[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                    DEPARTMENT OF TRANSPORTATION AND
                    RELATED AGENCIES APPROPRIATIONS
                                FOR 1998

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

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                              FIRST SESSION
                                ________

 SUBCOMMITTEE ON THE DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES 
                             APPROPRIATIONS

                    FRANK R. WOLF, Virginia, Chairman

TOM DeLAY, Texas             MARTIN OLAV SABO, Minnesota
RALPH REGULA, Ohio           THOMAS M. FOGLIETTA, Pennsylvania
HAROLD ROGERS, Kentucky      ESTEBAN EDWARD TORRES, California
RON PACKARD, California      JOHN W. OLVER, Massachusetts
SONNY CALLAHAN, Alabama      ED PASTOR, Arizona
TODD TIAHRT, Kansas          
ROBERT B. ADERHOLT, Alabama  

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

John T. Blazey II, Richard E. Efford, Stephanie K. Gupta, and Linda J. Muir,
                           Subcommittee Staff
                                ________

                                 PART 3
                                                                   Page
DEPARTMENT OF TRANSPORTATION:

   Coast Guard....................................................  135
   Office of Inspector General....................................    1
   Office of the Secretary........................................  817
   Saint Lawrence Seaway Development Corporation.................. 1045
   Secretary of Transportation....................................  637

RELATED AGENCIES:

   Architectural and Transportation Barriers Compliance Board..... 1101
   U.S. General Accounting Office.................................  471
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE

40-479 O                    WASHINGTON : 1997

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             For sale by the U.S. Government Printing Office            
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        THOMAS M. FOGLIETTA, Pennsylvania   
HENRY BONILLA, Texas                   ESTEBAN EDWARD TORRES, California   
JOE KNOLLENBERG, Michigan              NITA M. LOWEY, New York             
DAN MILLER, Florida                    JOSE E. SERRANO, New York           
JAY DICKEY, Arkansas                   ROSA L. DeLAURO, Connecticut        
JACK KINGSTON, Georgia                 JAMES P. MORAN, Virginia            
MIKE PARKER, Mississippi               JOHN W. OLVER, Massachusetts        
RODNEY P. FRELINGHUYSEN, New Jersey    ED PASTOR, Arizona                  
ROGER F. WICKER, Mississippi           CARRIE P. MEEK, Florida             
MICHAEL P. FORBES, New York            DAVID E. PRICE, North Carolina      
GEORGE R. NETHERCUTT, Jr., Washington  CHET EDWARDS, Texas                 
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director












DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                                  1998

                              ----------                              

                                           Tuesday, March 11, 1997.

                      OFFICE OF INSPECTOR GENERAL

                               WITNESSES

JOYCE N. FLEISCHMAN, ACTING INSPECTOR GENERAL
RAYMOND J. DeCARLI, ASSOCIATE DEPUTY INSPECTOR GENERAL
LAWRENCE H. WEINTROB, ASSISTANT INSPECTOR GENERAL FOR AUDITING
WILBUR L. DANIELS, ASSISTANT INSPECTOR GENERAL FOR EVALUATIONS
TODD J. ZINSER, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS

                            Opening Remarks

    Mr. Wolf. Welcome to the committee. I apologize for the 
delay because of the other witnesses having to leave.
    We will try to go through these issues relatively fast, and 
I hope we won't keep you too long, so maybe if you can keep 
your answers relatively succinct and then on the ones that are 
more elaborate, just elaborate for the record, but welcome.
    Why don't you summarize your opening statement and then we 
will submit the full statement into the record as if read?

                             Introductions

    Ms. Fleischman. Thank you, Mr. Chairman. I am very happy to 
meet with you today. I will present the highlights of the OIG's 
proposed budget for fiscal year 1998, and I would like to 
summarize the office's accomplishments for the last year and 
present our goals for fiscal year 1998.
    I would like to introduce people that actually, I am quite 
sure, you know well. On my immediate right is Mr. Ray DeCarli, 
who is the Associate Deputy Inspector General. To my far right 
is Mr. Larry Weintrob, who is the AIG for auditing. To my 
immediate left is Mr. Todd Zinser, who is the AIG for 
investigations, and on his left, Mr. Wilbur Daniels, the AIG 
for evaluations.
    I would like to say at the outset that, as you know, I have 
been acting Inspector General at DOT now for about seven 
months. I want you to know and I want to state for the record, 
I have worked for the government for 22 years. This is the 
finest staff it has been my privilege to work with. They are 
outstanding, dedicated, hard working federal employees, I think 
exemplary of all the federal employees that work in this city.

                           Opening Statement

    First, our budget. The 1998 budget request totals 
$40,889,000 which would enable us to maintain our current level 
of operations and staffing level of 440 full-time equivalents. 
This is an increase of $3,084,000 over the 1997 enacted budget 
level. $2,448,000 of the increase is for General Service 
Administration office space rent cost, which had previously 
been funded within the Office of the Secretary of 
Transportation's appropriation. The remaining $636,000 increase 
is to cover personnel compensation and benefit costs connected 
with fiscal year 1998 pay raises and career promotions. This 
increase is about $257,000 less than the amount actually 
needed; however, we will fund that difference by reducing our 
operating costs.
    As I said, this is a highly dedicated and hard working 
staff, and the OIG's work over the last year has continued to 
make significant contributions towards identifying programs and 
operations needing improvement in the Department of 
Transportation.
    For example, in fiscal year 1996, the OIG's Assistant 
Inspector General for Auditing identified savings of 
$560,000,000. The Office of Assistant Inspector General for 
Evaluations issued 20 reports, completed 30 projects, and 
processed six congressional requests. The Office of the 
Assistant Inspector General for Investigations carried out 
activities resulting in 138 indictments, 127 convictions, and 
fines, court-ordered restitution, civil judgments and federal 
and state recoveries totalling $17,000,000.
    I have to tell you that this is the fourth OIG I have 
worked in. This is an outstanding record for an office of this 
size. We will include in our statement a chart that details the 
activities of this office and the results of said activities in 
greater detail.
    This OIG's work has continued to emphasize transportation 
safety and security issues throughout DOT. I would like to 
summarize just a few examples which illustrate the value of the 
office's work.

                            airport security

    In an audit of the FAA's oversight role in airport 
security, OIG concluded that the effectiveness of current FAA 
testing of airport and air carrier compliance with security 
requirements had significantly improved from the time OIG 
audited this same thing in 1993.
    Specifically, we found that they had increased their 
testing. They had established specific testing parameters and 
reporting requirements. However, we also identified that there 
were additional improvements which needed to be made.
     Fortunately, FAA agreed with our recommendations and is 
carrying out their improvements as we speak.

                          offshore facilities

    In another safety-related audit, this time with the United 
States Coast Guard, we discovered, in looking at how U.S. Coast 
Guard inspected offshore facilities, that the Coast Guard was 
not effectively targeting high-risk facilities. Instead, they 
would look at facilities that were not as high risk as others 
and did not maintain an inventory of those facilities, and 
further, did not go back to follow up to see if corrective 
actions were taken.
    I am pleased to report that the Coast Guard accepted the 
Inspector General's findings and recommendations, and those 
recommendations and improvements to be made in the program 
should be accomplished by the end of this month.

                            deicing program

    The OIG's evaluations office conducted a review of FAA's 
Deicing Program. We found a number of problems and made 
recommendations to the FAA as to how to improve the Deicing 
Program, its regulations and requirements throughout this 
country. FAA agreed with most of the recommendations; however, 
it did not agree with a recommendation that we involve the 
airports in setting up deicing programs at the airports.
    We have asked the FAA to review and revise its reaction to 
our recommendation in that regard. They have promised us a 
reply as of May 7 of this year.

                advanced technology transit bus project

    Most recently, OIG found that the Federal Transit 
Administration had sufficient data to support its conclusion 
that the Advanced Technology Transit Bus Project would result 
in cleaner transit buses; however, the data was not sufficient 
to conclude that the project would result in safer buses and 
that FTA planned to field test four prototype buses in revenue 
service beginning in September, 1997.
    We recommended that FTA ensure that the ATTB prototype 
buses comply with all applicable safety standards before the 
buses are deployed. FTA has agreed with our recommendation.

                          motor carrier safety

    Turning now to our investigative staff, as a result of 
joint investigative work between our staff and the FBI, a 
federal grand jury in the Northern District of Texas has 
returned a 12-count indictment against a nationwide trucking 
company which is headquartered in Texas and three corporate 
officials of that company for conspiring to defraud the United 
States and for submitting false statements.
    The reason this case is so important is that this company 
represents an example of trucking companies which unfortunately 
do not pay heed to the first enforcement action taken by the 
Office of Motor Carriers and frequently do not pay heed to 
successive enforcement actions. They continue, even after they 
have paid fines, to ignore the rules and falsify logs. 
Unfortunately, from time to time, such companies, in addition 
to their history of compliance problems, are involved in a 
number of incidents. This particular company is an example.
    One of the incidents this company was involved in was an 
April, 1996, crash with a school bus in a small town in Texas 
where the driver of the truck was cited by the police for 
fatigue and for falling asleep at the wheel as a contributing 
factor to the crash.
    Fortunately, the school bus driver, who was seriously 
injured, was driving an empty bus. Normally, on that route, 
that bus takes 50 school children back and forth to school 
every day. As I say, we were fortunate that there happened to 
be no children on that bus at the time.
    On February 6 of this year, this company and the owner pled 
guilty to charges of conspiracy to defraud FHWA by making false 
statements regarding the drivers' logs, to include instructing 
drivers to violate DOT safety highway regulations by using the 
names of nonexistent people in the drivers' logs. Sentencing 
has not been scheduled yet.

                       suspected unapproved parts

    We have also, over the years, as you know, participated in 
a number of projects of a long-term nature to emphasize safety 
and security in DOT programs. One example of those kinds of 
projects is this office's involvement in suspected unapproved 
parts in aviation.
    One of the things I am pleased to report is that FAA has 
concurred, as you know, with not only a number of our own 
recommendations, but also with recommendations made by FAA's 
SUPs task force. Presently, the FAA SUPs Program Office is now 
fully staffed. That office was established in November, 1995.
    Among other things the FAA's SUPs office has done is issued 
clear guidance on procedures for parts suppliers, ruled on the 
disposition of scrap and salvageable parts, and ruled on the 
eligibility of military parts for use in civil aviation. It has 
also developed a comprehensive training program for all 
inspectors who handle SUPs reports. Furthermore, coordination 
between the FAA and OIG has continued to improve.
    Joint FAA and OIG initiatives are being planned to enhance 
the SUPs program. One of those initiatives is training. Our 
people provide direct training to FAA inspectors in this area. 
We are also working with the FAA and the FBI to strengthen SUPs 
enforcement and to develop a national strategy to combat the 
SUPs problem.
    While OIG's work typically focuses on suspected problems, 
our work has identified programs and activities that have 
worked well. Several examples I think bear mentioning.

                   seagoing and coastal buoy tenders

    We have concluded that U.S. Coast Guard oversight of the 
construction of seagoing and coastal buoy tenders has been well 
managed and highly effective in ensuring that materials and 
work performances complied with contractual requirements and 
appropriate remedies were instituted when contractual 
requirements were not met.

                  commuter and air taxi pilot training

    We have also found that the Federal Aviation Administration 
has implemented effective oversight procedures and controls for 
monitoring commuter and air taxi pilot compliance with pilot 
certification training and proficiency testing requirements.

                        oig emphasis in fy 1998

    In 1998, this office will continue to emphasize 
transportation safety which is, as I understand it, Secretary 
Slater's number one priority. Our track record in this area is 
a good one, and I expect this office to maintain it.

                       financial statement audits

    A significant portion of our resources will be dedicated to 
audits of DOT's financial statements. We plan to audit DOT's 
consolidated statement as well as the statements of the Highway 
Trust Fund and the Aviation Trust Fund. Our activities in this 
area fulfill requirements of the Chief Financial Officers Act 
and the Government Management and Reform Act.
    As budgets are stretched and we implement, throughout the 
executive branch requirements of GPRA, the accuracy and 
completeness of financial data significantly need to be 
improved. Obviously, financial management and program 
administration are inextricably linked. Without solid, reliable 
data, forecasting costs and planning for the operation of 
systems and programs is a guessing game at best and may result 
in failed programs and initiatives.
    For example, our ongoing CFO audits as well as the February 
28, 1997, independent financial assessment prepared by Coopers 
and Lybrand have identified significant weaknesses in FAA's 
financial systems. These weaknesses impact FAA's ability to 
forecast costs and to develop funding options to meet those 
costs.
    That is one of the reasons that we are particularly 
interested in and will continue to emphasize audits of 
financial statements and financial management systems 
throughout the department. Without accurate data, it is almost 
impossible to develop adequate analysis to support any kind of 
funding initiative to carry out the programs of a particular 
agency.

               faa's acquisition and personnel management

    We also intend to devote resources to the oversight of 
FAA's new acquisition management and personnel management 
systems. We will conduct audits of both of these systems to 
determine if they are meeting the requirements and the 
intentions of the legislation established by Congress allowing 
FAA to move into new systems both in acquisition and personnel.
    As you can see, our responsibilities as mandated by the IG 
Act of 1978 and other legislation are substantial. We will 
continue to meet these responsibilities to the best of our 
ability.
    That concludes my opening statement. I would be pleased to 
respond to your questions.
    [The prepared statement of Joyce Fleischman and senior 
staff biographies follow:]

[Pages 6 - 12H--The official Committee record contains additional material here.]


    Mr. Wolf. What are you allergic to?
    Ms. Fleischman. Tree pollen. This is the earliest I think I 
have ever succumbed to it.
    Mr. Wolf. This area can be very, very tough for that. Thank 
you very much for your testimony. We do have a number of 
questions, and we will try to move through them rapidly if we 
can.

                        OIG Budgetary Resources

    There has been evidence in the past that the Department of 
Transportation is more zealous at cutting the IG's budget 
request than it is for some of the other elements of the 
department. In that regard, when you compare the IG's proposed 
budget increase to that of other operating accounts, it appears 
once again the IG is low person on the totem pole.
    Why is the IG's percentage increase so much lower than the 
operating budgets of the other modes for the Department of 
Transportation?
    For instance, IG, up 1.7 percent; Coast Guard, up 4.6 
percent; OST, six percent; FAA, nine percent; FTA, 13 percent; 
FRA, 22.8 percent.
    Ms. Fleischman. I don't know that I know an absolutely 
exact answer to that question. I will say that this office has 
made every attempt, as far as I can tell, throughout the years 
and has done so in the past year and will again to utilize the 
resources that are provided to us by the Congress as 
efficiently and as effectively as we can.
    I would like to think that our efficiency and our 
effectiveness, our economy, if you will, in using those 
resources is not hurting us, although I will tell you that 
there are times when I think that those of us who do more with 
less end up with even less to do more with.
    Mr. Wolf. IGs in other departments around the government 
are requesting reasonable but larger percentage increases than 
you are. For example, the Agriculture IG, where you came from 
and I assume will return, is requesting a 3.5 increase; 
Commerce and NASA are up to 7.6 percent increase; Energy, 24 
percent increase. Your budget appears to be pretty thin even 
compared to those of the other IGs.
    Did you get a high enough allocation, particularly in some 
of the more complex issues that you had to deal with, the FAA, 
AAS, some of those others?
    Ms. Fleischman. I can't speak to other IG offices' budgets, 
and I don't know what their relationships are like with their 
home departments or agencies. My recollection is that for 
Agriculture, the request is for expanded initiatives that both 
the Secretary and the Congress have essentially asked the IG's 
office to undertake.
    With regard to DOT, I think that, as I said a little while 
ago, this office does a remarkable job, a more than remarkable 
job with regard to the level of resources that they have and 
the kind of return on investment, if you will, that the office 
provides both to the department and to the Congress and to the 
nation at large.
    I don't know, frankly, that I have enough experience with 
DOT, having been there only seven months, to adequately answer 
your question, although frankly, I would think that the office 
could use a greater and higher degree of resources.
    Mr. Wolf. There was a concern last year that there was an 
amendment to cut the IG's office because some people were 
unhappy with the very public criticism of the administration by 
the previous IG. Do you think that your lack of budgetary 
support could be because some officials didn't appreciate the 
public stand that was taken by the IG's office with regard to 
aviation safety?
    Ms. Fleischman. I don't know honestly if that is the case. 
I will tell you that since I have been at DOT, one of the first 
things that I did was to go around and talk to all of the 
senior officials in the Department's operating administrations. 
I wanted to understand what they thought about the Office of 
Inspector General, and I wanted to tell them how I intended to 
proceed as the Acting IG.
    To a person, from the Secretary on down, the heads of 
operating administrations and other offices in the department 
told me that they respected the professionalism, the 
objectivity, and the hard work of the IG professional staff. I 
have seen nothing in the last seven months to make me doubt 
what they told me back in September and August.
    I would hope that that would continue to be the case. I 
would not want to think, frankly, that any official in the 
federal government would be petty enough to want to cut the 
budget of an Office of Inspector General who told the truth.

                         Audit Staff Downsizing

    Mr. Wolf. Between fiscal years 1993 and 1998, your audit 
workforce has dropped 18 percent from 349 staff years to 285 
even as you were given additional audit responsibilities from 
the Chief Financial Officers Act. Over that time period, Coast 
Guard and FAA started up major acquisitions which have never 
been audited. We have seen a number of management problems 
continuing at the department.
    Hasn't the cutback in audit staffing and redirection to 
financial management audits affected your ability to oversee 
the department's acquisition, grant management, and operating 
programs?
    Ms. Fleischman. I don't think overall that the shift of 
resources in the immediate past to financial management audits 
mandated by the CFO Act has interfered with acquisition or 
grant management audits. In fact, it has been my experience in 
other departments that as IGs look at financial management 
systems, whatever they find with regard to the financial 
management system is a very good indication as to the health of 
the rest of the program in that particular agency.
    For example, if you have very good, certainly more than 
adequate financial management systems and you can track money 
as you spend it and what you are spending it for, you will 
generally see reasonably decent practices with regard to 
acquisition. Program administration and financial management, 
as we all know because we manage our households and our own 
income, are completely intertwined. That is true for federal 
agencies as well.
    I am anticipating that, similar to what has happened in 
other departments where Offices of Inspector Generals have for 
some time been doing a lot of work in the financial management 
area, that we will be able to use fewer resources on financial 
management audits in the future because we will have learned 
more about the financial management systems. We can then use 
that information to target other aspects of the program 
administration, whether it is acquisition in Coast Guard or 
management of long-term acquisition and implementation of major 
programs such as the FAA has underway.

                         Audit Recommendations

    Mr. Wolf. Your budget documents indicate a drop in 
management recommendations made by your audits since 
significant resources started going into implementing the CFO 
Act. In 1993, for example, you made 1,515 recommendations to 
improve the department's programs. By the end of 1996, 
thatnumber had dropped to 354, a drop of more than 75 percent.
    With findings such as this, would it appear or could it 
appear that the CFO work, perhaps combined with the staffing 
cuts, is hurting the IG's ability to review and recommend 
management improvements in specific departmental programs in 
need of assistance?
    Ms. Fleischman. One of the things that we have done in this 
office is to focus on larger, broader audits, audits that are 
more focused, if you will, on major issues that cross the 
country. Consequently, you will see fewer recommendations, 
fewer findings, but those that you do see cover a broader area.
    The other difference is that we have stopped doing A-128 
audits and, consequently, the large bulk of the difference that 
you just recited in that question falls there. The actual 
number of audit findings and recommendations with regard to our 
own direct audits of DOT programs has not dropped severely in 
that time period.

               Director at Dulles Unapproved Parts Office

    M.r Wolf. Is there a permanent director at the unapproved 
parts office at Dulles now?
    Mr. Zinser. Yes, there is.
    Mr. Wolf. There is a permanent director. Mr. Sabo.

                       OIG Coordination With GAO

    Mr. Sabo. Thank you. I am curious how your office 
coordinates with the GAO.
    Ms. Fleischman. The Inspector General Act of 1978 which 
established our office and all of the other Offices of 
Inspector General in the executive branch mandates that we talk 
to GAO fairly frequently, if you will, not in those words, to 
make sure that we do not duplicate efforts, and we do that.
    This office, as other Offices of Inspector General, 
particularly, of course, in the audit arena, has ongoing 
conversations with GAO audit staffs that are focused on 
Department of Transportation so that we don't do the same work.
    The government has limited audit resources and we don't 
need to be going around looking at the same thing all the time, 
so that is the first way that we coordinate and share 
information. It is not at all unusual for a GAO audit team to 
call us up and say we were out in such-and-such a place doing 
this audit, but we heard something else, and we think you need 
to know that. We will do the same thing.
    I think the other aspect of it is that the same statute, 
the IG Act, requires our audits to be in conformance with 
government auditing standards which of course are promulgated 
by the GAO.

                        Follow-up of GAO Studies

    Mr. Sabo. What about follow-up of GAO studies? Does that 
become a priority of yours?
    Ms. Fleischman. Typically DOT-OIG does not follow up GAO 
audit studies. I would expect that the department will do some 
follow-up, but GAO will typically do its own follow-up.
    Mr. Sabo. Over how long a period of time?
    Ms. Fleischman. I really couldn't answer that question, Mr. 
Sabo. I would think that GAO could certainly supply that 
answer.
    Mr. Sabo. Thank you.
    Mr. Wolf. Mr. Pastor.

               Enforcement of OIG Deicing Recommendations

    Mr. Pastor. Thank you, Mr. Chairman. Good afternoon. I am 
also new to the committee, so I am trying to learn as much as I 
can.
    As I was caught in another hearing during your testimony, 
let me apologize for being late. I got stuck in another 
meeting.
    Ms. Fleischman. That is quite all right. I understand.
    Mr. Pastor. I was reading your statement here and something 
caught my eye. I guess it goes back to not GAO, but I saw in 
your testimony, the written testimony, about how you had made 
some recommendations to the FAA on deicing and anti-icing 
program, and the paragraph ends, we requested FAA to reconsider 
its position on this matter. We have not received their reply.
    As I had stated earlier this morning, flying every weekend 
round-trip about 4,000 miles, airline safety is a big issue 
with me, and frequently, during the winter, I go through 
Chicago, and so when i read that, I was a little bit concerned, 
saying here we have your office making recommendations which 
deal with a safety factor, especially through Chicago, that 
here, they have kind of said well, we don't agree with you.
    How do you enforce some of your recommendations, especially 
those that concern safety matters? Obviously, we know that ice 
on wings have caused some tragic accidents and it is something 
I have an interest in.
    Ms. Fleischman. I can appreciate your concern, Congressman. 
I think all of us who fly, particularly during the winter, have 
the same kind of concern.
    The Inspector General Act does not provide IGs with 
enforcement authority. To a great extent, Inspectors General 
rely upon the logic, the force of the truth with an agency such 
as FAA, to persuade the agency to adopt the recommendation that 
the Inspector General makes to the agency, whether or not it is 
with regard to a practice that we would think, such as this 
one, would enhance the safety of aircraft and the American 
flying public.
    If that doesn't work, and as in this case, FAA continues to 
disagree and we think strongly enough that we are right, then 
the audit recommendation will go to a resolution official 
within the Department of Transportation.
    In DOT, the Secretary has delegated that authority to the 
Assistant Secretary for Administration. In the resolution 
process, the dispute resolution official will undertake to look 
and weigh both the arguments of the Inspector General and the 
FAA.
    If that doesn't work and they side with the FAA and not us, 
we always have the opportunity of continuing to go to the 
Secretary. We can also essentially refer the dispute to the 
Congress. Ultimately, the Congress can make a decision.
    In this particular case, we are still at the moral 
persuasion stage, if I may say so. We have requested FAA to 
rethink its position and they have promised us--in fact, last 
Friday, we got a notification on a number of reports in which 
they promised an answer to us. On this case, FAA has promised 
an answer within 60 days, so that would be May 7 that I am 
anticipating a response from the FAA.

                  Review of FAA's Deicing Regulations

    Mr. Pastor. As I read back, the 1992 accident was what 
triggered this whole policy change. Now, I think as you start 
the paragraph, it talks about that you conducted a review of 
the FAA's de-icing program. When did that occur, the review of 
the de-icing program?
    In 1992, we had an accident. Here we are in 1997, and we 
still have some conflict of whether or not therecommendations 
you made are in order and it is a few years, so maybe you made the 
review just recently, and that is why the FAA is not responding so 
quickly.
    I was going to say if this started in 1992, we have a few 
years under our belt since they have had a chance to review 
your recommendation.
    Ms. Fleischman. As a result of the 1992 accident at 
LaGuardia, the FAA undertook to revise part 139 of its 
regulations, the Federal Aviation Regulations, and that 
particular part that FAA revised concerned the procedures and 
the requirements laid upon the carriers, the airlines regarding 
environments where you have icing problems on the wings of 
aircraft.
    We undertook some time thereafter to see if what FAA had 
prescribed and the requirements that it had laid down for the 
carriers under such circumstances were working, to make sure 
that, first of all, airlines were doing what they were supposed 
to do under the regulations and second, was this regulation, as 
implemented, an effective regulation.
    We determined that there were a number of problems with 
both the implementation of the regulation and one final problem 
that we thought needed to be corrected within the regulation 
itself.
    Mr. Pastor. Let me interrupt you for a minute. What time 
span are we talking about, just recently or----
    Mr. Fleischman. Mr. Daniels.
    Mr. Daniels. October of 1996.
    Mr. Sabo. October of 1996.
    Mr. Daniels. In October of 1996, we visited dozens of 
airports. The pilots had received training in deicing as well 
as the ground crew, but we were looking at the airport 
operation to find the best practice that FAA would learn from, 
and then visit other airports to make sure that they were doing 
similar practices. The FAA determination is that deicing is a 
local problem with the airports and the carriers, so let them 
take care of it.
    Mr. Pastor. So let every airline at the local level with 
the airport operator determine what is a proper procedure?
    Mr. Daniels. Right. The proper procedure is when the wings 
are deiced, the pilots look out of the windows and see whether 
the wings are clear, or the trained airport help to check the 
wings.
    Mr. Pastor. Is there a minimum that for safety reasons 
every airport ought to do or every pilot ought to do?
    Mr. Daniels. They have changed the procedure now so that 
every airport that is subject to ice would come under this new 
rule of training and ensuring that they have the equipment to 
deice the airplanes, so the emphasis is going there. It is just 
that FAA does not want to make that ruling so that what is 
learned here is spread to the other airports so that they can 
have a similar practice to clean and deice wings before they 
depart.
    Mr. Pastor. That is not too comforting.
    Ms. Fleischman. If I could summarize this and if I am 
incorrect, Wilbur, correct me. Basically what it comes down to 
is that we believe, as Mr. Daniels said, that where the 
practices are working very well, those practices ought to be 
emulated around the country, and further, we believe that the 
way to do that is to involve the airport operator with the 
carriers so that there is a single coordinated plan that works 
very well.
    Once icing starts at an airport, virtually every airline is 
affected, and of course, all the aircraft. Operations will slow 
down because they have to get that ice off the wings before the 
plane can take off. Therefore, if you have a busy airport or 
even one that is not so busy, operations will get delayed and 
we need very strong coordination.
    As you well know, people are fussing, passengers want to 
leave, they want to get wherever it is they are going, 
particularly if they have to make a connecting flight at 
another airport. Consequently, the pressure is to deice the 
aircraft and to do it as quickly as possible, and we think that 
the most efficient way to do this is to have very close 
coordination between the operating authority at the airport, 
i.e., those people who run that airport every day, and the 
carriers and the pilots. That view is buttressed and supported, 
frankly, by air traffic controllers throughout the country in 
those regions that have this problem and the carriers 
themselves in some cases.
    FAA, however, persists in believing, and they have an 
argument on their side and I don't mean to imply that they 
don't, that this is a local problem and a local situation and 
while they encourage airport operators to cooperate and to 
coordinate in this endeavor--when you have an icing situation, 
to get the wings deiced, get those planes out on time, on 
schedule, they do not require it and that is the real crux of 
the matter.
    We think that FAA should require it because it is a good 
practice and it works very well where it is instituted. FAA, 
however, believes that as much independence as possible should 
be allowed to the local operating authority at the airport to 
do what is best for their situation.
    Mr. Pastor. I would think that there would be a minimum 
standard that all operators in those areas would be required to 
have because as much as people want to move from one place to 
the other as quickly as they can, and I am one of them, we want 
to make sure that the plane is going to get there, so you want 
to make sure that all that ice is off and that the plane can 
get up in the air and get you wherever you are going.
    It would concern me that if you leave everything to local 
operators, sometimes, safety may not be the highest priority 
with that operator. The economy, the balance sheet may be of 
greater interest and safety may be taking a secondary position, 
which I would disagree with.
    Ms. Fleischman. I certainly appreciate your concerns, and 
quite frankly, I share them. Hopefully, FAA will change its 
mind.
    Mr. Pastor. Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Pastor. Following up on 
Congressman Pastor's comments on deicing, 90 percent of the 
airlines you reviewed allow the pilot to check wing ice by 
looking out an aircraft window because that is easier and 
quicker than performing a physical inspection on aircraft in 
line for takeoff.
    The Air Line Pilot's Association, however, is strongly 
opposed to this practice, and your review of safety reports 
indicate that almost three-quarters of deicing accidents arise 
from problems with aircraft ice checking procedures. Given this 
evidence, aren't we compromising public safety by not 
requiring--not recommending, but requiring--a more efficient 
procedure?
    Ms. Fleischman. Well, I can certainly see how one 
wouldarrive at that conclusion. My own view is, and I am not as 
familiar with this issue as I might be if I had been at DOT for a long 
time, but quite frankly, just as Mr. Pastor, I fly fairly frequently, 
and I think most people would prefer that the best practices, just as 
the Air Line Pilots Association seems to indicate, the best practices 
are those that would work to ensure the safest operation, whether it is 
deicing or anything else.

                 faa enforcement of deicing regulations

    Mr. Wolf. Over the past 15 years, there were six aircraft 
accidents, 203 fatalities in the U.S. attributable to ice 
accumulation, including a major one here in 1980 that hit the 
14th Street bridge and U.S. Air flight 405 at LaGuardia, and 
according to your report, the FAA gives the airlines wide 
latitude in running their own deicing program.
    However, even when FAA finds deficiencies, they don't 
appear to take any action. You found that during the 1993 and 
1994 winter season, FAA conducted 3,238 deicing inspections and 
took no enforcement actions against air carriers as a result.
    The FAA officials said they don't want to be ``heavy'' but 
prefer to work with the airlines to correct the problem.
    Is this an effective approach?
    Ms. Fleischman. I don't know that we measured the 
effectiveness of that approach. I would like to think that the 
airlines would move toward a more consistent practice across 
their area of operation and the safest possible practice.
    I think all of us think that they will move toward that. 
Mr. Daniels, would you like to address that?
    Mr. Daniels. That is one of the areas that we identified in 
these inspections that FAA performed. FAA didn't analyze the 
results of those inspections, to summarize them to get trends 
that they could share with the other airports. FAA made the 
inspections, but they did not formulate any trends as to the 
best practices that could be implemented, and there are 
shortfalls in the airport operating regulations to ensure or to 
require these improvements to be implemented.
    FAA funds the deicing facilities. Without analyzing these 
trends, they don't have all the information they need to make 
recommendations on how the construction of deicing facilities 
should be accomplished. FAA also did not have a technical 
expert in-house on the deicing situation. They are trying to 
put one in place now, and they are beginning to keep track of 
the analyses from the inspections, but at the time of the 
review, FAA did not make any summaries or any analysis from the 
inspections.
    Mr. Wolf. Your report found 34 reported incidents of 
improper deicing in the three years after implementation of the 
new regulations that potentially compromise aircraft safety.
    This included one case where the aircraft was on the runway 
cleared for takeoff. A passenger notified the pilot that the 
wing had not been deiced.
    That would indicate that the regulations really aren't 
working very well, and I would hope that you would keep 
pressing, and we will next week when the FAA comes up on the 
issue.
    Ms. Fleischman. The FAA has agreed with our recommendations 
with the exception of that particular recommendation on local 
airport operating authority.
    We will, of course, as we do with all of these audit 
reports and evaluation reports, follow up to ensure that the 
FAA does what it tells us that it is going to do.

                          faa's safety mission

    Mr. Wolf. FAA's charter was changed in last year's 
Reauthorization Act to a single mission: safety. The industry 
promotion mission has now been deleted. Would this indicate 
that FAA should be more diligent at requiring the highest 
practical level of safety?
    [The information follows:]

    With the recent change to a single mission, aviation 
safety, the incoming new senior management of FAA have a unique 
opportunity. The OIG will certainly encourage them to seize 
that opportunity to change the culture in FAA to one of 
aggressive, but judicious, safety enforcement. Doing so can 
result in achieving the highest practical level of safety.

                    epa regulations on deicing fluid

    Mr. Wolf. Your report also notes that, even though FAA 
prioritized funding to build more deicing facilities at 
airports, few of these new facilities are under construction in 
part because of EPA regulations on the use of deicing fluid. 
What is EPA's concern, and how can it be resolved?
    [The information follows:]

    The Environmental Protection Agency (EPA) restricts the 
discharge of glycol (the main component in deicing/anti-icing 
fluids) into the environment. When glycol biodegrades, it 
consumes oxygen. If glycol is released directly into 
watercourses without treatment, the glycol may deny both plants 
and animals life-sustaining oxygen levels. In addition, 
ethylene glycols are so toxic to humans that airline workers 
must wear safety equipment and respirators to avoid skin 
contact and inhalation.
    Because of these dangers, EPA has developed the National 
Pollution Discharge Elimination System (NPDES) regulations that 
limit the volume of glycol-based deicing/anti-icing fluids an 
airport can discharge directly into the environment. Both EPA 
and state regulatory agencies monitor and issue NPDES storm 
water permits. As a result, airports face different limitations 
on the amount of permitted glycol runoff depending on local 
state regulations. For example, the Minneapolis-St. Paul 
International Airport had an agreement with the Minnesota 
Pollution Control Agency to reduce the oxygen-robbing effect of 
airport fluid runoff by 50 percent. In order to comply with 
this agreement, the airport was forced to collect deicing fluid 
runoff in large ponds and meter the fluid discharge.
    We found these various environmental regulations may 
dissuade certain airports from constructing deicing facilities 
because of the logistical problems and cost involved with 
properly disposing of deicing/anti-icing fluids. In the 
comments to the draft Deicing Report (incorporated in the final 
report in appendix I on page 5), the Federal Aviation 
Administration (FAA) outlined several ways it has cooperated 
with EPA in resolving the problems involved with constructing 
deicing facilities which are compatible with environmental 
concerns. Specifically, FAA personnel met with EPA during the 
development of the NPDES regulations and raised concerns about 
conflicts between NPDES and airport operations. Furthermore, 
environmental specialists in the FAA Office of Airport Safety 
and Standards are available to assist any airport requesting 
help in resolving environmental concerns regarding deicing 
fluid runoff. Finally, FAA indicated that funds from the 
Airport Improvement and Passenger Facility Charge Programs are 
available for the construction of facilities devoted to the 
disposal and treatment of deicing fluid runoff.
    Although these FAA efforts help address the conflict 
between the use of deicing fluids at deicing facilities and the 
limitations on deicing fluid runoff, we found some airport 
operators and air carriers are not aware of the assistance FAA 
can provide. This lack of knowledge and understanding may 
inhibit airport operators from fully using Federal funds for 
deicing facility construction. Therefore, we have requested FAA 
inform airport operators and air carriers on the active role 
the Office of Airport Safety and Standards can take in solving 
environmental issues related to deicing/anti-icing facilities.

                      financial assessment of FAA

    Mr. Wolf. Coopers and Lybrand recently issued their 
independent financial assessment of the FAA. The report will be 
used by the National Civil Aviation Commission to help 
recommend a long-term financing structure for the FAA by the 
end of September, 1997. Have you reviewed the major findings of 
the Coopers and Lybrand study, as you indicated when you were 
talking earlier? What are your comments and observations?
    Ms. Fleischman. Based on the relatively short time that we 
have had the report and gone through it, this is one of those 
reports that requires a fair amount of detailed attention. Our 
first indication is that we--for the most part--agree with what 
Coopers and Lybrand have said. Indeed, much of what they said 
and many of their findings echo findings by both the Inspector 
General's Office and the GAO. I think that FAA faces enormous 
difficulties and problems in addressing issues such as funding, 
particularly in the next few years.
    As I indicated earlier in my statement, one of the reasons 
that we are pushing detailed audits of financial statements and 
financial management systems in FAA, as well as other places, 
but particularly in FAA, is to ensure that FAA will have 
sufficient and accurate data upon which to base their analyses 
to present funding options to the Administration and to 
Congress. That was one of the areas that the Coopers and 
Lybrand report addressed. And we are in full agreement with 
that.
    We also are in agreement with Coopers and Lybrand's 
conclusion that the FAA has not listed in its forecast for the 
next few years any savings that might be realized from 
activities that they would undertake. FAA is going to have to 
deal with and have to achieve some savings over the next few 
years, because as funding dries up the Congress simply has less 
and less money to provide. So consequently, agencies like FAA 
must seek to achieve savings where they can so that that money 
can be earmarked and moved to another place.
    I would also like to ask Ray DeCarli to address your 
question, because he has far more experience with FAA than I 
do.
    Mr. DeCarli. Yes, Mr. Chairman. Part of the issue with the 
Coopers report is that if FAA maintains the status quo it will 
not have enough funding in the out years. And that is probably 
true. If you look at the kinds of issues that we have raised 
with FAA over the past number of years, there are a lot of 
opportunities for them to reduce their operating costs, like 
revitalization pay which we have audited in the past.
    Revitalization pay is in the Coopers report. This is an $85 
million-a-year issue. Revitalization pay is a five percent 
increase above the standard GS rates that all government 
employees get. That was intended, we believe, to be a short-
term program for air traffic controllers that didn't go on 
strike back in the early 80s, and that program still exists. 
Coopers cites revitalization pay as being almost a $500 million 
issue in the future.
    One of the things that was supposed to happen with 
acquisition reform and pay reform is that those programs were 
supposed to make FAA more efficient. There were projections of 
over $2 billion of savings in the acquisition programs as a 
result of Congress giving FAA the authority to restructure 
their program so they could be more efficient. Those kind of 
projections are not factored into FAA's future funding 
estimates.
    Unless FAA takes advantage of those kinds of things, takes 
advantage of savings from GPS, takes down the systems that they 
no longer need as they get new equipment in place, streamlines 
their information systems out to the general aviation, unless 
they do all those things which are not easy decisions, FAA is 
going to have tough funding issues as the years progress. From 
that standpoint Coopers is absolutely right on the money.

                           faa accountability

    Mr. Wolf. On the accountability question, anyone who has 
dealt with the FAA over the years can tell you about the lack 
of accountability which has been a problem at the agency. A 
little over a year ago, on January 26, 1996, the IG's office 
told FAA about a ``common thread'' in the agency's failures. 
The IG's memo said the mindset within FAA is that managers are 
not held accountable for decisions that reflect poor judgment. 
We were told at the hearing last year that the FAA tolerates 
poor judgment and protects bad management. Have there been any 
steps taken, specific steps, to hold managers accountable in 
the time that you have been the IG? There really hasn't been an 
administrator very much during the time you have been in there.
    Mr. DeCarli. These same issues of mental attitude at FAA 
have been raised not only by us since that memo was written by 
the former IG. NTSB has raised a very similar question. The GAO 
has raised a similar issue in the acquisition parts of FAA and 
basically said that they have to change the way they do 
business and change their mind set. Now that FAA has this new 
personnel management system, they have a tremendous amount of 
flexibility that they are giving to their managers. And the 
question is whether FAA is going to hold those managers 
accountable for the decisions they make.
    If you look back at the kinds of issues that we have raised 
with respect to PCSs in Denver where people actually moved 
further away and were paid, and familiarization pay where 
people are basically taking vacations on the government ticket; 
those kinds of things can still happen. As a matter of fact, in 
the new personnel system there is even more flexibility as 
opposed to rigidity in dealing with those kinds of situations. 
So I think the question in the longer term is whether FAA is 
going to hold their managers accountable as those situations 
occur.
    Mr. Wolf. Have you seen anything to indicate that they are? 
It would be difficult to say yes, because there really hasn't 
been much going on. And in fairness to Mr. Hinson, who I 
personally liked and thought did a good job, but has there been 
any change?
    Mr. DeCarli. The question also arises if there has been any 
incentive to make changes. Go back and look at the PCS issue we 
raised concerning overpayments of $500,000, and in those cases 
FAA was willing to take a hard stand and recover that money. 
Those PCS overpayments were appealed to GAO and GAO found that 
since the intentions of the people were good and management 
participated in it, it was okay. So there is no real incentive 
yet to make those hard decisions.

                         faa acquisition reform

    Mr. Wolf. In the 1996 Transportation Appropriations Act, 
this committee gave the FAA far-reaching ability to revise 
their acquisition policies in ways that would save money and 
put new equipment in the field faster. That was passed 18 
months ago.
    What overall grade would you put on the FAA's report card 
for using this flexibility in a way that improved the 
acquisition process and saved money? A, B, C, D, E, F?
    Mr. DeCarli. I would probably give them a C at this point. 
I think again it is too early to tell. They have put together a 
good concept. I think the idea of having the teams, the product 
teams, is a good strategy but only one out of 16 teams or so 
has all the tools that it needs. It is a good concept, but it 
really has not been demonstrated yet that it will work or that 
it will save a lot of money.

                           faa accountability

    Mr. Wolf. Although associated with acquisition personnel, 
we have seen some of the same features in the non-acquisition 
parts of FAA. For example, FAA managers demanded a sole-source 
contract for Gregory May training and demanded FAA executives 
take the training if they wanted to get promoted. They set 
staffing levels at air traffic control facilities without 
involving the rank and file employees at the facility. There 
are many other examples. Is this a cultural problem? Is it 
broader than just the acquisition process? What do you think?
    Ms. Fleischman. I have been here for seven months and one 
of the things that I have observed about FAA, and this is not 
really unusual for agencies or any kind of organization, for 
that matter, is that organizations change when they have to 
change. It seems to me that when the circumstances dictate, 
then FAA will respond in a positive manner.
    One of the things I was particularly interested in was the 
suspected unapproved parts program, because I had heard for 
years that FAA dragged its feet, it didn't want to do this and 
it didn't want to do the other. I have read all these reports 
and I have read all these documents.
     Now, FAA is working quite nicely with both the FBI and the 
IG's office in training and in setting up their own program to 
deal with the SUPs problem, which is a nationwide problem. FAA 
ultimately came to the conclusion, I gather, that it would do 
this once it had sufficient impetus, sufficient persuasion. FAA 
also had a task force comprised of their own people who came to 
the same conclusions that the OIG and others as well had come 
to. So they had to move.
    Reading the Coopers report and GAO's report on a lot of FAA 
problems, I think FAA is facing such a changed environment in 
the next few years that it will have to change. Its senior 
management will have to hold middle management, everybody 
throughout that agency accountable, because otherwise they are 
not going to be able to get through what looks like an 
incredibly huge expansion in civil aviation. With these 
extended responsibilities for FAA, they will have to be held 
accountable.
    I think they will do it at that point because I don't think 
they will have a choice. Otherwise FAA won't be able to carry 
out everything that they have got to do.
    Mr. Wolf. I am going to recognize Mr. Sabo. Just one 
comment that I would make is I think they acted on the 
unapproved parts issue because of your office, to be honest 
with you. And then there were a number of news stories that 
indicated there may have been crashes based on this issue. And 
then a number of members on both sides of the aisle and both 
sides of the capitol raised the issue over and over. It was 
certainly a reluctant embracement of dealing with that for the 
longest period of time.
    Mr. Sabo.
    Mr. DeCarli. I would add that over the last 12 to 15 years, 
FAA is an organization, with the exception of Mr. Hinson, that 
has gone through a tremendous amount of administrators very 
quickly. I think the average is less than two years. They have 
been under a number of reorganization structures during that 
period, so they haven't had a long period of stability. FAA 
needs somebody in there, a good strong administrator, who is 
committed to stay for a period of time and who the career 
bureaucrats are not just going to outwait in the decision-
making processes.
    Mr. Wolf. Well, the Congress passed a law saying five 
years, and we spoke with Secretary Slater the other day, hoping 
they would get a commitment of five, six, seven, eight years, 
because it is not a political, partisan Republican/Democrat 
issue. And I thought Mr. Hinson did a good job. He stayed there 
three and a half years. And the GAO testified yesterday they 
thought it probably took a person up to three years to get a 
handle on the place. I guess that all depends on where the 
individual comes from and their previous experience. But I 
think you are right, and up until that time it had been about 
18 months time.
    Mr. Sabo.

                      major procurement management

    Mr. Sabo. Thank you, Mr. Chairman. With regard to the FAA 
there have clearly been major problems in large procurements. 
That is typical of some other federal agencies, too--especially 
operational agencies that have requirements for some very large 
sophisticated procurements. I believe we need to take a look at 
how we manage those types of major procurements on a 
government-wide basis. Are we asking too much of people whose 
orientation is operations to develop extraordinarily, large, 
complicated procurements.
    Ms. Fleischman. That is right. I agree with you. In fact 
various committees of the Congress on both sides of the Capitol 
have tried to address this problem and have taken reams and 
reams of testimony from various agencies that have undergone 
this experience in which they try to replace typically major 
ADP systems. IRS has certainly had a problem. FAA has had its 
problems, NASA and Defense too. And I am given to understand 
even the FBI is having its difficulties with a major 
procurement in ADP that it is undertaking.
    Overall, having sat through many of those hearings and read 
a number of those reports and seen somewhat smaller 
acquisitions go through the same problem, one common theme that 
stands out is poor planning. They do not undertake the 
requisite detailed analysis of what do we need, how much do we 
need, when will we need it, what kinds of persons are going to 
operate this system, what can we do with the system, and then 
go out and try to either buy it off the shelf if that is 
possible or engage in a contract with a developmental goal to 
achieve the kind of equipment that the agency needs. The 
biggest problem overall is, literally, poor planning. You have 
got to define what you need, decide how much you are going to 
need and when. And they don't always engage in that.
    Now whether or not that is because the folks who do this 
are operational or not, I am not so sure. In offices that I 
have managed, when buying much smaller systems, management 
information systems and so forth, I have learned if you let the 
people who--the techies, as I call them, if you let them do it, 
that is not going to work, because they don't know what people 
on the ground, in the field need.
    Mr. Sabo. Need, yes.
    Mr. Fleischman. So you have to engage in a lot of up-front 
activity, as I call it, a lot of needs assessment and planning. 
And if you don't do that, it is almost a guarantee that you 
have got a problem.
    The second problem is once you decide what it is that you 
want, don't change your mind every five minutes, because every 
time you tell the contractor or the entity from whom you are 
purchasing this system, ``I think I wouldlike for it to do X as 
opposed to Y,'' he says sure, we can do that and he just tacks on 
another hundred million dollars or whatever it is. No problem for him, 
he just keeps on doing it. By the time you get through, you have cost 
overruns that are incredible and you may or may not have a system that 
you can use.

                        faa procurement planning

    Mr. Sabo. As they are about to start on a major 
procurement, where does an agency like the FAA go for advice 
within the government?
    Ms. Fleischman. I would expect that they would first of all 
talk to each other. It is not like FAA has never purchased 
anything before. They have a detailed process for going through 
a procurement. And it is like a little road map. It will tell 
you what you are supposed to do and how to go about it. They 
can also, of course, get advice, if you will, from the 
Department of Transportation.
    Mr. Sabo. Has DOT done other procurements of the magnitude 
that the FAA is doing?
    Ms. Fleischman. I would think so. Did you say the 
Department of Defense or DOT?
    Mr. Sabo. DOT.
    Ms. Fleischman. Sorry. I don't know.
    Mr. DeCarli. No, FAA is the big daddy in the Department of 
Transportation in terms of acquisition. The next agency that 
would come close to it would be Coast Guard, and they are not 
in the same league in the acquisition world. As Ms. Fleischman 
said, the main thing you have got to do is understand what you 
want and come up with a good specification up front. The 
tighter the specification is, the better off you are because 
you are less likely to change it, and when you don't have a 
change order you don't get contractor sole source pricing 
mechanisms.
    One of the things to the Department's credit, is that both 
FAA and Coast Guard, if you went back to the times when they 
were having their big problems, had the mind set that if we 
didn't invent it, if it wasn't our concept, our design, our 
specifications, we really don't want it and this has changed 
quite a bit. If you look at the types of things that the Coast 
Guard is buying today and even some of the FAA system 
acquisitions you will see that they are starting to go to what 
is referred to as COTS, Commercial Off The Shelf devices, items 
that are available in the economy with some significant 
modification so that it meets their needs. But at least they 
are starting with something that already exists rather than 
something that exists in somebody's mind that may not even be 
able to be built. And that is a significant difference which 
results in having something that is more likely to be delivered 
on time and within cost.
    Mr. Sabo. Thank you.

                       faa cost-benefit analyses

    Mr. Wolf. Thank you, Marty.
    Benefit-cost studies are one way for agency managers to 
evaluate not only one program, but also make comparative 
judgments among competing programs. In a 1995 audit, the IG 
found flaws in the FAA's process for developing benefit-cost 
estimates for major acquisitions. Individual managers were 
``gaming'' the system, providing non-standardized, and often 
unsupported, data to support their estimates. Although the FAA 
claimed to be improving this process, a recent GAO report on 
software development found some similar problems. To what 
extent is the FAA giving its managers too much flexibility in 
this area, ending up with an inability to measure and compare 
one project with another?
    [The information follows:]

    In response to our audit of cost-benefit analyses on major 
acquisitions, FAA agreed to strengthen oversight of the 
preparation of cost-benefit analyses including independent 
evaluation to ensure that they comply with DOT and FAA policies 
and procedures. FAA's new acquisition management system, 
established in April 1996, requires cost-benefit analyses to be 
prepared as part of the investment analysis phase. An 
investment analysis staff has been established to lead the 
effort in preparing cost-benefit analyses. We have not audited 
the process of developing cost-benefit analyses. We have not 
audited the process of developing cost-benefit analyses under 
the new acquisition system to determine whether procedures have 
improved since our audit, which covered FAA's cost-benefit 
analyses activities during 1993 and 1994. GAO's January 1997 
report ``Air Traffic Control: Improved Cost Information Needed 
to Make Billion Dollar Modernization Investment Decisions,'' 
reviewed some of FAA's latest system acquisitions. GAO reported 
that FAA's managers did not have good data because the 
underlining cost estimating and cost accounting practices for 
the air traffic control modernization program were inadequate. 
The result was an absence of reliable cost and financial 
information needed to make informed investment decisions. While 
generally agreeing with GAO's findings and conclusions, FAA 
believes its plans to implement a cost accounting system by 
October 1, 1997, will solve problems in project cost accounting 
and improve its ability to manage air traffic control 
investments. Also, the Coopers & Lybrand recent report 
``Independent Financial Assessment'' stated that FAA lacked 
detailed cost accounting information to use in determining 
which projects, operations, or investments make the most sense.

                 full funding for capital acquisitions

    Mr. Wolf. The fiscal year 1998 budget requests $2.2 billion 
in advance appropriations for 13 FAA capital programs as part 
of an administration initiative to promote greater use of 
``full funding'' for capital acquisitions. As I understand it, 
the concept of full funding began many years ago in the 
Department of Defense, who realized the good sense of 
appropriating all the money needed up front for a tank, for 
example, rather than signing a contract for half the tank and 
coming back for more money year after year.
    DOD guidelines are very clear in specifying that the ``full 
funding'' concept applies only to pieces of equipment in 
production, and not to items wholly or partly under 
development. Yet the budget proposal for FAA requests that we 
fully fund many programs still under engineering development. 
Does it make sense to expand the full funding concept to 
include items still under development?
    [The information follows:]

    Full funding makes sense when adequate testing has proven 
that the system will perform as intended. Full funding may also 
make sense when (1) acquiring commercially off-the-shelf and 
non-developmental items and only minor modifications are made 
and (2) the agency can demonstrate that systems can be acquired 
within established cost estimates and on schedule. Full funding 
should not include items under development.

                     faa's tower automation program

    Mr. Wolf. One of the programs recommended for full funding 
is FAA's Tower Automation Program (TAP). Your office issued an 
audit last August which was highly critical of FAA's approach 
in this program. What were your findings, and in your opinion, 
is this one of a select group of programs which are so stable 
and meritorious they should be singled out for full funding?
    [The information follows:]

    When FAA restructured the AAS contract, it continued the 
tower automation effort under a modified program called HAB 
TCCC. In May 1996, FAA restructured the HAB TCCC Program to the 
Tower Automation Platform (TAP) due to funding concerns. FAA 
concluded that the greatest benefit from the remaining FY 1996 
funds would be to modify the tower contract to include the 
Surface Movement Advisor (SMA).
    Our August 1996 report presented our two concerns with 
FAA's decision to restructure the HAB TCCC Program into TAP. 
First, TAP will not satisfy FAA's stated mission need for high 
activity towers and FAA had not completed critical analyses to 
make an informed decision on the most cost-effective solution 
to satisfy the tower mission need. Second, according to FAA 
program officials, TAP funding will be eliminated if FAA's FY 
1998 Facilities and Equipment funding falls below $1.8 billion, 
thus eliminating the automation platform for deploying SMA. 
Yet, FAA did not fully evaluate other potential alternatives 
for SMA before restructuring HAB TCCC. OIG provided two 
examples of alternatives FAA should evaluate. These were the 
ongoing Tower Data Link Services Program and a stand-alone 
system for SMA.
    The full funding request in FAA's FY 1998 budget is for the 
Tower Automation Program, budget line 2B14. Our review of this 
budget line indicates that FAA is proposing a national 
Information Display System (IDS) Sustainment and Upgrade 
Program and a Tower Integration Program (TIP) under the Tower 
Automation Program. Our advisory memorandum addressed FAA's 
restructured HAB TCCC Program referred to as the Tower 
Automation Platform. We have not reviewed FAA's two new 
proposed programs to satisfy its tower mission needs. 
Consequently, we have no basis to determine if the new Tower 
Automation Program efforts are either stable or deserving of 
full funding.

                 full funding for capital acquisitions

    Mr. Wolf. I understand the desire of program managers to 
want all their money up front. That way agency officials don't 
have to come before this committee each year and disclose 
problems they may have in the programs. But isn't it true that 
if we had agreed to fully fund FAA capital programs in past 
years, we might have paid a lot more to get out of failed 
programs like MLS and AAS?
    [The information follows:]

    We agree. If the Committee had fully funded programs like 
MLS and AAS, FAA would have had little incentive to reevaluate 
troubled programs and stop funding their continued development. 
Full funding of capital programs does provide benefits both in 
stability of the acquisition as well as potentially reducing 
cost. However, FAA has yet to demonstrate that it can acquire 
and field major systems within cost and schedule. Consequently, 
only full developed and tested systems should be considered for 
full funding at this time.

    Mr. Wolf. Can you think of any good reason why we should 
approve advance appropriations for items which are still under 
development at the FAA?
    [The information follows:]

    No. In our opinion, advance appropriations should not be 
approved for items still under development.

                      faa's nas architecture plan

    Mr. Wolf. The FAA recently released a draft version of 
their long-range capital program (called the ``NAS 
Architecture'' plan). This plan states that the OMB budget 
targets for the next five years will allow little or no 
modernization of the ATC system, and that users such as 
airlines and airports will have to start paying for equipment 
(such as airport lighting systems and landing aids) which have, 
up to now, been bought by the FAA. Have you reviewed this 
report? Do you believe FAA needs more (or less) money for its 
modernization budget than we see in the annual budget requests?
    [The information follows:]

    We have not reviewed FAA's draft version of the NAS 
Architecture. However, for FAA to successfully modernize its 
ATC system within reasonable budget expectations, it must 
clearly identify its requirements, prioritize its needs, focus 
on commercial off-the-shelf technology, and hold the line on 
program changes.

                          faa personnel reform

    Mr. Wolf. We are going to submit some on personnel reform 
for the record.
    The FAA was allowed, in 1995, to develop an entirely new 
personnel system. Yet to date we have seen little change from 
this effort. Have you been monitoring FAA's work to develop a 
new personnel system, including a new compensation schedule for 
its employees? Do you have any opinions or concerns over the 
reforms they have taken?
    [The information follows:]

    On April 1, 1996, FAA initiated personnel reform by 
creating the FAA Personnel Management System (PMS) and issuing 
24 Personnel Reform Bulletins (PRIBs) announcing management 
procedures and direction for implementing personnel reform. The 
PRIBs addressed various issues on: (1) staffing; (2) 
compensation; (3) performance management; (4) training; (5) 
labor relations; and (6) executive systems. For example, PRIB 7 
changed existing policy regarding premium pay for night and 
Sunday shifts. Other PRIB's were longer-term, establishing 
committees or giving enabling authority to FAA's lines of 
business for future action. For example, PRIB 2 established a 
Compensation Committee which is developing a framework for a 
new compensation plan to be implemented in FY 1998. Since April 
1, 1996, FAA has issued only three additional PRIBs, one 
clarifying issues regarding premium pay, and two concerning 
executive system positions and performance management.
    FAA's personnel reform initiatives are too new to evaluate. 
However, we are developing FY 1998 audit proposals to determine 
whether FAA personnel reform initiatives, including 
compensation initiatives, improve operational efficiency and 
effectiveness. Specific concerns we have with personnel reform 
include the increased authority given to managers in each line 
of business over travel, compensation, training, and hiring. 
Recent audits and investigations such as workers' compensation, 
permanent change of station moves, training, employee buyouts, 
and revitalization pay have identified abuses that resulted 
from weaknesses in management oversight and lack of 
accountability.

                          faa union agreements

    Mr. Wolf. In past years, the IG has been critical of some 
elements of pay and benefits for FAA employees such as the FAM 
flying program. In fact, in last year's hearing, the IG told us 
that some union agreements ``have obstructed FAA's ability to 
effectively meet program objectives in an economical and 
efficient manner'' (p. 59). This year, all of the major 
employee union contracts will be renegotiated. In your view, 
what elements of the existing contracts should FAA change, in 
order to eliminate unnecessary costs or improve workforce 
productivity?
    [The information follows:]

    As stated in last year's hearings, current union agreements 
hamper FAA's ability to move controllers to locations where 
they are most needed. Additionally, unnecessary premium pay 
should be eliminated. We have made recommendations to FAA on 
both of these issues. We have also recommended that FAA open 
negotiations with its unions to (1) establish permanent change 
of station mileage criteria consistent with current Internal 
Revenue Service guidelines, and (2) establish new guidelines 
and restrictions for participation in the FAM Program.
    We are currently auditing air traffic controller workforce 
labor agreements to evaluate the impact of labor agreements on 
FAA's ability to effectively and efficiently manage air traffic 
resources. We anticipate issuing the audit report in the fourth 
quarter of FY 1997.

            los angeles airport revenue diversion repayment

    Mr. Wolf. Your office has done a good job over the years of 
exposing the problem of airport revenue diversion. Nowhere has 
this been a greater problem than in Los Angeles. We were told 
by the IG last year that the IG confirmed ``a number of 
inappropriate uses'' of airport property and airport revenues 
in October of 1995. How much of that diversion has Los Angeles 
repaid to date?
    Ms. Fleischman. I don't think they paid any of that back. 
That report was issued in October of 1995 and we got a response 
to that report this past Friday, on the very day that we issued 
the audit report that FTA, the Federal Transit Administration, 
needs to make a determination as to whether or not any revenue 
diversions have occurred in Los Angeles from the Los Angeles 
Airport since September 30, 1996. We are reviewing that 
response now, but as far as we can tell I don't think any of 
the diverted money has been transferred back to the airport.
    Mr. Wolf. There was a running feud over the past year 
between L.A. city officials, who wanted to divert $33 million 
from the airport fund for general city purposes, and a number 
of federal officials who believed this would be a violation of 
the revenue diversion provisions. In a letter dated October 28 
of 1996 to the Committee, you reported the findings of your 
investigation into this matter. Would you tell the subcommittee 
what you found?
    Ms. Fleischman. Ray, would you like to address that?
    Mr. DeCarli. After we looked at the documentation that we 
had available to us and that was available to FAA, we concluded 
that the $31 million they were trying to move back to the city 
was for so-called expenses that occurred between 1928 and 1971. 
When we looked at the documentation, the first thing that we 
noticed was that in 1975 the City Council of Los Angeles passed 
a city resolution that specified that for a certain payment all 
prior debts of the airport to the city would be covered under 
that payment, $5.2 million that was transferred from the 
airport to the city.
    Based on that city resolution, we concluded that the $31.5 
million was already settled as a result of that city 
resolution. That is what the resolution basically said. It is 
our understanding now that the city is arguing that the 
resolution is not binding, and FAA is currently considering 
whether or not it has any legal effect.

               faa enforcement of l.a. revenue diversion

    Mr. Wolf. On November 13, 1996, the General Counsel of the 
Department of Transportation released a legal opinion that the 
$31 million transfer is ``not justified as a permitted use of 
airport revenue,'' advising the city that it should be required 
to return the funding with interest to the airport fund. On the 
same date, the FAA ordered Los Angeles to pay the $31 million 
within ten days. However, when Los Angeles refused to do so, 
the FAA then decided to avail itself of the much slower 
enforcement proceedings called for under part 16 of the 
aviation regulations. Why did the FAA not continue to demand 
payment?
    Ms. Fleischman. I am not sure that we know the answer. We 
don't know exactly what FAA's thinking was, but my 
understanding is that they have started this longer process and 
they are engaged in that currently.
    Mr. DeCarli. It is our understanding that the six-month 
timeframe on that hasn't started either.
    Ms. Fleischman. They haven't?
    Mr. DeCarli. It is our understanding that FAA does not 
consider the six-month period to have started.
    Mr. Wolf. When would that start, then?
    Mr. Weintrob. As soon as the FAA makes a determination that 
in fact it was a prohibited diversion. And they tell me as 
recently as this morning that they are close, but we have not 
been given an indication as to how far they are or how close 
they really are. Even though you had the letter from the 
General Counsel in November which said it was a prohibited 
diversion, and even though there was a November letter from FAA 
to Los Angeles saying it was a prohibited diversion, they will 
not start the clock on that new six-month procedure until they 
make a definite determination that there was----
    Mr. Wolf. Well, there is something strange going on there. 
And that is not fair to every other airport and every other 
locality in the nation. I mean, why shouldn't the airports in 
my area divert if they can get away with it, or why shouldn't 
the airports of any other place? It just seems to me that 
that----
    Mr. DeCarli. The airports in your area basically can't 
divert because they are under a better system because you have 
an airport authority. The airport authority is not under the 
control of the city and that is a much better system to prevent 
this kind of situation.
    Mr. Wolf. It is mainly where the city owns the airport.

             resolution of l.a. revenue diversion findings

    Mr. Wolf. Has FAA ever resolved the revenue diversion 
findings of your October 1995 audit?
    Ms. Fleischman. No, sir. We have a response that we 
received on Friday that is not quite, if I may say so, 
responsive. Basically they do two things. They rely on 
assertions made by the Department of Airports in Los Angeles, 
and they also rely upon a rulemaking that has not yet occurred 
and indeed may never occur, as far as I can tell. Neither of 
those reasons are sufficient.
    First of all with regard to the assertions made by the 
airport, by the Department of Airports in Los Angeles, FAA took 
the assertions literally at face value. We will have to go back 
and determine whether or not these assertions are accurate. We 
already have at least one indication that they are not, which I 
am going to ask Mr. DeCarli to address. But to finish--
basically what FAA does with the remainder of the issues raised 
in the 1995 report--if they don't rely on the assertions made 
by the Los Angeles Department of Airports, then they defer a 
resolution, in providing the IG with an answer, to a rulemaking 
that has to occur some time in the future.
    Quite frankly I don't think that either of those positions 
is adequate. And as I said, at least one of the assertions is 
wrong. And I would like to ask Mr. DeCarli to address that, 
please.
    Mr. DeCarli. There is nothing wrong with assertions, but 
there ought to be some verification that they are in fact 
something other than the view of the airport, which is in fact 
the circumstance. Much of the reply that we got last Friday on 
the Los Angeles airport issue is based on assertions.
    One of the issues that was in the report of 1995 and our 
current report issued last week on LAX involves parking ticket 
revenue. In its reply to us FAA says, and I will quote to you. 
``The FAA concludes the traffic fines assessed by a sponsor's 
local court system are not generally considered airport 
revenue. Department of Airports states that proceeds from LAX, 
violations like fines for other violations, are allocated by a 
state formula that does not provide for contributions to the 
airport revenue fund.''
    Well, on its face that sounds good and it sounds like there 
is a state formula that precludes the airport from getting any 
of those fines from parking tickets. Immediately we went back 
to FAA and asked them to provide a copy of that formula so we 
can take a look at it. The FAA said we don't have it. We have 
never taken a look at it.
    We asked for a copy. We did get a fax sent back to us from 
the Los Angeles City attorney through the FAA. Basically that 
fax cited that the parking tickets were controlled by the penal 
code of the State of California. That is true prior to 1992, 
but in 1992 those parking violations became part of the vehicle 
code and no longer are controlled by the penal code. When we 
looked at the vehicle code, it said that revenue for parking 
violations goes back to the agency who issued the tickets. In 
this case it is the police of the Los Angeles airport, which 
are fully paid for by the Los Angeles airport that issued the 
tickets.
    And we would maintain that there is no California formula 
that prohibits the Los Angeles airport from getting those 
proceeds, and as the issuing agency they are entitled to them. 
So that is a dispute that occurred in the last two days. We got 
their reply on Friday. We got the California statutes 
yesterday, and that conclusion is based on our analysis over 
the last two days. But it seems pretty clear to us that the 
assertion by the Los Angeles airport may have been true back in 
1992 but is no longer valid.

             compliance with airport revenue retention act

    Mr. Wolf. In last year's hearings when we were talking 
about diversion at Denver, you said ``typically, based on the 
work that we have done over the last, I guess, three years on 
these issues''--this was the exact quote--``they just drag on 
and on and on and never come to a conclusion. It is rare when 
they finally come to a conclusion and say yes, you have to pay 
this money back.'' What should we do to make the discipline 
more immediate?
    Mr. Weintrob. I think Congress did it when they passed the 
Airport Revenue Retention Act of 1996. Now what somebody has to 
do is get FAA to come into compliance with that act.
    Mr. Wolf. How do you do that?
    Mr. Weintrob. It is how Congress does it. All we can do is 
cite what we find and make recommendations.
    Mr. Wolf. Should we make it a criminal offense? Should we 
ask the U.S. Attorney for the District of Columbia to 
investigate? Do you believe that they are in violation of the 
law? I mean, you have got to give us an answer, yes or no. Are 
they in violation of the law?
    Mr. Weintrob. Well, the airports are not--in many cases are 
not complying with the----
    Mr. Wolf. But is the FAA in violation?
    Mr. Weintrob. By not enforcing it? I am not a lawyer.
    Mr. DeCarli. We haven't looked at it from that standpoint, 
to be honest with you.
    Mr. Wolf. Well, why don't you look at it and tell me, 
because if they are I want to write a letter to Eric Holder, 
the U.S. Attorney for the District of Columbia, to ask him to 
bring a case, because you can't keep going on. It is really not 
fair to the other cities and the other airports. And if you 
would research that for us and let us know. And if it is a 
violation, we will ask that the individuals who were 
responsible be removed from their jobs, because you can't keep 
defying this thing and going on. You either change one way or 
the other, but you just can't keep doing it. So we will either 
ask that they be removed from their jobs or we will ask that 
they file a criminal action if they are in violation of the 
law. So if you could get back to us, give us your----
    Mr. DeCarli. When we were looking at the new legislation 
last year on the Senate side our suggestion was to put a clock 
in place that said FAA had six months to resolve these issues. 
At the end of that six-month period, those issues would then go 
to an independent review board, similar to the process you have 
with contract appeals. There are some organizations that could 
get in the middle and resolve those kinds of things rather than 
have them linger on, because they do linger on forever in FAA. 
There is no question about it. It is years before you get any 
resolution.

                       san francisco bart project

    Mr. Wolf. The subcommittee is concerned about the design of 
the BART project at the San Francisco International Airport 
because of potential issues of revenue diversion. Have you done 
any audit work on this project, BART?
    Mr. DeCarli. No, we haven't looked at BART.
    Mr. Wolf. What we are going to ask is that you join GAO and 
FTA similar to what the Federal Highway Administration has done 
on the Central Artery Project. In order to look at that we had 
the Federal Highway Administration, the IG's office, as you 
know, and GAO develop a team, working in conjunction with the 
Congress, to look at that. And I think some good things have 
happened whereby the project has been capped at $10.4 billion. 
They are submitting cost reports. We would like to ask the IG's 
office to participate with the GAO and FTA on the BART Project. 
Not to hurt it, but really to help it. That doesn't mean that 
the committee is opposed to that project. I just want to stress 
that for the record, but if is to make sure these costs are 
proper. So if we could have you work the same way. I think you 
all did such a good job on the Central Artery Project, maybe we 
can replicate that here.
    Ms. Fleischman. We would be glad to.

                    L.A. FEDERAL GRANT RESTRICTIONS

    Mr. Wolf. Thank you very much.
    Are there any restrictions on Los Angeles receiving federal 
grants while this long discovery and enforcement process is 
underway?
    [The information follows:]

    There are no restrictions on Los Angeles receiving federal 
grants as long as FAA is in the discovery phase. FAA must 
perform fact finding, provide an opportunity for a hearing, and 
find Los Angeles has diverted revenue. This process should take 
no longer than 180 days after the issuance of an audit or any 
other report identifying a diversion. Los Angeles must then 
receive notification that it must reimburse the airport, and 
have an opportunity to do so. If Los Angeles fails to reimburse 
the airport, then the Secretary can withhold funds that would 
otherwise be made available to the sponsor as part of an 
apportionment or grant made available pursuant to title 49, 
United States Code.

                         l.a. transfer of funds

    Mr. Wolf. A couple of years ago, Los Angeles transferred 
$58 million from the airports fund to the general fund based on 
a determination involving the Century Freeway. Although this 
issue was protested almost immediately by the airlines, my 
understanding is that it still hasn't been resolved. Is that 
accurate? Why is it taking FAA so long?
    [The information follows:]

    You are correct. FAA has not resolved the issue of the $58 
million transferred to Los Angeles' general fund. FAA has 
received documentation from the airlines and airport, but has 
not reviewed the documents. FAA officials state they will begin 
the review as soon as they complete their investigation of the 
$31 million transfer issue.

                 Revenue Diversion--PART 16 Regulations

    Mr. Wolf. Do you believe the new part 16 enforcement 
proceedings are adequate to minimize revenue diversion in the 
future, or could they be strengthened?
    [The information follows:]

    The recently promulgated part 16 regulations will not 
minimize revenue diversion in the future. Part 16 amends and 
updates existing procedures for filing, investigating, and 
adjudicating complaints against airports for violation of 
various statutes administered by FAA, of which revenue 
diversion is but one. The intended benefits of the rule are 
increased cost effectiveness and timeliness in resolving 
complaints, not minimizing revenue diversion. For instance, FAA 
expects the rule to reduce the average time per investigation 
of compliants from 3 years to 1 year. In our opinion, new 
legislation including the Airport Revenue Protection Act of 
1996, should help to minimize revenue diversions in the future.

                            airport security

    Mr. Wolf. As you know, a large amount of additional 
funding, $226.6 million, was provided in supplemental 
appropriations last fall to improve airport security. This 
included funds for new explosive detection devices, canine 
teams, airport security inspectors. Have you done any audits to 
determine how much additional security we can buy through 
appropriations and how much can be obtained instead through 
stronger operating practices at the nation's airports?
    Ms. Fleischman. I don't think that we have done any work to 
quantify exactly how much could be purchased. My recollection 
is that the Gore Commission addressed some of those issues, and 
GAO in one of their reports has addressed that issue with 
regard to purchases. We have not done work specifically 
addressed to that. We have done some work, as you know, with 
regard to operating procedures that would enhance security.
    Last summer we issued a follow-up report to an earlier 
report on airport security. We found that FAA had done a number 
of the things that we and others had recommended in the past to 
enhance operating procedures at airports. They had better 
testing. They had better protocols. Things were much better 
than they had been in 1993 when this office issued the first 
report. However, we also found that some of the personnel in 
airport security, FAA's security division, hadn't quite figured 
out that yes, they were supposed to do this very carefully and 
they were supposed to report all instances of failure on the 
part of the operators in the airports and the air carriers to 
carry out what they were supposed to do under various security 
directives, depending on which airport you were in.
    We recommended that FAA better train its security personnel 
who inspect airport security and that they insist upon 
accurate, detailed use of the protocols and testing throughout 
this country and those airports for adherence to security 
procedures that FAA has mandated. The Federal Aviation 
Administration has agreed with our recommendations and are in 
the process of enhancing their training for their own special 
agents who do this kind of testing and who enforce security 
procedures at airports. I don't think that they have completed 
redrafting of the protocols yet, but they are working on it.
    Mr. Weintrob. There is some more current information. We 
are currently working on a security project with the FAA, as 
security is an area that we have worked very closely with FAA 
for the last several years. We are working on the new rules 
that took effect regarding cargo on passenger planes. In fact 
we are shipping packages, suspect packages, and testing results 
very closely with FAA to determine compliance with the new 
rules and to help FAA evaluate their inspectors working in that 
environment.
    Getting back to your original question about the amount of 
funds that have been appropriated to buy trace detection 
equipment, CTX-500s, all that money is very well spent. I have 
seen the equipment. It can do what is said, but it is all very 
dependent on people. And when you are talking about the 
airports across our country that have minimum wage employees 
who can make more just by walking to the next concession down 
the hall and working at McDonald's, we are asking a lot of very 
low-paid, under-educated folks to be working this very 
sophisticated equipment. And so far I don't think they have 
solved that problem.
    Ms. Fleischman. I worked at the Department of Energy some 
years ago, and security at DOE's facilities was always a major 
concern of the IG's office. One of the things that I learned 
from that experience in a number of inspections and evaluations 
that we undertook, and I think the same thing is true here. 
Larry, Mr. Weintrob, is exactly right. Ultimately it comes down 
to people paying attention every day, all the time, to the 
details. That is hard to do because people go along for days 
and weeks and nothing happens, everything seems just fine and 
so your attention lessens.
    That is one of the things that FAA must guard against 
through enhanced protocols and better inspections. Mr. Weintrob 
is right. It is ultimately a people problem.
    Mr. Wolf. Staff just said that is a lot to expect when you 
are paying somebody minimum wage, too.
    Ms. Fleischman. Well, there is that.
    Mr. Weintrob. Right now, as I am sure you know, the 
passenger screening stations, which screen your carry-on bags 
are operated by the air carriers, not the airports. At one 
airport you might have a dozen different contractors doing that 
kind of work. The air carriers who pay more typically hire 
qualified people and show up a little better on the test that 
FAA has been doing.

                       airport security user fees

    Mr. Wolf. The Administration's fiscal year 1998 budget 
would require the FAA to collect $400 million in user fees. 
Last year one FAA proposal was to assess a security user fee at 
domestic airports, and Secretary Slater indicated last week 
that this is now getting very serious consideration. You 
disagreed with this proposal last year. Could you briefly tell 
us why?
    Ms. Fleischman. Mr. DeCarli, could you address that, 
please?
    Mr. Weintrob. I don't remember that we disagreed. I can 
tell you that I personally made a couple dozen trips to the 
hill with Admiral Flynn, the FAA's head of civil aviation 
security. And I agreed with his options.
    Mr. Wolf. Do you support the user fees?
    Mr. Weintrob. I would personally, yes. In their most 
comprehensive plan, I believe, the figures are about $1.62 per 
ticket or per leg on a ticket. When I fly I would pay that 
$1.62, and I think most people would if they were getting in 
exchange for that what they were paying for.
    Ms. Fleischman. Whether or not one decides to support user 
fees, there are certain pieces of information that one would 
need, whether it is the IG's office or a Congressional 
committee. First of all, we need to know if there is 
sufficient, accurate data to support the analysis concluding 
that we need this much money from user fees. You need to know 
with some certainty just how much money it is that you need and 
what the source of the funding will be.
    And if it is going to be user fees for the American public, 
or anybody for that matter, people who are paying those fees 
want to know, and studies by other IG Offices, GAO and, 
frankly, common sense indicates they want to know that the 
money that is being collected from them is used precisely for 
that purpose for which they are told it is being collected. If 
you start to use the money for something else, then any kind of 
good will and approval that you get from those from whom you 
are collecting this money dissipates almost immediately.
    Mr. Wolf. How much would $1.62, whatever the figure is per 
ticket, raise?
    Ms. Fleischman. I don't know that I have sufficient 
information to answer that. We could supply that.
    Mr. DeCarli. The issue last year that we objected to was 
the FAA floating a proposed rulemaking to put in a user fee for 
the security that they were at that point in time providing as 
opposed to any additional security. They wanted to find another 
stream of revenue for what was already being provided out 
there. That is where we disagreed.
    [The information follows:]

    The security user fee FAA proposed was $1.32 per ticket. 
This fee would result in revenues of $6.5 billion over a 10-
year span.

                        airport security survey

    Mr. Wolf. We gave them the ability to collect $100 million 
last year in user fees and they haven't even come up with any 
of it, they haven't levied one penny yet. And they are asking 
for $300 million more in user fees this year. It is pretty hard 
to argue to the Congress that you ought to give $300 more 
million when they haven't used the $100 million and they 
haven't defined even where the $300 million ought to come from.
    Please outline to the Subcommittee your findings last year 
in a survey of security at major U.S. airports.
    [The information follows:]

    We found FAA testing adequately assessed airport and air 
carrier compliance with increased security requirements. FAA 
clearly identified testing procedures; developed realistic, 
covert testing techniques; and established specific testing 
parameters and reporting requirements. In contrast, FAA's 
access control validation inspection data could not be relied 
on to reflect the true compliance posture of the aviation 
community. FAA's access control inspection protocol did not 
assure special agents consistently and aggressively tested 
access control points; and statistical data was not always 
supported by special agents' narrative results. New testing 
procedures resulted in a heightened awareness toward compliance 
with security requirements by individual employees, and airport 
and air carrier officials. FAA tests demonstrated some airports 
and air carriers were not complying with access control and 
challenge requirements, as well as additional security measures 
imposed through emergency airport security program amendments 
or security directives.

                      explosive detection systems

    Mr. Wolf. As you know, we spent a lot of time and money to 
develop thermo-neutron analysis (TNA) devices after the Pan Am 
103 explosion, and that money was largely wasted. We certainly 
want to deploy effective improvements as soon as possible. But 
we don't want to repeat the TNA debacle by chasing after 
inappropriate or untested technologies. Is the FAA's current 
approach for developing and deploying new explosives detection 
systems the right one?
    [The information follows:]

    FAA's aviation security program is multifocused. Explosion 
detection devices for checked baggage, such as the CTX5000SP, 
is only one aspect of the program. Use of the CTX5000SP, in 
conjunction with other aspects of the program, appear to be a 
realistic and reasonable approach. Airport and airline security 
will be enhanced with FAA's purchase of 54 state-of-the-art 
CTX5000SP baggage inspection and explosives-detection units.

                       airport security user fees

    Mr. Wolf. As you know, today most of the costs for airport 
security in this country are borne not by the federal 
government, but by the airlines. The FAA performs an oversight 
role, and assists in the development of new security equipment 
and procedures. Would you agree that we should change this 
policy and allow FAA to bear the costs of upgrading airport 
security, through user fees or taxes, rather than the airlines, 
through landing fees?
    [The information follows:]

    While in the short run FAA could bear some costs of 
upgrading airport security, the majority of costs should be 
borne by the traveling public. It is important, however, when 
establishing ``user fees,'' or as some have called them 
``security fees,'' to create a system that prevents airports, 
airport sponsors, and air carriers from using them for other 
aviation or nonaviation security purposes.

    Mr. Wolf. Do you support the findings of the Gore 
Commission as they relate to airport security?
    [The information follows:]

    The OIG supports the findings and recommendations of the 
Gore Commission.

                          AIRLINE SAFETY DATA

    Mr. Wolf. After last year's TWA 800 crash, there was 
considerable discussion of whether or not the FAA should 
release a safety scorecard which provides comparative airline 
safety data. Last month FAA decided to begin releasing some new 
aviation safety information, but they backed off of preparing a 
scorecard because of opposition from the airlines and technical 
consideration about what the data should be including. In the 
audit last year, the IG said ``FAA's argument for not compiling 
comparative safety data is not convincing because FAA can 
compile information on airline safety and furnish it to the 
public in a readily understandable form in order to facilitate 
comparison among airlines.'' Do you stand by that statement 
this year?
    Ms. Fleischman. I think that experience indicates, quite 
frankly, in the last month or so that FAA can provide data that 
is certainly accessed by people. I don't know how well they are 
using it and how well the consumer or whoever is accessing the 
data over the Internet can figure out and make a safety 
comparison with regard to carriers and safety records.
    FAA collects an enormous amount of data in a variety of 
data streams and collections. Obviously, FAA had resisted this 
for some time. After the former IG made the statement that you 
just quoted there, Senators Ron Wyden and, I believe, Wendell 
Ford wrote to the FAA and asked that FAA engage in providing 
safety data to the American flying public or anybody else, for 
that matter.
    FAA engaged a contractor to look at this issue. I read a 
substantial portion of that study, and I thought it was really 
quite an interesting study. One of the things it pointed out is 
that even with all of this data put together because civil 
aviation in this country has such an outstanding record, if you 
will, such a small number of accidents or incidents, the data 
is not reliably predictive. In other words, we can't use the 
data to predict exactly which plane, which airline, air 
carrier, is going to have the next accident or incident, 
because the data is just not useful in that form.
    However, FAA, I think, to its credit, has started to 
present data from its databases to the public on the Internet. 
And I think we have the figures somewhere.
    Mr. DeCarli. 1.4 million.
    Ms. Fleischman. 1.4 million hits, 1.4 million people 
accessed that information within a few weeks of FAA making it 
accessible. We understand from FAA that in the next few weeks 
and months they will make even more data accessible to folks 
through the medium of the Internet. I think that is a good 
thing. I don't see how information can hurt one. The more one 
knows, the better off one is. And people can make their own 
analysis. They can look at all of this data, in a readable 
form, a usable form, and make their own judgments. I think that 
is fair. Frankly, I am glad to see that FAA has finally decided 
to do this. And I hope they will continue it.

                 AIRLINE SAFETY INFORMATION ON INTERNET

    Mr. Wolf. Do you believe FAA's proposal meets your 
recommendations to compile and furnish to the public airline 
safety information which is ``in a readily understandable form 
in order to allow consumers to make comparisons among 
airlines?''
    [The information follows:]

    FAA's decision to substantially increase public access to 
aviation safety information through the Internet is a positive 
first step in meeting our recommendation to compile and furnish 
airline safety information to the public. In fact, in the first 
full week following FAA's announcement, 1.4 million Internet 
users accessed the FAA homepage. This figure more than doubled 
FAA's previous weekly average for Internet activity. Further, 
FAA expects to add information on U.S. aviation safety over the 
next few months. By March 31, 1997, FAA will add airline 
activity data needed to calculate accident and incident rates. 
Future additions include quarterly summaries of all civil fines 
against U.S. airlines, statistics on near midair collisions 
since May 1987, and general information on all U.S. carriers 
such as length of time in business and fleet information.

                     ACCESS TO AIRLINE SAFETY DATA

    Mr. Wolf. Your report notes that in May 1996, FAA's 
National Aviation Safety Data Analysis Center prepared an 
internal report entitled ``Low-Cost Carrier Safety Record'', 
which compared the safety statistics of the various low-cost 
airlines. Why should FAA officials be the only ones who have 
access to this type of data, and not the flying public?
    [The information follows:]

    FAA's officials should not be the only ones who have access 
to airline safety statistics. We recommended that FAA compile 
and furnish to the public on a recurrent basis, information on 
airline safety in a readily understandable form in order to 
allow consumers to make comparisons among airlines. FAA is 
taking steps to provide aviation safety information to the 
public through the Internet.

                USCG INSPECTION OF WATERFRONT FACILITIES

    Mr. Wolf. We have some Coast Guard questions, but we will 
submit them for the record.
    For many years, Congress has been pushing DOT agencies to 
develop inspection programs which more effectively target their 
limited resources to the most likely offenders. FAA, FRA, and 
RSPA have all been developing sophisticated systems over the 
past two years to accomplish that goal. You found in an audit 
last summer that the Coast Guard was not targeting its 
inspection of waterfront facilities. In the two areas you 
reviewed, Coast Guard spent 33 and 43 percent of its time 
inspecting low-risk facilities (those with no prior 
deficiencies), while failing to inspect over three dozen 
facilities with known past deficiencies. What does the Coast 
Guard need to do to improve this situation?
    [The information follows:]

    We recommended Coast Guard (i) target high-risk facilities 
for inspection by using available data of facilities with prior 
deficiencies, and (ii) establish accurate inventories of 
waterfront facilities. In response to our recommendations, 
Coast Guard has completed the methodology for making risk 
assessments of all facilities. Coast Guard plans to use the 
results of risk assessments to rank and prioritize facility 
inspections. Coast Guard has also completed an inventory of all 
facilities and is currently updating the Marine Safety 
Information System. Full implementation of these actions should 
significantly improve the effectiveness of Coast Guard's 
waterfront facilities inspection program.

                    USCG ENFORCEMENT OF REGULATIONS

    Mr. Wolf. Much like the findings in your FAA deicing audit, 
in this report you found the Coast Guard was pretty soft when 
it came to enforcement. You found Coast Guard inspectors did 
not always establish compliance dates for correcting problems 
and they did not promptly conduct follow-up inspections. In 
fact, they didn't even recommend penalties for repeat 
offenders, in violation of Coast Guard policies. Why wasn't the 
Coast Guard taking a harder line on enforcement of its own 
regulations?
    [The information follows:]

    According to Coast Guard inspectors, they attempt to obtain 
compliance with Coast Guard policies through voluntary actions 
by industry rather than enforcement using penalties. Inspectors 
stated they were frustrated with the penalty process because it 
was cumbersome, and when penalties were recommended, the 
amounts they recommended were often reduced by hearing officers 
without explanation. Therefore, the inspectors often used 
warning letters because it was more expedient than recommending 
penalties. We recommended Coast Guard ensure inspectors comply 
with requirements for recommending civil penalties. Coast Guard 
agreed and stated, that as part of revising the marine safety 
manual, it will emphasize recommending civil penalties for 
repeat offenders.

                         USCG DRUG INTERDICTION

    Mr. Wolf. Last summer, there were some discussions about 
the Coast Guard seeking an additional $200 million for drug 
interdiction activities. The Coast Guard put together some 
briefing materials on the subject. Can you tell us what 
additional equipment or capabilities the Coast Guard would have 
purchased if they had received the additional $200 million, and 
do you believe such an investment would have significantly 
impacted our anti-drug effort?
    Ms. Fleischman. Our understanding is that the $200 million, 
had they gotten it, would have not been used to purchase 
additional equipment, but rather to enhance their operations, 
i.e. USCG would have undertaken more operations in drug 
interdiction than they were doing at the time. They did not, as 
I understand it, receive the $200 million.
    Mr. Wolf. No. Would it have had a significant impact on 
their anti-drug efforts?
    Ms. Fleischman. I don't know that we have the data to make 
an intelligent answer to that question. Frankly, I don't know 
that I know how much more they would have been able to do with 
the $200 million. To some extent, it would depend on how many 
interdictions they made. And I don't know that we have the 
information to make that kind of analysis.
    Mr. DeCarli. But the indications are that as the Mexican 
border gets squeezed, more drug traffic is heading back up 
through the Caribbean.
    Mr. Wolf. And as it squeezes there, it goes someplace else.

                        CENTRAL ARTERY OVERSIGHT

    I have a whole series of central artery questions, but we 
will ask one or two. Over the past several years, your audit 
work has identified excess payments for emergency equipment, 
construction changes and extra work orders, and other 
management and oversight deficiencies under the Central Artery/
Third Harbor Tunnel Project in Boston. Last year before the 
Committee, the IG took issue with the Department's oversight of 
the project. In your opinion, have the Department and the 
Federal Highway Administration improved their oversight during 
the past year, and have they exercised fully their authority to 
control costs on this federally-financed project?
    Ms. Fleischman. Gentlemen.
    Mr. DeCarli. We would have to defer to GAO with respect to 
whether Federal Highways has really taken control of the 
financing and if they are adequately overseeing the financing 
of the project. Has Federal Highways improved their oversight? 
To some extent they have. I think the focus now changes 
direction and what Federal Highways now has to focus on is the 
quality of construction as we move into the actual laying of 
the pavement and theconcrete. Over the last year we have done 
two audits of the Central Artery Project.
    Mr. Wolf. And what have they shown?
    Mr. DeCarli. In one audit we looked at the quality of 
construction. We found problems in that material was not tested 
and that materials that were below specifications were 
accepted. In addition to buying it the first time, FHWA 
participated in the cost the second time. And we think, at 
least from our perspective, once they buy it they ought to be 
buying the quality that they intended and should not pay the 
second time for defective material. So we have made 
recommendations with respect to the oversight of quality 
controls to Federal Highways.
    And the other issue that we identified was with respect to 
property controls. There was about $500,000 of property that 
they were not aware of. FHWA has since hired a property manager 
to better control the materials on that project.
    Clearly if there is going to be any success on Central 
Artery, it has to come out of that financial control system 
that we jointly looked at, that John was involved in putting 
together last year. And I think GAO is really the one that 
needs to address that, because you asked them to do a review. 
We had anticipated doing one, and because of your request, we 
left it to GAO.
    Mr. Wolf. Over the past several years your office presented 
three options for controlling costs on the Central Artery. A 
combined cap on the federal funding and a reduced federal 
participation rate has been recommended as the preferred 
method. Has your opinion on the need for a cap or reduced 
federal participation rate changed over the past year?
    Mr. DeCarli. No, I think we would stand by that.
    Mr. Wolf. In a December 1996 report, an audit revealed 
weaknesses in the project's quality of workmanship and said the 
Federal Highway Administration did not have assurances that 
construction and materials used in the project were in 
accordance with project specifications. In that report, you 
suggested that these weaknesses have the potential to escalate 
into larger problems as construction proceeds over the next 
several years. What actions has the Federal Highway 
Administration taken in response to your findings, and are you 
satisfied that FHWA management controls and oversight are now 
sufficient to provide effective oversight?
    [The information follows:]

    FHWA plans to strengthen its oversight of project testing 
procedures by identifying appropriate follow-on review 
activities and strategies as part of the Massachusetts 
Division's FY 1997 work plan. In addition, FHWA will set up 
periodic materials monitoring coordination meetings with the 
Massachusetts Highway Department (MHD) and the project 
consultant as a mechanism to improve overall materials 
management. Also, FHWA is increasing its vigilance and 
oversight in monitoring the quality of construction materials 
on the project's contract for Federal-aid participation. MHD 
has rewritten a portion of the Project Materials Manual and 
Resident Engineers' Manual strengthening the language relevant 
to project testing procedures and regulations. We intend to 
follow up on the corrective actions taken in response to our 
audit to determine whether FHWA's actions are sufficient to 
provide effective oversight.

                     central artery financial plan

    Mr. Wolf. The Federal Highway Administration now requires 
an annual update of the project's finance plan on October 1 of 
each year until the project is completed. What has your review 
of the financial plan revealed, and how reliable is the 
financial data reported?
    [The information follows:]

    In October 1996, at the request of the Chairman, 
Subcommittee on Transportation, House Committee on 
Appropriations, the General Accounting Office (GAO) began a 
review of the project. The objectives of the review are to 
determine the progress the project has made in achieving its 
cost containment goals and Massachusetts' current plans for 
financing the project. The review also includes evaluation of 
the financial data reported. GAO's Resources, Community, and 
Economic Development Division, under John H. Anderson, is 
performing the review, which is expected to be completed in 
June 1997.

                central artery oversight staffing levels

    Mr. Wolf. The Federal Highway Administration's oversight of 
the Central Artery project amounted to more than 20.25 staff 
years in 1995. In your opinion, are these staffing levels 
sufficient to provide adequate oversight?
    [The information follows:]

    In 1993 we initiated a series of briefings, time-phased 
audits, and management advisory memoranda addressing FHWA 
oversight of the project, funding for the project, and other 
concerns. At that time, FHWA had assigned a full-time staff of 
only nine employees to monitor the project. The current number 
of staff years is a significant increase and reflects 
additional FHWA resources necessary to oversee the work of the 
Massachusetts Highway Department, the project consultant, and 
the contractors involved in the project's design, planning, and 
construction. With the right mindset and focus, FHWA can 
continue to improve its oversight as work progresses further 
into the construction phase and towards completion of the 
project.

                      los angeles metro oversight

    Mr. Wolf. Last year we had a long discussion with the IG 
about the status of construction for the L.A. Metro. Can you 
update us on the construction status today?
    Mr. DeCarli. We have not done a lot more work on the 
construction status of the project. Our effort since last year 
has been in looking at FTA's project management oversight 
contract. Congress gave FTA the ability to use one-half of one 
percent of their grant funds to hire a contractor to oversee 
major projects. This goes back a number of years. FTA has had a 
contractor out there overseeing the project from the beginning. 
Initially the question was if you have such a good oversight 
contractor out there, why didn't that contractor identify the 
problems and why did you end up with the problems in the pumps.
    When we looked at that the first time, years ago, we 
concluded that the contractor was operating with two hands tied 
behind his back and that the contractor, according to FTA, 
could only look at those documents that either the MTA brought 
through the door or that the construction people brought 
through the door. The contractor was not allowed to go out into 
the tunnels and do his own independent testing, smell the dirt, 
look at the construction. He was absolutely prohibited from 
doing that, so he had very little to look at other than paper.
    We had that issue ongoing with FTA in resolution for 
probably a three-year period. And it wasn't until Gordon Linton 
arrived that it was finally resolved. And to Gordon's credit, 
he did agree with us and he directed FTA to strengthen their 
project management oversight contracts to provide for their 
contractors to go in, actually do independent testing, and look 
at more than the paper that came through the door.

                   los angeles metro tunnel problems

    Mr. Wolf. Do you have any comments on the fact that the 
Army Corps of Engineers concluded last year that the tunnel for 
the project might start deteriorating within 15 years, instead 
of the design life of 100 years?
    Mr. DeCarli. Yes, that was in the early part of the 
construction before FTA had a good project management 
contractor on site. The point is that it is going to take good 
quality maintenance to prevent that kind of deterioration. We 
presented that report to FTA and FTA got a reply from the City 
of Los Angeles which said they were actually going to perform 
that high level of maintenance. It is problematic as to whether 
that will actually occur. They are looking for funds as to 
where they are going to build the next mile as opposed to how 
they are going to maintain what they currently have. So that is 
a hard one to talk about.
    But to finish up the PMOC, we are pleased to report that 
when we looked at the PMOC now in Los Angeles, it is in fact 
strengthened. They have hired more people. The people that they 
have hired are down in the tunnels as opposed to sitting up in 
the trailers looking at the paper. So there is a strengthened 
process for project management oversight at Los Angeles.
    Mr. Wolf. They are still having problems, though.
    Mr. DeCarli. Any time you are doing tunneling, you are 
going to have problems. I have no doubt they are having funding 
problems.
    Mr. Wolf. Funding problems.
    Mr. DeCarli. Trying to decide whether or not they can 
afford to build the bus lanes that are required by the courts 
or how far to go with the metro system.

                   l.a. metro/l.a. airport diversion

    Mr. Wolf. Should the Congress divert money from the L.A. 
Metro in the same ratio that it was diverted with regard to the 
L.A. airport?
    Ms. Fleischman. I am sure Congress can make up its own 
mind.
    Mr. Wolf. No, I just wondered if you think that is a form 
of sanction, if you will, that would----
    Ms. Fleischman. I will tell you it is like a little 
parable, in a sense. Last year Congress put in the conference 
report that FTA would not be able to provide the first part of 
their grant to the L.A. Metro Transit Authority for this 
construction if the IG's office did not certify that there had 
been no illegal revenue diversion after the date of passage of 
that Appropriation Act. We just finished that report and have 
provided the audit to Mr. Linton and to the Acting 
Administrator of FAA on Friday.
    I have to tell you that we did find prohibited revenue 
diversion. So I guess my parable is, we tried that, and whether 
or not the money goes, I don't know. But it didn't seem to 
inhibit the city from taking money from the airport. So I don't 
know if we reversed it, whether that would work either. I can 
appreciate your quandary as to what to do. I have to admit in 
the months that I have looked at this and learned about this, I 
would go around shaking my head frequently. It is so unusual, 
it seems to me.

                           transit bus safety

    Mr. Wolf. Okay, we will have some other questions, and we 
will have one on transit bus safety.
    NHTSA has elaborate programs to ensure that motor vehicle 
manufacturers meet the federal motor vehicle safety standards. 
However, you found in an audit last year that the Federal 
Transit Administration was not ensuring that transit 
authorities buying buses with federal funds meet these same 
safety standards. I think those people who get on a city bus 
should have the same assurance of the vehicle's inherent safety 
as someone buying a new car. Should Congress take action to 
help FTA in this area?
    [The information follows:]

    Congress enacted the Surface Transportation and Uniform 
Relocation Assistance Act of 1987 (STURAA) which directed the 
Secretary of Transportation to require pre-award and post-
delivery audits on buses purchased after October 24, 1991. The 
pre-award requirement is intended to help grantee recipients 
ensure bus procurements meet Buy American regulations, grantee 
specifications, and federal motor vehicle safety standards. 
Post-delivery audits are to help the grantee ensure delivered 
buses meet grantee bid specifications and federal motor vehicle 
safety standards and must be completed before the grantee takes 
title to the bus.
    The Secretary delegated to FTA the responsibility for 
issuing regulations to implement the STURAA requirements. FTA 
published the implementing requirements in title 49, code of 
federal regulations, part 663. For compliance with federal 
motor vehicle safety standards, FTA only requires the grantee 
to obtain self-certifications from the manufacturer that 
federally-funded buses comply with the standards. FTA does not 
require the grantee to conduct an independent review of the 
documentation supporting the manufacturer self-certifications. 
In contrast, STURAA provides, ``For the purpose of assuring 
compliance with Federal motor vehicle safety requirements . . . 
manufacturer certification shall not be sufficient, and 
independent inspections and auditing shall be required.'' 
[italic added for emphasis.]
    We determined, and FTA agreed, that the implementing 
regulation did not comply with the statutory requirements. 
Also, FTA stated that compliance with federal motor vehicle 
safety standards is NHTSA's responsibility.
    Subsequent to the issuance of our audit report, FTA 
proposed in Title IV--Federal Transit Act Amendments of 1997--
to delete the pre-award/post-delivery requirements. FTA stated 
the requirements were unnecessary and costly. In our opinion, 
Congress should not eliminate the requirement that DOT assure 
compliance with applicable safety standards.

                advanced technology transit bus funding

    Mr. Wolf. You had mentioned the advanced technology transit 
bus (ATTB). We will ask that for the record in light of the 
time.
    Should Congress be providing more funding for this project 
before we have the assurances that it will meet the federal 
safety standards and be cost-effective for transit agencies to 
buy?
    Ms. Fleischman. I think that for any money that Congress 
might provide for this project or any other one, Congress must 
have, absolutely should have, assurances that these buses will 
meet the safety standards that are applicable to them. I can't 
imagine that we wouldn't.

                 advanced technology transit bus safety

    Mr. Wolf. Three months ago you issued an audit of FTA's 
Advanced Technology Transit Bus. You concluded that, 
notwithstanding the high cost of this development project 
($37.3 million thus far), FTA could not show the ATTB would be 
a more cost-effective or safer bus than those on the roads 
today.
    You noted that testing for compliance with federal motor 
vehicle safety standards will begin in March 1997, but the 
contractor could not provide a date for completing all the 
safety tests. You believed FTA should not deploy prototype ATTB 
buses on our city streets until the agency ensures the bus 
design meets all applicable federal safety requirements. Is it 
FTA's current plan to defer fielding of the prototypes until 
this concern is addressed?
    [The information follows:]

    Yes. On January 17, 1997, FTA instructed the grantee to 
require the ATTB prime contractor to ensure prototype buses 
will be in compliance with all federal safety requirements, 
including Federal Motor Vehicle Safety Standards, prior to the 
initiation of field testing.

                 advanced technology transit bus costs

    Mr. Wolf. Even though the ATTB would cost more to buy than 
ordinary buses, the project's goal is to convince transit 
authorities that those costs are more than offset by lower 
operating costs through the vehicle's life cycle. Your audit 
raises questions about the adequacy of the life-cycle cost 
estimates for the ATTB, which therefore raises a question about 
the viability of the entire project. Would you tell us what you 
found, and describe what FTA has done to address the issue?
    [The information follows:]

    We found that neither FTA, the grantee, nor the contractor 
completed comprehensive life-cycle cost analyses for the ATTB 
program. FTA's assurances to Congress that the anticipated 
reduced life-cycle costs from operating the ATTB will offset 
the higher capital investment needed to procure the ATTB were 
based on cost data limited to fuel and brakes. FTA maintained 
that over $500,000 a year would be saved in fuel costs and 
$270,000 a year for replacement brakes on a fleet of 150 ATTBs. 
While the $500,000 savings was adequately supported by 
contractor tests, a computer simulation model and industry 
data, we could not evaluate the reported cost savings of 
$270,000 for brake replacement because there was no supporting 
documentation.
    Subsequent to our report, the grantee included a contract 
provision that requires the contractor to manage and support 
the life-cycle cost analysis program. However, FTA has not 
provided us with a date when a comprehensive life-cycle 
analysis will be completed.

                          fra safety oversight

    Mr. Wolf. With regard to FRA, between 1990 and 1991 the 
Federal Railroad Administration was the subject of several 
highly critical GAO reports on their rail safety oversight 
program. These reports showed an agency lax in its inspection 
practices and reluctant to pursue hard enforcement actions. In 
response, the agency began developing new inspection and 
enforcement practices. However, in an audit a few months ago, 
you found the same old problems at FRA. The agency did not 
conduct follow-up inspections. They did not require railroads 
to fix the problems, and they did not use their civil penalty 
powers as an effective deterrent to future safety violations. 
Why were these safety problems still occurring and what has FRA 
done since your audit to change the situation?
    Ms. Fleischman. FRA has done a number of things. We have 
talked about the audit results at length with senior management 
officials in FRA. They take the position that many of these 
problems, indeed all of these problems, in their view, will be 
addressed by their new program, which is in effect. And I may 
not have the exact right title here, but it is the safety 
partnership with the railroads.
    Mr. Wolf. The GAO expressed some concern about that.
    Ms. Fleischman. Yes, well, we are hopeful that FRA is 
right, that this will solve many of their problems with regard 
to safety inspections and enforcement of safety requirements on 
the nation's railroads. And we have indeed promised the 
administrator of the Federal Railroad Administration that we 
will go in and audit toward the end of this fiscal year to 
determine whether or not this partnership initiative is 
resulting in enhanced safety inspections and safety practices 
by the railroads and the employees of said railroads.
    Mr. Wolf. Will we know the results by accidents?
    Ms. Fleischman. I hope that that is not the case. I am 
hopeful that what we will find when we go out there is that 
people will have decided that yes, indeed, it is better to, if 
you are going to inspect a railroad car, to look at both sides 
of the railroad car, not just one.
    Mr. Wolf. If there is an accident, will you be able to go 
out--could I ask you that if there is, and will you pray to the 
Good Lord that there isn't, but if there is one that you go out 
and see if that was involved in this process whereby it made 
any difference?
    Ms. Fleischman. I don't know that we have people who are 
proficient as accident investigators. I would assume that the 
National Transportation Safety Board would investigate such an 
accident if, as you say, God forbid, it should occur.
    Mr. DeCarli. We could do some work. Clearly the 
investigation of the accident falls under NTSB and they will be 
looking at the cause of the accident. What we could do under 
that kind of circumstance is take a look at what kind of 
oversight FTA provided that railroad. That would fall within 
our capabilities.
    Mr. Wolf. If, and we hope that this is not a situation that 
you even have to participate in, but should it happen, and we 
hope it doesn't, if you would do that.
    Mr. DeCarli. We could take a look at when FTA last reviewed 
that railroad, what types of inspections were done, what kind 
of inspection program they are currently using with that 
railroad, what kinds of problems they had, and what kind of 
follow-up systems there were. Basically, the types of issues 
that we addressed in that prior report could be looked at with 
respect to that specific railroad.

                  safety regulation enforcement in DOT

    Mr. Wolf. From your audits, it appears almost all the modes 
are negligent in firmly enforcing their safety regulations--
FAA, FTA, the Coast Guard, and now FRA as well. There seems to 
be a common thread in these audits--DOT's regulatory agencies 
go soft on safety violators, even in those cases where they 
have vigorous enforcement powers. Why do we see these systemic 
problems all across the department?
    [The information follows:]

    The perception by DOT safety inspectors, be it real or 
imagined, that senior departmental and operating administration 
personnel did not support rigorous enforcement actions was 
probably the single consistent reason why DOT has not 
frequently used the enforcement powers it has. We encourage the 
new Secretary to reemphasize the importance of transportation 
safety and to pronounce his support for enforcement actions 
when other avenues fail to result in compliance with safety 
regulations.

                         fra safety inspectors

    Mr. Wolf. You found that FRA inspectors hardly ever 
reviewed the railroad's own inspection files before, during, or 
even after inspections, even when serious safety defects were 
discovered during the inspection. They did not review company 
records to determine the quality of rail safety inspectors 
hired by the railroads, even though this group is the ``first 
line of defense'' in railroad safety, and there is a federal 
regulation requiring all such inspectors to have appropriate 
training and credentials. Why wasn't FRA engaging in these 
inspections? Do they have the time to do so?
    [The information follows:]

    FRA does not believe safety would be enhanced by requiring 
its inspectors to review railroad inspection records in 
conjunction with FRA inspections, except in some unusual 
circumstances. Also, FRA does not believe it would be 
productive to review the records of designation of railroad 
inspection personnel, unless there is a question on their 
qualifications. FRA's review of railroad inspection records has 
been infrequent and superficial. According to FRA management 
reports, inspectors spend less than 1 percent of their 
inspection time reviewing company records.
    As pointed out in our recent report on FRA's railroad 
safety program, records inspection can be a valuable source of 
information to assist FRA inspectors in determining (1) the 
railroad's level of compliance with Federal safety standards, 
(2) the quality of the railroad's inspections, and (3) the 
adequacy of remedial or corrective action taken to comply with 
Federal safety standards. In our opinion, inspectors could have 
reprioritized their work to allow time for records reviews.
    Under the new safety assurance and compliance program, FRA 
has procedures for the comprehensive, systematic review of 
inspection records and other relevant data. We plan to conduct 
an audit of FRA's safety assurance and compliance program in 
the last quarter of FY 1997.

                      fra safety oversight program

    Mr. Wolf. It seems from your audit there is a general 
sloppiness in FRA's safety oversight program. They don't check 
bad railroads often enough, and when they do, if they find 
something, they don't follow up. They don't pursue penalties 
because it is too much trouble. Would you agree with this 
assessment?
    [The information follows:]

    Yes. FRA's new safety assurance and compliance program 
provides an opportunity for significant improvements.

    Mr. Wolf. In such a climate, doesn't industry get the 
message that there is a good chance they can get away with 
safety violations?
    [The information follows:]

    You are absolutely correct. The railroads industry has been 
getting away with defects and violations for a very long time. 
In our report on FRA's railroad safety program, we identified 
patterns of repeat violations at the same railroad facilities 
continuing over a number of years.

               fra's safety assurance compliance program

    Mr. Wolf. What is FRA's new safety assurance compliance 
program, and how effective do you believe it will be in 
addressing the problems you discovered?
    [The information follows:]

    The Safety Assurance and Compliance Program (SACP) is FRA's 
partnership initiative in the area of safety enforcement. The 
approach is based on the notion that the combined expertise of 
rail labor, management, and FRA can analyze railroad safety 
problems and devise workable solutions, more effectively that 
entities acting unilaterally. Under the SACP, FRA conducts 
system-wide railroad safety assessment through coordinated 
multi-discipline team inspections. Serious or systemic safety 
concerns are presented to senior level railroad officials who 
respond with remedial action plans. FRA will then monitor the 
action plans to determine whether they effectively address the 
safety concerns.
    FRA should be commended for its partnering initiatives. 
However, the partners must not forget their collective 
customers; passengers riding trains, and people living and 
working along railroad tracks. The desire to achieve a 
harmonious partnership should not come at the expense of the 
customer, when an partner fails to live up to partnership 
goals. The success of FRA's SACP is still dependent on:
    Regular inspections as a critical source of safety 
information; including identifying systemic problems and 
targeting high-risk areas for safety audits.
    The skill levels of the inspectors conducting the safety 
audits.
    More severe enforcement actions, including larger civil 
penalties against railroads which (1) continue to be in 
noncompliance with Federal safety standards, and (2) refuse to 
cooperate in achieving partership goals.
    As part of our commitment to a safer transportation system, 
the OIG plans to initiate an audit of FRA's SACP during the 
fourth quarter of FY 1997. Once we have completed this audit 
effort, we will be in a position to address the effectiveness 
of the SACP.

                   penn station/farley project costs

    Mr. Wolf. Last year the IG told us the $315 million cost 
estimate for the Penn Station Project in New York City was 
completely unreliable. Then they added, ``I think at this time 
the most correct thing that can be said about how much the 
Farley Building is going to cost is that nobody knows. It is an 
open-ended figure''. Is a more reliable estimate available 
today? Clearly it must be. A year has gone by to resolve these 
things. Is there a more reliable figure?
    Ms. Fleischman. Well, I don't know how reliable it is. We 
understand that there is a revised cost estimate; however, that 
estimate has not been released yet. The Penn Station 
Redevelopment Corporation wants to present the revised 
estimate, presumably a better analysis of cost, to its board of 
directors before it releases it. Obviously they will want to 
discuss the revised cost estimate and the various options on 
how they are going to proceed with that project. What we 
understand is that this cost estimate is anticipated to be 
between 455 million and 525 million dollars, which strikes me 
as a lot of money as a difference, but be that as it may, that 
is where we understand that they are right now.
    Mr. Wolf. What would you recommend that the Congress do 
with regard to that?
    Mr. DeCarli. Well, the situation was----
    Mr. Wolf. What would you recommend to the Department if not 
to the Congress?
    Mr. DeCarli. The original plan was that this was going to 
be a $315 million investment, that $100 million would be 
federal funds and the rest of the funding would be provided by 
the state, city and the users of the facility. You have already 
put on the table $78 million, I believe. And what they are 
asking for is the remainder to make up the $100 million. At 
that point in time the only one who will have come to the table 
with any money will be the federal government. The other 
participants have not put up any money and may not when they 
see the revised estimate.
    Mr. Wolf. So what will happen?
    Mr. DeCarli. I would think if you want to protect the 
federal interest and make sure that the taxpayers are getting 
something of value, you need to continue to put a requirement 
on the Department that these funds be used for safety-related 
projects.
    Mr. Wolf. We have done that.
    Mr. DeCarli. You have. There is plenty of work on safety-
related projects. There is about a $300 million backlog in 
safety-related projects that could be funded.
    Mr. Wolf. The federal exposure stops at $100 million.
    Mr. DeCarli. That is correct, but you could require that 
$100 million fund safety-related work as opposed to making this 
grand stained glass for the Farley Building, ensuring that the 
money goes into needed safety work.
    Mr. Wolf. Have you had an opportunity to look at the 
federal expenditures to date to see if they have gone towards 
safety?
    Mr. DeCarli. Yes.
    Mr. Wolf. And are you confident that they all have?
    Mr. DeCarli. Yes. There was $8.8 million that went into 
designing an environmental assessment, which was appropriate, 
and then there was $12.9 million spent so far on safety related 
projects. The rest has not been encumbered.
    Mr. Wolf. What do you think is going to happen here? How 
are they going to afford this? The city has put up how much, $8 
million?
    Mr. DeCarli. The only one that has put up any money is the 
federal government, to our knowledge.
    Mr. Wolf. I thought the city had committed eight.
    Mr. DeCarli. They may have committed, but I don't think 
there is any money on the table except for yours.
    Mr. Wolf. That is yours.
    Mr. DeCarli. I know. You are absolutely right. The concern 
we raised last time was with Amtrak's financial situation and 
whether or not they would be able to come up with their part of 
the money.
    Mr. Wolf. I don't think they are going to be able----
    Mr. DeCarli. To be able to fund it, afford this project.
    Mr. Wolf. That is up to Mr. Downs to talk about, but I 
think you are right. That is going to be very tough when you 
look at the----
    Mr. DeCarli. You are looking at a project that may be $450 
to $525 million dollars and they are not going to do that 
without an investment beyond $100 million from the federal 
government. They are clearly going to ask for more federal 
money if it goes to that level.

                     current penn station capacity

    Mr. Wolf. The IG's office was of the opinion that there is 
just not much rail traffic that could not be handled from the 
current Penn Station. Mr. DeCarli said ``the Long Island 
Railroad and New Jersey Transit really don't benefit from this 
thing, although they are 93 percent of the passengers.'' Is 
that still your view?
    [The information follows:]

    Yes. While Amtrak and the commuter railroads that use Penn 
Station could benefit from additional space gained by Amtrak's 
expansion to the Farley Building, the increased passager growth 
may be accommodated within the existing Penn Station. According 
to LIRR officials, the projected growth in passenger traffic 
could be handled within their existing facilities at Penn 
Station. NJTC officials stated their projected passenger growth 
could be accommodated with the existing Penn Station by 
creating a central concourse and extending the existing west 
end concourse with additional egress. In addition, as of 
January 1996, the railroads invested or planned to invest about 
$817 million at Penn Station to address passenger capacity and 
safety issues. For example, the LIRR spent $190 million to 
completely renovate its Penn Station facilities, including 
climate-control, signage, and improved platform access. NJTC 
also plans to build a $106 million ``station within a station'' 
by constructing an east end concourse at Penn Station, 
regardless of Armtrak's plans to proceed with the project.

                 non-federal funding of farley project

    Mr. Wolf. There is an expectation that non-federal sources 
will share in the cost of the Farley Building. Yet last year, 
the IG advised us that the city had committed about $8 million, 
and the rest of the non-federal share was ``very soft money.'' 
Has this situation changed today?
    [The information follows:]

    No. To date, only $9 million has been committed by the city 
and $16.25 million committed by the state. Of the total city 
and state share of $100 million, only about $500,000 has been 
expended, compared to $22.3 million in expenditures of Federal 
funds. During the 1997 Subcommittee hearings, Amtrak testified 
that its ability to raise its share of $85 million through 
private financing would be contingent upon how realistic the 
retail benefits of the project are, and that this will be 
looked at as part of the reestimation process. In addition, 
Amtrak still does not have a formal funding commitment for the 
$30 million from the U.S. Postal Service.

            penn station/farley project funding restrictions

    Mr. Wolf. The fiscal year 1998 budget includes an 
additional $23.4 million to continue the Farley Project. What 
restrictions would you suggest we put in place before we allow 
more federal funds to be obligated for this project?
    [The information follows:]

    In view of the $300 million in life safety improvements 
needed in Penn Station and its approaches, any additional 
federal funds obligated for the project should be restricted to 
safety repairs and life safety deficiencies.

                         senior official travel

    Mr. Wolf. Last year there was considerable discussion in 
the IG hearing about findings regarding the travel of senior 
officials in the department. Have you done any audit work over 
the past year to determine whether the situation has generally 
improved?
    Ms. Fleischman. I don't think that we have done any 
additional work. We have witnessed senior officials in the 
department reminding various operating administrations and 
other offices, to tell, to reiterate once again to their people 
that identification should be made when the travel request is 
made if you are going on actual as opposed to per diem expense. 
They have also been reminded that contractors or people in DOT 
who are making arrangements for conferences should seek to hold 
those conferences in places that are not excessively over the 
per diem rates and try to get the best deal that you possibly 
can.
    Mr. Wolf. Well, last year during the hearings, we were told 
by various administrators that they and their senior staff 
would place a special emphasis on reviewing travel to ensure it 
was well justified along the lines of what you were just 
saying. The problem is, the travel in question was by the very 
same people who would now be reviewing the justification for 
travel. Isn't it likely that if these people found no fault 
with these trips in the first instance, they would not change 
their opinion now? That was the tone last year.
    Ms. Fleischman. We have not gone back and done any----
    Mr. Wolf. I think you ought to go back and look at it in a 
quick way. I just don't think everyone has forgotten about it, 
and we haven't. I know it came up in the confirmation hearing, 
I think, of Secretary Slater. And I would like to ask you to go 
back and look at it. You did a lot of the original work. Just 
see if people are complying.
    Mr. DeCarli. I think if you look you will probably find 
that there are still a lot of department officials traveling. 
Whether or not it is justified is a very difficult judgment 
call. They are clearly going to things that are transportation 
related. There have been some changes. For example, last year 
if you looked at the Coast Guard and where they had their 
Admiral's meetings, you would have found that they had it on a 
very expensive facility in your part of the world----
    Mr. Wolf. My Congressional district.
    Mr. DeCarli [continuing]. Out at Westfield. This year 
rather than going there they went to Andrews Air Force Base.
    Mr. Wolf. Well, they are filing monthly audits. Why don't 
you just look at them, the monthly reports, and tell us what 
you think.
    Mr. DeCarli. Okay.
    Mr. Wolf. Under what conditions are DOT senior officials 
allowed to take travel paid for by lobbyists, non-profit 
organizations, or other non-governmental entities, and who 
approves such travel?
    [The information follows:]

    Government rules pertaining to acceptance of payments from 
a non-Federal source for travel expenses are in the Code of 
Federal Regulations (CFR), Chapter 41, Part 304-1. The CFR 
allows an agency to accept payment for employee and/or spousal 
travel provided approval is obtained in advance of the travel. 
Travel to and attendance at functions must relate to the 
employee's official duties and must be performed under an 
official travel authorization. Additionally, there must be no 
conflict-of-interest between the employee and the non-Federal 
source. The CFR also prescribes that the approval level should 
be at as high an administrative level as practical. Within the 
Department of Transportation, the Secretary, Deputy Secretary, 
Associate Deputy Secretary, General Counsel, Assistance 
Secretaries, Executive Secretariat, Inspector General, Deputy 
Financial Officer, and Administrators have been delegated this 
approval authority.

                          gregory may training

    Mr. Wolf. The last question concerns Gregory May training. 
Has that been eradicated from the FAA? Did they follow up with 
the individuals who had been harmed by it? You remember the air 
traffic controller who testified and the former employees who 
testified. What is the status of the Department's closing down 
on the Gregory May problem?
    Ms. Fleischman. Please, Mr. Zinser.
    Mr. Zinser. The Department banned Gregory May from 
training.
    Mr. Wolf. I know they banned him.
    Mr. Zinser. From 1993. He is now debarred governmentwide.
    Mr. Wolf. I know that, but there were the comments with 
regard to the air traffic controller who was, I think, looking 
for some assistance. There were some women who had been 
involved in it who were trying to get the attention of the FAA 
to help. Do you know about the status of dealing with the after 
effects of the Gregory May training?
    Mr. Zinser. What we have tracked are the actions that the 
Department has taken institutionally to deal with the training 
programs. We have not tracked the individual cases and we don't 
have any numbers regarding individual cases.
    Mr. Wolf. How about the individual people, though, that had 
the courage to come and testify? Do you know what they have 
done in those cases?
    Mr. Zinser. I don't know. I don't.
    Mr. Wolf. Could you look at it and let us know? Gregory May 
is out, though. Do you think the influence of that is out or do 
you think it is still present? Not the training course, the 
influence.
    Mr. Zinser. I think that it is still a very controversial 
issue at the FAA. I think that the influence for the most part 
is out, because many of the senior officials who were 
responsible for promoting the training have left the agency.
    Mr. Wolf. Many just were retired though, not with any 
punishment involved or----
    Mr. Zinser. I think in the end there were more resignations 
and retirements than there were removals. I think there were 
two removals from the Senior Executive Service.
    Mr. Wolf. Do you think the Department did a good job in how 
it policed that or do you think it could have done a better 
job?
    Mr. Zinser. I don't know that the actions that the 
Department took, primarily the FAA with respect to disciplinary 
actions in the training issue, were much different than the 
disciplinary actions taken overall. In that respect, I was not 
too surprised with the actions taken. There is just not a lot 
of interest on the part of managers, and it goes back to the 
accountability issue, of using the disciplinary system the way 
they should.
    Mr. Wolf. Okay. Well, thank you very much for your 
testimony. We appreciate it very much, and we will submit the 
other questions in writing. And if you could get back to us as 
quickly as possible, we would appreciate it very much.
    Ms. Fleischman. I promise you.
    Mr. Wolf. Thank you.

[Pages 54 - 134--The official Committee record contains additional material here.]


                                         Wednesday, March 12, 1997.

                       UNITED STATES COAST GUARD

                                WITNESS

ADMIRAL ROBERT E. KRAMEK, COMMANDANT, U.S. COAST GUARD

                          Introductory Remarks

    Mr. Wolf. Good morning, Admiral. This morning, the 
subcommittee welcomes the Commandant of the Coast Guard, 
Admiral Bob Kramek. Admiral, we appreciate your presence before 
the Subcommittee once again, and we appreciate all the hard 
work done by the Coast Guard to keep our shores clean and safe 
and protect the boating public over the past year. We look 
forward to discussing the Coast Guard's $3,900,000,000 
appropriation request for fiscal year 1998.
    Let me say at the outset that the Coast Guard has done an 
outstanding job at downsizing its workforce and consolidating 
its facilities over the past few years under your direction. We 
will be asking a few questions to determine whether or not 
there are other streamlining opportunities in the Coast Guard, 
and I know you have studied this extensively, but I want you to 
know that we appreciate all you have done so far in 
streamlining.
    I should also point out that we will not be covering all 
the Coast Guard mission areas today because the budget 
increases in many areas are small or frankly, nonexistent. 
Instead, we will be focusing the questions mainly on drug 
interdiction activities, for which you are requesting a 
significant budget increase.
    As you know, I have been skeptical of the magnitude of our 
drug interdiction efforts in the past relative to drug 
treatment or prevention activities, so we will explore this 
area more fully today.
    We welcome you and your staff. Also, I wanted to say so the 
record is clear, a couple years ago when we first developed 
this relationship, there were some problems I had and I made 
them clear to you. We have had a couple of differences which I 
think have been pretty much resolved.
    I do have some problems on the drug interdiction effort, 
but I just wanted to make sure you know that I think you and 
your people are doing an outstanding job. While there may be 
differences on drug interdiction because of the rocky start 
that we had at the beginning--you remember the time that I 
thought some Coast Guard people were up here lobbying? Without 
going into all the problems, I just want to say for the record 
that I do appreciate the good job you personally are doing and 
your people are doing, and we will just argue the drug 
interdiction thing back and forth and see where we come out, 
but I do appreciate what you have done and I thank you, and I 
particularly thank your people.
    Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman. I simply want to welcome 
you again. I look forward to your testimony.
    Admiral Kramek. Thank you.
    Mr. Wolf. Your full statement will appear in the record as 
read.

                           opening statement

    Admiral Kramek. Thank you, Mr. Chairman. I will present the 
written statement and testimony for the record and make a short 
oral statement, if I may, before we start on questions.
    Mr. Wolf. Certainly.
    Admiral Kramek. I look forward to testifying before you 
today to discuss what the Coast Guard does with emphasis on the 
war on drugs, and we certainly should cover that.
    I appreciate your kind comments about our performance. We 
believe that the Coast Guard gives great value to the American 
people. That is our goal and those are the customers that we 
serve.
    We are best known, of course, for saving their lives and 
protecting their property and keeping their waters safe and 
clean, but also for preserving living marine resources, our 
fisheries mission--as well as the great sanctuaries of the 
United States, and we stop drugs and migrants and maritime 
pollution, and we have had a lot of activity this year in that 
area.
    We are also a member of the armed forces, as you well know, 
one of the five members of the armed forces and we work jointly 
together with the Department of Defense. At times of downsizing 
the armed forces, when there is less of a global threat and the 
United States moves into a national security environment which 
involves operations other than war--peacekeeping, limited 
intensity conflict--there is a large demand for Coast Guard 
resources which we have met with support from the Department of 
Defense and support from your committee as well, sir. Those are 
the types of things that we do in training other nations to be 
Coast Guards rather than armed navies that we would have 
conflict with.
    We are always ready to respond. In fact, we are perhaps 
best noted for our responsiveness. When we are called, we get 
out there real fast to help people. We are also good stewards 
of the taxpayers' purse, and I thank you for your comments on 
streamlining. I would say the streamlining package was put 
together with the help of members of your staff and my Senate 
appropriations staff a few years ago who were able to sit down 
with me and show me how to put together a four-year plan that 
would be successful and that we could all share in streamlining 
the Coast Guard and managing our base. This year's budget is 
the last year of that particular plan, so I want to compliment 
your staff on the input that they have had to that.

                            twa 800 response

    In our responsiveness this year, Mr. Chairman, we all 
recall TWA 800. That still hasn't been solved yet, but you will 
recall that the Coast Guard was there within 18 minutes taking 
care of and searching for survivors, but all we found were 
victims. We had hundreds of Coast Guard personnel. The Coast 
Guard Reserve reported in within acouple hours voluntarily. We 
didn't even call them. The Coast Guard Auxiliary was there, our entire 
team. We continued to work that for months at a time.
    I had just been to that station before the crash, about a 
month before, to give them a meritorious service medal for the 
service they made to the people of eastern Long Island. The day 
I was there was a Sunday afternoon. There were about 60 people 
there, and I gave them the award.
    Three weeks later, I was back early in the morning before 
sunrise on the evening of the crash. There were 3,000 people at 
Moriches. Over 1,000 of them were national media people 
covering that particular incident.
    The Coast Guard responsiveness was one thing, but 
certainly, our concern was really for the victims and the 
families of the victims, and we spent a lot of time with the 
families in Moriches including an awards ceremony where the 
Secretary and I recognized many of the people who assisted in 
the search and recovery operations. I know you have gone up 
there and traveled to that site as well.

                             responsiveness

    We have demonstrated our responsiveness in Hurricanes 
Bertha and Fran; in the jungles of Peru, Colombia, Venezuela 
training riverine forces in the war on drugs. Our aircraft are 
stationed out of Panama to assist in destructing the air bridge 
between Peru and Colombia.
    We are breaking ice on the Great Lakes now in readiness of 
opening up the season. This last year, we assisted over 650 
vessels that were stuck in the ice thereby preventing commerce 
from proceeding very efficiently in the Great Lakes.
    We have responded to a few absolutely major oil spills 
mostly due to personnel error. There is no such thing as a good 
oil spill or environmental pollution, but the governors of 
Rhode Island and Maine complimented the Coast Guard and the 
Secretary for being responsive, because really what we did was 
we took the tools that this Committee and others gave us with 
the Oil Pollution Act of 1990, exercised them, and we were 
ready to respond.
    I would hope by the year 2015 that we won't have to respond 
any more to those type of disasters. Rather, our efforts in 
preventing those accidents from happening with the new design 
of vessels, with the new training of mariners, and with the new 
waterways management systems that we will have, will ensure we 
are safe and protected from those spills ever occurring. That 
is the path that we are on, prevention, rather than having to 
pay for response.
    We are also helping to restore the competitiveness of the 
U.S. flag vessels in the maritime economy, Mr. Chairman. That 
is very, very important. The U.S. has over 45,000 miles of 
coastline, ports, waterways, rivers, and harbors, more than any 
other nation in the world. From a commerce standpoint, we are 
still considered an IMO nation; 95 percent of all of our 
imports and exports go and come by sea.
    Our ports, harbors, waterways, and the traffic systems we 
have that connect all this are an important part of the 
intermodal system of transportation in this country. Sometimes, 
we focus on what happens from our shoreline inward, and 
certainly, that is a big part of this committee's oversight.
    In recent years, I know we have drawn attention and you 
have drawn attention to connecting to our maritime highways of 
commerce as well. They are important for the amount of 
passengers, the amount of money they contribute to the economy, 
and they are our lifeline for trade and our lifeline to being 
globally competitive in the international economy.
    We are still responding to the great floods out in the 
Midwest. We have assisted and rescued over 600 people recently. 
The Coast Guard doesn't have helicopters along the great Ohio 
River system, but we sent them there from other areas to assist 
those municipalities along with a couple of hundred people and 
Team Coast Guard. Our active duty, our Reserve, and our 
auxiliary are out there assisting all those people in the 
Midwest that are suffering from the great floods that we just 
had.

                       reserve and the auxiliary

    We are also a quality organization. We serve our customers 
as a team. This Committee asked me to make sure that we fully 
employed the reserve and the auxiliary and our civilians along 
with our active duty in working together as a team. Mr. 
Chairman, that was essential to be able to keep up our service 
to the American people as we streamline the Coast Guard.
    We have gotten great legislation last year. The Auxiliary 
has been reauthorized--the first time since 1939--and can now 
perform other missions for the Coast Guard. We are now trying 
to employ them where we can get the most bang for the buck in 
assisting us in just about every mission area except law 
enforcement, which they are not allowed to do.
    We have integrated our reserve into our active duty force, 
trying to reduce their overhead instead of having special 
training facilities and special training organizations for 
them. If you were to go to a Coast Guard station like Port 
Angeles, and I was there just last week, the readiness 
officers, the Coast Guard reserve commander actually doing 
Coast Guard duties, contributing, learning valuable experiences 
so that if the reserve has to mobilize, they will be totally 
ready to do that.
    Besides a team, we are a family. You and I have talked 
before about what a close-knit group the Coasties are, and to 
me, their support is paramount. In this budget, we ask for 
support in housing. We ask for support for child development 
centers. We ask for parity with other members of the armed 
forces, and that is an important part of our budget.
    Sometimes, our people give their lives so that others may 
live. Two weeks ago, I had the sad occasion of traveling to an 
Indian reservation on the northwest coast of Washington called 
Quillayute River. There is Station Quillayute, a team of Coast 
Guard personnel with motor lifeboats. In their attempts to 
rescue two people in distress on a sailboat, three of the four 
members of that crew lost their lives. That boat rolled over 
three times in the surf before it crashed on the cliffs with 
the engines still running, and three of the four crewmen lost 
their lives. Their sacrifice was the ultimate sacrifice in that 
others may live.

                        Maritime Law Enforcement

    Maritime law enforcement--we are probably best known for 
the war on drugs, but Mr. Chairman, we spend an equal 
proportion of our budget for living marine resources and 
fisheries enforcement, and this year, we have interdicted over 
9,000 migrants, some along with the drug patrols that we have 
conducted.
    I know we are going to get into this very deeply during our 
conversation, but I would like in my oral statement to kind of 
put our drug law enforcement mission in perspective with 
respect to the total federal budget if I may.
    There is about $16,000,000,000 that the President is asking 
for to accomplish the National Drug Control Strategy which was 
rolled out in February at the White House. I had occasion to 
attend that rollout. It is a good plan. It is a ten-year 
strategy. There are going to be five-year budget plans that 
agencies are putting together now in order to accomplish this. 
It has been put together with, I feel, bipartisan input, and we 
need to work together to see what the realm of the possible is 
in being able to carry out this plan.
    But in the context of total funding, interdiction is what 
we will mostly be talking about today, and that is the major 
role for the Coast Guard. We are the lead maritime agency for 
interdiction of drugs in the transit zone coming to the United 
States on the surface of the water, and we are co-lead with 
Customs in the air. We have had that role since the mid-'80s.
    In fact, the Coast Guard has had the maritime role since 
1790 as the revenue cutter service. That was our job then. It 
was the same during prohibition which we used to call the rum 
war at sea. If you would read a book on the rum war at sea, it 
doesn't read much different than the drug war at sea does 
today. It is the same type of business in keeping things that 
don't belong in this country, whether they are illegal migrants 
or drugs out of this country so they don't harm our citizens.
    But in the context of the federal budget, interdiction 
represents ten percent of the total budget to carry out the 
National Drug Control Strategy. Of the $16,000,000,000, 
interdiction is about $1,600,000,000. That includes what I do, 
what Customs does, what other agencies do, what the Department 
of Defense does.
    In my budget this year, I am asking for a real increase, as 
you know, of about $34,000,000 in operating expenses (OE) to 
carry out my responsibilities in accordance with this plan. 
This is a large increase in OE, about 15 or 16 percent.
    However, in terms of my total budget of the $3,900,000,000 
that I am asking for, it represents an increase from 8.7 
percent of all my assets and resources which are spent in drug 
interdiction, if you will, to 9.7 percent, should you approve 
that request.
    It is still at about ten percent of our total budget. I 
spend most of my time testifying on that particular issue. I 
had a hearing on Monday before the House Government Reform and 
Oversight Committee, and on the third of April, I have been 
asked to testify before House Judiciary Committee on the same 
issues.
    In context, it is about ten percent of what we do, Mr. 
Chairman, but a very important national security issue for this 
Nation.

                            Budget Overview

    Our budget overview is simple, as you mentioned. It is 
current services, Mr. Chairman. About the same level of service 
we provided to the American public last year, we will provide 
this year.
    In 1997, we have reached a personnel level equal to what we 
had in the 1960s. We are healthy with that personnel level. 
Through quality management and the use of technology, our 
streamlining plan has been successful. By the end of this year, 
we will have eliminated 4,000 personnel in the Coast Guard 
through streamlining.
    We will have reduced our annual operating expenses by 
almost $400,000,000 a year, and I hope and my target is by the 
year 2002, the share of savings to the federal budget to 
contribute to reducing the deficit for the Coast Guard will 
equal $2,600,000,000. That is all from making better use of 
unused capacity, reducing overhead expenses, better use of 
technology, quality management, better use of the Auxiliary, 
better use of the Reserve, and many of the things that we have 
discussed before.
    I appreciate your compliment on that. I would only point 
out that the hardest part of doing this was our people. It was 
difficult on them.
    I will only use one example, one that you know quite a bit 
about and your staff knows quite a bit about. We are moving 
from Governors Island. I have been there several times 
recently. All of our families are off, the school is closed, 
the chapel is closed. The families are being relocated in 
Staten Island, in Charleston, in New Jersey, in New London, 
other places around the East Coast.
    We will save between $30,000,000 and $40,000,000 a year by 
doing that, and 500 people, but I changed the lives of 5,000 
people in the interim.
    The support that this Committee gave me in exit costs by 
being able to reprogram our AC&I budget last year was very, 
very helpful, and I would like to report to you that it was 
done with a minimum of duress. We had quite a few people lose 
their jobs, but we were able to relocate and re-employ through 
other places in government and business almost 70 percent of 
the people that were displaced, Mr. Chairman, and we worked 
very, very hard on that to take care of them.
    On our current services portion of our budget, the real 
increase is the $34,000,000 for drugs, and we will talk about 
that.

               Acquisition, Construction and Improvements

    I am also concerned about the acquisition, construction, 
and improvements portion of our budget. It requests 
$379,000,000. I would request that the committee approve that 
requested level, as close to it as possible. It is very, very 
important to continue our savings in the future.
    The new ships that we are buying, the new motor lifeboats 
that we are buying, the new systems that we are buying to 
manage our logistics and inventory, all of those are paid for 
out of that, and future savings depend on that investment.
    Also, we have some vessels that are over 50 years old, Mr. 
Chairman. We have an icebreaker on the Great Lakes that is over 
50 years old. We have buoy tenders that are over 50 years old. 
We have motor lifeboats that are over 30 years old, much as the 
one that just rolled over at Quillayute , and these are all 
scheduled for replacement.
    This is a really bare-bones AC&I budget. I requested much 
more. It is not available. We are all trying to reduce the 
deficit. I really need every penny of our requested level in 
order to have the minimum order quantities for vessels, for 
boats, for systems. This will only buy one or two major ships a 
year, and about ten patrol boats a year, about ten lifeboats a 
year. We need that as a minimum order quantity so that the 
shipyards and the facilities and the businesses that build 
these can give us a good price and stay on a learning curve, 
and it doesn't end up costing us more as we have less 
capitalization and recapitalization of our plan.
    Mr. Chairman, the real buying power of the Coast Guard has 
been reduced significantly in about the last seven or eight 
years, but the missions that the American public have given us 
to do are the same or even a little bit more. I feel with 
approval of this budget, I will be able to do my job.
    The men and women of the Coast Guard will be well 
supported. We will be able to respond and be semper paratus, 
and do all the missions that you ask of us, the President asks 
of us, and the American people have come to expect and deserve.
    Thank you very much for allowing me to make this statement 
and I am ready to answer any questions you or other 
distinguished members of the committee may have.
    [The prepared statement and biography of Admiral Robert 
Kramek and Budget in Brief follow:]

[Pages 142 - 197--The official Committee record contains additional material here.]


                          Morale and Readiness

    Mr. Wolf. Thank you very much, Admiral. We appreciate your 
testimony. You have been Commandant now for three years. With 
the downsizing, how is the morale and the readiness compared to 
what you thought it ought to be, and because of doing what you 
have done in the last three years?
    Admiral Kramek. I would say that the morale is very good. 
The major concern or alarm clock concern I would call it of all 
of our men and women is called ``the budget.'' They know that 
this country is trying to reduce the deficit and balance the 
budget. They know that they are a part of that. They are always 
unsure of how much more they are going to have to do, not have 
to do as far as work is concerned. They are working hard, but 
whether or not their jobs are secure.
    I have told them that their jobs are secure, that you 
approved the budget for the Coast Guard last year within one 
percent of what I asked for, and we were able to do all of the 
missions that were required of us. This budget pretty much 
repeats that.
    We are done now with the reductions in force, we are done 
with the force-outs of many people, and I think we are stable. 
They can start to see that.
    They like some of the streamlining moves we have made. They 
much prefer being in Charleston, South Carolina, and 
Portsmouth, Virginia, than Governors Island, New York, as an 
example. They are starting to get used to some of the 
efficiencies that we have put together with our quality 
management program.
    I have reassured them of that and all of my leadership has 
reassured them of that. We have one major goal left to 
accomplish.
    We redesigned the processes of a lot of things we do. We 
redesigned a lot of our operational organizations in the field 
to save money. We have empowered more of our employees where 
they have to make a decision, to make that decision themselves 
without having to go through a large bureaucratic oversight 
organization.
    They are still trying to do business the old way. We still 
need to work another year or two to train them in the new ways, 
to achieve 100 percent of those efficiencies, because what they 
are having you do now is work harder than they used to work 
before they were streamlined.
    When I go out there, they tell me they have to do more with 
less, and I said no, that is not what I want you to do. I want 
you to serve the American public working just as hard as you 
used to, not having to work harder. The men and women on our 
ships work an average work week of 80 hours a week. The people 
at our stations, their standard work week should be 68 hours a 
week. At Neah Bay, where I was last week at the Straits of Juan 
de Fuca, it was 82 hours a week, and I don't want them to work 
any harder than that.
    I want them to use the technology that our AC&I budget 
provides. I want them to use the streamlining organization that 
we have put together and their quality management systems to be 
able to reduce the amount of workload and still maintain 
service to the public.
    That is their biggest concern right now, and we are working 
on that and managing it, and I am sure we are going to be 
successful with it.

                     challenge for the next century

    Mr. Wolf. What is the biggest challenge for the next 
century for the Coast Guard?
    Admiral Kramek. For the next century, our challenge will be 
to maintain our responsiveness to the American public in a 
decreasing budget environment, to be able to adapt to a 
changing global economy.
    One of the issues for us will be waterways management. Last 
year, we had a lot of discussion about vessel traffic systems. 
Vessel traffic systems are one small part of waterways 
management, but as I mentioned in my opening statement, to be a 
leader in the global economy which is important for the 
leadership and power and the economics of the United States, we 
have to depend on our sea lanes and communications.
    Ships being built nowadays, Mr. Chairman, container ships, 
are going to carry 5,000 or 6,000 containers as an example. New 
cruise ships are being designed. Over 70 of them sail in our 
waters now. The new ones have 3,000 passengers on board. There 
is one on the drawing board now that is going to have 6,000 
passengers.
    These are mega-ships; our ports are not mega-ports. Our 
ports, our harbors, our safety systems, our inspection systems, 
our regulation of the Merchant Marine, all of these things that 
the Coast Guard is responsible for need to get in tune and the 
Coast Guard needs to provide the leadership so that part of our 
transportation system connects properly with our railroads, 
with our airports, with our highways, and all of the modes of 
transportation, because when it doesn't, in a place like 
Seattle, the trucks are backed up for miles and miles and 
miles. The containers come in and there is no place for them to 
go, and those delays will chase those container ships to places 
like Vancouver and British Columbia, and we will lose all of 
that trade.
    That is going to be one of our major challenges.

                     acquisition needs--long-range

    Mr. Wolf. Some people have suggested that the Coast Guard 
is facing block obsolescence in ships and aircraft, as you 
referred to today. Early in the next century, your large 
cutters and many helicopters will reach the end of their 
service life.
    You may have difficulty maintaining your current missions 
unless you get a large increase over today's acquisition budget 
of $350,000,000 to $400,000,000.
    Are you facing a wave of acquisition needs in the next few 
years that are all going to hit at one time?
    Admiral Kramek. I see that wave occurring in about the year 
2002, 2003, and that has to do with the obsolescence of our 
high endurance cutters and our medium endurance cutters, mainly 
the 378s and the 210-foot cutters and some of our aircraft.
    We put together an acquisition plan. We have already been 
through key decision point one with the department. There is 
money in this budget to start the concept exploration of that 
procurement.
    I have met with the Secretary as well as other members of 
Congress, especially in the Senate recently, because it is 
clear to me that after the turn of the century when we get into 
the procurement and replacement of these ships which will be 40 
to 50 years old at that time, that we will need different 
funding for those major assets outside of function 400, 
probably outside of function 50, and as you know, the 
Department of Defense helps us with some of our funding.
    Going back through the years when this nation needed new 
icebreakers and there was no money in transportation accounts 
or DOD to buy them, the Senate and the House appropriated 
special monies for procurement of some of the Coast Guard's 
replacement fleet.
    That was true with the 378-foot cutters years ago; it was 
true with the polar icebreakers which serve us in the Arctic 
and the Antarctic today.
    I have talked to the Secretary, and I have already alerted 
him that I see a potential procurement, over a ten-year period, 
a need for about $10,000,000,000, in order to recapitalize the 
Coast Guard's fleet of ships and planes.
    We will work together with the Administration and the 
Congress to come up with that acquisition plan after the turn 
of the century, and I think it will require special funding 
beyond what we have ever been appropriated before, Mr. 
Chairman.
    Mr. Wolf. If so, what are you doing to plan for the 
eventuality that your acquisition budget may not be increased 
to the level you need?
    [The information follows:]

    The Coast Guard has faced similar recapitalization 
challenges in previous years. In each case, the Coast Guard 
provided sufficient justification to the administration and 
Congress to support replacing assets that were essential to 
maintaining the Coast Guard's national security capabilities. 
For example, in fiscal year 1990, when the Coast Guard needed 
to replace its polar icebreaking capability and its aging 
patrol boats, Congress provided $847 million in Acquisition, 
Construction, and Improvements (AC&I) funding. Likewise, in 
fiscal years 1986 and 1987, when the Coast Guard needed to 
replace the HH-3F helicopter with the HH-60, and renovate the 
210-foot Medium Endurance Cutters, Congress provided AC&I 
funding at a level of about $550 million each year.
    In the next few years, the Coast Guard will face similar 
recapitalization needs as its long-range cutters and aircraft 
approach the end of their service lives. The Coast Guard 
expects to be able to provide sufficient justification to 
support Congress in finding funds for these national assets 
that serve such vital national interests as stopping the flow 
or illegal drugs (FRONTIER SHIELD); interdicting alien migrants 
(Haiti/Cuba); responding to national security crises (Cuban 
shootdown of U.S. civilian aircraft, TWA 800 disaster) and 
natural disasters (west coast flood relief); and responding to 
oil spills (Rhode Island).
    The Coast Guard intends to work with the administration and 
Congress to support funding for outyear investment in Coast 
Guard assets that serve the national interest.

    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman. The conference committee 
last year had requested a study on how one could make aircraft 
acquisition at a cheaper cost for the Coast Guard. I don't 
believe we have gotten that study, and I would simply request 
that the Coast Guard could respond by June 1 with an interim 
report on that study. I would appreciate it.
    Admiral Kramek. Fine. We will do that.

                     domestic icebreaking user fee

    Mr. Sabo. Let me ask another question. I understand that 
you assume certain revenues from icebreaking fees. Is that in 
your budget for this year or is it next year?
    Admiral Kramek. We have been asked--the budget this year 
from the Administration tasked the Coast Guard with coming up 
with a method and asking for legislation for user fees for 
icebreaking in the Great Lakes and the Northeast United States. 
That is something that we will have to develop.
    It doesn't offset any costs in this budget, but it is 
assumed that these fees could be in the magnitude of 
$25,000,000 a year and it would offset budgets in 1999.

                     great lakes icebreaking costs

    Mr. Sabo. Of your budget, how much do you spend on 
icebreaking services in the Great Lakes?
    Admiral Kramek. Probably about $15,000,000 a year.
    Mr. Sabo. And your budget is close to----
    Admiral Kramek. $4,000,000,000.
    Mr. Sabo [continuing]. $4,000,000,000.
    Admiral Kramek. $3,900,000,000. However, some of those 
ships there need to be recapitalized. The Mackinaw is over 50 
years old, as we know. I have just completed an icebreaking 
study that has been underway for over a year in the Great 
Lakes.
    There is no question that major icebreaking capability like 
we have today will be required for the next ten or fifteen 
years to assist the movement of iron ore, coal, and cement. I 
have met with industry up there. I have reviewed the study 
carefully. The question is, what is the mix of vessels that 
will be able to do that.
    We have icebreaking tugs there now. We have some new buoy 
tenders being built in Marinette. They are ice strengthened and 
they will contribute to that, but the Mackinaw will either need 
to be renovated or will need to be replaced, because it is 
World War II vintage.
    Those capital costs would probably be offset by user fees 
if in fact we can come up with a scheme for user fees that 
Congress will approve.

                      user fees for other services

    Mr. Sabo. What user fees do you impose in other parts of 
the country?
    Admiral Kramek. We have user fees for licensing, for 
inspection of passenger vessels, for inspection of cruise 
vessels, for those types of services. Those are the only user 
fees that we have.
    Mr. Sabo. What about beyond inspection fees for services 
provided?
    Admiral Kramek. We don't have any user fees for services 
provided unless it is a search-and-rescue case that really 
wasn't a valid case; somebody called us out on a hoax call or 
really didn't need assistance. Then those costs are charged 
back to the person.

                     icebreaking user fee inequity

    Mr. Sabo. I have to tell you that the folks in my part of 
the country see themselves as beneficiaries of a relatively 
small part of the Coast Guard budget in comparison to the rest 
of the country. I understand that some very vital services are 
provided throughout this country by the Coast Guard. Imposing 
fees simply on icebreaking may be viewed as being very 
discriminatory in a geographical sense, a unique service where 
it is cold.
    Other Coast Guard customers from warmer climates have 
different weather problems, and if we are going to impose fees 
for icebreaking, we probably need to do it for services related 
to hurricanes and other needs.
    There is substantial opposition to this proposal. If fees 
are imposed we think it needs to be done in a geographical, 
fair fashion rather than for a selective service that has 
significant impact on a very small part of the country or which 
benefits to a much lesser degree in total from Coast Guard 
services than other parts of the country.
    Mr. Chairman, I thank you.
    Mr. Wolf. Mr. Callahan.

                       coast guard budget request

    Mr. Callahan. Thank you, Mr. Chairman and Admiral. I live 
in a coastal area along with the chairman of our full 
committee, Bob Livingston, and I guess that our observation of 
the needs of the Coast Guard are a little different from some 
of the members of Congress from inland communities.
    Frankly, I am disappointed at your budget. I don't think it 
is enough.
    I guess one question I might have, and I don't think you 
being a good Coast Guard person could possibly come to Congress 
and recognize that you are not asking for a sufficient amount 
of money to maintain a viable Coast Guard from a new ship 
capability in the next ten years.
    Your limited amount of request for new ships is, in my 
opinion, insufficient. Were you pressured by the Secretary of 
Transportation to reduce what you thought were the true needs 
of the United States Coast Guard?
    Admiral Kramek. No, I wasn't pressured by the Secretary. We 
had budget caps we had to live within which, I guess, 
aresimilar to the Congress, but when targets are put out for the 
Administration, I have to try to live within those targets.
    Mr. Callahan. Do you really feel that this request, both 
operating and maintenance and new ships is sufficient for the 
long term financial integrity of the United States Coast Guard?
    Admiral Kramek. The AC&I budget is not. It is bare bones, 
and that is why I would ask this committee for approval of our 
AC&I request up to the amount requested, because it only allows 
us to buy the minimum quantity of ships and boats and systems 
that we need.
    Mr. Callahan. I understand that, Admiral, but we are 
looking at an agency that is going to be around long after you 
leave and long after I leave Congress, I hope, and I think that 
to continue to downsize, you have downsized 3,500, I think, in 
the last couple of years, members. You have downsized your 
operation. You are emphasizing more and more on becoming the 
meter maids of the environmental community. Twenty-five percent 
of your budget now, as I read it, is now either going towards 
marine and environmental protection or fish law enforcement, 
and your number one priority is search and rescue, aids to 
navigation, and defense readiness.
    Yet we see the Coast Guard being turned into the meter 
maids of the environmental community. If the United States of 
America and if this Congress wants you to enforce all of these 
environmental rules and regulations and laws, then they ought 
to provide you with additional money to do that rather than 
taking it out of the primary mission and purpose of the United 
States Coast Guard.
    Your mission primarily, is aid navigation, search and 
rescue, defense readiness, and yet, 25 percent of your budget 
request is to enforce environmental laws, both fish 
environmental laws and other environmental laws. I know you are 
a good soldier and I know that you have the best interests of 
the Coast Guard, but nevertheless, we are moving in the wrong 
direction, Admiral.
    We have to maintain a viable navigable safe system of 
transportation on the waterways of this country. You can't 
continue to cut back. I don't care what the Secretary put on 
you in the form of a quota.
    I don't know what the Congress is going to allocate to this 
Committee for appropriations, and I don't know what we are 
going to do. All I know is, as far as the Coast Guard is 
concerned, we are going in the wrong direction, because we are 
beginning to neglect the primary mission and concentrate our 
limited efforts on environmental problems.
    You had 13,000 boardings of fishing vessels last year in 
the Gulf of Mexico, I think, to check to see if there were any 
illegal fish on there, to check to see if there were proper 
TEDS on the shrimp nets, and yet your drug enforcement area is 
diminishing.
    Now, Customs is actually doing more in the drug, and maybe 
they should, in the drug enforcement, but drug enforcement 
should be a priority concern, not secondary to whether or not a 
shrimp boat might have a tab on it that is the proper size or 
operating properly, and I think it should be your charge as 
commandant of the United States Coast Guard to argue you to the 
Administration that things are going in the wrong direction.
    I don't mean a lack of good leadership, because I have a 
tremendous respect for you and your leadership abilities. You 
don't do everything like I think you should.
    For example, they moved a Coast Guard icebreaker out of 
Mobile. What are we going to do if Mobile Bay freezes over, but 
that was a decision of the Coast Guard and I respected that, 
and I certainly respect you and I respect the integrity and the 
professionalism of your people, and they are trying hard, and 
many of them live in my district in Mobile, and they are doing 
a great job. When that phone rings at night and we need search 
and rescue activity, it is a great security to have them there. 
They are very professional.
    I am not here chastising you personally, but I am telling 
you and the administration and this Committee that we are 
moving in the wrong direction, that we should recognize the 
priorities and the needs of the United States Coast Guard, and 
that we ought to fund aids to navigation. We ought to fund 
search and rescue. We ought to fund defense readiness. We ought 
to fund marine safety, but if we are going to utilize the Coast 
Guard, taking 25 percent of their resources to enforce 
environmental laws, we ought to give them the money to do it 
and not take it away from their operations, not taking it away 
from their long-term ability to have a viable fleet of ships 
that can run.
    I don't guess I am chastising you, Admiral. I know you are 
a good soldier, if Coast Guard will permit that, but I just 
want to tell you that I am going to do everything I can to 
increase this appropriation, and I am going to do everything I 
can to prioritize the use of the monies, to not let you 
downsize operation and maintenance activities, to not let you 
downsize drug interdiction, to not let you downsize the need or 
the monies to provide adequate ships and cutters for the 
future.
    I imagine I am going to run into a buzz saw with Mr. 
Chairman, because he is very meticulous and very professional, 
and he, too, has limited resources available to him, but if 
nothing else, Mr. Chairman, maybe we ought to begin to realize 
that it is time to earmark monies for the United States Coast 
Guard. We ought to earmark a designated percentage of the money 
to the basic needs and to the basic responsibility of the Coast 
Guard, and if this Congress is so concerned about environmental 
issues, let them send some more money over there, and we will 
give it to the Coast Guard to board fishing vessels in the Gulf 
of Mexico or any other place, and let them check the law to see 
whether or not they got too many red snapper.
    That is not the mission of the Coast Guard. The mission of 
the Coast Guard is to be there if that little boat gets in 
trouble, and yet we are spending 25 percent of our money, so if 
we want to spend 25 percent of our money on that, let us give 
it to them, but let us give it to them in addition to what we 
should be giving to them for operation and maintenance and 
providing for the future needs of the Coast Guard, Mr. 
Chairman.
    I know my five minutes is up, and I appreciate it. You 
don't even have to answer, Admiral.
    Admiral Kramek. Thank you.
    Mr. Wolf. Thank you, Mr. Callahan. We can take some of that 
Amtrak money.
    Mr. Callahan. That suits me.
    Mr. Wolf. Mr. Olver.

                   undocumented migrant interdiction

    Mr. Olver. Thank you, Mr. Chairman. Thank you, Admiral, for 
being with us today. I was going to engage in a colloquy with 
my colleague from Alabama there, but I was stunned that 
ultimately there was no real question at the end of that set of 
comments.
    Admiral in your testimony, you have spoken about the role 
that the Coast Guard plays in interdicting illegal migrants, 
and I guess from the numbers, if I read this correctly, the 
inference would be that in 1996, the number of such 
interdictions is way down, and the number of migrants is way 
down. Is that correct?
    Admiral Kramek. Migrants vary greatly from year to year. I 
think in 1996, we probably interdicted 9,000 migrants. I am not 
sure what you are referencing there, but in some years, it 
has----

                    mass migration and interdiction

    Mr. Olver. What would be a mass migration year?
    Admiral Kramek. A mass migration year would be about 
50,000.
    Mr. Olver. Really?
    Admiral Kramek. Yes. In other words----
    Mr. Olver. In what years have we had that kind of 
situation?
    Admiral Kramek. We had mass migrations in the 1981 and 1982 
time period, over 100,000.
    Mr. Olver. In 1981 and 1982? Where were they coming from?
    Admiral Kramek. Cuba, 100,000 Cubans.
    Mr. Olver. Cuba, okay.
    Admiral Kramek. In 1991 and 1992, in just a four-month 
period, we had 37,000 Haitians. That was a mass migration.
    Mr. Olver. In 1991?
    Admiral Kramek. Between 1991 and 1992, we had 37,000 
Haitians. From 1994 to about 1995, we had a combination of 
Haitians and Cubans which I think was about 58,000, and in the 
in-between years, this year, we had almost 8,000 or 9,000 
migrants we picked up, mostly Dominicans trying to make it to 
Puerto Rico.
    The migrants vary by country and by year. Generally, except 
for the Chinese, which we have intercepted as many as 1,000 a 
year, they are mostly from the Caribbean-South American basin. 
They are economic migrants. They look at the United States as 
the land of milk and honey, and they will try to do anything to 
get here including jeopardizing their lives.
    This last weekend, I had over 100 migrants trying to cross 
the Mona Pass. One boat capsized and half the people died 
because it is very, very dangerous to come across in wooden 
canoes.
    Our foreign policy is very important toward illegal 
migration by sea. That is, when we had huge amounts of Cubans, 
we did not have a repatriation agreement with Cuba. Recently, 
we have negotiated a repatriation agreement with Cuba that any 
Cuban migrants that we pick up, after they are interviewed by 
the Immigration and Naturalization Service on board our ships 
at sea, if they don't have a claim because they have been 
persecuted, they are returned directly to Cuba, which is about 
99 percent of them.
    Returning illegal migrants to their country of origin is 
the biggest deterrent on illegal migration that I know. That is 
why it has pretty much shut down Haiti right now, that is why 
it has shut down the Cuban migration. For the time being, they 
are under control as long as the governments remain stable--
especially in Haiti. I was just there, and that government 
needs to remain stable, or we are going to have more Haitian 
migrants.
    I am hopeful. I just met with the President of the 
Dominican Republic, President Fernandez. I went to meet with 
him in the Dominican Republic to sign an agreement to 
repatriate migrants there, and he agreed for 120 days to work 
together to do that. So far, that is working. I see migration, 
illegal migration down by 75 percent between the Dominican 
Republic and Puerto Rico as a result.
    Because we would never have all the ships and all the 
aircraft in this county including those of the Department of 
Defense to help us to stop all these migrants, it is important 
that our foreign policy be a strong foreign policy. We must 
work with those governments to prevent them from leaving in the 
first place, and secondarily, if we find them, we be allowed to 
repatriate them--bring them directly back before bringing them 
here to the United States.
    That is kind of our policy, and the threat varies depending 
on what is going on in all those countries based on their 
economies or on their governments, as to whether or not they 
are hostile governments, communist governments, or democratic 
governments.

                         migrant transit routes

    Mr. Olver. From what you said, I would infer that probably 
95 percent or more of the illegal migrants are in the Caribbean 
and related maybe to the Florida coast or what other----
    Admiral Kramek. They try to----
    Mr. Olver. Are there other particular----
    Admiral Kramek [continuing]. Get up to Florida either 
directly or through the Bahamas. Right now, you won't read much 
about Haitian migration directly into Florida from Haiti. 
Rather, they leave in small merchant vessels, perhaps 200 to 
400 in a small freighter, and they try to land in the Bahamas 
and then they pay fishermen to bring them over to Florida in 
small groups.
    We have worked with the Bahamas, and the Bahamas now has a 
repatriation agreement with Haiti, and they are returning the 
migrants as well. Some get transferred to fishing boats, and we 
usually find them landing in places like Fort Lauderdale or 
Boca Raton or Key West in smaller groups.
    It is still a problem but not as big as it was because we 
have restored democracy in Haiti, and there is a stable 
government there.

         coast guard/navy relationship in migrant interdiction

    Mr. Olver. What is the relationship between the Coast Guard 
and the Navy on these issues?
    Admiral Kramek. On these issues, the Coast Guard is a 
supporting commander. We work jointly, which means we all share 
resources.
    In this case, I have responsibility for the mission for 
both Cuban migrants and Haitian migrants as an example, Chinese 
also.
    I will explain the relationship in terms of a different 
case. Recently, we intercepted a vessel carrying illegal 
Chinese migrants 125 miles northeast of Bermuda bound for Cape 
Cod. We had intelligence----
    Mr. Olver. Did the Coast Guard make that interdiction?
    Admiral Kramek. That is correct. The Coast Guard made that 
interdiction. We had intelligence that this was an illegal 
migration. We know that there are at least 10,000 Chinese a 
year trying to reach the coast of the United States. They come 
in both directions, from the Atlantic and the Pacific. They 
usually come in Taiwanese fishing vessels that have been 
converted to carry 100 to 150. They pay $30,000 apiece to reach 
our shorelines to gangs of thugs called Snakeheads that are on 
board that control them and lock them in the hold for about 
three months to get here.
    We intercepted that vessel and our goal was to take them 
directly back to China. It is very difficult to deal with 
China, but finally, we did, with the assistance of the 
Department of Defense.
    Mr. Olver. To China or to Taiwan?
    Admiral Kramek. To China. I had to take the migrants into 
Bermuda. The governor of Bermuda allowed us to stay 24 hours. I 
had the Department of Defense and Coast Guard have planes come 
into Bermuda. We then took then to Guantanamo Bay, Cuba, run by 
the Department of Defense, and then the Department of Defense, 
I believe, took them to Wake Island, and then the Chinese or 
the United Nations paid for them to be repatriated all the way 
back to China.
    In cases of the Haitian migration, the Department of 
Defense set up an interim camp with over 45,000 refugees in 
Guantanamo Bay, Cuba, and they provided all the policing, as 
well as the larger vessels for me to transfer the migrants to, 
because all I could fit was 500 migrants on a Coast Guard 
cutter.
    At one time, I had 11 cutters with 500 migrants each on 
board, and I had to ask the Department of Defense to help, but 
they were right there. So we work together in that nature on 
the migrant issue.
    Mr. Olver. But you have indicated that you are the head of 
this mission in relation to--I take it in relation to the 
interdiction of illegal migrants.
    Admiral Kramek. We are, because it is a law enforcement 
mission. It is maritime law enforcement. We are the only 
members----

            memorandum of agreement on migrant interdiction

    Mr. Olver. When you call upon the Navy or other elements of 
the Department of Defense, do you ask, do you order--is this 
negotiation?
    Admiral Kramek. We ask. It is already prearranged. Two 
years ago, I signed a memorandum of agreement with the CNO of 
the Navy to operate jointly in this mission area.
    I had the Secretary of Defense sign that memorandum of 
agreement with the Secretary of Transportation. As a member of 
the armed forces, I meet with the CINCs once a quarter--I meet 
with the other service chiefs. I am an adjunct member of the 
Joint Chiefs, and so I simply ask my operations officer to call 
up USACOM and ask them for a couple ships and a couple planes 
and this is the mission we have, and that is the way it is 
done, very, very easily and with total support.

                          oil spill prevention

    Mr. Olver. Let me pass on quickly to one other thing. You 
also mentioned, and we have gotten into that, I think, with the 
previous questioning, but the focus on preventing oil spills, 
preventing spills, I take it oil spills is what you are 
concerned with there.
    I am curious in that process, how you again relate to other 
units of the Department of Transportation. I would ask you to 
elaborate a bit on how you go about prevention of oil spills 
and what information you may come to and that gets transmitted 
to other agencies as to how one can prevent even earlier--I 
mean, you are preventing oil spills when the ships are close 
into coastal waters, I take it.
    Admiral Kramek. Way before that. We are preventing oil 
spills when the ships are being designed, before they are even 
built.
    The system that we have set up in the United States, and it 
is primarily represented by the Oil Pollution Act of 1990 is 
one of prevention and response. Because we didn't have a good 
safety net system in the United States, one of prevention, we 
have put forth about 75 pieces of legislation of which 73 were 
approved and now the law which will provide in the future--by 
the year 2015--for all oil tankers to be double-hulled before 
they get here.
    I can tell you that the International Maritime Organization 
doesn't agree with this, but there is not a tanker in the world 
being built that isn't double-hulled today.
    That is because 28 percent of the world's oil supply comes 
to the United States in ships to meet our energy and our 
production and our economic needs.
    We have a port state control system. Any vessel that comes 
into U.S. waters, even foreign flagged, the Coast Guard 
inspects those--tankers more frequently. We target the vessels 
that have unsafe histories or that are single-hull orthat 
represent a bigger threat for one reason or another to us, even based 
on the classification society they might have been classed on. We 
license mariners.
    Even more than that, we are the U.S. representative to the 
International Maritime Organization in London. My Chief of 
Staff, Vice Admiral Jim Loy, is in London now leading the U.S. 
delegation in the maritime environmental protection committee 
to make sure the ships designed in the future will meet U.S. 
stringent standards, so when they come here, they will be safe 
to begin with.
    All of these prevention systems are in play now, and in my 
opening statement, I indicated that I was very, very hopeful 
that by the year 2015 when they are all supposed to be fully 
implemented, it will be illegal to enter U.S. waters with a 
single-hull tanker or a single-hull oil barge. Most accidents 
involve single-hull vessels.
    Our prevention system as part of the safety net will be 
effective in reducing the amount of response we have to perform 
because response is costly. In order to respond, we coordinate 
with all other federal agencies. We are usually the federal-on-
scene-coordinator. NOAA is essential, the Corps of Engineers is 
essential, the Environmental Protection Agency is essential, 
the local state and municipalities are essential.
    Following the recent spill in Portland, Maine, we were able 
to respond within ten minutes to the satisfaction of the State 
and local officials only because we had held response exercises 
in the previous three weeks and actually had replicated the 
exact accident that happened--a tanker hitting the bridge going 
into Portland, Maine.
    So our job is to coordinate a federal response plan should 
an accident happen and at the same time, to take measures that 
will prevent these accidents from happening in the future, a 
two-pronged attack on that.
    Mr. Olver. Thank you.

                  Additional Resources in the Drug War

    Mr. Wolf. Admiral, your fiscal year 1998 budget requests an 
additional $34.3 million for anti-drug activities. Please 
explain in general why you believe these additional resources 
will make a difference in the drug war.
    [The information follows:]

    The additional $34.3 million included in the Coast Guard's 
fiscal year 1998 Operating Expenses budget request will 
strengthen maritime interdiction and take a measured first step 
towards satisfying the Coast Guard's responsibilities under the 
National Drug Control Strategy. The Coast Guard needs the 
resources associated with this respect to help address a 
national priority: stopping the flow of illegal drugs across 
our borders. Transit Zone interdiction, one component of the 
national strategy, is making a difference, and can make a 
bigger one.
    Operation FRONTIER SHIELD in fiscal year 1997 is a 
successful proof of concept as to how the Coast Guard will 
employ the resources requested in the President's fiscal year 
1998 budget. Prior to FRONTIER SHIELD, the success rate for 
drug smugglers in the Eastern Caribbean was approximately 32 
percent, based on the Coast Guard deterrence model. However, 
when Coast Guard law enforcement assets were surged during the 
first quarter of fiscal year 1997, 7 tons of drugs were seized, 
17 of 34 known smuggling events were disrupted, and an 
estimated 8.5 tons of drugs were thrown overboard or jettisoned 
by smugglers to avoid arrest and seizure. As a result, the 
success rate for drug smugglers was slashed by a third, to 
approximately 20 percent.
    More importantly, interdiction also serves as a symbol of 
national commitment to combating the drug trade and its deadly 
effects, including associated crime and destruction of the 
moral and social fabric at home an abroad. Coast Guard 
interdiction serves as a model for source and transit countries 
besieged by drug traffic. Intelligence, international training, 
and sufficient resources for combined and multi-national 
operations offer opportunities for neighboring nations to 
contribute to regional stability and security through drug 
control efforts and in so doing, strengthen their legitimacy 
and credibility.
    Interagency assessments estimate 608 metric tons of cocaine 
flow through the transit zone each year, increasingly by 
maritime means. As long as present levels of domestic demand 
continue, interdiction must remain a crucial element of the 
global solution. The fiscal year 1998 budget request marks the 
beginning of the Coast Guard's multi-year commitment to shield 
this nation's maritime borders, and to reduce the wholesale 
availability of illegal drugs in U.S. cities and neighborhoods.

                     drug interdiction funding uses

    Mr. Wolf. I have a series of questions on drug interdiction 
and the request of $34,500,000. In last year's hearing record, 
the Coast Guard estimated a drug interdiction budget of 
$315,700,000 for fiscal year 1996 and $328,000,000 for fiscal 
year 1997.
    The fiscal year 1998 budget, however, reflects a lower 
amount for drug interdiction in each of those years, 
$309,200,000 and $319,700,000 respectively.
    Over the past two years, a total of $14,800,000 provided 
for drug interdiction has apparently been used for other Coast 
Guard programs. If this is a high enough priority to request a 
budget increase, why have you been spending existing drug 
interdiction funds on other activities?
    Admiral Kramek. I am not aware that we are spending 
existing drug interdiction funds on other activities unless we 
were out on patrol and I would like to show you a chart that 
shows where we tried to really increase our drug interdiction 
activities around Puerto Rico and the Virgin Islands as part of 
Operation Frontier Shield. At the same time, we interdicted 
over 2,000 migrants. I had to use the vessels that were 
employed in drug interdiction--could you put the Frontier 
Shield statistics slide up, please?
    This is a recent surge operation that we conducted this 
year, Mr. Chairman, from October 1 until March 1. In the lower 
left-hand corner is Puerto Rico and the Virgin Islands. 
Congress held hearings last May to indicate that perhaps 28 
percent of all the cocaine coming to the United States came 
through Puerto Rico and the Virgin Islands. I believe that 
number was accurate.
    Working together with Customs and DEA, in two operations, 
we worked together on drug law enforcement. Our efforts 
resulted in 17,968 sightings of vessels. We boarded 892 of 
them.
    You can see how much contraband we seized, over 19,000 
pounds. We witnessed 24,000 pounds being jettisoned. All that 
equates to about 195,000,000 cocaine doses prevented from 
coming into the United States, but at the same time, I found 
2,237 migrants and I had to break off those missions to rescue 
the migrants in their canoes, to repatriate them back to the 
Dominican Republic or Haiti or wherever they were coming from. 
That might be part of the reason for that funding.

                     ONDCP DRUG INTERDICTION STUDY

    Mr. Wolf. Last year, Mr. Porter and I made a request to 
GAO, and last week, GAO made us aware of the internal ONDCP 
report which evaluated the impact of a hypothetical increase of 
$200,000,000 in drug interdiction funds for transit zone 
interdiction, which is the Coast Guard's primary 
responsibility.
    They concluded, ``It does not appear that the potential 
benefit of decreased traffic or smuggling success rate in a 
transit zone is significant enough to warrant additional 
resources,'' and suggested that other federal anti-drug 
programs should receive any increases provided.
    They concluded that even with the assumed 11-percent 
reduction in supply, 430 metric tons of cocaine would still 
enter the United States. This level still far exceeds the 
estimated demand of 300 tons. Would you respond to the findings 
of the study?
    Admiral Kramek. I am familiar with that study, and in fact, 
that study was initiated by Dr. Brown, then-director of ONDCP 
in response to a letter that I wrote to him. Most of the letter 
was classified, but this portion is not.
    As the U.S. Interdiction coordinator, which is a collateral 
duty that the President assigned to me, to coordinate all the 
federal agencies in response to interdiction of drugs in the 
western hemisphere, it was clear to me that source country 
programs had not been stood up or were working, and we were 
unable to stop the drugs at the source, that is, in Peru and 
Colombia and Bolivia and Venezuela.
    There had been a tremendous reduction in transit zone 
assets between 1991 and 1992 and 1995 for all agencies, whether 
it was Coast Guard, Customs, or anybody else, and we provided 
that information, I think, for the record last year, but we all 
had quite a reduction from both the Administration and Congress 
in that particular effort.
    My task as the interdiction coordinator was to get together 
with all agencies involved in this and to make sure that they 
were asking for enough resources to accomplish the strategy, 
that they were then employing those resources wisely and 
efficiently, and then making sure that they were working 
together and being coordinated.
    I got them all together at the Pentagon for a meeting. I do 
that once a quarter, by the way, ever since that time, Mr. 
Chairman. It is called the U.S. Interdiction Coordinator and 
joint staff conference which includes all the commanders who 
are responsible throughout the world for the United States to 
do this job.
    I had them identify for me what their issues and 
capabilities were with respect to what they were tasked to do. 
They came up with a shortfall in the transit zone of between 
$200,000,000 and $500,000,000 in assets that had been 
decommissioned, radars that hadn't been procured, people that 
had been reduced, and the defense system that had been set up 
from 1986 to 1991 no longer existed. All we had was being able 
to look at a particular zone or area threat.
    The bottom line was, I presented that to ONDCP and they 
funded this study to either confirm or deny the quantitative 
work that I had all of these people do.
    In my opinion, they have confirmed it. A $200,000,000 
investment would reduce the drug traffic success rate by 11 
percent in the transit zone. That means to me 1,200,000 fewer 
Americans with drugs readily available; 500,000 fewer Americans 
with cocaine readily available; potential reductions in violent 
crime; 33,000 fewer crack babies born each year; and 1,100 
fewer related deaths, and I thought $200,000,000 was a 
worthwhile investment for that, and that is why I asked the 
Administration for that.
    Mr. Wolf. We are going to recess for a vote. We will be 
back in about ten minutes.
    [Recess]

                  REAL COST OF $200 MILLION INVESTMENT

    Mr. Wolf. The Coast Guard has responded that obtaining an 
11-percent drop in supply with only a four percent increase in 
the drug control budget, $200,000,000, is a good investment, 
but this could be misleading because a large portion of the 
drug control budget is actually the cost to the federal prison 
system of incarcerating drug offenders.
    To the extent that new drug dealers take the place of those 
in our prison, these expenses do nothing to get drugs off the 
street. If we exclude the prison costs and just look at drug 
interdiction costs, wouldn't $200,000,000 be a much higher 
percentage increase?
    Admiral Kramek. I don't think, Mr. Chairman, that you 
cannot look at any of the costs. In the appendix--which I 
didn't bring with me--to the drug control strategy which is 
about four times thicker than the strategy itself, is a very 
meaningful economic lay-down of all of the costs for all the 
agencies and what they are supposed to be doing. That comprised 
the President's request of $16,000,000,000 in fiscal 1998 for 
the drug control strategy.
    I think we have to give credit to the new drug czar, 
General McCaffrey, and to the Administration, and for 
bipartisan groups and members of Congress for trying to put 
together what is a ten-year plan to deal with the issue of 
narcotics in our country and narcotics abuse and five-year 
budget plans which aren't produced yet.
    There is a classified version to this plan, classified 
secret, which tasks me as the Interdiction Coordinator over the 
next six months to get together with all agencies responsible 
for interdiction and have them submit their five-year resource 
plans to me so that I can review them to see that they will do 
the job and then submit them to General McCaffrey.
    The point I want to make is that this is kind of a systems 
approach. The new strategy deals with many things on the demand 
side as well as the supply side. It is intended to keep those 
things that work and measure them as we go along, and we are 
just coming up with measurement systems now.
    While ours is not the greatest measurement system, I think 
we are one of the only agencies in government to have started 
this year to try to institute a measurement system and to do 
away with the programs that don't work.
    I think you have to look at all of them in context. I am 
not an expert on prison programs. I am surprised at the total 
cost of the prison programs as a percentage of this budget, but 
certainly, I would never advocate increasing the Coast Guard's 
share at the cost of taking someone else's share, because they 
are all important, too.
    Rather, I believe that as a national security issue, this 
is one section of the Federal budget overall for all agencies. 
Whether you are a treatment agency like the Department of 
Education, or involved in supply reduction like the United 
States Coast Guard, the funds should be provided to accomplish 
this multi-faceted strategy, and that it is going to take us 
ten years to be successful.

                 COST EFFECTIVENESS OF DEMAND REDUCTION

    Mr. Wolf. A recent expert panel organized by the Council on 
Foreign Relations and chaired by a woman named Mathea Falco 
suggested that reducing the demand for illegal drugs is more 
cost-effective than trying to reduce foreign supply.
    They quote from a 1994 study of the Rand Corporation which 
concluded that $34,000,000 invested in treatment reduces 
cocaine use by as much as spending $783,000,000 for source 
country programs or $366,000,000 for interdiction.
    Given your prominent role in the interdiction activities, 
would you take exception to that, or do you agree? What are 
your comments with regard to that?
    Admiral Kramek. My comments are that the Rand study is yet 
again one other study that we need to read and pay attention to 
just like the IDA study that just came out which totally 
refutes the Rand study and points out that an increase in 
interdiction of about $25,000,000 or $30,000,000 could reduce 
demand in this country by one percent, and refutes the 
statistics in the Rand study.
    There is almost a study for any advocate that wants to take 
a position. I would go back to the notion that all positions 
are important. There is a lot of things on the supply side that 
have to work in concert with the demand side, that is, 
treatment programs are important, the ones that work; education 
programs are important, the ones that work.
    All law enforcement officers would tell you and I will join 
them in saying that we won't win the war on drugs unless we 
reduce demand in the United States. We all agree with that.
    But until such time as we have meaningful programs that can 
do that, we cannot leave our borders open. Leaving our borders 
open will just let the drugs come in here, drive the price 
down, and increase demand and we know that and we have seen 
that before.

                        DOMESTIC SUPPLY OF DRUGS

    Mr. Wolf. I understand that. I have had a series of 
conferences in my district on the drug issue. The drug issue is 
growing.
    In fact, General McCaffrey came to the first one we had in 
June of last year. We have had a number of others. I have one 
Thursday night in Loudoun County.
    Drug use in our area, the Washington, D.C. area, 
particularly in the suburbs is up among high school students, 
and this is an issue that I care very, very deeply about.
    Obviously, I don't have young children anymore, but I care 
very deeply and I worry about the type of society that we are 
raising the children in.
    I had an opportunity to fly with the Virginia State Police 
last summer. We flew in the Shenandoah Valley.
    A large portion of the drugs that are being used in this 
country are domestically grown.
    Admiral Kramek. The marijuana.
    Mr. Wolf. The marijuana. In fact, as I heard and you might 
want to comment if it is accurate, the largest cash crop in 
Kentucky, I heard, was marijuana. Is that accurate?
    Admiral Kramek. I would say that a lot of states are 
growing marijuana, especially in national forest areas, and 
that is why the National Guard is assisting the state 
governments, but I would stay that is also true of Hawaii, and 
it is also true of Oregon, and I wouldn't single out any one 
state.
    Mr. Wolf. No, but I heard of two states where the largest 
cash crop is marijuana. It is growing all over, I am telling 
you. It was growing in my area, I am not embarrassed to talk 
about it.
    I have gone out everywhere I possibly can. If you are not 
willing to say what the facts are, you ought not to be in the 
business. It is being grown in the Shenandoah Valley. It is 
being grown in the George Washington National Forest.
    We flew over, but the point is, I do believe it is the 
largest cash crop. I was told so in Kentucky by the law 
enforcement people that day. I was also told it was the largest 
crop in the State of Georgia, and if I am wrong, we will 
correct the record.
    But the point is, we have a tremendous breakdown of the 
American family. We have moms and dads not spending enough time 
with their kids. We have churches that are not reallydealing 
with these tough issues. We have a situation where we have put a 
tremendous burden on the schools. Probably the safest place with regard 
to drugs are in schools, the hours between 7:30 and 3:00 in the 
afternoon.
    If you look at the figures, most drug use comes after 
school in somebody's home, in a car, out in the woods, or down 
by a stream. I think the more we do in the area of education, 
the better. And I happen to be a very conservative Republican, 
law and order; my dad is a retired policeman and I have been 
very, very supportive of all this.
    I do worry though that we are over doing this with regard 
to interdiction. While I do believe that we need interdiction, 
I believe we would get more benefit at this point, particularly 
since so much is coming from our own country, being grown right 
here in river city, that we have to deal with these issues, and 
we are ignoring the fundamental issues of moms and dads 
spending time with their kids. We are ignoring the different 
issues of churches speaking out more.
    If you look at the culture and during the Ronald Reagan 
period, and I thought Ronald Reagan was one of the greatest 
presidents we have ever had. I don't want to get off into that 
area, but when he talked about the Soviet Union being the evil 
empire, we would have never given MFN to the Soviet Union when 
they were persecuting those of the Jewish faith and those who 
were Pentecostal.
    In the mid-1980s, we had 250,000 people rally on the Mall 
in support of those people, and now we want to give MFN to 
China when there are Catholic priests in jail, Catholic bishops 
in jail, evangelical pastors in jail. There are more gulags in 
China than there were in the Soviet Union. They sold weapons to 
Iran.
    I saw a document the other day that their central committee 
wants to eradicate the Catholic church. They plundered Tibet 
with regard to the Dalai Lama. They are persecuting Muslims, 
and the beat goes on. Many of the weapons used by Saddam 
Hussein in Desert Storm came from China, and they were having 
coffee at the White House, Mr. Huang, who is head of the Poly 
Corporation who was then trying to sell assault weapons to 
gangs.
    The point is, though, I think that Ronald Reagan's approach 
and ``just say no'', and speaking out and having families 
involved probably makes more of a difference than interdiction.
    I worry that we are putting more money into interdiction 
and not enough money into education and building up the family.
    Admiral Kramek. Mr. Chairman, if I may, I understand your 
worry about that, but going to the monetary--the budget 
appendix of the 1997 strategy, the major increases asked for by 
the President are in education.
    Mr. Wolf. Four years late, though. Four years late.
    Admiral Kramek. But the major increases asked for are for 
education.
    Mr. Wolf. Admiral, that is correct, and I think General 
McCaffrey is doing a good job and I support it, but that is 
four years late, and during that time, the pain and the 
suffering and the agony of all those families that allowed this 
thing just to drift, drift, and drift. Four years late, and 
there was a lot of pain, a lot of suffering that nobody has 
spoken about, so I understand that.
    Let me just go on, because I have been trying to develop a 
record as I make up my mind and then the Committee has the 
opportunity to look at this thing.

                  EASTERN PACIFIC INTERDICTION EFFORTS

    ONDCP believes that currently, about 180 metric tons of 
cocaine is shipped into the U.S. from the eastern Pacific 
Ocean. Because of its sheer size, openness, and lack of defined 
checkpoints, most experts believe it will be harder to 
interdict drugs entering through the Pacific than the 
relatively easier Caribbean choke points.
    Would you agree that this would be a harder problem?
    Admiral Kramek. Mr. Chairman, I have put a chart up, and 
this is the magnitude of cocaine flow by the latest interagency 
estimate. I think the cocaine flowing in the eastern Pacific is 
even more than you had mentioned. It is 234 metric tons that is 
our estimate this year; 264 metric tons flowing up into what we 
call the western Caribbean; 110 metric tons going up to Puerto 
Rico and the Virgin Islands; then 40 metric tons heading over 
to the Lesser Antilles, a total of 608 metric tons headed to 
the United States that I am tasked with interdicting.
    Whether it is on the surface, under the surface, or in the 
air, it comes by maritime routes, and the Coast Guard is the 
lead agency for maritime interdiction.
    The most challenging is to interdict the eastern Pacific, 
or the 234 metric tons. It is almost a 2,000 mile journey. 
Almost 100 percent of it is destined for the west coast of 
Mexico in an effort to get it into Mexico so then it can come 
across our land border. There are estimates of 60 percent or 
more of all the cocaine that enters the United States comes 
across the southwest border between the United States and 
Mexico.
    My job is to coordinate all the Federal agencies including 
the Coast Guard to prevent it from getting to Mexico to begin 
with, and I can tell you, we have a paucity of assets that is 
the best way I can describe it to do anything in the eastern 
Pacific.
    However, this year we have mounted an operation called 
Caper Focus. Caper Focus is a joint operation of Navy, Coast 
Guard, Customs, DEA operations and we have had 
severalsignificant seizures of as much as 13,000 and 14,000 pounds of 
cocaine in fishing vessels coming up through that area.
    We feel we are doing better there, but there are not enough 
assets now to protect that particular threat arrow.
    Mr. Wolf. Your Coast Guard Pacific area commander, Admiral 
Roger Rufe, described the drug interdiction to the Washington 
Post this way, ``When you press the balloon in one area, it 
pops up in another.''
    Does this indicate we are just kind of moving the problem 
around?
    Admiral Kramek. No, I don't believe so. It indicates we 
don't have a defense in depth, rather that we will just focus 
on one particular area.
    If all agencies now focus on Puerto Rico, there are not 
enough assets then to focus on these other threat vectors. 
However, the ten-year strategy that the Administration has just 
proposed takes that into account.
    Resources are going to be asked for, the right types, a lot 
of intelligence, a lot of types of equipment that are not 
people-intensive to be able to tell where the smugglers are 
moving in and where they are coming from, because our job is to 
do the best we can to disrupt these supply lines, to make it 
difficult.
    The Coast Guard's goal over the next five years is to try 
to reduce that flow by 25 percent. This is our government 
performance and Results Act goal, which we are just kicking off 
now, in order for our education system to work and our 
treatment system to work and to give credibility to the 
education and treatment programs in the United States.
    Again, we just can't leave our borders open. If we weren't 
trying to keep the bad stuff out, I don't think the kids would 
ever believe the program and the education was credible.
    Mr. Wolf. I agree.
    Admiral Kramek. That is our task and it is very difficult 
to counter all those threats at the same time, but with a 
balanced approach--you can't do it 100 percent across the 
board, so what we try for is a particular deterrence rate and 
seizure rate and we have measures that we are trying to effect 
now.
    Mr. Wolf. But it does move around. We did South Florida----
    Admiral Kramek. It is, but it is harder for them to move it 
around, because the type of ships they use to transfer it in 
the western Caribbean and up through Puerto Rico are usually 
fast boats with outboard motors.
    Down here, there are cargo ships, containers, fishing 
vessels, different types of vessels because the journey is 
long. There are no choke points going all the way up there. It 
is almost 2,000 miles.
    The last couple of seizures we made, we made 400 to 800 
miles off the coast of Ecuador as an example. The vessels will 
come out that far and then head straight north, but we have 
made some seizures nonetheless with good intelligence and 
beefed-up forces from the DEA as an example, and the FBI and 
CIA who are all contributing to this now.
    Mr. Wolf. What I meant about it moving, when Mr. Bush was 
vice president, he organized the south Florida task force, and 
they went heavy down there. If you recall, the Bahamas, the 
fast boats were coming in.
    Now, it is coming into Mexico. In those days, Mexico wasn't 
nearly----
    Admiral Kramek. The South Florida task force was 
successful.
    Mr. Wolf. It was successful, but it did push it into other 
areas.
    Admiral Kramek. It has pushed it way south, and that is 
what you see now. In fact, and it is not landing in the Keys 
anymore, and it is not landing in Fort Lauderdale. Every once 
in a while, there is a small load ending up there, but not this 
magnitude.
    The objective is to get it into Puerto Rico or the Virgin 
Islands. If you are in Puerto Rico, you are already in the 
customs waters of the United States and that is a major 
transshipment point to the United States, so almost 30 percent 
heads there. The other 60 percent heads to Mexico, and you 
understand well, and we have talked about it, all the problems 
we have cooperating with the Mexicans.

                     Mexican Government Cooperation

    Mr. Wolf. Do you think we can trust the Mexican government? 
Do you think after that corruption problem we can trust them?
    Admiral Kramek. I think that if we are not successful in 
working together with the Mexican government and if we cannot 
trust them in the future and work together, that stopping drugs 
across the southwest border will not be successful.
    That is absolutely an essential national security issue to 
not only have cooperation with the Mexicans, but in that whole 
area, the Coast Guard has signed agreements with 18 of the 22 
nations in that area called maritime agreements that allow us 
to work together in a cooperative fashion, because without 
their help, you can't do it.
    Mr. Wolf. Do you have confidence in the new person they 
just appointed?
    Remember, the general came and there were laudatory 
comments about him, and then three weeks later, he was being 
arrested.
    Admiral Kramek. I would have to see what his performance is 
first before I could comment. I am not familiar with him.
    Mr. Wolf. Have you met the new individual?
    Admiral Kramek. I have not.
    Mr. Wolf. After you do, would you give us a comment on what 
you think?
    Admiral Kramek. I will.

    Mr. Mariano Herran Salvatti, a deputy federal chief 
prosecutor from the southwestern state of Chiapas, was recently 
appointed as Commissioner of the National Institute to Combat 
Drugs. I am not familiar with Commissioner Herran and therefore 
it would be premature to comment on his performance. Although I 
have no immediate plans to meet with the Commissioner, I will 
provide the subcommittee with my comments once I have had an 
opportunity to meet with him.

                          U.S. Drug Production

    Mr. Wolf. A recent study showed that one of the increasing 
problems with the drug war involves the production of illegal 
drugs right here in the United States. For example, many drug 
dealers are shipping precursor chemicals into the U.S. legally 
where they are combined in laboratories here in our own 
country.
    We are also seeing, as I mentioned, the use of marijuana, a 
large portion of which is grown right here in the United 
States.
    Are there any estimates of the percentage of the illegal 
drug consumption in the U.S. which involves drugs produced here 
in the U.S.?
    Admiral Kramek. Perhaps ten percent of the drugs going into 
California from Mexico are methamphetamines. Those are 
synthetic drugs, if you will.
    I think the concern is that the percentage of those drugs 
that are being used are increasing as a result of the total. In 
other words, as we are successful with cocaine, and we are 
successful with cocaine.
    Mr. Chairman, in 1985, there were 5,700,000 users of 
cocaine in the United States. As of 1995, there are 1,500,000 
users of cocaine in the United States, so cocaine use has gone 
down.
    Heroin use has gone up a little bit, but synthetic drugs, 
methamphetamines as an example, have gone up quite a bit. That 
goes to the education and to the treatment programs and 
convincing our children and our society that it is wrong.
    That particular threat, I am not sure how we would stop 
those drugs from being produced other than to control the 
chemicals from which they are made. I know we are taking action 
on that, not the Coast Guard, but other agencies are taking 
action on that.
    Mr. Wolf. Are the domestic drugs increasing or decreasing, 
the amount of drug use being supplied domestically?
    Admiral Kramek. Increasing.

                    Drug Interdiction Effectiveness

    Mr. Wolf. Increasing. Congressman Porter and I requested 
GAO last year to look into the effectiveness of the drug 
interdiction program. The report is now final, but the draft 
report concludes the following, ``Although these efforts have 
achieved some successes, we have found that the flow of 
cocaine, heroin, and other illegal drugs into the United States 
continues. The availability of drugs and the cultivation of 
drug crops have not been reduced. Data on the availability of 
illegal drugs as measured by the average price and purity of 
the drugs, show the price and purity of cocaine have remained 
relatively constant since 1988.''
    Given this evaluation, why should we be providing more 
money for drug interdiction next year?
    Admiral Kramek. We should provide more money for drug 
interdiction because it is morally wrong to leave our borders 
open and allow 70 to 90 more metric tons of drugs, cocaine 
particularly, to come into the United States. That will drive 
the prices even lower.
    There is an inverse relationship between price and demand. 
If the price is reduced by 50 percent, demand will increase by 
25 percent, Mr. Chairman. I don't think we can allow that to 
happen.
    Also, I think some of the programs that we have had over 
the last ten years were successful. As I mentioned, reducing 
the amount of cocaine users from over 5,000,000 a year to about 
1,500,000 today.
    So those are primarily the reasons. I don't necessarily 
agree that we are not successful because--was that the GAO that 
you were referencing in that particular report?
    Mr. Wolf. Yes. I am sure your people have seen it. They are 
going to release it on Friday, but I think your people have 
seen it.
    Admiral Kramek. I think my people have seen a draft of it. 
I don't necessarily disagree with what they say, but I thought 
their view was narrow. They didn't take into account the new 
IDA report.
    There is an elasticity of price. When you have a product 
that costs $1 in Peru and it costs $20,000 in New York, and the 
real increases in price occur once it gets to Mexico and beyond 
that, one would have to wonder how much you would have to do to 
affect price and to affect purity.
    We know that, but we look at certain things we can do that 
will really help. Two things that have really affected this 
that I think the GAO should have looked at and they should 
comment on.
    It was clear that 80 percent of the cocaine coming to the 
United States was the result of cocoa leaves being grown in 
Peru, made into paste, and shipped to Colombia. One-hundred 
percent of it was being transported by aircraft, so two years 
ago, as Interdiction Coordinator, I and the CINC South with the 
help of the Joint Chiefs set up an operation called GREEN 
CLOVER. It is now called LASER STRIKE. It is to disrupt the air 
bridge of cocoa paste between Peru and Colombia.
    We have shut down the air bridge between Peru and Colombia. 
The Colombians and the Peruvians have destroyed, seized, 
strafed, or shot down 120 aircraft during that period of time.
    It has driven the price of cocoa leaves below bananas, 
soybeans and pineapples in Peru. It is what President Fujimori 
had hoped to accomplish so that his farmers would grow other 
crops.
    Now, the Peru strategy has to deal with the next step of 
helping Peru develop its transportation infrastructure tobring 
those crops to market, because the growing portion of that county is on 
the east side of the Andes. There are no highways or railroads coming 
across the Andes. There is one two-lane semi-dirt, semi-paved road I 
have been on. You wouldn't want to travel it, and there is no way to 
bring all those crops to market.
    The point is, the price of cocoa leaves was driven down so 
low that the farmers are willing to grow something else. We 
need to follow up now and help that source country strategy.
    I have seen the same thing just happen in Puerto Rico. I 
have just visited Puerto Rico. As you know, I have met with the 
Governor of Puerto Rico here in the United States before I 
went. When I got there, I met with his Secretary of State and 
all the forces in Puerto Rico trying to stop that 110 metric 
tons a year from coming in there.
    Things are a little bit better in Puerto Rico, because we 
have done two things. We have stopped the huge flow of drugs. I 
feel we stopped 80 percent of what was going into Puerto Rico 
with Operation FRONTIER SHIELD. The money I am asking for in my 
budget is to sustain that operation, not to borrow assets 
against the fourth quarter like I had to and send them down 
there to see if we could do that. FRONTIER SHIELD is a 
prototype for the types of things we have to do in steady 
state.
    He had to call out the National Guard in his projects, as 
you know. The drug dealers from the Dominican Republic were 
paying off his citizens with drugs rather than money, and as a 
result, they were having this habit themselves, and I won't 
have to repeat it. You have heard all of the horror stories he 
has told you.
    Things are getting a little bit better there. Customs is 
doing Operation GATEWAY in-country. DEA is providing the 
intelligence.
    The Coast Guard is the major operator there, with the help 
of DOD, even giving us some patrol boats to operate and radars 
and things of that nature. And we have been very successful 
there, like I showed you on the FRONTIER SHIELD slide. I think 
it would be a broader scope picture for the GAO to show you 
where some of those successes are too, because I think we have 
to build on those successes. And I think there are other places 
we don't do as well and we ought not to concentrate our assets 
there. But certainly on Puerto Rico, which is part of the 
United States, and on the Virgin Islands we have more than a 
vested interest in that particular area.
    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Nothing, thank you.
    Mr. Wolf. Mr. Packard.

                         alteration of bridges

    Mr. Packard. Thank you, Mr. Chairman. It is a pleasure to 
have you here, Admiral. I was reviewing your budget request 
briefly. And just some general observations, alteration of 
bridges I noticed you zeroed out. What is your explanation on 
that?
    Admiral Kramek. The ISTEA legislation which has been rolled 
out by the Administration this morning at a ceremony in the 
White House will ask for authorization of highway bridges that 
obstruct navigable waterways to be financed through highway 
trust funds. I think we also had that authorization last year 
on a one-year issue, but it is going to be asked that it be 
authorized with ISTEA for the next five years.

                           boat safety funds

    Mr. Packard. And boat safety was increased quite a bit.
    Admiral Kramek. I think the boat safety funds, the same 
thing is being asked for in the ISTEA legislation with the boat 
safety funds to provide a stable base for boat safety funds for 
primarily the state grant program.
    Mr. Packard. Well, it shows here an increase of $10 
million. And I was wondering----
    Admiral Kramek. If the ISTEA legislation is requesting that 
those funds be made mandatory. And that is the issue there.

                     american underpressure system

    Mr. Packard. Okay. Under the Oil Pollution Act, it is 
required that we move toward double hull for tankers by 2015. 
And in addition it also provides for a requirement to review 
all new technology that might also be considered to help 
resolve the oil spill problems. One of these systems, the 
American Underpressure System, which I think you are familiar 
with, was not included by this rule, and yet they were 
granted--given a grant by the maritime administration using DOD 
funds to test their system. And last year the Coast Guard in 
the authorization bill was directed to fully fund this grant, 
Department of Transportation was, for the completion of that 
study this fiscal year. And the Coast Guard, I understand, is 
helping in the design and evaluation of those tests.
    My concern is that this is a little bit of an incestuous, 
maybe a conflict of interest, where the Coast Guard will be 
designing and evaluating the test and at the same time they are 
the ones that determine whether the test is going to be 
acceptable or not and would be considered as an alternative 
technology for double hull. Would you respond to that in terms 
of whether you can evaluate fairly a system that later on you 
will actually be determining whether it is acceptable or not?
    Admiral Kramek. Well, I am familiar with the proposal. 
There have been a number of steps laid out with the designer 
and inventor, proposer of the system, Mr. Husain, I think it 
is. There have been some moniesprovided, and some of those 
monies are matching-type fund monies. That is we can't proceed and go 
to full-scale tests unless the designer comes up with a certain amount 
of funds. And it has been in--it is legislated to be that way.
    We have just been in recent correspondence within the last 
month with the designer on this, and I will share all of that 
correspondence with you and your staff. I think we are on the 
right track. The issue really is doing full-scale tests in 
order to see that this system will be as safe as building a 
double-hull tanker.
    There are a lot of skeptics in the world, but we shouldn't 
prevent something which might be totally successful and save 
everybody a lot of money. And so we really need to do full-
scale tests. And that is the issue I think we have with the 
designer now on being able to fund full-scale tests and not 
accept lesser testing as being representative of whether the 
system would work or not.
    Mr. Packard. Would it be reasonable to have an outside 
scientific agency like the National Academy of Sciences to 
review the test plan and the evaluation?
    Admiral Kramek. I would be happy to ask them to join us and 
review the test plan and to help evaluate the system.
    Mr. Packard. That is fine. And is there merit in 
considering or reconsidering the rule on existing single-hull 
tankers if in fact this test--the tests proved that this would 
be effective and thus save money, as you have indicated?
    Admiral Kramek. If the test was effective, I think then we 
would take it to the International Maritime Organization also.
    Mr. Packard. That----
    Admiral Kramek. And before the Marine Safety Committee. And 
then if this looks like an acceptable system worldwide and for 
the United States, why, I think then we need to take the next 
step.

                      alternatives to double hulls

    Mr. Packard. Obviously safety is the thing that is going to 
be driving all of this. But it may be that there are other 
alternatives than a double hull. That is a very----
    Admiral Kramek. I would hope. The International Maritime 
Organization just doesn't require double-hull tankers. Only the 
United States requires double-hull tankers. They are willing to 
consider other methods, but nobody yet in the world has come up 
with another method which is as safe as double-hull tankers. 
And so that is part of the issue that needs to be evaluated.
    Mr. Packard. Did I understand you correctly, no other 
country is requiring double hull?
    Admiral Kramek. No, I don't know that there have been any 
other proposals that we have found that equals the safety of 
double-hull tankers, even though the IMO rule says there can be 
other means beside double-hull tankers. U.S. law says you can't 
come into our waters unless you have a double-hull tanker or a 
tank barge.
    Mr. Packard. Did this law come as a result of the Valdez?
    Admiral Kramek. It did, yes.
    Mr. Packard. And the Valdez was a single hull?
    Admiral Kramek. The Valdez was a single-hull vessel. It 
might have had double bottoms, but it was a single-hull vessel.

                 drug interdiction performance standard

    Mr. Packard. Let us proceed with the questions of the 
chairman until he returns. Your budget set goals for the Coast 
Guard of reducing the flow of illegal drugs entering the United 
States by way of maritime routes by 25 percent over the next 
five years. That is the goal you have set. The base against 
which you will measure success assumes that drug smugglers are 
currently able to smuggle into this country 71 percent of the 
illegal drugs produced. Your goal is to reduce this smuggler 
success rate to 46 percent over the next five years, a 
reduction in the flow of 25 percent, a worthy goal. But this is 
trying to measure a flow which we do not see. If we could see 
all the drugs entering this country, we would be able to direct 
our resources toward them more easily, but since we can't 
measure with much certainty a flow we do not see, how will you 
know how well you are moving toward your goal and how much----
    Admiral Kramek. Well, it is certainly a challenge in 
measurement. When one develops any performance standard, the 
challenge is in measurement. And this is in an area that has no 
measures of effectiveness, which makes it even worse.
    I am encouraged by two things. The Coast Guard recently has 
established a measure of effectiveness with respect to the 
deterrents, which feeds into this model, based on the amount of 
contact we need to have with smugglers to deter them from 
coming here and then how many we can actually arrest and 
interdict. I have recently presented that model, developed by 
Rockwell International in 1989, to the Interdiction Committee. 
That is, the Commissioner of Customs, the Administrator of DEA, 
the Operations Officer of the Joint Staff, Ambassador Barb 
Gelbart in the State Department, and others who advise me as 
the Interdiction Coordinator on how to coordinate our 
interdiction of drugs in the western hemisphere.
    We have sent that to ONDCP to have them validate that study 
as part of a bigger study they are doing on measures of 
effectiveness, which will take them probably another year. They 
were hopeful to have it done by this summer, but I don't think 
they will make it. The point is that all federal agencies have 
to use, in my opinion, the same measure of effectiveness so we 
can combine all of those, otherwise there is no way to set a 
performance standard of 25 percentover five years unless others 
are measuring the same based on the same baseline and the same 
standards. So I have asked for a national standard that will affect all 
agencies, and I have sent that to the Director of ONDCP for his 
consideration.

        impact of technology on drug interdiction effectiveness

    Mr. Packard. The GAO testified last week that drug 
smugglers are increasingly using new technology such as the GPS 
to prearrange their drug drops, in order to eliminate radio 
communications and perhaps other things. Do these simple but 
effective technologies make it even less likely that our drug 
interdiction program will have the desired impact?
    Admiral Kramek. Well, I think it increases the threat, 
causes more of a challenge to us. We used to rely a lot on 
intercepting their communications when they talked. Now with a 
hand-held GPS receiver that you can buy in a local electronics 
store you can know within five meters distance of where you are 
anywhere in the Caribbean, and certainly they communicate ahead 
of time and then they are able to go there and not communicate. 
It makes it difficult.
    It is just as difficult as the group we just arrested in 
Miami of trying to sell a used Soviet submarine to the drug 
smugglers to try to smuggle drugs from Columbia. We have to 
rely on our superior intelligence network in the United States. 
In my view, for any country that could do what we did in Desert 
Storm and put a man on the moon, we should be able to counter 
this. However, I would note that with only ten percent of the 
interdiction--the drug budget being for interdiction, it is 
kind of hard to do it with the resources that are available. 
The resources that all agencies are asking for this next year, 
in particular in the Coast Guard budget, I have improved 
technology. As an example, some of our funds will go to 
procuring infrared--forward-looking infrared on our aircraft, 
which will be able to help detect these people where we 
couldn't see them before. So we have to be able to counter 
their increased technology with our increased technology, which 
is available in the United States, but it is an investment 
issue and it is part of our budget request.
    Mr. Packard. I am going to recess the Committee while I go 
vote and the chairman should be almost back by now. He will be 
back shortly.
    [Recess]

                       puerto rican customs zone

    Mr. Wolf. Admiral, I think we have kicked the drug issue 
around enough. I think you know where my concerns are and I 
know what your position is. We will have a number of questions 
that we will ask for the record, and if you could get back to 
us as quickly as possible on them, that would be helpful.
    There was one other question. The staff just gave me a 
question. One of the staff was down in the region with your 
people, and they said once goods and products and drugs arrive 
into Puerto Rico, there is a direct line into the continental 
U.S. After security and customs and your cutters in the 
Caribbean, drugs are placed in containers and shipped to cities 
all over the U.S. without any impediment. Do you believe we 
would significantly reduce drug traffic into and out of Puerto 
Rico if goods and shipments from Puerto Rico were subject to 
customs and inspection? Is it time to change the custom zone in 
Puerto Rico if we are serious about winning the war on drugs?
    Admiral Kramek. I don't think it is time to change the 
custom zone, even though a year ago I had proposed that myself. 
As a result of my proposal, and I met with the--mentioned it to 
the Attorney General. Customs came up with an operation called 
Gateway, that I think now is being successful. It is very 
complimentary to our FRONTIER SHIELD. And GATEWAY means it is--
customs is making it much harder for drugs to be smuggled in 
cargo into Puerto Rico, and they are--they have upped their 
inspection of all cargo leaving Puerto Rico except for 
commercial aviation cargo. Container inspection is a tough nut 
to crack, however.
    And I particularly went to Puerto Rico to look at how they 
are inspecting the containers, Mr. Chairman. It is a little bit 
better than a needle in a haystack, but not a whole lot. It 
depends on where the cargo is coming from and where it--and 
whether it is properly manifested. Certainly if it is from 
Colombia or another source country, that container is 
inspected. It is used--x-rays are used, x-ray machines. Drug 
sniffing dogs are used. The National Guard is used. And so I 
would say about five percent of the containers are inspected 
based on the intelligence that we have, but it is a tough nut 
to crack.
    Mr. Wolf. Excuse me. Go ahead.
    Admiral Kramek. GATEWAY is really the answer to your 
question. Customs has a dramatic increase in funds. I want to 
say over $20 million a year just for GATEWAY, agents, x-ray 
machines and other--boats and other things that they just put 
in Puerto Rico to prevent that from happening and reduce that 
threat that you had just mentioned.
    Mr. Wolf. Well, maybe you were right in the first time and 
this is something that I will take a look at, too. The staff 
says that your people down in Puerto Rico favor it. They also 
maintain that the Customs people favor it.
    Admiral Kramek. If they do, I would be surprised. There is 
another issue with that.
    Mr. Wolf. Staff also maintains that the DEA favors it. And 
if it would help and we are really committed, if thiswould make 
an impact or make a difference, then we ought to do it.
    And maybe it is a political problem that people don't want 
to deal with. But if we are trying to eradicate drugs, if we 
are trying to do all we can, the people at this level never get 
down to talk to the moms and the dads who have had kids who 
have just been ravaged by it. And so if this would help, if 
this would work, we ought to do it no matter what the political 
ramifications are, no matter who we are going to make angry.
    But staff was saying that your people that they spoke with 
down there favored it, the DEA people favored it, the rank and 
file, the people that are on the front lines, and Customs also. 
So, you know, I would appreciate you taking another close look 
at it. Maybe we can talk about it outside of the hearing.
    Admiral Kramek. There is one other issue with that. It is 
economics, having Puerto Rico be in the customs zone of the 
United States causes them to be the transshipment point for all 
cargo coming up from South America and the Caribbean to the 
United States. It has made them very economically successful 
over the last 20 years. So the real issue is one of a 
transshipment point and economics much more than political. It 
is not really a political issue, I don't think.
    Mr. Wolf. Well, but economics drives politics and politics 
drives economics. The Governor was complaining about the 
situation, and they called out the National Guard. Sometimes 
economics are driving, giving communist China MFN. People who 
go and worship in churches don't think in terms of the Catholic 
priest or the Catholic bishop or the evangelical pastor that is 
in prison. So they want to do business with them. They don't 
think in terms of the American personnel who may have to deal 
with these people in an altercation four or five years from 
now. Economics drive everything. And there is a selective 
approach, ``well, economics, you know, we don't want to upset 
it.'' Maybe we should forget economics. That is just the way it 
is. Maybe the ravaging of the veins of the youngsters down 
there in Puerto Rico and throughout this country is enough to 
overcome the economics.
    You know, if the staff maintains that all of the people 
support it--I will do a little more digging into it. I don't 
think you and I can decide it now, but maybe this would be 
something that you could do. The more I saw things like this 
that were being done, the greater the comfort level that I have 
of trying something that I otherwise have some doubts about. 
You know, I have been wrong before. I don't have a 100 percent 
record on anything. So maybe I would be proven wrong, then we 
could do something else. So I think we should just look at it, 
and if you have got to take a tough stand, we just take a tough 
stand. If people don't like it, you know, that is just the way 
it is.
    But economics drive everything. I mean, I am so tired of 
it. I mean, if any Member of Congress had gotten up on the 
floor in the mid-80s and said ``we ought to give MFN to the 
Soviet Union,'' they would have been driven out of Congress. 
Now they get up every day. You see the Chinese government is 
making a push with regard to this Congress and this 
Administration, and yet we are still going to continue to give 
them MFN because of economics. Well, how about the young kids 
and their veins and the moms and the dads and the broken 
families and the broken lives.
    So let us look at it. We will leave that and then you and I 
can talk about this later.
    [The information follows:]

    Last year the Coast Guard favored legislation which would 
have effectively created a ``customs border'' between Puerto 
Rico and the U.S. mainland. However, interagency discussions 
and additional research into the issue have revealed a number 
of potentially negative implications that warrant 
reconsideration. Therefore, the Coast Guard currently opposes 
introduction of any legislation pending resolution of several 
key issues.
    Interagency discussions revealed that sufficient border 
search authority already exists: the problem is a shortage of 
resources. Legislating a new boundary would merely increase 
resource demands in a region that is already resource-
challenged. Further, a legislated boundary would apply to 
commercial air traffic as well as surface traffic, and require 
additional Customs inspectors and resources at all of the 
arrival points used by traffic from Puerto Rico. If Customs 
agents are subsequently withdrawn from Puerto Rico, local 
government officials will have to assume traditional customs 
duties. Coincidentally, withdrawing Customs agents from Puerto 
Rico would weaken tactical intelligence collection on Eastern 
Caribbean drug traffic and crime, which would reduce 
operational effectiveness.
    Interagency representatives also suggested that Puerto Rico 
residents might perceive such legislation as a sign of 
disassociation. In addition, the administrative demands of a 
customs zone would likely have a direct effect on air travel 
and commercial shipping that could result in a negative 
economic impact throughout the Caribbean basin.
    Acknowledging the validity of these concerns, the Coast 
Guard focused on the nature of drug traffic and interdiction 
opportunities, and developed and implemented Operation FRONTIER 
SHIELD. This ongoing effort complements Operation GATEWAY, 
which is being conducted by the Customs Service. Lessons 
learned thus far suggest that strengthening interdiction 
resources is a successful means of denying illicit drug entry 
into the Puerto Rico customs zone.

                Drug Interdiction--FY 1998 OMB Passback

    In their passback of the fiscal year 1998 budget, OMB did 
not fund your recommended increase in drug enforcement hours 
``because other increases provided in the passback will better 
equip the current Coast Guard workforce, resulting in 
significant interdiction gains.'' Why was OMB reluctant to 
agree with your proposed increase?
    [The information follows:]

    Because of budget constraints necessary to balance the 
federal budget by fiscal year 2002, the Office of Management 
and Budget (OMB) could not support all Coast Guard drug law 
enforcement initiatives in the fiscal year 1998 request. OMB 
fully supports the Coast Guard's fiscal year 1998 budget 
request which is an integrated package of increased operational 
hours for Coast Guard aircraft coupled with state-of-the-market 
technology, increased training and a strengthened intelligence 
program.
    The Coast Guard will be working closely with OMB and the 
Office of National Drug Control Policy (ONDCP) in developing 
its five year drug budget which will require additional 
resources to achieve the goals of the President's National Drug 
Control Strategy.

                   FOCUS OF DRUG INTERDICTION EFFORTS

    Mr. Wolf. While much of your drug interdiction efforts are 
focused on the Caribbean, the GAO tells us that about 70 
percent of the illegal drugs now enter the U.S. through Mexico. 
If this is so, wouldn't it seem to make more sense to put our 
additional money to seal off the land and air borders with 
Mexico, rather than in the Caribbean?
    [The information follows:]

    While political attention has long been focused on the 
Southwest border, maritime drug traffic through the Caribbean 
has the capacity to satisfy the current level of domestic drug 
demand on its own. Moreover, drugs flow into Mexico primarily 
using non-commercial means through the Caribbean, as well as 
the Eastern Pacific. The National Drug Control Strategy 
provides a balanced approach to the drug problem that enhances 
overall transit zone interdiction. Increased interdiction in 
high traffic areas throughout the transit zone could serve to 
deny drugs from ever reaching Mexico.
    The Coast Guard has historically had a high presence in the 
Eastern Caribbean. Through Operation FRONTIER SHIELD, the 
smuggling problem in this region was recently attacked with a 
surge of assets with a substantial and immediate impact. It was 
important to disrupt drug flow through Puerto Rico because 
there is no customs boundary between the island and the U.S. 
mainland. Consequently, drugs exported from Puerto Rico have a 
tremendous probability of successful delivery into the United 
States. Concomitantly, Coast Guard operators have developed 
strong relations with law enforcement agents of island nations 
and Federal law enforcement agencies to enhance the vitality of 
a unified regional program to keep drugs out of Puerto Rico and 
the Eastern Caribbean.
    It is vital to maintain closure in the Eastern Caribbean. 
As part of its multi-year strategic plan, the Coast Guard 
intends to maintain significant presence in the region to 
discourage smugglers from trafficking in the area and to 
interdict those who do. Cooperative efforts with British, 
Dutch, and, eventually, French allies should also help maintain 
this closure as transit zone threats are addressed in other 
Caribbean areas.
    The Coast Guard has long term objectives for other areas of 
the transit zone. Increase effectiveness will be more difficult 
in the Western Caribbean and Eastern Pacific. These areas are 
immense and extremely far from reliable logistics bases. The 
Coast Guard's 5-year budget plan will seek resources necessary 
to support increased engagement in these areas.
    For the immediate future, Coast Guard interdiction 
operations are being conducted at each end of the Southwest 
border with Mexico to effectively extend border security beyond 
the land border into the ocean. Law enforcement presence has 
also been increased in operations near Mexico. The Coast Guard 
participates in such operations conducted by Joint Inter-Agency 
Task Forces (JIATFs) East and West. With international support, 
through bilateral agreements and combined operations, counter-
narcotics efforts throughout the transit zone will be even more 
effective in preventing illicit drugs from entering the United 
States.

                 VALUE OF COAST GUARD DRUG INTERDICTION

    Mr. Wolf. From the data from last year's Coast Guard 
appropriations hearing and a recent GAO report on the Customs 
Service, it would appear that we get more ``bang for the buck'' 
by providing drug interdiction resources to the Customs Service 
rather than the Coast Guard. And apparently, the FY 1996 data 
is even more supportive of the Customs Service.
    Looking at the number of seizures and arrests, why wouldn't 
it make more sense to give the Customs Service the extra $34 
million, rather than the Coast Guard?
    [The information follows:]

    The National Drug Control Strategy promotes a balanced 
approach to the nation's drug control problem. Domestic law 
enforcement, transit zone interdiction, demand reduction 
programs, and source country programs all have a unique and 
complementary role in the overall strategy. Coast Guard 
maritime efforts, and those of the other law enforcement 
agencies, contribute to the successes of the Customs Service, 
and vice versa. It would be a mistake to view the effort and 
success of any one agency as being absolutely separate and 
distinct from that of the national law enforcement team. In 
this case, to the extent that Coast Guard efforts successfully 
deter smuggling in the maritime region, persistent smugglers 
may be drawn to the path of least resistance and become 
contributors to the success of the Customs Service along the 
land borders.
    The Coast Guard and Customs Service are complementary 
enforcement agencies with different areas of responsibility. 
The Coast Guard is the lead agency for maritime drug 
interdiction. Coast Guard law enforcement authority extends 
from U.S. shores onto the high seas, essentially the entire 
transit zone. Customs has land border responsibilities, and its 
maritime area of responsibility extends twelve miles from the 
beach, effectively the arrival zone. The Coast Guard's 
Operation FRONTIER SHIELD and Customs' Operation GATEWAY around 
Puerto Rico have demonstrated that interagency air and surface 
capabilities can be effectively coordinated for a synergistic 
improvement of overall counter-drug effectiveness.
    The Coast Guard's fiscal year 1998 request is an investment 
in national security that the Coast Guard is uniquely qualified 
to provide. It will allow the Coast Guard to establish a 
defense in depth against drug traffic in the transit zone that 
complements Customs' and other domestic and international law 
enforcement agencies' efforts elsewhere. Furthermore, increased 
Coast Guard presence provides security against illegal 
migrants, promotes the safe and efficient passage of maritime 
commerce, improves search and rescue response, and is 
consistent with the military strategy of engagement and 
enlargement. Through its unique transit zone authority and its 
multi-mission capabilities, the Coast Guard provides an 
extremely cost-effective ``bang for the buck.''

             INCREASED OPERATING HOURS FOR DRUG ENFORCEMENT

    Mr. Wolf. Your budget justifications indicate an 18.6 
percent increase in cutter operating hours for drug enforcement 
during fiscal year 1997, and a 38.5 percent increase in 
aircraft flight hours, without additional money dedicated for 
this purpose. You are now requesting increased funding in 
fiscal year 1998 for additional flying and steaming hours for 
anti-drug activities. If you were able to raise your level of 
effort during fiscal year 1997 without additional funding, 
couldn't you also manage this in fiscal year 1998?
    [The information follows:]

    In fiscal year 1997, the Coast Guard received $14.6 million 
of the non-recurring $60.9 million discretionary funding 
appropriated to the Office of National Drug Control Policy 
(ONDCP) in the 1997 Omnibus Appropriation. The ONDCP funding 
was programmed for surge cutter and aircraft operations to 
produce an immediate increase in interdiction rates in high 
threat areas. This surge, Operation FRONTIER SHIELD, was an 
effective proof of concept to deny smuggling routes around 
Puerto Rico and in the Eastern Caribbean. However, the FRONTIER 
SHIELD level of effort is not sustainable without additional 
recurring investment in resource infrastructure and personnel.
    Over the past several years, streamlining efforts have 
squeezed the surge capacity out of the Coast Guard. Personnel 
on the front lines have been asked to work harder, deploy 
longer and see their families less. Operational units have been 
temporarily augmented with personnel from other units, leaving 
gaps elsewhere. This level of operations with the current 
workforce, apparent in fiscal year 1997 operational data, 
cannot be sustained for long periods of time.
    The Coast Guard's fiscal year 1998 budget request will 
allow the Coast Guard to commence Campaign STEEL WEB. STEEL WEB 
will institutionalize the capabilities and strategies that have 
proven effective in Operation FRONTIER SHIELD.

                 SPECIFIC INCREASE IN DRUG ENFORCEMENT

    Mr. Wolf. Although the $34.4 million increase is advertised 
in some documents as being an increase specifically for drug 
enforcement activities, is it more accurate to say these 
resources would be used to raise cutter and aircraft OPTEMPO in 
the Caribbean area of operations, which will likely result in 
activities other than just drug enforcement?
    [The information follows:]

    The Eastern Caribbean is obviously one area of emphasis, 
but increased OPTEMPO will not be limited or exclusively 
focused on the region. Interdiction efforts have been surged 
during Operation FRONTIER SHIELD to establish a deterrent. The 
Coast Guard will continue an enhanced level of OPTEMPO in the 
region to maintain the deterrent, not necessarily at the surge 
level. With the resources in the fiscal year 1998 request, the 
Coast Guard intends to deploy flexible interdiction surge 
capabilities elsewhere in the Western Caribbean and Eastern 
Pacific to address the highest prevailing threats. Operation 
GULF SHIELD, currently in progress off the coast of Texas, is 
an example of initiatives that support this concept of 
operations.
    The multi-mission nature of Coast Guard assets presents the 
likelihood that increased OPTEMPO will concomitantly benefit 
mission activities other than drug law enforcement. Because 
drug and migrant interdiction high threat areas frequently 
overlap, the Coast Guard can effectively accomplish these two 
missions at once, essentially doubling the taxpayers' return on 
investment. This type of flexibility highlights the benefits of 
the Coast Guard's multi-mission character. For example during 
Operation FRONTIER SHIELD, the flow of undocumented immigrants 
into Puerto Rico has been reduced by 75 percent.
    The Coast Guard's fiscal year 1998 budget request reflects 
an estimated increase in interdiction based on anticipated 
mission requirements and resource availability. Actual 
employment of Coast Guard resources is always dependent on 
national security or humanitarian priorities, which cannot be 
accurately predicted.

                 INCREASE IN AIRCRAFT EMPLOYMENT HOURS

    Mr. Wolf. Your 1998 budget proposes across-the-board 
increases in aircraft hours for virtually all missions, 
including aids to navigation, marine environmental protection, 
and training. Is this made possible from the additional $34.4 
million?
    [The information follows:]

    The increase in aircraft hours referenced is in the 
``employment'' hours category presented on pages 100-101 of the 
Coast Guard's fiscal year 1998 budget request. Since all Coast 
Guard aircraft are multi-mission, it is possible to document 
efforts in several different mission categories simultaneously 
during one sortie. For example, while enroute to identify a 
suspected drug trafficking vessel, aircrews are also able to 
survey that same area for pollution and patrol for undocumented 
immigrants. The ``resource'' hour is credited to drug law 
enforcement while the entire sortie may also be credited to 
``employment'' hours expended in support of marine 
environmental protection, and illegal immigration efforts.
    In this regard, the increase in ``employment'' hours 
across-the-board is made possible by the increased resource 
hours sought for drug law enforcement in the $34.3 million 
request.

        operating hours for drug enforcement--fy 1997 vs fy 1998

    Mr. Wolf. If the increased resources would be used for 
anti-drug efforts, why do your justifications show decreases in 
cutter and aircraft operating hours allocated to drug 
enforcement activities in fiscal year 1998?
    [The information follows:]

    The increase in fiscal year 1997 drug law enforcement 
resource hours is largely attributed to $14.6 million in non-
recurring funding the Coast Guard received from the Office of 
National Drug Control Policy to make surge operations like 
FRONTIER SHIELD and GULF SHIELD possible. However, the fiscal 
year 1997 level of effort attained with non-recurring funding 
is not sustainable without further investment in resource 
infrastructure and personnel. The fiscal year 1998 request 
seeks to begin establishing the permanent infrastructure and 
personnel necessary to sustain higher operations tempo 
consistent with Coast Guard drug law enforcement program 
standards. The funding request for fiscal year 1997 will 
provide a marked increase in permanent capability over that of 
fiscal year 1996, and comparable capability to that 
demonstrated during temporary surge operations in fiscal year 
1997. The Coast Guard's 1998 request is a measured first step 
in a multi-year strategy and budget consistent with the 
National Drug Control Strategy.

                drug enforcement flight/employment hours

    Mr. Wolf. On page 51 of the justifications, it is indicated 
that drug enforcement aircraft flight hours will be reduced in 
fiscal year 1998. However, on page 101, it indicates that 
aircraft employment hours for such purposes will be increased. 
What is the difference between these two measures, and how can 
one be going down when the other is going up?
    [The information follows:]

    Aircraft flight hours, or resource hours, are a measure of 
actual flight time officially creditable to an individual 
aircraft.
    Employment hours represent the multi-mission benefit of 
flight hours. Two or more employment categories can benefit 
simultaneously. For example, a three-hour drug law enforcement 
flight where the crew is simultaneously alert to the detection 
of marine pollution would benefit both marine environmental 
protection and drug law enforcement. This flight would 
constitute six employment hours, three for each program, but 
only three resource hours.
    The total of all aircraft resource hours, planned for 
fiscal year 1998, including training, is greater than that 
programmed for fiscal year 1997. By the end of fiscal year 
1997, due to mission priorities, the Coast Guard expects 
resource hours will have been reprogrammed from other missions 
to drug law enforcement. In fiscal year 1998, with resources 
(i.e. flight hours) provided in the fiscal year 1998 budget 
request, the Coast Guard will restore those flight hours to 
approximate fiscal 1996 levels for other missions.
    Due to the multi-mission nature of the Coast Guard and the 
increased emphasis on drug law enforcement, the expectation is 
that all operational units will be planning more flights that 
will include the drug law enforcement mission category as a 
beneficiary. Thus it is possible, and expected, that employment 
hours for drug law enforcement will increase even if actual 
resource hours decrease.

              effect of doubling drug enforcement funding

    Mr. Wolf. If the 1998 budget request were approved by the 
Congress, the level provided ($345.1 million) would be about 
twice the level provided in fiscal year 1994 ($177.2 million). 
Will the outputs from your efforts be twice the level of 1994 
as well?
    [The information follows:]

    The fiscal year 1998 funding request nearly doubles the 
operating hours for cutters and aircraft as compared to fiscal 
year 1994.

             COAST GUARD DRUG ENFORCEMENT FUNDING VS. EFFORT            
------------------------------------------------------------------------
                                                   Fiscal year--        
                                         -------------------------------
                                            1994 actual    1998 estimate
------------------------------------------------------------------------
OE Funding level........................    $177,200,000    $354,100,000
Cutter operating hours..................          39,825          80,800
Aircraft operating hours................           6,331          12,700
------------------------------------------------------------------------

    The Coast Guard anticipates total drug interdiction 
effectiveness in fiscal year 1998 will be higher than 1994, but 
the historic relationship between funding and mission 
effectiveness is not necessarily linear. Changes in policy 
demands (defense in depth), smuggling trends, operating and 
maintenance costs, interagency involvement, and the quality of 
intelligence are examples of other variables that impact 
interdiction effectiveness.

                special exclusion for interdicted aliens

    Mr. Wolf. Your budget justifications say the Coast Guard 
supports a legislative change for special exclusion of aliens 
interdicted by the service. Would you describe this problem to 
us, and tell us how it affects your operating budget?
    [The information follows:]

    The Coast Guard supports special exclusion legislation for 
interdicted aliens, currently called ``Expedited Removal,'' 
because it could avoid the loss of a significant amount of 
Coast Guard cutter time and costs. Currently policy requires 
Coast Guard cutters which interdict migrants at sea to remain 
at sea and hold migrants while waiting for their disposition to 
be decided. Throughout the lengthy waiting period, cutters 
cannot pursue their other mission requirements. Expedited 
Removal, if applied to illegal aliens, interdicted at sea, 
would allow Coast Guard cutters to transfer custody of 
interdicted aliens to Immigration and Naturalization Service 
agents ashore and get back to scheduled operations, such as 
drug and fisheries law enforcement patrols.
    The Department of Justice will gradually phase in the 
implementation of Expedited Removal beginning on April 1, 1997 
due to concerns regarding potential legal challenges. The new 
immigration legislation allows challenges to the new procedure 
for the first sixty days after the effective date. It is still 
unclear whether Expedited Removal will apply to all migrant 
nationalities.
    The following examples illustrate the inefficient use of 
resources by holding interdicted migrants on Coast Guard 
cutters at sea:
    Chinese Aliens: From March 1995 to March 1997, the Coast 
Guard averaged 19 days of delay in each of five cases 
(averaging 113 migrants per case), waiting for an interagency 
decision on the migrants' disposition. This unprogrammed time 
equates to 2,280 hours of high and medium endurance cutter 
operating time. Those cutter resource hours represent 
approximately $3.8 million which would have otherwise been used 
for other Coast Guard missions such as drug or fisheries law 
enforcement operations.
    Cuban Migrants: For Cubans in fiscal year 1996, the average 
decision making period was 2.5 days in each of 42 cases 
(averaging 10 migrants per case), amounting to 2,520 hours of 
patrol boat operating time, and approximately $1.3 million that 
could be used for other Coast Guard missions.

                        sale of governors island

    Mr. Wolf. When do we now expect the Federal Government to 
sell Governor's Island, who will perform the sale, and how much 
money will it bring in?
    Admiral Kramek. At the end of this summer, in the 
September/October period, I expect to have our remaining 
operations off of Governor's Island. I will then put it in a 
caretaker status for approximately a year. I don't expect any 
environmental surprises there. We have already had some 
environmental impact statements. We don't have any big cleanups 
to do. I expect then in October of 1998 to turn the island over 
to the General Service Administration for their caretaker 
status. In this intervening year, October 1997 to October 1998, 
GSA will start to get it ready and advertise it for disposal as 
excess property.
    I hope that Governor's Island will be developed. And it is 
valued between 500 million and a billion dollars. And I also 
hope, and some in the Senate have suggested, especially Senator 
Hollings, that if that is the case and GSA disposes of it to 
developers for that price, why then the exit cost that the 
Coast Guard used to get out of there, $70 million over a period 
of years, and the infrastructure we have invested in that 
island would be returned to offset our Acquisition, 
Construction, and Improvements costs. It would be paid back. 
Whoever paid for it would pay for that. There is some thought 
to that.
    There are other people interested in it. Senator Moynihan 
would like to turn it into a park for New York.
    Mr. Wolf. Do they want to buy it, or do they want it for 
free?
    Admiral Kramek. Free. The city has already met, the city 
and state. They have no money. So I would say that there is 
multiple people who want it. It will end up being an economic 
and a political decision, but it will be--GSA will be in charge 
of it, and they should have it lock, stock, and barrel in 
October 1998. All the families are off, like I said. The school 
is off. All of our things are off except for those operations I 
needed to maintain in New York, like the Station New York and 
the group and the MSO. I have new facilities being made ready 
for them on Staten Island, and they will all be ready this 
year. And we are progressively moving over there.

                    additional streamlining options

    Mr. Wolf. Before developing your streamlining plan, you 
established two high-level teams to assess potential 
organizational consolidations and streamlining or closure of 
your training facilities. These groups identified several 
options for cost savings, only some of which were implemented 
in the streamlining plan. Some of the options not included in 
the original streamlining effort were, one, replacement of the 
current field structure with a reduced regional structure, 
elimination or consolidation of maintenance and logistics 
commands, and elimination of one of the three training centers.
    What is the estimated annual operating cost, including 
personnel cost, of the current Coast Guard field structure and 
what additional savings were identified in the earlier study 
from possible consolidations?
    Admiral Kramek. I will provide those savings, potentially 
what they were, for the record. But I can tell you only one of 
those things had potential for greater savings. The alternative 
analysis that showed a regional structure was not--the benefits 
didn't exceed the costs as much as some of the other 
alternatives. And the rate of return on investment wasn't as 
high. It was also a great risk to do that.
    It might be something we can do in the future now that we 
have done the first step of consolidation. And all of our 
districts now, which have been reduced to ten, are what I call 
districts light. They no longer have all the support 
activities, all of the bureaucratic baggage. They are there to 
make operational decisions. Going to the regions would be the 
next step. It was too big of a risk to take in disruption of 
service to the public. I wasn't sure that was all going to 
work. I would call that reengineering rather than just quality 
management and process improvement, which is what we did.
    As far as consolidating the two MLCs, I don't agree with 
that at all.
    Mr. Wolf. I was just going to ask you. What would the 
savings had been had you done that?
    Admiral Kramek. I don't know. I have to provide that for 
the record, but----
    Mr. Wolf. Roughly?
    Admiral Kramek. I don't remember. The thing that--the 
reason why we didn't do it was because, in my view, it would be 
impossible to provide customer service and logistic support to 
a very diversified Coast Guard on both coasts from just one 
location. There are great risks when you consolidate support 
activities and centralize, there are savings that are available 
from doing away with like things in consolidation, but there 
are also costs on loss of service to your customers and the 
people not being out there with the people they serve. And 
these are maintenance people, the people who fix the boats, who 
write the shipyard contracts, who provide the health care and 
the health service and the medical contracts to take care of 
our dependents and all that.
    I actually consolidated them from 12 Coast Guard districts 
into two areas, one in Norfolk and one in San Francisco. That 
is just starting to work now. And we have had that going for 
about four or five years now.
    I have also taken all of the support services away from all 
of the Districts and made these Integrated Support Commands. 
They haven't been even stood up for one year, but as I go 
around--I just visited the one in Seattle and they gave me a 
tour last week. It is operating very successfully. I was very 
happy to see that. I just visited the one in New Orleans. They 
have got a little way to go. It has only been a year since we 
have operated them.
    I think it was more of a management decision. I am not sure 
what the savings would have been if we consolidated more, but I 
will provide that for the record. In my view, at that time it 
was too big of a risk to take and disrupt our service to the 
public.
    [The information follows:]

    Currently, the two Maintenance and Logistics Commands 
(MLCs) each directly support one of the two Area commands. The 
following factors contributed to maintaining the status quo as 
the most desired organization:
    The Coast Guard relies heavily on its MLCs for technical 
and administrative support of operational assets and crews. The 
disruption or inefficiencies of consolidation could affect 
frontline readiness and degrade vital services the Coast Guard 
provides the public. Consolidating both MLCs into one would 
have created a situation where an over-extended span of control 
would have reduced surge capacity, reduced customer focus, and 
increased travel costs.
    Maintaining two MLCs retains the existing strengths of the 
current organization. Each has adapted to the unique 
operational and support needs of differing geographic regions, 
and each MLC has a strong customer focus and familiarity.
    The Area/MLC combination links the delivery of support with 
operations and maintains unity of command.
    Maintaining the two-MLC concept provides needed stability 
in order to establish the new Integrated Support Commands 
(ISCs) for decentralized support delivery. These new ISCs were 
designed to more efficiently and effectively provide frontline 
customer support while relying on their respective MLCs for 
resource, technical, and administrative support. In this sense, 
the MLCs and their ISCs are an integrated support system. 
Eliminating one MLC would necessitate additional staff for the 
new ISCs and pose a digression away from one major streamlining 
objective--refining operations and support activities as core 
expertise.
    The savings which would have resulted from consolidating 
the two Maintenance and Logistic Commands (MLCs) was estimated 
at 83 full time equivalents (FTE). Eliminating both MLCs and 
distributing their functions to other organizations was less 
efficient and had savings estimated at 64 FTE. Maintaining the 
two MLCs avoided the anticipated negative impacts discussed 
earlier.

                        training center closure

    Mr. Wolf. Why did the Coast Guard decide not to close one 
of the training centers? And if one had been closed, which one 
would it have been?
    Admiral Kramek. It would have been Petaluma, California. We 
decided not to close it because of the tremendous public outcry 
from Petaluma, California. I mean, we even had the children in 
the elementary school writing letters to the President of the 
United States.
    Mr. Wolf. How many people do you have there?
    Admiral Kramek. We had about six or seven hundred people 
there.
    Mr. Wolf. How many go through basic training there?
    Admiral Kramek. I don't remember what the flow is, but we 
have a lot of our basic training schools, technical schools, 
our corpsmen, our dental technicians, our electronics 
technicians, our telecommunications specialists all go to that 
school, plus our chief petty officer.
    Mr. Wolf. What would have the savings been had that closed?
    Admiral Kramek. At least $20 million a year. It had a 
tremendous--when you do these closings----
    Mr. Wolf. I know.
    Admiral Kramek [continuing]. You do an impact, community 
impact. It had tremendous impact on the community, something 
like 45 percent of all the children in Petaluma elementary 
schools were dependents on the base. The town of Petaluma is 
not a wealthy town, and this school is eight miles out of town 
in a place called Two Rock. It is only horses, farms, cows out 
there--it is a good learning environment. It is eight miles 
from town. The bottom line is the economy depends on that base. 
And at that particular time and the shape that that local 
economy was, it was decided it was too much of an impact to 
eliminate that. That may not be true in the future. We have to 
continue to look at places like that, in my view, if we are 
going to balance the budget.

                  excess capacity at training centers

    Mr. Wolf. I understand. I had a base close in my district, 
Vint Hill, out in Fauquier County. It is tough on an area.
    How much excess capacity, classroom, sleeping areas, 
currently exists at each of the training centers?
    Admiral Kramek. None exists at Yorktown. None will exist at 
the Coast Guard Academy anymore after I have--I am 
consolidating all of my quality management, leadership 
training, and management training and all the schools 
associated with that at the New London site. This includes 
moving the Officer Candidate School there from Yorktown, 
Virginia, and the CPO Academy from Petaluma to amortize that 
university site over 365 days a year. There will be no excess 
capacity there. I have already started to move some of those 
entities there now. By the end of 1999 there will be no excess 
capacity at either of those two training centers.
    There is really--Cape May is our recruiting center for 
enlisted personnel. It is designed to take 3,500 recruits a 
year. We could really take 4,500 or 5,000. It is big enough, 
but all we are bringing into the service, because we are 
downsizing, is 3,500 now. I would not carve out any excess 
capacity there. I just have not put the instructors or the 
people there. I am not using that facility to 100 percent. But 
should we have a change in environment or things change, we 
only have one recruiting center.
    We consolidated--I had one in Alameda, one in Cape May. 
There is only one for the Coast Guard now, one receiving center 
for enlisted personnel. That is Cape May. So while there might 
be some spare barracks rooms there that are not being used, 
that is just because we have downsized the service. We are 
still on our decline. We are not bringing as many people in.

                     domestic icebreaking user fee

    Mr. Wolf. To cover something that Mr. Sabo covered on the 
user fees, would you explain why you feel user fees are 
justified for the domestic icebreaking on the Great Lakes.
    Admiral Kramek. I can't explain why they are justified. I 
will just say that I have been asked to look into user fees. I 
have been asked to study the issue this year and to propose 
legislation. And then if Congress approves what I propose, then 
that will be used as part of the fiscal 1999 budget. I really 
don't know at this point if user fees will work. I have to put 
together a study group. I have to have an outreach to all of 
the customers who would pay those fees on the Great Lakes and 
in the northeast.
    In a place like the Hudson--if we get off the Great Lakes 
for a moment, if we go to the Hudson River, all the oil that is 
required in Albany and Schenectady and those places for home 
heating oil in the winter comes by barge up the Hudson River. 
There is no pipeline. There is no other way for it to get 
there. In the winter, the Coast Guard has to break the ice all 
the way from New York City to Albany in order to allow that 
commodity in domestic commerce to flow.
    I am not sure what formula we would come up with for user 
fees for those types of barge and shipping companies and how 
that would be passed on to the consumer, so we have to do what 
is called an impact analysis. And that will take me a year to 
do that, Mr. Chairman, before I can report to you whether it is 
a viable fee or not.
    Mr. Wolf. Can you identify the beneficiary of the services 
provided?
    Admiral Kramek. You can identify the beneficiary in each 
case, but they are all different. I would say, though, in 700--
almost 700 assistance cases on the Great Lakes during last 
year's ice season, about half of them were commodity shippers 
or carriers, cement carriers, coal carriers.
    We contribute to the economy of that Great Lakes industry 
somewhere between 45 million to 78 million dollars a year in 
reduced inventory costs because, as many of our industries are 
going in this country, it is just-in-time inventory, Mr. 
Chairman. And rather than for them stockpiling materials at 
some great cost in the winter, they like to try to keep moving 
as late into the ice season as they can, because they are--
until they are totally frozen and then as early in the spring 
as we can.
    And that is predominantly where most of our icebreaking 
comes. The other half of the customers are people in trouble, 
people who probably shouldn't be out there or people that are 
trying to push it. It could be a fishing vessel. It could be 
recreational people. Sometimes it is just people fishing on the 
ice.
    A couple weeks ago it was tug with an oil barge that was in 
Lake Erie being delivered and it lost its tow in the ice and 
almost cause an environmental disaster just north and west of 
Cleveland. And one of our icebreaking tugboats was able to get 
there and to break it out of the ice and keep it--it was moving 
along with the ice as the wind was blowing, heading right for 
the rocks. Once you are beset in the ice, you move with the ice 
wherever the wind delivers you and the currents deliver you.
    So there is a variety of things. We would have to sort out 
all of the users. In some places it is easier than others, like 
in the oil traffic up and down the Hudson River.

                      recreational vessel user fee

    Mr. Wolf. I will recognize Mr. Packard in a minute. Just 
one last question, though.
    In the original passback, OMB proposed that the Coast Guard 
begin collecting a new user fee for large recreational vessels 
in fiscal year 1998, and assumed that $25 million could be 
raised. Is this part of the President's budget, and if not, why 
not?
    Admiral Kramek. I don't believe it is part of the budget 
right now. While we may look at that, I don't think--I think we 
are held harmless from that amount of money being collected. 
Our experience--and at my OMB hearing that I had--I had a 
hearing with OMB, as we all do. I explained to them that our 
experience with recreational user fees was not popular with the 
American public, that although Congress had approved a user fee 
for recreational boats a few years ago, the following year 
after that legislation was passed it was repealed by Congress.
    Mr. Wolf. Yes.
    Admiral Kramek. It was voted out. It was considered by the 
American public to be double taxation in that they have already 
paid for fuel taxes and things of that nature. In my opinion, 
the real reason that that legislation was overthrown and not 
popular was because all of the funds collected from that 
recreational boat user fee went into the general treasury fund. 
Our surveys indicated that had it gone to the agency that was 
responsible for improving services for them, that it might have 
been more agreeable to them.
    I think that is going to be an issue with any user fee for 
the type of services we provide in the future. The American 
public that I deal with, my customers, they don't like user 
fees, but when they do pay them, they have a less of a problem 
paying for them if they see it is going to the service provider 
and if it is to help provide improved services to their 
customers and to offset their costs. They understand that. But 
when it goes into a general fund to offset a deficit and it is 
not used for the service provider, they mount quite a campaign 
so that that legislation is not approved.
    Mr. Wolf. Mr. Packard.

               boating safety regulation and enforcement

    Mr. Packard. Thank you, Mr. Chairman. I will--let me just 
concentrate for a moment on boat safety. What is the role of 
the Coast Guard in terms of local and state or county or city 
boat safety regulations and enforcement?
    Admiral Kramek. The Coast Guard is responsible for a 
national boating safety program. It really has three facets to 
it, in my view. One is the state program that we administer a 
grant program to the states, because the states are 
instrumental in boating safety. They are really on the docks, 
on the marinas. The state marine patrols, the state educational 
system, some of them have licensing systems, all of these are 
part of the grant program. Every state in the union 
participates except for Alaska. They are the only state that 
doesn't participate.
    It is usually about $35 million a year. This year it will 
be $55 million, I believe, in grants that go out to the through 
a formula that we put together and we administer. We are in 
partnership now with the National State Boating Law 
Administrators, NSBLA. I signed a partnership agreement with 
them to further that state boating safety program.
    The other part of our boating safety program is conductedby 
the Coast Guard itself and mostly involves the Coast Guard Auxiliary. I 
have 35,000 volunteers who last year conducted over 500,000 boating 
safety classes in the United States and conducted, I think, over 
200,000, might be even 250,000, courtesy marine examinations of boats 
at marinas and docks to make sure they are safe, life jackets, 
ventilation systems, flares, lights working and all of that type of 
thing.
    The third arm of our boating safety program has to do with 
assisting the boaters that are in distress or have a problem 
and need assistance. Our whole small boat unit, search and 
rescue system, VHF FM system, is all part of that. Our boating 
safety program is designed to ensure that if they do have a 
problem while they are out there that they are safe.
    Those three things work together. If we do really good on 
the prevention side, making sure that they are sober--half of 
all boating fatalities are for people that are inebriated--
making sure that they follow the rules, that their equipment 
operates properly, that the boats they buy have been properly 
inspected and certified, and the states are all locked in 
together with us, then that is less of a response system we 
need to go after them. So it is really those three things 
comprise the major boating safety program, the national boating 
safety program that the Coast Guard has oversight for.
    Mr. Packard. Do intrastate--within each state, are the 
standards and safety requirements the same statewide, or do 
they vary from city to city?
    Admiral Kramek. They vary from state to state.
    Mr. Packard. But not from----
    Admiral Kramek. Some states will have licensing for minors. 
Some won't.
    Mr. Packard. What kind of problems does that variation from 
state to state create for you?
    Admiral Kramek. It creates a problem. An example, probably 
a good example, would be boating while intoxicated. We know the 
ravage that that causes, and so the Coast Guard, when we are 
out conducting law enforcement on the water, if we pick up a 
boater and give them a breathalizer or feel that he is 
intoxicated, in some states our authority is good and we can 
have an arrest. In other cases, they won't believe the Coast 
Guard at all. You need to have the state boating officer there 
to conduct the tests or they won't accept that. That is 
probably the one that has the greatest variance.
    There is also a great variance in licensing. Some states 
refuse to have a licensing program for minors who operate 
boats, and others insist on it.
    The State Boating Law Administrator, Ed Carter, the head of 
NSBLA, has a great deal of leadership and talent. And I believe 
under his leadership he is going to be able to eliminate a lot 
of those disparities and bring a lot of unity to all the 
states. And we are working very closely together with him and 
our auxiliary is, too, to bring that about. It would be a very 
powerful improvement in safe boating for America.

             Regulatory Initiatives For Personal Watercraft

    Mr. Packard. What changes in regulations have you 
implemented or contemplated as jet skis and other types of 
boating activities have emerged?
    Admiral Kramek. Jet skis represent the largest increase in 
accidents and deaths of anything--personal watercraft, of 
anything we have done recently. The states now have all 
programs for educating the public. The Coast Guard Auxiliary 
has programs on educating the public on jet skis. We even have 
auxiliarists on jet skis who go out to these locations to train 
people to properly wear their life jackets.
    One of the major thrusts was not allowing minors below a 
certain age, capability or size to use jet skis. And most of 
the states have adopted that as a rule now. So I think it would 
be rare if you would find in Florida, for instance, someone 
under the age of 12 or 13 operating a jet ski. All of those 
initiatives are underway in order to reduce the amount of 
accidents on that personal watercraft.
    Mr. Packard. Are those federal or state initiatives?
    Admiral Kramek. The federal initiatives are what I 
promulgate through the Coast Guard Auxiliary, and they don't 
have law enforcement authority, but theirs is one of education 
and compliance and inspecting at the dock and courtesy marine 
exams. The enforcement authority almost always rests with the 
state, because it is usually in inland waters and state waters 
that those things are operated.
    Mr. Packard. Thank you, Mr. Chairman.
    Mr. Wolf. So you are not recommending any federal 
regulation of water skis?
    Admiral Kramek. No, I am not.
    Mr. Wolf. Have you promulgated a standard that every state 
should follow if they want to be a good state?
    Admiral Kramek. I think we probably have, but I don't know 
exactly what it is. I do know it is based on education. It is 
based on age of user. It is based on having flotation devices 
that you must wear, but it is not a federal regulation. It is 
normal safety standards.
    Mr. Wolf. But it probably wouldn't be a bad idea to just 
put out a standard recommendation for all the states to adopt 
with regard to the issue.
    Admiral Kramek. If I haven't already, I will, and I will 
provide that for the record, too. I think it is a great idea. 
It is absolutely necessary. I would be surprised if I hadn't 
done it. I am just not--I am not personally aware of it.
    [The information follows:]

    There are no Federal standards promulgated to the states 
specifically regarding personal watercraft (PWC) safety. PWC 
are vessels, and are subject to federal rules of the road and 
other operational regulations, as well as applicable equipment 
carriage requirements. The National Association of State 
Boating Law Administrators developed and adopted a model act 
for personal watercraft. The Coast Guard participated in the 
development of the model act and fully supports it.
    More than 50 States and territories have some sort of PWC 
laws. There are various provisions in these laws, including 
requiring operators and passengers to wear personal flotation 
devices (PFDs), operator age restrictions, prohibition of 
nighttime use, and limitations on wake jumping. Federal 
regulations issued in 1993 provided the latitude for States to 
adopt and enforce PFD requirements suited to their needs. 
Nearly 50 states and territories require PFD wear on PWC.
    Because the location of PWC operations are primarily on 
inshore waters, State and local agencies are most involved in 
regulating their operation. They enforce operational 
infractions such as reckless and negligent operation, and 
excessive use of alcohol. More than 50 states and territories 
have adopted a blood alcohol concentration intoxication level 
standard in their laws equal to or more stringet than the 
federal standard.

                   Importance of Boat Safety Mission

    Mr. Wolf. How important is boat safety to the Coast Guard 
in its overall mission? Where does it rank?
    Admiral Kramek. Boating safety ranks very high as far as 
serving the American public. About the largest number of 
constituents we have are in recreational boats. There are some 
estimates as much as 60 or 70 million Americans find themselves 
on a small boat or personal watercraft during the year. And I 
know that there are over 17 million boats owned by Americans in 
the United States.
    The national program that we administer, however, is one 
where we really try to have the states responsible for what 
should properly fall under their responsibility. We do that by 
meeting together with them, by suggesting various standards 
together with them, through the grant program, which you are 
familiar with. The remainder of it is being able to respond to 
the boater both with our Auxiliary and education, as I 
mentioned, and courtesy marina exams, and when they are in 
trouble and being able to be there with our series of small 
boat units and all that respond to their needs.
    I think it is a very wise investment that we make in funds. 
I agree with Ed Carter, the President of NSBLA, that it is 
important to fund the states at the amount that they have 
requested this last year. I think it is $55 million in the 
grant program. That is essential to boating safety. I know it 
is always an issue of where the money is going to come from. I 
hope we----
    Mr. Wolf. Entitlement or not.
    Admiral Kramek. But the important point is that they are an 
important cog in that wheel, in my view the most important cog 
in that wheel. And we have the responsibility for managing the 
national program in an intelligent way. It relies on the 
states.

                         Gambling Vessel Safety

    Mr. Wolf. You know of my concern over the safety of casino 
gambling. Has the Coast Guard made any changes over the past 
year to improve the safety in this area? We had the New Orleans 
situation. I know you did look at some search and rescue 
exercises. You did in 1994. Have you done anything recently 
over the past year?
    Admiral Kramek. After my discussions with you in December, 
I looked very hard at this whole area. I wanted to ensure that 
the highest degree of safety existed with these particular 
vessels, because of the passenger load. At any one time today, 
if we froze time this moment, there would be 80,000 passengers 
on gambling vessels in the United States.
    Mr. Wolf. 80,000?
    Admiral Kramek. 80,000 passengers. That is not all of the 
barges that exist and these other fixed things that they have 
along the docks in different places that I don't, in the Coast 
Guard, have oversight over, but the Corps of Engineers does 
permit. There are over 75 million passenger trips a year on 
these gambling vessels.
    Mr. Wolf. 75 million?
    Admiral Kramek. 75 million. They only go in and out four 
hours at a time. About every four hours they change passengers. 
Some go overnight. Most of them go every four hours or once a 
day. So there is a tremendous change out. The new ones being 
designed I am very concerned about, especially the ones that 
are going to be operating in the Great Lakes. I am concerned 
because they are going to carry between three and five thousand 
passengers on board.
    And so I have told my marine safety people I want the 
highest standards of safety for passenger vessels, applied to 
them. We are presently doing that from fire safety to having 
inflatable devices on the Great Lakes because the water is cold 
there should they have a problem, toward stability so they 
won't capsize. They are two subdivision standard vessels. That 
means two adjacent compartments below the waterline can flood 
and they won't sink. Just about everything we can think about, 
including inspections and quarterly inspections.
    And even the ones that are moored that I don't have 
oversight over, I have asked to let me inspect. And we are 
doing that. Recently, I think, the GAO or the IG is 
recommending that we not do that, because it is not in our 
purview, but I think it is a safety issue now. Looking at the 
Bright Field accident in New Orleans is a good example that we 
can't overlook.
    Having said all that, there is one more thing that we can 
do. I had asked my staff a week or so ago when it was clear to 
me that at the time the Coast Guard didn't appear to have the 
authority to require all these vessels to have a response plan. 
Mr. Chairman, if something would happen to one of these 
vessels, the Coast Guard's 41-foot search and rescue boat 
wouldn't be able to rescue 3,000 people or 2,000 people. So I 
am very concerned that these ships are designed so safe that 
nothing would happen that would cause all those people to end 
up in the water where we would have to respond. But should that 
happen----
    Mr. Wolf. Kind of like the Titanic.
    Admiral Kramek. Kind of like that. Should that happen, you 
need to have a community response plan. And the local city, 
FEMA, Red Cross, everybody has to exercise together. And it is 
the responsibility, I feel, of those communities where those 
vessels are going to sail from to come up with that response 
plan.

                             Response Plans

    Mr. Wolf. Do you think Gary, Indiana, has come up with a 
sufficient response plan?
    Admiral Kramek. I think they are--Indiana is one of the 
only states that requires a response plan. And Indiana is going 
to allow us to test that response plan. I am working together 
with them. So I applaud Indiana as taking a lead in response 
plans. I also think now, having my experts look at this just 
last week, that I may have the authority to regulate response 
plans for all these vessels and an exercise plan which has to 
be accomplished.
    Mr. Wolf. Well, I would encourage you to do that.
    Admiral Kramek. I am going to propose that that be done. 
And if I don't have that authority, I will come before Congress 
and ask for that legislative authority. I think it is something 
that we have to make sure that we ensure the safety of all 
those people.

               Cold Water Requirements for Gaming Vessels

    Mr. Wolf. Well, I would encourage you to do that, although 
it is well known that I am opposed to casino gambling on boats. 
Frankly, I am opposed to it, you know. I am opposed to it, 
period. But having said that, I certainly want to make it as 
safe as possible for anybody who is out there, particularly in 
cold water. I was concerned with regard to the Great Lakes. Has 
there been anything special with regard to cold water areas?
    Admiral Kramek. With respect to that area, we are going to 
require inflatable life rafts or special life boats so that if 
anything would happen there are sufficient boats. Usually we 
require 125 percent of the passenger carrying capacity for all 
those people to get on so they never have to enter the water.

                      High Capacity Gaming Vessels

    Mr. Wolf. How large are those boats? How many passengers 
will they hold?
    Admiral Kramek. Some of the new boats that are being 
designed--I haven't seen them built yet, but they look like 
they will carry from three to five thousand passengers.
    Mr. Wolf. And you inspect the crew? The crew meets----
    Admiral Kramek. The crew will be licensed. The crew will be 
tested. The ship will have to meet certain design standards 
approved by the Coast Guard. We will inspect it annually and 
once a quarter. And in that particular case we will also 
inspect their response plans. We will make them drill for 
lowering their lifeboat, evacuating passengers, fire fighting 
and all of those typical things we do for a large passenger 
vessel.
    Mr. Wolf. Will they pay a user fee?
    Admiral Kramek. Yes, they will. They will pay a user fee 
for our inspection program.

                         Senior Official Travel

    Mr. Wolf. Good. If you can keep me updated on that, I would 
appreciate it very, very much.
    Admiral, you remember the discussion we had last year about 
senior official travel. What changes have been put in place 
over the past year to provide further control over travel 
abuses?
    Admiral Kramek. I met with you personally on that, Mr. 
Chairman. And I told you that I felt our senior officials were 
responsible for approved travel within per diem rates. I 
personally wrote each senior official in the Coast Guard a 
letter, and I asked them over two years to save 15 percent 
administratively. I can report to you this morning, on recently 
having checked that within the last month, it looks like their 
savings over a two-year period will be 17 percent of all their 
personal travel. I also have not received any reports, I am not 
aware of any reports, of any abuses by any senior officials 
this last year by the IG. I have asked the IG if she has had 
any, and as of a couple of weeks ago she said she has had no 
complaints or reports of abuses.
    Mr. Wolf. We have asked the IG to look at it, and she also 
mentioned how your meeting which had been at Westfield was at 
Andrews Air Force Base this year, which is----
    Admiral Kramek. Yes, I held it at Andrews Air Force Base.

                 Vessel Traffic Service Implementation

    Mr. Wolf [continuing]. A better price, and we appreciate 
that. I think it just demonstrates good leadership.
    The last area concerns, vessel traffic services. Last year 
Congress terminated the VTS 2000 program and directed the Coast 
Guard to work closely with affected local communities in 
developing requirements for a follow-on system. I understand 
you are pursuing this analysis of the New Orleans area, which 
has the highest need for a port safety system such as VTS. How 
are you evaluating the requirements at both the local and 
national level, and what is your time frame for coming back to 
Congress for implementation?
    And after we did, I remember seeing a number of ads in the 
paper, where Global and other companies took these ads out in 
the New York Times and Washington Post, with regard to VTS. 
What is your time frame for coming back to us with a program?
    Admiral Kramek. My time frame will be this summer. There is 
money in this budget to implement a system in the New Orleans 
area. There is about $5 million, I believe, in Acquisition 
Construction, and Improvements funds. We are on track to be 
able to implement the system.
    What will the system look like? We have had quite an 
outreach to people with--outreach with the people and our 
customers in the area, with industry and local officials. I 
have a special 24-person board being headed up by the former 
owner of Tidewater, Mr. John LeBord, and a very renowned person 
in the maritime community, and representatives on that board 
from industry, local county governments, et cetera. They have 
had four meetings already. This is a tough one.
    The system that it appears the users want, I would call an 
automated information system. It has to do with GPS 
transponders. It is with the industry making the investment for 
navigation systems on their ships and tow boats that would 
automatically report to the Coast Guard their position and then 
for us to assimilate all of that information and advise them of 
one-way traffic or other navigational information, rather than 
investing in an infrastructure of radars, low-light level TVs.
    It may be that we will come up with a combination of those 
things, but I have confidence that we will describe a system 
that will be suitable to the users and it will be the least 
cost for the Federal government from an investment standpoint.
    Not everybody is happy with all of these meetings. There 
are users of this system in the New Orleans area on the rivers 
who don't believe that they should pay one penny for this. I 
disagree. I think we should share. I also think the Federal 
Government should invest in a portion of this, but I think it 
will be a lot smaller than what our VTS 2000 system had in 
mind. And that is the track we are on.
    This will be a minimal-cost system that will have user 
credibility. They will want to use it. They will make the 
investment on their ships. We have to make the investment on 
the shore side infrastructure. I don't have any idea of the 
cost yet, but we are on target on our meetings, our technology 
demonstrations by industry. We have tremendous participation. I 
know your staff has been there meeting with these folks too, 
and they are a tough crowd, but we are working very hard with 
them to have them participate in the system that will serve 
their needs.
    Mr. Wolf. So the people of New Orleans shouldn't be worried 
about the fact that you put money in the budget for this coming 
fiscal year, that you are just going to go back to VTS 2000 and 
come in with the same----
    Admiral Kramek. We are not going back to VTS 2000. And next 
year, I would hope, we would do a demonstration project using 
the same technique in Tampa, Florida, which is another place 
where that port has shown some initiative in investing 
themselves. They have had two major conflagrations and oil 
spills there recently, and that will be in 1999 the next place 
that we will be able to do that. I think from those two 
demonstration projects we will be able to move on through the 
ports and waterways systems working with the local people and 
the municipalities to get the best package for them there at 
least cost for the federal government.

                  Vessel Traffic Service Capabilities

    Mr. Wolf. Some people have claimed that the recent crash of 
the freighter Bright Field into the Riverwalk retail section of 
New Orleans highlighted the need for VTS systems in New 
Orleans. Was there so little time, the four minutes after the 
master of the vessel realized he had lost steering power, that 
a VTS system would have made any difference there in that case? 
Was it simply that there wasn't enough time?
    Admiral Kramek. There was a VTS system there. There is an 
existing one. It is a traffic light system. The Coast Guard had 
regulated one-way traffic in the river for the Bright Field's 
passage due to currents and high water. So we were already 
regulating the Bright Field's passage, allowing nobody to come 
up river while she was coming down river. Had we not done that, 
it could have been an awful lot worse there.
    Mr. Wolf. VTS 2000 would not have----
    Admiral Kramek. VTS 2000 or any other system wouldn't have 
done any more than what we had done with the traffic light 
system, which is pretty basic in that section of the river. 
There have been over 100 collisions and 150 allisions--that is 
a ship hitting something else other than another vessel--over 
about the last ten years in that area. And it is about the most 
dangerous area on any of our waterways anywhere in the United 
States.

            Language Difficulties on Board M/V Bright field

    Mr. Wolf. What about the language problem? I read that 
there was a language problem. There was a Chinese crew. We have 
had problems in the air traffic control system. For example, 
the accident up in Long Island, where the Colombian, I think, 
Avianca aircraft crashed because of the communications. The 
pilot wasn't able to explain that he was----
    Admiral Kramek. That looks like one of the elements. We 
have held a safety board and an investigation. We have asked 
the NTSB to join us, and they have. That investigation is 
complete now, but they are putting it together and analyzing 
it. It will be a few more months before we have it.
    The language appeared to be an issue in some of the 
testimony. I can't report to you yet on what a factor that was, 
because it hasn't been analyzed. But definitely there were not 
English speaking crewman in the area of letting goof the 
anchors, as an example. That is now not required. You need English 
speaking crewmen where you are lowering lifeboats and things like that. 
And so that is one of the elements we will be looking at. But the facts 
have been established. We haven't connected them together, so I can't 
give you my opinion on that yet.

      language difficulties on board foreign aircrafts and vessels

    Mr. Wolf. But could it be a problem in other places? In 
aviation now, particularly with the number of aircraft that are 
traveling to foreign countries, it is not uncommon to fly all 
over the world on an American aircraft or an aircraft.
    Admiral Kramek. It is absolutely a problem. It is a major 
issue in aviation. It is a major issue in passenger vessel 
safety. When we go and inspect a cruise ship, if a certain 
percentage of the crew--all the cruise ships--almost all the 
cruise ships, over 95 percent in the United States, are foreign 
flag vessels with foreign crews. If a certain percentage of 
that crew does not speak English, they are not allowed to sail 
because they are the ones who have to give the instructions 
to--95 percent of the passengers are American citizens, over 6 
million a year. They have to give the instructions in English 
as to what is going on. They have to--especially in the--to the 
lifeboats and how to put on your life jacket in case there is a 
fire. Most--many, if not most, of the passenger vessels that we 
have not allowed to sail in the cruise ship industry in the 
last two years have been due to language problems.

                    Vessel Traffic Service User Fees

    Mr. Wolf. Is the Coast Guard still considering assessing 
user fees to cover the cost to run VTS stations? If so, why 
should this be considered?
    [The information follows:]

    The Coast Guard is not considering user fees to run Vessel 
Traffic Services (VTSs). The Coast Guard believes funding for 
basic waterway safety systems, including VTS, should be the 
responsibility of the Federal Government. Funding for 
enhancements beyond any safety-based functionality should be 
the responsibility of state or local governments, or private 
enterprises desiring the enhanced functionality. This is 
consistent with the funding arrangement recommended by the 
Marine Board in their 1996 report on VTS.

                       counterdrug security force

    Mr. Wolf. One last issue. Back to the drug problem, which 
is a problem as to what the Committee does. You never have 
adequately addressed, nor has the Administration, nor in 
fairness has any other Administration, addressed the potential 
of putting together a force which would literally and 
physically go down, whether to Mexico or whether to Peru or 
Colombia, and pick up the cartel people that are involved and 
bring them back to the United States like President Bush did 
with regard to Noriega, who is now in jail.
    You talked about the strafing and the shooting down of a 
couple of airplanes, although I would like to know how many for 
the record. I don't know if you want to tell me, but I----
    Admiral Kramek. I will provide that. I think it was--
overall it was approximately 60 between the two countries, 
Colombia and Peru.
    Mr. Wolf. Were they actually shot down?
    Admiral Kramek. A combination of shooting down, seizing on 
the ground, or strafing on the ground, taking those airplanes 
away from the system so they couldn't fly again.
    Mr. Wolf. If you could give us the different categories.
    Admiral Kramek. We will.
    [The information follows:]

    The following Operations GREEN CLOVER and LASER STRIKE 
statistics were provided to the Coast Guard by U.S. Southern 
Command (SOUTHCOM):

   AIRCRAFT DESTROYED, SEIZED, OR FORCED DOWN DURING DRUG INTERDICTION  
                               OPERATIONS                               
------------------------------------------------------------------------
                                                         Calendar year--
                                                       -----------------
                                                          1995     1996 
------------------------------------------------------------------------
Aircraft destroyed, including shootdowns and strafings       18       18
Aircraft seized or forced down........................       21       10
------------------------------------------------------------------------
Note.--GREEN CLOVER was a proof of concept for LASER STRIKE, with no    
  clear separation between the two operations. The figures represent the
  combined results of both operations.                                  

    Mr. Wolf. I don't believe--and I would feel much 
morecomfortable on the interdiction level. I don't believe that we will 
be successfully able to interdict unless we are very aggressive in 
areas like this. It is no secret that with regard to the Mexican 
government the level of corruption is very high. I am sure there are 
good and honest and decent people in the Mexican government, and I mean 
no total indictment, but we know what the level is.
    We know in the Columbian government the same thing, but 
there are many very courageous people in Columbia who have 
given their life, and others who daily risk their lives, so I 
mean no blanket indictment of all the people in those 
governments.
    Bolivia is the same way, we know the level of corruption 
but we also know they are very fine, fine people, in their law 
enforcement. And it is like any other area, the level of 
corruption in different countries is very high, but in those 
countries, Bolivia, whatever, we also have some good, good 
people.
    I don't believe that until the Federal Government, the 
United States government, literally puts together an effort 
whereby the cartel, whoever they may be at that time, knows 
that at any moment blackhawk helicopters may swoop in, the 
military may come in and take these people away and bring them 
back to the United States, similar to what President Bush did 
with Noriega, I don't believe that we are really going to break 
the back of the supply area.
    I think you are nibbling around the edges and probably 
doing as good as a job as anybody could do. And frankly, as I 
said at the outset, I think you do an excellent job. But there 
are some jobs that even people that do excellent jobs find very 
difficult to do. That would raise my comfort level. And all the 
Members in the Congress who talk about this big interdiction, 
none of them seem to want to go to this point or certainly 
thinking of this point or verbalize it. And so I would like to 
know why can't you. I mean, we are not talking about 150 
cartels.
    The intelligence, the money that we put in intelligence is 
very, very important. Why not put together a group of 
individuals in our government that as needed would just go 
wherever--and I won't say down, because down is to infer that 
that is the only place that there is a problem--would go 
wherever the case may be to pick these people up and bring them 
back to the United States and put them on trial.
    Admiral Kramek. Well, there is a step that certainly needs 
to be taken first. And certainly that is a national security 
issue. And while I would love to talk about it, it is really 
not my role or my field to do that. But I would first encourage 
your support of something else. And that is not more 
interdiction forces. That is not what I am going to say.
    This issue can't be solved without regional cooperation. 
And I think if you would take a look at what has been done this 
year and what is planned for next year, you would see a major 
effort by the Administration, including myself, including 
General McCaffrey, including the Administrator of the DEA and 
the Commissioner of Customs, the head of the FBI, we are all 
going to Puerto Rico on April the 3rd to appear before 
Congressman McCollum's committee down there and testify on this 
issue on behalf of the President of the United States.
    Last week a senior official in the National Security 
Council traveled throughout the Caribbean with Admiral Allen, 
who is here with me today, [my Resource Director] and my 
operational commander, to visit all of these countries to get 
them to regionally cooperate together. The President intends on 
going in a couple of weeks to Barbados, where there will be a 
regional meeting where he will try to get their cooperation. 
That is a prelude to a Summit of the Americas next year, which 
will include 32 Latin American and South American nations. 
Countering narcotics will be a major item on the agenda.
    I am telling you all this because, in my view, unless there 
is 100 percent regional cooperation by all of those nations 
together to help us with this issue, you will end up with a 
couple of countries that--I am not sure. We would have to take 
some other action. We have not exhausted diplomatic means. We 
have not exercised all the remedies available for getting 
regional cooperation.
    Regional cooperation to me means that in South America, 
Brazil, Venezuela, Colombia, Peru, Bolivia, Paraguay, Uruguay, 
all join together and have regional cooperation, and maybe even 
a regional force together down there to take care of this type 
of problem. It is their responsibility. The same is true of 
regional security forces in the Caribbean. The same is true of 
our relationships with Mexico.
    We are just starting to get the type of agreements that we 
need with those nations. It has not been done before. I don't 
know why. Maybe it was too difficult, but I--surely we ought to 
exhaust that remedy first. And we would ask for your support on 
that, because that is a much easier way to solve the problem.
    Mr. Wolf. Well, I think a regional security effort would be 
a good idea, although there are potential problems. You know, 
it is not uncommon when the FBI is ready to do a sting in a 
certain area they really can't deal with the local law 
enforcement because there is a potential problem of leaking it 
out----
    Admiral Kramek. Exactly.
    Mr. Wolf [continuing]. And endangering people's lives. But 
there have been conferences. President Bush went down to 
Colombia, if you recall, and it seems that, you are going to 
leave. General McCaffrey will leave, not before your time, but 
they will leave and new people will come in. And it just seems 
that, having watched it, it just stays about the same. In the 
last six or seven years we have had very little improvement. I 
think the good news is, among adults the drug use is down. 
Among teenagers, it is up. But we are at a critical, critical 
point now, and I just think that would really demonstrate the 
commitment and the will to do what has to be done.
    Anyway, I appreciate you taking the time, and the hearing 
is adjourned.
    Admiral Kramek. Thank you, Mr. Chairman.
    [Questions for the record follow:]

[Pages 247 - 470--The official Committee record contains additional material here.]


               Thursday, March 6, 1997, and Monday, March 10, 1997.

                     U.S. GENERAL ACCOUNTING OFFICE

                           THURSDAY WITNESSES

JOHN H. ANDERSON, DIRECTOR FOR TRANSPORTATION ISSUES, RESOURCES, 
    COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION
GARY L. JONES, ASSISTANT DIRECTOR FOR TRANSPORTATION ISSUES, RESOURCES, 
    COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION
ROBERT LEVIN, ASSISTANT DIRECTOR FOR TRANSPORTATION ISSUES, RESOURCES, 
    COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION
NORM RABKIN, DIRECTOR FOR ADMINISTRATION OF JUSTICE ISSUES, GENERAL 
    GOVERNMENT DIVISION
DR. RONA STILLMAN, CHIEF SCIENTIST
MARNIE SHAUL, ASSISTANT DIRECTOR
TOM KAI, ASSISTANT DIRECTOR
RICK JORGENSON, SENIOR EVALUATOR

                            MONDAY WITNESSES

JOHN H. ANDERSON, DIRECTOR, TRANSPORTATION ISSUES
GARY JONES, ASSISTANT DIRECTOR
JOSEPH CHRISTOFF, ASSISTANT DIRECTOR FOR TRANSPORTATION ISSUES, 
    RESOURCES, COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION
ROBERT LEVIN, ASSISTANT DIRECTOR
RALPH LAMOREAUX, ASSISTANT DIRECTOR FOR TRANSPORTATION ISSUES, 
    RESOURCES, COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION
NORM RABKIN, DIRECTOR, ADMINISTRATION OF JUSTICE ISSUES

                            Opening Remarks

    Mr. Wolf. Mr. Anderson, we welcome you and all of your 
people here. In the interest of time, I am not going to have 
any opening statement. Hopefully, we can complete this. We were 
going to take the full day, and then the Secretary's hearing 
had to be rescheduled for today. He had to go to Arkansas 
because of the natural disasters that took place. So he will 
testify at 1:00 today. So we will make every effort to finish 
today, and if we don't, then we can find another time to get 
you back.
    Mr. Anderson. Be glad to do that.
    Mr. Wolf. Welcome.
    Mr. Anderson. Thank you.
    Mr. Wolf. Your full statement will appear in the record.
    Mr. Anderson. Thank you, Mr. Chairman. We appreciate the 
opportunity to discuss the safety, management, financing, and 
other issues that are facing the Department of Transportation 
during fiscal year 1998 and beyond. With me today, starting on 
my right are Norm Rabkin, Gary Jones, Bob Levin, Rona Stillman, 
and Marnie Shaul.
    When I testified before you last year, I pointed out that 
DOT faced tremendous challenges in ensuring the safe and 
efficient movement of people and goods and a cost-effective 
investment in the nation's transportation infrastructure.
    Today, we believe the obstacles to meeting those challenges 
have increased, primarily because efforts to improve the safety 
and security of our aviation system will stretch limited 
resources even further.
    At the same time, the pressures to reduce the Federal 
budget have not abated. Funding constraints intensify the need 
for DOT to improve its management and oversight processes to 
ensure that the American taxpayer's dollars are used 
efficiently.

                      aviation safety and security

    Crashes of ValuJet Flight 592 and TWA Flight 800 heightened 
concerns about the safety and security of our aviation system. 
Over the years, we have reported on the problems with FAA's 
oversight, and our recent reports and testimonies on new 
airlines and aviation security have reiterated the need for 
improvement in these areas. Recently completed studies by the 
Gore Commission and FAA also found that major improvements are 
needed in our aviation system.
    We believe that the recommendations contained in FAA's and 
the Gore Commission's reports are a good start to improving 
aviation safety and security. However, neither of the reports 
fully address how much more the improvements will cost and how 
they are going to be funded. This issue will be addressed by 
the National Civil Aviation Review Commission. The cost could 
be in the billions of dollars.
    Besides the funding issue, a strategic plan to guide 
implementation and prioritize funding tradeoffs, a rigorous 
recommendation tracking system, and strong, stable leadership 
at FAA and the Department will be needed. Without these 
elements, the momentum for improving aviation safety and 
security could be lost.

                             surface safety

    Turning now to surface safety, the major challenge is to 
reduce the more than 40,000 deaths that occur each year on our 
highways. Increasing the use of seat belts is an excellent low-
cost way to deal with this problem. Recent concerns about the 
potential hazards of air bags intensifies the importance of 
using seat belts.
    Another way to improve surface transportation safety is to 
improve the safety of large trucks because thousands of people 
die each year in truck accidents. Another significant surface 
transportation safety issue concerns the North American Free 
Trade Agreement (NAFTA) and the safety of trucks entering the 
U.S. from Mexico. Last year, we reported that many Mexican 
trucks did not meet U.S. safety standards and that the border 
states' readiness for enforcement varied significantly.
    Our ongoing work shows that while the number of truck 
inspectors at major border crossings has increased, more 
inspections are being conducted, and two large permanent 
inspection facilities, both in California, have been opened, it 
is still not clear whether Mexican trucks are becoming safer.

                           management issues

    Now, I would like to turn to important management issues 
that face the Department. First, FAA can improve the management 
of its air traffic control modernization program, which is 
estimated to cost $34 billion through the year 2003 and has 
experienced substantial cost overruns, schedule delays, and 
significant performance shortfalls. Because of its size, 
complexity, cost, and problem-plagued past, we designated the 
program as a high-risk initiative in 1995 and again this year. 
Technical difficulties, management problems, and the lack of 
continuity in top FAA management are major causes of the 
problems.
    The Gore Commission has recommended accelerating completion 
of the modernization program by seven years. While we believe 
that it would provide tremendous benefits to have a modernized 
system sooner, we have some concerns about how realistic that 
goal may be. In addition, it would have significant budgetary 
implications.
    Regarding DOT's management of major surface transportation 
programs, our work continues to focus on the need for 
management attention in controlling costs and ensuring that 
financing is available to pay for large dollar projects. We 
believe that FHWA and FTA can do more to work with states and 
transit operators to enhance their ability to manage the cost 
of and acquire financing for these projects. If not, more 
Federal, state, or local funds could be needed for the projects 
stretching limited funds even further and potentially limiting 
funding for other projects.
    At your request Mr. Chairman, we are currently reviewing 
the cost and financing of four major infrastructure projects. 
Each of these projects cost more than a billion dollars and 
have cost growth and/or financing risks that jeopardize their 
completion. For example, while the Boston Central Artery/Tunnel 
Project has made substantial progress in improving cost 
estimates and finance plans, we remain concerned about cost 
increases and financing strategies.
    The financing uncertainties of the two transit projects we 
are reviewing--BART's extension to the San Francisco Airport 
and the Los Angeles Red Line--could be the tip of the transit 
project financing iceberg. This is because FTA has essentially 
mortgaged future Federal transit New Start funds. It will take 
until the year 2003 to fulfill existing and pending Federal 
commitments if funding continues at the same level it has in 
the past. Therefore, securing additional Federal funds under 
the New Start Program for existing and new projects will be 
problematic.

                   intelligent transportation systems

    Another important issue facing the Department involves the 
development of intelligent transportation systems (ITS). After 
seven years and $1.3 billion in Federal funding, DOT's vision 
for widespread deployment has not been realized. In its 1998 
budget, DOT is proposing to focus Federal funds on deploying 
ITS systems. However, before DOT can aggressively pursue 
widespread deployment, it must help state and local officials 
overcome a number of obstacles.
    And one final management point that I will mention concerns 
how DOT structures its surface transportation field offices. In 
1995, we testified that DOT could potentially save millions of 
dollars by consolidating and/or co-locating its surface field 
structure. Over two years have passed and DOT has done little 
to take advantage of these opportunities. The departmental 
reorganization is off the table, and DOT is not currently 
considering field office consolidations.

                             faa shortfalls

    In addition to the safety and management issues I have 
discussed, there are three other issues that I would like to 
briefly discuss. First, FAA faces potential funding shortfalls 
totalling billions of dollars over the next several years 
driven by the cost of safety and security improvements and 
attempts to speed up air traffic control modernization. The 
shortfalls could be mitigated to some extent if FAA improves 
its productivity and makes some other operational changes, but 
significant financial challenges would still remain.

                         amtrak financial needs

    The second issue concerns Amtrak. Our current work shows 
that the corporation is still in a very precarious financial 
position and remains heavily dependent on Federal support. 
Amtrak's 1997 net losses could be as high as $786 million. 
While the corporation's goal is to eliminate the need for 
Federal operating support by the year 2002, it is likely that 
Amtrak will continue to require Federal financial support, both 
operating and capital, well beyond that time frame.

                     coast guard drug interdiction

    The final issue that I will mention involves measuring the 
effectiveness of the Coast Guard's drug control actions. This 
is inherently difficult. In addition to separating the impact 
of its actions from those of other agencies, the Coast Guard 
must develop a way to compare the amount of drugs seized or 
deterred against a measure of supply, which becomes 
problematic. In its 1998 budget request, the Administration is 
asking for $389 million for Coast Guard drug interdiction 
efforts, a $53 million increase over 1997 levels. The 
difficulty in measuring the impact of the Coast Guard's efforts 
complicates decisions about funding levels for these 
activities.
    The bottom line is that tough financing and other decisions 
lie ahead for transportation programs with no easy choices. 
This concludes my oral statement, and we would be glad to 
answer questions.
    [The prepared statement and biography of John Anderson and 
biographies of GAO staff follow:]

[Pages 475 - 539--The official Committee record contains additional material here.]




                           project oversight

    Mr. Sabo [presiding]. I thank you and we have a journal 
vote on so Chairman Wolf had to leave. As soon as he reappears, 
I will leave.
    Mr. Anderson. Okay.
    Mr. Sabo. Let me ask just a couple of questions before he 
comes back. I note that you have some comments about the 
relationship of the Department to local units of government 
that receive federal money. Is the Department helpful in the 
design of these programs?
    And as history--just let me go back. We used to have the 
UDAG Program through HUD which no longer exists. My experience 
with UDAG was that proposals from local units of government, 
came to HUD for review. And going through the delay process was 
always a little bit frustrating and uncertain.
    On the other hand, my observation was uniformly at the end 
of the process and as HUD asked for a review, you had stronger 
and better projects at the end. I really thought it probably--
the money that UDAG involved was very helpful, but I thought 
that the unique expertise that HUD brought--and I thought they 
had a very good professional staff for an extended period of 
time--they have really sharpened up the proposals before they 
went back to the local unit of government to work better for 
everyone. Does DOT do that and what is their capacity in that 
area?
    Mr. Anderson. Yes, they do. Especially when you are talking 
about surface transportation projects, they are involved at the 
outset in reviewing the designs of some projects and ensuring 
that they are meeting the safety requirements.
    And I would say, without question, the comments that we get 
from the folks that we talk to at the state and local level are 
supportive of the help that they get from DOT. They often say 
that DOT has expertise that is not readily available at the 
state and local level, and they really rely on DOT a lot in 
that regard. I don't know if there is anything you want to add, 
Gary, to that.
    Ms. Jones. I was just going to add that that is very true 
on the highway side. On the transit side, the Federal Transit 
Administration has been moving away in recent years from being 
totally involved in reviewing the designs. They are one of the 
many people that review, but they don't approve designs for the 
transit systems.

                        faa acquisition process

    Mr. Sabo. On the other hand, it would strike me, just 
observing sort of from a distance, that FAA has really had 
trouble handling the acquisition process?
    Mr. Anderson. No question.
    Mr. Sabo. And the size and scope of the project that they 
have been under taking for a number of years, somehow the 
infrastructure internally there is simply not--I am just 
curious. To what degree have they worked with DOD, especially 
in terms of acquiring some expertise in the governmental system 
for hiring--for doing that kind of acquisition?
    Mr. Anderson. I think they have worked with DOD in the 
past. I know the current Global Positioning System that they 
are developing, they have had to work closely with DOD on that. 
But I think the problems that we have seen are with the 
management of the modernization of the air traffic control 
system which we have been looking at for a number of years. I 
have a person here that can probably tell us everything that we 
wanted to know and more about what has happened.
    But the problems fall into several broad categories. There 
have been, clearly, technical problems. FAA has been trying to 
do some things that they technically haven't been able to do as 
quickly as they thought or within the cost estimates that they 
had. They have also had management problems. They haven't 
overseen contractors as closely as they should have in the 
past.
    And I also think a major problem--we have talked about this 
many times--has to do with the frequent turnover in the 
leadership at FAA. You need strong, stable leadership to be 
able to keep the people focused on the prize. And if you don't 
have that, you can get some problems.
    We have done some other work that has gotten more at some 
underlying causes of the problems as well. Last August, we 
issued a report on FAA's culture. They have a basic cultural 
dilemma where they need to have people better focused on what 
the mission is and hold people more accountable and that sort 
of thing. That is one of the underlying things that they really 
have to fix.
    Just recently, Rona Stillman and her staff have done some 
work taking a look at whether or not FAA has good processes for 
developing architecture for its systems and for developing the 
software and for estimating the cost of its projects. And we 
found that in all areas they are deficient. So they do need 
some help, and they need some focused attention. And I think 
strong, stable leadership at FAA is one of the first things 
that needs to be resolved. Currently, they do not have an 
administrator or a deputy administrator.
    Mr. Sabo. I am told I have less than five minutes to go 
vote three and a half. Why don't we just recess briefly.
    Mr. Anderson. Sure.
    Mr. Sabo. The Chairman should be back shortly.
    Mr. Anderson. Fine.
    Mr. Sabo. And I will be back as soon as possible.
    [Recess.]
    Mr. Wolf [presiding]. Have you finished the testimony?
    Mr. Anderson. Yes.
    Mr. Wolf. Again, I apologize.
    Mr. Anderson. That is okay.

         air traffic control [ATC] modernization--FAA oversight

    Mr. Wolf. Moving to the question area, with regard to ATC 
modernization, in a report last August, the GAO concluded that 
many of the FAA's longstanding acquisition problems stemmed 
from its underlying culture. You found that ``agency officials 
acted in ways that did not reflect strong commitment to its 
acquisition missions.'' They suppress bad news, resist making 
needed changes, and seek to control data rather than share it. 
Why is the FAA this way, and what specific steps need to be 
taken to improve their culture?
    Mr. Anderson. Well, we had four underlying cultural causes 
that we identified that contributed to their bad culture--lack 
of a mission focus; accountability problems--people really 
weren't being held accountable like they should; poor 
coordinations--making sure all the folks that were needed to 
get these projects done wasn't always happening; and lack of 
adaptability to change. That just wasn't occurring.
    FAA needs to focus on those things. They have created an 
office specifically to look into those causes. And, Bob, maybe 
you might want to expand on what they have done?
    Mr. Levin. Yes. The basis for their cultural change is the 
integrated product development system. It sets up a structure 
for FAA to bring employees from various parts of FAA to work 
together, to improve coordination, to respond to changes in 
technologies as they come up, and to build accountability into 
the system.
    FAA has made some progress in forming these integrated 
product teams (IPT). We have seen some change over time in the 
feeling of the employees, that they feel more accountable. They 
feel more responsible.
    I think maybe with the WAAS contract, the Wide Area 
Augmentation System, you could see that the folks on the IPT 
really felt like it was their decision to make. And when they 
saw that there were problems in performance of the contract--
the contractor was Wilcox Electronics--they cancelled the 
contract and signed another one with Hughes. It is the kind of 
positive action that you would hope, if the folks really felt 
accountable and responsible, they would take. That is a 
positive sign.
    Mr. Wolf. How widespread is that?
    Mr. Levin. It is probably too early to tell how it is going 
overall. We see some positive signs. Our concern--and this came 
out in this report that we just issued this week on the 
Standard Terminal Automation Replacement System (STARS) 
acquisition--found that the people in the IPT were not getting 
the commitment of the regional staff of FAA that actually do 
the installations or oversee the installations.
    And as a result, the whole schedule really is up in the 
air. There is a lot of risk about being able to install this 
equipment because the people in the field aren't committed to 
the schedule. That is something FAA has to manage. But their 
new acquisition management system calls for all these roles and 
responsibilities to be lined up even before contract award.
    So that is the kind of concern that we have. You have to 
get all the stakeholders involved and get them all committed to 
the cost, to the schedule, to the technical goals of the 
program. It is going to take time.

       impact of faa administrator vacancy on acquisition process

    Mr. Wolf. Is there any sense that since there has not been 
an administrator since November that this could be slipping 
backward?
    Mr. Levin. I would find it hard to underestimate the 
importance of getting leadership at the top that is very 
committed to cultural change. I think any successful cultural 
change initiative in either the Federal Government or in 
private industry starts at the top.
    Now, George Donahue is very committed to cultural change. 
He can only take it so far. He controls one part of the 
organization. As our report talked about, it was the commitment 
of other parts of the organization that was reallythe problem 
that FAA really had to focus on. And you are not going to get the broad 
commitment unless you get leadership from the top.
    Mr. Wolf. How long do you think it takes the FAA--a new 
administrator to get up to speed whereby the administrator is 
fully in control and running?
    Mr. Anderson. I would like to answer that. I have been the 
Director of transportation issues for going on two years now. 
It takes time. It takes a good two or three years even if they 
come from the industry with a good, strong background. And, of 
course, what we found in the past, prior to Mr. Hinson, was 
that they were turning over every 18 months. And that is not 
enough time to really find out what is going on. You really 
need some time. I would say four to five years in my judgment.
    Mr. Levin. And cultural change initiatives usually take 
five years or more. It is that difficult.

                         faa administrator term

    Mr. Wolf. So you think it takes two or three years for them 
to get up to speed to get everything under control so the ideal 
time--the shortest time a new administrator ought to stay is 
five years?
    Mr. Anderson. I would say five years. Longer would be ideal 
if possible. Of course, there are tremendous pressures in the 
position, and I remember talking to Mr. Hinson in the past. 
After a while, it sort of wears you down, I suppose, but we 
have to find ways to deal with that and keep some strong 
leadership there for a while. I think that would send a strong 
signal to the employees of FAA that we are going to have some 
stable leadership here, and we need to rally behind this 
person.
    Mr. Wolf. So hopefully the person the Administration offers 
the job to, and I hope they are very close, will commit for at 
least five years and perhaps eight?
    Mr. Anderson. I would hope so.

                       faa acquisition management

    Mr. Wolf. This is not a political issue-type position, and 
I think whether you have a Republican or Democratic 
Administration, that person could serve. So hopefully the 
Administration will do that. Would you say the FAA's 
acquisition employees have adequate training or background in 
complex engineering systems to perform their duties?
    Mr. Anderson. I think this is one of the things that they 
can definitely be improving on. And, Rona, you can expand on 
this. One of the things that we found when they go to develop 
the system's architecture, do their software acquisitions, do 
their cost estimating, is that they have not done a very good 
job in that regard. And I don't know whether you look 
specifically at the training aspects.
    Ms. Stillman. In work that we are doing for you that will 
be out later this month, we evaluated FAA's processes--the 
procedures and processes for acquiring software-intensive 
systems. Those processes are not adequately disciplined. They 
are not adequately structured.
    Mr. Wolf. They are not?
    Ms. Stillman. They are not.
    Mr. Wolf. FAA's director of acquisition is Mr. Donahue who 
admitted to the GAO that in the FAA a group of programs has 
emerged which do not reflect a unified approach to acquisition 
because the individual program managers are rewarded for 
starting their own programs and getting them to advance, 
regardless of the long-term consequences. Isn't this a pretty 
severe indictment of the workforce, and what can be done about 
this?
    Mr. Anderson. Clearly, that is a major problem. You don't 
want a bunch of people going off in their own directions. And I 
think the most important thing that needs to be done is to 
provide strong direction from the top, and they all have to be 
pulling together in the same direction.
    And I think from what we have seen, for example, on the 
STARS project, while there are technical risks, schedule risks, 
and some real potential for cost growth on that project, it 
looks like there are some processes in place that will keep 
everybody focused--you know, a top management focus and regular 
progress reporting. But that is what it is going to take. You 
are going to need a top management focus and convince the 
people that they are serious about this, serious about meeting 
the milestone, serious about coming in within cost.
    Mr. Wolf. Would it be a real setback then if Mr. Donahue 
were to leave the FAA?
    Mr. Anderson. I think it would.
    Mr. Wolf. I am worried about that. So if he were to leave, 
we would have to recreate this and start all over again?
    Mr. Levin. Yes. I think it would be a setback. It is human 
nature, I suppose, and it is part of the culture that project 
managers and companies that produce the technology are going to 
advocate that technology. They are going to push it. And it is 
top management's position to impose the discipline and ask 
questions, such as, do we really need it, is this the best 
technology to meet our needs, can we really afford it, what is 
the best solution, and pose that discipline.
    One of the fears that we have about the Gore Commission's 
proposal is that all this technology that everybody wants to 
accelerate will be pushed on top management at FAA, and they 
are going to have to make some really tough decisions about 
whether we could really afford it or whether it really makes 
sense. In the 1980s, in a lot of cases, we found that some of 
the technology being pushed did not make sense.
    Mr. Wolf. Mr. Olver.

                        faa controller staffing

    Mr. Olver. Thank you, Mr. Chairman. Let me ask--I have not 
had a chance to read the whole of your report here, and yet 
there are some things that clearly you have indicated problems 
with. Since we were talking about the FAA, I am very concerned 
about that set of circumstances. And in every report I see on 
it, there is this discussion about the culture of the agency. 
That must be really quite remarkable--this culture of the 
agency--that I haven't yet come to a clear understanding of.
    But has GAO in your reports or can you point me to a report 
that does an objective analysis of the staffing pattern there 
over a period of years? And I am told that there has been a 
major change in the staff--well, there, obviously, was a major 
change in the staffing 15 years or so ago--but the titles of 
line controllers and supervisors and then management people--I 
am not sure exactly what categories--is there a report that 
succinctly puts down what has been the history--a chart of what 
has been the history of movement on those jobs classifications 
over a period of time, number 1?
    Number 2, is there a report that you can point me to, yours 
or someone else's, that takes--does an analysis of the age and 
retirement likely patterns for the line controllers? I am not 
sure if I am covering ground that has already been covered. 
When you run in and out the way we have done, it is a little 
bit difficult. Because I am curious whether the budget which 
for 250 people in the last year's budget of new controllers--
which, by the way, are there any of those that have been hired?
    Mr. Anderson. Yes, I think so.
    [The information follows:]

[Page 546--The official Committee record contains additional material here.]


    Mr. Olver. And the budget for this year proposes another 
500. Does that come anywhere close to meeting a pattern of 
covering the needs over the next 10 or 15 years as we know what 
the ages and retirement patterns are likely to be?
    Mr. Anderson. Yes. Mr. Olver, we have a review underway 
right now--in fact, we have a report that we are preparing that 
is looking at the air traffic controller staffing and what has 
been going on. In terms of the history that you asked about at 
the outset, I am not sure that we have done anything on that, 
not that I am aware of.
    In in our report, which we are hoping to get out in April--
we do get into this analysis of what the FAA's needs are and 
how they are prepared to meet those needs, their estimates of 
retirement, and where they are headed in that regard. And I 
think we are going to have some suggestions and recommendations 
to make for improvements.
    Clearly, they have plans to increase the staffing--large 
numbers. I believe for fiscal year 1998, they plan to hire 800 
additional staff. For 1999 and 2000, I think it is a total of 
1,350 additional staff that they want to hire. They are 
anticipating a large number of controller retirements starting 
in early 2000. And they have some hiring plans in place to take 
that into account.
    One of the things that we have done is that we have looked 
really close at the assumptions they are making and the data 
that they use to estimate their needs. And we are going to have 
some suggestions in that regard. We think that they can fine-
tune their estimates. We have a report coming out in April on 
that. Is there anything you want to add to that, Marnie?
    Ms. Shaul. Just that the agency does have information in 
its files that is not as accessible as it might be on some 
factors which affect retirement such as----
    Mr. Olver. Accessible to whom?
    Ms. Shaul. To the FAA itself. Some of the information that 
it has on its controllers--for recent controllers is easily 
accessible by computer. But for some of the controllers who 
have been with the agency longer, the data are not as easily 
accessible for them to do an analysis that shows exactly when 
controllers are actually eligible to retire so they make 
assumptions. The study that we are doing for this committee 
uses information on age and years of service which would help 
better predict retirements.

                      faa controller staffing data

    Mr. Olver. Well, you made an interesting comment, that the 
agency has information which is not accessible to us, to you 
serving us, preparing a report for us? Who do you mean it is 
not accessible for the proper analysis of this situation, which 
sounds as if it is fairly extreme?
    Ms. Shaul. What I mean is that FAA has told us that for 
controllers that they have hired more recently, the data that 
they have collected on the controllers are easily accessible 
for them to do computer analysis and help them project more 
accurately when the controllers will retire. For controllers 
who were hired longer times ago when, as I understand it, the 
way in which they collected data on the controllers they hired 
was not put into the computerized format, it is a large task 
for them to get that data and to use it to make more accurate 
projections of when the controllers will actually retire.
    Mr. Anderson. Okay. If I could interject, I think the 
problem is that we think they have some data in-house within 
FAA to better predict what their needs are. And we have 
actually gone and done some analysis that shows that if they 
use some of that data, they might change some of their 
projections a little bit and fine-tune some of these things. So 
it is not that there is no attempt to share the information. 
They just haven't used it. And when we go in and look at it, we 
think that is something that they should use.
    Mr. Olver. And is the report that is coming out going to 
examine that aspect? Should I just wait for the report that is 
coming out? How soon is it going to be out?
    Mr. Anderson. Well, our goal is to get that out in April.
    Mr. Olver. In April. So you think that my question about 
what has been the flow pattern of people in different job 
categories and what are the likely needs, what the retirement 
pattern is likely to be, all of that is going to be answered in 
this report in April?
    Mr. Anderson. At least on a macro level. Now, I am not so 
sure that we are going to have specific information down to the 
job series, but on a macro level, we will be able to talk about 
that in our report.

                          faa culture changes

    Mr. Olver. Okay. If there is a culture problem here, what 
are the ways that you would think you can deal with the culture 
problem other than stable management at the top, which knows 
what it has to do and is going to stay there long enough to see 
it through? That is, obviously, important. But what other 
things might you do as in a hypothetical?
    Mr. Anderson. Well, I think you have to do things that 
address what we identified as the four underlying causes to the 
culture problem--a lack of a mission focus, a lack of 
accountability, lack of coordination, and a lack of 
adaptability. And in each of those areas, you need to take 
action. You need action plans to focus on that. Bob, do you 
want to expand on those a little bit for me?
    Mr. Levin. Sure. We made a recommendation in the culture 
report that FAA should come up with a comprehensive strategy to 
make cultural change happen throughout the agency. And one of 
the comments we got back from the agency when we met with them 
on the draft report was, ``Well, can you give us more 
specifics?''
    And we said, ``That is your job really to come up with the 
specifics. We can't tell you what incentives you need to put in 
place. We can't tell you what performance measures and 
evaluations of employee performance that you need to put in 
place. You have to figure that out because you know your 
employees. You have to figure out what is going to work for 
you.''
    We published a list in the back of the report of best 
practices that different companies use; for example, realigning 
your reward systems to maintain interest in change; 
establishing a base line measurement of the currentculture with 
a survey; and a variety of other steps that can be taken. But we didn't 
want to be too prescriptive, Mr. Olver. We wanted to give FAA the 
chance to develop its own system, what would work best for them.
    But the key is, and our recommendation said this, you have 
to recognize that you can't just target your cultural change 
efforts to part of the organization. You really have to cut 
across the whole organization.
    Mr. Olver. Well, you surely can't change the culture if you 
target the efforts at the lower levels. And, surely, if you are 
going to make a cultural change, you have got to target the 
efforts of those who are running the place----
    Mr. Anderson. Running the place, the middle managers, 
everybody.
    Mr. Olver [continuing]. At the supervisory or the top 
management level--somewhere up in there. But it clearly has to 
do with personnel and personnel attitudes. Now, do you 
highlight in the report--and, again, I am sorry--but do you 
highlight in the report the possibility of--since a lot of 
people are going to retire somewhere along the way--of 
retirement incentives particularly aimed at the part of the 
organization where the problem is?
    Mr. Anderson. I don't think--and correct me if I am wrong 
on this, Bob--I don't think that we were that specific. What we 
talked about instead was a need to find those incentives and 
develop those measures that will get the organization where you 
want it to go.
    So, for example, if you sat down and set expectations with 
your acquisition management workforce on what you want to 
achieve, you need to lay out clear expectations for them so 
that they know what is expected of them. And then when you 
measure their progress, you have rewards and punishment to the 
extent necessary when they are not achieving what is intended.
    Mr. Olver. Do you have a sense in an organization--
hypothetical organization here or otherwise but sort of as an 
oxymoron I suppose--whether early retirement incentives are set 
up in an organization which everybody says has cultural 
problems, whether that leads to the people who are just 
disgusted with the cultural problems taking the early 
retirement and those who are satisfied with the status quo 
staying, or leading to those who are satisfied with the status 
quo, which is where their cultural problems lie, essentially, 
taking the incentive? Is there any sense of what happens in a 
situation like this from a management point of view?
    Mr. Anderson. Now this is getting out of my area of 
expertise in GAO. We have another division that looks at 
retirement systems and that sort of thing, say, for Federal 
employees. But I do recall--and I will double-check this, and 
if it is different than this, I will let you know--but I do 
recall that we have taken a look at special incentives like 
early retirements. And lots of times you don't really do 
anything but reward people that were going to go ahead and 
retire anyway. So, you might give them some sort of an 
incentive to go a couple months early or something like that.
    Mr. Olver. That takes a big carrot away from your 
possibilities. It leaves you only whatever the stick is.
    Mr. Anderson. That is correct. So there is only so much 
that you can do in that regard. Now, again, this is something 
that is not within my bailiwick, but I will check on it and let 
you know if it is any different than that.

                      motor carrier border safety

    Mr. Olver. I am not sure what time is allowed here. We 
don't seem to have a huge number of people, Mr. Chairman, but I 
will move to another thing if I still have a minute. I wanted 
to ask you something about what you think are the mechanisms 
that need to be used to deal with truck safety across the 
Mexican border these days.
    In particular, I am curious whether--my understanding is 
that California has set up--I think it is California, has set 
up a state inspection program, but the other states on the 
border have not done so. And how do we deal with that?
    Mr. Anderson. I would just tell you from the work that we 
have done, I believe that California has been sort of a model 
on how to deal with this. They have built two permanent 
roadside inspection facilities in California. They have a 
program where they have a goal to inspect Mexican trucks every 
three months that are coming into the country. They have more 
resources in terms of inspectors assigned to the key border 
locations to check on the trucks.
    And I would think that Texas and Arizona, to the extent 
that they could do more along those lines, it would definitely 
help. You have the majority of the Mexican truck traffic coming 
through Texas, and it really would be helpful to have more 
inspectors and that sort of thing.
    Of course, Texas is like other states. They are financially 
strapped for some things so they say, ``We need some Federal 
assistance in this regard.'' And, of course, we found that FHWA 
has been giving them assistance in terms of guidance and 
assigning some Federal inspectors to help. But I really think 
you are going to need a more concentrated effort.
    Mr. Olver. Now, is Texas running at a deficit of two 
percent of their gross state product?
    Mr. Anderson. I don't know.
    Mr. Olver. I doubt it. But they are looking for aid from us 
to do this?
    Mr. Anderson. Yes. This is a tough problem and, obviously, 
a sensitive one, and it is not real clear. I mentioned in my 
oral statement and in the long statement too, it is not really 
clear whether or not trucks entering from Mexico are getting 
safer. We have received a mixed view. We have the fact that 
there are a lot more inspectors that have been assigned. They 
are doing more inspections now than they were at the end of 
1995.
    We also get anecdotal views from the inspection personnel 
that we have talked to down there that think things are 
improving. But then when you look at some of the facts, they 
have an out-of-service rate for Mexican trucks that are 
inspected that averages about 45 percent compared to about a 28 
percent rate for trucks inspected across the U.S.
    And even that 45 percent rate is a little bit misleading 
because that is based upon level two inspections which aren't 
as rigorous or intensive. So really their out-of-service rate 
if they did level one inspections, which comprise a bigger 
percentage of the inspections that are done across the country, 
might be more.
    So you have got a mixed bag. You have got some anecdotal 
views of folks that think things are getting better, and, 
clearly, there are some more resources and inspectors that are 
being put on the problem. But it has not necessarily shown up 
yet in the numbers in terms of out-of-service rates.
    Mr. Olver. Well, it seems odd. The argument that I hear,of 
course, is that Texas views NAFTA as a national decision and a national 
problem that we should deal with, but we are running at two percent 
deficit on our gross domestic product. They run a balanced budget by 
constitution. And they were among those who felt that NAFTA would be 
the most beneficial to them. So really there is some responsibility 
there.
    It seems to me that seeing what California has done in 
meeting its responsibility is a much better reflection of where 
the responsibility is in this one because the border states 
really were all very much in favor of NAFTA, which is the thing 
creating the traffic across the border. I think the answer 
ought to be somewhat simpler. Thank you, Mr. Chairman.
    Mr. Wolf. Mr. Sabo.

                   intelligent transportation systems

    Mr. Sabo. This is sort of a local question. I notice on 
your report on intelligent transportation systems that you make 
several references to the Minnesota program. I am just curious. 
Do you think it is doing well?
    Mr. Anderson. Yes. That was a good example of an ITS 
system, the GuideStar Program. We think that is one that makes 
some sense and seems to be pretty good.
    Mr. Sabo. So I should believe them when they tell me they 
are doing a good job?
    Mr. Anderson. Yes, sir.

                          acquisition process

    Mr. Sabo. Okay. Coming back, in my earlier questions about 
procurement and handling of the big systems--procurement by 
FAA--it just strikes me that is not unusual for FAA. Throughout 
the Federal Government we have agencies that are operational 
agencies, and suddenly they are thrust into handling huge 
procurements. And it probably shouldn't be surprising that an 
operational agency all of a sudden has trouble handling them. 
And I gather IRS has had trouble with it, and I expect there 
are a host of others.
    Do we need to be looking at some different type of system 
just throughout the Federal Government on how we handle large 
procurements that go behind an agency and a recruiting 
process--I had somebody suggest to me a couple of years ago 
that in handling these large procurements, we should have a 
capacity to maybe recruit for a period of time some people from 
the private sector. We might have to waive some or all of the 
requirements we put on people to work for the Federal 
Government if they are going to be involved not in policy but 
in--and, again, I will use the word mechanics in the broadest 
sense of the word--bring their technical expertise to helping 
us handle these procurements. Because it just strikes me we 
just regularly haven't had a problem.
    Mr. Anderson. I think that is true. Rona, I will call on 
you again. Rona, in her capacity as the chief scientist in GAO, 
has had an opportunity to look at different agencies especially 
with regard to the procurement of automated data processing 
systems and software. So, Rona, do you want to talk about that?
    Ms. Stillman. The operational agencies are the ultimate 
users, the customers. If they don't know what they want, if 
they can't specify their requirements, if they can't manage 
their own requirements growth, if they can't manage--if they 
can't track and monitor either systems that they are developing 
themselves or contractors that they have hired to develop 
systems for them, this is a customer who is in no position to 
buy a system for himself. I personally wouldn't trust anyone 
else to buy a system to meet that customer's needs. He is the 
one who knows his business.
    This problem isn't rocket science. The crux of this problem 
is just instilling good management discipline to buy systems: 
when you define requirements, you validate them; when you add 
to these requirements, there is an assessment of what impact 
that has on your systems; when you estimate project costs and 
manage your Federal budget to determine which systems to invest 
in and which not to invest in and what order to invest in them, 
that among the things you consider are good costs--good 
reliable estimations of what the system will cost. We did not 
find this at FAA.
    There is nothing in FAA's cost estimating procedures that 
would give you any basis for confidence in those costs. Project 
by project there is a variation in how well they estimate 
costs, but across the agency, there was no common, consistent 
discipline level. The will to surface problems early and to 
change costs and schedule to solve problems, are addressed in 
the culture report and are related to the systems of rewards 
and incentives in place.
    If a program manager is rewarded for maintaining the 
appearance of a problemfree development, he will do that 
regardless of whether there are problems. If he is actually 
rewarded for results, for bringing in a system as promised and 
on time within budget and schedule, then he is much more apt to 
want to identify problems early and to be willing to fix them. 
You were right to conclude that these problems exist across the 
board, not just at FAA. We evaluated IRS in detail, and they do 
not do better.
    Mr. Sabo. But it seems to me there is a significant 
difference. Clearly, users have to be involved in the process 
of deciding what a system should be doing. And I had a problem 
with another program where folks were headed off in a research 
program and ignoring the users--sort of off in their wonderland 
by themselves. But it strikes me though that there is a 
difference between having some understanding of the uses you 
would like for a system and then being able to interpret that 
through the design and the procurement process. Now, I have 
some idea what I would like to have the computers do in my 
office, but I would be the last person in the world that I want 
to----
    Ms. Stillman. Correct.
    Mr. Sabo [continuing]. Figure out what type system to use 
or how to build it or----
    Ms. Stillman. Absolutely. When agencies acquire systems, 
they don't have to prepare technical specifications. They are 
encouraged to prepare functional specifications.
    Mr. Sabo. So you don't find even a good description?
    Ms. Stillman. Correct. And not only is it not a good 
description, but the functional requirements are not carefully 
considered. Do we, in fact, need all of them? Are some of them 
running up the cost for questionable benefits? Often as a 
program is acquired and developed, requirements change, 
sometimes radically. What does this do to the development that 
you have underway?
    If you plan to build a house and you change requirements in 
the middle and decide you want a basement, that is a very 
unfortunate time to make that change. If you don't consider 
what it willcost and what it will do to the ongoing 
development, that is a very unwise way to run your acquisition.
    Mr. Sabo. But the wish list of the uses may be sort of 
broad. I mean, you have got to have, however, somebody who 
knows capacity, how you do it, what it may cost to be able to 
say, ``Hey, your wishes here may be unrealistic.''
    Ms. Stillman. We found no consistent, disciplined 
institutionalized process for doing that.
    Mr. Sabo. But that might require expertise different than 
what an operational agency might normally have in place, would 
it not?
    Mr. Anderson. Yes. Our work over the years has found 
examples where maybe some of the requirements that were trying 
to be developed were just way, way too much, and eventually 
they had to back off on them because they couldn't achieve 
them.

                       dod procurement management

    Mr. Wolf. Mr. Sabo raises a good point. The tax system 
modernization with regard to IRS, $3.8 billion--yesterday they 
announced there were $600 million of it that is just totally 
wasted. Some of it they were able to use. But like AAS, it just 
went on and on and on, and maybe there was an attempt last year 
by the Treasury Appropriations Subcommittee to use the office 
over at DOD as kind of a checkpoint.
    And maybe there could be something done whereby all of 
these procurements went through DoD I don't know that DOD 
contracts out, if you will--but since 75 or 80 percent of the 
procurement in the Federal Government is done at DOD, would 
that make any sense, to have these things clearly, as Mr. Sabo 
said, the agency who has to--or you said--the agency who has to 
use it should be designing it, but to go to a place whereby 
they can get assistance? Does that make sense, to have things 
work through DOD?
    Mr. Anderson. That might not be a bad idea. I think that 
some of the work that Rona has done recently has shown that 
there are some guides out there. There are some standard 
criteria, processes, procedures that are available for the 
agencies to use if they would use them. Some of their work has 
compared their practices against those benchmarks that exist 
out there. But they are not following them.

                    faa's advanced automation system

    Mr. Wolf. How much money was wasted in the Advanced 
Automation System (AAS) since 1982?
    Mr. Levin. I don't know that I have ever seen any precise 
estimate, but just based on my knowledge and if you would ask 
me for a guess----
    Mr. Wolf. Yes.
    Mr. Levin [continuing]. Somewhere between a billion and 
$1.5 billion. The money would not be recoverable either because 
the software couldn't be used or project management activities 
were wasted.
    Mr. Wolf. I saw an IG report where one of the individuals 
who is involved in the procurement owned stock in IBM. And IBM, 
if you recall, was involved, and then some of the people left 
and went there, and I think Mr. Sabo puts his finger on 
something. I don't know if the committee could do that. It 
might be interesting to try it for one project whereby we 
mandate it that the FAA worked with the Department of Defense 
to see. If you have any thoughts, if you could get back to both 
Mr. Sabo and myself, we might want to try that for----
    Mr. Olver. Mr. Chairman?
    Mr. Wolf. Yes, Mr. Olver.
    Mr. Olver. Might I comment on that for a moment? If you are 
looking for an IRS kind of a problem and how to solve an IRS 
problem, I think the place to go is to the states which have 
solved that problem. IRS is trying to use basically 1970's 
computer technology or even earlier to deal with 1990's issue.
    And some states have done very well at moving their 
computer systems forward, and the people who managed to do that 
would be the kind of management people that I think would be 
able to deal with a similar problem but at a slightly different 
scale--slightly somewhat different scale certainly that is what 
the Federal problem is.
    I would be a little concerned about going to DOD for the 
procurement on this kind of a thing because I don't think they 
deal--you know, using the IRS as an example, that they--well, 
they know about what they need for the Army, and--they have 
less constraint probably on dollars than we are trying to 
impose upon other agencies.
    They are a little freer with their money there in military 
procurement. And in an FAA kind of a situation, I think that 
the data processing problem that is needed, the computerization 
problem is considerably less complex than the IRS problem.
    Mr. Wolf. Well, I would just say to the gentleman that may 
be. I am not an expert in it. But this has been going on since 
1982.
    The total cost to the AAS has been from the beginning--all 
this together has been how many billions of dollars?
    Mr. Anderson. Well, they are estimating $34 billion through 
2003 for the total modernization effort.
    Mr. Levin. Congress has appropriated about $23 billion.
    Mr. Wolf. $23 billion. And so it has gone on, and it is a 
major financial issue, clearly, that the committee is concerned 
with and the Congress. But equally important, it is a safety 
issue. And they just haven't been able to get their arms around 
it, and I don't think that DOD is the answer for everything.
    But I just thought if there was one that you could try, and 
Mr. Sabo really kind of triggered me onto the idea--one that 
you could try, not to have DOD do it, but since they do 75 to 
80 percent of the procurement, perhaps there is an office over 
there that could just look at some of these things as almost a 
contractor ought. Maybe it is a good idea and maybe it is not.
    But this has been such a difficult thing to get a handle 
on, and maybe in the complexity--the tax systems modernization 
is more complex, but it certainly hasn't cost nearly the degree 
of money when you look at the years that it has taken.
    Ms. Stillman. From a technical perspective, just for the 
record, IRS's TSM is a very large accounting and administrative 
processing system. FAA's system technically is far more 
complex. It is a real time system that needs to be fault 
tolerant. Its availability requirements are extraordinary. It 
is a substantial technical challenge.

                     faa management accountability

    Mr. Wolf. Moving on to the questions, you conclude ``FAA 
program officials have not been held accountable'' for 
theiracquisition management. What can be done to hold them more 
accountable?
    Mr. Anderson. I think that you really need to have good 
expectations where you have what you want them to do, what you 
want them to accomplish, and that you have periodic assessments 
of how they are doing and provide appropriate feedback.
    Mr. Wolf. And if they are not?
    Mr. Anderson. Then you take appropriate action.
    Mr. Wolf. Such as?
    Mr. Anderson. Well, I think if they accomplish things, you 
look at rewards. If they don't accomplish things, you look at 
the opposite of rewards.

                      faa employee survey results

    Mr. Wolf. Okay. In discussing the culture report, you 
mention the FAA is monitoring changes in its culture through 
employee surveys. When was the most recent survey taken and 
what did it show?
    Mr. Anderson. The most recent survey was done in July of 
1996, and, if anything, I think the results are mixed. Bob, do 
you have some information on that?
    Mr. Levin. Right. July 1996 was the last one. It showed 
some improvements--statistically significant improvements in 
areas of teamwork and innovation. But still you wouldn't look 
at those survey results and say, ``Boy, we are doing a lot 
better.'' Let me just give you an example from the survey. We 
quoted this question in the culture report that employees were 
afraid to say what they think because they were afraid of 
retaliation. FAA is showing some improvement in that response, 
but far more people still think this is a problem than think it 
is not a problem. Another case, ``Management is open to change. 
Do you think people feel that way?'' Slight improvements are 
evident but still most people in FAA do not think----
    Mr. Wolf. What are the percentages?
    Mr. Levin [continuing]. Management is open to change. Well, 
on this one, it looks, just eyeballing it, about 50 percent 
believe that management is not open to change, and about 25 
percent think that management is open to change, and the 25 
percent are uncertain. In terms of employees being hesitant to 
say what they think for fear of retaliation, it looks like 
about 45 percent feel that that is true, and about 30 percent 
think that it is not true, and 25 percent are uncertain. If you 
would like us to give you exact percentages----
    Mr. Wolf. Sure. Why don't you do that for the record?
    [The information follows:]

                    FAA 1995 Culture Survey Results

    Survey respondents answered the question ``are employees 
often hesitant to say what they really think for fear of 
retaliation?'' as follows:

                                                                 Percent
Strongly disagree or disagree.....................................  21.3
Unsure............................................................  16.6
Strongly agree or agree...........................................  62.1
                        -----------------------------------------------------------------
                        ________________________________________________
    Total.........................................................  100%

    Responses to the question ``most people in my workgroup 
think management is open and responsive to change'' were:

                                                                 Percent
Strongly disagree or disagree.....................................    50
Unsure............................................................  26.2
Strongly agree or agree...........................................  23.8
                        -----------------------------------------------------------------
                        ________________________________________________
    Total.........................................................   100

                      faa's modernization program

    Mr. Wolf. The Gore Commission's final report recommends 
acceleration of the FAA's modernization program. Can you 
provide examples of why it may not be realistic or desirable 
from a technical standpoint to accelerate the modernization 
program?
    Mr. Anderson. A lot of the problems that we found, Mr. 
Chairman, over the years is that FAA just hasn't been up to 
speed technically to make some of these things happen. And just 
willing it and saying that we are going to do it faster is not 
going to necessarily solve those technical problems. I think 
that is the biggest concern that we have. I don't know, Bob, if 
you want to add some examples?
    Mr. Levin. We have talked about their management capability 
over the years and how FAA has struggled. If you ask them to do 
more faster, is that going to make it easier on management or 
harder? I think it is going to make it a lot harder. Also, 
there is a technical challenge.
    FAA hopes that, and I think the Gore Commission hopes that, 
they can buy a lot of things off the shelf, but history shows 
us that most of these major procurements are not off the shelf, 
that development is necessary. It takes a lot of time. You 
can't just buy something from a company that is ready to plug 
in.
    It takes time and effort, and inevitably FAA finds that the 
technical and managerial challenges of instituting this new 
technology are considerable, if not beyond their capabilities. 
Certainly it takes them a lot of time and effort.
    Mr. Anderson. Another concern with speeding it up, quite 
frankly, is that you can look at the acquisition of the 
security equipment that they are getting with the additional 
$144 million that the Congress gave at the end of 1997. The 
problem is that you get the process speeded up so that you 
don't follow the disciplined approach that is laid out in FAA's 
acquisition management system. That system requires you to go 
through a logical process of determining what it is that you 
want to accomplish, what your mission is, looking at options 
and alternatives.
    If you try to speed up that process too much, you could be 
going down some blind alleys on some of these things because 
you have a really tight deadline to try to get it done, and you 
could end up spending more resources than you would normally. 
If you could just will it and have it done and have the 
modernized system there seven years sooner, it is great, but 
there are some real practical limitations.
    Ms. Stillman. I think a judicious approach would be to 
correct the underlying weaknesses that we have identified that 
have jeopardized their acquisitions in the past. Once those are 
corrected, then maybe they can go forward at a faster rate. But 
it is terribly dangerous to go forward faster before the 
underlying weaknesses are corrected.

                     faa procurement reform savings

    Mr. Wolf. Two years ago, the FAA estimated thatprocurement 
reform would save them an estimated 20 percent in acquisition costs. 
Even though acquisition reform has been in place now for about a year, 
there is no evidence in their budget submissions or in their long-range 
architecture plan of these savings. Have you seen evidence in your 
review of the modernization programs of any cost savings from 
procurement reform? And is it reasonable for us to expect any savings?
    Mr. Anderson. To date, we haven't seen any evidence. I 
think it is probably still too early to tell. Clearly, it is 
reasonable to expect some cost savings. That is one of the 
basis that the system was approved on. It is supposed to speed 
up the ability to award contracts and make it easier to deal 
with problem contractors. That is what is supposed to happen 
here.
    But if they don't find a way--getting back again to what 
Bob and Rona have mentioned--to deal with their technical 
problems, that is where the real costs come and where the real 
savings are going to occur. So what they are going to have to 
address are the underlying causes that are behind that.

              stars terminal computer replacement program

    Mr. Wolf. All right. You just issued a report on the 
terminal computer replacement program known as STARS. Can you 
give us your major findings of that work and, in particular, 
address the technical risk in STARS meeting its cost and 
schedule targets?
    Mr. Anderson. Sure. I will give an overview, and then Bob 
can add some more specifics. In fact, I think the report was 
issued yesterday. Basically, we found with regard to costs that 
the total life cycle costs of the system might be about half a 
billion dollars more than was originally estimated.
    FAA told us that they are confident that they are going to 
be able to keep the costs within their estimates, but we had 
some evidence to the contrary. And so there is a potential 
additional $500 million of cost growth there.
    With regard to the risk, we see some real risk associated 
with them being able to meet their schedule that they have 
lined up. And, Bob, why don't you talk a little bit about some 
of those risks?
    Mr. Levin. Okay. Well, we identified three. One had to do 
with, as I mentioned earlier, getting the commitment of the 
people in the field to the schedule so they will agree that 
they will install this equipment on time.
    A second had to do with resolving conflicts between the 
installation of STARS and other activities that might be going 
on like putting in a new tower or getting all the digital 
radars in place because STARS only uses digital radars. It 
cannot use analog radars.
    And the third point had to do with software development. 
FAA has a software development effort that is supposed to 
stretch almost three years from contract award to the 
completion of the full system. So in that three-year period, 
you know, a fair amount of effort in terms of developing the 
software, testing it, making sure all the software works 
together, has to be undertaken, and that is really in the 
critical path.
    So these are things that FAA recognizes are key risks. They 
are doing what they can to manage it. It requires management 
attention and effort, and we will keep an eye on it.
    Mr. Wolf. In acknowledgement of the technical risk in the 
en route computer program, FAA instituted an ``insurance 
policy'' known as the Display Complex Channel Rehost (DCCR). 
Does the FAA have a similar insurance policy under development 
should STARS fall behind schedule? And should one be put in 
place?
    Mr. Levin. FAA does not have an explicit insurance policy. 
They have the capability of updating the current system--what 
they call the Automated Radar Terminal System (ARTS) system--
with more modern workstations and supporting computer 
equipment. There has been some discussion about having that to 
fall back on. I don't think FAA though has come to the point 
where they feel they need an insurance policy. They feel like 
STARS will work.
    Mr. Wolf. Do you think there should be one?
    Mr. Anderson. At this point, it would be hard for me to 
argue that they should spend a lot of money on an insurance 
program. We are putting a lot of money into STARS. Maybe ask me 
in a year or two. Maybe I will change my mind, but right now I 
would say go with STARS.
    Mr. Wolf. Are the much-touted ``integrated product teams'' 
a step in the right direction, or not? Is such an acceleration 
consistent with the principles of FAA's new acquisition 
management system?

                    aviation safety recommendations

    In two reports last fall, you were critical of FAA's 
willingness and ability to improve its safety oversight 
programs. In one, you stated that FAA is slow to implement NTSB 
and IG safety recommendations even when they say they agree 
with them. In the other report, you found that even though new 
airlines have higher accident and incident rates, the FAA did 
not target these companies for greater oversight. Would you 
please explain why FAA seems so lax in these two general areas 
of aviation safety?
    Mr. Anderson. With regard to the implementation of the 
safety recommendations, we followed up on about 250 
recommendations that GAO, the NTSB, and the IG had made. We 
found that FAA agreed with about 90 percent of the 
recommendations, but they were slow to implement them.
    I think first of all some of the problems that gave rise to 
the recommendations were complicated and took some time to 
address. What we were more concerned about though, Mr. 
Chairman, was the fact that some of the recommendations were 
closed as having been fully implemented when, in fact, you'd go 
out and follow up in the field and find that the action was not 
complete.
    For example, if it was an NTSB recommendation to install 
some lights on a runway and FAA got the assurance from the 
airports that they were going to do it, NTSB would close it 
out. You would follow up in the field and find out three or 
four years later the lights still hadn't been installed.
    Mr. Wolf. Three or four years?
    Mr. Anderson. Yes. So that is the type of thing that we 
believe needs to be improved with regard to the recommendation 
system. FAA should monitor and report on recommendations until 
you have some assurance that what was actually supposed to 
happen as a result of the recommendation--not some sort of 
administrative process or procedure is done--but that the 
actual fix to the problem is done.
    Mr. Wolf. Well, I think that makes sense. What do they say 
to you about that?
    Mr. Anderson. Well, when we discussed our recommendations, 
with FAA there was some disagreement because they thought that 
they were going to have to keep these things open for a while 
because it takes some time to actually fix some of these 
problems.''
    Our belief is that this would be better because you will 
beable to keep the heat on a little bit to make sure that the things 
eventually do get fixed, as opposed to kind of clearing your books and 
saying, ``Oh, well, we have got those recommendations dealt with.'' And 
I think in commenting on our report officially, they did concur.
    Now, with regard to the new entrant airlines report that we 
did, I think until we did our work and then the FAA 90 day 
safety review came out with very similar findings to what we 
did, there was a general belief on the part of FAA that they 
needed to concentrate their inspection resources on those 
airlines that fly the bulk of the passengers, the major 
carriers.
    What we found in looking at data over a five-year period is 
that new entrant airlines had a higher rate of accidents, 
incidents, and enforcement actions, and that they needed more 
attention. In fact, the Daschle Task Force came to the same 
conclusion, and they went even further than we did by saying 
that FAA should change its classification systems for 
inspectors so that FAA could assign more experienced inspectors 
to the newer inexperienced airlines.
    The way the system used to work is that, and probably still 
does, is that you can't get the higher pay grades unless you 
are examining the bigger airlines. But they are taking actions 
to address that.

                             state formulas

    Mr. Sabo. Let me move in a different direction I am sure 
the numbers are readily available but I don't have them. Have 
you looked at the relative level of state effort in 
transportation funding? As we go about all the struggle and new 
formula for my state, and I happen to come from a state in 
which we were a donor for three or a donee for two or vice 
versa so we are sort of----
    Mr. Anderson. Are you aware, Gary? Have we looked at the 
level of resources or effort devoted to safety on the part of 
the states?
    Mr. Sabo. No, no, not necessarily safety but----
    Mr. Anderson. Oh, just resource of funding?
    Mr. Sabo. Yes.
    Ms. Jones. When we issued our report several years ago on 
the highway funding formula and the problems with the current 
formula and kind of options for the future, we mentioned that 
you could look at the fiscal capacity of the state and what 
each state was doing as part of your formula determinations. 
But we did not look specifically at each state to kind of 
compare how they were doing. But I think that information is 
out there.

                      airline safety report cards

    Mr. Wolf. Last year, there was considerable discussion of 
developing a safety ``report card'' for each airline. Although 
strongly pushed by the IG, in the end the FAA decided to back 
off from the public release of such data.
    In your report last October, you said, ``While such an 
endeavor is a formidable task, the benefits could be 
substantial. It would not only allow FAA to publicly disclose 
airline-specific safety data to help the public in making 
transportation decisions, but, just as importantly, better 
equip the FAA to identify and preemptively act on emerging 
aviation safety trends.''
    Please explain your position more fully and address FAA's 
concerns that such data could actually undermine safety by 
causing airlines to take unsafe actions simply to get a higher 
report card.
    Mr. Anderson. What was behind our recommendation was that 
we really thought it was time for FAA to start looking at what 
sort of criteria you could develop to determine whether or not 
you have a safe aviation system working. And we thought it 
would be a good idea to have them start giving some thought to 
that.
    We saw a need--an interest on the part of the public to try 
to get some indicators, but we didn't underestimate the 
significant problems associated with doing that. And there are 
significant problems. I think FAA now has decided to go ahead, 
and I think it has now published some safety information on the 
Internet. But it is basic information. And it is information 
that wasn't easily available to the public before. They had to 
have a freedom of information request to get some of it.
    But you do have to be very, very careful interpreting these 
data. With regard to accident information, accidents are very, 
very infrequent. Even though we all get concerned when you have 
crashes like ValuJet Flight 592 and TWA Flight 800, we do have 
a very safe system, and you have got to be careful because 
accident data doesn't necessarily constitute trends, and 
accident data are not predictive of future accidents.
    So I think that while ultimately it would be ideal to get 
to the point that you could have some very specific data that 
you could publish and let somebody say, ``Ah, well, this 
airline is safer than that one,'' we are not there yet. I don't 
know to what extent we will ever get there, but we have 
supported providing the public with some additional information 
that they can use, as long as it is caveated, as long as they 
recognize that it can only take you so far.
    It can't give you total assurance that, ``This airline has 
never been or has not recently been involved in an accident or 
incident so it is okay for me to fly them.'' You can't go that 
far. The information is just not available.
    Mr. Wolf. The information on the Internet--of course, 
everyone is not on the Internet. But is it--when you look at 
it, does it tell you something? I mean, do you have to be 
knowledgeable about aviation? Or if you are just like an 
individual who is trying to make a decision on what airline 
they may want to fly, does it tell you very much?
    Mr. Anderson. I don't believe it is going to tell you 
anything to really help in your decision on which airline to 
choose. Marnie, you have looked at this a little bit. Have you 
seen anything that would help in that regard?
    Ms. Shaul. I actually haven't looked at the data on the 
Internet, but it is my understanding that you could look at 
things like significant enforcement actions that FAA has taken 
with airlines for over a $50,000 fine. And as an individual, 
you could attempt to make some judgment about that. I think it 
will be difficult for many consumers to use that information to 
pick an airline.
    Mr. Wolf. Is there any information on how many people have 
used it yet? Could you check on that? I listened to the debate 
go back and forth one day on public radio, and I assume it is 
on there now?
    Ms. Shaul. Right. Tom Kai knows something about it.
    Mr. Kai. It has just been loaded onto the Internet 
recently, and I think the last indicator we heard was about 
85,000.
    Mr. Wolf. 85,000?
    Mr. Kai. And it went from 5,000 to 85,000 after the New 
York Times article on the Internet so there is an interest out 
there.
    [Additional information follows:]

    From Jan. 28, 1997 through Mar. 9, 1997, a total of 820,000 
public inquiries were made to FAA's new website page, 
``Aviation Safety Data Information.'' This averages to 137,000 
inquiries per week. FAA's new webpage on safety data was put on 
the Internet on Jan. 28, 1997.

    Mr. Wolf. That is good to know.

                             faa financing

    What is your view of the need to implement the findings of 
FAA's ``Ninety Day Safety Review,'' which was released last 
year? We will just have this last question, and we are going to 
both have to go and vote. Last December, GAO issued a report on 
the ``Big Seven'' airline proposal for FAA fees. You concluded 
``the proposal would dramatically redistribute the cost burden 
among airlines and could have substantial implications for 
domestic competition.'' Would you explain the major findings in 
the report?
    Mr. Anderson. Basically, what we found was that the 
proposal by the major airlines would significantly impact 
competition and really wasn't based on what we thought were 
good factors. The major airlines have a concern about the 
ticket tax and that you pay more of a tax based upon paying 10 
percent of the price of a ticket. So the higher the price of 
the ticket, the more tax you pay, and that on the surface 
appears inherently unfair.
    Clearly, if you could develop a better system it would 
help. When we looked at it closely, there are some readily 
available measures of system usage--departures and that sort of 
thing. One of them that is I personally think is a good 
indicator of system usage is fuel usage. When we looked at 
using a fuel tax rather than a ticket tax, and compared the 
major airlines, as a group to the low-cost airlines as a group, 
there was virtually no difference in the tax the two groups 
paid.
    Let us say if you would go for the aviation system and have 
a fuel tax be your prominent, primary revenue generator, that 
would be an indicator of use, and there was virtually no 
difference in that in what the aviation taxes--ticket taxes 
would generate.
    Mr. Wolf. And that would be fair then for both large and 
small?
    Mr. Anderson. That is right. I am not sure what the 
potential unintended consequences would be of a fuel tax in 
lieu of a ticket tax, but I think that is something definitely 
that the National Aviation Review Commission ought to look at.
    It would be easy to administer that sort of thing. It would 
affect different airlines differently. You would have some 
winners and losers in terms of who would pay more taxes and who 
would pay less. But as a group, all the airlines--the major 
airlines compared to the low-fare airlines and the commuter 
airlines would remain about the same.
    Mr. Wolf. Well, we will be back in about 10 minutes.
    [Recess.]
    Mr. Wolf. My understanding is that large carriers have now 
developed a second proposal which would finance FAA's budget 
through en route fees similar to those assessed by Eurocontrol. 
This proposal does not address the cost of hubbing at U.S. 
domestic airports, a situation that GAO said should be 
addressed. Do you believe that any fee system established 
should somehow delineate the specific costs imposed by the 
hubbing concept?
    Mr. Anderson. I really do. I think that creates an added 
burden for FAA at the congested hubbing airports and that sort 
of thing. So to the extent that they can do that, they 
definitely should. I think we have got to deal with the bigger 
problem, and that is whether FAA is going to be able to have 
the basic cost accounting system in place to be able to 
identify what the costs are and attribute them to the proper 
users. But, clearly, assuming that that can be done, yes.
    Mr. Wolf. Should any user fee system charge different 
prices according to the time of the flight or the day of the 
flight?
    Mr. Anderson. Well, that would be one way to try to deal 
with the congestion issue. I can't say definitively, but it is 
something that you wouldn't take off the table immediately.
    Mr. Wolf. Like morning hours, evening hours----
    Mr. Anderson. Some sort of a surcharge for the busy times, 
yes.
    Mr. Wolf. If the FAA begins charging user fees for 
regulatory services, isn't it possible that some users of the 
system may not avail themselves of FAA services, thereby making 
the system less safe?
    Mr. Anderson. I think what you have to be real careful 
about is that the system you set up doesn't have unintended 
consequences. I think you have to be careful not to build in 
incentives that might harm safety.
    Mr. Wolf. What are some of the examples that could happen?
    Mr. Anderson. Well, if you did something that was somehow 
linked to--had some either direct or indirect link to safety, I 
think that you wouldn't want to do that. You wouldn't want 
carriers to take actions that would cause them to, in any way, 
make the system less safe. I am struggling to think of a 
specific example but----
    Mr. Wolf. If you could, I would appreciate it. If you could 
maybe do it for the record.
    Mr. Anderson. Let us think about that. Yes, sir.
    Mr. Wolf. Thanks. Would you agree that to the extent this 
happens, it is most likely to involve pressures on those small 
parts manufacturers, air carriers, air taxis, and et cetera who 
have slim financial margins and every incentive to cut costs 
and cut corners, and who, therefore, need the FAA oversight the 
most?
    Mr. Anderson. There is definitely that potential. Yes, sir.
    Mr. Wolf. If you can elaborate a little bit more, and maybe 
you could do it for the record?
    Mr. Anderson. Okay.
    [The information follows:]

    The user fee structure should not discourage pilots from 
filing instrument flight rule (IFR) flight plans and using the 
ATC system. If pilots try to fly outside the system under 
visual flight rules (VFR), they may find themselves in weather 
conditions they were not expecting and need to enter controlled 
airspace. User fees should not be structured to discourage use 
of controlled airspace when such airspace is the safer 
alternative.

    Mr. Wolf. But what would an air carrier perhaps? What would 
an air taxi? What about the small part manufacturers? What 
things in the FAA that they now use and need that if you did 
have a user fee whereby they may change and do it----
    Mr. Anderson. Well, the inspection process and the 
certification processes would incur some costs which they would 
have to pay for or reimburse FAA for. Those are some of the 
things that you want to be careful about and not have them 
trying to usher the inspectors out the door because the 
inspectors are on the clock, and they are going to have to pay 
for it. You want the inspectors to be able to do a thorough 
job.

                            faa funding gap

    Mr. Wolf. In predicting a funding gap, the FAA assumed that 
operation costs would grow at an annual compounded rate of 
about seven percent. Is this reasonable?
    Mr. Anderson. Well, we think that hopefully there can be 
some productivity gains and other improvements in operations 
that would help offset that cost. We do not believe that their 
estimates take that into consideration. So we can't quantify 
what they might be, but certainly a lot of the actions that 
they are taking for their air traffic control modernization 
efforts are designed to improve efficiency over the long term. 
So you would hope that those types of things would happen.
    Mr. Levin. This was a major point made by Coopers & Lybrand 
in their recently released study. They felt the same way we 
did, that there is a lot of pressure on FAA in the operations 
account, and FAA needs to look for ways to somehow find 
efficiencies through productivity gains or whatever means. So--
--
    Mr. Wolf. And moving people around better and closing 
things that should be closed?
    Mr. Levin. Yes.
    Mr. Wolf. And you don't think they have done a very good 
job in that area?
    Mr. Levin. I think maybe this is the biggest challenge 
facing the new administrator, trying to find ways to address 
the pay and compensation issues.
    Mr. Wolf. Have the decisions been made that will foreclose 
the new administrator from having that ability? How far along 
are they to doing that? They have been without an administrator 
for four months, but are they so far along that some of these 
things are being foreclosed?
    Mr. Levin. No, not at all. FAA has some flexibility now to 
set up its own personnel system. They have the union contracts 
that are up for negotiation now. This is kind of a critical 
time.

                          controller staffing

    Mr. Wolf. FAA is requesting funds to hire 500 new air 
traffic controllers next year on top of the 250 new controllers 
this year. They are projecting further increases in the 
outyears. From your work, do you believe the FAA has accurate 
estimates of its future staffing needs?
    Mr. Anderson. In the job that we are doing at your request 
and also for Mr. Sabo, we are looking into that in some detail. 
What we found is that over the short term, they do pretty well. 
Their estimates and projections are pretty good. Over the long 
term, they are not nearly as good. And we are going to have 
some recommendations I believe in that regard especially on how 
they are estimating the number of future retirements. I 
mentioned this earlier in the hearing.
    Mr. Wolf. Is FAA's staffing standard for air traffic 
controllers adequate?
    Mr. Anderson. That is something I believe that is being 
looked at right now by the National Academy of Sciences. The 
staffing standards are being reviewed and revalidated so the 
work that we are doing is based upon looking at the existing 
standards. But I think that there is going to be some changes.
    Mr. Wolf. Do you have any comment you want to make?
    Ms. Shaul. At the aggregate level, those staffing standards 
have been generally I think fairly good. The problem FAA has 
faced I think in part has been looking at the staffing 
standards as they play out at individual air traffic control 
facilities.
    Mr. Wolf. You mean the hard-to-staff ones versus the 
Chicagos and New Yorks versus others? Is that what you mean by 
that or what?
    Ms. Shaul. No. What I meant is that the standards have been 
developed to be accurate at the national level. They weren't 
designed to be as accurate at the facility level.
    Mr. Wolf. Oh, I see what you mean.
    Mr. Anderson. There are unique circumstances at individual 
facilities that the standards might not take into account.

                            airport security

    Mr. Wolf. If Congress were to appropriate increased funding 
for airport security equipment, could FAA improve on the 
process they used for spending $144 million we appropriated 
last fall?
    Mr. Anderson. Yes. I believe they can. They are under a 
pretty tight time frame to try to get the equipment out to the 
field as soon as possible now. As a result, they have done a 
lot of noncompetitive procurements. They are also asking for 
waivers for some of the requirements that are designed to make 
it a more disciplined, orderly process. I would hope in the 
long term that they could get back to using those types of 
processes.
    Mr. Wolf. Have you assessed the technical performance of 
the CTX-5000 explosive detection device to determine whether it 
will provide the increased detection capability with acceptable 
false alarm rates and throughput?
    Mr. Anderson. We haven't done that right now. I know that 
it is currently being tested at three airports. Do you have any 
more current information, Marnie?
    Ms. Shaul. Well, the results of the testing with the CTX-
5000 are actually classified, but the performance of the 
equipment has been tested to meet FAA's standards. But one of 
the issues in the field is the ability of the human operators 
to use the equipment effectively, and preliminary tests in the 
field showed that the performance level was less than it was in 
the lab.
    Part of what should be happening this year with the 
fielding of these 54 CTX-5000's that are being purchased with 
part of the $144 million, will be to gather operational data so 
that FAA will have a better idea of how this equipment is 
actually performing in the field.
    Mr. Wolf. Do they know what airports they are going to be 
placed in yet?
    Ms. Shaul. FAA has developed a draft deployment plan in 
conjunction with the IPT it formed which included industry 
partners, and they did come up with some recommendations about 
which airports would receive the equipment. And the draft plan 
has been circulated within the industry and with other FAA 
officials, and they plan to have a final deployment plan in the 
middle of this month--I believe about the 15th of March.
    Mr. Wolf. Well, we are not going to finish this hearing 
because as I said at the outset, Mr. Slater had to go to 
Arkansas because of tornadoes so we rescheduled his hearing. 
How is your schedule? We are going to stay here until 12:45. 
You can or cannot come up tomorrow?
    Mr. Anderson. Tomorrow was a problem but we could come up 
next week. I talked to one of your staff earlier, and we could 
come up next week, if necessary. We can make adjustments if you 
want and try to make it tomorrow. But it looks like next week 
would be easier.
    Mr. Wolf. I just want to set up a time before you leave if 
we can. Well, let us try to resolve it by the end of the day.
    Mr. Anderson. Okay.

                          amtrak restructuring

    Mr. Wolf. And we will work with Mr. Sabo too to pick a 
time. In 1994, Amtrak undertook a major restructuring effort 
that sought to make it more self-sufficient. GAO has been 
reviewing the results of this restructuring effort since the 
beginning. How is Amtrak doing to date?
    Mr. Anderson. Overall, I think Amtrak has made some 
progress in reducing its losses, but they have not met their 
targets for the loss reduction that they had in mind.
    Mr. Wolf. How far off are they?
    Mr. Anderson. I believe----
    Mr. Wolf. What progress have they made?
    Mr. Anderson. All right. I believe and I am going to need a 
little help with this, Rick, is it several million dollars off 
in terms of more losses than they wanted?
    Mr. Jorgenson. Mr. Chairman, they have been off of their 
plan about $125 to $127 million. They expected to have a loss 
in fiscal year 1996 of about $639 million. It was a net loss 
and it was about $125 to $127 million above that. It was 
actually $764 million.
    Mr. Wolf. That is quite significant, isn't it?
    Mr. Anderson. Yes, sir, it is.
    Mr. Wolf. And what does that do, what does that mean? They 
want it to be self sufficient by the year 2002. What does that 
mean?
    Mr. Anderson. I think that that is not likely to happen, 
that they are going to continue to need federal funds both for 
operating and capital support beyond that time frame.
    Mr. Jorgenson. Mr. Chairman, it puts pressure on Amtrak to 
generate additional revenue and more importantly to further 
reduce and contain their costs and every year that they are off 
of their plan increases the pressure to do that.
    Mr. Wolf. If you look at the fact that they are off of 
their plan by $125 million, is that what you said?
    Mr. Anderson. Yes, sir, that is correct.
    Mr. Wolf. And the slippage that you have that that will 
result in and knowing as a supporter of Amtrak, we have tried 
to be helpful here. If the slippage continues, what do you 
think the impact of this will be? When would they become self-
sufficient assuming that the committee did everything that we 
possibly could knowing that we are on a balanced budget target? 
What do you think the impact is in years?
    Mr. Anderson. Well, I really do not think that we can 
predict that at this time, Mr. Chairman. I know that their 
needs are great. We are talking about $10 million [$8 billion] 
in capital needs over the coming years. The federal subsidy has 
been getting less and less but their needs are not shrinking.
    And it has been difficult for them to make the route 
reduction changes and those types of things that they needed to 
do. The demand is not going down but they are unable to reduce 
it. Their costs are not going down either and the longer it 
takes for them to replace the capital and the equipment, the 
more expensive it is going to be to maintain them in the 
interim.

                      amtrak routes/projected loss

    Mr. Wolf. What was the loss to Amtrak last year at the end? 
I was not on the group that did it but they gave I think $22 
million for several additional routes that Amtrak had said it 
wanted to close. There was a loss there.
    Also, they would have been able to take the cars off of 
those routes and put them on proper routes. What impact does 
that have? Do you know what the total cost of that will be?
    Mr. Jorgenson. Amtrak projects that their additional loss, 
net loss, from keeping those routes open is $13.5 million.
    Mr. Wolf. So that is 22 and 13. Have any of the states----
    Mr. Jorgenson. No, that is a net loss, the 13.5. The 22 we 
had we threw down the rat hole. The 22\1/2\ covered some of the 
additional costs. They had projected an additional $29 to $30 
million in cost.
    Mr. Wolf. Well, what does it actually mean then for Amtrak? 
That was $22 million appropriated for the lines.
    Mr. Jorgenson. That is correct.
    Mr. Wolf. It would not have been thrown down the rat hole 
if the states come forward so assuming--I would ask you that 
question, but assuming that they did not come forward and they 
had that $22.5 million, what is the loss then to Amtrak for the 
fact that those routes would have been shut down and then they 
could have taken cars and done whatever on other routes. What 
will be the total loss for Amtrak when you combine that?
    Mr. Jorgenson. That, sir, is the $13.5 million.
    Mr. Wolf. Plus the $22.5 million we could have given to----
    Mr. Jorgenson. Something else.
    Mr. Wolf. Something else.
    Mr. Jorgenson. Yes, sir.
    Mr. Wolf. Are any of those states picking up the service?
    Mr. Jorgenson. We are not aware of additional states coming 
in with contributions for those routes.
    Mr. Wolf. What about Texas? We had the gentleman from Texas 
here the other day who I thought answered the question to the 
effect that they were looking at it or they were hopeful. Do 
you have any indication that Texas----
    Mr. Jorgenson. We are not entirely sure what the state of 
Texas is doing. We have heard that the state is trying 
tonegotiate with Amtrak to put some additional money into it by making 
loans and they would be loans based on additional mail and express 
business, and once that was up and running then the loans could be 
repaid to the state.
    Mr. Wolf. Was that a mistake for Congress to do that with 
that money?
    Mr. Jorgenson. I would not want to characterize it that 
way, sir. This is one of those situations where it is a policy 
call for the Congress.

                  AMTRAK OPERATING SUBSIDY ELIMINATION

    Mr. Wolf. What progress is Amtrak making in eliminating its 
need for operating subsidies by the year 2002?
    Mr. Anderson. With them not meeting their targets that they 
had in mind, we believe that it is going to slip and we do not 
believe that realistically they are going to be able to make 
that deadline.
    Mr. Wolf. Amtrak has undertaken a number of efforts to 
improve its financial and operating conditions such as reducing 
staff, eliminating routes, and reducing the service. Are there 
other actions that GAO believes Amtrak will need to do within 
the next few years to insure its long-term operating success?
    Mr. Anderson. Clearly one of the major things that they 
need to do is try to negotiate with labor and see if they can 
get some concessions from the employees to reduce some of the 
costs there, some of the severance pay costs. Rick, what else 
is there?
    Mr. Jorgenson. Well, there are a number of items they are 
going to have to do. One of the items is to grow revenues and 
right now they are putting a very heavy dependence on bringing 
high speed rail to the Northeast Corridor and north of New 
Haven, Connecticut.
    They expect that will generate somewhere between $150 and 
$200 million additional net revenue per year. That is one of 
the key things they will have to do. As Mr. Anderson was just 
mentioning, they have additional cost-saving items that they 
will have to do, part of which gets into making additional 
route and service adjustments which has been very difficult for 
them to make to date, as well as negotiating additional 
productivity improvements with labor.
    But you cannot underestimate the importance of capital 
investment as well. I mean capital investment not just to bring 
high speed rail to the Northeast Corridor but also to modernize 
and overhaul the existing equipment and facilities is a 
critical component of being able to maintain high quality 
service and to attract the ridership that will allow them to 
grow the revenues that they are expecting.

                         AMTRAK BUDGET PROPOSAL

    Mr. Wolf. Mr. Downs has expressed disappointment with the 
Administration's budget proposal, stating that the budget 
proposal limits funding for Amtrak so severely that service in 
the Northeast Corridor's high speed rail program would stall.
    He further noted that the level of capital proposed is so 
seriously inadequate and the level of operating assistance so 
insufficient that Amtrak's national system cannot survive. Do 
you agree with that?
    Mr. Jorgenson. I think there is some degree of truth in 
that. I mean, one of the problems that we have noted is that 
the gap between operating subsidies and operating deficits 
which is really their net loss adjusted for non-cash items have 
been growing. At the end of '94 when they were in such a severe 
financial crisis, the gap was about $75 million between those 
two figures. At the end of '96 that had grown to $82 million.
    Part of this is the fact that Amtrak has not been able to 
accomplish a lot of the actions they had planned such as the 
productivity improvements which required negotiation with their 
union employees. But also there has been a decline in the 
operating subsidies provided by the Congress and as those 
operating subsidies continue to decline, Amtrak is still going 
to have a difficult time making cost adjustments either through 
the route and service adjustments or the productivity 
improvements that they are expecting. And it is very likely 
that that gap between the two figures is going to grow even 
larger.

                    AMTRAK ROUTE CLOSURE COMMISSION

    Mr. Wolf. At the last Congress I had suggested that there 
be a national base closing type commission to look at the whole 
Amtrak structure whereby it would be an up or down vote on what 
routes stay open and what closes. Does that make any sense to 
you? Would that be a mechanism?
    Mr. Anderson. Yes, definitely. I think we talked about that 
in our report we did in 1995 on Amtrak and that would take some 
of the political pressures off the difficulties of trying to 
reach these types of decisions if you could have an independent 
body like a base closure commission to do that. That would be a 
good thing.

                          AMTRAK CAPITAL NEEDS

    Mr. Sabo. Just so I am straight in what funding goes to 
Amtrak. We have the operating assistance, then we have a 
capital fund, and that capital fund, is that primarily 
equipment?
    Mr. Anderson. That is for equipment and other improvements 
to the rail line and other things like that.
    Mr. Sabo. There is really the road bed itself?
    Mr. Jorgenson. There are really two types of capital 
provided. There is a general capital fund which provides for 
new equipment and stations and infrastructure. There is also 
what is called the Northeast Corridor Improvement Program.
    Mr. Sabo. Which is a separate line though.
    Mr. Jorgenson. It is a separate line item. That primarily 
goes for the actions that will bring the high speed rail to the 
north and to the Northeast Corridor.
    Mr. Sabo. And as I understand it, in that corridor Amtrak 
is running on its own road bed or its own line?
    Mr. Jorgenson. Yes, that is correct.

                   AMTRAK OPERATING COSTS/TRACK FEES

    Mr. Sabo. For the balance of the country it is contracting 
with freight railroads, I assume.
    Mr. Jorgenson. Right.
    Mr. Sabo. They are the fee for whatever pay comes out of 
the operating budget?
    Mr. Jorgenson. Yes.
    Mr. Sabo. So it is operating in the balance of the country.
    Mr. Jorgenson. Yes, that is an operating expense for what 
they pay the freight railroads for access to their lines and 
use of their lines. By the way, 97 percent of Amtrak's route 
system is on lines owned by freight railroads which Amtrak has 
to contract with and pay a fee for that access.
    The other 3 percent is owned by Amtrak and it is primarily 
made up of the Northeast Corridor from Washington to Boston.
    Mr. Sabo. What is the size of those payments they makefor 
capital in the balance of the system, do you know?
    Mr. Jorgenson. On the balance of the system?
    Mr. Sabo. Yeah, for the right to use the freight trains, 
trackage.
    Mr. Jorgenson. They historically pay the freight railroads 
about $90 to $100 million per year for access. Several of those 
contracts, in fact, all those contracts have expired. They have 
been able to renegotiate several of them but the vast majority 
of them are still being negotiated and those fees could change 
in the future.
    Mr. Sabo. In the Northeast Corridor where they own their 
own trackage, are there commuter lines that use their trackage?
    Mr. Jorgenson. That is correct.
    Mr. Sabo. And they use the revenue generated off that. Is 
that operating or does that go back in the capital?
    Mr. Jorgenson. That is considered operating revenue.
    Mr. Sabo. The fees they get?
    Mr. Jorgenson. Yes, sir.
    Mr. Sabo. How much are those, do you know?
    Mr. Jorgenson. I am not entirely sure but we would have to 
provide that for the record.
    [The information follows:]

    AMOUNTS PAID TO AMTRAK BY COMMUTER AGENCIES--FISCAL YEARS 1987-96   
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                     Amounts paid by                    
                                    commuter agencies   Amounts paid to 
            Fiscal year              to access Amtrak  Amtrak to operate
                                          track        commuter services
------------------------------------------------------------------------
1987..............................                $59                $49
1988..............................                 58                 79
1989..............................                 73                 83
1990..............................                 76                 90
1991..............................                 80                 99
1992..............................                 81                116
1993..............................                 84                162
1994..............................                 83                184
1995..............................                 92                213
1996..............................                 84                234
                                   -------------------------------------
      Total.......................                770              1,309
------------------------------------------------------------------------

    Mr. Sabo. Is that usage expanding, the update for the 
Northeast Corridor?
    Mr. Jorgenson. It has been expanding in the last several 
years and out to the year 2000 and beyond several of the 
commuter railroads that use Amtrak's Northeast Corridor are 
expanding their operations so it will be increasing in the 
future.
    Mr. Sabo. Are they legitimate contracts in terms of fees 
charged?
    Mr. Jorgenson. Are you asking if the fee is reasonable?
    Mr. Sabo. Yeah.
    Mr. Jorgenson. I do not think we have undertaken an 
evaluation to know whether they are reasonable costs or not. We 
did put out a report last year--I believe it was in June of 
'96--where we looked at the users, including the commuter 
railroads that use the Northeast Corridor. If you try to relate 
their payments to the actual use of the corridor, I think there 
was a little bit of a disconnect between the two.
    Mr. Sabo. Are they similar to what Amtrak has to pay?
    Mr. Jorgenson. Not exactly, because what Amtrak pays off of 
the corridor to the freight railroads is based on incremental 
cost whereas the charges that they charge the commuter 
railroads is based on a higher rate. It is more on the usage, 
the electricity they use, the track wear and tear and things 
like that.

                        AMTRAK PROFITABLE ROUTES

    Mr. Wolf. Mr. Olver.
    Mr. Olver. Thanks, Mr. Chairman. To continue with this 
Amtrak discussion--are there any lines presently which are 
profitable if you take into account both operational costs and 
capital costs?
    Mr. Jorgenson. Yes, sir, there is. In fiscal year 1996 for 
the first time in Amtrak's history the Metroliner service did 
make a profit on a fully allocated cost basis.
    Mr. Olver. A fully allocated cost--metro liner, and which 
is that one? Where does that go?
    Mr. Jorgenson. That is the New York to Washington service.
    Mr. Olver. Just New York to Washington?
    Mr. Jorgenson. Yes, sir.
    Mr. Olver. Okay. Are there lines other than that which are 
profitable on a purely operational cost without being fully 
allocated?
    Mr. Jorgenson. I do not believe so, sir. Historically they 
have all lost money in relation to their operating costs.

                    AMTRAK ROUTE/SERVICE ADJUSTMENTS

    Mr. Olver. Okay. So historically you do not believe so. 
Okay. From the proposed closures last year there were several 
that I assume were the ones with the largest percentage loss. 
No, I should not assume that. I will not assert that. But had 
those closed immediately, we would have had some slightly 
better position as has been discussed here over time in the sum 
of $22 million and $13 million allocated in some way. I am not 
exactly certain how that is done.
    But there would be some more trains in some places. Is 
there reason to believe that any of the lines to which those 
reallocated train sets or whatever were going would then be 
profitable on an operational basis? I mean are there any of 
these which are not profitable now, not profitable because they 
were absolutely full and they did not have enough cars on them 
to take another several hundred passengers?
    Mr. Jorgenson. Mr. Olver, I do not believe that is the 
case. I think they have the capacity. One of the things that we 
have noticed in our evaluation is that Amtrak's load factor 
over the last two years has declined. It was at about 49 
percent. It is now at about 46 percent.
    Mr. Olver. The load factor has gone down in other words?
    Mr. Jorgenson. Yes, sir, it has.
    Mr. Olver. I would suggest that just reallocating and 
putting more cars in various places is not a question of not 
having enough capacity for the ridership.
    Mr. Jorgenson. I do not believe that is the case. There 
could be some lines that at various times of the year, because 
Amtrak does have seasonality, where the additional equipment 
would be needed to accommodate the passengers that desire that 
service.
    Mr. Olver. We are going to get into the watermelon analogy 
in here pretty shortly but, okay. If that is the case, is there 
an analysis--if that does not sound as if we are closing the 
gap necessarily by these moves or at least not much, nothing 
like the closure of the gap of $700 million net loss which 
already Mr. Jorgenson has said with any moves that are 
presently anticipated you cannot see how--I am perhaps putting 
words in his mouth, how that is going to get us to zero net 
operating cost.
    Net operating, I think that was even without taking into 
account capital costs without allocating capital costs within 
it but only on the operating zero at 2002. Have you folks done 
an analysis or can you direct me to an analysis of what other 
lines one would close down in order to reallocate more train 
sets into other places that are already unprofitable?
    That does not seem to me to be the best way to get savings 
that are necessary from what we are talking about. I do not see 
how that move is going to get us anywhere but maybe only 
marginally at best closer to the goal.
    Mr. Jorgenson. Mr. Olver, I think what you are referring to 
is just one component of what Amtrak is going to have to do in 
order to address their deficit position and their continued 
need for federal support. Redeployment of assets to routes is 
one aspect of it and I know Amtrak is placing a great reliance 
on route and service adjustments in order to help close the gap 
but that is not the only action that they are going to have to 
take.
    They do have other actions such as negotiating productivity 
improvements with their employees that will also address that. 
As I referred to a few minutes ago, they also are relying on 
the high speed rail service north of New Haven to generate 
additional new revenues so that is just one component of it.
    Mr. Olver. Okay, so in productivity improvements and high 
speed rail in the expanded metro liner now going from 
Washington to Boston when they are finished with the Northeast 
Corridor are supposed to net them substantially more. That one 
is profitable, but the other moves, I am not getting from you a 
sense that the moves that have been taken of closing lines are 
getting them anywhere closer to their goal, at least by 
themselves, not in any significant way.
    And what I was going to lead to, what I was trying to get 
was--do you have an analysis, and maybe just that, do you have 
an analysis of which of the next several lines that one might 
triage off this system that from this history you are probably 
also not going to get it significantly closer but maybe 
slightly, maybe marginally. Do you have any sense of what would 
be the next few that ought to be--that would be dropped as part 
of that process?
    Mr. Jorgenson. Sir, that is not an analysis that we have 
conducted. That is an analysis that Amtrak has undertaken and 
is in the process of undertaking. And in fact in 1994 they had 
a consulting firm, Mercer Management, that came in and assisted 
them in trying to identify which route should be the targets of 
potential reductions or eliminations.
    And at that time Amtrak had applied the criteria of trying 
to cut $2.00 in costs for every $1.00 of revenue that they 
might potentially lose on a route.
    Mr. Olver. This was a 1994 report? I have not seen it. 
Would you reference it again so that I know what I should be 
asking for?
    Mr. Jorgenson. This was an analysis that Amtrak had 
conducted in consultation with a consulting firm. They used 
Mercer Management Consulting firm and there may have been other 
firms as well that had conducted that analysis and that is what 
was the basis of the initial route and service adjustments that 
they took in '94 and '95.
    Mr. Olver. That study was done in 1994?
    Mr. Jorgenson. Yes, sir, that is correct. And that was part 
of the basis for their original strategic business plan that 
they developed.
    Mr. Olver. I guess the ultimate there though is that the 
point--I do not know how far you can go if we had the group 
map, and that is not your responsibility, it should be taken up 
later, before you no longer have anything that can arguably be 
called the national rail system. There cannot be many more that 
you can knock off that system and still claim that you got a 
national rail system.
    Mr. Jorgenson. Well, I would like to make one comment that 
when we put out our February 1995 report at the time there was 
I think 11 or 12 routes that accounted for about two-thirds of 
Amtrak's ridership as well as its passenger revenue and we had 
looked at routes. That basically is routes that had generated 
$30 million or more per year in passenger revenue.
    Mr. Olver. But still 11 of those 12 were losing on an 
operating basis and only one this year has finally made it 
through the--which leads along with hope that with good 
procedures, management and a variety of things, actually make a 
good route go profitable on a fully allocated basis, but that 
is kind of a unique route from Washington to New York, I guess.
    Mr. Jorgenson. Well, what I was going to say was our 
analysis now shows that that number where it was 11 or 12 in 
1994 and 1995 has now been cut back to nine routes. There are 
nine routes that now basically account for two-thirds of the 
revenues and ridership.
    Mr. Olver. Where would I find those two analyses, then, 
1994 and 1995, versus now, comparison to see what those--you 
obviously have them, you can make them--I just do not have 
them. I am new to the committee. Clearly probably the committee 
has them.
    Mr. Jorgenson. Our February 1995 report included a graph 
that showed what those routes were. In fact, it showed Amtrak's 
route system and it identified which ones had the largest 
ridership and revenue.
    Mr. Anderson. We can provide that information to you, Mr. 
Olver.
    Mr. Olver. You can get me the February 1995 report. Can you 
give me the update, get me the update that shows what they are 
now?
    Mr. Jorgenson. Sir, we can provide something for the 
record.
    Mr. Olver. Okay.
    [The information follows:]

                    REVENUE \1\ AND EXPENSE CONTRIBUTION OF SELECTED AMTRAK ROUTES IN FY 1993                   
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                    Net profit/ 
                              Route                                Total revenue   Total expense      (loss)    
----------------------------------------------------------------------------------------------------------------
1. NEC Conventionals............................................          $219.3          $358.6        ($139.3)
2. Metroliners..................................................           127.9           142.1          (14.2)
3. California Zephyr............................................            45.3            80.6          (35.3)
4. Empire Builder...............................................            43.9            87.6          (43.7)
5. Auto Train...................................................            43.2            50.3           (7.1)
6. Silver Meteor................................................            39.9            75.8          (35.9)
7. Silver Star..................................................            36.8            74.0          (37.2)
8. Southwest Chief..............................................            36.8            72.2          (35.4)
9. Empire.......................................................            36.5            69.9          (33.4)
10. Cresent/Gulf Breeze.........................................            31.7            69.6          (37.9)
11. Coast Starlight.............................................            31.7            64.3          (32.6)
                                                                 -----------------------------------------------
      Total.....................................................           693.0         1,145.0         (452.0)
                                                                 ===============================================
Total all routes................................................        1,1018.6         1,882.3         (863.7)
Selected routes as a percent of total for all routes............           0.680           0.608           0.523
----------------------------------------------------------------------------------------------------------------
\1\ Revenue$30 million.                                                                                         
                                                                                                                
Note.--NEC Conventionals are now called Northeast Direct.                                                       


                     REVENUE \1\ AND EXPENSE CONTRIBUTION OF SELECTED AMTRAK ROUTES IN FY 1996                  
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                    Net profit/ 
                              Route                                Total revenue   Total expense      (loss)    
----------------------------------------------------------------------------------------------------------------
1. Northeast Direct.............................................          $239.9          $381.9        ($142.0)
2. Metroliners..................................................           157.9           143.8            14.1
3. Southwest Chief..............................................            45.6            83.4          (37.8)
4. Auto Train...................................................            45.4            58.4          (13.0)
5. San Diegans..................................................            36.4            73.2          (36.8)
6. Empire.......................................................            35.7            83.4          (47.7)
7. Empire Builder...............................................            32.5            73.6          (41.1)
8. Silver Star..................................................            31.1            70.4          (39.3)
9. Silver Meteor................................................            30.1            62.9          (32.8)
      Total.....................................................           654.6        1,031.00         (376.4)
                                                                 -----------------------------------------------
Total all routes................................................         1,011.4         1,866.7         (855.3)
                                                                 ===============================================
Selected routes as percent of total for all routes..............           0.647           0.552           0.440
----------------------------------------------------------------------------------------------------------------
\1\ Revenue$30 million.                                                                                         

    Mr. Anderson. There is just one thing I want to add on this 
whole discussion of Amtrak. One of the things that we 
emphasized in our 1995 report was that there is no passenger 
rail system throughout the world that has not received some 
form of federal or government subsidy associated with it. So 
that is going to be a policy decision that, if we do decide we 
are going to have a national rail system, there is probably 
going to have to be some continuing level of federal subsidy.
    Mr. Olver. Excuse me, may I clarify that one? Okay, now is 
that on a fully allocated basis or on only an operating basis?
    Mr. Anderson. I think that was on a fully allocated basis.
    Mr. Olver. Okay. I think you have identified something if 
we are going to have a rail system, we are going to have to 
have a degree of subsidization, but the question then becomes, 
well, is it on a fully allocated or only on an operational 
basis if we are going to make comparisons which at least 
somewhere in the background we need to realize that we are 
probably not going to be successful at doing it on a fully 
allocated basis.
    Mr. Wolf. I think there is a lot that we can do and I am 
glad Mr. Olver is on the committee because I know of his 
interest in Amtrak with regard to the Northeast Corridor. I 
think the more that we were to have routes that people believe 
that the bad routes have been pruned the greater support there 
would be, particularly when we go to the floor, but in the 
country for subsidizing--there are no mass transit systems that 
pay for themselves with fair bucks and the public policy which 
I support of subsidizing them because they make a contribution.
    I think we could do the same thing. The problem has been 
some of these routes are political and nobody likes to have a 
route closed. Amtrak goes through my district. I am prepared 
because I want to see a viable system in operation and I think 
the only way to do it, you would have never had the base 
closing taking place, I had a base closed in my district.
    I support the base closing commission. We had hoped they 
would have kept it open but once they made a decision to close 
it, we made and are attempting to make lemonade out of the 
lemons to redevelop and do some things. But to continue to have 
routes that we are just pouring money down that we know are 
going to lose, it makes Mr. Downs' job much more difficult to 
even make a legitimate case.
    And so I think there is a lot that we can do. I think it is 
in the nation's interest to have a national rail system but I 
think people are going to have to see that there has been every 
effort made to kind of make it work and everything else.
    Amtrak suggests that it cannot become free of federal 
operating support without dedicated capital funding sources. 
However, the Administration did not support Amtrak's request 
for the creation of a new trust fund--a half-cent of dedicated 
funding in the fiscal year 1998 budget. What is your opinion of 
the necessity of the half-cent?
    Mr. Anderson. Mr. Wolf, that is a policy call but they are 
going to need some sort of a dedicated funding source whether 
it comes from the trust fund or somewhere else to deal with the 
capital needs.

                    Amtrak Dedicated Funding Source

    Mr. Wolf. How does the creation of a new dedicatedfunding 
source, which could lead to greater subsidies, induce greater operating 
efficiencies at Amtrak? How do you condition that?
    Mr. Anderson. I think the key thing is that if you can 
improve the quality of your capital you might be able to 
generate more revenues. From the operating efficiency side, 
Rick, any information to add there?
    Mr. Jorgenson. Well, I think the important thing to 
remember on providing a dedicated source of funds for Amtrak is 
that you would provide them additional funds for capital 
investment which could help their operating side in terms of 
attracting riders and becoming more efficient cost wise.
    But I think the other thing about Amtrak is that they have 
certain actions that they are going to have to take themselves 
in order to reduce their costs and increase their revenues even 
outside of a dedicated funding source.
    Mr. Wolf. So you actually have to condition, and I think 
there ought to be a dedicated funding source, you actually have 
to condition that upon actions. The 80/20 federal funding for 
federal transit sometimes guarantees the gold plating of the 
system because they know it is 80/20 and therefore they can do 
whatever they want to do.
    So I think the same thing could be here if you had a half-
cent. Before you enact the half-cent, you need to condition 
certain changes and then when those conditions come in, the 
half-cent comes in. I think that would be the way to guarantee 
that you would get the necessary changes.
    It appears that Amtrak is ``betting the farm'' on its half-
cent proposal. What is Amtrak's ``fall back'' option if 
Congress does not provide Amtrak with a half cent funding from 
the Highway Trust Fund?
    Mr. Anderson. I do not think there is any really good 
option. They are going to need some sort of federal assistance 
in some way so I do not think there is any.
    Mr. Jorgenson. I do not think there is a fall back position 
either. One of the things Amtrak though is counting on I think 
heavily is increased federal capital support potentially 
through a half-cent but if that does not materialize they are 
going to be back to historical, potentially historical levels 
of capital funding which will allow them--one of the things I 
wanted to mention was that a large percentage of their capital 
funding now is being devoted to debt service payments and 
mandatory items such as environmental cleanup, as well as 
overhaul of their existing equipment.
    In fact, in fiscal 1996 that was about $211 million of 
about $230 million capital funding. That is going to continue 
into the future and so the fall back position is that they will 
be able to undertake those activities and those items but 
beyond that they are going to have to look to private financing 
sources which is another concern that was raised in our 
analysis because their debt levels have increased substantially 
over the last two or three years.
    Mr. Wolf. Do you agree that it is possible to construct a 
series of decisions which lead to, I do not want to use the 
word profitable, but a legitimate national rail system that is 
relatively productive.
    We are not betting on something that just cannot happen, 
are we? Tell me what you think from your own opinion. Assuming 
you get the half-cent and assuming the changes are made--do you 
believe that you can then lead to a profitable national 
railroad?
    Mr. Anderson. I believe, Mr. Chairman, if we can deal with 
some of the political problems that you have alluded to and 
allow some objective type of decisions to be made, I believe 
that it can be accomplished. But you have to deal with the 
political realities of it.
    Mr. Olver. Mr. Chairman, may I ask another question?
    Mr. Wolf. Sure. Mr. Olver.
    Mr. Olver. Do you think that there is a serious impediment 
that Amtrak has owned trackage of 3 percent and the rest of it 
is all on the freight railroad? Does that end up being a 
serious problem for them operationally? Maybe they have to 
charge a fee or something like that along the way but do they 
need, if we really mean to have a national passenger system, do 
we have to give them some assistance on that aspect of it?
    Mr. Jorgenson. Sir, I do not think that is really the case 
because by law Amtrak is guaranteed access to those tracks and 
in fact they are also given priority. Their trains are given 
priority over freight railroads.
    Mr. Olver. I ask that in part because as I had understood 
from the closure of the section of the Lakeshore Limited 
attaching Boston, the ninth largest metropolitan area going 
directly west and they are still attached through the shore 
route and presumably when the Northeast Corridor stuff is done 
they will have a much better attachment but other cities, 
smaller cities, are affected by it where the ridership was 
quite small.
    The argument in part that I was hearing was that they were 
having continuous problems with Conrail on who had the rights 
of way, things that were being closed down. Conrail was running 
freight and the passenger trains were being held up so that 
they could never keep a schedule.
    Mr. Jorgenson. Sir, I think what you are alluding to is 
probably correct. The law may allow for them to have priority 
and to have access to the tracks but from a practical 
standpoint whether from an operational standpoint if the 
freights are given priority or not is a different question.
    Mr. Olver. Well, it seems to have been a serious impediment 
in that one case. I do not know whether it is true in others. 
But they are supposed to have priority. I mean freight can go 
an hour later but schedules really ought to be--if you are 
going to have an efficient national passenger rail system 
you've got to be able to make the connections in a reasonable 
manner.
    Mr. Jorgenson. That is correct, sir, and part of the way 
Amtrak tries to deal with that is to offer on time performance 
incentives to the freight railroads that if they keep trains on 
time a certain percentage of the time they can earn an 
incentive payment for that.
    Mr. Olver. Okay. Thank you.

                             travel reform

    Mr. Wolf. Last March the GAO testified before the Senate 
Government Affairs Subcommittee that the federal government 
could save a lot of money through administrative reform of the 
travel process. The Transportation Inspector General concurred 
at last year's appropriation hearing that DOT could save 
millions from such changes. Since FAA has the largest travel 
budget in the department, they could perhaps reap the largest 
benefit from such reform. Have they taken action on these 
recommendations?
    Mr. Anderson. I do not know the status of that.

                  boston central artery/tunnel project

    Mr. Wolf. I have a whole series of questions on the Central 
Artery project. I want to make sure that this thing is holding, 
that the cost overruns are not--maybe let us try to cover a 
couple for five more minutes.
    Last year, the Federal Highway Administration, GAO and the 
Inspector General reviewed the costs to complete the Central 
Artery/Third Harbor Tunnel in Boston, Massachusetts and 
concluded that total costs would amount to $10.4 billion.
    Since that time, the Massachusetts Highway Department 
submitted an updated finance plan, dated October 1996, and 
concluded that the overall cost of the project has not changed. 
In November, the Federal Highway found the plan acceptable. Is 
it the GAO's opinion that the overall cost of the project has 
not changed since last year?
    Mr. Anderson. That is correct, sir, but we do have some 
concerns in the regard. There have been some cost increases on 
contracts that go over and above what their goals have been. 
They have a goal to keep cost growth on construction contracts 
to 10.7 percent.
    They have been averaging about 16 to 19 percent so they 
have had some cost growth but they have offset this cost growth 
with some savings. Primary savings are coming from $600 million 
anticipated savings from their insurance program. We have some 
concerns whether those things will be sustainable over the long 
term.
    To date the Central Artery has had a really good record 
that has enabled its insurance costs to be low. But they are 
also moving into a very risky part of their construction 
process where they are doing a lot of tunneling.
    Whether or not they will be able to sustain that over the 
future is unknown. They are containing it so far, but the 
margins for error are pretty narrow.
    Mr. Wolf. Why have the costs increased then with regard to 
the contract? You said they were 10 to--why?
    Mr. Anderson. They have always anticipated cost growth. 
They built in a factor that they would have cost growth for 
unforeseen circumstances. That was 10.7 percent. Costs have 
grown 16 to 19 percent.
    Ms. Jones. Well, I think the statistic that John is talking 
about, the 10.7 goal, is they are averaging about 16 to 19 
percent. What that is, Mr. Wolf, is changes to construction 
contracts. As they are moving through the construction 
process----
    Mr. Wolf. Add-ons.
    Ms. Jones. It is add-ons. They are seeing things maybe 
underground, subsurface elements that they did not know were 
there so it is additional cost to remove them. They also had 
some additional costs for removal of soil so there is a number 
of things that have related to the cost increases.
    Mr. Wolf. Do you see anything out there that would take 
this over 10.4?
    Ms. Jones. We have not done an analysis yet to kind of re-
baseline that cost. As John said, we do have some concerns 
about the savings that they are using to offset that.
    Mr. Wolf. Are you making it clear to them and is this 
becoming an issue of public interest and discussion or by 
people knowing that it is being watched and this is an area of 
concern?
    Mr. Anderson. Yes, we communicated this directly to the 
project officials, that is correct.
    Mr. Wolf. What are they saying to you?
    Mr. Anderson. If you look at them as being very optimistic 
in their outlook and you look at us as being very cautious and 
conservative in our outlook, the answer is probably some place 
in the middle. Right now we need to keep an eye on the cost 
growth. If cost continue to go up, they have a relatively small 
margin of error--16 to 19 percent versus 10.7--that they plan 
for. If that goes along over much more time, that is going to 
make their costs go up.
    Ms. Jones. And I think one other element of the savings 
that they are accruing from the insurance program is because 
they are basically estimating, Mr. Wolf, that some of these 
savings which they have already taken are based on accruing 
interest in a retained earnings account through 2018 which is 
actually 13 years beyond the end of the project. They are 
assuming that the interest earned is actually going to still be 
there. If they do not need it for their workmen's compensation 
program it will be applied to the program at that time.
    Mr. Wolf. Is that valid? Is that a good procedure?
    Ms. Jones. It all depends on whether or not--in talking 
with the people knowledgeable about workmen's comp, if they 
have one big accident, you know, that could blow the whole 
assumption. The other thing is that you are assuming that you 
are going to be accruing interest 13 years after the project is 
over; it will not at the end of the project. Even if the 
assumption holds true, you will not be getting that money until 
2018 to apply to the project cost.
    Mr. Wolf. Well, if that happens they will not have any 
money to build any roads in Mr. Olver's district. They will 
have to take the whole money from the rest of the state. It is 
a quarter of and we will just kind of end. Some time next week 
we will bring it back and go through the rest of the questions. 
Thank you very much. I appreciate it.
                                            Monday, March 10, 1997.

                  Boston Central Artery/Tunnel Project

    Mr. Wolf. Last year the Federal Highway Administration, 
GAO, and the Inspector General reviewed costs to complete the 
Central Artery, third harbor tunnel in Boston, Massachusetts, 
and concluded--we did ask you that, but then you made the point 
about the inflation. I think that is where we were at that 
point. You had talked about the things were on, but there were 
some problems with regard to inflation.
    Would you elaborate a little bit more?
    Mr. Anderson. Sure. They are estimating that the cost is 
still going to be $10.4 billion. They have had some cost 
increases. The construction contract cost increases have been 
averaging 16 to 19 percent. They had only been planning for a 
10.7 percent increase, so they have had cost increases there 
and a couple of other increases.
    They offset all these cost increases with anticipated 
savings. The largest amount comes from savings that they 
anticipate from insurance----
    Mr. Wolf. That is where you are, talking about the 
insurance. Could you talk a little bit more about how reliable 
that is to do that?
    Mr. Anderson. I think what they are basing it on right now 
is what their history has been. Their history to date has been 
a good one in terms of workers' compensation and other types of 
insurance benefits; it has been real good. The project is just 
now moving into its real heavy underground tunneling 
construction phase, and that is where it becomes riskier and 
makes the assumptions about the insurance savings a little bit 
optimistic.
    Gary, do you want to elaborate?
    Ms. Jones. Just to add one thing to that, Mr. Wolf. We 
also, in talking on Thursday, mentioned the fact that another 
assumption that is at the base of the cost savings for the 
insurance program is the fact that these savings are based on 
interest that will be accruing in an account 13 years after the 
project has been completed. They are making an assumption that 
they are going to put about $120 million in a retained earnings 
account and let that sit there and grow interest until 2018; 
and they are taking that right now as part of their cost 
savings. If, in fact, they don't need that money to pay 
workers' compensation claims, that money may be there at 2018, 
but again it is 13 years after the project has been completed.
    Mr. Wolf. Is that a legitimate or fair accounting way or 
way of looking at things?
    Mr. Anderson. I think it is as long as you have the proper 
disclosure and recognition of the risks that are inherent 
there.
    Ms. Jones. I think one problem with that, Mr. Wolf, is if 
that money is not there at 2005 when the project is completed, 
which it won't be, that may in fact increase the financing cost 
of the project. This is because they are assuming that money is 
going to be there at 2005, and it is not going to be there 
until 2018.
    Mr. Wolf. Okay. We have some other questions on that issue; 
we will just submit them for the record.
    Mr. Wolf. Are more regular and periodic updates of the 
financial plan necessary at this time? And are you still 
working with the IG and Federal Highway Administration?
    Mr. Anderson. Yes. We are still tracking the status of 
project, and I believe that this is not something we have 
talked about. And, Gary, if you have a different opinion, jump 
in here, but I believe regular sort of progress reportings on 
the financing status would be a good idea.
    Ms. Jones. I would agree with that, and I think they are--
right now they are committed to do that update annually. I 
think the next big decision point is what Federal funding is 
going to be coming out of NEXTEH, because a lot of the 
financing concerns that we still have about the project, 
depends on how large a Federal share they will be getting in 
the future, and that is still uncertain.
    Mr. Wolf. Would you work with the staff, then, if you have 
any ideas of what we can institutionalize for more regular 
reporting, so we don't get caught 5 years out or 3 years out if 
somebody says, why didn't you check on this more, so we can do 
everything we possibly can.
    Ms. Jones. Be happy to.

                        Alameda Corridor Project

    Mr. Wolf. On the Alameda Corridor, last year Congress 
provided a direct loan totaling $400 million for the Alameda 
Corridor. Can you bring the Committee up to date on the status 
and terms of the loan and whether or not the loan has been 
executed.
    Mr. Anderson. Yes. The loan has been executed. It is a 
loan, so there is an anticipated payback to the Federal 
Government, plus interest. They plan to use the loan to pay for 
some engineering design and some construction cost. I don't 
know if any of it has been used to date. Joe?
    Mr. Christoff. No. In fact the first $140 million the 
project anticipates we will be getting this year and $140 
million next year and $120 million the year thereafter.
    Mr. Wolf. When will construction on the corridor begin and 
to what extent will the differences between the Ports of Long 
Beach and Los Angeles and the small cities along the corridor 
contribute to any delays?
    Mr. Anderson. I think construction is supposed to start 
this year. I don't believe there have been any delays as a 
result of the disagreements with some of the cities along the 
corridor. I don't believe there have been any delays that are 
directly attributable to them.
    Mr. Christoff. None so far. I believe the California 
Supreme Court was to have decided last Friday whether or not it 
was going to hear lawsuits that were submitted by two of the 
smaller cities requesting that they become Members--rejoin the 
Alameda Corridor Transportation ProjectAuthority. They agreed 
to hear it.
    Mr. Wolf. When is construction on the corridor expected to 
be completed?
    Mr. Anderson. I believe it is 2001.
    Mr. Wolf. The year before we balance the budget.
    Mr. Anderson. Right.
    Mr. Wolf. It was reported in the Journal of Commerce in 
October that the Alameda Corridor Transportation Authority has 
suspended several contracts and construction of the corridor 
has slowed to a snail's pace because of serious cash-flow 
problems. Are there cash-flow problems, do you know?
    Mr. Anderson. Joe, do you know anything about that?
    Mr. Christoff. I think that article was written before the 
loan was received and signed in January. I don't know of any 
cash-flow problems at this point. It is only about 5 percent 
constructed and about 15 percent designed, so you are talking 
about the bulk of the construction occurring probably next 
year.
    Mr. Wolf. One of the partners in the Alameda Corridor 
Project is the Los Angeles Metropolitan Transportation 
Authority, which is expected to contribute at least $218 
million to the project. With the MTA caught in a money squeeze 
because of the subway construction delays and cost overruns and 
recent court order consent decree for additional bus 
operations, how able is the MTA in meeting its financial 
obligations to the project?
    Mr. Anderson. We think that is a real risk associated with 
the financing of this project. It is my understanding that MTA 
is supposed to contribute about $347 million for the total life 
of the project. They have a potential shortfall of a total of 
$1.5 billion for all of their projects, of which Alameda is 
just one. And so I think there is some risk associated with 
their being able to meet it. They anticipate and/or tell us 
that they plan to do it, but they have a lot of other needs 
too, including the L.A. subway.
    Mr. Wolf. How critical is this amount to the corridor?
    Mr. Anderson. I think it is a very important piece of it, 
$347 million of a $2 billion project.
    Mr. Christoff. What makes it critical is the fact that the 
loan agreement between the Federal Government and the project 
caps the amount of money that the project can get through its 
revenue bonds at $1 billion. And the project is saying right 
now that they are going to need all of that $1 billion, not 
only for the construction, but for any potential cost 
escalations. So when you have the $1 billion cap on the revenue 
bonds, the MTA contribution is essential, according to the 
project.
    Mr. Wolf. The Congress provided a direct loan authority of 
$400 million in limited annual loan levels over the next 
several years, based on programmatic consideration and other 
factors. How likely is it that the annual loan levels will 
exceed the annual need; for example, should these annual levels 
be revised, spread out over a longer period of time or 
rescinded in part?
    Mr. Anderson. I don't think that we really know yet. I 
don't think enough has happened on the project to be able to 
predict--unless there is some information that you have on it, 
Joe.
    Mr. Christoff. No. Just in terms of the 5 percent 
construction, it is hard to predict what will be needed when.
    The other point probably to mention is that this is a loan 
agreement, and the Federal Government is committed to providing 
$140 million this year, $140 million next year, and $120 
million thereafter. It is not subject to the annual 
appropriations process as a full funding grant agreement would 
be.
    Mr. Wolf. What are the problems then, in summary, with 
regard to the Alameda Corridor? If you are looking at this 
thing, the first money will be released, you said 2001--what 
should we be concerned about?
    Mr. Anderson. I think we really need to watch the financing 
carefully because in addition to MTA's contribution of $347 
million, they plan to have bonds totaling about $711 million. 
They are hoping they are going to be interest-free bonds. If 
they don't get the okay from the IRS to have them interest 
free, we will have to have more bonds, maybe about $800 million 
worth. So there is a significant portion of the financing that 
has some questions associated with it that bears watching.
    Mr. Wolf. Should the Federal Government take a more active 
interest in watching this, or is this something we should just 
rely on the dates?
    Mr. Anderson. With the Federal Government----
    Mr. Wolf [continuing]. What we have done on the Central 
Artery project?
    Mr. Anderson. Yes, I think that would be prudent. We have a 
$400 million commitment on the part of the Federal Government. 
It would be worth keeping an eye on the status.
    Mr. Christoff. Also, Mr. Wolf, this project, the Alameda 
Corridor, is being used more or less as the model for the 
Transportation Infrastructure Credit Program.
    Mr. Wolf. So we want it to go well.
    Mr. Christoff. Right. So I would think the Department would 
want to follow it closely, and certainly Congress as well.
    Mr. Wolf. If you could look at that and do basically what 
we did on the Central Artery Project, to do it on the Alameda, 
not because we think there is a problem like there was on the 
Central Artery--it was clear that there was a cost overrun and 
problems--but more to protect it along the lines of what you 
are saying, that this is a model, and make sure it goes well 
and give them any guidance.
    If we could do that, that will be a help.
    Mr. Anderson. Sure.

                     Bay Area Rapid Transit Project

    Mr. Wolf. BART--in its report on the BART project, GAO 
stated that BART's finance plans provide little room for error. 
It depends on large, annual Federal cost savings to be derived 
from new and unproven contracting procedures and other factors.
    To what extent have the cost estimates and funding sources 
for the project changed since last year?
    Mr. Anderson. The cost estimates for the project and 
funding sources have remained stable. The biggest concern that 
we have with the BART project right now has to do with some 
optimistic assumptions about the level of Federal funds that 
are going to be coming to it.
    Mr. Wolf. What are those assumptions?
    Mr. Anderson. Do you recall the specifics, Joe?
    Each year their rate of assumptions of receipt of Federal 
funds is much higher than what it has been in the past and what 
you would expect. We can provide the specific information.
    Mr. Christoff. Specifically, in the outyears BART is 
anticipating beginning in the year 2001 Federal appropriations 
between $160 million and $150 million. In their previous 
finance plan they had about $110 million to $120 million a 
level that FTA a year ago said was too high and too optimistic. 
Now BART's latest finance plan, which is the November plan, has 
these higher projections.
    Mr. Wolf. The BART project is a good project. I am not 
questioning it. Is anybody focusing on that then? Because $160 
million, I don't think there is any way the Federal involvement 
could be at $160 million, unless I am wrong, and as each year 
you come closer to getting to 2002, this thing is getting 
tighter.
    If you look at the administration's recommendation about 
FTA and this budget, I think they are actually too low. They 
are lower than I think they ought to be. Are the people and the 
region looking at this, or is there someone focusing to see 
what the reality of the situation is, that there probably won't 
be that Federal? And what happens if there isn't that Federal 
involvement of $160 million?
    Mr. Christoff. What happens is, basically BART has to 
borrow more money to complete the construction. Its current 
finance plan and all the previous finance plans show that there 
is going to be a shortfall in cash around the year 1998, and so 
they have a short-term borrowing program to try to meet that 
shortfall. Right now, it is going to cost them $40 million in 
finance costs. If they get less in Federal appropriations, 
their finance costs would go up.
    Mr. Wolf. Do you have any idea--is this another project 
that we should be--should we be putting together a team of GAO 
and the agency involved, in this case the FTA, to look at some 
of these?
    We have the MTA, which is just falling behind. We have the 
BART project, which again is a good project. I think they 
clearly need it with the transportation problem out there. I am 
just wondering, if nobody is really looking at how they are 
going to pay for this thing later on, I mean, that is almost 
not fair to the people out there.
    What do you suggest should be done on big projects like 
this?
    Mr. Anderson. I have always believed that when a project is 
watched, people are a more careful about what they do, and it 
instills a bit of discipline into the process. I think that it 
is not a bad idea to have this done on some of these mega 
projects--to have some periodic status reporting.
    Mr. Wolf. I will ask my staff to work with you and the MTA 
to see if we can do the same thing on the BART project.
    The last question, then I will recognize Mr. Sabo, is the 
project sponsors have indicated there is a diminishing window 
of opportunity to construct the BART station at the airport as 
the airport expands its international terminal. At what point, 
if at all, will the airport's ongoing terminal construction 
preclude the construction of a BART station or a people-mover 
at the airport? Is there a real window and, if so, what is it?
    Mr. Anderson. The best information that we have is that a 
decision has to be made in the June time frame. That is when 
they plan to award the last contracts for the airport work. So 
we need to have some of these decisions made and firmed up by 
then, or there could be a commitment made that might rule BART 
out of coming into the airport if the airport opts to go it 
alone on a light rail system.
    Mr. Wolf. Well, the last question was--and I am a little 
bit confused--could contracts be written and could construction 
on the airport terminal proceed without precluding either a 
BART station or an airport people-mover? Will it stop them?
    Mr. Anderson. I think it could, and our discussions with 
the airport officials there indicated that they might have to. 
If decisions aren't made on BART, they may have to go ahead.
    Mr. Christoff. I think, in some regards, BART has breached 
this window of opportunity concern many times over the past 
year-and-a-half, and it has not affected the construction 
schedule. However, at this point they are in a crunch and the 
airport is going to be faced with the decision, do we simply 
build this light rail system that we need for our own terminals 
in getting out to the parking lots, or do we also build the 
station that BART needs?
    And it is a different construction. You need heavier 
construction, more supports if you are going to have both the 
BART station and the people-mover that the airport needs.

                      los angeles red line project

    Mr. Wolf. Mr. Sabo?
    Mr. Sabo. No questions.
    Mr. Wolf. Over the past several years MTA has been plagued 
by a number of problems over the construction of the MOS number 
3, including escalating costs, delays, difficulties in 
engineering, mismanagement, organization.
    Based upon your review, what is the current cost and status 
of the Los Angeles Red Line?
    Mr. Anderson. The Red Line's cost has grown from the last 
time we talked to you last year about this. It was $5.5 billion 
then; it is up to $6.13 billion now.
    Mr. Wolf. Last year it was----
    Mr. Anderson. $5.9 billion.
    Mr. Wolf. Now it is----
    Mr. Anderson. $6.13 billion, and it could grow even further 
as a result of them having to deal with the problem they had 
with hydrogen sulfide gas and one of the tunnels out there, and 
there are some pending lawsuits that could cause the cost to go 
up further.
    Mr. Wolf. Do they have the capacity, the county and the 
State, to absorb these costs?
    Mr. Anderson. I think that this is a real risk, as I 
mentioned earlier, with regard to the financial capacity of the 
Los Angeles County Metropolitan Transit Authority, which has a 
major part in contributing to the financing of this project. 
There are some real financial problems, including a projected 
shortfall through the year 2010 of $1.5 billion. The Red Line 
project is just one of the several transportation projects that 
could be affected by this shortfall.
    And I think they are supposed to be paying MTA--I think $35 
million toward the Red Line project, so that is no small amount 
of change here.
    Ms. Jones. Mr. Wolf, I think in the next couple of months 
there will be two important reports that will help everyone 
determine if they have the financial wherewithal to meet the 
commitments for the Red Line. One is that the FTA has brought 
in a financial consultant to look at the fiscal capacity of MTA 
to be able to move forward with its transit program as well as 
the bus program.
    And also MTA is redoing their long-range 20-year 
transportation plan. That is due to their board of directors in 
June 1997. That report will be looking at their priorities, 
their financing. So, I think those two documents will enable 
FTA to have a much better handle on the fiscal capacity of MTA.
    Mr. Wolf. The $6.13 billion is for--how many miles roughly 
are we talking about?
    Mr. Anderson. That is the basic system now, the 23-mile 
system.
    Mr. Wolf. $6 billion for 23 miles and it could go higher?
    Mr. Anderson. Right. That doesn't even take into account 
potential plans to expand the system to be a 40-mile system, 
another 17 miles.
    Mr. Wolf. What could it be? What could we be talking about?
    Mr. Anderson. Over $12 billion. I think another $5.6 
billion on top of the $6.13 billion. That is their initial 
estimate for the additional 17 miles. Who knows what it could 
be?
    Mr. Wolf. Okay. We have a number of other questions we will 
just ask you for the record.
    In your opinion, should we stop digging a deeper hole for 
ourselves, or should the FTA renegotiate the funding agreement 
to complete all the planned projects? What should we do? Should 
we bring everybody together? Should we look at this? Should we 
hold Los Angeles harmless? What is the right thing to do here?
    Mr. Anderson. I believe there is probably going to be an 
amendment to the full funding grant agreement for segment 3. 
But before they do that, they need to hear what the consultant 
has to say. We need to see what MTA's own self-assessment comes 
up with in terms of their need, and use that as a basis to 
decide just what else the Federal Government needs to do on 
this.
    Mr. Wolf. Maybe we will use this same process we used on 
the Central Artery also on this. I am concerned, at the hearing 
last week Mr. Pastor was raising questions of what if they have 
something. I know Mr. Sabo is interested in some things and 
other members--good, legitimate projects.
    If you look at the amount of money that California, New 
Jersey, and Oregon are taking, it is literally taking--so 
somebody has to look at this now to see, would there be a way 
whereby they could change what they are trying to do and go on 
the bus ways or finishing a portion of it? Has anyone looked at 
that?
    Mr. Anderson. I don't know for sure.
    Ms. Jones. I am not sure whether they have or not, Mr. 
Wolf. I am sure those things were considered prior to them 
deciding to go with the Red Line subway.
    Mr. Lamoreaux. The comment I would make is, as they look at 
the Red Line project and funnel money into the Red Line 
project, a light rail project known as the Blue Line is being 
held up. Also, they were planning to build about 30 miles of 
car-pool lanes, and that has been put on hold so they can 
funnel about $300 million in funds into the Red Line project. 
Then they have the bus consent decree, which is also receiving 
a lot of emphasis.
    Mr. Wolf. For the stenographer, would you identify 
yourself.
    Mr. Lamoreaux. My name is Ralph Lamoreaux.

                       federal highways oversight

    Mr. Wolf. I just wonder if it wouldn't be a good thing for 
the people of Los Angeles. I think the Committee would be open 
to it if you get the members that are interested in it from 
that region, working with the FTA and your people to see if 
something could be done. Because, again, if you ever went up to 
this amount of money for 23 plus 17 miles, there would be no 
money left in the country for any other rail or system. It 
would just absorb everything.
    So in addition to the BART project, I think we are trying 
to develop a concept now, for a big project like this, that we 
can keep track of this way.
    What is the Federal Highway Administration's role and 
attitude in ensuring cost control of large-dollar highway 
projects?
    Mr. Anderson. FHWA takes the position that their role is 
not on cost containment. Their role is to help in design and 
ensure that highway projects are safe and of good quality. So 
they have not had an expressed role in cost containment. They 
get involved in issues related to cost when they approve the 
design and look at the safety features and they approve 
individual segments, but in terms of the overall cost of a 
project, they don't get involved in that.
    Mr. Wolf. Should there be a change of that?
    Mr. Anderson. Well, that is one of these touchy issues. It 
is a question of, is this something that FHWA should do, or is 
it something that is more of a State or local responsibility?

                   intelligent transportation systems

    Mr. Wolf. We had the Central Artery project where the money 
was coming, so there was no incentive to change it because it 
was 80/20 and that was just the way it was.
    I wonder if the Federal Highway Administration and the 
Federal Transit Administration shouldn't participate with 
regard to that? We will ask them when they come up.
    The budget request includes a set-aside of $100 million of 
the Federal, aid highways obligation authority for an 
intelligent transportation center deployment program. You have 
been critical of similar proposals in the past. Has your 
opinion about the appropriateness and timeliness of a large-
scale Federal deployment changed over the past year?
    Mr. Anderson. No, Mr. Wolf, it hasn't. We still have some 
concerns about going on a wide-scale deployment program at this 
time. There are a number of barriers that still need to be 
addressed, I believe, before you go into this area.
    DOT has just completed the architecture for ITS. They still 
have to come up with technical standards. There is a need to 
improve the communication among the people involved if there is 
to be a full understanding about what ITS means. There is a 
real question about what is the cost and benefit of ITS, and 
whether there are some other, less costly options than some of 
the ITS options that are on the table?
    There are a number of things that need to be looked at to 
address those obstacles before you go into widespread 
deployment.
    Mr. Wolf. The Intelligent Transportation Infrastructure 
program is to deploy and support integration of metropolitan 
air travel management systems within 25 to 30 metropolitan 
areas. What can you tell the Committee about the ability and 
knowledge base of stakeholders and the state of the practice 
which effectively deploys these systems in the Nation's largest 
metropolitan areas?
    Mr. Anderson. I think we found that the views and knowledge 
and everything varied widely. In some areas, the people were 
very familiar with what was required and needed to be done; 
other areas, there was little or no knowledge.
    Mr. Christoff. I would agree with that in the sense that a 
lot of States and urban areas know of certain types of ITS 
technologies. They are familiar with electronic toll 
collections. They are familiar with ramp metering.
    The question is, do they know how to put them all together 
to have an integrated ITS system that gives them the 
efficiencies and the interoperability that supposedly is the 
vision of the ITS program? In that area, that integrated area, 
there is very little knowledge.
    Mr. Wolf. What are your thoughts about the Federal 
Government providing additional Federal aid to pay for the 
deployment of the integrated ITS systems?
    Mr. Anderson. I think we really ought to go slow on that. I 
think until we take care of addressing some of these obstacles, 
you could just be providing some carrot money out there for 
people to go after because there are some funds to do capital 
projects. But you know there are many other needs that exist 
out there, and I am not sure that you necessarily would be 
addressing the highest priority ones if you went with it at 
this time.
    Mr. Christoff. I think it is what you do first. Many States 
and urban areas don't understand this 8,000-page architecture 
and they won't have the technical standards available for them 
until the year 2001. Therefore, you would want to overcome 
those barriers before you spend a lot of money on widespread 
deployment.
    Mr. Anderson. I know, Mr. Wolf, you know the fast toll 
project out on the Dulles Toll Road. I think that is a good 
thing, but you want to be able to have that designed in a way 
that it will be compatible. There are little sensors that could 
be put in your car, but there is some standardization needed so 
when you go from one locality to another it will still work.
    Mr. Wolf. I don't think that is compatible with the Green 
Way. That is used from the Dulles airport in, but I think if 
you go out, that is not compatible with the Green Way. So when 
you get on the Green Way, which takes you to Leesburg, you have 
to stop, I believe, unless it has changed in the last couple of 
weeks--stop and pay.
    Mr. Anderson. I think they fixed that now. I know I went to 
the Winchester area about a month ago, and I took the Green Way 
and it worked.

                       STATE INFRASTRUCTURE BANKS

    Mr. Wolf. Please elaborate for the Committee your findings 
of the October 1996 report on the State infrastructure bank 
(SIB) program.
    Ms. Jones. Basically what we said in that report, Mr. Wolf, 
is, looking at State infrastructure banks, there is a promise 
that State infrastructure banks would be able to assist in 
terms of the funding shortfall that States and localities are 
facing. Unfortunately, we are so early into that program, there 
has only been one project, the State of Ohio has loaned money 
through its SIB. We are not sure yet whether we are talking 
about SIBs helping just around the margins or whether they are 
going to make a very strong contribution.
    Ten States are currently involved in the pilot program. 
Since that pilot program has been extended, 28 States have come 
forward and are also interested in being part of it. FHWA has 
not selected any additional States yet. So I think there is 
promise, but it is a little early to tell what we are going to 
get out of State infrastructure banks.
    Mr. Wolf. Given the limited experience in the State 
infrastructure program to date, does the GAO believe it is 
appropriate to create a new similar program, the Transportation 
Infrastructure Credit Program, for which the administration is 
seeking $100 million?
    Mr. Anderson. Again, that is one proposal that I think my 
conservative nature would say, let's go a little slowly. What 
you are really talking about--as we understand it, that the 
$100 million proposal which would give DOT loan authority of up 
to $859 million. That is a big chunk, and we don't know how 
well this is going to work.
    We know in the case of Alameda Corridor project that the 
Federal Government is pretty far down the list of creditors if 
something goes wrong in terms of getting paid back, so we need 
to see how these things work out a little bit.
    Mr. Wolf. How many more years would we need to know? Next 
year, would you have enough information?
    Mr. Anderson. We will definitely have enough information 
next year to see how Alameda is going.
    Mr. Christoff. The only problem with the Alameda Corridor 
project is that the payback doesn't begin until the year 2001, 
and it is a 30-year payback period for the Alameda Corridor 
project. So I don't know if that puts in perspective when you 
will have more information.
    One of the interesting things about the Transportation 
Infrastructure Credit Program, the first question I would ask 
is, what is the criteria that one would use in selecting these 
projects of national significance? When Deputy Secretary Downey 
testified last week before the Senate Environment and Public 
Works Committee, he said that completing the criteria is one of 
the first things DOT wants to do. A second question is, who 
makes the selection? Is it something that the Department does 
exclusively, or is it done in consultation with the Congress?
    Ms. Jones. I think, Mr. Wolf, in addition to what Joe has 
just mentioned for these loan programs, you also need to 
determine the risk to the Federal Government. And I think for 
these transportation projects, since there are just very few of 
them right now in the United States; that another question that 
we would have is what OMB and DOT would use in terms of 
determining risk?

                     COAST GUARD ANTIDRUG PROGRAMS

    Mr. Wolf. Last fall Congressman Porter and I requested that 
GAO review antidrug programs across the government in both 
interdiction and prevention. The work is nearing completion.
    You have a draft report. Can you tell us your findings? 
This is very important because they are asking for more money 
for interdiction. What have you found?
    Mr. Anderson. Norm Rabkin, who is our Director responsible 
for reviewing Justice programs, can address this issue.
    Mr. Wolf. Do you recommend that we increase the funding 
specifically for the Coast Guard, or would you recommend that 
we not do it, or what are your findings?
    Mr. Rabkin. That report should be issued by Friday. 
Basically, we are going to be talking about some promising 
approaches in prevention, focusing on school-aged youth and 
promising approaches in treatment for cocaine addiction. We are 
also going to be talking about work we have done over the last 
couple of years on the international drug control front and 
some of the disappointments in that program, some of the 
shortcomings and problems they have had in achieving the 
results that they had hoped to achieve.
    Now, regarding Coast Guard----
    Mr. Wolf. Give us a little bit more. What are some of the 
promising things?
    Mr. Rabkin. In terms of prevention, there are generally 
five approaches that are followed in preventing drug use. The 
first is what is referred to as information dissemination, just 
providing information for people about drugs, et cetera. The 
second is effective education, where the approach is to try to 
change the behavior of the individual. The third approach in 
prevention is alternative approaches to drugs, and that is 
where providers try to offer alternatives to youth who may be 
intrigued with drugs, things like Scouts, the sports programs, 
something to fill their time other than allowing them free time 
that may lead to drug use.
    The two approaches--and these all have found some 
successes, but the two approaches that we are finding now to be 
more promising are what is referred to as the psychosocial 
approach, which involves helping youth develop the skills for 
resisting drugs or coping with life in general, and a 
comprehensive approach which has several of the previous 
components that I mentioned and is generally directed through 
several institutions--not only the schools, but families, 
community organizations, et cetera. So the psychosocial and the 
comprehensive approaches are the two that researchers are 
finding more promising these days.
    Mr. Wolf. Will you be elaborating on psychosocial and 
comprehensive?
    Mr. Rabkin. Our report will summarize the results of 
studies that have been done on this. It will talk about the 
size of the groups that have been studied, and some of how they 
measure success. It will get into quite a bit more detail.
    Mr. Wolf. Are you making this available to the Drug Czar's 
office?
    Mr. Rabkin. Yes. In fact, we provided it to them in draft a 
couple of weeks ago.
    Mr. Wolf. What do they think of it?
    Mr. Rabkin. They agree with the findings in the report.
    Mr. Wolf. Will this be startling or confirmation of what 
people thought?
    Mr. Rabkin. I would hesitate to call it startling, but I 
would think that, yes, it is a confirmation. In fact, the drug 
strategy that was announced a couple of weeks ago is putting 
more emphasis on prevention.
    Mr. Wolf. I would agree with that.
    Mr. Rabkin. The funding for prevention is increasing at a 
greater rate than the funding for other aspects of the drug 
strategy.
    Mr. Wolf. What about the interdiction then the question 
that I asked you about the Coast Guard?
    Mr. Rabkin. The focus----
    Mr. Wolf. They have asked for an increase in fiscal year 
1998.
    Mr. Rabkin. Our focus was looking at how they measure the 
effectiveness of what they do. How they can tell what they are 
spending their money on is really producing some results, and 
the Coast Guard like all other interdiction agencies is having 
a very difficult time showing that.
    They can show the number of seizures that they make, the 
number of arrests and convictions and the number of pounds of 
cocaine and heroin and marijuana that they seize. But what they 
have more of a problem showing is, how much do they miss? What 
is the total amount that is being brought into the country? 
There are some attempts to try to measure that, and the Coast 
Guard is planning to use those kinds of measures to assess its 
success.
    They are hoping to be able to achieve a 25 percent 
reduction in the amount of drugs that are brought into the 
United States via maritime routes over the next 5 years. 
Unfortunately, the denominator in that equation, the total 
amount that is brought in is going to be very difficult to 
calculate. There is some intelligence about how much is being 
produced in the source countries, but it is a very onerous 
calculation to be able to translate that into how much is 
actually coming in.
    Secondly, the Coast Guard is not the only agency that is 
involved in doing the interdiction.
    Mr. Wolf. If you were to increase interdiction, would you 
put it in Coast Guard, DEA, Customs? Where would you put it?
    Mr. Rabkin. I would probably spread it across the board, 
but I might be a little careful whether I would put it in some 
of the assets, the cutters, the airplanes, et cetera, or put it 
into intelligence gathering. Most of the successes that the 
Coast Guard, Customs Service, other interdiction agencies have 
is more a result of intelligence that they get about where the 
drugs are coming and who is bringing it in, than it is a result 
of the routine inspections or random inspections that they do.
    Also, the agencies argue about a deterrent effect--that by 
having more presence in their zone of work they will deter the 
smugglers from coming through. While that makes sense on one 
level, there is very little evidence to support that, however.
    Mr. Wolf. Could you supply that section to Mr. Sabo and me 
before the hearing on Wednesday?
    [The information follows:]

    A draft of the GAO report, Drug Control: Observations on 
Elements of the Federal Drug Control Strategy (GAO/GGD-97-42, 
March 14, 1997) was delivered to Chairman Wolf and Mr. Sabo.

    Mr. Rabkin. Certainly.
    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. I am just curious, in your work on interdiction, 
did you look at the question of how we interdict the flow of 
cash back to suppliers?
    Mr. Rabkin. We have looked at that. We have looked at the 
controls that the Customs Service has at the border on outbound 
traffic, and quite frankly, it is not as much as they want to 
have. They have resource constraints, they have to make 
resource allocation decisions, and they have been placing the 
bulk of their resources into looking at what is coming into the 
country. Unfortunately, in terms of smuggling cash out of the 
country, there is just not as much inspection activity at the 
borders as they would like to have.
    Mr. Sabo. Would we expect money to flow back through the 
export of cash, or is the bulk of it done by wire or other 
financial transactions?
    It always struck me when we put significant effort into the 
interdiction of supply and to the degree we are successful, it 
is still a low part of overhead of the suppliers, that if we 
were more effective in intercepting receipts flowing back--that 
is, a dollar on the dollar. My sense is, we have very little 
impact on the flow of money back.
    Mr. Rabkin. I don't have any specific information, but the 
theory that you have talked about is absolutely correct, that 
is, that the drug cartels will respond more to the interruption 
in the flow of cash coming back to them than in drugs going 
out. Theoretically, they have huge inventories that they 
haven't even touched yet, and we are probably getting around 10 
percent of what they are shipping in, and that is a low risk 
for them.
    Mr. Sabo. How much are we getting of cash flowing back?
    Mr. Rabkin. I have no idea.
    Mr. Anderson. Mr. Wolf, I will just interject on the Coast 
Guard and the budget issue. You mentioned earlier that we have 
a goal to get to a balanced budget by the year 2002, and the 
Coast Guard is going to have to be a participant in that 
process, as well. So it certainly does raise questions, 
especially if you can't pin down what the real effect is of 
putting more money into this area. It is about a 16 percent 
increase in their drug interdiction efforts.
    So it raises some questions, and I think you need to probe 
with them when they come up here on Wednesday, pretty heavily 
since I think that is also their request to get some more 
assets to do drug interdiction.
    Mr. Wolf. Well, we will. You know the Coast Guard does an 
excellent job, but I have really serious reservations about all 
the new things, and I generally feel the more we can do on 
education and eliminating the demand--I saw a New York Times 
piece on Thursday, a long story where the Russian mafia down--
which is making a major inroad in the country, down in Miami, 
were working to buy a submarine from Russia whereby they could 
take stuff out of Colombia by submarine.
    It is coming in here and the price is down, and we don't 
seem to be making very much headway, although I think our DEA 
and FBI and Customs and Coast Guard are doing an outstanding 
job. It is just flooding. And they are saying in south Miami 
now it is very big coming in again; and we see the Mexican 
Government being fundamentally corrupt, if I may say that for 
the record. We see the things that are going on down there.
    I think the more we can make sure that in our own country 
we are doing everything we can to educate young people not to 
use it. I guess if nobody here purchased anything, there would 
be no drugs coming into the country, supply and demand. 
Oversimplification, but I tend to agree with the Drug Czar's 
office, General McCaffrey, that the more we can do with demand, 
the better, although I don't know if I am in a majority or not. 
But we will ask the Coast Guard those issues.

                       departmental consolidation

    Mr. Wolf. GAO indicated that opportunities for streamlining 
and downsizing existed at the Department both by consolidating 
headquarters' administrative and executive functions, and 
through consolidation and collocation of field activity. 
Opportunities to streamline and downsizing still exist at the 
Department. What have they done to date to consolidate field 
offices?
    Mr. Anderson. I believe opportunities do still exist, but 
they haven't done much since we looked at this a couple of 
years ago. The headquarters' consolidation has totally fallen 
off the table, and they are not really looking at consolidating 
any field offices either. Their efforts are looking more at 
collocation in terms of possible savings; and they have a 
collocation task force that is looking into that issue right 
now. In fact, FHWA has been establishing some metropolitan 
district offices, new offices that might actually increase 
their cost in these areas.
    Mr. Wolf. I remember when Secretary Pena testified a couple 
of years ago, he thought this was a great opportunity, and it 
has all gone for nothing now.
    Mr. Anderson. I think it is an example of one of those 
things, if you don't keep after it, it can slip away from you.

                              truck safety

    Mr. Wolf. As of December 18, 1995, trucks from the United 
States and Mexico were supposed to have been allowed to move 
freely within Arizona, California, New Mexico, and Texas and 
certain Mexican border states; however, the access has been 
delayed.
    Since then, GAO has been reviewing the Federal and state 
governments' ability to inspect trucks entering the United 
States and Mexico. In the last 14 months, how have the 
inspection abilities changed? Have they improved?
    Mr. Anderson. They have improved. They have added more 
inspectors, they are doing more inspections, but the overall 
bottom line is whether or not trucks entering from Mexico are 
becoming safer. It is really not clear to us at all. We get 
anecdotal evidence from the people that we talk to down there 
that they think the trucks are becoming safer. When you look at 
the results of the inspections that they do, you see very high 
out-of-service rates; in other words, they reject the trucks 
and don't allow them to continue serving. It is averaging about 
45 percent.
    Mr. Wolf. Last year you were at 50 percent.
    Mr. Anderson. I believe so.
    Mr. Wolf. Is that an improvement?
    Mr. Anderson. I don't think it was a hard 50 percent 
before. I think there was some anecdotal information that made 
it look like 50.
    They have been tracking the trends, and they go up and down 
with no clear downward trends at all. That compares to a 28 
percent out-of-service rate for U.S. trucks. I just want to 
point out that the 45 percent rate is based upon a less 
stringent, level two inspection for the majority of the 
inspections that they do of the Mexican trucks. The 28 percent 
rate for U.S. trucks is based upon the inspections being more 
stringent level ones.
    Mr. Wolf. What can we do about this?
    Mr. Anderson. Well, I believe what the Department is doing 
in terms of trying to educate the Mexican officials, the 
inspectors, and in trying to provide funds for additional 
inspectors at the border, is a good thing. I think we still 
need to do that.
    We need to get assurances that they can develop some 
performance measures for what they expect in terms of things 
that could be measured and whether or not the actual safety of 
the trucks is improving or not. We are going to be making some 
recommendations in that regard in our next report.

                    surface transportation research

    Mr. Wolf. The Department has expended a total of $2.9 
billion since 1992 for surface transportation research. In a 
September, 1996 report, the GAO noted that the Department lacks 
both a strategic plan and a departmental focus.
    What improvements are necessary to ensure that funds 
expended to support surface transportation research at the 
Department are spent efficiently?
    Mr. Christoff. Probably the first area that needs to be 
improved is the fact that for the past 3 years the Department 
has sent up to the Congress what they are calling a strategic 
plan for surface transportation research. Basically it is an 
inventory of all the projects that are occurring in the modal 
agencies, surface modal agencies.
    First, we think you need to have a strategic plan that 
gives one a sense of what are the current problems and the 
goals and the missions that we want to achieve in the 
transportation area and how we are going to go about addressing 
those transportation problems with our various research.
    Second, the concept of this focal point, there is a 
position within the Office of the Secretary, a directorate 
position, that is charged with trying to coordinate all the 
modal research. However, we found that in the absence of having 
someone who has the budgetary resources that can bring together 
the modal agencies to develop a strategic plan, you are not 
really going to have a strategic focus and you need that kind 
of focal point, a focal point with clout, basically.
    Mr. Wolf. Is that the Director of Technology Deployment?
    Mr. Christoff. That is correct.
    Mr. Wolf. That office has been vacant.
    Mr. Christoff. It has been temporarily filled by an 
Associate Administrator [from the Resource and Special Projects 
Administration (RSPA).]
    Mr. Wolf. But how long has that been vacant?
    Mr. Christoff. It was vacant from May to September of last 
year. Since September, a RSPA Associate Director has served the 
dual roles of being the Director of Technology Deployment with 
the Office of the Secretary and also being a RSPA Associate 
Administrator.
    Mr. Wolf. Is he or she acting or----
    Mr. Christoff. Yes.
    Mr. Wolf. In order to improve the external and internal 
coordination of the Department's research program and 
coordinate the Committee on Transportation's research and 
development, the Research and Technology Steering Committee and 
the Research Technology Coordinating Council will be formed in 
addition to the addition of Director of Technology Deployment. 
Has all of this made any difference?
    Mr. Christoff. I think when we spoke to the former 
Director, Noah Rifkin, who was in the position of Director of 
Technology Deployment, he felt that he had been able to get the 
modal agencies to try to coordinate some of their research 
through basically cajoling and trying to encourage them to 
coordinate their research where there is duplication.
    But when we talk to a variety of transportation experts and 
States, the Federal Government, Transportation Research Board, 
American Association of State Highway Transportation Officials, 
they all felt that unless you had some type of assistant 
secretary for research and development that had the clout, the 
budgetary resources, you were not going to get the kind of 
coordination that was needed to make sure you were getting the 
most cost-effective use of your research dollars.
    Mr. Wolf. Would the GAO conclude that funding for the 
research program is insufficient or that the current mix of 
research projects gives too little emphasis to basic, long-
term, high-risk surface transportation research?
    Mr. Christoff. We certainly heard from most experts that 
there was an inadequate amount of long-term basic research and 
that is the kind of research where you don't really have 
expectations of finding anything, but it is the seed kernel 
that you need to grow innovation in the future. Whether or not 
you have the right mix, let's say, whether or not we have too 
much in highways and not enough in transit, we don't know, and 
I don't think the Department knows either, because they don't 
have a strategic plan that would give them that kind of overall 
information.

                          federal grant system

    Mr. Wolf. In a recent report, the GAO concluded that for 
the most part the current Federal grant system does not 
encourage States to use Federal dollars as a supplement rather 
than a replacement for their own spending on nationally 
important activities.
    Would you please elaborate on your findings for the 
committee?
    Ms. Jones. Mr. Wolf, we would like to do that for the 
record, if that is all right with you.
    [The information follows:]

    Our December 1996 report, Federal Grants: Design 
Improvements Could Help Federal Resources Go Further (GAO/AIMD-
97-7) states that for the most part, the federal grant system 
does not encourage states to use federal dollars as a 
supplement rather than a replacement for their own spending on 
nationally important activities, nor is every grant intended to 
do so. Grants are unlikely to supplement completely a state's 
own spending. Thus, some substitution is to be expected in any 
grant. Our review and analysis of economists' most recent 
estimates of substitution suggests that every additional 
federal grant dollar results in less than a dollar of total 
additional spending on the aided activity. The estimates of 
substitution clustered around 60 cents of every federal dollar. 
This means that bout 60 cents of every federal grant dollar 
substitutes for state funds that states otherwise would have 
spent. Excluding extreme high and low values, substitution 
estimates ranged from 11 to 74 cents. Therefore, part of the 
fiscal impact of these transfers is to free up a portion of 
state funds for other state programs or tax relief.

    Mr. Wolf. As Congress begins to consider changes in the 
distribution of the largesse of the Department's grant 
programs, what grant design changes should be considered to 
increase the likelihood that States will use Federal funds to 
supplement rather than replace?
    Ms. Jones. I think that is a very difficult question. 
Again, we will elaborate on that for the record.
    I think the Department is considering a number of different 
changes--on the highway side as well as the transit side--to 
provide more flexibility to the States. For example, on the 
transit side, they are going to open up and allow some of what 
used to be capital money to be used for operating assistance.
    The same thing on the highway side: They are going to 
provide some more flexibility. That might do it, but we will 
elaborate more on that for the record.
    [The information follows:]

    Our report notes that most of the 87 largest federal grant 
programs we examined did not include features, such as state 
maintenance-of-effort and matching requirements, that can 
encourage states to use federal funds as a supplemental rather 
than a replacement for their own spending. Also, we found that 
most grant formulas do not allocate funds using a combination 
of the three factors that we have reported can improve grant 
targeting-programmatic needs, fiscal capacity, and service 
costs. Depending on the value the Congress places on the fiscal 
impact of grants relative to other grant goals and objectives, 
there are ways to strengthen matching and maintenance-of-effort 
provisions for grant programs. In redesigning grants, however, 
the Congress would need to consider how best to balance any 
increase in federal grant restrictions needed to reduce 
substitution against the decreases in state budgetary 
flexibility and discretion that might result. And, if states do 
not share the federal government's programmatic objectives, 
high levels of substitution may occur even after design 
changes.

    Mr. Christoff. I think we would also like to see the ISTEA 
reauthorization proposal as well, to give us some sense of 
where the administration is coming from. They are trying to 
combine lots of current pots of monies.
    A lot of safety programs, for example, from what we hear, 
will be combined into one larger, flexible program like the 
grade crossing safety program and HAZMAT elimination. We are 
looking forward to seeing that reauthorization proposal and get 
a greater sense of what direction they want to move surface 
programs over the next 5 years.
    Mr. Anderson. Also, it certainly is a good thing to have 
some flexibility because there are some unique problems out 
there with the different States and localities. But you have to 
balance that and have some accountability as well. I think 
whatever happens in that, we have to make sure we have the 
accountability in there.
    Mr. Wolf. A newly released Department of Transportation 
study on level of effort shows that many donor States invest 
less of their own State resources into transportation than 
other States, while many of the donee States donate a greater 
percentage of their own resources to their highway program.
    Should States be required to maintain a given level of 
spending from their own funds in addition to the Federal grants 
they received, or should the existing level of effort be 
considered in the allocation of Federal transportation funds?
    Ms. Jones. In the report we did in November of 1995, we 
mentioned level of effort as one of the many factors that could 
be considered in terms of coming up with a formula to provide 
apportionment of highway funding to the States. I think that 
DOT is considering that.
    I think there are proposals that would consider that, but 
as we said in our report, that would be something for the 
Congress to choose. They need to set the objectives, what do we 
really want to accomplish with the highway funding, and choose 
the appropriate factors in terms of the formula.
    Mr. Anderson. Another thing, too, different States have 
different capabilities and capacities to deal with these 
things; so I am not so sure you wouldn't need a little bit of 
flexibility to deal with some of the areas that are really 
problems and don't have the same capacity to generate revenues 
in other ways.
    Mr. Wolf. Give me an example. I think I know what you mean.
    Mr. Anderson. I am thinking of a poorer area where you 
don't have the same capacity as you do in another area that has 
some revenue-generating capacity, such as toll roads and that 
sort of thing.
    Mr. Wolf. I included a requirement that States set aside at 
least 10 percent of the $24 billion made available for 
transportation enhancement, such as pedestrian walkways, bike 
ways, scenic routes, and historic preservation projects. These 
enhancements are designed to strengthen the cultural setting or 
environmental aspects of transportation.
    Based on your analysis, how have these funds been used and 
have they been used effectively?
    Mr. Anderson. We found, and I will let Gary talk about this 
in detail--I think we found some instances where it didn't look 
like the funds were being used as intended. They were being 
used on other types of projects.
    I think what we generally found also was that there was a 
concern that if you didn't have these set-asides in a number of 
places, the legitimate projects wouldn't have been conducted 
because they would have had to compete with other funding.
    But, Gary, do you want to elaborate?
    Ms. Jones. I think what we found, when we talked to the 
States, I think of the 16 States that we talked to, most of 
those States would prefer flexibility. They would prefer not to 
have the 10 percent set-aside.
    But as John said, most States told us that they probably 
wouldn't spend the money on transportation enhancement-type 
projects. We did find there were a number of projects that the 
localities that sponsored them--that were very, veryimportant 
to the local communities, and we believe that if the Federal Government 
did not provide that assistance to them in terms of 10 percent set-
aside, the projects would not have been completed.
    Unfortunately, the other thing we found, Mr. Wolf, was data 
was not real helpful. The Department of Transportations data 
was incorrect in showing us how the States were spending money 
on these projects. They did not code transportation 
enhancements properly in their financial accounting system. So, 
it was difficult for us to pull together the numbers to see 
where the money was being spent.
    Mr. Wolf. So basically the States were saying they wanted 
more flexibility, but the people were saying, if they had it, 
it would be for sand and gravel and----
    Ms. Jones. That is correct.

                          rail safety programs

    Mr. Wolf. The last question I have, then I will recognize 
Mr. Sabo, is on rail safety.
    Between 1990 and 1991 the Federal Railroad Administration 
was the subject of several highly critical GAO reports on rail 
safety oversight programs. These reports showed an agency lax 
in its inspection practices and reluctant to pursue forceful 
action.
    More recently, the Inspector General released a report on 
FRA safety program that included that FRA's inspection and 
enforcement of Federal railroad safety standards were not 
effective, did not ensure that railroads comply with safety 
standards.
    What conclusions have you reached about the FRA rail safety 
oversight program, based on your current and previous work? Do 
you plan on following up on any of it?
    Mr. Anderson. Yes, we have an ongoing assignment right now 
that we are doing for the House Transportation Infrastructure's 
Railroads Subcommittee, and we are looking at the safety 
trends.
    One of the things GAO has said in the past is that we 
really felt--and we said this about all the different modes--
because of the limited amount of resources that you have, you 
have to target your inspection resources to areas of highest 
risk, and we recommended that this be done. I believe the 
Federal Railroad Administration has gone away from doing that, 
and they are now doing more of a cooperative working 
relationship with the industry to try to improve safety.
    And, Joe, if you want to elaborate a little bit on what 
types of things that we are looking at there.
    Mr. Christoff. For Congressman Oberstar, we are doing this 
work. Basically, last year the Federal Railroad Administration 
decided that they needed to have more of a partnership approach 
in working with their railroads and developing safety profiles 
with the major railroads and trying to, in effect, negotiate 
improvements in the safety profile of individual railroads.
    They also are in the process of trying to use this 
negotiated process in rule-making where they would bring 
together labor and the railroads to try to develop and 
implement some of the more contentious rules.
    And for Congressman Oberstar we are basically looking at 
how has this new partnership approach worked and is it more 
effective? Is it to the detriment or is it a supplement of the 
usual inspection approach that you have with the 400 inspectors 
who are out in the field?
    Mr. Wolf. What are your conclusions?
    Mr. Christoff. We are still developing those
    conclusions.
    Mr. Wolf. What are your preliminary conclusions?
    Mr. Christoff. Preliminary conclusions, I think FRA 
certainly has hopes that this approach over the long term is 
going to try to improve rail safety. I think we are not yet 
certain if negotiating with those that you are supposed to be 
over seeing is necessarily the best approach.
    Mr. Anderson. Part of the problem is that sometimes the 
solutions to rail safety problems are solutions that are going 
to result in additional monies being required. I think that you 
have to balance the working cooperatively part with still 
having enough of an independent check to make sure that things 
are getting done.
    That pendulum on where you go from cooperating over to 
being the policeman on the beat, I think you have to maintain 
the right balance there. I am just not real sure whether there 
has been enough time for FRA's new approach for all the results 
to be in yet, but I think there are some questions that we 
don't want to see them go too far on the partnership route.
    Mr. Christoff. The IG report actually ended on a positive 
note, even though they felt FRA was not using its inspection 
resources diligently. The IG noted that a lot of the new 
approaches they did not look at, these new partnering 
approaches might address some of the concerns that the IG had 
in the report.

                   intelligent transportation systems

    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman.
    If I might go back to intelligent vehicle systems and what 
I would describe as your skepticism about it, it just strikes 
me that one of the goals should be to try to improve the 
capacity and efficiency of the existing infrastructure system. 
Again, my experience from Minnesota is that I think that system 
is doing that. I gather you don't think that is what is 
happening around the country where it is being implemented.
    Mr. Anderson. What we found is sort of a mixed bag, and we 
have used the Minnesota Guide Star system in our report as an 
example of a good thing.
    I think the key is, you need to have a clear understanding 
of what the standards are that you are going to use. You have 
systems that can interoperate with one another effectively. I 
think you also really need--with the limited funding that is 
available today, to make sure that what you are doing is a 
cost-beneficial solution to the transportation problem that you 
have. And just because it might sound good to have a neat 
computer communications system, there might be a less costly, 
effective alternative.
    Mr. Christoff. I think our skepticism is one of timing. I 
think ultimately the vision of an integrated ITS system is 
probably one we should be moving to, but whether or not we 
begin it now with $100 million in deployment funds, we probably 
would say, first, you have to educate the intended users of 
these technologies about what is the architecture. You have to 
complete the standards over the next 5 years.
    States are clamoring for some cost-benefit analysis they 
could use to prove to their local and state funders that this 
makes sense. Until all of this is out on the table, it doesn't 
make sense to begin an aggressive deployment approach for ITS.
    Mr. Sabo. How much study and analysis is there available 
for how existing systems are working?
    Mr. Christoff. One thing that the Department recognizes is 
that they want to try to put out some more cost-benefit 
studies. They acknowledge there aren't a lot of them out there. 
There might be some on individual projects. Guide Star is a 
good one where they show they have been able to improve----
    Mr. Sabo. Part of our money there does go for analysis?
    Mr. Christoff. Right.
    Mr. Sabo. Through the Transportation Center at the 
University of Minnesota.
    Mr. Anderson. I think that is the type of role that DOT 
should be fulfilling, and that is disseminating some of that 
information. Evaluating, disseminating and providing it to 
others that can use it.
    Mr. Sabo. Is much of that done?
    Mr. Christoff. It is the start of it. I think last year was 
the first year that the ITS program asked for evaluation money 
of about $2 million. I think there has been $9 million in this 
year's budget that--they want to use that money to begin 
evaluating those programs.
    The model deployment program, the results of that model 
deployment program, it is in four large metropolitan areas. 
That information will be disseminated next year, as well. That 
is also information that talks about cost benefits associated 
with trying to deploy integrated ITS systems in, I think it is 
New York, San Antonio, Seattle, and I forget the fourth area.
    Mr. Sabo. Thank you.
    Mr. Wolf. I thank you very much.
    We appreciate your taking the time to come back. What we 
will do is have the staff work with you to set up the same 
mechanism that we did on Central Artery on the BART project and 
on the Los Angeles Metro project using the Federal Transit 
Administration, and on the Alameda project using the Federal 
Highway Administration.
    Then we might look to see if there are one or two other 
projects that are of that significance and size, again not to 
hurt the project, more getting in early to help the project. 
Then if you get a situation where it is so expensive that it at 
least forces people to focus and say, maybe there is a better 
way or less expensive way to do it.
    Again, we appreciate your help and appreciate everyone. 
Thank you.

[Pages 602 - 636--The official Committee record contains additional material here.]


                                           Thursday, March 6, 1997.

                      SECRETARY OF TRANSPORTATION

                               WITNESSES

HON. RODNEY SLATER, SECRETARY OF TRANSPORTATION
HON. LOUISE STOLL, ASSISTANT SECRETARY FOR BUDGET AND PROGRAMS, 
    DEPARTMENT OF TRANSPORTATION

                            Opening Remarks

    Mr. Wolf. We will begin. Thursday afternoon is a bad time 
for a lot of members. I don't think there are going to be any 
more votes today, but we are letting people know that we are 
starting at this hour and we made the change based on your 
schedule, Mr. Secretary.
    Why don't you just begin, and as the members come in, we 
can let any member who has to leave early ask questions first. 
Maybe you can begin and your full statement will appear in the 
record, but feel free to read the whole statement.
    Mr. Slater. Sure.
    Mr. Wolf. Also, let me say that Mr. Sabo wanted me to 
apologize. He has a series of meetings, too, this afternoon 
that are up on the Hill, and he is going to try to break away 
to be here, but he did want me to let you know that he is in 
other meetings.

                           Opening Statement

    Mr. Slater. Thank you, sir. Mr. Chairman and members of the 
Subcommittee, I want to thank you for this opportunity to 
testify in support of the fiscal year 1998 budget of the 
Department of Transportation (DOT). I have a longer statement 
for the record, but I want to just offer some brief comments, 
Mr. Chairman, in outlining for the Subcommittee the President's 
proposal to invest $38,400,000,000 next year for our 
transportation system, and I would like to say at the outset 
that I do understand that many members may not be here because 
it is a Thursday afternoon, but I very much appreciate the 
opportunity afforded me to be out of Washington last Tuesday to 
review with the President and other members of the 
administration the devastation of the storms that recently hit 
Arkansas and some other states in middle America. I very much 
appreciate the understanding of the Committee in that regard, 
and you especially, Mr. Chairman.
    The President said in his state of the union address that 
over the last four years, we have brought new economic growth 
by investing in our people, expanding our ports, cutting our 
deficit, creating over 11,000,000 new jobs, a four-year record. 
Now, we must keep our economy the strongest in the world.

                          transportation goals

    I believe that transportation plays a very important role 
in that regard, Mr. Chairman, as I know you believe as well as 
the Members of this Committee. Over the next four years, I hope 
to focus on three basic goals as Secretary of Transportation.
    One, underscoring the important role of transportation to 
the economy in ensuring that it remains the strongest in the 
world; also, safety is our number one priority; and then 
bringing a common-sense approach to our work at the Department 
of Transportation.
    We want to do that in partnership with the Committee. Under 
the leadership of the President, I believe we have worked to 
make good, and I know we have in a spirited way, to make good 
the promise of ISTEA, the landmark legislation that Congress 
will be reauthorizing this year. Working with the Congress, we 
have increased transportation infrastructure investment to 
record levels. These investments have paid off in substantial 
improvements in the condition and the performance of our 
highways and transit systems.
    The President's budget includes $38,400,000,000 for our 
nation's transportation system and key national priorities 
which both invest in our people and in our economy. The 
foremost among these priorities is to make the nation's 
transportation system even safer for the American people.
    Today, we do just as George Washington did in years past in 
opening wide doors as a byproduct of a quality transportation 
system, allowing new businesses and express packages to move in 
just-in-time fashion with items almost moving seamlessly from 
water to air to land. Thirty years ago when the Department of 
Transportation was established, that was our goal, and that 
remains our goal today, investing in the safety of our people.
    As you know, Mr. Chairman, I believe that transportation is 
about more than concrete, asphalt, and steel. It is about 
people, and there is no better way to demonstrate that than 
making safety our number one priority.
    We propose in this budget to increase by $200,000,000 to 
$2,900,000,000 the amount of resources that we will devote to 
direct spending for highway, aviation, and maritime safety. 
That is a record seven and one-half percent of our total 
budget, and again, that goes toward safety.

                          ntsb recommendations

    Also, I know that you have watched very closely our 
relationship with the National Transportation Safety Board and 
the many fine recommendations that they make from time to time 
dealing with the importance of safety. Among my first visits, 
even before becoming confirmed as Secretary of Transportation, 
was with Jim Hall, the Chairman of the Safety Board, and I am 
pleased that as of February of this year, the NTSB had issued 
some 6,353 recommendations to DOT. Of that number, 86 percent 
have been closed, and of the 758 open recommendations, 86 
percent of those have been classified by the NTSB as open with 
acceptable action underway or not yet classified. We have a 
good partnership with the NTSB and we plan to continue working 
on that partnership.

                       welfare to work initiative

    Also, we have a $100,000,000 new program to ensure that all 
Americans, especially those moving from welfare to work, will 
not be stymied by a lack of transportation.

                     coast guard drug interdiction

    The Coast Guard continues its valiant effort in drug 
intervention, and we hope to have a 15-percent increase in 
their funding.

                       infrastructure investment

    When it comes to strategic investment in infrastructureand 
the economy, beyond improving the quality of life concerns of 
transportation, transportation in the 21st century will be necessary 
for Americans to compete and win in the global economy. Infrastructure 
investment is central in that regard. I am pleased to say that on 
average over the last four years, we have invested about 
$25,500,000,000 in infrastructure investment, 20 percent higher than 
the preceding four years, and we have done that in partnership with the 
Congress.
    With respect to aviation operations, just as the interstate 
system expanded our national economy in the last half of this 
century, I believe that the aviation industry will expand our 
global economy in the first half of the 21st century. I know 
that there have been a number of questions asked in previous 
hearings today about what we are doing to make sure that our 
aviation system is the safest in the world, that it is 
functioning in an efficient and effective manner, and I look 
forward to visiting with you about those concerns as we go 
forward.

                       state infrastructure banks

    Let me close with a few comments about common-sense 
government. We believe that we have to bring new innovations 
into the public sector so as to take advantage of private 
sector initiatives and philosophies, policies, and the like. 
With our state infrastructure bank program, we believe that we 
can leverage public sector dollars in the private sector so as 
to bring greater investment in transportation.
    Also, we have a $100,000,000 new federal credit program 
that we hope will allow us to meet our obligations when it 
comes to multi-state projects and important national projects 
like the Woodrow Wilson bridge.
    Then, finally, I know that there was some discussion this 
morning about the aging, if you will, transportation personnel 
and the fact that many people came on board to build the 
interstate system. It is now complete. In the aviation arena, 
the same holds true.

             morgan technologies and transportation program

    Mr. Chairman, I assure you that we have the leadership 
capability within the Department to provide for the 
transportation leadership of the 21st century, and one program 
that we are going to implement, and I would love to have your 
support in that regard, is a program called the Garrett A. 
Morgan Technologies and Transportation Futures Program, 
designed to reach into our schools and to encourage young 
people to consider a professional career in one of the most 
dynamic industries in the country.
    With that said, Mr. Chairman, I would like to just offer 
that I look forward to all of the questions that will be 
offered forth this afternoon, and again, I thank you and the 
members for extending to me the courtesy to be in my home state 
on Tuesday to respond to a terrible natural disaster there, and 
I very much appreciate that, sir.
    [The prepared statement and biography of Secretary Slater 
and biography of Louise Stoll follow:]

[Pages 641 - 657--The official Committee record contains additional material here.]


    Mr. Wolf. Thank you very much, Mr. Secretary. I appreciate 
that very much. We were glad to do that. That was a terrible 
thing which happened there and also in Ohio and the other 
states.
    Mr. Slater. Exactly, Kentucky and others.

                     inspector general appointment

    Mr. Wolf. I will begin and as other members come in, if 
somebody has to leave town, we will let them break in.
    First, Mr. Secretary, the Inspector General's position has 
been vacant for about eight months.
    Mr. Slater. Yes, sir.
    Mr. Wolf. I believe this is an extremely important position 
which provides critical assistance to DOT's operations, and I 
think a delay of this magnitude is really unacceptable. Let me 
just say before I ask the question, some of these questions may 
be framed in a way that it would look like you haven't done it, 
and so let me just at the outset say that there is no need for 
you to feel any burden that we are saying that you have done 
something that is unacceptable, because you are brand new on 
the job, and as you know, I thought your appointment was an 
excellent appointment. When I was called, I made a comment that 
I thought there was probably nobody better.
    In that spirit, so you know without being defensive, you 
are new on the job. The notebook is completely clean, but on 
this issue, it is important.
    How much longer will there be a vacancy in that area, 
because the Committee relied on the IG and I know the last IG 
was viewed to be controversial by some, but many of the 
recommendations that were made were very, very important: the 
Gregory May investigation and diversity training, and ValuJet 
and many different things.
    How much longer will the Department be without an IG, a 
full-time, not an acting one, but a full-time IG?
    Mr. Slater. Mr. Chairman, first of all, your points 
regarding this matter are very, very important. The IG serves, 
as you know, a very important responsibility.
    We are moving forth expeditiously on a replacement. I can 
tell you that a decision has been made. We are now going 
through the clearance process, and I would think that very 
soon, that process should be concluded, and we will have an IG 
on board.
    I do believe that it is a person who comes with the highest 
degree of integrity, credibility, and that is exactly what we 
need, and I think he will serve us well, he or she.
    Mr. Wolf. Good. So probably within a month, there will be 
somebody?
    Mr. Slater. I would say so. Again, we are involved in the 
background check, and you just can't make a judgment on that, 
but a decision has been made.

                transportation infrastructure investment

    Mr. Wolf. The Department's Budget-in-Brief notes that the 
annual federal investment in transportation infrastructure has 
increased by 21 percent over the past four years. The 
Department's budget continues this level of investment. Just 
two years ago, the Administration's budget sought reductions of 
over $2,500,000,000 in transportation infrastructure. In fiscal 
year 1998, the Administration proposes to reduce funding 
allocated to the states under the Federal Aid Highway program. 
It reduces the Airport Improvement Program, which I think has 
been viewed as very controversial, by one-third, or 
$500,000,000 a year. It cuts funding by $166,000,000 for 
transit new starts, below the levels negotiable by the FTA for 
full funding grant agreements.
    How do these budget requests represent the Administration's 
continued commitment to federal transportation investment?
    Mr. Slater. Mr. Chairman, it is true that there is a modest 
decrease, but the overall amount is consistent with sustaining 
a record level of investment in transportation infrastructure. 
Our amount for this year is $38,400,000,000 overall and 
$25,600,000,000 for infrastructure investment.
    We have made some hard choices, though, in deciding where 
we should place our emphasis, and as noted earlier, one of 
those areas is in the safety area, but also the area of 
infrastructure investment.
    Two of the areas that you have cited are slated for a 
decrease in funding, the AIP program from $1,460,000,000 in 
1997 to $1,000,000,000 in 1998. It is our belief that the AIP 
program, the Airport Improvement Program, is a good program, 
but that larger airports actually have a number of ways to 
bring additional resources to the table. We do hope that with 
the amount of funds that we provide, we will be able to handle 
the responsibilities and obligations to medium-sized and small 
airports that have a limited ability to tap other sources of 
monies.
    As relates to transit, it is true that we reduced the new 
start program by approximately $160,000,000, but I would like 
to note that over the last four years, we have instituted about 
13 or so new starts and that we have been able to continue some 
of our other activities. So clearly, we have a commitment to 
the transit program and the new starts program.
    When it comes to the distinctions between our capital 
investment and operations investment, what we are trying to do 
there is to bring greater flexibility to those who make 
decisions regarding the expenditure of transit dollars. We are 
trying to broaden the definition of capital investment. Our 
overall objective is to provide as many dollars as possible and 
to provide as much flexibility as possible, but we have made 
tough choices.

                    transit full funding agreements

    Mr. Wolf. The budget with regard to FTA will now not allow 
the 13 full funding agreements to be met. Even if there were 
full funding of everything, we would be in the year 2001 or 
2002 before we could reach it, and with this reduction, there 
will be a slippage of that.
    Mr. Slater. That is correct, but our assessment is that all 
of these projects are in different stages, and we think that by 
slightly extending the schedule for some of the projects, we 
will be able to meet our obligations over the time specified. 
We have had these discussions with the properties, and we have 
made that judgment based on that analysis.
    I will also say that some of the projects aren't moving 
quite as fast as was expected, the Red Line project in Los 
Angeles, to be exact, and in those instances, we have actually 
used the resources to fund some of the other projects that are 
moving along in a more expeditious fashion.

                   faa controller staffing increases

    Mr. Wolf. At the earlier hearing with the GAO, and you 
referenced it with regard to the FAA, which we will get into 
detail later on, but I am concerned that the FAA is not using 
the money we gave them last year to hire the safety staff, and 
I might say that this Committee on both sides of the aisle 
actually put more money in the FAA budget than the 
Administration requested for it for safety issues.
    In fiscal year 1997, we provided money to hire 500 
controllers.
    Mr. Slater. Yes, sir.
    Mr. Wolf. To date, only 17 have been hired, 17 out of 500, 
while 133 have actually retired. We are actually losing. We 
gave you the authority and the money to hire 500, only 17 have 
been hired, and we have lost 133. We are really in a deeper 
hole today than we were last year.
    Mr. Slater. That is correct, but sir, we are poised to move 
forward with the hiring of the 500 safety air traffic 
controllers that you have identified, and we are committed to 
doing that.
    Mr. Wolf. You are asking us to provide more money this year 
to hire more when we are into this fiscal year.
    Mr. Slater. That is correct, but it did take some time for 
us to beef up the capacity to move on this front. We are at 
that stage now, and I can assure you and the members of the 
committee that you will see results very, very soon.
    [The information follows:]

    Beginning in April, FAA plans to increase the controller 
workforce by an average of 80 employees per month to bring the 
controller workforce to 17,300 by September 30, 1997.

    I can tell you that some of the most substantive 
discussions I have had with the FAA staff deal with accepting 
the challenge and the opportunity that Congress has afforded 
the FAA and DOT when it comes to personnel reform, procurement 
reform, and also, when it comes to dealing with the long-term 
funding initiative. I have been assured that we are ready to 
accept that challenge much as the Federal Highway 
Administration, the Federal Transit Administration, and NHTSA 
accepted the challenge offered them by virtue of the passage of 
the ISTEA legislation in 1991.
    Mr. Wolf. The testimony this morning didn't quite track 
with that, and with the reform that the Committee gave you, we 
gave you the ability. Again, not you, but we gave the 
Department the ability to hire these people immediately, and 
here we are farther and farther behind.

                           faa administrator

    With regard to the FAA, when will there be an FAA 
Administrator? Testimony this morning indicated that it may 
take an FAA administrator three to four years, perhaps up to 
five, to get up to speed where that individual can take control 
of the agency.
    One, how soon will you have someone on, and two, have you 
asked that individual if they are prepared to stay five years 
or eight years?
    To Mr. Hinson's credit, he did say that he would stay the 
full term. Will you have someone on soon, and will they be 
prepared to say they are willing to stay for five years?
    Mr. Slater. We will have someone on soon, and that question 
has been put directly to all of the applicants under 
consideration and all have answered that question in the 
affirmative, that they will be able to stay the term.
    Mr. Wolf. What is your definition of soon, because Mr. 
Hinson has been out of the building since November 1, and gave 
his notice in July, and Linda Daschle has been gonesince 
January.
    Mr. Slater. Almost a month, yes.
    Mr. Wolf. What is your definition?
    By the end of the month?
    Mr. Slater. I can say that by the end of the month the 
person will be identified. There is still the background check 
that is necessary, and that may take a little time, but by the 
end of the month, the person will be identified. That is 
correct.

                        secretarial appointments

    Mr. Wolf. Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. On this issue of FAA, I 
think that clearly, from the things that have been said 
earlier, you know what questions I had been asking of the GAO 
earlier in the day. They are going to provide me with things 
directly in report form and the Committee as a whole for the 
record, information on, essentially, an analysis of what the 
changing pattern, since we are talking about the FAA, the 
changing pattern of personnel has been in the FAA over a period 
of time since 1980.
    I am not going to dwell on that, since you know what 
questions were asked there, just to know that at some later 
time, I will be asking you or the FAA themselves, as soon as I 
get that information, what is going on in that area.
    What other key top administrative officials do you have 
under your appointment power? We now have the IG and the FAA 
Administrator. Are there others in positions at that level that 
are still to be filled now that you have been confirmed and are 
moving along?
    Mr. Slater. There are, sir. The Deputy FAA Administrator is 
also Presidentially appointed and Senate confirmed. We are 
moving forth with those interviews at this time as well.
    I recently, almost as my first act as Secretary, named my 
former Deputy Jane Garvey as the acting Federal Highway 
Administrator, but there, we have at least one and possibly two 
positions to be filled.
    Mr. Olver. That has not been made permanent?
    Mr. Slater. No.
    Mr. Olver. You should never believe the newspapers, because 
I knew you would act a week or ten days ago or something like 
that, and I had seen a more recent article that that was made 
permanent.
    Mr. Slater. No.
    Mr. Olver. That is now done. Does that require 
confirmation?
    Mr. Slater. It does.
    Mr. Olver. Senate confirmation?
    Mr. Slater. Senate confirmation, but in highways, only the 
Administrator. The Deputy Administrator does not.
    Mr. Olver. I guess you have identified--does the IG require 
Senate confirmation?
    Mr. Slater. Yes.
    Mr. Olver. So you have identified whatever it is that 
requires Senate confirmation in the transportation area?
    Mr. Slater. I am sorry, sir?
    Mr. Olver. You are going down the list as far as Senate 
confirmation.
    Mr. Slater. Right. I am basically going down that list, but 
there are a few other positions as well. I can tell you that 
the interview process is underway. We are moving forward and 
will fill those positions very, very soon.
    We have too much business to not be ready to move in full 
force in dealing with all of these transportation concerns 
before us.
    Mr. Olver. I will stop there.

                 surface transportation board user fees

    Mr. Wolf. Mr. Tiahrt.
    Mr. Tiahrt. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. I just recently spoke with Dean Carlson, the 
Secretary of Transportation in Kansas, and he worked very 
closely with you. We have high regard for Mr. Carlson there, 
and he has high regard for you, so I am sure that you are going 
to do a good job in our Department of Transportation.
    Mr. Slater. Thank you.
    Mr. Tiahrt. There are a couple of things that I have heard 
recently. We have the Surface Transportation Board, which is 
looking at a mitigation study in the Wichita area related to 
the Union Pacific-Southern Pacific merger. Some of the talk I 
heard is that their budget is only about $16,000,000. It is not 
real large compared to the overall ISTEA appropriations, but 
there was some talk that their budget would be obtained through 
fees.
    I am concerned with that. Just in dealing with this issue, 
which is a big issue in my district right now. If cities and 
counties are trying to negotiate a memorandum of understanding 
with the railroads and the Surface Transportation Board becomes 
an intermediary in that process, a mediator, then if they 
obtain their fees from railroads, I am afraid that it may put 
some undue bias into this overall negotiation struggle between 
communities and railroads.
    I don't know if that is the plan. What is the plan for 
funding the Surface Transportation Board?
    Mr. Slater. I am not exactly familiar with how it will be 
fully funded. I can say that the Surface Transportation Board 
is the board that was established after the sunset of the ICC. 
It is a body that is really independent of the Department of 
Transportation, in terms of decision-making.
    [Additional information follows:]

    In fiscal year 1998, the Department is requesting to fund 
the Board fully from user fees.

    I will say this, that to start to focus on user fees is a 
consistent theme across the transportation industry, and I am 
sure that we are going to talk a bit more about that as it 
relates to FAA user fees as the hearing goes on.
    I can tell you that as a department and as the Secretary, I 
do think that there are other voices that are important when it 
comes to all of these mergers. We are talking about people 
having access to an important mode of transportation, our rail 
system, or not having that access. I think that as we 
deregulate, moving forcefully on that, and as we consider the 
ramifications of the mergers that there are voices, other 
voices besides the parties and the Surface Transportation 
Board, that deserve to be heard.
    Mr. Tiahrt. My concern about user fees, I think, carries 
through plans of FAA and other areas in transportation, and I 
go back to the example of the merger of the Union Pacific and 
Southern Pacific.
    In the Wichita mitigation study, there was never a 
consideration of just going around Wichita--bypassing Wichita 
as one of the options. The only option that was considered was 
going right through the heart of town.
    Now, this was a decision that was made apparently--I am not 
sure who made the decision, but it appears that somewhere in 
the Surface Transportation Board before the mitigation study 
started in Wichita, they made a decision not to involve what 
would be an entire cost to the railroads versus coming through 
the town and involving the city and the county and the state 
and the federal government as far as helping solve the problem 
with cost, and I can't say that with user fees that someone 
would be biased towards the railroads.
    If I look at that instance, there could be that 
explanation, that perhaps they feel more allegiance to where 
the fees are coming from, and that is a concern, and how valid 
that is, I think, is a subject of argument.
    I think that is something that we need to be very cautious 
about.
    Mr. Slater. I agree.
    Mr. Tiahrt. I am not convinced that user fees are the right 
way to go for the FAA or for the Surface Transportation Board 
or for other parts of transportation.
    Mr. Slater. I understand, and Congressman, your points are 
well taken. I think that I can probably be a little more 
forthcoming when it comes to the FAA question, but again, I 
think your point is well taken, and this is something to be 
appropriately addressed with the Surface Transportation Board.

                 wright amendment impact on air travel

    Mr. Tiahrt. When you talk about air travel, we have one 
monopoly in America that I think we should take into 
consideration. The Wright amendment gives a monopoly to the 
Dallas-Fort Worth Airport, and according to the Department of 
Transportation in a 1992 study, costs travelers about 
$183,000,000 in additional fees every year. That Wright 
amendment should be repealed and I would like to solicit your 
support in making a fair and competitive market in the Dallas 
and Fort Worth area.
    Most of that money comes from travelers going from Wichita 
to the Dallas area, I believe, and that is kind of parochial, I 
know, but I do want to get my plug in.
    Mr. Slater. That is fine. I can tell you, sir, that Senator 
Hutchison has also raised that issue and it is something that 
we are looking at, we are sensitive to, and hopefully, working 
together, it can be resolved in a way that respects the 
interests that you have identified.
    Mr. Tiahrt. I am looking forward to working with you on 
those issues.
    Mr. Slater. Thank you.
    Mr. Tiahrt. Thank you, Mr. Chairman.

                        welfare to work proposal

    Mr. Wolf. Mr. Torres.
    Mr. Torres. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. It is good to see you here.
    Mr. Slater. Thank you, Congressman.
    Mr. Torres. I am sorry I was in late and I missed your 
statement, but I have had a good chance while the questioning 
has been going on to read through your statement, and I have a 
number of questions here.
    Mr. Secretary, in your statement, you talk about the 
President's goals in terms of transportation and training and 
other aspects that will truly help the large part of people 
that are out there in our system without jobs.
    In particular, in the President's thrusts toward welfare 
reform, he mentions providing access to jobs and training that 
would be administered by the Federal Transit Administration. 
The new initiatives will elevate the transportation 
contributions to welfare reform.
    Moreover, you say in your statement here that for the past 
year, Congress and the Department have been engaged in reaching 
out to groups, individually and across the country, to gather 
ideas for reauthorization of ISTEA.
    Mr. Secretary, what can you share with the Subcommittee 
today about the department's much anticipated ISTEA 
reauthorization proposals? Can you tell us anything about the 
highway funding levels or of the state distribution formulas? 
Can you elaborate on what I just mentioned, the new program 
that would transport welfare recipients to jobs and job 
training sites?
    Mr. Slater. If I may, let me just make mention specifically 
at the outset of our welfare-to-work initiative that is in the 
amount of about $100,000,000 over six years, meaning 
$100,000,000 each year.
    The objective is to deal with the transportation and 
training needs of those individuals moving from welfare to 
work. Some recent reports have documented the fact that 
transportation is one of the three most important issues to a 
person desiring to move from welfare to work. Others include 
child care and training, and our initiative hopefully will 
allow us to cover all three. It is something that we believe 
in, and it is something that we think will make a significant 
difference in this initiative.

                         istea reauthorization

    As relates to our ISTEA reauthorization proposal, let me 
just say that our program is going to be called NEXTEA, the 
National Economic Crossroads Transportation Efficiency Act. We 
recognize in our proposal that with the interstate era, we 
built a national economy, but with trade agreements like NAFTA 
and GATT and the 20-some odd trade agreements that we have 
passed over the last four years, the world is our stage, and so 
as we think about NEXTEA, we think about it from the vantage 
point of our nation being at a crossroads.
    We propose that the bulk of the program totalling about 
$175,000,000,000 total, really an 11-percent increase over the 
1991 ISTEA funding levels, that about 80 percent of that will 
go to the preservation of the core system; the nationalhighway 
system, the interstate system through interstate maintenance; the 
Surface Transportation Program which you know is much like a block 
grant where we give resources to state and local governments, and they 
spend it on those projects that they deem suitable, and also the bridge 
program, again at the core of our system.
    Beyond that area, those areas that account for some 80 
percent of the resources, we will have a number of safety 
initiatives. We plan to increase safety by a significant 
amount. I think safety will represent about seven and one-half 
percent of the total budget, something in the amount of about 
$2,900,000,000 on an annual basis, maybe a little more.
    We also will look at certain innovations, like ITS 
technologies, making those efforts eligible for funding across 
all of the major funding categories, and we are excited about 
that. Then more specifically, and I close with this, on an 
innovative, common-sense government approach, what we hope to 
do is actually grow the pie to an even greater extent through 
our state infrastructure bank initiative and our federal credit 
program which will be funded at about $100,000,000 a year, 
meaning the federal credit program will deal with those multi-
state and really large mega-projects.
    Those are some of the initiatives that we will offer forth. 
Finally, on the issue of formulas, we recognize that in order 
to maintain the credibility of the system, we have to have a 
formula structure that is fair, that is based on current data. 
We will offer forth such a formula, and we would like to view 
it as sort of a starting point for the discussions. Then, 
ultimately, working with the Congress, we would like to come to 
some common ground on that effort.

                          technology consortia

    Mr. Torres. You just mentioned advanced technology. As you 
are aware, my state of California has been a leader in advanced 
transportation technology. In fact, two of the seven regional 
consortia are based in California, Calstart and something we 
call the Sacramento Municipal Utility District. I don't like 
the acronym, SMUD.
    These consortia supported both by DOT and DOD are dedicated 
to the development and deployment of transportation 
efficiencies at lower costs as well as contributions to cleaner 
air.
    My question, Mr. Secretary, does the department support the 
technology consortia program and would it support the inclusion 
of funding for the program?
    Mr. Slater. We do support the initiative to bring more ITS 
technologies to practice and implementation. We actually have 
an ITS deployment program that is a part of this particular 
initiative, and being from California, I can tell you that one 
other initiative that we have dealing with trade corridors and 
border planning and the like will hopefully take into account 
some of these capacity enhancement efforts that can be provided 
through the use of ITS technologies.
    Mr. Torres. Thank you. How is my time, Mr. Chairman?
    Mr. Wolf. We are not going to limit anybody, so if you have 
something else you want to ask, please proceed.

                            border crossings

    Mr. Torres. I just have one because he raised the issue of 
border crossings. I understand that the border states, and I 
see my good colleague from Arizona here, Mr. Pastor.
    The states have made a great deal of progress in improving 
their inspection of Mexican trucks crossing the border under 
the terms of the North American Free Trade Agreement. What can 
you tell us about the current situation surrounding the safety 
and the security standards applied to Mexican traffic coming to 
the United States? Are there consultations with Mexico still 
ongoing?
    Mr. Slater. Oh, yes. Those consultations are ongoing. I can 
tell you that it had been a goal of Secretary Pena to bring 
this matter to closure. Frankly, I believe that we have been 
fortunate as a nation to have someone who actually was born and 
grew up on the border serving in such a strategic position at 
this point in time.
    What I would like to do is pick up where he left off and to 
fully move forward on the NAFTA initiatives, but we will not, 
as he noted, compromise safety in the process.
    We are seeing improvements, we are continuing our 
negotiations with our Mexican counterparts. We are in hopes 
that they will establish a regime on their side of the border, 
the southern side of the border, so as to do a lot of the work 
before the vehicles, the trucks, actually get to the border and 
all of those discussions are moving along very well. I hope 
that we will be in a position to announce something very, very 
soon.
    Mr. Torres. I thank the Secretary, and I thank you, Mr. 
Chairman, for allowing me this time.
    Mr. Wolf. Mr. Packard.

                       san diego border crossing

    Mr. Packard. Thank you, Mr. Chairman. I would like to 
pursue further the border crossing situation and be somewhat 
parochial to the San Diego area, because we have a major, major 
problem there and we have to find a solution.
    We were successful in building a new border crossing at 
Otay Mesa there between Tijuana and San Diego, and it was 
specifically built for a truck crossing. It is working very 
well. It has all the modern equipment. It has your new X-ray 
machines and all of the other technology that will allow the 
trucks to be inspected and move through, and instead of a two 
or three-day delay, sometimes, for trucks that are loaded with 
goods and merchandise, and sometimes produce, sitting there for 
days and almost the best was four, five, six, seven-hour wait; 
that was the best.
    We now have it down to a half-hour to a couple of hours of 
delay, so it is working better than it ever had before. But 
when that crossing was built, and this is a federal 
responsibility to build our crossings, border crossings, there 
was no consideration of connecting the crossing to the existing 
freeway system in California moving out of San Diego. So the 
trucks come across, and we now, instead of having 600,000 
crossings a year, we have close to 1,500,000 crossings a year, 
so it has tripled in the last three years, the number of 
crossings, so NAFTA and trade is working, but those trucks are 
dumped onto local streets. That is an absolutely absurd 
bottleneck, and it does no good to have them cross our borders 
in a matter of minutes or hours versus days when they dump onto 
streets and they are still bottled up and can't get out onto 
the freeway system.
    There is a five-mile stretch there that they need to 
connect with 805, with I-5, with I-15, with 8 that takes it all 
throughout the rest of the country and certainly out of San 
Diego. A very small portion of that product coming across that 
checkpoint stops at San Diego. The vast majority goes to other 
parts of California and to the rest of the country.
    We feel that the federal government has the responsibility 
to connect our crossing with the existing freeway system. We 
are having a very difficult time gettingfunding, getting 
approval for 905, which is the freeway designed to connect with the 
existing freeway system that is yet to be built, and I was just 
wondering if you could give me an update of what is being done from DOT 
in terms of that connecting freeway?
    Mr. Slater. Sure. If I may, Congressman, let me just say 
that the federal responsibility here is understood. It is not 
appropriate for the cities and states along the border to bear 
the full burden of an initiative that clearly benefits the 
entire nation.
    So under our NEXTEA proposal, we have a special 
discretionary program dealing with border crossings. As I 
recall, the amount is somewhere in the neighborhood of about 
$45,000,000 to $50,000,000 annually. The objective is to engage 
in border planning and corridor planning and also to engage in 
some implementation of innovations along the border.
    Also, we are hopeful that we can avoid situations like the 
one you mentioned where we don't take into account the full 
measure of activities necessary to make complete this kind of 
crossing. We are suggesting that as we move forth with this 
discretionary program that there be planning that includes the 
communities that share the border on both sides of the border, 
that that be a condition of receiving this kind of 
discretionary funding, and we are hopeful that that program 
will prove successful.
    Mr. Packard. We are, too, and I applaud you for initiating 
that kind of an effort for border infrastructure. It is crucial 
if NAFTA is going to work, and I am a very strong supporter of 
NAFTA and I believe it is working, but it has to work at all 
levels and all parts.
    Mr. Slater. Exactly.

                      AIRPORT IMPROVEMENT PROGRAM

    Mr. Packard. I think the question was already asked, but I 
would like to maybe amplify on it, and I apologize for being 
late. I have had hearings of my own today and I simply could 
not be everywhere.
    In the airport improvement program, I would like you to 
elaborate a little bit on that, because I believe it was--you 
did make some comments. That is a massive cut. That is probably 
the most significant cut in your entire budget proposal where 
you are cutting approximately $500,000,000 out so that is--what 
is it, a third or almost a 50 percent cut? I don't know how we 
can absorb that kind of reduction in any program and certainly, 
this is a very important program for maintaining what I 
consider a very significant growing part of our transportation 
system. Our airports are moving more and more planes, more and 
more activity at virtually every airport, and while that is 
significantly increasing, to decrease the airport improvement 
funds, I think, may be very short sighted.
    I would like you to respond in a little more detail.
    Mr. Slater. Let me just say that you raise a very important 
issue. It is one that we understand well.
    It is true that our proposal cuts about $460,000,000 from 
the appropriated level for 1997, from about $1,460,000,000 to 
$1,000,000,000.
    This decision really is based on just the difficult choice 
of having to try to provide as many resources as possible but 
within the context of a balanced budget, so choices have been 
made here where we have an increase on one hand, safety, for 
example, we have a decrease here.
    It is our belief that we can justify the decrease because a 
lot of the larger airports are able to find resources from 
other sources, and we believe that many will take advantage of 
those options. Your smaller airports, medium-sized airports 
aren't able to do that, and hopefully, the $1,000,000,000 
federal investment will provide a good support in those 
instances.
    But I have to say that we did not do this with any belief 
that the aviation industry is not going to be really the 
industry of the first half of the 21st century that the 
interstate industry has been for the latter half of the 20th 
century. We understand that, we believe it, and this just 
reflects a difficult choice that had to be made.
    Mr. Packard. You referred to other sources that the 
airports can perhaps call upon other than AIP funds. What are 
some of those and is there assurance that those funds will be 
available?
    Mr. Slater. We believe that with the larger airports, yes. 
The passenger facility charges and the like--I should have said 
this at the outset. I think the Congress is to be commended for 
moving forth expeditiously in re-establishing the airport 
excise tax, and then clearly when we establish the National 
Civil Aviation Review Commission to deal with long-term 
funding, we will take into account questions regarding user 
fees and other options that might be available, and hopefully, 
they will give us a recommendation or series of recommendations 
that will help to move us along in this regard.
    Mr. Packard. Thank you. Mr. Chairman. I want----
    Mr. Olver. Would the gentleman yield for a moment just in 
the area that you have been talking?
    Mr. Packard. Of course.
    Mr. Olver. Along those lines, it would seem to me, I am 
willing to accept that it is probably possible to work out some 
arrangements with the large traffic airports and that there may 
be some ways that one can put some of those improvements that 
would otherwise have come directly out of federal funds on a 
pay-as-you-go basis, if you would like.
    But I would think that by the very thing that you have 
said, Mr. Secretary, and knowing how difficult it is to expand 
smaller airports in areas that are small, growing metropolitan 
areas or ones that have not had a good airport that needs to be 
improved, that that would provide an opportunity to provide a 
year at a time before we grow to the point that we no longer 
can have any options, especially when you have identified that 
this is likely to be a problem mode for the first half of the 
next century. This would be a time to actually, at least until 
we see for sure whether we are going to be able to work out 
those programs at the large airports, to keep the funds there 
and try to move those toward expanding our facilities in the 
regional air transportation systems that otherwise we might 
lose in the not-too-distant future by just implosion of 
populations.
    Mr. Slater. Well, Congressman, maybe I should have made it 
a bit clearer, and I apologize for that. When it comes to the 
smaller, medium-sized airports, we intend to protect the 
investments there. That will be a focus.
    It is our belief that the larger airports are the ones that 
can tap other sources of funding, but I am sure that we will 
have some instances where we are even helpful with difficult 
situations with a large airport or two, but the focus will be 
on the small, medium-sized airports.

                           OIL TANKER SAFETY

    Mr. Packard. Mr. Chairman, do I have time for one more 
question? I would appreciate it.
    Last year, the Congress passed in their authorization bill 
requirements for the Secretary of Transportation to take steps 
to allocate research funds in regard to improvement of oil 
tankers and their safety. It is the single-hull, double-hull 
controversy, and there are some instances where research or 
technology shows that perhaps maybe double-hull is not always 
necessary.
    I am concerned about those research funds being used and I 
would appreciate it if you would look into and give this 
subcommittee a detailed explanation of the steps that you are 
taking to implement that research and that request from the 
Congress.
    Mr. Slater. We will do that, sir.
    Mr. Packard. I would appreciate that very much.
    Mr. Slater. Thank you.
    [The information follows:]

    The Coast Guard has $200,000 available in its Research, 
Development, Testing and Evaluation Appropriation (RDT&E) for 
testing of double hull oil tanker alternatives. Authority to 
obligate the $200,000 is contingent upon local, state, private 
and other entities contributions of at least $500,000, to match 
the appropriated $200,000, for double hull alternative testing. 
At the time of this hearing, the Coast Guard did not have the 
required $500,000 commitment from local, state or private 
contributors.
    A joint Coast Guard and Maritime Administration (MARAD) 
technical review team has reviewed a double hull oil tanker 
alternative design and test plan proposed by Mo Husain Systems 
(MHS), the developer of the American Underpressure System 
(AUPS). The technical review team forwarded its findngs to MHS 
on March 4, 1997 citing significant concerns regarding safety 
and performance. The Coast Guard and MARAD maintain that 
certain analyses, laboratory tests, and various planning 
documents need to be completed by MHS prior to full scale 
testing. MHS agrees with the technical review team assessment 
that the proposed AUPS would not be a fully-working shipboard 
prototype and is therefore not a full scale test of the system. 
Congress specifically stated that the funding, when matched was 
for a full scale test, so that the funds appropriated for a 
full scale test cannot be used for a more limited or different 
type of test. The Secretary of Transportation will comply with 
section 1134 by obligating $200,000 of the RDT&E appropriation 
when the congressionally imposed $500,000 matching funds and 
full scale testing contingencies are met by any government 
sponsored project intended to evaluate double hull 
alternatives.

                    State Route 905 Border Crossing

    Mr. Packard. I personally am very grateful to have you in 
your position. I am pleased that we have a chance to work with 
you. I think you are very well suited for this assignment, and 
I am pleased that you are there.
    Could I ask unanimous consent that an article regarding 
this 905 and the border crossing problem be entered into the 
record?
    Mr. Wolf. Without objection.
    [The article follows:]

[Page 671--The official Committee record contains additional material here.]


    Mr. Packard. With that, I will conclude, Mr. Chairman. 
Thank you.

                        Highway Funding Formula

    Mr. Wolf. Mr. Pastor.
    Mr. Pastor. Thank you, Mr. Chairman. Mr. Secretary, how are 
you? Good to see you again.
    Mr. Slater. Thank you. Good seeing you, too.
    Mr. Pastor. Two issues have already been brought up but I 
would like to revisit them, both the formula and NAFTA, and 
then we will talk about the Federal Transit Administration who 
was here this morning.
    As you well know, Arizona is a donor state, 85 cents is 
returned, and as you well know because of your visits in 
Arizona, it is a growing state, if not the highest growth in 
population, we are probably second, so there is demand for new 
infrastructure, new ways of getting people around.
    I look forward to working with you and the Committee as you 
address the issue of formulas and in response to what 
Congressman Torres said, that you would get us involved to make 
sure that there is equity. It is a concern that obviously 
affects Arizona and I look forward to working with you.
    I also agree with my colleague from California that you are 
suited for the job and you have the experience, and I know that 
we will do well by you, so I congratulate you for that.
    Mr. Slater. Thank you, sir.

                                 NAFTA

    Mr. Pastor. The other issue is with NAFTA, and we had a 
very pleasant day in Nogales, as you recall.
    Mr. Slater. I remember.
    Mr. Pastor. We toured the border. We saw the Mexican driver 
being taught all the rules and regulations of Arizona law, and 
they were being trained by DPS, the Department of Public 
Safety. We went across the border and saw the Mexican trucks 
being certified by Arizona Corporation Commission, and 
everybody was in agreement that that needed to be done. The 
tires were checked and the equipment was checked, and if it met 
the standards that we require in this country, they were 
approved.
    We saw the latest equipment on trucks, computerized where 
the manifest would start south of the border and as they got to 
the American side, they would connect to the computers at the 
border station, and the manifest would read out, and that was 
to bring trucks across with greater ease. It was very promising 
about a year ago. Everything had been looked at, there was 
detail, and the day we were supposed to announce that NAFTA was 
going to be implemented, we decided to delay it.
    But one of the concerns of mine, another issue that we 
probably have not talked about here today, was concern with law 
enforcement in terms of the drug crossing.
    Mr. Slater. Right.
    Mr. Pastor. Can you address that? Has that been resolved or 
where are we? I know that very quickly, we are going to reach 
an agreement with Mexico, and I wonder how we are going to deal 
with that issue.
    Mr. Slater. First of all, I picked up after a while that we 
were getting to the point where the question was going to be 
why, because it is true that a number of things were in place 
and they weren't fully in place. We were coming together on 
those things.
    Since December 18 of that particular year, we have 
continued to work on these issues. I can say that we are even 
closer today.
    As relates to the issue of enforcement, that was a matter 
of concern at the time. We didn't talk a lot publicly about 
that, because some of the information was, as you might expect, 
very sensitive. The Administration, as you know, recently 
acknowledged the fact that Mexico is a partner dealing with 
this issue in a more appropriate way.
    So I think that all of that sets the stage for us to really 
bring to closure this issue and then in doing so, to bring the 
whole matter to closure regarding safety and security concerns 
as relates to the border.
    But as I say that, I want to assure all Americans, that we 
will not compromise our safety standards even for the sake of 
continued economic benefits with our number two trading 
partner. I think we owe that to the American people, and that 
is something that we are going to be assured of before we fully 
open our border.
    Mr. Pastor. I am assuming since that visit about a year 
ago, or was it less than that----
    Mr. Slater. A little bit more.
    Mr. Pastor. A little bit more, that most of the safety 
issues--I know you went to San Diego. You stopped in Nogales. 
You went on to El Paso, so there are still concerns.
    I receive letters that possibly we haven't done everything 
we need to do to ensure that the Mexican driver is 
knowledgeable about our laws, that Mexican trucks meet all the 
requirements, and so you feel now that those issues pretty much 
have been addressed so that we can go forward very quickly.
    Mr. Slater. I think that most have been addressed. Clearly, 
there are yet concerns. There will continue to be concerns, but 
this is not a decision that we will make in isolation. Even 
after the border is open, we will continue to monitor the 
situation and, where appropriate, take the necessary action to 
ensure the safety and security of the American people.
    Mr. Pastor. I was also very happy to hear in your response 
to the question to Congressman Packard that you recognize that 
there is a need to develop an infrastructure from the border 
through the state so that these goods get to the ports of exit, 
whether it be Los Angeles for us or San Diego, and as we work 
our way from the border into metropolitan Tucson then on to 
Phoenix, we do have a need to ensure that the goods are carried 
as quickly as possible with all the safety features, and we 
need to get them away from the border and into the harbors 
where they will be exported. I am very happy to see that we 
have a program that would allow those communities to either do 
research or begin the implementation of the NAFTA corridors.
    Mr. Slater. We are excited about that as well, sir. One 
thing that I didn't mention is that I do believe that a lot of 
our innovative financing techniques will prove very, very 
important to our efforts along the border.

                           transit new starts

    Mr. Pastor. The last area that I want to cover, in the 
Phoenix metro area, basically, we still rely on the automobile, 
and we have been able to do some development of the 
infrastructure basically because of a tax we placed on 
ourselves to develop it. One of the external factors that we 
have is that EPA is constantly reminding us that we are not 
attaining their standards. For the first time, I think, the 
cities around the metro area, the regional governments, et 
cetera, have gotten together and decided that probably the 
solution is a combination of public transportation, and now, 
they are looking at the possible development of a light rail 
system so that people can come into the metro area and out and 
not rely on the automobile.
    It was very disheartening this morning to hear the GAO 
testimony that the Federal Transit Administration has made full 
funding grant agreements for approximately 15 projects 
committing billions to these projects. These commitments could 
effectively and probably do effectively freeze new starts for 
transit, according to the GAO, and this will probably continue 
until the year 2003 with the balanced budget and these funds 
frozen.
    With the reduced amount, the department is budgeting for 
major capital investments in FY 1998. How does the 
Administration expect other new transit projects to secure 
federal assistance?
    Mr. Slater. Congressman, clearly, the whole issue of 
providing light rail service is a growing demand from many 
quarters throughout the country, and we are trying to figure 
out some way to accommodate it. I am pleased that for the first 
time in many, many a year, we were under the leadership of our 
Administrator of FTA, the leadership of Secretary Pena, and 
Administrator Linton that we were able to move on a number of 
fronts with full funding grant agreements.
    It is true that by moving forth so successfully and 
forthrightly that we have tested the ability of the system to 
bear that kind of investment, but I think that we are in good 
shape. I do believe that we will find a way to continue to 
provide assistance for light rail systems.
    It may involve asking local and state governments to bear 
more of the burden. It may involve utilizing innovative 
financing techniques to fund some of these programs.
    Also, we can use some of our CMAQ funds to really get us a 
long way in that regard as well. It is a challenge that we 
recognize and we do appreciate the need of many cities like 
Phoenix and others to deal with their transportation demands in 
a different way, something other than just highways.
    Mr. Pastor. And I think that the Phoenix metro area and 
Maricopa County Regional Authority recognize that they are 
going to have to contribute and be full partners in many cases, 
but what we don't want to see is because of the full funding, 
that any initiative that you may want to implement is basically 
halted or not encouraged because of the situation.
    I am encouraged to hear you say that you recognize that 
there is--that we do have the opportunity to meet the new 
challenges that we have, and so I look forward to working with 
you as well as probably the rest of the Committee to ensure 
that wherever the cities and towns and counties want to 
initiate a better system that gives us clean air at thesame 
time and safe transportation that we encourage it and not be stuck with 
the commitments that we have made and would discourage others to 
participate.
    I look forward to working with you. Congratulations, and 
thank you, Mr. Chairman.
    Mr. Slater. Thank you.
    Mr. Wolf. Thank you, Mr. Pastor. Before I recognize Mr. 
Aderholt, I want to follow up for a second.
    I did a speech on the floor on Monday. I would urge you to 
take a look at it. It raises many of the questions that Mr. 
Pastor mentioned.
    We also made a comment there, just to read it to you, 
another interesting fact worth noting: Since fiscal year 1992, 
California has received nearly one-quarter of all the funds in 
the new start programs, more than any other state, and in fact 
the top three recipient states, California, New Jersey, and 
Oregon, together received more than half of the funds in the 
program during the period.
    I think that Mr. Pastor makes a very good point, and if you 
look at the budget's deficiency with regard to the amount of 
money requested for the new starts program, we get into that, 
and I won't bore the Committee and read it, but I want to send 
a copy of the statement to everybody on the Committee.
    If you would take a look at it, also to this light rail 
phenomenon that everyone is going to, using Department of 
Transportation to compute the total annualized cost-per-
passenger mile of the different forms of transit, CBO concluded 
that ordinary buses average 35 cents per passenger mile; 
commuter rail averaged 65 cents per passenger mile; heavy rail 
at $1.40 per passenger mile; and light rail at $3.40 per 
passenger mile, nearly a tenfold increase over buses.
    Mr. Pastor's concern is that there are other areas that are 
growth areas of the country and need these transportation 
structures. The gentleman from Philadelphia comes from an area 
where the older systems, whereby the ridership in Philadelphia 
is very high and in New York, and boy, the numbers are very 
tough.
    Mr. Slater. Yes.
    Mr. Wolf. I think it really has to be looked at in a very 
tough way, or else areas like Phoenix and other places are just 
going to be out of it.
    Mr. Slater. Yes. Mr. Chairman, your point is well taken, 
and I would look forward to receiving a copy, reviewing a copy 
of your comments as well.
    [Clerk's Note.--Mr. Wolf's floor speech entitled, America's 
Transportation Funding Needs Exceed The President's Budget 
Proposals is printed in the Congressional Record of March 3, 
1997.]

                   reauthorization of highway formula

    Mr. Wolf. Thank you. Mr. Aderholt.
    Mr. Aderholt. Good afternoon, Secretary Slater. It is an 
honor to have you with us today.
    There are numerous proposals to reauthorize ISTEA that were 
already submitted this year. The funding formula, of course, 
will be one of the key issues in reauthorization.
    Does the Administration oppose a minimum level of return 
for each state from the highway trust funds?
    Mr. Slater. I wouldn't say that we oppose a minimum per se. 
I will say that what we are trying to do is to bring clearly 
more fairness and equity to the process, to use more current 
data in the process, and to balance the needs of the states 
with individual and national concerns. That is where our 
primary focus is.
    I can tell you that we do look at what the relative 
distribution is for the individual states and clearly, we don't 
want a situation where to look at those numbers would be to 
suggest that there is not fairness in the system.
    We also don't believe it appropriate to accept the 
resources and not make every effort to ensure that they are 
spent for the purpose for which they are collected.

                    step 21 highway funding proposal

    Mr. Aderholt. My home state of Alabama is a donor state, 
and the state transportation department supports the Step 21 
proposal. What specific concerns does the Administration have 
with the Step 21 proposal?
    Mr. Slater. Well, first of all, let me just say that I, 
too, hail from a donor state in the south, Arkansas, and you do 
have quite an effective voice in Jimmy Butz as your Secretary 
of Transportation.
    I wouldn't say that the Administration has problems with 
the Step 21 initiative. As a matter of fact, there are certain 
aspects of it that really speak to the heart of some very 
important concerns. The Step 21 initiative seeks to streamline 
the process by having clearly less programs to have to deal 
with. They provide for considerable flexibility, maybe not as 
much as we would hope, and also, they go right to the heart of 
this issue of an equitable return.
    So in that way, we commend their efforts and have sought to 
actually make some of those very concerns a part of our 
proposal. We may have gotten to it a little bit differently.
    What we did was to base our decision on what we have 
discovered over four years of aggressive implementation of the 
principles, the policies of ISTEA, and then the way we have 
engaged in extensive outreach to listen and learn and then come 
back to Washington and seek to respond in a much more effective 
way.
    In a nutshell, I just want to say that we have gained a lot 
from the Step 21 initiative, and I think when we unveil our 
proposal, you will see that it reflects many of the concerns 
that they raise.
    Mr. Aderholt. Thank you.

                       welfare to work initiative

    Mr. Wolf. Mr. Foglietta.
    Mr. Foglietta. Thank you, Mr. Chairman. I want to join my 
colleagues in welcoming you, Secretary Slater, to the 
Subcommittee in your new job as Secretary.
    Mr. Slater. Thank you, sir.
    Mr. Foglietta. I am thrilled that you will be at the helm 
of the Department of Transportation and certainly look forward 
to working with you.
    Mr. Slater. Thank you, sir.
    Mr. Foglietta. In Philadelphia and cities like it across 
the country, hundreds of thousands of low income Americans are 
losing their eligibility for welfare benefits, as you well 
know.
    In Philadelphia alone, we have approximately 25,000 
individuals who will lose benefits and have to find work. Now, 
the rallying cry in the country as you have heard many times is 
get people off of welfare and get them to work.
    Representing the district that I represent, we have another 
part of that problem, namely, where do we get the jobs to put 
people to work, and if we do have jobs, how do we get people to 
those jobs.
    I believe that we have to look at all areas just to see 
where we can help some of these people in either getting jobs 
or if they are not skilled, to get them the skills so they can 
get a job.
    Now, certainly, the $1,000,000,000 we spend annually to 
build and repair our roads, our bridges, our transit systems, 
there must be an opportunity in the expenditure of that 
$1,000,000,000 to get some of these people to work.
    President Clinton very wisely recently enlisted the 
assistance of several of the large corporations and companies 
in this country to achieve the goals of the Welfare Reform Act 
in putting people to work.
    Mr. Slater. Yes, sir.
    Mr. Foglietta. Do you have any views--I am sure you do, but 
I would like to hear your views on how we can use our 
transportation investments to create jobs and perhaps ways you 
might encourage the transportation industry to get involved in 
this effort of helping people get jobs and getting them trained 
for those jobs?
    Mr. Slater. Sure. Thank you, Congressman Foglietta, for 
raising a very important issue.
    Let me just say that I believe that there are many, many 
opportunities through the expenditure of, in our case for 1998 
as we propose $38,400,000,000, to actually enhance the 
opportunities of people to move from welfare to work. We have a 
special provision in our proposal that is a discretionary 
program to be funded at $100,000,000, per year over the life of 
NEXTEA, as we call it, to do just that, to provide the 
transportation needs of individuals seeking to move from 
welfare to work as well as to provide some training for them to 
become possibly employees within the transportation industry, 
which, I might add, provides the highest paying jobs, on 
average, of any industry in the United States.
    We have also taken great pride in the fact that of the 
businesses identified by the President to help move people from 
welfare to work, two of those are actually transportation 
businesses: UPS and United Airlines.
    I have also had conversations with other CEOs of major 
transportation businesses who are encouraged and are interested 
in doing the same. The travel and transportation industry is 
meeting here in Washington as we speak, and this is one of the 
important issues on their agenda.
    In my opening statement, and I would just close with this, 
I mentioned that what I would like to do is establish in a 
partnership with the Congress, industry, both labor and 
management, and other governmental entities, a program that I 
call the Garrett A. Morgan Technology and Transportation 
Futures Program. Garrett Morgan invented the stop light, and I 
would like to establish this program to actually entice 
millions upon millions of young people to come into the 
transportation industry. Some of them could clearly include 
individuals moving from welfare to work, and I think we could 
do this with minimum expenditure. This is a program that I have 
a lot of interest in and I look forward to working with you and 
other members of the Committee and members of Congress in 
making it a reality.
    Mr. Foglietta. It was $100,000,000 during ISTEA, and now it 
is $100,000,000 per year?
    Mr. Slater. Per year, yes, sir, and it is discretionary, 
and we believe that we will be adding additional resources to 
it either from the private sector or other governmental 
entities.
    Mr. Foglietta. A basic principle that I have embraced as a 
member of this Subcommittee is that transportation investments 
should leverage jobs and economic opportunity.
    Mr. Slater. Yes.

                     livable communities initiative

    Mr. Foglietta. This is true all over the country, but 
especially true in disadvantaged communities. That is why I 
supported Secretary Pena and Administrator Gordon Linton in 
their efforts to fund the livable communities initiative.
    Through their leadership and vision, funds were awarded to 
Chester, Pennsylvania, in my district to vitalize the Chester 
train station. This station is the busiest in Delaware County 
and the only transportation hub for the residents of Chester.
    Chester is one of the poorest communities in the entire 
nation. Once, it was an eyesore, but people catching buses and 
commuter rail from all over Delaware County stood in the 
station building where the roof was full of holes, the platform 
was falling apart, and today, you wouldn't recognize that 
station. As the gateway to the city, it presents a much 
different impression. The historic station has been renovated. 
The platform and the canopies are being rebuilt. The 5,500,000 
people who use that station can get off the train and know that 
Chester has a lot to offer. With this asset, Chester will be 
better poised to attract businesses.
    I was disappointed that the Subcommittee never shared my 
enthusiasm for the livable communities initiative that made 
this project possible. However, Mr. Secretary, I believe that 
we share a commitment to helping these distressed communities 
to develop and thrive by enhancing their mobility.
    Can you tell me your views on targeting transportation 
funds to help bring back neighborhoods and communities by 
creating jobs and economic opportunity and empowerment, and 
therefore, hope for these people?
    Mr. Slater. Sure. Congressman, I fully support the livable 
communities initiative as offered forth by Secretary Pena and 
Administrator Linton. I am pleased that the Federal Highway 
Administration was a full participant in that regard, and I do 
believe that it underscores again that transportation is about 
more than concrete, asphalt, and steel. It is about people.
    Mr. Foglietta. If you go down early in the morning, at 7:00 
in the morning to the station in Chester and you see these 
people, many, many, many of them are women from Chester with 
their own families, their own houses, their own children. They 
are leaving their own children to go take care of somebody 
else's house and somebody else's children to make a living for 
themselves.
    It would be so great to be able to help these people make a 
better life for themselves by providing maybe day care centers 
close by, and by providing shops within these stations so that 
on their way home from taking care of someone else's house, 
they could buy some food to take home to their own family.
    When you get to a place like Chester and look around at 
6:30 in the morning, you will see what the problem is, and you 
will see some of the solutions that are possible.
    Mr. Slater. Sure. Congressman, I can assure you that we 
have seen that vision manifested through the leadership of 
Administrator Linton and Secretary Pena. We are going to see 
more of that in the days and months and years to come.
    I can tell you that, traditionally, we have thought about 
transportation in that vein, but it generally involved either 
first getting the farmers out of the mud for a connection to a 
given piece of land, and then with the interstate system, more 
specifically, manufacturing firms that would line the 
interstate system, and now, as we move into a service economy 
that has to deal with the international pressures of our being 
on the international stage, these kinds of investments are 
proving rather beneficial.
    It is my commitment that we will see more of that in the 
coming months. We do have that kind of initiative reflected in 
our NEXTEA proposal.

                      transit operating assistance

    Mr. Foglietta. Another thing is that you could very well 
imagine them quite disappointed in the elimination of operating 
assistance for mass transportation.
    Mr. Slater. Yes.
    Mr. Foglietta. And even further adding insult to injury, we 
are saying that in communities of under 200,000 people, they 
could use some capital funds for operating, but in the larger 
cities that need it so desperately, we are saying they can't do 
that.
    Will you support a change in that policy so that the larger 
cities also could use capital for operating?
    Mr. Slater. Well, in a sense, our proposal does in fact 
provide that through a broader definition of what a capital 
expenditure is. We suggested things such as maintenance and the 
like, but those are actually capital expenditures.
    Mr. Foglietta. I won't take the time of the subcommittee, 
but I want to sit down and talk to you about assistance for 
operating mass transit.
    Mr. Slater. I understand. Thank you.
    Mr. Foglietta. Thank you, Mr. Chairman.
    Mr. Wolf. I was up in Philadelphia this weekend on Sunday, 
and we stopped just outside Chester in Essington. We got a 
great hoagie and cheese steak at Romano's. Do you know where it 
is, just off the interstate?
    Mr. Foglietta. Yes, I do. They learned how to do them in 
South Philadelphia.
    Mr. Wolf. I know. That is where I came from originally.

                      transit operating assistance

    Mr. Wolf. Mr. Secretary, I have a number of other 
questions, but to follow up on what Mr. Foglietta was saying, 
last year, and it is interesting how history changes and how 
time changes things, Secretary Pena advocated $500,000,000 for 
transit operating assistance in the 1997 budget, an increase of 
$100,000,000 over the preceding year. In fact, the Secretary 
vowed to work tirelessly against those in Congress who would 
try cut it at that time. I said that $400,000,000 was not a 
cut, it was the same level as fiscal year 1996.
    This year, in an abrupt departure from earlier budgets, the 
Administration proposes to eliminate transit operating 
assistance in fiscal year 1998. Do you advocate the program 
termination or is this one of those items that maybe you would 
not have supported had you been Secretary at the time when this 
budget was formulated?
    Mr. Slater. At the time that the budget was formulated, 
clearly, I was serving as federal highway administrator, but I 
did have conversations with Administrator Linton at that time 
and since that time, and he is of the belief, and I share that 
belief, that if we in fact broaden the definition of what 
capital expenditures are and then give state and local 
officials the flexibility to use those resources as they deem 
necessary and fit, that what we may end up with is your local 
transit operating entities actually having more money to devote 
to operating activities than is currently the case.
    Now, the only place where we have determined that that is 
not likely to be the case is when you deal with the ability to 
supplement salaries, and that is something that our friends in 
labor have brought to our attention, and it is a matter of 
concern to us. That is something that we don't want to appear 
to be insensitive to.
    Mr. Wolf. Labor costs are 80 percent of metros operating 
costs.
    Mr. Slater. I know, but a much smaller percentage of the 
operating funds are generally used for labor purposes as we 
have determined.
    Mr. Wolf. Well, you can see this is a concern?
    Mr. Slater. Oh, yes, it is. I understand. Yes.

                   airport passenger facility charges

    Mr. Wolf. Before I get to the other questions, your answers 
on some of the questions raised a couple issues.
    On the airport question that Mr. Packard raised, the larger 
airports, can impose PFCs. Do you favor increasing the $3 limit 
that airports can now levy?
    Mr. Slater. I don't necessarily favor increasing it, but I 
think that our budget again reflects tough choices and what we 
do recognize is the ability of larger airports to secure 
funding from a number of sources, many, many more sources than 
your smaller and medium-sized airports.
    Mr. Wolf. But would not allowing the $3 limit to go higher 
for PFCs be a major source?
    Mr. Slater. Yes.
    Mr. Wolf. Does the Administration favor that?
    Mr. Slater. We would not oppose it, but clearly, we are not 
on the side of raising taxes. We do recognize----
    Mr. Wolf. Well, I don't think it is fair to call that a 
tax.
    Mr. Slater. That is a user fee.
    Mr. Wolf. I really----
    Mr. Slater. I understand.
    Mr. Wolf. Much of what the Administration and the Gore 
Commission has recommended, and we are going to get to the FAA 
section later on. You have recommended $300,000,000 of 
additional user fees----
    Mr. Slater. That is correct.
    Mr. Wolf [continuing]. And the Committee approved 
$100,000,000 last year, and you haven't even levied any of that 
yet. If you stand in line and talk to somebody who is waiting 
to get on an airplane and tell them that this is for a safety 
function, I don't think you will find great objection. I don't 
think that is really a tax. That is a user fee.
    Mr. Slater. I agree with you. Mr. Chairman, what we are 
hopeful of is that all of these considerations will be taken 
into account by the National Civil Aviation Review Commission 
as it deals with long-term aviation funding needs.

                       air ticket tax expiration

    Mr. Wolf. How much did we lose with the expiration of the 
ticket tax?
    Mr. Slater. Mr. Chairman, Ms. Louise Stoll, our assistant 
secretary for Budget and Programs, says that it is about 
$500,000,000 a month.
    Mr. Wolf. So how many months was it off? What was the total 
that we lost then?
    Mr. Slater. The total was almost $2,000,000,000.
    Mr. Wolf. And did the airlines lower their ticket prices 
during that period of time?
    Mr. Slater. No.
    Mr. Wolf. So when we look at what Mr. Packard's concerned 
about, we really kicked an opportunity away.

                          program terminations

    Secretary of the Treasury Rubin recently indicated that the 
Administration has slated 254 programs for elimination in 
fiscal year 1998. Over the past two years, the Appropriations 
Committee has eliminated 297 programs, some of which were in 
the Department of Transportation. How many and what programs 
within the Department of Transportation are included on 
Secretary Rubin's list of 254 program eliminations?
    Mr. Slater. Mr. Chairman, what we would like to do is be 
clearly and totally accurate on this issue. We would like to 
submit that to you for the record.
    Mr. Wolf. Sure. That is fine.
    [The information follows:]

[Pages 684 - 685--The official Committee record contains additional material here.]


               funding amtrak from the highway trust fund

    Mr. Wolf. The budget proposes to fund all federal funds for 
Amtrak and transit programs from the highway trust fund, 
shifting some $1,800,000,000 in spending that might otherwise 
be expended from the general fund of the treasury. Why are you 
doing that?
    Mr. Slater. Well, clearly, what we are attempting to do 
here is to recognize the integral role that Amtrak plays in the 
overall transportation network of the country, especially as we 
approach the next century.
    We are also trying to provide a stable funding source for 
Amtrak. Really, in the final analysis, those individuals who 
use Amtrak actually help us to deal with the highway congestion 
issue that is really choking growth and development in many of 
our major cities around the country. This is especially true in 
the Northeast Corridor, where 11 percent of all of the 
passengers moving along that corridor travel by Amtrak.
    Mr. Wolf. Earlier today when GAO came up, there was a lot 
of discussion with regard to Amtrak. I would encourage you to 
sit down with the GAO so that they can give you the numbers.

                         amtrak route closures

    Last year, Congress put $22,500,000 in for routes that Mr. 
Downs wanted to terminate. It was that money that was basically 
lost, and then this was to give the states the opportunity to 
pick up the service.
    Mr. Slater. Yes.
    Mr. Wolf. Then an additional $13,500,000 was lost because 
they would have moved cars from those lines to other lines for 
$35,000,000. This is always a difficult issue. Do you shut this 
line down; this member doesn't want to lose it, the Congressman 
or Senator.
    Would you favor the concept of a base closing commission 
that could take Amtrak and make recommendations for an up or 
down vote to deal with these issues whereby we can have a 
strong national rail transportation system, which I want and I 
know you do, too. But knowing how difficult it is to pick this 
route out and argue about this, maybe the commission, some 
appointed by the Administration, some by the Congress, could 
take a look at this and then make an up or down vote, similar 
to what they did on the base closing commission?
    Mr. Slater. Mr. Chairman, I can tell you that in the long 
term, we may come to that, something like that, but in the 
short term, what I would rather see is some effort to take 
advantage of the initiative, I guess last year, that involved a 
lot of round table discussions on the Amtrak issue and the 
exploration of possibly other funding sources for Amtrak.
    I recognize the fact that your question really goes to 
management efficiency and the like, and we may not ever be able 
to raise as much as we need to deal with everything that we 
want. So we do need to probably get to a discussion of what do 
we need to have a national system.
    This kind of approach is one thing to consider, but there 
may be others as well. What I would like to do is maybe have a 
discussion with my staff, with Tom Downs in particular, and get 
his thoughts on it, and then I would be happy to come back to 
you to consider the matter further.
    Mr. Wolf. Sure. The capacity actually dropped in the 
numbers that GAO gave us, and the picture over the last year or 
so has been not as bright as many of us thought it would be, so 
if you could do that, I would appreciate it.
    Mr. Slater. Okay.

                     surface transportation program

    Mr. Wolf. The budget proposal would permit state and local 
officials to use their National Highway System and surface 
transportation program funds to improve freight rail 
infrastructure. Mr. Secretary, isn't such a proposal another 
form of corporate welfare and unacceptable in light of the fact 
that the freight railroads made over $1,000,000,000 in profit 
last year and the significant unmet needs of highway and 
transit infrastructure that exist?
    [The information follows:]

    The use of funds under the National Economic Crossroads 
Transportation Efficiency Act (NEXTEA) for publicly-owned 
freight rail infrastructure would not provide a subsidy to 
private railroads. Rather, by allowing public agencies to use 
Surface Transportation Program (STP) and, to a limited extent, 
National Highway System (NHS) funds for projects on publicly-
owned infrastructure, local planners would be given another 
tool to address transportation issues, allowing a more multi-
modal approach. Under the Congestion Mitigation Air Quality 
(CMAQ) program of the Intermodal Surface Transportation 
Efficiency Act (ISTEA), states and localities can sponsor 
projects on both publicly-owned and privately-owned 
infrastructure, if the project helps a non-attainment area meet 
its air quality goals under the Clean Air Act.
    A number of rail related projects, some involving cost-
sharing partnerships with freight railroads and some solely on 
publicly-owned infrastructure, were funded under CMAQ. In 
selecting and developing these projects, state and local 
governments determined that they reduced highway congestion, 
enhanced highway safety and improved air quality in a more 
cost-effective manner than conventional highway projects.
    Our NEXTEA proposal builds on the successes of the CMAQ 
program by expanding some of its flexibility. The STP program 
would be broadened to include publicly-owned rail 
infrastructure projects; NHS eligibility would include the 
portions of publicly-owned rail facilities used to effect the 
transfer of freight. By broadening the NHS and STP programs, we 
have proposed to allow states and localities additional options 
to address problems such as congestion regardless of the 
``attainment'' status of the area in which the project is 
located.

                            safety programs

    Mr. Wolf. During 1996, crashes of ValuJet Flight 592 and 
TWA Flight 800 raised public concerns about aviation safety. 
Over the past year, there were a number of rail derailments and 
more recently, pipeline explosions in the Pacific Northwest. 
Highway fatalities have continued to rise over the past four 
years and are likely to increase further with the repeal of the 
national speed limit, which I did not favor.
    What do you consider to be the most significant issues and 
challenges facing the Department today?
    Mr. Slater. Education, one of them, because I think we have 
made considerable improvements on the infrastructure side, even 
though we still have more to do. We have made considerable 
improvements on the hardware side whether it is better vehicle 
design, train design, plane design and all of that, but the 
human factor is something that we have not dealt with as 
aggressively as I think we should.
    For example, all vehicles are now equipped with seat belts, 
but we only have about a 68-percent seat belt usage rate when 
other countries, some of our neighbors even, have as much as 90 
to 95 percent rate of usage.
    The President has challenged us to come forward with a plan 
to increase seat belt usage. We will do that, but a lot of that 
deals with the issue of human behavior.
    Mr. Wolf. Will your approach be a carrot or will it be a 
stick?
    Mr. Slater. I think it is much better if it is a carrot, 
and we are going to try to incentivize our operations in that 
way with some of the NHTSA initiatives, some of which we have 
talked about earlier.
    I also think that with safety as our number one priority, 
that the Department needs to do more to clearly communicate 
that that is more than just rhetoric. One thing that we have 
discussed and that we are going to move on is the establishment 
of a DOT-wide safety council where we take into account all of 
our efforts on the safety front and better coordinate those 
efforts, better interface with Congress and our partners when 
it comes to their implementation and seeking to make them 
incentive-based programs rather than enforcement-based, where 
possible.
    I am very pleased at increasing our safety investment. I 
mentioned in my opening statement that we are going to add 
about $200,000,000 bringing the total to about $2,900,000,000 
for 1998. That represents seven and one-half percent of our 
budget, that is a record; about $1,080,000,000 for FHWA and for 
NHTSA. That is a record as well, a considerable increase, a 12 
percent increase for aviation, 12 percent for pipeline, I 
believe, and about four percent for maritime. But I can get you 
the specifics. The point I want to make is across-the-board we 
have increased investment in safety. Those are some of the 
things that we focused on.
    [The information follows:]

    Safety is our highest priority, and we are pleased to say 
we are proposing to raise safety spending by $200 million--to 
$2.9 billion, which would be a record 7\1/2\ percent of our 
total budget. We are proposing increases in safety funding for 
all modes of transportation. The largest increases are in FAA, 
NHTSA and Coast Guard.
    Highway crashes account for more than 9 out of every 10 
transportation fatalities, so we proposed to increase spending 
for highway safety, including both FHWA and NHTSA budget 
requests, to $1.08 billion--its highest level ever--and up 48 
percent from fiscal year 1993.
    For the safety programs of the National Highway Traffic 
Safety Administration, we are proposing an 11-percent increase 
in funding--to $333 million--to support import new programs and 
to provide significant increases in programs focused on 
critical safety problems: $9 million for a new Occupant 
Protection Grant program to encourage states to adopt laws and 
enforcement policies to increase seat belt use, the best way to 
protect travelers; a $9 million increase--to a total of $34 
million--for grants to states to encourage enactment of anti-
drunk laws; $8 million for a new air bag safety research and 
education program to improve air bag safety for children and 
small-statured adults, while still preserving the benefits of 
air bags for all motorists; and $2 million for a pre-license 
drug testing pilot program, as the first step in launching a 
new presidential initiative to combat drug-impaired driving. 
This program is proposed to be augmented in subsequent fiscal 
years.
    Aviation safety spending would increase 12 percent under 
our proposal to $839 million in fiscal year 1998. This will 
support an aviation safety inspector and certification staffing 
increase of 273 of a total of 4,135, as well as the work of the 
new National Certification Team targeting inspection resources 
on new-entrant air carriers.
    Spending for Railroad Safety would increase from $51 
million this year to $57 million next year--a 12 percent 
increase. The additional funding would support three new safety 
positions to speed up the safety rulemaking process, as well as 
acquisition of a new automated track inspection vehicle. Other 
FRA accounts, such as Research and Development, also promote 
safety.
    Spending to improve maritime safety, primarily in Coast 
Guard, would increase by 4 percent to $797 million. There are 
significant increases in operational hours dedicated to search 
and rescue, in Coast Guard efforts to improve vessel safety, 
and in grants to states to improve recreational boating safety.

    Mr. Wolf. Total motor vehicle fatalities and deaths per 
100,000 people began increasing in 1993 after declining since 
the mid 1970s. Do you believe that the repeal of the national 
speed limit and motorcycle helmet law had any impact on this?
    Mr. Slater. We did have a slight dip in last year's 
numbers, and we are a little more than a year into an 
environment where we would no longer have a national speed 
limit and where we don't have the provision mandating helmets. 
We have not been able to determine whether there has been an 
adverse impact based on those decisions.
    I will say this, though, that the Congress challenged us to 
produce a report, I believe, by May of 1997 [September 30]. We 
are on line as far as doing that. We will meet that obligation. 
And hopefully then we will see better what the case has been. I 
do know that 34 states did in fact take advantage of the law 
and so we should have a lot of information out there on which 
to rely.
    Mr. Wolf. Recent statistics have shown an increase in the 
number of alcohol-related incidents and fatalities. In 1995 the 
number of alcohol-related deaths increased sharply to 17,274 
from 16,580 in 1994. Do you have any thoughts as to why this is 
occurring?
    Mr. Slater. Well, I just think that we have more people who 
are drinking and driving. And again, that is a human 
behavioral----
    Mr. Wolf. Do you have any programs that deal with that?
    Mr. Slater. We do, but I can tell you we are going to 
increase our focus on those programs. I think we are adding 
about $9 million to that NHTSA program for 1998, and that will 
bring our total to $34 million, which is a considerable 
increase. Also we are looking at ways to better measure the 
impact of that program through performance criteria and those 
sorts of things. We are engaging our partners at the state and 
local level, safety groups and the like, trying to deal with, 
again, a matter of human behavior.
    Mr. Wolf. What about teenage driving and alcohol, what are 
your plans there?
    Mr. Slater. Fortunately, with the NHS Designation Act, we 
got a very strong piece of legislation passed overwhelmingly by 
the Congress that will help us in that regard dealing with zero 
tolerance. We have seen the benefits of the program already in 
a very small way, but as we go forward we think that it is 
going to have significant impact on this particular portion of 
society that, you know, sometimes can believe that they are 
invincible. I mean, we have had those periods in our own lives, 
and what we want to do is to communicate that they are the most 
precious assets we have as a nation and that we are right to be 
concerned about their use of alcohol and getting behind the 
wheel of an automobile.

                           highway fatalities

    Mr. Wolf. I have seen conflicting information on injuries 
and fatalities caused by increased speed limits. For example, a 
recent Washington Post article stated that after Wyoming raised 
its speed limit to 75 miles per hour on nearly all interstates, 
the state experienced a 15 percent decrease in auto accident 
fatalities. Whereas in Nevada, auto fatalities are up by 11 
percent since the state raised its speed limit on rural 
stretches of its two interstates to 75 miles per hour. What is 
the nationwide picture?
    [The information follows:]

    Preliminary estimates of the traffic fatality toll for 1996 
indicate that while total fatalities declined slightly by 0.7% 
compared to 1995, fatalities occurring on the Interstates 
increased by 9% and by 4% on U.S. routes, the roadways most 
likely to have been affected by increases in the posted speed 
limit. While the Department believes that repeal of the 
national maximum speed limit (NMSL) will have an impact on 
traffic fatalities, it may be too early to determine what the 
impact will be at the national level. Following the repeal of 
the NMSL in November 1995, with passage of the National Highway 
System (NHS) Designation Act, states began to pass legislation 
increasing speed limits on selected roadways. Of the states 
that have increased speed limits, only nine (Arizona, 
California, Illinois, Massachusetts, Montana, Nevada, Oklahoma, 
Pennsylvania, Wyoming) have had the increased limits in place 
for all or most of calendar year 1996. Data for the first six 
months of 1996 on fatalities occurring on the Interstates 
compared to the same period in 1995 shows that three of these 
nine states experienced increases, while the remaining states 
experienced decreases or no change in Interstate fatalities.

    Mr. Wolf. The Administrator of the National Highway Traffic 
Safety Administration recently testified that all of the ``easy 
gains'' in reducing fatalities and accidents and in making 
vehicles and highways safer have already been made. Incremental 
improvements will be far more difficult. What further gains do 
you believe the Department can make and what specific plans 
does the Department have to make these gains?
    [The information follows:]


[Pages 691 - 692--The official Committee record contains additional material here.]


             safety research contacts with other countries

    Mr. Wolf. What are we learning from other countries in 
reducing accidents and keeping unsafe drivers off the road? 
What fundamental societal differences, if any, exist between 
these countries and the United States that would make it 
difficult to adopt their successful countermeasures?
    [The information follows:]

    Through bilateral contacts with researchers in most of the 
developed world, as well as active participation in 
international organizations such as the International Council 
on Alcohol, Drugs and Traffic Safety (ICADATS), the National 
Highway Traffic Safety Administration (NHTSA) can stay abreast 
of advances in other countries. In fact, NHTSA has 
international cooperative agreements in place with Germany and 
the Netherlands to conduct research of common interest. In 
Germany, we completed a series of studies on the effects of 
various drugs on driving performance and in Holland, we 
continue to study the effect of marijuana smoking on driving.
    Individual liberties differ greatly between the U.S. and 
other countries. For example, some members of the European 
Union, Australia and New Zealand more freely allow the use of 
automated enforcement devices, and view civil liberties in a 
different light. In much of Europe automated speed enforcement 
is widespread. In Australia, besides the use of photo radar, no 
probable cause is required to compel a motorist to take a 
roadside breath test.
    Many Australian states use random breath testing, red light 
cameras, photo radar for speeders, and strict enforcement of 
belt use and helmet use laws to reduce crashes and injuries. 
These measures have worked and are acceptable to Australians, 
but it is doubtful that many of them would pass legal, 
constitutional, or political muster in the U.S.
    In most countries other than the U.S., national laws, 
rather than a myriad of differing state and local laws prevail. 
Most European countries have national police forces or, as in 
Canada and Australia, few state or provincial police agencies, 
instead of well over 13,000 agencies as in the U.S. Their 
system can often provide greater national uniformity in 
legislation, enforcement and adjudication.
    The fundamental societal difference in occupant protection 
is reflected in the difficulty the United States has 
experienced in increasing our national use rate. Other 
industrial countries have not been hampered by the passage of 
secondary enforcement laws and the need to pass belt law 
legislation in a large number of states. An additional 
consequence of that process is that each one of these laws 
differ in some way from the other state laws. All this tends to 
erode the importance of compliance among the general public. 
Other countries have been able to raise use rates into the 80 
percent range over a much shorter duration, which has then 
enabled them to implement stronger countermeasures involving 
the assessment of driver points for violators, and to implement 
enforcement programs which present a higher level of risk of 
apprehension and being cited for belt law violations than is 
able to be accomplished in this country. The result is that 
these countries have use rates in the high 80-low 90 
percentages, while the U.S. has been stagnant at national use 
rates of 66-68 percent for the past 4 years.

                           depowered air bags

    Mr. Wolf. On December 19, this Committee held a hearing on 
air bags, and at that hearing NHTSA stated that the Department 
was moving rapidly to reduce or eliminate the number of 
fatalities to children and small-stature adults. Shortly 
thereafter, the agency issued a notice of proposed rulemaking 
to depower air bags. While the Committee is pleased that the 
agency has moved rapidly on these rules, it is my understanding 
that the agency has not yet issued a final rule on depowering. 
And at the December 19 hearing, the automobile manufacturers 
testified that if the rule was not implemented by mid-February, 
depowered air bags could not be installed in model year 1998 
vehicles. Can you tell us what you are going to be doing as 
Secretary to assure that the depowering rule is expedited so 
that we can eliminate the tragic fatalities as quickly as 
possible, and have you spoken to the automobile manufacturers 
to see if we have actually missed that date?
    Mr. Slater. I have not had direct communications with the 
automobile industry. I have visited with our Administrator for 
NHTSA, Rick Martinez, and I am of the belief that we are moving 
forward. I personally believe that we should be moving faster. 
I will say that Administrator Martinez has assured me that we 
will. It is our hope to soon have some opportunity to visit 
with major automobile leaders so as to strike the kind of 
partnership that is necessary to make this initiative a 
reality.
    Mr. Wolf. Well, I think it is--if you could check on that.
    Mr. Slater. I will.
    Mr. Wolf. Because if you missed, that whole car year goes 
by.
    Mr. Slater. I understand.
    Mr. Wolf. If you look at the number of people, I think a 
million cars a month roll off the line.
    Mr. Slater. Right.
    Mr. Wolf. So we could potentially miss 12 million cars.
    Mr. Slater. That is a good point.
    Mr. Wolf. Which would be translated into a number of 
deaths.
    Mr. Slater. Yes.
    [The information follows:]

    As part of its comprehensive air bag strategy to reduce the 
risk of death and injury to children and small adults in low 
speed crashes, the agency amended the crash protection standard 
in a final rule published on March 19, 1997, to give vehicle 
manufacturers additional leeway in producing less powerful air 
bags. Based on public and industry comments to the January 1997 
proposal, the agency selected the option that will permit 
vehicle manufacturers the most expeditious approach to 
introducing depowered air bags: a full-vehicle sled test. Based 
on information provided by manufacturers and their 
associations, the agency expects vehicles to be available with 
depowered systems late in Model Year 1997 or beginning in Model 
Year 1998.

                             smart air bags

    Mr. Wolf. The Department is planning to require the 
installation of smart air bags into vehicles within the next 
five years. Do you believe the Department has the technical 
resources and expertise required to evaluate the variety of 
claims made about smart air bags and determine what are 
feasible, near-term solutions?
    [The information follows:]

[Pages 695 - 696--The official Committee record contains additional material here.]


                          ntsb recommendations

    Mr. Wolf. One of the Department's goals is to promote safe 
and secure transportation. Last year, the National 
Transportation Safety Board testified that although the 
Department is increasingly implementing NTSB's recommendations, 
there are some modal administrations that do not do as good of 
a job. Coast Guard, FRA and RSPA have below average 
acceptances. Now could you look at this and comment?
    Mr. Slater. Yes.
    [The information follows:]

    All of the Operating Administrations take seriously the 
NTSB safety recommendations. We must be concerned whenever 
there are low acceptance rates, and we need to determine the 
reasons for them. In some cases there are legitimate 
disagreements over the feasibility, effectiveness, and cost of 
NTSB's recommendations. The Department's historical average for 
actions deemed acceptable by NTSB is 80 percent. With the 
exception of MARAD (which has acceptance on all 17 of the 
recommendations made to it), the spread among operating 
administrations ranges from 88.5 percent to 70.8 percent. These 
acceptance rates are based on every recommendation made to the 
Department over the past 30 years. Over the period 1992 to 
1996, however, according to NTSB data, the acceptance rate for 
Coast Guard was 85 percent, for RSPA it was 95.6 percent, and 
for FRA it was 91.3 percent.
    The differences among rates reflect the nature of the 
various NTSB recommendations, the regulatory powers the 
operating administration has over its industries, and the 
character of the operating administration's individual 
programs. An operating administration may choose a course of 
action different from a particular recommendation because a 
rule would be of limited cost-effectiveness, or because the 
action is being addressed by another safety initiative, which 
NTSB may find acceptable. Also, there may be a delay in NTSB's 
classifying a response it receives from the operating 
administrations. The Coast Guard is presently waiting for 
responses from NTSB on the status of over 90 recommendations 
and we anticipate that these responses will bring the Coast 
Guard's acceptance rate even higher.

    Mr. Wolf. And secondly, a comment was made this morning 
that sometimes DOT considers the recommendation closed when it 
is not closed. For instance, they recommend to the FAA that 
runway lights should be on a certain airport. The DOT will say 
we accept that recommendation, and the GAO says sometimes you 
will go back four years later and so on and the NTSB, FAA 
recommendations is closed, accepted. Then you will go to the 
airport and there are no lights. So the GAO felt that it should 
stay open until the recommendation is not only accepted but 
also implemented.
    Mr. Slater. Well, in the case of the FAA, that is probably 
something we should consider. We will consult with the GAO and 
try to work out something there. I can tell you that we have 
had, I think, a very good working relationship with the NTSB. I 
mentioned earlier that one of my first meetings even before 
confirmation was with Director Jim Hall, and we talked about 
the relationship, how we can improve it. We are both committed 
to doing that. As it relates to those modes within the 
Department that have had lower responses to the 
recommendations, I think if we look at what has occurred since 
that last report, we are going to see some improvement. And I 
have been given assurances that we are going to see even more 
improvement as we go forward.
    Mr. Wolf. I think it is important to look at all the modes, 
too.
    Mr. Slater. I agree.
    Mr. Wolf. If closed means implemented or just closed.
    Mr. Slater. That is a good point. Okay, we will do that 
across DOT.
    [The information follows:]

    The action to be taken by each operating administration to 
recommendations addressed to it is carefully considered by 
program managers and top officials before the response is 
written. The NTSB in turn makes the decision to classify a 
recommendation Closed-Acceptable Action when the Board is 
satisfied that the initiated actions will meet the intent of 
the recommendation. At the same time, it is the responsibility 
of the operating administration's cognizant technical program 
to monitor the effectiveness of these safety actions and the 
manner in which final implementation may be completed.
    Closed can mean a variety of things. Closed-Acceptable 
Action means that the safety recommendation has been completed 
by the recipient, and complies with the safety recommendation. 
Fifty-two percent of the recommendations to the Department fall 
under this category.
    Closed-Acceptable Alternative Action means that the 
recipient's alternate course of action is completed and meets 
the objective of the safety recommendation. Eleven percent of 
the recommendations to the Department fall under this category.
    Closed-Unacceptable Action means that the recipient 
disagrees with the need outlined in the recommendation, and the 
Board concludes that further correspondence or discussion would 
not change the recipient's position. Fifteen percent of the 
recommendations to the Department fall under this category.
    Closed-Unacceptable Action/No Response Received means that 
a response has not been received within 270 days of the 
issuance of the recommendation. Less than one-half of one 
percent of the recommendations to the Department fall under 
this category.
    Closed-No Longer Applicable means that the recommended 
action has been overtaken by events. Less than three percent of 
the recommendations to the Department fall under this category.
    Closed-Reconsidered means that the safety recommendation 
has been rejected by the recipient and supports the rejection 
with a rationale with which the Board agrees. Four percent of 
the recommendations to the Department fall under this category.
    Closed-(any of the above)/Superseded means the safety 
recommendation that is open has been superseded by a new 
recommendation. Three percent of the recommendations to the 
Department fall under this category.
    Twelve percent of NTSB recommendations are open.

                           rail safety rules

    Mr. Wolf. Congress has repeatedly criticized the Federal 
Railroad Administration for being too slow in developing rail 
safety rules. FRA has yet to issue track safety regulations 
that Congress mandated the agency to complete by 1992. I know 
you are new on the job, but could you look into that and see if 
there is a way that that could be----
    Mr. Slater. I will be happy to, sir.
    [The information follows:]

[Pages 699 - 700--The official Committee record contains additional material here.]


                      balancing safety challenges

    Mr. Wolf. We have discussed many of the challenges faced by 
the Department of Transportation and its agencies in ensuring 
safe transportation for the traveling public. Given the 
relative differences in fatality and accident rates on the 
nation's highways, in the air, and on the water, are the 
Department's efforts adequately balanced to address the 
relative incidence in each mode of transportation?
    [The information follows:]

    Ensuring the overall safety of our transportation system 
requires us to focus our efforts on a wide and diverse array of 
transportation activities involving the movement of both 
passengers and freight. The magnitude and focus of the 
Department's programs in each mode is determined by the role 
that Congress has given to be various operating administration. 
For instance, the Federal Aviation Administration (FAA) budget 
reflects the fact that it directly operates and has full 
regulatory authority over a massive and complex safety system, 
which requires the full confidence on the part of the public 
that it is extremely safe. The National Highway Traffic Safety 
Administration (NHTSA), in contrast, can use its regulatory 
power to mandate that private sector resources be used to 
assure a higher level of safety performance in the automobile 
market, but has no regulatory authority over the operation of 
the highway network. That regulatory authority, and the police 
enforcement responsibilities, are assigned to state and local 
governments.
    In each mode, to varying degrees, the diverse nature of 
transportation requires a balanced public/private approach in 
which federal, state, and local governments join with private 
citizens and the business community to work collaboratively to 
address safety concerns--this work cannot be successfully 
addressed by the sole efforts of the federal government. All of 
the modal administrations within the Department utilize a 
cooperative and leveraged approach to achieve continuous 
improvements in the safety of each mode of transportation. The 
Department's recently announced National Economic Crossroads 
Transportation Efficiency Act (NEXTEA) proposal reflects an 
increased emphasis on programs which address the single largest 
source of transportation-related fatalities (94 percent) and 
injuries (99 percent): the operation of motor vehicles, 
particularly passenger cars and light trucks and vans. We 
attempt to optimize motor vehicle and highway safety programs, 
along with those that focus on air, marine, transit, rail 
travel, and the transport of hazardous materials, based on 
available resources, to achieve a safe and efficient U.S. 
transportation system.

                           highway fatalities

    Mr. Olver. Mr. Chairman.
    Mr. Wolf. Yes, Mr. Olver.
    Mr. Olver. Before you leave this area of safety, may I 
ask----
    Mr. Wolf. Sure, sure.
    Mr. Olver [continuing]. Make one comment. We have been 
covering ground and I don't really want to stop the flow, but 
on this issue of the highway fatalities, the Chairman had asked 
whether the change in statistics since 1993 could be related to 
the national speed limit and the motorcycle helmet laws, and I 
am sure that that could be the case. I don't know what studies 
are out there now, but my recollection is that that also 
happens to be exactly the low point just on birth rate. There 
were a whole series of years when we were going down in persons 
reaching driving age, and it has started up again at about 
1993. So I would urge if you are looking at this that there are 
several factors confounded in this statistical study, and I 
would want to make certain that we weren't merely seeing the 
increase of 18 year olds or people who are just beginning to 
drive, because we are told that about 50 percent of all people 
in the first year that they drive get into some accidents and 
they don't get into accidents after they have been driving and 
had experience of several years of driving.
    Mr. Slater. Not as many, maybe. But let me just say that 
your point is well taken. We have seen demographic changes that 
could account for some of those changes in the numbers. When I 
responded to the Chairman's question, the point that I was 
really trying to make was that since the passage of the NHS 
Designation Act in 1995 we really haven't had the time to 
collect the data that would lead us to make a reasoned 
judgment, but your point is well taken. We have been following 
those demographic changes for some time now and we do know that 
in the future one of the great challenges will be to deal with 
the needs of older drivers as well as a second sort of baby 
boom generation that will give us more younger drivers on the 
roadway as well. And unless we deal with this issue now, we can 
expect that those numbers will continue to get worse, Mr. 
Chairman, so that is why we have to be very, very aggressive on 
this front.
    Mr. Wolf. I want to just thank the Department, too, for its 
quick response in helping us on the problem with the George 
Washington Parkway. As you know, five individuals have been 
killed in the last ten months. We met with your people and also 
the Park Service people and they were very helpful in coming up 
with the funding whereby we can begin to let the contract in 
April.
    Mr. Slater. Yes.
    Mr. Wolf. And complete the necessary barriers by that time, 
so I do appreciate your help.
    Mr. Slater. Thank you, sir.

                             faa user fees

    Mr. Wolf. To cover user fees, we spoke about the issue 
earlier, and as you know I wrote you a note concerned about the 
$300 million in user fees which are really--and I know you are 
ready for this one, I know you have got a home run to hit--but 
are currently undefined. Is it appropriate for Congress to be 
authorizing user fees that are undefined, particularly when the 
last ones that were undefined were not used? And so will you 
talk to us about this $300 million? Do you want to define them 
today or do you want to tell us how we can define them?
    Mr. Slater. Well----
    Mr. Wolf. Because it is developing into a major issue.
    Mr. Slater. Oh, you are right.
    Mr. Wolf. We have a hole in our budget right now of $300 
million. We have a bigger hole, but that one how do we fill it?
    Mr. Slater. I understand.
    Mr. Wolf. So do you want to----
    Mr. Slater. Well, let me just say that the best that I can 
hope to do is to get on base. And what we are proposing is that 
with the overflight fees we will be able to collect about $100 
million, and then through the use of user fees that are yet 
undefined we would be able to collect in the neighborhood of 
about $300 million, giving us the total of $400 million needed 
for the purposes about which we speak. I can tell you that it 
is our hope that as we go forward with the work of the National 
Civil Aviation Review Commission that we will be able to get to 
a better understanding of what kind of user fees we are talking 
about and what kind of long-range funding strategy we might be 
talking about.
    Some that we are considering beyond the issue, beyond the 
ones that I mentioned concerning overflights, would be an 
evaluation of obstructions to navigable air space and security 
services particularly in light of FAA's discussions with this 
Subcommittee pertaining to the recommendations of the White 
House Commission on Aviation Safety and Security. But we have 
got to bring more clarity to this, and I think that the 
National Civil Aviation Review Commission can help us in that 
regard.
    Mr. Wolf. Well, okay, the legislation for that came out of 
the Committee.
    Mr. Slater. Yes.
    Mr. Wolf. The appointments haven't been made. And I am sure 
you are ready to appoint them now, because you just came on, 
but----
    Mr. Slater. Pretty soon.
    Mr. Wolf [continuing]. They really--because we have to have 
that by the end of----
    Mr. Slater. You are correct. I can tell you that there was 
an effort to try to get some kind of safety net and we just 
weren't able to work that out in the budgetary process. But 
hopefully we will be able to make sure that that is not in the 
lap of the Committee as we go forward.
    Mr. Wolf. And on the question of overflight----
    Mr. Slater. Yes, sir.
    Mr. Wolf. To raise $100 million, five months have gone by. 
We have almost lost a half a year--how soon do you think that 
will be out, because that is going to be a bigger gap. Soon?
    Mr. Slater. Soon.
    Ms. Stoll. Momentary.
    Mr. Slater. Soon.
    Ms. Stoll. Ten days.
    Mr. Slater. And very soon----
    Mr. Wolf. I understand you just came on as Secretary. I am 
not being critical of you. You know that.
    Mr. Slater. I understand.
    Mr. Wolf. This was implemented far before you were 
involved.
    Mr. Slater. Right.
    [The information follows:]

    The FAA will start collecting overflight fees in May 1997, 
and estimates that the fiscal year 1997 revenue will be 
approximately $20 million. It is estimated that $93 million 
will be collected in FY 1998.

    Mr. Wolf. Every day we are losing time--it is just like the 
ticket tax. Every day you are losing more time and money.
    Mr. Slater. We are losing resources.
    Mr. Wolf. And it is very difficult to sell this, a user 
fee, to the Congress when the other one isn't in----
    Mr. Slater. Right.
    Mr. Wolf [continuing]. In effect. As we all know, the 
dominant low-cost airline is Southwest. They are the leader in 
this segment of the industry and have the best safety record. 
Regarding Southwest, the OST report said the following: ``In 
addition to their own direct competitive effects, Southwest had 
another important effect. It provided a blueprint for 
successfully competing with large network carriers. The 
linchpin to this success is low costs. The common denominator 
[among successful new airlines] is very low operating costs.''
    The GAO says the user fee proposal put forth by the Big 
Seven airlines would cost Southwest about $600 million more 
than they pay, and in return, lower the operating costs of the 
high-cost carriers. From a public policy standpoint, how do you 
redistribute this from low-cost to high-cost carriers?
    And the report that came out by the Office of Aviation and 
International Affairs concluded that today one of every seven 
domestic passengers is flying because of the lower prices 
brought about by low-fare airlines. And they said, I quote, 
``virtually all domestic traffic growth in recent years is 
attributable to the spread of low cost service.'' And all the 
low-cost airlines are vigorously opposed to the spread of the 
user fees as proposed by the administration. So I am kind of 
merging these two things together.
    Mr. Slater. Right.
    Mr. Wolf. What are your comments?
    Mr. Slater. Well, clearly you have identified a company 
that does have quite a blueprint for success, Southwest 
Airlines. As we focus on issues of international markets and 
open skies and the like, we always talk about policies that are 
characterized as being pro-competition and pro-consumer. I 
think personally the same holds true for our decisions at the 
national level dealing with our domestic interests. And I am 
concerned about some of the proposals offered by the larger 
airlines as it relates to their impact on the new starts and 
companies like Southwest. And it is my hope that as we go 
forward that the National Civil Aviation Review Commission will 
be able to balance these competing interests and will be able 
to offer some recommendations that take those factors into 
account and that will also lead us in a direction to make 
available the resources needed to support this growing 
industry, growing and dynamic, by the way.
    Mr. Wolf. Mr. Olver.
    Mr. Olver. Mr. Chairman, I am just trying to find out 
exactly where this GAO report is on the proposed user fee 
program, so until I can find it I don't have anything to say 
right now.
    Mr. Slater. I can tell you that we did not embrace that 
user fee proposal and we didn't embrace it as an administration 
for the reason recognized here. And again, through the work of 
the National Civil Aviation Review Commission that is supposed 
to deal with long-term funding issues we are hopeful that we 
can come forward with some recommendations that will be more 
palatable.
    Mr. Wolf. Mr. Packard.
    Mr. Packard. Thank you, Mr. Chairman. I would just like to 
ask three questions that you could give short answers to, I 
believe.
    Mr. Slater. Yes, sir.
    Mr. Packard. And frankly, I appreciate your short responses 
all day long.
    Mr. Slater. Okay.

                          faa personnel audit

    Mr. Packard. And then the rest of my questions, Mr. 
Chairman, I would like to submit just for the record. I have 
several that the governor of my state would like to have some 
response to.
    Mr. Slater. Thank you.
    Mr. Packard. Coopers and Lybrand just completed recently an 
audit of the FAA, and one of their findings has been that the 
single most factor for FAA is the cost of labor. In fact, they 
were rather strong in their report. They simply said that 
personnel costs are out of control at FAA. Are you planning--
and incidentally, they have gone up about 30 percent in the 
last five years, a significant increase, I think. Are you 
planning to do or have your new--I am aware that the new 
director is not aboard, but when that happens are you planning 
to reevaluate the problem of personnel at the FAA as it has 
been highlighted in the report?
    Mr. Slater. Yes, and let me just commend the Congress once 
again for giving us the tools we need to engage in significant 
personnel procurement reform. And that is due, again, in large 
measure to the leadership of the Congress and the 
Administration on that front.

                        dot personnel reductions

    Mr. Packard. Let me carry it now to your own jurisdiction 
as the new Secretary of the Department. The interstate highway 
system is now complete.
    Mr. Slater. Yes.
    Mr. Packard. And it has been a remarkable system. With that 
complete, do you anticipate a reduction in your own department?
    Mr. Slater. Well, there has in fact been a significant 
reduction across the Department.
    Mr. Packard. I am talking about personnel now.
    Mr. Slater. Yes, I understand.
    Mr. Packard. Okay.
    Mr. Slater. Across the department over the last four years 
we have cut the force by roughly ten percent, by more than 
11,000 people. Within the FHWA, which I most recently headed, 
we cut the staff, I think, by about 400, giving us the lowest 
number of agency employees in some time. We will continue our 
streamlining activities, but I do think that we have done a 
pretty good job when it comes to staff reductions. But there 
are many, many other ways that we can bring efficiency to the 
Department of Transportation. To close with one, the Department 
was established 30 years ago this coming April, and it was 
established much as a holding company with the individual modes 
and the like. I think that it is appropriate for us to review 
our success over the last 30 years and to offer forth a vision 
for the Department as a visionary vigilant federal organization 
for the 21st century, and we plan to do that.

                             five year plan

    Mr. Packard. Along that line, may I ask another question?
    Mr. Slater. Yes, sir.
    Mr. Packard. In my Subcommittee I am asking all of the 
agencies that come under the jurisdiction of the Subcommittee--
and it is a little bit easier with defense because I am--I have 
military construction--to develop a five-year plan.
    Mr. Slater. Oh, yes.
    Mr. Packard. From that five-year plan would come your 
annual budgeting request, but we would see in a report 
submitted your five-year plan for your agency. Would that be 
difficult to do, to put yourself on a five-year planning 
process?
    Mr. Slater. Not at all. As a matter of fact, under the 
reinvention initiative of the Vice President and the President, 
we are doing just that. We are actually looking out a little 
farther.
    Mr. Packard. And that is fine. And then you can--every year 
you update your----
    Mr. Slater. Exactly.
    Mr. Packard. You add another year and keep it a five-year 
plan, at least.
    Mr. Slater. Yes, sir, we can do that.
    Mr. Packard. I would commend you for doing that.
    Mr. Slater. Thank you.

                       environmental regulations

    Mr. Packard. My last question, Mr. Chairman, may not 
require a long answer. The Administration--would the 
Administration support a certification process, the NEPA 
process or a cleanup process through NEPA, where the Secretary 
of Transportation in cooperation with EPA could delegate the 
NEPA review process to the states if the states have an at 
least equal to or more thorough review process of cleanup 
requirements? Could that be delegated to the states to do?
    Mr. Slater. Well, let me just say that the obligations that 
we exercise under NEPA are obligations given to us by law. And 
so we have the responsibility of carrying them out, but with 
the reg reform review effort underway, this is the kind of 
thing that I can tell you we have been discussing internally. 
And in some instances we have been able to do just that. Now we 
have not made that kind of a decision as it relates to NEPA, 
but it is something that we have discussed.
    Mr. Packard. Obviously if any given state has a lesser 
requirement or lesser----
    Mr. Slater. It wouldn't apply.
    Mr. Packard [continuing]. Then you would have to do it.
    Mr. Slater. Right.
    Mr. Packard. But if they have a stronger review process and 
requirements, it may be an area of delegation.
    Mr. Slater. It may be, and that is something that we will 
consider, sir.
    Mr. Packard. Thank you. Thank you, Mr. Chairman. You will 
answer the questions that I will submit to you?
    Mr. Slater. Oh, yes, I will.

                             faa user fees

    Mr. Wolf. On the fees, would you be having something like a 
hold harmless fee formula similar to the Federal Highway 
Administration on the aviation fee proposal? Is that something 
that you are looking at?
    Mr. Slater. That is something that we are looking at.
    Mr. Wolf. So that no airline has any undue----
    Mr. Slater. Yes, that is something that we are looking at, 
sir.
    Mr. Wolf. Two years ago the FAA claimed that additional 
revenues were needed to handle the anticipated growth in 
aviation over the next ten years. However, these forecasts 
depend largely on increases in general aviation and short-haul 
domestic aviation, which has itself risen largely because of 
the low-cost airlines that we talked about earlier. The basic 
laws of supply and demand tells us that when you raise the 
price of something the demand for it goes down. If the new 
financing system forces general aviation and short-haul 
airlines to pay more, isn't it possible that the forecast 
growth in aviation may not materialize, thereby negating the 
FAA's justification for the new system in the first place?
    Mr. Slater. That is possible, but I can tell you that 
everything that we have looked at suggests that we are going to 
have a sizable increase. It may not be as large as projected, 
though.
    Mr. Wolf. Some have suggested that any true user fee system 
would take into account the system-wide delays caused by hub 
airports. Delays at a major hub airport have a ripple effect 
through the system, much like traffic accidents at a busy 
highway interchange. Would you agree that any user fee formula 
should allocate those system-wide costs to users of the hub 
airport system?
    Mr. Slater. That is something that should definitely be 
taken into account by the National Civil Aviation Review 
Commission.
    Mr. Wolf. And the commission--the report is six months 
away. The members will be announced next week, is that your 
intent?
    Mr. Slater. Oh, yes. We are going to move on that very 
soon, sir.
    [The information follows:]

    On March 14, 1997, Secretary Slater named the 13 members of 
the commission: former Representative Norman Mineta, senior VP 
and managing director of Lockheed Martin; Charles Barclay, 
president, American Association of Airport Executives; Bill 
Campbell, mayor, City of Atlanta; Robert Davis, corporate VP-
engineering and technology, Boeing; Sylvia de Leon, partner, 
Akin, Gump, Strauss, Hauer & Feld; Robert Frenzel, VP, United 
Parcel Service; Mary Kay Hanke, international VP, Association 
of Flight Attendants; Richard Hirst, senior VP-corporate 
affairs, Northwest; Stephen Kaplan, partner, Cutler and 
Stanfield; Michael Lexton, managing director, Lehman Brothers; 
Fred McClure, senior VP, Public Strategies; Carol 
O'Cleireacain, visiting fellow in economics, Brookings; and 
Revius Ortique, chairman, New Orleans Aviation Board.

                       AVIATION USER FEE PROPOSAL

    Mr. Wolf. What specific features will be included in DOT's 
aviation user fee proposal to ensure equity, maintain the 
delicate competitive balance in the airline industry, and 
promote general aviation?
    [The information follows:]

    The Department believes that the aviation user fee proposal 
is an evolutionary move to a more equitable situation of 
allocating costs to those who actually generate the costs than 
is currently the case. The Federal Aviation Administration's 
provision of air traffic control is applied uniformly across 
all of the airline industry yet receipts into the trust fund 
from the airlines are a percentage of the cost of a ticket. 
Airlines which charge higher ticket fees receive the same 
services as lower cost airlines from the FAA but they pay a 
higher cost. A system of user fees will instill more equity in 
the airline industry by charging the recipient of a service for 
the actual cost of those services.

    Mr. Wolf. FAA originally supported user fees as a way to 
address their estimated $14 billion ``budget gap'' over the 
1995-2002 time period. They believed that if the FAA had to 
continue competing with other agencies for domestic 
discretionary funds, they would be unable to obtain the funds 
they needed. However, the Administration's fiscal year 1998 
budget makes all aviation user fees subject to the annual 
appropriations process, and over the long term maintains the 
FAA within the domestic discretionary portion of the budget. If 
user fees are not going to provide the FAA with additional 
resources over the long term, why make such a dramatic change?
    [The information follows:]

    It has long been the Administration's policy to charge 
recipients of identifiable services the costs required to 
provide those services. From a long term perspective, 
fundamental financial reform is required to assure adequate, 
dedicated sources of funds to operate FAA. As a step toward 
financial reform, the budget assumes limited user fee funding 
in 1998 with the expectation that the National Civil Aviation 
Review Commission (NCARC) will provide a long term financing 
option for FAA programs.

                           AVIATION FUEL TAX

    Mr. Wolf. As the former Administrator of the Federal 
Highway Administration, you have first-hand experience with 
fuel taxes that finance the highway trust fund. Based on your 
experience, what would be the advantages and disadvantages of 
an aviation fuel tax in terms of administration, system and 
efficiency? Would fuel use be a good proxy for the costs 
imposed by the airlines on the airport and airway system?
    Mr. Slater. I think there, too, Mr. Chairman, that would be 
an issue appropriate for consideration by the National Civil 
Aviation Review Commission. But clearly I have had some 
experiences dealing with this issue as a Federal Highway 
Administrator and also as a state member of a commission. The 
only thing is that in some instances fuel taxes are viewed as 
being regressive, but those kinds of considerations could be 
balanced in a broader review of all sorts of funding 
possibilities. But the study should give us a clearer 
indication and understanding of that possibility.

                 LOS ANGELES AIRPORT REVENUE DIVERSION

    Mr. Wolf. Revenue diversion, Los Angeles.
    Mr. Slater. Yes, sir.
    Mr. Wolf. The diversion--and of course it has gotten a 
little controversial because Web Hubbell was hired. I think 
that this issue is being looked at by other people, but what is 
the status of the L.A. diversion issue? We really have to bring 
these things to conclusion.
    Mr. Slater. We do.
    Mr. Wolf. And by allowing them to just go on and on, other 
airports are beginning to kind of say well, if they got away 
with it, maybe we can get away with it.
    Mr. Slater. Your point is well taken. Let me get back with 
you as it relates to the details of exactly where we are, but I 
can say for the record at this point that we have sent a clear 
signal to LAX that we are serious about following through on 
our responsibilities under the law and that we intend to 
exercise that responsibility. I will say that I had hoped to 
visit with some key officials on the matter last week and was 
unable to do so--earlier this week, I am sorry, and was unable 
to do so, but we have sent a clear signal and I would like to 
just follow up with you with more details on where we are.
    Mr. Wolf. Would you consider withholding FTA money from 
L.A. if you find airport diversion----
    Mr. Slater. Yes.
    [The information follows:]

[Pages 710 - 711--The official Committee record contains additional material here.]


                          GAMBLING ON AIRLINES

    Mr. Wolf. There was an article in the Washington Post the 
other day by Daniel S. Greenburg, who is editor and publisher 
of the Science and Government Report, which takes a very strong 
position against gambling on aircraft. It says, ``airborne 
gambling by domestic and foreign airlines is forbidden by 
federal law in U.S. airspace and thus the prohibition poses no 
direct competitive disadvantage to domestic air carriers. The 
outcome must be emphatic, no--that means no gambling--unless 
government policy is blindly committed to further deterioration 
in the handling and management of the traveling public.'' They 
talk about the closeness of the seats. Then they talk about 
bringing gambling in, particularly with the emotional aspect 
involved, you can find mom and dad and two kids and dad loses 
$350 on the way over to London for the family vacation.
    And of course they all start out by--when they try to put 
river boats in different communities they say well, you know, 
we are going to limit it to $350 or $500 dollars loss, and then 
they get it in and then they say well, we are not doing what 
we--we have got to take $1000, and then they take the limits 
off.
    I want you to know how concerned I am. I would hope that 
the policy of the FAA and also of the Department would continue 
to oppose gambling on airlines. Do you have any comments you 
would like to make about that issue?
    Mr. Slater. Sure. First of all, unfortunately I have not 
had occasion to read the article that you reference, but it has 
been brought to my attention, the substance of it. And I can 
tell you that our priority is safety. And clearly this is an 
issue that could impact safety rather adversely, so it is a 
matter of great concern to us. As you know, it is an issue that 
is being addressed over the long term by what is called the 
National Gambling Impact Study Commission. And while I think 
that their findings will be very helpful to us, I can say 
without equivocation as a Secretary committed to our number one 
goal of safety first that this is a matter of grave concern to 
us, and it is a matter on which we will not be silent as it 
relates to safety.
    Mr. Wolf. Good. I appreciate that. I was the author of the 
Gambling Commission.
    Mr. Slater. I know.
    Mr. Wolf. And we are waiting for the Administration--if you 
can call them up when you leave here, call Mr. Nash up and tell 
him we are waiting. The law said October 2nd and now it is into 
March 2nd and 3rd, and we just hope, and I mean this seriously, 
that there are three objective people.
    Mr. Slater. I understand.
    Mr. Wolf. Because if there aren't, I am going to ask for an 
FBI investigation, because there has been campaign financing 
money taken. Both parties have taken money from the gambling 
interest, as part of the coffees at the White House and the 
different things. So we are asking--I don't want anti-gambling 
people put on nor do I want pro-gambling people on. I want 
three honest, objective, decent people. So if you could just 
pass that on. I know how close you are to Mr. Nash. He is from 
Arkansas, is he not?
    Mr. Slater. He is from Arkansas.
    Mr. Wolf. I bet he is a friend of yours.
    Mr. Slater. He is a friend of mine.
    Mr. Wolf. If you could just tell him that we just want 
three good people on there----
    Mr. Slater. I will.
    Mr. Wolf [continuing]. I would appreciate it.
    Mr. Slater. I will, sir.

                 TRANSPORTATION TRUST FUNDS OFF-BUDGET

    Mr. Wolf. This whole issue of off-budget, I have a whole 
series of questions which I will just submit. And I know you 
have been testifying all morning.
    Mr. Slater. That is all right.
    Mr. Wolf. I am glad Mr. Sabo came in, who I completely 
agree with on this issue, but there is a concern and he has a 
better understanding, perhaps, than anybody having been the 
ranking member on the budget committee, but do you want to 
comment about the push with regard to off-budget and what is 
the Department's position on this issue off-budget?
    Mr. Slater. Sure. Clearly I can state in one sentence 
rather succinctly that the Administration is opposed to the 
off-budget initiative. I would like to, though, offer a couple 
of comments in support of the position. One is the uniform 
budget effort that is in place, a procedure that is in place, 
that has allowed the President working with the Congress 
tosignificantly lower the deficit to begin the process of bringing our 
economic house in order. And we have not just the highway trust fund, 
but we have got an aviation trust fund. We have got some 150 or so 
trust funds with programs in place designed to collect monies for 
specific purposes, but we also have a country that at least at one time 
was sinking in red ink and is beginning to put its economic house in 
order. And having this uniform budget process in place has helped us do 
that.
    Also a number of economists have expressed their opinion as 
well in that regard. And with the Administration and the 
Congress committing to balance the budget by the year 2002, 
this action could clearly make that effort, if not impossible, 
clearly more difficult.
    Mr. Wolf. Is it true that if the highway reauthorization 
bill makes the choice not to provide billions of dollars in new 
highway demonstration projects, adjusts the funding formula to 
more accurately place federal dollars where they are needed, 
and encourages program efficiencies in areas like overweight 
truck enforcement, that the effective output of the federal 
highway program would actually be greater?
    Mr. Slater. That is true, sir.
    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman. My apologies, Mr. 
Slater, for missing most of----
    Mr. Slater. Oh, that is all right.
    Mr. Sabo [continuing]. This meeting. I had some other 
appointments and so I am not sure what has been covered but 
just want to welcome you again to the Committee and your new 
role.
    Mr. Slater. Thank you, sir.
    Mr. Sabo. And I congratulate you on your appointment.
    Mr. Slater. Thank you.

                         Bicycle Infrastructure

    Mr. Sabo. And over the years we worked with the highways in 
developing some sensitivity to bikes and biking.
    Mr. Slater. Oh, yes.
    Mr. Sabo. And you were always very responsive to that, and 
I continue to believe that that sensitivity within the 
development of highways and transportation in this country is 
very, very important. One tends to hear lots of complaints in 
this business. I really haven't heard complaints from the 
highway department and the federal highways in the last few 
years, so you must have been doing something right there.
    Mr. Slater. Well, thank you. Thank you. We have got quite a 
team there.

                      TRANSIT OPERATING ASSISTANCE

    Mr. Sabo. And I am sure you will bring that same skill to 
being Secretary of Transportation. So I congratulate you. I 
look forward to working with you. We have looked at your 
budget. Clearly there are things I am troubled by. I am not a 
fan of cutting off operating assistance to larger transit 
agencies. I think that is rather important. I think overall the 
budget is a little tight of money, and I am not one who thinks 
that transportation should get everything in the world with no 
tradeoffs for anything else that goes on, but transportation 
does represent an area where there has been a significant 
federal commitment over the years.
    Mr. Slater. Right.

                   INTELLIGENT TRANSPORTATION SYSTEM

    Mr. Sabo. And it is an historic federal role that has been 
very important in developing the infrastructure in this country 
for a period of time focused mostly just on highways, and over 
the years we understood it includes other things like transit 
and considerations of changing modes, of making sure we have 
sensitivity to bikes. I think your new--the intelligent vehicle 
system makes sense, the program direction. The Department is 
moving. I think clearly we have to make sure that we get 
maximum efficiency out of the superstructure that we do build. 
So I am interested in what you are doing, look forward to 
working with you and wish you well.
    Mr. Slater. Well, thank you, sir. And if I may, I mentioned 
to Chairman Wolf early on that I very much appreciate the 
decision that was made by the Chairman and you and other 
members of the Committee in setting the hearing for today 
rather than continuing with the schedule on Tuesday, because 
that allowed me to be in Arkansas with the President and with 
Director James Lee Witt of FEMA to respond to some of our 
challenges there involving people that we know very, very well. 
And I very much appreciate that.
    If I may, I would like to just mention that when it comes 
to the use of ITS Technologies, clearly Minnesota, through the 
Guidestar Program, provides leadership in that regard. Also it 
is true that we have evolved in the area of transportation over 
the years with Minnesota, again, playing a leadership role in 
that regard, moving from just a focus on highways to transit 
and now to the intermodal nature of transportation as we enter 
a global economy. And I--we have talked about some of our--I 
wouldn't say disagreements necessarily, but clearly challenges 
yet before us when it comes to dealing with some of the 
budgetary concerns in our proposal and some of your wishes.

                      TRANSIT OPERATING ASSISTANCE

    And I am also pleased with all that we have been able to do 
as it relates to other modes, alternative modes of 
transportation, biking and pedestrian facilities especially. So 
I feel very good about all of that. I would be happy to respond 
specifically to the operating issue as it relates to transit. 
You and I have talked about it, and you know that our goal 
there is to extend the definition of capital and that we do 
believe that the transit properties will be able to have more 
flexibility and meet their operating needs. But this is an 
issue that has been raised rather forcefully by many of our 
friends in the transit community as well as members on this 
committee. And we understand and appreciate your position on 
it.
    Mr. Sabo. Federal funding is not the major part. It is 
marginal, but the marginal funding at times can be the 
difference between keeping routes going. And often the folks 
most impacted by the marginal funding are the folks--are the 
people who most need----
    Mr. Slater. Yes.
    Mr. Sabo. They have an alternative to the car.
    Mr. Slater. Sure.
    Mr. Sabo. They are the ones who don't have cars and are 
sometimes least served by the highest volume routes, which 
serve a different function.
    Mr. Slater. Right.
    Mr. Sabo. Part of the function is to deal with peak travel, 
but for others it really deals with the question of alternative 
transportation. For them that becomes very important. But I 
look forward to continuing to work with you on that issue.
    Mr. Slater. Okay, thank you, sir.
    Mr. Sabo. Thank you, Mr. Chairman.

       TRANSPORTATION TRUST FUNDS--DISPOSITION OF STATE REVENUES

    Mr. Wolf. Thank you, Mr. Sabo. Mr. Slater, Without beating 
a dead horse on the off-budget issue----
    Mr. Slater. Yes, sir.
    Mr. Wolf. I have a question that I will use as a 
referencepoint to supply some other information. The supporters of off-
budget sometimes give the impression that raising federal highway 
spending will automatically have an impact on road construction in the 
United States. However, a recent GAO report indicated that in many 
grant programs like Federal-aid highways there is a substitution 
effect. When federal dollars are raised, states and localities often 
reduce their funds and apply them elsewhere. And I guess the concern 
that I have here--and I just use that as a backdrop. I know a number of 
states, they take a portion of their gas tax and use it for something 
else.
    Mr. Slater. Right.
    Mr. Wolf. I know one state uses it for education. Do you 
have a breakdown of the state gasoline tax for each state and 
how much of that is used in each state for transportation and 
then how much is used for other than that, whether it be 
transportation or whatever the issue?
    Mr. Slater. Sure. Mr. Chairman, we do have that information 
and we can provide it on a state-by-state basis. I will say 
that in most states, though, motor fuel taxes are used for 
transportation purposes. You do have some exceptions to that 
rule where the resources would go into the general fund and can 
be used for other purposes. Also I would take some issue with 
the GAO report in that what I think they recognize is the 
exception rather than the rule. In most cases when federal 
funds increase you have a commensurate response on the part of 
state and local governments. We found that to be the case more 
often than not.
    [The information follows:]

[Page 717--The official Committee record contains additional material here.]


    Mr. Wolf. I guess--and I accept that as fact. The two 
concerns, one, I think the one state--25 percent of the 
gasoline tax in Texas, we understand, goes for education.
    Mr. Slater. Oh, is that right? Okay.
    Mr. Wolf. I believe, and perhaps I am wrong, if you could 
look at that.
    Mr. Slater. We can look at----
    [The information follows:]

    Texas State Law provides that after a one percent 
distribution to the Tax Administration Fund for collection and 
administration of motor-fuel taxes, 25 percent of motor-fuel 
tax revenues are distributed to the Foundation School Fund, 
State Board of Education for aid to public schools. Motor fuels 
include gasoline, gasohol, diesel and LPG.
    This information on the distribution of motor-fuel tax 
revenues in Texas is from the FHWA publication, Highway Taxes 
and Fees: How They Are Collected and Distributed--1995.

                    DEVOLUTION OF TRUST FUND REVENUE

    Mr. Wolf. The other thing is there are some people talking 
about devolution, turning everything back, which is appealing 
to me. But then on the other hand I know how reluctant certain 
governors are for tax increases, so if you were to take this--
knowing the unmet needs----
    Mr. Slater. Right.
    Mr. Wolf [continuing]. For the nation's transportation 
system, and knowing how important it is to the economy and 
everything else, if there is less money spent on it we are 
going to have a greater problem than we currently have. My area 
is number two in congestion, the Washington D.C. area, and so 
the concern was if you were to take off the federal 
responsibility----
    Mr. Slater. Right.
    Mr. Wolf [continuing]. And pass it back, the governor in a 
certain state, whatever state it may be, and I am not thinking 
of any particular state, may very well say well, I don't want 
to--I made a no pledge, no tax pledge, so I am not going to put 
that on. And that is the concern there. So the concern is that 
transportation motor fuel taxes are being used----
    Mr. Slater. Right.
    Mr. Wolf [continuing]. For that.
    Mr. Slater. And I can say this, Mr. Chairman. Your concern 
there is a legitimate concern. It is highly unlikely that if 
the entire program were devolved back to the states that the 
states would pick up the full measure of the federal tax so as 
to keep their system in a high performance level. That is 
challenge enough for us working in partnership. Not to have 
that partnership, which means that we are inspired by their 
actions, they are inspired by ours, could lead to either side 
becoming less enthusiastic about the role that we each must 
play to keep our transportation system the number one system in 
the world.

                          HIGHWAY NEEDS STUDY

    Mr. Wolf. Does the Federal Highway Administration have a 
study that can document the unmet needs of the nation with 
regard to that?
    Mr. Slater. Yes.
    Mr. Wolf. If you can give us a summary of that.
    Mr. Slater. We can do that. It is actually a conditions and 
performance report that we prepare everyother year. And I think 
the last report was prepared in 1995, if I am not mistaken.
    Mr. Wolf. Do you have any sense now what the unmet needs 
with regard to transportation are?
    Mr. Slater. We do, and I will tell you just to maintain the 
system requires quite an effort. We are pleased to note that we 
are seeing some stabilization of the present condition and 
performance of the system, especially on the national highway 
system. And we are seeing some improvement in the conditions of 
our bridges. The challenge is to sustain that, and it is quite 
a challenge.
    [The information follows:]

[Pages 720 - 722--The official Committee record contains additional material here.]


                            state gas taxes

    Mr. Wolf. On most state referendum or recommendations to 
increase the gas taxes, are they going up or are they going 
down or are they staying about the same? I know a couple cases 
where the people have recommended gas taxes and have failed.
    Mr. Slater. In most instances, though, if----
    Mr. Wolf. It is passing?
    Mr. Slater. It is passing in most instances. And one other 
thing that we are seeing is that a lot of local initiatives in 
support of transit are proving very, very successful. So we are 
seeing some appreciation in the public at large as to the value 
of transportation to the health and well-being of the overall 
economy.

                         trust funds off-budget

    Mr. Wolf. Before becoming Secretary, Mr. Slater, you served 
as the Administrator of the Federal Highway Administration 
since 1993. Prior to working in that capacity, you worked on 
the Arkansas State Highway Commission. Over the past several 
years, you must have made a number of friends in the highway 
community. Mr. Secretary, what do you tell your friends in the 
highway community about your position to off-budget?
    [The information follows:]

    We oppose taking the Trust Funds off budget for several 
reasons:
    It would limit the ability to respond to changing needs and 
priorities in allocating resources. The burden of balancing the 
budget would fall more heavily on other discretionary programs;
    It would be a dangerous precedent that would encourage off-
budget treatment for other activities and programs supported by 
user fees or trust funds--which comprise over 40 percent of 
total federal spending; and
    A comprehensive, unified budget is necessary to properly 
account for and control federal spending. It is essential in 
making trade-offs among competing priorities and programs and 
for accurately assessing the government's share of national 
resources. Fragmenting the budget could call into question the 
government's ability and commitment to control federal spending 
and balance the budget.

    Mr. Wolf. The leadership of the Transportation and 
Infrastructure Committee has cosponsored H.R. 4, the Truth in 
Budgeting Act. If H.R. 4 were presented to the President as 
either a stand-alone bill or as part of the broader ISTEA 
reauthorization, would you recommend to the President that he 
veto the legislation?
    [The information follows:]

    The Administration expressed its strong opposition to 
similar legislation when it came before the House in the last 
Congress, because it would jeopardize the shared national 
objective of a balanced budget by 2002. The President has 
proposed a budget plan to achieve balance by 2002 and to 
maintain the record high level of investment in transportation 
infrastructure programs. The Administration wants to work with 
the Congress toward timely enactment of the Intermodal 
Transportation Efficiency Act (ISTEA) reauthorization 
legislation and toward a balanced budget by 2002. Passage of 
H.R. 4, either as a stand-alone bill or as part of ISTEA 
reauthorization, would not be consistent with those goals.

    Mr. Wolf. According to the Bureau of Transportation 
Statistics, about $90 billion was spent in this country on 
highways in 1994. While an extra $1 billion may seem a lot at 
the federal level, when state and local funds are added in, an 
extra billion only adds about one percent more in total highway 
spending around the country. That could disappear even with a 
modest increase in the inflation rate. And if states use the 
opportunity to siphon off their own gas taxes or tolls to non-
highway uses, the net increase could be close to zero. Would 
the off-budget proposal, to your knowledge, target the 
additional funds to ensure some real impact is seen?
    [The information follows:]

    The off-budget proposals introduced to date address only 
the budget status of the federal transportation trust funds and 
the programs they finance. They do not address the possibility 
of states substituting federal funds for their own.
    As previously stated, the Administration does not support 
the off-budget proposals. The Administration is committed to 
the bipartisan effort to balance the federal budget, and all 
spending and taxing decisions should be made in this context.

                         central artery project

    Mr. Wolf. We won't have a lot of questions here, but if you 
would just be sensitive----
    Mr. Slater. Yes.
    Mr. Wolf [continuing]. Knowing that we want GAO and your 
people who do a good job on central artery project and the IG 
working to keep that at the $10.4 billion figure.
    Mr. Slater. Sure.
    Mr. Wolf. There was testimony by the GAO which raised a 
little bit of a red flag if you would look at that. We will get 
into more detail with the Federal Highway Administration.
    Mr. Slater. Sure. Mr. Chairman, on that score, if I may, 
first of all I would like to commend your leadership in that 
regard. And I think we have done a good job as it relates to 
the Central Artery Project, but we also have another--a number 
of other large projects coming on line, and what I would like 
to do is to explore with you something that we discussed some 
time ago, and that is to have a special effort that we put in 
place to deal with major projects. At the time we talked about 
it initially we were talking about projects maybe in excess of 
a billion dollars. I would like to work with you, other members 
of the Committee----
    Mr. Wolf. Sure.
    Mr. Slater [continuing]. On that kind of initiative.
    Mr. Wolf. Great. Now you are the boss, too, you know. I 
mean, you not only have Federal Highway Administration, you 
have the whole department.
    Mr. Slater. Right.
    Mr. Wolf. And I think that would be great.
    Mr. Slater. Okay.

                     highway demonstration projects

    Mr. Wolf. That would be wonderful. As you know, over the 
last two years this Subcommittee has not earmarked funds for 
special highway demonstration projects, choosing instead to 
increase the annual federal-aid highway limitation by over $813 
million since 1995. On the other hand, ISTEA contained over 500 
demonstration projects totaling more than $6.2 billion. At the 
time ISTEA was considered, then-Secretary Skinner told the 
public that Congress was ``pickin' your pocket for pork'' and 
urged the White House to veto the bill.
    During your confirmation hearing, you noted that you, too, 
were opposed to earmarking special highway demonstration 
projects. This year the picture may be much the same, reverting 
4.3 cents of the gasoline tax to increase spending for more 
highway demonstration projects. If the successor to ISTEA were 
to contain highway demonstration projects, would you recommend 
that the President veto the bill?
    [The information follows:]

    We think that states and localities are in the best 
position to make project funding decisions and would oppose the 
inclusion of new demonstration projects in reauthorization of 
ISTEA.
    Our focus is on achieving a reauthorization package which 
moves us forward into the 21st century. It is too early to 
comment on what the President may or may not veto, or what 
future recommendations might be.
    Our National Economic Transportation Efficiency Act 
(NEXTEA) proposal does not make special provisions for the 
funding of new demonstration projects, however our budget does 
not limit funding for Intermodal Surface Transportation 
Efficiency Act (ISTEA) and other demonstration projects, as had 
been proposed in previous years.

                       Field Office Organization

    Mr. Wolf. Two years ago, Secretary Pena indicated that the 
Department believed that significant savings could result from 
consolidating the field offices of Federal Highway, FRA, FTA 
and NHTSA, and that consolidation would improve customer 
service through one-stop shopping and efficiencies. To date, 
little if any consolidation has occurred. Has the Department 
abandoned this or is this something that will be looked into? 
We talked about Atlanta.
    Mr. Slater. Right.
    Mr. Wolf. One place has office buildings all over town 
and----
    Mr. Slater. Right. We have not abandoned the initiative. We 
are still looking at it, and frankly I think my experience at 
the modal level with responsibility for many of our field 
offices will prove helpful in that regard. We would like to 
continue to work with you and members of the Committee on this 
initiative. It is something that we plan to continue.
    Mr. Wolf. Officials of the Department stated before the 
Committee that the Department planned to focus on changes in 
the field structure during 1996 and to finalize the 
Department's consolidation plans by the end of the year. What 
specific proposals for streamlining field operations and 
offices has the Department completed over the past year, and 
what significant changes do you envision occurring in the 
Department's field structure this fiscal year?
    [The information follows:]

[Pages 726 - 727--The official Committee record contains additional material here.]


    Mr. Wolf. Do you envision any significant changes in the 
field structure in fiscal year 1998, and if so, what cost-
savings have been included in the budget?
    [The information follows:]

    Safety is our top priority at the Department, and one of 
our key objectives as we consider consolidation is how to 
enhance safety. Any consolidation or co-location will be 
targeted to improve program delivery. Safety officials in each 
region will define and implement activities that best meet the 
particular needs and conditions of the region.
    A Co-location Task Force with representatives from each 
Department of Transportation (DOT) operating administration 
will identify opportunities, via sensible space sharing, to 
improve customer service, reduce costs, increase efficiency, 
and advance the National Performance Review recommendations. In 
November 1996, the task force identified approximately 50 
potential co-locations for further analysis and prioritization. 
We expect to receive a detailed plan by this spring.
    In order to provide one-stop shopping closer to major 
customers, FHWA and FTA are setting up jointly-staffed 
metropolitan offices in Los Angeles, New York City, 
Philadelphia and Chicago. These offices bring existing highway 
and transit field staff together to address urban and 
intermodal issues in these major metropolitan areas, extending 
the reach of field offices in State capitals and regional 
headquarters. The LA office opened last October and plans are 
well underway in the other cities.
    There are no cost savings associated with field 
reorganization included in the fiscal year 1998 budget. While 
cost savings are an important aspect of all co-location 
endeavors, the Department's main focus is on enhancing customer 
service. It is important to note that this may or may not 
result in a cost savings.

                  Surface Transportation Field Offices

    Mr. Wolf. How do you plan to collocate and/or consolidate 
the Department's surface transportation field offices that 
number over 150 to best serve transportation needs in a cost-
effective manner?
    [The information follows:]

    The Secretary's Management Council, consisting of the 
Deputy Secretary and the modal Deputy Administrators, 
established the Co-location Task Force in mid-1996 to identify 
and recommend potential co-location and consolidation 
opportunities for Department of Transportation (DOT) field 
offices in areas where it made sense programmatically to do so. 
The objectives of the Task Force were to complete a focused 
review of the Department's field space inventory to identify 
opportunities to improve customer service, increase efficiency, 
reduce costs, and advance the National Performance Review 
recommendations.
    The Task Force issued an interim report in November 1996 
that identified approximately 50 co-location opportunities. The 
Task Force then developed a system for analyzing and ranking 
those opportunities. The ranking factors included logistical 
ease, cost/savings, customer base, program/administrative 
coordination, personnel, and technology advantages. Each 
administration potentially involved in the co-location 
opportunity evaluated the project from its perspective. The 
scores were then averaged for the co-location and the projects 
were prioritized with the easiest co-locations to implement 
being the first to be completed. This analysis was recently 
completed and the modal administrations are currently 
evaluating the results.
    While cost savings are an important aspect of all co-
location endeavors, the Department's main focus is on enhancing 
customer service. It is important to note that this may or may 
not result in a cost savings.

                                 Amtrak

    Mr. Wolf. Amtrak President Tom Downs expressed 
disappointment with the budget proposal, stating that the 
budget proposal limits funding for Amtrak so severely that 
service in the Northeast Corridor's high-speed rail program 
would stall. He further noted that the level of capital 
proposed is so seriously inadequate and the level of operating 
assistance is so insufficient that Amtrak's national system 
cannot survive. Do you agree with that assertion?
    Mr. Slater. I would note that clearly Mr. Downs has 
concerns, but the objective is to ultimately make Amtrak a 
self-sustained, self-sufficient quasi public/private entity. 
And with Mr. Downs' leadership I know that we can get to that 
end.
    Mr. Wolf. Does the Administration support the creation of a 
new trust fund to support Amtrak's capital needs?
    Mr. Slater. Let me just say that we are going to speak to 
that issue in our upcoming ISTEA reauthorization initiative. 
And it may not be a part of the initial rollout, because we 
still have questions yet to be resolved and answered, but my 
personal objective is to see that Amtrak is made a part of the 
intermodal surface transportation system of the 21st century. 
And we have got to deal with this issue of funding effectively 
and efficiently as soon as possible.
    Mr. Wolf. That is why a base closing----
    Mr. Slater. That is true.
    Mr. Wolf [continuing]. Commission may----
    Mr. Slater. That is an option.
    Mr. Wolf [continuing]. May really provide that opportunity. 
A dedicated funding source for Amtrak implies a new mandatory 
program, yet another entitlement. How does the creation of a 
new mandatory program and greater federal subsidies induce 
greater operating efficiencies at Amtrak?
    [The information follows:]

    The Administration has not proposed the establishment of 
dedicated funding source through an Amtrak trust fund. The 
administration supports increased capital investment in Amtrak 
from the Highway Trust Fund. This investment can be used to buy 
technology to modernize Amtrak's reservation, technology, and 
accounting systems, which improves productivity and reduces 
costs.
    The investment can also be used to renew or replace aging 
equipment facilities. Amtrak's existing fleet and facilities 
show the results of years of capital disinvestment, being 
inefficient, costly to maintain and prone to break down. Their 
replacement will reduce direct operating costs in such areas as 
lowered fuel consumption and reduced maintenance costs and 
requirements. Modern equipment is also more reliable which 
helps induce greater patronage of Amtrak's services. All of 
these factors contribute to a lower demand for federal 
operating assistance.

    Mr. Wolf. Why do you believe it is appropriate that 
Amtrak's funding, including the retirement costs of former 
railroad employees who never worked for Amtrak, be derived from 
the highway trust fund as you have proposed in the budget 
request?
    [The information follows:]

    The Administration views Amtrak as an important part of 
this nation's intermodal transportation system. Funding Amtrak 
from the Highway Trust Fund may provide Amtrak with a more 
stable source of funding. The Administration has proposed that 
all federal funding to Amtrak, including railroad retirement 
costs, be derived from the Highway Trust Fund. Passenger rail 
service may also help reduce highway congestion. States as 
diverse as Washington, Wisconsin and Florida have invested in 
rail passenger service to address highway congestion.

                         Advance Appropriations

    Mr. Wolf. The budget requests $2.2 billion for the 
Department of Transportation in advance appropriations for 
funds to modernize the air traffic control system, yet it does 
not include advance appropriations for the transit new starts 
program. If the Administration believes that incremental 
funding for capital projects has resulted in poor risk 
management, weak planning, and inadequate funding levels to 
procure and construct the assets within or close to the 
original cost estimates, why were advance appropriations not 
requested for transit new starts?
    Mr. Slater. I have to tell you, Mr. Chairman, I did not 
focus on the way we dealt with those two issues. What I would 
like to do, now that you have raised the issue, is to think 
about it and get back with you----
    Mr. Wolf. Sure.
    Mr. Slater [continuing]. With a more detailed explanation 
for our action, but also to consider the very point that you 
raise by viewing the two together. And we will do that.
    [The information follows:]

    Advance appropriations were requested for programs that 
involve direct procurement of equipment to be used by the 
Federal Government. In the case of air traffic control 
modernization, the FAA is buying the equipment and will be the 
user of the equipment being produced. The transit program is a 
grant program and contracts for transit systems are managed by 
the state or local government that receives the grant.

    Mr. Wolf. Fine. And if you do that, you can answer this too 
if you want to for the record.
    Mr. Slater. Yes, sir.
    Mr. Wolf. But the concern that the Department's budget 
requests $634 million for transit new starts, $160 million 
below the levels identified in the 15 signed full funding 
agreements.
    Mr. Slater. Yes.
    Mr. Wolf. And how do you----
    Mr. Slater. I do have somewhat of an answer on that. What 
we are doing is extending the schedule somewhat of the projects 
in operation. Then with some of the projects that are at 
different stages in their development where they aren't moving 
as quickly as possible, we are actually using those resources 
to support the efforts on other projects. I can mention the 
L.A. Red Line as an example in that regard.
    Mr. Wolf. You don't have to answer this, but the next 
question following along which will fit in is historically full 
funding was applied only to those items in the procurement 
phase, after development work was complete and risks were low. 
The current proposal, however, asks us to fully fund programs 
still being developed. And if we had done this years ago for 
the MLS or AAS, we would have wasted a lot of money. So the 
concern is why should development programs be fully funded. And 
if you could answer that all.
    Mr. Slater. I will do that.
    Mr. Wolf. Okay, good.
    Mr. Slater. Thank you.
    [The information follows:]

    In general, new product development programs do not require 
large appropriation requests and would not need to be advance 
funded. However, almost all large production contracts have a 
certain amount of development that would be included in the 
requests for advance appropriations.
    There are two reasons for this. One is that there is a 
limited commercial market for the products the Department buys, 
so some adaptation of commercial products is normally required. 
The second is that equipment produced under a production 
contract has more rigorous requirements for durability and 
maintainability. This requires refinements on the design of the 
R&D prototype. There is significant emphasis on buying 
commercial products in the future to avoid development in 
production contracts, but it is unlikely that the Department 
will ever be able to buy unmodified commercial products.

    Mr. Wolf. How do advance appropriations lead to greater 
efficiency and accountability when budget requests and reviews 
of major capital programs would no longer be performed by 
Congress annually?
    [The information follows:]

    A request for advance appropriations requires that detailed 
cost estimates by provided for a complete project. Changes to 
the initial estimates, such as a request for additional 
funding, would require Congressional review, so any project not 
reaching cost or performance goals would be highlighted. 
Projects that were meeting goals would not have to be reviewed.
    Projects that receive advance appropriations could receive 
lower bids than projects funded on an annual basis. Companies 
that can plan on the size of production runs and length of the 
contract can provide the infrastructure for production 
facilities and support more efficiently than companies that 
rely on year to year contracts.

                          innovative financing

    Mr. Wolf. Innovative financing, how is the transportation 
infrastructure credit program not duplicating that of the state 
infrastructure bank program?
    Mr. Slater. Our objective with the credit program is to 
give us the ability to deal with multi-state, large projects, 
much like the Alameda Corridor or some of the major interstate 
reconstruction efforts, possibly I-15 in and around Salt Lake 
City or maybe I-95 in and around Philadelphia, or the Woodrow 
Wilson Bridge. Those would be examples of the sort of large 
multi-state projects that we could fund under the federal 
credit program.
    Mr. Wolf. Maybe you could elaborate--yes, Mr. Sabo.
    Mr. Sabo. Frankly, this program--both what we have funded 
is--I frankly don't know what we are doing under it.
    Mr. Slater. Yes.
    Mr. Sabo. Or the new one. Can you give just----
    Mr. Slater. Give a few examples?
    Mr. Sabo. Yes, a brief description to----
    Mr. Slater. Sure.
    Mr. Sabo [continuing]. Inform one. I guess I voted for it 
last year.
    Mr. Slater. Okay, let me just give you a couple of examples 
of what we are doing. With the SIBs we have a parking deck in 
the Vienna, Virginia, station area of the Washington Metro; 
State Route 80, an interchange project in Palm Beach County, 
Florida; an Oregon vanpool project in the State of Oregon.
    Mr. Sabo. But what are we doing, borrowing the money?
    Mr. Slater. Well, we are doing different things with each 
project. In many instances it is to guarantee a line of credit. 
In some instances we use the resources to leverage private 
sector dollars, to bring more private sector dollars to the 
table. But a lot depends on the character of the project and 
what exists in the private arena and sometimes even in the 
public arena when it comes to state and local dollars being 
added to the initiative. But it is more a toolbox of 
opportunities that can be employed depending on the particular 
needs of a given locale or state. I can tell you that the 
effort is based on primarily a test and evaluation initiative 
that we employed within the Federal Highway Administration that 
allowed us to work with our state partners to move somewhere in 
the neighborhood of 60 to 70 projects in over 30 or so states 
around the country. But again, using techniques that were most 
attractive, if you will, in a given locale for a given project 
at a given time. And it varies from time to time and state to 
state.
    Mr. Sabo. Thank you. Could you send me----
    Mr. Slater. We can.
    Mr. Sabo. I assume somewhere in documents we have some 
description.
    Mr. Slater. We do. We can provide that. The key thing, 
Congressman, is that traditionally our program has been a grant 
reimbursement program. And it has been pay-as-you-go with very 
little private sector involvement. And what this initiative 
does is allow us to bring the private sector into our business 
a lot more.
    Mr. Sabo. Are these loan guarantees?
    Mr. Slater. Some.
    Mr. Sabo. I am just curious.
    Mr. Slater. Yes, sir. We can provide a detailed report on 
our efforts to date.
    Mr. Sabo. Thank you.
    Mr. Slater. Yes, sir.
    [The information follows:]

[Pages 733 - 750--The official Committee record contains additional material here.]


    Mr. Wolf. The budget request includes $150 million for 
continuation of the State Infrastructure Bank program and $100 
million for a new program, the Transportation Infrastructure 
Credit program. In an October 1996 report, the GAO noted that 
the state infrastructure program needs time to develop and 
mature and that it is too early to evaluate comprehensively the 
program. The GAO further noted that there are a number of 
barriers that impede states from participating in the SIB 
program, including lack of candidate projects, debt repayment 
obstacles and legal barriers. Considering these early findings 
and the limited involvement of the states to date, why propose 
an additional $150 million for the SIB program and $100 million 
for a new transportation infrastructure credit program?
    [The information follows:]

    The additional $150 million for the SIB program will be 
used as ``seed money'' to capitalize SIBs and accelerate 
implementation of the program. SIBs are state-level investment 
funds capitalized in part with federal grants. They are 
intended to complement traditional transportation programs and 
provide states with increased flexibility to offer many types 
of assistance, including low-interest loans, loan guarantees, 
and standby lines of credit.
    The administration's infrastructure credit enhancement 
program will provide funding for large projects of national 
significance that due to their scale and complexity can not be 
adequately funded through a SIB. This new program will help 
address these projects' special needs by supplementing existing 
Federal programs and leveraging private capital investment.

                           transit new starts

    Mr. Wolf. The 3(j) report, or the Report on Funding Levels 
and Allocations of Funds for Transit New Starts, is to provide 
the Department's recommendations to Congress for allocations of 
funds to be made available under Section 3 of the Federal 
Transit Act for construction of new fixed guideway systems and 
extensions. This report provides critical information in 
support of the budget recommendations. Last year, the final 
printed copy of the 1996 3(j) report was delivered to the 
Committee on September 23, one week after the Committee 
reported the conference report accompanying the 1997 Act. It 
would be helpful, Mr. Secretary, if you could assure the 
Committee today that this year's 3(j) report will be 
transmitted to the Committee before April 1 so that the 
Committee can fully consider the Department's judgment of the 
allocation of Section 3 new start funds.
    Mr. Slater. Mr. Chairman, you have that assurance.

                         transit formula grants

    Mr. Wolf. Thank you. A major change in this budget is the 
consolidation of all formula driven programs under the formula 
grant program. Rail modernization, buses and bus facilities and 
other programs are to be merged and distributed by formula to 
allow greater flexibility and predictability at the local 
level. In addition, the Department is proposing to expand the 
use of capital for preventative maintenance costs. Departmental 
officials are trumpeting this proposal as good for the program 
and good for the properties. Yet just last week, the Executive 
Director of SEPTA stated before the Committee that the 
structural changes recommended by the Department are not good 
news to SEPTA or the larger transit properties. He also 
suggested that in the future it may well pose a hardship which 
would force service reductions. APTA seems to share these 
concerns as well, advocating the continuation of the current 
program structure. What do you tell transit properties like 
Philadelphia, New York and others?
    [The information follows:]

    In developing the fiscal year (FY) 1998 budget and 
Intermodal Surface Transportation Efficiency Act (ISTEA) 
reauthorization proposals, the Administration has proposed 
measures that maintain funding and ensure that transit agencies 
can use their federal resources for locally identified needs.
    President Clinton's FY 1998 budget would provide Federal 
Transit Administration (FTA) grantees with increased discretion 
over the use of federal transit funding. The proposed FY 1998 
budget expands further the local decision making provisions in 
ISTEA by merging the rail modernization and urbanized area 
formula programs. This will allow transit operators greater 
discretion of the use of these funds. For an agency like SEPTA, 
the increased discretion would move decisions about 
expenditures for bus purchases, rail modernization and other 
activities from Washington, D.C., to the local level.
    The increased investment discretion would be accompanied by 
increased funding. The merging of the Bus Discretionary and 
Fixed Guideway Modernization programs into Formula Programs 
will increase formula program funding from $2.1 billion in FY 
1997 to 3.3 billion FY 1998. The combination of increased 
discretion and stable funding is a demonstrable improvement 
over current programs. Transit agencies of all sizes will 
benefit from these measures.
    The proposed capitalization of selected activities 
currently classified as operating expenses will be highly 
beneficial to transit providers like SEPTA in urbanized areas 
over 200,000 in population. Expanding the capital expenditure 
definition to include preventive maintenance will parallel the 
Federal highway program and mitigate the impact of eliminating 
Federal operating assistance to areas over 200,000 in 
population. FTA analysis indicates that with the capital 
redefinition, the amount of expenditures SEPTA can reallocate 
from operating to capital is eight time greater than its recent 
federal operating assistance.
    In short, the combination of increased flexibility, 
increased funding, and the capitalization of preventive 
maintenance will definitely both improve service for transit 
customers and the condition of transit providers.

                         access to jobs program

    Mr. Wolf. The budget requests $100 million for a new 
discretionary grant program to states and localities to support 
new or modified service for low-income individuals, including 
former welfare recipients. Why is another categorical grant 
program necessary when formula funds are available to all 
transit districts today to fund these types of services?
    [The information follows:]


[Pages 753 - 754--The official Committee record contains additional material here.]


    Mr. Wolf. If, as the Department suggests, it wishes to 
provide maximum flexibility for transit authorities and allow 
them to prioritize and target funds to their most important 
needs, doesn't a special set-aside run counter to that 
philosophy?
    [The information follows:]


    In general, transportation decision making at the local 
level is supported by the Department. But in instances where 
strong national interests exist, the federal transit and 
highway program does include categorical programs like Access 
to Jobs. The Congestion Mitigation Air Quality (CMAQ) program 
reflects a strong national commitment to solve air quality 
problems; the National Highway System programs seek to maintain 
highways most critical to interstate commerce; and the Section 
5311 program supports a national emphasis on providing special 
transportation services to elderly and disabled individuals. 
The Access to Jobs program likewise reflects a national 
priority for the next several years to put in place 
transportation services that will supplement our existing 
transit services and make it possible to help people move from 
welfare to work in the time frame required by federal law.
    It also should be noted that the Access to Jobs program 
affords localities great flexibility in determining the best 
solutions, and provides funding flexibility even beyond that of 
our transit formula program. Funding may be used for 
identifying needs and planning strategies, linking 
transportation and welfare planning, coordinating local 
services to maximize efficiency, operating and capital start-up 
costs for new and supplementary transit services, employer-
provided transportation services, support facilities like day 
care and employment services at transit stations, and the 
development of long-term financing strategies. Locally 
determined collaborations may include transit agencies, non-
profit social service organizations, local neighborhood or 
community-based transportation ventures, private for-profit 
operators, ride-sharing organizations, employer transportation 
management associations, and other entities.
    Therefore, the Access to Jobs initiative, similar to other 
programs currently funded under the Intermodal Surface 
Transportation Efficiency Act, reflects a strong national 
purpose while at the same time allowing localities maximum 
flexibility in deciding how to respond.

                           transit new starts

    Mr. Wolf. With the need to balance the budget, funds for 
new rail starts certainly will be cut back. The budget you 
present today reduces the funding that we talked about earlier. 
This is Mr. Pastor's point, but how can we be assured that 
existing projects aren't penalized by making new commitments to 
marginally cost-effective big-ticket projects?
    Mr. Slater. We have to make a commitment that that will not 
be the case. I mean, a lot of states and localities have taken 
steps towards the full construction of projects that are 
already in the pipeline. And it would be, frankly, 
unconscionable for us to not honor those commitments.

            bart agreement on san francisco airport project

    Mr. Wolf. Okay, let me cover BART, then, and see if we can 
get you on the record. Maybe you can elaborate a little bit. 
The Committee's concerned with regard to the proposed full 
funding grant agreement for the BART extension to the San 
Francisco Airport, which will require three-quarters of a 
billion federal dollars, concerned because it has a cost 
effectiveness index of at least $20 per new trip and calls for 
annual outyear appropriations of over $100 million. In 1995, 
the Department indicated it was giving serious consideration to 
providing a full funding agreement to a smaller operable 
segment at that time with further segments to be considered at 
a later date. Under the current circumstances, isn't that a 
reasonable approach to take with projects that would consume 
more than their fair share of the scarce resources? And while I 
don't question whether that is a good project or not, but----
    Mr. Slater. The question actually relates to, I guess, a 
question that was asked earlier dealing with the fact that of 
the new starts a considerable amount are to be found in the 
State of California.
    Mr. Wolf. In fact, the top three recipients, California, 
New Jersey and Oregon.
    Mr. Slater. Right. The only thing I can offer in response 
is that with California you do have the largest state in the 
nation and you have a state that has traditionally been 
dependent on the automobile. These initiatives are designed to 
wean them of that dependency. They all emanate from efforts at 
the state and local level. We just join as a good partner in 
that regard.
    As it relates to New Jersey, we are talking there about I 
think the most congested state overall in the country. With 
Oregon, we probably have there some of the most innovative 
examples of how decision makers are trying to take into account 
how transportation impacts the environment. And so you have 
those factors, but I say that only to also hasten to say that I 
think your point is well taken that we as a national Department 
of Transportation cannot make decisions where some states 
benefit and others equally as appropriateare not given an 
opportunity to compete for these resources. And that is something that 
I will look at and deal with over the course of my tenure as Secretary 
of Transportation.
    Mr. Wolf. Well, I hope so, because I am really concerned 
that we are squeezing everybody else out. I am not objecting, 
frankly, to the merits of the project. And before Mr. Sabo came 
in, I had talked about the three top recipient states, 
California, New Jersey and Oregon, together received more than 
half of the funds in the program during the period. And in the 
1998 budget for new starts it is the same. Of the $634 million 
proposed for the program, California is to receive almost one-
third of the funding, New Jersey 13 percent and Oregon ten. And 
you have all the growth areas and you have Minnesota and you 
have all the other places, and it is just a squeeze.

                        bart financing agreement

    BART, as you know, this Committee, the Senate 
Appropriations Committee and the Senate Commerce Committee have 
had a number of questions related to the financing plan of the 
proposed BART extension to the San Francisco Airport. Further, 
I understand that the Chairman of the Senate Appropriations 
Committee has asked the Federal Transit Administration to 
refrain from issuing a full funding grant agreement for the 
project until he has had an opportunity to review the issues. 
When does the Department anticipate the awarding of the full 
funding grant agreement for the project extending BART to the 
airport?
    Mr. Slater. I don't know that we have a date certain on 
that matter. We are moving forward with our discussions with 
the appropriate parties so as to ensure that all of the 
policies, procedures and a demonstration of will at the state 
and local level are in place before we make that kind of a 
decision, but we are moving forward. Again, I don't know 
whether there is a date certain as to when we desire to have 
that work concluded [there will be a need to meet construction 
commitment timetables].
    Mr. Wolf. It would be helpful, because of this issue that 
we talked about earlier, if you could be kind enough to keep 
the Committee informed.
    Mr. Slater. I will.
    Mr. Wolf. And before you make a full funding agreement----
    Mr. Slater. Sure. That is a legitimate--clearly a 
legitimate request. And we will comply with that.
    Mr. Wolf. I understand that the parties involved in the 
financing of the BART project have been meeting over the last 
couple of weeks and they are hopeful that they can reach 
agreement very soon. Mr. Secretary, would you agree that while 
the parties are negotiating their differences, it would be 
premature to issue a full funding grant agreement, 
notwithstanding the request of the Chairman of the Senate 
Appropriations Committee?
    [The information follows:]

    FTA believes that, as required in both the FY 1996 and FY 
1997 DOT appropriations acts, we have provided a full 
resolution of issues regarding this project. Moreover, in a 
joint letter dated February 11, 1997, the FTA and FAA responded 
to the concerns expressed by Chairman Wolf in his letter of 
January 5, 1997. Also, it is our understanding that BART, the 
airlines, and the San Francisco Airport have reached agreement 
on all issues that had been outstanding.
    These developments notwithstanding, FTA will delay issuing 
an FFGA until confirmation is received from the Appropriations 
Committees that their concerns have been addressed. The 
Department hopes the FFGA can be executed as soon as possible 
so that construction can start, in line with the construction 
of the international terminal and our financing assumptions. 
Delays in construction will likely lead to cost escalation.

    Mr. Wolf. Would you also agree that once the parties have 
reached agreement, that FTA, FAA and Congress will need to 
fully review the financing arrangement to ensure that it is 
consistent with federal transportation law and regulation, 
particularly as they relate to revenue diversion?
    [The information follows:]

    No. The Federal Aviation Adminstration (FAA) has determined 
that it is consistent with federal law to use airport revenues 
for construction of the Bay Area Rapid Transit (BART) extension 
and for certain association facilities, since the station and 
the facilities will be owned by the airport, will be 
constructed to service--and will be used by--primarily airport 
passengers, and will be directly and substantially related to 
the air transportation of passengers. This determination was 
explained in the FAA's October 18, 1996, letter to the director 
of the airport. Unless the financing arrangement is consistent 
with this determination, it would not be necessary for the FAA 
to consider this issue again.
    The issue of appropriate levels of rental payments by 
public transit facilities to airport sponsors, for use of 
airport property and including the issues of no-rent or below 
fair rental value leases, is the subject of pending policy 
guidance. FAA Docket No. 28472, 61 Federal Register 66735, 
December 18, 1996. The final lease under negotiation between 
the City of San Francisco, BART, and the air carriers serving 
the airport contemplates substantial rental payments. It would 
not be necessary for the FAA to consider the issue of public 
transit rental payments to the airport should the parties 
concerned agree to such a rental structure for BART.
    Finally, a premium surcharge collected by BART at the 
airport station is only conceptual at this time. The revenue 
collected by a surcharge would be part of the BART fare and 
would not be handled by or available to the City or the 
airport. Accordingly, it would not be considered airport 
revenue for purposes of the revenue use grant assurance. 
Therefore, it would not be necessary for the FAA to consider 
whether the imposition of such a surcharge constituted airport 
revenue diversion.

    Mr. Wolf. Can you tell me why supporters of a one-stop 
terminal have not been invited to participate in recent 
meetings with other critics of the BART project to reconcile 
the differences among all the parties?
    [The information follows:]

    That alternative was fully examined during the planning 
process and input was received from all interested parties. The 
one-stop terminal alternative raised major environmental 
concerns, including impact on endangered species.

                           los angeles metro

    Mr. Wolf. The committee and a lot of other people, I think, 
continue to be troubled about the ability of the Los Angeles 
County Metropolitan Transportation Authority to manage its 
construction of the Metro Red Line in the face of escalating 
costs, significant schedule delays, criminal prosecutions and 
investigations, difficulties in engineering and issues of 
organizational management, including the recent resignation of 
both the executive officer and the executive officer for 
construction. Insufficient sales tax revenues, a court order 
consent decree for additional bus service and cost overruns may 
lead to operational deficits of over $1 billion.
    It appears likely that MTA may be unable to meet its 
obligations under the full funding agreement. The mayor of the 
city favors a bus alternative. Other political leaders who 
write seem to take different positions. There is a lack of a 
consensus and more than half of the residents in a Los Angeles 
Times poll which I saw indicated that they opposed building the 
subway, and nearly the same number believed that it is 
unrealistic to expect the subway system will ever reach the 
people who need it. Today the Eastside extension is two years 
and $70 million over budget. The Mid-City extension is over 
seven years and nearly $200 million over budget and it is going 
to escalate. Is it time to renegotiate the full funding 
agreement, or would it be a good idea to get all the parties 
together--because LA needs it. I mean, clearly Los Angeles has 
a transportation problem. I noted the Washington D.C. area is 
second worst congested area in the nation. I made the comment 
last week that the Houston busway system has been so 
successful. I commented at the hearing that LA should look at 
something like a busway. But would it be a good idea for the 
Department to get Mr. Dixon and Mr. Torres and the mayor and 
all the parties together to see if there was a way that the 
full funding thing could be restructured?
    Mr. Slater. Let me just say that I don't think that that 
kind of proposal can be summarily dismissed. I think it does 
have some merit. I will say this, though, that the Federal 
Transit Administration, has increased its oversight of the 
project considerably. And we have reduced the amount of money 
going into the project pending a better understanding of where 
the parties responsible for the project want to go with it. So 
in a sense we are doing some of what your proposal suggests. 
And short of following through on the proposal what I would 
like to do is to get a better understanding of exactly what FTA 
is doing, maybe take into account some of the things that we 
have been able to do with our oversight of the Central Artery 
Project, see if some of those initiatives might be applicable 
in this instance and make a determination as to whether 
something else is necessary. But I think bringing the parties 
together clearly demonstrates the fact that we understand that 
there is a lack of consensus here and we are talking about a 
multi-billion dollar investment as an appropriate thing to do 
as well.
    Mr. Wolf. I think that would be a good idea. And if your 
Department took the leadership, brought everybody back and just 
did that, I think you could resolve the issue, because LA 
clearly has a major transportation problem. The problem is they 
are having so many varying problems. And the last question, 
then, I will really recognize Mr. DeLay.

                     los angeles revenue diversion

    Mr. Secretary, the Committee has been concerned about 
repeated attempts by the City of Los Angeles to illegally 
divert airport revenue for non-airport uses. The conferees were 
troubled by reports that they directed the Federal Transit 
Administration not to award funds made available for the Red 
Line project unless the Inspector General certified that no 
illegal revenue diversion had occurred. There has been 
proceedings against it. You are open to the possibility of 
withholding----
    Mr. Slater. Oh, yes.
    Mr. Wolf [continuing]. Till this issue has been resolved? 
Fine. Mr. DeLay.

                             houston metro

    Mr. DeLay. Mr. Chairman, thank you. And I apologize to you, 
Mr. Chairman, and Mr. Sabo, for blowing in here at the very 
last hour. My duties in leadership preclude my being here as 
much as I would like to be, because I really enjoy this 
committee. And, Mr. Secretary, congratulations to you.
    Mr. Slater. Thank you, Congressman.
    Mr. DeLay. I haven't seen you since you have been confirmed 
and sworn in, and I know you will do a good job and am looking 
forward to working with you.
    Mr. Slater. Thank you, sir. Same here.
    Mr. DeLay. Since we are talking about Houston Metro and 
FTA, you know, we have worked together in the past in your 
previous life before you were Secretary in many different 
areas, but particularly in the creative and successful approach 
that Houston Metro has adopted for meeting our needs in the 
Houston area. I believe that Houston's bus plan is a model, as 
well as our intelligent vehicle system and the whole design of 
our transportation system. I was very disturbed to learn that 
the FTA was withholding federal grant funds from Houston Metro 
because of the federal court injunction prohibiting Metrofrom 
using its federally approved Disadvantaged Business Enterprise program. 
Mr. Secretary, Houston Metro is caught between two branches of the 
federal government telling it to do two entirely different things. Why 
has the FTA not taken the difficult situation in which Houston Metro 
finds itself into account and why haven't they offered some relief from 
the requirements which the federal court says that Metro can't meet, 
such as granting a waiver for this very special circumstance?
    Mr. Slater. Let me just say that I know that the FTA under 
the leadership of Gordon Linton is very much concerned about 
the action it has had to take as well. This is a matter on 
which we are currently in discussions, and I just want you to 
know that we all recognize the burden that it is placing on the 
Houston transit system as well as the entire transportation 
system of Houston. And it is my hope that working with all of 
the parties we will be able to come to some conclusion about 
how we might be able to proceed, though still recognize the 
legitimate issues that support the decision that has been made 
by the Federal Transit Administration. And I think we can work 
on this matter, and I look forward to working with you on it.
    Mr. DeLay. I appreciate that.
    Mr. Slater. Thank you, sir.
    Mr. DeLay. Why can't the FTA--continue to fund Metro's 
projects while the law suit----
    Mr. Slater. Underway?
    Mr. DeLay [continuing]. Over the constitutionality of the 
DBE program is being litigated? After all, Metro's 
noncompliance with DOT's DBE requirements is not due to any 
fault of it----
    Mr. Slater. Sure.
    Mr. DeLay [continuing]. Of Metro.
    Mr. Slater. Sure. Well, let me just say that I think you 
raise an important issue, and it is one that we need to take 
into account. I will say that under the federal highway program 
as we dealt with states there was the DBE requirement, but 
because it dealt with the overall program and we were able to 
make a judgment about compliance at the end of the fiscal year, 
we had a little more flexibility than the transit 
administration believes it has at this point in time. But 
again, we are discussing the matter and would welcome an 
opportunity to work with you on that.
    Mr. DeLay. I look forward to that. I would just ask one 
more question. Maybe one of your legal staff--I know the bind 
that FTA is in, because they feel that they have laws that they 
are supposed to uphold, but at the same time the courts are 
saying something different.
    Mr. Slater. Right.
    Mr. DeLay. Could the FTA get some sort of opinion from the 
Attorney General or their legal staff that would get them maybe 
out of this bind that they find themselves in?
    Mr. Slater. Let me just say that we plan to explore that 
and other ways of dealing with this issue in the short term. I 
have mentioned that one of my goals during my tenure as 
Secretary is to bring a common sense approach to our business, 
and if ever there was a situation crying out for that kind of 
approach, I think it is this one. So hopefully we will be able 
to resolve the matter in a way that allows us to move forward.

                     INTERNATIONAL TRADE CORRIDORS

    Mr. DeLay. Well, I am encouraged by that and I appreciate 
it. Moving to one other subject, and I don't want to belabor 
these issues, but I would like to talk a little bit about the 
International Trade Corridors, particularly something a little 
parochial to me, I-69.
    Mr. Slater. Okay.
    Mr. DeLay. The emergence of the U.S. and Canada and Mexico 
as the world's largest trade zone has represented incredible 
growth and opportunities for all three countries and promises 
to continue doing so in the years ahead. We have seen a huge 
increase in growth in Houston as a result of NAFTA and the 
opportunities in Houston, particularly coming out of Mexico. 
And future projections estimate a 93 percent increase in trade 
between U.S. and Mexico by the year 2000. Similarly, trade 
between U.S. and Canada is expected to climb 21 percent. I 
believe it is essential that we fund an infrastructure to 
support that kind of trade. Now I have advocated the creation 
of a new category in ISTEA, international trade corridors, with 
dedicated funding for North/South national benefits. And I 
believe that I-69 would be a perfect candidate for funding 
under such a category. I am very pleased to see that the 
Administration's reauthorization proposal has a new program for 
border crossings and trade corridors. Could you elaborate on 
that program and specifically on whether I-69 would be included 
in such a program?
    Mr. Slater. Sure. What we are proposing, Congressman, is to 
actually follow up on the two reports that we were required to 
do under ISTEA, to deal with questions of whether we might need 
an independent funding source for border infrastructure 
activities and also to study the whole question of the demand 
and who should bear the relative responsibilities for meeting 
that demand. Our program is designed to further that effort. We 
have what we are calling a trade corridor and border crossing 
initiative. It will be funded by approximately $45 to $50 
million dollars per year. It is a discretionary program. Much 
of the focus will be on planning, whether planning dealing with 
needs at the border or planning as relates to the trade 
corridors.
    We are also hopeful that we can use our innovative 
financing initiatives to actually start to put in place a 
funding mechanism for any project that might be identified. As 
it relates to I-69 in particular, let me just say that that is 
also a project that I have some personal association with as 
far as that it travels through the delta region of the United 
States, which is my home region. And I have also traveled that 
portion of it that begins in Michigan at Port Huron crossing 
over the Bluewater Bridge into Canada and that comes down to 
Indianapolis, I believe.
    And then we have the Federal Highway Administration working 
with a number of states that have come together, including 
Texas and Arkansas, Mississippi, Tennessee and others, to 
continue to study the economic feasibility of the route, which 
was determined to be economically feasible, and then secondly 
to deal with the issue of route location. That study is 
currently underway. And I am pleased that we have been able to 
provide seed money for those initiatives. I think that this 
effort is moving along very well. I do believe that it is 
important that we move beyond the issue of route location soon 
to a discussion of how such a project of this type might be 
funded. And I think that is going to prove to be quite 
challenging.

                     NEXTEA HIGHWAY FUNDING FORMULA

    Mr. DeLay. No doubt. And along those lines, and I will 
finish with this, Mr. Chairman, I have a bill I am sure youare 
aware of called Step 21. I noticed in an article that ran September 17 
of 1996, the Associated Press wrote the following about your thoughts 
on highway funding formulas, and I quote, ``there is just going to have 
to be some give and take on the part of all the states to make 
distribution of highway funds more equitable.'' How does the 
Administration's ISTEA reauthorization proposal attempt to make 
formulas more equitable?
    Mr. Slater. First of all let me say that I did make that 
statement and I stand by that statement to this day. And I do 
think that it is important that there be the give and take. The 
Administration, as a part of our ISTEA proposal, will actually 
have a funding proposal. And I sort of chuckle a bit because we 
have been encouraged by some to just stay out of it because 
this was a matter of contentious debate, if you will, in 1991, 
and I am sure that will be the case this time.
    Mr. DeLay. It has already started.
    Mr. Slater. I know. But I think that that would be to 
abdicate some responsibility that we have to at least put on 
the table our best thinking about a formula structure and then 
to engage with the Congress that must dispose of this issue 
with the back and forth that hopefully will allow us to come to 
some common ground on it. We believe that there has to be 
equity and fairness manifested in the formula, that the formula 
has to deal with current data, meaning 1990 census data, and 
even more so if that is possible, that there has to be a 
sensitivity to the transition necessary for some states that 
might have been significant, if you will, donee states in the 
past that may be affected somewhat by a new proposal. And also 
that ultimately some of those national considerations that were 
taken into account, that led to the donor/donee scenario, that 
where appropriate those national interests remain on the table 
and that the case be made in a way that states will understand 
that there is a place for those kinds of considerations. So we 
are going to be serious about it and look forward to working 
with you and other members of the Committee and the Congress as 
a whole on this issue.
    Mr. DeLay. Okay, thank you, Mr. Chairman. Thank you, Mr. 
Secretary.
    Mr. Slater. Thank you, sir.

                      ISTEA REAUTHORIZATION GOALS

    Mr. Wolf. Mr. Secretary, what are the Department's most 
important goals for the reauthorization of ISTEA?
    [The information follows:]

    The Department's most important goals for the 
reauthorization of the Intermodal Surface Transportation 
Efficiency Act (ISTEA) are to preserve and improve America's 
highways, bridges, transit systems, and railroads; reduce the 
toll in lives and health care costs from surface transportation 
crashes, especially motor vehicle crashes; enhance America's 
environment; and support mobility and economic prosperity. The 
Department is proposing a $174 billion investment within the 
context of balancing the budget.
    Overall, authorizations for core highway programs increase 
by 30 percent over ISTEA levels. The Department is putting a 
much stronger emphasis on safety by increasing funding and 
allowing state and local officials more flexibility in the use 
of funds. The Department also is proposing an increase in 
funding for the Congestion Mitigation and Air Quality 
Improvement Program by 30 percent and Transportation 
Enhancements funding by more than 25 percent--both of which 
contribute to protecting the environment. To move people from 
welfare to work, the Department is proposing investing $600 
million to support flexible, innovative transportation 
alternatives and increasing incentives for states and 
localities to provide job training for federally-funded 
technology and construction projects.

    Mr. Wolf. When will this important legislation be 
submitted?
    [The information follows:]

    It was submitted March 13, 1997.

             ISTEA HIGHWAY FUNDING FORMULA PROPOSED CHANGES

    Mr. Wolf. In testimony before the Committee, the GAO 
indicated that the existing formula for distributing highway 
funding is irrelevant and that outdated factors underlie the 
calculations for certain highway programs. Others call the 
formula unfair, inequitable and incomprehensible. What changes 
is the Administration proposing in the distribution of highway 
funds?
    [The information follows:]

[Pages 764 - 765--The official Committee record contains additional material here.]


              Highway Formula And Donor/Donee State Issue

    Mr. Wolf. The current allocation of highway funds results 
in the distribution of funds as a percent of contributions to 
the trust fund from 83 percent to 707 percent. With respect to 
the equity issue, what specific changes is the Department 
seeking its reauthorization proposal to address the donor/donee 
state issue?
    [The information follows:]

[Pages 767 - 768--The official Committee record contains additional material here.]


                             INTERMODALISM

    Mr. Wolf. How does the reauthorization proposal address the 
conflict between continuing to fund modally-based programs 
while attempting to foster an intermodal approach to 
transportation decisionmaking and financing?
    [The information follows:]

    Although the Department's funding programs continue to be 
modally-based, they are significantly adaptable to local needs. 
To a much greater extent than previous surface transportation 
legislation, the Intermodal Surface Transportation Efficiency 
Act (ISTEA) allows state and metropolitan areas to spend their 
apportioned federal funds based on thorough and inclusive 
planning rather than restrictive program categories. 
Specifically, almost 60 percent of the funds authorized by 
ISTEA have been available, at the initiative of State and local 
officials, for almost any type of surface transportation 
projects.
    The Administration's proposal for reauthorization--the 
National Economic Crossroads Transportation Efficiency Act, or 
NEXTEA--continues these ISTEA programs which have given State 
and local officials the freedom to spend Federal dollars on an 
expanded set of transportation solutions.
    NEXTEA would retain the enhanced flexibility and 
eligibility provisions of three programs introduced by ISTEA: 
the National Highway System (NHS), the Surface Transportation 
Program (STP) and the Congestion Mitigation and Air Quality 
(CMAQ) program. Through these programs, $3 billion in five 
years has been transferred at local request from the Federal 
Highway Administration (FHWA) to the Federal Transit 
Administration (FTA) for delivery to its grantees. Without any 
administrative transfers, however, the STP and CMAQ programs 
support many projects that directly benefit multiple 
transportation modes. In addition to preserving this 
flexibility, NEXTEA would extend elibility within certain 
programs to intercity bus and rail service and publicly owned 
freight rail service.

                              DRUG TESTING

    Mr. Wolf. I just have a few other questions now and then we 
will submit a lot for the record, because you have been here 
all day.
    Mr. Slater. Yes.
    Mr. Wolf. This past November voter initiatives in 
California and Arizona permitted the medical use of marijuana 
in Prop 214 and Prop 200, respectively. How will these state 
initiatives affect random and post-accident drug testing of 
safety-sensitive transportation workers, such as pilots or 
railroad engineers and bus drivers?
    Mr. Slater. They will not affect them at all, because 
safety is our number one priority and there is no way even for 
medical purposes for us to allow an individual to use mind 
altering drugs when they are in sensitive positions.
    Mr. Wolf. So they can not use this as a defense?
    Mr. Slater. No.

      EMERGENCY SUPPLEMENTAL REQUEST FOR EMERGENCY RELIEF PROGRAM

    Mr. Wolf. A question with regard to supplemental. The 
budget request does not include an emergency supplemental 
request for the floods that hit the Pacific Northwest and 
California. The State of California is seeking $381 million in 
supplemental emergency relief funding to fund the federal share 
of repairs needed as a result of the floods. And then also as a 
result of the floods that are literally taking place as we sit 
here. When does the Administration anticipate submitting a 
supplemental request for emergency relief? Doyou have any 
indication of what the amount will be?
    Mr. Slater. I don't have any indication of the amount, 
because that is changing based on new demands, Ohio, Kentucky, 
West Virginia and others on line now, Arkansas, Mississippi and 
others impacted by the storms, and then you mentioned the 
Pacific Northwest, Oregon, Washington State and California, as 
well. As I said, I don't know what the amount will be, but I do 
know that the Administration will be coming forth very soon 
with a proposal. And, you know, hopefully we will be able to, 
as in the past, work with the Congress to come up with an 
appropriate number to help us to respond to our fellow 
Americans in need.
    Mr. Wolf. Well, we will submit the rest of the questions 
for the record.
    ISTEA sets aside $100 million annually for emergency relief 
activities of the Federal Highway Administration, yet average 
annual requirements have greatly exceeded this amount. Why did 
the Administration not seek to increase the set-aside as part 
of its reauthorization proposal, thus reducing the need for 
emergency supplemental requests?
    [The information follows:]

    It is impossible to predict the number of disasters that 
will occur in the next few years and what their impact on 
Federal-aid highways and Federal roads will be. A higher base 
authorization level for the Emergency Relief program could 
eliminate the need for supplemental appropriations, but could 
also result in setting aside more funds than the program needs, 
thus reducing funds available for the formula Federal-aid 
program. For the November 1996 and January-February 1997 
flooding, on March 19, 1997, the Administration submitted a 
supplemental request for $291 million, of which $15 million in 
contingency funding for anticipated emergency requirements in 
the mid-western and mid-Atlantic states. The recommended 
approach in our reauthorization proposal is to continue the 
current $100 million authorization level for a base program 
with any needed additional funding coming from the Emergency 
Requirements for Natural Disasters account proposed for FY 
1998. The Department will have access to this proposed 
contingency fund once FHWA Emergency Relief funds have been 
obligated, and a Presidential decision has been made to make 
additional funds available.

    SUPPLEMENTAL REQUEST FOR FEDERAL-AID OBLIGATION AUTHORITY ERROR

    Mr. Wolf. The budget request includes a supplemental 
request of $318 million for the Federal-aid highway program to 
distribute to those states that received reduced apportionment 
and obligational authority in fiscal year 1997 due to an error 
in the highway trust fund income statements. The Administration 
chose to take an administrative action to reduce the 
apportionments, not Congress. In fact, the Congress 
specifically addressed, and rejected, the notion of correcting 
the income statements. Why should Congress pay for the 
Administration's mistake?
    [The information follows:]

    On December 24, 1996, the Administration announced that the 
Secretary of the Treasury had directed the Financial Management 
Service in his Department to correct the clerical error in the 
calculation of the fiscal years 1994 and 1995 Highway Trust 
Fund (HTF) Income Statements. This decision was reached by the 
Secretary of the Treasury after an extensive review of the 
facts, legal authorities, and equities relevant to this matter. 
He determined that a correction of the error best maintains 
trust fund integrity and is most consistent with the law.
    Once the error was corrected, the Department of 
Transportation was bound to make apportionments to the States 
based on the new data reported by Treasury. Our lack of 
discretion on this matter was confirmed by my General Counsel 
and is consistent with a position of the Comptroller General.
    In making the correction and using the revised Treasury 
data for apportionments, we fully understood that it would 
result in a shift of approximately $318 million in fiscal year 
(FY) 1997 federal-aid highway obligation limitation among the 
States. Indeed, it was in part this potential impact which the 
Congress attempted to address in a failed legislative effort 
during consideration of the FY 1997 Department of 
Transportation (DOT) and Related Agencies Appropriations Act. 
However, the Congress considered the issue before the Treasury 
Department ruled on this matter. In recognition of this changed 
circumstance and fairness to all States, the Administration 
proposed an amendment to the FY 1997 DOT Appropriations Act to 
increase the obligation limitation for States that received a 
lower limitation than expected because of the Treasury 
Department decision to correct the error.

    Mr. Wolf. As you know, Mr. Secretary, Congress enacted in 
fiscal year 1997 a federal-aid highway obligation limitation of 
$18 billion, an historic level, and $315 million over the 
Administration's 1997 request. Given this level, why then is 
supplemental for federal-aid highways necessary at all?
    [The information follows:]

    While we acknowledge the historically high fiscal year (FY) 
1997 federal-aid obligation limitation, the rationale for a 
supplemental appropriation is based on the proportionate 
distribution of obligation limitation among the states, not the 
overall level of funding. For example, following Treasury's 
correction, Virginia received approximately $377 million in FY 
1997 obligation limitation. If this supplemental appropriation 
is approved, Virginia will receive approximately $14 million in 
additional federal-aid obligation authority for FY 1997, an 
amount the State would have received in FY 1997 had the 
Treasury correction not occurred.

                          funding alternatives

    Mr. Wolf. In total, the Administration has requested an 
additional $2.8 billion for domestic spending in fiscal year 
1997, to be offset from unspecified defense reductions. What 
alternatives--other than proposing an additional $318 million 
in new obligational authority--did you consider, and why were 
those options rejected?
    [The information follows:]

    The option of not proposing the $318 million supplemental 
was considered and rejected. This option was rejected because 
it was decided that the fairest course of action to take 
regarding the clerical error made in recording the Highway 
Trust Fund receipts in 1994 was to request the amount necessary 
to make those states that had their 1997 limitation reduced 
whole. State highway plans assumed the higher obligation 
levels.

             disadvantaged business enterprise requirements

    Mr. Wolf. Mr. Secretary, it is my understanding that 
several Department of Transportation grant recipients have been 
sued for trying to satisfy the Department's disadvantaged 
business enterprise (DBE) requirements. In particular, the 
transit authorities in Los Angeles and Houston have had the 
constitutionality of their programs challenged, and Houston is 
under an injunction prohibiting it from using its federally-
approved program. Mr. Secretary, how is the Department 
responding to these challenges?
    [The information follows:]

    The Department has responded to these challenges by 
defending, through the Department of Justice, the 
constitutionality of the DBE program. If a state or local 
government has been sued over the Department's DBE program and 
the federal government has not been made a party to the case, 
the United States has sought intervention or amicus 
participation in the litigation. In the Los Angeles matter, the 
United States filed an amicus brief in the California Court of 
Appeals that urged dismissal of the case on standing grounds, 
an argument which the court accepted, leading to dismissal of 
the case. In the Houston transit authority case, the federal 
court denied the United States' motion to intervene, but 
permitted the government to file another motion to intervene 
which is pending before the court. If intervention were 
granted, we would defend the DBE program and otherwise seek to 
limit the effect of the court's injunction.

    Mr. Wolf. Does the Department plan to offer any relief from 
its DBE requirements for those grantees who are judicially 
precluded from meeting those requirements?
    [The information follows:]

    The Department's statutes and DBE regulations require 
grantees to have an acceptable DBE program as a condition of 
receiving federal funds. Where a court precludes the grantee 
from meeting those requirements, the Department will attempt to 
work with those grantees in order to assist them in defending 
the DBE program, in obtaining relief from or modification of an 
injunction imposed by the court, or in achieving a settlement 
or other resolution of the matter.

    Mr. Wolf. It is my understanding that other federal 
agencies have accepted race and gender-neutral programs. Do you 
have any plans to consider such programs, which seem acceptable 
to the courts?
    [The information follows:]

    We are intending to revise our regulations in order to give 
grantees more flexibility in achieving the overall goals of the 
DBE program. Such flexibility would include the use of race and 
gender-neutral programs alone or in combination with other 
measures so long as the overall goals and objectives of the 
program are achieved.

    Mr. Wolf. Along the same lines, are you reforming your 
requirements to meet the constraints imposed by the courts, and 
if so, when will you have new requirements in place?
    [The information follows:]

    We are revising our DBE regulations in order to respond to 
the Adarand decision and expect to have these regulations 
published for comment in the Federal Register in the near 
future. In addition, we have participated in the Department of 
Justice's government-wide review, based upon the Adarand 
decision, of all federal agency programs that may use or rely 
upon race-conscious measures. As a result, we are in the 
process of making a number of changes in the programs covered 
by this review.

                        research and technology

    Mr. Wolf. The Director of Technology Deployment within the 
Office of the Secretary formerly served as a focal point for 
coordinating research, but that position has been vacant since 
May 1996. This past August, the Department announced that the 
RSPA Associate Administrator for Research, Technology and 
Training would assume the Director's coordinating function on 
an interim basis. When will the position be filled, or has the 
Department yet to decide whether the position will be retained 
at all?
    [The information follows:]

    In mid-1996, the Deputy Secretary and the Research and 
Special Programs Administrator initiated a major restructuring 
of the Department's research and technology planning and 
coordinating process. The duties formerly performed by the 
Director of Technology Deployment have been reassigned to 
RSPA's Associate Administrator for Research, Technology and 
Analysis as a key component of that restructuring. The RSPA 
Associate Administrator now serves as the Department's focal 
point on science and technology issues in support of the Deputy 
Secretary. The Department orders delegating this authority are 
being revised to formalize this arrangement.

             rspa's role as department's strategic planner

    Mr. Wolf. A recent GAO report noted that although RSPA was 
established to foster cross-cutting research, it lacks the 
resources and authority to act as the Department's strategic 
planner for surface transportation research. What actions are 
you able to take to enhance RSPA's ability to act as the 
Department's strategic planner?
    [The information follows:]

    Under the direction of the Deputy Secretary, the Research 
and Special Programs Administration (RSPA) has already begun to 
revise the Department's research planning and management 
structure to address issues raised in the GAO review. The new 
approach is modeled after successful approaches used at the 
Department of Defense, NASA, and other Federal agencies. RSPA's 
fiscal year 1998 budget request was also restructured to 
provide needed funding support for the revised program.
    The Department is seeking to institutionalize this process 
and has included in the National Economic Crossroads 
Transportation Efficiency Act (NEXTEA) a proposal for a new 
chapter in Title 49 that would be entitled ``Research and 
Development.'' An important part of the proposal would be the 
formal recognition of a strategic planning process for 
transportation R&D that coordinates research priorities both 
within the Department and across the federal government.
    The Department is seeking additional resources for RSPS's 
intermodal research and development program in fiscal year 
1988. Currently RSPA, through its Volpe National Transportation 
Systems Center (VNTSC), performs approximately $215 million of 
R&D each year for all of the Department's operating 
administrations and for other federal sponsors of 
transportation-related research. As a result, RSPA is ideally 
suited to foster the integration of research across the 
Department, leverage research performed outside the Department 
and provide strategic planning and system assessment work for 
the Department and the White House.

              advanced transportation technology consortia

    Mr. Wolf. As you are no doubt aware, several of my 
constituents, including Virginia Power, are participants in the 
advanced transportation technology consortia. These consortia, 
supported by both DOT and DOD, are dedicated to the development 
and deployment of transportation efficiencies at lower costs as 
well as contributions to cleaner air. Does the Department 
support the technology consortia program and funding for its 
activities?
    [The information follows:]

    DOT has followed, and worked with, the Defense Advanced 
Research Projects Agency's (DARPA's) Advanced Transportation 
Consortium since DARPA initiated its electric and hybrid 
vehicle development program in April 1993. During the same 
period, DOT's Federal Transit Administration (FTA) has had 
major programs underway related to electric and hybrid 
vehicles. This includes development of a light-weight, fully 
accessible, low emission, fuel-efficient bus. Prototype buses 
are being tested in regular service during 1997.
    A second major research effort is development of a fuel 
cell bus which will convert fuel directly to electricity for 
propulsion with ultra-low emissions. Eleven million dollars has 
been requested for this and other new bus technology 
demonstration projects in FY 1998. Information on the results 
of such projects is shared with, and through, the consortium.

                            closing remarks

    Mr. Wolf. And again, I appreciate your cooperation. And, 
you know, I am glad you are there. I think the committee will 
have a good relationship with you and the Department and we 
look forward to working with you. And again, thank you very 
much.
    Mr. Slater. Thank you, Mr. Chairman.
    Mr. Wolf. The hearing is adjourned.
    [Additional information follows:]

[Pages 774 - 1154--The official Committee record contains additional material here.]









                           W I T N E S S E S

                              ----------                              
                                                                   Page

Anderson, J. H...................................................   471
Christoff, Joseph................................................   471
Daniels, W. L....................................................     1
DeCarli, R. J....................................................     1
Fleischman, J. N.................................................     1
Jones, G. L......................................................   471
Jorgenson, Rick..................................................   471
Kai, Tom.........................................................   471
Kramek, Adm. R. E................................................   135
Lamoreaux, Ralph.................................................   471
Levin, Robert....................................................   471
Rabkin, Norm.....................................................   471
Shaul, Marnie....................................................   471
Slater, Hon. Rodney..............................................   637
Stillman, Dr. Rona...............................................   471
Stoll, Louise....................................................   637
Weintrob, L. H...................................................     1
Zinser, T. J.....................................................     1







                               I N D E X

                              ----------                              

                      Office of Inspector General

                                                                   Page
Access to Airline Safety Data....................................    39
Advanced Technology Transit Bus:
    Costs........................................................    45
    Funding......................................................    45
    OIG Management Advisory Memo/FTA Response....................    95
    Safety...................................................3, 45, 133
Aeronautical Charting & Cartography (AC&C).......................    72
Airline Safety:
    Access to Data...............................................38, 39
    Information on Internet......................................    39
Airport Revenue Diversion:
    Audits of Revenue Diversion..................................    59
    FAA Compliance with Airport Revenue Retention Act............    32
    FAA Enforcement of Los Angeles Airport Revenue Diversion.....    31
    Los Angeles Airport Revenue Diversion Repayment..............    30
    Los Angeles Federal Grant Restrictions.......................    34
    Los Angeles Metro/Airport Diversion..........................    44
    Los Angeles Revenue Diversion--10/96 Letter to Subcommittee..    54
    Los Angeles Revenue Diversion Findings Resolution............    31
    Los Angeles Transfer of Funds................................    34
    Part 16 Regulations..........................................    34
Airport Security:
    Audit of Airport Security.................................... 2, 35
    Explosive Detection Systems..................................    37
    Survey Results...............................................    37
    User Fees....................................................36, 38
Amtrak Issues:
    Northeast High Speed Rail Improvement Program................   103
    Penn Station Current Capacity................................    50
    Penn Station/Farley Building Project--Non-Federal Funding....    50
    Penn Station/Farley Building Project Costs...................    49
    Penn Station/Farley Building Project Funding Restrictions....    51
ASR-11 Radar.....................................................    54
Audit Staff Issues:
    Accomplishments..............................................     6
    Chief Financial Officers Act Audits........................117, 120
    Completion Time of Audits....................................   129
    Contract Audits Costs/Time...................................   117
    Coordination with GAO........................................    15
    Financial Statement Audits...................................     5
    Follow-up of GAO Studies.....................................    16
    Internal Audit Staffing......................................   122
    Most Staff-Intensive Audits..................................   130
    Number of Recommendations....................................    15
    Ongoing/Planned Audits.......................................   123
    Staff Downsizing.............................................    14
Broad Transfer Authority.........................................    86
Budget Justifications:
    Assistant IG for Auditing....................................   117
    Assistant IG for Evaluations.................................   115
    Assistant IG for Investigations..............................   131
    Budgetary Resources..........................................    13
    Immediate Office of IG.......................................   112
    Overall......................................................   108
Buyout Abuses....................................................    65
Central Artery/Third Harbor Tunnel Project:
    Financial Plan...............................................    42
    Oversight....................................................    41
    Oversight Staffing Levels....................................    42
Chicago Central Area Circulator Project..........................   102
Commuter and Air Taxi Pilot Training.............................     4
Compliance with Airport Revenue Retention Act....................    32
Deicing Program:
    Enforcement of OIG Deicing Recommendations...................    16
    EPA Regulations on Deicing Fluid.............................    20
    FAA Enforcement of Deicing Regulations.......................    19
    Review of FAA's Deicing Regulations.......................... 3, 17
Department-Wide Issues:
    Safety Regulation Enforcement in DOT.........................    47
    Senior Official Travel.......................................    51
    Targeting of Grant Funds.....................................   106
    Travel Reform................................................   104
    Working Capital Fund Balance--Volpe Center...................   105
Director, Dulles Airport Unapproved Parts Office.................    15
DITCO Contract Impropriety.......................................    79
Enforcement of OIG Deicing Recommendations.......................    16
EPA Regulations on Deicing Fluid.................................    20
Evaluations Staff Issues:
    Accomplishments..............................................  6, 8
    Mission......................................................   115
    Staffing Levels..............................................   116
Explosive Detection Systems......................................    37
FAA Issues:
    Accountability...............................................22, 23
    Acquisition and Personnel Management Reform...............5, 23, 29
    Aeronautical Charting & Cartography (AC&C)...................    72
    Airline Safety Data Access...................................38, 39
    Airline Safety Information on Internet.......................    39
    Airport Revenue Diversion Audits.............................54, 59
    Airport Revenue Diversion Part 16 Regulations................    34
    Airport Revenue Retention Act Compliance.....................    32
    Airport Security Audit....................................... 2, 35
    Airport Security Explosive Detection Systems.................    37
    Airport Security Survey Results..............................    37
    Airport Security User Fees...................................36, 38
    ASR-11 Radar.................................................    54
    Broad Transfer Authority.....................................    86
    Buyout Abuses................................................    65
    Commuter and Air Taxi Pilot Training.........................     4
    Cost-Benefit Analysis........................................    26
    Deicing Regulations--FAA Enforcement.........................    19
    Deicing Regulations Review................................... 3, 17
    Director, Dulles Airport Unapproved Parts Office.............    15
    DITCO Contract Impropriety...................................    79
    FAM Program..................................................    67
    Financial Assessment of FAA..................................    21
    Full Funding for Capital Acquisitions........................27, 28
    Gregory May Training.........................................52, 87
    Interactive Video Training...................................    71
    Los Angeles Airport Revenue Diversion--10/96 Letter..........    54
    Los Angeles Airport Revenue Diversion--FAA Enforcement.......    31
    Los Angeles Airport Revenue Diversion Findings Resolution....    31
    Los Angeles Airport Revenue Diversion Repayment..............    30
    Los Angeles Federal Grant Restrictions.......................    34
    Los Angeles Metro/Airport Diversion..........................    44
    Los Angeles Transfer of Funds................................    34
    NAS Architecture Plan........................................    29
    PCS Move Reform..............................................    64
    Procurement Planning.........................................    26
    Quality Through Partnership Program..........................    77
    Safety Mission...............................................    20
    Support for Private Radar System.............................    78
    Support Services Contracts...................................    68
    Suspected Unapproved Parts................................... 4, 83
    Tower Automation Program.....................................28, 68
    Union Agreements.............................................    29
    VSCS Training and Backup Switch..............................    71
    Workers' Compensation Fraud Case.............................    81
Farley Building Issues:
    Non-Federal Funding of Penn Station/Farley Building..........    50
    Penn Station/Farley Building Project Costs...................    49
    Penn Station/Farley Building Project Funding Restrictions....    51
FHWA Issues:
    Central Artery/Third Harbor Tunnel Financial Plan............    42
    Central Artery/Third Harbor Tunnel Oversight.................    41
    Central Artery/Third Harbor Tunnel Oversight Staffing Levels.    42
    Motor Carrier Safety.........................................     3
    Unexpended Balances..........................................    90
Financial Assessment of FAA......................................    21
Financial Statement Audits.......................................     5
FRA Issues:
    High Speed Ground Transportation Program.....................   103
    Oversight of Amtrak's Northeast High Speed Rail Improvement..   103
    Penn Station Current Capacity................................    50
    Penn Station/Farley Building Project--Non-Federal Funding....    50
    Penn Station/Farley Building Project Costs...................    49
    Penn Station/Farley Building Project Funding Restrictions....    51
    Safety Assurance Compliance Program..........................    48
    Safety Inspectors............................................    47
    Safety Oversight Program................................46, 48, 103
FTA Issues:
    Advanced Technology Transit Bus Costs........................    45
    Advanced Technology Transit Bus Funding......................    45
    Advanced Technology Transit Bus Management Memo..............    95
    Advanced Technology Transit Bus Safety...................3, 45, 133
    Chicago Central Area Circulator Project......................   102
    Los Angeles Metro Oversight.................................43, 134
    Los Angeles Metro Tunnel Problems............................    43
    Los Angeles Metro/Airport Diversion..........................    44
    San Francisco BART Project...................................    33
    Transit Bus Safety...........................................    44
    Unliquidated Balances by State...............................    92
Full Funding for Capital Acquisitions............................27, 28
Gregory May Training:
    Status.......................................................52, 87
Inspector General's Statement....................................     2
Interactive Video Training.......................................    71
Intercity Rail Issues:
    High Speed Ground Transportation Program.....................   103
    Oversight of Amtrak's Northeast High Speed Rail Improvement..   103
Introductions....................................................     1
Investigations Staff Issues:
    Accomplishments..............................................  7, 9
    Resource Usage on Motor Fuel Excise Tax Evasion..............   131
    Staffing Levels..............................................   131
Los Angeles Airport Revenue Diversion:
    Diversion Repayment..........................................    30
    FAA Enforcement..............................................    31
    Federal Grant Restrictions...................................    34
    Los Angeles Transfer of Funds................................    34
    Metro/Airport Diversion......................................    44
    October 1996 letter to Subcommittee..........................    54
    Resolution of Los Angeles Diversion Findings.................    31
Los Angeles Metro Rail:
    Metro/Airport Diversion......................................    44
    Oversight...................................................43, 134
    Tunnel Problems..............................................    43
Major Procurement Management.....................................    25
Motor Carrier Safety.............................................     3
NHTSA Issues:
    National Advanced Driving Simulator Program..................    94
Non-Federal Funding of Penn Station/Farley Building Project......    50
Offshore Facilities..............................................     2
OIG Coordination with GAO........................................    15
OIG Follow-up of GAO Studies.....................................    16
Opening Remarks..................................................     1
Opening Statement................................................     2
PCS Move Reform..................................................    64
Penn Station/Farley Building Project:
    Costs........................................................    49
    Current Capacity.............................................    50
    Funding Restrictions.........................................    51
    Non-Federal Funding..........................................    50
Quality Through Partnership Program..............................    77
Resolution of Los Angeles Revenue Diversion Findings.............    31
Revenue Diversion--10/96 Letter to Subcommittee..................    54
Revenue Diversion--Part 16 Regulations...........................    34
Revenue Diversion Audits.........................................    59
Review of FAA's Deicing Regulations..............................    17
Safety Regulation Enforcement in DOT.............................    47
San Francisco BART Project.......................................    33
Seagoing and Coastal Buoy Tenders................................     4
Senior Official Travel...........................................    51
Support for Private Radar System.................................    78
Support Services Contracts.......................................    68
Suspected Unapproved Parts Issues:
    Director, Dulles Airport Unapproved Parts Office.............    15
    Suspected Unapproved Parts................................... 4, 83
Targeting of Grant Funds.........................................   106
Tower Automation Program.........................................28, 68
Training Abuses..................................................52, 87
Transit Bus Safety...............................................    44
Travel Issues:
    Senior Official Travel.......................................    51
    Travel Reform................................................   104
USCG Issues:
    Drug Interdiction............................................    40
    Enforcement of Regulations...................................    40
    Inspection of Waterfront Facilities..........................    39
    Offshore Facilities..........................................     2
    Seagoing and Coastal Buoy Tenders............................     4
VSCS Training and Backup Switch..................................    71
Workers' Compensation Fraud Case.................................    81
Working Capital Fund Cash Balance--Volpe Center..................   105

                            U.S. Coast Guard

Abandoned Barges:
    Houston Ship Channel and San Jacinto River...................   323
    Removal of Abandoned Barges..................................   323
Academy:
    Costs Per Graduate...........................................   314
    SAT Scores for Coast Guard Academy Cadets....................   315
    Trends in Academy Degrees Awarded............................   315
Acquisition, Construction, and Improvements (AC&I):
    Acquisition Review Council Membership........................   372
    Aircraft, see: Aircraft
    Breakdown of Unobligated Balances............................   357
    BUSL, see: Stern Loading Buoy Boat (BUSL)
    Communications System 2000 Project...........................   347
    FLS, see: Fleet Logistics System (FLS)
    Frequency Spectrum Reallocation, Cost Estimate...............   394
    Frequency Spectrum Reallocation Re-Engineering...............   393
    General Discussion...........................................   199
    HEALY, see: HEALY
    Housing, see: Housing
    Land Acquisition.............................................   397
    Major Acquisition Projects...................................   371
    Major Acquisition Reviews....................................   373
    MLB, see: Motor Lifeboat (MLB)
    Opening Statement............................................   140
    Personnel Costs, see: Personnel
    Personnel, see: Acquisition, Construction, and Improvements 
      (AC&I) Personnel
    Project Deviation Reports....................................   374
    Project Outyear Cost, Projects...............................   367
    Project Outyear Cost Estimates...............................   364
    Shore Facilities, see: Shore Facilities
    Spare Parts..................................................   411
    SSR, see: Surface Search Radar (SSR)
    Transportation Systems Acquisition Review Council (TSARC)....   373
    Unobligated Balances, Estimates..............................   364
    Unobligated Balances over $1,000,000.........................   362
    WLB, see: Seagoing Buoy Tender (WLB)
    WLM, see: Coastal Buoy Tender (WLM)
    Written Statement............................................   153
Acquisition, Construction, and Improvements (AC&I) Personnel:
    AC&I Funded Personnel........................................   403
    AC&I Funded Personnel by Program, Project, and Activity......   407
    Appropriation Changes in Positions and Full Time Equivalents 
      (FTE)......................................................   411
    Direct Personnel Costs.......................................   412
Aids to Navigation (ATON):
    Aids to Navigation Projects..................................   398
    BUSL, see: Stern-Loading Buoy Boat (BUSL)
    GPS, see: Differential Global Positioning System (DGPS)
    LORAN-C, see: Long Range Aids to Navigation (LORAN-C)
    OMEGA, see: OMEGA Navigation System
    Nautical Charts..............................................   327
    WLB, see: Seagoing Buoy Tender (WLB)
    WLM, see: Coastal Buoy Tender (WLM)
Aircraft:
    Aircraft Ceiling.............................................   251
    HC-130 Engine Conversion Savings.............................   348
    Personnel Assigned to Air Stations...........................   275
    Sale of HU-25 Aircraft.......................................   354
    Tiltrotor Technology.........................................   466
    Traffic and Collision and Avoidance System (TCAS)............   392
Asset Sales:
    Assumptions Regarding Asset Sales............................   351
    Budget Enforcement Act Exemption.............................   356
    Environmental Cleanups of Excess Properties..................   353
    Financial Resources from Asset Sales.........................   354
    FY98 Total Asset Sales Assumptions...........................   353
    Governors Island, see: Governors Island, New York
    Legislative Authority for Offsetting Collections.............   355
    LORAN Station Upolu Point, Hawaii............................   355
    Offsetting Collections.......................................   355
    Operating and Maintenance (O&M) Cost for Excess Properties...   354
    Projection of Offsetting Collections from Asset Sales........   357
    Properties Expected to be Surplus............................   351
    Property Under Consideration for Sale or Lease...............   357
    Sale of HU-25 Aircraft.......................................   354
    Sale or Lease of Coast Guard Property........................   357
Auxiliary:
    Membership by State..........................................   420
    Opening Statement............................................   138
    Personnel, see: Personnel
    Support in M/V QUESTAR Case, see: QUESTAR Search and Rescue 
      Case
Boating Safety (BS):
    Accidents and Fatalities by State............................   415
    Accidents Per Boat By State..................................   417
    Boating Safety Grant Funding for FY92-FY98...................   424
    Federal and State Funding....................................   424
    General Discussion.........................................220, 236
    Radio License Fee, Effect on Boating Safety..................   325
    Radio License Fee Increase...................................   325
    Reauthorization of Boating Safety Program, Elements..........   425
    Reauthorization of Boating Safety Program....................   425
    Recreational Boating Accident Data...........................   426
    State Boating Safety Grant Fund, Unobligated Balance.........   426
    State Matching Funds.........................................   420
    Status of Prior Year Statistics..............................   414
    Written Statement............................................   154
Bridge Alteration (AB):
    Alteration of Bridges, Program Status........................   413
    General Discussion...........................................   220
    Limehouse Bridge, St. Johns Island, South Carolina...........   414
    Written Statement............................................   155
Budget:
    AB, see: Bridge Alteration (AB)
    AC&I, see: Acquisition, Construction, and Improvements (AC&I)
    BS, see: Boating Safety (BS)
    Budget Authority (BA) Increase...............................   247
    Budget Growth by Mission.....................................   286
    Budget In Brief FY98.........................................   159
    Coast Guard Personnel Command Budget.........................   316
    Cutter Operating Costs, see: Cutters
    Depot-Level Maintenance Funding Increases....................   252
    Districts, see: District Offices
    EC&R, see: Environmental Compliance and Restoration (EC&R)
    Federal Aviation Administration (FAA) Franchise Fund.........   251
    Fleet Operating Costs........................................   304
    Fuel and Energy Costs, see: Fuel and Energy Costs
    Funding for Areas, Districts, and Maintenance & Logistics 
      Commands...................................................   258
    General Discussion...........................................   202
    Headquarters Program, Project, and Activity (PPA) Budget.....   343
    MWR, see: Morale, Well-Being, and Recreation
    OE, see: Operating Expenses (OE)
    Offsetting Collections, Legislative Authority................   253
    Opening Statement............................................   140
    OSLTF, see: Oil Spill Liability Trust Fund (OSLTF)
    Pay and Compensation, see: Pay and Compensation:
    Pesonnel Costs, see: Personnel
    PMIS/JUMPS II Operating Savings..............................   395
    RDT&E, see: Research, Development, Test, and Evaluation 
      (RDT&E)
    RP, see: Retired Pay (RP)
    RT, see: Reserve Training (RT)
    Streamlining, see: Streamlining
    Total Coast Guard Spending...................................   238
    Training, see: Personnel
    Transfer of Funds from Department of Defense.................   330
    Travel Costs, see: Travel
    Written Statement............................................   152
    Yard, see: Yard, USCG at Curtis Bay, Maryland
Buoy Boat Replacement Program:
    BUSL, see: Stern Loading Buoy Boat (BUSL)
    Current Status of New Buoy Tenders...........................   346
    Operations of New Buoy Tenders...............................   347
Child Care:
    Child Care Support...........................................   278
    Child Development Centers, Operating Expenses................   270
Coastal Buoy Tender (WLM):
    Current Status...............................................   346
    Funds Breakdown..............................................   376
    Operations...................................................   347
Coastal Patrol Boat (CPB):
    Sailaway Cost Reduction......................................   382
    Schedule.....................................................   382
Coast Guard Institute:
    Recruiting and Training Support..............................   314
Coast Guard Personnel Command:
    Budget.......................................................   316
    Staffing.....................................................   316
Coast Guard Supply Fund:
    Coast Guard Supply Fund History..............................   281
    Coast Guard Supply Fund, Unobligated Balances................   281
    Fuel Purchased, see: Fuel and Energy Costs
Cost of Living Adjustment (COLA):
    CONUS COLA...................................................   273
Cutters:
    BUSL, see: Stern-Loading Buoy Boat (BUSL)
    CPB, see: Coastal Patrol Boat (CPB)
    Cutter Listings and Other Statistics.........................   288
    Cutter Operational Costs, High Endurance Cutter (WHEC).......   304
    Cutter Operational Costs, 65-Foot to 225-Foot Cutters........   305
    Cutter Operational Costs, Medium Endurance Cutter (WMEC).....   306
    Fleet Operating Costs........................................   304
    HEALY, see: HEALY
    IMARV, see: Independent Maritime Response Vessel (IMARV).....
    Listing of Cutters and Boats.................................   295
    Listing of Cutters 180' and Shorter..........................   290
    MACKINAW, see: MACKINAW
    MLB, see: Motor Lifeboat (MLB)
    Operating Days...............................................   302
    Perry Class Frigates, see: Perry Class Frigates
    Personnel Assigned to Cutters................................   275
    Polar Class Reliability Improvement Project Budget Breakdown.   388
    Polar Class Reliability Improvement Project, Long Lead Time 
      Material (LLTM)............................................   391
    Sea Pay for 65-Foot Cutter Crews.............................   275
    WLB, see: Seagoing Buoy Tender (WLB)
    WLM, see: Coastal Buoy Tender (WLM)
Differential Global Positioning system (DGPS):
    Differential Sites, Construction.............................   395
    Electronic Chart Display and Information System (ECDIS), Use 
      of.........................................................   328
    LORAN-C, see: Long Range Aid to Navigation (LORAN-C)
    Nautical Charts, Resurveying.................................   327
    Phase II Installation........................................   394
    Problems Encountered.........................................   332
District Offices:
    Billets......................................................   307
    Costs and Funding............................................   306
    Operations Funding...........................................   308
Drug Interdiction:
    Activity Along California Coast..............................   468
    Bilateral Maritime Counter-Drug Agreements...................   460
    Changes in Smuggling Patterns................................   462
    Drug Detection Technology, Types in Use......................   458
    Drug Seizures vs. Operating Hours............................   319
    FRONTIER SHIELD, see: FRONTIER SHIELD, Operation
    Funding (FY96-FY98)..........................................   468
    General Discussion....................................209, 221, 244
    Intelligence Collection Support Equipment....................   321
    Intelligence Collection Support Personnel....................   320
    Law Enforcement Equipment Requirements.......................   458
    Partnering with Source and Transit Country Neighbors.........   467
    Perry Class Frigates, see: Perry Class Frigates
    Role of Technology in Drug Detection.........................   457
    U.S. Interdiction Coordinator (USIC) Response................   460
    Written Statement............................................   146
Environmental Compliance and Restoration (EC&R):
    Environmental Cleanups of Excess Properties..................   353
    Housing Related Assessment and Remediation Projects..........   279
    List of Cleanup Sites Under $500,000.........................   427
    Programmatic Compliance Activities...........................   428
    Written Statement............................................   153
Fisheries Enforcement, see: Living Marine Resource Management
Fleet Logistics System (FLS).....................................   392
Foreign-Flagged Cruise Ships:
    Estimated Collections for Inspections of Foreign-Flagged 
      Cruise Ships...............................................   349
    Other Services for Foreign-Flagged Cruise Ships..............   349
    Status of Rulemaking for Inspection Fees.....................   348
FRONTIER SHIELD, Operation:
    Adapting to Changing Smuggling Patterns......................   462
    Changes in Smuggling Patterns................................   462
    Lessons Learned..............................................   463
    Operation Completion.........................................   462
Fuel and Energy Costs:
    Coast Guard-Owned Housing....................................   282
    Fuel and Energy Costs Assumptions............................   279
    Fuel and Energy Costs, Boats and Cutters.....................   280
    Fuel and Energy Cost Breakdown...............................   279
    Fuel and Energy Funds Allocation.............................   280
    Fuel Purchased Using Coast Guard Supply Fund.................   280
Gambling Vessels, see: General Discussion
General Discussion:
    Acquisition Needs, Long Range................................   199
    Alteration of Bridges........................................   220
    Boating Safety.............................................220, 236
    Coast Guard Budget Request...................................   202
    Double Hull Construction of Vessels..........................   220
    Drug Interdiction.....................................209, 221, 244
    Gambling Vessels.............................................   239
    Icebreaking and Other User Fees............................201, 234
    Migrant Interdiction.........................................   204
    Morale and Readiness.........................................   198
    Oil Spill Prevention.........................................   207
    Sale of Governors Island.....................................   230
    Senior Official Travel.......................................   241
    Streamling...................................................   231
    Training Centers.............................................   233
    Vessel Traffic Service.......................................   241
    General Services Administration (GSA) Rent...................   345
Global Positioning System (GPS), see: Differential Global 
  Positioning System (DGPS)
Governors Island, New York:
    Caretaker Proposal...........................................   350
    Caretaker Status.............................................   350
    Disposal Status..............................................   349
    General Discussion...........................................   230
    Operating Budget.............................................   350
Health Care:
    FY95 Health Care Cost Savings................................   277
    FY97 Health Care Costs.......................................   277
    Health Care, Projected Costs.................................   277
HEALY:
    Polar Icebreaker Replacement Project.........................   381
Housing:
    Family Housing Schedule......................................   399
    Fuel and Energy Costs, Coast Guard-Owned Housing.............   282
    Housing Related Assessment and Remediation Projects..........   279
    Sault Ste. Marie Family Housing..............................   400
Icebreaking:
    General Discussion.........................................201, 234
    HEALY, see; HEALY
    Icebreaking User Fees, Economic Impact.......................   465
    Icebreaking User Fees, Proposed Legislation..................   463
    Long Term Great Lakes Icebreaking Solution...................   465
    MACKINAW, see; MACKINAW
    Polar Class Reliability Improvement Project, Long Lead Time 
      Material (LLTM)............................................   391
    Polar Class Reliability Improvement Project Budget Breakdown.   388
    Polar Icebreaker Replacement Project.........................   381
    Rationale for Icebreaking User Fees..........................   465
    Regional Inequity of Icebreaking User Fee....................   464
Illegal Migration:
    General Discussion...........................................   204
    Illegal Migration Transit Routes.............................   468
    Interdiction Effectiveness...................................   470
    Source Countries.............................................   469
Independent Maritime Response Vessel (MARV):
    Evaluation...................................................   385
    Funding......................................................   385
Information Resource Management:
    PMIS/JUMPS II Operating Savings..............................   395
Intelligence Coordination Center:
    Equipment and Operating Expenses.............................   328
Law Enforcement:
    Drugs, see: Drug Interdiction
    Illegal Migration, see: Illegal Migration
    Intelligence, see: Intelligence Coordination Center
    Opening Statement, see: Opening Statement
    Written Statement, see: Written Statement
Long Range Aid to Navigation (LORAN-C:
    Electronics Engineering Center Support.......................   336
    Funding for Long Range Electronic Aids to Navigation.........   334
    LORAN-C Cost Sharing.........................................   334
    LORAN-C Upgrade, Funds Utilization...........................   332
    LORAN-C Upgrade Plan.........................................   333
    LORAN-C, Use of Eurofix......................................   333
    LORAN Station Upolu Point, Hawaii............................   355
MACKINAW:
    Icebreaking, see: Icebreaking
    Long Term Great Lakes Icebreaking Solution...................   465
Marine Environmental Protection (MEP):
    Ballast Water Management Program.............................   345
    Double Hull Construction of Vessels, see: General Discussion
    Oil Spill Prevention, see: General Discussion
    OSLTF, see: Oil Spill Liability Trust Fund (OSLTF)
    Written Statement............................................   148
Marine Safety (MS):
    Abandoned Barges, see: Abandoned Barges
    Delegation of Tasks to Maritime Companies....................   326
    Written Statement............................................   151
Mass Transit Subsidy Benefit Program:
    Budget Request...............................................   270
    Personnel Enrolled...........................................   269
Morale, Well-Being, and Recreation (MWR):
    General Discussion...........................................   198
    Non-Appropriated Funding Support.............................   283
    Percentage of Support from Appropriated Funding..............   283
    Retail Exchange Support......................................   282
    Total Appropriated Funding Support...........................   282
Motor Lifeboat (MLB):
    Option Quantity Production Costs.............................   381
    Sailaway Cost Reduction......................................   380
    Spare Parts Requirements.....................................   381
National Security, see: Written Statement
Natural Disasters, Coast Guard Response........................136, 464
Oil Spill Liability Trust Fund (OSLTF):
    Annual Emergency Fund Appropriation..........................   431
    Emergency Fund Obligations...................................   430
    Increasing the OSLTF to $2.5 Billion.........................   430
    Long-Term Financial Projection...............................   431
    Payment of Claims............................................   429
    Projected Increase in FY97 Payment of Claims.................   429
OMEGA Navigation System:
    Funding for Long Range Electronic Aids to Navigation.........   334
    OMEGA System Decommissioning, Effect on U.S. Air Carriers....   335
    OMEGA System Decommissioning Costs...........................   335
    OMEGA Termination Costs......................................   335
Opening Statement:
    Acquisition, Construction, and Improvements (AC&I)...........   140
    Budget Overview..............................................   140
    Coast Guard Responsiveness...................................   136
    Maritime Law Enforcement.....................................   139
    Reserve and the Auxiliary....................................   138
    TWA 800 Response.............................................   136
Operating Expenses (OE):
    Budget, see: Budget
    Child Development Centers, see: Child Care
    Cutter Operating Costs, see: Cutters
    Estimated Obligation for ``Other Services,'' FY96 Breakdowns.   318
    Estimated Obligation for ``Other Services,'' FY96-FY98.......   317
    Fleet Operating Costs........................................   304
    Housing, see: Housing
    Lapsed OE Funds..............................................   251
    Offsetting Collections.......................................   316
    RT Assessments to OE Appropriation, Report Findings..........   438
    RT Assessments to OE Appropriation FY96-FY98.................   439
    Staff Years, OE-Funded.......................................   445
    Streamlining, see: Streamlining
    Total Outlays................................................   247
    Travel Costs, see: Travel
    Written Statement............................................   152
Pay and Compensation:
    Annualized Portion of the Pay Raise by Type..................   263
    Bonuses for Non-Senior Executive Services Employees..........   274
    CONUS COLA see: Cost of Living Adjustment (COLA)
    Fourth Quarter FY97 Pay Raise................................   263
    FY96 Average Total Earned Compensation Table.................   269
    FY97 Basic Military Compensation (BMC) Tables................   267
    FY97 Budgetary Savings Due to Pay Raise Personnel Base.......   262
    FY97 Regular Military Compensation (RMC) Tables..............   264
    FY98 Pay Breakdown...........................................   272
    FY98 Pay Raise Base Explanation..............................   261
    Health Care, see: Health Care
    Reserve Pay, see: Reserve Program
    Retirement Pay, see: Retired Pay (RP)
    Sea Pay for 65-Foot Cutter Crews.............................   275
    Senior Executive Service Bonuses by Appropriation............   274
    Senior Executive Service Bonuses.............................   273
    Total Pay Raise by Type......................................   262
Perry Class Frigates:
    Non-recurring Costs..........................................   322
    Operating Costs..............................................   322
    Use in Counter-Narcotics Operations..........................   322
Personnel:
    AC&I personnel, see: Acquisition, Construction, and 
      Improvements (AC&I) Personnel
    Academy, see: Academy
    Child Care Support...........................................   278
    Civil Service Retirement Fund (Civilian).....................   249
    Civilian Workforce Measurement...............................   312
    Coast Guard Personnel Command, see: Coast Guard Personnel 
      Command
    Commandant and Vice Commandant Staff.........................   338
    CONUS COLA, see: Cost of Living Adjustment (COLA)
    Cost Per Full-Time Equivalent (FTE)..........................   444
    FY97 Full-Time Positions.....................................   248
    Gender and Minority Categories...............................   312
    Headquarters Billets.........................................   336
    Health Care, see: Health Care
    Housing, see: Housing
    Management Study Results.....................................   313
    Mass Transit Subsidy Benefit Program, see: Mass Transit 
      Subsidy Benefit Program
    Military Personnel Rotations.................................   272
    Military/Civilian Conversion Review..........................   261
    Military/Civilian Mix........................................   261
    Officer-Enlisted Ratios......................................   263
    Operating Expenses (OE) Funded Staff Years...................   445
    Overseas Billets.............................................   275
    Pay and Compensation, see: Pay and Compensation
    Personnel Assigned to Cutters and Air Stations...............   275
    Personnel Increases..........................................   249
    Professional Training and Education Funding..................   308
    Project Resident Office......................................   412
    Public Affairs Personnel, Full Time Equivalents (FTE)........   340
    Public Affairs Personnel Listing.............................   339
    Recruit Training Costs.......................................   446
    Recruiting, see: Recruiting
    Reserves, see: Reserve Program
    Travel Costs, see: Travel
Port Safety:
    Port Safety Development Project..............................   414
Port Security Units (PSUs):
    Equipment....................................................   258
    Port Security Unit Support...................................   447
Publications:
    ``Coast Guard'' Magazine.....................................   342
    Routine Publications.........................................   341
QUESTAR Search and Rescue Case:
    Auxiliary Support............................................   324
    Safety Board Recommendations.................................   324
Questions for the Record from Chairman Wolf.....198, 209, 223, 238, 247
Questions for the Record from Congressman Callahan...............   202
Questions for the Record from Congressman Foglietta..............   466
Questions for the Record from Congressman Obey...................   463
Questions for the Record from Congressman Olver..................   204
Questions for the Record from Congressman Packard..............220, 236
Questions for the Record from Congressman Rogers.................   460
Questions for the Record from Congressman Sabo...................   200
Questions for the Record from Congressman Torres.................   467
Recruiting:
    Prior Military Service Recruits..............................   441
    Recruiter Billets and Recruiting Office Locations............   310
    Recruiter Productivity Tools.................................   311
    Recruit Training Costs.......................................   446
    Relocating Recruiters to Historically Black Colleges and 
      Universities...............................................   310
    Reserves, see: Reserve Program...............................
    Workforce 2015 Initiative, Prior Military Service Recruiting 
      Needs......................................................   442
    Workforce 2015 Initiative....................................   309
Research, Development, Test, and Evaluation (RDT&E):
    Research and Development Center Operating Costs..............   432
    Unobligated Balances.........................................   432
    Written Statement............................................   154
Reserve Program:
    Augmentation of the Coast Guard..............................   444
    Augmentation Workhours--FY96.................................   443
    Augmentation Workhours.......................................   443
    Comparison of Reserve Enlisted Personnel Onboard and Billets.   447
    Pay and Compensation, see: Pay and Compensation
    Opening Statement............................................   138
    Personnel, see: Personnel
    Reduction of Selected Reserve................................   445
    Reserve Recruiting Mission for FY97..........................   443
    Reserve Training, see: Reserve Training
    Retired Pay..................................................   434
    Selected Reserve Recruiting..................................   441
    Selected Reserve Shortfalls..................................   440
    Selected Reserve Strength in FY98............................   440
    Staff Years of Work FY96.....................................   444
Reserve Training (RT):
    Administration of Reserve Training...........................   439
    Assessments to OE Appropriation, Report Findings.............   438
    Assessments to OE Appropriation FY96-FY98....................   439
    Operating Expenses, see: Operating Expenses (OE)
    Operation and Maintenance of Reserve Training Facilities.....   436
    Other Services...............................................   437
    Written Statement............................................   154
Retired Pay (RP):
    Average Retired Pay by Grade.................................   434
    Pay and Compensation, see: Pay and Compensation
    Reserve Personnel Estimate...................................   435
    Written Statement............................................   155
Seagong Buoy Tender (WLB):
    Current Status...............................................   346
    Design and Construction Status...............................   375
    Full Production Award Estimate...............................   374
    Operations of New Buoy Tenders...............................   347
    Sailaway Costs...............................................   376
    Schedule of Contracting Events...............................   375
Search and Rescue (SAR):
    SARSAT, see: Search and Rescue Satellite-Aided Tracking 
      (SARSAT)
    TWA 800 Response, see: Opening Statement
Search and Rescue Satellite-Aided Tracking (SARSAT):
    Agency Cross-Sharing.........................................   344
    Intragovernmental Reimbursements.............................   344
    Service Fees Formula.........................................   344
Shore Facilities:
    Activities, see: Streamlining
    Excess Properties, see: Asset Sales
    Operation and Maintenance Support to Training Facilities.....   446
    Operational Dates............................................   287
    Pier Space Availability at Bayonne, New Jersey...............   402
    Relocation of Group/Station New Orleans, Louisiana...........   401
    Relocation of Station Bellingham, Washington...............401, 401
    Survey and Design............................................   396
    Training Centers, see: General Discussion
Steamlining:
    Activities...................................................   260
    Evaluation of Activities Concept.............................   260
    General Discussion...........................................   231
    Major Streamlining Initiative Reductions.....................   259
    Streamlining Savings.........................................   259
Stern Loading Buoy Boat (BUSL):
    Current Status of New Buoy Tenders...........................   346
    Delivery Schedule............................................   379
    Fleet Schedule...............................................   379
    Funds Breakdown..............................................   377
    Unit Costs...................................................   378
Surface Search Radar (SSR):
    Fiscal Year Replacement Cost Comparison......................   386
    Replacement Cost.............................................   386
    Vessel Installations.........................................   387
Traffic and Collision and Avoidance System (TCAS) Funding........   392
Transportation Administrative Service Center (TASC) Services.....   249
Travel:
    General Discussion...........................................   241
    Non-Operational Travel Reduction.............................   253
    Operating Expenses (OE) Travel Funding.......................   254
    Operating Expenses (OE) Travel Funding FY98 Vs. FY95.........   255
    Travel Costs.................................................   256
Troops to Teachers Program:
    Funding......................................................   264
    Participation................................................   264
User Fees:
    Foreign-Flagged Cruise Ships, see: Foreign-Flagged Cruise 
      Ships
    General Discussion.........................................201, 234
    Icebreaking, see: Icebreaking
Vessel Traffic Service (VTS):
    General Discussion...........................................   241
    Operations and Maintenance Costs by Facility.................   283
    Operations and Maintenance Data by Program, Project, and 
      Activity (PPA).............................................   285
    Outreach Efforts in New Orleans, Louisiana...................   393
    Electronic Chart Display and Information System (ECDIS), Use 
      of.........................................................   328
Written Statement:
    Acquisition, Construction, and Improvements (AC&I)...........   153
    Alteration of Bridges........................................   155
    Boat Safety..................................................   154
    Budget Overview..............................................   152
    Environmental Compliance and Restoration (EC&R)..............   153
    Marine Environmental Protection..............................   148
    Maritime Law Enforcement.....................................   146
    Maritime Safety..............................................   151
    National Security............................................   150
    Operating Expenses (OE)......................................   152
    Research, Development, Test and Evaluation (RDT&E)...........   154
    Reserve Training (RT)........................................   154
    Retired Pay..................................................   155
Yard, USCG at Curtis Bay, Maryland:
    Coast Guard Yard, Request Breakout...........................   329

                     U.S. General Accounting Office

Acquisition and Procurement:
    DOD Management of Procurements...............................   553
    FAA Acquisition Process......................................   540
        ATC Modernization--FAA Oversight.........................   541
        ATC Modernization's Software Acquisition.................   493
        FAA Acquisition Management...............................   543
        FAA's Organizational Culture Hinders Acquisition.........   494
        Impact of FAA Administrator Vacancy on Acquisition 
          Process................................................   542
    Federal Government Acquisition Process.......................   551
Air Traffic Control (ATC) Modernization..........................   602
    Air Traffic Control Modernization Problems...................   490
        Complete Systems Architecture Lacking....................   491
        FAA's Organizational Culture Hinders Acquisition.........   494
        Observations on Gore Commission's Proposals for 
          Accelerating ATC Modernization.........................   495
        Reliable Cost Information Lacking........................   492
Software Acquisition Capability is Immature......................   493
    Ongoing Air Traffic Control Modernization Projects: Status 
      and Issues.................................................   524
        Standard Terminal Automation Replacement System..........   526
        The Global Positioning System............................   527
        STARS Terminal Computer Replacement Program..............   557
Airline Safety Report Cards......................................   560
Airport Security.................................................   565
Alameda Corridor Project.............................508, 581, 612, 632
    Financing Issues Unresolved for the Alameda Corridor Project.   508
Amtrak:
    Amtrak Dedicated Funding Source..............................   575
    Amtrak Operating Subsidy Elimination.........................   568
    Amtrak Restructuring and Route/Service Adjustments.........566, 571
    Amtrak Route Closure Commission..............................   569
    Amtrak's Financial Condition, Needs........................474, 517
        Amtrak Budget Proposal...................................   568
        Amtrak Capital Needs.....................................   569
        Projected Profits and Losses of Amtrak Routes............
          567, 571...............................................
            Revenue and Expense Contribution of Selected Amtrak 
              Routes in FY 1993 and FY 1996......................   574
        Amtrak Operating Costs/Track Fees........................   569
            Amounts Paid to Amtrak by Commuter Agencies--Fiscal 
              Years 1987-96......................................   570
Aviation Safety and Security..............................472, 481, 603
    Airline Safety Report Cards..................................   560
    Airport Security.............................................   565
    Aviation Safety Recommendations..............................   558
Bay Area Rapid Transit (BART) Project................502, 583, 614, 634
    BART Capital Reserve Account.................................   634
    BART: Critical Decisions Still on Hold.......................   502
    BART Extension to the San Francisco Airport..................   614
Biographies of GAO Witnesses:
    John H. Anderson, Jr.........................................   536
    Joseph Christoff.............................................   538
    Gary L. Jones................................................   537
    Thomas Kai...................................................   539
    Robert E. Levin..............................................   537
    Norman J. Rabkin.............................................   539
    Marnie Shaul, Ph.D...........................................   537
    Rona B. Stillman, Ph.D., Chief Scientist for Computers and 
      Telecommunications.........................................   538
Central Artery/Tunnel Project.............................499, 578, 604
    Cost and Financing Concerns Remain for the Central Artery/
      Tunnel Project.............................................   499
Coast Guard......................................................   622
    Coast Guard's Drug Interdiction/Antidrug Efforts......474, 520, 590
    Drug Control: Observations on Elements of the Federal Drug 
      Control Strategy (GAO/GGD-97-42, March 14, 1997)...........   592
Compliance Reviews (Motor Carriers)..............................   627
Consolidation/Collocation--Departmental and Field....513, 593, 623, 636
Federal Aviation Administration (FAA):
    FAA Acquisition Process......................................   540
        FAA Acquisition Management...............................   543
        FAA Administrator Vacancy: Impact on Acquisition Process.   542
        FAA Oversight of ATC Modernization.......................   541
    FAA Administrator Term.......................................   543
    FAA Controller Staffing....................................544, 564
        FAA Controller Staffing Data.............................   547
    FAA Culture Changes..........................................   548
        FAA 1995 Culture Survey Results..........................   556
    FAA Employee Survey Results..................................   555
    FAA Financing and Funding Gap....................474, 515, 561, 563
    FAA Management Accountability................................   555
    FAA Procurement Reform Savings...............................   557
    FAA's Modernization Program..................................   556
        Status of FAA's Major Modernization Projects.............   530
            Summary of Costs and Schedules for FAA's Major 
              Modernization Projects.............................   533
Federal Grant System.............................................   595
    Improving Federal Grants.....................................   630
    State Formulas...............................................   560
Gore Commission's Proposals for Accelerating ATC Modernization, 
  Observations on................................................   495
Innovative Financing Proposals...................................   620
    State Infrastructure Banks...................................   589
Intelligent Transportation Systems.........473, 511, 551, 587, 599, 618
    Issues Concerning ITS' Deployment............................   511
Introductions....................................................   471
Los Angeles Metropolitan Transit Authority Red Line Project...504, 585, 
                                                               616, 633
    Los Angeles Red Line's Costs and Schedule Still Increasing...   504
Management Issues.........................................473, 478, 490
Opening Remarks..................................................   471
Project Oversight................................................   540
Questions for the Record from Chairman Wolf......................   602
Questions for the Record from the Honorable Esteban Torres.......   633
State Formulas...................................................   560
Statement of John H. Anderson, Jr., Director for Transportation 
  Issues, Resources, Community, and Economic Development Division   475
Statement of the Honorable Esteban Torres (D-CA), Submitted for 
  the Record.....................................................   632
Surface Transportation Programs:
    Few Budgetary Savings Have Occurred Through Surface Field 
      Office Consolidation/Collocation...............513, 593, 623, 636
    Cost Control of Large-Dollar Highway Projects Could Improve..   497
        Alameda Corridor Project.................................
          508, 581, 612, 632.....................................
        Bay Area Rapid Transit (BART) Project....................
          502, 583, 614, 634.....................................
        Boston Central Artery/Tunnel Project.....................
          499, 578, 604..........................................
        Federal Commitment to Transit Capital Funding Is 
          Mortgaging Future ``New New Starts'' Funds.............   510
        Los Angeles Metropolitan Transit Authority Red Line 
          Project................................................
          504, 585, 616, 633.....................................
    Federal Highways Oversight...................................   587
    Intelligent Transportation Systems.....473, 511, 551, 587, 599, 618
    Transportation Enhancements..................................   631
Surface Transportation Research................................594, 628
Surface Transportation Safety..................................472, 484
    Grade Crossing Safety........................................   635
    Highway Traffic Accidents: Reducing Resultant Fatalities and 
      Injuries...................................................   484
    Rail Safety and Rail Safety Programs.......................489, 598
    Truck Safety...............................................593, 625
        Motor Carrier Safety on Borders..........................   550
        Need to Improve Large Truck Safety.......................   486
        Safety of Mexican Trucks.................................   487
Testimony Statement--DOT's Budget: Safety, Management, and Other 
  Issues Facing the Department in Fiscal Year 1998 and Beyond....   475
Transportation Enhancements......................................   631
Travel Reform (DOT administrative changes for official travel)...   577

                  Secretary of Transportation Hearing
                          (General Discussion)

Aviation:
    Advance Appropriations.......................................   729
    Advance Appropriations for Capital Projects..................   780
    Air Ticket Tax Expiration....................................   683
    Airline Competition..........................................   800
    Airport Improvement Program..................................   668
    Airport Passenger Facility Charges...........................   682
    Aviation Fuel Tax............................................   708
    Aviation User Fee Proposal...................................   707
    FAA Administrator............................................   660
    FAA Controller Staffing Increases............................   660
    FAA Personnel Audit..........................................   705
    FAA User Fees....................................702, 706, 777, 791
    International Aviation.......................................   786
    Wright Amendment Impact on Air Travel........................   663
Coast Guard:
    Assessment of Domestic Icebreaking Fees......................   806
    Coast Guard Drug Budget......................................   639
    Coast Guard Icebreaking Fees.................................   805
    Domestic Icebreaking Fee Proposal............................   806
    Double Hull Alternatives.....................................   792
    Joint U.S./Canada Icebreaking Agreement......................   805
    Long Term Plans for Great Lakes Icebreaking..................   807
    Oil Tanker Safety............................................   669
Highway:
    Central Artery Project.......................................   724
    Consolidated Block Grants....................................   796
    Devolution of Trust Fund Revenue.............................   718
    Highway Demonstration Projects...............................   724
    Highway Formula and Donor/Donee State Issue..................   766
    Highway Funding Formula......................................   672
    Highway Needs Study..........................................   718
    ISTEA Funding Formula Proposed Changes.......................   763
    ISTEA Reauthorization........................................   665
    ISTEA Reauthorization Goals..................................   762
    NEXTEA Highway Funding Formula...............................   762
    Reauthorization of Highway Formula...........................   675
    Step 21 Highway Funding Proposal.............................   676
    Supplemental Request for Federal-Aid Obligation Authority 
      Error......................................................   770
    Surface Transportation Program...............................   687
    Transportation Trust Funds-Dispositions of State Revenues....   715
    Transportation Trust Funds Off-Budget........................   713
    Treasury Error on Highway Funds..............................   784
    Trust Funds Off-Budget.....................................723, 779
Innovative Financing:
    Innovative Financing.......................................731, 797
    Public-Private Partnerships..................................   797
    State Infrastructure Banks...................................   639
NAFTA:
    Border Crossings.............................................   666
    Coordination of Border Crossings.............................   791
    Cross Border Truck Traffic (NAFTA)...........................   785
    Cross Border Trucking........................................   811
    International Trade Corridors................................   760
    NAFTA........................................................   672
    San Diego Border Crossing....................................   666
    State Route 905 Border Crossing..............................   670
        A Vital Connector: Border Commerce Depends on 905 Link...   671
Railroad:
    Amtrak.......................................................   728
    Amtrak in NEXTEA.............................................   814
    Amtrak Route Closures........................................   686
    Funding Amtrak from the Highway Trust Fund...................   686
    Vision for Amtrak............................................   813
Research and Development:
    Advanced Transportation Technology Consortia.................   773
    Research and Technology......................................   772
    RSPA's Role as Department's Strategic Planner................   772
    Technology Consortia.........................................   665
Transit:
    Advanced Technology Transit Bus..............................   813
    BART Agreement on San Francisco Airport Project..............   755
    BART Financing Agreement.....................................   756
    Livable Communities Initiative...............................   678
    Los Angeles Metro............................................   758
    Los Angeles Metrorail Project................................   782
    State Gas Taxes..............................................   723
    Transit Formula Grants.......................................   751
    Transit Full Funding Agreements..............................   659
    Transit New Start.....................................674, 751, 755
    Transit New Starts Funding...................................   780
    Transit Operating Assistance................679, 682, 714, 715, 789
Transportation, Department of:
    Airport Revenue Diversion....................................   778
    Bicycle Infrastructure.......................................   714
    Biography of Louise Frankel Stoll............................   656
    Biography of Rodney E. Slater................................   654
    Closing Remarks..............................................   773
    Disadvantaged Business Enterprise Requirements...............   771
    DOT Personnel Reductions.....................................   705
    Emergency Supplemental Request for Emergency Relief Program..   769
    Encouraging Intemodal Freight Facilities.....................   798
    Environmental Regulation...................................706, 795
    Field Office Organization....................................   725
    Five Year Plan...............................................   705
    Funding Alternatives.........................................   771
    Gambling on Airlines.........................................   712
    Houston Metro................................................   759
    Infrastructure Investment....................................   639
    Inspector General Appointment................................   658
    Intelligent Transportation System............................   714
    Intermodalism................................................   769
    Los Angeles Airport Revenue Diversion........................   708
    Los Angeles Revenue Division.................................   759
    Morgan Technologies and Transportation Program...............   639
    Opening Remarks..............................................   637
    Opening Statement............................................   637
    Program Terminations.........................................   683
        Letter from Franklin Raines to Bob Livingston on.........   684
    Secretarial Appointments.....................................   661
    Secretarial Priorities.......................................   774
    Statement of Rodney E. Slater................................   641
    Surface Transportation Board User Fees.......................   662
    Surface Transportation Field Offices.........................   728
    Transportation Goals.........................................   638
    Transportation Infrastructure Investment.....................   658
Transportation Safety:
    Balancing Safety Challenges..................................   701
    CAFE Standards...............................................   788
    Depowered Air Bags...........................................   693
    Drug Testing.................................................   769
    FHWA Safety Rating Process...................................   794
    Highway Fatalities.........................................690, 701
    Medical Marijuana Issue......................................   782
    NTSB Recommendations..................................638, 697, 776
    Rail Safety Rules............................................   698
    Safety Challenges............................................   774
    Safety Programs..............................................   687
    Safety Research Contacts with Other Countries................   693
    Smart Air Bags...............................................   694
Welfare to Work:
    Access to Jobs Program.......................................   752
    Welfare to Work Initiative.................................639, 676
    Welfare to Work Proposal.....................................   664

               Office of the Secretary of Transportation
                          (OST Hearing Record)

Automated Records Systems:
    Case Management System.......................................   867
    Docket Management System..............................880, 881, 883
    Automated DOT Rulemaking System..............................   884
Budget--Miscellaneous:
    Advisory Committees..........................................  1011
    CBO vs. DOT Outlays by Appropriation.........................  1034
    Programs Requiring Authorizing Legislation...................  1032
    Telecommuting................................................  1037
    Training and Executive Development...........................  1022
    Workforce Diversity Training.................................  1023
Bug 2000:
    Completion of Assessment Phase...............................   836
    Computer Equipment and Support for OST.......................   837
    Departmental Cost Estimate...................................   834
    Extent of Problem............................................   838
    Failing Grade on Developmental Report Card...................   838
    Federal Share of State Information Systems...................   837
    GAO Recommendations..........................................   840
    Planning Strategy............................................   835
Chief Information Officer (CIO):
    Additional Cost of Funding the CIO...........................   863
    Cost of Improved Computer Equipment..........................   865
    National Performance Review..................................   891
    Programs Subject to CIO Oversight............................  1041
    Responsibilities and Duties..................................   863
Essential Air Service (EAS):
    Administration of the Rural Airport Program..................   846
    Amount Collected to date under New Legislation...............   842
    Communities Effected in FY 1997 and Changes in FY 1998.......   847
    Communities Eligibility in 1998..............................   843
    Communities Eliminated By Second Hub Criteria in 1997........   847
    Communities Likely to see Increased Service..................   843
    Communities Reinstated By Second Hub Criteria in 1998........   847
    EAS Funding..................................................   843
    EAS Legislative Restrictions.................................   842
    EAS vs. Rural Airport Funding................................   844
    EAS Weekend Subsidies........................................   847
    Renegotiated Subsidy Rates...................................   848
    Rural Airport Funding Carve out from the AIP Program.........   845
    Rural Airport Projects.......................................   846
Government Performance and Control Act:
    Accountability of Managers...................................   833
    Congressional Coordination...................................   831
    Coordination with other Federal Agencies.....................   831
    Departmental Changes made to be More Results-Oriented........   832
    Departments' Stakeholders Views..............................   830
    Identification of Conflicting Goals........................825, 826
    Impact on Daily Operations...................................   833
    Lessons Learned from Results Act Pilot Phase.................   828
    Linking Goals from Strategic Plan with Annual Performance 
      Plan.....................................................826, 827
    Progress on Strategic Plan...................................   825
    Realistic Assessments of Resources...........................   826
    Results-Oriented Performance.................................   828
Integrated Personnel and Payroll System (IPPS):
    IPPS Alternatives............................................  1020
    IPPS Cost to Complete........................................  1021
    IPPS Development.............................................  1018
    IPPS Expenditures............................................  1019
Nassif Building:
    Cost of Relocation...........................................   849
    GSA's Responsibility.........................................   850
    Lack of HVAC Maintenance.....................................   851
    Payments for Relocation......................................   850
    Recouping Costs of Relocation................................   851
    Status of Relocation Process.................................   849
National Performance Review:
    Air Traffic Control Towers Conversion to Contract Operations.   892
    General Status Report on Recommendations.....................   891
    Information Technology.......................................   891
    Specific Status Report on all 44 Recommendations.............   893
Office of Acquisition and Grant Management:
    Formal Reviews of Major Acquisitions Performed...............   817
    Why is Office Necessary?.....................................   819
    Actions to Reduce FTE........................................   823
Office of the Secretary:
    Contract Appeals Board Workload..............................  1003
    Printing Increase............................................   862
    Reception and Representation Expenses........................  1001
    Reimbursable Agreements with OST.............................  1007
    Salaries and Expenses Reimbursables..........................  1006
    Training and Executive Development...........................  1022
Olympic Games in Salt Lake City:
    Support for the Games by Mode................................   900
Personnel and Staffing--DOT:
    Attorneys, number of.........................................   948
    Authorized Positions.........................................   923
    Employee Bonuses and Awards..................................   963
    FTE Dollar Savings...........................................   925
    Political Appointees.........................................   969
    Senior Level Reductions......................................   929
    SES Bonus Awards by Mode...................................960, 961
    Streamlining Plan............................................   927
Personnel and Staffing--OST:
    Acquisition and Grants Management............................   822
    Assistant Secretary for Administration Staffing..............   949
    Authorized Positions and EOY Employment......................   921
    Average Grades of Employees..................................   995
    Aviation and International Affairs Staffing..................   940
    Clerical vs. Professional Workers............................   993
    Full Time Equivalents (FTE)..................................   933
    General Counsel Aviation Staff...............................   954
    General Counsel Staffing.....................................   944
    Governmental Affairs Staffing................................   936
    Immediate Office of the Deputy Secretary Staffing............   935
    Immediate Office of the Secretary Staffing...................   934
    Political Appointees on Board................................   965
    Political/Career Employee Ratios.............................   984
    Position Increases and Decreases.............................   931
    Positions and On Board Strength..............................   932
    Public Affairs Staffing......................................   937
    SES Bonus Awards.............................................   955
Personnel Benefits:
    Benefits for Former Personnel................................   862
    Federal Employees Retirement System, Contributions to........  1025
    Pay and Non-Pay COLA's.......................................  1030
Procurement:
    Small Business Involvement...................................   869
Rental Payments:
    DOT's Analysis of Proposed Security Enhancements.............   861
    FY 1997 and FY 1998 Rental Payments and Square Footage.......   999
    GSA's Security Enhancements for FAA..........................   861
    GSA's Security Enhancements funded by TASC...................   861
    GSA's Security Enhancements Total Cost.......................   860
    GSA's Security Enhancements................................858, 860
    Last time Modes Budgeted for Space Requirements..............   854
    Modal Office Space Budget....................................   855
    Modal Overpricing of Space Requirements......................   853
    Office Space Comparison......................................   856
    Office Space Reductions......................................   857
    Office Space Utilization.....................................   996
    OST Headquarters Office Space................................   997
    Outlay Savings from Modal Funding............................   862
    Termination of the Consolidated Rental Payments Account......   853
Transportative Administrative Service Center:
    FAA Franchise Fund...........................................   890
    FY 1998 FTE..................................................   890
    List of Non-DOT Clients Served...............................   887
    Positions Funded.............................................   886
    Services Rationed in FY 1997.................................   886
Transportation Planning Research and Development:
    Cost of Printing ISTEA Booklet...............................   878
    Funds to Coordinate Aviation and International Policy........   879
    Global Climate Change Funding................................   873
    Older Driver and Mobility Study..............................   873
    Ongoing TPR&D Activities.....................................   877
    TPR&D Budget Increase........................................   871
    Vulnerability Assessment...................................875, 876
Travel:
    Budget Office Travel.........................................   918
    Civil Rights Travel..........................................   867
    DOT Transportation of Things by Appropriation................   917
    DOT Travel by Appropriation..................................   915
    OST Overseas Travel..........................................   906
    OST Travel Expenses..........................................   902
    Secretarial Travel...........................................   905
    Travel Paid for by Other Modes...............................   903

             Saint Lawrence Seaway Development Corporation

1996:
    Accomplishments..............................................  1048
    Navigation Season Overview...................................  1047
1996 Accomplishments.............................................  1048
1996 Navigation Season Overview..................................  1047
Advisory Board...................................................  1082
Binational Seaway................................................  1052
Canadian:
    Laker Cargo Volume...........................................  1080
    Marine Services Fee..........................................  1096
    United States/Canada Working Group...........................  1051
Canadian Laker Cargo Volume......................................  1080
Canadian Marine Services Fee.....................................  1096
Capital Needs....................................................  1084
Consulting Services..............................................  1092
Customer Exit Survey.............................................  1051
Emergency Response Drill.........................................  1051
Employee Buyouts.................................................  1082
Estimated Other Services (in thousands of dollars)...............  1075
Estimated Savings and Reserve Contributions......................  1066
Global Positioning System........................................  1050
Global Positioning System (GPS)..................................  1095
Health Insurance Costs...........................................  1083
Incentives.......................................................  1058
International Seaway Tonnage (millions of metric tons)...........  1079
Montreal-Lake Ontario Section Traffic for 1995/1996..............  1077
NPR Hammer Award.................................................  1049
Offsetting Collections from Non-Federal Sources..................  1100
Opening and Closing Dates........................................  1073
Overseas Trade...................................................  1058
PBO:
    Conversion...................................................  1048
    Funding Versus HMTF Appropriations...........................  1068
    Performance Based Organization...............................  1062
PBO Conversion...................................................  1048
PBO Funding Versus HMTF Appropriations...........................  1068
Performance Based Organization (PBO).............................  1062
Personnel Incidents..............................................  1095
Pilotage:
    Issues.......................................................  1061
    Transfer.....................................................  1048
Pilotage Issues..................................................  1061
Pilotage Transfer................................................  1048
Pleasure Craft and Non-Commercial Vessel Tolls...................  1072
Questions for the Record from Chairman Wolf......................  1052
Reimbursable Agreements..........................................  1074
Reprogramming....................................................  1084
Revenues.........................................................  1092
Seaway:
    Binational...................................................  1052
    FTE Authorization, On Board Utilization......................  1081
    FY 1998-2002 Five-Year Capital Plan..........................  1085
    Health Insurance Costs.......................................  1083
    Opening and Closing Dates....................................  1073
    Revenue Available by Source..................................  1092
    Statistics...................................................  1074
    Usage........................................................  1093
Seaway Operating Dates 1992-1996.................................  1073
Seaway Statistics................................................  1074
Seaway Usage.....................................................  1093
SLSDC FTE Authorization, On Board and Utilization................  1081
SLSDC FY 1998-2002 Five-Year Capital Plan........................  1085
SLSDC Health Insurance Costs.....................................  1083
SLSDC Revenue Available by Source................................  1092
Staffing.........................................................  1080
Statement by Administrator Gail C. McDonald......................  1046
Tolls:
    Negotiations.................................................  1048
    Pleasure Craft and Non-Commercial Vessel.....................  1072
Tolls............................................................  1071
Toll Negotiations................................................  1048
Tonnage:
    International Seaway.........................................  1079
    Montreal Lake Ontario Section Traffic........................  1077
Trade Development................................................  1049
Trust Funds Off Budget...........................................  1070
Unions...........................................................  1061
Union Agreements with AFGE Local 1968............................  1062
United States/Canada Working Group...............................  1051
Vessel:
    Fleet Study..................................................  1049
    Incidents....................................................  1093
    Incidents FY 1996............................................  1094
    Transits Through the U.S. Locks..............................  1093
Vessel Fleet Study...............................................  1049
Vessel Incidents.................................................  1093
Vessel Incidents FY 1996.........................................  1094
Vessel Transits Through the U.S. Locks...........................  1093

       Architectural and Transportation Barriers Compliance Board

ABA Compliance and Enforcement...................................  1105
ABA Enforcement..................................................  1140
Accessible Transportation........................................  1110
ADAAG Review...............................1101, 1117, 1125, 1147, 1150
Advisory Committee Process.......................................  1111
Advisory Committees:
    ADAAG Review...........................1101, 1117, 1125, 1147, 1150
    Outdoor Parks and Recreation Facilities..................1102, 1144
    Play Area Regulatory Negotiation...................1102, 1149, 1152
    Recreation Access............................1102, 1129, 1146, 1151
    Telecommunications...........................1102, 1133, 1148, 1153
Architectural Barriers Act...................................1108, 1126
Budget.................................................1101, 1141, 1143
Detectable Warnings..............................................  1125
Estimate of Americans with Disabilities..........................  1113
Government Performance and Results Act...........................  1139
Guideline Development..................................1103, 1117, 1120
Improving Accessibility..........................................  1108
Internet.........................................................  1137
Miniature Golf Courses...........................................  1129
Outdoor Parks and Recreation Facilities......................1102, 1144
Paratransit Services.............................................  1115
Performance Goals:
    ABA Compliance and Enforcement--Fiscal Year 1997.............  1105
    ABA Compliance and Enforcement--Fiscal Year 1998.............  1106
    Guideline Development--Fiscal Year 1997......................  1103
    Guideline Development--Fiscal Year 1998......................  1104
    Technical Assistance and Training--Fiscal Year 1997..........  1104
    Technical Assistance and Training--Fiscal Year 1998..........  1104
Play Facilities Regulatory Negotiation Advisory Committee...1102, 1149, 
                                                                   1152
Publications.....................................................  1136
Recreation Access Advisory Committee.............1102, 1129, 1146, 1152
Recreational Facilities and Outdoor Developed Areas..............  1128
Research.........................................................  1138
Rulemaking Plan and Status Report................................  1150
Technical Assistance and Training......................1104, 1134, 1144
Telecommunications Equipment.....................................  1133
Telecommunications Access Advisory Committee.....1102, 1133, 1148, 1153
Water Transportation.........................................1131, 1154