[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 ------------------------------------------------------------------------ For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 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