[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND URBAN DEVELOPMENT, AND
RELATED AGENCIES APPROPRIATIONS FOR 2015
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
________
SUBCOMMITTEE ON THE DEPARTMENTS OF TRANSPORTATION, AND HOUSING AND
URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS
TOM LATHAM, Iowa, Chairman
FRANK R. WOLF, Virginia ED PASTOR, Arizona
CHARLES W. DENT, Pennsylvania DAVID E. PRICE, North Carolina
KAY GRANGER, Texas MIKE QUIGLEY, Illinois
JAIME HERRERA BEUTLER, Washington TIM RYAN, Ohio
DAVID P. JOYCE, Ohio
MICHAEL K. SIMPSON, Idaho
NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full
Committee, and Mrs. Lowey, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.
Dena Baron, Cheryle Tucker, Doug Disrud,
Carl Barrick, and Brian Barnard,
Subcommittee Staff
________
PART 4
Page
Department of Transportation..................................... 1
Oversight Hearing: Office of Public and Indian Housing,
Department of Housing and Urban Development....................... 135
Department of Transportation Modes............................... 165
Department of Housing and Urban Development...................... 253
Outside Witness Testimony........................................ 461
________
U.S. GOVERNMENT PRINTING OFFICE
88-725 WASHINGTON : 2014
COMMITTEE ON APPROPRIATIONS
HAROLD ROGERS, Kentucky, Chairman
FRANK R. WOLF, Virginia NITA M. LOWEY, New York
JACK KINGSTON, Georgia MARCY KAPTUR, Ohio
RODNEY P. FRELINGHUYSEN, New Jersey PETER J. VISCLOSKY, Indiana
TOM LATHAM, Iowa JOSE E. SERRANO, New York
ROBERT B. ADERHOLT, Alabama ROSA L. DeLAURO, Connecticut
KAY GRANGER, Texas JAMES P. MORAN, Virginia
MICHAEL K. SIMPSON, Idaho ED PASTOR, Arizona
JOHN ABNEY CULBERSON, Texas DAVID E. PRICE, North Carolina
ANDER CRENSHAW, Florida LUCILLE ROYBAL-ALLARD, California
JOHN R. CARTER, Texas SAM FARR, California
KEN CALVERT, California CHAKA FATTAH, Pennsylvania
TOM COLE, Oklahoma SANFORD D. BISHOP, Jr., Georgia
MARIO DIAZ-BALART, Florida BARBARA LEE, California
CHARLES W. DENT, Pennsylvania ADAM B. SCHIFF, California
TOM GRAVES, Georgia MICHAEL M. HONDA, California
KEVIN YODER, Kansas BETTY McCOLLUM, Minnesota
STEVE WOMACK, Arkansas TIM RYAN, Ohio
ALAN NUNNELEE, Mississippi DEBBIE WASSERMAN SCHULTZ, Florida
JEFF FORTENBERRY, Nebraska HENRY CUELLAR, Texas
THOMAS J. ROONEY, Florida CHELLIE PINGREE, Maine
CHARLES J. FLEISCHMANN, Tennessee MIKE QUIGLEY, Illinois
JAIME HERRERA BEUTLER, Washington WILLIAM L. OWENS, New York
DAVID P. JOYCE, Ohio
DAVID G. VALADAO, California
ANDY HARRIS, Maryland
MARTHA ROBY, Alabama
MARK E. AMODEI, Nevada
CHRIS STEWART, Utah
William E. Smith, Clerk and Staff Director
(ii)
DEPARTMENTS OF TRANSPORTATION, HUD, AND RELATED AGENCIES APPROPRIATIONS
FOR 2015
__________
Wednesday, March 12, 2014.
DEPARTMENT OF TRANSPORTATION
WITNESS
HON. ANTHONY FOXX, SECRETARY, DEPARTMENT OF TRANSPORTATION
Mr. Latham. The subcommittee will come to order. I guess
before we start, we should recognize our newest member, the
gentleman from Idaho, Mr. Simpson. Welcome.
Mr. Simpson. Thank you, Mr. Chairman.
Mr. Latham. And I know you will be a very constructive
member of the subcommittee.
Mr. Simpson. I am on your team, Mr. Chairman.
Mr. Latham. Thank you. That is what I like to hear.
Today we welcome the Department of Transportation Secretary
Foxx to kick off the fiscal year 2015 budget hearings. It is a
good thing to start out with a conference bill that sets the
foundation for the budget proposal.
Chairman Rogers, who will be here shortly, Ranking Member
Lowey, along with Chairman Mikulski and Senator Shelby really
moved mountains to get the fiscal year 2014 omnibus done, and
we are ready to move mountains again to get the bills done for
fiscal year 2015 at the set level of $1.016 trillion.
However, the Department of Transportation is a bit of a
problem child this year, which is saying a lot when you have
HUD also in the bill. Not only are the surface programs in need
of reauthorization, but the trust funds are flat out of money.
Next, the budget proposals to shift approximately $4 billion
worth of existing programs--actually $6 billion if you look at
the expansions and increases--from the discretionary general
fund to a mandatory, not-yet-in-existence Transportation Trust
Fund. I am guessing the President spent the $4 billion
somewhere else. But if the past is prologue, we will need to
find the $4 billion-plus under the $1.016 trillion to continue
those existing programs, and I am hoping this is not an
insurmountable problem.
I am sure there will be a question or two on those topics
this afternoon, Mr. Secretary, and I look forward to our
dialogue.
Before we get to the questions, I will recognize my good
friend and colleague, the ranking member of the subcommittee,
Mr. Pastor for his opening statement.
Mr. Pastor. Thank you, Mr. Chairman. Good afternoon.
I want to join you in welcoming Secretary Foxx to his first
appearance before the subcommittee. Our colleague Mr. Price
will provide a more formal introduction when he comes in.
This afternoon we will discuss the President's fiscal year
2015 budget for the Department of Transportation. This budget
is familiar to other budgets. It requests robust funding for
many programs, and shifts nearly all the surface transportation
programs to the mandatory side of the budget. That, of course,
is not within the subcommittee's jurisdiction; however, we can
explore how to address our Nation's infrastructure needs and
how to ensure that our transportation system is safe and
efficient.
Secretary Foxx, as the former member of a large city, you
certainly know firsthand the important role that transportation
plays in the quality of life of our citizens and the economy as
a whole. I welcome you and look forward to hearing your
testimony.
Mr. Latham. Thank you very much, Mr. Pastor.
I think the full committee chairman will be here shortly,
but I would like to recognize the ranking member of the full
committee, Mrs. Lowey.
Mrs. Lowey. Well, thank you, Mr. Chairman and Ranking
Member Pastor. And a very great welcome to Secretary Foxx, who
really got going, and it has been a pleasure for me working
with you.
First of all, I want to commend the work of our chairman
and Ranking Member Pastor, who both announced that this will be
their last Congress. And Iowa and Arizona, along with this
committee, have benefited greatly from their service. They will
be sorely missed.
And as we know, this is the Secretary's first hearing
before the House Appropriations Committee. And I want to thank
you personally for the Department's commitment to building the
new Tappan Zee Bridge, and I look forward to continuing to work
with you on the project.
With a 25 percent increase for infrastructure spending
compared to the 2014 enacted level, the President's budget
answers the call for rebuilding our aging country's
infrastructure, which the American Society of Civil Engineers
grades on average as a D. That is before you came to this
position, a D. We have work to do. For every billion dollars of
infrastructure investment, we create or preserve nearly 35,000
jobs, generate more than $6 billion worth of economic growth.
At $18 billion above last year's bill, this budget would create
over 630,000 jobs, and generate $108 billion in economic
activity.
I am particularly pleased that the budget request includes
$825 million to assist with the implementation of positive
train control on commuter and passenger rail lines. According
to the National Transportation Safety Board, this automated
technology would have prevented the devastating Metro-North
crash in the Bronx last December, which killed one of my
constituents. I hope that the fiscal year 2015 THUD bill
supports this effort by helping rail lines install this
technology in some way.
Mr. Secretary, while we are on the topic of Metro-North, I
am also anxiously awaiting the results of your deep dive into
Metro-North's operations and the Department's report to this
committee on your findings. I trust that you will have
something to the committee by the March 17 deadline.
The budget also includes $40 million to establish the Safe
Transportation of Energy Products Fund to support prevention
and response activities surrounding the transportation of crude
oil. The Lower Hudson Valley has recently had two very close
calls with trains that transport crude oil. Thankfully, at the
time of the derailments, the oil tankers on the trains were
empty. The Department and industry have taken some good first
steps to make crude transport safer, but more must be done to
hold responsible those accountable and safeguard communities
like mine in the Lower Hudson River Valley.
Lastly, as you know, Mr. Secretary, the Appropriations
Committee doesn't have sole authority to provide the funding
increase that you seek. Until Congress and the administration
come together and agree on a pay-for that assures the long-term
solvency of the Highway Trust Funds, I fear that we will
continue to receive a failing grade for our country's
infrastructure. The American people are looking at us for
leadership. Last year we stood at the edge of the budgetary
brink, and were able to pull ourselves back by supporting a
compromise. This year I hope the administration feels the same
sense of urgency for addressing the solvency of the Highway
Trust Fund.
And I thank you again, and welcome.
Secretary Foxx. Thank you.
Mr. Latham. Thank you, Mrs. Lowey.
We would now like to recognize Mr. Price from North
Carolina to introduce the Secretary.
Mr. Price. Thank you, Mr. Chairman. I will gladly do just
that.
It gives me great pleasure to welcome my friend and fellow
North Carolinian Secretary Anthony Foxx to the subcommittee. We
look forward to his leadership and what he has to say to us
today. We know that he understands the transportation and
infrastructure challenges confronting our communities in North
Carolina and across the country. He has been mayor of
Charlotte, one of the Nation's fastest-growing cities, and he
has been on the front lines, delivering transportation services
to the public and boosting economic growth and creating jobs.
During his time in office, Secretary Foxx helped to improve
local transportation systems and the quality of life in
Charlotte. I will just name a few of his efforts: extending the
LYNX light rail system, the largest capital project ever
undertaken by the city; breaking ground on the Charlotte street
car project, which will leverage Federal and city financing to
establish rail service in a critical corridor; expanding the
Charlotte Douglas Airport, which is the sixth busiest airport
in the world.
Secretary Foxx now leads an agency with more than 55,000
employees and a $70 billion budget that oversees our
government's efforts to build the safest, most efficient
transportation system in the world. As the President said in
nominating Secretary Foxx, he has got the respect of his peers,
mayors, Governors, all across the country. As a consequence, I
think he is going to be extraordinarily effective.
We all know we have pressing needs across the Nation,
infrastructure needs. I trust that Secretary Foxx's experience
at the local level is exactly what the doctor ordered at this
point. It is going to prove extremely valuable shaping national
transportation policy. And I know he will work tirelessly for
national multimodal transportation investments that will
further our Nation's prosperity and quality of life.
So welcome, Mr. Secretary. You are off to a great start.
And we are happy for the first time, really, to welcome you to
this subcommittee here today.
Mr. Latham. Thank you very much, Mr. Price.
Mr. Secretary, your full written statement will be entered
into the record, and you are recognized for 5 minutes for your
opening remarks.
Secretary Foxx. Thank you, Mr. Chairman, and to the ranking
member. Thank you as well to Congressman Price. Thank you very
much for the introduction. And also to Congressman Lowey, thank
you very much.
I want to say a particular word of thanks to the chair and
the ranking member of the subcommittee. And I know that I speak
on behalf of advocates of transportation everywhere when I say
that both of you will be deeply missed.
Today I am here to discuss the President's 2015 plan for
the Nation's transportation system. While I come here as the
U.S. Secretary of Transportation, our Department supports all
50 States and territories, and a host of local and regional
project sponsors. Today I also speak for them.
What concerns our Department and our stakeholders is what
concerns many of you. Year after year we have shored up the
Highway Trust Fund with short-term measures, and now it is
running out again, perhaps as early as August. On top of that,
our last surface transportation funding bill was a 2-year bill,
rather than a 6-year bill like the ones that came before it.
When I speak to folks on the ground, including mayors and
Governors, heads of DOTs in your States, they tell me that this
funding and policy uncertainty is creating an invisible crisis
in our country, a crisis where they are not willing or able to
put new projects on the books because they don't know if they
can fund them, which means they are leaving our already
crumbling infrastructure to crumble further.
To put a finer point on it, since 2009, our surface
transportation programs have been operating under short-term
extensions nine times, including a 2-day lapse in March of
2010. And there have been 18 continuing resolutions, including
8 in fiscal year 2011.
Overall, our Nation has a massive infrastructure deficit,
including 100,000 bridges that are old enough to qualify for
Medicare, and billions of dollars in backlogged highway and
transit needs. According to the World Economic Forum, our
infrastructure quality has fallen to 25th in the world.
To address these challenges, we must confront two
realities. The first is that we are underinvesting, and the
second is that our system is underperforming from an efficiency
standpoint. If you can imagine America's infrastructure as a
house, we have had years of termites in the basement. In
effect, we are spending money by allowing the cost of repairs
to rise as the damage becomes more extensive. The most fiscally
responsible path is to invest significantly more in our system,
which will spur job growth and allow us to meet growing new
capacity needs and deferred maintenance.
By working together we can change these trends for the
better, and it is in that spirit that a couple weeks ago
President Obama laid out his vision for a 4-year, $302 billion
transportation plan that will put us back on the path of
solving this problem. To fill the hole in the Highway Trust
Fund, the plan draws on savings from progrowth business tax
reform, a bipartisan pay-for. And I should point out that
Chairman Camp has released his own variation of this proposal,
which suggests to me there is an opportunity to get something
done. In fact, we in the administration are also sending a bill
to Congress that will provide program-by-program details behind
every budget request that we have.
To the issue of underperformance, we can and should
continue to improve on efficiency within our system, and our
proposal aims to do so. Our proposal enables us to redouble our
efforts to increase the value proposition for transportation
dollars spent, and we can do so without compromising project
integrity or the environment. That is why major new initiatives
in the President's budget include putting a premium on
streamlining through an interagency review process, and on
incentives to catalyze innovation at the local and the State
level.
The American people need and deserve funding certainty so
they can plan. I would encourage the committee and Congress to
do something different: Shock the world. Let's get a long-term
funding plan in place and move America forward.
Thank you very much.
Mr. Latham. Very good. Thank you very much for your
comments.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latham. I guess we all understand the trust fund
situation, the run-out in August, and the situation we have had
with short-term extensions and all of that. In your budget,
like you talked about, your 4-year, $203 billion proposal as
far as infrastructure, you said you are going to be sending up
specific legislation?
Secretary Foxx. Yes, sir.
Mr. Latham. When can we expect that?
Secretary Foxx. We aim to send that legislation as early as
possible in April.
Mr. Latham. In April?
Secretary Foxx. Yes, sir.
Mr. Latham. Does that include also the funding mechanisms?
Secretary Foxx. Details of the funding mechanism were
alluded to in the budget proposal, in the Treasury section of
the proposal.
Mr. Latham. Specifically that are going to pay for this?
Secretary Foxx. Yes, sir.
Mr. Latham. Okay. But that will not be part of your
legislation?
Secretary Foxx. Well, just to elaborate further on the pay-
for, what is contained in the budget proposal in the Treasury
section are several areas of opportunity in progrowth business
tax reform, including the $1- to $2 trillion of estimated
corporate profits that are overseas. Included in that is also
reducing accelerated depreciation and eliminating last in first
out accounting. And those are three different ways.
I would say to you that there are many ways to address
progrowth business tax reform. We are open to the suggestions
of Congress on that, but that is really a Treasury discussion.
It is one of those discussions that we are part of, but it is a
Treasury--
Mr. Latham. You are not going to specify what you are
talking about?
Secretary Foxx. Well, I have given three very clear ideas
that are contained in the budget proposal.
Mr. Latham. But they won't be in your bill.
Secretary Foxx. Our bill will come in April. We will have a
discussion about what the contents of that bill are at that
time.
Mr. Latham. Well, I am concerned. You know, you talk about
short-term extensions and start-stop, and basically in your
progrowth reforms, talk about a one-time revenue influx of
approximately $150 billion, which is not sustainable, right?
Secretary Foxx. Well, it is sustainable over a period of 4
years, which is several grades better than 2 years or 18
continuing resolutions.
Mr. Latham. But you are not going to specify what they are.
Secretary Foxx. Well, as I say, this is a dialogue, not a
monologue, and we are looking for areas of opportunity to have
bipartisan cooperation on a pay-for. Progrowth business tax
reform has bipartisan interest, and we think there is an
opportunity to get to yes.
Mr. Latham. Maybe you are not aware. I know Secretary
LaHood, we have had several conversations back and forth in
public and private about funding for reauthorization for long-
term funding streams. Are you making any proposals for that?
Secretary Foxx. Well, we believe that in terms of the
President's proposal that 4 years of funding and policy
certainty would do a lot more than what we have been able to do
in the last few years.
Mr. Latham. But no permanent fix. So you are talking about
another start-stop thing.
Secretary Foxx. Well, I believe, sir, that having been on
the local level, and having experienced what it is like to not
know what the future holds even 6 months or 12 months from now,
that a 4-year bill would be light years ahead of where we have
been.
Mr. Latham. Are you suggesting any increase in the gas tax,
or vehicle miles driven, or any other long-term funding?
Secretary Foxx. Not in this proposal, sir, but we remain
open to ideas that Congress has. To be honest with you, if
there are other ideas that Congress has to solve this problem,
we have expressed our openness to those suggestions.
Mr. Latham. Have you taken those off the table? The
administration previously did.
Secretary Foxx. We have been very clear that we are open to
any ideas that Congress has on this subject.
Mr. Latham. So that is a change in policy?
Secretary Foxx. Well, it is our position today.
Mr. Latham. Which would be a change of policy. Okay.
Why don't we go--Mr. Pastor. I see I have a yellow light
here.
Mr. Pastor. Thank you, Mr. Chairman.
Secretary Foxx, this is not a situation in which it is
directed to you in terms that you are responsible for the
situation, but I think that the chairman, as he asked those
questions, and looking at fiscal year 2015, that being an
election year, being that probably major proposals, which
include infrastructure development as well as tax reform, the
probability is pretty small that it is going to happen. But the
close reality is that come August the Highway Trust Fund will
probably be near broke, if not broke. And so trying to be more
of a realist, and trying to help you as Secretary of
Transportation, have you and your staff looked at come August,
Congress is gone for vacation or elections, what you would plan
to do in informing the local ADOTs, Department of
Transportation, et cetera?
Secretary Foxx. Well, a couple of points on this. We
believe that this situation will increasingly become dynamic as
we get closer into the summer. There are a host of variables
that have to be taken into account, including the facility of
individual States at the point in time which, as we have said,
is potentially as early as August.
Mr. Pastor. Right.
Secretary Foxx. So we are prepared to manage through the
event should it occur, but our specific plans will have to be
developed based on exactly what is happening at that particular
time. And so we do not have what I would say is a blueprint
today, but we are prepared and obviously looking at the Highway
Trust Fund from month to month. We are making sure we are
staying in contact with the States, and our plans will evolve
as we get closer to that point. But I would also point out that
our goal is to avoid that situation, as I think is probably
everyone's goal in here, and we remain open to continuing the
dialogue and hopefully coming up with an answer together with
Congress.
Mr. Pastor. Well, I agree that that is the goal, but
achieving that goal sometimes is a few yards away, and you have
to plan for what is the likely situation. And so trying to be a
realist and trying to wish you success, I would counsel you
that probably plan A ought to be come August that you will
probably have to implement a plan that goes back to the States
and local jurisdiction and deal with the trust fund so that the
injury or the hardship doesn't fall too hard, and we are able
to at least accomplish a few things.
Secretary Foxx. Congressman, Mr. Ranking Member, I would
tell you that having spoken already to many Governors and State
DOTs, that I cannot overemphasize the impact of going over the
cliff for the States, including the fact that they are going to
be letting contracts in July. And if we don't have certainty on
the funding situation, there will be projects that may not get
moving as a result, and it will be hard to get those projects
moving again later.
I think that is probably the story that I can tell you from
a local perspective is that at some point if Congress solves
this problem, what we are losing is the opportunity to keep the
pipeline of projects moving from the design phase all the way
through completion. And over years and years and years of
short-term measures, that is the problem that we are facing.
So this is a problem that Congress has to solve, but I will
say to you that I will spend every ounce of my energy and time
with you to try to help find a bipartisan solution.
Mr. Pastor. I appreciate that, Mr. Secretary.
So I will yield back, Mr. Chairman.
Mr. Latham. Thank you, Mr. Pastor.
Mr. Dent.
Mr. Dent. Thank you, Mr. Chairman.
And good afternoon, Secretary Foxx. Welcome to the job. And
good to have you here in front of the subcommittee.
I am not going to belabor the point either on the Trust
Fund challenges except to say that, you know, there are some
States out there like mine, Pennsylvania, literally bit the
bullet on transportation funding fairly recently and did what
they felt they had to do. And there was a lot of revenue in
that equation as well. And I recognize that we are going to
have to work together on a bipartisan, bicameral way to resolve
this problem, and it is going to require a lot of leadership on
the part of the administration, too, to help us deal with this
funding issue I think in a responsible way, in consultation,
too, with Chairman Shuster and Ranking Member Rahall, who are
going to have a lot to say about this.
I don't expect you to respond to that. We have talked
enough about it already, but I know we are going to have to
confront it.
I want to move to the hazardous materials safety permit
issue. I want to highlight an issue one of my constituents has
brought to my attention. For a few years now, a company in my
district has voiced a lot of concerns about the Federal Motor
Carrier Safety Administration Hazardous Material Safety
Program. This constituent's frustrations are twofold. He
believes the standards used to evaluate carriers do not
adequately measure safety. And, two, the current rules do not
provide an appeals process prior to automatically being denied
a permit. These seemingly arbitrary rulings are having real
consequences and effect on their livelihoods and a lot of
industries in my area.
And pursuant to MAP-21, the Federal Motor Carrier Safety
Administration was required to conduct a study of the HMSP
program. That study should have been completed and reported
back to Congress by October 1 of 2013. To date, we have not
received that report. When can Congress expect that report,
Secretary?
Secretary Foxx. Sir, I will have to come back to you with a
specific answer on the status of that report. I will go back to
my staff and ask them to update your staff on that. I am also
aware that you and the administrator of the Federal Motor
Carriers, Anne Ferro, have spoken earlier this week about a
specific situation.
Hazmat Report
The Federal Motor Carriers Safety Administration transmitted the
report on the implementation of the Hazardous Materials Safety Permit
(HMSP) program on March 11, 2014. The report describes the FMCSA's HMSP
program and provides information on the study overview, the number
safety permits, State equivalency to Federal permits, and
recommendations to improve the HMSP program. A copy of the report will
be provided to staff.
Mr. Dent. Yeah. And I just want to say, too, that I want to
commend Administrator Ferro and her staff for the hard work in
pursuing these available remedies for my constituents under the
current regulatory structure, and she and her staff have been
very helpful. And while the work is certainly appreciated, and
much remains to be done to fix the current shortcomings and
inequities currently in the present regulatory structure, I am
aware that the FMCSA again wants to pursue a compliance safety
accountability rulemaking before handling any of these HMSP
issues.
In considering Federal Motor Carrier Safety previously
accepted a petition for the HMSP rulemaking, I am looking for
your commitment that you will seriously consider expediting
regulatory consideration of fixes to the Hazardous Material
Safety Program. In the meantime, I simply ask that you utilize
your agencies to the fullest extent possible to review, where
you have the authority, to pursue administrative remedies and
expedite interim solutions as soon as possible, because this is
creating some real hardships in States like mine, where we have
a lot of mining activities, and extraction, and cement, and
others, and quarrying that goes on. It is having a very real
impact. So I appreciate your consideration and that of Anne
Ferro.
On the issue of contract tower funding, the President's
budget request included $140 million for the Contract Tower
Program, and $10.35 million is used for the Contract Tower Cost
Share Program. And by the way, currently there are 252 airports
in 46 States that participate in that program, including 5 in
my State. Can you elaborate on DOT's possible support for this
important air traffic safety program in fiscal year 2015? This
is a very important issue in my district as well.
Secretary Foxx. Yes. The FAA's fiscal year 2015 budget
request includes funding to continue to operate the Contract
Tower Program. Given today's constrained budget environment and
the increasing demand on our aviation system, Congressman, the
FAA is taking a hard look at all the services they provide.
And, as you know, there is a reauthorization process that will
be underway in fiscal year 2015, and so we will have more
discussion about that, but at present that is what our budget
contains.
Mr. Dent. How much time do I have, Mr. Chairman?
Mr. Latham. You are under a minute.
Mr. Dent. Okay. Thank you.
Then I will just quickly go to airport infrastructure
funding. The FAA has faced repeated financial obstacles, as you
know, in recent years. We had the partial FAA shutdown in 2011,
the government shutdown. I just want to say the President's
proposal to fund highway and transit investments assumes that
the Highway Trust Fund receives a one-time infusion of revenues
from tax reform. What support is there within the
administration for improving our Nation's airports? And can you
speak a little bit about the FAA and its budget proposal?
Secretary Foxx. Well, obviously our air system is very
important, and our proposal would do a couple of things. First,
it would implement a PFC charge that large hub airports could
implement. It gives them flexibility to have more local control
over resources. And we would reduce the AIP program by about
$450 million. That reduction is basically paid for by the
additional flexibility with the larger airports. The small
airports are not affected by that. And so for the small
airports, they are more or less held harmless, but there is
more flexibility for the larger hub airports.
Mr. Latham. Thank you.
Mr. Dent has a really good way of asking a question just
when the light turns red. Good job.
Mrs. Lowey, I was going to recognize you, and then you
could yield to Mr. Rogers. And then I will recognize you again.
Mrs. Lowey. Oh, okay. Thank you, Mr. Chairman. It is my
pleasure to yield to the distinguished chairman of the whole
committee, Mr. Rogers.
Mr. Rogers. I thank the gentlelady for yielding.
I apologize for being late to the hearing. Consequently, I
have a statement I will make rather than question, Mr.
Secretary. But thank you for being here, and thanks for your
hard work.
Because Ranking Member Lowey and I have committed to move
all 12 appropriations bills individually through the
subcommittees, to the full committee, the floor, conference
with the Senate, we plan to move our process along at a very
brisk pace this year. Thus, this hearing is one of the earliest
in history. Unquestionably, this return to regular order is
critical to crafting bills that wisely expend taxpayer dollars.
The fiscal year 2014 omnibus package--I started to say ominous,
which it is----
Mr. Simpson. It was.
Mr. Rogers. But the omnibus package that we put together
and passed in January through the work of this subcommittee and
the other subcommittees on appropriations are a prime example
of what we can accomplish together. This committee was able to
provide every facet of the Federal Government with adequate,
responsible funding, while continuing to reduce Federal
spending, totaling $165 billion in cuts since 2010. And while
these hard-fought reductions on the discretionary side of the
ledger have been critically important and given us all an
opportunity to make our government more lean and more
efficient, the reality is that we need to tackle our mandatory
spending programs, where two-thirds of spending is now located,
the real driver of our debt.
And yet I see no leadership from this administration to
tackle that issue head on in its budgetary submissions,
including yours. Quite to the contrary, your budget proposal
proposes to shift even more money into mandatory programs for
infrastructure spending, off-loading about $4.2 billion worth
of fiscal year 2014 programs and activities over to the
mandatory side, where the problem is. And just as
disappointing, your proposal once again utilizes budget
gimmicks that Congress has time and again said no to, gobbling
up passenger facility fees, a nonexistent, nonauthorized
transportation trust fund that no one knows what it is.
Candidly, Mr. Secretary, our committee, we can't budget with
imaginary money, and neither should you try.
I am also concerned about the priorities this
administration has which continues to push billions of dollars
toward short stretches of high-speed rail projects when roads
and bridges around the country are falling apart. California is
banking on receiving upwards of $40 billion for its high-speed
rail projects, including $2.5 billion in fiscal year 2015
alone.
How can we look our constituents in the eye and with a
straight face and tell them that a stretch of high-speed
railway in California with sparse ridership potential is a
better use of Federal tax dollars than bridges over the Ohio
River or an interstate highway through eastern Kentucky?
It is our job to ask these questions and set these
priorities straight in our appropriations process, and that is
what this is all about. So I thank you for being here and
hearing us out.
I yield.
Mr. Latham. Thank you, Mr. Chairman.
And because the gentlelady was so gracious, she will be
recognized for 5 minutes.
Mrs. Lowey. You are very kind.
And it is a pleasure again to welcome you here, Mr.
Secretary.
Over the past year, as you well know, there have been 5
rail accidents on Metro-North's system in New York and
Connecticut, which resulted in 6 deaths, nearly 130 injuries,
one of whom was a constituent of mine. In fact, just 2 days ago
another Metro-North worker was struck and killed by a train.
DOT did launch a comprehensive and systemic safety review
of Metro-North's operations in December. This committee
requested a final report on DOT's findings by March 17. Can we
expect to see your final report by March 17? Can you give us a
preview of the findings? And are you getting everything you
need from Metro-North?
Secretary Foxx. Madam Ranking Member, first of all, we
appreciate your leadership in leading the charge in requesting
that report. Our staff has been working very hard with Metro-
North on the Operation Deep Dive. Our goal is actually to beat
the deadline, and I feel like things are tracking well there.
And our staff will be in touch with yours and with the
committee as this process moves along, but I expect to beat the
deadline.
Mrs. Lowey. Thank you.
Now, the budget requests $825 million to help implement
positive train control systems on commuter railroads. The NTSB
has stated that if a positive train control had been installed
on the Metro-North's tracks, the deadly derailment in the Bronx
would have been prevented.
As you know, the freight and passenger railroads are
required to implement PTC by 2015. How many railroads do you
expect to meet the 2015 deadline, and what happens to those
that don't meet the deadline? And the budget assumes that
positive train control funding will be phased out by 2018. Will
you request that the implementation deadline be extended beyond
2015? And without the funding you requested in the budget, how
difficult will it be for the commuter railroads to meet the
2015 deadline? And is the Railroad Rehabilitation and
Improvement Financing Program a viable option to fund PTC? Do
you have any active applications for this purpose?
And I thank you. If you can remember all of those, let's
talk about positive train control in the couple of minutes
left.
Secretary Foxx. Sure. And any responses that I don't
provide directly to the questions that you asked, I would like
to submit for the record more full answers to those questions.
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Mrs. Lowey. Thank you.
Secretary Foxx. The short answer is that we are hearing
from railroads all the time about the December 31, 2015,
deadline. Many of them are telling us that they will not be
able to meet the deadline. We are very committed to getting PTC
implemented, but just being very blunt, that is what we are
hearing from the railroad community.
Despite the difficulties of it, we are committed to doing
everything we can at DOT to encourage and help move things
along, and that is part of the reason why the budget request
contains the $825 million amount to help implement this.
We do think that in some cases, particularly for commuter
systems, but also for some of the other rail systems, including
short lines and so forth, that many of them will seek to take
advantage of some of our programs, including potentially the
RRIF program that you mentioned.
So we are continuing to work through this issue, but we are
hearing from industry that it is going to be tough to meet the
deadline.
Mrs. Lowey. Now, just lastly before we go to red, the last
question was is the Railroad Rehabilitation Improvement
Financing Program a viable option to fund PTC, and have you
gotten applications for this purpose?
Secretary Foxx. I would like to have our staff send you
specifics on whether we have received applications. I am not
aware that we have. But let's confirm that, and I will make
sure we get that to you promptly.
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RRIF
Yes, we can fund PTC through RRIF under 45 U.S.C. 822(b)(1), and we
do have a pending application for this purpose.
Mrs. Lowey. Thank you so much. We appreciate your
commitment. We look forward to working with you on this. Thank
you.
Mr. Latham. Thank you, Mrs. Lowey.
Ms. Granger.
Ms. Granger. Thank you, Mr. Secretary.
While we were under sequestration last year, the Department
of Transportation came close to canceling contracts for
airports that were in the Contract Tower Program. And as a
result then, Congress specifically included $140 million for
that program in fiscal year 2014 from this subcommittee. But
the President's fiscal year 2015 budget request doesn't include
that specific funding. So I will ask you why it didn't. And
also, will you commit to funding the Contract Tower Program
without a specific line item in the fiscal year 2015 THUD
appropriations bill?
Secretary Foxx. Congresswoman, the FAA's fiscal year 2015
budget does include funding to continue to operate the Contract
Tower Program. I am not sure what the discrepancy may be, but
we can certainly have our staffs reach back to you.
[The information follows:]
Contract Towers
Yes, funding for contract towers is included in the FY
2015 President's Budget.
Congress provided $140 million in the FY 2014
appropriation to continue to operate existing contract towers. This
includes $129.7 million for the base program and $10.3 million for the
cost share program.
FAA's FY 2015 budget request includes the funding needed
to continue to fully operate the contract tower program.
The Contract Tower and Cost Share programs do not appear
as distinct line items in FAA's budget justification. Funding for these
programs is included in the $7.4 billion request for FAA Operations.
Ms. Granger. Okay. Good. Thank you.
Another question has to do with your Competitive Surface
Transportation Grant program. Can you tell me how that differs
from the TIGER grant program.
Secretary Foxx. Let's see. Are you talking about the CIP
program under the highway----
Ms. Granger. It is the Competitive Surface Transportation
Grant program is the way it is listed.
Secretary Foxx. I think it is the Fixing and Accelerating
Surface Transportation. Is that--okay. So the FAST initiative
is an initiative that is really driving innovation at the State
and local level. We have, as you know, out of our $70-plus
billion budget, more than half of it is distributed to States
by way of formula. And as I pointed out in my opening remarks,
our desire is to attack the infrastructure deficit both by
addressing the revenue issues through progrowth business tax
reform, and, secondly, by addressing it by increasing
efficiency in the system.
Well, the reality is we have precious few tools to require
States to operate more efficiently. And so the FAST program is
designed to award funding for projects in States that actually
implement process innovations that are designed to accelerate
the delivery of project. So it is actually trying to use a
carrot to get projects done faster, and our hope is by funding
a few projects and incentivizing at the State level, we help
all projects move forward on a more accelerated basis.
Ms. Granger. All right. Thank you.
Thank you, Mr. Chairman.
Mr. Latham. Thank you very much.
Mr. Quigley. We will go in order of appearance here when
the hearing started.
Mr. Quigley. Thank you, Mr. Chairman.
Mr. Secretary, I have learned very quickly to ask you these
questions as specifically as possible.
Mrs. Lowey brought up the tragedy that took place in New
York surrounding areas. Positive train control. The first issue
is will there be an extension of this deadline or not? Do you
conceive any way that this is going to go forward without an
extension, and freight and passenger rail will be able to
comply without it?
Secretary Foxx. Well, Congress has basically put a deadline
on positive train control, December 31, 2015, and we are doing
everything we can to help the rail industry get there. To be
honest, what we are hearing from the rail industry is that they
are not going to be able to make the deadline.
Mr. Quigley. Right.
Secretary Foxx. So we are going to keep doing everything we
can, but I am just telling you what we are hearing back from
the rail industry.
Mr. Quigley. And at some point you all are going to have to
help us. We got to do this together. There are lives at stake,
but there is a certain realistic aspect to this and how will we
get this done as soon as possible. So, you know, at this
juncture it is hard for you to imagine that this is going to
be--they are going to meet these deadlines without an
extension, correct?
Secretary Foxx. I think that is fair to say.
Mr. Quigley. Okay.
Secretary Foxx. And, again, we continue to offer any
technical assistance that Congress may need as it looks at this
issue.
Mr. Quigley. And we appreciate that.
The financial assistance outlined with the $825 million you
talked about is one thing. There is also the current omnibus,
which seems to give you extraordinary discretion about how to
use funds to various rail programs. Would this be one of those
that you would include?
Secretary Foxx. We would use every tool at our disposal to
try to help the industry meet the obligations under PTC.
Mr. Quigley. Well, we would encourage you, given the risk
that is involved, the tragedy that could have taken place in
Chicago and many other cities unfortunately just as easily.
With the time I have left, bicycles. It seems that we are
buying fewer cars and driving fewer miles. And the good news is
they are riding their bikes more. But in Illinois, the number
of deaths nationally and number of deaths attributed to
automobile accidents has gone down, but it is not true for
bikes and pedestrians. Those numbers have actually gone up, the
deaths for bikes and pedestrians. Nearly 17 percent of Illinois
traffic facilities are now bicyclists and pedestrians.
Will the Department of Transportation prioritize the
establishment of separate performance measures for bike and
pedestrian safety? And what is the stance on the rise in these
fatalities and what you can do?
Secretary Foxx. It is an issue of great concern to me as
well, Congressman, having been a mayor, and having left a
community that was seeing an uptick in both bicycle and
pedestrian accidents and fatalities. We view that as one of the
issues that we as a Department need to tackle. And so it is one
of my top priorities.
We will be advancing a bill, as I said, as early as
possible in August, and I would love to have a conversation
with you once that bill hits the street.
Mr. Quigley. And in the meantime, if you could pass on to
us some of the measures that you have that are possible to deal
with these issues to the committee and to my staff, I would
certainly appreciate that.
Secretary Foxx. Sure.
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Mr. Quigley. Thank you, Mr. Chair. I yield back.
Mr. Latham. Thank you, Mr. Quigley.
Ms. Herrera Beutler.
Ms. Herrera Beutler. Thank you, Mr. Chairman.
And thank you, Secretary Foxx, for being here. I have a few
questions, so I am going to talk a little fast.
First, I would like to focus on the New Starts title,
specifically the Columbia River crossing, which connects
Vancouver, Washington, to Portland, Oregon. And I see that the
administration is requesting $65 million again for the project,
and here is the problem. The project is dead. The only votes on
this project in Clark County, Washington, where the bridge
would land on the Washington side, the Clark County residents
voted against it not once, but twice, in 2012 and then in 2013.
Specifically, they voted against the light rail portion, which
is where the funding that you all are proposing would go to,
not necessarily fixing the bridge. And in the Washington State
Legislature it denied proposals to fund the project in 2013, a
year ago, and then they didn't even consider it this session,
which I think closes today or tomorrow. And then last week, the
Oregon Legislature refused the only funding proposal left for
the bridge, and now they have adjourned for the year.
So I guess I want to know why the administration is still
pushing a project on States and citizens who appear not to want
it.
And then secondly, what I really would like from the
Department is to finally acknowledge that this proposal is not
the right one. We recognize, I believe, we need a fix here. You
know, the I-5 connects Canada and Mexico. It is a Federal
responsibility. We have to keep at this. But will you all
refocus and help us come up with a real solution that both
Oregon and Washington can support?
Secretary Foxx. Well, let me say that at the time that our
budget was developed, there was still activity associated with
the project. And it is clear that the project as it had been
conceived and proposed is not moving forward. And so for that
reason, that is why it appears in our budget.
We don't have large pools of discretionary dollars in the
Federal Highway Administration to move getting a bridge like
this done, and that is part of the reason, I suspect, that the
proposal came to us the way it did with the heavy FTA component
to it.
You know, I think the folks at the local level are going to
have to pick up the pieces and figure out what they want to do,
and we will continue to try to help communities as we can.
Ms. Herrera Beutler. And I think you hit the nail on the
head, the community needs to decide what is best for them. And
I agree, this project has gotten bigger and bigger and more
costly and more costly. I mean, the light rail piece that you
all were talking about funding was I think almost $200 million
more than the most expensive mile of light rail in the country.
So I definitely think we can do better with the limited
resources that we have to work with.
You know, one of the things I really want to see, as we are
putting together a solution, it is I-5, it is still a Federal
responsibility, it still needs to be shorn up for safety
purposes. You know, I want to see us move people. Last year
your predecessor said we, quote, ``don't build bridges to get
people places more quickly or relieve congestion.'' I am not
going to ask you to comment on your predecessor, but I would
hope that as we are moving forward with a solution, that when
we come up with something that is going to help us for safety
purposes, it also is okay that we address congestion, and we
would like your help with that.
Secretary Foxx. Well, you know, I have high admiration for
my predecessor. He is a great, great guy and, I know, a friend
of many people in this room.
But separate and apart from that, we as a Department don't
pick projects for communities. They pick them, and then we try
to support them. And in this case there was a coalition of
folks at the local level and the State level that prodded this
project along over a long period of time. If there is a
different combination of folks that want to figure something
else out, that is up to the community, and we will continue to
wait and see what happens.
Ms. Herrera Beutler. Hopefully you will be willing to work
with the community and help fund what the community comes up
with. I guess that is backing into the question.
Secretary Foxx. That is always our posture.
We also have the problem of what to do with funds that have
been sunk into this project, and we will continue to work on
that issue as well.
Ms. Herrera Beutler. And before my time expires, skipping
over, there is a lot of uncertainty over the shipping of oil
through southwest Washington via rail. And rightly, there are
strong concerns regarding the safety of the rail cars that
carry the oil. And I think industry agrees that we need new
safety standards. I assure you our communities are very much in
support. And we are hoping that newer, stronger safety
standards be issued as soon as possible. And where is DOT--or
perhaps maybe on the next round you can answer where DOT is in
the rulemaking process and what we should expect in new oil car
safety regulations. So perhaps you can think about that. And we
can move on, and maybe he can answer that next round.
Mr. Latham. That would be fine.
Ms. Herrera Beutler. Okay. Thank you.
Mr. Latham. I would appreciate that.
Ms. Herrera Beutler. Thanks, Mr. Chairman.
Mr. Latham. Thank you very much.
Mr. Price.
Mr. Price. Mr. Secretary, the missing Malaysian Airline
flight jetliner has raised many questions that are relevant to
several executive departments, Homeland Security, State, and
especially Transportation. A massive international sea search
with more than 40 planes and ships from at least 10 nations
searching the area so far turned up no trace of the plane. But
even if we were to quickly find the plane wreckage, many
questions are going to remain until we have information that is
contained in flight data recorders, or black boxes. In the
event of an accident, this data is essential in determining
what went wrong.
Safety experts have worried for a long time that delays in
retrieving recorder information that can help explain a crash
can keep critical information hidden, yet recovering these
black boxes and the data they track is no simple matter. We are
reminded of that in the case of this Malaysian Air flight. But
nearly every major commercial air accident that has occurred
over water or in remote areas has resulted in a costly and
time-consuming recovery. In many cases, including the planes
that brought down the Twin Towers, the boxes are never
recovered. In addition, some recorders when they are found
don't yield high-quality data because they have been damaged by
a crash.
Now, there is technology, automatic deployable flight
recorders, that is extremely useful in such instances. This
technology is not new. It was developed in the 1960s in Canada.
It has been used by the military for decades. Deployable units.
They usually contain both the flight data and cockpit voice
recorder, as well as an emergency locator to help them be
found.
High-profile cases have led to the call for a broader
application of deployables on commercial aircraft, as you well
know. The International Civil Aviation Organization currently
has such a recommendation under consideration. A 1999 National
Transportation Safety Board recorder symposium included a
discussion of ADFR benefits. And the 9/11 Commission staff
recommended that the Federal Government take steps to ensure
the survivability and quick recoverability of black boxes from
commercial air crashes.
So as a result of these recommendations, I secured funding
a few years ago for a pilot program at the Transportation
Security Administration that successfully tested in concept the
ability of ADFRs to improve rapid access to flight data
following commercial aviation crashes, while also providing
localization of downed aircraft and potential survivors.
I am one of a bipartisan group of Members that has strongly
urged the use of deployables on American commercial passenger
aircraft. In fact, I previously introduced legislation, along
with Representative Duncan of Tennessee, the SAFE Act, which
would require the installation of a second backup set of
deployable flight data and cockpit voice recorders on new
commercial passenger aircraft, specifically those that are
expected to operate long distances over ocean or remote-
location routes. This legislation would also create a
reimbursement mechanism for the security upgrade.
Well, now the need for this has once again been
demonstrated. The pilot work has been done at TSA. The ball is
in the FAA's court. I wonder what degree of attention you have
paid at this early point to this deployable technology. As you
know, the fiscal year 2014 Appropriations Act included language
that encourages the FAA to evaluate costs and benefits of this
technology, and to work with the NTSB to support U.S. and
international initiatives to develop standards for use of this
critical safety technology on commercial passenger aircraft. So
I wonder if you could give us an update what your agency is
currently doing to follow through on this directive and where
you think we might go with this.
Secretary Foxx. Well, thank you for the question.
The FAA is doing exactly what you suggested, which is they
are evaluating the technology. And specifically, they are in
the process of developing a plan to determine the cost-benefit
of deploying the technology.
It is unclear at this time, obviously, how that might have
impacted the situation with the aircraft in Malaysia. There is
a lot of activity around the investigation there, and that
remains a dynamic situation.
But to your greater point, it is a technology that we are
aware of, and we are working very hard, and you have my
commitment to continue working hard, to get this figured out.
Mr. Price. Good. I do think it is time to move ahead on
this. And, you know, it surely wouldn't take too many searches
like the one we are undertaking now. I mean, these costly,
agonizing, expensive searches. I mean, how many of those would
it take to pay for this on every commercial aircraft,
particularly newly manufactured commercial aircraft going
forward? You have to ask what kind of cost-benefit ratio there
would be here. I would think it would be highly favorable. This
technology exists. It has been on military aircraft. The TSA
has done its due diligence on this. I really urge you to move
this ahead.
Secretary Foxx. Thank you.
Mr. Price. Thank you, Mr. Chairman.
Mr. Latham. Thank you, Mr. Price.
The gentleman from Idaho Mr. Simpson.
Mr. Simpson. Thank you, Mr. Chairman. Let me first say how
glad I am to be a new member of your subcommittee. It is an
exciting subject.
Secretary Foxx, thanks for being here today. This is kind
of a strange question. I ask this both as chairman of the
energy and water appropriations committee and as a new member
of the Transportation Committee. One of the emerging issues
that is being debated is the export of liquid natural gas.
Congress changed the law to allow the Maritime Administration
jurisdiction over offshore LNG projects. DOE has two permits to
export LNG pending that, as noted, will require your Maritime
Administration to oversee and approve construction and
shipping.
What arrangements and formal working relationships have you
established with the Department of Energy to ensure that you
are working through any applications and approvals
expeditiously? And has your Administrator formalized an
agreement with the DOE for these offshore projects? Onshore
projects, as you know, require FERC approval, but offshore
Maritime Administration and Department of Transportation must
approve these. If not, why not? And if not, when can we expect
to see you and Secretary Moniz maybe formalize a Memorandum of
Understanding to move this forward?
Secretary Foxx. Sir, I would like to come back on the
record on that question and get you a thorough response to it.
That is one that I was--it was a surprise.
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Mr. Simpson. Okay. Thank you.
Mr. Simpson. Recently the Department of Transportation
released its conditions of performance report on the Nation's
highway and transit systems. The report estimated highway and
transit needs for all levels of government based on a range of
growth assumptions. The low-end highway need was $123.7 billion
per year, and the low-end transit need was around $22 billion
annually. Higher-end assumptions was obviously higher, but
about the same ratio.
The highway need is about six times the transit need under
the report that was done, and while I am certainly not opposed
to transit, there are great needs in both transit and highways.
However, your budget and reauthorization proposal would change
the proportions of Federal support from today's 4-to-1 highway
program dollars to transit program dollars ratio of basically 3
to 1 in spite of the fact that we still have about a 6-to-1
need ratio between highways and transit.
Could you explain to me and members of the subcommittee
your reasoning behind this budget and how it seems to
contradict what the report said?
Secretary Foxx. Well, the report focuses on maintenance
needs. It doesn't focus on future capacity needs. And so we are
taking a very limited, although a sizable limited, look at the
overall system needs that we have as a country. That is the
first point.
The second point is that what our proposal--I am going to
make sure we are clear on what our proposal does and what it
doesn't do. In order to shore up the Highway Trust Fund over a
4-year period, we need $63 billion to do that. Our proposal,
using progrowth business tax reform and the transition dollars
available, would put $150 billion into our surface
transportation system, $63 billion of which would actually
backfill the Highway Trust Fund.
We don't change the split in the Highway Trust Fund. The
80-20 split that has been traditionally there would still be
there even with the additional $63 billion. What is different
is what we would do with the additional dollars above and
beyond backfilling the Highway Trust Fund. And there, we are
addressing needs that we see happening in metro regions across
the country.
This is not just an urban challenge of tackling the 100
million people that we are going to have in this country above
what we have today by 2050; this is also a suburban issue and a
rural issue. Connecting these regions is going to be very
important. Making sure people have predictable travel times
that are consistent every single day is something that transit
can give us that in some cases our highway system can't.
So I say to you it is not that we are changing the formula
within the Highway Trust Fund, it is just that additional
dollars from a new source gives us the ability to do what we
believe the country needs.
Mr. Simpson. I can't see what the lights look like.
Mr. Latham. Thirty seconds.
Mr. Simpson. Let me ask you this real quickly before it
turns red. Your budget and reauthorization proposal would
increase transit over 60 percent, but the rural transit
program, so-called 53-11 program, would increase by 2 or 3
percent. Assuming that there is to be some cost increases, that
is effectively a decrease in the rural transit programs, while
the others are receiving huge increases. Why is that, Mr.
Secretary?
Secretary Foxx. Actually there are several programs that
are added into our budget that we think will have significant
rural components to them. For example, the bus rapid transit
proposal, which is about $2.2 billion over 4 years, that
proposal will actually help us connect rural areas, suburban
areas to metro areas, which are job centers, places where
people go to the doctor, pharmacy, or what have you.
So I haven't done an exhaustive look at the numbers that
you just gave out, but I will be happy to have our staff
respond back with really the full story on where the rural
opportunities are.
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Mr. Simpson. Thank you.
Secretary Foxx. Yes, sir.
Mr. Latham. Thank you, Mr. Simpson.
Mr. Ryan.
Mr. Ryan. Thank you, Mr. Chairman.
Welcome, Secretary Foxx.
Secretary Foxx. Thank you, sir.
Mr. Ryan. I have a lot of family that lives in Charlotte,
and I remember the buzz down there when you were doing the
light rail project. So it is good to have you hit the helm now
here, and knowing that that is a focus. I think it is the
future of transportation, so thank you for your leadership
already on this.
Just to follow up on Mr. Simpson's question, in eastern
Ohio we have a lot of natural gas that is now coming out of the
ground, and we are looking for opportunities to ship it around
the world, if possible. And I think it ties into the situation
we are dealing with right now in the Ukraine where Ukraine gets
60 to 70 percent of its natural gas from Russia. And I think we
have an obligation geopolitically to expedite the process the
best we can.
So I will submit a question for the record unless you want
to answer it about generally what DOT is doing to address the
infrastructure needs to help deal with the booming natural gas
industry in some nontraditional areas like eastern Ohio and
western PA.
Secretary Foxx. Again, we will follow up with you on the
record. PHMSA does provide a supporting function to the Federal
Energy and Regulatory Commission's siting and approval process
for LNG facilities. FERC is the ultimate authority that may
grant a permit to construct LNG facilities, and we have several
applications that are pending review at the Department today
that will help facilitate this issue. But I want to make sure
we get you a full response.
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Mr. Ryan. Okay. Dealing with pipelines and all the rest. So
we will submit a couple questions that you can follow up on.
The other question, too, I think there is an opportunity
for us to convert a lot of our buses, for example, over to
natural gas. Is there anything in this budget that can help
expedite that process and help drive up some of the demand here
in the U.S.?
Secretary Foxx. We have had programs in the past, and we
will continue to be entrepreneurial here with fuel alternative
programs. In fact, back in the fall we launched a NOFA for one
such effort.
And one of the conversations that is very robust in the
transit community right now is this issue of alternative fuels.
And, you know, I think what I would say here is that that over
the next 5 to 10 years what is going to happen is the
conversation is going to become much more of a mainstream
conversation. Some of our typical programs are also going to be
programs that are supportive of these efforts. So I would look
at the programs like the New Starts, the BRT proposal and so
forth as ones that have great potentiality to help on this
issue.
Mr. Ryan. Are there any incentives as far as getting--you
know, we obviously have a million gas stations around. It is
harder to put up stations for natural gas, for example. Is
there anything in here that areas like mine could look at to
try to at least get that up off the ground?
Secretary Foxx. This is a place where the function of the
Department of Energy and the Department of Transportation have
some intersect. I would like to come back to you with a
specific response that takes into account both the DOT and the
DOE impacts there to be more comprehensive.
Mr. Ryan. Okay. I just think there is a great opportunity
for this administration to take the lead on some of this. I
mean, we have plentiful natural gas, and there is an
opportunity for you to drive it. And we talk a lot about how do
we get the post office working on natural gas? How do we use
the Department of Transportation and the grant process for new
buses, or retrofits, or whatever the case may be to move in
this direction? So I think there is a great opportunity for you
to take the lead here.
One last question. I know this is more or less HUD, but
there is some interaction and interfacing going on between
Department of Transportation and HUD with the Livable Cities
program. Can you talk a little bit? Is there money in here for
that? Is that primarily funded through HUD, which I seem to
think it is? And is there something that we could maybe do from
this committee that would allow that to function better in your
time that you have been there? Is there something we can do,
because I think it is a great, great concept.
Secretary Foxx. Yeah. We do see increasing intersection
between the transportation facilities that are being placed in
communities and the concomitant development that occurs around
those facilities. The Livable Communities Initiative has been a
wonderful collaboration.
We have quality-of-life measures, if you will, built into
lots of our programs, and it is now becoming more, as I say,
sort of a more mainstream consideration as we look at some of
our programs like New Starts, as we look at TIGER and others.
We do have planning money in the TIGER grant process this year,
$35 million, which can help communities plan, and we will look
to do that.
I apologize, Mr. Chair.
Mr. Latham. Thank you very much, Mr. Ryan.
Mr. Ryan. Thank you, Mr. Chairman.
Mr. Latham. Mr. Wolf.
Mr. Wolf. Thank you, Mr. Chairman.
Welcome, Mr. Secretary. I want to thank you for your
support for the Silver Line out to Dulles Airport. That has
been strongly supported by Secretary LaHood and by the entire
congressional delegation in the House, and Senator Warner and
Senator Kaine in the Senate. I don't know if you met with Jack
Potter yet. Have you spoken to Jack Potter? I would recommend
you might want to meet with the Airport Authority Board. But
DOT has been very supportive, and I want to thank you. And I
will call them and ask them to give your office a call if I
can, because it a great investment, I think.
I want to ask you a question that I have been thinking
about. We are seeing more localities, even the District of
Columbia, now moving toward legalizing marijuana. This
committee has done yeoman's work on both sides of the aisle on
all the safety issues. I was chairman of this committee for 6
years. Safety came up over and over, .08, 21-year age drinking.
Is anyone down at DOT looking at I won't say the drunk driving
aspect of smoking marijuana, driving an automobile, driving a
truck? Because I saw there was the conference out in Denver;
the police were very confused on how they can see if there is
an intoxication or whatever. Are you doing anything? Is there
anything planned on that?
Secretary Foxx. NHTSA is currently conducting research to
improve our understanding of this area. There are also State-
level efforts that are underway that are supported by NHTSA,
including a nationwide network of 7,000 drug-recognition
experts. These are officers who are trained to recognize and
document signs of drugged driving. We also understand that
States are also doing driver evaluations performed by these
officers, assisted by criminal justice professionals.
The reality here is that the Office of National Drug
Control Policy is a partner with us on this issue, and while
Federal law has not changed, we recognize that this is an issue
that needs to be tackled. And we will continue being committed
to working with States that have legalized marijuana to find
acceptable standards.
Mr. Wolf. Are you looking at other countries, for instance
in Holland and places like that, to see what their experience
was, or are you just domestically looking locally in the United
States, or are you looking abroad, too?
Secretary Foxx. As a data-based organization, our goal is
always to look not only domestically, but to look
internationally where we can. I will come back to you with the
specific nature of what NHTSA has looked at internationally.
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Mr. Wolf. Thank you very much.
Secretary Foxx. Yes, sir.
Mr. Latham. Mr. Joyce.
Mr. Joyce. Thank you, Mr. Chairman. I know sort of like the
wedding feast at Cana, you want to save the best for last. So I
appreciate you being here, Secretary Foxx.
Mr. Latham. Your time has expired.
Mr. Joyce. I would like to start with a statement and
follow up with a question, and sort of tag onto what my
distinguished colleague Mr. Ryan had brought up, that being,
Mr. Secretary, I want to take a few moments to raise with you
the growing importance of the Great Lakes/St. Lawrence Seaway
system for the moving of commercial goods by water to and from
the Great Lakes region.
As you know, 90 percent of all trade around the world moves
by water, and it is critical that we educate domestic and
overseas industries on the safety, reliability, and
environmental advantages of moving their products on and
through the Great Lakes/Seaway system. It is an underutilized
asset.
Under your leadership the Department's St. Lawrence Seaway
Development Corporation has safely and efficiently operated and
maintained the U.S. Portion of the St. Lawrence Seaway for more
than half a century. I am pleased to see the President's fiscal
year 2015 budget request continues to support the SLSDC's
multiyear asset renewal program to modernize the U.S. seaway
assets and a proactive approach to infrastructure renewal. This
program is crucial to ensuring the long-term reliability of the
seaway for our regional industries.
I have recently met with Seaway Administrator Betty Sutton
and would ask your office to begin working with the SLSDC to
find new ways to utilize the corporation's current and possibly
future authorities to expand the economic development and job
creation in the region. A number of us in the Great Lakes
Coalition have been discussing this concept of transforming the
SLSDC to advance the regional economic development, and we will
be sending you our ideas in the near future.
I have a question, sir. Funding has been allocated in the
administration's budget for a Rapid Growth Area Transit
Program, which is meant for communities experiencing fast-
growing populations. In northeastern Ohio we have the Greater
Cleveland Regional Transit Authority, or RTA, which does an
excellent job servicing Cleveland. And although transit
ridership is growing at a rate higher than the national
average, unfortunately Cleveland is not an area where the
population is currently expanding. Just as important as growing
our transit is taking care of our current transit assets, such
as RTA's bus fleets and rail infrastructure. What is the
administration's vision for maintaining our current transit
infrastructure?
Secretary Foxx. That is a very good question. And when it
comes to our transit infrastructure, we have to recognize that
we are seeing over the next 30 years 100 million new people net
in this country, which is going to create a lot of pressure on
our conventional transportation systems. That is one of the
reasons why this issue of an infrastructure deficit that I
mentioned at the outset is so important. We have got to tackle
that, because we are going to outstrip our ability to move
people in a quick fashion if we don't.
Having said that, we have a significant amount of money set
in our budget for state-of-good-repair needs, and that money is
there specifically to try to deal with maintenance issues that
you just mentioned.
The Rapid Growth Area Transit program is designed for
communities that are experiencing the kind of population surges
that I am talking about, and our criteria for that program
would basically fall down to three areas: communities that are
experiencing moderate to significant population growth;
secondly, moderate to significant transit ridership growth; and
third, the capacity to pay the operating expenses associated
with the additional capacity.
Again, as I pointed out earlier, we don't view this as a
specific program for urban areas. We think this is actually
going to support suburban areas as well as rural areas, too,
that are connected.
Mr. Joyce. So in other words if we hit points two and
three, we won't be denied?
Secretary Foxx. I think if you hit points one, two, and
three, you are going to be fine.
Mr. Joyce. Population isn't growing in northeastern Ohio.
Secretary Foxx. Well, you know what? I think the issue is
you have lots of options for transit funding in this proposal.
You have the options under New Starts, Small Starts, in
addition to this particular program. And so our proposal is
going to try to help address these issues wherever they happen
to be. But in your case maybe it may be a Small Starts as
opposed to this program.
But there are going to be opportunities. I would just
encourage the committee and the Congress that we shouldn't
prejudge the outcome on the funding source. We are open to
other ideas. But we think the progrowth business tax reform is
one that hits the sweet spot for this Congress.
Mr. Joyce. Great. Thank you for your time. I yield back.
Mr. Latham. Thank the gentleman.
Mr. Secretary, you are proposing to fund TIGER grants at
$1.25 billion, which is a high-water mark for this account,
certainly outside of the stimulus. But DOT really has yet to
demonstrate publicly that it has the capacity to competitively
compare projects in a manner that clearly shows the national
interest--or even regional.
In a 2011 report on TIGER program, the GAO found project
selection data to be limited, and cited an absence of
documentation for awards made contrary to the recommendation of
application reviewers. I am looking at some winning projects
funded in the last 2 years of TIGER grants, and some of these
really do not appear to meet any kind of a national interest.
The City of Fresno received $16 million toward a $20
million reconstruction of a pedestrian mall, which is really
ironic considering most of your projects are geared to taking
cars off the road. The City of Fresno didn't even vote on the
proposal of the TIGER grant until February of 2014. You had
already given the grant. They hadn't even approved it. I don't
know how you could effectively evaluate the merit of the
project when the city didn't even know what the money was going
to be used for.
And Missoula County received $4.6 million toward a 7-mile
bicycle trail between Missoula and Lolo, Montana. I don't know
if that is Montana's number one transportation need.
South Florida Regional Transportation Authority received
$18 million towards an $83 million streetcar line. It should
have been evaluated and funded under the New Starts or Small
Starts program.
The City of Philadelphia received $19 million towards an
almost $26 million transit state-of-good-repair effort. The
state of good repair is a requirement under the Core Capacity
Program, and Philly got a windfall over and above other transit
systems.
I think the Department has really demonstrated you haven't
gotten it right, and the GAO recommendations should give a
serious look at that. I can't see a reason to grossly increase
the amount of earmark money, whether you are doing it or
whoever, until we can see how the money is being allocated and
the criteria that you use to evaluate the programs, which
obviously you are not following in TIGER grants.
Tell me anything here that has national or regional
interest, which was supposed to be part of the TIGER grant.
Secretary Foxx. Well, let me start with a couple points.
First, the TIGER program has done tremendous amounts of good
across this country. The criteria that is used by the team to
go through and evaluate projects, a project can be of national
significance, but a project can also be of regional and local
significance, too. And in the case of Fresno, for instance,
there was an application submitted by the City of Fresno for
that project. My guess is, although I would like to come back
and confirm this--
Mr. Latham. They hadn't even voted on it.
Secretary Foxx. There was an application for a proposal
from the City of Fresno. We don't make grants if there hasn't
been a request. There was a request.
Mr. Latham. So why is that national interest, or even
regional interest?
Secretary Foxx. Let's look at Fresno. Fresno is one of the
poorest cities in America. The mayor of Fresno----
Mr. Latham. This is transportation.
Secretary Foxx. Absolutely. And transportation has economic
development----
Mr. Latham. Pedestrian mall?
Secretary Foxx [continuing]. Aspects of it.
The City of Fresno has basically a downtown core that has
been stripped out over years. The mayor is trying to redevelop
that city to create more momentum so that the region can
attract jobs for the community. And in that particular case,
that project----
Mr. Latham. It is transportation.
Secretary Foxx. Right. Transportation creates jobs.
Mr. Latham. For a pedestrian mall?
Secretary Foxx. Transportation creates jobs.
Mr. Latham. What does this have to do with transportation?
Secretary Foxx. It is not just a pedestrian mall; it is
actually opening the center of the city for cars.
Mr. Latham. It is a pedestrian mall.
Secretary Foxx. It is a pedestrian mall that is being
removed so that cars can move through so that downtown can
grow.
Mr. Latham. The GAO says the projects were selected in the
absence of documentation for awards made contrary to
recommendations by the application reviewers. So your own
reviewers were saying these did not qualify, but went ahead
anyway and gave out these grants.
Secretary Foxx. Was that in the year 2013?
Mr. Latham. 2011.
Secretary Foxx. That predated the projects you are talking
about.
Mr. Latham. Have you changed the criteria?
Secretary Foxx. We are using objective criteria. I am not
aware of any projects that I have supported that have gone
against the staff recommendation.
Mr. Latham. Again, I mean you are asking for $1.25 billion
for things that have nothing to do with transportation and even
haven't been approved locally as far as being a priority.
I see I am out of time, but we need to talk further,
obviously, on this subject.
Mr. Pastor.
Mr. Pastor. In the final fiscal year 2014 bill, we included
about $42 million for rail corridor planning and safety
activities. Fiscal year 2014 will end September 30, or the end
of September. How will the FRA solicit applications for the
initiative, and when do you expect to start making awards?
Secretary Foxx. Could you repeat the question, sir?
Mr. Pastor. How soon do you think the FRA will solicit
applications for this initiative, the $42 million that was in
the 2014 bill, and when would you expect it to make awards of
this money?
Secretary Foxx. Our goal there would be to get the process
started as soon as possible.
Mr. Pastor. Right.
Secretary Foxx. I know our team is working to try to get it
done as soon as possible this spring. So the goal would be to
get it--I can't give you a specific date. I will have to come
back to you on a date, but I expect that to happen early
spring.
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Mr. Pastor. Okay. That would be fine.
And also in this bill, the fiscal year 2014 bill, we
included about $600 million of additional money for TIGER
grants that you will have the opportunity to decide on.
Secretary Foxx. Yes.
Mr. Pastor. And following the chairman's comments, what is
your expectation in terms of how soon--well, are you going to
go back to old applications to be considered in this new money?
Is this going to be just new applications? And when do you plan
to start the process and begin awarding the money, since the
fiscal year is the end of September?
Secretary Foxx. Sure. If I am correct, the notice of
funding availability was made public 2 weeks ago today, sir,
and the application period will close April 28.
Mr. Pastor. Let me interrupt you. So that means only
applications that have come in during this period will be
considered.
Secretary Foxx. They have to be new applications. And many
times we find that communities resubmit round after round, but
they do have to submit.
Mr. Pastor. Okay. And you anticipate awards when, end of
August, sometime in August?
Secretary Foxx. We hope sometime before the end of the
summer, yes, sir.
Mr. Pastor. Okay. In the past years--and I bring it to your
attention because this has been a situation with the Department
of Transportation, and there has been a number of studies by
different institutions, and it deals with your IT and computer
capabilities, technology, equipment. And it seems that over the
years, less money and assets have been given to continually
update your computers, your programming, your cybersecurity.
And I don't know what you have in this year's budget, but it is
something that in the past this subcommittee has heard from
various institutions that have investigated and analyzed the
Department of Transportation.
So I bring it to your attention because it is something
that we have talked about and have heard about over the years,
and it is something that you may want to begin if not--if you
haven't done it already, begin investigating where you are at.
And then in this budget, do you address some of the problems
that you may know are there?
Secretary Foxx. Yes, sir. It is an issue of concern for us.
That is one of the reasons why our IT director has been very
focused in leading cross-departmental teams to develop a
strategy for the Department on this issue. And we are
implementing protocols all the time designed to tighten up our
cybersecurity situation. But it is an evolving issue, it is
dynamic, and as resources are needed, we will certainly make
sure that comes to the attention of the committee.
Mr. Pastor. Thank you, Mr. Secretary.
I yield back.
Mr. Latham. Thank you.
Ms. Herrera Beutler.
Ms. Herrera Beutler. Thank you.
And back to the question, would you like me to kind of
repeat?
Secretary Foxx. That would be helpful.
Ms. Herrera Beutler. Okay.
Secretary Foxx. I have had a few since.
Ms. Herrera Beutler. Shipping of oil, rail on rail,
particularly through southwest Washington, naturally people are
concerned about the safety. And in speaking to industry
leaders, they are ready and willing to move forward on new or
tighter standards that ensure safety.
I guess what I am also hearing in some concerns is where
DOT is in the rulemaking process, because I think everybody
agrees--in fact, what I am hearing from certain folks is they
are going to shoot for the highest known safety standards and
move forward, because they have been waiting for the rule for
some time, and we kind of need to move forward. So I guess I
wanted to know where DOT was at with that.
Secretary Foxx. We are continuing to work to move this rule
along as quickly as we can.
Ms. Herrera Beutler. What kind of time line do you see?
Secretary Foxx. It is hard to say, but I tell you we are
working as hard as we can. It is not lost on me that this is an
area of need in terms of certainty for the industry. We called
the industry to action about a month and a half ago, and the
rail industry has been really good about offering voluntary
steps.
We have to have an all-of-the-above strategy on this issue.
It is not just the tank cars, by the way; it is also addressing
some prevention-oriented areas such as testing the material,
which we have issued fines and also Executive Orders to require
that the material be tested and classified appropriately. It is
also a matter of----
Ms. Herrera Beutler. You mean the commodity?
Secretary Foxx. Yes, the actual crude oil itself, to make
sure that it is packaged properly. And in addition to that, we
also think that there are other measures that we will be
continuing to work through.
But trust me when I say that we are going to work as hard
and as fast as we can to get this rule out and on the street as
soon as possible.
Ms. Herrera Beutler. All right. And switching gears to
general aviation, the President's budget again calls for user
fees both on commercial and general aviation, and Congress has
repeatedly rejected this proposal. And I guess I would say,
since you are coming back with it again, have you studied the
impacts this would have on general aviation and the related
economy around this industry?
And I guess I would ask, you know, as we are talking about
where money is being spent and how it is being spent, where it
comes from is pretty important as well, and is that part of the
consideration?
Secretary Foxx. Well, in the case of the user fee that you
are mentioning, the Treasury Department estimates that that
would generate about $960 million in fiscal year 2015 and about
$11.4 billion over the next 10 years.
Ms. Herrera Beutler. So that is money taken out of the
industry. So have you studied what impact that would have on
the industry itself? I mean, because that is----
Secretary Foxx. Well, part of the purpose of it is to help
with deficit reduction.
Ms. Herrera Beutler. So it is not about necessarily whether
or not we are--I mean, we talked about jobs, and inner cities,
and growing jobs, and transportation helps us grow jobs. But to
take the money out of the industry that is in large part small
business and private, jobs come from there, as is wealth to
take it out of there, is that--so now we are focusing on
deficit reduction or not? We are talking about jobs?
Secretary Foxx. Well, you know, I have a lot of easy
choices to offer you, and one of them is that the proposal that
the administration has offered over several terms have offered
this up as one part of a deficit reduction strategy, but also
as a way of trying to more equitably share the cost of the air
traffic space to the users. So I highlighted the deficit-
reduction aspect of it because I understand that that is an
issue that this Congress cares deeply about, and it is also
something that the President cares deeply about.
Ms. Herrera Beutler. So with that, I guess, you know, one
of the things I would just mention, and the chairman spoke to
it in his opening remarks about a long-term plan. With the
trust fund going dry, you know, I applaud that you are looking
for places to get financing, but what we really need is a long-
term, big-picture plan to pay for repairing our aging
infrastructure. And I think you are right; having the
infrastructure in place can help us grow jobs. But I guess I
would say we can't keep coming back to proposals that have been
shot down in a bipartisan way, so to speak, and look for a
bigger-picture proposal. I guess I would ask you to consider
that.
Thank you.
Mr. Latham. The gentlewoman's time has expired.
Mr. Price.
Mr. Price. Thank you, Mr. Chairman.
Mr. Secretary, just to return for the moment to the
discussion about the TIGER program, I heard your strong
defense. I certainly agree with that defense of that program
and the uses to which it has been put. I certainly can testify
to that in terms of the rail facilities, the Union Station
project in Raleigh, which is going to facilitate rail transit,
transportation, but also be a transportation hub. It is going
to spur lots of economic development in that part of town and
so forth. It is money well spent.
And if the question is is there a demand for this, I do
have the figures from the last 3 fiscal years. Fiscal year
2011, we were talking about $14.1 billion in TIGER applications
for $527 million. Fiscal year 2012, $10.2 billion in
applications for $500 million. Fiscal year 2013, $9 billion in
applications for $500 million.
It sounds to me like there is a need out there. That is not
to say every last one of these applications is worthy, but when
you have got $9 billion worth of applications and $500 million
to dispense, you can be pretty selective, and you can apply
those criteria, and it sounds to me like you are doing just
that.
Moving to a couple of other programs. I want to ask you
about the adequacy of the funding levels. The Capital
Investment Grants you have stressed in this budget, and here,
too, I wonder if you could comment on the current level of
interest in the program. How many takers are there out there
who would--communities who would like to get started with
transit or who would like to expand their transit systems?
Of course, your home city of Charlotte has benefited
greatly from these resources. And we now have a project
development agreement in Durham-Chapel Hill. That is good, too.
There is plenty of demand out there.
You have proposed $2.5 billion for the Capital Improvement
Grant Program for 2015. That is a $500 million boost over
current funding levels. I wonder if you could comment on the
adequacy of that, or what it will let you do, as compared to,
say, the flat funding that was proposed in MAP 21.
And then finally, the Rapid Growth Area Transit
Discretionary grants. That anticipates bus/rapid transit
development. Here, too, you are requesting an additional $500
million for this new discretionary grant program targeting BRT.
How does that relate to the Capital Investment Grant Program?
You think this new pilot in the BRT area would remove some of
the pressure on New Starts?
You know, there is a lot of debate going on in my
community, as you know, about the virtues of BRT and rail. They
are complementary. The plan that we are envisioning would be
complementary. But there are questions, for example--maybe you
would want to comment on them--on the relative impact that a
BRT system is likely to have on economic development, as
opposed to light rail encouraging economic development because
of the fixed right of way. So how do you see the new money for
BRT intersecting with the more generous funding, still not
overly generous, I would say, for New Starts?
Secretary Foxx. Great question, Congressman. Within the New
Starts program, we think that this is an area where the
uncertainty and unpredictability over the past years has worked
a very difficult problem for local project sponsors, because
many of them have to go through an extensive and expensive
design process to even get to the point where they get into the
Federal program, as the Durham project has, and because of
that, there is pent-up demand on the one end. But what is
important here is not just the amount, but is actually having a
pathway over a 4-year period of time to get projects from the
planning stages into the design stages so they can actually
move forward.
I would say that the demand for New Starts is increasing,
and the need for it is also increasing because of the
population trends that I mentioned before. How it relates to
the BRT program is that there will be communities that, for
whatever reason, cannot or do not want to go to the extent of
putting in rail to support their systems, but they need rapid
support for fast-growing populations, and the BRT program is
designed to address those situations.
Mr. Latham. The gentleman's time has expired.
Mr. Simpson.
Mr. Simpson. Thank you, Mr. Chairman. I don't have any more
questions, but that won't stop me from saying something.
Mr. Latham. Sure.
Mr. Simpson. And I say this respectfully. One of the
biggest problems we face in this country, other than the debt
and deficit we are facing in this Nation, is our infrastructure
backlog. I am not just talking about roads and bridges; I am
talking waterways, harbors, dams, the electrical grid, water
and sewer systems throughout this country. Most of them are
reaching their expected life expectancy.
We have got a $750 billion water and sewer problem. We
throw about $5 billion a year at it, which means 150 years from
now we can address the backlog that exists today. Funding
streams are going down. The example I use, my wife gave me her
SUV that got 18 miles a gallon, went and bought a Prius. She
gets 52 miles to the gallon, which means she drives the same
distance she used to, pays 40 percent of the gas tax that she
used to pay, putting the same wear and tear on the road. We are
getting more efficient cars. What are you going to do about
electric cars?
And I got to tell you in all honesty, the plan here that
says we are going to have a progrowth business tax reform--and
we can have a real debate about whether this is progrowth or
not, because I kind of fail to see how a retroactive tax on
LIFO that brings in revenue one time that funds something for 4
years is actually a long-term solution. And what we need, and
sometimes this takes Presidential leadership, administrative
leadership, is how are we going to address these funding needs
in the future on a permanent basis? And I don't think a one-
time solution that fixes it for 4 years theoretically is going
to do the trick. So I just throw that out there. There are many
of us in Congress, and believe me, if I had the answer, I would
be brilliant, and I am not. I would be the Secretary of
Transportation, but I am not.
Mr. Ryan. Thank God.
Mr. Simpson. Thanks very much. I appreciate that.
But what we need is to work both with Congress and the
administration to solve some of these problems in the long
term. I am not going to like the solution. Neither are you. It
is going to be tough solutions that are going to require some
tough decisions by Congress. And so we need to be able to work
together to try to solve this on a long-term basis rather than
this let's fix it for now, and we have got an election this
year, so let's not do anything now, and we will do it the year
after that. But as you know, we are always up for election.
So anyway, thank you, Mr. Chairman. That is just me
ranting. If you would like to----
Secretary Foxx. Yes, if you wouldn't mind.
First of all, I appreciate the sentiment. Our proposal is
really calibrated to deal with the fact that this is not a new
problem. This is a problem that has been around for a while.
And as I mentioned in the opening of my comments, 18 continuing
resolutions since 2009.
While the gaps ultimately have gotten filled, what is
missing in the equation, maybe invisible to folks in
Washington, but I saw it very clearly as a mayor, is that you
don't know what tomorrow looks like.
So I completely agree with you that the issue of addressing
this problem is important, but because there hasn't been a
settling point on getting to a longer answer, this proposal
actually, you know, may not be perfect in the eyes of some, but
it is a proposal that addresses what we understand are some of
the touch points in this Congress around taxes and lots of
other things.
So we don't apologize for this proposal. It is a good
proposal. And if there are other ideas that emerge in this
Congress that are better ideas that get us a longer draw on
solving the problems that we have, as we have said, we are open
to them. But we believe that it is important for us to have a
proposal that we think has bipartisan interest and put it
forward, and that is exactly what this is.
Mr. Simpson. Thank you for being here today.
Secretary Foxx. Yes, sir.
Mr. Latham. If I could just comment. You should also be
aware that this administration has never made a proposal, never
put forth legislation in an authorization or a pay-for to do
exactly what you talked about. So I just want to make that
point.
Mr. Ryan.
Mr. Ryan. Thank you, Mr. Chairman.
Let me just follow up on what Mr. Simpson was saying. I
think that a big, bold infrastructure proposal--and I get it;
this is short term, let's do what we can, let's use this
immediate revenue to do what we can do in the short term--I
think the American people will support it. Because there is a
lot of people in the city of Akron, right now, for example,
they need combined sewer. It is outdated. It is 6-, 7-, $800
million. If they bond that out themselves, the rates are going
to go up dramatically in the city, as you know as a mayor,
further drive people to the suburbs, which is going to put more
of a burden for water, sewer, transportation costs for all the
rest of us to keep the sprawl going. Meanwhile, our cities are
rotting.
So I think the initiative from the administration would be
supported. And I think Mr. Simpson is right, and I don't
normally say that publicly about my buddy, but I think there
could be a bipartisan support. So I would also encourage you
and the President to step out on this issue, and we will
support you. And we will go out and make the argument to the
American people, because they are driving on the roads. And you
look in Ohio and a lot of the other places, because of the cold
winter, the roads are a wreck now all over the place. So I just
want to encourage you to do that, and we are happy to sit down
and work with you on it.
Two other things. I want to speak to the TIGER grant that
has had an amazing ripple effect in Kent, Ohio. Twenty million
dollars has led to over, I think, $110 million in other
matching investments, whether it is State, local, private
investments. There is hotels now, there is downtown, there is
businesses. They are now talking about phrase two of it, of
this project. Tying the university together, Kent State
University, with the City of Kent has been an amazing project.
So these TIGER grants, I think, are a major benefit to a lot of
communities.
And then lastly let me just say what Mr. Joyce brought up
with the St. Lawrence Seaway. I think there is a great
opportunity for the administration here as well to use the St.
Lawrence Seaway organization as an opportunity for more
economic development in the Great Lake regions. If you look at
where the manufacturing institutes that the President is
pushing, 15 and eventually 45 of them, 1 is in Youngstown,
Ohio, 1 is in Detroit, 1 is in Chicago, all in the Great Lakes
region. So to take an initiative like this and basically say
the St. Lawrence Seaway organization could be a port authority
for economic development for the entire Great Lakes region I
think would put us in a great position in all of these older
industrial areas and give us one more tool in the toolbox for
economic development. So I would also ask you to look very
closely at that.
I don't have a question. I am just following the leadership
of my friend Mr. Simpson.
Yes.
Secretary Foxx. If I might, further to this question of the
proposal, one thing our proposal does that, as I am listening
to the conversation, there are sort of several different
conversations. There are some that say it should be longer, and
to that we say we are open to ideas. Show us how you pay for
it. We have got a pay-for. We are ready to work on it.
What our proposal also does is that it goes above Highway
Trust Fund current levels to increase funding and support for
infrastructure in this country. And I think if I could leave
you with one point, it is that backfilling the Highway Trust
Fund is helpful, but, that is kind of looking through the rear-
view mirror. If we are looking at the windshield, we have got
an awful lot coming at us in terms of population and needs as a
country. And I think what can get lost in this conversation is
the fact that we are offering a proposal that substantially
increases investment in American infrastructure above current
levels, and if there is another way to do that that folks think
is more doable, we are open to those ideas.
Mr. Ryan. No, I hear you, and I am supportive of the
proposal. Just this is a short term because that is the
political situation we are in right now. And there is no doubt
about it. You know, maybe me and Mr. Simpson can put something
together, or maybe not. I don't know.
Mr. Simpson. Don't hold your breath on that.
Mr. Ryan. Yield back the balance of my time.
Mr. Latham. The gentleman yields back.
Mr. Joyce.
Mr. Joyce. Thank you.
In following up on the manufacturing aspects that Mr. Ryan
has brought up, specifially eastern Ohio and western
Pennsylvania and the oil and gas play that Mr. Ryan had brought
up, it is a tremendous ability to direct ship from the Great
Lakes to Europe. That is another reason why it makes that St.
Lawrence Seaway project very important for us.
In the President's proposal to fund highway and transit
investment, it is assumed the Highway Trust Fund would receive
a one-time infusion of revenues from tax reform. I am curious,
what is the administration proposing as far as their vision for
our Nation's airports?
Secretary Foxx. Well, as you know, we have our FAA
reauthorization process that is going to happen over the next
year or so, and we expect robust discussion on a bipartisan
basis as we look to frame a vision for the longer term there.
I think as far as the budget proposal is concerned, we
think that this proposal offers not only the opportunity to
continue advancing our airspace and our air systems, allowing
us to continue to move forward with emerging technologies--
unmanned airspace is potentially one of them--but also to
continue to modernize the airspace through NextGen and other
technologies. So we have in this budget proposals that help us
continue moving the ball in the airspace. But I think the
reauthorization process will open up new debates about how we
go forward on a more long-term basis.
Mr. Joyce. The proposal is talking about the FAA and what
you are going to do for the infrastructure for airports?
Secretary Foxx. Yeah. I mean, we continue the airport
investment program. We continue to invest in the back-office
systems that support the national airspace. We continue to try
to modernize it using 21st century technology, working hard to
get us off of the World War II radar systems into a 21st
century GPS system. Those are the types of things that we are
going to continue working towards.
Mr. Joyce. So I take that as support for NextGen?
Secretary Foxx. Absolutely.
Mr. Joyce. Thank you.
Secretary Foxx. Thank you.
Mr. Joyce. Thank you for coming today.
I yield back.
Mr. Latham. We just started a vote on the floor, so I think
we will conclude the hearing right now. You must create a lot
of interest. This is the first time I have ever seen 100
percent participation of a subcommittee, and that is probably
because of the afternoon hours too.
Mr. Simpson. Your leadership, Mr. Chairman.
Mr. Latham. Yeah, I think it is my leadership. I don't
know, if I did earmarks like the Secretary does, you would get
one, Mr. Simpson.
But thank you very much. It is extraordinarily important
that we maintain open and free dialogue and communicate.
Obviously, we are not going to agree on everything and
prioritize. But the only way we are going to be able to be
successful and get our bill done and have you folks support it
certainly is going to be that open communication back and
forth, and we look forward to having that continued
communication. And thank you very much for your participation
today and for your testimony.
Secretary Foxx. Thank you, sir.
Mr. Latham. And the committee is adjourned.
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Wednesday, April 2, 2014.
OVERSIGHT HEARING: OFFICE OF PUBLIC AND INDIAN HOUSING, DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
WITNESS
HON. SHAUN DONOVAN, SECRETARY, U.S. DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
Mr. Latham. The hearing will come to order. This afternoon,
we welcome Secretary Shaun Donovan to the subcommittee for an
oversight hearing on housing issues.
Secretary Donovan. Good to be back.
Mr. Latham. Good to see you after your skiing trip and all
those good things. You and Ranking Member Pastor can go travel
somewhere now, too.
Secretary Donovan. You are welcome.
Mr. Pastor. We are going to Iowa.
Mr. Latham. Okay, you are going to Iowa? Good, good.
Due to a scheduling conflict we had to postpone our fiscal
year 2015 general budget hearing for HUD until next Thursday,
April 10th. Today we will review the budget request for Public
and Indian Housing programs, learn about your ideas for program
reforms, and look at the challenge of meeting long-term
commitments in the Project-Based Rental Assistance account.
For a number of years we have seen renewals of the voucher
program and other housing programs steadily crowd out other
high priority programs. This year is no different. HUD's
request for Public and Indian Housing programs grow $1.1
billion or 4.4 percent over the enacted level. At the same
time, community planning and development programs, for example,
see a reduction of $9.8 million in the budget request.
The Ryan-Murray budget agreement for fiscal year 2014 and
2015 reflects a broad bipartisan agreement that we must live
with relatively flat budgets this year and next year and
actually well into the future.
Chairman Rogers and Chairwoman Mikulski have stated very
publicly that they will abide by the Ryan-Murray agreement for
fiscal year 2015 in spite of the administration's multi-billion
dollar gimmicks across the budget. In the case of this
subcommittee, the President's budget offloads billions of
transportation spending to the mandatory side.
As we consider your request for fiscal year 2015, the
committee will move forward honoring the bipartisan agreement
to effectively freeze the top line for both domestic and
defense spending, and we will not use gimmicks to increase
spending. To meet this goal we need to have an honest
discussion about how we continue to serve our most vulnerable
citizens while focusing on hard choices and cost-saving
reforms. Sticking to the budget agreement means that when some
programs grow, others must be cut back.
You have been on the job now for 5 years, and we appreciate
your leadership and open communication with the committee. I
have confidence that your remaining years, hopefully years, as
Secretary will finally bring in some urgently needed reforms so
that HUD's housing programs effectively serve the national
interests while protecting the taxpayer.
I look forward to your testimony and would like to
recognize my good friend and ranking member, Mr. Pastor, for
his opening statement.
Mr. Pastor. Good afternoon, Mr. Chairman.
And thank you, Mr. Chairman.
I welcome Secretary Donovan this afternoon.
The programs we are reviewing today are some of the most
important programs in HUD's portfolio. Public housing and
Section 8 house more than 5 million tenants, many of whom are
for vulnerable populations. More than half the tenants in
public housing are elderly or disabled. These programs are the
largest in HUD's portfolio. Together, public housing and
Section 8 rental assistance represent $36.3 billion or 85.9
percent of the fiscal year 2015 budget request.
We have a responsibility and a commitment to ensure that
these programs run efficiently while having a positive impact
on tenants' lives. I look forward to hearing an update on two
of the administration's initiatives in this area, the Choice
Neighborhood Initiative and the Rental Assistance Demonstration
program.
I look forward to the Secretary's testimony this afternoon.
And thank you, Mr. Chairman. I yield back.
Mr. Latham. Thank you, Mr. Pastor.
Following your opening statement members will be recognized
for 5 minute rounds of questioning based on seniority here on
the committee.
Secretary Donovan, you are recognized for your opening
statement, and your full statement will be submitted for the
record.
Secretary Donovan. Chairman Latham, Ranking Member Pastor,
members of the committee, it is a pleasure to be with you today
to discuss the Department of Housing and Urban Development's
public housing programs with a specific focus on the innovative
proposals contained in our fiscal year 2015 budget.
We come together today at an important time for the
American people. Although our Nation has come a long way since
the depths of an historic economic crisis, there are still too
many families struggling to get by. One example, according to
HUD's latest worst case housing needs study, in 2011 roughly
8\1/2\ million families spent more than 50 percent of their
income on rent and/or lived in substandard housing. This was a
jump of more than 43 percent since 2007, the largest increase
over a 4-year period in the quarter century history of the
survey.
Recognizing that so many are in need, HUD's fiscal year
2015 budget is designed to build ladders of opportunity so that
families from all backgrounds have a fair chance to lift
themselves up if they work hard and play by the rules.
Public housing is at the heart of these efforts because it
provides affordable rental homes to low-income families. HUD's
proposed budget dedicates a significant amount of funding to
support this critically important work by addressing capital
needs to preserve existing units, empowering families with the
resources to secure affordable units, and ensuring that once
they obtain affordable housing, these families have the support
to grow and thrive.
RAD
And with all of these efforts, we are looking for new and
innovative ways to make a difference on the ground, especially
in tight fiscal times. Case in point is our Rental Assistance
Demonstration, which is helping public housing authorities and
owners of assisted housing tap the private market to make
physical improvements to their units.
With a backlog of $26 billion in capital needs for public
housing, this effort couldn't be more timely. That is why this
budget proposes legislative changes to RAD that will eliminate
the 60,000 unit cap and allow for a greater portion of public
housing stock to convert. Specifically, these measures will
enable HUD to address the more than 180,000 units of
applications that we have on hand today and create
approximately $6 billion in private financing for the
recapitalization of public housing at no cost to the taxpayer.
The budget also provides $10 million for a targeted
expansion of RAD to public housing properties in Promise Zones
or other high priority communities. In total this means more
quality affordable housing options for families, and to help
them seize these opportunities, the budget includes $20 billion
for the Housing Choice Voucher program to help more than 2.2
million low-income families afford decent housing in
neighborhoods of their choice.
SPECIAL PURPOSE VOUCHERS
In addition, the budget provides 40,000 special purpose
vouchers, including 10,000 new vouchers targeted to homeless
veterans and also includes $9.7 billion for the project-based
rental assistance program to maintain affordable rental housing
for 1.2 million families, and once families are in these units,
we want to see them succeed.
This is an area where we are doing some of our most
innovative work. For example, the budget provides $25 million
for the evidence-based Jobs-Plus program, a proven model for
increasing the employment and earnings of public housing
residents. They receive on-site employment and training
services, financial incentives that encourage work, and
neighbor-to-neighbor information sharing about job openings,
training, and other employment-related opportunities.
The Opportunity, Growth, and Security Initiative includes
an additional $125 million for Jobs-Plus, which together with
the base funds in the budget could assist up to 50,000
participants.
PHA FLEXIBILITY
Another proposal in the budget provides flexibility to help
PHAs improve supportive services for assisted families, the
Family Self-Sufficiency program which connects residents to
resources and services that lead to economic independence and
self-sufficiency will be consolidated and aligned to enable
PHAs to better serve voucher and public housing residents, and
as part of the forthcoming legislative package, we propose
expanding our Moving to Work program to help even more public
housing authorities design and test innovative, local
strategies aimed at helping residents succeed.
In total with all these efforts, we are looking for
creative ways to achieve our desired results in tough fiscal
times. We do so with the primary goal in mind, to give more
Americans a fair chance to thrive if they work hard. HUD's
fiscal year 2015 budget is designed to do just that, with our
innovative public housing programs at the center of this work.
We are eager to discuss these items with Congress as you
work through the appropriations process and look forward to
your questions. Thank you.
Mr. Latham. Thank you very much, Mr. Secretary.
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Mr. Latham. The request refers to a comprehensive package
of legislative reforms that you will be submitting to the
authorizing committees this spring, it is my understanding; is
that right?
Secretary Donovan. That is correct.
Mr. Latham. Okay. I think we can all agree this is the
right time for reforms, to ensure that the HUD housing
assistance programs serve the neediest populations, control
costs, and lead to greater self-sufficiency for the residents.
However, we have heard promises to work with the authorizers in
the past, including during last year's hearing. So I hope you
can appreciate the fact that we may be somewhat skeptical as to
whether you are really serious about making reforms.
What makes you think that you have a better opportunity
this year and what do you see as some of the barriers that
might pop up?
LEGISLATIVE REFORMS
Secretary Donovan. So, first of all, I would say we were
very encouraged by some of the advances we did make in the 2014
budget. There is hundreds of millions of dollars of savings in
the voucher program and in other programs based on the work
that we did with you but also with the authorizing committee.
Having said that, we literally on the day we introduced the
budget, briefed the authorizing committees. I personally made
calls to the authorizers to encourage them to work with us. We
are actively engaged in discussions on potential legislation
this fall. Obviously you know better than I do that in an
election year and with other challenges we can't guarantee any
legislation getting done, but we will do everything we can to
make progress.
I would also note we have proposed a range of legislative
changes which we think are appropriate for an appropriations
bill. That is why we divided the legislative proposals. Some we
included language with the budget, others we are saving for
what we consider an authorizing package later, and we look
forward to working directly with the committee on things that
clearly fall within appropriations language.
Mr. Latham. That really goes to my next question about the
selection of programs that you want us to expand, rather than
the authorizers. Whether you are talking about the RAD or the
rent policy demonstrations, change in medical deductions and
authority for the public housing authorities to merge their
operating and capital funds and so on. Will constraining
renewal costs be one of your goals as far as reforming the
voucher system? Tell us what you are proposing there.
Secretary Donovan. Absolutely. We believe with the changes
that we were able to make working with you in the 2014 budget,
we already expect savings in the voucher program of just over
$200 million in 2015. In addition to that, we believe that the
changes we have proposed, for example, to medical deductions
will save at least tens of millions of dollars more.
The other thing that I would point out, we have been
working to move to a more efficient contracting model in our
project-based Section 8 program over a number of years. We have
actually run that competition twice and lawsuits have delayed
that. There is specific language that we proposed in the budget
that would clarify that we have the right to do this through a
NOFA process which we believe already and was confirmed by one
judge in a prior court. If that language gets approved, we
think we could save $100 million within the project-based
Section 8 program next year.
Mr. Latham. Okay. In 2012 GAO reported to Congress that 20
different Federal agencies administer 160 programs to support
home ownership and rental housing. I wondered, are you working
within the administration to identify where there is
duplication and are there efforts to consolidate programs so
that the tax dollars serve the national interest rather than
just duplicating programs?
Secretary Donovan. We are. We have established a rental
housing working group across the entire administration that has
looked for ways to consolidate and also to better align
programs. I would also point to RAD, which I mentioned earlier.
RAD alone has already gotten applications that would
consolidate almost entirely the Rent Sup program, and we are
looking as well, the potential to consolidate RAP and the Mod
Rehab program, and with the right language and the lifting of
the cap, we should be able to do that in the coming years.
RAD EXPANSION
Mr. Latham. Well, why start another program when you have
160 of them there already? I mean, what are you talking about
eliminating? Is there any report from this working group?
Secretary Donovan. Well, I would be happy to provide more
specifics about that. But, again, we don't see RAD as a new
program. It is using a time-tested Section 8 program and moving
other programs that, frankly, I would call them orphan
programs, a small number, moving them into Section 8 to be able
to truly consolidate them.
Mr. Latham. Okay. My time has expired.
Mr. Pastor.
Mr. Pastor. Thank you.
Mr. Chairman. Mr. Secretary.
The Rental Assistance Demonstration, RAD, was created in
the 2012 appropriation bill, and the program allows public
housing authorities to modernize and preserve existing housing
by leveraging outside capital. As you said, it had a cap of
60,000.
Secretary Donovan. That is right.
Mr. Pastor. It was extended I think last year, the 60,000
was extended, and it is going to expire December 31st of this
year, and since you and the chairman were having the dialogue
on RAD and some of the programs, and you alluded to some of the
orphan programs, et cetera, but let me ask a question first.
This program is really, it is in its infancy, at least it
took you time to get it going and maybe a year in existence,
maybe a year and a half in existence. What tools or what
methods of evaluation have you compared it to so that now you
can say it is working, it is not working, we still need, we
still have some glitches so that we know as you ask for further
expansion where we are at today.
Secretary Donovan. So, first of all, I think the two
biggest indicators of success thus far, first, that despite a
cap of 60,000 units, we have demand as of the end of last year
for three times that, 180,000 units have applied, and we
continue to hear significant demand beyond that. So obviously
if you put it this way the housing authorities are voting with
their feet and applying and really want to do this. Second----
Mr. Pastor. Let me ask a question. Why do you think the
PHAs are using this mechanism to increase the demand?
Secretary Donovan. So two things I would say. One is that
they are able to raise capital that far exceeds what they can
do within their traditional means in the public housing
program. Those 180,000 units could raise $6 billion of other
private and public capital to help them do the repairs with no
additional cost to the taxpayers. So, that is an opportunity
they just don't have anywhere else.
And, second, I believe it allows them to use a time-tested
program, Section 8, that they understand, they know well
because it is an existing time-tested program that has lower
regulatory burdens and other challenges relative to public
housing, the traditional public housing program. So it has
benefits administratively and in terms of efficiency for them.
That is why I would go to the fundamental point, I don't
see this as a, you know, a demonstration in its infancy because
we are using programs that have been around for decades.
Project-based Section 8, project-based vouchers are time
tested, and all we are really doing is converting them, not
trying a new program or a new alternative.
Mr. Pastor. In raising the capital, are these PHAs crowding
out other low-income tax credit programs or the market itself?
Secretary Donovan. We heard some initial concern about
that. What we have seen in practice is that only about 10
percent of the transactions are using the 9 percent credits
which are competitive. Thirty percent of the projects are using
what we call 4 percent tax credits, which are tax-exempt bonds.
Those have not been oversubscribed in States, and so it is not
crowding out other, and the additional 60 percent of projects
are just using private financing, whether through FHA or other
sources. So there was some concern initially that it would be
crowding out, but in practice we haven't seen that extensively.
Mr. Pastor. So the new demand for 180,000, the expansion to
increase that number of units, is that generally throughout the
country or is there certain areas that are relying on this
program or wanting this program to expand?
Secretary Donovan. We have seen some variation, but every
State in the country has housing authorities that have applied,
and there is great demand in all regions of the country.
Mr. Pastor. You have PHAs that are larger than others. I
mean, you probably have, as you well know, smaller ones and you
have larger ones. Is the balance equal or do you find that the
larger and more urban areas that are now using this program?
Secretary Donovan. Interestingly, there was some
expectation that the larger housing authorities would use it.
It has really been the opposite. We have a disproportionate
number of small and medium sized housing authorities that are
using the program. The percentage of units represented by small
and medium sized housing authorities is bigger than you would
expect given their representation in public housing overall.
Mr. Pastor. I will yield back.
Mr. Latham. Thank you, Mr. Pastor.
Mr. Dent is recognized.
Mr. Dent. Thanks, Mr. Chairman.
Good afternoon, Mr. Secretary.
Secretary Donovan. Good to see you.
Mr. Dent. Included in the fiscal year 2014 omnibus spending
bill were a number of provisions designed to reduce the
administrative costs for public housing authorities. However,
regulations for many of these reforms such as the streamlined
biennial inspection protocols have not yet been issued by HUD.
Can you tell me what your timetable is for writing the
regulations necessary to implement these cost saving measures?
REGULATORY CHANGES
Secretary Donovan. Absolutely. One of the things that was
very helpful in the way you all crafted the bill was you gave
us the ability to implement these through notice, so we are
literally, as we speak, drafting that notice. It will be issued
this spring and allow us to go forward and start to realize
those savings to some degree in 2014, but largely in 2015.
We will then follow that notice with a full regulatory
process, but it was extremely helpful that you gave us the
ability to implement these three notice so that we could get
going quickly. Obviously the housing authorities are eager to
get going on these, and they are looking forward to that
notice.
Mr. Dent. Thank you. And also, Mr. Secretary, I understand
that many public housing authorities across the country have
coordinated with their State associations and elected
representatives to develop proposals that are within HUD's
regulatory authority to reduce administrative burdens and help
them save some money.
Several public housing authorities in my district are
contemplating taking a similar approach, but they are
discouraged by the response received by their counterparts
specifically in North Dakota and Virginia, and what would you
recommend is the most effective method by which these public
housing authorities may propose time and money saving
suggestions to the Department and how would the Department work
to implement good ideas received from these public housing
authorities?
I would just also point out, I do have a correspondence I
saw from Senators Kane and Warner to you I guess it was back in
September and then your response I guess was back in October
back to them and then also a similar letter from Senator
Heitkamp in January on the same issues.
Secretary Donovan. Obviously it will depend on the
specifics of the issue whether we have authority to implement
it, but what I would suggest is that we set up a follow-up
meeting with your office with the housing authority to sit down
and to specifically discuss their ideas.
We are preparing guidance that would provide greater
flexibility through our own administrative authorities in a
range of areas. We have a notice that we issued last year that
did that. We are looking at further steps, so it would be a
good time to do that.
Mr. Dent. I would very much like to take you up on your
offer to sit down with some of----
Secretary Donovan. Great.
Mr. Dent [continuing]. My housing authorities who have I
think some very thoughtful ideas about how they could realize
some greater efficiencies while maximizing the number of people
staying in the public housing units. So I would appreciate
that.
And finally, on the issue of housing counseling, what can
you tell us this year? How are we doing in terms of oversight
and in terms of making sure that these programs are as
effective as they can possibly be? I know we have, that not all
home counseling programs are created equally, some are better
than others, and what are we doing to make sure that they are
all living up to better standards? Again, some are doing quite
well. There have been some reports a few years ago about some
of the programs that were not quite up to snuff. Can you fill
us in?
HOUSING COUNSELING
Secretary Donovan. We are in the process of developing a
comprehensive testing regime for housing counselors. This was
part of the HERA legislation that was passed and is something
that we are moving actively toward.
The other thing I would mention, we are proposing an
increase in housing counseling this year in our budget, along
with an initiative in the Federal Housing Administration called
HOC which will increase the use of counseling in order to not
only help make sure families can stay in their homes, typically
what we see is a 30 percent better chance of staying in your
home if you get counseling, but we also expect it to save
between $1,000 and $2,000 a loan for the taxpayer through safer
loans in FHA. So we are expanding the use of counseling to
better protect the FHA fund and expand access to credit.
Mr. Dent. I will yield back then, Mr. Chairman.
Mr. Latham. Thank you, Mr. Dent.
Mr. Price is recognized.
Mr. Price. Thank you, Mr. Chairman.
Welcome, Mr. Secretary, we are glad to have you here.
Secretary Donovan. Good to be back.
Mr. Price. Let me ask you a number of questions, I think
most of which are straightforward and won't require too much
elaboration, but they are nonetheless important questions that
have been raised by various stakeholders and that I am not
certain I am clear on what the Department's position is.
First on these vouchers that were lost due to sequestration
and that are being restored, there is some debate about
whether, whom those should go to, and the waiting lists, of
course, are pretty long and compelling, but also there is
specific populations such as homeless persons, victims of
domestic violence, people who otherwise might be
institutionalized, people with disabilities who arguably have a
special claim or a special need on these restored vouchers.
What is the Department's position on this? How much leeway are
you permitting and to what extent are you directing the use of
these vouchers?
SPECIAL PURPOSE VOUCHERS
Secretary Donovan. Largely speaking we leave local
discretion to communities to determine their priorities. Each
housing authority has their own plan with particular special
priorities they may place based on local needs. So, most of the
additional vouchers that would be created are of that type, but
we are proposing, as I mentioned in my testimony, 40,000
special purpose vouchers, 10,000 for homeless veterans and
30,000 for what we call tenant protection vouchers, which are
targeted for families that might otherwise lose their homes
through opt-outs of other forms of housing or situations like
that.
Mr. Price. And what will be the plan for the distribution
of those additional vouchers?
Secretary Donovan. For the VASH vouchers specifically, the
Veterans Affairs Supported Housing vouchers, we measure very
carefully each year the need based on the number of homeless
veterans, particularly chronically homeless veterans, and we
match the distribution of those to need. Tenant protection
vouchers go to where we have these specific cases. So, in other
words, if there is a building in one community that is leaving
a program and residents are at risk of being evicted, we would
provide those from HUD directly to that, those residents of
that facility.
Mr. Price. That would be a matter of HUD's determination,
not necessarily an application process on the part of----
Secretary Donovan. Exactly. That is not competitive or
anything like that, and then finally the bulk of these are
distributed through formula that is set by appropriations
through our regular distribution of renewal funds for Section 8
vouchers.
Mr. Price. Presumably if a local authority had a specially
compelling case that needed to be brought to the Department's
attention, they would be encouraged to do that?
Secretary Donovan. You have in past years, and we would
want to continue this, provided some emergency funding. So, for
example, the effects of sequestration last year meant that
there were many, many housing authorities, almost 200, that ran
out of reserves and needed some help in order to make sure they
weren't evicting tenants. The flexibility you gave us allowed
us to meet some of those special needs in the regular voucher
renewal pot.
Mr. Price. Now, let me turn to administrative fees. In the
last 10 years do you know how many public housing authorities
have turned in their Section 8 program vouchers because there
were simply insufficient funds to operate them?
We hear about that, and of course it is extremely
frustrating. What is the status of the administrative fee study
that is being conducted by ABT, I understand and what interim
proposals is HUD advocating to help these programs survive?
ADMINISTRATIVE FEES
Secretary Donovan. I am glad you asked about that because
it is an area where I am very, very concerned. Administrative
fees fell to an all-time low last year. Less than 70 percent of
documented need, and although 2014 raised that to 75 percent
proration, it is still too low, and in fact we saw the effects
of that.
In 2013, for example, we saw the number of housing
authorities that are turning back VASH vouchers. So these are
housing authorities that are turning away new vouchers to help
house homeless veterans, we saw the number of those housing
authorities double last year. So we are very concerned about
the administrative fees.
On the administrative fee study, we have completed the work
on 30 out of the 60 housing authorities that are part of the
study. We will be providing by the end of this week a summary
of that research. What it shows is that very well run voucher
programs, need about 92 percent of the formula allocation that
has traditionally been the level, and again I would compare
that to 2014's level of 75 percent. We are proposing to
increase that substantially but still not get up to 92 percent
in our budget this year.
Mr. Price. Thank you.
Thank you, Mr. Chairman.
Mr. Latham. Thank you.
Ms. Herrera Beutler.
Ms. Herrera Beutler. Thank you, Mr. Chairman.
And I guess you may have already touched on it with the
VASH vouchers. I am sorry, I am on Mucinex and sometimes it
makes your tongue a little funky. It is a little head cold, and
that is all on camera, that is great.
The VASH Veterans Assistance Supportive Vouchers. Am I
saying it right? And I know we were, you absolutely said it,
that was one of the things I asked you about last year is they
were returning those vouchers because there just wasn't enough,
and when you are talking about veterans, we are talking about
needing wrap-around services, it is extremely difficult.
Secretary Donovan. Absolutely.
Ms. Herrera Beutler. Or should I just say it takes a lot of
time and effort to put together the wrap-around services to
make these work, and so the administrative fees are crucial and
to go from 68 percent to 75 percent in the Ryan-Murray budget,
I mean, I know you are putting together the study, and I am
curious as to when the study is going to be out. In addition,
do you think the 75 percent reimbursement is enough for this
year? Is that--are we still going to see those vouchers
returned?
Secretary Donovan. Obviously we don't know yet. We are
going to be making the allocation in the next few months, and
we will wait and see. I am hopeful that with a higher level of
admin fees this year, although it is at 75 percent, that there
will be fewer that turn them back, but it is still, 75 percent
proration is not enough for administrative fees, and, look,
this is a program that is working.
Ms. Herrera Beutler. Yeah.
Secretary Donovan. It is not only saving lives. We have
reduced veterans homelessness by 24 percent in the last 3
years.
Ms. Herrera Beutler. Oh, wow.
CHRONICALLY HOMELESS VETERANS
Secretary Donovan. It is also saving money because the
alternative when you have a chronically homeless veteran on the
streets, they use emergency rooms, they go to prisons, they
have all kinds of other impacts that have human costs but also
have economic costs to the taxpayer, and so we believe that
this is an investment that is not only good for these veterans
and good for our country, but good for taxpayers as well.
Ms. Herrera Beutler. So do you think, is it the fall that
your study is expected, so that we at least know what our
baseline should be?
Secretary Donovan. Again, we have initial results we will
be providing by the end of this week that shows at least based
on the first 30 housing authorities that it is about 92 percent
is an adequate level.
Ms. Herrera Beutler. Okay.
Secretary Donovan. But the full final study will be
completed this year.
Ms. Herrera Beutler. Okay, thank you, and thank you for
your work on that.
Secretary Donovan. Thank you.
Mr. Latham. Thank you.
Mr. Quigley.
Mr. Quigley. Thank you, Mr. Chairman.
Welcome, Mr. Secretary.
Secretary Donovan. Good to see you.
Mr. Quigley. Upon questioning from the esteemed ranking
member, you were talking about the RAD program. Chicago's
program has been approved but as you talked about, there is a
cap. You mentioned the demand is 180,000 and the cap is 60.
Secretary Donovan. Yes.
Mr. Quigley. I didn't--I was just waiting for the magic
language of your discussions about your desire or efforts
within the agency to expand or lift the cap. Can you comment on
that?
Secretary Donovan. I would love to lift the cap. It is not
something that is within my power without legislative authority
and something that we were hoping to get done this year in the
budget. We can continue to make efforts with authorizers, but
clearly the best opportunity is in the 2015 budget to lift that
cap, and that is what the President has proposed.
Mr. Quigley. And it is going to be part of your efforts as
well though?
Secretary Donovan. Absolutely. It is proposed in our
budget. We have continued to tell housing authorities like
Chicago, which has the biggest application of any housing
authority in the country, but just missed the 60,000 units, we
have told them that we will continue to process their
applications in the hope that the cap will get lifted, but
clearly it is not something within my power to be able to do.
We need to work with the committee to lift that cap.
Mr. Quigley. Sure. And my agency is a little concerned
about something else. You were talking about Moving to Work.
Obviously the CHA is a Moving to Work agency, but in the budget
request HUD has given the authority to reduce funding for
voucher renewal costs to individual public housing authorities
as a result of cost savings for the enactment of Section 8
authorizing provisions.
Now, I understand the need to cut costs, but this language
seems pretty broad, and you are making some of these agencies
nervous that they are going to lose some of these funds, excess
funds.
MOVING TO WORK FUNDS
Secretary Donovan. Simply what we are trying to do there,
Congressman, is to say where we achieve cost savings through
making the program more efficient, streamlining, as we did last
year in the bill, that we be able to apply those across the
board, including MTW agencies.
Traditionally those kind of cost savings have had no effect
on the funding levels for MTWs, and it only seemed fair to us
to apply that evenhandedly. If you have concerns that we make
sure it is evenhandedly, we would be happy to work with you on
revised language around that.
Mr. Quigley. How long do you think this process has gone on
before this change, I mean the way before you are talking about
this proposed change? I guess the point is a lot of these
agencies have built in their ability to do their work on this
funding.
Secretary Donovan. They have also, I think, to be fair,
been protected from reductions or cuts that other housing
authorities have had to bear more broadly, and again, agencies
who aren't MTWs might ask is it fair that they absorb more
than, you know, a pro rata reduction of their fees, their
renewal burden because MTW agencies don't, and so that is why
we included the provisions to be able to try to implement some
of these fairly. We would be happy to work with the committee.
We are also, frankly, looking to expand the MTW program and
have proposed that we do that in a way that hopefully the
committee will be able to support.
Mr. Quigley. And in a way that protect the agencies like my
agency in particular. But we look forward to working with you
to make sure, as you say, those are as fair as possible, it
takes as little burden as we can from an agency that has an
extraordinary demand in the city of Chicago.
Thank you, Mr. Chairman. I yield back.
Mr. Latham. I thank the gentleman.
I am going to follow up on a couple things here with the
VASH vouchers.
There was a bureaucratic problem between VA and HUD. Has
that been resolved or can you give us the status of how they
are----
Secretary Donovan. I would tell you it may not be perfect
everywhere around the country, but it is dramatically better,
and what we are seeing is shorter amounts of time to get
veterans referred and into housing, but perhaps most
importantly we have seen the percentage of veterans who are
chronically homeless using VASH go up dramatically to where it
is close to 70 percent of all those using VASH, and why is that
important? Because VASH is sort of our Cadillac, if you will,
of approaches.
It is the most intensive services. It really works most
effectively when we are working with the chronically homeless
who may have long-term challenges with PTSD or mental illness,
substance abuse, and too often the vouchers were being used in
a way that wasn't as efficient and as effective as possible, it
wasn't targeted in the best way, and not only are we getting
the vouchers out faster, but we are also better targeting them,
and what that means ultimately is that we are going to get more
cost savings as well as really help more veterans get off the
street with the vouchers.
Mr. Latham. Can you, and maybe for the record, give me the
information breaking down between urban and rural areas? Rural
people don't use VASH at all, I mean, it is not available
apparently, it doesn't work.
Secretary Donovan. We have been making allocations in rural
areas. We don't see, obviously, the same concentration of
veterans in certain communities, but we have been----
Mr. Latham. Right.
Secretary Donovan. Making allocations at some, and we will
certainly provide that information.
Mr. Latham. I mean, for a lot of us, services in sparsely
populated areas are not there.
The Moving to Work that Mr. Quigley was talking about, to
date there is no housing authority that has lost its status on
the Moving to Work. It appears they are not all real high
performers, like in Philadelphia where there is a lot of
corruption and ended up in receivership and still retained its
designation. Is there any standard as to who keeps it and who
loses it?
Secretary Donovan. We do have a set of standards that we
will apply, and there are specific requirements.
Mr. Latham. What do you have to do to lose it?
Secretary Donovan. So specifically in the Philadelphia
example, they actually continued to perform based on their MTW
agreement. Obviously there were huge problems, that is why we
went in and replaced the board, that is why we took them into
receivership. But the types of problems they were experiencing
were really about a housing authority director who, frankly,
was out of control and a board that wasn't overseeing that.
With the changes that we made, we were still confident that
they were performing on all the metrics that an MTW requires.
Mr. Latham. Okay. I burned up a lot of time here, but this
is a big question. In the past few years as you are keenly
aware, it has become nearly impossible to determine how many
months of funding are provided by the request for the Project-
Based Rental Assistance Account.
One consistent theme of the administration's proposals is
they always manage to push payment liabilities into future
years in order to provide more room for spending in that budget
year. We had short-term funding 2 years ago, then a hole in the
funding last year, and now this year we have a proposal to
rebase contracts to the calendar year. This program is one of
the cornerstones of Federal affordable housing and a platform
for critical policy innovations like the RAD program.
I would hope you would agree that the stability of Project-
Based Rental Assistance is too important to be, you know, part
of annual budget games. Once and for all, can you tell us how
many months of funding per contract are necessary to ensure a
stable, well-functioning Project-Based Rental Assistance
program?
FULL FUNDING FOR PBRAS
Secretary Donovan. So from my perspective, what we are
proposing this year is trying to do exactly what you said,
which is to get us to a point where we will no longer have the
question marks about whether funding is provided, and I will
say this, Congressman, if you believe you can find an
additional $1.3 billion this year that would bring us back to,
quote unquote, ``full funding'' based on the current system, we
would take it, and we would be happy.
But recognizing the budget challenges, what we are saying
is rather than continuing to go through what we have gone
through these last few years where we are providing short
funding, let's accept once and for all that we move to a
system, which is how we do the voucher program, where we can
provide funding for all the contracts on January 1st, there is
a one-time savings from doing that, and then going forward
provide 12 months of funding.
Mr. Latham. There is also a huge hole the next year.
Secretary Donovan. It actually creates no hole the next
year. The exact, 12 months of funding starting January 1st is
$10.8 billion. Whatever starting point you begin with, if you
stay with the current starting point, it would still be $10.8
billion in 2016. So this is, this rebaselining creates no
additional demand in 2016. All it does is move these contracts
to a January 1st date the same way that vouchers does and gets
you a one-time savings in this year. And I believe it will
actually be better for the program because at least we are
saying, okay, we have got a new baseline, we are going to try
and provide 12 months of funding from that date, and that we
know what it is going to be going forward as opposed to the
uncertainty.
As you know, there is lots of private financing that comes
into these contracts, right? And the more uncertainty there is,
the higher the interest rates, the more reserves they are going
to require. So we really do believe that given the challenges
that we have, again, I would be happy to take an additional
$1.3 billion to get to full funding under the current
timelines, but if that is not possible, which I think we can
all agree is going to be extremely tough, we believe it is
better to say, okay, let's reset the annual funding date, and
to be very clear, it does not create any additional funding
needs in future years. It does not shift any burden.
Twelve months of funding is 12 months of funding in 2016,
no matter what the starting date is.
Mr. Latham. Okay, we will continue the discussion.
Mr. Pastor.
Mr. Pastor. Thank you, Mr. Chairman.
I am going to have one more question on the RAD. In the
2015 budget request, you asked for an additional $10 million.
What will that do to the RAD program in this fiscal year?
Secretary Donovan. The idea there, the vast majority of
these conversions under RAD can be done with no additional
funding. There are, however, a very limited number where either
because they may be in high poverty communities where it is
harder to attract private capital, they may be in rural
communities where it is harder to get private financing, other
challenges like that.
We would attach a slight increase to the amount of money
that could be provided through the public housing subsidy in
order to make the renovation of those units possible. So it is
a very targeted amount of money for a small number of the units
converting to allow a RAD conversion and extensive renovation
to be feasible.
Mr. Pastor. The Next Generation Management System (NGMS)
has been a centerpiece of HUD's information technology
transformation initiative efforts. The system when operational
will consolidate many of the individual public housing IT
systems into one holistic system. To date, HUD has spent more
than $50 million on this effort. Can you give us an update on
the progress of NGMS, Mr. Secretary?
NGMS IMPLEMENTATION
Secretary Donovan. Absolutely. Just getting the specifics
here.
So NGMS did become operational, the first module of it,
which is the budget formulation and forecasting module, last
August. In addition, the portfolio and risk management tool
became operational in September. We are adding functionality
and making changes. Both of those sort of modules of NGMS will
be fully operational this year, and we are obviously continuing
to add new functionality in other modules on an ongoing basis.
But NGMS is operational, it is already adding value in the
Department.
Mr. Pastor. Would you say 50 percent complete, 25? What
percentage can you give me?
Secretary Donovan. To be honest, Congressman----
Mr. Pastor. I like honesty.
Secretary Donovan [continuing]. I would like to get back to
you with a more detailed analysis of that. I don't know off the
top of my head what percentage I would say.
Mr. Pastor. The implementation, as you go forward, what is
the relationship between the public and Indian housing and the
chief of information office on the project and who has the
final say on the scope of it?
Secretary Donovan. So what we have done, as I think most
technology projects of this scale, is to create a team that
includes the information technology experts from the CIO office
along with program officials who have expertise about the way
the program should run to create a joint team that has
oversight.
Ultimately the decisions are being made by the Deputy
Secretary and by myself if there are disagreements within that
team, but that joint team is managing the project and
overseeing its implementation.
Mr. Pastor. As you continue the implementation, when do you
expect the core data infrastructure that houses the current
public and Indian housing centers and the voucher management
system to be implemented? Or have you done that already?
Secretary Donovan. So, in fact, that is already in place.
The core data infrastructure is part of the PIH data warehouse.
The important move that is still to come is that we are
actually moving towards a single integrated data warehouse for
all of HUD, but at this point the core PIH data infrastructure
is there and is already feeding into NGMS.
Mr. Pastor. Could you give me a further definition of what
is left to incorporate in the whole HUD warehouse?
Secretary Donovan. So, for example, we have certain
grantees or entities' projects that receive funding from
multiple HUD programs, just to give you one example, where they
may have public housing money but also have HOME money. There
may be city entities that have their block grants but also are
drawing other kinds of HUD funding as well.
What a single integrated data warehouse will give us is the
ability not just for all the PIH programs to talk to each
other, but to actually have linkages between all the data
across all of HUD's programs in a single warehouse. Right now
we have to basically create those linkages separately rather
than having it all reside with single identifiers that go
across all of HUD's programs.
Mr. Pastor. Just take a minute, Mr. Chairman.
So Phoenix has a housing authority, also receives CDBG
monies and other HUD monies, so then once everything is
completed, HUD will have the information of all HUD funding for
one particular municipality or agency.
Secretary Donovan. Or a project. Exactly, in a single
integrated data warehouse.
Mr. Pastor. Thank you, Mr. Chairman.
Mr. Latham. Thank you, Mr. Pastor.
Mr. Price.
Mr. Price. Thank you, Mr. Chairman.
Mr. Secretary, let me ask you one very specific question
following up on the discussion of the Rental Assistance
Demonstration, and then I want to move to Choice Neighborhoods,
a key proposal in your budget.
I am inspired to ask this question by the situation of one
of your applicants, the Fayetteville Housing Authority in our
district, but I think it is reflective of a broader situation.
That is, a certain number of these applications, and I
understand maybe 115, 120,000 units outside the cap are at risk
in this sense.
We are talking about applications already received that
already have, that depend on financing arrangements where it
is, let's say, a tax credit deal or another financing
opportunity that may expire or terminate for those units that
are outside the RAD cap. Any special plan for taking that into
account or accommodating those situations? That really
represents a lost opportunity.
Secretary Donovan. It is a huge lost opportunity, and
frankly while that is a specific case with tax credits, every
one of these transactions is bringing in some form of private
financing, which is going to have some set of deadlines or
risk, and so other than the first come, first served way that
we did set up the list, it would be, I would be very hard
pressed to say, you know, this deadline takes precedence over
that one.
The right way to solve this is to be able to lift the cap
and allow these housing authorities to move because, again,
recognize what we are doing here is with not a single extra
dime of taxpayer money, we are allowing the housing authorities
to not only bring in billions of dollars of financing to create
jobs, to improve the lives of residents, and every one of those
120,000 units that is waiting has a story, it may not be
identical, but similar to the one that you are hearing.
Mr. Price. Well, an expiring tax credit is a pretty
compelling story, but I am aware it is not the only sort of
situation we may be referring to here, and I of course agree
with your basic conclusion that the solution to this is not to
try to distinguish too finely among different classes of
applicants but really to get this cap lifted and get on with
the program. There is clearly a huge demand and a huge need.
Now let's talk about Choice Neighborhoods. That is a
program, as you well know, to revitalize severely distressed
public housing and the surrounding area. It is the successor of
the HOPE VI program which had a similar goal. Here, too, I have
every reason to appreciate these programs. Raleigh, Durham,
Fayetteville, these cities have benefited greatly.
Secretary Donovan. Greatly, yes.
Mr. Price. And in many instances have been model HOPE VI
cities. Your $120 million, your request in this budget is $120
million for Choice Neighborhoods. I take it that would be maybe
four projects in a year?
CHOICE NEIGHBORHOODS
Secretary Donovan. Roughly, yes. A number of planning
grants, but in terms of implementation grants, that is right.
Mr. Price. And how does that compare to what HOPE VI was at
its high point and the kind of progress we were able to make
with that appropriation?
Secretary Donovan. It is a smaller number of projects, to
be frank. That is part of the reason we proposed----
Mr. Price. Smaller is putting it mildly. What was the high
water mark, do you know?
Secretary Donovan. In inflation-adjusted terms I am not
sure, but I know that there was, I think, four to five hundred
million dollars at least annually. We can--575 was the high
point historically. And if you did it in today's dollars, it
would be even higher.
Mr. Price. So now we are talking 120. That is four projects
if we are lucky, and even that represents an increase from last
year's abysmally low appropriation.
Secretary Donovan. Congressman, I would just add, this is
one of the reasons why we thought it was important to include
in the Opportunity, Security and Growth Initiative an
additional $280 million because we agree with you, $120 million
is not enough, and the President believes if we do some common
sense things on reforming both mandatory and discretionary
funding, some tax changes, we could fund things like Choice
Neighborhoods that really make an enormous amount of sense in
terms of creating growth and opportunity, creating jobs.
Mr. Price. Yes, it does show what could be done if a kind
of ideological rigidity around here were to be relaxed and we
were to have a more adequate budget.
There is nothing anywhere else in the housing budget that
comes close to Choice Neighborhoods, is there? I mean, I don't
know what it would be. Nothing else that takes this kind of
comprehensive approach.
Just finally, I want to understand the handling of public
housing here, and this is just a short, easy question I think.
Both of these programs, HOPE VI, Choice Neighborhoods both aim
at revitalizing severely distressed public housing. As I
understand, the requirements as to what kind of area would be
cleared aren't exactly the same, and I am not sure how the
requirements as to what kind of housing replaces it, the kind
of mix of housing that replaces it. Is that the same? Of
course, public housing is in big trouble here, too.
Very great area of need. Does the transition from HOPE VI
to Choice Neighborhoods promise to alleviate that or could it
possibly make it worse? How is public housing treated, in other
words?
Secretary Donovan. So public housing continues to be the
primary kind of goal, the revitalization of public housing of
Choice Neighborhoods. We did include the ability to take a
privately owned multifamily property and have it be the target
of a Choice Neighborhoods grant.
But I would say the other thing that we have done is build
into Choice Neighborhoods in a way that some HOPE VIs achieved
but not all of them much more partnership from other agencies
so that we are seeing, for example, many of the Choice
Neighborhoods are receiving Promise Neighborhoods grants from
the Department of Education, they are receiving Byrne Criminal
Justice Investments from the Department of Justice, so much so
that for every dollar we put into Choice Neighborhoods
implementation, we are raising $8 from other public and private
sources. That is what I really think goes to your point of
nothing else quite has this catalytic impact that Choice
Neighborhoods does because we are able to leverage every dollar
of Federal money so effectively across both public and private
dollars.
Mr. Price. Thank you.
Mr. Latham. Going back to our previous subject about
Project-Based Rental Assistance, I have a letter here from a
whole list of different organizations and councils and groups
that deal with this, and they basically are saying exactly what
I am talking about: the fact that you are just shifting off
costs, another $1.1 billion in 2016 that you are going to have
to back-feed, back fill to keep the programs going. Do you have
any proposal for offsets in 2016's budget or are you going to
have another gimmick?
PBRA FUNDING
Secretary Donovan. So, Congressman, just to be clear, and
we actually did reach out and talk to these groups and
disabused them of their mistaken view of this. To be clear
about the way this works----
Mr. Latham. I am sure they will be happy to hear that.
Secretary Donovan. Were they happy, Laura?
Look, I think what they will tell you----
Mr. Latham. So they are all wrong, right?
Secretary Donovan. No, no. What they will tell you and what
I would agree with is if you can find an additional $1.3
billion, which----
Mr. Latham. We have to do it next year then. You are
kicking the can down the road here.
Secretary Donovan. Think about it this way. If the average
start date for a contract now is in July-August of the year,
right? And what we are saying, okay, we are going to find that
extra $1.3 billion, fund every contract starting on average in
July or August, whatever it might be. If you do that this year,
right, and you say how much will it cost to fund those
contracts from July to July the next year, it is $10.8 billion.
What we are saying is given that we have not been able to
do that for a number of years now, let's just all agree that we
are going to change the system, move it to January 1st. That is
the way the Section 8 system works. We have a one-time savings,
which is basically taking the start dates from the average of
July to January. And then forever more we will fund them
January to January.
Mr. Latham. Which is a gimmick to spend on other new
programs that you can grow, and then you are going to have to
back fill again next year.
Secretary Donovan. You never have to back fill it because
every January you are funding for a year, so the same cost is
$10.8 billion next year.
Mr. Latham. You have to come up with about $1.1 billion
more in 2016.
Secretary Donovan. You don't. You don't, because----
Mr. Latham. You are magical, you really are.
Secretary Donovan. What it is doing is shifting the funding
dates later in 2015. So it is a one-time savings that never has
to be made up as long as you are funding from January to
January the following year. So it really--it is not a gimmick.
We think it is just acknowledging the fact of the challenge you
have had the last few years, which is we have never been able
to get back to full funding on the contract year that currently
exists.
And again, if you can find a billion three to get us to
full funding this year, we would love to take it, and then we
will have a $10.8 billion cost in 2016 as well, but we just
think that is going to be hard given the challenges that you
have, and we think it is better rather than having this
uncertainty to just say let's shift it to January 1 for every
contract, and all agree that going forward that will be the new
program year, just as we do with vouchers, and that will have
no--it will create a cost of $10.8 billion, which is the same
12 months of funding that you would need if your starting date
was an average of July or whatever else it might be.
Mr. Latham. Okay. Then can you commit to full funding in
the 2016 budget proposal?
Secretary Donovan. I would love to be able to commit to
full funding. We believe that it will make it easier to do full
funding in the following year.
Mr. Latham. So are you going to find the money then?
Secretary Donovan. I will do everything I can to find the
money. Look, Congressman, I used to run this program at HUD. I
think it has been a huge problem.
Mr. Latham. That is the problem.
Secretary Donovan. I think it has been a huge problem, the
uncertainty that we have had.
Mr. Latham. Right.
Secretary Donovan. And we worked hard to get extra money in
the Recovery Act to bring it back to full funding, but that has
then eroded after these years, and, again, I really mean it, if
we could find the billion three this year to get back to full
funding on the current cycle that we have, that would be ideal,
that would be my first choice.
But I think it is better to go to this new funding year
than to continue to have the kind of uncertainty we have had
the last few years where it is not, it is you know, it is
partial funding each year, it is not quite enough, and that
actually creates more uncertainty for lenders, for others.
If we are not going to be able to get to the full funding,
we believe that this is a second-best alternative, it is the
right thing to do to say, okay, let's go to January 1st and
let's reset, let's have a new year just the way vouchers are
done, and let's all commit that we are going to try to keep it
at that going forward, and it really doesn't create the extra
cost that--I know there has been confusion about this, and I
understand why it gives the appearance that it might, but it
actually doesn't if we stick to that new year.
Mr. Latham. Okay. Thank you for that answer.
Secretary Donovan. More than you wanted, right?
Mr. Latham. Mr. Pastor.
Mr. Pastor. I went to Arizona State where one plus one was
two. Mr. Donovan is from New York, so we will have to go back
and----
Mr. Latham. Harvard math.
Mr. Pastor. He is a Harvard man, okay?
Secretary Donovan. We would apparently be using a Matchbox
set and cars at the office to show people how this actually
works.
Mr. Pastor. Well, good. Well, you may have to come back and
show me Choice Neighborhoods with cars and buildings how this
thing is going to work.
A lot of members saw that HOPE VI was very successful, and
I have to tell you that in at least in Arizona we had very
successful HOPE VI projects, not only in Phoenix but in Tucson
and other places. So it was some, a little bit of reluctance to
all of a sudden have those success stories not being able to be
expanded to other housing projects in other parts of
metropolitan Maricopa County or Pima County.
And maybe what you can explain to me, as I look at HOPE--
not HOPE VI, but Choice Neighborhoods, with the impact and the
amount of dollars that you are going, millions of dollars you
are going to put in, it kind of reminds me of an urban renewal
light, and I lived through that experience, and I have to tell
you that the results of that whole urban renewal light or urban
renewal as an initiative has mixed results for all the efforts
and monies that were used, and so probably there is still a
sense of--well, I hope they are successful, but to see all of a
sudden everything emphasized on four communities or five or
eventually 10 or whatever the number may be, there is great
expectation and obviously you have, this administration has a
very short time span in its implementation.
If there is one thing I realize, being in Congress as long
as I have been, when administrations change, initiatives
change, and so as I think that is a truism that I have seen not
only in housing but transportation and energy and water, et
cetera. And so that creates for me a little bit of a hesitancy
and a little bit of doubt in terms of, it is a great
initiative, it is almost at the end of an administration where
I saw success with HOPE VI. That is probably what causes me to
have a little angst about the Choice Neighborhoods program
because I have seen the results of other programs in the past,
and they had mixed results, and so that is my situation with
Choice Neighborhoods. You might respond to it.
CHOICE NEIGHBORHOODS
Secretary Donovan. So I guess I would say two things in
response to that. One is, I think what we tried to do here is
take the best of HOPE VI. HOPE VI was incredibly successful in
lots and lots of places. There were places where it didn't
engage, you know, the police, local anchor institutions, other
institutions in the community enough or it didn't get enough of
a mixed income.
It also just focused on public housing, and there may have
been a dilapidated privately owned property across the street
or foreclosed homes or other things in the surrounding
neighborhood that limited its success. And so I think what we
tried to do is take the best lessons from HOPE VI and make that
sort of standard practice in Choice Neighborhoods. That is one
thing. The other thing is, we really are different from urban
renewal.
Mr. Pastor. In terms, then, where you had all the
neighborhoods in this country had a shot at some money, you
said no mas, we are just going to limit it to the ones we
choose, basically is Choice Neighborhoods.
Secretary Donovan. Well, HOPE VI was----
Mr. Pastor. I mean, isn't that the reality?
Secretary Donovan. No. HOPE VI was about the same amount of
money per grant. There was just more money. And if we had more
money for Choice Neighborhoods, we could reach a lot more
neighborhoods. In fact, in some ways we are reaching more
neighborhoods because we are doing planning grants as well. So
we have reached dozens of other communities with small amounts
of money to help them get going, and I think that goes to my
second point, which is the big difference here I think between
Choice Neighborhoods and urban renewal is this is a locally
driven process.
What we are looking for in our competition is do you have
strong groups in your community with a very clear vision of
what you want to do, and that is why for every dollar we are
putting in, there are eight other dollars that they are
bringing to the table. That is what gives me hope that when the
administration ends that these projects are going to keep going
is because most of the money isn't ours. Most of the money is
being raised locally, it is being driven by local planning
groups, and there is strong momentum whether or not I am here
or, you know, obviously HUD will continue to be involved.
Mr. Pastor. Sure.
Secretary Donovan. But this is really a locally driven
effort, what is their vision for the neighborhood? What is the
community's vision for the neighborhood? Not us coming in like
urban renewal and saying, well, you have got to knock down
everything and build the exact same public housing project in
every single neighborhood in the country, and I think that is
really the approach we have tried to take. Honestly, that
follows on HOPE VI. It takes the example from that.
Mr. Pastor. But I guess the, where I don't have as much
hope is that the reality is that most of the money that is
being wrapped around through these planning--once the planning
grants are done and the initiative, most of that money, as I
see it, maybe I am wrong, but at least as I see it, grants from
Justice, grants from Education, grants from Transportation.
So there is still a great reliance on Federal money to
make, to ensure that this neighborhood choice project or plan
is implemented and successful. I mean, maybe you and I see it
differently, but that is how I see it.
Secretary Donovan. A huge share of that is private money,
too. Just like with HOPE VI the biggest amount of money that
you are bringing in is private money, and that is a big part of
what drives the success, too, is you have other folks. Maybe
what we could do is give you a little bit of a side-by-side of
a typical HOPE VI project, typical Choice Neighborhoods and how
they are the same and how they are different, and that might
help on this point.
Mr. Pastor. Bring your model with houses and model cars and
maybe my math at issue will also improve.
Mr. Latham. Do you have anything else? Okay.
Not to beat a dead horse here, but----
Secretary Donovan. Please.
Mr. Latham. Did you try to find the $1.3 billion this year,
did you ask OMB to come up with it, or what happened?
Secretary Donovan. We looked hard. You know as well as I do
the limitations under the Murray-Ryan budget. And we simply
could not figure out how to find an additional $1.3 billion
without huge damage to other programs.
So we felt in that context this was the best choice, and I
really do believe that if we go to--this is a funding cycle
that works in vouchers. We provide all the money on the fiscal
year, well, actually the calendar year, January 1, so we do
believe that this is workable.
Mr. Latham. Okay. Getting back to the Rental Assistance
Demonstration you were talking about taking. They currently
have an authorized cap of 60,000, you said there were 180,000
units waiting to enter the program. You want to completely
eliminate the cap. I don't know how we have any kind of
certainty on the budget going forward if you have no cap or
there is no containment of it. Do you have a suggestion on how
we write appropriation bills to do that?
Secretary Donovan. Given what you have done, you have
basically required that we take a dollar of public housing
money and move it either into the project-based Section 8
account or into the voucher account if they are project-based
vouchers, it has been about 50/50, and the way you have written
it, the additional, the renewal of that shows up in the
following year.
So we would continue to budget in the way that we have been
doing to put in our budget the expected cost in the following
year. But on a net basis the cost should be zero because you
are taking a dollar out of the public housing account and
putting it either in the voucher account or the project-based
Section 8 account.
Mr. Latham. So how do we add additional units to the
project base if we are unable to support the 12 months of
funding for the existing units that we have today?
Secretary Donovan. Because money will be freed up out of
public housing to create room for that.
Mr. Latham. There won't be any additional demand outside of
this?
Secretary Donovan. Again, any unit--the additional demand,
even if every unit of public housing came in we would still
have the dollars from the public housing account that you could
move into the voucher account or to the project-based Section 8
account. That is what we did with the first 60,000 units, and I
think it has been working effectively. We have been able to
budget for those in future years. And, again, on a net basis
there is no additional Federal cost.
Mr. Latham. And you are going to have the authorizers do
this, right?
Secretary Donovan. We would love to.
Mr. Latham. She is smiling.
Mr. Pastor. She knows better.
Secretary Donovan. I will not guarantee for you today.
Mr. Latham. You are supposed to be straight faced back
there.
Secretary Donovan. She is confident.
Mr. Latham. Confident, good.
Secretary Donovan. But not confident enough that we didn't
include it in our 2015 budget proposal. How's that?
Mr. Latham. Not totally confident, okay. The gentleman
wants to know if you would settle for 180,000?
Secretary Donovan. I think the problem is we know we have
more housing authorities that are interested, so lifting the
cap entirely, I think if we could talk about 250,000 or more,
it would give us room to be able to continue to take
additional--no, no, but seriously we have other housing
authorities that are, we know are coming in, want to come in,
and if we just did 180,000 we would only deal with what we had
in house as of December 31st.
Mr. Latham. This is the last question or request. If you
could provide the committee with a 5-year, 10-year, 15-year
cost projection that assumes you receive the authority you are
asking and all the conversions to the project base platform, I
would like that.
Secretary Donovan. Happy to do that. What we can also do is
provide the public housing numbers which show the corresponding
reduction.
Mr. Latham. Can you also provide the $1.3 billion to make
it up?
Secretary Donovan. If I had it, I would.
Mr. Latham. We have to find that.
Secretary Donovan. Have you found it?
Mr. Latham. No, not yet, but I am looking in my pockets.
Do you have anything additional, Mr. Pastor?
Mr. Pastor. Absent the RAD, you are now letting public
housing authorities use capital, housing capital money
interchangeably with operating funds. How is that working out?
I know you have had smaller PHAs do it.
Secretary Donovan. That is exactly right.
Mr. Pastor. Now you would let more do it. Would this--is
this an alternative now to the expansion of RAD?
PHA FLEXIBILITY
Secretary Donovan. We don't see it as an alternative. We
see it as flexibility. As you said, housing authorities that
are less than 250 units already have this flexibility.
And this is one of the innovations from Moving to Work that
we think has been successful, and so we are trying to expand
that to other housing authorities, but even if they can blend
or move money between the operating fund and the capital fund,
it doesn't give them the ability to go and raise private
capital in the same way that RAD does. So it is not a
substitute in that sense.
Mr. Pastor. That is it.
Mr. Latham. Thank you very much, Mr. Pastor.
And thank you for your time today, Mr. Secretary.
I know we will have a number of questions for the record,
and I am sure I will and other members of the subcommittee will
also.
I would ask that you and your staff work as quickly as
possible to get those answered, cleared and returned to us
within 30 days if possible. We are going to be on a fast track
getting our bill done.
Secretary Donovan. Good to hear.
Mr. Latham. Well, hopefully.
Secretary Donovan. Especially when we bring that $1.3
billion check.
Mr. Latham. That is right. Slightly used twenty dollar
bills are fine. It will really help us if we get those
responses to help us write the fiscal year 2015 bill.
I look forward to seeing everyone tomorrow at 10 a.m. when
we meet with a number of the DOT intermodal administrators.
So with that, thank you very much for your testimony and
the hearing is adjourned.
Secretary Donovan. See you next week.
Mr. Latham. Right.
Thursday, April 3, 2014.
DEPARTMENT OF TRANSPORTATION MODES
WITNESSES
MICHAEL HUERTA, ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION
GREG NADEAU, DEPUTY ADMINISTRATOR, FEDERAL HIGHWAY ADMINISTRATION
JOSEPH SZABO, ADMINISTRATOR, FEDERAL RAILROAD ADMINISTRATION
THERESE McMILLAN, DEPUTY ADMINISTRATOR, FEDERAL TRANSIT ADMINISTRATION
CYNTHIA QUARTERMAN, ADMINISTRATOR, PIPELINE AND HAZARDOUS MATERIALS
SAFETY ADMINISTRATION
ANNE FERRO, ADMINISTRATOR, FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION
PAUL JAENICHEN, SR., ACTING ADMINISTRATOR, MARITIME ADMINISTRATION
Mr. Latham. The Subcommittee will come to order. This
morning we will focus on the Presidents' Fiscal Year 2015
budget request for seven DOT federal administrations. As you
know we heard from Secretary Foxx on March 12th and we will be
able to delve deeper and ask more specific questions today. Why
don't I ask each of you your name and your position, if you
would.
Mr. Jaenichen. My name is Chip Jaenichen. I am the acting
Maritime Administrator.
Mr. Huerta. My name is Michael Huerta. I am the Federal
Aviation Administrator.
Mr. Szabo. Joe Szabo, Administrator, Federal Railroad
Administration.
Mr. Nadeau. Greg Nadeau, Deputy Administrator, Federal
Highway Administration.
Ms. McMillan. Therese McMillan, Deputy Administrator,
Federal Transit Administration.
Ms. Ferro. Anne Ferro, Administrator, Federal Motor Carrier
Safety Administration.
Ms. Quarterman. Good morning. Cynthia Quarterman,
Administrator, Pipeline and Hazardous Materials Safety
Administration.
Mr. Latham. Very good, thank you. Welcome to all of you and
we do have a lot of issues to discuss today. Not only are the
surface programs in need of reauthorization, but the Highway
Account of the Trust Fund is expected to go broke by August.
Further, the Administration's Surface Transportation Budget
Proposal ships approximately four billion dollars' worth of
existing programs, six billion if you look at the expansions
and increases, from the discretionary general fund to a
mandatory, not yet in existence, Transportation Trust Fund. We
also face the challenge of safe transportation of domestic
crude oil, production of which has increased forty fold over
the last five years. In the aviation area, we want to discuss
the FAA's efforts to advance NextGen and ensure air traffic
operations are efficient. And of course we want our funding
decisions to result in the most efficient and safe as systems
possible across all transportation modes. Chairman Rogers and
Chairwoman Mikulski will abide by the Ryan-Murray Agreement for
FY 2015 which translates into relatively flat budgets for this
year and well into the future. As we consider your requests for
FY 2015, this committee will move forward honoring the
bipartisan agreement. The THUD bill will conform to our portion
of the one trillion, sixteen billion dollar allocation and to
meet this goal we need to have an honest discussion about how
we continue to provide money in the most efficient and
effective manner. We have received your statements and because
we have a significant amount of ground to cover today and
limited time, I will ask that our witnesses dispense with
reading opening statements and instead be entered in for the
record. I will also keep my remarks to a minimum so we can
advance questions. But first, I want to recognize my colleague,
ranking member of the subcommittee, Mr. Pastor, for his opening
statement.
Mr. Pastor. Well, Mr. Chairman, in the interest of time I
will submit my opening statement for the record and am looking
forward to hearing from the panel. Thank you.
Mr. Latham. Mrs. Lowey, would you like to make a statement?
Mrs. Lowey. A brief one, and thank you Mr. Chairman, and
welcome. I appreciate your giving me the opportunity to say a
few words this morning about your very important work. Let me
just say Administrator Szabo and Administrator Quarterman, the
lower Hudson Valley has recently had two very close calls with
DOT-111 tank cars used to transport crude oil. In one instance,
a train carrying almost a hundred empty DOT-111 tank cars,
which had previously transported crude oil, struck a semi-
truck, pushed it 500 yards down the track. Thankfully, since
the cars were no longer carrying crude, a spill was avoided.
The rail line used to transport crude oil through my district
runs along the Hudson River, which in addition to being a
source or drinking water for the communities that live along
it, has been recognized as an estuary of national significance
under the Clean Water Act, an American Heritage River, and a
National Heritage Area. As you can imagine, a spill would be
absolutely devastating to the ecology and economy of my
district. I applaud the Department of Transportation for taking
some very good steps to make crude transport safer, but I
remain very concerned about our abilities to deal with a worst
case scenario. Thank you.
Mr. Latham. Thank you Mrs. Lowey. I want to start with
questions, unless anyone has an overwhelming need to have an
opening statement here. Mr. Szabo, within your $5 billion rail
budget proposal, $1.3 billion is set aside to develop high
performance rail networks or high speed rail. This is
interesting because the California High Speed Rail Authority's
business plan assumes $2.5 billion of new appropriations every
year. In all, California is relying on $24 billion in Federal
funding to complete construction of the initial operating
segment over ten years. I am not sure if you are giving us the
signal that you have given up on the project but how does your
budget propose to find the $2.5 billion dollars for California?
Mr. Szabo. Well first off, Chairman, we absolutely have not
given up on the project. We remain very strong and very
committed to what we believe are the merits of that project.
Our budget proposal sets up grants that would be competed on a
competitive basis. There is no presupposition that the money
would go to one project over another. The business plan for
California calls for private investment and that is a key part
of it. In addition to the additional multiyear funding that the
Governor is now proposing using cap and trade dollars, so----
Mr. Latham. But you have got $1.3 billion in your budget
and they assume that they are going to get $2.5. What happens
if they don't get $2.5?
Mr. Szabo. Well again, they are looking at private
investment as well as substantial additional new dollars coming
from the Governor's budget, so a stronger state contribution
than first had been proposed.
Mr. Latham. They received $3.5 billion for high speed rail
and they were supposed to pay $180 million dollars in April as
part of their matching requirement. On February 21st you
notified the committee by email that it had accepted changes to
the grant agreement between the department and the California
High Speed Rail Authority. The email took great pains to advise
us that this change was not another amendment to the agreement,
but an update. This is the sixth change that showed the $250
million dollar contribution from cap and trade funding
beginning in July of this year, and delayed $180 million dollar
matching payment owed by California already. My staff asked
several times in several different ways if anyone at the
department was discussing, involved in negotiation, thinking
about or interested in making changes to the agreement or
payment structure. They were told no. Is the department less
than candid to the committee or what is----
Mr. Szabo. No, Mr. Chairman, we were very candid. It is
very, very clear if you read the agreement, that the agreement
requires California to regularly update the funding
contribution plan, and so almost on a quarterly basis you will
see updates to that plan. It is a living document that reflects
the realities of those revenues that would be available from
California. There is a significant change in the proposal of
revenues from California, so it is absolutely appropriate that
they update their funding contribution plan to reflect the
reality--the new revenues that were coming in.
Mr. Latham. What new revenues are coming in?
Mr. Szabo. The cap and trade dollars that are proposed by
the Governor.
Mr. Latham. Have they passed that?
Mr. Szabo. The budget is up for a vote now and I believe
that by June 1----
Mr. Latham. You are assuming that it is going to pass and
that there is no----
Mr. Szabo. Well that is what they are proposing and of
course if it doesn't, then we would take a look at a new
funding contribution plan from them. So, the decisions are made
based on the facts at hand at the time.
Mr. Latham. Who made the decision to accept the change? Was
it you or OMB or----
Mr. Szabo. The department. I mean, Mr. Chairman, accepting
the funding contribution plan is a somewhat routine matter.
Mr. Latham. Excuse me?
Mr. Szabo. I said, it is a somewhat routine matter. Again,
it is expected that they will regularly update that plan, so--
--
Mr. Latham. Where does it say that it is a living document,
that it can be changed just with an email?
Mr. Szabo. The grant agreement provides that it regularly
be updated to reflect the facts at the time. So it is an
expectation.
Mr. Latham. So what happens if they don't get the $2.5
billion this year?
Mr. Szabo. Then they have to amend their funding
contribution plan and we make a decision based on the facts
that are presented to us.
Mr. Latham. Okay, there are no facts saying that they are
going to have the revenue.
Mr. Szabo. Well at this point, there is no reason to
believe they won't see the Prop 1A dollars. We believe that
those issues--the outstanding issues there are resolvable and
then there is the proposal for cap and trade dollars for this
year followed up by a multi-year commitment and there is
actually a strong possibility that they are going to see more
revenues than had originally been proposed.
Mr. Latham. Is the $180 million that was due in April
through June--is that now due in July or some other time or
what is the status?
Mr. Szabo. I would actually have to go back and take a look
at the funding contribution plan and see what it states. I
don't have it here in front of me, but again, what has been
spelled out in the document is what our expectations are.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latham. I have got six seconds left, so I will
recognize Mr. Pastor.
Mr. Pastor. Thank you, Mr. Chairman. Good morning, Mr.
Huerta, and to all the members of the panel. Mr. Huerta, I
would like to talk about the FAA and Comptroller staffing. The
FAA has lost hundreds of air traffic controllers during the
hiring freeze that was imposed during sequestration. The FAA
recently put out a job announcement and the response was
overwhelming. There were nearly 28,000 applications filed.
However, I understand that only a very small percentage, less
than ten percent of the applicants, made it through the initial
cut. Normally, you would expect, probably at minimum, 30
percent of the applicants to make it through the first review.
The question is, are you--what determination have you made
for--on the results of the first review so far?
Mr. Huerta. Thank you Mr. Pastor. We did make changes to
the hiring process for traffic controllers for this round and
in doing that, what we wanted to do was evaluate all the
candidates against a standard set of criteria, revise the
testing process and make it more uniform and objective across
the country as a whole. You are correct. We did receive 28,000
applications. We have only 1700 positions that we expect to
fill out of that pool. And we received about ten percent
through the first screen. We are confident that we will be able
to get the 1700 out of the process as it continues through. It
is our intention that this process would take place on an
annual basis, whereas our past practice was to have lists that
were in existence for a very long period of time that we would
draw off of. What we found is that that was actually blocking
subsequent applicants from being able to apply into the process
and so what we wanted to get to was a more orderly process
where we hire according to our needs in a given year and then
enter into a new process for that so we can ensure that we are
getting the best qualified candidates.
Mr. Pastor. In making your evaluation more objective
nationwide, and you made some changes--what were those changes,
and obviously the results were not as you had expected, in
terms of the initial cut?
Mr. Huerta. I wouldn't say that they weren't as we
expected. What we did was we put together a series of factors
that had been shown by the Civil Aerospace Medical Institute as
being accurate predictors of success in air traffic. That was
validated by an independent third party and then that combined
with the air traffic examination--the ATSAT exam that is well
known which actually tests the actual skills for traffic
control. The combinations of those two things is what enables
us to, we believe, come up with a much higher success rate for
those candidates that do make it through the process. And so we
feel that the process is going to yield a very good pool of
candidates. We are monitoring it very carefully this year and
if we see that there are things that we need to change, we
would obviously do that in the subsequent round.
Mr. Pastor. Without asking specific questions in terms of
what was on the test or what was on the test or what was on the
application, what were some of those factors--a general sense
of what you are considering now that you may not have
considered before?
Mr. Huerta. A lot of it has to do with measuring an
individual's aptitude to deal with the sort of environment that
an air traffic controller deals with--being able to make
decisions quickly, decisively, being able to react to different
circumstances under pressure. It is essentially to a series of
factors that give us a better understanding of the individual
and their suitability for the position. But again, I want to
come back to--this is a very competitive process. We have only
1700 positions we are going to fill from a universe of 28,000
applicants. And so we would expect that people that might be
qualified wouldn't make it all the way through the process and
we would encourage them to reapply in subsequent rounds.
Mr. Pastor. Since there has been a number of bills that
have passed this subcommittee and have become law throughout
the years, there has been a recognition that we would like to
make the workforce more diverse. Has this new examination or
new application process--has it shown a bias toward any
particular group?
Mr. Huerta. We won't know until we are done at the end of
the process and we see the pool relative to the applicant pool
that came in. What we did want to do though was ensure there
was not adverse impact that could be predicted based on any of
the aspects of the process, and we feel confident that we have
no adverse impact. But we will evaluate the pool once it has
completed the process.
Mr. Pastor. So then, the 1700 positions will be filled by
this initial pool that you have now?
Mr. Huerta. Correct.
Mr. Pastor. Thank you Mr. Chairman. I yield back.
Mr. Latham. Thank you Mr. Pastor. Okay, Mrs. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman. Administrator
Quarterman, I would like to follow up on my brief comment
before. I know that PHMSA is currently working on an updated
rule that will govern the use of DOT-111 tank cars. It is my
understanding that a new rule isn't expected until the end of
2015. As you well know, the Association of American Railroads
has called for the aggressive phase out of DOT-111 cars built
before 2011, that do not meet the higher industry
specification. There doesn't seem to be an adequate sense of
urgency to address this important safety issue, in fact, I
wonder how you sleep at night, worrying about why this rule
isn't done. I can't believe I was--I have been to the tracks; I
have watched these cars go by. Last time I was there I saw 90
cars marked DOT-111 and I said boy, this is a game of Russian
roulette. How do you know what is going to happen? So my first
question is, Administrator Quarterman, when can we expect a new
rule on tank cars? While the new rule is being drafted, has
PHMSA considered a moratorium on the use of DOT-111 cars that
do not meet the higher industry lead specifications? What would
be the effect of such a moratorium on the use of these old DOT-
111 cars on the transport of crude and other materials, and is
there anything that this committee can do to expedite the rule
making process?
Ms. Quarterman. Thank you Congressman Lowey. Let me start
by saying that the department, PHMSA, FRA, all of us involved
in the transportation of these materials share your concern and
have been working very hard on this issue and we are concerned
also about oil spill as well as incidents and deaths that might
be associated with the movement of crude oil. And that is why
the department has been working very, very hard to ensure----
Ms. Lowey. For how long?
Ms. Quarterman. For how long have we been working?
Ms. Lowey. Hard, on this issue--on the rule?
Ms. Quarterman. We have been working on the rule for quite
a while. We have been working on the broader issue for a number
of years. I went out to the Bakken myself at the end of 2012
when I began to hear stories about the increase in the movement
of crude by rail as well as issues associated with trucks. So
we came back to the department and put together an interagency
team including FMCSA, FRA, and FHWA to talk about some of the
issues that had arisen and to try to figure out, if there are
issues coming that we don't see yet. That was helpful to us
when the Lac-Megantic incident occurred last year. We were
already starting work so we were able to hit the ground
running. The department's approach to this very complicated
issue is a very comprehensive one. It is a three prong
approach. From our viewpoint on safety, the very most
important--the first thing you must do is prevent anything from
happening. And by prevention, that means preventing any
derailments that might occur associated with the operations of
the train or the equipment. So that is the first leg. The
second leg is mitigation. And that means that if something
occurs, we want to make sure that as few people as possible are
affected by that and that we are prepared on the third leg for
response. The DOT-111 is one piece of that comprehensive
approach. It is by no means a silver bullet. And we recognize
that and that is why the secretary pulled together a group of
executives from both the rail industry and the crude oil
industry and brought them to the department and said, we can't
wait. We need to do something today as we see more and more
incidents occur. We want you to take some immediate steps to
ensure that we don't have an incident like the one that
occurred in Quebec. We are very happy that the industry, for
the most part, stepped up to help us with that. In particular,
AAR signed an agreement with the secretary very recently, I am
sure you are aware of. It does a number of things that are
important--number one, more frequent inspections of the track
to ensure that derailments don't occur. It also does a very
important thing. We have under the PHMSA regulations a routing
rule that routes certain very dangerous cargo on a special
route. As of yesterday, that had not occurred for crude oil
trains, because we had not seen the numbers of unit trains of
crude moving across the country. It only applied to chemicals
like toxic inhalation chemicals and radioactive materials. We
have since that time, under the AAR agreement, changed the
routing protocol for those trains going forward so that they
will also go on those special routes. Another important factor
in this is braking as we saw in the incident that occurred in
Castleton. It is important to be able to control the train well
and to slow down. So one of the things that came in the AAR
agreement was distributed power--the use of distributed power
or the use of cars at the end of the train that could help
control the train in terms of braking. Those are extremely
important aspects of the agreement. Another is to slow the
trains down. We have an agreement that the trains will slow
down to 40 miles per hour if they are a unit train of crude oil
and they carry one 111 tank car or more. With respect to the
regulation that you are referring to itself, the DOT-111 tank
car, I can tell you that Administrator Szabo and myself have
sent a strong message to our team--they had been sequestered
for months--responding to our request that we move forward
immediately with a rule making on this issue. You may not know,
but the rule closed for comment on December 5th of 2013. We got
more than 150,000 comments on this rule. Within the course of
the past few months, our team has been drafting. We have a
draft of a rule we hope to move out very soon. I am not certain
of where the 2015 date came from. Our marching orders are get
this done ASAP. So we are working towards that goal. But I just
want to emphasize that the tank car itself is not the only
solution to this. We have other initiatives as well. Along with
Administrator Ferro and Szabo, we have a group of folks within
PHMSA and across the department and including North Dakota
representatives who have been going out to the Bakken area and
doing a strike force, going to the trains to the first time, I
think in--I am beyond my time. Is that okay? For the first time
in history, we have been taking oil out of the trains, sending
it to labs, and trying to determine the constituents of the
crude, because we are concerned that when the Lac Megantic
incident occurred, that the size of the explosion was something
that was unexpected. And we need to know what the constituents
of the crude are, and what can we do if anything to decrease
the volatility of that crude when it moves. Thank you very
much.
Ms. Lowey. Thank you Miss. I just want to thank you Mr.
Chairman for your indulgence, and next time I see those 90 cars
going by, I won't worry about it anymore, because I know you
are studying it. Thank you very much.
Mr. Latham. Thank you Ms. Lowey. Mr. Dent.
Mr. Dent. Thanks Mr. Chairman and good morning. Thank you
Administrator Ferro for you and your office's continued
willingness to work with us on reforming the HMSP program and
the OS issues that have been challenging for some of our
constituents who have smaller to mid-size companies in terms of
compliance. So thank you for all that. I had just a couple
quick questions. As part of the 2014 Omnibus, the final report
language is included related to the HMSP, at least as it
relates to administrative fixes, quote, FMCSA shall report
within 60 days of enactment. What improvements to HMSP program
can be made within existing authorities to provide relief to
those operators prior to instituting rule making. And when
FMCSA anticipates implementing each of those interim
improvements that was on page 37 of the report, the President
signed the Omnibus into law on January of this year, which
would make March 17th, 60 days after enactment. As we are now
into April, Administrator Ferro, when can the committee expect
this report?
Ms. Ferro. Thank you Congressman Dent. The report in
question will be available within the next three months. We
had, just within the past month, completed the report required
under MAP-21 that really analyzed the elements of the program
and achieved a much broader stakeholder outreach than an early
draft I had seen of the report last year. And that additional
work prompted a delay on the delivery of the MAP-21 report,
which includes some very--core recommendations that precede a
rule making, but also support a rule making, to improve the use
of inspection performance data on evaluating HMSP applicants
and permit holders more rapidly and with a better sensitivity
than the current process, that will improve the process. And so
within the next three months, you should see the report
required under the Omnibus that you just referenced.
Mr. Dent. Okay, that one, and you mentioned the MAP-21. I
guess last month----
Ms. Ferro. Yes.
Mr. Dent. Your administration released its report requiring
on MAP-21; as part of that report they made six recommendations
to improve HMSP. Is that what you are referring to?
Ms. Ferro. That is what I am referring to, yes.
Mr. Dent. Okay, and so I guess that is due by October 2014,
is that right?
Ms. Ferro. The report itself?
Mr. Dent. Yes.
Ms. Ferro. The report itself, from MAP-21, was delivered
last month. There are elements within that report that
incorporate recommendations for a rule making.
Mr. Dent. Oh, excuse me. Not the report, but to be
initiated by October.
Ms. Ferro. The initiation of that work, I would like to
follow up with timeline on each of those initiatives before I
commit on a rule making, but it is clearly part of our agenda
for the next 12 months--is a component of developing that rule
making. Pardon me.
[The information follows:]
Hazarous Materials Safety Permit
The Agency is currently developing a full and complete
implementation plan for the recommendations, focusing on the process of
identifying those elements that can be implemented without initiating a
resource-intensive rulemaking during FY 2015.
Toward that end, the Agency is developing a comprehensive
implementation plan for the recommendations relating to the
incorporation of current performance data as the primary means of
monitoring carriers that have an HMSP once the permit is granted,
rather than the current out-of-service rate checks during the renewal
period.
The full implementation plan and timeline will be
submitted to Congress this summer.
Mr. Dent. That is fine, just follow up with us on the
timing then, that is fine.
Ms. Ferro. Yes.
Mr. Dent. And some of the recommendations that appeared and
previously suggested ways to fix HMSP, yet there are--they are
contingent on funding. What funding priority has FMCSA given to
these recommended program enhancements?
Ms. Ferro. Our 2015 budget was developed before we had
completed the analysis of the program and consequently those
elements that we can move forward with in the near term we
will. A core component of the program revisions includes a
broader rule that we refer to as Safety Fitness Determination
and that is the proposal that will in fact be on the street
this fall.
Mr. Dent. Okay.
Ms. Ferro. In terms of incorporating an adjudication
process or an appeals process, I think that is what industry
has called for, that is a component that requires additional
resources.
Mr. Dent. Got you and for the report recommendations that
require rule making, what priorities would these rule makings
have?
Ms. Ferro. The Safety Fitness rule making is my top
priority now that I have got the electronic logging proposal on
the street.
Mr. Dent. Okay, thanks.
Ms. Ferro. Thank you.
Mr. Dent. And then, thank you. Thanks for all your help
again on that issue.
Ms. Ferro. Thank you.
Mr. Dent. Of HMSP, and Administrator Huerta, thanks too, to
Bonita DeLeone for his help and cooperation on some very
important regional economic development issues. Very much
appreciate his help. I would like to raise to you one of the
FAA's most successful and cost effective industry government
safety partnerships--the FAA Contract Tower Program. Currently
252 airports, I guess, in 46 states, participate in the
Contract Tower Program, including five airports in the
Commonwealth of Pennsylvania. The safety and cost effectiveness
of the program has been validated numerous times in several
reports by DOT's Office of Inspector General as well as the FAA
safety audits. Without this program, as you know, it enjoys
widespread bipartisan support in Congress and many smaller
communities would not enjoy the clear safety benefits these
Towers provide. Can you just please give us your commitment
today for FAA's continuing support of this important air
traffic safety program?
Mr. Huerta. Thank you, Mr. Dent. You are quite correct.
Congress last year provided $140 million in the FY2014
appropriation to continue the Contract Tower Program and our
2015 budget request includes the same $140 million for the
Contract Tower Program. I will say that should Congress support
that in 2015 we are in a good place for 2015, however given
today's budget environment and the need to focus on the
increasing demand that we have on all of our aviation services
we are taking a hard look at the full scope of services that
the FAA does provide. With ongoing technology and with
continued safety enhancements we need to ask if there are areas
where we could do things differently and you have my commitment
that as the FAA works through that process we will coordinate
closely with you and this Committee and our stakeholders in
doing so.
Mr. Dent. Thanks. I yield back, Mr. Chairman.
Mr. Latham. You were out of time anyway, Mr. Dent.
Mr. Dent. Then I take it back.
Mr. Latham. We are trying to remain flexible, Mr. Quigley.
Mr. Quigley. Thank you, Mr. Chairman. Administrator
McMillan, $120 million for core capacity which is a good thing
considering if you look at the language of the budget, and the
$275 million that the President's current budget seems to
allocate for core capacity. Chicago Transit Authority is one of
the few of the only that seemed to qualify at this point. But
as I said before I believe more people ride the CTA in a month
than Amtrak in a year. These are important funds. Could you
give us your best thoughts on how these are going to be
implemented and how the process will go forward?
Ms. McMillan. Thank you very much, Congressman. And indeed
the Core Capacity Program we believe was a welcome addition to
the family of projects that are funded under the Capital
Investment Grant program focusing as you noted on our larger
urban systems where they may not need capacity by extending
their footprint but building within the footprint that they
have. And we have heard from the industry of great interest and
as you noted the CTA is the first formal applicant to the
program. We have been working very closely with them in
refining their request and have admitted them into----
Mr. Quigley. And as with this Committee first seems to be
important.
Ms. McMillan. Exactly. But we have also heard from a number
of other properties. For example BART in the San Francisco Bay
area, the MBTA in the Boston area, the DART system in the
Dallas area, as well as not surprisingly the New York MTA, that
they are also very interested in participating with this
program. Therefore the funding requests that we made this year
anticipates further requests this fiscal year and we will be
working all of them in terms of specific dollar amounts.
Mr. Quigley. Thank you. Mr. Szabo, Mr. Yoder is not on the
Sub-Committee but he's on the Committee and he has the same
interest he asked me to discuss and that involves the--I know
the FRA is focused on working cooperatively with freight
railroads to enhance safety including the short line and
regional railroads, talking about cooperative partnerships here
with industry that generate real safety benefits, but we're
asking the Committee to consider finding some sort of
cooperative relationship between FRA and smaller railroads to
help them develop these safety culture and practices. If you
could comment on that.
Mr. Szabo. We have been in some discussions with the short
line association about what I'll call a short line safety
institute, I guess is kind of the best name I can give it at
the moment. And it's a critical piece of our safety initiatives
for crude by rail. You know, the Class Is have strong safety
departments, they have strong resources, a high level of
professionalism. It's much more of a challenge for these small
railroads, for these mom and pops and so the vision has been to
find a way through the Association to put together this safety
institute to where they would go out and do risk analysis
focusing first on crude routes for the short lines, for the mom
and pops and help them better understand the changes that need
to be made to advance safety. You know, and it is something
that we would be looking to potentially fund out of our
research and development budget.
Mr. Quigley. We appreciate your ongoing efforts toward that
end. Mr. Huerta, we are well on our way to ``Hare
Modernization'' being implemented, but the result is we are
getting fewer runways running over fewer and fewer neighbors.
It gets to the issue of noise in and around our airports. You
sent me a letter in December about your agency reviewing 65 DNL
which at best can be seen as an arbitrary antiquated figure
from the 1980s when traffic was lower. And I'm hoping we have
some progress to report on how noise impacts people in your
analysis.
Mr. Huerta. Thank you, Mr. Quigley. Yes, the DNL standard
that has been place, it has actually been in place since the
1970s, and as we had discussed we have done some work in
analysis leading up to us conducting the survey of whether we
should reopen and relook at the whole question of DNL. We have
secured funding for such an effort at this point and are now
working through the process of structuring the results of--or
structuring the framework of what the survey would look like.
Mr. Quigley. Time frame?
Mr. Huerta. We are expecting that it would be about a two
year effort to conduct the survey, it's a highly analytic
process and which would take us a little beyond the end of
2015. I am seeing what we can do possibly to tighten that up a
little bit. And then following the results of that we would
make a determination as to what we would do with the DNL
standard.
Mr. Quigley. Thank you. And, Mr. Chairman, I yield back. I
just for the record note that the original recommendations from
the EPA at that time was 55 and it is a noise level diluted
over an extraordinary period of time. Thank you.
Mr. Latham. Thank you. Mr. Joyce.
Mr. Joyce. Thank you, Mr. Chairman. Mr. Huerta, thank you
for coming today. As you know the cost of jet fuel is now the
airline industry's largest operating cost with the average cost
of a gallon of jet fuel up by 260 percent since 2000. One of
the reported benefits of NextGen is to allow airlines to
operate more efficient routes thereby reducing fuel burn.
Despite the FAA's investment of billions on NextGen
implementation, GAO and the Department of Transportation IG
have repeatedly highlighted significant cost overruns and
program delays with key NextGen programs. Do we have any
concrete data that demonstrates that airlines have realized any
significant operational benefits from NextGen today, and if so
can you please provide it to the Committee?
Mr. Huerta. Certainly. Nationwide the biggest activity that
will result in fuel savings is through the use of performance
based navigation systems. This reduces track miles flown, it
results in much more efficient tracks flown, tremendous savings
on fuel and on emissions. Nationwide the FAA has implemented
more than 7,000 PBN procedures in routes as of the end of last
year. And this includes nearly 700 arrival and departure routes
at commercial airports. At the same time we have also made very
significant progress in the build-out of the ground
infrastructure that enables us to further advance NextGen
capabilities. As of February of this year we've installed 93
percent of the ADSB ground infrastructure which we expect to
complete in the spring. Now the implementation of NextGen
procedures that are known as area navigation or RNAV to keep
aircraft safely separated on new precision flight paths is
showing significant progress while also delivering specific
benefits to users. And we're doing this in the metropolitan
context, working in particular metropolitan areas with the all
the users of the systems so that we can have a full
understanding of what their respective needs are. It translates
into significant fuel savings and we do have metrics on our
website that document those actual fuel savings at specific
airports around the country.
Mr. Joyce. Given your background in the private sector,
sir, are you convinced that airlines today will receive a
return on their investment for the NextGen equipage?
Mr. Huerta. NextGen equipage is a multilayered and
multifaceted enterprise. To date a lot of the work on equipage
the airlines have done has been in focusing on ensuring that
they can take advantage of the advanced navigation capabilities
that I just talked about. The burden is on the FAA to
demonstrate that they will actually get the operational
benefit. And it is for that reason that we have structured the
NextGen portfolios to focus much more on delivery of
capabilities as opposed to delivery of systems. A system isn't
worth anything if the users aren't able to take advantage of
it. So we have been working closely with industry to identify
what are their highest priorities, in what order should we be
deploying particular capabilities, and then working with them
to ensure that they're getting the benefit they need. I think
in working in this cooperative fashion we will be able to
ensure that we match benefits with investments because a cost
benefit case clearly needs to be there for them to make the
investment.
Mr. Joyce. Thank you. According to your agency flight
delays and cancellations cost the economy over $30 billion
annually which underscores the need to implement NextGen as
quickly and as efficiently as possible.
Mr. Huerta. Absolutely.
Mr. Joyce. When you read the most recent GAO and DOT IG
reports on the FAA's efforts to implement NextGen, I can't help
but think history is repeating itself. What steps have you
taken to address the delays and the costs overruns that have
been raised by the GAO and the Department of Transportation IG
reports?
Mr. Huerta. I think we've made good progress in addressing
previous contractual difficulties. And I think probably the
best example of that is our En Route Modernization program.
When I joined the agency three years ago that was a program
that was encountering significant challenges. We have re-
baselined the program; it is now on track, it is meeting its
schedules and it's milestones and we will complete the build-
out of that program by next year. In fact only two of twenty En
Route centers currently are not operating in that program which
is a very different place than we were a couple of years ago
when only two were operating on it. And so the vast majority of
air traffic in the En Route environment is being done in the
new system. What that illustrates is a level of contractual and
baselining discipline that has been put in place by our new
program management organization and those lessons are being
carried forward to TAMR, our Terminal Modernization program,
Data Comm, which is really a game changer program that really
replaces the traditional voice communications with data
communications that link directly to flight managements
systems. We have to be very vigilant in ensuring that these
highly complex programs as they are implemented, that we are
imposing the appropriate level of program discipline in order
to ensure that we can best manage scarce taxpayer resources.
Mr. Joyce. Mr. Chairman, I realize that I am out of time,
can I follow up with one quick question?
Mr. Latham. Very quickly.
Mr. Joyce. Thank you. Do you agree a sensible stepping
stone to NextGen would be to promptly adopt policies and
procedures, specifically performance based navigation
procedures, which would enable airlines to fully utilize the
advanced avionics already on these planes?
Mr. Huerta. That is what we are doing. The earlier
reference I made to PBN is actually to really focus in the near
term on how do we accelerate the deployment of Performance
Based Navigation procedures. Those yield maximum fuel benefit.
It really makes the case for continued investment and it helps
build a sense of confidence that the benefits will in fact be
there. So, yes, I agree with that.
Mr. Joyce. I yield back, Mr. Chairman.
Mr. Latham. On the first round here there will be
flexibility, the second round will not be. Mr. Price.
Mr. Price. Thank you, Mr. Chairman. Mr. Huerta, I want to
raise the question with you about a report that in our Bill
last year we required of your agency regarding the economic
feasibility of the deployment of flight recorders that would
eject when an airplane crashes and would float if it crashes
over water. We of course couldn't anticipate how much more
relevant that question appears today than when we posed it
because of the missing Malaysian Air Flight 370. But suffice it
to say that Congressional interest and interest in lots of
other quarters has been reawakened by this episode, interest in
an automatic deployable flight recorder that includes flight
data record information, cockpit voice recorder, and emergency
locator transmitter in one survivable, floatable box.
Recovering these black boxes and the data they track is no
simple matter, as you well know. Nearly every major commercial
air accident that has occurred over water or in remote areas
has resulted in costly and time consuming recovery; in some
cases it is never recovered. Congress has a longstanding
interest in this technology. Congressman Duncan, Rogers,
Pascrell, many others join me in supporting legislation we have
introduced three times since 9/11 that would have fitted
commercial aircraft with this available technology. It didn't
come out of the blue. I mean the technology was developed in
the '60s; it has been used by the military for decades. As you
know the 9/11 Commission recommended that the Federal
government take steps to ensure the survivability and quick
recoverability of black boxes from commercial crashes. And so
as a result of these recommendation that I secured funding
through our Homeland Security Subcommittee for a TSA test, a
series of tests on the ability of ADFRs to improve rapid access
to flight data following commercial aviation crashes. And then
most recently as I referenced the Appropriations Bill passed
last year we called on FAA to conduct a cost benefit analysis
on the use of FDRs on long range commercial aircraft. We
certainly didn't expect to have the need for this underscored
quite so dramatically quite so soon.
Well, with all this in mind let me just ask you a couple of
questions. With the 24 hours news cycle it is common that
following an accident assumptions are quickly made about the
potential cause of the accident. The longer the search goes on
the more the speculation is fueled. We know officials analyze a
lot of information following an accident, but we have to wonder
isn't the timely recovery of black boxes one of the most
important tools in helping prove or disprove with secure,
tangible evidence whether or not this was the result of a
terrorist attack for example or a pilot error or an aircraft
malfunction. Now Homeland Security has expressed their intense
interest in these questions. I assume you share that interest.
Secondly, as we track this incredible Malaysia recovery effort
that the costs of all this, the human costs, the economic
costs, just are overwhelming. Seems obvious to me what that
cost benefit analysis of yours is going to show. We estimate
about $30,000 per aircraft to deploy these black boxes. That
may or may not be totally accurate but the costs of these
searches are overwhelming. And the costs that need to be built
into your analysis are going to need to include not the only
the cost to install the records obviously but also the search
and rescue costs for non deployable recorders, the estimated
impact to the aviation industry, to passenger travel. I mean
this really needs to be a broad ranging study. I assume that
that is what you have in mind. So I hope that you can this
morning confirm that and also give us the timetable as to when
this information will be available.
Mr. Huerta. Thank you, Mr. Price. The FAA has been working
with industry over a number of years on the whole question of
ADFR systems and their possible application in commercial
aviation, and we continue to work with the NTSB, industry, and
the international regulatory authorities on the development of
technologies that would better support the location of wreckage
in remote or otherwise over water accidents. This is a terrible
situation and it is a very tragic accident and we share your
concern about the lack of knowledge about what actually
happened to the aircraft. In fact we have had two FAA technical
experts and a regional expert on the ground supporting our
Malaysian counterparts; we will do it as long as we need to.
Yesterday there were news reports that the International
Air Transport Association had also expressed support for really
studying the whole question of better tracking systems. Not a
specific technology per se but what can be done in order to
take advantage of what we know about technology so that we as
an industry can have much better tracking mechanisms. It is a
complicated issue as you point out. In addition to the costs
associated with installation there is also the cost of
operation, there is significant bandwidth challenges that our
technical folks are looking at in terms of what we can
understand about how this information might be streamed under
those particular options. And then we have to consider the full
range of possibilities that are out there. It is something that
I am very concerned about. I am pleased that the international
airline industry is stepping up and saying let us work together
to figure out how we can resolve it.
With respect to your question about a timetable, I am going
to have to take an IOU and get back you with a specific
proposal and a suggestion on that and I am happy to do that.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Price. Well, I hope you can do that. I don't know why
that would take a long time to tell us. I raised this with
Secretary Foxx; I am raising it with you. We have enough to go
on here I think to conduct that analysis and get it turned
around quickly. Thank you. Thank you, Mr. Chairman.
Mr. Latham. Thank you, Mr. Price. Ms. Herrera Beutler.
Ms. Herrera Beutler. Thank you, Mr. Chairman. Administrator
McMillan, I have a quick background and a question for you. On
February 11th of this last year I sent you a letter regarding
the Project Management Oversight Consultant for the Columbia
River Crossing in Southwest Washington. Unfortunately I have
not yet had a response to that letter. And although the project
is now dead I would appreciate a response from you on a couple
of related questions because I believe it is important for this
Committee to understand how oversight is performed at FTA. For
years the PMOC on the Columbia River Crossing Gannett Fleming
issued PMOC reports for the project on a monthly basis and they
were diligent and provided tremendous detail. They were very,
very helpful. In fact due to the complexity and lack of
transparency in the planning process these reports were about
the only source of reliable information on the project, they
were tremendous. And it was brought to my attention that in the
spring of 2013 FTA decided to stop accepting PMOC reports and
meetings with Gannett Fleming on the project. And when my staff
inquired about this decision they were told that FTA put an end
to the reports and meetings because the Oregon legislature was
going to be voting whether or not to fund the bridge and FTA
wanted to wait until after the vote to continue the reports.
And since I didn't get a response to my letter I guess my
question is why would FTA and the only really reliable source
of information for the six months leading up to the vote that
would ultimately decide the fate of this project--this is a
project your predecessor vowed to provide $850 million for and
the President's request this year calls for $65 million, and
why on earth not allow the people who are being asked to vote
on this that valuable information and the citizens who live in
the region that quality information?
Ms. McMillan. Congresswoman, I'll take----
Ms. Herrera Beutler. Yeah.
Ms. McMillan. Good question, thank you.
Ms. Herrera Beutler. Yeah.
Ms. McMillan. As you noted the Federal Transit
Administration does take very seriously putting oversight
attention to the projects. The timing of the Columbia River
Crossing project as you know was unusual and had a number of
elements to it that we wanted to ensure that we were providing
appropriate information at various stages along the way. We
worked very closely with our fellow federal agencies in looking
at the various elements of it. I would need to get back with
you on specific timing relative to the PMOC reports themselves,
but I would say that we were very responsive I believe in
getting appropriate information out to the public on this
process and its varying stages at the points that it was
delivered.
Ms. Herrera Beutler. So you don't necessarily know the
rationale behind why the reports stopped? I mean they were
great reports. We got tremendous information and was really the
only source. So I don't understand why--what we were told was
you are going to stop them leading up to the vote and I don't
know if it was because there was push from with the
administration to get the project going and so you felt like
holding the information back would help that.
Ms. McMillan. No. In no way would we hold back valuable
information. I will get back to your office specifically with
the timing schedule that you just outlined. I don't have that
answer here right now but will follow up with you.
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Ms. Herrera Beutler. Thank you. The timing schedule and the
rationale behind stopping them. If there was some sort of event
that took place because they were really heavily relied upon.
Okay. Thank you. Do I still have time, Mr. Chairman, or am I
done?
Mr. Latham. Yes.
Ms. Herrera Beutler. All right. Administrator Ferro--am I
saying that right? Okay. When I talk to experienced truckers,
men and women with a lot of experience in safety on the roads
they almost always tell me that recent actions--I mean almost
always--by the Agency especially new regulations I the
Compliance, Safety, Accountability program are causing them to
think about leaving the industry. It happens often. What is
your response to these folks and what are we supposed to do
about that? Obviously we want safety but at the same time I
trust some of these people who have been in this industry for
decades. Are you hearing similar complaints?
Ms. Ferro. I deliberately am out and about quite a bit
talking with drivers, talking with companies, talking with
enforcement, all stakeholders and victims advocates as well to
understand and learn from them about the impact of our rules
and our programs. And in this case CSA is a program. It's
really three parts, a system, a process change and a rule. The
rulemaking is not complete yet and I can come back to that if
we have time. With regard to how CSA is affecting drivers and
companies and the overall safety climate at its heart we are
using performance data to identify companies that present the
highest risk to the traveling public and to themselves. And
that performance data is gathered through roadside inspections
that our state law enforcement partners carry out across the
country every year to the tune of about three and a half
million inspections per year, about a third of which are clean
inspections. The violation data and the clean inspection data
from that work becomes the body of the safety measurement
system that is that first component of the CSA program. And in
many cases for companies what it looks like is a report card.
It is not a safety rating. It is data and analysis we use to
prioritize the highest risk but it is the interest of
transparency and open government and kind of following on the
heels of what we have always done at this agency we make the
data public and the analysis public. And it is that report card
piece that is problematic to companies that show trends in
noncompliance or in safety risk that put them at odds perhaps
with customers and others. For drivers we just rolled out a
program to ensure that drivers understand the data. We do not
rate drivers; this is not a report card on drivers. It is for
companies, it is on companies, but drivers can see it and use
it.
Ms. Herrera Beutler. I apologize, I am out of time.
Ms. Ferro. Yeah. That is right.
Ms. Herrera Beutler. Thank you.
Ms. Ferro. Thank you.
Mr. Latham. Thank you. Actually someone is finally
concerned about being over time. Mr. Szabo, not to beat a dead
horse which I think it probably is, but we really have some
serious concerns about the funding sources of $68 billion
project, the high speed rail in California. California Superior
Court has ruled against using $9 billion in bond funds, private
funds have not been identified, cap and trade funds have to be
voted on by the legislatures and there is opposition to that,
and we cannot afford the $2.5 billion in funds in 2015. The
California High Speed Rail Peer Review Group which is charged
with evaluating funding plans and prepares independent judgment
as to the feasibility and reasonableness of those plans says,
and I quote, ``Whatever is started will not be finished and
whatever is finished may have only limited utility.'' So these
are the independent people who have looked at this and that is
their judgment. You have delayed, tapered, amended, updated,
and the project is still on the ropes. Your email stated that
the funding plan was scheduled to be updated again late spring.
Mr. Szabo. That's correct.
Mr. Latham. What else are you doing to do to try to save
the project?
Mr. Szabo. Well, first off, Mr. Chairman, the Governor
remains absolutely committed to the project. He believes and we
agree that it is important to both the transportation and
economic future of the State of California. The entire picture
changes with dedicated predictable, sustainable funding.
Putting rail on parity with the other surface transportation
modes we think that is fundamental to achieve a balanced
transportation network and to allow people to move in the mode
that is most efficient for a particular journey. As I said
before the funding contribution plan will be updated at regular
intervals. There is no reason at this point to believe that the
defects that were alleged in the Prop 1A Bonds cannot be cured.
In fact there is an appeal going on at this moment to do that
and there is a high level of optimism. The bottom line is we
have no intention of prematurely killing this project. We
believe the merits are too strong and too important to the
state and we support the Governor.
Mr. Latham. Are you committed to making sure that
California actually in the end holds up their end of the
bargain? Actually----
Mr. Szabo. Absolutely. Oh, yeah, absolutely, Mr. Chairman.
There is ironclad provisions in there that protect the federal
taxpayers.
Mr. Latham. But you keep changing it every other day.
Mr. Szabo. We haven't made a change in many months to the
agreement itself. And frankly that is not unusual in a project
this large and that complex. Talk to some of the other modes
here that have built complex projects. Seeing amendments to the
agreement is not something that is that rare or that unusual--
--
Mr. Latham. They are not updates, right?
Mr. Szabo [continuing]. As facts change. Well, I am talking
about--you were stating the fact that we are in what, amendment
number--was it six or seven?
Mr. Latham. Six or whatever, yeah.
Mr. Szabo. So we are talking about two separate things. So
number one amendments to the agreement are not unusual. What
was done relative to the funding contribution plan was not an
amendment to the agreement. In fact it is a requirement, it is
an absolutely requirement of the agreement that they regularly
update the financial contribution plan.
Mr. Latham. You are changing the contract with an update.
Mr. Szabo. No, it is a requirement of the contract.
Mr. Latham. You are--the----
Mr. Szabo. It is a requirement. We can bring you the
language to show you it is an absolute requirement of the
contract to update the funding contribution plan.
Mr. Latham. Okay. We will probably continue----
Mr. Szabo. We will continue to talk.
Mr. Latham [continuing]. To--yes. Okay. Ms. Ferro,
typically it is the government's responsibility to demonstrate
benefits outweigh the cost of new regulations that are imposed
on working families and businesses, however your department
began enforcing a revised hours-of-service regulation this past
summer that has cost some truckers millions of dollars more in
lost productivity and lower pay than your own estimates of the
expected safety benefits that come from that. Absent an
adequate safety justification the administration has speculated
that drivers will use additional time off from driving to sleep
more and that this additional sleep will deliver health
benefits to drivers who may live longer. Does the rule specify
bed time for drivers?
Ms. Ferro. Absolutely not, Mr. Chairman.
Mr. Latham. I didn't think so. But then how does the
department have any confidence in how much additional sleep
drivers are going to get?
Ms. Ferro. The hours-of-service rule that you reference is
a rule that was developed in a very public fashion to update
the rule that was in place since 2003 which had updated a rule
that was about 60-70 years old at that time. The hours-of-
service rule development included a very rigorous regulatory
evaluation as we are required. And as you indicated, Mr.
Chairman, we are expected and mandated to ensure that we have
done a full analysis and demonstrated both the costs as well as
the benefits of any rule we develop. And in this case the net
benefits approximate $250-$300 million a year. That does not
erase the fact that there was about a $500 million cost to
industry predicted in the hours-of-service rule changes because
of the core change in the rule that is intended to achieve a
better rested driver. To give drivers the opportunity for more
reset by reducing the maximum hours they could work from about
82 hours a week down to 70 hours a week. That is still a very
long week. And all science and much of the data and analysis
used in analyzing the effects of this rule reinforce the fact
that accumulated fatigue impacts that individual's ability to
be alert and safe behind the wheel as we all want them to be
when they are operating this heavy equipment around your
family, my family, their own passengers in the case of a bus.
We are talking specifically about the truck hours-of-service
rule. That fatigue reduction or the--I should--let me back up,
the impact of cumulative fatigue actually goes beyond just
ensuring that the driver themselves can be alert and has the
opportunity to get more rest, but it also does get back to the
health of the driver. Every workplace study in recent years
reinforces that prolonged long hours particularly under the
kind of strenuous conditions drivers operate under----
Mr. Latham. You are talking about life time health.
Ms. Ferro. Yeah, absolutely.
Mr. Latham. Has there been--is there any precedent for
doing this?
Ms. Ferro. There----
Mr. Latham. It certainly just looks like you are trying to
find some way of----
Ms. Ferro. Oh, not at all. No. In fact the law requires us
to ensure that rules we introduce and propose and finalize do
not have a deleterious effect on a driver's health. And so
health is part of the analysis.
Mr. Latham. But you are taking credit for lifetime health
benefit.
Ms. Ferro. There is a component of the evaluation that
incorporates lifetime health. The larger safety component is
lives saved. So again back to the purpose of the rule and the
impact of the rule assessed an overall impact on about 15
percent of the driving population of commercial vehicle
activity. That is companies and drivers that generally run the
longest distances over the road, so that may be using that 80
hours a week and those that operate at night. That turns out to
be about 15 percent of the entire industry of over 500,000
companies that we regulate. And so again we did factor in the
cost, we recognized there would be a cost; we were very clear
about that. In this case the benefits, the overall safety and
health benefits outweigh the cost. And the vast majority of the
industry now has adjusted. It is true that some drivers took a
financial hit. It could be a whole day, a whole trip. And in my
view that doesn't justify going beyond a 70 hour work week. It
certainly does reinforce that the industry does has an
opportunity to compensate qualified drivers to keep them on the
job in a better, perhaps a healthier work environment
ultimately to ensure they are safe behind the wheel of that
truck.
Mr. Latham. I think we will probably come back to the
issue, Mr. Pastor.
Mr. Pastor. Mr. Szabo, I think we are beating a dead horse
because as we try to get this bill through the House and into
the Senate, it is going to rear its ugly head and be one of the
issues that will come up probably later this fall. So I guess
the Chairman wants to get as many facts on record as he can and
Mr. is it Nadu? Is it----
Mr. Nadeau. Nadeau.
Mr. Pastor. Nadeau? You may want to compare the changes of
possibly the high speed rail with the Big Dig and see how they
compare because I remember the days of the Big Dig that that
was always an issue of some of the changes. But the question I
am going to ask Mr. Jaenichen, during the sequestration we had
a problem with the Maritime Security Program. And I think we
resolved in the CR. What's the status of it today for in this
budget?
Mr. Jaenichen. Yes, currently the omnibus that was passed
by the Congress fully funded the program at $186 million for
the fiscal year 2014. The fiscal year 2015 budget also requests
$186 million for full funding that program to maintain all 60
ships in the program.
Mr. Pastor. So that is the number that is required to
ensure our security with the Maritime in terms of moving people
around equipment, et cetera?
Mr. Jaenichen. That is to support the Department of Defense
for their sea lift requirement to be able to support equipment
and supplies, yes, sir.
Mr. Pastor. Also, I have heard that there is concerns in
the training of your students at the Maritime Academies. That
it possibly the training ships, where they are trained, there
is a concern about the condition and et cetera. So can you give
me an assessment of what the situation is with the academies
and the workforce you're developing?
Mr. Jaenichen. Yes, thank you for that question. The ships
themselves, we provide the six to eight Maritime Academies with
a training ship. Part of our budget includes the maintenance of
that. Of the $17.7 million that is in the fiscal year 2015
request, $11.3 million goes to the actual maintenance, repair
of those vessels to ensure that it meets the Coast Guard
requirements for its certification.
We do have some concerns because the average age of those
ships is 35 years old, the oldest of which is at the State
University of Maritime, New York Maritime College SUNY and that
is the Empire State which is approaching 52 years old. We need
to take a look at a school ship recapitalization. We're putting
together a plan now to do that.
Mr. Pastor. What alternative do you have if the ship is not
able to provide the proper training?
Mr. Jaenichen. There are some signification challenges with
being able to meet the licensing requirements for each of the
students at the State Maritime Academies. Under the current
rules for certification and training of them to be able to
reach their--or get their Coast Guard license, they have to
have 360 days at sea. And so, if a training ship goes out of
service, we are going to have challenges being able to get all
the students at all the State Maritime Academies through the
proper at sea training that is required to be able to be
certified.
Mr. Pastor. Thank you. Mr. Szabo, I think in the Omnibus
Bill that we passed 2014 there was monies appropriated for
planning and other re--what's the status of that and what--
could you give me what the status is currently?
Mr. Szabo. Yes. Congressman, we will be coming out very
soon with a notice of funds available for the funds that were
provided to us in the fiscal year 2014 budget. Planning will be
eligible, multi-state planning, corridor planning,
infrastructure improvements for high speed rail projects and as
well as technology grants.
Mr. Pastor. Will there be consideration given to planning
that has occurred and needs further planning? Will they have
any kind of priority or consideration?
Mr. Szabo. Certainly, the goal is always to try and support
work that has already begun to try and make projects, continue
to move forward in the pipeline towards reality. We are aware
of some good work that has been done in the Southwest, and
proposals will be based on merits but some real good work has
been done there in the Southwest.
Mr. Pastor. Thank you. Chairman, I will yield back.
Mr. Rogers. Thank you, Mr. Pastor. And Mr. Dent is
recognized.
Mr. Dent. Thanks, Mr. Chairman. Mr. Jaenichen, the MARAD
Budget is again requesting 168, excuse me, $186 million dollars
for the regular Maritime Security Program to support the
authorized level of up to 60 ships. Looking at your budget on
pages 92 and 93, it appears that MARAD is vastly exceeding its
capacity goals under this funding proposal with the extremely
scarce defense resources, why should we overfund this program
when we can meet the capacity goals with fewer hours and
probably fewer ships?
Mr. Jaenichen. I need to understand the question. The
program that is currently authorized is the Maritime Security
Program. Are you referring to the $186 million for that
program?
Mr. Dent. That is correct, $186 million for the Maritime
Security Program.
Mr. Jaenichen. Yes, that program itself is based on
requirements that are provided by the Department of Defense.
They are undergoing a review right now for mission capabilities
and assessment and we will anticipate seeing that. Right now,
the 60 ship requirement stands with the rebalance to the
Pacific and the longer sea lanes; they anticipate that the sea
list requirement will stand. That program right now as it
exists has carried over 90 percent of the supplies and
equipment that have been required by the Armed Forces both in
Afghanistan and Iraq. We will need to continue to evaluate the
cargo specifically as the Department of Defense cargos come
down in this fiscal year and next fiscal year to see how there
might be an impact on that particular program.
Mr. Dent. And then the program also faced some challenges
under sequester and MARAD needed to examine the available ships
and capacity in the program. Was there ever a discussion of
giving preference to U.S. flagged and U.S. owned ships in the
event of a downsizing of the fleet? And if not, why not?
Mr. Jaenichen. As we took a look at the sequestration, we
had a significant shortfall. And so, as we took a look at the
program itself we had several vessels that were going to be at
risk. So we went through a very conscious program that was
coordinated with the Department of Defense to select the ship
types that would potentially have to be removed. That did not
necessarily consider whether the actual operating agreement
holder was a section two citizen, i.e. an American citizen or a
documented citizen. All of the ships are U.S. flag and they are
owned by U.S. companies although some of them are documented
citizen companies.
Mr. Dent. And the final question then I will yield back,
Mr. Chairman. How can we better align the dollars and Fleet
with capacity goals and the needs?
Mr. Jaenichen. Right now from our perspective, pending this
capabilities assessment that is going to be done by the U.S.
Transportation Command, we are aligned at this point until I
see something different. They are on record. Most recently,
General Fraser has stated that the 60 requirement still stands.
Mr. Dent. Okay, thank you very much and I will yield back
with the time remaining, Mr. Chairman.
Mr. Rogers. Noted, Mr. Dent. Mr. Joyce.
Mr. Joyce. Thank you, Mr. Chairman. Administrator Huerta,
if you would, could you tell us what is being done to help
accelerate the deployment of Performance Based Navigation
procedures that will conserve fuel and reduce costs associated
with travel. Section 213C of the F.A.A. Modernization and
Reform Act directed the F.A.A. to categorically exclude
National Environmental Policy Act, NEPA, requirements for
procedures that would reduce aircraft, fuel consumption
emissions and noise on an average per flight. The DOT's IG
efforts to implement the Act did not address this categorical
exclusion requirement. Can you provide a status report and
explain what role, if any, the requirement has played in
expediting PBN procedures?
Mr. Huerta. There were two specific provisions included in
section 213 related to the categorical exclusion. The first we
were able to implement. The second has presented more of a
technical challenge for us and that is the specific requirement
to consider the aggregate of the three factors you talked about
on a per flight basis which is inconsistent with how any noise
modeling or any environmental modeling has been up until--in
the past.
In light of that, we put together a technical team under
the auspices of the NextGen Advisory Committee to advise us on
how we put together a methodology to work through that. That
was presented to the NextGen Advisory Committee a couple of
meetings ago so that would have been something less than a year
ago. And we are now considering that recommendation about how
we can move forward and what is the best way to factor that in
technically to how we evaluate these projects but we have done
a lot of good work on that.
Mr. Joyce. The F.A.A. mandated that aircraft operators
equip for ADS-B by 2020?
Mr. Huerta. ADS-B out by 2020, correct.
Mr. Joyce. ADS-B was sidetracked when an F.A.A. aviation
rulemaking committee concluded that the required multibillion
dollar investment by airline and general aviation operators
cannot be justified at the present time. What initiatives do
you plan to undertake and to effectively lay out the business
case for ADS-B in and other long term NextGen programs to
ensure sufficient buy-in by all the airline operators?
Mr. Huerta. Yes, let me take a moment and talk about what
an ARC is. An aviation rulemaking committee is actually
comprised of the regulated industry. And so, the process we
were going through was actually to consult with those that
would be regulated by the rule as well as those that are the
proponents of the rule and those that are the proponents of the
technology in order to develop a sense of is now the right
time? And as you correctly point out, the ARC which does
represent this consensus view is that we are not quite ready
for primetime here.
There are a number of factors that were cited in the ARC
report. Paramount among them was the lack of an international
standard. And we have been engaged with our international
counterparts really to work through that issue and really focus
on how do we--the point you made and that we were talking about
in the earlier round. How do we make sure that the benefits
case catches up with what the deployment schedule would be so
that we could put forward an overall proposal where we are able
to match up the benefits with the investments and we are
continuing to work that with industry.
Mr. Joyce. Thank you. I have no further questions. I yield
back at this time, Mr. Chairman.
Mr. Latham. Thank you, Mr. Joyce and your time remaining is
noted. Ms. Ferro, going back to the subject we were on as far
as the new rule and using lifetime health benefits and
healthier outcomes, how do you quantify or what measure do you
use to confirm that there are these benefits? How do you track
this?
Ms. Ferro. Mr. Chairman, on a couple of points on the
specifics I would love to follow up with you and we will lay
out the exact case and the research on which it was based with
regard to the health benefits of the rule. I want to reinforce
there are crash reduction and fatality reduction benefits in
this rule as well to the tune of an estimated, conservatively
estimated, 19 lives saved per year of those driving around not
in terms or driver mortality and their longevity of life but in
terms of individuals operating around and in.
Mr. Latham. Was that enough to offset the cost of the----
Ms. Ferro. I will need to come back with the specific
numbers. I do not have them off the top of my head today.
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Mr. Latham. Go ahead.
Ms. Ferro. I just want to reinforce, the rule itself for
the vast majority of drivers, the rule had virtually no impact
or very little impact and I will talk specifically about what
that is. For a driver who operates 60 hours a week or less
within a seven day period, they do not need to use the restart.
The primary component of the rule that really impacted their
rest time doesn't even factor in because drivers still can run
in a 14-hour window and drive up to 11 hours in that window.
That did not change. So the other 15 percent are the ones
that generally, as I mentioned, run the longest hours, exceed a
60-hour seven day week or a 70-hour eight day week. But those
that stay within those limits do not even use the restart--
because it is a voluntary component.
The element of the rule that impacted all drivers is the
addition of a 30-minute break sometime within that 14-hour work
window. And that needs to be taken sometime before the ninth
hour of work if, in fact, they are going to be driving in the
ninth hour or later. So that 30-minute break, it is a pretty
standard work break for most folks. For drivers that are not
accustomed to taking a full 30 minutes, they may add 15 minutes
to a break they might already take for a cup of coffee or a
bathroom break.
So that 30-minute break would have impacted them. And there
is a component that took effect as soon as the rule was final
which is almost two years ago now which allows drivers to use
the cab of their truck to take that off duty time. That had not
been allowed in the past. If they were waiting at a dock, they
could not count sitting in their truck with no responsibility
for the vehicle as off duty time. And they can now under this
rule. So there are really kind of two pieces, sort of a give
and a take, on that 30-minute break expectation. But the vast
majority of drivers, I just wanted to explain why the vast
majority were not affected by the rule.
Mr. Latham. Okay.
Ms. Ferro. Yes.
Mr. Latham. Talking about the restart provision, we had a
study that was mandated by Congress to look at the benefits and
the study acknowledged that your rule changes have put more
trucks on the road during daylight hours which is something
that is of great concern. Most of the truckers would rather
drive at night with less traffic, much more efficient, much
safer. And, you know, you cause a lot more interaction between
other trucks and trucks themselves, other trucks, non-
commercial motorists. Did your study evaluate the safety and
congestion impacts of large trucks being forced by the
regulation in daytime hours?
Ms. Ferro. Yes, I would like to address that. The study in
question that was mandated under MAP-21 was a field study, the
components of which needed to mirror the elements and the study
structure of two lab-based studies that we used in determining
the restart components of the rule. So the field study did not
address or talk about the impact of traffic on the road.
Mr. Latham. Is that not important?
Ms. Ferro. Well, and we spoke about it in the rule itself
and the regulatory evaluation. Because there is a component,
about half of that 15 percent of those long over the road
drivers, about half of those generally run nighttime schedules.
The rule does not stop nighttime schedules and it does not stop
nighttime driving at all.
Mr. Latham. But the restart forces a lot of them to drive.
You are saying they cannot drive at night.
Ms. Ferro. I am going to finish that piece. What we are
saying, they absolutely can drive at night. If they choose to
use the restart, they have to include two periods between 1
a.m. and 5 a.m. for during their off duty time. The goal there
is to ensure they are getting two nights of rest when their
circadian rhythms are at their lowest.
It does not stop them from running a nighttime schedule the
rest of the week. It does not stop them from resuming a
nighttime schedule when they finish their off duty time if
they, in fact, need to use that 34-hour restart.
Mr. Latham. If they have to use night, two nights, when
would they drive then?
Ms. Ferro. Well, they have got five other days of the week.
They have got five other days of the week when they are driving
and running full nighttime schedules.
Mr. Latham. Are you doing anything to look at the safety
and costs of putting a lot more trucks on the road in the
daytime?
Ms. Ferro. We have examined that issue and there is a bit
of a fallacy in it and the fallacy is this. Trucks, for any of
us who commute to Washington or drive almost anywhere, you see
a lot of traffic on the road at about 5 a.m., commercial
traffic. Before this rule ever took effect last July, that is
just standard scheduling and we will continue to see it. In
this case, we are talking about half of that 15 percent, so
about 7 percent that we are running over nights that may now
shift their schedules.
Their schedule could reenter them into traffic any day of
the week, not a Monday at 5 a.m. So number one, how it is
diluted within the bulk of the other traffic, it does not
change the fact that folks are still running nighttime.
Mr. Latham. But you are acknowledging the fact that you are
putting more trucks on the road during peak time?
Ms. Ferro. I am not. I am not.
Mr. Latham. That is what you said.
Ms. Ferro. No, we recognize that for drivers that seven
percent that may be impacted by those two overnights, that they
may come on the road at a different time after their restart.
They may come on at 10 a.m. I mean it is a matter of, this is
an industry that is incredibly unpredictable when it comes to
demand because they are moving warehouses. So how the different
carriers shift their schedules is really up to them. What I am
reinforcing is that there is already a high density of traffic,
commercial traffic, on our highways in those early morning
hours that was in place well before July of last year and it
continues to be in place.
Mr. Latham. I think there is a huge safety component by
putting more trucks on the road during those peak times. My
time is expired. Mr. Pastor.
Mr. Pastor. Thank you, Mr. Chairman. Mr. Szabo, Amtrak has
requested that the revenue generated on the Northeast Corridor
be used for capital improvements on the Northeast Corridor. As
you know, the Corridor has got--revenues help with the
operating costs required for the long distance trains. If
Amtrak follows this new approach, how can we be assured that
the National Network will not suffer as a result?
Mr. Szabo. Well, if you take a look at our budget request,
it supports all components of our National Rail Network, and it
does concur in support of Amtrak's approach of having operating
surpluses be reinvested into the capital on the Northeast
Corridor. But our budget also fully supports State Corridor
service and fully supports long distance service. It provides
that rural connectivity that is so critical to these small
towns that otherwise would be disenfranchised. And so, our
budget proposal is comprehensive in, in fact, supporting all
three pieces to that and is consistent with Amtrak's plan to
put the operating surplus back into the Corridor.
Mr. Pastor. The Highway Trust Fund, assuming the worst case
scenario, when do we--when will the Trust Fund no longer have
any monies to appropriate?
Mr. Nadeau. The estimate that we have posted in the
Department's website, at the insistence of the Secretary,
tracks August, September, as the point at which a zero balance
could occur and the implications of that are quite serious.
Mr. Pastor. How confident are you that Federal Highway cash
management measures will prolong the life of the Trust Fund?
Mr. Nadeau. Well, the implications of the necessity of that
action will require our state partners to seek reimbursements
on a less-frequent basis. So delay of payments to states is the
first casualty of that situation, followed by the potential,
depending on the length of the failure to correct the shortfall
in Trust Fund, potential reductions in actual levels of
reimbursements.
The implications of that, simply the prospect of that
occurring are already being evidenced across the country. The
Director of Highways in the State of Arkansas, for example,
just reported that 10 highway projects that were scheduled to
be let have been postponed.
Thirty projects that they were planning on advertising in
the remainder of the fiscal year, about 30 projects valued
about $450 million, and another group of projects for next year
about that same level, of value have all been, essentially,
postponed or held, pending some certainty with respect to the
cash shortfall of the situation.
So, the implications are already being felt, and State DOTs
are, essentially, having to make judgments as to how they are
going to manage the situation should it occur. The Director of
DOT in Rhode Island, just has 54 EPW that he has already
suspended all advertising and rely on FY '14 apportionment. So
the effect in the way states are going to manage the situation,
once we are forced to take that action is, they are already,
essentially, taking action.
Mr. Pastor. What discussions are you having with the Office
of Management and Budget? Do you think the Department will
request a general Fund transfer into the Trust Fund? If not,
why not?
Mr. Nadeau. Well, as you know, and I you discussed at
length with Secretary Foxx at a recent visit with you, the
President has proposed a four-year funded, $302 billion surface
transportation program with sufficient funding to address the
shortfall in the Highway Trust Fund of a four-year period; and,
of course, if action is taken on a timely basis to address the
current shortfall as well.
So, the administration has put a proposal on the table that
will address and, hopefully, avoid the situation we just
discussed, that I just described, occurring.
Mr. Pastor. Can I just finish this?
Mr. Latham. Please.
Mr. Pastor. I know you have read the transcript of the
testimony, and probably you have--in reading the testimony you
have come to the opinion that the response to the Secretary was
that, the likelihood of legislation going forward to meeting
the needs of the proposal, or implemented proposal are pretty
slim, and I think there was great likelihood that probably it
was not going to happen. And we are asking the question, with
that prospect, what would be the probability that the
Department would ask for general funds?
Mr. Nadeau. And I believe his response, and I certainly
would concur, is that absent action, serious implications, I
just described, will take place. Therefore, whether it is the
proposal that the President and the Secretary have put on the
table, or some other alternative solution which the Secretary
expressed his openness to discussing with Congress. It is
imperative that a solution is found in a timely manner, to
avoid the economic implications of what I just described.
In one particular state, in Arkansas, for example, are not
replicated across the country. It could have a fairly
devastating impact on the economy, and certainly on recovery
and job growth. So I think the Secretary was clear that he is
open to working with Congress on a solution. The imperative is,
of course, to address the problem.
Mr. Pastor. Thank you.
Mr. Nadeau. Thank you, sir.
Mr. Latham. I am just curious on that point. Specifically,
how are you going to pay for it?
Mr. Nadeau. A proposal in the President's budget is on the
four-year--pay for with a Pro-Business Tax Reform Policy----
Mr. Latham. You have got talking points now, right?
Specifically, what tax changes are you going to make, to pay
for? They are pro-business, pro-growth; it is actually pro-
growth is the----
Mr. Nadeau. Pro-growth, I am sorry.
Mr. Latham. Is the talking point, so.
Mr. Nadeau. As you know, Mr. Chairman, the Treasury Green
Book, published with the publication of the President's budget
proposal, does describe, generally, elements of the Tax Reform
Proposal----
Mr. Latham. Have you got the specific proposal that you put
forth?
Mr. Nadeau. I think that the President has in his budget,
and I think further----
Mr. Latham. Tied into this pro-growth Tax Reform?
Mr. Nadeau. Addressing several elements that I know you
discussed with the Secretary, which I would be happy to review.
Mr. Latham. Okay.
Mr. Nadeau. But I think it is a credible approach to a
long-term solution----
Mr. Latham. Do you have meetings to practice these pro-
growth things and stuff to make sure everybody is on the same
page. Okay. Moving right along here.
Ms. McMillan, one issue that constantly comes up at home is
the inequitable Transit Formula Funding across the country, and
MAP-21 made a bad situation even worse, regarding the formula
allocation for mid-sized cities, as in Iowa, and places like
that. We requested a transit formula analysis in the fiscal
year 2014 House Report, and I asked the Secretary, when he was
here a few weeks ago, for an update on when we might see the
report. I am hoping you can give me an answer. When will we
have the report that was requested on the allocations?
Ms. McMillan. Thank you, Mr. Chairman. I will get back to
your office on the specific date.
[The information follows:]
Transit Formula Report
While FTA will report to the Subcommittee by the end of
May on its analysis, we have heard from the transit industry that the
amount of resources provided under the MAP-21 Bus and Bus Facilities
formula is inadequate. We understand that the transit industry also
believes that while predictable funding provided through a formula is
good, it often does not allow for transit agencies to address needs
when substantial investment is needed, like a large bus purchase or
building a bus garage.
In response to these concerns, the President's 2015 budget
significantly grows the amount of resources to be distributed under the
Bus and Bus Facilities grant program from $427.8 million to $1.9
billion. The budget also proposes that 70 percent of the finding would
be distributed through a formula and that 30 percent would be awarded
through a discretionary grant process to help address large one-time
investments that a formula does not address well.
I need to get a handle on that specifically and what I
would like to say though is, what we have been hearing,
similarly, from small and mid-sized cities, the major concern
with the Bus And Bus Facilities Formula Program, I am not sure
if that is what you are----
Mr. Latham. Right.
Ms. McMillan. Okay. I do have some answers for that. We
have been--let me just say that----
Mr. Latham. Is it both business--I am sorry.
Ms. McMillan. What I would say is that together with the
transit industry, we have been hearing a lot of feedback on the
ramifications of moving from what had been a discretionary
program to a formula program. And the issue was that the new
formula, based on frankly about half of the funding level that
have experienced under SAFETEA-LU, has resulted in much smaller
pieces of the pie available, particularly for our smaller
operators, and that is a problem.
What we are proposing as part of our Fiscal 2015 Budget,
for the Bus and Bus Facilities Program, is in fact to greatly
increase the funding level to $1.9 billion from only $450
million currently, to address the needs that we have hearing
from our smaller operators. And in addition, to include back
within that amount some discretionary capabilities, so that we
can help smaller entities that have these one-time, lumpy, big
cost, that a formula Program just strung over a period of years
simply will not accommodate for them, and be able to match the
benefits of having that type of program; with the certainty of
a formula Program at sufficient levels to meet the needs of our
transit agencies across the country.
Mr. Latham. Looking at the apportionments that are under
the Urban, Non-Urban Programs, I am trying to understand the
purpose behind the high-density program that provides hundreds
of millions of dollars on top of the Urban Formula already, but
it only goes for seven northeastern states. What is the purpose
of the extra funds, if that was created only for seven states?
Ms. McMillan. That program was established to recognize
high growth in those particular areas. Again, I think that the
combination of the Major Formula Program at the 5307--the 5307
Major Formula Program coupled with the Bus Facilities Program
at a Formula level of the small urbanized----
Mr. Latham. How do you determine growth--?
Ms. McMillan. I am sorry?
Mr. Latham. Population-wise, that is not true, the
northeast is not growing, in comparison to other parts of the
country.
Ms. McMillan. Well, my apologies if I misstated the fact.
What I will get back to your office, with some specifics on
those comparisons.
[The information follows:]
High Density Transit Program
The High Density program (Section 5340(d)) funds are
apportioned based on a statutory formula and to qualifying urbanized
areas (UZAs) and States included in section 5340. The finds are
allocated to UZAs in States with a population density equal to or
greater than 370 persons per square mile. Based on this threshold and
2010 Census data, the States that qualify are Maryland, Delaware,
Massachusetts, Connecticut, Rhode Island, New York and New Jersey
(these are the same States that qualified under SAFETEA-LU).
The amount of funds provided to each of these seven States
is allocated on the basis of the population density of the individual
State relative to the population density of all seven States. Once
funds are allocated to each State, funds are then allocated to UZAs
within the States on the basis of an individual UZA's population
relative to the population of all UZAs in that State.
Mr. Latham. If they are high density already, don't they
have the capacity already--without these additional funds that
come off from the other 43 states? I don't understand.
Ms. McMillan. What we have seen is that in large part for
our major areas, quite frankly, for the biggest systems the
federal dollar tends to be the minority dollar. Local and state
contributions to major federal areas actually exceed, often,
what the federal dollar contributes in terms of capital and
operating needs. So that is, you know, just one observation I
would put out there in terms of the funding combination.
Mr. Latham. You apparently are putting forth your
reauthorization package. Are they the same seven states in that
proposal which you have? Are you talking about doing this
again?
Ms. McMillan. We--our proposal, again, will be forthcoming.
I don't have the specifics on that piece of it yet.
Mr. Latham. Are you doing anything to help mid-sized cities
in your proposals?
Ms. McMillan. Yes. There are a couple of things I think
that are very beneficial to mid-sized areas, and small urban
areas such as we see in states such as Iowa. As I said before,
I think the improvement, or the modifications that we are
suggesting for the Bus and Bus Facilities is a significant
improvement for those areas. And, again, we have been hearing
directly from small and mid-sized communities, that that would
be a huge improvement, lifting the amount of funding and
reinstating the discretionary amount.
We have also put forward a new program for rapidly-growing
smaller urban areas, our Rapid Growth Area Transit program,
which is intended to complement New and Small Starts, and be
very location-specific on communities that are experiencing
significant to moderate population growth as well as transit
ridership growth.
And the idea is for them to hopefully get ahead of
congestion, that is potentially coming with that rapid growth,
and be able to put Bus Rapid Transit projects on the ground
fairly quickly, and we would assist them in that process so
that they might avoid conditions that would deteriorate with
the pressures that they may see.
Mr. Latham. Well, I hope we can address this. It is a huge
equity issue, and it is a huge problem for the small, mid-sized
bus transit, certainly.
You don't have any questions?
Mr. Pastor. Well, Mr. Chairman, I want to thank all the
Panel members for their----
Mr. Latham. We are not closing yet.
Mr. Pastor. Oh. The answer is no, I don't have any
questions. And to assure you, I was going to close.
Mr. Latham. I know. Okay.
Mr. Pastor. So you can have the remainder of the time. And
I am getting close to my hours of--what is the service--Hours-
of-Service too, so.
Mr. Latham. I think we both are. Just one last question,
Mr. Huerta, always good to see you. Your budget request, once
again, proposes two new aviation fees. One increasing the
passenger facility charge from $4.50 to $8.00 per flight, and
another to charge $100 per flight fee on general aviation
flights. These fees have been repeatedly rejected by Congress
in the past, and I would expect the same will happen.
Have you engaged, really, the user community to get input
on these fee increases?
Mr. Huerta. Let me talk about the two of them separately,
if I might. First of all, with respect to the increase in the
PFC that is coupled with a commensurate reduction in the AIP
Program itself. And the idea is that larger airports which have
the resources to generate their own financial resources through
the passenger facility charge, would be excluded from certain
aspects of the AIP Program, thereby ensuring that those
remaining funds could be made available to the mid to smaller
airports. And that does enjoy a great deal of support in the
airport community, particularly the larger airports who have
felt constrained by the PFC cap.
As it relates to the $100 fee, what we are trying to do
here is address the larger question of recognition that FAA
provides a wide variety of services and many of them at no
cost. Two segments of the industry, and we have a significant
General Fund subsidy for those activities. I think the
President has put forward a proposal of a way that we could
close that gap, that is the conversation we have been having,
and we know that there is significant challenge there, but I do
think that the aviation industry is starting to have some
serious conversations among themselves about the broader
question, of how do we pay for the suite of services that the
FAA is going to provide. And that is a conversation that we
look forward to continuing to have with you on this Committee
as well with the industry.
Mr. Latham. Have you done any kind of analysis,
economically, as to the effects, on private aviation? Have you
done any analysis?
Mr. Huerta. You know, in terms of the--there is a wide
variety of costs that we have to look at. We have done
different analyses up there, I would simply observe that, it
costs us as much to handle a private airplane in controlled air
space, as it does an A380. And if you look at their relative
contributions to the Aviation Trust Fund, they are dramatically
different. And that, I think that the larger question we need
to have is, where is the service being provided, and how do we
pay for it?
Mr. Latham. All right. Now, Mr. Pastor, if you would like
to close.
Mr. Pastor. Thank you. Thank you. I am getting to the
hours--I want to thank all the Panel members for their
testimony, and answering the questions, and look forward to
working towards a Bill. Hopefully, it will get done sometime in
the near future, so that we don't have a CR, and we are able to
fund the agencies, hopefully, the best we can.
So, thank you very much for your testimony.
Mr. Latham. Okay. And I also want to thank each of you for
your time today, and for your testimony. I know we will have a
number of questions for the record, and I am sure other members
of the Subcommittee will also as well.
I would ask you to work--you and your staff--as quickly as
possible to get those questions answered, cleared, and returned
to us within 30 days. Yes, Mr. Huerta?
Mr. Huerta. Mr. Chairman, I just wanted, on behalf of all
of our colleagues and Secretary Foxx, we know that both you and
Mr. Pastor will be retiring at the end of the year, and we
wanted to join together and thank you for your support for the
Department over so many years.
Mr. Pastor. Right. Thank you.
Mr. Latham. Thank you.
Mr. Pastor. Thank you very much.
Mr. Latham. That is what was meant with our Hours-of-
Service. Your answers, again, if we get your responses within
30 days, we are going to be moving a Bill quickly, we hope, and
we need to have those responses as soon as possible.
With that we will conclude. Our next hearing will be
Secretary Donovan on April 10th. So with that, the Subcommittee
is adjourned. Thank you.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Thursday, April 10, 2014.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WITNESS
HON. SHAUN DONOVAN, SECRETARY, DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
Mr. Latham. The hearing will come to order, and we want to
welcome the HUD Secretary Shaun Donovan here this morning. We
apologize for the late start here, but we have had a crazy
morning with votes.
Secretary Donovan. Understood.
Mr. Latham. So I am going to pass on my opening statement,
other than to welcome you.
We will recognize Mr. Pastor.
Mr. Pastor. Mr. Chairman, good morning. I will yield to
Mrs. Lowey.
Mrs. Lowey. Well, you set an important precedent, so I will
pass as well and put my statement in the record.
Mr. Latham. If you want to have an abbreviated opening
statement, that would be fine.
Mrs. Lowey. Just welcome, Mr. Secretary. We know of your
very, very essential work, and we look forward to putting
together a bill that gives you the opportunity to continue to
serve the people.
Secretary Donovan. Thank you.
Mr. Latham. Unless you had something very profound or very
complimentary towards the chairman, we will pass.
Secretary Donovan. You know, as matter would have it, I do.
It is a 17-minute opening statement.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latham. Thank you.
Secretary Donovan. Seriously, I do want to say this is the
last time I will be testifying in front of both you, Mr.
Chairman----
Mr. Latham. You are leaving?
Secretary Donovan. Wishful thinking. Wishful thinking--and
the ranking member, and I just wanted to thank you for your
years of dedicated public service. We have been through
decisions that were easy to make because we were able to expand
opportunity, improve government. We have been through difficult
decisions even as recently as last week on our MultiFamily
Transformation. And I can't thank you enough for your dedicated
public service.
Mr. Latham. That was good. The question starts as
highlighted in my opening statement.
Your request assumes FHA receipts of $14 billion in fiscal
year 2015. This is $1.4 billion over this year's projection and
a whopping $2.8 billion over CBO's latest estimate for 2015. If
the CBO estimates remain this low, receipt scoring changes will
create a significant hole in your budget. And I just ask you,
what are the driving factors or changes in assumptions that
resulted in a $1.4 billion increase over 2014 and a $2.8
billion difference with CBO?
Secretary Donovan. This is obviously very critical for
being able to put a strong budget together. I think the key
thing I would point to is we made two very significant changes
last year in our premiums. That significantly increased the
returns. So even though volume we are predicting to be lower,
the returns are higher because of those premium changes.
As I understand it, CBO has not yet factored those into the
scoring, and so as they update their scoring, our hope is--
obviously there are other assumptions that may be different,
but our hope would certainly be that we would see an increase
based on those premium increases that we instituted last year.
Mr. Latham. It is going to be very difficult to fill the
holes, obviously, with a $2.8 billion shortfall, and will cause
some really difficult choices for us to make. I would ask that
you talk to the CBO, share your assumptions and models, and
report back to the subcommittee on the differences. You are not
even on the same page, not even on the same chapter, the way it
looks, and it will have dire consequences if it isn't changed.
There are a number of municipalities that are considering
using eminent domain to acquire underwater performing mortgages
and then refinance them as to FHA products. I understand a city
in California has mailed letters to mortgage holders offering
to buy these mortgages at a discount and threatening to use
eminent domain if the mortgage holders don't sell.
Where do you stand on that issue? Just give us some input
and guidance.
EMINENT DOMAIN
Secretary Donovan. Absolutely.
I am actually quite familiar with the eminent domain
process, having led the agency in New York City that is
responsible for eminent domain there.
There is a fundamental legal question here that is up to
the courts on whether the mortgages themselves generally and
then also specifically the mortgages on the homes that they are
looking at qualify under public purpose for eminent domain.
That is a determination that needs to be and will be made by
the court, because not only of the regular process, but the
lawsuits that have been brought. So I think it is too early for
us to take a legal position on this until the courts have
acted.
Having said that, to be clear, we would not provide
financing at values that were above what the court determined
the value to be. And I think that is one of the fears that have
been out there is that somehow eminent domain would bring the
values down, write down these mortgages, and then somehow they
could be refinanced at a significantly higher value by FHA. And
that obviously that would not be the case.
Mr. Latham. Wouldn't it create great uncertainty for the
financial markets?
Secretary Donovan. What I would say on this is that there
is already the underlying system of eminent domain that exists
on the properties themselves, and given that the mortgages sit
beyond that, that I don't believe that it creates substantial
uncertainty. There is some uncertainty that it creates which
has to be resolved by the courts, but unfortunately I don't
think there is any shortcut to the legal process that has to
play out under these decisions, because ultimately eminent
domain is a very specific local decision on whether this
property does qualify under the rules of public purpose.
Mr. Latham. Well, it may be a local issue, but it has
national consequences, and I think is very significant as far
as creditworthiness, interest rates, everything else. No sane
investor is going to go into something, make a loan to someone,
if they know, in fact, the city can just decide that they can
take away the house and lower the value.
Secretary Donovan. The law requires in eminent domain that
full value, market value be paid, and so I think the greatest
risk here is if we get a bad decision from the court that----
Mr. Latham. But if they are taking a whole neighborhood;
the market value is going to be dramatically changed.
Secretary Donovan. If a correct decision were to happen, if
they determine that it is possible, they would have to value it
as it currently is, not as the decision might change the
neighborhood.
Mr. Latham. In the last fiscal year bill, we had asked for
a report by April 1st of 2014, which would be past due. On this
issue of as far as the implications, do you know when we can
see that?
Secretary Donovan. I don't know immediately. Let me ask my
team.
We will have it to you very shortly.
Mr. Latham. Okay. Good. I appreciate that.
Mr. Pastor.
Mr. Pastor. Good morning, Mr. Chairman.
Good morning, Mr. Donovan.
I am going to talk about CDBG. While the overall number for
CDBG programs is about the same as last year's budget request,
the funding request for formula grants to cities, counties and
States is at the lowest level since 1976. The CDBG program was
last reauthorized in 1994. Many things have changed in the last
20 years. Priorities have changed, funding has decreased,
building methods have changed. So there has been a lot of
changes in the last 20 years.
In light of these changes, what can HUD do to ensure that
the program is still responsive to the communities and their
requests?
MOVING CDBG FORWARD INITIATIVE
Secretary Donovan. It is a terrific question. And, first of
all, to be very clear, we strongly support reauthorization of
the program. And as we are approaching this major anniversary
of the program later this year, we have undertaken a program
that we call Moving CDBG Forward, an initiative where we
reached out to more than 20 different sets of stakeholders,
held forums around the country to get input and comments, and
based on that, we have suggested a set of changes to CDBG.
We will be providing legislative language as part of our
upcoming package to the committee, and basically it focuses on
a few key things; first of all, to update the formula and the
targeting of CDBG to make sure that we are reaching the
neediest places. As you know, for example, Arizona, there has
been enormous development in Arizona since the CDBG formula was
created, and we really don't believe that the current formula
best meets the needs of particularly places that have developed
substantially over the last few decades.
We also believe that there are ways that we can both
streamline the program and improve its administration; for
example, providing more flexibility to communities,
particularly the smallest communities, to be able to form
regional coalitions, to share back-office functions, a range of
things like that. And then there is also accountability to make
sure that we are able to measure the impacts and ensure that
CDBG is having the kind of impacts that we all want for it.
So I look forward to discussing that. It is obviously a
first step for us, and we wanted to be able to work closely
with the committee on any potential changes this year.
Mr. Pastor. In some cases the money, especially for smaller
rural communities, the money comes through the State, and then
the State--and then sometimes there is a lot of considerations
that are used to determine what cities get what and what they
don't. And is that something that you want to change, or is
that something that you still want to keep in place?
Secretary Donovan. Well, clearly, the State program is an
important piece of it, and we are not suggesting that we move
to a system where every local community is an entitlement
community. On the other hand, if we provide more flexibility
for communities to join together and reach a scale where they
would qualify as an entitlement community, there would be more
options for some of those smaller communities to come together.
Mr. Pastor. I don't believe that reauthorization is
probably a priority in this year's session, so would you look
at some regulatory changes to bring about some of these changes
where you can and--where you can make the changes?
Secretary Donovan. Absolutely. And, in fact, one of the
efforts that was part of this Moving CDBG Forward outreach that
we did was to identify things that we could do on an
administrative basis or a regulatory basis to improve the
program. So, absolutely, that will be part of what we are
undertaking, but we do want to discuss those with the committee
as well and get your input, even if they are not--don't require
legislative change.
Mr. Pastor. So what is the timeline on celebrating the
anniversary and bringing about some of these changes?
Secretary Donovan. So we should have in the next 6 to 8
weeks, I would expect, the package of legislative changes, and
that would be for the entire administration, but it would
include the specifics of this language and then to be able to
work with you going forward over the summer both on the
legislative piece of this, but also on the regulatory piece.
Mr. Pastor. Thank you, Mr. Chairman. I yield back.
Mr. Latham. You are out of time.
Mr. Pastor. Well, okay.
Mr. Latham. Thank you, Mr. Pastor.
Ms. Herrera Beutler.
Ms. Herrera Beutler. Thank you, Mr. Chairman.
And following up on that, and what I understand--and
correct me if I am wrong--that some of the proposal is to be--
is eliminating small grantees, which likely means, you know,
that the small guys will have to compete for statewide CDBG
funding, statewide grants; is that accurate?
FLEXIBILITY FOR SMALL COMMUNITIES
Secretary Donovan. We do have and in past years there have
been proposals. Because there have been such significant
reductions in CDBG, we now have some grantees operating with
programs that are just a few hundred thousand dollars, and
literally it is extremely difficult for them to be able to keep
up with the administrative and other changes.
Ms. Herrera Beutler. It is interesting----
Secretary Donovan. What we are proposing is to allow them
the flexibility to be able to join with neighboring communities
for administration and other steps----
Ms. Herrera Beutler. But you are not requiring----
Secretary Donovan [continuing]. That would allow them to
keep those grants.
Ms. Herrera Beutler. But you are not requiring that they do
that in order to apply for these grants.
Secretary Donovan. We are not requiring it, but we want to
provide more options around that.
Ms. Herrera Beutler. I think some of the challenges--part
of the reason these are small communities is they are hundreds
of miles from other communities, and so that is part of the
reason--and a couple hundred thousand dollars, though, isn't
much in the scope of your budget. It is a ton of money a small
community that is applying for one of these grants. I mean,
that is a tremendous asset.
And I have heard from a number of my small communities that
we need to protect, and I fully intend on helping protect,
their access to these things. I mean, trust me, these small
communities do band together where they can find efficiencies
because they have to. But part of the reason this is such a
valuable option for them is because, you know, they are
competing against large cities, and to require them kind of to
be on that same playing field seems to me to be putting those
rural communities at a disadvantage.
Secretary Donovan. We are putting barriers in the way of
them being able to work together through CDBG and our other
block grants, and that is one of the things we want to change
with these proposals.
But I also think it is important that we recognize when we
start to get to a scale of grants to communities where it is
almost impossible for them to keep up with the requirements for
accountability and reporting, that we risk wasting money that
would be better spent if we can improve the program and create
some of these efficiencies.
Ms. Herrera Beutler. Well, let me ask, you are not going to
lend to a grantee who can't fulfill the administrative
obligations, correct? I mean, I am sure that is part of letting
a grant is they have to be able to fulfill everything.
My point being, they are not going to be asking and
applying for if--and you are not going to be giving it to them
if they can't do it.
Secretary Donovan. We do make the awards, and then they are
required to meet requirements of the award.
Ms. Herrera Beutler. Yeah.
Secretary Donovan. And so it would be a many-year process
to track, create accountability, remove funding. Our step is to
actually revoke funding if they are not meeting those
requirements. So we would be awarding it to those communities.
Ms. Herrera Beutler. Absolutely. My point is, having worked
on development for a small nonprofit, you don't get the award
unless you can demonstrate you can fulfill the obligations and
requirements of the award generally, and I assume that is how
you operate.
Secretary Donovan. That is at the local level. It is a
block grant, and it is made by formula to the local community,
and then we will check if they are complying. So it is a
somewhat different process in terms of our relationship with
the State or local government than the State or local
government with an individual grantee, such as a nonprofit.
Ms. Herrera Beutler. Totally switching tracks, something
that we talked about a couple of weeks ago, I think it was a
couple weeks ago, PBRA. And I kind of wanted to clarify,
because I felt like after our last conversation, I was clear as
mud as to where we were. And this is with regard to moving the
calendar year.
Secretary Donovan. Yes.
Ms. Herrera Beutler. Now, moving the calendar year does not
mean that you planned to end what looks like--it doesn't look
like it is--it appears to be somewhat underfunding, but we have
had--you know, we have kind of a different perspective on that.
Do you think it will end? Do you think this is going to
help end the uncertainty around kind of the reliability of the
Federal funding felt by the owners, the managers, the lenders,
and the residents of these properties?
Secretary Donovan. Absolutely, Congresswoman. We would not
be proposing it if we didn't believe that this was a way to try
to get the program back to a stable and clearer funding base to
eliminate some of the uncertainty, and, by doing that, actually
decrease the cost of financing and increase investment into the
homes and communities of the families that depend on it.
Ms. Herrera Beutler. Thank you.
Mr. Latham. Thank you.
Mrs. Lowey, welcome.
Mrs. Lowey. Why, thank you, Mr. Chair.
Welcome.
Secretary Donovan. Thank you.
Mrs. Lowey. In the wake of Superstorm Sandy, a number of
people took out SBA loans to quickly repair damage to their
businesses. After the disaster, a package was passed months
later. A lot of these same people also applied for CDBG-DR
funding, but were subsequently denied because they weren't
allowed to receive money from both programs. A number of these
small business owners now feel taken advantage of by the
Federal Government because they aren't allowed to secure grant
assistance. We obviously can't fault small business owners for
not postponing repairs to their businesses until Congress had
done its job and passed a supplemental.
Has HUD considered reexamining this rule so that under
certain circumstances small business owners can receive funding
from both programs?
Secretary Donovan. Yes. In fact, we have had many
discussions with not only New York State, but the other
grantees, and we have clarified this in two ways; one, that if
there are initial needs beyond those that were funded by the
SBA loan, absolutely, they are eligible to get CDBG above and
beyond the SBA loan. Second, if for some reason the
circumstances have changed, and they are unable to repay an SBA
loan, if it would create risks for them in terms of the future
of the business, we can replace that SBA loan with CDBG.
But I want to be clear, what we are trying to achieve here,
we have limited resources, and if we have businesses that have
an ability to repay a loan, if they can afford a 2 percent or a
5 percent interest rate, or whatever it might be, we want to
make sure we are targeting the CDBG to the neediest businesses.
So replacing SBA with CDBG assistance would be a case-by-case
decision made by the grantee. We made it clear that that is
allowed. That is, in fact, happening. But we do want to make
sure that the CDBG is targeted to the neediest businesses.
Mrs. Lowey. But it is possible.
Secretary Donovan. Yes, absolutely.
Mrs. Lowey. On rental assistance, similar to last year's
budget request, the fiscal year 2015 budget includes a request
to expand the Rental Assistance Demonstration Program. The
program allows PHAs to modernize, preserve existing housing by
leveraging outside capital. The budget request includes 10
million in funding, eliminates the 60,000 unit cap, extends the
program through fiscal year 2017. And currently the program as
authorized at no more than 60,000 units is set to expire at the
end of the calendar year.
In New York, we have had tremendous success with this
program. We have utilized it to help renovate and preserve over
1,300 units of affordable rental housing.
Mr. Secretary, can you give us an update on the first round
of RAD projects? What kinds of projects are you seeing? What
kinds of markets are they in? Do you think there is sufficient
demand to support a program expansion?
RENTAL ASSISTANCE DEMO (RAD)
Secretary Donovan. Not only do I believe there is demand to
expand the program, we already have, as of the end of last
year, three times the demand that we can meet. So 180,000 units
have applied.
I think it is very important to recognize that this is not
only benefiting the residents of public housing, but the $1.8
billion in capital that will be generated on those first 60,000
units under the cap, and that is at no cost to the taxpayer, no
additional cost whatsoever to the taxpayer, has created or will
create 34,000 jobs, primarily in construction, but in a range
of other areas as well.
So this is a win-win. It is creating jobs, it is creating
better housing, and it is lowering costs in the long term,
because when you fix the roof today, obviously, you don't have
to do more major repairs down the line.
So we believe, given the demand that we have seen, 180,000
units, that it would make great sense to expand the cap. Just
the 180,000 units we have in would be an additional $6 billion
of capital that would come in. So it would roughly triple, more
than triple, the number of jobs that would be created as well.
Mrs. Lowey. Thank you, Mr. Chairman.
Secretary Donovan. I am sorry. One other thing I would just
quickly mention.
Interestingly, there was early concern that RAD would be
reaching the largest housing authorities. In fact, we are
seeing that the smaller housing authorities are
disproportionately represented. In other words, smaller housing
authorities are more likely to have applied for RAD and to be
using the program. So it really is reaching--to your question,
which I forgot to answer--it is reaching all parts of the
country, but particularly smaller housing authorities, smaller
towns, rural communities.
Mrs. Lowey. Thank you.
Mr. Latham. Thank you, Mrs. Lowey.
Mr. Joyce.
Mr. Joyce. Thank you, Mr. Chairman.
Good morning, Secretary Donovan.
Secretary Donovan. Good morning.
Mr. Joyce. Vacant, foreclosed, and abandoned property has
been a serious problem for communities around Ohio and
certainly across the country. Since the downturn of the housing
market, this problem has become crippling to some responsible
homeowners. Studies have found that vacant properties reduce
prices of nearby homes between as much as $8,600 to $17,000 per
property in certain cities. These properties are often magnets
for crimes like murder and drug trafficking, and they increase
public safety costs.
I support creative solutions to the abandoned housing
crisis.
Can you elaborate on some of the programs in the
administration's budget with funds usable for demolition? In
the future do you have any programs in mind that would be
restructured for demolition purposes, given the current need?
NEIGHBORHOOD STABILIZATION
Secretary Donovan. Absolutely. I think you are well aware,
Congressman, that the neighborhood stabilization effort, which
was part of the Recovery Act, was enormously successful in
being able to spur not just renovation of vacant homes, but job
creation and lifting values of surrounding properties. It is
reversing the very cycle that you describe.
So given the budget constraints and the fact that we don't
have continued investment in the Neighborhood Stabilization
Program, we have been looking for creative ways to continue to
spur that kind of development. One is using repayments of
neighborhood stabilization funds. Communities are now taking
those and reinvesting those to do more of that work. We have
also been working with communities under CDBG and other
traditional programs that we have to provide flexibility to
increase investment in those types of properties, and even in
some cases demolition of those properties. And we have also
provided a lot of flexibility, including recently to Ohio,
through the hardest-hit funds that are at Treasury to use those
for blight-removal activities. And so those are a few.
We have also begun, and this is something that is important
for Ohio as well, to use our FHA resources in new ways. We have
been doing targeted neighborhood stabilization loan sales and
other efforts that are trying to make sure that FHA isn't part
of the problem with our vacant or foreclosed homes.
Mr. Joyce. I don't know if you are familiar with Jim
Rokakis.
Secretary Donovan. Yes.
Mr. Joyce. There are some things going on in Slavic Village
you may want to take a look at. Technically, that is in
Congresswoman Fudge's district.
Secretary Donovan. Yes.
Mr. Joyce. We are working together, along with Congressman
Ryan, because I think it is very important that you take out
the houses that have bad bones, for lack of a better word, and
make sure those are removed, because you don't want to
necessarily debilitate the neighborhood, but you certainly want
to make sure that the people who are there and working to
stabilize the neighborhood stay, and the houses that can be
rehabbed are rehabbed. They are using a method that is 100%
private at the moment that is very interesting. It is worth
your looking into.
Secretary Donovan. We will follow up with your office right
after the hearing.
Mr. Joyce. Sure. I have a few more.
Following up on testimony that you gave in response to a
question from our esteemed chairman last week, you mentioned
that you were seeking a more efficient contracting model and
project-based Section 8 program. You went on to paraphrase the
language that your agency has requested in its budget request
concerning this program. The procurement process for the
program would not be a formal, competitively bid process, but
will instead utilize a less formal NOFA, or Notice of Funding
Availability.
During the testimony you mentioned that using a less
formal, and in my view, less competitive procurement process
was confirmed by one judge in a prior court. As you know, the
prior court's decision was overturned by a Federal court of
appeals. Can you comment on the overturning of this decision?
PROJECT-BASED SECTION 8 PROGRAM
Secretary Donovan. We believe the decision is wrong, and
that the court didn't look closely enough at the specifics of
Section 8. Just as we provide HAP contracts directly to housing
authorities, we believe under the project-based Section 8
program, we have clear authority, and that was what the earlier
court confirmed, to be able to enter directly into those types
of contracts.
The problem, we believe, with the full procurement process
is that it will not allow us to take into account sufficiently
the importance of the ability of the partner that we have to
work with other sources of affordable housing funding and to
include a mission component on preservation of those units in
the same way.
Just to be very specific, we have traditionally done this
kind of work with State housing finance agencies and local
housing authorities. We actually created a great deal of
competition by allowing these teams to cross State lines. They
do subcontract with private entities. But the problem is if we
go to a purely procurement process, not only will it greatly
lengthen the process, make it more complex, it will also likely
lead to places where we have no public involvement in the
oversight of these properties, where we wouldn't have State
housing finance agencies, we wouldn't have housing authorities,
and we would lose the ability to partner with them where they
can bring tax credits, other resources that will be able to
better preserve these properties.
So we think there is great risk in doing this in a way that
will be bad in the long run for these properties, and so we
want to work cooperatively with the committee to make sure that
we are clear about the flexibility that we have in doing this.
Mr. Joyce. I believe I am out of time.
Mr. Latham. The gentleman's time has expired.
Mr. Price.
Mr. Price. Thank you, Mr. Chairman.
Mr. Secretary, welcome back to the subcommittee.
Secretary Donovan. Good to be back.
Mr. Price. I want to talk to you about a persistent problem
having to do with the Housing Opportunities for People with
AIDS program, HOPWA.
The allocation formula, the allocation of formula funds,
has been an ongoing issue since the inception of HOPWA, almost,
but the initial arrangement was that 75 percent of the funds
have been distributed using the cumulative number of AIDS cases
as reported by the CDC, including those who have died. I am
sure you are well aware of this. HOPWA was enacted within 4
months of the Ryan White HIV-AIDS program, and both programs
have relied to the same degree on the cumulative number of AIDS
cases in distributing funding to eligible jurisdictions. After
all, that was the data that CDC reported, cumulative data.
Since then, however, Congress has made some prudent
adjustments to the Ryan White Program. The program now uses the
number of people actually living with AIDS and HIV. That
formula better represents the need, it allows States like mine
and other Southern and rural States to receive funding to
better address the changing HIV epidemic. And we do have a very
serious problem.
The HOPWA formula, however, has remained the same. That is
what I want to ask you about. Both Congress and numerous
Presidential administrations have acknowledged the disparity.
Following the first change to the Ryan White Program formula in
1997, the GAO released a report regarding the performance of
the HOPWA program in which it recommended that HUD look at
recent changes to the formula used by the Ryan White Program
to, quote, ``determine what legislative revisions are needed to
make the HOPWA formula more reflective of current AIDS cases.''
In response to that report, the House Appropriations
Committee included the GAO language in its report accompanying
the 1998 HUD Appropriations Act, directed HUD to make
recommendations to the Congress about an updating of the
formula.
Additionally, the administration's National HIV-AIDS
Strategy released in July of 2010 stated that HUD would work
with Congress to develop a plan, including seeking statutory
changes, if necessary, to shift to HIV-AIDS case reporting as a
basis for formula grants for HOPWA funding. The four most
recent HUD congressional budget justifications echoed this
goal.
So since the release of that strategy document, HUD has
solicited comments from the policy advocates, grantees, hopeful
clients about how and to what degree the formula might be
changed. In other words, you have done your work, and I commend
you for it.
Secretary Donovan. Thank you.
Mr. Price. Congress must act. I am going to be urging the
committee to include report language to this effect.
In the meantime, I do want to commend you for continuing to
advocate for HOPWA formula changes, and I would appreciate your
comments on this aspect of your budget submission.
CHANGES TO HOPWA FORMULA
Secretary Donovan. Congressman, I think you have said it
well. This is an urgent priority that we change the formula.
And to be very frank, the formula simply doesn't make any sense
anymore. To have a formula that is based on not just cumulative
cases of AIDS--so, in other words, in the entire history of the
disease, every single case that has happened over time is now
built into the formula--it also--the formula was created at a
time where we never imagined that we would have people living
with HIV, but not full-blown AIDS. So that whole group is left
out.
And I say this as a New Yorker and someone who implemented
these programs at the local level. New York and a very few set
of other communities benefit greatly from this outdated,
nonsensical formula, and they benefit at the expense of
communities represented by every one of you here today that
simply doesn't make the right amount of funding to match the
real needs that are on the ground today in communities around
the country.
So this is something that I would very much urge the
committee to look at, the legislative proposal that is in our
budget, and to pass it this year.
Mr. Price. As you say, this formula antedates the advances
we have made in HIV-AIDS diagnosis and treatment, keeping
people alive. It simply doesn't match the realities of the
current epidemic, the current spread of the disease. So I thank
you for including this in your budget request. I very much hope
Congress can act on it.
Secretary Donovan. Thank you.
Mr. Price. Thank you, Mr. Chairman.
Mr. Latham. Thank you Mr. Price.
Mr. Dent is recognized.
Mr. Dent. Thank you, Mr. Chairman.
Good morning, Mr. Secretary.
Secretary Donovan. Good morning.
Mr. Dent. Last week I appreciated your comments. I asked
you about some of HUD's regulatory authority to reduce
administrative burdens and help save some tax dollars. And I
mentioned North Dakota and Virginia had some issues there, and
you had offered to meet with some of my folks. And I just want
you to know the Allentown Housing Authority will be in touch
with your office and will follow up with your staff afterwards
just to try to follow through on that. So appreciate your
comments from last week on that issue.
Secretary Donovan. Thank you.
Mr. Dent. On the CDBG issue, Ms. Herrera Beutler, I think,
touched on it briefly, but your fiscal year 2014 budget request
included proposed legislation to revise the entitlement
qualification criteria for CDBG. The changes included possible
elimination of grandfathering and a minimum grant threshold for
entitlement communities. Your proposal for fiscal year 2015
shows that feedback from listening sessions with grantees would
be included in any such proposal going forward.
Mr. Secretary, what are your new proposals for revising the
CDBG entitlement criteria? And can you also share some of the
insights and recommendations that you received from these
listening sessions?
CDBG ENTITLEMENT CRITERIA
Secretary Donovan. I would really point to two things. One
is we obviously heard concerns along the lines the
Congresswoman mentioned, that smaller communities do like to
have direct access to that funding.
So what we included was a set of options, more flexibility
for communities to team together on administration, on
oversight, on a bunch of these expenses, so that we could
create a way for them to keep the funding directly, but still
meet the needs, I think, to run the programs you talked about,
efficiency and savings, to run the programs more effectively
and more efficiently.
The second thing I would say is that we did look at a
number of ways to make the program simpler to use and less
costly for grantees that came out of those sessions, things
like synchronizing planning and reporting cycles and other
kinds of options and flexibilities in the administration of the
program. And so there are a number of those that will be
included with the legislative language as well.
Mr. Dent. Were those some of the insights and
recommendations that you gathered from the sessions?
Secretary Donovan. Absolutely, they came directly from
those conversations.
Mr. Dent. Okay. Thank you.
And one final question or comment. I would like to discuss
a casework issue related to my office that we spent several
months on, working on, which I discussed briefly with you last
December. There is a manufactured housing operation in
Pennsylvania that had their operation shut down by HUD on
December 3rd, 2013, what appears to have been a clerical error.
The company's leadership acted, I thought, pretty quickly to
obtain the necessary paperwork from HUD. They found this to be
a needlessly difficult task. They were given little guidance
regarding their error and how to rectify it. The long delays
resulted in the workers being laid off from their jobs until
the paperwork came through, and they were finally permitted to
get back to work.
It seems to me there is room for improving some of HUD's
communications with the private sector. And, Secretary Donovan,
I guess the question is what is HUD doing to improve its
customer service and ensure that no company is unfairly harmed
by bureaucratic intransigence while doing their due diligence
to comply with Department rules and policies?
Secretary Donovan. Congressman, I want to thank you
directly for your intervention here. To be frank, this was an
issue where certainly, from our perspective, it wasn't just a
clerical error. This was something where there were some
significant concerns about the structural integrity of this
proposed sort of alternative design that had been approved in
the past. There had been changes made, and the company--we had
reached out a number of times to this company to try to get
this resolved, without success, and it was only when your
office became involved that we were able to move the process
forward.
I am pleased to say we have resolved that, as you know,
that workers are back at work. But we certainly saw this as an
issue where we have taken the steps, we had done outreach and
had not been successful in being able to get the company to
comply. And we will continue to try to work with them. And I
would be happy, if you have specific suggestions of where you
think our communication fell down, to try to correct those.
Mr. Dent. Thank you, and the staff, too. The company had
reached out me to--you know, to try to help move this along.
And things did get better after we did intervene and your
office got involved, and I appreciate that. We will follow up
with you after the meeting about how to, you know--just some
things we thought could have been done a little bit better. But
thank you again.
Secretary Donovan. Thank you.
Mr. Dent. Yield back.
Mr. Latham. Thank you, Mr. Dent.
Mr. Quigley is recognized.
Mr. Quigley. Thank you, Mr. Chairman.
Welcome back, Mr. Secretary.
Secretary Donovan. It is good to be back.
Mr. Quigley. Following up on Mr. Price's questions about
HOPWA and the new formula, you are absolutely right in what a
dramatic difference and how important this could be to my
committee and the HIV-AIDS community in Chicago. Because they
are so interested, and so am I, could you give us a little more
insight as to the timing and when we might see details of the
formula, and a little more information about how this formula
is going to be different from the existing?
LEGISLATIVE CHANGES TO HOPWA
Secretary Donovan. The legislative language we put out, I
was just confirming, it was actually part of the budget that we
published. We have a further legislative package that will be
coming, but the specifics of the language on this proposed
change was included in the budget itself.
Mr. Quigley. When might you see the new language that you
just referenced, the one that is still to be released?
Secretary Donovan. That new language I would expect to be
out--it will be for the entire administration, I would expect,
in the next 6 to 8 weeks. The key language for HOPWA was
included into the budget that we did publish, so I don't expect
any additional proposals in this further legislative----
Mr. Quigley. Change that language at all.
Secretary Donovan. We have spent a lot of time on this. As
Congressman Price referenced, there has been a lot of focus
from the CDC, from a range of organizations around the country
on this. We think we have reached the right proposal in the
legislative language based on those discussions. And so we
really hope that the committee will take it up and pass it this
year.
Mr. Quigley. Thank you.
The Office of HIV-AIDS Housing, does it currently have some
vacancies in that office?
Secretary Donovan. It does. We have been working to try to
create a better alignment between the office that works on HIV
and AIDS and our office that works on homelessness, because we
see increasingly a significant overlap in those populations,
and we believe better coordination between those offices will
help us better serve those with HIV and AIDS who are
particularly vulnerable to homelessness.
Mr. Quigley. And how will that affect your filling the
existing vacancies? You are just trying to get people who are
going to work on both issues, or are you going to change the
whole system and have them coordinate more?
Secretary Donovan. Effectively what we are doing is having
the HIV-AIDS Office report within the Office of Special Needs
Programs to the same office director, which will give us better
coordination and allow us, frankly, to use more resources that
are within the homelessness office to be able to expand our
focus on HIV and AIDS, and not only better coordinate, but to
have just more bodies, more folks that are working on it and
able to focus on the HIV-AIDS programs.
Mr. Quigley. Thank you, Mr. Secretary.
Mr. Chairman, I yield back.
Mr. Latham. Thank you very much, Mr. Quigley.
We just got called for votes, which will end the hearing
this morning, but I think we can go for about another 10
minutes. Maybe I will get one round and one for the ranking
member.
Mr. Secretary, performance on the CDBG grants allocated for
Hurricane Sandy has been painfully slow, and after a year and a
half, few homes have been rebuilt. It is looking like it will
be years before billions of dollars in recovery grants for
infrastructure and public services will actually be put to use.
Perhaps even more frustrating, there are billions of dollars
that remain unallocated by HUD, while eligible grantees from
2011, 2012, and 2013 storm seasons await action by the Federal
Government.
Exactly how much funding remains unallocated, and why is
HUD still holding those funds at the agency level over a year
and a half after Sandy and 4 months after the last eligible
storm would have made landfall?
HURRICANE SANDY ALLOCATIONS
Secretary Donovan. At this point, there is about 4 billion
that remains unallocated. We look forward to meeting with the
committee very shortly to discuss that. Basically the issue
was, because this allocation covered storms up through December
of 2013, we needed to wait for the final information about the
impact of those storms. And particularly, as you know, CDBG
goes to unmet needs, so we had to look at what needs of those
storms were being met by FEMA, SBA, other programs. We now have
full data on those storms and the unmet needs, and we are
prepared to meet with you in the coming days to discuss with
you a proposed way to allocate those remaining funds.
Mr. Latham. It is my understanding there are a lot of
eligible grantees from other storms besides Hurricane Sandy
that were not treated equally regarding their unmet needs, and
funds being provided to those non-Sandy storms. What percentage
of unmet need has been provided to the non-Sandy storm
grantees? And is that the same percentage as the Sandy storm?
Secretary Donovan. In the proposal that we want to discuss
with you, we would treat them exactly the same as the way the
Sandy grantees have been treated. There have been some updates
and changes that have been made over the last few years in the
way that we allocate funds.
Mr. Latham. The question is currently.
Secretary Donovan. Currently.
Mr. Latham. I mean, is the Sandy percentage much greater
than the other ones?
Secretary Donovan. Currently it is somewhat higher for
Sandy because we have added in, at the direction of the
legislation, resilience needs and other needs that were not
included before.
Mr. Latham. That was my next question.
Secretary Donovan. Again, we are literally at the point
where we want to sit down and talk through with you a way to
make sure that we are being very even-handed about the needs
across the country.
Mr. Latham. Grants to the Sandy communities were
considerably higher than other grantees because of their unmet
needs estimates with the multiplier you called resiliency. Has
this ever been done before, and do you plan to offer non-Sandy
grantees the same multiplier? ``Unmet needs'' is not a climate
change program. Has this ever been done before in other
communities?
Secretary Donovan. It is an approach that is different from
the approach that we have used in the past. Frankly, I think it
is a better approach. And I think if you talk to grantees, they
are very clear that the problem is they are often funded just
to build back what was there before.
And I think in particular Cedar Rapids is a community that
was hit very hard and wants to do the right thing in terms of
building community-level flood protection, and that kind of
need hasn't been funded through CDBG before.
Mr. Latham. So you are offering them resiliency?
Secretary Donovan. As I mentioned, we look forward to
sitting down with you literally within the next few days to be
able to present to you a proposal of how to do that.
Mr. Latham. Why Sandy communities and not other ones?
Secretary Donovan. Because these formulas have changed over
time. As a result of the work that was done in the Sandy task
force, we identified what we thought was a better way to
allocate CDBG, and we want to now go back and make sure that we
are treating all of those communities in an even-handed way.
The other thing I would just say is recognize that when
allocations were made to those earlier communities, they were
much smaller. We didn't know there was going to be a Sandy
allocation of the scale that was made, and so this is a chance
to go back and supplement earlier appropriations, which, in
terms of meeting unmet needs, were much, much smaller.
And so had we had a crystal ball and known that this
allocation was coming, we might have looked at doing something
different. We didn't, obviously, and this is a chance to be
able to go back and make sure that it is being even-handed. I
very much understand your concerns. We believe you are right to
make sure that we are doing this in an even-handed way, and we
do have a proposal we want to share with you on that.
Mr. Latham. Thank you.
Mr. Pastor.
Mr. Pastor. Mr. Secretary, last year I asked you about your
IT. You had a number of people look at your IT and say it was--
you needed to upgrade it, you needed to modernize it.
So the question is how far along are you with the system
you have now? And at the last hearing, you talked about a
transformation where you integrate--you were going to integrate
to PHAs. And so in the budget request, how far does it get you?
And is there also programming for cybersecurity?
IT SYSTEMS
Secretary Donovan. So I think we have made real progress
working with the committee. For example, our NGMS system, which
will consolidate and improve our oversight of rental
assistance, has made significant progress. We have implemented
this past year the first two components of that system. We are
also making real progress on our FHA transformation, technology
initiative. So we are making progress.
I will say that we are concerned that the level of funding
these past few years has not been substantial enough for us to
move these key projects as quickly as we would like, and we do
want to discuss with the committee the ability to make sure we
have adequate funds for new system development, not just
maintenance of funds.
And this goes directly to your question about
cybersecurity. We have made real advances. For example, we have
acquired software that will allow us to scan every outgoing
email for what we call PII, you know, personal identified
information. But if we are not able to upgrade these systems
overall, we will continue to have unsupported systems that do
not have the latest in security. And so that is an issue we are
concerned about in terms of the overall budget for developing
new systems.
Mr. Pastor. Thank you.
Secretary Donovan. Thank you.
Mr. Pastor. Thank you, Mr. Chairman.
Mr. Latham. With the votes on the floor, I think we are
going to have to adjourn the hearing. I know there are a lot of
questions that people have that will be for the record. We
would ask that if we could get the response back as quickly as
possible. Within at least 30 days, we are going to be starting
to write the bill pretty quickly.
Secretary Donovan. Absolutely.
Mr. Latham. We appreciate your efforts to make that happen.
Thank you very much. This will be the last hearing. I know you
hate that.
Mr. Pastor. I am going to reconsider. I am having second
thoughts here. I want to see Donovan one more time.
Mr. Latham. My people at home have pretty well accepted.
But I just want to publicly thank Mr. Pastor, been a great,
great friend, ranking member, for all your cooperation. And it
has been a real treat and an honor to have this opportunity to
serve here with you.
Mr. Pastor. Well, Mr. Secretary, the people ask me why I
decided to retire. I could not bear being up here 1 year
without Chairman Latham, and so I thought I would hang it up.
But I have to tell you that I have really enjoyed his
leadership. And obviously we have had a friendship for many
years. And thank you and thanks to Chairman Latham for your
leadership and your friendship.
Secretary Donovan. Thank you both for your leadership and
friendship. It has meant a lot to communities around the
country.
Mr. Latham. Very good. Thank you. The hearing is adjourned.
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W I T N E S S E S
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Page
Donovan, Hon. Shaun............................................135, 253
Ferro, Anne...................................................... 165
Foxx, Hon. Anthony............................................... 1
Huerta, Michael.................................................. 165
Jaenichen, Paul.................................................. 165
McMillan, Therese................................................ 165
Nadeau, Greg..................................................... 165
Quarterman, Cynthia.............................................. 165
Szabo, Joseph.................................................... 165