Taking the United States 'Beyond Traffic'

Taking the United States 'Beyond Traffic'

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U.S. Transportation Secretary Anthony Foxx joins David R. Slade, senior partner at Allen & Overy LLP, to discuss his department's thirty-year "Beyond Traffic" framework. Foxx begins by emphasizing the importance of U.S. infrastructure for the country's international economic competitiveness. He stresses the centrality of the United States as a major node in streamlining the transit of goods, services, and people across the world. With "Beyond Traffic," Foxx notes, the U.S. Department of Transportation assesses the current state of the country's critical transportation networks and identifies a thirty-year roadmap for the sustainable rejuvenation of U.S. infrastructure. Foxx additionally addresses high-speed rail, public-private partnerships, and expectations for future U.S. budgets.

SLADE:  Well, good evening, everybody.  We're very, very privileged to have with us here tonight the current Secretary of Transportation, Mr. Anthony Foxx, to—this is his—this is part of our "Renewing America" series and it's to discuss "Beyond Traffic" and how the—it's the current state of our U.S. infrastructure is so very important to our U.S. competitiveness abroad.

I guess you've been all given the Housekeeping rules already.  I guess I'd add it's as important as ever to turn off your phones and to vibrate, because it is on the record and you'll be, you know, therefore on the record as someone that did not turn off your phone if you failed to do it.

(LAUGHTER)

So, Mr. Secretary, welcome to the Council on Foreign Relations.

FOXX:  Thank you.

SLADE:  I've seen you speak on other occasions.  You're a very impressive speaker, so we're very much looking forward to this.

FOXX:  Thank you.

SLADE:  I thought since you know, before we take a deep dive into "Beyond Traffic" that since after all this is a room full of international enthusiasts and some actual foreign policy wonks that maybe you could remind us of some of the basics, why it is that our infrastructure is so important to us internationally.  Our—you know, our competitive position abroad.

FOXX:  Thank you for the question and I do want to thank the Council on Foreign Relations for having me here today.  It's great for me to come and talk to an audience that focuses on so many things working and happening across the world, to spend a little time talking about the role U.S. infrastructure does play in the global space.

Look, we as a country were the inventors of the modern aviation system, the automobile and many other innovations that have occurred in modes of transit and transportation.

And so just from the standpoint of America continuing to create and innovate within transportation, I think the entire world has seen the impact of this country's focus on that.

Beyond that, we also are very much aware that as the global market expands, as goods need to move across the world in a timely, efficient and safe way, that American transportation networks are going to be critical.

Our rail systems and highway systems are sometimes referred to as a "land bridge" for international travel because there are goods that literally come across our surface systems to get to another point in the world.

We have ports that are going to increasingly become important.  We saw just recently with the West Coast ports and the labor issues there that what happens when some of our ports start to slow down and become less productive, we also have challenges with the East Coast ports being dredged to a level of depth that's going to be receptive to the post-Panamax vessels that are going to be moving around the Earth soon.

We have an aviation system that continues to evolve and international standards setting that now happens in ICAO but innovations in aviation that continue to need to be worked through such as next gen and a lot of the discussion that we've had because of recent flights that were lost in some cases about the use of technology and tracking planes.

And so there's a lot of innovation that I think is still out there to be embedded in the world and, again, I think the U.S.' role is both as innovator, idea generator, bringing innovations into the marketplace but also just the sheer importance of our physical infrastructure can't be understated because we literally help the world move.

SLADE:  Well, Mr. Secretary, you've only been secretary now for about a year and a half but you've obviously been a very, very busy secretary.  Let's talk a little bit about "Beyond Traffic", which is a very impressive document, all 300 pages of it.

(LAUGHTER)

There is, by the way, also a shorter version on the Web...

(CROSSTALK)

SLADE:  ... if anyone wants to—and it's just jam fact pull—full of trends and impacts on our system from those trends and all the choices we need to make.  So maybe you could share with us a bit about the content—contents of that document, what it is and...

FOXX:  So "Beyond Traffic" is the latest effort the department has made to basically assess the current state of the American transportation system.  And to forecast over a longer horizon than we typically have the ability to do and on Capitol Hill and out in our communities, looking over a 30-year horizon, what's coming at us, what kinds of trends are happening to us that we need to think about now and adjust to.

And just a couple of things that we were able to find out in the course of doing the study, first, we—we're growing.  This country's going to have 70 million more people trying to move around in the next 30 years.  And so what I say to people is that, you know, that commute that takes an hour today?  Get ready because it's going to be longer 30 years from now if we don't do more.

And in some cases, doing more means doing some of the things we've done historically, which is adding lane miles to our highway system, but in some cases there are areas that are more constrained now, mostly urban areas, that are more constrained, where adding highway lane miles is impractical and you now need to think about doing something different with modal choices, adding transit features, adding bicycle-pedestrian features, giving people different choices, different ways of moving around.

So the growth, the sheer growth that the country is going to experience is, I think, a troubling trend, given how much we're investing and how we're investing today.

I'd say another big learning we took was that there are generational differences in how each generation uses transportation.  I'm still from the school, you know, when I was 16, the thing to do was to go get a car.  That's how you, you know, that's how you got the girls, you know, that's what—you know, that's what you did.

SLADE:  I'm glad you got the girls.

FOXX:  At least some people did, you know, I...

(LAUGHTER)

... depending on what kind of car you had.

But anyway, but this generation, this millennial generation, has a totally different perspective on transportation.  And many of them are not looking to go buy a car.  Frankly, some of them aren't even going to buy a house these days.  They have a totally different relationship to space and so they are much more likely to want to be on the interior of a large urban metropolis.  They're much more likely to use bicycles, pedestrian facilities, transit facilities.  This generation is really looking for a quality of life, so to speak, that allows them to move fairly organically between things and they don't want to have a lot of—a lot of accoutrements on top of that.

So, you know, anyway, the bottom line is I think that's a trend that we're going to have to see how long it sticks.  But assuming that it does, that means that we've got some challenges with how we're spending—because right now, we're putting out of a $70 billion budget, we're putting $40 billion into our highway system.  And you know, if we have a generation of folks that are coming alone that are not going to be as focused on the use of that, we still have commerce that needs to move that way, obviously.

But that may mean that we need to think about, you know, a balance that involves a little more transit, too.

SLADE:  So as secretary, you have responsibility over a lot of different modes of transportation throughout the United States, not just highways and transit, but airports, rail, seaports, but it would be unfair to expect you to fix everything in the United States, right, because as you also know from your period as a very successful mayor of Charlotte, North Carolina, that there's a lot of local and state authorities as well, right?

So could you just talk a little bit to—so that we get the groundwork here?

What are the respective roles of the—you know, the federal Department of Transportation versus the states?  So people don't set their expectations too high.

FOXX:  It's a great point and it's one that we refer to in "Beyond Traffic"—by the way, this is a real page-turner.  I want to offer it to everybody.

(LAUGHTER)

SLADE:  That's what I was talking about.

QUESTION:  Does it have Cliff Notes?

FOXX:  There is a Cliff Notes version, actually, yes.

But governance in transportation is an issue that I think we're going to continue to grappling with.  And to answer your question squarely, how things are built depends on what mode of transportation you're talking about.

So for instance, our rail system—our freight rail systems are largely privately owned and so you know, a lot of our engagement with the freight rail system is on private sector engagement.

Our highway system is largely state driven.  And so the states have a huge role to play in the maintenance as well as the continued expansion of our highway system.  Our transit systems are yet again a different level of governance because those are mostly local.  And so, you know, the large transit systems across the country are largely a feature, a creature of local government or some type of authority that picks up an area of local governments.

So we're all over the map when it comes to how governance shapes transportation and I think that's one difference that you find in the U.S. versus another part of the world is that a lot of places, you know, France builds French highways, you know.  They don't refer it down to a state or something.

We do that and that makes it a little more complicated.

SLADE:  Yes.

The—one of the fascinating statistics or projections in "Beyond Traffic" is that in 30 years 75 percent of the U.S. population is projected to live within these mega-regions you describe, like the Northeast Corridor, the West Coast, the Gulf Coast, the Chicago Hub.

So that's going to put a lot of—that's going to rejiggle this federal-state divide even more, right?  There's going to have to be more state cooperation.

But what do you think the federal government, the Congress can or should be doing to facilitate that cooperation?

That's really going to change the map.

FOXX:  Well, the "Beyond Traffic" study doesn't say this because it's really intended to be more of a descriptive document than a prescriptive document.

But what I believe is that the federal government—actually, all the governments going to need to be all more focused and attuned to this—to this growth of these regions.

And sometimes, frankly, they cross state borders.  I come from a city that was right on the border of North and South Carolina.  And part of our economic sphere of influence was actually in South Carolina.  And the reality is that the economy doesn't always tip its hat to the political jurisdictions.  It really focuses a lot more on workforce, on assets within a given region or what have you.

And unfortunately right now a lot of our decision-making is just within political jurisdictions.  So you know, another feature of what we have proposed last year in legislation was an effort to encourage local communities to organize their transportation thinking along a regional cluster as opposed to just one county or one city, starting to look at themselves as clusters of regional activity and making transportation decisions that adjusted to that.

And that—I think that 's a trend that we're going to need to bend towards as a country in order to be as successful as possible.

SLADE:  Yes.  I don't want to go off on a tangent here but I—recently there was in the press the fact that there had been an intergovernmental agreement signed on the Detroit-Windsor Crossing.  And on the one side, we had the U.S. government and Michigan and on the other side we had Canada.

And a lot of the press was about how Canada's going to—will assume the—most of the responsibility for the funding.  Is—would you say that's an example of the challenges we face as being a, you know, from a governance perspective, that it's just a little tougher to get things done on our side than it is on theirs?

FOXX:  I think we will have many examples of the kind of challenge.  There was a—there was a bridge project that was supposed to happen between the State of Washington and the State of Oregon.  And the politics aligned for a point in time and then the state House, or state Senate changed in the State of Washington—they didn't want to do the project.  The project sort of fell apart.

And we find these types of challenges all the time.  So the Windsor project is a little different because it's—it has an international dimension to it...

(CROSSTALK)

SLADE:  Yes, which is why I raised it before this...

FOXX:  I understand.  Absolutely, yes.

A little different because the Canadians are really putting up a significant amount of the capital costs of doing that project and not withstanding a lot of efforts, we undertook it as an administration to figure out a way to do more cost-sharing.

SLADE:  Yes.

Well, if we could maybe for a moment focus on probably the most—(inaudible) the biggest from a budgetary perspective, mode of transportation, our highway system and maybe move a little bit from the proscriptive to the prescriptive, because there is now a bill before Congress that the administration has put there to reauthorize the surface transportation system.  It's still sitting in Congress while the current authorization runs out in two months, right?

Could you maybe just talk a little bit about the key features of that bill and what's going to happen if we don't get something done in two months?

FOXX:  Well, anybody find a pothole on the way here?

(LAUGHTER)

I mean, you know, seriously.  It—you know, potholes in this country are atrocious and they're getting worse.  And they're getting worse all over the place.  And I think what the average American doesn't always realize is that the transportation infrastructure, the surface system they use, the road systems they use, are really an amalgam of the federal, state and local governments working together to ensure a quality transportation system.

We've had over the last six years 32 short-term measures passed by Congress on the surface transportation.  And having been a mayor, this is what that means.  What it means that if you have got a big $100 million or more project, you may sit on it for a while because if you don't know the federal government share is coming, it makes it really hard to justify going through the expense of planning a project and engineering a project and designing a project and going through the headaches of public input and you know, the push-pull of getting a project done.

And so I think what the—what Washington has told the rest of the country is just stop.  And that's the opposite of what we need to be doing.

So within that context, the president has proposed the Grow America Act, his budget reflects what we think we should be spending on our infrastructure, which is basically a 50 percent increase over current levels.

We think that we should be doing a whole lot more highway work, both maintenance and new capacity, that we should have a national freight plan that actually has money behind it as a country so that we can ensure that we maintain our place as the most efficient, effective and safe system of moving commercial goods across the world.

We think that we should have funding set aside for these local communities that have figured out how to cluster themselves along areas of economic spheres of influence.  And we think that we should have some greater protections for safety for the traveling public that we don't currently have as a department today.  So the Grow America Act is a huge step forward, but we do need Congress to pass it, and if they're not going to pass that, pass something.

SLADE:  Yes.  So maybe we could talk for a minute about just one of the elephants in the room, the Federal Highway Trust Fund.  That, just by way of background, ever since Eisenhower, our federal highway interstate system has been built out through this trust fund, which is funded solely by a gas tax, right?

And if I recall correctly, from "Beyond Traffic," there is—if I have the numbers correctly, there's like $30 million that's currently—of revenues being generated by the gas tax, $40 million that's being spent just to keep the current spending.  But like $80 million to really—if we're going to make the investment we need.

So we have a real problem with the trust fund.  You know, the gas tax is not going to be able to fund it.  It's basically insolvent.

So what are some of—what is some of your thoughts, the administration's thoughts anyway, on how to plug that gap?

Is it going to be an increase in the gas tax?

That's—there seems to be bipartisan lack of support for that.

Is it going to be hitting up the general fund continually?  Or is it going to be—I guess the president's proposed this one-off 14 percent income tax on foreign income, which might spark a little interest in this room, too, what is what—or tolls, right?  There's the possibility of just revisiting the tolling system for the—for the interstate highway system.

FOXX:  Well, this is a very important point.  The highway trust fund has been roughly running $15 billion short on an annual basis.  And in recent years Congress has tried to patch it together, using a variety of legislative duct tape and chewing gum to just keep it afloat.

I  would say in response to question, I think it is—I think it is misguided on our part as a country to think that plugging the highway trust fund is a substitute for making the investments in our infrastructure that we should make.

Somewhere along the lines we got this impression that if we just got the trust fund plussed up, that would solve our problems. And the reality is is that the spending levels of the trust fund, even according to CBO, if you just got the trust fund leveled off into last year's numbers, you'd still be about $11 billion or $12 billion short in terms of just the maintenance that needs to happen on an annual basis in this country.

So we're—you know, I think the problem we have is that everyone wants things to be like they were in 1956 and we're not in 1956 anymore.  We're in 2015.

And I will say one other thing.  Just you know, I—you know, I had an opportunity to watch a little basketball over the weekend and I watched Duke play a game.  And for the first 24 minutes, Coach K looked like he was just—he—looked like he'd prefer to be someplace else.

And at the end of the game, he said, you know, it was like an out-of-body experience.  The team was like not doing anything we told them to do for 24 minutes.  And the last 16 were fine.

I have to tell you, as Secretary of Transportation, I'm having an out-of-body experience every day because I go to these places and I see these bridges and I see the roads and I see the potholes and it's just like this is not the country I grew up in.  And so I get sometimes mildly snarkily criticized for being such a champion for a Congress doing something on this.  But the reason has nothing to do with just being Pollyannaish.  It's about the fact this country really needs it.  You know, our kids need it.  And if they don't have it, we're going to have taken something away from them that we were given.  And I just don't think that's right.

SLADE:  So you don't think that the lower price of gas right now is going to encourage Congress to up the gas tax?

It's not going to be that easy?

FOXX:  You know, look, I think what—the reality is I think we're going to have to have a different system.  And you know, look, we've proposed a system  that would at least for six years give us, you know, a substantial bump in the amount of money that goes into our trust fund using pro-growth business tax reform.

But I—you know, I think that it's like everyone wants the ribbon cutting, but nobody wants to do what it takes to get there.  And I think we're at a point right now where we're in a much deeper hole than most the country realizes.  We're in a much deeper hole.  This is a serious problem.  And I would be committing malpractice if I didn't continue to try to say...

(CROSSTALK)

SLADE:  ... mention you're a lawyer.

FOXX:  So I know a little...

(CROSSTALK)

(LAUGHTER)

SLADE:  So maybe we could go back again for a moment to the whole question of the federal-state-local divide because some would argue that what's going on here, one of the reasons why Congress is—has—resists reauthorization, is to in effect encourage devolution of a funding responsibility to the state level.

And the fact, you know, that seems to be happening.  And I think Senator Wicker recently referred to the fact that the states are a laboratory for fiscal experimentation here, right, they're passing fuel taxes, sales taxes, experimenting while the withholds (ph) and that sort of thing.

So is that maybe de facto what's going to happen?

I mean, is it, to some extent just a realignment of responsibility in a direction where it's OK?  Or I mean...

FOXX:  I wish we were—I wish—I wish we were having a real conversation about what that means because what that means in my view is that we will do even the same maintenance of effort we've been doing.

But I think devolution ultimately means that we're going to be doing less, less of maintenance, less of new capacity building.  And look, you know, you look around the globe, there are countries that are experiencing population declines.  And you know, maybe that's a decent strategy for a country that's experiencing population declines or declines in the amount of commercial goods movement.

But we're expecting exponential increases in both of those areas.  And so it's like what don't we get about this?

You know, it is not—I'm promising you, it is going to be more expensive for us to doddle around for years and years and years that it would be to just bite the bullet, develop a strategy, stick to the strategy, pay now because it's going to be a lot cheaper than trying to pay later.

You know, I have this conversation with Secretary Duncan a lot because I think education and transportation have a lot in common in the sense that they're both long-term.  If you don't invest today, you will see the outcome tomorrow.  You will see it in increased costs.  And I just think that for the country, if we get those two issues right, the country has a very bright future.

But if we keep doddling along, going to be a tough time.

SLADE:  OK.  So now we get to my favorite topic, which is public-private partnerships.  This administration has been a big supporter of PPPs as a—one way of encouraging capital into the transportation sector.  There has been a lot of high profile P-3s, actually, if you look around, Capitol Beltway is one, Miami Tunnel, there's the solution in Pennsylvania, the rapid bridge program that I think has been a pretty high-profile item with you.

I think some 34 states throughout the country now have P-3 programs and a lot of other countries, the U.K., Canada, even a lot—a lot of countries in Europe have relied very heavily on this system.

So what does the administration think about this?

Are they—is there other things that are in the pipeline to encourage a further development of this technique or...?

FOXX:  Yes.  We think there is an increased role for the Department of Transportation to play in public-private partnerships.  And I will give you a couple of examples.

First, you know, while there are increasing numbers of states that are setting up public-private partnership offices, there is still a little  bit of residual fear out there in the public realm around public-private partnerships.  And so part of what we think we can do as Department is to—is to help promote best practices, to help issue model legislation or at least put model legislation out there that states can then take up to try to help create an atmosphere in which public-private partnerships gain greater acceptance at the project delivery level.

Secondly we have a lot of permitting work that we do at the department that we work with our interagency partners on.  And one thing we have learned is that when you talk about the cost of a project, oftentimes there is a lot of permitting costs associated with it.  And there is a reason why we have some of the regulatory requirements we have.  We think you can actually get faster results without doing an injustice to those equities.  And that means having all the agencies sitting at the table at the same time look at a permit, making the comments and sending them of to the project sponsor.  The Tappan Zee Bridge Project in New York, an example of this, that had about four or five years of permitting that would have happened under the normal course of things.  We were able to get that project permitted in like 18 months, and we look at that as an example of something we'd like to replicate every day.

But I think that's a part of giving the private sector greater confidence that the public sector can actually deliver.

And then third, I think one of the roles of the department I'm hopeful can play a better facilitation role in is helping the private sector and the public sector find each other.  You know, there's—there are a lot of projects out there that are still looking for resources.  A lot of public sector sponsors would like to think about a public-private partnership and may not have the tools to figure that out.

So we want to try to help them while we're also helping the private sector figure out where the deal flow may come from.  This is big because in a time of scarce resources, if we can convert even, you know, 5 percent or 10 percent of the transportation work into public-private partnerships, that's 5 percent or 10 percent that we don't have to go find someplace else.

And frankly if it—if the deal works for everybody, all the better, so I think this is a space that there's is a lot of opportunity.

SLADE:  Well, as you know (inaudible) very supportive of that whole technique and we have been working with the Department of Transportation to develop this model contract guide for highway P-3s.

I know you know because I just reminded you in the other room before...

But so what we're finding as we work on roads and transportation projects throughout the state is that there's an increasing use—or federal support that comes in the form of credit assistance or, you know, as opposed to grant funding in the past.

And there has been two programs in particular that we see a lot—the TIPIA (ph) program, which is subordinated loans and then public—private activity bonds which is a form of tax exempt financing.

Does the Grow America Act sort of increase the caps, encourage for the use of that?

Do you see that sort of a trend in the direction of credit assistance as opposed to grand funding from the federal government?

FOXX:  Absolutely, make big expansions in both programs. And the idea is just to create more facilities so we can get more projects going.

Again, though, I want to say one other caveat to my great belief that public-private partnerships are going to be the wave of the future, which is to say that they have to be undergirded with a public sector commitment to transportation.

And in other words, if you—if you don't get a long-term highway bill and you just rely on the public-private partnerships, the problem is going to be that the private sector is not going to undertake the risk to plan those projects.

So it's like there still needs to be an underpinning of a public sector commitment to the long term for it all to work.

SLADE:  Right.

Well, I guess I should warn you all that in about several minutes I'll start turning it to the floor for questions.  But I do have one more question, I have to admit I watched your recent interview with Eric Schmidt, and there was one question in there that I thought was hilarious, I got to bill that out to you, too, that just shifting gears to our rail system a little bit.

Why is it that it takes only three hours to get from Paris to Marseilles, and that's 536 miles and the Boston to D.C., the Acela Express, which a lot of us take every day, takes seven hours for just 437 miles?  I think I got the numbers right.

FOXX:  Well, this is a vision that the president and I both share, which is that we can—we can speed up these times.  And you know, look, when the rail system in the U.S. was built, some of it predated the road systems.

But at some point what folks decided was to put both of those things on the same grade.  And so in some cases our speeds are going to be limited because you don't want to have rail traffic going at such a high speed at grade that's intersection—intersecting with vehicular traffic.

Having said that, the cost of getting is going to be significant.  But again, as you point out, the rest of the world has figured out that there are ways to get there.  And I think that the U.S.—the future for high-speed rail in the U.S. is actually pretty bright.  But it's going to take some funds.  It's going to take some commitment.  It's going to take a lot of time, but we'll get there.  We always do.

SLADE:  OK, so at this point in the program I'd like to turn it out to the audience.  I'd remind you that when you ask a question, please stand and give your name, your affiliation.

This lady right here.

QUESTION:  Thank you, I'm Mitzi Worth.  I'm with the Naval post-graduate school.  I was lucky enough to work with Graham Claytor (ph), who was the acting secretary of transportation as well as the acting deputy secretary of defense and the secretary of the Navy.  He was a really smart guy.

And he told all of us about the importance of maintenance.  I mean, we just became so committed to that issue.  I sit here listening, why don't we understand that?  And I'm into storytelling.  And I—first of all, I didn't know about this document you've put out.

But I want you to— I want you to think about—nobody has time to read 300 pages.

So the question is what are the essential messages that you want all of us to understand?

You ought to think about writing stories for children, for middle school kids.  If the middle school kids can understand it, the rest of the population can.  And you need to get Mike, getting your stories onto PBS.

But yet—but again, that's short.  So you have to figure out how to tell these in a short time and is your information department working on that?

FOXX:  Actually, it's a great, great question.  And we are working on that.  And here's the thing about transportation that's hard.

If I give you a statistic—I'm going to make one up—that the average commute times—I'm totally making this up.  So nobody quote me on this.

The average commute times have gone up 20 percent in the U.S. over the last 10 years.  That means something on one level, but it means nothing on another level.  A lot of our—a lot of our storytelling has to be told at a very localized level.  It has to be almost microtargeted in a sense.

This road in your neighborhood, that the—that the state has been talking about for 10 years, has not gotten done because the money doesn't exist.  If the money were there, you could get the road done, you'd be—you'd have 15 minutes saved on your commute or whatever.

I think it's—I think one of the challenges we have is that the country is so vast, and there's so many different ways in which transportation impacts people, that we've got to figure out a way to talk about this that reaches people where they are.  But I think there is a way to do it and our team is working on that and I appreciate the point, thank you.

SLADE:  Well, in fact, there is a 10-page, shorter version of this that even a simpleton like me...

FOXX:  There are Cliff Notes.

SLADE:  ... was able to access and read very quickly.  So...

QUESTION:  How do we find it?

FOXX:  They're on our website, dot.gov/beyondtraffic.

If you go there...

(CROSSTALK)

FOXX:  It's short.

QUESTION:  How do I get the Cliff Notes?

What do I call it?

FOXX:  If you go to "Beyond Traffic" on our website, it has the short version and the long version.

QUESTION:  OK.  Short version?

FOXX:  Yes, absolutely.

Yes.

SLADE:  And could we go to this gentleman in the back corner here?

QUESTION:  I am Charlie Firestone (ph) at the Aspen Institute (ph).

Hi.

And I'm concerned and I think a lot of council members are about cyber hacking.  And its impact on our infrastructure.  And I guess my question is how—well, and the premise is that virtually every corporation has been hacked apparently—a lot of times we don't even know.

How vulnerable is our American infrastructure to cyber hacking and what are we doing about it?

FOXX:  It's a great question and it's an area that we're spending an awful lot of time on.  So we have, if I were looking at concentric circles, the smallest one being our data systems within U.S. DOT, which extend from everything from FAA, which is doing flight management all day long, to other parts of our—of our work.

And we are certainly not perfect.  We've had some high profile vulnerabilities exposed to us recently and we always work to ensure that we're stay ahead of whoever is trying to get into our systems.  And I think that's an effort that will continue.

Longer term, as we become more technologically connected, you know, we talk about connected vehicles.  We are having conversations about vehicles that talk to the infrastructure.  Next gen, which takes our aviation system off of World War II radar on to a GPS system.  Just about every mode of transportation is going to become more automated in some way.

And as we do that, we have got to be triply focused on making sure that there are protections built in there to prevent the type of hacking that you're talking about.  Now I would say that as we're working to build through next gen, a lot of that work is ongoing in the process of building that out.

When it comes to connected vehicles, we're going to have to work with industry on that and we have encouraged the auto industry for instance to form an alliance that allows them to share information on cyber-security issues, and with our support, because it's going to  take that kind of partnership within industry to be able to help get there but we are working on this issue all the time.

SLADE:  This woman at the table right there.

QUESTION:  Hi, Reeva Carruth (ph) from McCourt School (ph), Georgetown University.

I would just like to ask where are we now with the North American transportation system?  You know, when NAFTA was passed, it also had a lot of policy cooperation and regulatory cooperation, and the area of transports was one of the—you know, intermodal transport was one of the things that was supposed to give the North American region competitiveness in terms of global trade and global industry.

So I'm just curious where we are with that now and with the—with the pending transatlantic trade agreement.  I'm sure the Europeans have a lot of things they want to have in place in terms of compatibility, of port systems and surface transport and aviation.  So anyway, that's just what I want to ask.

FOXX:  You're right, there is an awful lot of opportunity in North America for cooperation.  I want to talk about two areas where we're working with Mexico, for instance, and then to talk more generally about how we're looking at our own national freight plan in the context of the continent, not just the U.S.

One of NAFTA's requirements was that we create a cross-border trucking program with the country of Mexico.  And just this year, after many fits and starts, we finally moved forward with creating that program and that work is ongoing to stand it up.  But that essentially means that Mexican trucking companies will be able to go from Mexico to a point in the U.S., bringing or taking goods from one point to the other.

That's a big development, by the way, because that has been a longstanding issue.

The other issue is that we're working with Mexico to develop a—this—an aviation agreement that opens up more access for both Mexican carriers as well as U.S. carriers.  And we're very, very encouraged by the work that's been done on that.  So I agree there are plenty of opportunities.

As we have begun looking at our own national freight plan, which I talked about earlier, one of the things that we have discovered is that we can't just look at U.S. borders.  We have to look at Canada.  We have got to look at Mexico.  We have got to think about how these different connections intersect.

You know, for instance, if we build a road that is supposed to go into Mexico, but their main route is coming up through someplace else, maybe that's not going to be the best way to do it.  So we've got to have some level of international discussion about how that freight plan comes together.  And that's—I think that's a take-home for us.  And we certainly are paying attention to it.

SLADE:  This gentleman right here.

QUESTION:  (inaudible).  Mr. Secretary, you mentioned high-speed rail.  I frequently take the bus when I want to go to New York.  It's not much slower than Amtrak, and the Acela is expensive and not comfortable and not very fast.

Japan has had high-speed rail since the 1960s.

Are we ever going to get there?

FOXX:  Well, look, our administration has taken some pretty forward-leaning steps on high-speed rail.  We haven't always been patted on the back for it.  But the efforts to get the high-speed rail connection in California, for all the dust-up that created, that project broke ground in January of this year.

We're now starting to see states like Texas, and, of all states, Florida, now coming with proposals to do it through public-private partnerships.  And so we're trying to work with those project sponsors as well.

In other words, I think the future of high-speed rail in the U.S. for the foreseeable future is going to be connecting city pairs.  I don't think you will see a wholesale system built out at one—in one fell swoop.  But I think you will start to see different city pairs get connected and after some period of time you will see more of the country connected by high-speed rail.

But I am very bullish on it.  I really think it's going to—it's going to happen.  But—by the way, our bill does actually put rail, passenger rail, into the trust fund.  You know, one of the challenges we've had with passenger rail in the U.S. is that it hasn't had a dedicated revenue stream and it hasn't been able to predict year to year what its funding would be.  And we would change that by creating a single trust fund for the surface system that would have rail, transit and highways in it.

SLADE:  This man in the front.

QUESTION:  Thank you, David Short with FedEx.  And of course my company has a lot of issues within the jurisdiction of your department.

First, if I could, your comment a moment ago prompted me to offer a shoutout:  congratulations on the Mexico aviation agreement.  And on the great work of your team.  I know Brandon Belford (ph) is with us tonight and Susan Curland (ph), did an outstanding job.  I think the Mexicans should be charging her income tax she spent so much time in Mexico, and Brian Headburg (ph), who was the chief negotiator on your team.

The question I wanted to turn to was about next gen.  FedEx is a company that operates over 660 aircraft flying to about 300 airports in the United States alone, not to mention our global reach.  Is—and with our on-time guaranteeing, if we don't deliver people's packages on time, we don't get paid.

Operating on time is critical to us.

Can I ask you, Mr. Secretary, to share with us your thoughts on the reasons it's been so difficult to implement next gen and what your prognosis is for the prospects for implementing that?

Thank you.

FOXX:  Yes.  Thank you.

Well, next gen has been on the horizon looking back; depending on who you're talking to, it's been 20 years.  And it—you know, it's a difficult thing to think about how you piece together our airspace on a GPS-based system.

In this administration, I would say we've made more progress in the last few years getting next gen advanced than we probably have made in so many years combined before.  I'm not going to put a number on it.

Some of the problems next gen has had have been that the commitments made to fund the effort for next gen haven't always come through.  And so there has been some years where the fundings fell short.  Some of it has been that it's just complicated.  I mean, I  was down in Houston where we just, I think we opened up like 60-plus next gen capabilities in Houston, which was huge.

But when they started describing for me, like it's the—it's the equivalent of taking I-495, I-95 and completely restructuring those and having to go through all of the EIS processes, all the public input processes to do that on more consolidated routes.  I mean, that's what they're doing with the airspace.

So even once you get through the technical features of it, when you start redesigning the airspace it starts to create a lot of push-pull.  And some of that is just endemic to any kind of transportation project.

So what I can say to you is is that this is an area of focus for me.  I know that we will not get next gen to the point of absolute completion by the time I leave this department, but one of the things that I have made it my mission to do is to make sure that we have got a clear pathway for next gen before we leave.  And that we're making as much progress every day as we possibly can as an administration.

And I think, you know, by the way, we're starting to see the product of it.  You know, we have optimized profile dissents happening around the country today.  That you may know what that is.  But for those of you who don't, this is basically the airplane idles as it lands.  And this is a capability that next gen makes possible.  And it saves fuel.  it makes the airplanes quieter when they land.  And it saves the environment.  But these are the types of capabilities that we're now seeing.

And you know in Memphis, where we are able to move the planes closer together because of our work together on that, that also saves fuel costs and other things.  So that is another promise of next gen.  So we're making progress.  But you know, I won't be here when the bell rings to say next gen's done, but you're going to see next gen capabilities all throughout the next couple of years.

SLADE:  This man right here.

QUESTION:  Good evening.  Tom Clark with Parsons Corporation.

Made a lot of great points this evening, Secretary, thank you very much.

Two in particular resonated with me.  One is the length of the surface transportation bill and the other one is the funding, the highway trust fund.

What do you see as the optimal length of the bill, number one?

And number two, is there consideration in this bill for a mileage based user fee alternative to be considered, not passed as the source of funding, but to at least do some additional study on it?

And where do you stand on that?

Thank you.

FOXX:  Thank you.

I think we have got to have, at a minimum, a four- or five-year bill.  We proposed a four-year bill last year.  We're going to have a new and improved six-year bill this year.  But you have got to have multiple years of funding.  Otherwise, you're not going to get the benefit of any single year's funding.

Because these projects take a while to move through the system.

Aside from that, I think that the country—and, look, I think the problem we have right now actually isn't in Washington.  That's going to sound all heretical, but I think—I think that's part of it.  But I think the bigger part of it is is that the country is not on fire about this.

And you know, one of the things that I've tried to really instill, I think "Beyond Traffic," without any intent on our part, but it actually helps to make a case even stronger, is that this is a generational issue.  This is a serious generational issue.  And we are literally—you know, it's as if I took my kids out to a restaurant and I asked them to get whatever they wanted and I ate more than what they ate.  I had dessert, too; I had the nice wine.  I even had some port after it was all over.

And then I said to my kids, OK, you guys pay the bill.  That's what we're doing.  And it's just—it's absolutely ridiculous.

But anyway, getting back to your point.  I think a six-year bill would be great.  A four-year bill at a minimum.

So we're starting to see states experimenting with this.  Oregon has a small pilot that they're undertaking now.  We don't want to stand in the way of laboratories and democracy taking on those types of studies.  They're always helpful for us to understand.

But at this point we're really focused on trying to just get a six-year bill that provides the basic level of funding and to try to move forward with something like that.  We're not—we're not getting fancy.

SLADE:  This—and right—(inaudible).

I'll get to you in a minute.

QUESTION:  I'm Chris Settle (ph) from Booz Allen Hamilton.  You mentioned the connected vehicle program, which is extremely exciting, but you also mentioned the challenge of paying to fix our highways and failing bridges.

How then do we find the investment to build out the infrastructure needed for that program?

Either from the state and local agencies or by incentivizing the private sector?

FOXX:  On the connected vehicles?  I'm trying—i want to make sure I understand the question.

QUESTION:  (inaudible) the connected vehicle program.

FOXX:  Yes, in theory, in theory, the infrastructure would be—would be paid for the same way.  So in theory, if we were talking about, for instance, connected—vehicle to infrastructure connections, the infrastructure that we would have paid—the conventional infrastructure we would have paid for using trust fund dollars, under our proposal, would still be used but it might be a more technologically updated form of infrastructure.

Sitting right here right now I couldn't tell you whether there's going to be a higher cost factor for connected vehicle to infrastructure technology versus conventional.  But what I can say is that I do think technology's going to play a role here —a disruptive role, perhaps a productively disruptive role in helping us settle some of these questions.

For instance, you know, I was talking about the airplanes and how closely they can fly together when you're using next gen technology.  Well, the same principle is at play when it comes to connected vehicles on the surface system.

So you could imagine that our trucks could be moving at greater proximity to each other using technology partly to connect them.  And that that would actually create fuel savings and create efficiencies on the system because the distances between cars and trucks wouldn't have to be as great.

So you know, there are—there are some aspects of technology that may upend what I'm saying.  But what I—what I—I think the fundamental point, though, that you're making and I would also make is that the infrastructure itself is still going to need to be maintained and it's still going to need to be invested in.  And we may get more out of it using more technology but we're still going to need the basic bones of it.

SLADE:  This man over here.

QUESTION:  Mike Fercetic (ph), PBS Online Newshour.

First of all, in response to Mitzi's comment, when I was on the broadcast, we did more stories and series on infrastructure than all the other networks combined, even though video of trains and cars moving ever more slowly doesn't necessarily make for riveting television.

(LAUGHTER)

What are you—I'm just back from six weeks in Asia.

What is the department doing now or contemplating doing tapping into the knowledge of friendly countries like Singapore, South Korea, which not only seem to know how to build things but come up with pretty creative ways of financing them, perhaps more so even than the Europeans, who rely on a level of taxation that probably the United States would never tolerate, no matter what kind of train you got them.

FOXX:  It's a great question.  And to some extent it relates back to this governance discussion we were having because in the U.S. the equivalent of the government of Singapore is the government of North Carolina or the government of Virginia or some other state.

A lot of our surface system is state-based.  And because of that, unlike some of our foreign countries, competitors or friends, we don't have one-stop shopping when it comes to these 3-Ps.  We actually have 52 different systems around the country when you count the territories that really function more or less independently of each other.

So the innovations that you're talking about right now, the default is for those innovations to happen at the state level.

And the question that we are trying to address as a—as an agency is can we play a role in helping to facilitate and encourage those kinds of innovations to happen at the federal level, given the history we have of a state-driven surface transportation system?

I think we're going to get there.  You know, I think again, the Tappan Zee Bridge is an example of a big project that we were able to get done.  It had a lot of hair on it.  It had a lot of—a lot of dollars associated with it, a lot of challenges associated with it.  But it was—you know, it's an example of the kind of financial creativity that may be needed to get big-scale projects done.

There is actually the gateway project, that—the rail tunnels that lead between New Jersey and New York.  You know, this is an area that I'm concerned about because those tunnels, as they sit there, have a shelf life and it's not all that long.

And it may take some ingenuity to figure out a way to get those tunnels paid for, maybe even designed in a different way than anybody's thought about before.  But I agree with you.  I think the reason why we can't tap into that as well today is because we basically have 52 different systems.

And what we're trying to do is to create a clearinghouse for best practices that help us get to the answers faster and hopefully to the innovations faster.

SLADE:  OK.  We have a firm and fast rule of ending on time here and I've just been given the five-minute warning.  So we have time for a couple more questions.  Let's go to this gentleman way in the back.

QUESTION:  Mr. Secretary, I'm Bob Perry with the Corporate Council on Africa.  I want to thank you for your remarks on "Beyond Traffic."  Also we're looking forward to your trip to Africa in a few months.

FOXX:  Thank you.

QUESTION:  My question has to do with the intersection between rail and energy.  And at last thanks to fracturing we've got production in areas where we didn't have pipelines, and the rail system is moving it from the Dakotas to East Coast markets.  That's a win.

The safety accidents that have occurred along that rail system are a problem.  They were designed to move coal and grain the last 50 years and now we're dealing with another problem.

So how do you see a solution in terms of consensus on new safety standards?

FOXX:  Well, it's a big deal.  Four days into my job at DOT, Lac-Megantic happened up in Canada.  And it was a horrible day, not only for our Canadian friends but really for all of us.  And from that point forward I'd been focused like a laser on trying to help our country get into a better safety posture when it comes to the movement of crude by rail.

To the point that we've taken 24 short-term measures that were thought about as bridges to a long-term answer, which is ultimately a rule on this.  Let me just say this just to cut to the chase.  You have to have a comprehensive approach to this issue.  You know, there's a lot in the news about tank cars and tank car standards.

But honestly the tank car is a mitigation device.  It is not a device that's designed to prevent an accident.  It simply is a device that contains an accident for some period of time.

We have to have a prevention strategy.  We have to have a mitigation strategy.  We have to have an emergency response strategy.  And one of the things we've really pushed on as a department is having a comprehensive approach that takes into account all of those areas.

And I would say that I think that there is a building consensus both outside of government and within government that a comprehensive approach is the right way to go.  So we're still working through what I hope are the later stages of rulemaking, but I certainly have to respect that process but know that this is an area of great focus for me.

SLADE:  And we have time for one more question, unfortunately.  This gentleman at the front table.

QUESTION:  Thank you.  Sam Vissner (ph) with ICF International.

Swinging back briefly to the question of cyber-security, there is a very complex mixed ownership structure in this country depending on the mode.  The president's executive order signed out last month brought forward the idea of stronger information sharing and advisory organizations, ISAOs, and I wonder what the department might be able to do to build a stronger information-sharing organization amongst all the various modes of transportation for which their responsibility.  Because I do think the industry is crying out for better coordination, information sharing, threat information sharing, and information sharing about best practices and best results.  Thank you.

FOXX:  Yes, thank you.  And very quickly, we are very open to trying to play a stronger role in trying to, you know, assist these conversations across different modes of transportation.  I would say that just the first thing we've got to do in each of these modes is get the modes, you know, within the modes having the discussion because there will be things unique to automobiles or to rail cars or to aviation that are distinct.

But to your point, I do think there are cross-cutting issues too.  And you know, our department intends to play an active role on the cross-cutting side of the conversation as well.

SLADE:  Well, on behalf of the Council, Mr. Secretary, I'd like to thank you for a very interesting and informative session.

FOXX:  Thank you.

SLADE:  Let's all give the secretary...

(APPLAUSE)

FOXX:  Thank you very much.

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