i was brought here more to discuss how close we are to seeing these benefits and what must be done to ensure we get to where we want to be. h p ℠ this country to put a man on the moon before the end of the 1960's he knew that his bold aggressive promise required a new culture, a new mindset and ultimately a new administration of nasa to become a reality. this kind of example is something that i think we had should be mindful of today. don't misunderstood me. i have complete confidence in the united states department of transportation and secretary

lahood, his colleagues at the federal railroad administration have -- a team including the administration. we have not had a chance to work together. and with karen ray, we had a pleasure of being with her in houston at one of the outreach sessions. they're fully capable of developing the system throughout the nation. in order for america's in the broadest sense of the term moon shot to become a reality we, all of us here, and congress must work in concert with the same bold initiative. we must recognize that the clear view of this administration and congress combined with the mounting public and private sector groups such as the texas high-speed rail and transportation corporation, the california high-speed rail authority, the florida high-speed rail authority working with nafta, with other organizations represent a once in a century opportunity to make real and positive impact on our country's transportation and economic development landscape. let's be certain that we all have our eyes on the same

prize, passenger trains traveling at at least 185 miles an hour or more on a new dedicated, as mr. boardman talked about, high-speed rail infrastructure. if we have that separate infrastructure, we improve safety, reduce collisions and improve economic benefits to the community. as we look to build this new system, it's important to remember that we are breaking new ground in this nation. it would be wise to provide flexibility in these federal funds to provide for market studies and environmental studies. and all the projects i am involved with at the local level it's primarily been traffic and toll road. we have the only toll road 500 miles. we always build the projects ahead of schedule and under budget. the key is having the right schedule and right budget and doing the studies beforehand so we knew what we would be spending in the end. the market and environmental studies are important if we were to attract private investment as well. in all of the suggestions up until most recently having

discussed private investment and public-private partnerships, there are places in the world where high-speed rail is covering its operational costs and making a profit for investment. there are places in america, too, where high-speed rail can make sense for private investment and to atrack these investors we must show that the routes are viable and they can cover cost. to encourage private investment we should offer tax-exempt -- additional bonds, additional funding and other financial mechanisms that might be available from the federal level. i also would encourage you as we lk to different projects we don't try to put in one formula for the entire country. innovative project delivery systems are important. there are different needs in the northeast corridor, california, illinois, and north carolina. in texas we have a linear airport kind of model where we have -- and, again, senator hutch sinnson -- hutchinson has worked with us, in every part of the country where there is a sea port, all of them are working by cities or counties. if you give local governments

an ability to connect our airports, our sea ports, and our transportation metro -- metro transportation systems we will for the first time breathe life into a truly viable interconnected mobility system. we are very grateful of the support of the administration's vision for high-speed rail and are encouraged by the size of the financial commitment. we are not working under the assumption that the federal government or any state governments alone are prepared to cover the cost of these projects for our country. i do think the governor gave comments about being able to sustain the systems that we build. but we believe that the cities and counties have a role to play in that and are coming together to try to make that work. we do have a local government corporation in the capacity to bring that coalition together. we helped deliver this project in our state and provide a service that are 340-mile texas t-bone corridor. it would bring 16 million texans living today, connect us along the gulf coast corridor to new orleans and atlanta and

to oklahoma city to little rock and up into memphis and ultimately into the midwest. we would very much look forward to working with this committee and with f.r.a. and amtrak to make that happen. so thank you very much for having us here and i look forward to questions. >> ms. fleming, we welcome you and ask you to make your remarks now, please. >> mr. chairman, ranking member thune, ranking member hutchinson and members of the subcommittee, thank you for the opportunity to discuss high-speed inner city passenger rail and the american recovery and reinvestment act. the $8 billion provided by the act for high speed and other inner city passenger rail projects have focused more attention on and generated a great deal of anticipation about the possibility of developing high-speed rail systems in the united states.

my testimony has two parts. i will discuss the factors that we have identified that affect the economic viability of high-speed rail projects and how f.r.a. strategic plan incorporates these factors. first, while the potential benefits of high-speed rail projects are many, these projects are costly, take years to develop and build and require substantial upfront public investment as well as potentially long-term operating subsidies. determining which, if any, high-speed rail projects may eventually be economically viable will rest on the factors such as ridership potential, cost and public benefits. high-speed rail is more likely to attract riders in densely and highly populated corridors especially whether there is congestion on existing transportation modes. characteristics of the proposed service are also important. as high-speed rail attracts riders where it compares favorably to transportation alternatives in terms of

door-to-door trip times, frequency of service, reliability, safety and price. costs largely hinge on the availability of rail right of way, corridors. once projects are deemed economically viable ject sponsors face the task of securing the significant upfront investment for construction costs an of sustaining public and political support and stakeholder consensus. we found that in other countries with high-speed rail systems the central government generally funded the majority of upfront costs of high-speed rail lines. the $8 billion in recovery act funds represents a significant increase in federal funds available to develop new or enhanced inner city passenger rail service. this amount, however, represents only a small fraction of the estimated costs for starting or enhancing service on the 11 federally authorized high-speed rail corridors. furthermore, the challenge of sustaining public sector support and stake holder

consensus is compounded by long project lead times, the diverse interests of numerous stakeholders and the absence of an established framework for coordination and decisionmaking. moving on to my second point, f.r.a.'s strategic plan steampts to address the absence of an institutional framework for estimates in high-speed rail. in our recent report, we discussed the need for clear identification of expected outcomes, ensuring the reliability of ridership and other forecasts to determine the viability of high-speed rail and including high-speed rail with a re-examination of other federal surface transportation programs to clarify federal goals and roles, link funding to needs of performance and reduce moto funding stovepipes. the fmple r.a.'s strategic plan is more than just a plan. first, it doesn't talk about goals, how these investments will achieve them and how the federal government will determine which corridors it should invest in.

f.r.a. uses the strategic plan the first step in planning federal involvement. f.r.a. has emphasized that it will involve stakeholders to help develop high-speed rail that's under its control. officials told us that it plans to spend recovery act funds in ways that shows success to help keep long-term political support for these projects at the local level. in conclusion, the infusion of up to $8 billion in recovery act funds is only a first step in developing potentially viable high-speed rail projects. the host of seeming and attractable issues, such as through high cost, uncertain ridership and need for broad political support that have hamped hampered development of these projects are still with us, and these issues will need to be resolved to effectively spend recovery act funds. surmounting these challenges will require federal, state and other stakeholder leadership to champion the development of economically viable high-speed rail corridors and the political will to carry them out. if will also require clear,

specific policies and delineations of expected outcomes and realistic analysis of ridership cost and other factors to drm the viability of projects and their transportation impact. mr. chairman, this concludes my statement. i would be pleased to answer any questions you or other members of the subcommittee might have. >> thank you very much ms. fleming. and, now, mr. skancke, we welcome you and invite you to give your testimony. >> thank you, mr. chairman. the tough part about being the caboose is you cover a lot of track that the previous train has covered. keeping in light with all the other -- >> get a little closer, please. >> is that a little better? >> yes. >> good afternoon, chairman lautenberg, ranking member thune, and members of the committee. thank you for allowing me to have the opportunity to testify today. in 2005, i was appointed to the national surface transportation policy and revenue study

commission by senate majority leader harry reid. in january of 2008, after two years of meetings, hearings and research, our commission recommended to congress a vision for transportation policy and funding in america. a new vision which includes a framework that will reform and hopefully revolutionize the way we do transportation policy and funding for the next 50 years. one of our recommendations was substantive reform of our passenger rail system. over the next half century, the united states is projected to add 150 million new residents. this increase will cause travel to grow at an even greater rate than the population will. we will need to provide new mobile choices which will require a cultural shift for the traveling public. we presented our report to congress in january of 2008. we recommended that the entire country should be connected by passenger rail by the year 2050. the recommendations also defined that the passenger rail

corridor should connect population centers within 500 miles of each other. just 11 months later the g.a.o. concluded that the existing inner city passenger rail system is in poor financial condition and the current structure does not effectively target federal funds to where they provide the greatest public benefit, such as transportation congestion relief. corridor routes generally less than 500 miles in length have higher ridership, perform better financially and appear to offer greater potential for public benefit. we also recommended to congress that our nation invest in at least $8 billion per year over the next 50 years in passenger rail systems. president obama and senator reid and this congress realesed that that investment in passenger rail is needed now, not over the next 50 years. so $8 billion was put into the stimulus bill to not only create jobs but to kick-start the program to begin a valiant new vision for america's transportation modes. i think this president and senator reid and this congress

have a vision for transportation in our nation and is much like that of president eisenhower, which is connecting america. the united states's way behind the curve in passenger rail service as we all know. the far east, europe and the middle east have invested billions in passenger rail system for years. our lack of vision and investment is deteriorating our global competitiveness and our quality of life. the nation's new vision should not just focus on existing passenger rail linds but should expand beyond the current corridors. in my opinion, the vision should include a western connection much like the recommendations of our commission. connecting all 22 western state in phases as a system, not as pieces, should be a priority. the first phase of a western connection is currently being considered and under way which is the desert express high-speed rail passenger corridor connecting victorville, california, to las vegas. it will connect that area to

palmdale, california. which will go to san francisco to los angeles. this will eventually connect three major western metropolitan megaregions. each project meeting the criteria set out by our commission and the g.a.o. for being corridors of being 500 miles or less. this strigs is one that takes leadership and courage to get it done. it can be done and it should be done. i know having grown up in sioux falls, south dakota, it would have been nice too take a trip to minneapolis for a vikings game. but i was at home stuck in a blizzard because we had to travel by car. yes, these systems will be costly to design, fund and construct, but we can do this. this is the united states of america. mr. chairman, i have three policy changes for this committee to consider in the new authorization. first, we must agree upon a bold new vision and make the cultural shift in the h in the way we do transportation. a vision they can invest in and

believe in, connecting america much like the eisenhower highway system did. we@@@@@@x it will include reliable, ontime performance, congestion mitigation, safety and environmental benefits,

improved choice -- improve choices, mobility options for all communities and reduce energy use. it needs to have ontime delivery. it needs to be reliable or the public won't use it. albert einstein said we won't be able to -- let's change our patterns of thought so we can solve the problems we created with our current patterns and thauths. mr. chairman, you should be commended for having this hearing today to talk about high-speed passenger rail. your leadership demonstrates the change is -- changes in washington, d.c., and is right here in this committee. passenger rail is the future for moving americans and now is the time to make that investment. we need to restore hope and performance in our transportation system. our fellow citizens are counting on us to get it done. thank you.

>> i would ask governor rendell a question. and that is president obama made high-speed rail a reality. the president has also proposed . i have to be a little cautious with the climate change money

we are working arduously. to say that there are many problems, some of them more severe than others, among them for generations to follow, to breathe the air and conduct a healthy life with a climate change. and one of the best things for climate change is i think you said is rail. -- high-speed rail system. -- what we have invested in

rail is pitiful in comparison. in terms of more efficient operations. but the security needs of the country, in -- to be able to function. in the development of high-speed service receive a dedicated federal funding like our interstate highway system, our aviation system. that is really the first part of the question i ask. >> well, there's a sports writer in philadelphia who writes a column once a month and he entitles it "if i were king of the world" and he would delineate changes in sports. if i were king of the world we would stop messing around. every one of the g-7 nations have created massive infrastructure repair problems. japan, germany, countries a

fraction of our size who have spent over $1 trillion one time in a five to 10-year infrastructure program, that's what we should be doing as a nation. we should finance it through a capital budget. and we should change the way we score such financing meck anythings. it's the only way we can ever get this done. i mean, we're kidding ourselves. we're doing something to pat ourselves on the back saying, boy, i heard secretary lahood, and i think he's terrific, he said $13 billion is terrific. $13 billion is better than nothing. well, sure it is. but it doesn't get us anywhere down the road. we can't do infrastructure on the cheap. we have to invest what we need to invest and we have to find a way to do it. and we have to find the political courage to find a way to pay for it. i think a capital budget is long overdue. i testified as -- >> i agree. >> i ran a pretty good size company and i can tell you if --

>> no company would ever -- >> cash basis it -- >> you wouldn't finance your capital means out of operating costs and we do. we finance building a train or bridge the same way we finance paper clips in the federal government. it's nuts. it's time to change. it's time to change and we better do it soon because infrastructure is a lot like that commercial, you can pay me now and he holds up a can of oil filter, $8.75, or you can pay me later, he points toe dilap dated car. it's not getting cheaper. it's not getting cheaper. >> you and i are very much on the same page. and all we have to do is convince about 85 others here that we're doing the right thing there. ms. fleming, in your march, 2009, report you studied high-speed rail service in france, japan and spain. each of these countries has committed significant government support for its

high-speed rail system. is it realistic to expect a high-speed passenger rail service to be successful without government contributing toward capital or -- and/or operating expense? >> what we found is there was a real commitment and priority in france, spain and japan. and the majority of upfront construction costs was born by the central government in these countries without the expectation that they would recoup these initial investments. and most of these countries, what they did was they build a initial trunk line in order to show success and then build upon it. the commitment followed with a significant amounts of money, and that model allowed them to begin initial construction relatively quickly than if they didn't have that large investment by the central

governments. >> thank you. i'd like to ask you a question, mr. boardman, and hope that we can get a quick response. my understanding that foreign-owned manufacturers passenger cars, high-speed rail equipment are interested in competing for the $8 billion that are provided in the recovery act. what can we do to encourage more american companies to enter in the high-speed rail manufacturing market? >> mr. chairman, i was encouraged yesterday to see that in the field hearing that the d.n.i. had, g.e. locomotive provided testimony where they are ready, they said, to build the next generation of diesel high speed and their definition was 110 to 124. they had their c.e.o., lorenzo

simenelli in pittsburgh. i think they're catching on to the fact there is a chitment here in this country and i think that's the most important part of that. >> and the commonwealth is velfing $7 million in helping to build that technology, senator. >> thank you. i'm going to turn to my ranking member here, senator thune, for you, sir, to ask your question. >> thank you, mr. chairman. governor -- senator wyden and i have a proposal called build america bonds which i think is sort of geared at what you're talking about. it's a way of bonding for capital improvements. i agree entirely that the way that we budget around here defies any sort of common sense or, you know, rational basis for making these types of decisions. it's clearly not the way that these decisions will be made in the private sector if we ran a private business. i appreciate your observations about that.

and i would say to mr. skancke that if brett favre is playing for the vikings next year there are going to be a lot more people that will want to get from sioux falls to minneapolis and prmblely quickly and without having to drive through a blizzard. if i might direct a question to, this will be to mr. szabo and ms. fleming. what i take from the g.a.o.'s testimony is ridership and cost. the concern is that overly optimistic project proponents is going to overstatement ridership and understatement cost. if the federal government makes investment decisions based upon faulty forecasts we're going to fund the projects that won't be successful. so i guess the question and maybe i'll direct this to mr. szabo is how are you going to evaluate scutch projections for proposed projects -- such projections for proposed projects and are you going to rely on the project sponsor for those? >> well, first off, one of the

key components that we will be ranking the applications on will be their proposed management plan and their management of risk which includes covering all of the operating costs and any cost overruns. those responsibilities belong to the applicant, not the federal government. so clearly it's in their best interest to protect themselves to ensure that those forecasts are accurate. one of the things that we plan to do is to use a temp late where essentially -- template where essentially they'll provide the data to us. we'll run that data through our own calculations to ensure that as we compare the projects we're getting an apples to apples comparison. we believe that that will help ensure the integrity of the data and help us make sure that

we have accurate forecasts. clearly at if r.a. we understand the fact that the projects that we -- at f.r.a. we understand the fact that the projects that we choose are going to have to be successful. we understand we cannot squander this opportunity. that if we are not in fact very careful about the projects we select and ensuring the success of the projects that we select, if we fumble that wall there won't be a next generation on this. so we understand the responsibility that we have and we're prepared to take that challenge. >> senator, can i add something quickly? one of the ways to ensure that you get an accurate estimate is if the state's recommending it, make sure they chip in some money so they bear the risk as well. amtrak and pennsylvania shared the $145 million cost of the expansion of philadelphia to harrisburg.

>> that's a good suggestion and one that we ought to i think take to heart if which do when we start looking at evaluating these projects. >> senator, it is a key part of our plan. >> it is, ok. and let me ask ms. fleming to sort of follow-up that question too. do you think the department should take or make sure these forecasts, when it relies on this information that you want to make them as accurate as possible. i guess my question is, do you believe there ought to be a neutral party that evalue waits these forecasts too in addion to having the -- >> ridership and other forecasts are key factors in determining whether a project or a system is going to be economically viable. and unfortunately, you know, statistics and results have shown that ridership tends to be overestimated and costs tends to be underestimated. so we feel there are several ways to try to get and provide more reliable statistics.

the first would be kind of following governor rendell which is really obligating the state and local governments to share some of the risks of underestimated costs. for those projects where they're seeking federal assistance. another way would be to abstain statements and forecasts from independent sources -- would be to obtain estimates and forecasts from independent sources. and lastly, making the forecasts subjected to peer review and making the data publicly available. so i think that those three things would be to better ensure that the information would be more reliable. >> mr. szabo, after we spend $13 billion that's likely to be appropriated for high-speed rail over the next five years, do you expect the united states to have at least one corridor of substantial length that's served by a japanese or european style high-speed railroad? >> i think it's important