How Can We Maximize Private Sector Participation in Transportation?—Part Ii

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How Can We Maximize Private Sector Participation in Transportation?—Part Ii HOW CAN WE MAXIMIZE PRIVATE SECTOR PARTICIPATION IN TRANSPORTATION?—PART II HEARING BEFORE THE SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY AFFAIRS OF THE COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS SECOND SESSION SEPTEMBER 30, 2004 Serial No. 108–277 Printed for the use of the Committee on Government Reform ( Available via the World Wide Web: http://www.gpo.gov/congress/house http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 98–605 PDF WASHINGTON : 2005 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 11:01 Mar 10, 2005 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 D:\DOCS\98605.TXT HGOVREF1 PsN: HGOVREF1 COMMITTEE ON GOVERNMENT REFORM TOM DAVIS, Virginia, Chairman DAN BURTON, Indiana HENRY A. WAXMAN, California CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. MCHUGH, New York EDOLPHUS TOWNS, New York JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York STEVEN C. LATOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland DOUG OSE, California DENNIS J. KUCINICH, Ohio RON LEWIS, Kentucky DANNY K. DAVIS, Illinois TODD RUSSELL PLATTS, Pennsylvania JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah WM. LACY CLAY, Missouri ADAM H. PUTNAM, Florida DIANE E. WATSON, California EDWARD L. SCHROCK, Virginia STEPHEN F. LYNCH, Massachusetts JOHN J. DUNCAN, JR., Tennessee CHRIS VAN HOLLEN, Maryland NATHAN DEAL, Georgia LINDA T. SANCHEZ, California CANDICE S. MILLER, Michigan C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland TIM MURPHY, Pennsylvania ELEANOR HOLMES NORTON, District of MICHAEL R. TURNER, Ohio Columbia JOHN R. CARTER, Texas JIM COOPER, Tennessee MARSHA BLACKBURN, Tennessee BETTY MCCOLLUM, Minnesota PATRICK J. TIBERI, Ohio ——— KATHERINE HARRIS, Florida BERNARD SANDERS, Vermont MICHAEL C. BURGESS, Texas (Independent) MELISSA WOJCIAK, Staff Director DAVID MARIN, Deputy Staff Director/Communications Director ROB BORDEN, Parliamentarian TERESA AUSTIN, Chief Clerk PHIL BARNETT, Minority Chief of Staff/Chief Counsel SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY AFFAIRS DOUG OSE, California, Chairman EDWARD L. SCHROCK, Virginia JOHN F. TIERNEY, Massachusetts CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California JOHN M. MCHUGH, New York PAUL E. KANJORSKI, Pennsylvania CHRIS CANNON, Utah DENNIS J. KUCINICH, Ohio NATHAN DEAL, Georgia CHRIS VAN HOLLEN, Maryland CANDICE S. MILLER, Michigan JIM COOPER, Tennessee PATRICK J. TIBERI, Ohio EX OFFICIO TOM DAVIS, Virginia HENRY A. WAXMAN, California BARBARA F. KAHLOW, Staff Director LAUREN JACOBS, Clerk KRISTA BOYD, Minority Counsel (II) VerDate 11-MAY-2000 11:01 Mar 10, 2005 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 D:\DOCS\98605.TXT HGOVREF1 PsN: HGOVREF1 C O N T E N T S Page Hearing held on September 30, 2004 ..................................................................... 1 Statement of: Dorn, Jennifer L., Administrator, Federal Transit Administration, U.S. Department of Transportation, accompanied by D.J. Gribbin, Chief Counsel, U.S. Department of Transportation, Federal Highway Admin- istration; and William Sears, Chief Counsel, Federal Transit Adminis- tration ............................................................................................................ 11 Tangherlini, Dan, director, D.C. Department of Transportation, Washing- ton, DC; Tom Mack, chairman, Tourmobile Sightseeing, Washington, DC; Jerome Cooper, chairman, Transit Alliance and president, Jamaica Buses, Inc., Jamaica, NY; David N. Smith, director of marketing and sales, Oleta Coach Lines, Inc., Williamsburg, VA; and Steven Diaz, esq., former Chief Counsel, Federal Transit Administration, Depart- ment of Transportation, Law Office of Steven A. Diaz .............................. 50 Letters, statements, etc., submitted for the record by: Cooper, Jerome, chairman, Transit Alliance and president, Jamaica Buses, Inc., Jamaica, NY, prepared statement of ...................................... 88 Diaz, Steven, esq., former Chief Counsel, Federal Transit Administration, Department of Transportation, Law Office of Steven A. Diaz, prepared statement of ................................................................................................... 124 Dorn, Jennifer L., Administrator, Federal Transit Administration, U.S. Department of Transportation, prepared statement of ............................. 14 Gribbin, D.J., Chief Counsel, U.S. Department of Transportation, Federal Highway Administration, letters to Congressmen ..................................... 41 Mack, Tom, chairman, Tourmobile Sightseeing, Washington, DC, pre- pared statement of ........................................................................................ 77 Ose, Hon. Doug, a Representative in Congress from the State of Califor- nia, prepared statement of ........................................................................... 4 Smith, David N., director of marketing and sales, Oleta Coach Lines, Inc., Williamsburg, VA, prepared statement of .......................................... 110 Tangherlini, Dan, director, D.C. Department of Transportation, Washing- ton, DC, prepared statement of ................................................................... 53 (III) VerDate 11-MAY-2000 11:01 Mar 10, 2005 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 D:\DOCS\98605.TXT HGOVREF1 PsN: HGOVREF1 VerDate 11-MAY-2000 11:01 Mar 10, 2005 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 D:\DOCS\98605.TXT HGOVREF1 PsN: HGOVREF1 HOW CAN WE MAXIMIZE PRIVATE SECTOR PARTICIPATION IN TRANSPORTATION?— PART II THURSDAY, SEPTEMBER 30, 2004 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY POLICY, NATURAL RESOURCES AND REGULATORY AFFAIRS, COMMITTEE ON GOVERNMENT REFORM, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2154, Rayburn House Office Building, Hon. Doug Ose (chairman of the subcommittee) presiding. Present: Representatives Ose, Tiberi, Davis (ex officio), Tierney, and Kucinich. Staff present: Barbara F. Kahlow, staff director; Lauren Jacobs, clerk; Megan Taormino, press secretary; Krista Boyd, minority counsel; and Cecelia Morton, minority office manager. Mr. OSE. Welcome to this morning’s meeting of the Energy Pol- icy, Natural Resources and Regulatory Affairs Subcommittee. Not- ing the presence of a quorum, I will call the meeting to order. Today, we are meeting on the subject of ‘‘How Can We Maximize Private Sector Participation in Transportation?’’ I am joined by the gentleman from Ohio, Mr. Tiberi. We are going to go ahead and commence. On May 18, 2004, this subcommittee held its initial hearing on maximizing private sector participation in transportation. Wit- nesses included the Department of Transportation, think tank ex- perts, and three adversely affected small business operators of mass transit services. Today, we will focus on mass transit and highways, and we will further explore DOT’s record in implement- ing the various statutory and regulatory private sector participa- tion requirements. There are many advantages to participation by the private sector in improving America’s transportation system. For example, infra- structure improvement projects can often be completed more quick- ly and at reduced cost, transportation services can often be deliv- ered more cost-effectively, and Federal and State funds can be de- voted to other pressing needs. In 1964, Congress began to enact laws to encourage private sec- tor participation in transportation. The 1966 law that established Department of Transportation identified six reasons for the cabi- net-level department. The second reason was to ‘‘facilitate the de- velopment and improvement of coordinated transportation service (1) VerDate 11-MAY-2000 11:01 Mar 10, 2005 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\98605.TXT HGOVREF1 PsN: HGOVREF1 2 to be provided by private enterprise to the maximum extent fea- sible.’’ DOT’s implementing rules assign primary responsibility for ‘‘evaluation of private transportation sector operating and economic issues’’ to the Assistant Secretary for Transportation Policy, who is organizationally located within the Office of the Secretary. In addition to laws requiring private sector participation to the maximum extent feasible, Federal regulations support this objec- tive. For example, the governmentwide grants management com- mon rule provides that Federal grantees and subgrantees ‘‘must not use equipment acquired with grant funds to provide services for a fee to compete unfairly with private companies that provide equivalent services.’’ I became especially interested in this subject in March 2003, when I learned of a public takeover of an over 25-year competi- tively awarded contract for mass transit services in Sacramento, California. Since then, I have found a number of things. First, we have come upon unneeded expenditure of scarce Federal funds, substantial in nature; second, we have come upon noncompliance by a federally funded local transit grantee with the Federal law re- quiring private sector participation to the maximum extent fea- sible; and, third, we found inadequate enforcement by the Depart- ment of Transportation. Now, after the public takeover, in the city of Sacramento, peak hour bus service is every 15 minutes,
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