[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]










     CONTINUED OVERSIGHT OF THE CALIFORNIA HIGH-SPEED RAIL PROJECT

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

                                (114-50)

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                       RAILROADS, PIPELINES, AND
                          HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

              AUGUST 29, 2016 (San Francisco, California)

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman

DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of 
  Vice Chair                         Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
FRANK A. LoBIONDO, New Jersey        CORRINE BROWN, Florida
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
CANDICE S. MILLER, Michigan          ELIJAH E. CUMMINGS, Maryland
DUNCAN HUNTER, California            RICK LARSEN, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHAEL E. CAPUANO, Massachusetts
LOU BARLETTA, Pennsylvania           GRACE F. NAPOLITANO, California
BLAKE FARENTHOLD, Texas              DANIEL LIPINSKI, Illinois
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
DANIEL WEBSTER, Florida              DONNA F. EDWARDS, Maryland
JEFF DENHAM, California              JOHN GARAMENDI, California
REID J. RIBBLE, Wisconsin            ANDRE CARSON, Indiana
THOMAS MASSIE, Kentucky              JANICE HAHN, California
MARK MEADOWS, North Carolina         RICHARD M. NOLAN, Minnesota
SCOTT PERRY, Pennsylvania            ANN KIRKPATRICK, Arizona
RODNEY DAVIS, Illinois               DINA TITUS, Nevada
MARK SANFORD, South Carolina         SEAN PATRICK MALONEY, New York
ROB WOODALL, Georgia                 ELIZABETH H. ESTY, Connecticut
TODD ROKITA, Indiana                 LOIS FRANKEL, Florida
JOHN KATKO, New York                 CHERI BUSTOS, Illinois
BRIAN BABIN, Texas                   JARED HUFFMAN, California
CRESENT HARDY, Nevada                JULIA BROWNLEY, California
RYAN A. COSTELLO, Pennsylvania
GARRET GRAVES, Louisiana
MIMI WALTERS, California
BARBARA COMSTOCK, Virginia
CARLOS CURBELO, Florida
DAVID ROUZER, North Carolina
LEE M. ZELDIN, New York
MIKE BOST, Illinois

                                  (ii)

  


     Subcommittee on Railroads, Pipelines, and Hazardous Materials

                   JEFF DENHAM, California, Chairman

JOHN J. DUNCAN, Jr., Tennessee       MICHAEL E. CAPUANO, Massachusetts
JOHN L. MICA, Florida                CORRINE BROWN, Florida
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
CANDICE S. MILLER, Michigan          JERROLD NADLER, New York
LOU BARLETTA, Pennsylvania           ELIJAH E. CUMMINGS, Maryland
BLAKE FARENTHOLD, Texas              RICK LARSEN, Washington
RICHARD L. HANNA, New York           STEVE COHEN, Tennessee
DANIEL WEBSTER, Florida              ALBIO SIRES, New Jersey
SCOTT PERRY, Pennsylvania            RICHARD M. NOLAN, Minnesota
TODD ROKITA, Indiana                 ELIZABETH H. ESTY, Connecticut
JOHN KATKO, New York                 GRACE F. NAPOLITANO, California
BRIAN BABIN, Texas                   JANICE HAHN, California
CRESENT HARDY, Nevada                PETER A. DeFAZIO, Oregon (Ex 
MIMI WALTERS, California             Officio)
LEE M. ZELDIN, New York
MIKE BOST, Illinois
BILL SHUSTER, Pennsylvania (Ex 
Officio)

                                 (iii)
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               WITNESSES

Hon. Sarah E. Feinberg, Administrator, Federal Railroad 
  Administration:

    Testimony....................................................     3
    Prepared statement...........................................    41
Dan Richard, Chairman of the Board, California High-Speed Rail 
  Authority:

    Testimony....................................................     3
    Prepared statement...........................................    46
    Responses to questions for the record from the following 
      Representatives:

        Hon. Jeff Denham of California...........................    58
        Hon. Blake Farenthold of Texas...........................    61
Jim Hartnett, Executive Director, Caltrain:

    Testimony....................................................     3
    Prepared statement...........................................    62
    Responses to questions for the record from Hon. Jeff Denham, 
      a Representative in Congress from the State of California..    64
Stuart M. Flashman, J.D., Ph.D., Attorney, Law Offices of Stuart 
  M. Flashman:

    Testimony....................................................     3
    Prepared statement...........................................    66
Robbie Hunter, President, State Building and Construction Trades 
  Council of California:

    Testimony....................................................     3
    Prepared statement...........................................    96
    Responses to questions for the record from Hon. Jeff Denham, 
      a Representative in Congress from the State of California..    99

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California..................................................    24

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     CONTINUED OVERSIGHT OF THE CALIFORNIA HIGH-SPEED RAIL PROJECT

                              ----------                              


                        MONDAY, AUGUST 29, 2016

                  House of Representatives,
Subcommittee on Railroads, Pipelines, and Hazardous 
                                         Materials,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:06 a.m., in 
room B040, San Francisco Federal Building, 90 7th Street, San 
Francisco, CA, Hon. Jeff Denham (Chairman of the subcommittee) 
presiding.
    Present: Representatives Denham [presiding], Farenthold, 
Capuano, LaMalfa, Huffman, and Lofgren.
    Mr. Denham. The subcommittee will come to order.
    I ask unanimous consent that noncommittee members be 
permitted to sit with the committee at today's hearing and ask 
questions.
    Without objection, so ordered.
    First let me welcome our guests in attendance, as well as 
our witnesses, and I want to thank Ms. Pelosi. We had a nice 
conversation. This is a beautiful Federal building, and we 
enjoy this beautiful space being here in the bay area.
    This hearing is about one thing, and that is continued 
oversight by the Federal Government. There is a huge investment 
by the Federal taxpayers, as well as by the State taxpayers. So 
the main focus of this hearing will be on that oversight. This 
project has been awarded nearly $4 billion in Federal funding, 
and it represents nearly 40 percent of all high-speed rail 
funding awarded by the Federal Railroad Administration, the 
FRA.
    That is why I focused on this project since I became 
chairman of the Subcommittee on Railroads, Pipelines, and 
Hazardous Materials, and unfortunately I have watched as costs 
have gone up and up, and project plans have continued to 
change. When the voters of California approved this as Prop. 
1A, they approved a $33 billion project that had equal funding 
from State, Federal, and private investors. Since then, this 
project has risen to $43 billion, then over $100 billion, and 
then cut back down to $64 billion by cutting off San Diego and 
Sacramento.
    The 2016 business plan recently approved by the authority 
also had a new focus, connecting the Central Valley segment 
with the bay area via an electrified Caltrain corridor, with no 
near-term progress on closing the existing rail gap across the 
Tehachapi Mountains in southern California, meaning right now 
Amtrak has to let their passengers off to get on a bus, take 
the bus over the Tehachapis, and then get back on a train 
again. So this is something that we are going to have to 
address as this project moves forward through phase 1.
    Today I want to explore what was originally promised to 
Californians when they approved Prop. 1A in 2008, where the 
project stands now, and whether there is a realistic plan to 
complete the project that was sold to voters. We must also look 
at the Federal taxpayer and what they are going to be on the 
hook for in the future. Meeting the project mandate may be more 
difficult than before if the 25-percent set-aside from the 
California Cap and Trade Program does not produce the revenues 
the authority is currently counting on. The early Cap and Trade 
options have not raised the revenue the State was originally 
expecting, and I look forward to discussing my concerns on that 
issue today.
    I am also happy FRA Administrator Feinberg could be with us 
today, as her agency recently amended the grant agreement with 
the authority for the sixth time. I want to discuss the changes 
made in that agreement and also talk more broadly about what 
the ongoing Federal involvement with this project will be.
    California voters narrowly passed in 2008 this plan before 
voters. If the project is going to move forward beyond current 
activities, we need to know what the State and Federal 
obligation is. If the authority can't provide specific 
deliverables and a timeframe, then I believe it would be time 
for Californians to go back to the polls to vote on whether to 
continue this project.
    We have many problems facing California, most notably one 
of the worst droughts that we have ever seen. The money 
allocated to this project was part of the Federal stimulus 
package, which was done 8 years ago. In a State grappling with 
the lack of an adequate water infrastructure, we could have 
built long-term, sustainable water storage for a fraction of 
the cost. There are many shovel-ready projects that will 
directly benefit millions of California residents, including a 
number of rail projects in the bay area, a number of 
transportation projects across the State, and most critical is 
water infrastructure that could be built.
    I would now like to recognize the ranking member, Mike 
Capuano from Massachusetts, for 5 minutes for any opening 
statement he may have.
    Mr. Capuano. Thank you, Mr. Chairman.
    First of all, thank you all for having us here, and thank 
you for coming.
    This is an important issue, as is any time the Federal 
Government spends your tax dollars. In this particular case, it 
is billions of dollars. I myself am a strong proponent of the 
concept of high-speed rail any place in this country that can 
support it. Certainly, I think there is a good argument by any 
stretch of the imagination that California should be able to 
handle and support a high-speed rail system.
    I live in an area where what we have is old, and we 
struggle with problems of how to get it to a true high-speed 
system. You are building a new one, and my hope is that you can 
lead the way to show us how to improve our system.
    One way or the other, America is going to have high-speed 
rail across this country. It will take time, it will cost 
money, and there will be mistakes made. There may or may not 
have been mistakes made here already, or there will be if there 
hasn't been already. That is normal. That is a normal part of 
the process. But I think that makes these oversight hearings 
even more important. Even if you are doing the best job 
possible, there are still differences of opinion, there are 
still people who make mistakes, things happen that you didn't 
anticipate, and therefore it is our responsibility to try our 
best to make sure that Federal tax dollars are spent as wisely 
as possible. That is why I wanted to come to California, and 
that is why I am looking forward to the testimony here today.
    With that, I will yield back so we can hear from people who 
know what they are talking about.
    Mr. Denham. Thank you, Mr. Capuano.
    Let me first welcome our other Members here: three 
Californians, Ms. Lofgren, Mr. Huffman, Mr. LaMalfa; and the 
vice chair from the great State of Texas, Mr. Farenthold.
    Our panel is with the Honorable Sarah Feinberg; Mr. Dan 
Richard; Mr. Jim Hartnett, Mr. Stuart Flashman; and Mr. Robbie 
Hunter.
    I ask unanimous consent that our witnesses' full statements 
be included in the record.
    Without objection, so ordered.
    Since your written testimony has been made part of the 
record, the subcommittee will request that you limit your 
testimony to 5 minutes.
    Ms. Feinberg, you may proceed. Thank you very much.

  TESTIMONY OF HON. SARAH E. FEINBERG, ADMINISTRATOR, FEDERAL 
 RAILROAD ADMINISTRATION; DAN RICHARD, CHAIRMAN OF THE BOARD, 
 CALIFORNIA HIGH-SPEED RAIL AUTHORITY; JIM HARTNETT, EXECUTIVE 
DIRECTOR, CALTRAIN; STUART M. FLASHMAN, J.D., PH.D., ATTORNEY, 
     LAW OFFICES OF STUART M. FLASHMAN; AND ROBBIE HUNTER, 
 PRESIDENT, STATE BUILDING AND CONSTRUCTION TRADES COUNCIL OF 
                           CALIFORNIA

    Ms. Feinberg. Chairman Denham, Ranking Member Capuano, 
other Members who have joined us, thank you for inviting me to 
today's hearing.
    Much attention has been paid to the urgent need for the 
United States to build a modern transportation system to keep 
up with our growing population, increased congestion, and more 
diverse economy. Congress rightfully recognized nearly 8 years 
ago that in order to achieve this goal, our transportation 
system must include more reliable, more frequent, and faster 
passenger rail service. Congress passed two landmark pieces of 
legislation that established FRA's High-Speed Rail Program, and 
then through the Recovery Act provided the seed money to build 
the system.
    FRA and Congress conceived of a high-speed and intercity 
passenger rail program to be national in scope but led by the 
State in execution. With the launch of the program, there was 
immediate and significant interest. States submitted nearly 500 
applications requesting more than $75 billion worth of 
projects, far exceeding the funds Congress had made available. 
FRA eventually awarded $10 billion to nearly 150 rail projects, 
including $3.5 billion to California.
    With California's growing population, the State was 
understandably focused on building out a high-speed rail system 
that would serve its growing communities, because 2 railroad 
tracks can carry as many travelers in 1 hour as 16 lanes of a 
congested freeway. As the chairman knows and as anyone who 
lives, works, or visits the bay area or the Los Angeles area 
knows, they can recount far too many nightmare stories about 
congestion on the roads and in the sky: vehicular and air 
traffic at all times of day, constant commuters, families and 
businesses, hours of time and resources they can spend 
otherwise.
    The L.A. to San Francisco flight alone has become one of 
the busiest and most delay-prone air markets in the United 
States. One in every five flights is late by more than an hour. 
And the challenges of moving more people and goods in a safe 
and efficient way will only continue to grow. By 2050, 
California is predicted to be home to another 12 million 
people. To add capacity to California's transportation system, 
the California High-Speed Rail Authority is leveraging the 
majority of the $3.5 billion that FRA awarded to construct the 
first 119 miles of rail in California's Central Valley.
    The Federal investment made in California's high-speed rail 
is significant, and FRA takes its obligations to protect the 
taxpayers' investment seriously. FRA closely monitors the 
California project, as we do with all grants. With all major 
and ambitious transportation projects, there have been and 
remain important challenges that demand continued attention.
    Consistent with grants management and oversight best 
practices, FRA works closely with all of our grantees to ensure 
that taxpayer dollars are spent wisely and that contractual 
agreements are current and adhered to.
    To be clear, and despite reporting to the contrary, 
ensuring that a project is meeting its obligations and amending 
contractual grant agreements is not only a due diligence 
requirement but it is also standard practice for any agency 
that oversees grants.
    Last spring, the California High-Speed Rail Authority and 
FRA executed the Sixth Amendment to ensure that the contractual 
agreement that exists between the two entities accurately 
reflects the current project status. California High-Speed Rail 
Authority also requested FRA's approval of a $60 million 
working capital advance for right-of-way acquisitions needed to 
allow construction work to progress and remain on schedule.
    A working capital advance is one of the approved payment 
methods allowed under the Federal Government's stringent grant 
payment rules. This tool is available to any grantee and can be 
used effectively for timely right-of-way acquisition on large 
infrastructure projects across the country. In fact, other 
agencies, like the Department of Health and Human Services and 
the Department of Homeland Security, also use the same method 
of payment.
    Mr. Chairman, in closing, for centuries leaders in 
California and across the United States have fulfilled bold 
projects. Many of these projects haven't been easy or without 
challenges, but they are worth the persistence and dedication 
because they are necessary to move our country forward. I 
believe this project is no different.
    We continue to look forward to working with California, 
with Members of Congress, with your staff and your committee as 
we continue to make progress in bringing this project to 
completion. Thank you, and I look forward to your questions.
    Mr. Denham. Thank you, Ms. Feinberg.
    Mr. Richard, the floor is yours.
    Mr. Richard. Thank you. Chairman Denham, Ranking Member 
Capuano, and other Members of this committee and the Congress, 
my name is Dan Richard. I am the chairman of the California 
High-Speed Rail Authority Board. I appreciate the opportunity 
to appear before you today to provide an update on the progress 
that California has made in developing the high-speed rail 
system.
    The Federal Government, through actions by the Congress and 
the administration, has provided some $3.5 billion to commence 
design and construction of the system, funds that have proven 
vital to our initial efforts. Accordingly, oversight by the 
Congress through this committee is an important function to 
bolster public confidence that these funds are being well 
spent.
    I am pleased also to share this panel with Administrator 
Feinberg of the Federal Railroad Administration. FRA has been a 
strong partner in this program, and we appreciate her 
leadership and that of her staff and her predecessors.
    Mr. Chairman, I would like to summarize four key points in 
outlining our current status and progress.
    First, the California high-speed Rail program is an 
essential element of the State's endeavor to build a 
sustainable economic future. The voters in 2008 approved what 
will ultimately be an 800-mile system with the first phase of 
520 miles to connect Los Angeles, San Francisco, and the 
Central Valley. But what is more important here is that 
California is building much more than a high-speed train 
system. Our legislature in 2012 embarked on a $13 billion 
statewide rail modernization. High-speed rail is the backbone 
of that system, but that system extends to major improvements 
such as Caltrain electrification here on the San Francisco 
peninsula, improved Amtrak service, regional rail like 
Metrolink in Los Angeles, the ACE Train that is important in 
your district, Mr. Chairman, and much more.
    All told, this rail modernization of California through 
statewide, regional and local systems will vault us into a more 
sustainable future and one that is also cheaper to build and 
maintain, much cheaper, in fact, than the cost of the 
equivalent mobility of new highways and airports required to 
sustain the 50 million people that we must serve by the middle 
of this decade--excuse me, by the middle of the century.
    Second, high-speed rail construction in California is now 
underway. It is proceeding smoothly, and we are maintaining 
effective management and cost control of the program. We now 
have three sets of construction packages totaling $3 billion in 
progress across about 110 miles of the Central Valley. Hundreds 
of workers and scores of companies, including small business 
and disabled veteran businesses, are on the job.
    But the indirect impacts have engaged thousands more 
already across the State. All of these construction contracts 
have come in under our engineer's estimates. In fact, the 
combined total, considering our low and high ranges, is that we 
have seen winning bids come in between $500 million and $1.7 
billion less than we estimated these packages would cost us.
    We have overcome startup problems like slower-than-expected 
right-of-way acquisition and higher costs for third-party 
contracts, but we are still well within our budget 
contingencies.
    Third, our recent 2016 business plan marked a milestone in 
the development of the project. By emphasizing the completion 
of an initial operating segment from the Central Valley to the 
Silicon Valley, we laid out a plan that can be accomplished 
with available funds that are in hand or expected. Silicon 
Valley is the engine not only of California's economy but of 
the Nation's, and yet it faces severe limitations on housing 
and expansion. The Central Valley is historically an area of 
underinvestment. The prospect of connecting these areas of our 
State has generated enthusiasm in both regions. Significantly, 
based on more advanced engineering and experience to date, now 
our estimate for the total system completion has been reduced 
by some $6 billion.
    My last point is that while we know this program has a 
controversial history and has had its share of hurdles, we are 
not only on track but I want to emphasize that we are 
absolutely fulfilling the purposes of the State bond act that 
launched this effort.
    With respect, Mr. Chairman, I noticed that there was a 
statement that was included in the committee's notice of this 
hearing that said that the program no longer provides full 
high-speed rail service from Los Angeles to San Francisco. This 
is not correct. We are absolutely fulfilling the mandate of 
providing 200-mile-per-hour electrified service that is 
designed to achieve transit from L.A. to San Francisco in 2 
hours and 40 minutes or less without an operating subsidy. 
There are no changes from that commitment.
    As you know, we adopted the so-called blended system to 
share tracks with regional rail in urban areas like Caltrain, 
but that only constitutes about 15 percent of the track area, 
and this was suggested by one of your colleagues in the 
Congress and by local elected Representatives, and was 
recommended by an independent peer review group as something 
that could dramatically reduce costs while meeting the bond act 
requirements.
    Unfortunately, this is one of many false narratives that 
have grown up around this program. I hope today's hearing will 
allow us to examine those issues and correct the record.
    Mr. Chairman, thank you again for the honor of appearing 
before this committee. We look forward to your questions.
    Mr. Denham. Thank you, Mr. Richard.
    Mr. Hartnett, you are recognized for 5 minutes.
    Mr. Hartnett. Thank you very much, Mr. Chairman and 
Members. Good morning. Thank you for your attention to this 
issue and for inviting us to share a local perspective.
    I am Jim Hartnett, the executive director of the Caltrain 
commuter rail system and the CEO of the San Mateo County 
Transit District. I am also a past member of the California 
High-Speed Rail Authority Board of Directors and a former mayor 
of Redwood City.
    When voters approved Prop. 1A in 2008, it wasn't just about 
connecting the State with high-speed rail. It was also about 
improving transportation connectivity on existing systems. The 
measure included significant resources dedicated to upgrading 
local transportation services to feed the statewide network and 
to improve mobility options for surrounding communities.
    Large-scale, visionary projects like high-speed rail can 
and should be planned and delivered in a way that prioritizes 
investments in local improvements while also making incremental 
but significant progress toward the long-term vision.
    During my time on the California High-Speed Rail Authority 
Board, I worked with my colleagues to ensure that this approach 
would be embraced. The product of those efforts was SB 1029, 
which appropriated funding for high-speed rail construction in 
the Central Valley, but also directed over $1 billion for local 
and regional improvements on the bookends in southern 
California and the bay area. In our case, this State funding is 
being used to leverage over $1 billion in local, regional, and 
Federal funds to upgrade the Caltrain corridor and allow us to 
deliver more service at a time when our communities need it the 
most.
    Caltrain is struggling to accommodate unprecedented 
regional growth. Two thousand sixteen marked our sixth 
consecutive year of record-setting ridership. As Highway 101 
and 280 have become more and more congested, employers have 
turned to Caltrain as the preferred commute option between San 
Francisco and Silicon Valley. As a result, our peak-hour 
service is well over 100 percent capacity, with ridership on 
some trains exceeding 125 percent of available seats.
    The Caltrain corridor is arguably the most economically 
productive area in the State. The communities served by our 51-
mile railroad are responsible for 14 percent of the State's 
GDP, 20 percent of California tax revenue, and are the 
birthplace of over one-half of California patents.
    However, the region cannot continue to thrive without 
equipping the 150-year-old rail corridor with a modernized 
transit system capable of accommodating current and future 
ridership demand.
    Fortunately, with local, State and Federal help, Caltrain 
has been able to advance the Caltrain Modernization Program. 
The centerpiece of this program is the transformation of the 
corridor from its diesel fleet to a system that features high-
performance electric trains capable of delivering cleaner, 
faster, and more frequent service to peninsula communities.
    When complete, electrification of Caltrain will be able to 
serve more riders at more stations. As a result, 619,000 
vehicle miles traveled will be eliminated every day and the 
system's emissions will be reduced by 97 percent, eliminating 
over 176,000 tons of CO2 annually.
    Caltrain and the California High-Speed Rail Authority have 
worked with several local, regional and Federal partners to 
secure funding for the Caltrain Modernization Program as an 
early investment in the high-speed rail system. Six bay area 
funding partners have agreed to commit significant local funds 
in order to leverage over $700 million in high-speed rail and 
State funding, and these investments have positioned the 
project to receive almost $650 million in Federal Transit 
Administration discretionary grant funds.
    Thanks to these commitments, Caltrain was able to authorize 
contractors to begin design work on the project. The next steps 
will be construction of the project and the procurement of 
electric trains, work that will create over $2.5 billion in 
economic value, including almost 10,000 new jobs during 
construction.
    Meanwhile, we are also collaborating with the California 
High-Speed Rail Authority as it begins the environmental 
process for additional improvements that will be needed to 
equip the corridor to accommodate high-speed rail service. When 
high-speed rail is extended north of San Jose, Caltrain and the 
California High-Speed Rail Authority will share the corridor 
and operate on a blended system to San Francisco. The planning 
and design of these improvements will be carefully considered 
to ensure that impacts on surrounding neighborhoods are 
minimized and benefits are realized.
    Thank you very much, Mr. Chairman.
    Mr. Denham. Thank you, Mr. Hartnett.
    Mr. Flashman, you are recognized.
    Mr. Flashman. Thank you, Chairman Denham. Good morning, 
Chairman Denham, Mr. Capuano, and Congress Members. Thank you 
for the opportunity to testify today.
    Let me start by saying that I have no conceptual problem 
with high-speed rail. High-speed rail systems in other 
countries have shown they can, if planned and implemented 
prudently, be cost-effective and improve transportation 
efficiency while reducing greenhouse gas emissions.
    Here in California, however, too much has been promised and 
too little will be delivered. I will focus on legal issues 
affecting the California high-speed rail project's use of State 
funds and the associated risk to the Federal Treasury from the 
California High-Speed Rail Authority's, or CHSRA's, use of 
Federal grant funds for construction and other activities.
    Before doing that, I want to comment briefly on CHSRA's 
current financial situation and why this issue is important. As 
my written testimony explains in more detail, CHSRA currently 
has only two sources of funds: $3.5 billion in Federal grant 
funds, and State funds, primarily Prop. 1A funds, plus a much 
smaller contribution from the greenhouse gas Cap and Trade 
auction proceeds.
    Prop. 1A asked that CHSRA seek private funding, but no 
private entity has stepped forward to invest funds in the 
project to this point. There are good reasons for that. CHSRA 
has over $6 billion in appropriated funds, but restrictions on 
using Prop. 1A funds for construction prevent CHSRA from using 
those funds. Consequently, CHSRA current construction funding 
is limited to its Federal grants plus a small amount of Cap and 
Trade auction proceeds. In essence, CHSRA is like a steam 
engine with almost no coal left to shovel in its fire box. It 
may keep going for a while longer, but it will eventually run 
out of steam and stop cold.
    The California Legislature, in writing Prop. 1A, was aware 
that voters were worried about the risk in approving more 
general obligation bonds that would eventually be on their 
shoulders. Consequently, it put into the measure what the 
California Court of Appeals has called a financial 
straitjacket, intended to reassure voters that the funds would 
not be wasted. There are stringent procedural and substantive 
requirements on how and when CHSRA can use the bond funds.
    While the courts have allowed the legislature to 
appropriate bond funds without fully complying with Prop. 1A, 
those same courts have made clear that before those funds can 
be used for construction, CHSRA will have to comply with Prop. 
1A's requirements. With CHSRA's currently politically motivated 
design, that is virtually impossible.
    Prop. 1A requires CHSRA to show it has available all the 
funds needed to complete construction of a usable segment that 
will be suitable and ready for high-speed rail operation. CHSRA 
optimistically estimates that its current usable segment from 
Wasco to San Jose will cost over $20 billion. At most, CHSRA 
has maybe $6 to $8 billion in available funding. Unless CHSRA 
can show where it has squirreled away over $10 billion, it 
cannot meet that requirement.
    In addition, service on that segment must be able to run 
without a public operating subsidy. Even if you accept CHSRA's 
highly optimistic ridership estimates, its usable segment is 
very unlikely to be able to do so. Consequently, no Prop. 1A 
funds can be used to build that segment.
    Even if CHSRA could meet these procedural requirements, 
Prop. 1A's substantive requirements would still block use of 
Prop. 1A funds. Prop. 1A requires that trains be able to travel 
from the Transbay Transit Center in San Francisco to Los 
Angeles Union Station in no more than 2 hours and 40 minutes. 
With the indirect route that CHSRA has chosen, making the trip 
in less than 3 hours is basically impossible. Nor can the 
current legislatively mandated blended system meet the required 
30-minute travel time between San Francisco and San Jose.
    Further, the blended system, which requires CHSRA and 
Caltrain to share the same tracks between San Jose and San 
Francisco, also precludes meeting Prop. 1A's 5-minute headway 
requirement.
    As for using Cap and Trade funds, that system is currently 
under legal challenge. Even if it survives, the current funding 
is only $4.5 million this year, and Cap and Trade's 
authorization runs out in 2020. With the legislature having 
rejected its extension and indicating a preference for a 
revenue-neutral carbon tax where the collected funds would be 
rebated to businesses and the public, that would leave no 
proceeds to fund high-speed rail.
    In short, despite its optimistic statements at this point, 
CHSRA has no viable financial way forward.
    As I said at the start, I believe a prudently planned and 
executed high-speed rail system could be beneficial for 
California. Unfortunately, CHSRA has given no indication that 
it intends to rethink its current disastrous course, which will 
result in more litigation but no useful rail project.
    Thank you.
    Mr. Denham. Thank you, Mr. Flashman.
    Mr. Hunter, you may proceed.
    Mr. Hunter. Good morning, Chairman Denham, Ranking Member 
Capuano, members of the subcommittee. I appreciate the 
opportunity to appear before you today to discuss the 
California high-speed rail construction program.
    I am the president of the State Building and Construction 
Trades Council of California. I am an iron worker by trade and 
spent 27 years working in the field building skyscrapers and 
bridges throughout California. Our council represents in excess 
of 400,000 skilled and trained California construction workers, 
including 48,000 apprentices that have graduated or the 
equivalent from California high schools.
    Each and every one of these workers work for private 
construction companies building our harbors, airports, water 
treatment plants, freeways, transit systems, dams, as well as 
the vast majority of commercial and residential projects 
throughout the State.
    These contractors that we work for need a streamlined, 
highly trained, competent work force to compete, using the 
least amount of people, building projects in the shortest 
timeframe, done once, done right, under the lowest bid.
    The workforce that we represent drives the economy of 
California. They set aside a portion of their hourly wage for 
their pension and medical benefits and even in retirement are 
not a burden to the State or the Federal Government.
    I am very proud to report that at this very moment, several 
hundred of these workers, who are residents of the Central 
Valley, are on the job building the high-speed rail in the 
Central Valley. This is an area where, during the Great 
Recession, we have had unemployment in excess of 60 percent, 
and the Valley itself has been a traditionally--has had some of 
the highest unemployment statewide in the general population. 
Now these workers are building the high-speed rail system that 
will transform the Valley and all of California.
    Of course, I am happy that these workers are earning a 
paycheck, supporting their families, and driving the economy. 
But I am also gratified that they are creating a third mode of 
transportation, something that California desperately needs 
right now and that will greatly benefit the people of the State 
of California for generations to come.
    Furthermore, the project is being built efficiently and 
economically. The best value bids for the first construction 
packages have ranged from 13 to 45 percent below the engineer's 
estimated cost, resulting in savings of hundreds of millions of 
dollars so far.
    Decades from now, I believe California will look back with 
gratitude at the vision of this generation's leaders, whose 
foresight resulted in a magnificent, efficient high-speed rail 
system, less congestion on our roads, airports, and a healthier 
environment. We simply cannot afford to not build this vitally 
important infrastructure project.
    California's transportation system is already overtaxed, 
and our population will pass 50 million by mid-century. Doing 
nothing will ultimately cost far more than building this 
essential system today. High-speed rail is the only viable 
means of making sure our transportation infrastructure can meet 
our growing demand.
    Continuing to build more and more freeways and airports 
would be more expensive, more environmentally damaging, and 
less efficient for moving millions of Californians up and down 
the State.
    In fact, the nonpartisan Legislative Analyst's Office has 
reported that the project would, and I am quoting, ``alleviate 
the need to build over 3,000 miles of freeway, and 5 airport 
runways and 90 new departure gates--at a cost of nearly $100 
billion--that would otherwise be necessary to accommodate 
interstate travel by 2030.''
    By saving $100 billion, the project pays for itself. To 
remove any doubt, just look at the spectacular success of high-
speed rail around the world. We have learned from places like 
Spain, France, China, Germany, Japan, and many other countries 
that high-speed rail is the more efficient and preferred mode 
of transportation between population centers between 100 and 
500 miles. That is precisely the corridor California's high-
speed rail will serve.
    High-speed rail is working breathtakingly well everywhere 
else in the world. California needs its great benefits even 
more. As the 2008 ballot summary language points out, high-
speed rail will provide long-distance commuters with a safe, 
convenient, affordable, clean and reliable alternative to 
driving and high gas prices. It will reduce traffic congestion 
on California's highways and at the State's airports. It will 
reduce California's dependence on foreign oil. It will reduce 
air pollution and global warming greenhouse gases. It will 
provide fast, time-saving connections between California's 
major population hubs. It will bring thousands of good jobs to 
working families across the State.
    We cannot afford to fall behind the rest of the country, 
the rest of the world. Our State needs the economic, 
environmental, and quality-of-life benefits of a third mode of 
a clean, fast, mass transit system to meet the needs of our 
children and grandchildren just as generations before us paid 
for and built the infrastructure that has supported today's 
population and economy. We need to build this system.
    I would say that we have built the infrastructure of 
California, the building trades, for over 130 years. We were 
criticized heavily on the Golden Gate Bridge. It was the first 
bridge to nowhere. The Hoover Dam----
    Mr. Denham. I'll ask you to wrap up. We are a little over 
time already.
    Mr. Hunter. The Hoover Dam was a boondoggle that was going 
to bankrupt the country.
    Thank you, sir.
    Mr. Denham. Thank you, Mr. Hunter.
    I would like to thank each of our witnesses for their 
testimony today.
    There are a number of different questions here on the 
update and progress of this project. Our goal is to get in two 
rounds of questioning, so I would ask Members to keep their 
time allotment to 5 minutes, as well as our witnesses to answer 
any questions as succinctly as possible.
    I am going to start off today's round here, mostly focused 
on the most recent changes.
    As you and I had talked, Ms. Feinberg, on the last change, 
the fifth change to the agreement about the tapered match, I 
once again talked about my concern about spending all Federal 
dollars first and then owing the State dollars. My concern with 
tapered match is it leaves California on the hook, and the only 
penalty or the only way to extract that money would be to hold 
up rail dollars, highway dollars, or even education or housing 
grants. So I still have that big concern about the last change 
to the grant agreement.
    But specifically on this sixth change, when I had sent out 
my statement earlier in the year about this being a blank 
check, I know that you had taken some concern with that.
    Actually, let me address this to Mr. Richard first. My 
concern is with this most recent change is that it is a blank 
check to spend money and get beyond the ARRA funding of 2017. 
This is being used for working capital. So my concern is that 
you could make a request at the end of 2017 to get beyond the 
original congressional mandate to allow you to spend money 
beyond that.
    From the experts that we have talked to in the construction 
sector, a $2.6 million burn rate is a pretty high burn rate to 
be able to accomplish spending the $3.5 billion by the end of 
2017. So the concern is that you get close to the 2017 
deadline, you go back to FRA and you say we are going to need 
future dollars and we are putting the working capital in ahead 
of time. Mr. Richard?
    Mr. Richard. Mr. Chairman, I can certainly understand that 
concern. Let me allay your concerns this way. First of all, the 
number we should be focused on is not $3.5 billion but $2.55 
billion, because the remaining $980-some-million is fiscal year 
2010 money that does not have any kind of statutory deadline 
for expenditure. So under the Stimulus Act, we have to spend 
$2.55 billion by September 2017. We are about 70 percent of the 
way through that right now. Between invoices we have been 
giving to Ms. Feinberg's agency and work that has been accrued 
but not yet invoiced, we are at $1.8 billion. The burn rate to 
accomplish the rest is less than the average burn rate that we 
have seen in the last 3 or 4 months. So we have no doubt that 
we are going to meet the ARRA deadline for the expenditure.
    Let me just say with respect to your concern, the purpose 
of the working capital request was simply to get ahead of money 
for land acquisition. Land acquisition is the most fundamental 
piece of the construction. If we can't deliver the parcel, the 
contractor can't do the work. So that is what we are using it 
for, and basically I would just say to you what you want to do 
with the ARRA money is what the Congress intended, put people 
to work. Waiting until the last minute, it is just not the way 
the program is going right now.
    We got off to a slow start on real estate acquisition. We 
want to make sure we don't fall behind on that again. The 
working capital helps us get the real estate land acquisition 
done. But this is all about people building things, and they 
are doing it right now, and the burn rate is such that we will 
accomplish the 2017 deadline.
    Mr. Denham. So you can commit, then, that you will not 
request an advance payment for the ARRA funds in 2017 to keep 
you on the congressional deadline?
    Mr. Richard. That--I will commit to that.
    Mr. Denham. Thank you.
    And, Ms. Feinberg, you would also commit that if there was 
such an advance request at the end of the 2017 deadline, that 
you would not approve such a request?
    Ms. Feinberg. Correct. We see no--we have no interest in 
going beyond the September 2017 deadline, and beyond that we 
don't think there will be a request for it.
    Mr. Denham. Thank you.
    Mr. Hartnett, the initial operating segment has changed. 
The blended approach is a somewhat new idea. The question that 
I received is primarily about safety in the community along 
your line. If the track is now electrified, with pedestrian 
traffic being the biggest issue of train accidents, do you 
expect this new electrification to change any safety concerns?
    Mr. Hartnett. I do not. We currently serve over 65,000 
riders a day. Our safety record is good. The pedestrian safety 
issues are primarily with respect to trespassers on our line, 
and a number of the trespassers are intentionally there. That 
does create safety concerns, but we do work well to address 
that.
    Mr. Denham. And I am not questioning your safety record. 
You guys have a good record. My concern is that these are now 
going to be hot tracks, and recognizing that we have 
pedestrians and trespassers in those areas, does that create a 
new challenge?
    Mr. Hartnett. It does not in the sense that--fortunately, 
it is not a third rail. You can walk on them. You can be on the 
tracks and not be subject to electrification. It is overhead 
wiring, which has a tremendous safety record. I have had the 
privilege of living off and on in Japan for 8 years using their 
electrified services, and you can do it in a very safe manner 
with electrification itself, not enhancing any safety risks.
    Mr. Denham. So the speed of the train, if the train can 
actually get to 200, 220 miles an hour, does that create any 
safety concerns to the communities?
    Mr. Hartnett. It won't be going at that rate of speed 
through the peninsula. So the speed is not going to affect the 
safety. The trains for us in particular are going to be quicker 
in the sense that, because they are electrified, they can slow 
down quicker and speed up quicker, which actually makes it 
safer overall in terms of our service, and I think in the 
blended service as well.
    Mr. Denham. So if the train is not going to hit those high 
speeds in San Jose to San Francisco, how do we expect to hit 2 
hours and 40 minutes or 2 hours and 30 minutes?
    Mr. Hartnett. That would be a design question. I think Mr. 
Richard can respond to that.
    Mr. Denham. Mr. Richard?
    Mr. Richard. Thank you, Mr. Chairman. The train was never 
going to go at those speeds in the urban areas, even before the 
blended service. In fact, I don't know if my staff brought it, 
but one of the things I would like to submit to the committee 
is a page from our 2008 business plan which was before anybody 
even talked about blended service, when they were only talking 
about a single high-speed rail separate service. That map shows 
that in the urban areas, the speeds were going to be around 120 
miles an hour. This is because of the geometry. You have to 
have the curves to go at those high speeds. You are really 
taking a lot of land in urban areas. It is very expensive. You 
see it in other countries. As you come into the cities, the 
trains go slower.
    One of the great things about the blended service--and this 
is one of the reasons the independent peer review group 
recommended to the legislature that it support the blended 
service--was the notion that you could maintain essentially the 
same speeds in the urban areas that we would have with separate 
tracks but at a cost reduction of about $20 billion between 
north and south. That is why we decided that we would be able 
to do that.
    It may have some impact on capacity. Mr. Flashman raised 
that question. We can talk about it. But it really has no 
impact on the speeds. I just want to say to you for the record, 
right now our engineers are telling us that the current design 
would get you from Los Angeles to San Francisco with the 
blended service in about 2 hours and 33 minutes. We are about 7 
minutes ahead. So that has never been a concern that we have 
had.
    Finally, just on your earlier point, part of the 
electrification program will be the installation of intrusion 
detection devices and other advanced mechanisms to try to 
minimize or eliminate unauthorized entry into the corridor 
there.
    Mr. Denham. And what does that mean?
    Mr. Richard. Fencing, electronic intrusion detection, 
things like that.
    Mr. Denham. So like some type of sensor that would allow 
you to know whether or not trespassers went on there, on the 
walls of the sides of the----
    Mr. Richard. Right. I think it is sensors and fencing, but 
before I get myself to a place where I don't know what I am 
talking about, perhaps I can supplement that answer for the 
record for the committee.
    Mr. Denham. Certainly. It is more out of curiosity for the 
future of what those residents are going to be looking at, if 
you could provide that to the committee.
    Mr. Richard. Yes, sir.
    Mr. Denham. We would appreciate it.
    Mr. Hartnett, does the Caltrain go 120 miles an hour today?
    Mr. Hartnett. It does not.
    Mr. Denham. What is the current speed?
    Mr. Hartnett. We are generally at 79 miles per hour.
    Mr. Denham. And on a blended track, you have an opportunity 
to have Caltrain on the same tracks as California high-speed 
rail would. Do you anticipate an increase in speed for 
Caltrain? What would it be?
    Mr. Hartnett. We are not going to increase our speed with 
the Peninsula Corridor Electrification Project. We are going to 
increase our quickness. With the diesel fleet, it takes a very 
long time to slow down and stop at a station, and a very long 
time to get out of the station and move up. So while going at 
the same top speeds, we will be able to get into the stations 
quicker and get out of them quicker. So we will be able to, for 
example, a ride that would currently take an hour, San 
Francisco to San Jose, if we use the same stops, it could be 45 
minutes instead of an hour. So we will have choices as to go 
quicker up and down the line or to stop at more stations, both 
of which will enhance our capacity. We have modeled increasing 
Caltrain's speed to 110 mph in a blended system, but the final 
decision on speed has not been made.
    Mr. Denham. Thank you.
    And finally, the last question, Mr. Richard. We talked 
about the initial operating segment, the initial construction 
segment. Mr. Flashman had said Wasco. Is it Wasco, Shafter, 
somewhere in-between? And where is the initial construction 
segment? Can you define both ends of the initial construction 
segment?
    Mr. Richard. The initial construction segment, which is the 
subject of our grant agreement with the Federal Government, 
is--I think it is 130 miles from Madera down to the Bakersfield 
area, north of Bakersfield. We stopped short of going into 
Bakersfield so we could work with that city to look at an 
additional alignment. So it is somewhere in the area of Wasco. 
At the moment I am forgetting the precise road that it stops 
at. That is the Central Valley segment, which will be the spine 
of the system.
    When we made the change in the business plan, we said we 
need to connect the Central Valley to the Silicon Valley. Let's 
build no further south right now than we are building, which is 
why it seems a little odd to be stopping kind of in the middle 
of an almond orchard and turn around and connect to San Jose 
and San Francisco.
    But what we also said in our business plan was that it 
really makes sense to enhance the service into San Francisco 
and to reach down to Bakersfield. That is an additional $2.9 
billion, and we will be coming to the Congress and talking 
about the benefit of that connection because it generates $4.7 
billion of additional ridership revenue.
    Mr. Denham. Thank you, sir.
    Mr. Richard. I am sorry. I did not mean to go on.
    Mr. Denham. I did not mean to cut you off. I want to hear 
much more about this, but I have gone over my time.
    Mr. Richard. And I apologize, but I am very happy to work 
with you on this because we think it will be an important 
enhancement.
    Mr. Denham. Thank you.
    Mr. Capuano?
    Mr. Capuano. I am going to defer to my California hosts and 
let them go first.
    Mr. Denham. Mr. Huffman, you are recognized for 5 minutes.
    Mr. Huffman. Appreciate that. Thank you.
    Thank you, Mr. Chairman, for having this hearing, and 
thanks to our terrific witnesses for joining us.
    I especially want to welcome you, Administrator Feinberg. 
It seems like just yesterday I was touring in Marin and Sonoma 
County on the Smart Rail project, which is an exciting project 
where our communities are bringing back commuter rail. Thanks 
to the support of your agency and others, that is going to be 
reality in just a couple of more months. It will open on day 
one as one of the safest passenger rail systems in the United 
States, again with your support for Positive Train Control, so 
thank you very much.
    I appreciate that Mr. Hunter in his remarks reminded us 
that there was another really big, transformative, and yet 
controversial project nearby. It happens to be the defining 
southern feature of my congressional district, the Golden Gate 
Bridge. What people sometimes don't appreciate, because it is 
such an iconic piece of infrastructure now that is taken for 
granted, is that it was very controversial in its time. Over 
2,000 lawsuits were filed to stop this project in the 1930s. It 
went through several different designs. They were all very 
controversial. There were huge cost overruns. Yet, if you went 
to my district today, or I would say anyplace else in 
California, and asked people if you would like to go backward, 
they would probably laugh at you. It has been a huge success.
    So when we talk about this project and the promise of high-
speed rail, we should talk about cost, we should talk about 
budgets and plans and the challenges this project faces. But we 
should also think about the cost of inaction and the benefits 
it brings.
    So, Mr. Richard, I am especially grateful to have the 
conversation with you at this point in the project's history 
because in a prior life as a State legislator on the budget 
committee, I do remember lots of conversations with your 
predecessor where I had lost confidence in the ability of 
California to realize the promise and the vision of high-speed 
rail. The project was in complete drift, and yet today 
construction is underway. Construction contracts are coming in 
under budget, and it does seem that through innovation and 
creativity we are poised to actually make this happen in 
California, and it is in no small part due to your leadership, 
so thank you for that.
    That doesn't mean your critics have gone away, so I want to 
ask you about a couple of points that Mr. Flashman has very 
eloquently laid out in his remarks. Specifically--and these are 
points that we have heard for some time now as criticisms of 
the project--the assertion that financially you can't get there 
from here because of limitations and constraints on funding in 
Prop. 1A and the Federal funding, that when you add it all up, 
the dollars just don't connect and you can't get there from 
here.
    And the second one is the impossibility of achieving the 
speed and travel times that have been promised, I believe, 
between Wasco and San Jose.
    So I want to give you a chance to speak directly to those 
claims that have been levied, and also to the extent you can 
because, again, these are not new claims--they have been part 
of litigation--what the courts have said as well about these 
matters.
    Mr. Richard. Thank you, Congressman. Thank you for your 
kind remark there.
    There are several things I would say. First of all, when 
the voters in 2008 went to the ballot, the legislature put 
before them a bond measure that said to them we want to get 
started on high-speed rail. In fact, the opening line was it is 
the intent of the people of California to build a high-speed 
rail system. But that bond measure, by its terms, made it clear 
that the money was not all in hand. There was $9 billion. By 
law, it required to be matched, so it could only be half of 
what could be spent. They talked about Federal money. There was 
no Federal program. There was no stimulus program. It hadn't 
been created yet.
    They talked about saved money. There was no other saved 
money. They talked about the private sector. The private sector 
has historically done this at certain points in the project and 
in history around the world, but basically the people were told 
this is a down payment, we are going to get started.
    Sometimes people say to me, well, you are admitting that 
you don't have all the money in hand to build the entire system 
right now. That is true. In Ms. Lofgren's district, they are 
building BART to San Jose. I helped start that project 15 years 
ago. They are still finding pieces of the money to finish it. 
That is just the nature of transportation projects. We build 
them in pieces.
    The legislature in its wisdom, and the people in their 
wisdom, said we understand you are going to build this in 
segments. We want them to be usable segments. We don't want our 
money wasted on something that isn't going to have value. So 
the courts have basically found that we could do that.
    I am sorry, I don't mean to go over on this, but we have 
the dollars in hand between the bond funding, the Federal 
money, and the Cap and Trade money we have been allocated, to 
build an initial operating segment from the Central Valley to 
the Silicon Valley. Are there some uncertainties about that? 
There are. Do we think they are being resolved? We think they 
are being resolved favorably, and we have confidence we can 
build it, and the independent peer review group told the 
legislature that they think this is a financially responsible 
and constrained plan.
    Let me just stop there. I don't want to go on and on, but I 
think I addressed the question of before.
    Mr. Huffman. Thank you, Mr. Richard.
    Mr. Denham. Mr. Farenthold, you are recognized for 5 
minutes.
    Mr. Farenthold. Thank you very much.
    Administrator Feinberg, I would like to start with you. 
There is a high-speed rail project entirely privately funded 
going on in Texas, my home State, right now. They are looking 
at going from Houston to Dallas at an estimated cost of about 
$10 billion for the project cost.
    I understand things are more expensive in California. I 
just paid $3 for a Dr. Pepper here. But we are looking at money 
six times more expensive for a rail that isn't even twice as 
long. Do you have any thoughts on the cost differential? And 
then I will pass that along to Mr. Richard as well, if he wants 
to. I will allow you to pump that to Mr. Richard if you would 
like to.
    Ms. Feinberg. Well, they are very different. The reality is 
they are just very different projects. I will let Mr. Richard 
weigh in on this, but there are more stations and more stops in 
California and a much longer distance that will be traveled. 
They are just fundamentally different projects. But we have 
really enjoyed working with the folks in Texas who are working 
on this project, and we have very high hopes for success 
because I think that segment between those two cities is a 
perfect example of where--a significant game changer for that 
economy and for people's lives there.
    Mr. Farenthold. As a steward of the taxpayer dollars, I am 
concerned about the cost.
    Mr. Richard, if you would like to weigh in on that for a 
second, it would be appreciated.
    Mr. Richard. Congressman, this is a very complex State both 
geo-physically as well as economically. I had the chance one 
time to drive from Los Angeles up to Fresno and back to the bay 
area, and I thought I wish everybody could do that drive with 
me and then ask the question why this costs so much.
    Over mountains, through ravines, through built-up urban 
areas, it is just a very complex topography. We have earthquake 
issues that, fortunately, you don't have to deal with in Texas. 
I spent a lot of time in Texas in my youth. I worked at NASA as 
a kid. I think you are pretty flat down there in Texas compared 
to some of the area here. That is one of the big drivers.
    Mr. Farenthold. Let's talk about land acquisition.
    Mr. Richard. Yes, sir.
    Mr. Farenthold. Where are you on that? Do you have the 
entire--do you have contracts for the entire route of the land? 
How much of that are you going to be able to get through 
negotiating with the landowners? What are we looking at with 
respect to exercising eminent domain?
    Mr. Richard. Well, I stated, Congressman, that I felt that 
if we could get all of the land that we need without ever 
having to resort to eminent domain, that that should be our 
policy and that should be our approach. Unfortunately, that is 
not the reality. Part of the reason it wasn't the reality is 
that when we had litigation and so forth, we actually had 
lawyers running around telling people don't settle with these 
guys because we think the project is going to go away, and that 
was really unfortunate. We ended up having to go to eminent 
domain in some of those situations.
    But we have about 1,300 parcels that we need to get, I 
think 1,100 parcels for the first 130 miles. I think we are 
about 700-some-odd into that.
    Mr. Farenthold. So barely halfway.
    Mr. Richard. That is why the working capital request that 
we could accelerate that.
    Mr. Farenthold. That is more of a rural segment. You sound 
like you are cutting through some urban areas like San 
Francisco.
    Mr. Richard. But there are some important urban areas 
there. In Fresno we moved an entire food processing operation, 
but most of it is rural. You are right.
    Mr. Farenthold. And how much of this is going to be 
elevated versus at grade?
    Mr. Richard. We are going to do as much at grade as 
possible. One of the reasons that some of the contract bids 
came in below our estimates were that their engineers were able 
to suggest areas of at grade. I don't have the specifics in my 
head, but I would be happy to supply that to you and the 
committee.
    Mr. Farenthold. That is fine. I would point out the entire 
Texas system is above grade. It is either in a viaduct type of 
arrangement or on a berm. I wonder how much going over people's 
property might not be worth looking at.
    Finally, I only have 30 seconds left, and I apologize for 
not being an expert on California geography. I can understand 
there being a lot of people who might want to go from L.A. to 
San Francisco. You have a fair amount of options once you get 
there of how to get around the city, on the BART or an Uber 
lift. But from Madera to Bakersfield, you get there, what do 
you do when you get there, and what do you think of how that is 
going to affect your ridership demand to fund your ongoing 
operating over numerous years until you get the endpoints 
built?
    Mr. Richard. I am tempted to refer you to the House 
Majority Leader about Bakersfield.
    Mr. Farenthold. I do not want to get crossways. I have been 
to Bakersfield, so I know there is not a lot of--there is no 
subway in Bakersfield.
    Mr. Richard. I think the main point, very quickly, 
Congressman, is that the legislature and the people in 
California deliberately said we want you to connect areas of 
the State. We are not building a straight line from San 
Francisco to L.A. We are going through the Central Valley. It 
is an area that has been left behind.
    Just very quickly, three of the five most impoverished 
areas in the United States are in the Central Valley in 
California, despite the great wealth that we have there. 
Twenty-one percent of the kids have asthma. It has three of the 
five worst air quality districts. And if you want to get from 
Fresno to Los Angeles by air, it is $700. It is an area that 
has been disconnected from the rest of the State.
    The excitement around our opportunity to connect the 
Central Valley and Silicon Valley, which is bursting at the 
seams, and to move not only housing but investment and 
manufacturing facilities there is enormous, and it gives 
diversity to the Central Valley. So there is a real strong 
economic reason why this program is structured the way it is, 
and I think we are going to see a tremendous uplift in the 
economy of the Central Valley that is going to benefit people 
far and wide.
    Mr. Farenthold. Thank you, Mr. Richard.
    Mr. Denham. Ms. Lofgren?
    Ms. Lofgren. Thank you. Thank you, Mr. Chairman, for 
allowing me to participate in this hearing.
    It has already been said that it is not just what we are 
building but what would happen if we didn't build this, and I 
think it is important to keep that in mind. California is going 
to have a lot of growth. It needs to be accommodated. To try to 
meet that growth with airports and roads is just not viable.
    I know also, before I ever ran for Congress, I was in local 
government, and I remember building big projects. It is easy to 
criticize, harder to build. When we built Highway 85 down in 
Santa Clara County, the section from 101 to 280 was done and it 
took decades to get 280 to the southern 101. So you do these in 
pieces, and that is just the way big construction projects go.
    I just want to mention the 2016 draft business plan that 
was approved, because I think it is a knockout achievement. Not 
only does it reduce the cost for the initial segment, it is 
easier to get through that mountain range than the southern 
mountain range, and it will be so important economically not 
only for Silicon Valley and my district but I think also in the 
Central Valley.
    In San Jose, traffic congestion is through the roof, and 
affordable housing is a big challenge. The median price of a 
house in the bay area in June was $751,000. The median price of 
a house in Santa Clara County last month was $1.045 million. So 
we are bursting at the seams, and the capacity to connect the 
Central Valley and Silicon Valley is going to help Silicon 
Valley survive, and it is also going to provide tremendous job 
opportunities for people who live in the Central Valley. It 
will take an hour to get from Merced to San Jose. My chief of 
staff lives in San Jose and it takes her longer to get from 
parts of San Jose to downtown.
    So this is really going to be an economic lift-up for our 
State, and it is worth remembering that most of the job growth 
in the State of California actually occurred in Silicon Valley. 
We got plenty of jobs, and we are not shy about wanting them to 
go to people in other regions.
    So, as someone said, there is high poverty in the Central 
Valley. I chair the California Democratic Delegation. Our 
delegation is very supportive of this high-speed rail project. 
We have cochairs of the Congressional High-Speed Rail Caucus, 
Jim Costa, John Larson and myself. So we are really very 
pleased with what is happening here.
    Now, I guess we have a second round of questions coming up, 
but one of the things that I wanted to ask--and I think it is 
great that Ms. Feinberg is here. Thank you for coming once 
again. Mr. Denham, the chairman, asked for the California High-
Speed Rail Authority's agreement with the FRA to be reviewed by 
the GAO last year, and it is my understanding that they have 
concluded that the California High-Speed Rail Authority has 
complied with its agreement with the FRA. Do you have any 
disagreement with that GAO conclusion?
    Ms. Feinberg. I don't. In fact, the GAO has looked into 
California high-speed rail several times. I think it is now the 
most investigated and most audited project in U.S. history. I 
don't know if that is something to be proud of or not, but I 
think it is worth being proud of that they have succeeded and 
the GAO has never found a significant issue.
    Ms. Lofgren. So it is your testimony, then, that not only 
is the California High-Speed Rail Authority currently in 
compliance but they have been in compliance.
    Ms. Feinberg. Yes.
    Ms. Lofgren. Thank you very much.
    You know, I was interested, Mr. Richard and Mr. Hartnett--
this is really an issue for up the peninsula, not in my 
district, but the intrusion on blended rail. We know that there 
has been an epidemic of suicides among teenagers, high school 
students, in the mid-peninsula area. I was pleased to hear that 
you are going to have some intrusion devices. Is it your belief 
that with the ability to stop these trains faster and these 
intrusion technologies, that we might have a better chance of 
saving these young lives?
    Mr. Hartnett. Together with fencing, there will be 
additional fencing that will help for those who have a spur of 
the moment desire, so the fencing will be just a natural 
barrier. I can't speak to the high-speed rail intrusion 
devices, but there is experimentation with a variety of methods 
to detect folks going on the tracks, including video feeds.
    But in that area of youth suicide, we have worked very 
closely with the school districts and the communities on the 
broader issues, which we have to continue to do because the 
ultimate solution isn't going to come from fencing and devices.
    Ms. Lofgren. No. It will come from the children themselves.
    Mr. Hartnett. So that is something we continue to work on.
    Ms. Lofgren. Thank you.
    I see my time has expired, Mr. Chairman.
    Mr. Denham. Thank you, Ms. Lofgren.
    Mr. LaMalfa?
    Mr. LaMalfa. Thank you, Mr. Chairman and panelists. I 
appreciate it.
    What the voters voted for in 2008 was a $33 billion 
project, a high-speed train, one train, not switching trains, 
from S.F. to L.A. A year later the number was adjusted up to 
approximately $42 or $43 billion, adjusted beyond what the 
voters saw, beyond what the voters approved. And then finally, 
after much agitating from the State legislature, we had a 
hearing in November of 2011 where the admission was that there 
wasn't going to be 1 million jobs created by high-speed rail 
but something called 1 million job years, and that the cost was 
no longer just $33 or $43 billion, it was $98.5 billion, triple 
the price.
    Now, if I am seeking to, let's say, enclose my garage and 
build a bathroom inside, I might get a bid for $33,000, not $33 
million, and they tell me the price a few months later is 
$43,000, and then when the trucks show up and they start 
construction they say it is $98,500--you can see where I am 
moving the decimal points here--I am going to say that is a 
breach of contract. I am going to tell you to take a flying 
leap, especially since the completion date initially was 2020 
and now it is 2033. So I don't get my garage enclosed for an 
additional double or more of the time.
    This is the recent contract with the voters of California. 
It is why I carried two bills as a new State senator, SB-22, to 
say don't spend any money until you actually have a plan. You 
don't even have a plan yet on how you are going to go through 
Bakersfield, how you are going to go through the Tehachapis, 
where the funding will come from. You are still $55 billion 
short of the change projection, down to $68 billion after the 
scramble, from $98.5 up to $118 scared everybody for a blended 
system.
    So this is indeed something that the taxpayers should be 
looking at and saying we have been taken to the cleaners on 
this. That is why my second bill was SB-95 saying put it back 
on the ballot and ask the voters once again what they think of 
something that is triple the price, that isn't meeting the mark 
anywhere near the time, nor are the so-called environmental 
benefits of this, of the green project, will be saving C02. I 
almost laughed when I heard one of the solutions during 
construction would be that they are going to plant trees to 
offset the concrete and the construction equipment being used 
in there, since we are worried about C02 these days.
    So, Mr. Flashman, I want to drill down with you on that for 
a moment here. Of the different projects--there are green 
projects, there are Cap and Trade replacement projects--what 
are the ones that are the most eligible, the highest priority, 
the most bang for the buck? Briefly, please.
    Mr. Flashman. I am not sure I can name any one specific 
project, but the aim of AB-32, which is what set up the whole 
idea of doing a Cap and Trade project, was to get greenhouse 
gas emissions down to 1990 levels by 2020.
    Mr. LaMalfa. Will high-speed rail do anything to help that 
by 2020 or 20-anything?
    Mr. Flashman. Well, at some point maybe it will. It 
certainly can't by 2020. It is still going to be under 
construction in 2020. It won't actually start operating--at 
this point they are estimating 2025.
    Mr. LaMalfa. So should high-speed rail be pulling these 
greenhouse gas option funds, then?
    Mr. Flashman. Well, I am handling the lawsuit which 
basically is saying it should not.
    Mr. LaMalfa. OK. So if we are looking at the benefit, 
perhaps, of high-speed rail in this and greenhouse gas and the 
option, the most recent one was somewhere around $8 million I 
think was the auction generation----
    Mr. Flashman. That is correct.
    Mr. LaMalfa. The projections I have is that for the $55 
billion funding gap, since there is no Federal money coming 
into it, there is no private money coming into it, it would 
take about maybe over 6,000 years to pay off the funding gap 
with the high-speed rail new-found money--excuse me--coming 
from the greenhouse gas options.
    Mr. Flashman. Obviously, if it is going at the current 
rate, it is not going to be very much help at all. I am sure 
the Governor would like to see Cap and Trade extended. He is 
talking about sending it at least to 2030, maybe to 2050. If 
they could extend it to 2050, they hope they could securitize 
it.
    Mr. LaMalfa. But at this rate of options, it is not going 
to pull a whole lot. Thank you.
    Mr. Hartnett, currently you don't have 120-mile-an-hour at-
grade trains running with your Caltrain system?
    Mr. Hartnett. That is correct.
    Mr. LaMalfa. But you expect you will have 120-mile-an-hour 
at-grade crossing with high-speed rail with Caltrain?
    Mr. Hartnett. Well, high-speed rail will determine the 
speed, but we have tested out in our conceptual analysis the 
blended system that they can operate at 110 mph----
    Mr. LaMalfa. How can you fence for an area for people to 
not have access to 120-mile-an-hour trains, especially when you 
come to an at-grade crossing where cars are, people are, 
pedestrians are? How do you fence the whole area for a rail 
going across a highway or road or street?
    Mr. Hartnett. Well, fencing doesn't go across the grade 
separations.
    Mr. LaMalfa. At-grade I am saying.
    Mr. Hartnett. And it doesn't go across the at-grade 
crossings. We have gates, and there would be an opportunity to 
establish quad gates that will be down well before the----
    Mr. LaMalfa. How easy is it for a pedestrian to pass 
between those gates and run out on the track?
    Mr. Hartnett. It is not easy at all to go through the quad 
gates.
    Mr. LaMalfa. For a pedestrian?
    Mr. Hartnett. Correct.
    Mr. LaMalfa. It doesn't take a limbo champion to go 
underneath one of those gates.
    Mr. Hartnett. The quad gates are set up to provide maximum 
security for----
    Mr. LaMalfa. For automobiles and motorcycles.
    Mr. Hartnett. Not just for automobiles and motorcycles; for 
pedestrians.
    Mr. LaMalfa. So a pedestrian will not be able to penetrate 
the tracks easily at an at-grade crossing?
    Mr. Hartnett. They will not be able to do so easily. Like 
with anything else, if a pedestrian wants to come off a 
platform or otherwise get onto the tracks, it will be possible 
to do.
    Mr. LaMalfa. Sorry, the time. I would love to see an 
illustration of how a pedestrian cannot go around those gates 
at an at-grade crossing.
    Thank you, Mr. Chairman.
    Mr. Denham. And we would ask you to submit any plans or 
drawings you might have to the committee.
    Mr. Capuano, you are recognized for 5 minutes.
    Mr. Capuano. Thank you, Mr. Chairman.
    I want to thank the panel for your thoughtful comments.
    Before I begin, I would also like to submit a letter for 
the record from Representative Eshoo, who couldn't be with us 
today, who is in support of the project.
    Mr. Denham. Without objection.
    [The letter from Congresswoman Anna G. Eshoo follows:]
 
 
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    Mr. Capuano. Thank you.
    I want to stay away from the local issues, to be perfectly 
honest, as far as safety and getting access to rail. Good luck. 
You couldn't keep me off the train tracks when I was a kid. You 
are not going to be able to keep people off who want to get on. 
You do the best you can, God bless you, but that is not a big 
issue to me because I know you are trying the best you can, but 
you are not going to do it.
    I am just curious, though, and I really don't know the 
geography of California, but on the presumption that--I am not 
even going to use San Francisco--San Jose is a job center to a 
certain extent, San Francisco being at the end of the line, 
once this high-speed rail is built, let's assume it can do 
everything you want it to do, go the speed you want, have the 
stops you have, give me an idea of where would I be if I got 
off the train after about 45 minutes on the train, 
approximately?
    Mr. Richard. Starting in San Jose?
    Mr. Capuano. Yes. I assume you will have a stop at San 
Jose.
    Mr. Richard. Yes, we are.
    Mr. Capuano. Approximately.
    Mr. Richard. I would say 55 minutes from San Jose you will 
be in Fresno in a car on your way to Yosemite.
    Mr. Capuano. OK, and I really don't know. Has anybody 
considered the suburbs of Fresno as a bedroom community to San 
Jose? Did anybody consider that today?
    Mr. Richard. Actually, today, it is not considered today, 
but I will tell you that there are people in San Jose that----
    Mr. Capuano. The reason I ask is because I am sure that 
some people do that commute.
    Mr. Richard. Yes.
    Mr. Capuano. The average person is more than willing, and I 
am sure they do it here like they do everywhere else, to 
commute give-or-take an hour back and forth to work. The whole 
idea of high-speed rail is, yes, to connect San Francisco and 
L.A., that is all well and good. But for me, it is more about 
providing affordable housing for people who want to work, 
because you cannot afford it here. You might be able to afford 
it 45 minutes south of San Jose, wherever it might be, in a 
town now where property values are half that, or whatever they 
might be. It is no different here than it is on the east coast.
    So for me, I actually think connections to suburban 
communities is of more value to this rail system than San 
Francisco to L.A. To be honest, 2 hours and 40 minutes, good 
luck. I just took the train from Boston to Philly, and we 
allegedly hit 150 miles an hour a few times, and maybe we did, 
maybe we didn't, but we hit every stop on time. It was a great 
ride. I am glad I did it, but it was about 5 hours. I think you 
will be able to do better, but you don't have the same problems 
we have with curving track and the like. We have other problems 
that would take a lot of money to address.
    But either way, affordable housing for workers is one of 
the biggest problems we have in Boston, and keeping our 
talented young people to fuel our economy is hard because they 
can't afford housing. It is kind of simple. And honestly, you 
are not getting many young people either because they can't 
afford to come here. That being the case, anything you can do, 
we can do, this country can do to maintain the economic centers 
of our country is a good thing.
    Now, whether this particular project is it, I will leave 
that to the people of California to decide, because though 
there is a lot of Federal money here, it is mostly State money, 
and it is your prerogative.
    We had a project that is similar. By the way, this is not 
the most investigated project in the history of the country. 
The Big Dig is.
    [Laughter.]
    Mr. Capuano. But let me tell you, criticize it all you 
want, it works. It did exactly what it said it was going to do. 
It didn't solve all of our problems, but it solved the problem 
it was meant to address. It cost a lot of money, and more than 
60 percent of it was State money. And, by the way, when we ran 
over, here is how we funded it. We borrowed against future 
Federal highway funds. Every year for about 10 years after 
that, we took several hundred million dollars of Federal 
money--that we would have otherwise used to build other 
things--to pay off the debt. So the concept of advanced 
payments is not new. Call it a different name. It is a choice 
by the people of California as to what is the most important 
thing for them, which is why I won't get into whether this is 
or isn't the best use for that. That is up to you.
    We thought it was the best use for the Big Dig. Now, as a 
former mayor at the time, my city got stuck and had nothing for 
a while. In the long run, over time, it was worth it. But I say 
that more as a lesson to be learned. This is not the first big 
project, it is not even the most recent big project. It is not 
the project with all the problems that you ever had.
    Land acquisition? I come from the most densely populated 
area of the country. Good luck with land acquisition. I can't 
imagine that there is a farmer--and by the way, Mr. Flashman, 
that is how you say it, ``fahmer''----
    [Laughter.]
    Mr. Capuano [continuing]. In the Central Valley that would 
be happy to part with his land any more than my triple decker 
in Dorchester is happy to part with theirs. So, yes, land 
acquisition is a difficult thing and is absolutely necessary.
    Whether you get this project done or not on the timescale 
you want, good luck. I support it in general. I will do what I 
can to help, within reason. I am fighting for those same 
Federal dollars for my Northeast Corridor, and I want a high-
speed rail from Boston to Springfield to do all that stuff we 
just talked about.
    I want to warn everybody here, when it comes to Federal 
dollars, the pie is shrinking. The struggle for those dollars 
is growing. Every city wants a subway now. It used to be a 
handful. Now we all do. Everybody wants a commuter rail system. 
Only used to be a handful. High-speed rail is the next big 
thing. We used to have one, not really high-speed but kind of a 
medium-speed rail, called Amtrak in the Northeast Corridor, 
from Boston to Washington, the only rail corridor in the 
country that makes money, the only one. Why? Density of 
population. And it is not people going from Boston to DC, 
Boston to New York, New York to Philly, Philly to DC, DC to 
Baltimore. It is those middle stops that make the system.
    And I say all that not because you don't know it, but I 
think it is important for people to understand that when we 
talk about these massive projects, it is not just one big 
massive project we are talking about, but we are actually 
talking about a series of smaller projects that are tethered 
together. You are not going to make money from San Francisco to 
L.A., but you might make money from San Francisco to San Jose, 
San Jose to Fresno, Fresno to whatever bedroom community it 
might be. Again, I don't know the geography of California that 
well.
    I would warn people to think of it in those terms. Again, 
to do it or not do it. That is your decision, because every 
dollar we spend in the Federal Government, you have to match 3 
or 4 to 1. Federal dollars are not going to save you, but 
Federal dollars will help.
    With that, I really don't have too many questions. I just 
want to make sure that I understood this project for what it 
was. I did have one question, but I will wait for the second 
round because I have already gone over. Thank you, Mr. 
Chairman. I usually don't pay attention to the clock.
    Mr. Denham. You don't usually pay attention, but I have to 
say that normally you are way under the guidelines, so a lot of 
discretion here. You are always way too kind with giving your 
time to other Members.
    That concludes our first round, and we do have time for a 
second round. I would like to start off the same way that I 
said in many of my conversations with Mr. Capuano as we have 
looked at projects around the country, as well as I have stated 
in every hearing that we have had now: I support high-speed 
rail. We are going to have high-speed rail in this country. We 
have a higher speed rail in Florida. I have a great promise on 
the Texas private effort. I think at some point we have to get 
high-speed rail in the Northeast Corridor with the huge 
ridership that we have there.
    My concern here is that there is a commitment that has been 
made to the voters. It was a $33 billion project. And at some 
point we have to bring some trust back into Government. We have 
an obligation for Government to do what it said it was going to 
do. And I get it, there were cost overruns in the Bay Bridge, 
there were cost overruns in Golden Gate Bridge. This was an 
issue passed by voters, and I think we have to have priorities 
in this State, and we have to have some trust in Government. We 
need to do what we say we are going to do or it should go back 
before the voters.
    This was started in the Central Valley. It was written into 
Prop. 1A. Far too often, initiatives are passed and the 
investment gets done in the bay area, the investment gets done 
in L.A., and yes, the high unemployment continues to go on in 
the Central Valley because we don't put the money into 
infrastructure in the Central Valley.
    So this was done there, putting the Central Valley in this 
first, but the concern is that all of the money is going to be 
spent and you could be stuck in a field with somewhere between 
Shafter and Wasco and somewhere further down the road in 
Madera, and we are out of money. That is the last thing we want 
in the Central Valley. We don't want to have something that has 
no riders, that has no train, that has no future investment, 
only to wait for decades hoping that maybe we can take some 
money from the Northeast Corridor and hold you guys up, or we 
can take money somewhere else, from another State, to get this 
project moving along.
    So this has more to do with transparency and accountability 
than I think any of us, Republican or Democrat, on whether we 
want more transportation in this State or in this country.
    Let me now jump to the issue of jobs. Labor in my district 
has continuously asked me, on a variety of different projects, 
where are the local jobs? So, Mr. Richard, before this hearing 
started we had talked about some of the jobs that have started 
in 2015 and now this year. I would like for you to provide for 
this committee, and I will follow up with a written request, 
but specifically where those jobs are.
    And to Mr. Hunter, the question has been with PLAs on a 
number of different projects in our area, labor in our area has 
questioned whether or not it has been a local job. So a PLA 
will be put in place by the letter of the law. The contract is 
granted, only to find out that all of the labor has been 
brought in from out of State or out of the area and living in a 
hotel room under an address in the Central Valley, showing 
Central Valley jobs. The people in my district still don't get 
those jobs.
    So first if you could comment on that, and Mr. Richard, you 
don't need to comment. I would just like a followup just to let 
us know where those jobs are and who is taking them.
    Mr. Hunter, you mentioned Billy Powell. The IBEW was the 
very union that asked me specifically about French camp and the 
PLAs, the future PLAs there and whether or not those would be 
local jobs or whether or not, like high-speed rail, was their 
response, would we have out-of-the-area jobs.
    Mr. Hunter. Measure our L.A. County $40 billion half-cent 
sales tax for a transit system because we had none. Everybody 
wanted the local people in there. They wanted no tax on their 
sales. We are not getting it from the State or the Federal 
Government. We negotiated an agreement for the percentage of 
workers to be in this from the L.A. County. Just like this 
agreement, we negotiated preference for kids in the foster care 
system, for veterans, and for people who were on social 
services.
    These contractors are private contractors. They are going 
to use the least amount of people. They are going to do it in 
the least amount of time. We have no seniority. They want the 
most streamlined workforce. We negotiated at the end of this 
agreement a preference for zip codes from the Central Valley. I 
myself have been up and down from the Central Valley----
    Mr. Denham. But specifically your members had expressed 
concern that while you enter a zip code, you could be living in 
a hotel room or be a new resident to the area using a local zip 
code. I am almost out of time.
    Mr. Hunter. I am aware of none of that. We looked pretty 
closely. The people who are on the books live in the zip codes 
of the area, Merced and Fresno.
    Mr. Denham. Thank you. I look forward to a followup. I 
would just like to point out for the record that a big part of 
our, in the Central Valley, our high unemployment is due to the 
shortage of water. Temperance Flat, a $2.5 billion project to 
provide over 3,000 jobs for members of yours. Shasta Dam, $1.3 
billion, our biggest bang for the buck in California, 1,400 
jobs. Over 4,000 jobs could have been done if we had waited for 
7 years on this project. As well, BART expansion, 1,400 jobs; 
ACE expansion in my area, 1,000 jobs; less than $2 billion for 
those two projects. Caltrain's Alameda County, 235 jobs. We are 
talking over 4,000 jobs just in rail projects that are on the 
books right now that could have all been done during this same 
time period. Those could be jobs that--again, this is not an 
issue of labor. It is an issue of jobs today.
    Mr. Capuano?
    [No response.]
    Mr. Denham. Mr. Huffman, you are recognized for 5 minutes.
    Mr. Huffman. Thank you.
    Mr. Richard, I want to go back to you about the financing 
issue. I know that one of the criticisms of your plans and the 
Governor's involvement in the plans has been the reliance on 
credit from the Cap and Trade system under AB-32. A lot of 
folks in the months leading up to this hearing have claimed 
that that is an unreliable source of revenue, maybe even an 
unlawful source of revenue, and we know that the fossil fuel 
industry has been putting on a full court press to allow the 
very authority from which it derives, AB-32, to simply expire 
and not be renewed.
    But it seems to me that with developments in Sacramento 
over the past week, we are having a bit of a different 
conversation now. The fossil fuel industry lost and we are 
moving forward not just with the continuation of AB-32 
authority but actually we are doubling down on climate 
leadership, raising the bar even higher and declining to join 
the fossil fuel industry on the road backward to perdition.
    So let me ask you now as we sit here today, what is your 
assessment of the reliability and the stability of that 
greenhouse gas policy framework and the Cap and Trade revenues 
that are a critical part of your long-term plans?
    Mr. Richard. First of all, as you know as one of the 
leading environmental voices in the California Legislature 
before you became one of the leading ones in the U.S. Congress, 
California has led the globe in terms of action on climate 
change, and our Governor and our legislature have just 
recommitted to that last week with an extension of the basic 
law, which was Assembly Bill 32. Now Senate Bill 32 by the same 
author has, as you said, essentially tightened down on the 
limits. Instead of meeting the 1990 limits by 2020, we are now 
talking about 40 percent below the 1990 limits by 2030.
    Industry, and I think even the oil industry, knows that the 
best way to get there is through market mechanisms and not just 
rely on command and control. I have had this conversation with 
many of my conservative Republican friends. You want cap and 
trade to continue because you do not want to have everything be 
simply coming out of the error sources as a command that you 
will, smokestack by smokestack, reduce these emissions.
    So I am very confident that with the action of the 
legislature last week and the bill signed by the Governor, I 
think it will now turn the dialogue back to the extension of 
the market mechanism of cap and trade as a way to help our 
businesses and industry meet these standards, which we will 
meet one way or another. But the market mechanism provides a 
very effective tool for them.
    We have already gotten about a half-a-billion dollars from 
the Cap and Trade Program this year, even before the recent 
auctions that were, in fact, disappointing. But I am not an 
expert on this and this is not an official State pronouncement, 
but the things that I read from people are that the uncertainty 
around these issues was one of the big contributors to people 
holding back from participating in these markets. So let's see 
what happens going forward.
    But today sitting here, I can say to you I have great 
confidence Cap and Trade will be extended, and I think it will 
be a successful program, as it has been.
    Mr. Huffman. And in the time that I have remaining, since 
we haven't covered this specifically yet, could you just speak 
to the greenhouse gas reduction benefits that should accrue to 
the State of California if your vision of this project is 
realized?
    Mr. Richard. Very quickly, one of the interesting things 
about California is we are the exact opposite of the rest of 
the country. The rest of the country, electric generation 
emissions are about 43, 45 percent of carbon emissions. In 
California, they are 22 percent. The rest of the country, 
transportation is in the 20-percent contributor. In California, 
it is in the 40s.
    The only way we are going to meet our climate goals for Cap 
and Trade is basically to address the transportation sector, 
and that means the electrification of the transportation 
sector, not just electric vehicles, in which we lead the 
Nation, but regional and statewide rail systems. And what we 
are doing with high-speed rail--and again, I go back to the 
point that this is not just about high-speed trains. It is our 
total investment in the electrification of State, regional, and 
local rail systems. It is going to put an enormous dent in 
carbon emissions.
    High-speed rail has been the glue. We have been the last 
funding source for the Caltrain electrification, the last 
funding source for BART car rehabilitation, the last funding 
source for the L.A. Metro run-through tracks. So we are 
basically on the forefront of electrifying California's 
transportation system. That is what will help us achieve our 
carbon goals.
    Mr. Huffman. Thank you, and I yield back.
    Mr. Denham. Thank you, Mr. Huffman.
    Mr. Farenthold?
    Mr. Farenthold. Thank you very much.
    Mr. Richard, I want to go back a little bit to the eminent 
domain and the funding question for a second. You said you have 
been able to negotiate purchases of roughly half of the land 
that you will need. Do you have an estimate of what the--are 
the cost estimates still in line, or because you are going to 
have to use eminent domain, are the cost estimates going to go 
up?
    I ask this question because recently in the district that I 
represent we had a relatively large bridge project that ran 
through an economically disadvantaged community in the 
district, and part of the negotiation for this and avoiding 
potential lawsuits was that despite the eminent domain 
requirement that we pay fair market value for the property that 
was taken, some of these homes were below, well below the cost 
of what they could be replaced at.
    Do you foresee running into this, and has this been 
included in some of your cost calculations? So rather than just 
purchasing their home, an expense associated with relocating, 
long-term rent subsidies or subsidies of purchasing a more 
expensive home because there are no homes at that cost range.
    Mr. Richard. Congressman, you raise a really critically 
important point. While I don't know all the different 
mechanisms we use, and I will be happy to supplement the record 
with that, the essential point is the right one. It has been a 
real tragedy that, as we have gone out to acquire people's 
property and we are limited legally to paying fair market 
value, many parts of the State have not recovered yet in terms 
of the downturn in the housing markets that occurred, and 
taking somebody's property at today's fair market value, which 
is less than what it was in 2008, seems manifestly unfair.
    I can tell you that we have done everything we can to try 
to be aggressive in using tools to be fair with people, and we 
have also done things, particularly with our farmers, where 
what we have said to them is we will be quite liberal in 
looking at the impact on your property if we are only taking a 
portion of it. So, for example, we have----
    Mr. Farenthold. I understand the issues, and I want to ask 
you a couple of other questions.
    Mr. Richard. I am sorry, sir.
    Mr. Farenthold. It just runs the cost of these things up, 
and it is very tough.
    Mr. Richard. It is.
    Mr. Farenthold. I want to ask Mr. Hartnett a question real 
quick. We talked a little bit about sharing track with the 
high-speed rail and your commuter rail. I worry about this. I 
am not sure you--maybe you did it in your testimony. Are we 
going to drop the high-speed rail down to your standard 
commuter rail speeds, or are we going to have different speeds 
of trains on these tracks?
    Mr. Hartnett. They will be able to go faster than our 
trains, but we also have built into the blended system approach 
passing tracks. So certainly they are not stopping at all our 
stations. It is designated to be----
    Mr. Farenthold. Because to me this seems like a scheduling 
nightmare. I mean, I am not a regular train rider, if you don't 
count the Washington Metro, but they are never on time.
    Mr. Hartnett. Actually, we don't foresee it as a problem. 
We have already studied it. There is further scheduling work 
that will be done. But with our ability to schedule down even 
without passing tracks, the blended system can be accommodated. 
There will be passing tracks, so that will enhance the 
ability----
    Mr. Farenthold. I am going to reserve the right to remain 
skeptical of that. We will see, and I am just going to shake my 
head because I expect you will be coming back to Uncle Sam for 
some more money.
    If you will allow me, Mr. Chairman, I want to digress for 
my last minute of questioning since I have Administrator 
Feinberg here. I just wanted to ask her if the Texas high-speed 
rail project that we are talking about between Houston and 
Dallas is currently going through some environmental studies. 
Can you give me an update on the project and how those studies 
are coming in the last 30 seconds I have here?
    Ms. Feinberg. I will be happy to. The last time I spoke to 
you, I believe that the draft environmental work should be done 
by the end of 2016. I believe it is the fall of 2016. It will 
be in the coming months. I believe that is the latest report we 
have on this, as well.
    Mr. Farenthold. All right. Would you please keep me posted 
if you run into any hiccups?
    Ms. Feinberg. Be happy to.
    Mr. Farenthold. Thank you. And I will yield back my last 3 
seconds.
    Mr. Denham. Thank you, Mr. Farenthold.
    Ms. Lofgren?
    Ms. Lofgren. Thanks very much. I think this hearing has 
been enormously helpful, not only hearing from the witnesses 
but hearing from my colleagues about some of the things of 
concern to them.
    You know, there is a lot of construction going on in Santa 
Clara County for transportation right now per your comments, 
Mr. Chairman, on BART and ACE. We are building BART right now. 
We had the Secretary of Transportation out last week. The 
station is almost done in San Jose, and now we are going to the 
ballot in November with a proposal for county voters to tax 
themselves, renew their sales tax to do the extension down to 
the Dearborn station. Obviously, the voters have to decide, but 
it is polling at a very high rate. People are used to paying 
for what they get. The ACE train is about to be expanded, and 
then with high-speed rail coming in, we are going to have a 
whole system that will really help people get to work. The 
transportation system right now is at gridlock, and it is 
really a drag on economic development, in addition to being an 
annoyance.
    Mr. Hunter, it was so good hearing from you that the men 
and women who are in the building trades build this country, 
build this State, and they are building these systems. We want 
to make sure they keep working on not just these transit 
projects but other infrastructure projects. I have heard the 
comment about off-street storage versus rail. We need both. 
There is growing consensus that it is not a partisan issue, 
that there is going to be a need for off-street storage. There 
is not a fight about that. There are issues we need to work 
through on where it is, but I noticed the San Luis Reservoir is 
almost empty. So it is not as if there is an immediate need. We 
have a terrible drought right now.
    I want to ask you, Mr. Richard, you said you are going to 
fill in later with the jobs that are underway, but I would love 
to get, if you could off the top of your head, an outline of 
who is in the work, what has happened so far in the 
construction, who will be put to work, and where.
    Mr. Richard. Well, there are hundreds and hundreds of 
people who are directly involved in the construction right now. 
We have seven construction sites in the Central Valley of the 
viaducts, which are the long lead-time items. But beyond that, 
for example, the columns, the concrete that was made for the 
Tuolumne Street overcrossing was made in Lathrop, California. 
So people in that community, which is in the Central Valley, 
are working in a factory to make those pre-cast things that 
drive down to Fresno.
    The other thing that I think is really important here is I 
am proud that my colleagues on the California High-Speed Rail 
Authority Board have set up a 30-percent set-aside for small 
business. Right now, we have 276 small businesses working on 
the project. We have a 10-percent set-aside for disadvantaged 
businesses. We have 94 of those on the project. We have a 3-
percent set-aside for disabled veteran businesses. We have 46 
of those disabled veteran-owned businesses working on the 
project.
    Ms. Lofgren. Not 46 vets but 46 businesses?
    Mr. Richard. Businesses. And I can just tell you one 
businessman who is a disabled American veteran, fought for this 
country, runs a business that does environmental remediation. 
He has expanded his workforce, including hiring people from the 
CalWORKs program who were homeless, unemployed, who are now 
working. One of them bought his first home ever. There are some 
really wonderful stories about the economic impacts here.
    Ms. Lofgren. Let me ask you this. The chairman sketched a 
scenario that no one would find suitable, which is we build 
this to Madera and then that is the end of it. What is your 
answer to that scenario? Is that something we need to fear in 
your judgment?
    Mr. Richard. Well, when I was listening to the chairman say 
that I thought to myself, I don't want my name, I don't want 
the Governor's name associated with a piece of track in the 
Central Valley that doesn't connect to the rest of the State. 
So none of us want to see that.
    Mr. Denham. Nor do I, for the record.
    Mr. Richard. Mr. Chairman, that was very clear. But I will 
just say this, to sort of take the extreme position on it. 
Right now what we are building in the Central Valley, if you 
just looked at that--and I don't--but if you just looked at 
that, we are taking out 55 at-grade crossings in the Central 
Valley right now with this $6 billion construction program. We 
are creating a passenger-only track system that will relieve 
pressure on our freight system because the Central Valley has 
the fifth most traveled Amtrak corridor in the United States. I 
have talked to major agribusiness people down there who can't 
get freight capacity. So there is a lot we are doing right now 
that will have immediate benefits in the Central Valley, but I 
believe we will be connecting it.
    Ms. Lofgren. I will close with this, Mr. Chairman. I 
represent the Silicon Valley. I think it is essential that we 
connect the Central Valley and the Silicon Valley. But my 
husband grew up in Bakersfield. When I hear people say, well, 
instead of going from nowhere to nowhere, I always think the 
people who live in the Central Valley think they are somewhere, 
and they are a part of our State's population.
    So I yield back and I thank you again for inviting me here 
today.
    Mr. Denham. Thank you, Ms. Lofgren.
    Mr. LaMalfa?
    Mr. LaMalfa. Thank you, Mr. Chairman.
    For $100 billion, we can do a lot of things. That is truly 
what this will cost at the end. You can build 20 dams, as was 
mentioned earlier, or possibly 3,000 miles of infrastructure. I 
think that was the figure reported. Think of all those jobs. 
Mr. Hunter's colleagues, if they had all that activity instead 
of what we are talking about here, because we haven't 
established yet what the true cost of this rail is going to be, 
as I thought 6 years ago legislatively.
    Mr. Richard, I would still like to know after the fact, 
after the voters narrowly approved the measure, there seemed to 
be a new idea to go ahead and drill through the Tehachapis 
instead of some alternative route. Do we have any idea what 
this is going to cost, what tunneling through the Tehachapis 
will be?
    Mr. Richard. We do, Congressman. If I could just make two 
quick points.
    Mr. LaMalfa. I am short on time, so----
    Mr. Richard. Yes. On the southern leg from the Central 
Valley to Los Angeles, that is an estimated $30 billion leg.
    Mr. LaMalfa. OK. So is this reflected in the initial 2008 
plan the voters saw?
    Mr. Richard. No, but----
    Mr. LaMalfa. So we had $33 billion, plus $30 billion. So we 
are at $66 billion right there.
    Mr. Richard. Sir, it is an apples to oranges comparison 
because the numbers we used are fully inflated over the life of 
the project numbers. That is different than a single point 
number.
    But my main point to you is I wasn't here in 2008. I came 
in in 2011. The Governor told us to tell the truth to the 
people about what it would cost. We stood up and we told them 
that. I wasn't here for the earlier time. Today----
    Mr. LaMalfa. It doesn't matter who was here because you 
said something about a commitment to the program working as it 
is, a commitment to a true high-speed rail train.
    Mr. Richard. That is right.
    Mr. LaMalfa. And that would be one that runs from S.F. to 
L.A., and makes it in 2 hours and 40 minutes.
    Mr. Richard. That is right, and right now that looks like 
it will cost $64 billion over its life, fully inflated. That 
number, if it were----
    Mr. LaMalfa. Including the drilling through the Tehachapis.
    Mr. Richard. Yes, sir.
    Mr. LaMalfa. You can do it for that original $30 billion 
that wasn't included in the original plan.
    Mr. Richard. I don't think I understand or accept the 
second part of your question, but I am saying that for the $64 
billion fully inflated cost, we will build you a system from 
San Francisco to Los Angeles, including going through the 
Tehachapis.
    Mr. LaMalfa. I don't see how those numbers can possibly 
come in on that. But that said, right now, again, we can 
identify about $13.5 billion, plus what you are pulling in from 
the Cap and Trade, which by the time SB-32 finishes putting a 
noose around whatever petroleum products are drilled in 
California industries--the industries are leaving in droves--
you are not going to tap a whole lot, even in a good year for 
Cap and Trade. Half-a-billion dollars, I hate to project how 
many years that half-a-billion dollars it would take to raise 
$55 billion or $58 billion or $100 billion.
    So, sir, where is the money going to come from? There is no 
private-sector money. The Federal Government isn't in a mood to 
do this since we already have a $19.5 trillion national debt, 
and we have other priorities. Where will this additional $55 
billion come from? Because I don't see it forthcoming from 
anywhere.
    Mr. Richard. Well, it is a longer conversation than we have 
today, but the private-sector money is going to be a very 
robust part of this, and it will equal about a third of the 
contribution----
    Mr. LaMalfa. There are taxes, but they are not California 
in the private sector.
    Mr. Richard. I am trying to do this as quickly as I can. 
The private sector has told us--we are not able to offer any 
kind of a subsidy. That means the private sector needs to see 
the first leg operating before they will come in. Our estimates 
are that there will be about $20 billion of net present value 
of private-sector contribution----
    Mr. LaMalfa. Could we meet them, please, at another 
meeting?
    Mr. Richard. Yes, sir.
    Mr. LaMalfa. All right. As Mr. Capuano was talking about, 
the system is successful in the Northeast Corridor. I have 
ridden that. I like it, you know? But it makes sense in a dense 
urban area, that Boston to Washington area, with lots of stops. 
You have to have lots of stops where people get on and off. It 
isn't truly high-speed anymore when you are stopping a lot. 
California can't do that because if you are stopping in Wasco 
and places like that, you are not high-speed rail anymore. So 
this is a project that isn't nearly the same as the Acela in 
the Northeast Corridor. It can't make money when you are 
stopping. It can't fulfill the mandate that the voters voted 
for, for true high-speed rail.
    I was told one time that if one train ran north to south at 
full speed without stopping, that would fulfill a high-speed 
rail system. The rest is going to be commuter lines stopping in 
Hanford and Shafter, even in the Bakersfield area, although 
without Buck Owens and Merle Haggard around anymore, so there 
is less reason to stop in Bakersfield.
    That said, I don't see how this can be successful, sir. How 
do you see this as being successful? And lastly, what will the 
price of the ticket be these days since it cannot be 
subsidized?
    Mr. Richard. I will say this very quickly, Congressman. In 
our business plan, what we use for our revenue models, if we 
had the system in place today we believe it would have to 
compete with the airlines. So we priced the ticket at 85 
percent of a discounted airfare between L.A. and San Francisco, 
roughly about $83.
    On your other question, it is a longer conversation, but I 
will say this, and I say this to you as a person who I know is 
a conservative Republican: We are building this system to be 
operated by the private sector. The Government would put in the 
first money, but it is the private sector that would bring 
their genius, their innovation, their efficiency to operate it. 
They are telling us they want the chance to do that. To do 
that, they know they have to compete with the airlines and they 
have to provide a service that would make money.
    The Acela is not true high-speed rail, but it throws off 
operating cash. Every high-speed rail system in the world, once 
it is built, throws off positive operating cash. That is why 
the private sector wants to come in and operate this system, 
and they will be able to operate it successfully. We really 
believe that, and all our models and all our numbers--and we 
have the former vice chair of Bank of America on our board who 
has looked at all this and says this will operate profitably 
when we get it done.
    It is a longer conversation. I welcome the opportunity, Mr. 
LaMalfa, to have it with you.
    Mr. LaMalfa. You made my point right to Amtrak, which I am 
heartily supportive of, and it still requires the input of 
Federal dollars to keep it----
    Mr. Richard. All but the Acela.
    Mr. LaMalfa [continuing]. The Northeast----
    Mr. Richard. That is right.
    Mr. LaMalfa. But the rest of it, it doesn't.
    Mr. Denham. I think this will require a longer debate.
    Mr. LaMalfa. Thank you, Mr. Chairman.
    Mr. Denham. Mr. Capuano?
    Mr. Capuano. I would like to yield a few minutes to my 
colleague, Ms. Lofgren.
    Ms. Lofgren. I just wanted to mention that in terms of the 
subsidy, we don't know precisely but the tech companies, they 
have the Google bus, the Yahoo bus, the Genentech. I saw them 
coming off here on 280. In talking with the technology sector 
in Silicon Valley, they fully expect that they will be part of 
financing their employees on the system, and it would actually 
cost them less than what they are paying to get their employees 
to work now.
    I thank the gentleman for yielding.
    Mr. Capuano. I guess I would just like to start out by 
asking can anybody here imagine what would have happened to 
this country, the last time we had a major deficit which 
actually was greater than the deficit we have today, no matter 
how you measure it, if a conservative Republican President had 
said that because of our deficit, we are not building the 
Interstate Highway System? Dwight Eisenhower said we need to 
invest in our future. We had just spent every penny we had in 
war, on World War II, but we knew we had to invest. I can't 
imagine what this country would be like.
    I am not going to say whether this project is the best way 
to invest in our future, or building dams, or something else. 
That is an issue for the people of California. But to fail to 
invest in our future, regardless of the economic situation, is 
shortsighted and stupid, no matter how you look at it. If this 
is the way you want to invest in it, good for you.
    I do want to ask a question about the blended system. That 
is a new term to me. I want to make sure I understand it. That, 
to me, sounds like Amtrak. Am I hearing that correctly?
    Mr. Richard. You are.
    Mr. Capuano. OK. That is not a new system. The question I 
have is do you have the ability to separate this track in the 
future? Because, Mr. Hartnett, I know what you are saying, and 
I accept that you can time these trains right. We do it when we 
have to do it. But one of the biggest problems we have in the 
Northeast Corridor is shared track. It doesn't mean we don't do 
it. We do it. But we are doing everything we can now, and 
spending a lot of the money, to separate that track.
    So I am just curious, as you build this, is there the 
ability at a later time to separate the track if and when the 
system proves viable?
    Mr. Hartnett. I think the way the system is designed is to 
share our right-of-way and it is to be built substantially 
within the right-of-way. In order to increase the number of 
trains, there are passing track opportunities. While passing 
tracks can be built, it enables us to share the remainder of 
the track more efficiently because of the passing track. So I 
think that is an integral element of the future.
    Mr. Capuano. I get that. I am looking 50 years down the 
road or something. And the reason I am asking is because I am 
personally involved with two projects in my own area where we 
are trying everything we can to separate track. Some of it is 
subway and rail, some of it is rail and rail, some of it is 
Amtrak. It would help us greatly--again, I am not saying don't 
do the project because you can't do it, but I am hoping that 
you are thinking long term.
    I guess the other question I have, and again it goes back 
to a personal opinion, as you build up these stations, there 
has to be one. You have to start somewhere. You are not going 
to build them all the same day. You are not going to open them 
up the same day. Is there priority being given to the areas 
taking local or regional leadership in allowing for smart 
growth?
    I say that because if you are going to build a stop in the 
middle of nowhere, or you are going to build a stop in the 
middle of a community that allows for more residential 
development and more parking opportunities so you can actually 
get on and off the train, obviously I would argue to build in 
the latter. The communities that want to fight it, I guarantee 
you they will be back 20 years later saying we didn't mean it, 
but that is a different issue. We can jump over them and move 
to the guys that want to do it.
    I am just curious. Are you doing that, or are you just kind 
of going full steam ahead?
    Mr. Richard. Yes, sir. Very quickly. And by the way, I grew 
up in the DC area, so I am very familiar with Georgetown and 
the Metro and the communities that said no and the communities 
that didn't.
    This is a particular passion of mine. This is how we really 
make the system work for everybody and meet our environmental 
objectives, is we have to look at transit and land use. I had 
the transit land-use committee of my board. We are looking at 
developing sustainability and connectivity and density 
standards around the stations. We absolutely need to do that 
and build these stations the right way.
    Mr. Capuano. Thank you. I yield back.
    Mr. Denham. I know better than to cut off the ranking 
member. We work very, very closely together. We have a trip 
here ahead of us.
    Let me first start by thanking all of the Members for not 
only expressing their views but for keeping us on time today. 
And I want to thank each of our witnesses today for taking time 
out of your schedules to be here with us today. A lot of 
information, but I would say the most important information 
that we usually get out of each of these hearings is the 
questions that we have to follow up afterwards.
    Ms. Feinberg, I specifically want to thank you and all of 
the work that you have done to keep our rail systems safe 
across the country. We have made some big accomplishments this 
year with implementing PTC, Positive Train Control, as well as 
the new tank car rules, working together to make sure that the 
crude by rail that is moving throughout our communities is much 
safer. I think one of the most important issues is alerting and 
training our first responders, letting them know not only what 
is coming through our communities but making sure they have the 
training to address any catastrophe that we may see.
    So I just want to thank you for your ongoing relationship 
and communication that we continue to have. I look forward to 
working with you in September in Washington, DC.
    And Mr. Richard as well, we have communicated well. Early 
on we had a number of hearings. I don't expect to have another 
oversight hearing for some time, but you certainly had previous 
leadership that ran things a different way. We have had a great 
relationship and having a discussion about some of these, but 
we have not always agreed on our approach. But you have been 
very accessible, and I hope to address a number of the 
transparency issues. So we would follow up with some questions 
that we still have outstanding from this committee.
    As well, I want to thank each of our other panelists. You 
each have different concerns, as we have different concerns, 
and your testimony today has been very helpful.
    I just have one last thing that I want to touch on. We have 
an election ahead of us. There will be a new administration, 
and we still have $2.9 billion for the initial operating 
segment, which you say you need to have completed before we can 
have private investment.
    So first of all, on the initial operating segment, 
regardless of who the next President is, it sounds like both 
candidates are making positive statements about infrastructure 
investments. What do you need? What do you anticipate going 
back to the Federal Government for on the initial operating 
segment?
    Mr. Richard. Just to be clear, Mr. Chairman, our business 
plan says that even without that $2.9 billion, we can open an 
initial operating segment. What we are saying to the Federal 
Government is we are going to put all this money in at the 
State level, but if you help us with this piece, it will really 
enhance it, enhance the value, and I can follow up with you on 
that.
    But I wanted to be clear, we don't need the Federal dollars 
to open the initial operating segment beyond what we have 
already received from the Congress and the administration, but 
we think we are ready to have a good conversation with you 
about the costs and benefits there.
    Mr. Denham. And the initial operating segment you are 
defining as----
    Mr. Richard. Well, I am defining it south of Fresno or 
north of Bakersfield into San Jose, with more limited service 
to San Francisco. We can enhance service to San Francisco and 
reach down to Bakersfield with this additional support.
    Mr. Denham. And the phase 1 of this project, do you 
anticipate Federal tax dollars, and do you have an idea of what 
that Federal request would be as well?
    Mr. Richard. I would just say this, Mr. Chairman. Right 
now, if we got no more Federal money and we were able to build 
this, the Federal contribution to California's high-speed rail 
system would be 5 percent. I would submit to you that that is a 
far lower percentage of Federal participation of any major 
transportation project in this Nation. Without giving you a 
specific number, I would like to work with the Congress. Once 
we establish that we are on track and we are doing this in the 
right way, to have a more intelligent conversation, not just 
about grant money but about things that you can also do to help 
us accelerate private-sector investment.
    Mr. Denham. Thank you.
    Thank you. Again, I want to thank all of our Members here 
today, as well as our witnesses.
    I am going to ask unanimous consent that the record of 
today's hearing remain open until such time as our witnesses 
have supplied answers to any questions that may be submitted to 
them in writing; and unanimous consent that the record remain 
open for 15 days for any additional comments and information 
submitted by Members or witnesses to be included in the record 
of today's hearing.
    Without objection, so ordered.
    I would also like to thank again Ms. Pelosi for inviting us 
or having us in her beautiful city and her great district and 
allowing us to have this hearing here today.
    If no other Members have anything to add, the subcommittee 
stands adjourned.
    [Whereupon, at 11:04 a.m., the subcommittee was adjourned.]
    
    
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