult 
for trucks to move safely and efficiently between the NHS and 
intermodal terminals. DOT identified 616 intermodal freight terminals 
in the United States. This includes 253 truck-and-port terminals, 203 
truck-and-rail terminals, and 99 truck-and-air terminals.
---------------------------------------------------------------------------
     \22\NHS Intermodal Freight Connectors, A Report to Congress; 
Prepared by the U.S. Department of Transportation, July 2000.
---------------------------------------------------------------------------
    It is useful to understand just how important these intermodal 
intersections are to the U.S. economy. Any product that is produced in 
the United States must access the global marketplace in the most cost-
efficient manner possible. The producer or manufacturer is the party 
that decides how to receive or ship freight. They make their decisions 
based on many factors, including just-in-time delivery factors, 
reliability of delivery times, security, freight value-to-weight 
ratios, and cost. Shippers also avail themselves of the inherent 
virtues of each mode of freight carriage. The only way they can take 
advantage of these efficiencies and values is if the interfacing 
mechanisms that join the different freight modes is adequate for the 
transfer. Many times, this is not the case.
    Improving intermodal connections also benefits communities, 
surrounding ports, railheads, and other Intermodal transfer facilities. 
In many situations, improving connectors will separate commercial 
vehicles from surface traffic that passes through congested 
neighborhoods. Often, these neighborhoods are clean-air non-attainment 
areas, and improved intermodal connectors would likely produce more 
efficient trucking operations, which will in turn result in fewer 
emissions.
    ATA encourages Congress to set aside funding for improvement of 
intermodal connectors and to make innovative financing options more 
available for addressing connector deficiencies. This should include 
lowering the threshold for TIFIA funding eligibility. We further urge 
Congress to make changes to the State and metropolitan planning 
processes to ensure that projects which benefit freight on a regional 
and national scale receive greater consideration. Project selection 
should be determined by the U.S. DOT in cooperation with the freight 
community, State DOTs and other stakeholders.
    It is important to keep in mind, however, that as critical as 
improving intermodal connections is, if the overall highway system is 
allowed to deteriorate, investing in connectors will be for nought. The 
2,000 miles of connector roads will only be as efficient as the 160,000 
miles of NHS highways that bind intermodal terminals and other points 
of loading and offloading together.
    Congress should also consider more creative ways of financing 
highway improvements and adding highway capacity. New innovative 
techniques would allow States to leverage existing funds. In addition, 
we support the spending down of the current cash balance in the Highway 
Trust Fund (HTF) to fiscally responsible levels; crediting the Highway 
Account with gasohol tax revenues that currently go into the General 
Fund; ending the gasohol subsidy or crediting the HTF from the General 
Fund for the cost of the subsidy; crediting interest on HTF balances; 
and eliminating fuel tax evasion.
    Some have suggested that fuel taxes should be increased to pay for 
growing demand. For nearly 50 years, the trucking industry has 
supported the concept of a user-supported system. However, the 
relationship between those who provide financial support for the system 
and those who determine how the money is spent must be a two-way 
street. Over our objections, Congress has continuously expanded highway 
program eligibility to include projects that provide few or no benefits 
to highway users (e.g. bicycle paths, light rail). Therefore, we cannot 
and will not invest additional moneys in a highway program whose value 
to our industry is slowly diminishing. Furthermore, any discussion 
about trucks paying additional fees to meet their full cost 
responsibility must be preceded by an acknowledgment that our industry 
has been prohibited by the Federal Government from operating our 
safest, most pavement-friendly vehicles, and that such prohibition is 
an obstacle to the industry's ability to meet our full cost 
responsibility.
    ATA applauds the efforts of Senators Ernest Hollings and John 
McCain to eliminate the TEA 21 toll pilot program. ATA is opposed to 
any attempts to toll existing non-toll highways. However, we would not 
oppose toll financing that delivered an economic benefit to the 
trucking industry and did not restrict our use of existing roads. For 
example, we believe that Congress should consider supporting the 
construction of truck-only highways. While we will evaluate each 
project on its merit, any congressional proposal should include all of 
the following constraints:

      The project should add capacity;
      Use of the lanes should be voluntary;
      If the highway is tolled, trucks should receive a rebate 
on Federal and State fuel taxes paid for using the facility;
      The facility should allow for the use of more productive 
trucks; and
      The facility should have a safe design.
                     improving freight productivity
    An effective approach to saving lives, relieving congestion and 
improving air quality is to reduce the number of trucks on American 
roads. Given a fixed amount of freight for America's trucks to move, 
the only way to reduce the number of trucks is to improve the 
productivity of the trucks themselves, and of their drivers. This is 
analogous to carpooling--it increases capacity without increasing the 
road lane-miles. To improve truck productivity, Federal size and weight 
regulations must be reformed.
    Federal law currently limits States' ability to control size and 
weight on their own highways. The limits imposed are lower than those 
mandated by other nations' governments, including our northern and 
southern neighbors, who are major trade partners and business 
competitors. This creates an economic disadvantage for American 
businesses and it causes additional costs and administrative problems 
when it comes to moving international freight, including intermodal 
containers.
    There has been no legislative relief to these laws in 20 years, 
despite considerable improvements in truck safety and better driver 
training. Decades of experience and volumes of research indicate that 
more productive vehicles can be safely operated without a detrimental 
effect on safety or the condition of highways and bridges.\23\
---------------------------------------------------------------------------
     \23\See for example Transportation Research Board, Truck Weight 
Limits--Issues and Options, 1990, and New Trucks for Greater 
Productivity and Less Road Wear, 1990.
---------------------------------------------------------------------------
    At the request of Congress, the Transportation Research Board (TRB) 
recently issued a new report on the impacts of Federal truck size and 
weight regulations.\24\ Among the report's conclusions was that the 
largely static and inflexible system of Federal regulation that 
currently exists``. . . discourages private-and public-sector 
innovation aimed at improving highway efficiency and reducing the costs 
of truck traffic . . . ,'' including costs related to accidents 
involving trucks.\25\
---------------------------------------------------------------------------
     \24\Transportation Research Board Special Report 267, Regulation 
of Weights, Lengths and Widths of Commercial Vehicles, 2002.
     \25\Ibid., p. 5-1.
---------------------------------------------------------------------------
    In a nutshell, the TRB report concludes that States should be given 
greater authority, with strong Federal oversight, to make decisions 
with regard to the size and weight limits of trucks on highways under 
their jurisdiction. This reflects ATA's own policy. TRB further 
recommends that Federal regulatory oversight of weight limits should 
not be extended to the NHS, as H.R. 3132, the Safe Highways and 
Infrastructure Preservation Act (SHIPA) seeks to do.\26\
---------------------------------------------------------------------------
     \26\Ibid., p. 5-16.
---------------------------------------------------------------------------
    There is no doubt that continuing or further restricting current 
Federal size and weight limits will cost lives. While it would not make 
sense from a safety or economic standpoint to allow larger or heavier 
trucks to operate on every highway or in every State, Congress cannot 
continue to ignore the growing body of evidence that supports the fact 
that opportunities to prevent accidents through size and weight reform 
are available. Those States that identify these opportunities should be 
allowed to take advantage of them.
    Allowing the expanded operation of more productive trucks would 
have two safety benefits. First, carriers would need fewer trucks to 
haul a given amount of freight, reducing accident exposure. Second, 
studies have consistently found that certain trucks with greater 
carrying capacity have a much better safety record than trucks that are 
in common use today. A study sponsored by the Federal Highway 
Administration found that the accident rate for longer combination 
vehicles (LCVs) is half that of other trucks.\27\
---------------------------------------------------------------------------
     \27\Scientex. Accident Rates For Longer Combination Vehicles, 
1996.
---------------------------------------------------------------------------
    A recent Canadian study found that LCVs have an accident rate that 
is five times lower than the rate for tractor-semitrailers.\28\ This 
study also found that during the 10-year period after LCVs were 
authorized to operate on a large scale in Alberta Province, the number 
of registered trucks dropped by 19 percent, even though the economy 
grew and non-truck vehicle registrations grew by 23 percent. The report 
concluded that increased truck productivity due to expanded LCV use was 
the most likely reason for this reduction in truck registrations.
---------------------------------------------------------------------------
     \28\Woodrooffe and Assoc. Longer Combination Vehicle Safety 
Performance in Alberta 1995 to 1998, March 2001.
---------------------------------------------------------------------------
    In Nevada last year, just .02 percent of vehicles involved in an 
accident were triples.\29\ Of the more than 36,000 accidents in 
Montana, including 1,326 accidents involving trucks, just one accident 
involved a triple. The year before, there were two triples accidents in 
Montana, in 1999 there was one, and in 1998 there were none.\30\ In 
Colorado, of the 4,226 accidents involving trucks in 2000, just nine 
involved triples; none of the triples accidents involved a 
fatality.\31\
---------------------------------------------------------------------------
     \29\Nevada Department of Transportation.
     \30\Montana Department of Transportation.
     \31\Colorado State Patrol.
---------------------------------------------------------------------------
    This data reflects Roadway Corporation's experience with triple-
trailer trucks. Since 1990, Roadway triples have been involved in 
exactly one fatal accident. That is one fatal accident in over 155 
million miles of travel. Last year, there were just five accidents 
involving Roadway triples, one accident every 2.5 million miles. By 
comparison, on average, all vehicles nationwide are involved in an 
accident every 430,000 miles.\32\ Triples are by far the safest trucks 
in our fleet and among the safest vehicles on the highway.
---------------------------------------------------------------------------
     \32\``Traffic Safety Facts 2000,'' National Highway Traffic Safety 
Administration.
---------------------------------------------------------------------------
    Furthermore, Congress and the States can avoid large investments in 
pavement maintenance and rehabilitation, as well as capacity expansion, 
by allowing States to make common-sense changes to their size and 
weight regulations. Gross weight can increase exponentially and not 
cause additional pavement damage so long as axle-weight is controlled. 
This is why, for example, a turnpike double that weighs 126,000 pounds 
causes half the damage of an 80,000 pound tractor-semitrailer on a ton-
mile basis. In addition, if trucks are able to ship the same amount of 
freight in fewer trucks, the need for capacity expansion could be 
avoided, fuel use and emissions could be lowered, and costs to American 
manufacturers and consumers could come down.
    The Federal restrictions on States that limit their ability to 
determine what types of trucks are allowed to operate on State-owned--
and controlled highways have no basis in science or logic and can no 
longer be justified. Our opponents on this issue continually attempt to 
represent the industry's ultimate goal as unfettered access to the 
highway system by more productive trucks. Such a position would be 
completely illogical, and it thoroughly misrepresents the industry's 
position. It would be foolish for the trucking industry to disregard 
the infrastructure and safety impacts of putting trucks on highways 
that they were not meant to handle or in traffic conditions that are 
unsuitable. Ultimately, the trucking industry itself would pay the 
price in terms of higher user fees, weight-posted bridges, higher 
insurance premiums and tighter government regulation. We are not asking 
Congress to increase truck sizes and weights. We are simply asking 
Congress to give States the ability to determine the safest and most 
cost-effective regulatory regime for their own highway systems.
                 improving the freight planning process
    ATA believes that the current planning process does not effectively 
address the movement of freight. The Federal Government has effectively 
devolved its responsibility for ensuring a safe and efficient highway 
system to State and local governments. While this has allowed planning 
agencies to address the unique demands of local transportation needs, 
and to respond more effectively to citizens' concerns, it has also 
resulted in a parochial system of transportation planning and 
programming that essentially ignores freight needs. MPOs, for example, 
may ignore a deficient connector road that links a seaport or rail-head 
to the Interstate Highway System because the project's benefits are not 
believed to be as beneficial as other local projects. However, most of 
the benefits of the project may accrue beyond the geographic scope of 
the State or local planning agencies' analyses.
    We do not blame these agencies for failing to include these far-
reaching benefits in their analyses; they simply do not have the 
resources or expertise necessary to do so. The Federal Government is 
the only governmental entity with the expertise, resources and standing 
to identify freight projects of national significance. We urge Congress 
to give FHWA the necessary tools and direction that allow the agency to 
ensure that crucial freight bottlenecks are dealt with quickly and 
effectively.
   freight stakeholders: working together to ensure future economic 
                            competitiveness
    ATA has joined with representatives of our modal freight partners 
and our customers in promoting a joint agenda designed to facilitate 
the efficient movement of freight. A joint statement is attached at 
Appendix B. The joint statement may be the most extensive united effort 
by the freight transportation community ever at the Federal level, and 
this points to both the growing interdependence of freight modes and 
the seriousness with which we regard Congress' decisions in the next 
reauthorization bill. In brief, the freight community is requesting 
additional investment in freight projects, including intermodal 
connectors, and in border crossings and corridors with significant 
freight traffic; the creation of a national freight industry advisory 
group to assist in the freight planning process; additional money for 
freight research and professional development; creation of new or 
expanded innovative financing options for funding freight projects; and 
more emphasis on funding freight projects that reduce congestion and 
improve air quality under the Congestion Mitigation and Air Quality 
Improvement (CMAQ) program.
    We have also joined with our freight partners to secure additional 
funding for the Borders and Corridors programs that were created in TEA 
21. The Coalition for America's Gateways and Trade Corridors, of which 
ATA is a founding member, is calling for a significant increase in 
funding for these crucial programs. We are concerned about the 
significant earmarking that has undermined the effectiveness of these 
programs. However, we believe that the original intent of the 
programs--to ensure that the infrastructure necessary to accommodate 
current and future freight needs, due in part to massive trade 
expansion--is still valid. We strongly urge Congress to extend the 
Borders and Corridors programs during TEA-21 reauthorization, and to 
make the programmatic and financial changes that are necessary to 
ensure the future mobility of America's freight transportation system. 
In addition, we urge Congress to refrain from expanding the eligibility 
of the program beyond its current parameters.
           improving the efficiency of nafta-related freight
    Trade volumes between the United States and its two North American 
Free Trade Agreement (NAFTA) partners have reached record levels: For 
2000, U.S.-Mexico trade reached $248 billion, while U.S-Canada trade 
amounted to $408 billion. The growth in NAFTA trade is especially 
impressive if one considers that in 1993, the year before NAFTA was 
implemented, U.S.-Mexico trade stood at just $81 billion, while trade 
with Canada was valued at $211 billion. The movement of imports and 
exports across our international land borders depends on an efficient 
and effective transportation system.
    Unfortunately, the development of physical and human resources at 
U.S. international land borders has not kept pace with the growth in 
NAFTA trade. Congestion at U.S. ports of entry is the norm, and 
considering the heightened security that will continue into the 
foreseeable future due to the September 11 attacks, these problems have 
been compounded. This creates inefficiencies in the movement of cargo 
among the North American trading partners, straining the present-day 
capacity of human resources and facilities at U.S. land borders. 
Because trucks haul more than 80 percent of the U.S.-Mexico freight 
bill and more than 70 percent of the U.S.-Canada freight bill, they are 
critical to the success of NAFTA and its attendant economic benefits. 
Delays result in additional freight transportation costs, and threaten 
to diminish NAFTA's promise.
    Data from a Federal Highway Administration (FHWA) analysis of the 
seven busiest border crossings (which account for 60 percent of truck 
crossings) reveal that congestion at these ports of entry cost the 
industry about 2.6 million hours in delay time per year, at a financial 
cost of at least $88 million.\33\ In addition, trucks waste about 2.6 
million gallons of fuel annually, with a resulting environmental impact 
of 23,000 tons of carbon dioxide and more than 300 tons of nitrous 
oxides. Congress should ensure that adequate resources are dedicated to 
the development of infrastructure and human resources along the U.S. 
borders with Canada and Mexico in order to meet the challenges 
associated with rapidly increasing trade growth among the three 
countries.
---------------------------------------------------------------------------
     \33\``Commercial Vehicle Travel Time and Delay at U.S. Border 
Crossings,'' Federal Highway Administration, Office of Freight 
Management and Operations, June 2002.
---------------------------------------------------------------------------
    Some examples of where Federal resources could be applied include:

      Funding for the construction of truck inspection 
facilities, and for hiring truck inspectors, both at the Federal and 
State level, to inspect trucks entering the United States from Mexico.
      Construction of ports of entry solely for commercial 
traffic on the U.S. northern and southern borders.
      Planning and development of quality access roads between 
ports of entry and the National Highway System.

    In addition, ATA has actively supported the funding and development 
of the Automated Commercial Environment (ACE) and the International 
Trade Data System (ITDS) to make cross-border movements of cargo, 
vehicles and drivers more efficient and secure.
    We ask the Subcommittees to look at technologies under development 
that can facilitate enforcement efforts while at the same time expedite 
the movement of freight across our borders. One such system being 
designed presently by U.S. Customs, with input from the trade 
community, is the Automated Commercial Environment, or ``ACE.''
    In 1993, along with legislation implementing the NAFTA, Congress 
passed the Customs Modernization Act, or ``Mod Act,'' establishing a 
new operating environment for U.S. Customs and the international trade 
community. Concepts such as ``informed compliance,'' ``shared 
responsibility,'' and ``reasonable care'' imposed greater obligations 
on U.S. Customs to provide improved information concerning the 
responsibilities and rights of the trade community. At the same time, 
the legislation mandated U.S. Customs to develop a new automated 
customs processing system to replace the antiquated and overburdened 
Automated Customs System (ACS). Nearly 10 years after the passage of 
the Mod Act, ACE is still in its nascent stage, but it is finally under 
significant development, and its full deployment is expected within the 
next three to 4 years. The present head of U.S. Customs, Commissioner 
Robert Bonner, has recognized the importance of developing such a 
system to give Customs greater tools to improve its information 
collection and improve the efficiency with which it processes millions 
of transactions every year.
    Mr. Chairman, it is important that Congress continue to provide 
adequate funding for the full development and implementation of the ACE 
system. In order to defend our Nation from potential future terrorist 
attacks, and at the same time process the legitimate commercial goods 
so important to our Nation's economy, we must provide our border 
enforcement agencies the necessary tools and resources to fulfill their 
duties and responsibilities. It is also critical that no new user fees 
be imposed for the future development of ACE, especially if the current 
Merchandise Processing Fee (MPF), which raises about $900 million each 
year and is slated to end in 2003, is earmarked for some other 
budgetary purpose. If the MPF is supposed to be for Customs commercial 
processing, then this fee should be used for nothing but for improving 
Customs commercial operations.
    Mr. Chairman, ATA supports the implementation of NAFTA's trucking 
provisions in order to improve the efficiency with which cross-border 
operations take place between the U.S. and Mexico. ATA is also a strong 
advocate for ensuring that all carriers operating in the U.S.--
Canadian, Mexican or U.S. carriers--meet all U.S. safety and 
environmental standards, as well as all financial operational 
responsibilities.
    Furthermore, implementing NAFTA's trucking provisions would enhance 
the security of cross-border trucking operations by simplifying the 
movement of trailers across our common borders. In a report to Congress 
issued in 1997 by the White House on U.S.-Mexico anti-drug cooperation, 
the U.S. Customs Service wrote:
    The high congestion of truck traffic entering the United States is, 
in part, a result of restrictions imposed by both the United States and 
Mexico on crossborder motor carrier operation . . . over 50 percent of 
commercial trucks enter the United States empty, contributing to border 
congestion and increasing the inspection burden for border agencies.
    NAFTA's trucking provisions allow for carriers throughout North 
America to improve their ability to make cross-border trucking more 
efficient, effective, safer, and more secure.
    It is also important that we work with our counterparts in Canada 
and Mexico to improve harmonization of border operations and 
infrastructure development to establish technology and mechanisms to 
facilitate and expedite the gathering, sharing, and exchange of 
information and data to clear cargo and people crossing our land 
borders efficiently and securely. We must continue to find solutions 
that improve the processing of the legitimate flows of people and 
cargo, while simultaneously improving our security through stronger 
relationships between the trade community and law enforcement agencies 
at our borders.
         ensuring the secure and efficient movement of freight
    In our efforts to protect the country from the terrorist threat, 
strategic planning for this new type of war must take into account 
three critical principles with respect to the trucking industry.
    First, the timely communication of threat related information is 
the single most important short-term objective that must be met. In 
order for trucking companies to properly deploy our security resources 
and instruct our drivers on the proper steps needed to protect 
themselves, the public and our customers' goods, we need detailed 
communications so that we can understand and appreciate the threat, 
evaluate our company's exposure and act in time to avoid becoming 
victims of terrorism.
    Second, our professional drivers, dispatchers, managers and 
supervisors are the most critical elements in protecting trucks from 
becoming the objects of, or the mechanism for, terrorist attacks. 
Drivers have control of our equipment 90 percent of the time, and 
therefore they are the most vulnerable to terrorism. We have an 
obligation to train our 3.2 million professional drivers to recognize 
terrorist operational acts, report these acts to the proper 
authorities, and react appropriately. The trucking industry needs 
Federal help to complete this effort in no more than 3 years.
    Third, productivity is the lynchpin of America's global economic 
competitiveness. In our efforts to conduct our war on terrorism, we 
must give equal attention to the preservation of our abilities as 
transportation enterprises to creatively and efficiently move the goods 
and instruments of commerce where needed, when needed. Any new 
regulatory framework must adhere to the core principal of ``the green 
light is on'' for trucks unless there is a substantial, direct and 
immediate threat that would justify slowing or restricting commercial 
flows.
    Thank you for the opportunity to offer our thoughts regarding the 
upcoming reauthorization of the Federal surface transportation 
legislation. We look forward to working with the Subcommittees to 
improve the safety and mobility of our Nation's freight transportation 
system.

                                 ______
                                 
                               APPENDIX B
           Freight Stakeholders Tea-21 Reauthorization Agenda
    1. Protect the integrity of the Highway Trust Fund. Reauthorize the 
firewalls provided for in TEA-21 to ensure that the funds collected are 
used for their dedicated purpose and not for deficit reduction.
    2. Dedicate funds for NHS highway connectors to intermodal freight 
facilities. The NHS Intermodal Freight Connectors report that was sent 
to Congress documents the fact that these road segments are in worse 
condition and receive less funding than other NHS routes. Targeted 
investment in these ``last mile'' segments would reap significant 
economic benefits compared to the associated costs.
    3. Form a national freight industry advisory group pursuant to the 
Federal Advisory Committee Act to provide industry input to USDOT. The 
advisory group should be funded and staffed, and it should consist of 
freight transportation providers from all modes as well as shippers and 
State and local planning organizations. Despite the best efforts of the 
agency to function as ``One DOT,'' there is still not enough of a 
focused voice for freight. An Advisory Group would meet the need for 
regular and professional interaction between USDOT and the diverse 
freight industry, and could help identify critical freight bottlenecks 
in the national freight transportation system.
    4. Create a Freight Cooperative Research Program. Increasingly, 
industry issues are public issues that would benefit from a dedicated, 
funded research effort led by an industry-based steering/oversight 
group, such as the one described above, to ensure useful research 
results to benefit the freight transportation system as a whole. One 
option would be to dedicate a portion of the States SP&R dollars to 
freight issues. Freight data issues would fall under this program as 
well.
    5. Expand freight planning expertise at the State and local levels. 
Given the importance of freight mobility to the national economy, 
States and MPO's should be provided additional funds for expert staff 
positions dedicated to freight issues (commensurate to the volumes of 
freight moving in and through their areas).
    6. Develop ways to increase available funds without new user fees 
and taxes by creating a toolbox of innovative financing options 
specifically aimed at freight capacity improvements and enhancements. 
Options could include (1) lowering of the threshold for TIFIA funding 
eligibility (2) development of tax incentives, and (3) expansion of the 
State infrastructure banks (SIBs).
    7. Significantly increase funds for an expanded corridor/border and 
gateway program. This would build on the highly popular but under-
funded ``Corridors and Borders Program'' (Sections 1118 and 1119), but 
adds the important concept of gateways. The funding should be freight 
specific, and there should be a qualification threshold (based on 
volumes) so that dollars get directed at high volume corridors/borders/
gateways rather than wish-list projects.
    8. Streamline environmental permitting for freight projects. 
Multiple and often duplicative Federal laws and regulations delay 
environmental review of transportation projects. Language in TEA-21 
directing Federal agencies to streamline the review process for highway 
projects has not been effective and other measures to simplify the 
review process for all freight projects should be considered.
    9. Increase funding and promote use of the Congestion Mitigation 
and Air Quality Improvement Program for freight projects that reduce 
congestion and improve air quality. CMAQ was designed to fund projects 
that will help reduce transportation-related emissions. Although CMAQ 
has supported some freight projects, it has been used primarily to 
address passenger needs. CMAQ funding should be dedicated to projects 
that can be shown to reduce congestion or improve air quality. Total 
funding for CMAQ should be increased and the use of CMAQ funds for 
freight projects should be clarified and strongly encouraged.
                           American Association of Port Authorities
                Contact: Mary Beth Long or Jean Godwin 703-684-5700

                                     American Trucking Associations
                                  Contact: Darrin Roth 703-838-1900

                                  Association of American Railroads
                           Contact: Jennifer Macdonald 202-639-2533

               Coalition for America's Gateways and Trade Corridors
                                Contact: Leslie Blakey 202-828-9100

                            Intermodal Association of North America
                                   Contact: Joni Casey 301-982-3400

                              National Association of Manufacturers
                                Contact: Larry Fineran 202-637-3174

                          National Industrial Transportation League
                                   Contact: Kathy Luhn 703-524-5011

                                           U.S. Chamber of Commerce
                                  Contact: Ed Mortimer 202-463-5451

                                             World Shipping Council
                                   Contact: Lars Kjaer 202-589-1234
                                 ______
                                 
 Responses by Michael W. Wickham to Additional Questions from Senator 
                                  Reid
    Question 1. In your testimony you state that the value of the 
highway program to your industry is diminishing because of ``expanded 
highway program eligibility to include projects that provide few 
benefits to highway users.'' I find that statement astonishing. Do you 
really believe that highway programs that encourage nontraditional 
solutions to traffic congestion like HOV lanes, intelligent 
transportation systems, and transit are of no benefit to highway users? 
Every person who commutes on transit, takes the train, or shares a ride 
with a friend, means one less car clogging our roads. No one benefits 
from transit use more than those of us who drive on our roads every 
day. Are you saying that because States have the flexibility to spend 
highway funds on non-construction programs that you do not believe the 
highway program has value to your industry?
    Response. ATA believes strongly in a Federal highway program that 
is funded by highway users for the benefit of highway users. Highway 
maintenance and capacity expansion are critical components of a highway 
program that promotes a safe and efficient surface transportation 
system. However, as your question suggests, we must also look beyond 
these traditional methods and seek out more innovative ways of 
improving the condition and performance of our highways.
    You mentioned Intelligent Transportation Systems (ITS), for 
example. ATA supports eligibility of ITS under the highway program. ITS 
can be an effective means of communicating system problems, which 
allows traffic agencies to respond more quickly and gives motorists the 
information they need to avoid these problems. States, in partnership 
with the trucking industry, use ITS to more effectively target their 
truck inspections, improving the efficiency of responsible carriers and 
enhancing highway safety. In addition, under certain circumstances, HOV 
lanes can be an effective tool for relieving congestion and improving 
air quality, and ATA does not oppose their eligibility under the 
highway program.
    However, an increasingly larger share of Federal highway revenues 
is being used for projects whose effectiveness at curbing congestion 
and saving lives is questionable. For example, while transit can 
effectively relieve congestion in some areas, in most of the cities 
where rail transit systems have recently been established, it will not 
be an effective strategy for addressing the growing traffic that 
plagues our urban areas. It is important to recognize that transit 
demand is very concentrated. One-half of the national ridership is in 
New York and Chicago and 76 percent is in seven metropolitan areas. In 
urban areas, transit accounts for just 2-3 percent of all trips. Even 
if transit ridership were to double in the next 10 years--an ambitious 
goal since ridership actually declined over the previous decade--
because highway use would also rise, transit's share of trips would 
only grow to 3-3.5 percent. Transit is largely beneficial for commutes 
to and from work. However, commutes now make up less than 20 percent of 
all trips, and less than one out of three trips during rush hours are 
trips between home and work.
    According to a study by the Texas Transportation Institute, areas 
that were more active in adding roadway capacity to respond to 
increased travel were able to slow the increase of regional traffic 
congestion. However, not all highway projects need add more traffic 
lanes or new highways to achieve substantial improvements. According to 
one study, improving conditions at the 167 worst traffic bottlenecks 
around the country would reduce travel times by an average of 38 
minutes per day, result in 287,000 fewer accidents, including 1,150 
fewer fatalities, reduce carbon monoxide emissions by 45 percent, smog-
forming emissions by 44 percent and carbon dioxide emissions by 71 
percent at those sites. Unfortunately, a lack of resources, in part 
because of the diversion of highway funds to non-highway projects that 
are less effective, is preventing States from making these crucial 
investments.
    We have concerns with other eligible activities, such as those 
under the CMAQ and enhancements programs. While some would argue that 
these programs divert relatively few resources from the highway 
program, the impact of this diversion is actually quite large. For 
example, we find it difficult to understand how it is in the national 
interest to invest more than twice as much Federal money on bicycle 
paths than on truck safety programs.
    ATA does not oppose using highway user fee revenues for 
nontraditional programs. We oppose the use of this money on programs 
that have been shown to be ineffective at reducing congestion and 
improving highway safety. We believe that in the face of limited 
resources, the Federal Government should make strategic investments 
that deliver the most cost-effective results.

    Question 2. In your testimony, you argue for reduced Federal 
restrictions on truck size and weight. You make many safety claims that 
are refuted by a recent U.S. Department of Transportation study on 
truck size and weight, which estimated that multi-trailer trucks have 
an 11 percent higher fatality crash rate than single trailer trucks. 
While I differ with your conclusions on safety, I will not dwell on 
that issue here. However, I will ask you to address the conclusion of 
the Department of Transportation study that allowing bigger trucks on 
our roads would result in bridge capital costs of over.$50 billion and 
well over $200 billion in additional costs due to delay from bridge 
construction and repairs.
    Response. It should first be noted that the U.S. DOT's 
Comprehensive Truck Size and Weight Study to which you refer was 
roundly criticized by the academic community, State departments of 
transportation, the trucking industry, and others. In fact, AASHTO 
passed a resolution (attached) calling on the Department to delay 
release of the report until its many deficiencies could be addressed; 
unfortunately, the uncorrected report was released anyway. Therefore, 
'we would caution Congress against using the Study as a basis for 
making policy decisions.
    Specifically, to the multi-trailer truck accident rate that 
appeared in the Study. Some have used this analysis to argue that 
longer combination vehicles (LCVs) are less safe than single-trailer 
trucks. In fact, because about 80 percent of the vehicle miles traveled 
by multi-trailer trucks are by non-LCVs, the statistic cannot be 
applied to this class of vehicle. Nonetheless, we cannot allow DOT's 
study to stand unchallenged. Almost all previous evaluations of the 
multi-trailer trucks that make up the bulk of vehicles that comprise 
DOT's research found that these vehicles were either as safe or safer 
than single trailer trucks. The most comprehensive evaluation of the 
safety of twin trailer trucks to date is a 1986 study by the 
Transportation Research Board (TRB Special Report. 211). That study 
concluded that, ``overall, twins clearly appear to be about as safe a 
method of hauling freight as the tractor-semitrailers they replace.''
    DOT did, in fact, contract with an independent consultant to 
complete a study on the safety experience of LCVs versus other, more 
common, trucks (Accident Rates for Longer Combination Vehicles. FHWA, 
October 1996). This study found that LCVs, including triples and heavy 
doubles, had an accident rate which was half that of the trucks they 
would replace. The study also concluded that truck configuration, not 
highway environment or driver factors, was the reason for this finding.
    This statistic is reflected by other research. For example, Alberta 
Province found that LCVs had the lowest accident rate of all vehicles 
on their highways, including passenger vehicles. In fact, single-
trailer trucks had an accident rate five times higher than LCVs. States 
have also found that LCVs are extremely safe. In Nevada, for example, 
triples were involved in just .02 percent of all accidents in 2000; 
none were fatal.
    LCVs have been in operation for more than 50 years. Today, they 
operate on rural roads in the west, eastern turnpikes and in large 
urban areas, in nearly half the States. No State has ever rescinded 
their operating authority, for the simple reason that LCVs contribute 
to a much safer and a much more efficient highway system.
    Regarding the bridge costs cited in the DOT study. Of all the 
criticisms leveled against the study, those regarding bridge costs were 
probably the most severe. DOT assumes that any bridge not rated to 
carry the loads modeled by the study would automatically be replaced. 
This simply does not happen in the real world. In practice, States 
would choose to either replace or strengthen the affected bridges, or 
to load-post them.
    As part of its research, the panel that conducted the most recent 
TRB truck size and weight study (TRB Special Report 267) obtained from 
DOT a list of highway structures in California identified by the bridge 
analysis method used in the study as requiring replacement if a 
specified type of larger truck were to come into use. Four were 
selected for analysis. Each of the four structures exceeds the 
threshold overstress criterion applied in the DOT study under the 
assumed loading by just a few percent, and therefore the DOT study 
would assume that all four bridges would have to be replaced given the 
heavier loads. The four structures were examined by engineers of the 
State DOT, who reported to the committee that, following its normal 
practices, the State would not replace, strengthen, or restrict the use 
of any of the four structures if heavier tractor-semitrailers within 
the range analyzed in the DOT 2000 study came into use.
    This is not to say that increasing the weight of trucks will not 
produce additional bridge costs, or that some interchanges may not have 
to be rebuilt to accommodate longer trucks. However, these are one-time 
investments whose costs pale in comparison with the tremendous savings 
associated with less pavement damage, less pollution, fewer accidents 
and greater economic productivity if size and weight laws were 
reformed.

    Question 3. You argue that allowing longer combination vehicles 
will reduce the number of trucks on our roads. Isn't the real impact 
likely to be a shift of freight from rails to our already overburdened 
road infrastructure?
    Response. While evaluations of increases in truck productivity all 
predict some shift of freight from rail to truck, the magnitude of this 
shift is generally considered to be very low. A 1990 TRB study (TRB 
Special Report 225) found that under various scenarios where truck 
productivity increased, rail diversion would range from 2.2 to 6.6 
percent, and all scenarios resulted in overall truck VMT reductions. 
Furthermore, it is very likely that the shift of freight from existing 
trucks to other, more productive trucks, will result in a net reduction 
in both the number of trucks on the road and truck miles, even when 
rail diversion is factored in. For example, the previously referenced 
Alberta study found that over the 11-year period following the 
introduction of higher weight trucks to the province, the number of 
registered trucks dropped by 19 percent, even though non-truck 
registrations grew by 23 percent and the economy expanded.
    The fact is that trucks and trains compete for very little 
business. Even with a productivity increase that makes truck 
transportation more attractive to rail shippers, the fact that freight 
railroads enjoy very large profit margins on most routes means that the 
railroads simply have to lower their rates slightly to keep this 
business. Herein lies the real reason for rail opposition to trucking 
productivity gains. This competition is a positive factor for shippers, 
who will realize lower shipping costs, and consumers, who will see 
lower retail prices. The most likely market for truck-rail competition 
is in the rail intermodal segment. Rail carload shipments are simply 
too price-sensitive for trucks to compete effectively in this market 
segment. Even if trucks were somehow able to draw 100 percent of all 
rail intermodal business, however, this would increase annual truck 
volumes by less than one-fifth of 1 percent nationwide (Freight 
Transportation Forecast . . . To 2013, DRI-WEFA, 2001).
    According to the FHWA, truck volumes will nearly double by 2020 and 
trucks' market share will expand from 71 percent in 1998 to 75 percent 
in 2020. This growth is inevitable, but a doubling of the number of 
trucks needed to accommodate this growth is not inevitable. Increasing 
trucking productivity through sensible size and weight reform will slow 
the growth of trucks and reduce their societal impacts.
                                 ______
                                 
  Response by Michael W. Wickham to Additional Question from Senator 
                                Jeffords
    Question 1. Mr. Hamberger of the Association of American Railroads 
notes that railroads are three or more times more fuel efficient as 
trucks. He points out that the :EPA estimates that for every ton-mile, 
a typical locomotive emits roughly three times fewer nitrogen oxides 
and particulate matter than the typical truck. He also points out that 
``rail competitive trucks, which are the heaviest, highest mileage 
operators among all trucks, do not come close to fully paying for the 
damage they cause to our highway system.''
    Response. As noted above, the potential for shifting freight from 
truck to rail, or vice versa, is extremely limited, and significant 
growth in truck traffic is inevitable. Therefore, any comparison of 
modal impacts becomes an academic exercise. Nonetheless, we are pleased 
to have the opportunity to respond to Mr. Hamberger's statements.
    According to new data produced under contract to the FHWA, in 2000, 
trucks' ton-miles were double that of rail. Therefore, if Mr. 
Hamberger's statement that trucks produce three times more emissions 
per ton-mile than railroads is correct, then trucks would have to emit 
six times more total NOx and PM than railroads. In fact, according to 
the EPA, trucks' total emissions of NOx and PM were just 2.7 times 
greater than the total emissions for rail. Therefore, on a ton-mile 
basis, trucks produce only about 1.35 times as much NOx and PM as 
locomotives.
    However, this does not tell the whole story. When measuring 
emissions on a ton-mile basis, what is left out is the fact that the 
commodities hauled by trucks are comprised of a far greater proportion 
of high-volume, low-weight freight than the commodities hauled by 
railroads, which haul mostly low-volume, heavier freight. Therefore, 
expressing trucks' volumes in terms of weight instead of area 
understates the amount of freight trucks are actually carrying, 
resulting in a disproportionately high amount of freight being assigned 
to railroads. This produces an emissions level which favors railroads.
    Furthermore, rail moves are almost always more circuitous than 
truck moves. Therefore, if one considers the environmental impact of 
shifting freight from truck to rail, the impact of this longer route 
must be considered. If there is an increase in distance of greater than 
35 percent, then the environmental benefits of shifting the freight to 
rail are wiped out by this factor alone.
    Also to be considered is the fact that if there is to be a truck to 
rail shift, this will likely occur as an intermodal movement. 
Therefore, the environmental impacts of the truck deliveries on both 
ends of the rail movement must be considered. These are not 
inconsequential impacts. The average truck drayage move is roughly 90 
to 120 miles long, typically with a significant urban component. The 
trucks involved are generally older--and therefore more polluting--than 
the typical trucks involved in long-distance movements.
    The issue of whether railroads pollute less than trucks is not that 
simple, and it should not be automatically assumed that a rail move 
produces less pollution than a truck move. In fact, FHWA has rejected 
States' requests for using CMAQ money on freight rail projects because 
they found that shifting freight from truck to rail would actually have 
a negative environmental impact.
    One other point should be made. Trucks contribute approximately $35 
billion in Federal and State highway user fees each year, which are 
used, in part, to offset the societal costs of the pollution that they 
produce. The railroads, on the other hand, pay just $170 million in 
user fees, and these revenues are not tied to societal costs produced 
by the railroad industry. There is little doubt that these revenues do 
not approach the health costs associated with pollution emitted by 
locomotives.
    This brings us to the second part of the question, which refers to 
trucking industry cost allocation. It is interesting that Mr. Hamberger 
attacks trucks for paying too little for their infrastructure and 
societal costs when his own industry fails to pay a single penny to 
compensate for the safety, environmental and congestion societal 
impacts of rail operations. (NOTE: While the question refers only to 
infrastructure costs, other societal impacts are now included in cost 
allocation studies. In addition, while the railroads do pay a tax on 
diesel, unlike highway user fees, there is no tie between these fees 
and the costs imposed by the railroads which are borne by the public.)
    While the FHWA Cost Allocation Study found that certain trucks do 
not pay their cost equity, there are several factors that contributed 
to this conclusion and that must be examined. First, there were several 
problems with the study which produced erroneous results. This is not 
to deny that there are trucks in operation which do not pay their fair 
share. However, it should also be noted that the study found that 
certain classes of trucks paid more than their fair share. It would be 
virtually impossible to achieve a perfect balance. While such an effort 
should be made, it must be recognized that results will always change 
depending on the assumptions and data used, which are constantly 
evolving. Therefore, there will always be some vehicles that will be 
found to not pay their allocated share of the costs.
    Mr. Hamberger complains that ``rail competitive trucks'' do not pay 
for the damage they do to highways without defining what a rail 
competitive truck is. Since the railroads and the ``safety groups'' 
they associate themselves with regularly criticize triple-trailer 
trucks, we assume that these are among the class to which Mr. Hamberger 
refers. However, it is widely recognized that the markets served by 
triples are generally not rail-competitive.
    When looking at the factors which result in a determination that a 
truck is not paying its cost equity, an objective analysis must lead 
one to the conclusion that this finding was made because of Federal 
restrictions on truck size and weight, not despite the restrictions. As 
the recent TRB study (TRB 267) found,. significant opportunities exist 
for States to reduce their infrastructure and societal costs if they 
are given flexibility to reform their size and weight limits. It is the 
Federal regulatory system that prevents carriers from putting trucks on 
the road that are more infrastructure-friendly and safer. For example, 
many States allow the operation of heavier trucks on non-Interstate 
highways, but are prevented from granting these trucks access to the 
Interstates by Federal law. If they were to use the Interstates rather 
than lower-order roads, the infrastructure, safety, congestion and 
environmental costs resulting from these trucks' operation would be 
lower, and thus the trucks would come closer to achieving cost equity.
    There are two ways to address the cost inequities of certain 
trucks. Congress and/or the States can increase the taxes imposed on 
these trucks, thus lowering the competitiveness of critical U.S. 
industries and increasing consumer prices. Alternatively, Congress can 
give the States the opportunity to improve their size and weight 
regulations, thus potentially changing the current vehicle fleet to one 
that is safer, less polluting, more productive and that produces lower 
infrastructure costs. The former choice benefits the railroads at the 
expense of the rest of the Nation. The latter would result in slightly 
lower railroad profitability, but the overall benefits to the Nation 
could be very significant.
                               __________
    Statement of Edward R. Hamberger, President and Chief Executive 
               Officer, Association of American Railroads
    On behalf of the members of the Association of American Railroads 
(AAR), thank you for this opportunity to discuss key issues relating to 
our nation's freight transportation capabilities as a result of the 
remarkable growth of international trade.
    Since Colonial times, the growth and vitality of our economy has 
been closely tied to the development of trade. The railroads' role in 
the settlement and development of the United States is well known, and 
yet the efficiency of our ports, international border crossings, and 
inland transportation systems is just as critical today. We must take 
steps to insure that our freight transportation system will be able to 
handle what is certain to be a huge increase in international trade 
volume in the years ahead. Today, I will focus on ways that our nation 
can combine the advantages of various transportation modes to reduce 
costs, save energy, better protect the environment, and increase 
transportation efficiency--thereby enhancing our productivity and 
international competitiveness.
                          international trade
    International trade is becoming the lifeblood of both the world and 
U.S. economy, and has been a major driving force behind world economic 
growth over the past decade. From 1990 to 2000, global GDP increased at 
an average annual rate of 2.0 percent, but the volume of world 
merchandise trade increased during the same period at an average annual 
rate of 7 percent--more than three times as much. In the case of the 
United States, which is the world's single largest exporting and 
importing nation by a significant margin, GDP over the same period 
increased at an annual average rate of 3.2 percent, while the volume of 
merchandise exports increased at an average annual rate of 6.5 percent 
and imports increased at an annual rate of 8.5 percent.\1\
---------------------------------------------------------------------------
     \1\ World Trade Organization, International Trade Statistics 2001, 
Table I.1, p. 19, available at www.wto.org/english/res--e/statis--e/
its2001--e/its01--toc--e.htm).
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    The importance of international trade relative to U.S. economic 
output has also risen dramatically. In 1975, U.S. exports plus imports 
was equal to less than 16 percent of GDP, but by 2000 that figure had 
risen to more than 26 percent.\2\ Manufacturers and agricultural 
producers in the United States depend upon foreign trade to reach 
markets for their products, and consumers have enjoyed both a richer 
variety of products and lower prices as a result of trade 
opportunities. According to the Office of the U.S. Trade 
Representative, U.S. exports alone support more than 12 million 
American jobs, including one in five jobs in the manufacturing 
sector.\3\
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     \2\Economic Report of the President, February 2002, p. 253.
     \3\Office of U.S. Trade Representative, Benefits of Trade: 
Information on the Globalization Debate, September 19, 2001 available 
at www.ustr.gov/new/benefits.html.
---------------------------------------------------------------------------
    In 2001, the value of U.S. international merchandise trade was $1.9 
trillion. According to figures from the Maritime Administration, United 
States ports handled over 1.1 billion tons of foreign trade in 2001. 
The liner sector, consisting mostly of containerized shipments, 
accounted for 68 percent of the value of this trade.\4\ More than 20 
million loaded containers were imported or exported through our 
nation's ports in 2001, with the ports of Los Angeles and Long Beach 
ranked number 1 and 2, respectively--each handling over 3.3 million 
loaded containers. Additional intermodal traffic flows across our 
borders with Canada and Mexico. Our ports and border crossings also 
handle significant volumes of bulk commodities, including grain, coal, 
non-metallic minerals, forest products, and petroleum products. 
Railroads serve U.S. ports on the Atlantic, Pacific, and Gulf coasts 
and the Great Lakes, and provide through service to and from Canada and 
Mexico at more than 30 border crossings. Railroads handled 
approximately 5.2 million international containers in 2000, which 
represented about one-half of their total intermodal traffic.\5\
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     \4\ See ``U.S. Foreign Waterborne Transportation Statistics,'' 
U.S. Maritime Administration press release, March 28, 2002, available 
at www.marad.dot.gov/statistics/usfwts/PR2001/PRDEC2001.htm.
     \5\Intermodal Association of North America, Year 2002 Industry 
Statistics--Overview; American Association of Port Authorities; and 
Association of American Railroads data and analysis.
---------------------------------------------------------------------------
    U.S. trade with Canada (long our largest trading partner) and 
Mexico (now our No. 2 trade partner) has grown rapidly following the 
lowering of trade barriers under the North American Free Trade 
Agreement of 1993. Together, Canada and Mexico account for 
approximately one-third of U.S. foreign merchandise trade.\6\ The value 
of this North American trade had increased by 85 percent from 1994 to 
2000, before declining slightly in 2001 largely following the September 
11 terrorist attack. The freight railroads of Canada, Mexico, and the 
United States, which form a seamless, integrated network that provides 
the world's most efficient, lowest-cost rail service, have achieved 
major increases in their trans-border traffic--up 22 percent by value 
between Canada and the United States and up 72 percent between Mexico 
and the United States just from 1997 to 2000.\7\
---------------------------------------------------------------------------
     \6\U.S. Department of Transportation, Bureau of Transportation 
Statistics, Transportation Statistics Annual Report 2000, BTS01-02, 
Washington, DC. 2001, p. 161.
     \7\AAR analysis of U.S. Bureau of Transportation Statistics 
transborder trade data.
---------------------------------------------------------------------------
    Our seaports, airports, and land border crossings--the gateways 
that connect us to the rest of the world through commerce--are clearly 
critical to the economic well being of our Nation. Moreover, more 
efficient modern container ships carrying 6,000 or more TEUs\8\ are 
increasingly being used, up from the 4,500-TEU standard that has been 
dominant up to now. These larger ships will place increasing demands on 
port and landside facilities.
---------------------------------------------------------------------------
     \8\Twenty-foot equivalent units.
---------------------------------------------------------------------------
    Existing congestion at these facilities must not be permitted to 
worsen. Moreover, as the Federal Highway Administration documented in a 
recent study,\9\ funding for intermodal connectors--public roads 
averaging less than two miles in length that lead to/from major 
intermodal terminals--has not been adequate under the Transportation 
Equity Act for the 21st Century (TEA-21) and these critical components 
of the freight transportation system suffer many deficiencies. 
According to the FHWA, ``States and MPOs often see freight as a low 
priority when compared with the pressing needs of passenger travel. NHS 
connectors are ``orphans'' in the traditional State and MPO planning 
processes.'' We must make the investments needed to improve our ability 
to handle international traffic efficiently, while limiting impacts on 
surrounding communities in terms of congestion, noise, and air 
pollution.
---------------------------------------------------------------------------
     \9\U.S. Federal Highway Administration, NHS Intermodal Freight 
Connectors, July 2000, p. 4.
---------------------------------------------------------------------------
             growing importance of rail intermodal service
    U.S. freight railroads move just about everything--from lumber to 
vegetables, from coal to orange juice, from grain to automobiles, from 
chemicals to scrap iron--and connect businesses with each other across 
the country and with markets overseas. America's freight railroads 
carry more than 40 percent of the nation's intercity freight (measured 
in ton-miles); about 70 percent of vehicles from domestic 
manufacturers; 67 percent of the nation's coal to coal-fired power 
plants (coal generates more than half the nation's electricity); and 
massive amounts of grain, chemicals, forest products, ores, and other 
commodities. They also contribute billions of dollars to the economy 
through wages, purchases, and taxes.

    Intermodal rail freight transport--the movement of cargo in 
trailers or containers by rail in combination with at least one other 
mode of transportation--has been the fastest growing major segment of 
traffic for the U.S. freight railroad industry over the past decade. 
Indeed, while volumes of non-intermodal rail traffic for 2002 to date 
are below those of last year for the same period as a result of the 
weak economy, U.S. rail intermodal traffic through August 2002 is 5.1 
percent above the 2001 level, including increases of between 7.4 
percent and 9.4 percent each month from April through August. U.S. 
intermodal traffic has grown from 3.1 million trailers and containers 
in 1980 to nearly 9.0 million in 2001. It now accounts for 
approximately 20 percent of revenue for Class I carriers and is vying 
for the No. 1 ranking among all rail commodities. Approximately half of 
U.S. intermodal traffic is either U.S. exports and imports, and 
intermodal traffic moves throughout the North American rail network.
    There are several reasons why intermodal transport has become such 
a vital part of the U.S. freight transportation mix:
1. Convenience and lower cost
    Intermodal combines the door-to-door convenience of trucks with the 
long-haul efficiency and cost-effectiveness of rail. As a result, 
railroads, trucking companies, international steamship lines, 
intermodal marketing companies, and others engage in productive 
partnerships to combine the best characteristics of all modes.
2. Fuel efficiency
    Railroads are the mode of choice in terms of fuel efficiency. 
According to studies sponsored by the U.S. Department of Transportation 
(U.S. DOT) and others, railroads are three or more times as fuel 
efficient as trucks. Fuel efficiency means reduced emissions and 
reduced dependence on foreign oil.
3. Improved air quality
    The Environmental Protection Agency estimates that for every ton-
mile, a typical locomotive emits roughly three times fewer nitrogen 
oxides and particulates than a typical truck. Other studies suggest 
that locomotives have a much greater environmental advantage relative 
to trucks, depending upon the pollutant measured.
4. Reduced traffic congestion
    An intermodal train can take approximately 280 trucks from the 
highways. Since a single combination truck requires the same highway 
capacity as approximately four automobiles, a single intermodal train 
can mean the equivalent of more than 1,100 fewer cars on the highway. 
According to the Texas Transportation Institute's (TTI) 2002 Urban 
Mobility Study, the aggregate cost of highway traffic congestion in 
just the 75 urban areas the institute studied is $67.4 billion, 
representing the cost of 3.6 billion hours of extra travel time and 5.7 
billion gallons of fuel wasted while sitting in traffic. Since 1982, 
according to TTI, the cost of congestion has risen by approximately 400 
percent in inflation-adjusted terms. Rail intermodal service is a 
highly effective way to reduce the staggering costs of highway 
congestion and the associated pressure to build costly new highways.
5. Innovative technology, specialized equipment, and tailored services
    Doublestack trains--with specialized rail cars that can accommodate 
one container atop another--are now in widespread use. RoadRailers look 
like conventional trailers, but come equipped with both rubber tires 
and detachable steel wheels so they can ride directly on the rails or 
on a highway. By using specialized equipment, railroads are targeting 
midand short-distance hauls, in addition to traditional long-haul 
markets. Rail service offerings include the use of flat cars in 
dedicated trains operating on a fixed schedule that are specially 
designed to quickly load, unload and carry standard, non-reinforced 
highway trailers without damage to the goods or the trailers 
themselves.

    The market for intermodal freight is extremely competitive, and 
U.S. freight railroads must continue to make major investments so that 
they can further enhance their cost efficiency and meet customer 
service requirements that are continually becoming more stringent.
    Railroads are incredibly capital intensive, and each year freight 
railroads must invest heavily to maintain and improve their 
infrastructure and equipment, that, together, comprise a national 
system that is the envy of the world. In 2000, Class I railroads 
directed 17.8 percent of their revenue to capital expenditures; the 
comparable figure for the U.S. manufacturing sector as a whole was just 
3.7 percent. Indeed, since 1980 when the Staggers Rail Act partially 
deregulated the rail industry, major U.S. railroads have spent more 
than $290 billion for this purpose--an average of more than $13 billion 
per year over this extended period. Much of this spending is either 
directly attributable to intermodal service (e.g., the construction or 
expansion of intermodal hubs, raising underpass clearances to allow for 
doublestack trains) or indirectly related to intermodal traffic (e.g., 
capacity expansion and enhanced signaling systems to allow faster, more 
frequent trains of all types throughout the rail network).
    In addition to making necessary infrastructure improvements, 
railroads have responded to customer needs by instituting a series of 
operational improvements and service initiatives. Some of these 
initiatives involve the improved use of information technology. For 
example, most major railroads now offer comprehensive Internet-based 
car ordering, car tracing, pricing, and billing capabilities. Railroads 
have also increasingly entered into productive partnerships with other 
carriers. These alliances expand the focus for a particular railroad 
beyond the interchange point, encompassing the total movement and 
providing customers with seamless service--giving rail customers more 
value for their transportation dollar.
    Since the Staggers Act, freight railroads have improved earnings, 
but as a group they still do not come close to earning their cost of 
capital. In 2001, the rail industry's cost of capital (as determined by 
the Surface Transportation Board (STB), an independent regulatory 
agency within the U.S. DOT) was 10.2 percent, compared with a return on 
investment (ROI) of 6.9 percent, as determined by the STB. Rail 
profitability is consistently in the bottom quartile of all industries.
    This cannot continue forever, and this fact explains why--
notwithstanding the tremendous gains railroads have made in intermodal 
and other service offerings in recent years, and the massive 
investments they have made--the future strength and vitality of our 
nation's rail system requires that earnings be aligned with investment 
needs.
    Especially over the past couple of years, freight railroads have 
become increasingly constrained in how much capital they can devote to 
infrastructure. Rail stockholders and outside capital providers are 
becoming ever more focused on the railroad financial performance, and 
now increasingly insist that railroads demonstrate a compelling case 
for further investments. This financial discipline is necessary and 
appropriate in a market economy, but it discourages railroad 
investments that would yield significant public benefits (e.g., 
congestion mitigation, emissions relief, enhanced mobility, enhanced 
safety, economic efficiency), but only limited direct railroad 
benefits. As profit-driven private entities, freight railroads simply 
cannot afford to make investments, including investments in intermodal 
projects and facilities, that yield primarily public benefits.
    Unless this issue is addressed head on, it will worsen in the years 
ahead as pressure on our nation's freight rail network intensifies. The 
U.S. DOT expects freight traffic to nearly double in the next 20 years. 
Rail customers will continue to demand improved service levels. With 
highway congestion consuming a growing share of our nation's economic 
output, and with the need to reduce emissions, conserve fuel, and 
promote safety on the rise, the need for railroads to provide relief 
will increase.
Surface Transportation Reauthorization
    TEA-21 expanded the reliance on an intermodal approach to 
transportation planning that was the focus of the landmark Intermodal 
Surface Transportation Efficiency Act of 1991 (ISTEA). Today, we are 
seeing the benefits that can be gained by taking this comprehensive 
approach.
    As planning for the reauthorization of TEA-21 proceeds apace, the 
AAR is pleased to be an active participant in the Freight Stakeholders 
Coalition, an organization comprised of diverse freight interests that 
work cooperatively to promote policies benefiting freight 
transportation. Besides the AAR, members of the Freight Stakeholders 
Coalition include the American Association of Port Authorities, the 
American Trucking Associations, the Coalition for America's Gateways 
and Trade Corridors, the Intermodal Association of North America, the 
National Association of Manufacturers, the National Industrial 
Transportation League, the U.S. Chamber of Commerce, and the World 
Shipping Council.
    The Freight Stakeholders Coalition has unified behind a nine-point 
agenda designed to promote sound, effective transportation solutions. 
The agenda includes:
1. Protect the integrity of the Highway Trust Fund
    Reauthorization of the firewalls provided for in TEA-21 would 
ensure that the funds collected in the HTF would be used for dedicated 
transportation purposes and not for deficit reduction or general 
government operations.
2. Dedicate funds for National Highway System (NHS) highway connectors 
        to intermodal freight facilities
    NHS intermodal freight connectors provide for a broad array of 
intermodal transport services and options. The FHWA has identified 517 
NHS freight terminals (253 ocean and river ports, 203 truck/rail 
terminals, and 61 pipeline/truck terminals). These 517 freight 
terminals, augmented by 99 major freight airports, connect to the 
mainline NHS via more than 1,200 miles of NHS connectors. Typically, 
connectors are located in older, industrialized and mixed land use 
areas that are subject to physical constraints and environmental 
considerations.
    TEA-21 directed the FHWA to review the condition of connectors and 
potential investments to improve their condition. In a June 2000 report 
to Congress, FHWA found that the connectors have significantly poorer 
physical and operational characteristics, and are underfunded when 
compared with all NHS mileage. Such conditions on these ``last mile'' 
segments can slow freight movement, damage goods in transit, and 
decrease efficiency and safety. U.S. DOT estimates show that the cost 
of improving connectors to an adequate level of service over the 2002-
2020 timeframe is $3.5 to $4.0 billion.
3. Establish a national freight industry advisory group to provide 
        input to the U.S. DOT
    The advisory group should be funded and staffed, and should consist 
of freight transportation providers from all modes as well as shippers 
and State and local planning organizations. There is not a sufficiently 
focused Federal voice for freight; an advisory group would meet the 
need for regular and professional interaction between the department 
and the diverse freight industry, and could help identify critical 
freight bottlenecks in the national freight transportation system.
4. Create and fund a Freight Cooperative Research Program
    More accurate and timely data on freight movements would allow 
State and local governments to plan transportation infrastructure 
improvements that more closely match actual transportation needs. To 
this end, a dedicated, funded research effort led by an industry-based 
steering/oversight group would allow for the collection and 
dissemination of more timely, complete, and detailed commodity flow and 
other types of freight data and better planning tools for freight 
planning professionals and others.
5. Expand freight planning expertise at the State and local levels
    Unfortunately, transportation planning typically focuses almost 
exclusively on highway and transit projects, with scant attention paid 
to freight (including freight rail). To address this deficiency, 
planning organizations should be strongly encouraged to consider 
freight transportation needs, including railroad projects and 
intermodal projects, more fully in their planning. Given the importance 
of freight mobility to the national economy, States and metropolitan 
planning organization (MPOs) should be provided additional funds for 
expert staff positions dedicated to freight issues, commensurate to the 
volumes of freight moving in and through their areas.
6. Develop ways to increase available funds without new user fees and 
        taxes by creating a toolbox of innovative financing options 
        specifically aimed at freight capacity improvements and 
        enhancements
    New capital investment in critical freight transportation 
infrastructure leads to major public benefits including higher 
productivity, enhanced global competitiveness, and a higher standard of 
living for our Nation. With freight traffic now forecast to double 
within the next 20 years, the United States must expand its limited 
transportation infrastructure dollars by leveraging additional public 
and private sources of funding. This will require innovative approaches 
to maximize transportation-related investments.
    Two financing options in which freight railroads are most 
interested are discussed below.
    The first option calls for tax incentives and tax exempt financing 
to companies that make investments in intermodal freight 
infrastructure. This option would provide targeted income tax benefits 
(investment tax credits, expensing in lieu of capitalization, 
accelerated depreciation, and/or tax-exempt financing) to companies for 
investments made in qualifying assets to improve the efficiency or 
increase the capacity of the national intermodal freight transportation 
system. Qualifying assets would include track and roadbed located on 
intermodal corridors, intermodal transfer facilities, freight handling 
machinery and equipment at intermodal transfer facilities, and 
intermodal information infrastructure. Under this option, the tax 
benefits would accrue to any company that made such investments, not 
just railroads. Such a program would recognize the huge societal 
benefits derived from an expansion of intermodal transportation 
solutions.
    The second option calls for allowing the funding of rail 
infrastructure through the issuance of tax-exempt indebtedness. Under 
this option, holders of ``Qualified Railroad Indebtedness (QRI)'' would 
qualify for an income tax exclusion for interest earned on the QRI. QRI 
would be any type of indebtedness, regardless of the form, issued to 
fund the acquisition, construction, improvement, maintenance, or repair 
of ``Qualified Railroad Property'' (QRP). QRP, in turn, would be any 
expenditure for the acquisition or maintenance of depreciable property, 
such as track, bridges, tunnels, grading, wharves and docks, terminal 
facilities, signals, computer systems, and public improvements either 
used or to be used in the railroad's trade or business. The tax 
benefits would flow directly to the holders of the indebtedness in the 
form of income tax exclusion for interest earned, and indirectly to 
railroads in the form of lower capital costs.
7. Significantly increase funds for an expanded corridor/border and 
        gateway program
    This proposal would build on the highly popular but underfunded 
``Corridors and Borders Program,'' but adds the important concept of 
gateways. The funding should be freight specific, and there should be a 
qualification threshold (based on volumes) so that dollars get directed 
at high volume corridors/borders/gateways rather than wish-list 
projects. The AAR is a member of the Coalition for America's Gateways 
and Trade Corridors, which is leading the effort among freight 
interests to expand funding for this important program.
8. Streamline environmental permitting for freight projects
    Multiple and often duplicative Federal laws and regulations delay 
environmental review of transportation projects. Language in TEA-21 
directing Federal agencies to streamline the review process for highway 
projects has not been effective. Consequently, other measures to 
simplify the review process for all freight projects should be 
considered.
9. Increase funding and promote the use of the Congestion Mitigation 
        and Air Quality Improvement Program (CMAQ) for freight projects 
        that reduce congestion and improve air quality
    CMAQ was designed to fund projects that will help reduce 
transportation-related emissions. Although CMAQ has supported some 
freight projects, it has been used primarily to address passenger 
needs. CMAQ funding should be dedicated to projects that can be shown 
to reduce congestion or improve air quality. Total funding for CMAQ 
should be increased and the use of CMAQ funds for freight projects 
should be clarified and strongly encouraged.
    In addition to the Freight Stakeholder Coalition proposals outlined 
above, the railroad industry proposes additional measures which we 
believe will enhance the ability of our nation's transportation 
providers to function effectively. Like the proposals from the Freight 
Stakeholder Coalition, the rail proposals expand further the emphasis 
on intermodalism that was fundamental to the original TEA-21 
legislation. The rail proposals include the following:
1. Increase funding for the Section 130 grade crossing program and 
        clarify that funds can be spent on maintenance activities
    The most critical safety problems faced by railroads are collisions 
at highway-rail grade crossings and incidents involving trespassers on 
railroad rights-of-way. Both of these problems generally arise from 
factors that are largely outside of railroad control. In 2001, these 
two categories accounted for 96 percent of rail-related fatalities.
    Due largely to railroads' and others' efforts to close grade 
crossings and to educate the public about the dangers of grade 
crossings, in conjunction with the Section 130 Federal grade crossing 
program, the number of collisions, injuries, and fatalities at highway-
rail grade crossings has fallen steadily over the years. From 1980 to 
2001, the number of grade crossing collisions was reduced 70 percent, 
injuries declined by 70 percent, and fatalities were down 49 percent. 
Despite these impressive declines, far too many grade crossing 
accidents occur each year.
    The Section 130 Program provides Federal funds to States and local 
governments to eliminate or reduce hazards at highway-rail grade 
crossings on public highways. Current funding, under a set-aside to the 
Surface Transportation Program of TEA-21, is approximately $155 million 
per year. The vast majority of Section 130 funds have been spent on the 
installation of new active warning devices such as lights and gates, 
upgrading existing devices, and replacing or improving grade crossing 
surfaces.
    The high cost of current active warning devices--approximately 
$150,000, on average, per installation--has limited the number of 
crossings at which they have been installed. Research into improved 
low-cost grade crossing warning systems is underway, but increased 
Federal funding for highway-rail crossing hazard abatement would permit 
additional crossings to be protected immediately.
    The Section 130 program is an important element of the HTF. Grade 
crossing warning devices are highway traffic control devices, there to 
protect the motoring public, not trains.
    Increasing Section 130 funding and clarifying that such funds can 
be spent on grade crossing maintenance projects would allow additional 
crossings to be protected and further enhance highway safety.
2. Expand the Railroad Rehabilitation and Improvement Financing (RRIF) 
        Program and remove restrictive program requirements
    The Railroad Rehabilitation and Improvement Financing (RRIF) 
program provides low-interest loans and loan guarantees (not direct 
Federal grants) to help finance railroad capital investments. As 
authorized by TEA-21, RRIF authorizes up to $3.5 billion in direct 
loans and loan guarantees, of which at least $1 billion is reserved for 
small railroad projects. It is administered by the Federal Railroad 
Administration. Due largely to an exceedingly long delay in the release 
of implementing regulations and overly restrictive regulatory 
requirements (especially lender of last resort and collateral 
requirements), to date very few RRIF loans have been approved.
    Railroads seek a major expansion of the RRIF program, and an easing 
of regulatory barriers to its use, in order to help railroads of all 
sizes--both freight and passenger--to continue to provide safe and 
efficient transportation service. Pending legislation (S. 1530--``RAIL-
21'', H.R. 2950--``RIDE-21'', and S. 1991 ``The National Defense Rail 
Act'') would increase to $35 billion the amount of loans and loan 
guarantees available through the RRIF program. These proposals would 
also countermand unnecessary existing regulatory barriers pertaining to 
lender of last resort provisions and collateral requirements.
             opposition to truck size and weight increases
    Notwithstanding the broad agreement detailed above among the 
freight railroads and other transportation modes on many issues 
relating to our national transportation needs and capabilities, there 
are some limited areas of disagreement among the modes. One such area 
concerns truck sizes and weights. Recently, proposals to allow larger 
and heavier trucks on our nation's highways have been offered. The rail 
industry strongly opposes these efforts.
    Under current Federal law, trucks operating on the 46,000-mile U.S. 
Interstate Highway System can have a gross vehicle weight of no more 
than 80,000 pounds, and the use of longer combination vehicles (LCV--a 
tractor and two or more trailers or semi-trailers longer than 28 feet 
each) is limited to 14 Western States that allowed such trucks before 
1991. These limits were frozen by Congress in the 1991 ISTEA 
legislation, largely in response to concerns about the safety of longer 
and heavier trucks. Since then, various interests have proposed that 
the weight limit be increased (for example, to 97,000 pounds) and that 
the use of LCVs be permitted on all or parts of the U.S. interstate 
highway network. Since 1991, all attempts to thaw the Federal freeze 
have been rejected by Congress.
    Increased truck size and weight (TS&W) limits would, according to 
the U.S. Department of Transportation, have a disastrous effect on 
freight railroads. Railroad revenues would decline by $2.9 billion to 
as much as $6.7 billion per year. Contribution to railroad fixed and 
common costs would fall by $2.1 billion to $3.1 billion per year. As 
the contribution to fixed costs declined, less funding would be 
available for current and future investments, and so fewer such 
investments would be made. The reduction in investment would directly 
translate into reduced capacity, lower efficiency, degradation of 
service, a reduced ability to handle freight, and, eventually, further 
disinvestment. Remaining shippers on the rail network would face higher 
rates, reduced service, or both. Social costs associated with diversion 
of rail traffic to truck--more highway accidents, pollution, greenhouse 
gases, congestion, energy consumption, noise--would rise, and the cycle 
would continue in a vicious circle. This outcome is certainly not in 
the best interest of our Nation.
    A primary basis for the rail industry's opposition to larger and 
heavier trucks is the unfair dichotomy between costs paid and costs 
incurred among the modes. Rail-competitive trucks, which are the 
heaviest, highest mileage operators among all trucks, do not come close 
to fully paying for the damage they cause to the highway system. The 
U.S. DOT's recent comprehensive Highway Cost Allocation Study concluded 
that combination trucks weighing 80,000 to 100,000 pounds pay an 
estimated 50 percent of their cost responsibility, and trucks weighing 
over 100,000 pounds would pay only 40 percent of their cost 
responsibility. Rail-competitive trucks already underpay by billions of 
dollars per year, representing an enormous competitive hurdle that 
railroads must overcome. Liberalizing TS&W limits would only exacerbate 
the existing inequity.
    A committee of the Transportation Research Board (TRB), an arm of 
the National Research Council, which in turn is part of the National 
Academy of Sciences, recently released a report on the truck size and 
weight issue. The report was Special Report 267: Regulation of Weights, 
Lengths and Widths of Commercial Motor Vehicles. The report recommends 
an immediate thaw in the TS&W freeze via the introduction of 90,000-
pound single trailer trucks and a 50 percent increase in the weight of 
double trailer combination vehicles (while also boosting the size of 
the vehicles). These dramatic changes would be followed by further TS&W 
increases and the authorization of LCVs through ``pilot programs'' 
overseen by a proposed new government agency. The TRB report calls for 
much of the regulatory authority associated with TS&W to be transferred 
from the Federal Government to the States.
    The TRB report has many shortcomings that undermine its usefulness 
in the debate over TS&W, as detailed in Dr. Gerard McCullough's August 
2002 evaluation of the report, undertaken for the AAR and included here 
as Attachment 1. As Professor McCullough\10\ explains, the TRB report 
starts with the faulty premise that there is widespread 
``dissatisfaction'' with existing TS&W limits, when, in fact, existing 
limits represent an equilibrium wherein the needs of truckers and truck 
shippers are balanced against the safety concerns of motorists and the 
national goal of maintaining a healthy overall freight transportation 
system. Professor McCullough notes that the TRB report contains no new 
quantitative analysis. For example, the report is critical of the way 
previous studies calculated bridge damage costs due to changes in TS&W, 
but does not provide an estimate of what it views as the correct costs. 
Instead, the report says that the correct analysis has not been done 
yet. In other words, the TRB report admits it does not know what the 
effect would be of a TS&W thaw on bridge costs, but it nevertheless 
recommends a thaw.
---------------------------------------------------------------------------
     \10\Dr. McCullough is Associate Professor of Applied Economics, 
University of Minnesota, St. Paul, MN, and Senior Consultant, Charles 
River Associates, Boston, MA. He is former Director of the Center for 
Transportation Studies at Minnesota and former Deputy Director of the 
Center for Transportation Studies at the Massachusetts Institute of 
Technology (MIT). He has been a consultant on transportation to the 
World Bank and the Federal Highway Administration (FHWA) and various 
private organizations. He was a Special Assistant at the U.S. 
Department of Transportation from 1977-1980. His Ph.D. is from MIT.
---------------------------------------------------------------------------
    Professor McCullough stresses that an efficient freight market is 
one in which the users absorb the full marginal costs that they impose. 
Unfortunately, the TRB offers no specific proposal by which the 
substantial current truck underpayment for the pavement damage they 
inflict would be ameliorated. These underpayments would sharply 
increase as gross vehicle weight increased, making existing inequities 
even worse. Finally, as the TRB report admits, serious questions exist 
regarding the safety implications of increasing TS&W limits. Yet the 
TRB calls for addressing this issue by instituting a ``pilot program'' 
that would essentially force unknowing and likely unwilling highway 
users to participate in an experiment to determine the safety 
implications of changes in TS&W.
    As noted above, increasing the size of trucks without insuring full 
cost recovery would greatly exacerbate the problems caused by large 
trucks. It is interesting to note that under a recent proposal by the 
Reason Foundation, a Los Angeles ``free market'' think tank, truck-only 
tollways would be built on highway median strips. Under Reason's 
proposal, LCVs and heavier trucks would be allowed on the truck 
tollways, but the roads would be completely user-financed. Railroads 
are pleased that the Reason proposal explicitly endorses what the 
railroads have long maintained--that heavy trucks should pay their own 
way.\11\ Every year that goes by means that motorists pay billions of 
dollars in subsidies, while heavy trucks continue to avoid their cost 
responsibility.
---------------------------------------------------------------------------
     \11\While a detailed analysis of the Reason proposal is beyond the 
scope of this testimony, it should be noted that while railroads 
support the requirement that trucks fully repay the cost of the damage 
they cause to the highway system, care should be taken to insure that 
all costs--such as right-of-way acquisition, property taxes, truck 
staging areas, etc.--be fully recovered. For example, the publicly 
owned median should not just be given to the private sector motor 
carrier industry without their having to pay for it. Railroads repaid 
the Federal Government several times over for the value of the land 
grants they received from the Federal Government. A 1943 study by the 
Board of Investigation and Research concluded that the value of 
compensation provided by railroads to the Federal Government has 
``fully counter-balanced these aids which were conferred many years 
ago.'' A 1977 study by the U.S. Department of Transportation concluded 
that``. . . the Federal Government has been a net beneficiary of its 
railway aid programs,'' having been more than fully reimbursed for its 
land, with interest.
---------------------------------------------------------------------------
                commuter and intercity passenger access
    Another important issue that could significantly affect the freight 
railroads' ability to provide the quality of service that today's 
freight shippers require to remain competitive in the global 
marketplace is the increasing demand for both intercity and commuter 
rail service.
    Rail passenger service can play an important role in alleviating 
highway and airport congestion, decreasing dependence on foreign oil, 
reducing pollution, and enhancing mobility and safety. Freight 
railroads have demonstrated their willingness to work cooperatively 
with Congress, Amtrak, commuter railroads, the States, and local 
jurisdictions to insure that the public's transportation needs can be 
met in the most efficient possible manner. Currently, freight railroads 
host commuter operations in cities around the Nation, operate commuter 
trains under contract to local authorities in several cities, and own 
97 percent of the mileage over which Amtrak operates. Moreover, at 
least 29 cities are proposing to establish new or expanded commuter 
rail operations, and the U.S. Department of Transportation has 
designated 11 corridors for the introduction of high speed passenger 
rail systems across the country.
    Freight railroads once provided all of our nation's rail passenger 
service, but large and growing deficits following World War II led them 
to exit the business. Existing rail passenger service is supported 
primarily by the public through Federal, State, or local government 
programs. While passenger railroading is important to our country, it 
pales in comparison to the importance of freight railroading. Our 
privately owned freight railroad system is a vital and strategic 
national asset--moving more freight, more efficiently, and at lower 
rates than anywhere else in the world, according to Lou Thompson, the 
World Bank's Railways Advisor. The safe, efficient, and cost-effective 
transportation service that freight railroads provide is critical to 
the domestic efficiency and global competitiveness of our Nation.
    Therefore, we must find the most effective way to provide the 
passenger services that America needs, but without burdening the 
freight rail system--operationally, financially, or in any other way. 
Congress should resist calls to legislate mandated passenger access to 
freight-owned track, as proposed in H.R. 2654 in the current Congress. 
Access by passenger railroads to facilities owned by private freight 
railroads must be negotiated on a case-by-case basis by the parties, 
without government interference.
    Freight railroads have developed a series of principles regarding 
the future of intercity passenger rail service. Our principles call for 
future rail passenger public policy to acknowledge the extreme capital 
intensity of railroading and to ensure that railroads' investment needs 
can be met. Policies which add to freight railroads' already enormous 
investment burden, such as further saddling them with the support of 
passenger rail infrastructure needs, or which reduce their ability to 
provide the quality of service needed by their freight customers, must 
be avoided. To do otherwise would undercut our nation's freight rail 
capabilities and be counterproductive in addressing our country's 
congestion, environmental, safety, and economic concerns.
                 security of our nation's rail network
    Finally, I would like to touch on the issue of security. This issue 
is relevant to this hearing because of the tension between the free 
flow of commerce and the assurance that our transportation systems are 
adequately protected from terrorist threats. Congress should strike a 
proper balance between protecting our country's transportation assets 
and its citizens, and providing for the free flow of goods and 
promoting our international competitiveness.
    Following the terrorist attacks on September 11, 2001, railroads 
took numerous proactive steps to increase the security of our nation's 
rail network. Railroads immediately began developing a comprehensive 
Terrorism Risk Analysis and Security Management Plan. The industry 
formed a security task force composed of railroad representatives with 
expertise in areas such as operations, legal issues, railroad police 
activities, hazardous materials transportation, and information 
technology. Outside consultants with expertise in intelligence and 
counter-terrorism were retained to provide advice on best practices.
    The task force created five Critical Action Teams addressing 
hazardous materials, operations security, infrastructure, information 
technology and communications, and military liaison. The task force 
undertook a comprehensive risk analysis which identified critical 
assets, vulnerabilities, and threats, and assessed the overall risk to 
people, national security, and the nation's economy. The task force 
then identified more than 50 countermeasures. The Terrorism Risk 
Analysis and Security Management Plan, which is now in effect, utilizes 
all this information and establishes four different alert levels, with 
implementation of specific countermeasures dependent on the alert level 
in effect.
    The plan also provides for the establishment of a Railway Alert 
Network (RAN), a 24-hours-aday, 7-days-a-week communications center 
operated by the AAR. Through the RAN, railroads share information with 
the intelligence community. In addition, the RAN provides a means for 
instituting appropriate alert levels and beginning to take the 
appropriate countermeasures.
    The AAR also operates the Surface Transportation Information 
Sharing and Analysis Center (ST-ISAC). Presidential Decision Directive 
63 called for the creation of private sector ISACs to protect the 
nation's critical infrastructure from attack. The ST-ISAC, formed at 
the request of the U.S. DOT, collects, analyzes, and distributes 
security information from worldwide resources to protect vital 
information technology systems from attack. The ST-ISAC also operates 
24-hours-a-day, 7-days-a-week.
                               conclusion
    Our nation's global economic supremacy is derived in large part 
from a transportation system that is second-to-none. Freight railroads 
are an indispensable element of that system. Going forward, we must 
ensure that our freight transportation capabilities will meet the 
increasing demands placed upon it. We are confident that the rail 
industry can play a major role in meeting this challenge. However, our 
nation's ability to provide transportation alternatives that promote 
mobility, economic efficiency, and environmental responsibility depends 
critically on the further development of the intermodal approach 
initiated by ISTEA and TEA-21 in which the full capabilities of each 
mode can be fully realized. No less important to freight railroads is 
the rejection of public policies that would unnecessarily and unfairly 
restrict their capability to deliver their maximum value to the U.S. 
economy.
                              Attachment 1
                             [August 2002]
    Evaluation of Transportation Research Board Special Report 267: 
 Regulation of Weights, Lengths and Widths of Commercial Motor Vehicles
                    (By Gerard J. McCullough, Ph.D.)
    Dr. McCullough is Associate Professor of Applied Economics, 
University of Minnesota, St. Paul, MN, and Senior Consultant, Charles 
River Associates, Boston, MA. He is former Director of the Center for 
Transportation Studies at Minnesota and former Deputy Director of the 
Center for Transportation Studies at the Massachusetts Institute of 
Technology (MIT). He has been a consultant on transportation to the 
World Bank and the Federal Highway Administration (FHWA) and various 
private organizations. He was a Special Assistant at the U.S. 
Department of Transportation from 1977-1980. His Ph.D. is from MIT.
                           executive summary
    The purpose of this memorandum is to provide an evaluation of the 
Transportation Research Board's (TRB) Special Report 267: Regulation of 
Weights, Lengths and Widths of Commercial Motor Vehicles (hereafter, 
``the Report''), which was released on May 16, 2002. The Report was 
produced by the TRB Committee for the Study of the Regulation of 
Weights, Lengths and Widths of Commercial Motor Vehicles (``the 
Committee'').
    The Report contains a series of conclusions and recommendations 
regarding TS&W regulation in the United States. It concludes that 
``opportunities exist for improving the efficiency of the highway 
system through reform of Federal truck size and weight regulations'' 
(p. ES-1) and finds that ``changes in truck size and weight regulations 
. . . offer the greatest potential to improve the functioning of the 
[highway] system'' (p. ES-2). The Report recognizes that ``it is 
essential to examine the safety consequences of size and weight 
regulation'' (p. ES-3), but cautions ``it is not possible to predict 
the outcomes of regulatory changes with high confidence'' (p. ES-3).
    To facilitate the liberalization of TS&W limits, the Report 
recommends a revised regulatory regime that would involve Federal 
supervision of State-set limits with evaluation provided by an 
independent Commercial Traffic Effects Institute (CTEI). The Committee 
calls for pilot studies to evaluate the consequences of changes in TS&W 
regulations, and recommends that States be allowed to issue permits for 
the operation of longer and heavier trucks once the CTEI is established 
and able to monitor and evaluate their performance.
    The Report adopts a too-narrow analytical perspective that 
significantly limits its usefulness in establishing national 
transportation policy. The report starts with the questionable 
assumption that there is widespread dissatisfaction with existing 
Federal truck size and weight regulations, when, in fact, the current 
system represents a balancing of the needs of truckers and truck 
shippers against the needs of motorists and the national goal of 
maintaining a healthy overall freight transportation system. In 
addition, it also fails to recognize:
      The need for an analysis of total freight supply and 
demand, including the role of shipper logistics costs.
      That changes in TS&W limits affect the capacity of the 
highway freight network and this in turn affects the performance of 
railroad and other freight networks (and their shippers).
      That the goal of TS&W regulation--after safety--should be 
to improve the overall efficiency of the national freight market, not 
just to reduce direct trucking costs.
      That an efficient freight market is one in which the 
users absorb the full marginal costs that they impose.
    There is no analytical basis, either in the Report or in earlier 
TS&W studies evaluated by the Committee, for many of the Report's most 
important conclusions and recommendations. For example, the Committee's 
recommendations for immediate changes in TS&W (subject to the creation 
of a CTEI) are not consistent with its own finding that the effects of 
such changes are uncertain. Nor is there any legal or economic analysis 
of why an independent CTEI would be more effective, or more 
appropriate, than the Federal DOT in determining the need for, and 
evaluating the performance of, TS&W regulations. There is also no 
analysis from an experimental design perspective of how the committee's 
pilot studies would demonstrate the effects of changes in TS&W limits, 
or an explanation of the potentially serious ethical issues a pilot 
program might entail.
    Perhaps most importantly, the Report does not evaluate the effects 
of changes in TS&W limits on the overall freight transportation market. 
Unfortunately, this decision causes it to omit certain points which are 
essential to a thorough evaluation of TS&W regulations. These include:
      Significant diversion of freight tonnage off the rail and 
barge networks and onto the highway network.
      Significant increases in the social cost--accidents, 
pollution, greenhouse gases, congestion, energy consumption, and 
noise--of moving this freight.
      Potential increases in the rates paid by freight shippers 
who remain on the rail network.
      Potential disinvestment by railroads, reduced intermodal 
and other service offerings by railroads, and secondary diversion of 
more freight onto the highway system.
    The Report has some strengths. It recognizes the uncertainty that 
exists regarding the benefits and full costs of changes in TS&W limits; 
the need to better understand nuisance-related and stress-related costs 
from mixed auto and truck traffic, and the potential benefit of 
separating auto and truck.; the potential role of cost-based user fees 
in managing infrastructure and mitigating negative effects of trucks; 
and the importance of regulatory institutions and enforcement 
mechanisms.
    Overall, because of its shortcomings, the Report provides extremely 
limited usefulness to policymakers interested in evaluating TS&W 
regulations. Previous studies relating to TS&W issues, produced by the 
U.S. Department of Transportation and other TRB Committees, do a more 
satisfactory job of including all pertinent factors in their analyses.
                             i. background
    The current U.S. truck fleet comprises about 8 million vehicles, 
about a fourth of which are combination trucks. Most combination trucks 
are large, with about 70 percent having registered maximum gross 
vehicle weights (GVW) over 75,000 pounds. The number of trucks on the 
road is small by comparison to private passenger vehicles, but because 
on average trucks are driven more frequently, their share of vehicle 
miles traveled (VMT) is disproportionate to their numbers. However, 
combination trucks still make up only about 5 percent of total VMT, as 
shown in Table 1.

                   Table 1. Total Vehicles and Vehicle Miles Traveled by Vehicle Class (2000)
----------------------------------------------------------------------------------------------------------------
                                                                                         Percent of
                                                                            Total VMT      Total      Percent of
                                                                            (millions)    Vehicles    Total VMT
----------------------------------------------------------------------------------------------------------------
 Autos................................................        137,967,488    1,612,393         61.1         58.6
                                                                                            percent      percent
Pickups/Vans..........................................         79,084,979      924,018         35.0         33.6
                                                                                            percent      percent
Buses.................................................            746,125        7,601  0.3 percent  0.3 percent
Single Unit Trucks....................................          5,926,030       70,583  2.6 percent  2.6 percent
Combination Trucks....................................          2,096,619      135,208  0.9 percent  4.9 percent
    Total.............................................        225,821,241    2,749,803        100.0        100.0
----------------------------------------------------------------------------------------------------------------
Note: Autos category includes motorcycles.
Source: Federal Highway Administration, Highway Statistics 2000, Table VM-1.

    Despite their relatively small numbers, trucks have an important 
and significant impact on the U.S. highway system. Trucks are 
disproportionately involved in fatal traffic accidents\1\ and are a 
major factor in urban traffic congestion and noise pollution.\2\ Trucks 
also produce significant emissions and because of the their weight, 
produce much greater wear on pavement than do private passenger 
vehicles.\3\
---------------------------------------------------------------------------
     \1\According to the Federal Motor Carrier Safety Administration, 
large trucks are involved in 9 percent of fatal accidents and 78 
percent the victims in truck-related fatal accidents are occupants of 
the other vehicles. See Large Truck Crash Profile: The 1998 National 
Picture, Tables 1 and 4.
     \2\The Federal Highway Administration has found that a combination 
truck imposes the congestion costs equivalent to 2.5 to 15 automobiles, 
depending upon the highway's grade and speed, the weight-to-power ratio 
of the truck, and the vehicle length, and that the most common semi-
trailer trucks impose more than 30 times as much noise pollution costs 
as autos. See Federal Highway Administration, 1997 Federal Highway Cost 
Allocation Study Final Report, August 1997, Table V-26.
     \3\Pavement wear increases exponentially with vehicle weight, such 
that 80,000-pound trucks on urban interstates impose marginal pavement 
costs per mile that are more than 400 times greater than automobiles. 
See Federal Highway Administration, 1997 Federal Highway Cost 
Allocation Study Final Report, August 1997, Table ES-6.
---------------------------------------------------------------------------
    Since the creation of the Interstate Highway System, trucking has 
become an increasingly important component of the U.S. freight market. 
Trucks now carry about 29 percent of total intercity freight volume in 
terms of ton-miles in the United States versus the 41 percent carried 
by railroads. In terms of revenue, trucking is even more significant--
intercity trucking now represents 81 percent of all intercity 
expenditures for freight transportation in the United States, as shown 
in Table 2

   Table 2. Freight Transportation Outlays by Type of Transport--2000
------------------------------------------------------------------------
                                       Millions of
               Mode                      dollars        Percent of total
------------------------------------------------------------------------
Rail..............................             36,454        9.0 percent
Truck-intercity...................            328,632       80.7 percent
Water.............................              3,501        0.9 percent
Oil pipeline......................              9,467        2.3 percent
Air carrier.......................             19,800        4.9 percent
Other.............................              9,111        2.2 percent
Total.............................            407,119      100.0 percent
------------------------------------------------------------------------
Source: Eno Transportation Foundation, Inc., Transportation in America
  2001.

Existing TS&W Regulation
    The dimensions and weights of commercial vehicles are regulated at 
both the Federal and State levels. Federal laws regulate both maximum 
permissible gross vehicle weights and maximum axle weights, and the 
width, length, and number of trailers. A summary of current Federal 
TS&W regulations is provided in Table 3.
    All States have laws governing the weights and dimensions of 
trucks. All but seven States apply some modification of the Federal 
regulations on a limited basis through permits, exemptions, and 
``grandfather rights.'' Altogether, regulations in the 50 States and 
the District of Columbia represent over 40 different combinations of 
single axle, tandem axle, bridge formula, gross vehicle weight, and 
interstate/non-interstate specifications.\4\
---------------------------------------------------------------------------
     \4\ A complete inventory of current State size and weight limits, 
as well as a thorough discussion of the nature, extent, and present 
status of grandfather rights is provided in U.S. Department of 
Transportation, Comprehensive Truck Size and Weight Study, Volume II 
Issues and Background, 2000, pp II-8--II-24.

                      Table 3. Summary of Current Federal Truck Size and Weight Regulations
----------------------------------------------------------------------------------------------------------------
                                               Criteria                Applicability               Limit
----------------------------------------------------------------------------------------------------------------
Weight.............................  Single Axle limit on         Interstate System.....  20,000 lbs.
                                      Interstate System.
                                     Tandem Axle limit on         Interstate System.....  34,000 lbs.
                                      Interstate System.
                                     Total gross vehicle weight.  Interstate System.....  80,000 lbs.
                                     Gross weight on any group    Interstate System.....  500(LN/(N-1)+12N+36)
                                      of two or more consecutive
                                      axles (bridge formula).
Size...............................  Vehicle width..............  National Network......  102 inches
                                     Semi-trailer length........  National Network......  48 feet (minimum)
                                     Twin trailer length........  National Network......  28 feet (minimum)
----------------------------------------------------------------------------------------------------------------
Notes: National Network refers to a network of roads designated by the Secretary of Transportation pursuant to
  the Surface Transportation Assistance Act of 1982. It includes virtually all Interstates and some other
  highways and totals more than 200,000 miles. For Bridge Formula W = overall gross weight on any group of two
  or more consecutive axles to the nearest 500 lbs., LN = distance in feet between the extreme of any two or
  more consecutive axles, and N = number of axles in the group.
Source: U.S. DOT, Comprehensive Truck Size and Weight Study, Volume I Summary Report, p. 3.

    Federal TS&W regulation has its origin in the creation of the 
Interstate Highway System in 1956. The passage of the regulations was 
motivated by the significant role of the Federal Government in funding 
90percent of the construction of the system. The Federal weight limits 
were originally set at 73,280 pounds, 18,000 pounds, and 32,000 pounds 
for gross vehicle weight, single axle weight, and tandem axle weight, 
respectively, but were increased to those shown in Table 3 in 1975.
    In 1982, the Federal role in TS&W regulation was increased through 
the passage of the Surface Transportation Assistance Act (STAA), which 
required States to adopt Federal weight limits on Interstate highways 
and allow single 48-foot trailers and twin 28-foot trailers on a 
``National Network'' designated by the Secretary of Transportation in 
consultation with the States. This network consists of virtually the 
entire Interstate system plus another 156,000 miles of highways.
    The Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) prohibited the States from expanding either the number of 
routes on which Longer Combination Vehicles (LCVs) could be operated or 
the maximum weights and dimensions allowed for these vehicles.\5\ This 
regulation has come to be known as the ``LCV freeze'' and in 1998 it 
was extended by the Transportation Equity Act for the 21st Century.
---------------------------------------------------------------------------
     \5\Longer combination vehicles (LCVs) refers to multi-trailer 
combinations longer than the standard twin 28-foot trailer combination 
vehicle (the so-called STAA double). The LCVs include seven-axle 
``Rocky Mountain'' doubles, eight-axle ``B-Train'' doubles, nine-axle 
``turnpike doubles'', and seven-axle tripletrailer combinations.
---------------------------------------------------------------------------
    The study of TS&W issues by the Federal Government predates its 
involvement in funding of the highway system. The first major study was 
completed in 1941 by the Interstate Commerce Commission.\6\ A major 
impetus for these studies has been the claim that higher size and 
weight limits increase the efficiency of the freight markets. The main 
findings of previous TS&W studies, especially those that are relevant 
to conclusions and recommendations in TRB Special Report 267, are 
reviewed in Appendix A1.
---------------------------------------------------------------------------
     \6\ Interstate Commerce Commission, Federal Regulation of the 
Sizes and Weight of Motor Vehicles; Letter from the Chairman, 
Interstate Commerce Commission, 77th Congress, 1st Session, House 
Document No. 354, August 14, 1941.
---------------------------------------------------------------------------
                 ii. overview of trb special report 267
    The Transportation Equity Act for the 21st Century (TEA-21) 
contained a provision specifically requiring the Secretary of 
Transportation to request that TRB conduct a TS&W study. The charge 
given in the act is quite general in scope, specifying only``. . . a 
study regarding the weights, lengths, and widths of commercial motor 
vehicles operating on Federal-aid highways . . .'' and that the study 
provide policy recommendations.\7\
---------------------------------------------------------------------------
     \7\P.L. 105-178, Section 1213, Subsection (i).
---------------------------------------------------------------------------
    The law requires TRB to consult with the U.S. Department of 
Transportation, States, the motor carrier industry, freight shippers, 
highway safety groups, air quality and natural resource management 
groups, and commercial motor vehicle driver representatives. It 
requires TRB to consult with ``other appropriate entities,'' although 
it does not specify what these entities might be. It also requires TRB 
to consider and evaluate the impact of its recommendations on the 
economy, the environment, safety, and service to communities.
    The Committee for the Study of the Regulation of Weights, Lengths 
and Widths of Commercial Motor Vehicles was formed in 1998, and its 
original purpose was to review certain aspects of the U.S. DOT's TS&W 
study. As it happens, TRB had already begun planning for a TS&W study 
before TEA-21, and so the Committee was reassigned to this task when 
the law was passed. The committee consisted of 13 members representing 
State transportation officials, professional researchers, and 
academics, overwhelmingly in the field of civil engineering, with a 
small representation from economics. A summary list of the members and 
their respective affiliations is provided in Appendix A2.
    As part of the process of conducting the study, the Committee 
solicited comments from outside parties on the issue of changes to TS&W 
regulations. Of the 46 organizations receiving letters, 25 provided 
comments in response. The full list of organizations contacted is shown 
in Appendix A3.
    The Committee's request for comments included the following three 
specific questions:
    1. What revisions to Federal law and regulations regarding 
commercial vehicle weights, lengths, and widths should the committee 
consider?
    2. What factors should it take into account in evaluating possible 
revisions?
    3. Should the committee recommend revisions to Federal law and 
regulations?
    Responses to the three questions were quite varied. In response to 
Question 2, four respondents explicitly stated that the Committee 
should not consider the issue of modal competitiveness or the diversion 
of freight from the railroads in evaluating possible TS&W revisions. 
Three of these were trucking industry interests.\8\ The other was the 
National Industrial Transportation League.
---------------------------------------------------------------------------
     \8\The American Trucking Associations, the Distribution & LTL 
Carriers Association, and the National Automobile Transporters 
Association.
---------------------------------------------------------------------------
    The basic conclusion in Special Report 267 is that increased TS&W 
limits have the ``greatest potential'' to improve highway freight 
efficiency, but that their full effects (including safety effects) are 
uncertain and that there is a ``substantial probability'' that there 
will be safety ramifications. To facilitate the liberalization of TS&W 
limits, the Report proposes a revised regulatory regime that would 
involve Federal supervision of State-set limits with evaluation 
provided by an independent Commercial Traffic Effects Institute (CTEI). 
The Report suggests that the States should not be able to begin 
liberalizing the regulations until the CTEI is established and is able 
to conduct careful assessments. A full list of the Report's conclusions 
and recommendations is in Table 4.

   Table 4. Conclusions and Recommendations of TRB Special Report 267
------------------------------------------------------------------------
            Conclusions                        Recommendations
------------------------------------------------------------------------
1. Opportunities exist for           1. Create a Commercial Traffic
 improving the efficiency of the      Effects Institute
 highway system through reform of
 Federal truck size and weight
 regulations. Such reform may
 entail allowing larger trucks to
 operate.
2. Appropriate objectives for        2. Evaluate the consequences of
 Federal truck size and weight        changes in truck size and weight
 regulations are to facilitate safe   regulations through pilot studies
 and efficient freight
 transportation and interstate
 commerce, to establish highway
 design parameters, and to manage
 consumption of public
 infrastructure assets.
3. Changes in truck size and weight  3. Allow certain immediate changes
 regulations made in coordination     in Federal regulations
 with complimentary changes in the
 management of the highway system
 offer the greatest potential to
 improve the functioning system.
4. The methods used in past studies  4. Allow certain Longer Combination
 have not produced satisfactory       Vehicles (LCVs)
 estimates of the effect of changes
 in truck weights on bridge costs.
5. It is not possible to predict     5. Routes and roads to which
 the outcomes of regulatory changes   Federal standards should apply
 with high confidence.
6. It is essential to examine the    6. Conduct research on enforcement,
 safety consequences of size and      environment and safety effects,
 weight regulation. Research and      bridge costs, freight markets,
 monitoring needed to understand      driver stress, and dedicated truck
 the relationship of truck            infrastructure.
 characteristics and truck
 regulations to safety and other
 highway costs are not being
 conducted today.
7. Although violations of size and
 weight regulations may be an
 expensive problem, monitoring of
 compliance with the regulations is
 too unsystematic to allow the
 costs involved to be estimated.
------------------------------------------------------------------------

     iii. evaluation of trb special report 267 general observations
    The most detailed analysis in the Report (pp. 2-17 to 2-29) focuses 
on new probabilistic techniques for assessing bridge costs. The actual 
analysis of freight market efficiencies--the raison d'Etre for the 
Report--is limited to a few bullet-points on pages 2-12 and 2-13. There 
is some discussion on pages 2-36 to 2-39 of the relationship between 
freight markets and land use--a topic some would regard as very 
important--but the Report elects not to weigh these effects: 
``Predicting and evaluating the effect of changes in size and weight 
regulation on land use would be extremely difficult'' (p.2-39).
    The Report does recognize the uncertainty that exists regarding 
TS&W issues. The Executive Summary cautions: ``Throughout its work, the 
Committee found that a lack of information about the costs and benefits 
of truck transportation and the impacts of the size and weight 
regulations hindered its effort to provide useful policy advice'' (p. 
ES-1). In a more detailed summary of these uncertainties (p. 2-11), the 
Report concludes that pavement impacts and traffic impacts are well 
enough understood to facilitate regulatory change, but that there is 
inadequate knowledge of safety effects, bridge costs, changes in the 
volume of truck traffic, motorist stress and discomfort, and 
administrative feasibility. Not all would accept the claim that the 
infrastructure and traffic effects are well known.\9\
---------------------------------------------------------------------------
     \9\The Committee appears to be less than certain about its 
knowledge of traffic effects. It recognizes (pp. 236) that the methods 
used to estimate congestion and pollution costs involve 
``oversimplified treatment on the complex interactions between trucks 
and other vehicles in the traffic stream. Changing the traffic volume, 
dimensions, and acceleration abilities of trucks will change how 
motorists drive around them, affecting other vehicles' patterns of 
acceleration and braking.'' The Committee also acknowledges (pp. 233 to 
2-34) that the predicted effects on traffic flow depend critically on 
freight diversion forecasts, (which the Report discounts).
---------------------------------------------------------------------------
    The Report also acknowledges the potential importance of motorist 
comfort and distress to TS&W. The Report does not devote an extensive 
amount of time to discussing the issue, but it does acknowledge that 
research should be conducted to determine whether these effects are 
``real costs that should be considered in evaluations of highway 
regulations'' (p. 5-18).\10\ The Report also mentions the potential 
benefits to be gained from separating truck and auto traffic by 
constructing separate highway and bridge facilities for trucks. Road 
Work, the 1989 Brookings Institution study of the U.S. highway system 
by Small, Winston, and Evans developed this idea that there may be 
``diseconomies of scope'' that result from combining cars and trucks on 
the same system.''\11\ The Report acknowledges that separate truck 
facilities could help to accommodate the growth in freight demand, 
though it does not discuss the financing of these facilities.\12\
---------------------------------------------------------------------------
     \10\The Report makes the methodological suggestion that the only 
way to evaluate the economic value of driver stress is to observe 
changes in traveler behavior where automobile drivers chose different 
routes to avoid big trucks. To see the limitations of this method, 
consider a case with which the Committee members might be familiar-the 
installation of Traveler Information Systems on public transportation 
systems. The economic value of these systems, which let travelers know 
in real time when the next bus or train is arriving, is not measured 
solely by the number of travelers who divert from highway to transit. 
The valuation should include some measure of the usefulness of 
information provided existing users.
     \11\Small, K., Winston, W., and Evans, C., Road Work: A New 
Highway Pricing & Investment Policy, Washington DC: The Brookings 
Institution, p. 102.
     \12\The Report also acknowledges here that ``other modes'' (p.5-
18) will be part of the solution.
---------------------------------------------------------------------------
    Finally, the TRB Report recognizes the potential role that cost-
based user fees could play in managing the utilization of highways and 
bridges and mitigating the negative effects of trucks. Though the 
Report's discussion is mostly limited to cases where the imposition of 
fees would facilitate the implementation of higher TS&W limits (p. 3-
28), the general endorsement of highway pricing is a policy advance. 
This is coupled with the important recognition that the design of 
regulatory institutions and enforcement mechanisms as well as standards 
are important elements of the regulatory process.
    A major shortcoming of the Report is that it fails to provide any 
real analysis of supply and demand in the freight market, even though 
the explicit aim of the Report is to increase the efficiency of this 
market. The economic theory upon which the Report is based is 
uncomplicated: ``The regulations have important economic consequences 
because trucking accounts for four-fifths of expenditures on freight 
transportation in the United States, and trucking costs are influenced 
by truck size and weight.''
    The DOT Comprehensive Truck Size and Weight Study does not 
necessarily contradict this theory, but it does provide a more thorough 
picture of the freight market to provide a basis for careful policy 
decisions. For example, the U.S. DOT study points out in Chapter IV 
that overall logistics costs--not truck or rail rates--are the factors 
that determine freight market decisions. It notes that savings in 
inventory carrying costs are about equally important as reductions in 
(truck and rail) transportation costs in increasing the efficiency of 
freight markets. The U.S. DOT study also spends a considerable amount 
of time analyzing the impact of TS&W regulations on the freight 
railroad industry (Volume III, Chapters II, III, IV, XI). These impacts 
are important because they have direct bearing on the overall 
efficiency of the freight market.
    The notion of freight market efficiency developed in Special Report 
267 is too narrow to be useful in a discussion of national 
transportation policy. The sole focus of the Report is on the movement 
by truck from Point A to Point B at the lowest direct expense to some 
motor carriers and shippers. An efficient national freight market is an 
intermodal system of air, water, highway, rail and shipper activities 
which take full advantage of linked networks of transport assets. 
Moreover, (as the TRB itself recognized in Special Report 246\13\) an 
efficient freight market is one in which the users absorb the full 
marginal costs that they impose.
---------------------------------------------------------------------------
     \13\ TRB Special Report 246, Paying Our Way: Estimating Marginal 
Social Costs of Freight Transportation, 1996, Table ES-1, p. 8.
---------------------------------------------------------------------------
    Using this metric, Special Report 246 found rail operations to be 
two-to-five times more efficient than truck operations on a corridor-
by-corridor basis. This suggests that higher TS&W limits, which would 
divert freight from the rail network onto the highway network, would 
increase social costs and decrease efficiency. One could argue that the 
reduction in private costs to truckers and truck shippers could 
partially offset this effect, but a national policy report should make 
that argument explicitly.
  point-by-point evaluation of report conclusions and recommendations
    This section provides a point-by-point evaluation of the TRB 
Report's conclusions and recommendations. A serious shortcoming of the 
Report is its failure to establish an analytical basis for the 
recommendations which it makes. There is no analytical justification, 
for example, either in earlier TS&W studies or the Report itself, for 
its novel regulatory proposal--Federal ``supervision'' of State TS&W 
permitting with oversight provided by an independent Commercial Traffic 
Effects Institute (CTEI). Nor is there an analysis from an experimental 
design perspective of how the Report's pilot studies would demonstrate 
the effects of changes in TS&W. Other recommendations for immediate 
change that the Report makes appear to be inconsistent with its own 
finding that the effects of increased TS&W limits are uncertain. The 
Report does suggest that States should not be able to begin 
liberalizing the regulations until the CTEI is established and is able 
to conduct careful assessments.
A. Conclusions of the TRB Report
    Conclusion 1: Opportunities exist for improving the efficiency of 
the highway system through reform of Federal TS&W regulations. Such 
reform may entail allowing larger trucks to operate.
    The proper focus of TS&W policy should not be solely on lowering 
the private costs of trucking firms and/or some freight shippers, but 
on minimizing the public costs (infrastructure, safety, pollution, 
energy consumption, congestion) of truck transportation and ensuring 
the overall efficiency of the national freight market. An efficient 
market is one in which the users absorb the full marginal costs that 
they impose.
    It is wrong for the Report to conclude--without a more careful 
analysis--that there is a direct relationship between increases in TS&W 
limits and increases in freight market efficiency. The data for such 
analyses were available to the Committee in TRB Special Report 246, in 
a 1998 DOT-sponsored study by David J. Forkenbrock of the University
    of Iowa entitled External Costs of Truck and Rail Freight 
Transportation, in the DOT's 2000 Comprehensive Truck Size and Weight 
Study, and in the 2000 Addendum to the 1997 Federal Highway Cost 
Allocation Study.
    According to the 2000 Addendum to the 1997 Federal Highway Cost 
Allocation Study, heavy trucks in the 75,000-80,000 pound range cover 
only 80 percent of the infrastructure costs they impose, and heavy 
trucks in the 80,000-100,000 pound range cover 50 percent.\14\ The full 
marginal social cost of bigger trucks--much of it not recovered--is on 
the order of $0.20 to $0.70 per mile.\15\
---------------------------------------------------------------------------
     \14\ Federal Highway Administration, 2000 Addendum to the 1997 
Federal Highway Cost Allocation Study Final Report, Table 7.
     \15\ Ibid., Table 13.
---------------------------------------------------------------------------
    Table 5 summarizes the relevant results of the TRB's own Special 
Report 246, comparing the efficiency of two representative freight 
movements by rail and by 5-axle tractor semitrailer:
      Case 1 compares the full costs of a grain movement from 
Walnut Grove, MN to Winona, MN, a distance of about 200 miles. Case 1A 
summarizes the full costs of a direct truck move using local roads. 
Case 1B analyzes the truck costs by Interstate. Case 1C is a combined 
truck/rail movement.
      Case 3 compares the full costs of a container movement 
from Los Angeles, CA to Chicago, IL, a distance of about 2,000 miles. 
Case 3A is a truck movement by Interstate. Case 3B involves truck and 
container railcar.
    In both corridors, the rail movements are more energy-efficient and 
labor-efficient and impose lower social costs. The modes are 
competitive largely because of public subsidies to trucking and the 
high valuation that shippers place on the flexibility and speed of the 
truck mode.

                             Table 5. Efficiency Comparisons: Truck versus Rail ($)
----------------------------------------------------------------------------------------------------------------
                                                                Case 1A   Case 1B   Case 1C   Case 3A    Case 3B
----------------------------------------------------------------------------------------------------------------
                    Marginal External Cost
Congestion...................................................      8.94      6.25      0.00     295.81      0.75
Accidents....................................................     46.04     26.11      9.19      89.43     77.72
Air Pollution................................................      6.54      6.75      1.43      63.65     34.83
Energy Security..............................................      3.10      3.63      0.39      16.64      5.36
Noise........................................................      2.31      0.00      0.78      20.68     12.65
Marginal cost of public infrastructure.......................     38.63     61.02      0.00     141.47      1.81
                                                              --------------------------------------------------
    Total....................................................    105.57    103.77     11.78     627.67    133.12
Less: User fees ($/truckload)................................     51.16     59.90      0.65     285.14     10.50
Equals: Net subsidy ($/truckload)............................     54.41     43.87     11.13     342.53    122.62
Carrier's average cost ($/truckload).........................    454.16    442.73    124.87    2469.06   1049.44
----------------------------------------------------------------------------------------------------------------
Source: TRB Special Report 246, Tables 4-2, 4-3, and 4-4.

    The implication is that the liberalization of TS&W might improve 
the efficiency of the highway system, but in so doing it would also add 
external costs (negative impacts on other transportation modes, and 
increased costs to some transport users) that would not be recovered. 
Thus, total freight transport efficiency would be harmed.
    Conclusion 2: Appropriate objectives for Federal TS&W regulations 
are to facilitate safe and efficient freight transportation and 
interstate commerce, to establish highway design parameters, and to 
manage consumption of public infrastructure assets.
    The Report recognizes here that the goal of TS&W regulation is not 
to improve the efficiency of the ``highway system,'' but to balance the 
public costs of truck travel against the efficiency of the freight 
transportation market. However, the Committee does not follow its own 
admonition, because the focus throughout the Report is overwhelmingly 
on lowering the private costs of trucking.
    A more balanced statement of goals is in the DOT's National Freight 
Transportation Policy Statement (January 1997), which guided the 
Comprehensive Truck Size and Weight Study. These goals include:
      Ensure a safe transportation system;
      Promote economic growth by removing unwise or unnecessary 
regulation and through the efficient pricing of publicly financed 
transportation infrastructure;
      Protect the environment and conserve energy;
      Provide funding and a planning framework that establishes 
priorities for allocation of Federal resources to cost-effective 
infrastructure investments that support broad National goals;
      Promote effective and equitable joint utilization of 
transportation infrastructure for freight and passenger service.
    Notice the emphasis on safety, transportation infrastructure (not 
just highways), environment, and effective and fair use of all of the 
nation's transportation assets. It is worth noting, also, that when the 
DOT conducted its Comprehensive Truck Size and Weight Study, direction 
was provided by a Policy Oversight Group which included officials from 
FHWA, the Federal Railroad Administration, and the Maritime 
Administration. In addition, a Multimodal Advisory Group was 
established to provide technical assistance.
    It is surprising that a national panel of transportation experts 
would view this broad set of goals and multimodal working structure as 
a ``shortcoming'' (p. 2-1), and yet that is the conclusion of the TRB 
Special Report 267. The Report claims that a fundamental problem with 
the 2000 study and earlier studies is that ``analyses have not started 
with clear definitions of the objective of regulation'' (p. 2-1) which 
should be ``asking how the size and weight regulations can be used as a 
part of a strategy for increasing the benefits of the highway system'' 
(p. 2-3). What the Report means by ``increasing the benefits'' is 
liberalizing the TS&W limits.
    Conclusion 3: Changes in TS&W regulations made in coordination with 
complimentary changes in the management of the highway system offer the 
greatest potential to improve the functioning of the system.
    The Report provides no analytic basis for its conclusion that 
changes in TS&W have ``the greatest potential'' to improve the 
functioning of the freight market or the efficiency of the highway 
system. There is no analysis of the role of logistics costs, for 
example, or of the impact of deregulation, computerization, 
containerization, and advanced communications on freight productivity. 
Nor is there a complete analysis of the role that prices could play in 
making highways more efficient.
    The Report's failure to consider logistics contrasts with the U.S. 
DOT's Comprehensive Truck Size and Weight Study, which recognizes that 
the freight market properly understood is a $600 billion activity (p. 
IV-12). The DOT study estimates that business logistics costs declined 
by about $65 billion during the 1980's, but that a large portion of 
that savings ($30 billion) was attributable to reductions in inventory 
carrying costs. The other $35 billion of savings was attributed to 
reductions in transportation costs for all modes including truck, rail, 
water, pipeline and air.
    With respect to the highway system, Special Report 246 concludes 
that the best way to guarantee improvement for all users of the system 
would be to charge the right prices. Quoting the earlier Committee:
    It is desirable that shippers and carriers pay the full social cost 
of their freight operations--that is, that the special taxes and fees 
paid by the shipper or carrier for each shipment of freight be enough 
to offset the cost to the government of the shipment and the external 
costs that the shipment imposes on others. If the shipper and carrier 
do pay the full cost of each freight shipment, then they will be more 
likely to use transportation services responsibly and efficiently.\16\
---------------------------------------------------------------------------
     \16\TRB Special Report 246, Paying Our Way: Estimating Marginal 
Social Costs of Freight Transportation, 1996, p. 1.
---------------------------------------------------------------------------
    TRB Special Report 267 also recognizes the potential role that 
cost-based user fees could play in managing the utilization of the 
highway system, but the focus is on applying these fees to larger-
permit trucks in order to ``facilitate'' the implementation of higher 
TS&W limits (p. 3-28). There are technical problems with such a fee 
scheme that are discussed below under Recommendation 3. The more 
general problem is that the pricing described in this Report would do 
little to reduce the truck-related stresses that motorists feel, the 
safety risks they face, or the cross-subsidies they pay for 
infrastructure.
    Conclusion 4: The methods used in past studies have not produced 
satisfactory estimates of the effect of changes in truck weights on 
bridge costs.
    In its Comprehensive Truck Size and Weight Study, the U.S. DOT 
estimates that nationwide legalization of six-axle 97,000-pound single 
trucks would reduce shipper costs by 5.1 percent, but increase bridge 
costs by 33.1 percent. Similarly, nationwide operation of LCVs would 
decrease shipper costs by 11.4 percent, but increase bridge costs by 
34.4 percent. Large expenditures for bridges--$53 billion in capital 
costs and $266 billion in user delay costs--would offset the efficiency 
gain to truckers and truck shippers.
    The reason for this large estimate is that heavier singles and LCVs 
would overstress bridges beyond their design limits and force them to 
be replaced. The DOT recognizes that it probably overestimates bridge 
costs since ``some bridges could be strengthened and replacement of 
bridges on highways with low volumes of the damaging vehicles would not 
have to be improved at all.''\17\
---------------------------------------------------------------------------
     \17\U.S. Department of Transportation, Comprehensive Truck Size 
and Weight Study, Volume I Summary Report, 2000, p. ES-20.
---------------------------------------------------------------------------
    The TRB Report puts considerable emphasis on the fact that a risk-
based analysis would reduce the projected cost of bridge replacement.
    Very high estimates of bridge costs from liberalized regulations 
are inconsistent with the experience of jurisdictions--in particular 
Michigan and Ontario--that have opened their roads to use by trucks 
much heavier than the Federal weight limits without experiencing costs 
of the magnitude estimated. Most important, the DOT estimates ignore 
the great potential for lower-cost methods of maintaining bridge safety 
that the States are increasingly capable of applying because of the 
widespread adoption of bridge management systems (p. 2-29).
    The Report recognizes that a proper, risk-based analysis has not 
yet been conducted. It does not fully acknowledge the difficulties that 
might be involved in such an analysis or the possibilities for upward 
revision of the DOT estimates. The Report is skeptical of the DOT's 
ability to predict regulatory outcomes in markets governed by supply 
and demand (see Conclusion 5 below), but confident of its ability to 
predict the behavior of State highway agencies and the legislative 
committees that fund these agencies.
    Also, as the Report notes on p. 2-19, the U.S. DOT study omits 
fatigue costs attributed to larger vehicles markets which State 
engineers feel are underestimated. And, as the Report notes on p. 2-21, 
there are alternative rating systems for judging how much a bridge can 
be loaded and the choice of the higher rating system would revise the 
DOT estimate upward. The methods used in the past may not have produced 
satisfactory estimates, but they have not necessarily produced 
exaggerated estimates, as the Report claims.
    Conclusion 5: It is not possible to predict the outcomes of 
regulatory changes with high confidence.
    It is true that there is uncertainty involved in the prediction of 
regulatory outcomes. However, economists have made considerable 
progress in the empirical analysis of various network industries, and 
these results have been used extensively to improve the regulatory 
framework and the functioning of the economy. An example which a TRB 
panel should have been aware of is railroad deregulation in 1980. The 
regulatory changes accompanying rail deregulation were supported by 
extensive economic studies before the fact, and have been validated by 
subsequent analyses. One might point to similar work in most other 
network industries--airlines, electricity, telecom, gas, water, 
etc.\18\
---------------------------------------------------------------------------
     \18\Economists involved in these reforms are aware of the mistakes 
that have been made and of the limitations of such analyses, but no one 
has concluded that the analysis efforts are irrelevant. For a critical 
overview of these developments see Michael A. Crew and Paul R. 
Kleindorfer, ``Regulatory Economics: Twenty years of Progress?'' pp. 5-
22, in a special issue of the Journal of Regulatory Economics, 21(1), 
January 2002.
---------------------------------------------------------------------------
    It is one thing to conclude, as the Report does (p. 2-6), that a 
1986 TRB committee was not able to predict the exact length (53 ft) of 
the trailers that the trucking industry would adopt in response to a 
change in statutory language, or (p. 2-6) that a 1970's Canadian study 
did not anticipate the variety of specialized trucks that would evolve 
as a result of new provincial weight limits. It is another thing to 
decide--as the Committee apparently does--that it could disregard the 
work in the Comprehensive Truck Size and Weight Study aimed at 
forecasting the effects of TS&W changes on the intercity freight 
markets.
    Those effects can be quite striking. The illustrative TS&W 
scenarios analyzed in the DOT study show that bigger trucks would 
divert between 4.0 percent and 19.6 percent of annual rail traffic 
(measured in car-miles) onto the highway system (Table ES-12). This 
means between 1.02 billion car-miles and 5.0 billion car-miles would be 
converted into highway trailer-miles each year. It also means a 
projected loss of railroad contribution to fixed costs ranging from 
38.2 percent to 55.8 percent. This is money that would no longer be 
available to the railroads to cover the fixed costs of their operations 
and sustain investment.
    The problem that the DOT report recognizes is that railroad fixed 
costs are high, so the losses would have to be recovered (to some 
extent) in the form of higher prices to remaining rail shippers. In 
other words, a reduction in costs to some highway shippers must lead to 
an increase in rates for some rail shippers. In response to trucks 
cutting rates, railroads in many cases would have to lower their rates 
to stay competitive or else lose the traffic. Losing traffic means that 
remaining shippers must bear the burden of providing fixed costs, and 
so on, and you get a vicious circle. The TRB Committee, with a mandate 
to consider overall economic efficiency, should have recognized this.
    Conclusion 6: It is essential to examine the safety consequences of 
TS&W regulation.
    In its Comprehensive Truck Size and Weight Study, the U.S. DOT 
concludes that safety must be the primary goal of TS&W policy along 
with ``the considerable public concern about mixing larger trucks with 
passenger cars on our highways.''\19\
---------------------------------------------------------------------------
     \19\ US Department of Transportation, Comprehensive Truck Size and 
Weight Study, p. V-1.
---------------------------------------------------------------------------
    Collisions between medium to heavy trucks and other, smaller 
vehicles (principally passenger cars and light trucks and minivans) can 
be particularly lethal to the occupants of the smaller vehicles, 
principally because of the difference in weight (mass) between the two 
vehicles, and for head-on collisions, the high vehicle closing speeds 
typically involved. In total, collisions with medium to heavy trucks 
account for 22 percent of all passenger car and light truck/van 
occupant fatalities sustained in collisions with other motor vehicles. 
(p. V-2)
    The DOT study acknowledges that it is difficult to use statistical 
inference to establish a relationship between TS&W limits and highway 
safety. Longer combination vehicles account for less than 2 percent of 
annual truck VMT, while 5-axle single trailers comprise 65.4 percent. 
It is difficult to develop robust estimates for vehicles larger than 
the typical vehicle in use. Also, the crash rates for larger vehicles 
now operating in highly controlled situations may not be transferable 
to other operating situations. The DOT's approach, therefore, is to 
focus on the systematic components of truck safety, comparing physical 
differences in vehicles and equipment, driver performance, and 
operating environment in standard versus larger trucks.
    The TRB Report recognizes the lack of conclusive information about 
the relationship between truck size and weight and truck safety. It 
also recognizes that this kind of information is critically important 
in formulating potential changes to TS&W regulation. The approach that 
the Report proposes is different from the DOT's and raises serious 
questions. According to the Report, pilot studies would solve the 
information problem by facilitating ``direct observation of the primary 
impact of interest'' (p. 5-9) which would be frequency and severity of 
accidents. This amounts to the use of unknowing or unwilling human 
subjects (motorists) in large-scale (or lengthy) safety experiments.
    The most successful past studies of the relative accident rates of 
trucks of differing dimensions have used data obtained from truck 
operators that include records of large numbers of trips made by 
different kinds of trucks operating between the same origins and 
destinations . . . In pilot studies involving a small number of 
vehicles, it would not be possible within a reasonable time span to 
measure small differences in relative accident risks. (pp. 5-9, 5-20)
    The pilot studies are endorsed despite the DOT's findings that 
combination trucks are more susceptible to rollover than conventional 
trucks and induce greater driver fatigue, as well as repeated 
substantiation that the public is strongly opposed to longer, heavier 
trucks and, therefore, would likely not wish to be party to a ``pilot 
study'' to examine the safety effects of TS&W changes.\20\
---------------------------------------------------------------------------
     \20\Ibid., p. I-22 and V-11.
---------------------------------------------------------------------------
    Conclusion 7: Monitoring of compliance with TS&W regulations is too 
unsystematic to allow the costs (of violations) to be estimated.
    This is an important observation, and the report rightly points out 
the need to better quantify the nature and extent of violations in 
order to inform the process of TS&W regulation. The Report identifies a 
number of techniques as being promising for improving enforcement, 
especially more widespread use of automated, information technology 
based systems.
B. TRB Report Recommendations
Recommendation 1: Establish an independent Commercial Traffic Effects 
        Institute to monitor and evaluate TS&W changes
    The Report stresses that the design of regulatory institutions and 
enforcement mechanisms, as well as performance standards, are important 
elements of the TS&W regulatory process. This is an important 
contribution, but the Report offers no legal, economic or 
administrative analysis of why a Commercial Traffic Effects Institute 
(CTEI) would provide more effective regulation than the DOT--especially 
in an area where there are significant public concerns.
    The primary justification for CTEI is that ``under present 
practices Federal size and weight policy has been deadlocked for more 
than a decade, in spite of general dissatisfaction with the 
regulation'' (p. 5-5). In fact, it is debatable that there is 
widespread dissatisfaction with the existing TS&W regulations, at least 
as far as it concerns liberalization, among the general driving public. 
The Report recognizes that the DOT's recent analysis of TS&W issues was 
``comprehensive'' (p. 5-6), and that the DOT has the authority to 
regulate truck safety (p. 3-4), but it concludes that the way to end 
the ``deadlock'' is to establish a separate agency (p. 5-6).
    The CTEI would be an ``independent public organization,'' financed 
from the Highway Trust Fund, and governed by a congressionally 
appointed board of Federal, State and industry representatives. The 
CTEI's professional staff of engineers, statisticians and economists 
would work on pilot studies and other research funded by government or 
the private sector. Here is how it might work, according to the Report:
    For example, a group of carriers in one industry segment or one 
region might have a particular interest in having research or a pilot 
study conducted on a vehicle or operating practice they believed would 
be of value to them. In such a circumstance, the carriers should be 
expected to contribute a major portion of the costs of the evaluations. 
Legislation would be needed to provide the proper legal form for such 
contributions. (p. 3-5)
    The Report predicts that under such arrangements the Institute 
``would come to be seen by industry, State governments, and others as a 
means to implement ideas about more efficient highway management and 
truck regulation'' (p. 3-4). This seems accurate, but it is not clear 
that the public interest would be protected.
Recommendation 2: Evaluate the Consequences of Changes in TS&W 
        Regulations Through Pilot Studies
    While the concept of pilot studies is, in principle, not 
inappropriate for research of this nature, the specific proposal put 
forth in the TRB report is problematic at best. As described by the 
Report, the pilot program would expose ordinary travelers to bigger/
heavier experimental trucks in traffic if the CTEI determined, based on 
all available information, that the pilot could be conducted without 
harm to safety (p. 5-10).
    One might consider pharmaceuticals as a model for the evaluation of 
innovations with the potential to both produce public harm and benefit, 
but what is proposed here is not really analogous to pharmaceutical 
regulation. In that industry, it takes about 13 years to develop one 
new drug, and the process is characterized by systematic, sequential 
incremental testing of the product for 7-8 years before it is tried on 
any humans. When human testing begins, extensive tests are initially 
conducted on healthy human volunteers just to ensure the product does 
no harm. Critical to the process is extensive monitoring in a 
controlled environment. Moreover, safety is always first--before a new 
drug is even tested for efficacy it is tested to ensure that it does no 
harm to human beings. Clearly, any public policy innovation that could 
potentially harm the public needs should be examined in a similar risk-
averse, safety-based framework.
    Nor is it clear that the pilot studies recommended by the Committee 
would establish the ``consequences'' of TS&W changes. The DOT study 
recognizes how difficult it is to use statistical inference to 
establish a relationship between TS&W limits and highway safety. One 
reason is that the current use of such vehicles is highly controlled so 
that the results would not generalize to different operating 
conditions. The same caveat would apply to pilot studies.
    Another troublesome aspect of this recommendation is that it gives 
individual States responsibilities for making decisions that affect the 
overall efficiency of the national freight network. Increases in TS&W 
limits lower the per-ton operating costs of long-haul trucks and this 
has an immediate effect on rail traffic-about one-third of which (on a 
ton-mile basis) is competitive with long-haul trucks. Because the rail 
and highway networks are interrelated--and because the rail network has 
high fixed costs-all shippers are affected.
    The Report fails to recognize that there is a difference between 
the optimal management of highway pavement and bridge structures and 
optimal regulation of a complex national freight network. It may make 
sense for the United States to further ``devolve'' responsibility for 
the management of pavement and bridge assets to State highway agencies 
(or regional agencies, or regulated private firms), but it is wrong to 
confuse the management of infrastructure with the regulation of 
national freight operations.
Recommendation 3: Authorize the States to participate in a federally 
        supervised permit program allowing for a) six-axle tractor 
        semi-trailers with maximum weight of 90,000 pounds, and b) 
        double-trailer configurations with each trailer up to 33 feet 
        long
    The Committee has been careful in its recommendations regarding 
changes to existing TS&W limits. The maximum gross vehicle weight of 
90,000 pounds for six axle semitrailers, for example, is just below the 
threshold estimated to cause negative bridge impacts, according to the 
DOT study.\21\ Because axle weights are not increased, such a limit 
would (according to the DOT study) not necessarily cause increased 
pavement damage. However, the current bridge formula would allow 33-
foot double-trailer configurations with weights up to 120,000 pounds on 
a nine-axle vehicle, 115,000 pounds on eight axles, or 110,000 pounds 
on only seven axles. A seven-axle vehicle at 110,000 pounds may not be 
as damaging to bridges as a 120,000-lb. nine-axle vehicle of the same 
length, but it certainly does more pavement damage. Notwithstanding the 
issue of infrastructure impacts, questions still exist regarding the 
safety implications of increasing TS&W limits, even in this limited 
fashion. The TRB report describes the lack of statistically reliable 
evidence both concerning the relationship between truck weight and 
accident involvement, and regarding the relationship between truck 
weight and the probability that an accident will result in a fatality 
(pp. 2-44 to 2-45).
---------------------------------------------------------------------------
     \21\The 90,000-pound GVW six-axle semitrailer is examined as part 
of ``North American Trade scenario.'' See U.S. DOT, op. cit., Volume 
III, Table VI-I.
---------------------------------------------------------------------------
    In addition, the Report recognizes that nuisance-related and 
stress-related costs from mixed auto and truck traffic should be 
considered in the evaluation of any TS&W policy. In focus groups 
conducted as part of the U.S. DOT study, a vast majority of automobile 
drivers said they opposed changes in TS&W regulations.\22\ Truck 
drivers in the survey groups also questioned the need for change. Truck 
sizes and weights are a serious issue for the public, and this must be 
an important consideration in any public policy decision.
---------------------------------------------------------------------------
     \22\ U.S. DOT, Volume II, pp. V-17-V-18.
---------------------------------------------------------------------------
    The Report recommends that ``fees related to costs be adopted to 
accompany the proposed new size and weight limits'' (p. 3-27), but it 
does not appear that these would cover the marginal costs of pilot 
programs. The Report does not explicitly endorse the pricing of all 
truck traffic (which would be logical) but only the pricing of 
experimental permit trucks to cover their ``added costs''. The report 
recognizes (p. 3-28) that the ``added costs might be proportional to 
the volume of permit traffic up to some traffic level but increase at 
an accelerating rate at higher volumes.'' As truck traffic increases, 
in other words, the marginal cost of the permit trucks would be 
increasing. But this implies that increases in conventional truck 
traffic would also increase the marginal cost of permit trucks, and 
vice versa. Under the plan that the report describes, increase in 
marginal costs of existing trucks would not be covered.
Recommendation 4: Allow the States to conduct pilot studies involving 
        any longer combination vehicles as long as the pilot study is 
        judged safe by the CTEI
    In addition to proposing the allowance of the 33-foot doubles 
described in Recommendation 3, this recommendation suggests that States 
be allowed to conduct pilot studies with any configuration of LCVs, so 
long as they are judged safe by CTEI.
    The open-ended nature of this aspect of this recommendation raises 
two important questions:
    1. What types of LCVs are likely to be proposed for pilot studies?
    2. How broad would the scope of these pilots be?
    With regard to the first question, the DOT study indicates that the 
economics of the industry are such that if longer combination vehicles 
were allowed to operate nationwide, they would become the dominant 
configuration, eventually constituting the majority of US truck 
VMT.\23\ In this context, the second question becomes critical.
---------------------------------------------------------------------------
     \23\U.S. DOT, Comprehensive Truck Size and Weight Study, Volume 
III Scenario Analysis, 2000, pp. IV 32--IV-33.
---------------------------------------------------------------------------
    Here the DOT study concludes that ``(e)ven if Federal law did not 
require States to allow larger or heavier vehicles, some States fear 
that if neighboring States allow LCVs, they will face irresistible 
pressure to also allow LCVs to keep their businesses competitive.''\24\ 
This raises the possibility that, even within the carefully designed 
pilot studies advocated by the Committee, larger LCVs could eventually 
dominate the intercity freight market.
---------------------------------------------------------------------------
     \24\U.S. DOT, op. cit., Volume I Summary Report, p. 40.
---------------------------------------------------------------------------
    A majority of automobile drivers oppose these vehicles. LCVs are 
less stable than conventional tractor-trailers, and the effects they 
would have on congestion and pollution are uncertain. LCVs would have a 
significant effect on the overall viability of railroad operations 
across their service offerings as described in the discussion under 
Conclusion 5.
Recommendation 5: Do not extend Federal TS&W regulations to the non-
        Interstate portion of the National Highway System
    The Committee reports a recommendation that there is no 
justification for extending Federal weight regulation to the non-
Interstate portion of the National Highway System. There is no 
discussion of this issue in the body of the Report and the Committee's 
congressional mandate is to analyze the regulations ``on Federal-aid 
highways to which Federal regulations apply on the date of enactment of 
this Act.''\25\ The recommendation appears to be aimed at HR3132, the 
``Safe Highway and Infrastructure Preservation Act'', which would 
extend the current Federal TS&W limits beyond the 44,000 miles 
Interstate system to the entire National Highway System of nearly 
157,000 miles.
---------------------------------------------------------------------------
     \25\PL 105-178, Section 1213.
---------------------------------------------------------------------------
    The recommendation is not inconsistent with the idea proposed in 
the Report that there should be a ``redefinition'' of Federal and State 
TS&W regulatory responsibilities. The Report describes that 
redefinition as follows:
    The Federal Government would have diminished involvement in 
defining numerical dimensional limits on the Interstates and other 
Federal-aid highways, since the States would have more discretion with 
respect to limits on these roads. However, the Federal Government would 
take on greater responsibility for ensuring that State rules governing 
the use of vehicles on Federal-aid highways were contributing to 
meeting national objectives. (p. 3-21)
    The Institute (Recommendation 1) would play a key role here, 
providing ``monitoring, oversight and research'' (p. 3-21), and the 
Federal Government would focus on performance standards: ``States could 
propose solutions to problems, and the Federal Government would have to 
assess whether the proposals met qualitative objectives'' (p. 322).
    The Report does not identify these qualitative objectives. It also 
does not recognize that changes in TS&W limits change the capacity of 
the highway freight network, and this affects the overall efficiency of 
the national freight network. Because the rail and highway networks are 
interrelated, all shippers (and all motorists) are affected. State 
agencies may well provide optimal management of highway and bridge 
assets but this does not mean that they can optimally regulate the 
performance of the national freight network.
Recommendation 6: Specific TS&W topics requiring research include 
        enforcement effectiveness, air quality effects, truck 
        characteristics and crash involvement, risk-based bridge costs, 
        freight market behavior, driver stress, and truck-only 
        facilities
    The report makes a good case that there are several key areas in 
which more information would improve TS&W policy.
    The recommendation for more freight transportation market research 
should consider not only the relationship between truck costs and truck 
traffic, but should examine the broader context of total logistics 
costs and shipper preferences across modes. Advanced and well-accepted 
market research techniques now exist that would, within a carefully 
designed program of research, allow the estimation of models that 
quantify shippers' relative valuation of the most important freight 
service characteristics. These models could then be used to forecast 
the likely impacts of service changes across the freight industry. This 
work could build on the DOT (2000) study.
    The proposed research into the nuisance costs of mixed auto and 
truck traffic is also an important recommendation, particularly given 
that the report rightly points out that these costs may be independent 
of actual accident rates. But the conclusion that such costs should 
only be considered in policymaking if they lead to observable changes 
in driver behavior is wrong. The stress or anxiety associated with 
driving with large trucks may impose costs on drivers that are real, 
but for a variety of reasons do not cause changes in behavior. Research 
into the adoption of advanced information technology in the public
    transit sector, for example, has demonstrated that travelers may 
value useful information for its ability to reduce stress and 
uncertainty, but may not necessarily change their travel patterns as a 
result of having access to it. Modern market research techniques could 
similarly be used to estimate and clarify drivers' valuations 
concerning the stress associated with truck traffic.
                   Appendix A1. Previous TS&W Studies
DOT (1981) An Investigation of Truck Size and Weight Limits
    This study was conducted in response to a congressional directive 
that the U.S. DOT examine the appropriateness of uniform TS&W standards 
throughout the United States. It examined the range of benefits and 
costs to the U.S. economy and society, as well as to specific groups, 
that would result from alternative changes in TS&W regulations. Five 
categories of changes were considered, including grandfather clause 
elimination, barrier elimination, uniformity, rollback to pre-1974 
limits, and increases in limits.
    The study found that transport cost savings from increased truck 
productivity could exceed the increase in highway and bridge 
maintenance costs and increased accident costs that would accompany the 
introduction of higher TS&W limits. At the same time, however, it found 
that additional infrastructure investments would be required to 
accommodate such increases, and that it was uncertain as to whether or 
not funding would be available for these investments. If these 
investments were not made, the study found that the negative impacts of 
TS&W changes could be much greater. The study estimated that diversion 
from rail would be small under the specific scenarios examined, but did 
not attempt to estimate the resulting effect on the railroad industry.
TRB (1986) Special Report 211: Twin Trailer Trucks
    The purpose of this study was to examine the potential impact of 
new rules adopted in the 1982 STAA, with a particular focus on safety. 
It found that twins were probably less safe than semis, but that little 
change in accidents should be expected because it was assumed that 
truck VMT would decline overall. On the other hand, it concluded that 
twins were expected to produce 90 percent more wear on asphalt pavement 
and 20 percent more wear on concrete pavement than the semis they would 
replace. This study did not independently estimate the diversion of 
freight traffic from rail to trucks using twin trailers, but traffic 
forecasts used in the study assumed that any such diversion would be 
very small. This assumption was based on the prediction that LTL 
carriers would be the primary users of twins, and that rail was not a 
good substitute for LTL truck service.
TRB (1990) Special Report 227: New Trucks for Greater Productivity and 
        Less Road Wear: An Evaluation of the Turner Proposal
    The purpose of this study was to evaluate a proposal to reduce road 
wear and increase truck productivity. Known as the Turner Proposal, the 
concept was to increase allowable truck lengths and gross vehicle 
weights but at the same time decrease allowable axle weights. The study 
evaluated the impact of ``Turner Trucks'' in terms of productivity, 
safety, traffic, bridges and pavement. It examined both nationwide and 
less-thannationwide adoption scenarios.
    For nationwide adoption, it found that that savings to carriers or 
shippers switching to Turner trucks would average 12 percent of 
linehaul operating costs, and the aggregate cost savings would be 
1.4percent of total truck freight shipping. Approximately 4percent of 
rail ton-miles would be diverted, causing rail to lose 5percent of its 
gross revenue. Some of the designs proposed were predicted to have 
negative safety or traffic effects, but the study predicted that total 
truck VMT would decrease. The study found that bridge costs would be 
increased markedly, but that pavement wear would be reduced, such that 
under nationwide adoption the net effect would be a savings in total 
infrastructure costs. Under less than nationwide adoption, however, the 
study found that bridge costs could exceed reductions in pavement 
costs. Overall, the study found that the Turner proposal would produce 
benefits and recommended that States consider its adoption under 
certain circumstances.
DOT (1997) Federal Highway Cost Allocation Study
    As part of its role in administering the Federal-aid highway 
system, the Federal Highway Administration has from time to time 
undertaken analyses aimed at estimating the costs imposed on the 
various parts of the system by different classes of vehicles. The total 
costs of building and maintaining the system are generally known, but 
the purpose of these studies is to allocate the costs among users. 
Known as Highway Cost Allocation Studies (HCAS), these analyses are 
major efforts requiring significant data collection and analysis, and 
have therefore been relatively infrequent. The most recent was 
conducted in 1997, the first HCAS since 1982.
    The 1997 HCAS provides the most up-to-date estimates available of 
the relative costs imposed on the system by cars and trucks. A specific 
objective of the study was to determine how changes in the Federal 
highway program and the user fees that support it have affected the 
equity of the user fee structure. The study also estimated the 
responsibility of different vehicle classes for the external costs 
associated with highway use, an important addition not included in the 
1982 report. In addition to estimating marginal pavement and bridge 
costs imposed by each class of vehicle, therefore, the study estimated 
per mile congestion and noise costs. An addendum to the report 
published in 2000 provided estimates of per mile air pollution costs by 
vehicle class. The study found that combination trucks with registered 
weights over 75,000 pounds (about 70 percent of all combination trucks 
as shown in Table A-1) are not paying their fair share of highway 
costs. Trucks with registered weights of over 80,000 pounds are on 
average paying only 50 percent or less of the infrastructure costs they 
impose.\26\
---------------------------------------------------------------------------
     \26\Federal Highway Administration, 1997 Federal Highway Cost 
Allocation Study Summary Report, Table 7.
---------------------------------------------------------------------------
    The study was closely coordinated with the Comprehensive Truck Size 
and Weight Study then being conducted by the U.S. DOT, in order to 
provide a consistent set of assumptions and methods for estimating the 
differential impacts on the highway system by vehicle class. The DOT 
study is described below.
DOT (2000) Comprehensive Truck Size and Weight Study
    This study was intended to be a comprehensive examination of the 
issues related to TS&W regulations and the potential impacts of 
changing them. The aim of the study was not to promote a specific 
policy objective, which is noted in the TRB Report.\27\ Rather the aim 
of the study was``. . . to develop an information base and set of 
analytical tools upon which to evaluate alternative TS&W options.''\28\ 
The study is comprehensive in many respects. For example, it attempts 
to make``. . . a significant improvement in the analysis of diversion 
from other modes by explicitly considering inventory and other 
logistics costs that shippers evaluate in making real-world 
transportation decisions.''\29\ The study recognizes the role of TRB in 
evaluating changes to TS&W regulations, with the assumption being that 
the TRB Committee charged with examining TS&W issues would internalize 
the results of the DOT study.\30\
---------------------------------------------------------------------------
     \27\Transportation Research Board, TRB Special Report 267, pp. 2-
3.
     \28\U.S. Department of Transportation, Comprehensive Truck Size 
and Weight Study, Volume I Summary Report, 2000, p.4.
     \29\U.S. DOT, op. cit., p. 6.
     \30\U.S. DOT, op. cit., p. ES-11.
---------------------------------------------------------------------------
        Appendix A2. List of Committee Members and Affiliations

----------------------------------------------------------------------------------------------------------------
                     Member                                                Affiliation
----------------------------------------------------------------------------------------------------------------
James W. Poirot, Chair.........................  Chairman Emeritus CH2M HILL, Mukilteo, WA
Kenneth D. Boyer...............................  Professor, Department of Economics, Michigan State University
Robert G. Dulla................................  Senior Partner, Sierra Research Inc., Sacramento, CA
Nicholas J. Garber.............................  Professor and Chairman, Department of Civil Engineering,
                                                  University of Virginia
Thomas D. Gillespie............................  Research Scientist and Adjunct Professor, University of
                                                  Michigan
Ezra Hauer.....................................  Professor, Department of Civil Engineering, University of
                                                  Toronto
James H. Kopf..................................  Deputy Executive Director and Chief Engineer, Mississippi
                                                  Department of Transportation
Sue McNeil.....................................  Director, Urban Transportation Center, University of Illinois,
                                                  Chicago
Eugene E. Ofstead..............................  Assistant Commissioner of Transportation Research and
                                                  Investment Management, Minnesota Department of Transportation
                                                  (Retired)
John R. Pearson................................  Program Director, Council of Deputy Ministers Responsible for
                                                  Transportation and Highway Safety, Ottawa, Ontario
F. Gerald Rawling..............................  Director of Operations Analysis, Chicago Area Transportation
                                                  Study
James E. Roberts...............................  Chief Deputy Director, California Department of Transportation,
                                                  (Retired)
John S. Strong.................................  Professor of Finance and Economics, School of Business
                                                  Administration, College of William and Mary
C. Michael Walton..............................  Ernest H. Cockrell Centennial Chair in Engineering, Department
                                                  of Civil Engineering, University of Texas at Austin
----------------------------------------------------------------------------------------------------------------
Source: Transportation Research Board, TRB Special Report 267.

   Appendix A3. Organizations Contacted by the Committee for Comments

------------------------------------------------------------------------
             Responded                         Did Not Respond
------------------------------------------------------------------------

American Bus Association...........  Association of Waste Hazardous
                                      Materials Transportation
American Trucking Associations.....  National Private Truck Council
Distribution & LTL Carriers          American Road and Transportation
 Association.                         Builders Association
Motor Freight Carriers Association.  Associated General Contractors of
                                      America
National Automobile Transporters     International Brotherhood of
 Association.                         Teamsters, AFL-CIO
National Solid Wastes Management     JB Hunt Transport
 Association.
Western Highway Institute..........  Schneider National Carriers
Owner-Operator Independent Drivers   United Parcel Service
 Association, Inc.
Truck Manufacturers Association....  Freightliner Corporation
Truck Trailer Manufacturers          Intermodal Association of North
 Association.                         America
Federal Express Company............  National Small Shipments Traffic
                                      Conference
Motor Coach Industries, Inc........  Advocates for Highway and Auto
                                      Safety
National Industrial Transportation   Surface Transportation Policy
 League.                              Project
Association of American Railroads..  Minnesota Department of
                                      Transportation
American Automobile Association....  New Jersey Department of
                                      Transportation
Coalition Against Bigger Trucks....  New York State Department of
                                      Transportation
Insurance Institute for Highway      American Association of Port
 Safety.                              Authorities
Connecticut Department of            American Assoc. of State Highway
 Transportation.                      and Trans. Officials
Florida Department of                Commercial Vehicle Safety Alliance
 Transportation.
Georgia Department of                International Bridge, Tunnel and
 Transportation.                      Turnpike Association
Idaho Department of Transportation.  National Governors Association
Indiana Department of
 Transportation.
Michigan Department of
 Transportation.
New York Department of
 Transportation.
Texas Department of Transportation.
------------------------------------------------------------------------
Source: Transportation Research Board, TRB Special Report 267, pp. C-21
  and C-22.

                                 ______
                                 
 Responses of Edward R. Hamberger to Additional Questions from Senator 
                                  Reid
    Question. Some of the figures we have seen indicate that much of 
the growth in freight will be carried on trucks. However, as you 
mention in your statement, one way to reduce wear and tear and 
congestion on our roads is to move more people and freight by rail. 
Since our road infrastructure will be hard pressed to accommodate the 
expected increase in truck traffic, how can we make rail more 
competitive and ensure the most efficient division between freight 
carried by trucks and freight on our rails? Keep in mind that we also 
will need to move more people by rail in the future, not just freight.
    Response. If freight railroads are to continue to provide safe and 
efficient transportation service that enhances our nation's economic 
health and global competitiveness, and if they are to play a meaningful 
future role in relieving congestion, reducing emissions and energy 
consumption, and improving safety, a number of steps should be taken 
that remove public policy obstacles and focus public policy choices on 
rail infrastructure.
    First, there should be a more pronounced reliance on public-private 
financing partnerships for railroad infrastructure improvement 
projects, especially for projects that provide significant public 
benefits or meet public needs, such as congestion mitigation, emissions 
relief, enhanced mobility, and enhanced safety. As outlined in my 
September 9th testimony, the TEA-21 reauthorization process should 
include modifications to several transportation infrastructure programs 
and Federal tax policies to allow freight railroads and other 
transportation providers to meet vital public transportation needs more 
efficiently and effectively.
    Second, Congress and rail regulators should resist calls to 
reregulate the rail industry. While it is beyond the scope here to 
explain in detail why railroad reregulation is such a counterproductive 
notion, the essential point is that regulatory restrictions that impede 
railroads' ability to generate sufficient returns would severely 
compromise their ability both to generate investment funds internally 
and to attract the outside capital needed to sustain--much less 
increase--their operations over the long term. Ultimately, if railroads 
are reregulated, the only realistic alternative to wholesale 
disinvestment of our nation's rail network would be for the government 
to step in and subsidize railroads on a massive scale.
    Third, a number of Federal laws and regulations that inhibit 
railroads by treating them less favorably than other modes should be 
addressed.
    For example, under existing truck size and weight limits, rail-
competitive trucks cover far less than the costs of the damage they 
cause to our highways. The shortfall is made up through billions of 
dollars in subsidies from other highway users to truckers. Equity 
demands that truckers bear this expense themselves. To make matters 
worse, various interests have proposed that the existing truck weight 
limit be increased (for example, to 97,000 pounds) and the use of 
longer combination vehicles be expanded. Attempts to expand existing 
truck size and weight limits should be resisted because such expansion 
would exacerbate existing inequities while severely harming the rail 
industry. A recent U.S. DOT study found that, depending on the 
scenario, increased truck sizes and weights would result in a decline 
in rail revenue of between $2.9 billion and $6.7 billion, a decline in 
the contribution to railroad fixed costs of between $2.1 billion and 
$3.1 billion, and a decline in railroad return on equity of 32 to 46 
percent. Such declines would decimate the rail industry's ability to 
invest in its infrastructure, add significantly to highway wear and 
tear, increase highway congestion, and diminish highway safety.
    Another example of a modal inequity concerns Federal research and 
development. The ``21st Century Truck Initiative'' is a public-private 
research partnership involving many of the nation's largest heavy-duty 
engine and truck companies and several Federal agencies designed to 
lead to prototype engines that double existing fuel economy for long-
haul trucks and significantly reduce truck emissions. Currently, there 
is no similar program for locomotives. To correct this inequity, 
Congress should establish a public-private partnership involving 
Federal agencies, railroads, and rail suppliers designed to increase 
the fuel efficiency of, and reduce emissions from, locomotives.
    Taxes constitute a third area in which modal inequities hinder 
railroads. Public policy should ensure that tax laws do not distort 
market forces by giving one mode a distinct competitive advantage over 
other modes. Thus, existing tax laws which disadvantage railroads 
relative to trucks and other modes should be modified.
    For example, the 4.3 cents per gallon ``deficit reduction'' fuel 
tax paid by railroads but not paid by trucks should be repealed. 
Likewise, railroad disadvantages created by existing capital recovery 
provisions should be addressed. Currently, for income tax purposes 
railroads must capitalize and depreciate, over a period of years, the 
costs incurred in building their infrastructure. In addition, railroads 
must capitalize many of the costs of repairing and maintaining their 
infrastructure. In contrast, the fuel taxes paid by trucking companies 
(used for both new capital expenditures and highway repair and 
maintenance) are expenses which can be deducted immediately. This 
disparity in treatment of infrastructure spending for income tax 
purposes results in a 9 percentage point penalty for railroads on their 
capitalized infrastructure investments. It is a significant issue for 
freight railroads because railroads are enormously capital intensive: 
in 2000, railroad capital spending was equal to 17.8 percent of 
revenue, compared with 3.7 percent for U.S. manufacturing as a whole. 
Railroads also pay hundreds of millions of dollars per year in property 
taxes on their right-of-way, an expense their trucking competitors do 
not pay.
    Finally, as your question reminds us, freight railroads also face 
significant and increasing demands for use of their infrastructure for 
passenger operations. Freight railroads agree that passenger rail can, 
under the right circumstances, play a role in alleviating highway and 
airport congestion, decreasing dependence on foreign oil, reducing 
pollution, and enhancing mobility and safety. However, the importance 
of passenger railroading to our country pales in comparison to the 
importance of freight railroading. Therefore, we must find the most 
effective way to provide the passenger services that America needs, but 
without burdening the freight rail system--operationally, financially, 
or in any other way. The goals of reducing pollution and highway 
congestion can be realized only if we ensure that passenger trains 
don't interfere with freight service.
    To this end, Congress should resist calls to legislate mandated 
passenger access to freight-owned track. Access by passenger railroads 
to facilities owned by private freight railroads must be negotiated on 
a case-by-case basis by the parties, without government interference. 
For their part, freight railroads will continue to work cooperatively 
to help passenger railroading succeed where it is practicable, but it 
is not the responsibility of our nation's privately owned freight 
railroads to subsidize passenger service. Once policymakers agree on 
the nature and scope of passenger railroading in this country, they 
must be willing to commit public funds on a long-term basis 
commensurate with that determination. To do otherwise would undercut 
our nation's freight rail capabilities and be counterproductive in 
addressing our country's congestion, environmental, safety, and 
economic concerns.
                                 ______
                                 
  Response of Edward R. Hamberger to Additional Question from Senator 
                                Jeffords
    Question. Mr. Hamberger, I appreciate your detailed and thorough 
recommendations regarding TEA21 reauthorization. Would you please 
expand upon the legislative changes-as opposed to the regulatory 
changes-you are seeking to the Railroad Rehabilitation and Improvement 
Financing Program?
    Response. AAR is seeking legislative changes to the Railroad 
Rehabilitation and Improvement Financing (RRIF) program that would 
ensure that the applicant for a loan or loan guarantee would not have 
to (1) provide collateral; or (2) demonstrate that it has sought other 
financial assistance under the program (i.e., lender of last resort 
provision). S. 1530, the ``Railroad Advancement and Infrastructure Law 
of the 21st Century,'' or RAIL-21, and a related House measure both 
include these important legislative changes. S. 1530, which has ten 
Senate cosponsors, is pending in the Senate Committee on Commerce, 
Science, and Transportation.
                               __________
Statement of Rick Larabee, Director of Port Commerce, Port Authority of 
                        New York and New Jersey
    Chairman Reid and Chairman Breaux, thank you for the invitation to 
appear before this panel on the matter of intermodal transportation and 
port access. I am pleased that you chose to conduct a joint hearing of 
your two committees. After all, the subject is intermodal 
transportation. Your collective effort demonstrates that it is 
important to consider how separate modes of transportation operate as a 
part of a total system. Congress showed great wisdom in acknowledging 
the role of intermodalism in modern transportation and commerce with 
the enactment of ISTEA and then TEA-21. Federal policy and support 
should continue to evolve to foster the productivity and efficiencies 
that can be achieved through addressing national transportation needs 
as a system of connecting and complimentary modes.
    As a region that has major port facilities and the nation's largest 
consumer market we especially feel the impact of the economic 
globalization on a major gateway and its infrastructure. My hope is 
that this hearing will heighten your interest in the subject, further 
your understanding of how the efficient movement of intermodal cargo is 
a matter of national interest, and convince you that improvements in 
Federal policy and the level of assistance are warranted.
    For the record, the Port Authority of New York & New Jersey is a 
bistate public authority created in 1921 by our States with the consent 
of Congress. The Port Authority's mission on behalf of the States is to 
identify and meet the critical transportation infrastructure needs of 
the bistate region and provide access to the rest of the Nation and to 
the world. The Port Authority's jurisdiction includes the region's 
major aviation and marine terminal facilities as well as the PATH 
commuter transit system, ferry and bus terminals, the interstate 
tunnels and bridges and other facilities. And appropriate to the 
subject of this hearing, intermodal transportation was born at Port 
Newark and, soon after, the first U.S. container port was developed on 
Newark Bay.
    Our operations and projects help move people on air, land and water 
to the workplace, home and distant places. The region is the most 
densely populated in the United States and the largest international 
gateway on the Atlantic. As such, people and freight heavily populate 
the highways, rail systems and marine terminals as foreign commerce and 
domestic markets are served in just-in-time fashion. And while you have 
asked me to focus my remarks on port access I should observe that our 
region and gateway is as modally diverse as can be, making access and 
mobility issues that much more complex. Within a one mile radius of our 
busiest marine terminals is one of the nation's largest air cargo 
facilities, the northeast corridor rail line serving passengers and 
freight, interstate highways, and other roads and rail lines in 
addition to the warehouses, rail yards and businesses that support 
national and regional commerce. Similar multi-modal views can be seen 
elsewhere in the bistate area.
    Our airports are responsible for roughly 22 percent of all US 
international cargo, which, combined with domestic cargo, totaled 
nearly 2.95 million tons in 2000 at a value of $150 billion. The 
seaport serves 35 percent of the U.S. population and 200 nations. The 
terminals in New York and New Jersey handled over 3 million container 
units (as measured in Twenty-foot Equivalent Units) last year and $80 
billion of general, bulk and breakbulk cargo moved through the port in 
2001. At one container terminal alone over 5,000 trucks go through the 
gates every day. Our on-dock rail terminal handled 200,000 containers 
per year and is near capacity. And lest you think that our port is the 
exclusive gateway for our region's consumers and manufacturers, another 
750,000 TEUs arrive in our region via rail from the West Coast. 
Meanwhile, traveling annually over our bridges and through our tunnels 
are approximately 250 million vehicles while 2.5 million buses use our 
two terminals in New York City.
    Those statistics attest to the vitality of the trade and economic 
activity that is at work every day. But it also hints at a major 
challenge we and other regions face.
    That challenge is to make sure that American gateways and freight 
corridors have the capacity to keep up with the growth in trade and the 
larger economy. To be clear, this is not a case of build it and they 
will come. It is a matter of . . . build it because the cargo is 
coming. In fact it is already here resulting in ever-greater congestion 
7 days a week. And whether you are talking about commuter routes, air 
cargo or port access finding new capacity is a present day issue that 
will only worsen unless actions are taken on a Federal, State and local 
level to improve efficiencies and expand capacity.
    To help you better understand the challenge we face, I would like 
to paint a present-day intermodal picture for you:

      The New York/New Jersey metropolitan region is a severe 
nonattainment area for ozone (NOx and VOCs).
      Approximately 87 percent of ocean borne cargo leaves or 
arrives at the Port of New York-New Jersey in a truck. Almost all of 
the remainder travel on rail.
      At a growth rate of 4 percent a year, estimates show 
trade in all types of cargo doubling in our port in little over 10 
years. Nationally, trade will double by 2020.
      Demand for consumer goods is driving continued growth in 
intermodal trade, which is expected to rise at rates exceeding 4 
percent annually. In the past recent years actual growth in general 
cargo at the port has averaged 6 percent. Container traffic is expected 
to quadruple by 2020.
      Five thousand commercial cargo ships called in the port 
in 2001.
      While regional population totals are expected to advance 
slowly at about 0.3 percent per year to 2020, even this modest growth 
rate will result in an absolute increase of nearly one million people 
to the population base creating a greater demand for consumer goods and 
placing further strains on an aging transportation infrastructure.
      Commercial and retail development initiatives along with 
growing public demand for access to limited waterfront areas are 
increasing traffic and land pressure on marine terminals, rail yards, 
and air cargo operations.
      Distribution facilities are migrating to more affordable 
locations on the region's periphery and in other States further 
straining our roadway systems and degrading our air quality as trucks 
must travel greater distances to deliver commodities to consumers in 
our urban center.
      Our region's highways are at or near capacity. Shortfalls 
in the rail freight line and yard capacity necessary to accommodate 
commodity flows are increasing. Competition for capacity on the road 
and rail systems between commuters and goods movement is fierce.
      Trucks move 90 percent of the region's freight (and 87 
percent of the port's intermodal cargo), though they represent about 10 
percent of the vehicles on the region's highways and about 7 percent at 
the Port Authority tunnel and bridge crossings. Freight trains comprise 
an even smaller proportion of the region's railroad activity, often 
confined to limited operating times in deference to extensive commuter 
rail schedules.
      The eight active intermodal rail yards that serve the 
entire region handle more than 1,000,000 lifts per year and are close 
to capacity.
      In addition to being among the busiest in the Nation, our 
airports contend with freight access problems, especially J.F.K. 
International where trucks and passenger vehicles vie for space on the 
main access route.

    Addressing these challenges will require investing in 
infrastructure and adjusting policies to foster logistically and 
environmentally smart solutions for the long term. Partnerships are 
coming together locally and regionally to support projects and we need 
a strong Federal partner to accelerate these activities. Such 
partnerships have proven to be successful, exemplified best by the 
Alameda Corridor project undertaken by our West Coast friends. The 
public and private sectors, including Federal and State governments, 
joined in planning and building the Alameda Corridor. And Federal 
support was crucial to the project being financially feasible.
    It is heartening that the U.S. Department of Transportation-the 
Federal Highway Administration, Maritime Administration and the 
Secretary's intermodal staff, in particular-and the freight community 
have devoted recent years to studying freight and intermodal 
transportation issues. FHWA maps vividly illustrate what the future 
holds for our country as international and domestic freight volumes 
grow at the gateways, borders and along trade corridors. The Maritime 
Administration's survey of port access problems and recent report of 
its findings is important work as was the discovery that port access 
and other intermodal linkages are among the lowest federally funded 
transportation projects.
    The Port Authority, in coordination with the States of New York and 
New Jersey, is in the process of developing specific recommendations 
for future legislation. Therefore I will devote the remainder of this 
statement to some general observations for your consideration. These 
are in no particular order.
    First, we and other ports greatly appreciate the attention that 
your committees are giving to the maritime transportation system (MTS). 
For a country that from its earliest days has depended upon maritime 
transportation to build and sustain a Nation the MTS is the least 
visible and federally supported transportation system in the country. 
That is why we are grateful that that the Bush Administration continued 
the MTS initiative. Consideration is now being given to identifying MTS 
infrastructure requirements and it is our hope that the Federal 
Government will act affirmatively on that information.
    Second, congestion and other bottlenecks to efficient 
transportation can be found throughout the country, but it is 
especially severe in major gateways and metropolitan areas that are 
essential elements of the nation's economic infrastructure and 
security. As such, those areas, including the New York-New Jersey 
region, deserve special attention. An older and densely developed area 
like ours, with roadways, ramps and bridges designed for early 20th 
century conditions have a special challenge to upgrade facilities to 
standardized lane widths and weight limits that can accommodate the 
larger and heavier containerized freight movements.
    Third, the significant growth in freight movement that is projected 
for this country will have to be accommodated efficiently or the Nation 
will suffer the consequences. However, in the Northeast and other 
heavily traveled areas building new capacity to meet the needs of 
commerce should not mean that trucking will alone have to bear the 
brunt of that growth. Clearly trucking will be an essential part of the 
transport strategy in the decades to come, carrying more and more 
freight. But in our region trucking and the highways on which they 
depend are not expected to have the capacity to handle a growing 
population and the anticipated doubling and tripling of domestic and 
international cargo. Can many more lanes be added to the region's 
interstates or to major corridors like I-95, even in the Washington 
area? And can that be done while maintaining Federal and State clean 
air objectives? It is evident to us that if we are to avoid 
debilitating congestion at the port and on the region's highways 
adjustments will be needed in the modal sharing of intermodal cargo. 
That leads me to my fourth point.
    Even as Congress continues to support the enhancement of highway 
capacity in the United States your committees should consider how to 
foster the development of other modes to accommodate increasing demand. 
Rail certainly is one part of the answer. We are building three new 
intermodal rail yards at our marine terminals in order to dramatically 
expand our capacity to move containers on rail. In addition, the Port 
Authority is working with the railroads and public agencies to identify 
specific regional rail projects that will improve line and terminal 
capacity.
    Another answer can be found off our shores. We are undertaking a 
program to encourage intermodal cargo to move by water where possible. 
That is made possible in part by the costs of congestion, which have 
made traditionally long distance modes more competitive over shorter 
hauls. There is tremendous underutilized capacity on the water. And 
while moving containers on barges can satisfy the market in the 
Northeast I think that Congress can look into the future and see how 
fast vessel technology can bring new capacity to intermodal 
transportation along major corridors. It is not the solution but if 
examined for its associated capital, energy and environmental costs it 
can be part of the solution with Federal support.
    Fifth, innovations approved by Congress in TEA-21, such as the 
Congestion Mitigation Air Quality (CMAQ) and National Corridor Planning 
and Development programs, were very worthwhile policy steps to take. 
CMAQ helps regions such as ours make sound transportation choices that 
are consistent with clean air objectives. The corridor program 
recognized that special conditions in need of special attention exist 
at the borders and elsewhere. Those innovations were worthwhile 
directions to take and they could be improved and expanded even 
further, especially to add to the capacity of major gateways and 
corridors.
    Sixth, while this hearing is concerned with the movement of 
freight, it is important to note how attention to freight can achieve 
improvements for passengers. I think especially of projects intended to 
divert freight from heavily traveled automobile routes to dedicated 
freight corridors, whether on land or water. Area transportation 
agencies have intermodal corridor projects in varying stages. Some were 
authorized for study in TEA-21, such as the New Jersey intermodal 
corridor and the cross-harbor rail freight tunnel projects. Port 
Authority staff have undertaken a comprehensive look at how intermodal 
freight improvements, primarily linkages between existing roads and 
rail lines, can be strategically planned and implemented to stitch 
together freight corridors. Already underway is a Port Authority 
project to link the Howland Hook Marine Terminal on Staten Island to 
the Chemical Coast Line in New Jersey. That, combined with the 
improvements that we have made with the State and City at Howland Hook, 
will bring intermodal rail access to a fast growing area of the port. 
It is a significant step in improving direct rail service to New York 
City. Another project, referred to earlier, is the Port Authority's 
Port Inland Distribution Network (PIDN), which is in the early stages 
of implementation. PIDN is intended to mitigate against growing 
congestion at the marine terminals and on the highways by transshipping 
via railroads and barges those inbound containers destined for 
Northeastern locations. The strong level of interest that Northeastern 
State departments of transportation are showing in PIDN is an indicator 
of how transportation planners are eager to find alternatives to 
congested corridors like I-95. An equally strong level of interest on 
the part of the Federal Government could help such initiatives 
demonstrate how water transportation can manage part of the freight 
growth. Flexibility in Federal programs can be a way to support such 
initiatives.
    Lastly, the use of intelligent technology has proven very 
worthwhile in our region for managing the flow of our busy highways and 
crossings. Continuing and enhanced Federal support in this area would 
be welcome including expanding the integrated use of technology to 
expedite, track and more efficiently manage freight movements in 
congested metropolitan areas. It could also provide a double benefit of 
added security for cargo shipments.
    Senators, the Port Authority of New York and New Jersey and other 
agencies of the region know we must dramatically strengthen intermodal 
service options. My department's twenty-year goal is to reduce port 
reliance on trucking from 87 percent of modal market share to 57 
percent by strongly growing water borne and rail market shares. Our 
capital plan reflects this with its support for dock and near dock rail 
extensions, port terminal highway improvements and PIDN developments. 
To do so we need to improve connections to local intermodal service 
facilities at or near the port with connector highway improvements as 
contemplated by the NJDOT International Intermodal Corridor Program and 
its portway element. New York City and New York State are taking a 
similar tact with plans for rail access, car float and intermodal rail 
improvements in the City and Long Island.
    In closing I should note that a lot of good work is being done by 
organizations represented at this hearing and others who are not here. 
The American Association of Port Authorities, the American Trucking 
Association, the Association of American Railroads, and the Coalition 
for America's Gateways and Corridors have joined with others in the 
freight community to develop a common platform to address freight 
mobility in future Federal policy. The Coastwise Coalition has worked 
to identify the potential for the maritime sector to accommodate some 
of the future demand for freight transportation. I think your 
committees can benefit greatly by the thoughtful attention that has 
been given to these issues by my counterparts in government and the 
private sector. Federal freight transportation policy is still in its 
adolescent stage, which means there is great opportunity for 
improvement to meet the challenges I have described.
    Thank you again for inviting the Port Authority to participate in 
this hearing. I welcome any questions you may have.
                                 ______
                                 
Responses by Rick Larrabee to Additional Written Questions from Senator 
                                  Reid
    Question 1.Mr. Larrabee, you argue in your testimony that at the 
same time Congress continues to support the enhancement of highway 
capacity, we should consider how to foster the development of other 
modes to accommodate increasing demand. What specific steps do you 
recommend Congress take to lighten the load on our highways and ensure 
that other modes share more equally in moving freight through our 
nation?
    Response. The points below will suggest ways that Federal programs 
can enhance the ability of waterborne systems to serve as an 
alternative to highway use recognizing that water transportation is the 
nation's least used mode. One of the reasons why water (and rail) modes 
do not handle larger volumes of domestic freight is that Federal policy 
has done such a good job in developing and expanding our interstate 
road system--understandably so--but it has not paid enough attention to 
the contributions that non-highway modes can make. The highway focus 
has worked well over the years but costly capacity constraints, 
resulting from the strong and continuing growth in commercial truck 
vehicle miles traveled (VMT), have become a glaring issue. Other modes 
should be examined for their potential to relieve truck volume related 
pressures. Federal policy has not been focused on the overall benefits 
to the highway program that could result from greater Federal support 
to alternative modal development such as less highway congestion, less 
wear and tear on the infrastructure, less pressure to add new highway 
capacity, as well as the general quality of life improvements (i.e.--
safety, security, and environmental). ISTEA, through the creation of 
the Congestion Mitigation Air Quality (CMAQ) program, allowed funding 
of intermodal freight programs that advanced its ``clean air'' policy 
purpose. CMAQ funding for non-highway projects, such as the locally 
successful Red Hook, Brooklyn to Port Newark Barge, has demonstrated 
that waterborne services can help reduce truck VMT in congested areas 
and mitigate negative environmental impacts. By encouraging additional 
programs that support multi-modal systems development, the Committee 
can broaden the means available to simultaneously create freight system 
efficiency and provide highway congestion relief.
    Here in the Northeast, Interstate 95 is not just a vital highway 
route to North--South travel between some of the nation's largest urban 
areas; it is the spine of a multimodal transportation corridor. Air, 
rail and waterborne systems join this essential highway element to 
create a network for personal and commercial mobility. Just as 
Northeast rail corridor operations provide relief and alternatives to 
highway and aviation systems, waterborne improvements can bring 
increased mobility and shipper choice in the freight realm. Congress 
should not wait for congestion to build to the point where gridlock 
finally occurs and forces a change to other modes--only then 
discovering that the alternative modes are not fully prepared to 
respond. Federal policy should begin now to support a transition toward 
modal equilibrium that our economy and society will require in the not 
so distant future. That equilibrium will certainly have trucking as its 
most essential element, but the increased cargo burden that growth will 
bring should be shared by the others.
    Following are proposals that I recommend:

Harbor Maintenance Tax Application Reform
    Obstacles to the expansion of domestic barge and short sea 
operations should be removed. One such obstacle is a provision within 
the Harbor Maintenance Tax (HMT) that creates an economic penalty on 
inherently domestic freight movements. If a container of imported cargo 
enters the US at the Port of New York and New Jersey, for example, it 
is assessed a fee for the maintenance of Federal channels. If that same 
cargo is off-loaded to a barge and now moves between two US ports 
(i.e.--Port Newark--Elizabeth and the Port of Boston), the HMT requires 
that the fee by paid again by the shipper after the goods are 
discharged in Boston.
            Recommendation:
    Eliminate the provision in the HMT that allows for double 
collection of the tax on domestic moves--especially the transshipped 
cargo. This change will provide a modest but important cost reduction 
that will make the waterborne alternative more attractive as a service 
choice. It would also eliminate an unfair ``double hit'' tax policy 
that puts the ad valorem tax on the same cargo twice. Based on fiscal 
year 1999 figures (the latest we have), the tax on all domestic cargo 
accounts (bulk and non-bulk) raised less than $50 million of the over 
$500 million that was collected that year. And the portion paid by 
containerized general cargo likely is a small fraction of the total 
domestic collection. Voiding the tax application on that cargo seems to 
be a cost-effective way to encourage consideration of the waterborne 
mode.
Freight Congestion Relief Grants And Corridor Improvement Funding 
        Targeted To Non-Highway Modes
    The startup costs associated with new services are a barrier to the 
introduction of waterborne alternatives to the truck-only movement of 
freight. The carriers who could provide such services need to be given 
the opportunity to demonstrate their effectiveness if we are ever to 
create congestion relief in critical multi-modal freight corridors. 
There are major but not insurmountable challenges to the initiation of 
domestic movements of containerized freight by water. Water carriers 
(like railroads) have to absorb additional costs of transferring 
containers at points where transfers to local truck pick up and 
delivery take place. Economies of scale advantages can only be realized 
by these intermodal services once they have operated long enough to 
build a market presence which attracts substantial volumes of general 
freight. Historically, shippers and ocean carriers have been slow to 
change their domestic transfer service patterns even when there is good 
reason to do so. Without some type of external funding assistance to 
give alternative modes, especially domestic water service operators, a 
chance to prove themselves, little progress can be made in shifting 
freight movements.
    The Port Authority is developing a barge and rail Port Inland 
Distribution Network (PIDN) as an alternative to truck-only container 
distribution in an eight-State market area 75 miles or more distant 
from Port of New York and New Jersey facilities. Our analysis shows 
that most of the potential routes can be operationally self-sustaining 
within 5 or 10 years and that there are substantial public benefits 
from reduced congestion, air quality improvements and increased 
economic development opportunities at feeder port locations from such a 
system. Moreover, the cost of operational support on a per route basis 
over this time is generally modest (i.e.--less than ten million 
dollars). PIDN barge service between the Port of New York and New 
Jersey and the Port of Albany may begin as early as this December. Some 
Federal funds, notably CMAQ moneys, will be utilized to help give the 
barge service its start. Unfortunately, CMAQ grants for waterborne 
programs compete with other worthwhile CMAQ programs and this puts a 
practical limit on dollars available. Moreover, CMAQ has a narrow focus 
on air quality improvements in non-attainment areas and only allows for 
2 years of operational support. It does not fully recognize the impact 
modal alternatives can have on general highway system congestion 
relief, safety, security or public investment cost effectiveness in 
multi-modal corridor service and development.
    A major barrier to new modal development, even where it enjoys 
strong local and State support, is the fact that intermodal service 
development requires multi-State support. Oftentimes, the benefits 
cross State lines while the major development costs are centered at the 
service hub and regional port. Thus benefits can reach well beyond 
these few locations but the sharing of the costs does not. Federal 
assistance supporting the delivery of broadly distributed benefits 
would seem ideal to overcome developmental barriers created by MPO 
boundaries and State lines. The Federal aid would, however, require 
expeditious Federal approval, based on State and local support, rather 
than the bottom's up MPO-through-the-State process that makes CMAQ and 
many other Federal programs difficult to apply even where it may be the 
intent of Congress to do so.
            Recommendation:
    New programs, more focused on congestion relief and other public 
benefits that would occur from the introduction of new intermodal or 
multi-modal services in congested corridors, are needed. One way to 
meet this need would be to set criteria to measure the contribution 
that the waterborne alternatives can make to multi-modal freight 
corridor congestion relief. If those criteria were satisfied, highway 
funds could be made available to introduce and sustain regional efforts 
to establish new systems. To deal with startup challenges, multi-year 
operational and capital assistance should be included. A greater 
Federal role to facilitate the application and funding review process 
for multi-State/multi-MPO applications is essential. An expanded CMAQ 
program is one way to support such projects in their initial years. A 
better approach is to create a freight specific CMAQ-like congestion 
relief program, open to alternative intermodal systems that can 
demonstrate highway congestion relief.

    Question 2. We hear a lot of positive feedback about the Alameda 
Corridor project and how Federal funds were able to leverage private 
sector, State and local funds for a project that benefited the port, 
the trucking companies, and the railroads. How useful is the Alameda 
Corridor model and can it be replicated elsewhere with some Federal 
assistance?
    Response. The Alameda Corridor project is an ideal model for 
strategically planning, coordinating, and funding the development of 
multi-jurisdictional corridors which optimize the movement of freight 
between and among key maritime, highway, rail and aviation gateways.
    The Port Authority of New York & New Jersey has already begun to 
expand upon the Alameda ``model'' in our development of a multi-State 
``Northeast Intermodal Transportation Corridor'' (NITC) program. While 
still in its infancy, the basic tenet of NITC is that it will, with 
Federal assistance, encourage States from Maine to Maryland to approach 
the planning and development of their respective freight infrastructure 
programs in a coordinated, systematic manner consistent with TEA-21's 
``National Corridor Planning and Development Program'' requirements for 
the development of corridors of national significance.
    Corridor programs such as Alameda offer the potential for: 1) 
removing cargo from the general passenger traffic flows thereby 
simultaneously reducing the cost to move those goods and enhancing 
public safety; 2) rationalizing container distribution; 3) improving 
air quality; 4) enhancing security; 5) fostering the utilization of 
``brownfields'' for warehousing and goods distribution activity; and 6) 
stimulating local economies. Given the potential benefits, it is clear 
that Federal policy needs to do more to promote logistically and 
environmentally sound long-term solutions to the movement of the 
nations freight.
                               __________
  Statement of Michael P. Huerta, Senior Vice President and Managing 
 Director, ACS State & Local Solutions, on Behalf of the Coalition for 
                 America's Gateways and Trade Corridors
The Coalition
    The Coalition for America's Gateways and Trade Corridors is an 
intermodal organization comprised of more than 22 groups. The 
Coalition's sole interest is to encourage adequate Federal investment 
in our nation's intermodal freight infrastructure and technology to 
ensure safe, efficient and cost effective goods movement.
Borders and Corridors Programs Overview
    Recognizing the unprecedented demands international trade is 
placing on our nation's transportation infrastructure, and bringing a 
clearer focus on needed freight transportation and intermodal connector 
projects, Congress established the National Corridor Planning and 
Development Program (NCPD) and the Coordinated Border Infrastructure 
Program (CBI) often referred to as the Borders and Corridors Program. 
Section 1118 and 1119 of the Transportation Equity Act for the 21st 
Century (TEA-21) provided $140 million annually through a discretionary 
grant program administered by the Federal Highway Administration's 
(FHWA) Office of Freight Management & Operations to fund planning, 
development, construction and operation of projects that serve border 
regions near Mexico and Canada and high priority corridors throughout 
the United States.
    The Coalition believes that current Borders and Corridors Programs 
have fallen short of the intended goals when these programs were 
established for two reasons.
    First, the programs included in the TEA-21 Conference Report were 
funded at levels far less than necessary to meet freight transportation 
and intermodal connector needs. As witness to that, since the beginning 
of the programs, funding requests from States and Metropolitan Planning 
Organizations (MPOs) have exceeded available funds by a ratio of 15:1.
    Second, programs were extensively earmarked in the annual 
appropriations process. In fact, in the transportation appropriations 
bill for fiscal year 1902 these programs were earmarked for specific 
projects at more than twice the authorized funding level, causing the 
FHWA to decline taking grant applications for that year. As a result, 
funds have not always been allocated to projects with the greatest 
national significance to the movement of freight.
Reauthorization
    With respect to the reauthorization of TEA-21, the Coalition 
strongly recommends the programs be continued, but bolstered to ensure 
the original goals are met. With respect to modification, the Coalition 
respectfully commends several recommendations to the Committee for 
consideration.

      To meet the high level of demand, funding for the Borders 
and Corridors Program must be increased to not less than $ 2 billion 
annually.
      The distribution of funds should be freight specific, and 
there should be a qualification threshold based on freight volumes and 
freight-related congestion to ensure limited dollars reach high-volume 
corridors/borders/gateways.
      Under current law, only States or MPOs are eligible to 
apply for funding under the Borders and Corridors Programs. It is 
recommended that the designation of entities eligible to apply for 
Program funding be expanded to include other public and quasi-public 
organizations.
      The programs should be redefined to address the needs of 
all trade gateways, not only land borders, and gateway connected trade 
corridors. Many gateways that handle high volumes of freight are not 
eligible for funding because they may not be ``borders.'' For example, 
while Illinois is not a ``border State,'' one-third of the nation's 
freight passes through Chicago and it is the largest intermodal hub in 
the Nation. Similarly, inland ports are also important gateways that 
enable the efficient movement of goods throughout the country.
      The designated ``high priority'' corridors eligible for 
funding under the Corridors Program need to be reexamined to ensure 
freight intensive areas can apply for funding. Currently, there are 
many important projects in need of funding that do not fall in one of 
the 43 priority corridors designated under TEA-21. Highest priority 
should be given to corridors that move goods to and from trade 
gateways.
Overall Needs
    International trade is the key to America's economic future. 
Imports and exports, which fuel our economy, are doubling every 10 
years. At the same time, freight traffic within the United States' 
borders will increase 100 percent by 2020. In 1970, foreign trade was 
10.8 percent of U.S. gross domestic product (GDP). By 2000, it grew to 
more than 26 percent of the GDP.
    This growth trend is expected to continue in all modes of 
transportation. In the next 20 years, foreign trade moving through 
American ports is expected to increase by 187 percent, while 
containerized cargo will experience an explosive 350 percent increase. 
In response to the overwhelming growth in trade, truck traffic will 
increase by 200 billion vehicle miles and rail freight shipments are 
projected to grow by 1 billion tons.
    Rapidly accelerating trade combined with domestic growth have 
created a $10 trillion U.S. commodity flow that produced millions of 
new job opportunities and a higher standard of living for Americans.
    These benefits will only last as long as we keep the freight 
moving.
    While so far freight carriers have done a good job keeping goods 
moving, in coming years, better, smarter and more truck, rail and 
intermodal gateway infrastructure will be needed to keep the traffic 
from stalling in gridlock. Even today, congestion and heavy volume 
often impede access to major freight terminals. Near dock rail capacity 
requires significant expansion and capital investment.
    Unfortunately, too small a portion of TEA-21 is devoted to freight-
related intermodal projects. Meanwhile, intermodal connectors currently 
have up to twice as many engineering deficiencies and pavement 
deteriorations as National Highway System non-Interstate routes. While 
the current port and trade corridor system is pressed to accommodate 
the current traffic levels, demands on it are expected to double by 
2020.
    The large burden placed on our freight transportation system has 
only been exacerbated by increased security concerns since September 
11. Intermodal freight infrastructure is critical to national defense. 
Thirty-eight thousand miles of the interconnected civilian rail 
system--vital for carrying heavy, oversized equipment and weapons 
systems--links some 170 strategic defense installations to seaports for 
military deployment.
    Ports and their connectors have always been the point of 
embarkation for defense materiel, and this role is even more important 
as our global strategy emphasizes flexible response. Highway connectors 
play a vital role in the rapid mobilization of personnel and materiel 
toward points of deployment.
Value of Investment/Cost of Neglect
    Investing in transportation yields economic paybacks for all 
corners of the country. Every dollar invested in the highway system 
yields $5.70 in economic benefits to the Nation. U.S. freight railroads 
contribute over $14 billion a year to the economy in wages and benefits 
to about 200,000 employees and billions in purchases from supplies. 
And, U.S. ports generate 13 million jobs, contribute $743 billion to 
the GDP and supply $200 billion in Federal, State and local taxes.
    Ignoring these problems will cost our Nation in numerous ways. 
Growing freight congestion puts our economic growth in peril by 
creating costly delays for manufacturing, putting a drag on job 
creation and undermining our ability to compete in the increasingly 
important global market. Highway congestion alone costs the U.S economy 
$78 billion annually, while also contributing to air pollution and 
other environmental concerns. In addition, delays at canal locks 
nationwide totally some 550,000 hours annually, representing an 
estimated $385 million in increased operating cost borne by shippers, 
carriers and, ultimately, consumers.
    As you are all probably aware, the Alameda Corridor recently opened 
in Southern California. We believe this public-private project 
exemplifies the type needed throughout the country. While at first 
glance this may seem to be only a rail project, it will also facilitate 
more efficient truck, ship and rail movement. The benefits from moving 
freight in and out of our nation's busiest ports faster will not only 
be felt in Southern California, but will stretch across the rest of the 
country. The goods that move through the ports of Long Beach and Los 
Angeles represent $97.3 billion in U.S. trade, support 2,121,500 jobs 
nationwide and deliver $4.51 billion in State and local taxes 
throughout the country.
    There are many other projects, similar to the Alameda Corridor that 
still need funding. Here are a few of examples drawn from our members:

      The Port of Pittsburgh will need up to $30 million for 
rail, road and port improvements.
      To facilitate goods movement San Bernardino County, 
California needs $383.3 million and Riverside County, California needs 
$926.7 million.
      For infrastructure improvements Washington State needs 
$183.8 million.
      The Gateways Cities Council of Governments in California 
alone needs $4 billion for improvements for goods movement and freight 
related congestion.

    These are just a few examples of tremendous need for intermodal 
infrastructure improvements.
Recommendation Detail
    In response to these problems, the Coalition for America's Gateways 
and Trade Corridors is asking Congress to:
1. Increase Funding for Freight Mobility
    Funding needs for freight mobility are large, and will be met in a 
variety of ways. It is estimated that some 25 percent of the general 
highway expenditures go to the benefit of freight movement. Special 
programs to encourage public-private partnerships will be a key element 
as well. Given the need for major, targeted investments that meet 
national needs, but are built by regional, State and local entities, 
there needs to be a targeted program to encourage and support these 
projects.
    A minimum of $2 billion per year for the Borders and Corridors 
Programs is required immediately to support designated programs for 
freight technology and infrastructure, such as intermodal connectors. 
This amount could productively be doubled as projects move out of 
design and into construction in the next reauthorization period.
    Since the beginning of the program, funding requests from States 
and MPOs have exceeded available funds by a ratio of 15:1. Much of this 
funding has gone to the planning, design and engineering of future 
projects. There is clearly large unmet demand for funding and a growing 
backlog of projects that are ``ready to go.'' The U.S. Department of 
Transportation projects that the volume of freight movements in the 
U.S. will double over the next 20 years. As a result, demands for 
infrastructure project funding will increase ever further.
2. Utilize Creative Funding Approaches
    To provide the level of funding required, Congress should actively 
explore a variety of funding approaches including the possibility of 
utilizing general funds. Available funds under the current Borders and 
Corridors Programs should be increased to support freight-related 
intermodal projects, especially projects that aim to reduce greenhouse 
gases.
    Attention should also be focused on restructuring and expanding 
Federal loan and loan guarantee mechanisms to provide grants and long-
term credit for intermodal and intermodal connector projects. The 
program should create incentives for State and local actions taken in 
support of freight movement projects that are designated under a 
national program.
3. Establish Freight Mobility as a Central Element in National 
        Transportation Policy and a Key Factor in State and Local 
        Planning
    Establishing and maintaining freight mobility as a high national 
priority must be articulated and reinforced in a variety of ways. 
Through public pronouncements and policy documents both Congress and 
the Administration need continually to underscore the importance of 
freight transportation and the urgency of increasing the capacity and 
efficiency of our national system.
    The Coalition is a member of the Freight Stakeholders Coalition and 
supports the principles outlined in testimony presented by that 
organization, which not only call for greater funding but also better 
freight data and planning.
    Freight mobility needs to be given higher priority as an element in 
State and local transportation planning. Strong relationships exist 
between the Departments of Transportation and Defense, but these 
relationships need updating to align them with today's priorities.
    Congress should create a National Council on Freight Mobility 
(including community mitigation) with strong representation from both 
shippers and carriers, as well as affected communities and other 
stakeholders, to advise the Secretary of Transportation.
    The Council would provide advice and counsel on:

      Overall freight infrastructure expansion strategy
      Developing trends and technology in freight movement
      Determining public interest in freight infrastructure 
projects
                               __________
 Responses of Michael Huerta to Additional Questions from Senator Reid
    Question 1. Mr. Larrabee argues in his testimony that at the same 
time Congress continues to support the enhancement of highway capacity, 
we should consider how to foster the development of other modes to 
accommodate increasing demand. What specific steps do you recommend 
Congress take to lighten the load on our highways and ensure that other 
modes share more equally in moving freight through our nation?
    Response. The Coalition believes competition in the marketplace is 
the best way to decide questions regarding the distribution of freight 
among modes to be decided. However, much can be done to improve the 
overall efficiency of our nation's transportation system.
    For example, the Coalition believes too small a portion of TEA-21 
is devoted to freight-related intermodal projects. Intermodal 
connectors currently have up to twice the engineering deficiencies and 
pavement deterioration than National Highway System non-Interstates 
routes. Also, while the current gateway and trade corridor system is 
pressed to accommodate the current traffic levels, demands on them are 
expected to double by 2020. Seamless transfer of goods between the 
modes will help meet that demand.
    The large burden placed on our freight transportation system has 
only been exacerbated by increased security concerns since September 
11. Intermodal freight infrastructure is critical to national defense. 
Thirty-eight thousand-miles of the interconnected civilian rail 
system--vital for carrying heavy, oversized equipment and weapons 
systems--links some 170 strategic defense installations to seaports for 
military deployment.
    Ports and their connectors have always been the point of 
embarkation for defense materiel, and this role is even more important 
as our global strategy emphasizes flexible response. Connectors play a 
vital role in the rapid mobilization of personnel and materiel toward 
points of deployment.
    Accordingly, The Coalition recommends that a larger portion of 
Federal transportation efforts target intermodal connectors and other 
infrastructure that improve our nations ability to move goods to and 
from our international gateways.

    Question 2. We hear a lot of positive feedback about the Alameda 
Corridor project and how Federal funds were able to leverage private 
sector, State and local funds for a project that benefited the port, 
the trucking companies, and the railroads. How useful is the Alameda 
Corridor model and can it be replicated elsewhere with some Federal 
assistance?
    Response. The Alameda Corridor is a great example of how focused 
Federal funds can leverage the involvement of other governments and the 
private sector in transportation improvement projects.
    We believe this public-private project exemplifies the type needed 
throughout the country. While at first glance this may seem to be only 
a rail project, it will also facilitate more efficient truck, ship and 
rail movement. The benefits from moving freight in and out of our 
nation's busiest ports faster will not only be felt in Southern 
California, but will stretch across the rest of the country. The goods 
that move through the ports of Long Beach and Los Angeles represent 
$97.3 billion in U.S. trade, support 2,121,500 jobs nationwide and 
deliver $4.51 billion in State and local taxes throughout the country.
    There are many other projects, similar to the Alameda Corridor that 
still need funding. Here are a few of examples drawn from our members:

      The Port of Pittsburgh will need up to $30 million for 
rail, road and port improvements.
      The Alameda Corridor East, San Gabriel Valley, and OnTrac 
Corridors in California need $2.5 billion for infrastructure 
improvements.
      To facilitate goods movement San Bernardino County needs 
$383.3 million and Riverside County needs $926.7 million.
      For infrastructure improvements Washington State needs 
$183.8 million.
      The Gateways Cities Council of Governments alone needs $4 
billion for improvements for goods movement and freight related 
congestion.

    In each of these projects, Federal funds will galvanize together 
the assets of local governments with private sector transportation 
providers in a manner similar to that which occurred with the Alameda 
Corridor project. I should note, however, that the Federal assistance 
the Alameda Corridor project received was primarily in the form of a 
loan. While this worked for that specific project, it will not work in 
every case and Congress should look at both grant and loan funds to 
facilitate projects such as those described above.

    Question 3. Many people believe that the Borders and Corridors 
Programs has not been able to successfully address many key freight 
issues. One improvement I believe we should consider is to revise this 
program to encourage public-private partnerships through a greater 
emphasis on innovative finance and other creative incentives. How else 
can we improve the Borders and Corridors Programs to target the highest 
priority freight corridors and intermodal facilities?
    Response. One significant step that can be taken is to establish 
freight mobility as a central element in national transportation policy 
and a key factor in State and local planning.
    Establishing and maintaining freight mobility as a high national 
priority must be articulated and reinforced in a variety of ways. 
Through public pronouncements and policy documents both Congress and 
the Administration need continually to underscore the importance of 
freight transportation and the urgency of increasing the capacity and 
efficiency of our national system.
    The Coalition is a member of the Freight Stakeholder Coalition and 
supports the principles outlined in testimony presented by that 
organization which not only calls for greater funding but also better 
freight data and planning.
    Freight mobility needs to be given higher priority as an element in 
State and local transportation planning. Strong relationships exist 
between the Departments of Transportation and Defense, but these 
relationships need updating to align them with today's priorities.
    To advise the Secretary of Transportation, Congress should create a 
National Council on Freight Mobility (including community mitigation) 
with strong representation from both shippers and carriers, as well as 
affected communities and other stakeholders.
    The Council would provide advice and counsel on:

      Overall freight infrastructure expansion strategy;
      Developing trends and technology in freight movement;
      Determining public interest in freight infrastructure 
projects;

    With respect to the Borders and Corridors program funds:

      The distribution of funds should be freight specific, and 
there should be a qualification threshold based on freight volumes and 
freight-related congestion to ensure limited dollars reach high-volume 
corridors/borders/gateways.
      Entity eligibility should be clarified and broadened to 
other public and quasi-public organization, such as multi-
jurisdictional authorities.
      The programs should be redefined to address the needs of 
all trade gateways, not only land borders, and gateway connected trade 
corridors. Many gateways that handle high volumes of freight are not 
eligible for funding because they may not be ``borders.'' For example, 
while Illinois is not a ``border State,'' one-third of the nation's 
freight passes through Chicago and it is the largest intermodal hub in 
the Nation. Similarly, inland ports are also important gateways that 
enable the efficient movement of goods throughout the country.
      The designated ``high priority'' corridors eligible for 
funding under the Corridors Program need to be reexamined to ensure 
freight intensive areas can apply for funding. Currently, there are 
many important projects in need of funding that do not fall in one of 
the 43 priority corridors designated under TEA-21. Highest priority 
should be given to corridors that move goods to and from trade 
gateways.
                                 ______
                                 
    Responses of Michael Huerta to Additional Question from Senator 
                                Jeffords
    Question 1. Mr. Huerta, you recommend that a minimum of $2 billion 
per year be provided for the Borders and Corridors Programs, and that 
the $2 billion should be doubled in future years. You also recommend 
that the Congress expand Federal loan and loan guarantee mechanisms for 
such projects. Would you please expand upon how this $4 billion in 
annual funding could be used to meet your estimated demand for funding.
    Response. The Coalition's recommendation is that funding for the 
Borders and Corridors Program must be increased to not less than $ 2 
billion annually. With respect to how funds can be most productively 
used the Coalition offers the following recommendations:

      The distribution of funds should be freight specific, and 
there should be a qualification threshold based on freight volumes and 
freight-related congestion to ensure limited dollars reach high-volume 
corridors/borders/gateways.
      Entity eligibility should be clarified and broadened to 
other public and quasi-public organization, such as multi-
jurisdictional authorities.
      The programs should be redefined to address the needs of 
all trade gateways, not only land borders, and gateway connected trade 
corridors. Many gateways that handle high volumes of freight are not 
eligible for funding because they may not be ``borders.'' For example, 
while Illinois is not a ``border State,'' one-third of the nation's 
freight passes through Chicago and it is the largest intermodal hub in 
the Nation. Similarly, inland ports are also important gateways that 
enable the efficient movement of goods throughout the country.
      The designated ``high priority'' corridors eligible for 
funding under the Corridors Program need to be reexamined to ensure 
freight intensive areas can apply for funding. Currently, there are 
many important projects in need of funding that do not fall in one of 
the 43 priority corridors designated under TEA-21. Highest priority 
should be given to corridors that move goods to and from trade 
gateways.
                               __________
   Statement of John D. Caruthers, Jr., Chairman, I-69 Mid-Continent 
                           Highway Coalition
    Messrs. Chairmen and Members of the Subcommittees, it is a pleasure 
to come before you today to discuss the importance of the completion of 
Interstate I-69 to the efficient movement of the nation's freight.
    When completed, I-69 will span the nation's heartland, connecting 
Canada and Mexico through the States of Michigan, Illinois, Indiana, 
Kentucky, Tennessee, Mississippi, Arkansas, Louisiana and Texas. 
Designated as congressional High Priority Corridors 18 and 20 in the 
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and as 
Interstate Route I-69 in the Transportation Equity Act for the 21st 
Century (TEA-21), the I-69 Corridor traverses over 150 counties and 
hundreds of municipalities, directly serving over 25 million people. 
The I-69 Mid-Continent Highway Coalition is comprised of cities, 
counties, States, business, labor and civic organizations all along the 
I-69 Corridor. It reflects the economic diversity of this vast region, 
including the agriculture, mining, timber, energy, transportation, 
chemical, electronic and industrial sectors-current and future users of 
the I-69 Corridor.
    Two sections of the Corridor 18 system--Interstate 69 from Port 
Huron, Michigan at the Canadian border to Indianapolis, Indiana and 
Interstate 94 from Port Huron southwest to the Ambassador Bridge in 
Detroit and west to Chicago, Illinois--are existing-open-to-traffic 
Interstates. The rest of Corridor 18, as well as Corridor 20, is under 
development. From Indianapolis south I-69 connects Evansville, Indiana, 
Memphis, Tennessee, Mississippi, Arkansas, Shreveport/Bossier City, 
Louisiana and Houston, Texas to the Lower Rio Grande Valley at the 
Mexican border. Corridor 20 extends along US 59 from Laredo, Texas at 
the Mexican border through Houston to Texarkana, Texas. A portion of 
Corridor 20 overlaps Corridor 18. Together, Corridors 18 and 20 
comprise I-69.
    The I-69 Corridor 18 and 20 system spans over 2600 miles. About 
2000 miles from Indianapolis to the Mexican border remain to be 
completed. Completion of I-69 will not require an entirely new facility 
from Indianapolis to the Mexican border. In some areas it will link 
existing Interstates or highways at Interstate standards. In other 
areas it will require upgrading and linking existing non-Interstate 
highways and, in others, new construction.
    Work is underway along the entire I-69 corridor. Feasibility 
studies have been completed and have shown that both Corridors 18 and 
20 have positive cost benefit ratios returning $1.57 and $1.68 
respectively for every dollar invested. Location and environmental 
studies are in progress and some sections are in design, preliminary 
engineering and construction. The entire corridor will be ready to go 
to construction and, in fact, much of it can be completed in the 
upcoming TEA-21 reauthorization, if funds are available.
    While I-69 traverses nine States, it is important to the Nation as 
a whole; for efficient movement of freight, for trade, intermodal 
connectivity and economic development. Trade has shifted, particularly 
after the passage of the North American Free Trade Agreement (NAFTA), 
from east-west to north-south. Canada and Mexico are now the United 
States' major trading partners. U.S. Mexican trade has more than 
doubled since the passage of NAFTA in 1993. U.S. imports from Mexico 
were up 175 percent from 1993 to 1999. U.S. exports to Mexico rose 109 
percent over the same period and trade with Canada increased 73 
percent. In 2001, 80 percent of U.S. trade with Mexico and 67 percent 
of U.S. trade with Canada went by truck. The I-69 Corridor accounts for 
over 63 percent of the nation's truckborne trade with Canada and 
Mexico. It has the nation's busiest border crossings on both the 
Canadian and Mexican borders. The Michigan border points of Detroit and 
Port Huron account for 48 percent of the nation's truckborne trade with 
Canada and the Texas border between Laredo and the Lower Rio Grande 
Valley accounts for over 49 percent of the nation's truckborne trade 
with Mexico.
    Examining the impact of NAFTA trade on just the I-69 States 
represented at this joint Subcommittee hearing, in my own State of 
Louisiana truckborne exports and imports to Canada and Mexico grew 47 
percent from 1995 to 2000, from $856 million to $1.26 billion. The 
largest increase in freight traffic has been in truckborne exports to 
Mexico which have tripled since 1995. Truckborne exports from 
Mississippi to Mexico have grown 105 percent since 1995 and truckborne 
imports have grown 74 percent. Total truckborne trade between 
Mississippi and Canada and Mexico increased from $984 million to $1.415 
billion, or 44 percent between 1995 and 2002. Truckborne trade between 
Illinois and Canada rose 49 percent from $10.76 billion to $16 billion. 
Truckborne trade between Illinois and Mexico rose 138 percent from $1.9 
billion to $4.6 billion. The value of truckborne trade between Texas 
and Mexico and Canada has increased from $35.6 billion to $72.2 billion 
since 1995, 103 percent over 5 years. The largest increase has been in 
truckborne exports from Texas to Mexico. Michigan and Texas are our 
nation's two largest trading partners with other countries in North 
America, accounting for $175 billion in value carried by all modes of 
surface transportation in 2000. Texas' North American trade is the 
equivalent of the combined North American trade activity of California, 
Pennsylvania and North Carolina.
    ooking at freight flows nationwide, not just with Canada and 
Mexico, approximately half of the total freight shipped in the United 
States in 1997--over five billion tons--passed through, originated or 
terminated in the I-69 Corridor States. Freight is entering and leaving 
the I-69 Corridor by truck, rail, air and water. Seventeen of the 
nation's top 25 seaports are directly connected to I-69 and 13 inland 
waterway ports serve I-69 cities. Fifteen of the nation's top 25 air 
cargo airports are readily accessible to I-69. There are 96 rail 
terminals within 150 miles of the Interstate 69 Corridor. Every major 
eastern and western rail carrier and both Canadian carriers have 
terminal operations on the I-69 Corridor. There are truck rail 
intermodal facilities in every major city along the I-69 Corridor.
    The I-69 Port of Houston leads the Nation in foreign waterborne 
tonnage. The Port of Houston handled 128.8 million tons of foreign 
cargo volume in 2000, 23 percent more than the foreign freight traffic 
handled at any other port in the United States. The foreign trade cargo 
volume handled at the Port of Houston in 2000 was the equivalent of the 
foreign cargo volume at the Ports of Long Beach, Los Angeles, Portland 
and Seattle combined. It was also the equivalent of the 2000 foreign 
cargo volume at the Ports of New York/New Jersey, Hampton Roads, 
Charleston, and Miami combined. With the exception of the Port of South 
Louisiana, which is also directly accessible to I-69, the Port of 
Houston handled more total trade tonnage (imports and exports) in 2000 
than any other port in the United States. The Port of Houston has 150 
trucking lines and two railroads operating intermodal service.
    While the Port of Louisiana is ranked third in the world in total 
tonnage, with 194 million metric tons of cargo volume, and the Port of 
Houston is ranked eighth in the world in tonnage with 144 million 
metric tons, container traffic is also growing. Container traffic in 
Gulf of Mexico ports served by I-69 is growing faster than the national 
average or than traffic at Atlantic or Pacific ports. Between 1990 and 
2000 Gulf port container traffic increased by 105 percent as compared 
to the national average of 99 percent. Container traffic in the Port of 
Houston grew 113 percent.
    The I-69 freight corridor also serves the nation's inland 
waterways. The I-69 Port of Memphis is the second largest inland port 
in the country. The location of a foreign trade zone, it generates $1.5 
billion in economic activity annually. The Port handled 18.3 million 
tons of domestic trade cargo volume in 2000. More than 275 trucking 
lines operate regular intermodal services in the Port of Memphis. In 
the city of Memphis, one of the top ten distribution centers in the 
United States, all modes of transportation converge and link to I-69. 
Federal Express operates its main hub in Memphis. The company's 
delivery of nine million packages a day includes a high percentage of 
intermodal movements between truck and air. Every major eastern and 
western rail carrier has a terminal in this I-69 gateway.
    Trade entering I-69 from all modes of transportation is growing 
faster than in the rest of the Nation. The trade tonnage moving through 
the U.S.' top 50 entry points--including land, sea and air--grew 8.3 
percent from 1990 to 1999. Trade tonnage moving through I-69 points of 
entry grew 18.3 percent, or more than twice as fast as the national 
average.
    A Federal Highway Administration (FHWA) study, ``Freight Analysis 
Framework'' 2000, suggests that the recent growth in freight traffic 
will continue through the year 2020. The study estimates that total 
domestic freight traffic will increase by approximately 87 percent over 
the next 20 years and that international trade will increase over 107 
percent. The vast majority of the new growth will be in the trucking 
industry with trucks expected to handle 68 percent of the increased 
tonnage, 82 percent of the increased value and 62 percent of the 
increased ton-miles. The FHWA Freight Analysis shows that the majority 
of the expected growth in truck shipments will continue to be in the 
central, eastern and southern United States, with a dominant movement 
in the southwest to northeast direction--a movement ideally suited for 
the I-69 Corridor.
    Yet the I-69 Corridor has not been completed and there is no direct 
Interstate level highway from Indianapolis to the Mexican border. 
Completion of I-69 will significantly enhance safety and efficiency 
along this key international trade route. I-69 will reduce travel time, 
fuel consumption and costs over the existing circuitous route. It is an 
essential intermodal link for trade and commodity flow. Completion of 
the Corridor 18 portion of I-69 alone is also projected to save 3100 
lives, avoid 158,000 injuries and 409,000 property damage accidents.
    In addition to its national and international trade benefits, I-69 
will stimulate economic growth. I-69 traverses some of the nation's 
most impoverished regions. There are over 9.1 million people living 
below the poverty level in the I-69 Corridor States. In six of the 
Corridor States the population in poverty exceeds the U.S. average. 
There are 13 empowerment zones, enhanced enterprise communities and 
enterprise communities along the Corridor, including two rural 
empowerment zones--Mid-Delta and Lower Rio Grande Valley. Construction 
of I-69 will provide economic growth. The Corridor 18 Feasibility Study 
estimated that, in the Houston to Indianapolis segment alone, I-69 will 
create 27,000 jobs, add $11 billion in wages and produce $19 billion in 
value added through 2025.
    When the Interstate system was initially designed in the 1940's and 
50's, it was laid out generally east to west, reflecting the 
demographics, trade patterns and defense needs of the time. Trade has 
shifted, particularly after the passage of the North American Free 
Trade Agreement (NAFTA), from east-west to north-south. However, when 
the Interstate was declared completed in 1995, some of the newer north-
south sections like I-69 were left dangling and unfinished. The promise 
of the National Corridor Planning and Development and Coordinated 
Border Infrastructure programs in TEA-21, of which the I-69 Mid-
Continent Highway Coalition was a major proponent, was the recognition 
that within the 160,000 mile National Highway System there were some 
remaining, unfinished corridors of significance to the Nation as a 
whole, serving national objectives of trade and economic growth, that 
still needed to be completed and merited a separate program with 
dedicated funding to do so. Unfortunately, the program was only funded 
at $140 million a year nationwide and many of the projects that 
qualified or were earmarked for funding were of local, not national 
interest. Despite insufficient funding diluted among projects that are 
not nationally significant, the I-69 Corridor made significant 
progress. Since the inception of TEA-21, I-69 has received over $245 
million from the National Corridor Planning and Development and the 
Coordinated Border Infrastructure programs and directly from the 
Highway Trust Fund. Funds have also been provided for specific segments 
in ISTEA, TEA-21 and appropriations. States have also invested 
substantial amounts of their own funds.
    The Corridor has moved ahead so significantly that all of I-69 can 
go to construction in the period of TEA-21 reauthorization and much of 
it can be completed--if dedicated funds are available to do so. The 
last estimated cost of completing the unfinished portion of I-69 was 
$8.3 billion, with the Federal share at $6.6 billion.
    Having built the Interstate system, which served us well for the 
latter half of the twentieth century, we cannot rest on our laurels. We 
must invest our resources in those unfinished corridors that serve 
today's and tomorrow's 20 first century trade flows such as I-69. There 
are a number of mechanisms to accomplish this; limiting the Corridors 
and Borders program to major trade corridors and increasing its 
funding, dedicating program funds to complete unfinished Interstate 
links or funding freight corridors. Any of these programmatic options 
would work--whether alone or in combination. The point is that we must 
recognize the need for and build the infrastructure to serve our 
nation's freight flows. The traffic is there. The intermodal 
connections--rail, water, and air--are there. The trade is surging at 
Houston, Detroit and Laredo. The maquiladoras in the Lower Rio Grande 
Valley of Texas are manufacturing automobile parts, electronics, 
computers, batteries and plastic, glass and rubber components and 
transporting them by truck for final assembly in manufacturing 
facilities in Michigan, Indiana, Illinois and Ohio. Corn from Indiana 
is being trucked to the Lower Rio Grande Valley to be used as corn 
syrup in soft drinks, fruit juices and candy produced in maquiladoras 
and shipped worldwide. Cotton is going by truck from Mississippi to be 
made into clothing apparel in South Texas. Foreign exports from the 
Port of Houston are going by truck to Chicago and Indianapolis. Yet the 
Interstate level facility to transport these products safely, 
efficiently and economically--I-69 remains unfinished.
Interstate 69--High Priority Corridors 18 and 20
      Designated as congressional High Priority Corridors 18 
and 20 in the Intermodal Surface Transportation Efficiency Act of 1991 
(ISTEA) and as Interstate Route I-69 in the Transportation Equity Act 
for the 21st Century (TEA-21), the I-69 Corridor traverses over 150 
counties and hundreds of municipalities, directly serving over 25 
million people. When completed, I-69 will span the nation's heartland, 
connecting Canada and Mexico through the States of Michigan, Illinois, 
Indiana, Kentucky, Tennessee, Mississippi, Arkansas, Louisiana and 
Texas.
      Two sections of the Corridor 18 system--Interstate 69 
from Port Huron, Michigan at the Canadian border to Indianapolis, 
Indiana and Interstate 94 from Port Huron southwest to the Ambassador 
Bridge in Detroit and west to Chicago, Illinois--are existing-open-to-
traffic Interstates. The rest of Corridor 18, as well as Corridor 20, 
is under development. From Indianapolis south I-69 connects Evansville, 
Indiana, Memphis, Tennessee, Mississippi, Arkansas, Shreveport/Bossier 
City, Louisiana and Houston, Texas to the Lower Rio Grande Valley at 
the Mexican border. Corridor 20 extends along US 59 from Laredo, Texas 
at the Mexican border through Houston to Texarkana, Texas. A portion of 
Corridor 20 overlaps Corridor 18. Together, Corridors 18 and 20 
comprise I-69.
      When the Interstate system was initially designed, it was 
laid out generally east to west, reflecting the demographics, trade 
patterns and defense needs of the time. Trade has shifted, particularly 
after the passage of the North American Free Trade Agreement (NAFTA), 
from east-west to north-south. U.S. Mexican trade has more than doubled 
since the passage of NAFTA in 1993. U.S. imports from Mexico were up 
175 percent from 1993 to 1999. U.S. exports to Mexico rose 109 percent 
over the same period and trade with Canada increased 73 percent. The I-
69 Corridor accounts for over 63 percent of the nation's trade with 
Canada and Mexico. It has the nation's busiest border crossings on both 
the Canadian and Mexican borders, accounting for 48 percent of the 
nation's trade with Canada and over 49 percent of the nation's trade 
with Mexico.
      Yet there is no direct Interstate level highway from 
Indianapolis to the Mexican border. Completion of I-69 will 
significantly enhance safety and efficiency along this key 
international trade route. Completion of the Corridor 18 portion of I-
69 alone is projected to save 3100 lives, avoid 158,000 injuries and 
409,000 property damage accidents. I-69 will reduce travel time, fuel 
consumption and costs over the existing circuitous route. It is an 
essential intermodal link for trade and commodity flow. Seventeen of 
the nation's top 25 seaports are directly connected to I-69 and 15 of 
the nation's top 25 air cargo airports are readily accessible to I-69.
      In addition to its national and international trade 
benefits, I-69 will stimulate economic growth. I-69 traverses some of 
the nation's most impoverished regions. There are over 9.1 million 
people living below the poverty level in the I-69 Corridor States. In 
six of the Corridor States the population in poverty exceeds the U.S. 
average. There are 13 empowerment zones, enhanced enterprise 
communities and enterprise communities along the Corridor, including 
two rural empowerment zones--Mid-Delta and Lower Rio Grande Valley. 
Construction of I-69 will provide economic growth. The Corridor 18 
Feasibility Study estimated that, in the Houston to Indianapolis 
segment alone, I-69 will create 27,000 jobs, add $11 billion in wages 
and produce $19 billion in value added through 2025.
      The I-69 Corridor 18 and 20 system spans over 2600 miles. 
About 2000 miles from Indianapolis to the Mexican border remain to be 
completed. The last estimated cost of completing the unfinished portion 
of I-69 was $8.3 billion, with the Federal share at $6.6 billion. 
Completion of I-69 will not require an entirely new facility from 
Indianapolis to the Mexican border. In some areas it will link existing 
Interstates or highways at Interstate standards. In other areas it will 
require upgrading and linking existing non-Interstate highways and in 
others new construction.
      ISTEA provided $4.05 million for Corridor 18 Feasibility 
and Special Issues Studies, the identification of Sections of 
Independent Utility (SIUs) and Special Environmental Studies. The State 
of Texas paid for the Corridor 20 Feasibility Study and other location 
studies out of State only funds. Since the inception of TEA-21, 
Corridors 18 and 20 have received over $245 million from the National 
Corridor Planning and Development and the Coordinated Border 
Infrastructure programs and directly from the Highway Trust Fund. Funds 
also have been provided for specific segments in appropriations, ISTEA 
and TEA-21 and States have invested their own funds.
      Work is underway along the entire I-69 corridor. 
Feasibility studies have shown that both Corridors 18 and 20 have 
positive cost benefit ratios returning $1.57 and $1.68 respectively for 
every dollar invested. Location and environmental studies are in 
progress and some sections are in design, preliminary engineering and 
construction. The entire corridor will be ready to go to construction 
and, in fact, much of it can be completed in the upcoming TEA-21 
reauthorization, if funds are available.
      The Corridors and Borders program is only authorized at 
$140 million per year and there has been over $2 billion in demand for 
funding each year. While I-69 is truly a national/international 
Corridor, there are many projects that have received funding under the 
Corridor program that only serve one State or region.
      Completion of I-69 will require funding dedicated to I-69 
and other corridors that are truly international in scope and service. 
I-69 is the nation's preeminent national/international Corridor. It is 
one of the nation's few unfinished Interstates that remained when the 
Interstate program was terminated in 1995. It is also one of a handful 
of high priority corridors that are designated as future Interstates 
under Section 1105(e)(5)(A) of ISTEA.
      The I-69 Mid-Continent Highway Coalition has been the 
primary advocate for I-69 before Congress and the executive branch. The 
Coalition spearheaded the creation of the National Corridor Planning 
and Development and Coordinated Border Infrastructure programs in the 
Transportation Equity Act for the 21st Century and has consistently 
advocated funding for I-69 in annual appropriations and at the 
Department of Transportation. The Coalition is a dues paying 
organization of cities, counties, states, business, labor and civic 
organizations all along the I-69 Corridor. Supporters include over 45 
Chambers of Commerce representing over 13,050 businesses. The I-69 Mid-
Continent Highway Coalition reflects the economic diversity of this 
vast region, including the agriculture, mining, timber, energy, 
transportation, chemical, electronic and industrial sectors-current and 
future users of the I-69 Corridor.
                               __________
      Statement of Jim Fiske, Chairman, Magtube, Inc., Goleta, CA
    I am Jim Fiske, Founder and Chairman of Magtube, Inc. of Goleta, 
California. We are a venture funded-company developing a new freight 
transportation system that promises faster service, higher security, 
far better energy efficiency, cleaner operation, and lower cost than 
any existing mode. Thank-you for giving me this opportunity to present 
information that I think could have a significant impact on the 
transportation planning that is so crucial to the economic future of 
this country.
    As I'm sure the Committee is aware, the American transportation 
industry is vast, encompassing nearly 11 percent of the GNP. According 
to the Bureau of Transportation Statistics, one out of every 10 U.S. 
jobs is directly or indirectly related to transportation. Some industry 
experts say the figure is closer to one out of five when all inventory, 
logistics, and related corporate functions are included. This industry, 
and the American population, is now facing severe problems, not the 
least of which is increasing congestion. For example, according to the 
Southern California Association of Governments (SCAG) the average speed 
for a 24-hour weekday period on the greater Los Angeles highway and 
arterial system is about 38 miles per hour. During the morning peak 
period in some of the heaviest corridors the average travel speed is 
less than 20 miles per hour. And Los Angeles is far from alone. In 
general, demand for transport rises faster than population or average 
incomes. Roughly 20 percent of U.S. urban areas are experiencing 
extreme congestion, and the percentage is growing.
    The capacity of our highways is clearly being strained to the 
limit, and yet the Department of Transportation projects that highway 
demand will only grow. Between the years 2000 and 2025 the number of 
passenger vehicles is forecast to grow from 219 to 262 million, while 
intercity ton-miles of freight carried by truck grows by 88 percent. 
City, State, and Federal agencies have earmarked huge sums of money to 
deal with this growth. The SCAG Regional Transportation Plan alone 
includes $15 billion for highway and arterial improvement projects 
including mixed-flow lanes, interchanges, truck climbing lanes, truck 
lanes and grade crossings. But even if this plan is completed SCAG 
projects that Southern California congestion delays could increase more 
than 100 percent by 2025. Some statistics project that a freeway trip 
taking 1 hour under normal conditions today will take 3 hours and 10 
minutes in 2020.
    What are we to do? Government and industry experts are straining to 
provide improvements but most industry analysts seem to believe that 
increasing congestion, safety concerns, and environmental damage is 
inevitable--``an inescapable part of modern urban life worldwide''. I 
am here to tell you that nothing could be further from the truth. The 
``Electro-Mechanical Revolution'' is far from over.
    The immensity of the transportation industry aggravates its 
problems and makes them difficult to deal with, but it also creates a 
huge potential market for cost effective solutions.
    I think there is a common misconception that the passenger 
transport business is much larger than the freight business, and as a 
result far more attention has been focused on improving the 
infrastructure and technology required to move people than that 
required to move freight. If this continues, we run the risk of missing 
a major opportunity. In reality, the freight component of the industry 
is both larger than the passenger component and far easier to improve. 
Furthermore, by improving the freight component we will greatly reduce 
the strain on the passenger component of the industry. But railroad, 
truck and air transport are all mature technologies with fundamental 
barriers to improvement. Significant improvement in speed, cost, and 
quality of service requires a totally new approach that circumvents 
existing problems.
    One possibility frequently overlooked is the pipeline. More than 
1.4 million miles of gas and petroleum transmission and distribution 
pipeline are in service in America. The technology is highly developed, 
well understood, and extremely cost effective. Transporting a ton of 
oil by pipeline is nearly 5 times cheaper than shipping a ton of 
freight by rail, 50 times cheaper than truck, and 170 times cheaper 
than air. Pipelines are also the safest transport mode and the least 
disruptive to the environment. But pipelines have two major limitations 
that prevent their application to general freight--their transport 
speed is very low (oil travels at roughly 4 miles per hour), and they 
only carry fluids.
    Another possibility is Maglev, or magnetic levitation, which uses 
magnetic forces to provide both lift and propulsion. Studies sponsored 
by U.S. Government agencies in the early 1990's compiled a long list of 
potentially beneficial attributes, including high speed, faster trips, 
low energy consumption, low operating costs, high reliability, low wear 
and maintenance, petroleum independence, low pollution, excellent 
system control, high capacity, safety, convenience, modest land 
requirements, and low noise. But they also revealed that capital costs 
exceeding $35 million per mile for maglev systems would result in a 
very low return on investment, making them commercially infeasible. 
Since the 1970's Germany and Japan have invested billions of dollars in 
maglev development. Neither has constructed an operational system. Only 
the Chinese government, which has purchased the German Transrapid 
design for a short installation in Shanghai, has been willing to foot 
the bill for an operational system. Barring a major cost breakthrough, 
maglev systems will never be constructed by private business alone.
    We have found that cost breakthrough.
    Engineers constantly improve operational equipment, so it's no 
surprise that their first impulse after discovering maglev technology 
was to apply it to an existing transport mode, namely railroad. Over 
time maglev became synonymous with trains. ``Maglev Train'' has become 
a single concept. This is a huge oversight. Trains are the wrong 
metaphor. Maglev is a powerful technology crippled by its association 
with the wrong application. Using maglev simply to improve a train is 
rather like using jet engines to propel a barge.
    If maglev technology is applied to pipelines, however, particularly 
freight pipelines, the result is revolutionary. This combination allows 
smaller vehicle size, narrower rights-of-way, lower complexity, reduced 
initial investment, lower energy costs, higher acceleration, higher 
speed, shorter headway, and higher system capacity. These capabilities 
reinforce each other to create a new synergy. Costs plummet, 
performance skyrockets, and the available market increases. Unlike 
maglev passenger trains, a system of maglev freight pipelines has the 
potential for a high return on investment.
    Magtube is creating just such a system. We have discovered a new 
maglev technique, for which we have patents pending, with fundamental 
advantages over previous designs. We are implementing it now. At this 
moment our first full-size maglev vehicle is floating over its track 
just outside Santa Barbara, California. Our goal is to create a new 
transportation paradigm, a arrangement of maglev pipelines or 
``Magtubes'' we call the Magnetic Levitation Freight Transportation 
Network, or more simply, the Mag Net(. This network will provide a 
level of speed, safety, security, efficiency, and cost-effectiveness 
not currently possible for mail, priority packages, perishables, and 
freight of all types. Transit times will be measured in minutes or 
hours instead of days. Think of it as an ``Internet for Freight.'' The 
Mag Net will streamline vital transportation corridors to reduce 
congestion, transit times, and costs while improving reliability. 
Construction costs will be a fraction of conventional Maglev, high 
speed rail, or highway expansion. Shipping costs will be lower than air 
freight, truck or railroad. The potential for high return on investment 
will permit private ownership, decreasing highway damage and congestion 
at no direct cost to the Federal Government. The same design can be 
used around the globe, providing even greater benefits for countries 
with poorly developed transport.
    We are currently planning the construction of pipelines a bit over 
six feet in diameter with a projected cost in the vicinity of $5 
million per mile. Our vehicles are sized to handle standard freight 
pallets for easy interchange with other modes. They will have the 
capability to move a one-ton payload at up to 500 miles per hour or 
more through an evacuated tube while providing an energy efficiency 
equivalent to more than 1000 miles per gallon of gasoline. Magtubes 
will have very high capacity when fully utilized -10,000 tons per hour 
or more should be readily achievable for a single pipe. This compares 
to a capacity of 7000 to 18000 tons per lane per hour for heavy trucks 
on an uncongested highway. Truck lanes planned for the Los Angeles area 
are projected to cost over $50 million per lane mile.
    The Mag Net's extreme energy efficiency provides a potential energy 
savings exceeding 8 billion gallons of diesel fuel per year in the U.S. 
alone, with a 72 million metric ton decrease in CO2 emissions. The 
carbon monoxide, nitrogen oxides, particulates, sulfur dioxide, 
volatile organic compounds and noise normally emitted by truck and air 
freight carriers would likewise be eliminated. With our vehicles 
traveling through underground tubes, totally isolated from passenger 
traffic, they will provide a level of safety never before seen in a 
transportation system.
    The Mag Net will also provide an unprecedented level of security.
    America's current freight system is barely able to handle the 
immense traffic flow required for free trade, even with minimal 
security. But the events of 9/11 have created a frightening dilemma--
while cursory inspection of imports is no longer acceptable, thorough 
screening seems impossible without bringing trade to a halt. Government 
and industry are struggling to find ways to efficiently move freight 
across borders while ensuring detection of explosives, chemical 
weapons, biotoxins, nuclear materials and other contraband. At present 
officials search only 2 percent of the 11 million freight containers 
arriving here each year. The solutions that have been proposed, such as 
they are, provide stop-gap measures at best. They will require huge 
expenditures and attempt to maximize security primarily by focusing it 
on a small fraction of shipments. Most trade goods will continue to 
cross borders without inspection, as they do now, or will encounter 
severe delays--or both.
    Magtube vehicles, on the other hand, will travel silently out of 
sight, protected by a vacuum, a steel tube, and several feet of earth. 
Untouchable. With computer control their precise location will always 
be known to Magtube and our security partners--and no one else. Small, 
standardized shipping containers will provide compatibility with other 
shipping modes and easy access for inspection or machine scanning. 
Automated searches for contraband will be fast and cheap with minimal 
delays. Nuclear, biologic, and/or chemical sensors can be installed in 
each vehicle for enhanced detection capability. Freight can be 
inspected either at its source or at a facility far from any border, 
then sent to a border crossing with complete assurance that it will 
remain under constant supervision until it reaches its destination. 
Whether their cargo is tissue paper or spent nuclear fuel rods, our 
vehicles will bypass highways, railroads, border inspection stations, 
and all other sources of congestion or concern. If one link of the Mag 
Net is shut down its normal traffic will simply be rerouted through 
other links.
    We are currently in the final stages of constructing a laboratory 
demonstration of a full-scale vehicle and track. In 2003 we plan to 
begin construction of a second-generation vehicle and a high-speed test 
track. At the same time we're exploring options for commercial pilot 
projects--actual revenue-producing freight transport installations--
with organizations such as SCAG, other transportation groups in 
California, New York and Michigan, and the Department of 
Transportation. Our goal is to be ready to begin the construction of 
pilot projects in the 2004-2005 timeframe. The most attractive sites 
for these installations will be those areas with the worst problems, 
such as clean air non-attainment areas, border bottlenecks, and 
severely congested cities.
    We do not expect or want the Mag Net to be publicly funded. We are 
in business to design, build, and operate the Mag Net for profit. But 
there are several things the Federal Government could do to accelerate 
system startup and expansion. (1) Congress could make freight maglev 
installations explicitly eligible for DOT's Transportation 
Infrastructure Finance and Innovation Act (TIFIA) to provide Federal 
credit assistance such as direct loans, loan guarantees and lines of 
credit. Additionally with much of the focus of next year's TEA-21 
reauthorization on the Congestion Mitigation and Air Quality (CMAQ) 
program, we would respectfully that it be clarified that technologies 
such as ours, be eligible, where appropriate and necessary, for CMAQ 
funding for those areas of the country in air quality non-attainment 
and maintenance areas. (2) Congress could help provide access to or 
assistance in acquiring rights-of-way for such installations adjacent 
to Federal aid highways. (3) Congress could make freight maglev part of 
any proposed freight component in the next highway authorization. (4) 
Congress could provide assistance with Federal agencies in identifying 
pilot projects and planning border crossing installations to improve 
freight flow and security. (5) Congress could assist us in our 
discussions with multiple Federal agencies and with our cross-border 
trading partners, Canada and Mexico.
    Major breakthroughs in transportation technology are exceedingly 
rare--the railroad, the automobile, the airplane--but they have far-
reaching consequences. In 1942 German submarines sank most of our oil 
tankers along the Gulf and East Coasts. In response we built the 
government-financed War Emergency Pipeline, the first large-diameter 
long-distance oil pipeline, and soon discovered it had immense economic 
and operational advantages. In that case it took a World War to 
overcome inertia and jumpstart a better method of transportation. We 
are now facing another crisis, a battle against increasing congestion, 
major threats to security, stagnating travel, slower goods movement, 
and increasingly severe environmental impact. We can win this war--
without constraining the free movement of goods and people. Indeed, we 
now have a clear path to a level of mobility previously considered 
science fiction. The ``Network Economy'' need not be limited to the 
exchange of information. If we build the Mag Net and move freight 
transport below ground everybody wins--shippers, carriers, the 
government, and the public. This Committee and the Congress can help us 
do it.
    Again, my thanks to the Committee for allowing me to present this 
testimony. My associates and I are available at your convenience should 
you care to discuss the information I have presented, or any issue 
dealing with freight transportation and security.

                      Energy Efficiency Comparison
------------------------------------------------------------------------
                                                                  Ton-
                                                                 miles/
                                           Speed    BTU/ ton-     Gal.
                  Mode                     (mph)       mile      (diesel
                                                                 equiv.
                                                                   *)
------------------------------------------------------------------------
Railroad...............................        65          368       377
Long-haul truck........................        65         1151       120
Truck (avg)............................        65         2793       150
747-400F...............................       500       10,800      12.5
Air Freight (avg)......................       500       20,000         7
Mag Tube (est.)........................       200           48      2890
Mag Tube (est.)........................       300           49      2831
Mag Tube (est.)........................       400           60      2312
Mag Tube (est.)........................       500           81      1712
------------------------------------------------------------------------
*138,700 btu/gal

                               __________
 Statement of the Los Angeles County Economic Development Corporation 
                                (LAEDC)
    Mr. Chairman and members of the subcommittees, the Los Angeles 
County Economic Development Corporation (LAEDC), a private nonprofit, 
501(c)3, is pleased to present this overview of goods movement in 
Southern California. We appreciate the opportunity to offer this 
statement as part of legislative hearing record being developed by the 
U.S. Senate in preparation for the reauthorization of TEA-21. We 
greatly appreciate the interest and focus of the respective full 
Committees in the issues surrounding TEA-21. In addition, we are very 
appreciative of the leadership demonstrated by Senator Barbara Boxer 
and Senator Diane Feinstein and the great economic and environmental 
benefits TEA-21 has brought to California's transportation system.
    This statement is based from four public policy and transportation 
studies: the Southern California Freight Management Case Study 
(enclosed); the Alameda Corridor East Train Study (enclosed); the 60-
Mile Circle (available at www.laedc.org the week of September 16th); 
and the forthcoming On-Trac Corridor Trade Impact Study, 2002. Together 
these studies, coordinated by the LAEDC, paint a remarkable picture of 
a region with a rapidly growing population, burgeoning international 
and domestic trade, and a looming trade transportation capacity crisis 
that has both local and national implications. Southern California is 
America's gateway to the Pacific Rim, and our nation's international 
trade is growing rapidly. Yet, Southern California's infrastructure is 
inadequate to handle this rising tide of trade, and the region will 
need Federal assistance and creative solutions to finance the required 
improvements.
    Today we would like to briefly introduce you to the region, 
describe its key population and trade trends, and summarize the 
region's infrastructure capacity shortfalls.
Regional Overview
    Southern California, the five-county region comprised of Los 
Angeles, Orange, Riverside, San Bernardino and Ventura Counties, 
operates on a scale normally associated with States and even countries. 
At 17 million people and growing, more people live in Southern 
California than in all of Florida, currently the fourth most populous 
State in the union. Despite its reputation for making movies and little 
else, Southern California employs more than a million people in 
manufacturing. Powered by core strengths in aircraft, biomedical 
technology, business services, food, furniture, metal fabrication, 
motion pictures and television production, textiles and apparel and 
tourism, the region produces over $600 billion in goods and services 
annually. This places the region's gross domestic product tenth in the 
world among countries, just behind Canada and Brazil and ahead of 
Mexico, Spain, India, South Korea and Australia. Home to almost 200 
different nationalities and cultures, Southern California is one of the 
most diverse places on earth. The region is one of the top tourist 
destinations in the country, and thanks to its combination of wealth, 
size and reputation for trend setting, comprises one of the world's 
most important consumer markets.
Regional Trends and Resulting Capacity Shortages
    Population and trade growth are the two key trends affecting the 
region. The five-county Southern California region will add more than 5 
million people between 2000 and 2020. This is roughly equivalent to the 
combined populations of the Cities of Los Angeles and San Diego, or 
twice the population of Chicago. Much of the growth will be internally 
generated: In addition to having the largest population base among the 
50 States, California also has one of the highest rates of natural 
increase (births minus deaths as a share of total population). Internal 
population growth will be supplemented by immigration. California has 
the highest rate of net international migration of any State, helping 
make Los Angeles a modern Ellis Island.
    Two shocking implications of this growth: First, at current rates 
of automobile ownership, five million more people will add about 2.7 
million private vehicles to the region's already congested freeways. 
Second, just to maintain the status quo, population growth of more than 
five million people will require adding twice the infrastructure and 
services that exist in present-day Chicago. For every school in 
Chicago, Southern California will need to build two.
    In terms of trade, Southern California has emerged as a leading 
global trade and transshipment center because of its massive internal 
market, heavy investment in world-class trade infrastructure, and its 
new role as the distribution center for U.S.-Pacific Rim trade. The 
massive internal market draws trade both for final consumption and for 
inputs in valued-added products ranging from shirts that are labeled 
and placed on hangers to parts that are used in manufacturing. These 
two factors help to pull in still more trade, and drive up the 
percentage of international cargo that makes its first stop in Southern 
California. With so much cargo destined here in the first place, it 
makes sense for shippers to use the region as a distribution center for 
the rest of the United States. This role is confirmed by data from the 
Los Angeles Customs District, which recorded almost one-quarter 
trillion ($230 billion) dollars in trade for year 2000.
    The $230 billion in trade is an underestimate since it is 
merchandise trade only, therefore excluding some of the region's core 
strengths such as motion pictures, tourism, and financial services. The 
number is also low because it is based on port of entry only, thereby 
excluding the region's NAFTA trade with Canada and Mexico, which 
travels primarily by truck and rail and thus is counted in border areas 
such as San Diego, Laredo and Detroit. Even still, the value of 
merchandise trade at the L.A. Customs District is expected to almost 
triple to $661 billion, 2000-2020. We'd like to quickly describe the 
growth trends and capacity issues for the region's ports, railroads, 
freeways and airports.
    Ports--The Ports of Los Angeles and Long Beach are the busiest in 
the Nation, together handling one-third of all container traffic in the 
United States and an astonishing 65 percent of all container traffic on 
the West Coast. With a combined container throughput of 9.5 million 
Twenty-Foot Equivalent Units (TEU) in 2000, they were the third busiest 
container facility in the world, behind only Singapore and Hong Kong.
    The long-term trend in container traffic at the ports has seen 
steady growth, though the pace has slowed in recent months. As recently 
as 1998, the Alameda Corridor Transportation Authority (ACTA) 
conservatively forecast year 2000 container traffic of 5.6 million TEUs 
(twenty-foot equivalent units). The actual total was 9.5 million TEUs; 
no one, including the ports, anticipated that container traffic would 
grow so fast.
    Container traffic on the Alameda Corridor East (see geographic map 
in Rail Corridors section) is now expected to almost double by 2010, 
and then double again to 32 million TEUs by 2025. For perspective, 
consider that a single large ship typically carries 6,000 TEUs. That is 
enough containers, placed end to end, to build a wall of boxes more 
than 20 miles long. The forecast growth may seem incredible, but if 
anything, it is probably conservative. Indeed, for the past 10 years, 
traffic levels have consistently surpassed previous estimates.
    Rail Corridors--Driven by the rising tide of trade flowing through 
the ports, easterly bound rail traffic is expected to rise dramatically 
over the next twenty-five years. The newly constructed Alameda 
Corridor--a 20-mile, high-speed, completely grade-separated train route 
connecting international trade via the ports and the rail yards just 
east of downtown Los Angeles--will handle some of the international 
increases. Yet the Alameda Corridor is only the first link of a massive 
regional mainline rail corridor network. Domestic and international 
trade at the two rail yards east of downtown is the starting points of 
the Alameda Corridor East. This eastbound corridor carries about three 
times the cargo of the recently completed Alameda Corridor because the 
intermodal rail yards receive more international goods by truck from 
the ports and even more domestic or locally produced goods for movement 
to the rest of the United States. The short answer is that Alameda 
Corridor East carries about 23 percent of the United States waterborne 
international trade and is the only corridor in Southern California 
that carries both domestic and international goods through the region 
to and from the rest of the United States.
Alameda Corridor East
            (Union Pacific and Burlington Northern Santa Fe Mainlines)
            
            
    As seen in the above graphic, the two rail corridors connect the 
downtown rail yards with the transcontinental rail network: the Alameda 
Corridor East (San Gabriel Valley Corridor), via the Union Pacific (UP) 
tracks through the San Gabriel Valley into San Bernardino and Riverside 
Counties, and the Alameda Corridor East (OnTrac Corridor), which 
follows the Burlington Northern Santa Fe (BNSF) mainline through 
densely populated northern Orange County into Riverside and San 
Bernardino Counties. Freight and commuter trains also share the tracks 
of both corridors, further complicating efficient mobility. The OnTrac 
Corridor, going through the city of Placentia, carries 50 percent of 
all eastbound rail cargo and is the only rail artery used by the United 
Parcel Service to move cargo to Midwest and East Coast destinations. 
OnTrac Corridor train traffic will rise 210 percent, 2000-2025, while 
the San Gabriel Valley Corridors train traffic will increase 236 
percent over the same period. Rail traffic on these routes, at more 
than one train every 10 minutes, will easily surpass current capacity, 
barring major improvements, in the next 3-5 years. Intermodal lift 
capacity in the region--the facilities that transfer containers between 
trucks and trains--is greatly constrained. Demand for intermodal lifts 
is expected to exceed capacity within the next 5 years. Simply put, in 
just a few years, a shortage of intermodal capacity and additional 
passenger trains will mean more trucks on the already congested 
freeways. At the same time, additional freight trains will translate 
into more cars on the freeway. Without additional capacity it is a no-
win situation for local commuters, the other 49 States, and the U.S. 
Treasury. Local commuters will be impacted because they will reach 
unbearable congestion. The other forty-nine will see job growth slow 
because Southern California consumers will see more difficulty 
receiving goods through eastbound rail corridors, and the U.S. Treasury 
because the customs revenues collected on imported international 
goods--an unbelievable 1 percent of all U.S. Treasury revenues comes 
from customs duties--will likely slow or decrease due to inefficient 
freight mobility in Southern California. Currently about half of those 
customs revenues are collected on goods going through Southern 
California's transportation systems.
    Freeway System--On the freeways, the number of vehicle miles 
traveled in Southern California has been rising faster than population 
growth. ``Rush hour'' has become an oxymoron in Los Angeles. The peak 
travel period has crept up to 6 hours per day, during which the average 
travel speed drops to 35 miles per hour. The Texas Transportation 
Institute annually surveys road congestion in metropolitan areas across 
the U.S., and Los Angeles has had the worst congestion every year since 
1982. The latest survey reveals 85 percent of all lane miles are 
congested, with almost half classified as ``extremely congested.'' As a 
result, on a per capita basis, the region wastes more hours (56) 
annually stuck in traffic than anywhere else in the country.
    Some freeways handle up to 40,000 trucks daily, and with heavy 
truck traffic expected to rise 65 percent, 1995-2020, they may soon 
handle up to 80,000 truck trips daily. Owing to their size and 
operating characteristics, trucks use a much greater share of freeway 
capacity than their numbers might suggest. Already, heavy trucks use 45 
to 60 percent of capacity on certain freeways, most notably the I-710. 
Since trucks move 81 percent of all tonnage originating in Southern 
California (according to the 1997 Commodity Flow Survey), increasing 
freight flows will mean more trucks on the freeways.
    Airports--Southern California's economy is increasingly dependent 
on airports. Many of the region's leading industries--from tourism to 
manufacturing to biotechnology--depend on air travel and air cargo. 
Even businesses that don't rely on air cargo directly benefit from the 
enhanced business connections and opportunities made possible by direct 
flights to and from our key overseas trading partners. The region's 
exports increasingly travel by plane. In 1995, 54 percent of regionally 
produced exports (by value) were shipped by air, and the percentage is 
higher today. Indeed, LAX handles more exports by dollar value each 
year than the Ports of Los Angeles and Long Beach combined.
    LAX is already extremely busy. In 2000, LAX was the third busiest 
passenger airport in the world, after Atlanta (ATL) and Chicago (ORD). 
Similarly, LAX was the third busiest cargo airport in the world behind 
only FedEx-hub Memphis (MEM) and Hong Kong (HKG). Although air demand 
dipped following the September 11, 2001 tragedy, the impact on long-
term air travel trends is expected to be slight. Air traffic demand has 
been skyrocketing, outpacing population growth. Estimates from the 
Southern California Association of Governments (SCAG) suggest air 
passenger demand will almost double from 82 million annual passengers 
(MAP) in 1998 to 157 MAP in 2020. Air cargo volume is expected to 
triple from 2.8 million annual tons in 1999 to 8.9 million tons in 
2020. Preliminary, post-9/11 revisions suggest these levels will be 
reached two to 3 years later than previously estimated, with passenger 
growth delayed more than cargo. Overall, the region faces a capacity 
crisis; particularly now that it seems certain that an airport will not 
be built at El Toro in Orange County.
    Congestion is a problem across all modes of transportation. The 
region will struggle to accommodate future freight operations; 10-15 
year lead times for financing and constructing upgrades to 
infrastructure are almost guaranteed; current intermodal facilities at 
local ports and rail yards will reach capacity within 5 years; and 
without major investments, the rail lines east of downtown Los Angeles 
will be so congested the rail network will effectively cease to 
function. These problems will be exacerbated by congestion on the 
roads. Air cargo facilities, for example, rely on trucks to feed 
shipments to the airport and deliver airfreight to its final 
destination, yet traffic is terribly congested in the vicinity of LAX. 
Congestion threatens both domestic and international trade moving 
through the region, and the quality of life for people who live there.
National Implications
    Southern California's trade transportation infrastructure should be 
of great concern to the rest of the United States because the region's 
global gateways and trade corridors act as conduits for two-way 
domestic and international surface trade between Pacific Rim nations 
and every region of the United States. Let's take a quick look at the 
OnTrac Corridor Trade Impact Study (2002) for two-way domestic and 
international surface trade during the year 2000 between California and 
regions of the United States.
    The international trade figure for each region represents the two-
way trade between other regions of the United States and overseas 
customers and suppliers that travel via the UP and BNSF train routes 
that comprise the Alameda Corridor East. The domestic trade numbers 
represent commerce between California and other States. Roughly half of 
the domestic trade between California and other States will originate 
or be consumed in Southern California (based on Southern California's 
share of the State's GDP). International trade diversion to other ports 
of entry is cost prohibitive since half of all international goods 
would still need to be delivered to Southern California. This means 
that over 20 percent of all U.S. waterborne trade is consumed locally 
in Southern California, or 45 percent of all customs revenue that is 
generated in the United States goes through Southern California, or .5 
percent of all the revenues of the United States Treasury is collected 
via customs duties on products imported through Southern California 
each year.
    The Northwest States (WA, OR, MT, ID and WY) received and sent 
international trade via the Alameda Corridor East in 2000 valued at 
$2.2 billion dollars. Domestic trade between the Northwest and 
California for the same year was $60.4 billion. For the Great Plains 
States (ND, SD, NE, KS, MN, IA and MO), the comparable figures were 
$8.6 billion and $42.4 billion. The numbers for the Great Lakes States 
(IL, WI, MI, IN, KY, OH and WV) were $25.0 billion and $69.4 billion. 
For the Atlantic Seaboard (CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT 
and VA), the figures were $34.4 billion in international and $74.6 
billion in domestic trade. In the Southeast (AR, AL, GA, FL, LA, NC, 
SC, TN and MS), the numbers were $16.0 billion international and $71.7 
billion domestic. For Texas and Oklahoma, the numbers were $12.1 
billion international and $54.2 billion domestic. And finally, for the 
Southwest States (CA, NV, AZ, UT, CO and NM), international trade 
moving through the Alameda Corridor East rail routes was valued at 
$98.0 billion and domestic trade with California was worth $80.3 
billion. The Southwest was the only region where the international 
trade was larger than the domestic only because California's 
international trade is included, but California's domestic trade with 
itself (worth $1.3 trillion in 2000) is not included in the $80 billion 
regional total.

    All these billions of dollars in domestic and international trade 
represent the value in two-way trade to other regions of the country 
and highlight the importance of efficient movement of goods through 
Southern California for the entire country. The domestic surface trade 
between California and the other States, worth tens of billions of 
dollars annually, dwarfs the enormous international trade flows. 
California consumers represent one of the largest markets for goods 
produced by other U.S. States. Thus, investing national funds in 
efficient transportation networks in California is actually in other 
States' interest. For example, Montana sells Californians about $1.5 
billion of domestic products each year and receives about $10 million 
of international trade through Southern California ports and corridors. 
Iowa, on the other hand, sells Californians about $5 billion worth of 
products each year and only buys about $300 million of Californian 
products in return. So, a lot of jobs depend on Southern California's 
appetite for products and all the Federal money spent on trade 
transportation infrastructure in Southern California will ensure that 
the goods produced in other States continue to reach their California 
customers in a timely way; may reduce warehousing cost through 
logistics strategies like ``just-in-time'' delivery; and will speed 
goods to and from overseas to destinations throughout the United 
States.
Reauthorization of TEA-21 and Freight Policy
    During the deliberations by your respective subcommittees regarding 
the reauthorization of TEA-21, we urge that you give strong 
consideration to the following proposals for Federal action to enhance 
the efficient movement of goods and freight on the nation's 
transportation system:
    1) Freight movement should be considered a major policy focus and 
high priority in the TEA-3 legislation;
    2) A dedicated category of Federal funding should be established to 
support freight related transportation infrastructure. Particular 
support should be given to trade corridor improvements, similar to the 
Alameda Corridor East extension program in Southern California, and 
other similar global gateways throughout the country. In addition, 
support should be given to the implementation of intermodal connectors, 
including connectors designed to improve ground access at international 
airports;
    3) Increased funding flexibility should be extended to existing 
TEA-21 funding categories, including CMAQ, providing access to freight 
related infrastructure, including rail grade-crossing and lowering 
improvements;
    4) Consideration should be given to new and innovative funding 
sources, including direct user-based fees, similar to the financing 
arrangement used for the Alameda Corridor project. Another concept we 
urge you to review is the earmarking of the incremental growth in 
custom revenues going through the nation's corridors and global 
gateways. These added funds should be targeted to support unfunded 
infrastructure improvements in communities that are directly related to 
the growth of two-way domestic and international trade;
    5) New policies and provisions, including changes in Federal tax 
policy to encourage public private transportation partnerships, 
including an enhanced role for Class I railroads serving the nation's 
most severely congested corridors; and
    6) Establish an Office of Freight Policy and Implementation in the 
Office of the Secretary of Transportation. One option would be to 
expand the current responsibilities of the Office of Intermodalism, and 
place the management responsibility with the Under Secretary of 
Transportation.
    Mr. Chairman, thank you for the opportunity to submit this 
statement for the legislative record associated with the 
reauthorization of TEA-21.
                               __________
   Statement of Hon. James P. McGovern, U.S. Representative from the 
                     Commonwealth of Massachusetts
    Mr. Chairman, thank you for the opportunity to testify before the 
Sub-Committee today. I commend you and the members for holding this 
TEA-21 reauthorization hearing on truck safety. It is, as we all know, 
a critically important issue.
    Mr. Chairman, I appear before the sub-committee this afternoon 
because I believe strongly that any serious and substantive discussion 
regarding truck safety begins and ends with the subject of truck size 
and weight. That is because truck safety is largely a function of truck 
size and weight. We know this, not only from recent studies and 
reports, but from our shared common experience as well.
    Too many of us, too often, have been unsettled while driving 
alongside or behind huge triple trailer trucks and other longer 
combination vehicles known as LCVs. These trucks can be more than 100 
feet in length and can sway three to four feet into adjacent lanes of 
traffic, even on a windless day. In some instances, a truck veering 
sharply can cause a ``crack the whip'' effect, where the wheels on one 
side of the rear trailer are actually lifted off the ground. These 
life-threatening occurrences are altogether too frequent to be 
dismissed as dramatized anecdotal evidence. In fact, the research 
suggests the danger posed by such trucks is very real.
    The US Department of Transportation's 2000 Comprehensive Truck Size 
and Weight Study confirmed that multi-trailer trucks are especially 
dangerous. According to the DOT study, if the current restrictions on 
LCVs were removed, they would likely have a fatal crash rate of at 
least 11 percent higher than single trailer trucks.
    An earlier report prepared for the Association of American 
Railroads suggested that LCVs are actually 66 percent more likely to be 
involved in a fatal crash. Similar studies have found that heavier 
trucks take more time and distance to stop and merge into traffic, 
thereby increasing the likelihood of crashes. Not surprisingly, these 
same studies have found that increasing truck weight increases the risk 
of rollover crashes and enhances the risk that collisions between 
trucks and cars will be fatal for the occupants of the car.
    Now, I recognize and appreciate that the Transportation Research 
Board's (TRB) recent report on truck size and weight finds much of the 
research I have just cited as inconclusive. And while I congratulate 
the TRB for their contribution to this policy discussion, I must tell 
you that I am more than a little troubled by their recommendation that 
we should instead experiment with bigger trucks on America's roads and 
bridges. I can assure you my constituents do not care to be guinea pigs 
in that experiment.
    Mr. Chairman, just as our common experience informs our opinion on 
this issue, so must common sense dictate the solution. I am pleased to 
be joined by nearly 75 of my colleagues in bi-partisan support of H.R. 
3132, the Safe Highways and Infrastructure Preservation Act. This IS 
common sense legislation that will maintain the reasonable limits that 
currently exist on truck size and weight on our Interstate System and 
extend those same limits to the National Highway System. It does not 
roll back truck size and weight, but rather closes loopholes in the 
current law that have resulted in a proliferation of overweight trucks. 
Ultimately, this legislation will both save lives AND protect the 
nation's multi-billion dollar investment in our highway infrastructure.
    Mr. Chairman, the fiscal considerations attendant to this issue 
must also not be minimized. According to the Federal Highway 
Administration's 1999 Status Report on the Nation's Surface 
Transportation System, it will take $1.13 trillion over the next 20 
years simply to maintain our roads and bridges. But, as we are all 
keenly aware, there is a backlog on road and bridge maintenance. Nearly 
30 percent of our nation's bridges--and 50 percent of the bridges in my 
home state of Massachusetts--are structurally deficient or functionally 
obsolete. Now, we also know that as truck weight increases, the amount 
of pavement damage increases exponentially. In fact, according to the 
DOT's 2000 Comprehensive Truck Size and Weight Study I referenced 
earlier, bigger trucks would add more than $300 billion in costs to our 
transportation spending.
    Mr. Chairman, as Congress prepares to consider the reauthorization 
of its major transportation spending bill, I am hopeful that the Safe 
Highways and Infrastructure Preservation Act will be adopted in some 
form or fashion.
    The legislation makes sense, the timing is right and above all 
else, the American public must be protected from the danger of still 
bigger trucks.
    Thank you very much.

                                   - 
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