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



 
                    DEPARTMENT OF TRANSPORTATION AND
                    RELATED AGENCIES APPROPRIATIONS
                                FOR 1999

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

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND 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           ESTEBAN EDWARD TORRES, California
HAROLD ROGERS, Kentucky      JOHN W. OLVER, Massachusetts
RON PACKARD, California      ED PASTOR, Arizona
SONNY CALLAHAN, Alabama      ROBERT E. (BUD) CRAMER, Jr., Alabama
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


 DEPARTMENT OF TRANSPORTATION:                                     Page
   Coast Guard....................................................  967
   Office of Inspector General....................................  479
   Office of the Secretary........................................  145
   Saint Lawrence Seaway Development Corporation..................  866
   Secretary of Transportation....................................    1
 RELATED AGENCIES:
   Architectural and Transportation Barriers Compliance Board.....  911
   U.S. General Accounting Office.................................  679
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
49-150                      WASHINGTON : 1998
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
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 
                                  1999

                              ----------                              

                                            Tuesday, March 3, 1998.

                      SECRETARY OF TRANSPORTATION

                                WITNESS

HON. RODNEY E. SLATER, SECRETARY OF TRANSPORTATION

                            Opening Remarks

    Mr. Wolf. Mr. Secretary, it is 10 o'clock. I think we can 
begin in the interest of time. I won't have an opening 
statement.
    We welcome you. We look forward to hearing from you. You 
can submit your prepared statement or summarize, whichever you 
believe is appropriate. Your full statement will appear in the 
record as read, and I recognize Mr. Sabo.
    Mr. Sabo. I have got to be shorter. Welcome. Good to have 
you here again and keep up the good work. I look forward to 
hearing from you.
    Secretary Slater. Thank you. Mr. Chairman, Congressman 
Sabo, and other members of the committee who will definitely 
join us over the course of the hearing, I want to say at the 
outset that I am very thankful for this opportunity to testify 
in support of President Clinton's fiscal year 1999 
transportation budget proposal.
    I would like to submit my written statement for the 
record----
    Mr. Wolf. Without objection.
    Secretary Slater [continuing]. And make some summary 
remarks concerning that statement.

                             budget request

    Our $43.3 billion transportation budget, part of the first 
balanced budget in 30 years, continues the President's 
commitment to creating a balanced, integrated transportation 
system that is international in its reach, intermodal in its 
form, intelligent in its character and inclusive in its 
service.
    When I took office a year ago, I reflected on what we need 
to meet the transportation challenges now and into the 21st 
century. Today our transportation system is the best in the 
world. Why? Because of technological innovations, 
infrastructure innovations and institutional innovations. We 
have, over the course of the year, developed a strategic plan 
that will continue such innovation, a plan that has been called 
the best in government. It sets goals for us to achieve as we 
prepare to meet the transportation challenges of the 21st 
century.
    In order to continue the progress we have made in 
partnership with the Congress, we will focus our resources on 
five major areas: First, enhancing safety; second, improving 
mobility; third, promoting economic growth and trade; fourth, 
protecting the environment; and fifth, supporting our national 
security. To make real progress towards these goals, we have 
submitted tough performance measures. I look forward to working 
with you, Mr. Chairman, and other members of the Subcommittee, 
as we implement this performance plan.

                            safety programs

    Now, to summarize our proposal and to lift up some of our 
funding recommendations--as I have said before, safety is our 
top priority. Our goal for 1999 is to reduce the number of 
transportation-related deaths to below 1995 levels, despite 
increased travel. To do this, our budget proposes $3.1 billion 
for safety programs, an 11 percent increase over this year and 
a record 7.3 percent of our total budget. This includes funding 
for tough laws dealing with measures against drunk driving, 
expanding the use of seat belts, targeting unsafe motor 
carriers while reducing regulatory burdens on safe ones, and 
hiring additional aviation and rail safety personnel. Last year 
the subcommittee supported our proposal for increased safety 
funding. We appreciate that and look forward to your support of 
this year's proposal.

                       infrastructure investment

    As relates to mobility, clearly mobility means getting 
Americans to the places they wish to go, through a balanced and 
integrated transportation system. We propose a record $30 
billion in infrastructure investment. This is 42 percent above 
the 1990-1993 average.
    One year ago today, Mr. Chairman, you spoke on the House 
floor about America's transportation needs; and you stated, 
``Clearly the transportation community is at an important 
crossroads. However, highway programs must continue to be only 
one component of a balanced transportation system, one that 
meets the needs of highway users, as well as those that depend 
on public transportation.'' Well, Mr. Chairman, we could not 
agree with you more.

                        transit capital funding

    We want to increase transit capital funding to $4.6 
billion. This includes $100 million for our Access to Jobs 
program, and this effort will help those individuals move from 
welfare rolls to payrolls and get to where the jobs are.

                             amtrak and aip

    We also want to ensure a balanced inner city transportation 
system by raising Amtrak investment to $621 million, helping 
Amtrak to achieve operating self-sufficiency. And we want to 
increase FAA funding, paying for additional air traffic 
controllers and maintenance technicians. Also, we hope to 
maintain $1.7 billion for the airport improvement program.

                   intelligent transportation systems

    In the area of economic growth and trade, maintaining 
America's competitive edge requires we improve efficiency. We 
propose a record $1.1 billion for technology, including $250 
million for intelligent transportation systems, which can cut 
by a third the cost of the new highway capacity that is needed. 
We propose $90 million for the Flight 2000 program, to 
demonstrate technologies and operating procedures which will 
lead to more efficient free flight, and we also propose $100 
million for an innovative infrastructure credit program and 
$150 million for our State infrastructure banks program.

                         environmental programs

    Our budget has a record $1.9 billion to protect the 
environment, to help communities clean their air. We have 
budgeted $1.3 billion for our Congestion Mitigation and Air 
Quality Improvement (CMAQ) program. We also seek to reduce 
emissions associated with global climate change and we want to 
fund the Advanced Vehicles program, a partnership tocut 
pollution and energy consumption by trucks and other large vehicles.
    On the national security front, we know that we live in a 
world with risk, and to support our national security programs, 
to protect Americans from deliberate harm, we propose 
significant investments in infrastructure as well. The Coast 
Guard's drug and interdiction effort is vital to America's 
security, and we want to increase its budget to $437 million. 
We also propose $100 million to provide airports with machines 
to detect explosives and to help airlines test jet cargo 
containers.

            reauthorization of aviation and surface programs

    In closing, Mr. Chairman, much of the progress that I have 
described today depends on aviation and surface transportation 
programs which need to be reauthorized. We are currently 
developing our proposal for aviation reauthorization, drawing 
upon the recommendations of the National Civil Aviation Review 
Commission.
    The Intermodal Surface Transportation Efficiency Act 
(ISTEA) reauthorization plan is pending before Congress. As 
Congress takes up the 1999 budget, timely reauthorization must 
be a top priority. I am pleased the Senate Environment and 
Public Works Committee is acting today to mark up the 
reauthorization bill in the Senate; however, I must note that I 
am disappointed that no additional funding was added for 
transit. I plan to work with the Congress to correct this 
situation.
    As we work with Congress on these bills, the President's 
proposal for a Transportation Fund for America can help us 
overcome obstacles that have cropped up in past efforts. This 
fund could assure users that new resources continue to be 
associated with targeted spending. All of this can be described 
as common-sense government--government delivering what people 
need as efficiently as possible.
    Mr. Chairman, the budget I have described helps us to 
achieve our strategic goals, it helps us to respond to the 
transportation challenges of a new century, and helps us to 
ensure more and more that transportation is the tie that binds.
    The President and I stand ready to work with you and 
members of the Committee and the entire Congress to pass a 
transportation budget that gives us the tools to do as the 
President says: strengthen our nation for the 21st century. 
Thank you, Mr. Chairman, and I look forward to responding to 
any questions that you or members of the Committee might have.
    [The prepared statement and biography of Rodney Slater 
follows:]


[Pages 5 - 20--The official Committee record contains additional material here.]



    Mr. Wolf. Thank you, Mr. Secretary. I understand you have 
to be at the White House at 1:45 for an appointment, is that 
correct?
    Secretary Slater. That is correct, Mr. Chairman, but this 
is a very important meeting, and we want to take care of our 
business before this committee as well.
    Mr. Wolf. We will go straight through the lunch hour and we 
will try to accommodate your schedule. I have a whole series of 
questions which we will go through as the day goes on, but in 
deference to the other members who have other appointments or 
are chairing other hearings, I will recognize them first.

                  faa management and year 2000 program

    I just have two opening comments and questions.
    Secretary Slater. Yes, Mr. Chairman.
    Mr. Wolf. I personally am very, very worried about the FAA. 
You saw the editorial in today's Wall Street Journal. It is 
called the Air Traffic Wreck, it says, ``It won't seem quaint 
when the Year 2000 befalls us,'' talking about the Year 2000 
program. ``Congress was informed this month by various experts, 
including the Transportation Department's own Inspector 
General, that the FAA lags woefully behind schedule in 
repairing date-related computer glitches and almost certainly 
won't have the necessary fixes completed by the millennium. We 
are not talking about expanding capacity to catch up with the 
growing economy and growing air travel; we are talking only 
about preventing the system from collapsing in a heap in 21 
months.''
    It went on to say, ``Scarier still is a revelation that the 
FAA gave itself a deadline of November of 1999, leaving itself 
only 2 months' slack. Whom is it kidding? The FAA is an agency 
that fell 15 years behind in its major computer upgrade, a job 
that still remains unfinished.''
    I am sure you saw the article in the Wall Street Journal 
yesterday.
    ``Even when it is done, it will consist of a technology 
that in any other part of the economy would be on its way to 
the junkyard; instead, it is just being installed. Yet the FAA 
continues to fumble in the dark. We use the expression 
advisedly. Several times in the past 3 years, the screens and 
communications have indeed gone dark at vital traffic control 
centers. Radio and radar contact with 300 flights was lost when 
the Kansas City control center went down a week before 
Christmas, then again in Florida a few days later.
    The FAA failures have become an authentic crisis, a word 
much overworked in Washington, but one that really applies this 
time. Meanwhile, the airlines are stuck rationing the systems' 
inadequate capacity the only way they can, higher fares.''
    We sent a letter, we met with the IG, we have met with the 
FAA with regard to the Year 2000 program. I am really 
concerned. I think you have to do more than is being done 
today.
    Secondly, I believe that it is very difficult to measure 
the progress or lack of progress at the FAA. We need to 
establish an office within the FAA, working with external 
people, to monitor the progress on the Year 2000, the progress 
on WAAS, the progress on STARS. We have asked Jim Hall, who has 
agreed to provide a person from the National Transportation 
Safety Board; Ken Mead the IG has also done the same; as well 
as John Anderson from GAO. I think NASA and several other 
groups should be involved. There really is a credibility 
problem, certainly a perception, that the FAA isn't measuring 
up.
    So the one question I will have before I recognize other 
members of the Committee, is why are you confident that you 
have a handle on the Year 2000, the WAAS, and please comment on 
the article in the Journal yesterday. Would you tell us a 
little bit about that and about your thoughts with regard to 
how we can monitor the FAA to makesure they are keeping on 
track both in procurement and particularly in the safety areas.
    Secretary Slater. First of all, let me say, I think these 
articles that are beginning to appear in publications across 
the country are sobering reminders of the challenge that we 
have before us. But I can tell you that we have new leadership 
at the FAA--Administrator Garvey, who is on board, who is a 
proven manager, who will work with the entire FAA but also the 
entire Department staff, to ensure that we meet our obligations 
when it comes to ensuring our air traffic control system is 
Y2K-compliant, not only on that important day of January 1st, 
but long before that. We actually hope to have all of our work 
done by January of 1999 so we can use the full year of 1999 to 
test and continue to assess our compliance.
    We have recently completed a review of what we call our 
critical FAA missions systems, and we have found that 125 of 
some 200 systems are already Y2K-compliant. We have a program 
in place to test the remainder of the systems over a time 
certain. We will continue to monitor that effort and continue 
to be vigilant as we ensure that the equipment is compliant.
    We have made a request to the Congress for additional 
resources, I think about $30 million or so, to give us the 
dollars we need to take these actions over the course of the 
year. We have also completed a review of our host computer 
system, and we have determined that we need to move forward to 
replace that equipment. We have also established within the 
Department a Department-wide Y2K initiative, headed by the 
Deputy Secretary. I designated him to oversee that effort, to 
put in place a schedule where senior officials within all of 
the modal administrations will report directly to him on a 
regular basis. We then will monitor their efforts.
    We will work with the Congress to continue to monitor our 
progress in this regard, but we intend to meet our obligations 
when it comes to ensuring that our system is compliant, a year 
before we actually have to test it in a real-life situation. 
You have that commitment from me, and I look forward to working 
with you and the other members of the committee and the 
Congress in that regard.
    As relates to the idea of putting together the committee 
that would include not only leadership from the Department, but 
also, as you mentioned, the NTSB and NASA and others--Mr. 
Chairman, I think that is a good idea. I should say that we are 
actually working with many of these stakeholders currently, but 
setting up a monitoring committee, I think would be a good 
idea, and I look forward to working with you and other members 
of the Committee who would have an interest in that.
    Mr. Wolf. We are going to put something in the bill to do 
that, because I think the Congress and the public have to have 
some measuring device. The slippage in so many of these 
programs over the years has been so dramatic. It is hard to 
believe why the FAA did not move on this a year ago or a year-
and-a-half ago; perhaps it was because Mr. Hinson had left and 
there was a vacancy.
    Also, I might say--and then I will end and recognize Mr. 
Sabo--I don't think Ms. Garvey has moved fast enough; she does 
not have enough of her own people around her. She has been on 
the job for over 6 months. You are losing Mr. Donohue, and I 
worry she has not brought in top-flight, knowledgeable people.
    She should have been getting the very best from the DOD, 
the very best from the private sector, the very best from Mitre 
Corporation, the very best from NASA and others; and I don't 
believe you have brought in enough of your own people to really 
get a handle on the FAA, and I think you have to be bold and 
innovative and imaginative because this is a very important 
issue.
    Secretary Slater. Yes.

                       coast guard hearing motion

    Mr. Sabo. Do you want to deal with the motion first?
    Mr. Wolf. Yes. Mr. Rogers, the Chairman of the Commerce, 
Justice, State, and Judiciary Subcommittee has asked the 
Commandant of the Coast Guard to provide testimony to the 
Subcommittee on the Coast Guard's drug interdiction activities. 
Since a disclosure of these specific activities would endanger 
the national security and compromise sensitive law enforcement 
activities, it is necessary that a portion of the Coast Guard 
hearings scheduled for March 5 be closed to the public. This 
closed session will be brief, but it will be the first order of 
business when the subcommittee reconvenes on March 5, and will 
be followed immediately by the Commandant's testimony in 
support of the President's budget request for 1999 open to the 
public; and pursuant to Mr. Rogers' request, we are doing this.
    So I move a portion of the Coast Guard hearing related to 
classified matters scheduled for Thursday, March 5, at 10:00 be 
closed in conformance with clause (2)(g), Rule 11 of the House 
of Representatives. The clerk will call the roll.
    The Clerk. Mr. Livingston.
    [No response.]
    The Clerk. Mr. DeLay.
    Mr. DeLay. Aye.
    The Clerk. Mr. DeLay votes aye.
    Mr. Regula.
    [No response.]
    Mr. Rogers.
    Mr. Rogers. Aye.
    The Clerk. Mr. Rogers votes aye.
    Mr. Packard.
    Mr. Packard. Aye.
    The Clerk. Mr. Packard votes aye.
    Mr. Callahan.
    [No response.]
    The Clerk. Mr. Tiahrt.
    Mr. Tiarht. Aye.
    The Clerk. Mr. Tiahrt votes aye.
    Mr. Aderholt.
    Mr. Aderholt. Aye.
    Mr. Aderholt votes aye.
    The Clerk. Mr. Sabo.
    Mr. Sabo. Aye.
    The Clerk. Mr. Sabo votes aye.
    Mr. Torres.
    [No response.]
    The Clerk. Mr. Olver.
    Mr. Olver. Aye.
    The Clerk. Mr. Olver votes aye.
    Mr. Pastor.
    Mr. Pastor. Aye.
    The Clerk. Mr. Pastor votes aye.
    Mr. Cramer.
    Mr. Cramer. Aye.
    The Clerk. Mr. Cramer votes aye.
    Mr. Obey.
    [No response.]
    The Clerk. Mr. Wolf.
    Mr. Wolf. Aye.
    The Clerk. Mr. Wolf votes aye.
    Mr. Wolf. Mr. Sabo.

                          acquisition process

    Mr. Sabo. Thank you, Mr. Chairman.
    Mr. Secretary, I share the concerns expressed by the 
Chairman as they relate to the problem for the year 2000. Let 
me, however, also express a broader concern as it relates to 
acquisition. This is not a question; I will move to the 
question later.
    My observation over a good number of years is that we just 
have a terrible time on any major procurements at the Federal 
level and, not unique to this administration, it goes--whatever 
the administration and regardless of agency it just seems that 
in agency after agency, when we move to major procurements, we 
have major problems; and at some point, my own judgment is, we 
ask operational agencies to handle a major procurement they are 
somehow not equipped to do, then we run into problems. Then we 
try to make villains of people for doing what they probably 
aren't equipped to do, and we go on making the same mistakes 
from agency to agency.
    I just think it is a very fundamental issue that at some 
point has to be addressed beyond individual departments.
    Normally, then, we decide we want to do some independent 
structure, and I am not sure that solves anything. It puts the 
same culture, the same framework off by itself, whether it is 
FAA or IRS or whatever agency.
    I just think at some point there needs to be a real 
centralized task force in the administration, looking at how we 
go through the process of planning major new acquisitions, 
and--because I know I had this conversation with Mr. Rogers 
some time ago about an agency he funds, the same experience; 
and it just seems to--you know, it goes on all the time. And I 
don't know the answer, but I think it would--we have wasted 
billions of dollars throughout the government in faulty 
procurement that just never gets off the ground, never 
accomplishes goals. I don't know if we tried to do too much to 
start with or some place, somehow, the planning process just 
breaks down, system-wide.

                 surface transportation reauthorization

    Let me--I would like to hear from you where we are in 
relationship to the reauthorization bill. What is our time 
frame when we really start running into problems this year? And 
I have to say that I also appreciate your comment that if we 
are going to add dollars, it should not just be for additional 
dollars for highways.
    As I understand what is happening in the Senate, they are 
adding dollars. They don't know where they are coming from in 
relationship to trade-offs, but as I understand it, they are 
all highway monies, no transit money, no enhancement money. I 
am not sure if they are increasing some of the things to 
increase the capacity use, like intelligent vehicle systems or 
not, I just read brief descriptions of it, but it seems to me 
that if we are going to make the decision, we are going to take 
money away from other programs to spend within ISTEA, that 
there has to be some balance in how those dollars are spent; 
and clearly, the additions I see in the Senate don't achieve 
those goals.
    Secretary Slater. First of all, Congressman Sabo, let me 
say that we are encouraged by the action that we are beginning 
to see in the Congress dealing with ISTEA reauthorization.
    Let me also say, before getting into the details of that 
response, I do think it important to say thanks to the Congress 
for at least giving the FAA the acquisition reform legislation, 
and also the personnel reform legislation that was passed 
recently, that really gives us an opportunity to try to deal 
with these very thorny and difficult acquisition questions that 
you reference and that are a part of our reauthorization and 
our modernization initiative.
    So I want to begin my remarks by thanking the Congress for 
giving us at least the ability to be much more aggressive, much 
more forthright and timely in dealing with acquisition 
questions. We look forward to staying in touch with you to keep 
you informed of our progress in that regard because we are 
learning as we go and we do intend to seek the best 
professional advice in this regard available.
    Back to the issue of reauthorization, it is true that we 
are beginning to see some progress. The good thing is that both 
major bills in the House and in the Senate reflect the key 
principles that were identified in our National Economic 
Crossroads Transportation Efficiency Act (NEXTEA) proposal that 
was introduced a year ago this month. We talked about the need 
for maintaining flexibility within the program that allows 
State and local officials to make determinations about how 
those resources should best be spent to respond to the 
transportation needs that they know exist.
    We also sought maximum investment with our program, with a 
focus on safety, a focus on the environment, a focus on helping 
people move from welfare to work. All of those principles are 
retained within the two bills that are moving forward--one in 
the House, one in the Senate.
    I did mention that the concern we have about the action 
taken by the Senate yesterday doesn't relate to the question of 
additional resources. It does relate, though, to the issue of 
whether there will be a balanced approach to the granting of 
those resources--will we take care of transit needs as well as 
highway needs, and will we continue to focus on questions like 
the environment and safety and the like? And we will continue 
to work with the Congress as we move forward.
    We are very concerned that we move forth as expeditiously 
as possible because, as you know, ISTEA actually expired last 
year, but Congress then passed an extension for 6 months. The 
extension expires May 1st of this year, and that is less than 
60 days away, and so it is incumbent upon us to continue to act 
in a forthright and timely fashion in reauthorizing this most 
important piece of legislation.
    The areas that will be hurt most severely, if we fail to 
act and fail to pass some kind of extension, would be the 
safety programs--motor carrier safety; also our ability to work 
with States to deal with questions like drunk driving laws; and 
rail safety, to a degree. So it is very important that we move 
on the program for that purpose.
    Also, if many States are unable to move forward with the 
awarding of contracts early in the year, then we stand the 
chance of losing an entire construction season, and that is a 
matter of major concern for States in the Northeast and the 
Upper Midwest. So that is also a matter of great concern to us.
    We also have two particular agencies within the Department 
of Transportation that depend on administrative funds being 
taken down from these resources. Those are the Federal Highway 
Administration and the Bureau of Transportation Statistics. As 
you know, both of those agencies are very important to States 
and local governments when it comes to moving through the 
performance chain as it relates to designing and moving a 
contract to actual construction.
    So those are the major areas of concern. But again, we are 
seeing activity and we are going to continue to work with the 
Congress to ensure that the bill is passed in a timely fashion.
    Mr. Packard. Would the gentleman yield for a moment on that 
point?
    Do you have a contingency plan if we go beyond the May 1st 
deadline?
    Secretary Slater. We put most of our contingency thinking 
on the table before the Congress when this matter came up in 
September of last year. We have stretched the resources about 
as far as they can go.
    We don't think we will be able to minimize the adverse 
impacts that could result if this bill is not passed in a 
timely fashion. We will do whatever we can; we will continue to 
think creatively with the Congress as we move forward, but it 
is really imperative that we deal with this most important 
piece of domestic legislation before the Congress--before that 
May 1st deadline.
    Mr. Packard. Thank you.
    Mr. Sabo. Just one follow-up question. And I don't 
understand all the technicalities on how States can proceed 
with bids and what they can bid today and what they have to 
hold back, but I represent a northern State and we have had a 
mild winter, which would lead one to believe El Nino has had 
some good effects in our State--mild winter, not much snow on 
the ground, and a construction season that could likely start 
earlier than normal.
    They are limited by whatever proportion you can commit from 
the 6-month extension. Anything beyond that, they have to wait 
for actual contract-letting until further action on ISTEA 
occurs; is that right?
    Secretary Slater. That is correct. I would assume, 
Congressman Sabo, that in Minnesota in particular, they 
probably let contracts to take advantage of the mild 
construction season that they now enjoy, so you probably have 
work under way, but they have not been able to do what they 
would normally have done in a situation like this, and that is 
to actually front-end load many of the contracts that they 
would have let because of their assurance that the resources 
would be forthcoming, so as to really pack into this 
construction season as many projects as possible.
    So without knowing the particulars of the case in 
Minnesota, that is an assumption I would make, based on my 
experience as a transportation official in years past.
    Mr. Sabo. Thank you.

                             houston metro

    Mr. Wolf. Mr. DeLay.
    Mr. DeLay. Thank you, Mr. Chairman.
    Mr. Secretary, it is good to see you, and welcome to the 
committee again. During my questioning, I would like to bring 
up a couple of parochial things, and I will come back during a 
second round to national issues.
    As you may know, Houston Metro serves the fourth largest 
city and third most populous county in the Nation, yet for some 
18 months, your department has denied Metro Federal funding for 
all construction projects because Metro, through no fault of 
its own, was prohibited by a Federal court order from 
implementing its federally approved DBE program. Throughout 
that period, the Department exhibited, in my view, a very 
inflexible and excessively bureaucratic posture in responding 
to Metro's dilemma of having to comply with the court order 
while at the same time facing a contradictory requirement in 
the law.
    Fortunately, however, the FTA finally granted Metro a 
temporary waiver from the DBE regulations which allowed Metro 
to proceed with its construction program, using a race- and 
gender-neutral small business development program. As you know, 
Mr. Secretary, that exemption is due to expire at the end of 
this month. In the meantime, Metro continues to operate under 
the constraints of the Federal court order and is unlikely to 
be released from those constraints for months, if not years, 
while Metro appeals the district court ruling that invalidated 
its DBE program as unconstitutional.
    Can you give me any reason why your Department wouldn't, as 
a matter of course, grant an extension of that waiver?
    Secretary Slater. Yes. First of all, let me say, 
Congressman DeLay, we appreciate the opportunity we have had to 
work with you to address this matter; and we appreciate your 
vigilance in continuing to press us on the issue, so as to 
provide maximum leeway for the City of Houston. Let me just say 
that in response to that, we want to continue to be mindful; 
and for that reason, we have already extended, once again, that 
date from April to October of this year, and we will continue 
to work with you in that regard.

          disadvantaged business enterprise (dbe) regulations

    Mr. DeLay. That is great to hear. I understand that Houston 
is not the only Federal grant recipient, though, to be sued for 
trying to satisfy the Department's DBE requirement. How does 
the DOT plan to deal with these cases where Federal grant 
recipients are judicially precluded from meeting your DBE 
requirements?
    Secretary Slater. Well, we will continue to address them on 
a case-by-case basis, depending on what restriction might be 
applied by virtue of court order or some other kind of official 
action, but I can tell you that in all of the instances, we 
will be as flexible and as forthcoming as we have been in the 
case involving Houston Metro.
    Mr. DeLay. Are you looking at this situation within your 
own Department as you develop recommendations for reforming the 
program, especially in light of the Adarand decision.
    Secretary Slater. We are. As you know, the President has 
challenged all of the administration to work on projects and 
programs of this nature so as to mend them and to ensure that 
they are compliant with Adarand. We are in the process of 
working across the administration and, clearly, within the 
department to do just that. We will soon, actually, have 
actions that we will announce that will go to the heart of that 
particular matter.
    But our objective is, again, to mend the programs, to make 
them compliant with Adarand and to continue the benefits that 
we derive from the program, allowing women, minority-owned 
businesses, and small businesses to participate in this dynamic 
industry and to help in the rebuilding of America.
    Mr. DeLay. Well, do you have any plans for considering 
approaches such as Houston's, which could very well be 
acceptable to the courts?
    Secretary Slater. Oh, yes, yes, we do.
    Mr. DeLay. Are you going to let us see them?
    Secretary Slater. We will continue to work with the 
Committee and with members who have expressed an interest. We 
will do that, and look forward to doing that. As a matter of 
fact, it is situations like the Houston Metro case that have 
continued to give us insight as to how we might be able to 
modify our program so as to preserve the benefits of the 
program, but ensure that they are in compliance with the 
Supreme Court's Adarand decision, which, as you know, raises 
the standard by which these programs are to be measured.

                            i-69 designation

    Mr. DeLay. I want to switch gears a little bit.
    I-69 is very important to Houston and actually, to every 
State from Indiana through Texas. As you know, the NHS 
Designation Act of 1995 designated these high-priority 
corridors--18 and 20, I-69--as future parts of the interstate 
system. The Corridor 20 feasibility study released in August of 
1996 and the special issue study released in July of 1997, 
together identify most of that route. At this point, the route 
of I-69 is now mostly known; there remain a couple of 
disagreements, but they are fairly small.
    In spite of all this, the States along the corridor have 
had a great deal of difficulty in getting future Interstate-69 
signs erected. In fact, in Texas, we have had to put up blank 
future Interstate signs without the numerical designation. I am 
working with Chairman Shuster to correct this in BESTEA.
    Could you work with us to ensure that future I-69 signs are 
placed along the route that everybody knows is the future site 
for I-69?
    Secretary Slater. Definitely. I look forward to doing so.
    Mr. DeLay. Since the corridors were first identified in the 
1991 ISTEA, there have been a number of federally and State-
funded feasibility and location studies. Those studies started 
by identifying 93 possible route locations, which have been 
narrowed down to a known highly cost-effective route. Corridor 
18 has a cost-benefit ratio of $1.57 in return for every dollar 
invested, and Corridor 20 has a return ranging from $1.49 to 
$1.72; in the course of picking the most effective route, a lot 
of the segments were considered and rejected.
    There is interest among some Members of Congress in 
legislatively adding back sections that were eliminated in the 
engineering studies, or never even considered at all. Could you 
discuss the possible impact of those legislatively designated 
route additions; and would they not reduce the overall cost-
benefit of I-69 and slow down that project and reduce its 
competitiveness with other corridors?
    Secretary Slater. Well, let me say as it relates to I-69, 
we have done a considerable amount of work, as you know, 
funding various studies, that have determined that theroute is 
economically feasible, which is quite a significant feat, when you 
consider that the route would go through, frankly, one of the most 
economically depressed areas of the country; but it was determined that 
this kind of investment effort would actually serve to revitalize those 
areas. So I think that all of that is commendable.
    I can tell you that from the vantage point of the 
Department of Transportation, we wish to work with the parties 
that are interested in these corridors and to do so in a way 
that will move us to actual design and construction as soon as 
possible.
    And as we are talking about additional resources for 
infrastructure investment, this is an ideal time and 
opportunity to do just that, so I would be concerned about 
doing too many things that would continue to add to the length 
of the time that would be required before we can move to actual 
design and construction.
    [The information follows:]

    In general, adding segments would increase both the area 
served by the Corridor as well as the construction, operating 
and maintenance costs. The specific effect would depend on the 
nature of the segment. For example, adding an additional major 
river crossing or an urban link with numerous interchanges 
might substantially increase both mobility and cost. Adding an 
existing segment which has already been improved to freeway 
standards would probably result in minimal improvement in 
mobility, but also only a small increase in cost.

    Mr. DeLay. Is that a commitment for I-69 that I just heard?
    Secretary Slater. That is a commitment to working with you 
and the individual States to move forward in this process. I 
want to qualify my response just a bit because we still have to 
deal with the issue of how it is paid for and that is going to 
require everyone coming to the table, but I can assure you that 
the Department of Transportation will be there, and this 
Secretary will be there to work with you and others who, I 
know, are very, very interested in this project.
    Mr. DeLay. Thank you, Mr. Chairman. I will wait for another 
round.

                       faa information technology

    Mr. Wolf. Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman.
    I am not quite sure how I got so completely in between 
these microphones, but Mr. Secretary, it is good to have you 
here again.
    Secretary Slater. Thank you, Congressman Olver.
    Mr. Olver. You were here--in place roughly a year, and I 
must say it must be one of the most exciting jobs in government 
that you have. My sense is that after Education, I think after 
education and maybe our commitment to research and development, 
there is probably nothing that is more critical than the 
investments in infrastructure and transportation infrastructure 
for keeping an economy going and really growing over time.
    So I am very interested, and am very pleased with the high 
level of investment that you put forward in rail and transit 
for the urban areas, and the airport improvement and things all 
up and down the line. I would like to just sort of piggyback on 
what the Chairman and the Ranking Member have said about FAA.
    Secretary Slater. Yes.
    Mr. Olver. And I hesitate a little because the 
Administrator is an old friend, and I have very high respect 
for her administrative abilities. She has only been there half 
a year, and you have given rather brave talk, I think, about 
how we are going to deal with the host computer and Y2K along 
the way.
    Beyond those, we have even the process of how to replace 
and rebuild an air traffic control system. Personnel, as part 
of the computer issue--is, clearly, also very critical.
    I hope you are on target on the brave talk, and I suppose I 
am playing to what my Ranking Member said about we need to be--
to build a process to do these things, because perhaps more 
than anywhere else in transportation, the computerization of 
the whole system is critical to the operation. It probably in 
subtle ways is critical in a lot of other places, but it is 
more obviously critical in air transportation in the whole FAA 
operation. And yet, here we are with a host computer which--I 
keep being told by reputable people that it is generations 
behind--generations in computerization are sometimes less than 
3 years, often less than 3 years, but generations behind.
    We just haven't been doing it. One doesn't get to that 
situation in a year. This has taken us a long time. We had to 
work to get ourselves into this situation, where our 
computerization is that far behind. We are trying to deal with 
that matter.
    And then the Y2K thing, which you are saying we are in 
control of, but I am hearing and reading there are several 
airlines that have said they won't fly on January 1st of the 
year 2000 if we have not resolved the issues here that are so 
serious for the whole program. And I guess I am not convinced 
that we are going to be there by the year 2000, by January 1st 
of 2000.
    I know you are putting forward a very brave front, but I am 
wondering whether it is a brave front or whether we have the 
systems in place to deal with that. This computerization thing 
is big, it is expensive. This one is running into problems.
    We had one in dealing with the IRS computerization over 
there, which has been just fits and starts in computerization 
there; it is at least as far behind. With a country as 
completely committed to modernization and to technology, that 
the major government computing systems are in such shambles--I 
really am not convinced that you are going to be out of this 
woods by January 1st of the year 2000.
    Can you help me?
    Secretary Slater. Well, let me just say, Congressman Olver, 
that clearly this is a matter that requires our best effort, 
and I think it is important to note at the outset, as we deal 
with these issues, that our aviation system is the safest in 
the world and that what we are seeking to do is to make a safe 
system safer, and that we do have to make some decisions that--
frankly--it would have been good had we made them earlier, but 
nonetheless, we are challenged and have the responsibility to 
make those decisions now.
    I noted at the outset of my earlier response that clearly 
all of the articles and all of the discussions are very 
sobering in that they challenge us to question every assumption 
and every assessment that we made up to this point, and they 
require that we be eternally vigilant as we check and double-
check all of our assessments. And we are doing that, but I can 
assure you and the members of this committee that when it is 
all said and done, we will have put forth the very best effort 
possible. We will have worked with members of this committee, 
we will have challenged and energized all of the individuals 
who are responsible within our individual modes, and here we 
are talking about especially the FAA.
    We will have sought the input from the private sector, we 
will have touched all of the bases to make the very best effort 
possible. I believe that that effort will be sufficient; I am 
confident in that regard. But I can tell you that every day, as 
we read about the challenges and come to a greater 
understanding of the challenges we face, that we are required 
to continue to question, reassess, recheck, and then move 
forward; and that is the spirit in which we accept the 
responsibility we have.
    And I just want to make sure that we continue to have the 
opportunity to confer with this Committee, to respond to your 
comments and questions in this regard as we move forward. We 
clearly don't have a day or an opportunity to waste; I 
recognize that, and I come before the Committee with that 
understanding. We are going to give this our very best effort.
    Mr. Olver. You know, it is very easy for all of us, as 
members, to understand and be advocates and really push for the 
big transit projects--the Amtrak modernizations and lines for 
those of us who really are concerned about the corridors that 
are involved there, for the airport improvements, the 
construction improvements and so forth--it is obvious and it is 
very clear, very easy to follow where those investments go and 
what those investments buy.
    When you have got a core investment in infrastructure, in 
the technology infrastructure here of the computer systems, I 
don't understand it. There are probably a fair number ofothers 
that don't either, but it is--nothing is going to float here unless 
that stuff, at least in relation to the FAA, is there. And I can't even 
judge whether you are asking for enough money or whether you have got 
the systems that are going to do it in place, but it grinds to a halt 
if that isn't done.
    Whether we improve and build more airports or name them or 
whatever we do with them, this computerization thing is really 
horrendous. It is neglect and it is--you know, you don't get 
there without a degree of neglect over a considerable period of 
time with this sort of situation. We really do need to make 
this system right and with a big, correct expenditure.
    Secretary Slater. Well, Congressman, your point is well 
taken, and that is why in the R&D area, we requested a 10 
percent increase in investment. Also, I mentioned earlier we 
have requested an additional $30 some-odd-million to invest in 
our modernization effort. This is on top of the increase that 
we request in our budget.
    So we are trying to put the resources on the table, but we 
are also trying to put in place a process that will ensure that 
those resources are expended for the appropriate purposes. It 
is a very daunting challenge, but it is one that we are 
stepping up to the plate to address. And I appreciate your 
concerns in this regard. I am sure that we may have, over time, 
hearings that will be devoted solely to a discussion of this 
issue; and at that time, clearly we will be able to get into 
more detail.
    Also--I think we may have mentioned this, Mr. Chairman, 
either in the meeting the other day or afterwards, but--after 
our meeting, we talked a lot about the whole question of our 
team that we put in place at the FAA. And we discussed 
internally that one thing we might do is to invite you and 
other members of the committee who were interested in this 
matter to our site where we have our senior leadership in place 
to review the plan that we are putting in place, and frankly, 
to get the benefit of your thinking and response to that. We 
plan to do that with key leaders in the private sector, the 
aviation industry and others, and I think that it would be good 
to do with the members of the Committee.
    Mr. Wolf. Thank you. We will come out and visit.
    I am very skeptical as to whether or not you are going to 
make it. If you look at the record of the past, since 1982, the 
FAA has failed on all of these target dates. Also, the ability 
to attract the people who have the necessary skills, it is so 
difficult because they are hiring in the private sector. There 
was an article the other day. They are trying to get the people 
to come up here and get the computers here on Capitol Hill in 
order.
    Mr. Rogers.

                ANNOUNCEMENTS WITHOUT INFORMING MEMBERS

    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Secretary, good to see you again.
    Secretary Slater. Thank you, Congressman Rogers.
    Mr. Rogers. It is certainly good to visit with you. Mr. 
Secretary. A member has informed us that sometimes that member 
reads about an important announcement from your department in 
the local newspaper, not having known about it before. What do 
you say about that?
    Secretary Slater. Congressman, I think that if that happens 
as an exception, it is an oversight that is probably 
explainable, but if it happens as a matter of course, then that 
is unacceptable; and where we find that to be the case, I can 
assure you that we will rectify the situation.
    Mr. Rogers. Well, certainly a Member of Congress that 
represents that district is pertinent and key to the 
information; is that correct?
    Secretary Slater. That is correct.
    Mr. Rogers. And should learn about it without reading it in 
the newspaper?
    Secretary Slater. That is correct.
    Mr. Wolf. Will the gentleman yield?
    What is your policy with regard to that? Because there was 
a problem last year with a member of the committee. What is 
your policy with regard to the notification?
    Secretary Slater. Our effort is to identify clearly all key 
members--if it is in a congressional district, then clearly 
that Member of Congress, but also, the Senators of the State--
and to do all of that before there is a public announcement, 
giving them the opportunity to make the announcement locally. 
That is generally the way we handle it. We also, from time to 
time, will be in touch with governors or mayors, especially if 
they have expressed an interest in a given project. But that is 
the procedure.
    Mr. Rogers. I thank you.
    Secretary Slater. A Member should not have to read about a 
project in the paper.
    Mr. Rogers. Thank you very much, Mr. Secretary.
    Secretary Slater. Yes, sir.

                        NATIONAL HIGHWAY SAFETY

    Mr. Rogers. I want to ask you about the national highway 
traffic safety, part of your budget request.
    Secretary Slater. Yes.
    Mr. Rogers. You gave that the largest percent increase, 22 
percent, the largest budget proposal increase in your whole 
budget; and as I understand, those monies are spent through the 
award of block grants and incentive grants to States to improve 
driver behavior and also to increase law enforcement measures.
    That is a very attractive request, to improve safety on our 
Nation's highways. I would like to talk to you about improving 
the safety of our Nation's highways.
    In 1996, almost 42,000 people died in accidents on our 
highways. That is increasing; it is up 2,500 just since 1992. 
FHWA maintains that road design contributed to 30 percent of 
those fatalities, that is, 12,000 people who died because of 
defective road design. I rode in my district, if you want to be 
parochial on the subject, the Daniel Boone Parkway. This past 
year, 44 people have died on that single, 40-mile stretch of 
road, by most people's accounts, because it is defectively 
designed.
    Can the monies that are in your budget for traffic safety 
administration, can they be used for highways like the Daniel 
Boone Parkway, to improve the design and correct deficiencies 
in design that are causing people's lives to be lost?
    Secretary Slater. Well, first of all, let me just say that 
you are correct in noting that NHTSA, our highway safety 
program, is where we are providing the largest increase. Second 
is aviation. Aviation is about 18 percent; for NHTSA, the 
funding increase is 22 percent.
    That program is, as you noted, Congressman, primarily 
designed to benefit law enforcement officials and to aid States 
and local governments in promoting education programs. The 
total amount of that budget under our proposed 1999 budget is 
about $406 million. We are requesting, frankly, a much larger 
investment increase on the infrastructure investment side, 
which goes to the heart of your question.
    If you look at what we, through the assistance of the 
Congress, are able to provide to States in 1998, we maintain 
that in 1999, and those numbers are actually 42 percent higher 
than the average for the first 4 years of the decade.
    Mr. Rogers. How can the country deal with problems like the 
Daniel Boone Parkway in my district that are defectively 
designed?
    Secretary Slater. Sure.
    Mr. Rogers. You are saying that these NHTSA monies could 
not be used for that purpose?
    Secretary Slater. That is correct.
    Mr. Rogers. What could be used for that purpose?
    Secretary Slater. All of the monies that would fall into 
your funding categories dealing with the National Highway 
System (NHS), dealing with the surface transportation programs, 
basically your infrastructure investment programs. There may be 
a way of using enhancement funds if it is a parkway, as you 
mentioned--I made a note of the 42 or so lives lost, if I am 
not mistaken.
    Mr. Rogers. Forty-four.
    Secretary Slater. And this is a project that, frankly, we 
would like to--and welcome an opportunity to--look at in 
partnership with the Kentucky Department of Transportation, to 
see if there are other funding sources that might be leveraged 
to address this particular issue.
    Mr. Rogers. I would appreciate that very much, so we can 
count on----
    Secretary Slater. You can count on our response in that 
regard.
    Mr. Rogers. That would be great if you could work with the 
State to see if there is a way we can remedy the problem. It is 
a massacre that is ongoing.
    Secretary Slater. Yes.

                    dot request for highway spending

    Mr. Rogers. Now, what did you request of OMB for highway 
spending this year.
    Secretary Slater. You mean, before we got----
    Mr. Rogers. Cut by the OMB.
    Secretary Slater. Well, Congressman, you know, I am 
supportive of----
    Mr. Rogers. I understand.
    Secretary Slater. Yes, sir. You----
    Mr. Rogers. You don't need to say all that speech. You are 
supportive of the President's budget request and you are a 
loyal troop and soldier and you are going to go all the way 
with him, I know.
    How much did you ask for before you got cut?
    Secretary Slater. As much as possible. Let me just say that 
we requested that we maintain our record level of investment, 
and that is what we have done with this budget.
    I should also add that last week at a meeting with the 
governors--I had a meeting with the governors--it was stressed 
that along with education, as has been mentioned earlier in 
other important investment initiatives, that transportation 
would be high on the list.
    The President indicated his support for the speedy 
reauthorization of ISTEA, as well as a willingness to consider 
an increase in transportation infrastructure and investment, so 
long as we maintained our fiscal responsibility and maintained 
our commitment to a balanced budget, which is historic. And so 
there is clearly a willingness on the part of the 
administration to entertain recommendations for additional 
resources for transportation, but we want to do it in a way 
that is consistent with the balanced budget agreement that was 
entered between the administration and the Congress just last 
year.
    Mr. Rogers. Well, you requested $21.850, right, billion, 
$21,850,000,000?
    Secretary Slater. That is what we got with highways.
    Mr. Rogers. Oh, for fiscal 1999?
    Secretary Slater. Yes.
    Mr. Rogers. That is what you asked of OMB?
    Secretary Slater. That is what we got.
    Mr. Rogers. How much did you ask is what I am trying to get 
at. It is a simple question.
    Secretary Slater. As much as possible, seriously.
    Mr. Rogers. What did you ask of--a specific figure of the 
OMB?
    Secretary Slater. I am pretty sure that it was basically 
this number. Yes, that is correct.
    Mr. Rogers. You got all you asked for?
    Secretary Slater. We got all we asked for.
    Mr. Rogers. Why didn't you ask for more?
    Secretary Slater. We asked for a lot. That is quite 
significant. That brings the budget to record level totals.
    Mr. Rogers. As I understand it, it is $34 million less than 
the current level.
    Secretary Slater. No.
    Mr. Rogers. It is not a decrease from the 1998 enacted 
level?
    Secretary Slater. No. I understand that only as it relates 
to demos--and that is because we have moved considerably on our 
investment in demos over the life of ISTEA--that it is a 
reduction in the outlays as it relates to demos.
    Mr. Rogers. Well, as I am sure you are aware, the Senate--
the Senate, apparently, last night, voted to increase funding 
levels for highways. As I understand it, that proposal in the 
Senate would yield $28 billion in contract authority for fiscal 
1999.
    Secretary Slater. Right.
    Mr. Rogers. Now, that is obviously more than you have 
requested and OMB has granted in your budget request.
    Secretary Slater. That is correct.
    Mr. Rogers. Can you live with that? Would you be supportive 
of that if the Congress came to an agreement on a higher 
figure.
    Secretary Slater. Clearly, I believe that the President 
would be receptive to that kind of increase, especially given 
the fact that it was a proposal by the Chair of the Budget 
Committee, and that suggests a recognition that it is all a 
part of the overall commitment of the Congress and the 
administration to do this, in keeping with the balanced budget 
agreement.
    We could definitely use the additional resources to invest 
in infrastructure and safety programs, and the environment and 
transit, as well as highways; but I do believe--and I feel it 
is incumbent upon me to say this--that there are other matters 
of importance on the table as well. Congressman Olver mentioned 
education and R&D investment. Those are important issues, and 
there is the issue of the balanced budget agreement that was 
historic. I think we gained a lot of trust on the part of the 
American people by putting our fiscal house in order and, yet, 
making tough investment and strategic investment decisions; and 
I am just hopefulthat as we review the overall budget, in the 
final analysis, we will be able to retain that good that we have gained 
because of some of these tough decisions we have made in the past.

                       HIGHWAY TRUST FUND ACCOUNT

    Mr. Rogers. Well, as you well know, there is a debate going 
on here and across the country on whether or not we should take 
the highway trust fund account off budget, so as to be able to 
spend more for highway construction and not use the balance in 
the trust fund for the purpose of balancing the budget for 
everything else.
    Have you a position on that?
    Secretary Slater. I do.
    Mr. Rogers. What is it?
    Secretary Slater. I don't think we should take the trust 
fund off budget. We have a number of trust funds that are a 
part of a unified budget, and because of our ability to operate 
with that reality, we, working with the Congress, have been 
able to reduce the deficit to almost zero, when it was 
anticipated in 1993 that this year the deficit would be more 
than $350 billion.
    Because of the fact that these trust funds--not only the 
highway and the aviation trust fund, but the many, many trust 
funds, including Social Security--are a part of a unified 
budget, this Congress, working with the administration, has 
been able to exercise fiscal discipline, which has our books 
pretty much in order now. We have also been able to invest in 
those things that prepare us for the 21st century. I think that 
is good.
    Mr. Rogers. What do you say to those people who argue that 
the trust funds were collected for a specific purpose and are 
not being spent for that purpose, and that there is a real 
problem with not enough money for highway spending or airport 
spending, and yet those trust funds, collected for that 
purpose, are being held hostage to be balanced off against a 
purpose for which they were not designed or collected.
    Secretary Slater. I would say that, first of all, faced 
with an extraordinary situation, extraordinary measures were 
taken. But then if you look at the action over time, you can 
see where monies that were once placed into the general fund 
have now come back into the trust fund. We are actually now in 
discussions about how we spend down more of those resources to 
put the money to the use for which the resources were raised. 
We are working together in a collaborative fashion, putting 
trust into the trust fund. And I do believe that when our work 
is done on this issue, reauthorization, that we are going to 
find that we are spending an amount that is much closer to the 
resources going into the trust fund than is currently the case, 
and that we have been making ground on that commitment over the 
last 5 years.
    Again, if you look at our proposed budget for 1999, we will 
be spending an amount that is a 42 percent increase over the 
amount that was being spent on infrastructure investment during 
the first 4 years of this decade.
    Mr. Rogers. Would you be satisfied or happy or unhappy if 
we spent this coming year, on highway construction, the same 
amount of money that is going into the trust fund this year?
    Secretary Slater. That is one of the issues on the table, 
and clearly Congress is looking at a number of options. I think 
it is best for me just to repeat what the President has said.
    He submitted a budget that will be balanced 3 years ahead 
of schedule. Within that context, we have record-level 
investment in infrastructure, which is a 42 percent increase 
over the investment levels for the first 4 years of the decade. 
The President has also acknowledged a willingness to work with 
the Congress, as we have over the past 5 years, to get to a 
record level of investment, where we currently find ourselves; 
to add additional resources, but to do so within the context of 
the commitment to a balanced budget that is historic and that 
this Congress and the administration agreed to just last year.
    Mr. Rogers. I have no further questions.
    Mr. Wolf. Thank you.
    Mr. Pastor.

                            BORDER CROSSINGS

    Mr. Pastor. Thank you, Mr. Chairman.
    Good morning, Mr. Secretary.
    Secretary Slater. Good morning, Congressman Pastor.
    Mr. Pastor. Approximately a year ago at our hearing with 
you, you recognized the needs that we have along the border as 
NAFTA and other free trade agreements have increased the 
transfer of goods and people across the border. We have now 
found that many of the facilities we do have are now allowing 
this free trade to move fairly quickly--one, the location of 
the gates themselves; secondly, the need to protect our borders 
due to undocumented people wanting to cross over and also the 
need to enforce--and to make sure that drugs aren't crossing 
our border. So all of those factors have really caused our 
border crossings to back up and goods not to move as quickly as 
we would like.
    Last year you said you were going to do a pilot program and 
had requested, I don't know how many millions of dollars, and I 
don't think the committee gave you as much as you wanted.
    Secretary Slater. Right.
    Mr. Pastor. Let me ask you, during this last year, what 
were you able to accomplish with the few bucks we gave you, and 
how did you meet the needs of the border communities?
    Secretary Slater. Well, Congressman Pastor, thank you, 
especially for your interest regarding the border. And it is 
true that as a result of NAFTA, we have seen a significant 
increase in traffic, both on the southern border that we share 
with Mexico and the northern border that we share with Canada.
    We have actually achieved some significant results as we 
have tested the benefits of Intelligent Transportation Systems 
(ITS) technologies along the border. What we want to do as we 
go forward is to have a program in the neighborhood of about 
$250 million for ITS investments--I am sure that a number of 
those investments will find their way to the border--but also 
to concentrate with about $90 million, an effort along the 
border dealing with the border itself and major trade corridors 
where we would actually deploy the technology that we have 
tested over the last few years. We look forward to working with 
you and your colleagues who have a particular interest in this 
matter.
    Mr. Pastor. In NEXTEA, the administration has proposed a 
special border program--I think it is $540 million--which 
amounts to about $90 million a year.
    Secretary Slater. Yes, sir.
    Mr. Pastor. From what I read, you are proposing $45 million 
be used for enhancement and development of the actual roads 
themselves, the development of the corridors. If thatmoney is 
given to you, how will the community be able to succeed in obtaining 
some of those monies? The reason I ask that is because sometimes the 
border communities, as a high priority, want to develop that corridor--
an example of this is Yuma. Yuma County knows that more goods are going 
to be coming from Mexico because of the maquiladora program increasing 
the investment down there, more agricultural products coming across the 
border from Mexico. So they know they are going to need a new site, a 
new gate, to develop the corridor from that gate into the freeway 
system that takes it on west to either San Diego or Los Angeles.
    But in many cases, the State may have higher priorities in 
terms of where the monies ought to be invested, so how could a 
community like Yuma, Arizona, who knows of the great need for 
the development of that border infrastructure, be able to 
ensure those monies are going to be made available for that 
purpose, rather than what the State transportation department 
may decide is more important.
    Secretary Slater. Well, clearly, Congressman Pastor, in 
those situations we would have to work with the States and the 
local communities; and hopefully, we would have instances where 
they are in agreement or general agreement. Those are always 
the best situations. These would be discretionary funds, and so 
we at the Federal level would have some say about how those 
resources would be expended. But we would like to get 
recommendations from those at the State and local levels, so we 
would be supporting a partnership effort.
    Even if we are using, say, $90 million annually for this 
kind of an investment, when it comes to some of the kinds of 
investments we are talking about, they still require 
significant investment from the State level and possibly the 
local level. So it is important that all of the interested 
parties are in agreement, or near agreement, as we work on 
investing in the projects of this type.
    Also, the monies will be limited and so we will have to 
make those investments strategically, and that too would 
require that the parties find some common ground based on 
common understanding, dealing with issues that we find to be of 
common interest.
    Mr. Pastor. You also propose $45 million, I think, to deal 
with the development of gates, and it has been my experience 
that at the border usually it is GSA that goes out and finds 
the location and then finds the money to build the particular 
gate, and then INS and Customs basically occupy it?
    With this $45 million, how are you going to work with GSA 
and the other agencies that will occupy it?
    Secretary Slater. We have a very good partnership with GSA 
and Customs along the border, because frankly many of our 
interests and responsibilities actually converge at those 
locations. What we are proposing is that we have resources that 
we can also bring to the table, working with GSA and with 
Customs to bring about the kinds of efficiency improvements 
that we would want to see along the border.
    To underscore the issue of efficiency, it has been 
determined that if we could increase the efficiency of our 
system by 1 percent across the board, over a decade we could 
save in excess of $100 billion. That really speaks to the 
essence of why it is important for us to enhance the movement 
of people and goods along the border. If we can bring some of 
the technology to bear that we have used in the aviation 
sphere, in years past, as people are moving through metal 
detectors and the like--if we can bring that kind of technology 
to bear along the border where trucks can move across with that 
kind of sensory and X-ray material or capability, then that is 
just going to enhance the flow of people and goods, making for 
a much more efficient transportation system, and adding to the 
bottom line. But we think that we have a role to play at the 
point where these interests converge with GSA and with Customs, 
and that is why we are asking for resources in this particular 
category.
    Mr. Pastor. About 2 years ago, on the border, I saw the 
technology that was being developed, or had been developed, in 
which the manifest, which would start in Mexico with the goods 
that would be occupying the carrier would basically be traced 
to the border. At the border, the truck would cross fairly 
quickly because law enforcement--Customs, the FDA or--excuse 
me, the Ag Department already cleared this truck at the point 
of origin.
    At that time, 2 years ago, they were saying this was going 
to be implemented throughout the border and every carrier would 
be able to secure this type of technology. Where are we on that 
particular technology?
    Secretary Slater. Well, we are moving forward. I can tell 
you that having in place that kind of safety regime and having 
in place that kind of technology is essential to the process, 
and that is why we are working with our counterparts in Mexico. 
Secretary Ruiz and I have met a number of times on this issue, 
which deals with the establishment of a safety regime south of 
the U.S. border so that all of these issues are not addressed 
right at the border. The use of this kind of technology, 
putting in place a comprehensive safety regime, will allow us 
to make this hope, this dream that we have addressed in the 
past, a reality. But we have tested the equipment, and now it 
is a matter of deployment, and we need resources to do that.
    Mr. Pastor. I hope you continue working on the border 
situation.
    If the Chairman will allow me one more question----
    Mr. Wolf. Yes.

                             faa management

    Mr. Pastor. Let me add to the frustration I guess you sense 
from some of the members about how we may not be as confident 
in the computers being brought in on time or some of the 
problems that the National Transportation Safety Board has 
brought forth. I will just give two examples and then you can 
take them, not as criticism, but at least my two examples.
    When we had the National Transportation Safety Board a year 
ago, we talked about the problem with the 737 and the rudders--
--
    Secretary Slater. Yes.
    Mr. Pastor [continuing]. And how we needed to replace them, 
number one; and secondly, that the pilots would need new 
training.
    A few weeks ago, Mr. Hall was here, and again, much to our 
frustration, the agency who has responsibility to ensure that 
those rudders were replaced and the pilots were trained, at 
least I had the impression that we weren't moving as quickly as 
we should.
    And this is a safety problem that has been identified; this 
is a problem that has a solution, but yet it seems that the 
agency who had the oversight and the enforcement responsibility 
just was, for whatever reason, not moving quickly enough. And 
Mr. Secretary, at that point, I was concerned personally, 
because, you know, I travel every weekend a few miles, as well 
as a lot of these members. And you travel more than I do, so I 
want to make sure that this airline system is safe.
    The other dealt with the computers. I remember a year ago 
we were talking about the computer system, the modernization, 
and late last year in this room we sat with people from the 
agency and the vendor. And we were discussing screens, I was 
talking about the big picture, and here we are talking about 
the screen and what color it should be, whether or not we 
should have a keyboard or have a wheel or have a mouse. I was 
frustrated because here I am worried about safety and I am 
micromanaging, because the issue was brought to us because the 
people who had responsibility couldn't come to a resolution.
    And so if you sense some frustration, it is because we have 
seen situations in which maybe you have been told that the 
modernization is going forth, that these problems are being 
addressed, but yet, before the committee, we are being advised 
that we can't move forward because the people who are viewing 
the screen, the people who have the responsibility to bring us 
a screen and the people who are managing this whole system 
can't agree on the screen.
    And so that is why I bring that to you, so that--to add 
some examples of our frustration so you might get a better 
sense of why we may be complaining.
    Secretary Slater. Let me say, Congressman, I appreciate 
that, and I know that Administrator Garvey appreciates it. I am 
sure that we are going to have a lot more hearings on these 
matters as we go forward, as we should, because I think that 
that is a way for us to stay focused, really, on these critical 
matters.
    I also think that our putting in place a performance plan 
where we actually state what our goals and objectives are in 
specific, results-oriented terms--something that is new for 
government, and new for the department--is going to be one of 
the great benefits of our strategic planning and performance 
planning efforts.
    And we look forward to working with you, and the members of 
the Committee and the Congress, in ensuring that our 
transportation system remains the safest in the world and that 
we meet these obligations that we have--as relates to Y2K, as 
relates to the modernization of our air traffic control system 
and as relates to the appropriate stewardship and expenditure 
of the record-level resources you are now considering, 
providing us in like manner as you have provided us with 
acquisition reform legislation.
    I want to underscore that again, because I think it is our 
obligation to follow through on the freedoms, the capabilities 
you have given us--acquisition reform, personnel reform--and 
this speaks to the need of getting the team together, going out 
and getting the best and the brightest. We have, in many 
respects, the ability to do that, and we should be held 
accountable. I respect that and appreciate it.
    Mr. Pastor. Thank you, Mr. Secretary. We have a common goal 
to make the transportation system safer, and you have my 
commitment to work with you to get to that goal.
    Thank you, Mr. Chairman.
    Mr. Wolf. Before I recognize Mr. Packard, I want to follow 
up to what Mr. Pastor was talking about. We had a hearing on 
STARS and that still has not been resolved. I know there has 
been a lot of progress made, but really it shouldn't have been 
necessary at all for the Committee to have had to call upon the 
FAA and air traffic controllers and Mitre to testify; that is 
something that shouldn't have had to occur.
    Secretary Slater. I agree.
    Mr. Wolf. And you have new procurement ability. You also 
have similar flexibility on personnel. This gives the FAA an 
opportunity to go out and bring the talented people in quickly, 
and to date, that authority has not really been used.
    Mr. Packard.

                        emergency relief program

    Mr. Packard. Thank you, Mr. Chairman.
    Welcome back to the Committee again.
    Secretary Slater. Yes, sir.
    Mr. Packard. Your first time last year was a pleasure for 
me to hear you, and we appreciate your testimony this year.
    Secretary Slater. Thank you, sir.
    Mr. Packard. As you know and everyone else knows, El Nino 
has changed the weather patterns and created a lot of damage in 
some States and perhaps created some good things in other 
States. Certainly in my State and several other States, a 
significant amount of damage has been done to our 
transportation system. The floods have wiped out complete 
sections of freeways and highways.
    The FHWA has an authorized cap of $100 million to address 
these kinds of problems, emergency relief programs. California 
alone, and I am sure Florida and Oregon and many of the other 
coastal States, particularly in the West, have had far more 
damage done already than the hundred million dollars. 
California alone is now probably in excess of that amount.
    Secretary Slater. Yes, sir.
    Mr. Packard. What are your plans to meet the needs of all 
of the States, my State as well as the others, that have had 
significant transportation damage done, in light of the FHWA's 
shortage of funds?
    Secretary Slater. Congressman Packard, let me just say that 
there is not one person within the DOT family that does not 
feel the sense of loss that many of your constituents have 
felt, whether it is property damage or the loss of loved ones, 
and we have tried to be responsive. It is true that our being 
responsive has put a strain on our resources, and we have 
actually prepared a request for supplemental appropriations 
that will come to the Congress for additional funds. The 
President was just in California and released an additional $20 
million. He was joined by our Federal Highway Administrator, 
General Wykle; and the week before, the Vice President was 
there, I think providing the first $20 million, and he was 
joined by our FHWA Deputy Administrator, Gloria Jeff.
    We want to continue to be responsive, but as you have 
noted, there is really the strain on the resources as currently 
available, so we would hope that the Congress would respond to 
our supplemental request. We have outstanding requests for the 
northeast, and we have not made a determination about the 
degree of damage throughout Florida, although we expect to 
receive a request from Florida soon. We are really being 
challenged at this point in time, but, as you have noted, we 
have to be responsive to Americans in need; and that is what we 
are trying to do.
    Mr. Packard. To add to that challenge, we don't know how 
much longer the season will go, and it may be that your 
supplemental request will be premature, or at least before we 
are finished with the damage that could come from El Nino and 
other storms. Also in the fall, we know that at least 
inCalifornia, there is almost a natural follow-up; and that is, we will 
probably have wildfires and other problems that could also add to the 
emergency need.
    It is a problem, and I don't know how you are going to 
manage, but certainly the supplemental, when it comes, we will 
give it the kind of consideration we always have.
    Secretary Slater. Thank you, sir.
    Mr. Packard. I appreciate your responsiveness in this area 
of emergency response.

            transportation conditions and performance report

    Secondly, as we continue to grapple with the 
reauthorization process of ISTEA and the Federal surface 
transportation program, it would be very helpful for the 
information that will come or should be available through the 
long overdue Transportation Conditions and Performance Report. 
I understand that is nearly ready for release.
    Secretary Slater. It is.
    Mr. Packard. Some of the information available in that 
report should be very helpful in the reauthorization process to 
determine the conditions of our highways, bridges and general 
transit facilities. It would seem that that report would be 
extremely important before we move forward on the 
reauthorization, and yet the reauthorization is, of course, 
critically time sensitive.
    Could you give us a brief preview of what that report might 
show?
    Secretary Slater. I can, and let me just say that I think 
Congressman Rogers, in his questions a few minutes ago, 
actually touched indirectly on this issue.
    In putting together the report, as you know, we have 
combined more than just highways into the report, which is a 
change from years past. Also, we are changing to more of an 
economic basis for analysis, rather than an engineering model 
for analysis; and I think that is consistent with some of the 
actions of the Congress and some executive orders that we have 
responded to. But the good thing that we have discovered is 
that we are seeing improvements in the condition of the system 
as it is, in particular the surface of the roadways.
    Also, we are seeing improvements in the condition of the 
bridges. We are finding fewer and fewer of those bridges being 
declared as either functionally obsolete or deficient in some 
other way. We are also finding a significant, 3.5 percent 
increase in transit usage, and improvements in the conditions 
of our transit properties.
    I think that that, frankly, reflects positively on the 
increase in investment that we have seen over the last 5 years 
that has been brought about by a partnership between the 
Congress and the administration. And I do believe that our 
proposed budget for 1999, which will continue that increase at 
about 42 percent above the investment levels of the first 4 
years of the decade, will continue to bring about improvements 
to the system as a whole. So I am very pleased with those kinds 
of findings in the Conditions and Performance Report.
    With that said, let me just say that we are in the final 
drafting, if you will, of the report. We have recently gotten 
back comments from OMB, and we should have that report to the 
Congress very soon.
    Mr. Packard. Do you have a date specific as to when it will 
be released?
    Secretary Slater. Why don't we say within 10 to 14 days, 
and if sooner, then clearly we will have it for you sooner.
    Mr. Packard. That is all, Mr. Chairman. Thank you.
    Mr. Wolf. Mr. Tiahrt.

                      stars and year 2000 programs

    Mr. Tiahrt. Thank you, Mr. Chairman. I want to welcome 
Secretary Slater, and I want to tell you it has been a pleasure 
to work with your office. You have been very responsive.
    It was kind of you to call last night at 6:30 in the 
evening when most people are worried about getting home, and 
you were worried about the needs of Kansans, and I appreciate 
that very much.
    Secretary Slater. Thanks, Congressman.
    Mr. Tiahrt. I also recently spoke with Kansas Department of 
Transportation Secretary Carlson. Dean Carlson and you, I know, 
have a long-term relationship. He sends his regards. He 
incidentally is doing a great job, and he sends his 
compliments.
    There are a couple areas of concern I would like to 
reiterate. One is, we have talked about the FAA and I was 
recently at the control tower at Midcontinent Airport and saw 
again--once again, the need for a STARS program. And I am 
pleased with the progress that Raytheon is making.
    My concern is more along the way of the Y2K--and I know 
others have expressed that--that when the year 2000 rolls 
around, we will have some problems. The last schedule I heard 
from the FAA is they thought they would be on line in November 
of 1999.
    In a previous life, I was a proposal manager at the Boeing 
Company. I managed several software projects, some with 
millions of lines of code, and unless you have an extensive 
testing program, your milestones are not going to be achieved, 
and with that short amount of time between November and January 
1st, I have a great deal of concern and would hope that you 
also track that progress and make sure we get on line in time.

                          airport improvements

    Another thing I would like to bring to your attention is 
the airports in Kansas. We have small and midsize airports. I 
was recently at a small airport in Kingman, Kansas, and the 
runway was so rough it would be difficult to ride a motorcycle 
down the runway because of all the ruts. It would cause it to 
be difficult to keep your balance, let alone land a small 
airplane.
    It is not only the small airlines that have a difficult 
time handling those airports, but also business jets. Many 
communities like Pratt, Kansas; Kingman, Kansas; Wichita, 
Kansas; Struther Field, between Ark City and Winfield, Kansas, 
are the homes of international companies. And they need to 
bring suppliers in, and CEOs and executives from other 
companies that are from big cities. And they often use business 
jets, and it is difficult to get them in and out of there, and 
it restricts the growth of rural America. So I have a great 
deal of concern for our small and midsize airports, and I hope 
you will take that into consideration and, of course, support 
our airport improvement program.
    Secretary Slater. Okay.

                 union pacific--southern pacific merger

    Mr. Tiahrt. But my main concern is related to the merger of 
the Union Pacific and Southern Pacific. It will double the 
train traffic, and that will be a problem in several areas. It 
is also complicated by a previous merger with the Burlington 
Northern-Santa Fe that was not included in the recent study 
done by the SurfaceTransportation Board, the STB.
    There are 27 grade-separations in Sedgwick County, which 
has a half a million Americans living there. Those 27 
intersections include one near a hospital, several close to 
fire stations and police stations. It creates a problem because 
these trains are a mile-and-a-half long and they cause delays.
    In the area of the environment, it is hard to believe, but 
in Wichita, Kansas, there are several days when the wind does 
not blow, and on those days, we do not reach air quality 
standards--clean air standards. As you know, if you do not meet 
those clean air standards, there is a problem with Federal 
funding. So on those days, we have a risk; with increased train 
traffic, we will certainly not achieve the existing clean air 
standards, let alone the proposed clean air standards, which 
would immediately put three-fourths of the State of Kansas out 
of compliance. So there is a big problem with the environment 
created by this merger.
    Also, there is a health-and-safety problem. I told you 
about police; there are also fire departments, hospitals and 
ambulances. If they are restricted from getting to their 
destinations, it could cause a problem. Also in the area of 
safety, within the last month, a friend of my daughter from a 
high school she attended last year was killed at a railroad 
intersection. Within the last year I lost a personal friend and 
a fellow employee at the Boeing Company at a railroad 
intersection, and we have a need for grade separations to keep 
the traffic from colliding.
    There is also the discomfort factor. You have probably seen 
the bumper sticker that says, ``If mama ain't happy, nobody is 
happy.'' Well, I am here to tell you, there are a lot of 
mothers in Wichita, Kansas, that aren't happy by the train 
delays. In my personal opinion, the Surface Transportation 
Board flunked the course on the Wichita mitigation study.
    Now, I know that from your book you handed out here that 
the Surface Transportation Board is fully financed by user 
fees. They did not slap the hand that feeds them, and that 
concerns me. It also says they are to provide an effective and 
efficient forum for resolution of disputes. It was efficient.
    So those three things are my concerns, the Y2K, 
improvements for our airports, and the critical needs that have 
risen from the Union Pacific-Southern Pacific merger.
    Secretary Slater. If I may, Congressman, let me just 
respond in summary fashion to the points that you raised.
    First of all, some of these issues are issues that we 
discussed last evening; and I appreciate the opportunity to 
hear from you again on them and assure you that we will respond 
to all of them.

                           year 2000 problem

    Regarding the Y2K problem, clearly, you know, based on your 
experience in the private sector, as you noted, and also as a 
Member of Congress, that November of 1999 is not acceptable, 
and we are not going to be in November of 1999 testing this 
system. We actually hope to start validating our compliance in 
January of 1999, so we will have the full year to test the 
capability of the system.

                    small- and medium-sized airports

    When it comes to small- and medium-sized airports, we feel 
that we are going to be able to respond to needs like the ones 
that you have mentioned with the increased investment, $1.7 
billion in the Airport Improvement Program (AIP), and look 
forward to working with you in that regard.
    Also, our Essential Air Service program may be a source of 
resources to address some of these needs.

                              rail mergers

    When it comes to the issue of the rail mergers, you should 
know that we are learning a lot from this process. I do believe 
that the reauthorization of the Surface Transportation Board 
will give us an opportunity to actually consider how some of 
these issues are addressed by the Board with its powers as we 
go forward. But the Department of Transportation is performing 
its role in an aggressive fashion, where we note questions 
regarding safety as paramount matters of consideration during 
these mergers.
    We recently submitted a very comprehensive brief dealing 
with the Conrail merger; and, as you know, we have worked 
rather aggressively and proactively with Union Pacific (UP), 
when it comes to dealing with the UP merger. We look forward to 
working with you on the particular matters that you have 
addressed.
    Unfortunately, a lot of times, with the railroad crossings, 
you do have situations where communities are separated from 
some of the major health and emergency response services that 
are critical to life and limb. It is true that your grade 
overpasses and the like are a way of addressing those concerns. 
But also bringing the best technology to those crossings is 
very, very important as well.
    I can tell you that one of the things I am most pleased 
with as relates to our performance last year, is the fact that 
we saw a reduction in collisions, injuries and fatalities at 
highway-rail grade crossings. I think that is the result of a 
more comprehensive and aggressive approach on the part of the 
Federal Railroad Administration, led byJolene Molitoris, 
working together with the Federal Highway Administration, led by 
General Wykle. We are going to see continued improvements in that 
regard, and I appreciate your mention of it during our discussion 
today.
    Mr. Tiahrt. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Tiahrt.
    Mr. Secretary, let me cover a couple subjects and then we 
will go back to other members.

                       budget request for amtrak

    Please describe how your budget request for Amtrak does not 
violate the agreement that you and Amtrak's Board of Directors 
negotiated with the Brotherhood of Maintenance of Way 
Employees.
    Secretary Slater. Well, first of all, Mr. Chairman, last 
year at this time we were, as you know, very much concerned 
about the potential of a strike and a shutdown of Amtrak. The 
President responded with the establishment of the emergency 
board, they came forth with recommendations, and the parties 
still weren't engaging one another.
    I am pleased that, because of some more proactive steps 
taken by the Department, we were able to get the parties 
together. They did come forth with a historic agreement, with 
work rule changes, productivity changes and an increase in 
salaries for the Brotherhood of Maintenance of Way Employees.
    As a result of that agreement, we were then able to come to 
the Congress and pass reauthorization legislation for Amtrak--
the first time in some 3 or 4 years. Then, as a part of the 
Taxpayer Relief Act, about $2.2 billion were made available to 
Amtrak for capital investment.
    As a part of our 1999 budget, we are proposing a $621 
million investment in Amtrak. When you couple the action taken 
by the Congress as a result of the Taxpayer Relief Act and also 
the record-level resources that we are providing, along with 
corporate revenues, we believe that Amtrak will have the 
resources that they need to move toward self-sufficiency in the 
near future.
    As a part of their budget plan that was submitted to us, 
they had said that, over the 5-year period or so, they would 
need about $5 billion. Under the proposed budget, along with 
the actions taken by the Congress, they are actually going to 
have in excess of $5 billion, so we believe they will be able 
to meet all their obligations, and become the only inter city 
rail passenger train operation anywhere in the world that is 
self-sufficient within a reasonable period of time.
    Mr. Wolf. Mr. Secretary, I am so skeptical that I don't 
believe that. I have been told by people who are very, very 
knowledgeable that they believe under the current--if the books 
are honest, that Amtrak will go bankrupt in the year 1999 or 
2000.
    Also, the labor agreement included $150 million for 
operating assistance in 1999. That is not in your budget. There 
was an additional $84 million for operating assistance--another 
item agreement not in your budget. The agreement also called 
for $199 million to replenish the capital appropriation, which 
is not in your budget. Should the Committee adopt the 
administration's budget request for Amtrak, how likely is it 
Amtrak will not go bankrupt in fiscal year 1999 or fiscal year 
2000?
    Secretary Slater. Well, again, based on the financial plan 
that was offered by Amtrak, where they requested in the 
neighborhood of $5 billion over the next 5 years, this is a 
budget that will give them in excess of $5 billion over this 
period, and we believe that they will be able to meet their 
financial obligations in that regard.
    Mr. Wolf. Should the Committee adopt the administration's 
budget request for Amtrak, what assurances can you provide the 
Committee that capital funds will not be used to provide wage 
increases to Amtrak's employees, wage increases Amtrak says it 
can ill afford?
    Secretary Slater. Again, if you look at corporate revenues 
and then the $621 million we are providing, along with the $1.1 
billion each year over a 2-year period that is being provided 
under the Taxpayer Relief Act, Amtrak should be able to meet 
all of its requirements.
    We have taken into account now, as we look at the resources 
that they have available, their ability, under the definition 
of capital within the Taxpayer Relief Act, to use some of those 
resources for maintenance. They have shared with us that that 
could total $400 million or so. Those were expenditures that, 
in the past, they probably would have taken care of out of the 
operating account. Having the ability to do so under the 
capital account should give them, again, the kind of 
flexibility and resources needed to meet both their operating 
expenditures as well as capital investment expenditures.

                     capital definition for amtrak

    Mr. Wolf. That was the next question.
    You were requesting $621 million in capital appropriations 
for Amtrak, to be available using the same preventive 
maintenance definition used by the Federal Transit 
Administration. Adopting this capital definition is really 
almost like a shell game, because Amtrak plans to spend up to 
$520 million of its capital--and I stress capital--funds on 
maintenance of equipment, infrastructure and facilities, which 
in prior years has been paid for by the operating grant.
    Isn't this definition just moving operating funds into 
capital funds, thus allowing the administration to say Amtrak 
is not dependent on operating subsidies before the year 2002? 
Isn't the administration moving it around and calling it 
something different?
    Secretary Slater. Well, within the Taxpayer Relief Act, 
capital is given a broader definition which would allow for an 
investment in maintenance. We are, in our proposal, seeking to 
make capital within Amtrak budgetary considerations comparable 
to the definition of capital that the Congress has agreed to as 
it relates to transit. So we are trying to bring consistency 
there.
    Mr. Wolf. For years Amtrak has stated that its greatest 
need is for capital funds, particularly if it is to be self-
sufficient after the year 2002. However, if we adopt this 
proposal, we will be using capital funds for previous operating 
expenses. This is really an operating subsidy; and the capital 
needs of Amtrak are very, very great.
    I know we will get down on the floor and there will be a 
number of people who want to zero out Amtrak. I speak as a 
friend of Amtrak. I really think it is kind of a shell game.
    If the Committee were to include bill language that would 
prohibit the use of the TRA funds or any capital appropriation 
for wage increases, would you support that?
    There will be a new chairman here in the year 2001 or maybe 
I can get Sonny Callahan to trade Foreign Ops. Maybe there will 
be a new chairman even next year if I could do that; but, who 
knows? Then the next group comes in. Maybe the distinguished 
gentleman from Kentucky would want to be chairman, and then all 
of a sudden we go through the same issue again. Aren't we 
really misleading the people?
    And for those of us who really want to see Amtrak survive--
so would you support that if the Committee were to add bill 
language? This is a real test.
    Secretary Slater. Well, clearly, if the Committee were to 
say that no capital funds could be used for----
    Mr. Wolf. Wage increases.
    Secretary Slater. Oh, I thought you were saying no capital 
funds could be used for maintenance.
    Mr. Wolf. No. The question is, if the Committee were to 
include bill language that would prohibit the use of TRA funds 
or any capital appropriation for wage increases, would you 
support that proposal?
    Secretary Slater. Well, I think if the Committee and 
Congress were also to approve our recommendation that capital 
resources for Amtrak be considered in the same way that we 
consider capital resources for transit--if you couple the two--
then that might work.
    Because we are providing, again, $621 million for capital 
this year--that is what we are proposing--with about $571 
million for the year 2000 and about $521 million for the year 
2001.
    Those resources, coupled with corporate resources and 
revenues, then might allow Amtrak, looking at all of the 
resources available, to have enough money to take care of 
capital needs as well as the salary questions that would fit in 
a broader definition of capital.
    Mr. Wolf. Well, I am not unsympathetic to that, but I 
believe the definition moves operating funds into capital 
funds. We are then allowing Amtrak to come back and say they 
are not dependent on Federal operating subsidies. We tried get 
a base closing commission concept put in effect the last year. 
That got involved in some controversy, and the Committee didn't 
do that. GAO was looking at it.
    I really think, potentially, what you are recommending is 
really going to bring about the downfall or the bankruptcy of 
Amtrak. I don't want to see that happen. I am very supportive 
of the Northeast Corridor. I am very supportive of the national 
Amtrak system. There are Members of Congress, perhaps some on 
this Committee, I am not sure, but certainly in the full House 
and Senate that would like to see Amtrak fold, but I am not one 
of them.
    The other question is, do you believe Amtrak will need a 
capital appropriation beyond the year 2002? And, if so, how 
much----
    Secretary Slater. They will.
    Mr. Wolf [continuing]. For 2003 or 2004 or 2005?
    Because if they are going to need it, why would we be using 
capital funds for operating expenses now? So how long past the 
year 2002 do you think they are going to need capital?
    Secretary Slater. I would say for a reasonable period 
beyond. There are certain legs of Amtrak that are self-
sufficient, but what we wish to have----
    Mr. Wolf. Not many.
    Secretary Slater. Not many. But what we wish to have is a 
national intercity rail system; and to the degree we provide 
for high speed rail along the Northeast Corridor all the way 
from Washington to Boston, that will bring additional revenues 
into the system. To the degree we replace aging rail cars, that 
will improve the efficiency of the system. We are going to see 
significant improvements over the next 5 years.
    I think the key thing to stay focused on, if we can, is 
that, based on the financial plan that was submitted by Amtrak 
and their business plan, they ask for about $5 billion over a 
time certain. We are going to provide in excess of $5 billion 
over that period. This should be able to accommodate their 
investment and operating needs.
    Mr. Wolf. But isn't it accurate that the agreement that was 
reached included the requirement that the OMB and the President 
seek: (1) $150 million in operating subsidies in 1999, that is 
not in your budget, (2) seek to make up $84 million in previous 
operating shortfalls, that is not in your budget, and, (3) to 
make up the 1998 appropriation for Amtrak capital above the 
1998 TRA funds. Were these conditions not part of the 
agreement?
    Secretary Slater. They were part of the agreement.
    Mr. Wolf. But are they in the budget?
    Secretary Slater. Let me just say that the budget proposal 
is modified to some degree. We did make a request for the 
resources that are reflected in the agreement but that were not 
provided in years past.
    Mr. Wolf. But if you had an agreement and the people 
involved thought they were going to be in the agreement, why 
isn't this in the budget?
    Secretary Slater. It is reflected in the total dollar 
amounts. We just ask for the money in a different form.
    But as far as the dollar amounts being there, we have 
actually asked for more than we proposed that we would ask for 
when NEXTEA was introduced last year. We are actually seeking 
more dollars, but the dollars are coming in a different form. 
We have made that request based on the dynamics, as we 
understand them currently--meaning under the Taxpayer Relief 
Act--having the ability to invest in maintenance as a part of 
capital investment and also as a part of our proposal for $621 
million to get a broader definition for capital that would be 
consistent with capital as defined in our transit activities. 
If Congress changes those dynamics, then, clearly, we have to 
come together and go forward with an arrangement that would 
continue to meet the financial needs of Amtrak.

                   renegotiation of amtrak agreement

    Mr. Wolf. Two other questions on Amtrak.
    Since the agreement has been broken by the administration, 
is Amtrak or the BMWE free to renegotiate the agreement? That 
was part of the agreement.
    Secretary Slater. That is true, but the responsibility 
primarily rests with Amtrak to make a judgment as to whether 
they will have the resources available to meet, first, the 
conditions of their financial plan and business plan and then, 
second, to meet the obligations resulting from the management-
labor agreement.
    Again, they asked for a particular amount in their 
financial plan that was less than $5 billion. If you look 
atwhat we are providing over the next 5 years, it is in excess of $5 
billion. We believe they will be able to meet their financial 
obligations with these funding proposals that we have put on the table.
    Mr. Wolf. Knowledgeable people that I have spoken to do not 
believe that is the case. They actually believe, if this 
proposal is intellectually honest, Amtrak will go bankrupt in 
the year 1999 or 2000.

                     amtrak reform council language

    One additional question.
    What is your understanding of the Amtrak Reform Council 
(ARC) language? Does it say that if it looks like they are 
financially in trouble that they have to recommend that they go 
out of business? How is that actually structured? What is your 
understanding?
    Secretary Slater. That is how the language is structured.
    Mr. Wolf. And then, if they make a recommendation, the 
Senate has to take a positive action to overrule that, is that 
right?
    Secretary Slater. I am not sure on that part of it.
    Steve, do you want to respond?
    Mr. Palmer. Mr. Chairman, I believe, without the language 
in front of me, that ARC makes a recommendation to the Congress 
on either the ways in which Amtrak has to reform itself to get 
into compliance with its overall budget plans or make a report 
to the Congress on how it would liquidate itself. Congress, 
both the House and Senate, have to vote up or down as to 
whether or not that would happen. It does not happen without an 
affirmative vote by the Congress.
    Mr. Wolf. How long do they have to act?
    Mr. Palmer. I do not know.
    Mr. Wolf. Maybe you can supply that for the record.
    Secretary Slater. We can supply that.
    [The information follows:]

    Section 203 of the Amtrak Reform and Accountability Act of 
1997 established the Amtrak Reform Council (ARC). Under the 
provisions of the Act, if at any time after December 2, 1999 
the ARC finds that Amtrak's business performance will prevent 
it from meeting the financial goals established in the Act, or 
that Amtrak will require a Federal operating grant after 
December 2, 2002, the ARC will notify the President and the 
Senate Committee on Commerce, Science and Transportation and 
the House Committee on Transportation and Infrastructure. 
Within 90 days of making such a finding, the ARC must develop 
and submit to the Congress an action plan for a restructured 
and rationalized national intercity rail passenger service.

    Secretary Slater. And, Mr. Chairman, if I may--and this is 
clearly with all due respect for the position that you have 
articulated--let me say that the agreement that was entered 
into by all of the parties we consider to be in existence 
still. We do not share the opinion that the agreement has been 
broken.
    We continue to provide the resources that have been noted 
as being necessary by Amtrak; and, as a matter of fact, we 
provide more over time than was originally requested. It is in 
a different form and there is some disagreement about that, but 
the agreement has not been broken, and we do believe that 
Amtrak can get to where we all want it to get to and that is to 
become self-sufficient and a viable, well-managed organization 
over time.
    Mr. Wolf. But Amtrak will to need capital for the 
foreseeable future.
    Secretary Slater. Yes.
    Mr. Wolf. Anyway, we will get into it more with Amtrak.

                        major project oversight

    One other subject, and then I will recognize Mr. Sabo. The 
IG and the GAO testified before this committee they believe 
that the Department could improve its management of large 
dollar highway projects by requiring States to prepare total 
cost estimates and tracking that progress against their initial 
baseline cost estimates. Why has the Department not required 
States to develop cost estimates for other major highway 
projects like the Big Dig and the Alameda Corridor?
    Secretary Slater. Well, let me just say that I think we 
have learned, frankly, a lot working with the Congress on these 
big, large dollar projects; and I would join the IG and the GAO 
in moving to actually make that a requirement for big ticket 
projects.
    You should know that we have begun that process internally, 
with the Deputy Secretary being designated as the person who 
works not only with the Federal Highway Administration but also 
the Federal Transit Administration--we have got some pretty 
large projects on the transit front as well--to begin to put in 
place a process that would allow us to monitor the financial 
decisions related to these large, sometimes, multi-billion 
dollar, projects.
    Mr. Wolf. And you are going to do it for the Alameda 
Corridor?
    Secretary Slater. Yes.

                 federal funding for media consultants

    Mr. Wolf. On the Big Dig, the committee has learned that 
the Federal Highway Administration has participated in the 
costs of a media consultant hired by the Big Dig's project 
manager to prep him for a 60 Minutes interview. Media reports 
indicate that the taxpayers footed the $24,210 bill. Moreover, 
press accounts indicate the Big Dig is proposing a $2 million 
media blitz, a portion of which is being paid for by the 
Federal Highway Administration. Are these reports accurate? Are 
we paying for coaches to prepare people for 60 Minutes and for 
a media blitz?
    Secretary Slater. Well, it is a legitimate expenditure to 
use some of the resources for public educational purposes; and 
we do have those kinds of expenditures that occur all the time. 
But, clearly, those efforts should be monitored, and those 
expenditures should be reasonable in nature.
    Mr. Wolf. But I know the Committee went through this 
several years ago and finally the State changed. They were 
using Federal money--I think they were the only State--for the 
payment of wages of police officers as traffic managers or 
flaggers. That was legal, but was it appropriate?
    And I think what we are talking about here is this mayvery 
well be legal, but it is not appropriate. I mean, it would be like a 
Member of Congress saying I got a call to be on 60 Minutes. I am going 
to go out and hire a coach to help me.
    If you want the best information, just don't go on 60 
Minutes. That is the best advice you can have. I remember John 
Connelly went on 60 Minutes, and they just cut him to pieces. 
So that is about 10 minutes worth of advice.
    But should we be using Federal taxpayers' money to coach 
people? And the answer is no. And should we be using it to 
promote the Big Dig? What Massachusetts State did is they took 
their own money for the flagging of policemen, and that is 
appropriate if they want to do that, but shouldn't they be 
using their own money? I would hope this would be disallowed.
    Secretary Slater. They are going to actually do the same 
thing here. This will not be an item for Federal participation.
    Mr. Wolf. There will be no Federal participation.
    Secretary Slater. That is correct.
    Mr. Wolf. Could you furnish that for the record?
    Secretary Slater. We will do that.
    [The information follows:]

    The State's hiring of Fifield Associates was to assist the 
State's public information staff, including preparing the 
Project Director for his 60 Minutes interview. The State has 
withdrawn Federal participation from the $24,000 related to 
this.
    On large highway projects around the United States that 
affect large numbers of the traveling public, the FHWA has a 
longstanding policy of encouraging public information programs 
that contribute to easing the driving task during construction. 
The intent to help motorists find better ways to get to their 
desired designation during construction, including the use of 
intermodal alternatives such as transit, ridesharing, or water-
based transportation.
    FHWA has carefully ensured in the past and will continue to 
ensure in the future that Federal participation is authorized 
only where it is legally permitted.

                            amtrak cash flow

    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman.
    A follow-up to the Chairman's questions on the funding to 
Amtrak. What is the cash flow of the money under the new, 
changed definition?
    The reason for the question is, it is switching from 
operating to capital. And I assume the cash flow is much slower 
and might well be over a 5- or 6-year period the same, but my 
assumption is that, as cash flow impacts the first year, and I 
would share some of the concerns with the Chairman over what 
impact that is going to be in fiscal 1999. Because, clearly, 
Amtrak has had major cash flow problems and having to borrow in 
anticipation of revenue.
    Secretary Slater. Well, we have received assurances from 
Amtrak that they will be able to meet their obligations based 
on the funding levels and the form of those funds as we have 
recommended. They recently passed a budget resolution to that 
effect.

                           funding priorities

    Mr. Sabo. Okay. I just have to make this observation. I 
know I am the only Member in the room who voted for both the 
nickel in 1990 and the 4.2 cents in 1993----
    Mr. DeLay. You probably are.
    Mr. Sabo [continuing]. And I am not sure why everyone voted 
for it, but I voted for it to reduce the deficit, and I think a 
significant number of Members did. And I suppose, being self-
serving on this committee, I should want the maximum amount of 
money to come through what may be under the jurisdiction of 
this committee.
    I have to say, I am also worried about what the other 
trade-offs are. Because, clearly, there is no judgment in 
discretionary spending limits to accommodate more money coming 
into ISTEA. There wasn't--when the two and a half cents went 
in, I forget when that went in, and for the 4.2 cents.
    I sometimes think what we should do is have a bill up to 
repeal the 9.2 for deficit reduction and the bill, in the next 
stage, to have the 9.2 to spend it for highways or transit and 
increased discretionary spending caps to accommodate it.
    I would be prepared to vote for the repeal and do the other 
the next day, but it would be interesting to see how many 
Members are anxious to scrape up the money that was intended 
for deficit reduction to spend it for a particular purpose.
    My worry is that there are other priorities. I listen in 
our State and I find amazing agreement, from urban to rural 
areas, just very fundamental problems in job training, in day 
care and in housing, and across the political spectrum, again, 
from urban to rural areas. I am just afraid that, all of a 
sudden pretending it is some new free money, which it isn't, we 
are going to make some isolated decision to substantially 
increase that and have some real impact in cutting some other 
programs that are very vital to my State and many communities 
around the country. So I just want to add that perspective as 
you and others try and sort out what we eventually do.
    Secretary Slater. Sure.
    Mr. Wolf. Before I recognize Mr. DeLay, I share Mr. Sabo's 
feelings. Frankly, the 4.3 cents was never meant for a gasoline 
tax; it was meant for deficit reduction.
    Secondly, I think it would be fair to each state and to the 
entire Congress to repeal the 4.3 percent tax and allow the 
governors to raise that tax. One, it takes care of the donor/
donee question, because every State would get 100 cents on 
whatever they collected. Secondly, you would not have the 
regulations and stipulations coming from Washington, the 
Federal controls and involvement. If Mr. Sabo were to offer 
that amendment, I would, frankly, support it because it is 
fair; it was never meant for highway construction; it was meant 
for deficit reduction; and, each and every State could do 
whatever they felt was appropriate.
    Yes, Mr. Sabo.
    Mr. Sabo. I was suggesting a dual vote, one to repealone 
day and then the next day to reinstitute it.
    Let me speak to the problem there, though.
    One of the real problems is that most States are very 
restrictive in what they can do with gas tax and what is 
imposed there, and we have more flexibility with that money 
flowing through the Federal Government and is one of the 
reasons I am not an advocate of some folks who want to simply 
turn back, which on balance would probably be okay in our 
State.
    But the reality also is that somehow we have a belief that 
the auto pays for itself, and the reality is it is heavily 
subsidized, not at the Federal level but at the State and local 
level by local property taxes for public safety and a variety 
of other services that are very tied to accommodating the auto, 
and it is just very heavily subsidized at the State and local 
level.
    Mr. Wolf. Mr. DeLay.

             PROPOSED AMERICAN AIRLINES-TACA GROUP ALLIANCE

    Mr. DeLay. Thank you, Mr. Chairman.
    I know you have been on for a long time, Mr. Secretary, and 
I appreciate it, but I have leadership meetings all afternoon, 
and I want to get through my questions. It won't take but maybe 
5 or 10 minutes.
    One of the things I want to bring up is an issue of concern 
to the Houston delegation. Three Democrats and three 
Republicans sent you a letter asking you to disapprove a 
proposed alliance between American Airlines and the Taca group, 
which includes six primary Central American airlines.
    Now we feel that this is a very serious matter that goes to 
the heart of what constitutes open and honest competition, 
especially in the international arena. Administrations, both 
this one and others before it, have been approving alliances 
for some time, but they have been approving alliances that are 
largely viewed by Members of Congress and even the industry as 
end-to-end alliances, where you take the strong network of one 
carrier and you combine it with the strong network of another 
carrier for public benefit--for example, Northwest Airlines/KLM 
or United/Lufthansa.
    But, in this case, even the Department of Justice has ruled 
that this is not an end-to-end situation, that it, in fact, 
stands in stark contrast to the kinds of end-to-end agreements 
that the Department has approved in the past.
    The proposed alliance between American and the Taca group 
is obviously not end to end.
    I fear that this is a case where one airline, American, 
wants to combine with its largest competitor and take over that 
market. So we are very anxious to understand your perspective 
on this matter.
    Would you give serious consideration and weight to the 
advice of the Justice Department and are you concerned about 
the nature of this particular alliance? And is your Department 
ready to distinguish between healthy end-to-end alliances and 
destructive, overlapping alliances, such as American and Taca?
    Secretary Slater. Okay. Well, clearly, this is an issue 
that we are looking at; and we will take into account concerns 
that were raised in your letter, the letter from you and your 
colleagues, and also recommendations or insights offered by the 
Justice Department.
    Our objective is to enhance competition. We seek to do 
that, as we regulate the aviation industry domestically and 
also as we continue to seek bilateral aviation opportunities 
for our carriers across the globe. So the point that you have 
raised is well taken, and we will continue to monitor the 
situation, work through it and stay in touch with you and your 
colleagues as we proceed and take into account all of the 
points that you have brought to my attention.
    Mr. DeLay. I appreciate it, and I commend this 
administration, your Department and you, Mr. Secretary, because 
you have attempted to open up markets in very difficult 
situations. I have confidence that you will see this situation 
for what it is, as most people in the industry see what is 
going on.

                        CONGRESSIONAL REVIEW ACT

    Another question, very quickly. Something that is very 
close to my heart, and that I have been very involved in, is 
the issue of regulatory reform. I have been working with the 
leadership and committee chairman to make one of our 
legislative victories, the Congressional Review Act, a high 
priority in this session.
    As a reminder, the Congressional Review Act was signed into 
law nearly 2 years ago. It requires agencies to report on their 
compliance with the Regulatory Flexibility Act, the Unfunded 
Mandates Act, the Paperwork Reduction Act and others; and it 
also gives Congress the ability to disapprove a regulation.
    Mr. Secretary, what, if any, procedural changes in the rule 
development process were made in response to the passage of CRA 
and can you give me what regulatory policies are currently 
under way that are critical to achieving the Department's 
strategic goals and objectives during the fiscal year 1999?
    Secretary Slater. Well, first of all, we are in compliance 
with the Congressional Review Act. I think that we have, to 
date, reviewed and taken into account the details of the Act as 
it relates to about 2000 or so regulatory matters, and continue 
to be guided by the specifics of the Act.
    We also view the Act as being consistent with our 
regulatory reform review initiative that is a part of the 
administration's Reinventing Government program. So we are 
committed to the Congressional Review Act and wish to continue 
to stay in contact with you and other Members who are 
interested in how this Act is being carried out.

                        RULE DEVELOPMENT PROCESS

    Mr. DeLay. In 1997, your Department issued 1,375 rules in 1 
year. Now many of these were small rules, I understand; a 
couple were very big rules. I am interested to know just how do 
you determine that a rule is necessary and how do you decide to 
devote staff to developing a rule?
    Secretary Slater. We have to make a judgment that the 
proposed rule is in keeping with the exercise of our 
stewardship responsibilities, primarily in the area of safety. 
A lot of times these issues come to us from a number of vantage 
points--a recommendation from the Congress, an issue that comes 
forth in the public sector or through the leadership, and 
proactive efforts of our staff. But, clearly, in moving forward 
on these regulations, we take into account the cost-benefit of 
the regulations and make judgments at that point as to whether 
to proceed or not.
    Those are the kinds of considerations that we take into 
account.

                             cafe standards

    Mr. DeLay. Let me move to CAFE standards, something I 
monitor and have ever since I have been in Congress. You no 
doubt know I am not a big fan of fuel economy regulations; and, 
frankly, I think it is pretty clear, they cause more harm than 
good. In fact, I think you could agree that CAFE standards are, 
in large part, responsible for the downsizing of our passenger 
cars by about a thousand pounds and the virtual elimination of 
the station wagon and other large cars like it.
    This past year, NHTSA issued a report that is entitled, 
Relationship of Vehicle Weight to Fatality and Injury Risk. 
Now, on Page 7 of that report it states that, and I quote, a 
100 pound reduction in the average weight of a passenger car is 
estimated to result in 302 additional fatalities.
    Now, if my math is correct, that means CAFE standards have 
resulted in about 3,000 additional fatalities per year. Now 
that figure is significantly higher than the one reported in 
NHTSA's 1991 study which determined that CAFE standards cost 
200 lives per 100 pounds of vehicle weight reduction. What 
actions are you and NHTSA taking to address what I think is a 
very serious problem?
    Secretary Slater. First of all, on the CAFE standards, we 
are recognizing actions and recommendations on the part of 
Congress related to these issues; and, as you know, actions of 
Congress have basically held firm the CAFE standards that are 
currently in place; and we have respected that.
    As to the effect on the industry, it is true that the large 
station wagons that we may have grown up with are changed in 
some form. They are now coming to us in the form of utility 
vehicles, the light trucks and the vans. So they have actually 
replaced the station wagon as we knew it. Because of the CAFE 
standards, though, these vehicles are getting pretty good gas 
mileage. That is bringing about a reduction of pollutants and 
greenhouse gases within the atmosphere. That is a positive 
result of the CAFE standards.
    But it is true that this issue of compatibility is becoming 
more and more a question of interest and focus for us within 
the Department, especially through the leadership of NHTSA. As 
you know, over the last few weeks, we have engaged in a series 
of crash tests, the most recent just yesterday, which is adding 
to the information pool that will allow us to make some 
judgments regarding the compatibility of these types of 
vehicles on the roadways and how we might be able to alter the 
design, both of passenger cars as well as the sports utility 
vehicles, so as to enhance the safety of both vehicles on the 
roadway.
    It is a matter that is getting much more attention, and it 
is an issue we are committed to working with the industry and 
concerned Members of Congress and others to resolve.
    Mr. DeLay. Are you planning any new regulations for light 
trucks and sports utility vehicles?
    Secretary Slater. Not at this time. What we are trying to 
do is to enhance the information flow in this arena so as to 
make those kinds of judgments. But, at this time, the objective 
is just to enhance our understanding.

                               luxury tax

    Mr. DeLay. NHTSA Administrator Ricardo Martinez, in 
February, in the Wards Automotive Reports, was reported as 
saying that if auto makers continue to make bigger trucks 
without regard to their impact on other vehicles on the road, 
the government will find ways to regulate away their 
popularity.
    Later in the article Dr. Martinez is quoted as saying, I 
realize we probably don't have the ability to regulate design, 
but there are other ways to skin a cat, like luxury taxes.
    In suggesting a luxury tax, is Dr. Martinez representing 
the administration and your Department's position on tax 
increases?
    Secretary Slater. Well, I think Dr. Martinez followed those 
comments with other clarifying comments, noting that he was not 
speaking for the administration. And that our objective at this 
time is to do as I have shared with you, to gain a better 
understanding of these issues regarding compatibility and then 
to work with the industry in deciding how we can best address 
the issues.
    I can tell you that just last week I attended the World 
Congress and Exposition of the Society of Automotive Engineers, 
and this was a major item of discussion. I said in my remarks 
that I look forward to working with this industry, which I know 
is as concerned about safety as those of us within the 
Department of Transportation, and those of you within the 
Congress, when it comes to ensuring that our system is as safe 
as it can be.
    So the response to that was very positive, and I just think 
that these tests we are now engaged in, along with our 
continued work with the industry, will bring us to an 
understanding of decisions that we might have to make to 
provide for greater compatibility as relates to how the sports 
utility vehicles share the roadways with passenger cars.

                    fhwa field office consolidation

    Mr. DeLay. NHTSA found that making trucks more compatible 
with cars only saves 40 lives; and, according to our 
calculation, CAFE costs us 3,000 lives.
    The last question, Mr. Chairman.
    As you probably know, Mr. Secretary, it has always been a 
priority of ours to reduce the size and scope of government; 
and, therefore, I strongly support any efforts to restructure 
FHWA to reduce the size and function of its regional offices 
and maybe remove a layer of bureaucracy in the system.
    However, I understand a detailed report on this matter that 
was requested by this committee in last year's bill is way 
overdue. And in addition to commenting on when you think the 
full report will be submitted to the committee, could you 
please tell us how a reduction in regional offices will improve 
FHWA's operations, their working relationship with the States 
and the agency's budget, and how will these changes make the 
project approval and oversight process more efficient?
    Mr. Wolf. If the gentleman will yield just for a second. In 
fairness to both of you, the Federal Highway Administrator came 
up yesterday to deliver a comprehensive report.
    Secretary Slater. I knew about his visit with you, Mr. 
Chairman, and was going to make reference to that.
    I think that we made a lot of progress on this issue, 
Congressman DeLay. Clearly, we have some distance to go; and I 
think Administrator Wykle shared that yesterday.
    As we go forward, clearly we want to be very sensitive to 
employees who might have to be relocated and accommodated in 
some way, so we want to have a schedule that respects that. We 
are talking about closing at leastfive of our regional offices 
but doing so in such a way that allows us, within the Federal Highway 
Administration, to continue to work cooperatively and collaboratively 
with other modes within the Department that have the regional level as 
their only field staff representation.
    I am speaking primarily of the Federal Railroad 
Administration, the Federal Transit Administration and NHTSA. 
So we have offered a proposal that will allow for that 
collaborative kind of effort to continue, while at the same 
time will continue to allow the Federal Highway Administration 
to provide that direct, day-to-day service that it provides 
through its division offices at the State level. I think that 
we have found a good compromise here, but, again, we look 
forward to working with you and the members of the committee as 
we move forward.
    Mr. DeLay. Thank you, Mr. Chairman; and I thank the 
committee for its indulgence.
    Mr. Wolf. Thank you.
    Mr. Secretary, I am going to recognize Mr. Rogers; but, 
before I do, the distinguished gentleman from Alabama, Mr. 
Callahan, came in.
    Mr. Secretary. I spoke to your staff. They told me you have 
a meeting that you want to go to--or maybe you would rather get 
out of it--but over with the Senate at 1 o'clock. We will, you 
know, try to accommodate your schedule..
    I have a lot more questions. I don't know that I want to 
bring you back, but I will submit them for the record, and we 
are going to try to catch a few after Mr. Rogers is recognized. 
We have never cut a Member off. We have a different policy here 
because I know it is a good opportunity. But I may want to meet 
with you to go over personally some of these questions, but we 
will submit them for the record. But about 1 o'clock or 1:05, 
we will end so you can make the meeting and go to the other 
body.
    Secretary Slater. Thank you, Mr. Chairman.
    I want to state again, since Congressman Callahan has come 
in, that we do have these other meetings, but I recognize and 
appreciate the importance of our meeting here today, and so I 
haven't really looked at the clock, don't plan to, and want to 
be accommodating of the Committee.
    Mr. Rogers. I can be brief, so I will move on.
    Mr. Wolf. Yes, go ahead.

                  COAST GUARD DRUG INTERDICTION BUDGET

    Mr. Rogers. I want to talk to you briefly about the Coast 
Guard drug interdiction budget. The Coast Guard, obviously, is 
vital in the fight against drugs; and I am speaking now as a 
member of the Committee that appropriates for the Coast Guard 
but also the chairman of the Commerce budget, which has most of 
the drug fighting monies over there, DEA, FBI and the like. But 
it all has to be an integrated approach.
    One of the most critical aspects of the Nation's drug war 
in interdicting cocaine, especially, coming into the country, 
is through the Caribbean and up the Mexican coast, both coasts, 
from South America. Most of the cocaine, much of the heroin and 
a huge supply of marijuana and other drugs come that fashion, 
by boat, small boats, many of them at night, running undetected 
under the screen we have put up.
    Why? Because the C-130s the Coast Guard controls that 
region with only can see during the daylight hours. They can't 
see at night. They have no radars.
    So the drug smugglers have figured that one out fairly 
quick, so they wait until dark to take off and flood the 
country with these killer drugs. It is a huge part of the 
problem, as I am sure you are aware.
    Consequently, last year, we found the money to equip the C-
130s with forward-looking infrared radars, FLIRs. They are 
costly but very effective. They allow the C-130s to see at 
night and see further out than anything that we have. So, at 
great cost, we found the money from other accounts to fund not 
all of the FLIRs but a good number of them for the C-130s.
    Now I learn that, after going through all of that with your 
budget, they don't have the gasoline nor the manpower to fly 
the doggone things. So they are going to be sitting on the 
ground looking at the hangar through the radars. How can you 
explain that?
    Secretary Slater. Well, Congressman Rogers, let me just say 
that, first of all, I appreciate your leadership on this issue 
and the support that we have gotten in years past, and I know 
that this is a matter that you will take up with the Commandant 
of the Coast Guard.
    Mr. Rogers. But he doesn't have the money. You have the 
money, and that is the problem.
    Secretary Slater. I understand. But based on my 
conversations with the Commandant and the leadership of the 
Coast Guard, I don't think they are going to say that with this 
budget that we have proposed that they aren't going to have 
gasoline to do what they need to do.
    Mr. Rogers. My information is, from the Coast Guard, that 
they would not be able to fly the projected time with the 
budget that they are being given.
    Secretary Slater. Is that right? Well, I have to tell you 
that something as critical as that is not something that has 
come to my attention directly from the Coast Guard. What I will 
do is visit with the Commandant and our leadership team 
specifically about that, but I can tell you that we are all 
pleased with the fact that we are going to have about a 2 
percent increase in the operating budget and about a 5 percent 
increase in the equipment budget of the Coast Guard.
    Mr. Rogers. Hang on. That is smoke and mirrors, and you 
know that.
    You have increased the O&E account of the Coast Guard by 2 
percent, but they have got to give a cost of living of 3.1 
percent, which nets out that they are going to lose $68 
million. So the operational account is going to lose money, 
rather than gain it.
    Number two, you are asking or assuming that we are going to 
enact and let you put on a user fee to help finance the Coast 
Guard at $35 million the first year and the second year; and 
you know that is not going to pass. So they are going to be out 
of money in both accounts.
    In fact, according to the 1999 projected workload activity 
levels that the Coast Guard has released--and I can file this 
for the record if you like or let you look at it, at page 
PP56--they project the number of drug enforcement aircraft 
flight hours that this budget would allow them, which is 14,100 
hours, that is down 5,000 hours from 1997, in spite of the fact 
that we have gone at great expense and great trouble and great 
consternation here to find the money to equip those planes with 
radars that will make them effective, which they haven't been 
in the past. Your O&E account of the Coast Guard is going to 
have them down by $68 million; and, according to the Coast 
Guard, that means they can't fly those planes; and, boy, that 
is going to make some real problems up here.
    Secretary Slater. Let me just say that it may mean that 
some of the things that we are doing we will not be able to do, 
but I can assure you that we will be able to fly the planes and 
make effective use of the enhanced technology that you have 
made available. I can say that because that is the indication 
that I have been given by the leadership of the Coast Guard, 
and we have set a very high mark in that in 1997. We had the 
largest interdiction and most successful interdiction effort 
related to cocaine and marijuana because of our comprehensive 
Frontier Shield effort.
    Mr. Rogers. And that is just during daylight hours. Think 
what you could do if you operated all night long.
    Secretary Slater. Well that included some night efforts.
    Mr. Rogers. Not much.
    Secretary Slater. But, clearly, we appreciate the Congress 
providing us with the resources for the enhanced technology. 
Again, I know that you are going to get a report, a 
confidential report from the Coast Guard; and what I will do is 
follow up on the comments that you have raised here for me as 
well.
    Mr. Rogers. If there is a way you can shift monies around 
in the Coast Guard account, even though you don't get any more 
money, in fact you may get less, to effectively usethe 
surveillance machinery we have made available to you, that will enhance 
it tenfold, at least. I think all of us would cheer.
    Secretary Slater. I think that is something that, clearly, 
we would be committed to doing.
    Mr. Rogers. Sandy Berger, the national security adviser, 
would cheer, because he asked OMB for more money for Coast 
Guard as well as the Commandant. Both of them were turned down 
by OMB. I suspect you were turned down for more money, too, 
down there. Is that right or wrong?
    Secretary Slater. I stand with the Commandant and with the 
Coast Guard in making the strong case for their resources.
    Mr. Rogers. Well OMB accountants turned down Sandy Berger, 
the national security adviser, the President, the Commandant of 
the Coast Guard and I suspect the Secretary of Transportation 
in providing more monies for the drug interdiction efforts so 
we can fly the C-130s at night. And the auditors and 
secretaries and any member at the OMB says that doesn't fit our 
pencils, and I just think it is absolutely ridiculous that the 
OMB and that administration is doing this type of thing.
    Secretary Slater. Well, if I may, Congressman, let me just 
say that, as you know, the work of the Coast Guard is an 
important part of a very comprehensive drug interdiction effort 
that is headed by General McCaffrey; and, recently, General 
McCaffrey has gone on record as saying that the resources that 
they need, they have--meaning for the whole operation.
    Mr. Rogers. Now you are really going to get me----
    Secretary Slater. If I may----
    Mr. Rogers [continuing]. Riled up.
    Secretary Slater. Then I will welcome the comments.
    That may mean, as you have noted, that we may have to make 
some hard choices and redirect some of our focus and some of 
our resources, but the point I am making is that it is a much 
broader context in which those judgments and decisions are 
made, rather than just a focus solely on the Coast Guard.
    Mr. Rogers. Of course it is, and that is true in the 
Congress as well. As I say to you--and my subcommittee makes 
the decisions on FBI and DEA and most of the Justice Department 
enforcement agencies and another makes judgments on Customs and 
Secret Service and the like and this Committee does Coast Guard 
and other things, but some of us do see the larger picture.
    Now where you could find the monies is in Barry McCaffrey's 
office, which is absolutely useless in the war on drugs. There 
is no coordination going on from his office. He has no troops, 
no forces. He only has a few people sitting down there thinking 
and talking. They do not have any authority to command FBI and 
DEA and Customs and Coast Guard and the like because the 
budgets are written else-wise.
    The Nation's drug war is uncoordinated, and it is a sad 
thing. It is tragic, and it is disastrous for the country. It 
is not General McCaffrey's fault. He is a fine man. It is just 
the Drug Czar's office has no control or authority out here to 
run the real war where the troops are, and that is in the 
agencies of Justice and the Coast Guard and military and so on. 
So, in my judgment, you can take the money that runs that 
office of his and put it in the Coast Guard and DEA and FBI; 
and we would be further along than we are now.
    I will get off my soapbox. Thank you very much. I hope you 
can find money for the FLIRs.
    Secretary Slater. I assure you we will, and I look forward 
to the upcoming meeting you are going to have with the Coast 
Guard. And we will follow up with continued discussions with 
the Coast Guard.
    Mr. Rogers. Thank you, Mr. Secretary.

                     proposed coast guard user fee

    Mr. Wolf. Before I recognize Mr. Callahan, let me follow up 
on what Mr. Rogers said.
    The user fee is a very difficult issue, and your user fee 
imposed last year by the FAA was thrown out by the courts. The 
FAA is $70 some million dollars in the hole because of that. So 
that is a double problem--not only imposing a user fee but, the 
constitutionality of it. What Mr. Rogers says is very valid 
because you have a big hole there, beginning at the outset.

                   firing directly at drug smugglers

    Secondly, I--and I only speak for myself, not necessarily 
for the others on the Committee--I think we have to be much 
more aggressive, and I think we have to consider changing the 
convention which will allow our people to fire directly on 
these ships and airplanes. We know the fast boats are coming 
out and going into southern Mexico are not tourists. We know 
who they are. We have been reluctant, and I know there is a 
convention that we now notify the Peruvians. I think we should 
be much more aggressive.

              effect of dod drawdown on drug interdiction

    Thirdly, you have a problem with regard to the decrease of 
our military forces overall. The drawdown of DOD has had a 
significant impact on this.
    I was in Bosnia in December visiting the troops, and, boy, 
these guys have been in Somalia, they have been in Haiti, they 
have been in Desert Storm, some have been back in Bosnia for 
the second time, and the stress it is putting on their family. 
You don't have the DOD efforts down there, and in the end, drug 
transits will increase. And the administration has given the 
impression it has a very strong policy with regard to that; but 
I think it has been, in many respects, more rhetoric than 
action, without the necessary funding.
    So I recognize the gentleman from Alabama, Mr. Callahan.

                       coast guard budget request

    Mr. Callahan. I thank you, Mr. Chairman.
    Mr. Slater, I was real happy to hear Mr. Rogers, who comes 
from a landlocked community, who doesn't really benefit from 
the Coast Guard as greatly as I do, as a representative of an 
area on the Gulf of Mexico. But I am going to get up on his 
soapbox and talk about the Coast Guard and to tell you that 
your request for the Coast Guard is inadequate. I don't know 
why this is. You are not the first Secretary of Transportation 
I have said this to. You are about the fourth Secretary of 
Transportation I have said this to.
    I don't know what the solution is. I know drug interdiction 
is failing. The Coast Guard admits that they do not have the 
facilities to interdict.
    If you will just look at the charts when the Coast Guard 
sees drugs coming out of Colombia and Bolivia and other areas 
and as quickly as they can stop it in one area, they are 
already going into another area. The very fact that the Coast 
Guard could reduce this by adequate funding is unforgivable.
    I see that you requested a 4.7 percent increase for Amtrak; 
and yet, really, the only basic increase, which isactually a 
decrease if you include the pay raises for the Coast Guard, is far less 
than that if you eliminate the user fee request, which is going to be 
very difficult.
    We have got to recognize how important the Coast Guard is. 
The Coast Guard is like a stepchild. I mean, I sometimes wonder 
why it is even under The Department of Transportation. Maybe we 
should put it someplace else. Maybe we ought to put it under 
The Department of Defense or someplace else. But since it is 
under the Secretary of Transportation, we must put more 
emphasis on the importance and the needs of the United States 
Coast Guard, period.
    Your budget submission is inadequate. The Commandant is a 
good soldier, and he recognizes the chain of authority, and he 
recognizes your authority over him and the President's 
authority over you, but the fact that the President is telling 
you you cannot ask for more money than this is not something 
that is going to fly.
    We must make a change either in the mission of the Coast 
Guard or we must make a change in the amount of money we are 
going to give them to fulfill these missions. The 
administration is turning the Coast Guard into the meter maids 
of the Gulf of Mexico. They are more concerned about finding a 
shrimper with a turtle excluder device (TED) violation than 
some guy bringing up 10 kilos of cocaine through the Caribbean.
    We must recognize that if we are going to be the meter 
maids every time the Fish and Wildlife Service is going to come 
forth with a new rule and regulation, or if they expect the 
Coast Guard to enforce fisheries, they are going to have to pay 
the Coast Guard to do it.
    You should be and the Commandant should be prioritizing 
your needs. You should come before this committee and say, 
Chairman Wolf, we need this much money for drug interdiction 
capabilities, and we need so much money for navigation, and we 
need so much money for search and rescue, and then we need so 
much money in order to fulfill the requirements that the Fish 
and Wildlife service come up with monthly telling them what to 
do.
    The Coast Guard is boarding ships in the gulf of Mexico, 
motor yachts in the Gulf of Mexico, and they are spending 
useless dollars on fisheries enforcement that they do not have 
in letting drugs come into the United States. So what you 
should request is: you need $400 million or $5 billion for drug 
interdiction programs; you need a billion dollars for your 
navigational safety programs; you need a billion dollars for 
search and rescue. And then if the Fish and Wildlife Service 
wants you to monitor their rules and regulations, you ought to 
tell them to give you the money to do it.
    But somebody has to come to their senses about the United 
States Coast Guard with respect to funding request. And I know 
your limitations; and I know that, just as the Commandant is a 
good soldier, you are a good soldier. You have been told not to 
ask for more than X dollars, and we appreciate that. But if 
that is the mandate, that you can't ask for more than such, 
that is fine with me; but we are going to have to find a way, 
with your help, to redistribute the allocation that has been 
given to you. Because you request, is so inadequate that I 
might not be able to vote for the entire bill unless some 
change is made to adequately prioritize the use of money that 
we are giving to the Coast Guard and for you and the President 
and the Coast Guard to understand that drug interdiction is 
important, sufficient to request a separate part of the money.
    Now, if they are enroute to intercept some drug or some 
type of drug activity and they they see a shrimp boat out there 
shrimping without a TED, they should give them a ticket and 
make a little bit of money. But this ought not be our priority, 
unless the Fish and Wildlife service wants to fund it. So I 
don't know what resolve we are going to take, Mr. Chairman.
    I will certainly yield in just a minute. But, Mr. Chairman, 
I want to put you on notice. I am coming forth with a 
substantial, additional request for the United States Coast 
Guard; and I think next year the Commandant should come to us 
and tell us what money he needs to have the most effective drug 
interdiction program he can possibly have. He should tell us 
what he needs, and we will get him the money.
    Mr. Secretary, then you say, we need this much for 
navigation; we need this much for search and rescue; and we 
need this much to enforce all these silly policies the Fish and 
Wildlife service dreams up every 3 months. We will then see if 
we can get the money for them, too. But we have to recognize 
that drug interdiction is now the most important thing you can 
do for the United States Coast Guard.
    I would be happy to yield to my landlocked friend from 
Kentucky.

                         coast guard priorities

    Mr. Rogers. I just wanted to bolster the gentleman's point.
    If you look at the cutter operating hours, comparing 1997 
and your 1999 estimate, you will have decreased drug 
enforcement cutter operating hours by some 26 percent. By the 
same token, you are increasing fisheries enforcement by 
significant amounts.
    So you are cutting drug enforcement, you are going to 
fisheries enforcement and cutting operating hours and aircraft 
flying hours, you have decreased drug enforcement flight hours 
in that period by 26 percent, and you have held steady on the 
fisheries aircraft operations. So you are turning the forces 
that were designed to interdict the poison for our kids in the 
country to keeping somebody from catching some fish they are 
not supposed to catch.
    I don't understand the administration's priorities, that it 
is okay to smoke cocaine but not tobacco, but that is another 
subject. But it just--I don't understand that, and I think the 
Secretary needs to explain why you are cutting drug enforcement 
aircraft and cutters to the bone, even below the bone, while 
you are increasing surveillance of American citizens fishing in 
the water.
    Secretary Slater. Well, first of all, let me just say 
thanks to Congressman Callahan and also to you, Congressman 
Rogers, for the spotlight that you have put on the work of the 
Coast Guard. Also, Mr. Chairman, thank you for your comments in 
that regard.
    You know, I personally can think of no other entity within 
the Department or, frankly, within government, that has 
streamlined more--that has risen to every challenge--as has the 
Coast Guard, especially over the last 5 years that I have been 
affiliated with the broader DOT of which the Coast Guard is a 
part. And it is true that we have set quite a mark for 
ourselves with the success of our efforts last year, in 
particular, where we had record level interdiction seizures of 
cocaine and marijuana. So, with that performance, I know that 
we have got that high standard.
    And even with some of the cutbacks that we are discussing, 
we think that we can operate in a smarter, moreefficient manner 
so as to maintain that level of performance and to play our role as a 
Department and as a Coast Guard in the context of a time when we are 
trying to put our economic house in order; and where many agencies and 
departments are being cut back, at least we can acknowledge an increase 
in important areas.
    Mr. Rogers. If the gentleman would yield briefly.
    Mr. Callahan. I would be glad to.
    Mr. Rogers. We have seized more cocaine, but much, much 
more is getting through than before. We are not making a dent 
in the problem.
    Secretary Slater. Well, I think, though, that we have 
clearly enjoyed some success here. The good thing is that we 
are focusing as much on demand as consumption; and the reports 
have demonstrated that, frankly, we do have fewer people 
consuming----
    Mr. Rogers. Mr. Secretary, as Secretary of Transportation, 
are you telling us that your job is to get people not to smoke 
cocaine and use heroin? No, your job is to interdict the stuff 
coming in, let someone else do that, but it is not working.
    Secretary Slater. But that is where we have had some 
success on the interdiction fronts. Have we done as much as we 
can do and must do? No. That is why I am really pleased that 
the members of the Committee are giving serious consideration 
as to how we might work together to ensure that the Coast Guard 
has the resources it needs and to ensure that they have the 
equipment needed over the long term.
    Let me just mention, as I close my response here, that I am 
very pleased that, as a result of this budget, we are going to 
start a long-term assessment of the kind of equipment that the 
Coast Guard will need over time. Most of the equipment that the 
Coast Guard depends on is aged equipment--some of it, you know, 
40 or so years old. And we do have, as a result of this budget, 
the down payment of a program that will allow us, in the not-
too-distant future, to enhance the capability of our 
equipment--much like, with the support of the Congress, we were 
able to provide the infrared technology that gives us the 
ability to use our equipment at night.
    So we are, as an administration, trying to respond to the 
needs of the Coast Guard both on the operational front and the 
equipment front and look forward to working with the Congress 
to address these concerns.
    Mr. Rogers. If the gentleman would briefly yield.
    Mr. Callahan. Yes.
    Mr. Rogers. It is not the administration that sought and 
got the FLIRs. You didn't ask for the money for FLIRs. We made 
you do it. We gave you the money and made you do it. So don't 
come here and tell us it is the administration that wanted to 
do this. You are cutting their flight hours, and you didn't 
want the radars.
    Secretary Slater. In the budget process, there is always 
the give and take that occurs between the administration and 
the Congress. We propose, you dispose, and ultimately the 
President decides whether he will sign a bill that is passed by 
the Congress.
    So there has been this give and take that has gone on, and 
I think it is a positive foundation on which to build. But it 
is true, as we have debated the issues over time, a lot of time 
the Congress has been able to raise concerns and raise issues 
that have contributed considerably to the overall health and 
well-being of the Department's budget as a whole; and for 
that----
    Mr. Callahan. Mr. Secretary, I want to make certain you get 
out of here at your designated time; and I know you said you 
would stay a little longer.
    But let me just tell you that, in your position, you have 
the authority to go to the Fish and Wildlife Service and say 
that just because some scientists that can't even park their 
bicycles straight have come up with a plan saying you should 
not catch more than 10 snapper, doesn't mean that we are going 
to dedicate the entire resources of the United States Coast 
Guard return to serve as game wardens, just because Fish and 
Wildlife mandates, through some rule, that there are not a 
sufficient number of snapper in the Gulf of Mexico.
    Secretary Slater. That is a good point.
    Mr. Callahan. That is fine with me. You call the head of 
the Fish and Wildlife Service and you tell him you do not have 
enough money in this budget, this year, to enforce those silly 
rules and regulations that they are passing. That, indeed, you 
are going to use the money for drug interdiction. And if they 
want you to enforce their policies to give you the money for 
enforcement or either go to Congress and get Congress to give 
more enforcement money. But don't come to the Congress asking 
for more money for fisheries enforcement than you are asking 
for drug interdiction. Which has the highest priority, in your 
opinion?
    Secretary Slater. The drug interdiction effort has to----
    Mr. Callahan. Then why didn't you submit a request for more 
money for drug interdiction than you did to monitor the silly 
regulations of the Fish and Wildlife Service?
    Secretary Slater. Well, we submitted, with the support of 
the Coast Guard, a budget proposal that we thought and still 
believe will help us meet our needs. Now, again, it is before 
the Congress at this point in time, and I want to state once 
again that I very much appreciate the interest that you have in 
this matter. I appreciate the interest that Mr. Rogers has.
    Mr. Callahan. I understand that. But let me tell you, I 
expressed this to your predecessors, and I have gotten nowhere.
    I am calling upon you because you have been south--in fact, 
that is where I met you, in Mobile, Alabama, when you were the 
Federal Highway Administrator--so you have seen the beauty and 
the greatness of the Gulf of Mexico. And I am telling you that 
we want to make an immediate change in requesting that you 
forget about policing the rules and regulations of some 
environmental agency and prioritize the money we are going to 
give you for drug interdiction. I mean, that is a very simple, 
logical request, that you just admitted that you support.
    So why don't you just go back to your office--and I know I 
am making you late getting back there--and call them and tell 
the Fish and Wildlife Service that, we have had a change of 
heart. That if you want to implement all these rules, create 
your own game warden. That we are not your meter maid, and we 
are not your game wardens. We are professional protectors of 
the United States of America, and snapper is not going to hurt 
the first American. That is just the way it is.
    And neither is some shrimper out there trying to make a 
living. First of all, they came out with TEDs, which is a 
turtle excluding device; and they made every shrimper in 
America put a TED in their net to let the turtles escape. Then 
we let the Texans and South Americans take the entire shrimp 
market away from us.
    And now they have come up with--in addition to the turtle 
excluding device, they want to put a device in one end of the 
net, to let the little snapper get away.
    So you tell them you no longer have the resources available 
and that you are going to reprogram this enforcement for 
fisheries money into drug interdiction. You have the authority 
to do that.
    You are up here asking us to reprogram all the time. So if 
you would rather we do it for you, I am sure the Chairman would 
agree, that we can just reprogram this, take out fisheries 
enforcement and put it in drug interdiction.
    Would you object to that?
    Secretary Slater. Mr. Chairman----
    Mr. Wolf. Well, let me--I share the gentleman's concern. I 
thank the good Lord every night my children are not at that age 
now.
    I was down in one of my rural counties on Saturday at a 
Lincoln Day dinner; and they told me the impact in this county, 
which is a very, very rural county. It is all over America.
    I think this administration's policy has been inconsistent, 
beginning with when the President went on MTV and said he tried 
drugs and did not inhale. The message that sent----
    Many people laughed at the Reagan program of Just Say No, 
but if you go into the schools, as I do perhaps more than just 
about anybody else around, I go into all of my high schools, 
every session of Congress, and sit down with the kids, answer 
questions and just listen to them. They will tell you, drugs 
are all over.
    I was up at Governors Island the other day, made an 
unannounced visit; and they have Coast Guardsmen raking leaves. 
This Committee was asked to provide funds for custodial care of 
the island and we complied, so that the Governors Island didn't 
just wither away. The Committee provided $6 million. But to see 
24 Coast Guardsmen raking leaves, when you could have taken 
that money and used it for fuel for drug interdiction 
operations.
    So it is a serious issue, and I do believe the rhetoric 
coming out of the administration.
    In closing, you are----

                 administration's shift in the drug war

    Mr. Rogers. Mr. Chairman, would you yield just briefly on 
that point, and I promise this is the last. But this 
summarizes, I think, the predicament we are in.
    In 1993, the White House announced, in all good conscience, 
what they call a control shift in the drug war from transit 
zone interdiction by the Coast Guard and Customs Service to 
source country eradication programs and drug treatment programs 
here at home; and they sort of downplayed the war in between--
the interdiction at sea and so forth. Unfortunately, the shift 
never occurred; and interdiction and source country programs 
were introduced, both of them, and the money put in drug 
treatment here at home.
    In 1998, interdiction and source country programs were 
funded at about 80 percent of the 1992 level, and that is not 
even counting inflation. At about the time that controlled 
shift took place, leading indicators immediately showed the 
results. Most troubling, the sharp rise in teenage drug use. It 
had trended downward from 1980 to 1992.
    When you cut out the monies for interdiction, according to 
your latest OMB/CDC figures, 54.3 percent of high school 
seniors have used drugs. That is up from 40 percent in 1992. 
That is a 14 percent increase in a short span of time when you 
had this controlled shift.
    You say, well, we are doing treatment programs. Well, your 
relying on treatment to win the war on drugs is like relying on 
field hospitals to win a field of arms. You don't win those by 
defensive measures, first aid to the wounded. You take your 
battle to where the bullets are coming from and you catch them 
out there. But this administration has decimated the 
interdiction effort, and this Congress is not going to let you 
go any further.
    Mr. Wolf. Go ahead.
    Secretary Slater. I think I should say I don't think the 
administration has been on the defensive as it relates to the 
war on drugs, and I think that General McCaffrey has done a 
good job in coordinating the effort of the administration in 
this regard.
    Clearly, we don't have as many resources as we would like 
to have; and we join the Congress in that regard. But I can 
tell you that we have got those in the Coast Guard out there 
day in and day out who are making the sacrifice, and last year 
they raised a very high standard for us to meet with their 
record level interdiction for cocaine and for marijuana.
    It is not our intent to propose a budget that would cause 
us to fall from that standard that has been established, and I 
do look forward to working with the members of this committee 
and with the Congress and with my colleagues within the 
administration to ensure that we move from strength to strength 
and that we continue to rid our society of this menace. I know 
that that is a goal that we share.
    Mr. Wolf. You never commented on the idea of the Coast 
Guard and our forces firing directly at the planes.
    Secretary Slater. If I may do this, Mr. Chairman. Let me 
consult with the Commandant on that issue and other----
    Mr. Wolf. The Commandant never addresses that. He talks 
about an international convention. The subject sort of shifts, 
and he drifts away from it. I think, frankly, nobody wants to 
deal with it.
    If there is a real war on drugs, will have an impact on our 
children and on the families in America, then I think it 
certainly ought to be something we should be willing to 
consider and not just necessarily call the Peruvians in to 
shoot the aircraft out of the air. I think our forces should 
also be able to do the same. Without that, people say they are 
going to spend more money on the drug war and talk about it, 
but we won't be successful with it.

                projected coast guard drug interdiction

    Mr. Rogers. Mr. Chairman, will you briefly yield?
    Your own records, Coast Guard records and the government 
records, show that your budget would anticipate the pounds of 
cocaine to be interdicted would decrease in 1998 and 1999 from 
the 1997 level with the money that you are putting into 
interdiction. You are anticipating a lot less cocaine 
interdictions. You would be going from 103,617 pounds, I guess, 
down to 89,000 in 1999.
    Secretary Slater. I think that is based on a performance 
level that is consistent with the level this year without any 
enhancement, without the use of the enhanced technology dealing 
with the infrared capability that you have mentioned. I can 
assure you that the Coast Guard, with this budget, is not going 
to respond in a way that we are not performing at the level or 
beyond the level that we performed at last year.
    Mr. Rogers. That is what your budget would show would 
happen.
    Secretary Slater. I think that is, when you are looking at 
it, only in terms of dollars. There are other streamlining and 
enhancing efforts----
    Mr. Wolf. I think he is talking about pounds seized.
    Secretary Slater. The judgment is being made only when you 
focus on the resource side of our initiative, rather than 
focusing on our effort to streamline our operation, become more 
strategic and focused in our endeavors to work better in a 
collaborative way. I mean, there are other ways----
    Mr. Rogers. When you talk to the Coast Guard people, they 
disagree with you. They say you are going to cut back big time 
on the patrol hours and that will mean fewer interdictions and 
pounds seized.
    Secretary Slater. We will see.

            reprogramming for coast guard drug interdiction

    Mr. Callahan. I want to ask one question. I think you 
understand and you share our concern about drugs.
    Secretary Slater. I do.
    Mr. Callahan. Then would you fight a possible reprogramming 
of maybe small percentages of some of these areas of your 
Transportation Department to increase the Coast Guard's ability 
up by $100 million, at least, for drug interdiction? Would you 
support us taking a few million dollars away from Amtrak, a few 
million dollars away from the Jobs program, a few million 
dollars here or there, in order to adequately fund the United 
States Coast Guard and their ability to interdict drugs? Would 
you adamantly be opposed to that? Do you think we could not 
take a few million dollars from each and every project to 
increase the Coast Guard's ability for drug interdiction?
    Secretary Slater. I would support----
    Mr. Callahan. Good.
    Secretary Slater. I would support an effort to work with 
the members of the Committee and to work with the 
administration and the Congress to ensure----
    Mr. Callahan. In Alabama, we would say that was a 
commitment, that you agreed to it.
    Secretary Slater [continuing]. To ensure that the Coast 
Guard has its resources to do the job we all agree it must do.

                  gambling casino on governor's island

    Mr. Wolf. In closing, let me give you an easy question.
    On the Governors Island, when I went out there, I saw piles 
of leaves, and Coast Guardsmen who were raking them.
    Secretary Slater. This sounds like it is going to be a 
tougher question, Mr. Chairman.
    Mr. Wolf. I also reflected, as I looked out, on the 
historical events that have occurred on the island. Ronald 
Reagan met with Gorbachev there. Bush met Gorbachev. It is a 
historical place. I urge Members to visit it.
    It also has the building where Mitterrand stayed, and the 
fort out there was used as a prison during the Civil War. The 
number of famous people who have served on the island--I, think 
one of the Wright Brothers' more important flights took off 
from there.
    There is a lot of beautiful land there that could be used 
for a park. As you look out, you can see Ellis Island, where 
many of us, you know, had relatives come to reside in the 
United States. That was their first port of entry.
    Lastly, it also looks out on the Statue of Liberty and 
Ellis Island, which are side by side.
    Would you agree with me it would be inappropriate to have a 
gambling casino out on Governors Island?
    Mr. Rogers. Easy question.
    Mr. Wolf. Was that a yes? You shook your head yes.
    Secretary Slater. I just said umm. The questions are 
getting tougher.
    Mr. Callahan. I will bet you two-to-one you are not going 
to get an answer.
    Mr. Wolf. I don't bet, but we really need to hear from you. 
What are your feelings?
    Secretary Slater. I should say--I wanted to say, I pass. 
But, clearly, we are working with the City of New York and New 
York State to try to come up with some way that this land could 
be used for a purpose that is consistent with its rich history; 
and I am looking forward to working with all concerned to 
accomplish that end.
    Mr. Wolf. Okay. But you really didn't answer. Do you think 
gambling would be appropriate out on the island? If you can 
just tell me yes or no.
    Secretary Slater. Mr. Chairman----
    Mr. Wolf. This is what leadership is all about.
    Secretary Slater. Well, clearly, you and I have had 
discussions about this; and I can tell you that I definitely 
understand the sensitivities you have raised. In many respects, 
I share them. Again, I just want to go back to my point 
earlier, that we have been in negotiations with New York State 
and with the City----
    Mr. Wolf. But all of the members of the congressional 
delegation of New York all share my feelings. Senator Moynihan 
is against gambling. Carolyn Maloney, who represents the area, 
and Jerry Nadler are against it. The only one pushing for it is 
the City of New York and the mayor. The New York General 
Assembly is against gambling.
    And, you know, this administration has been very weak on 
the issue of gambling. This administration has taken extensive 
contributions from the gambling interests. This is a real test, 
and the Clinton administration will go down in history as 
fundamentally and I believe morally corrupt----
    Secretary Slater. Oh, Mr. Chairman.
    Mr. Wolf [continuing]. If it permits gamblers to come in 
with political contributions to influence this in such a way 
that, 5 or 10 years from now, when people come out onto the 
island and look out and have a gambling casino that looks out 
on the Statue of Liberty, which is the symbol that the students 
in Tiananmen Square made a papier-mache to symbolize liberty 
and freedom, and look out on Ellis island, where a large number 
of people living in the country today had their grandparents 
and sometimes their parents and their great grandparents enter 
this country,--to even allow the gambling interests to 
establish themselves there would be a disgrace. I think history 
will demonstrate, history will show, and I would make sure I 
reminded people of that history.
    That is why I am disappointed that you are not willing to 
say, Congressman Wolf, I agree with you. I think it would be 
inappropriate. And a red flag goes off because I watched some 
of the people who came to the White House and some of these 
coffees; and they were from the gambling interests, giving an 
extensive amount of money.
    In fairness, let the record show that both political 
parties have taken a considerable amount of money. But when I 
looked and saw the list of the coffees at the very time the 
President was making appointments to the Gambling Commission, 
which I authored, your reluctancecreates a real concern in my 
mind.
    I thought that was an easy question, honestly an easy 
question. My God, why would you ever want to put gambling on 
Governors Island?
    I thought we could end the hearing quickly by saying I 
completely agree with you. It would be inappropriate for 
gambling to look out on the Statue of Liberty and Ellis Island 
given all the historical aspects that have taken place there. 
It should be open to an educational consortium, and a place 
where moms and dads can take their kids out on a weekend. It is 
not compatible to take your kids out on the island on a weekend 
and have the gambling interests out there.
    But I am not going to put you down on it, but I am 
disappointed you were not able to be forthright and answer me.
    Secretary Slater. Mr. Chairman, note that I did say you and 
I have talked privately about the matter, and many of the 
concerns you have raised are concerns I share. I know the 
administration to be working with New York City and New York 
State to ensure that these properties are used in a way that is 
compatible with the historic role that the properties have 
played in the past.
    Mr. Wolf. But that is in the defining of the person that 
says compatible.
    The mayor is not a bad person. He believes that would be 
compatible, to have it down on one end of the island.
    You are an important person. I have great respect for you. 
You are someone who the President of the United States listens 
to. You are valued by him. I mean, it is clear when I see the 
number of meetings that you attend, and that is to your credit.
    It troubles me that you would not say--you know, I don't 
know if you are signalling me that I agree with you, Mr. Wolf, 
but I am not going to say it here. But I was hoping you would 
say, Mr. Wolf, I completely agree. I think that it would not be 
a legacy that we in the Clinton administration would want to 
leave for future generations as they look out to the Statue of 
Liberty, they then look back and see that there is a gambling 
casino on the tip of the island.
    I think it would be horrible, and I just wanted you to say 
that, and I don't know how this is going to come out on the 
record. Is it going to be that Secretary Slater hedges or 
Secretary Slater signals Wolf with a wink and a blink that he 
really is with him but didn't want to say? I am not really 
sure. It is an issue I care deeply about.
    Secretary Slater. I understand, and this is why I made 
reference to our previous conversations on the matter and why I 
said now three times that the concerns you raised are some 
concerns that I share----
    Mr. Wolf. I appreciate that.
    Secretary Slater [continuing]. And I think that we are 
going to resolve this matter over time, that it will prove to 
be acceptable for all concerned.
    And I can say this--and I think I should--that, 
unequivocally, this administration will not make a decision 
based on any contributions that it might have received. We will 
deal with this matter in an up-front, objective and thoughtful 
fashion.
    Mr. Wolf. I take you at your word, and let me just 
stipulate that I think you are an honest and decent person.
    I just have to say, though, without knowing the fault or 
blame and have not spoken out on the issue, we have seen that 
there has been an outside counsel appointed with regard to the 
Indian tribes in the Midwest with regard to a member of the 
Cabinet, and certainly I don't know if there is a problem there 
or not. Secretary Babbitt seems like a fine guy. I don't know 
anything about it.
    But for the first time we have now seen this. There has 
been significant corruption on the part of gambling. We know 
that for the record. Now we are beginning to see it percolate 
within the last year or two up at the Federal level, and this 
latest thing with regard to the Indian tribes troubles me.
    Supposedly we will know eventually from the outside counsel 
about conversations in the White House and what different 
people have alleged, and I don't know what they are. I hope 
nobody is hurt by it. But we have now seen it has pierced the 
Federal veil and is now up at the Federal level.
    And I plan on doing this on a very high profile, with 
regard to this. Because, long after I am gone, I don't want to 
see a gambling interest. I think it will look bad if they are 
successful in doing this, and it is very difficult to kind of 
connect these. I mean, when the gambling interests make the 
contributions, it generally isn't because they support the 
Member or the person because they like his view or her view on 
troops in Bosnia or on the capital gains tax. It generally is 
to be involved with regard to the gambling interest.

                            closing remarks

    Again, I apologize. We wanted you out by 1:00.
    Secretary Slater. Sure.
    Mr. Wolf. But this will give you plenty of time to make 
your meeting at the White House.
    We will have a series of questions that we will submit for 
the record. Please return the answers quickly.
    Secretary Slater. We will provide that. Thank you.
    Mr. Wolf. Thank you very much.


[Pages 75 - 477--The official Committee record contains additional material here.]



                                       Thursday, February 12, 1998.

                      OFFICE OF INSPECTOR GENERAL

                               WITNESSES

KENNETH M. MEAD, INSPECTOR GENERAL
RAYMOND J. DE CARLI, DEPUTY INSPECTOR GENERAL
LAWRENCE H. WEINTROB, ASSISTANT INSPECTOR GENERAL FOR AUDITING
TODD J. ZINSER, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS
ALEXIS M. STEFANI, DEPUTY ASSISTANT INSPECTOR GENERAL FOR AVIATION
PATRICIA J. THOMPSON, DEPUTY ASSISTANT INSPECTOR GENERAL FOR SURFACE

                          Introductory Remarks

    Mr. Wolf. Welcome to the Committee. We are on a tight 
schedule, although we will probably stay here the whole day. 
The House is going to break at about 2:00 o'clock, or maybe 
even sooner, because of certain events. We have a series of 
questions, but we will wait until you finish your statement. If 
your answers could be relatively crisp, we would appreciate. 
You can elaborate in depth for the record.
    We want to welcome you, Mr. Mead, and your staff. I have 
great respect for you; I think you all have done a fantastic 
job over the years. This Committee has relied on your comments. 
I personally rely quite heavily on the work the IG has done, so 
we appreciate it very much, the good work. If you could, take 
back to all of your staff the appreciation of the Committee. I 
want to make sure you know that because this is a day Members 
are getting out of town, your statement will be available to 
all the Members so that they can see what you have done, too. 
But please proceed as you see fit.
    Mr. Mead. Thank you, Mr. Chairman, and I will try to be 
brief and crisp. Before I begin, I want to express my 
appreciation to the Congress and Secretary and the Deputy 
Secretary, Operating Administrators and the Assistant 
Secretaries at DOT for their support and responsiveness. And I 
wanted to say that in public session because I wanted you to 
know I think we and they have made a special effort in 
establishing a working relationship based on trust and mutual 
respect, and that is very important when you are, in effect, 
the internal auditor and have to do objective work.
    I would like to introduce my colleagues, too, for the 
record. Mr. DeCarli the Deputy Inspector General, is on my 
right; Larry Weintrob, he is our Assistant Inspector General 
for audit and evaluations; Todd Zinser is our Assistant 
Inspector General for investigations; Alexis Stefani is at the 
table, she is Deputy Assistant Inspector General for aviation; 
and back here is Pat Thompson, Deputy Assistant Inspector 
General for surface, and John Meche, Deputy Assistant Inspector 
General for Financial, Economic, and Information Technology. 
This is my first time before the Committee to present the OIG 
budget request, and I just wanted to briefly elaborate on the 
principles under which we are operating. We don't want to 
simply react to allegations, problems, and tragedies; we are 
here to catch problems.
    Mr. Wolf. Mr. Sabo is going to chair. I will be right back.

                           OIG Budget Request

    Mr. Mead. Mr. Sabo. We are here to catch and correct 
problems early whenever possible. We are requesting a total 
funding level of about 43 million dolalrs. That includes 665 
thousand dollars from the highway trust fund to cover FTEs. It 
is an increase of 1.2 million over our fiscal year 1998 enacted 
request. Our requested staffing level is 442, which is two more 
than our current level. I believe that that is sufficient. The 
details are provided in our budget submission.
    Now a word on our accomplishments last year. We issued 144 
audit reports, directed $138 million in funds, prompted 
decisions recovering $196 million and adjusting $32 billion in 
the Department's accounting records. During the first 4 months 
of this fiscal year we issued 65 reports and identified more 
than $500 million that could be put to better use.
    I want to say a word about our investigative staff, whose 
work secured 103 convictions last year and led to fines and 
judgments totalling a little more than $12 million. Criminal 
investigations currently are emphasizing illegal spare parts 
for aircraft, HAZMAT, motor carrier safety, and contract and 
grant fraud. Our work in fiscal years 1998 and 1999 will 
concentrate on significant issues facing DOT and the Congress.
    Now I know your work will be complicated this year by 
significant reprogramming requests dealing with the FAA fiscal 
year 1998 budget and Amtrak finances. Of course, the latter 
isn't particularly a new item.

                   Focal OIG Issues--Aviation Safety

    I would like to provide highlights of the key issues as we 
see them. First, aviation safety. After the ValuJet crash in 
1996, you will remember that the FAA established a task force 
that came up with 31 very credible, comprehensive 
recommendations. Action is completed on 8 and much remains to 
be done. Several ofthose recommendations pertain to the level 
of surveillance given new entrants. On another safety issue--dangerous 
goods and cargo security--assessments and tests show that indirect air 
carrier operations are not sufficiently complying with FAA 
requirements. These indirect air carriers are the people who show up at 
the airport and carry luggage or baggage that can be checked but which 
might contain hazardous materials.
    A third safety area I want to highlight has to do with 
collisions on runways, also known as runway incursions. They 
have increased fairly dramatically in just several years. They 
have risen 54 percent from 1993 to 1996, from 186 to 287. The 
goal now is to reduce incursions to 41 by 2001, so we have a 
long way to go. On one last aviation safety issue, we found FAA 
inspectors were not routinely provided basic technical 
training.

                             surface safety

    Moving to surface safety, the motor carrier compliance 
program needs to expand coverage and more accurately target 
carriers. A related item is unscrupulous motor carriers that 
put the public at risk by deliberately falsifying driver's 
licenses and requiring drivers to falsify logs. We now have 
over 20 criminal cases under investigation in this area. FRA's 
safety program and grade crossings are the subject of our 
ongoing work.

                        year 2000 computer issue

    As for Year 2000 computer issues, I think you've probably 
read enough about that. This issue deals with computers that 
cannot distinguish between 2000 and 1900. Seventy percent of 
the department's mission critical systems are within the FAA, 
and the most difficult challenge is fixing the problems by 
January 1, 2000. Testing the fixes and putting compliance 
systems on line is ahead. I know money is important, especially 
to this committee, but time is the key issue here. We think FAA 
should move up its November 1999 compliance date to June 
because we don't think there is much of a cushion with the 
November 1999 date.

                       air traffic modernization

    On the subject of air traffic modernization, I want to just 
footnote my observations with some remarks about Administrator 
Garvey. She has recognized the need to take control of this 
multi-billion dollar program, and as a result of the efforts 
and initiatives she has undertaken, you will see in this year's 
appropriation cycle a greater disclosure of risks, more focused 
program definitions and greater realism in project schedules.
    However, some of the key items facing air traffic 
modernization are the human factor issues and the standard 
terminal automation replacement system, called STARS for short. 
We had testified at a hearing on this some months ago. Those 
human factor issues have to be resolved and they better be 
resolved soon or you are going to see considerable slippage in 
the schedule. The cost of the wide area augmentation system, 
called WAAS for short, has to do with satellites for 
navigation. Costs have increased, mostly because of costs that 
weren't previously included. There remain big questions about 
backup systems, such as whether you need a backup system, 
whether you can rely exclusively on satellites, and on the 
number of satellites needed. You will also hear about cost to 
users.
    The HOST computer--the computer used to control high 
altitude traffic--has year 2000 problems as well as parts 
availability problems. The HOST computer must be repaired and 
it must also be replaced. We have serious doubts as to whether 
it can be replaced though, in all 20 centers, by January 1, 
2000. That is a lot of computer work for FAA to complete in 
less than 23 months time.

                        cost management systems

    On FAA cost management systems, FAA has to develop a cost 
accounting system that reflects the agency's debt, investments, 
allocated costs and revenues. This is needed for a fee-for-
service system, and also, more fundamentally, needed so as to 
know what the agency's costs are. The committee may be 
expecting this system to be delivered by October 1st. I think 
that is very, very optimistic. I don't believe it will happen 
by then.

                             infrastructure

    On infrastructure needs, in order to minimize cost overruns 
on major infrastructure projects, a requirement for a financial 
plan, similar to that required by this committee for Boston's 
Central Artery and L.A. Metro, is a good idea. That combined 
with FTA and FHWA oversight is, in our view, worthy of 
replication in other major construction projects.

                            airport revenue

    As a result of our work and legislation, airport revenue 
diversion problems have been reduced. Another item, passenger 
facility charges for non-air-side projects, such as transit 
systems that facilitate access to airports, needs a clear, 
articulated policy.

                          financial accounting

    On financial accounting, I should say that since passage of 
the Chief Financial Officers Act, we have seen a lot of 
progress in the department, but it is still going to be a real 
challenge for DOT to get an unqualified opinion by fiscal 1999. 
I want to point out here that last year on the highway trust 
fund, we gave an unqualified opinion. A similar unqualified 
opinion is unlikely this year if we can't resolve certain 
issues. The problem with the highway trust fund is external to 
DOT and relates to the Treasury Department's support for 
estimates of gas tax receipts.

                     amtrak financial requirements

    On Amtrak, recent reform legislation requires a thorough 
analysis of Amtrak's financial requirements. We are issuing a 
statement of work on this and we hope to have a contract 
awarded by mid to late March. This is an important one because 
Congress is looking to this analysis to assess what Amtrak's 
financial requirements and viability are over the next 5 years.
    A major issue the Committee will be asked to address 
thisyear is Amtrak's need for direct appropriations. DOT's budget 
request asks for 621 million in direct appropriations. That is in 
addition to the 2.2 billion that will be made available for Amtrak for 
capital under the Taxpayer Relief Act. Amtrak's Board of Directors 
would like to use the 621 million for what they call capital 
assistance.

                 government performance and results act

    Finally, with regards to the Government Performance and 
Results Act, a major challenge facing the department is 
implementation of a strategic plan. And with that plan, they 
are required to establish performance measures. I want to 
advise the committee that these measures are not going to be 
free from controversy. For example, improved safety and highway 
maintenance will depend on the performance of third parties, 
such as the States, and we encourage the committee to weigh in 
on the usefulness of these measures.
    Mr. Sabo [presiding]. Excuse me. I have about five minutes 
to get there to vote, so why don't you suspend until the chair 
is back.
    Mr. Mead. Yes, sir.
    Mr. Sabo. We will see you later.
    [The prepared statement and biography of Mr. Mead and 
biographies of DeCarli, Stefani, Weintrob, and Zinser follow:]


[Pages 484 - 508--The official Committee record contains additional material here.]



    Mr. Mead. I finished my statement while you were voting.
    Mr. Wolf. I appreciate Mr. Sabo doing that, that way it 
doesn't take as much of your time. I am going to go straight to 
the questions because I am not sure Mr. Sabo had any particular 
ones.

                        faa's management culture

    Work conducted by the GAO and others indicate that the FAA 
has a unique management culture which is resistant to change. 
The former IG said ``the FAA tolerates poor judgment and 
protects bad management''. A May 1997 survey of FAA's 
acquisition managers said the authoritative management style 
and back room decision-making characterized as ``negotiating 
with stakeholders crisis to crisis'' were commonly mentioned 
examples of a dysfunctional organization. The need for major 
cultural changes was frequently raised.
    The internal report went on to say, ``the perception 
continues that FAA's culture actively opposes change; senior 
executives do not seem to actively encourage change; no one 
wants to punish mistakes; and there is an undercurrent of 
cynicism.
    Are you seeing changes at the FAA under the new 
administration?
    Mr. Mead. Yes. I think your point about cultural issues and 
all the baggage that is associated with that is a correct one. 
I believe it is accurate to say we have seen changes under the 
Administrator. But the key here, as it has been in the past, is 
persistence, leadership, and insistence on the part of the 
Administrator. This time around, it is different. This is the 
first time we have had an Administrator, who, going in has a 5-
year term. People know this is for 5 years, it is not 18 
months, a year or 3 years or 4 years. It is 5 years, which is a 
good period of time.
    I would say that we need to see some changes in personnel 
reform and procurement reform, and I think they go hand in 
hand. I believe you need to encourage an environment at FAA 
where people, when they come forward with problems, aren't 
going to be made into a scapegoat.
    When Ms. Garvey comes here for hearings, you will see full 
disclosure of the risks associated with the acquisitions the 
Committee is funding, and the Committee will also see a more 
realistic set of schedules. The key again, Mr. Wolf, is follow-
through.
    Mr. Wolf. Well, I agree with that. That question is not 
meant as criticism of Ms. Garvey. You know my feeling with 
regard to Ms. Garvey and I think she has been one that has been 
open. She doesn't get defensive, she is open. But I think she 
is going to have to develop, and we won't get into this today, 
a team of Garvey people around her, 5 or 6 people. She should 
get the best person from the DOD, the best person from NASA, 
the best person from maybe your office, the best person from 
Mitre and develop a Garvey team in whom she has complete 
confidence and trust.
    Mr. Wolf. What changes are still needed to promote more 
accountability among FAA managers?
    [The information follows:]

    The Administrator and her senior-level managers need to 
change the way FAA does business by encouraging an environment 
that fosters accountability at all levels of management. 
Managers need to change their mindsets and consider the cost 
and staffing implications of their decisions. As our reports 
over the past several years have shown, managers have not been 
held responsible for their decisions. For example, it has been 
over two years since we issued our report on abuses of FAA's 
training program, which permitted employees to obtain free air 
transportation for personal gain. To date, no changes in the 
program have been made and managers continue to let employees 
abuse the program. We also reported that air traffic managers 
had little incentive for negotiating agreements that were cost-
effective, because they were never held accountable for the 
effects their decisions had on operations.
    To change this culture, the Administrator and her 
management team must focus on responsibility and 
accountability--directly linking managers' pay and bonuses to 
their performance.

    Mr. Wolf. Past IG reports have shown an agency rife with 
what might be called petty corruption: Officials taking buyouts 
they were not entitled to; others abusing rental car 
privileges; detailed employees remaining on the field payroll 
for several months in order to collect bonus pay they were not 
entitled to; employees requesting and collecting PCS money 
which they were not entitled to.
    Do you see evidence that stronger supervision and 
management controls are taking root at the FAA which can help 
stamp out these kinds of abuses by individual employees?
    Mr. Mead. I am going to ask Mr. Zinser to answer that 
question. Mr. Zinser is Assistant Inspector General for 
Investigations. He sees these cases when they come in and he 
sees what FAA does with them.
    Mr. Zinser. Mr. Chairman, I would have to say no, I don't 
see that taking root. The FAA is still a very large 
organization, 50,000 employees, and I think an organization 
that size is going to have those kind of problems. But I will 
tell you that we have increased our staff, in my office and in 
headquarters, to personally address a lot of those types of 
issues that are coming in, and we are trying to deal more 
directly with the management to try to address those issues.
    Mr. Mead. Let me add a postscript on that. I find when we 
get on the phone and call the Administrator directly on an 
issue, something happens. But too much depends on having to go 
directly to the Administrator to get something done. We have a 
number of cases we have investigated, and have made 
recommendations on only to find it has taken far too long for 
remedial action to be taken.

                          faa personnel reform

    Mr. Wolf. In a couple months, on 4-1-98, it will be the 
second anniversary of personnel and acquisition reform at the 
FAA, which, as you know, this committee did. Yet after almost 2 
years, very few personnel changes have been implemented and 
important modernization programs are still experiencing cost 
overruns and schedule slippage.
    Has the FAA moved fast enough to utilize the flexibilities 
and management tools provided in these reform efforts?
    Mr. Mead. No. On the personnel reform, there are lots of 
lines of business over there and they do have plans. But these 
plans have to be implemented and formed in some coherent 
agency-wide manner, which the Administrator is trying to come 
to grips with now. On personnel reform, it is not totally 
obvious to the FAA why this is so important. Over on the 
acquisition side, they need to bring in high-caliber talent to 
oversee these contracts and administer these contracts.
    You have seen the press reports about how tight the market 
is for the software specialties. Well, personnel reform is tied 
to the capability to bring in the talent. One of the things we 
see holding up personnel reform is having systems in place to 
figure out what people are doing and what they are getting 
paid. FAA is going to have to put in some of these advanced 
systems. Complicating this on the controller side is the matter 
of union negotiations. I expect these negotiations to go on for 
some time. The short answer to your question is no. I do not 
believe personnel reform has moved quickly enough. FAA needs to 
put the pedal to the metal.
    Mr. Wolf. I remember Secretary Pena made a big deal about 
vacuum tubes and saying if we could only get reform. Yet 
nothing really has changed to the point you can dramatically 
see it.
    Mr. Mead. I should add, on procurement reform, you will see 
quicker start-ups of procurements. Moreover, there are features 
of procurement reform that are now in place that are allowing 
FAA to design acquisiton better up front rather than at the 
tail end.
    Mr. Wolf. Has Ms. Garvey hired 5 or 6 new people to 
surround her, that you know of, since she has been on, since 
August?
    Mr. Mead. No, sir. The Administrator needs to have a team, 
as you were alluding to earlier.
    Mr. Wolf. Which part of the FAA would you say is farther 
along in utilizing the freedom of personnel and procurement 
reform, the acquisition, regulatory, or air traffic 
organization?
    Mr. Mead. I am going to ask Alexis Stefani to answer that 
question. She is our Deputy Assistant Inspector General for 
Aviation.
    Ms. Stefani. The acquisition area has made the most 
progress.
    Mr. Wolf. From listening to the air traffic controllers 
union, it is apparent that they are not happy with FAA 
management. For example, in a recent document called ``FAA 
Broken Promises'', they asked Congress to improve a ``badly 
deteriorating situation'' at the FAA. They say ``history is 
repeating itself''. From what you have seen, is personnel and 
acquisition reform reaching down to the field level controller?
    Ms. Stefani. The personnel reform faces, within the FAA, 
the difficulty of having so many different missions and 
different types of work forces, and each of these must be 
worked out with whatever unions are involved. If you look at 
air traffic services, they in fact have three unions they have 
to be concerned with and two different missions, so it is a 
very difficult and expensive experiment we are going through to 
change the culture that is too used to the current government 
pay, reform, and benefit system.
    Mr. Wolf. But in April it will be 2 years.
    Ms. Stefani. That is true.
    Mr. Mead. You know, it is interesting. Sometimes people 
call for freedom and liberty, and once they have freedom and 
liberty, they find they are perhaps more comfortable with the 
status quo. It is difficult to extricate yourself from this 
pattern.
    Mr. Wolf. That is very troubling because that was given as 
the solution of all these problems, and yet you say ``no'' with 
regard to the question that Todd answered, and the ``no'' with 
regard to the second anniversary. That is very troubling.
    Before you can hold someone accountable, you need a 
baseline against which to measure their performance. In FAA 
acquisition programs, that means the establishment of cost, 
schedule and technical baselines approved by the Joint 
Resources Council, the JRC. However, FAA's own review found 
that almost three quarters of JRC meetings in the first year 
were cancelled or postponed, and only 4 percent of programs, 6 
out of 145, have approved baselines.
    How can the FAA hold people accountable without baselines 
against which to measure their performance?
    Mr. Mead. The answer is you can't.
    Mr. Wolf. You can't.

                   FAA Financial Reform/Cost Savings

    In last year's hearings, Mr. DeCarli and Ms. Fleischman, 
the acting IG, agreed with Coopers & Lybrand financial 
assessments of FAA, which said that cost savings were possible. 
Mr. DeCarli said, ``There are a lot of opportunities for them 
to reduce their operating costs.''
    Is the FAA seizing any of these opportunities in the fiscal 
year 1999 budget request, to your knowledge?
    Mr. DeCarli. I would have to review the specifics of the 
ones that we are talking about to give you an honest answer, 
Mr. Chairman. I can answer that one for the record, but I don't 
know the answer right off.
    [The information follows:]

    The specific areas for savings we identified last year related to: 
the elimination of ``revitalization pay'' for air traffic controllers 
($485 million); acquisition reform from which FAA had projected a $2 
billion savings; FAA's plan to eliminate ground-based systems by 
switching to satellite-base communications, navigation and 
surveillance; and cost reductions from consolidating flight services 
stations used by general aviation.
    There are no savings in FAA's fiscal year 1999 budget request 
related to these four issues.

                     FAA Field Office Consolidation

    Mr. Wolf. Mr. Belger admitted to us in last years hearing 
that consolidation of the regional offices had already been 
studied and found cost-effective by the agency and the matter 
only awaited a decision by the new administrator. As you know, 
the Coast Guard has already consolidated their district 
offices, so it might be possible for the FAA to follow their 
lead.
    Has your office reviewed the possibility of regional office 
consolidation of the FAA?
    Mr. Mead. No, but we will if you want us to.
    Mr. Wolf. If you would, I would appreciate it. The next one 
we will do for the record, then I will ask one or two more and 
then I will go to Mr. Olver.

                       FAA Funding Predictability

    In a speech last September, FAA Administrator Garvey stated 
the FAA ``must have an adequate, stable, and predictable source 
of funding. We don't have that today. We definitely need it for 
tomorrow.'' Of course, it would be an ideal world if all 
organizations, all families, and all individuals had such a 
thing--adequate, stable, and predictable sources of funding for 
the things they wanted to buy or accomplish. But this is the 
real world. All budgets are plans which change as circumstances 
dictate. Airlines and other businesses don't have predictable 
or stable funding. Neither do families or government agencies.
    Do you know why the FAA and the department continue to 
pursue an automatic funding mechanism for the FAA?
    [The information follows:]

    FAA believes it needs a stable and predictable source of funding to 
carry out the modernization of the National Airspace System. According 
to FAA, the current appropriations process is full of uncertainty 
because projects must compete with other projects, as well as with 
other Federal programs, for a piece of a declining budget. As a result, 
FAA officials have stated that there may not be sufficient funding in 
future years for any project started in the current fiscal year. 
Notwithstanding this, I do not believe it is productive to focus on the 
appropriations process as the use or for FAA's various problems in 
managing acquisitions. The agency would be better advised to look 
inward and ask itself why it did not ever request sufficient 
appropriations for the year 2000 computer problems and to replace the 
host computer.

    Mr. Wolf. Over the past 3 years, when deficit cutting was 
the hardest, we found funding to add hundreds of new FAA safety 
inspectors, air traffic controllers and security personnel. We 
protected, in this committee, in a bipartisan way, and even 
added funds above the budget for high payoff capital programs, 
such as WAAS and data link. The increase we put in for the ATC 
operating budget last year was two to three times the increase 
in air traffic operations. Last year's increase in air traffic 
was almost 10 percent and this year the administration is 
requesting a 6 percent increase. But despite all this we hear 
the appropriations process cannot provide funding in an 
adequate or stable manner.
    Should we consider shifting some of this operating money 
into capital programs to keep the people happy who say we 
cannot do enough?
    Mr. Mead. No, I don't see the basis for that. I do think 
that the committee needs a more coherent explanation of what 
the operating budget is being used for and what the facilities 
and equipment budget is being used for. As you know, FAA is 
under an obligation to put together a cost accounting system to 
allocate costs to various functions. You should know, for 
example, what all the costs are that are associated with an 
enroute center. FAA is supposed to be get that cost accounting 
system on, I think, October 1st of this year. But earlier in 
the summary, as I pointed out,I don't believe a credible cost 
accounting system will materialize this year.

                  faa and year 2000 computer problems

    Mr. Wolf. On the year 2000 problem, I know you have taken a 
look at this, along with the GAO who will appear later today. 
You have been analyzing the year 2000 problem at the FAA.
    Does the FAA have a good handle on the scope of the 
problem?
    Mr. Mead. They just completed what they call an assessment 
phase. That is where they diagnose what their problems are. The 
big task lies ahead--the fixes--and I believe it is too early 
to tell.
    Mr. Wolf. Should this have been done sooner?
    Mr. Mead. Oh, yes. FAA's assessment process was done 7 
months after the OMB deadline for the rest of government. I am 
concerned about the final implementation date that FAA has 
established, which is November 1999, because of the agency's 
track record with computers.
    Mr. Wolf. Which has not been very good?
    Mr. Mead. No, it has not been something to write home 
about.
    Mr. Wolf. Do you believe this is a potential safety problem 
in the year 2000?
    Mr. Mead. No, I don't believe a safety problem will be 
allowed to materialize. I think it will be more a question of 
efficiency and whether there will be a need to keep some planes 
on the ground. At the same time, again, this November 1999 date 
ought to be moved up to June of 1999 so you have a cushion. If 
FAA finds that one of the computer fixes isn't working 
properly, FAA will need time to fix it; only allowing from 
November to the first of the year is too close a call.
    Mr. Wolf. When the FAA says a system has been, quote, 
``fully assessed'' for its Y2K problems, does that imply there 
has been a technical audit to verify the approach needed or is 
it more a survey, and to what extent is an in-depth technical 
audit necessary?
    Mr. Mead. Good question. To some people, the term 
assessment implies that an audit or an independent verification 
was done. You should not conclude that. FAA has a quality 
assurance process that kicks in after an assessment is done, 
and that quality assurance process is supposed to validate and 
assure that the assessment was done properly. Those quality 
assurance steps are supposed to be complete on February 15th.
    Mr. Wolf. Will they make that deadline in a sufficient way 
that will tell us very much? That is next week.
    Mr. Mead. I feel uncomfortable providing you an answer to 
that offhandely. We will get back to you.
    [The information follows:]

    As of February 26, 1998, the quality assurance review team 
has completed the review of 209 Air Traffic control mission-
critical systems. FAA also has expanded its quality assurance 
review for all of FAA systems. However, these reviews have not 
been completed. The quality assurance review process did result 
in improvement to FAA's assessment work. However, we noticed 
critical elements missing from assessment work (e.g., 
identifying all system interfaces, contingency plans) were not 
consistently detected by the quality assurance review team. We 
plan to continue our review of the assessment results during 
the next few months.

                        year 2000 computer issue

    Mr. Wolf. The FAA currently estimates $152 million to fix 
the year 2000 problem. How much confidence should we have in 
that figure and why?
    Mr. Mead. I don't have that much confidence in it. I have 
been told FAA used sophisticated models to come up with this 
estimate, but until they have assessed all the fixes they have 
to make, and how much all those fixes are going to cost, as 
well as dealing with the Host computer issue, I don't believe 
the committee has seen the last figures on the cost estimates. 
If I were in the committee's shoes, I would err on giving FAA 
slightly more money on this year 2000 problem than on the 
conservative side. The year 2000 problem must be our number-one 
priority in the acquisitions area.
    Mr. Wolf. Just out of curiosity, is there someone here from 
the FAA? I don't want to call you up, I want to make sure 
someone is taking the information back. Could you kind of 
scratch your nose? Okay, there you are.
    How many FAA people are working on this issue and, in your 
opinion, is the FAA staffing the program in a manner 
appropriate to the severity of the problem?
    Mr. Mead. They are now.
    Mr. Wolf. That began when?
    Mr. Mead. Adequate staffing fell into place about 3 or 4 
weeks ago. The leadership issue was resolved just last week.
    Mr. Wolf. Just last week. One last question on this issue, 
and then I will defer to Mr. Olver.
    OMB recently moved the required year 2000 implementation 
date for mission critical systems from November of 1999 to 
March 1999. Based on your work, do you believe the department 
can meet the earlier date?
    Mr. Mead. It will be difficult, but they can do it. I think 
it would be very, very difficult for FAA. I would say they 
should shoot for June.
    Mr. Wolf. So the FAA will not be able to meet the March 
date, and the department could meet it but might not meet it?
    Mr. Mead. No. In fact, Mr. Chairman, all of our 
recommendations on the year 2000 problem have been accepted by 
FAA, but we have yet to receive an affirmative response to the 
recommendation on accelerating the final implementation date to 
June of 1999. November 1999 is too late.
    Mr. DeCarli. Mr. Chairman, 70 percent of the mission 
critical systems in the department are FAA, and FAA does not 
currently plan to meet the March date. Their current 
expectation is November of 1999. We have said you need to push 
it back and you need to get it to at least June of 1999, and 
that is still 3 months after the OMB date.
    Mr. Wolf. November would be 7 months later.
    Mr. DeCarli. Absolutely. November, as Mr. Mead said, is 
pushing it to the limit and allows no cushion at all in case 
you have a problem. We think it has to go back. We would like 
to see the March date, but FAA is going to struggle to get to 
June.
    Mr. Wolf. Year 2000 is a fixed time, too. You cannot move 
it. It is kind of like election day, it is coming when it is 
coming.
    Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. Had the IG given his 
full testimony before we started questioning? I went off to 
vote and I sort of lost the whole thing.
    Mr. Wolf. Yes, and it was an excellent statement. In fact, 
we are going to do a letter to all the Members, and this is a 
difficult day, and Members are going to be getting out early. 
It has been a hectic time. I am going to do a letter to send 
the statements, and if staff for both sides could read 
particularly the IG and GAO statements because they do an 
overview of the whole department. But Mr. Sabo was the Chairman 
at that time and he did finish.
    Mr. Olver. Okay. I want to just address a couple sort of 
questions. I have been trying to catch up here rather quickly, 
having only seen the testimony as I was coming back from the 
vote. The computer issue, the computer 2000 issue, your 
comment, I don't know whether this mission--600 mission 
critical system, 70 percent of which are in the FAA, there must 
be substantial computer problems in other parts of the 
department as well, I take it, with the departments behind on 
all of them. It is just that they are concentrated in the FAA 
by the degree of the computerization there. Are we so far 
behind in computerization in other areas? I would think that 
all agencies would be pretty heavily computerized at this point 
and that the problem ought to be a somewhat similar problem in 
each of them.
    Mr. Mead. Well, that is so. Actually, the number that you 
are quoting there are mission critical systems. These systems 
are a subuniverse of the larger number of computer systems in 
the whole department. And the mission critical systems tend to 
predominate in FAA because the agency is so operational. It 
affects public safety. The Coast Guard is another one.

                       host computer replacement

    Mr. Olver. On air traffic modernization, you have indicated 
here that the air traffic modernization program is itself 
rather substantially behind and you speak to STARS and WAAS, 
and then again back to the host computer situation. In the host 
computer situation there is just one subgroup of all of the 
computer 2000 problems, is that correct?
    Mr. Mead. Yes, sir, but it would be mistaken to assume that 
the issue on the host computer is just the year 2000 problem. 
The host computer must be replaced, irrespective of the year 
2000 problem. And that is because the parts for this computer, 
which is used in the 20 en-route centers for high altitude 
traffic, are very scarce. There is one particular part. The FAA 
has only 7 in stock and they have 96 machines in the system 
using this part. Over the past 3 years, they had nine failures 
of this particular part. And it is no longer made.
    Mr. Olver. Well, what is the route, then, to a resolution 
in a situation like that?
    Mr. Mead. FAA is considering proceeding on a two-track 
approach. One is to try to repair the host computer, in terms 
of the----
    Mr. Olver. With parts that are no longer made.
    Mr. Mead. They feel they can perhaps cannibalize some from 
computers that aren't in the en-route centers. They also 
believe on the year 2000 problem that they can fix that, and 
move concurrently to replace the machines. But as my testimony 
notes, I believe it is too optimistic for FAA to think they can 
accomplish this in less than 23 months time at all 20 en-route 
centers.

                       satellite-based navigation

    Mr. Olver. And what is the WAAS problem? Can you give me--
can you make that understandable for the lay person?
    Mr. Mead. I can try, sir. The WAAS program essentially 
involves the use of satellites for navigation. At the present 
time, we have a ground-based system. The big issues in the 
satellite program are: first can we have only a satellite 
navigation program; in other words, no more ground-based 
system? What happens if the satellites go out? What happens if 
there is interference with the satellite's signal? So that is 
an issue; do we need a backup system? If we need a backup 
system, the committee will face annual appropriation issues for 
a ground-based system as well as a satellite system.
    The second key issue is, how many satellites? This is a 
satellite program. At some point, the committee needs to know 
how many satellites does FAA have to buy or lease and when will 
they be deployed? A third issue is the avionics cost to users. 
This is on-board aircraft equipment, which is the type of 
equipment one needs for satellite navigation that will be 
different from the equipment needed for ground-based 
navigation. Most commercial carriers have already got the 
equipment on board, the largest constituency that does not is 
general aviation. So when you talk to general aviation about 
moving to the WAAS system, a big issue on their mind is, how 
much it is going to cost them.
    Mr. Olver. That is installation of equipment in the capital 
stock.
    Mr. Mead. On the plane.
    Mr. Olver. And that is just not moving in the general 
aviation area, where in our passenger systems, it is something 
systems are able to do.
    Mr. Mead. Most large commercial carriers already have what 
they call inertial navigation systems, which rely on 
satellites. They are also equipped, incidentally, with ground 
navigation systems, so this WAAS program, I don't think, would 
result in a great deal of cost to commercial aviation.
    Another issue that the Committee will be hearing about in 
the coming weeks is the cost of this program; initially, you 
may have heard it would be about $1.4 billion, then it moved to 
approximately 2 billion, now it is nearer to 3 billion. It is 
more because certain costs were not included in prior estimates 
that the committee received. It is not so much a cost increase, 
if you will, as it is costs that were not included, such as the 
number of satellites. Satellites are not cheap.

                     faa--anti-terrorism activities

    Mr. Olver. I notice on your comments about airport security 
that the office--of the Inspector General is currently 
reviewing FAA's acquisition and deployment of new sophisticated 
explosion detection systems. What does that mean? What is going 
on in that area?
    Mr. Mead. I would like Ms. Stefani to answer that question.
    Ms. Stefani. Basically, the FAA is buying advanced 
equipment, using technology such as a CAT scan or an MRI or 
trace detection to detect explosive material in baggage or in 
parcels, and they are planning on spending, in the next year or 
so, about $170 million to procure the equipment and place it at 
the busier airports so that the airlines can use it.
    Mr. Olver. What is the review that you are involved in?
    Ms. Stefani. We are looking at FAA's acquisition and 
deployment of the equipment. We are looking at things such as, 
are the operators that are using it at the airport receiving 
the appropriate training?
    Mr. Olver. My impression is they are committed to a 
particular technology here, and the way technology is 
developing, is it wise to be committed to a single technology 
at an early stage in this process?
    Ms. Stefani. One of the things they are looking for is 
equipment they can certify that will reduce the false alarms 
and provide good information. At this point, in the technology 
that uses the CAT scan, there is only one company. The FAA is 
looking at different types of technology. There could be 
others. We could look to see if there are other concepts, and 
other ways of detecting explosives.
    Mr. Mead. We are driving a great deal of money into the 
security area, and the thrust of our work is to make sure that 
investment is cost-effective, and that we get trained people to 
run that equipment. The equipment basically falls into three 
categories. One is the CAT scan type device that Ms. Stefani 
was referring to.
    Another is a trace device, where they wipe a cloth-like 
material over your briefcase if you are carrying that on the 
plane, and they put that material in a device and it can 
determine whether you are carrying an explosive.
    A third type is an advanced X-ray machine. Those are not 
deployed anywhere as of yet. You would see those as you go 
through the scanner. The CAT scan device would be used for 
checked luggage.
    Mr. Olver. Okay. Thank you.

                     faa--management accountability

    Mr. Wolf. Thank you, Mr. Olver. I am going to recognize Mr. 
Tiahrt, just to give him advance notice. But just to make a 
comment before I do, we would like to have your help. 
Yesterday, Mr. Olver asked a number of questions and Mr. Pastor 
asked questions about turbulence, about the 737. Mr. Sabo asked 
questions about the parts and the inspections and all these 
other issues. And of course we have WAAS and we have STARS, and 
you know what is going on with regard to the year 2000 in 
computers. We just have a lot of issues. And there is a great 
skepticism, or I have a great skepticism. I have sat through 
the hearings over the years, both in the minority and majority, 
where FAA says when something crashes they rush to it, all of a 
sudden, then it kind of gets forgotten. What we would like to 
do, and Jim Hall from the Safety Board has agreed, is to set up 
a group which will do the following. It will develop a 
measurement device, it will look at the FAA, where it is today, 
not in an adversarial way, and of course all the comments we 
make don't apply to Ms. Garvey, who I like and I think has a 
pretty no nonsense approach to the place, because you really 
can't hold Ms. Garvey responsible for the year 2000 problem, 
because she was not there when it should have been looked at. 
But it is something she can look at, the public can look at and 
the Members of the House can look at and Members of the 
committee, to set up a group that will look at the FAA, but 
somebody from Jim Hall's office of the Safety Board, who has 
agreed to participate, someone from GAO, someone from the IG's 
office, someone from NASA, which is very, very important, 
somebody from the Flight Safety Foundation, someone from ALPA 
perhaps, and some other groups, to do two things, one, go in 
and look at all the systems that are delayed and problems that 
are out there, and develop a measurement device that the FAA 
can look at, but that laymen can also use--the public can look 
at to hold peopleaccountable, just like I do in my office. We 
have a list of things we are working on, we come back every 3 months to 
see what we have done on them, and develop the measurement and put 
together an annual report with quarterly updates to give the public and 
the traveling public an opportunity to be able to monitor these issues. 
Not to go way back into the past, but to begin now. I think it would be 
a group that Ms. Garvey could deal with, too. Would you participate; 
could we get the participation of the IG in this group?
    Mr. Mead. Sure. Actually, the Administrator might find 
something like that useful. The Government Performance Results 
Act, in fact, requires that the Federal Aviation 
Administration, and every other agency, establish performance 
measures. This is a key year for formulating them. I do believe 
that there would have to be dialogue with the Hill and with the 
user community on just what these performance measures will be. 
This is because these measures will depend on the performance 
of parties outside of FAA. Safety is an example. FAA oversees 
safety, but in the end the bottom line depends on the airlines. 
Yes, I would be delighted to participate in this group.
    Mr. Wolf. I appreciate that. Mr. Hall, if I understood him, 
also thought the ATA should participate. We are talking about a 
group that would come together and develop the measurements, so 
we are all starting from the same information, that everyone 
out there, everyone up here, everyone in Des Moines, everyone 
in Winchester in my district, everyone knows, and then one 
report per year, but on a quarterly basis, as a check, to see 
where we are going. I think had this been in effect with the 
year 2000 thing, it certainly would not have gotten to where it 
is. Anyway, I appreciate your participation and we have gotten 
the Safety Board's participation, and I appreciate it.
    Mr. Tiahrt.

                  wide-area augmentation system costs

    Mr. Tiahrt. Thank you, Mr. Chairman. Good morning. I have a 
couple questions that related to the Wide Area Augmentation 
System. Maybe this was covered, forgive me if it has been, but 
the growth in the life cycle cost, is it from 1.4 billion to 3 
billion, is it double, is it that much, and if it is, it seems 
like we went through this modernization fiasco before where the 
costs just got way out of control and we had to start all over. 
I hope that is not what is happening with the WAAS program. Has 
it grown that much, has it actually doubled?
    Mr. Mead. The terms ``growth,'' and ``cost growth,'' always 
have to be placed in context. What has actually happened on 
WAAS is that there has been some cost growth, but the bulk of 
the increase in the estimate, from 1.4 billion to 2.4 billion 
and now you will soon hear 3 billion is the inclusion of costs 
that should have been included all along but were not. Several 
examples are the cost of satellites and the cost of maintaining 
the system after it is fielded. FAA used to come here and say, 
here is how much the system is going to cost. And then the Hill 
would find out later on that there were costs associated with 
installing it, costs associated with maintaining it, and also 
costs associated with building a redundant system.
    Mr. Tiahrt. Are there more surprises out there waiting for 
us?
    Mr. Mead. I believe there are; the principal surprises are 
a backup system, how much that is going to cost, and whether 
there will be one. There have been some issues you perhaps have 
heard about as to whether or not it is prudent to rely 
exclusively on satellites for navigation or whether we should 
have a backup system in place that is ground-based. All along 
on the WAAS program, until very recently, I believe the general 
thinking was that satellites would be the exclusive means and 
we would not have a ground-based system. Well, there has been a 
shift in that thinking and some believe that we will need some 
type of backup system if, for example, there is satellite 
interference or some other reason that the satellites cannot be 
relied upon.
    Mr. Tiahrt. I think redundancy is quite common in the 
aircraft industry. They do it for safety reasons.
    Mr. Mead. Does that respond to your question?
    Mr. Tiahrt. Yes. I am just concerned about how much more it 
is going to grow. I understand redundancy, but is that in the 
$3 billion or is it another billion dollars?
    Mr. Mead. It is not in the $3 billion; FAA would reason, 
well, that is not the WAAS program per se. Most auditors would 
sit down and cost it out and say, well, we are talking about a 
navigation system here, I want to know what the whole package 
will cost. In addition, I believe there will be some increases 
in the cost of the satellites.
    Mr. Tiahrt. These aren't new satellites, though, are they? 
We have some 20 some satellites for GPS now.
    Mr. Mead. The types of satellites we are speaking of there 
are not global positioning satellites. We are speaking of 
communication satellites; there has been some uncertainty about 
how many of those they will need--the number estimated 
generally ranges from 2 to 5. They will probably lease those 
rather than purchase them, in perhaps a 7-year lease. We can 
give you quite a bit of backup detail on that, if you would 
like us to furnish your office with that, sir.
    Mr. Tiahrt. If it is available. I don't want you to 
generate anything new.
    Also in your written testimony, it says we should know 
exactly what WAAS phase one will provide to potential users. Is 
there not a set of requirements that is considered phase one? I 
mean, is there a milestone and a set of requirements that go 
along with phase one?
    Mr. Mead. The last time we testified on WAAS and phase one, 
I thought we had a solid definition. I thought that it meant 
that in the en-route environment--that is, at the higher 
altitudes--you would be able to navigate by satellite. 
Moreover, that you would have at practically every airfield in 
this country category-one precision landing capability. I am 
not certain that this would be an accurate statement today. Ms. 
Stefani will amplify on that.
    Ms. Stefani. Part of what we see in the program is that the 
category one--the approach capability--promised for WAAS phase 
one will not guarantee for about 146 airports that you will 
have the same capability that you have today with the ILS 
systems. That deals with the reliability and availability of 
the system. We are seeing a lot of changes in this program due 
to uncertainties and technical risks that they are trying to 
address, and it is difficult, at this point, to really say, at 
the end of phase one, what the private pilot and commercial 
aviation pilot will get from WAAS.
    Mr. Mead. You will be getting a report from the Secretary 
very shortly that this committee requested on WAAS; you will 
find that the report is clearer than prior reports have been on 
some of the uncertainties associated with it.
    Mr. Tiahrt. Okay.
    Mr. Mead. I certainly don't want to characterize WAAS as a 
program that we should not do, as I believe there are some big 
benefits. Clearly, for general aviation, if they are equipped. 
WAAS will allow them to make precision landings or something 
close to precision landings, and many places do not have 
precision landing capability now. But these uncertainties do 
need to be resolved as do the uncertainties about a backup 
system, the number of satellites, and so forth.
    Mr. Tiahrt. I am concerned because I don't want to see the 
system fail.
    Mr. Mead. We don't either.

                       faa's year-2000 timetable

    Mr. Tiahrt. This has probably been hashed before and will 
be rehashed until the year 2000 comes, but this is referred to 
as Y2K or the year 2000 computer program. I noticed the FAA, I 
believe, thinks they have the problem--or they are progressing 
well toward solving the problem but their end point isn't until 
November of '99, if I remember correctly.
    Mr. Mead. Yes, sir.
    Mr. Tiahrt. I am concerned about that because I haven't 
seen their schedule, and what testings they have in there to 
have 100 percent confidence, that in November, which is just a 
month or two away from the year 2000, that everything is going 
to work fine, and I noticed that this is of some concern to you 
too, and I would like to have some confidence that they are 
going to have testing, redundant testing, to make sure the 
system is 100 percent by November and not just ``let's see what 
happens when we flip the switch.''
    Mr. Mead. I can attest to the committee that the sense of 
urgency at FAA today on the year 2000 problem is very, very 
high. I give you that assurance. Still, I share your concern on 
the November '99 date I think it is much too late. As the 
Chairman was pointing out earlier, on January 1st 2000, we 
can't come before the committee and say we are here to report a 
slippage and a procurement delay. This is one time the date 
does not slip. It is an externally set date. Perhaps there is a 
system or two out there, but I cannot recall a computer 
hardware or software acquisition that FAA has done where there 
hasn't been a slippage of a month. In fact, I don't think I 
would even report a month slippage to the committee normally 
but this time I will, sir.
    Mr. Tiahrt. Thank you very much. Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Tiahrt. I think these questions 
are good and I think they validate the need to set up this 
group. I think you are being too kind when you answered the 
question on the year 2000. You said there is a sense of 
urgency. The reason there is a sense of urgency is because of 
basically two people, Jane Garvey and yourself. If you and Jane 
Garvey had been hit by a bus back in August of last year, I 
don't know where we would have been at this point. So there is 
an urgency over there, but only because the IG's office and Ms. 
Garvey have sensitized the agency to it. And that report you 
refer to is here, it came in yesterday, and the committee will 
give you a copy. We will give it to members on both sides of 
the aisle, but I think the whole WAAS thing is another 
indication of why we need an ongoing group that can come in and 
say ``here is where we are, we slipped over these 3 months and 
this is what the problem is.''
    Mr. Mead. Mr. Chairman, I do want to say, I think the 
Secretary, the Deputy Secretary, the Administrator, the head of 
air traffic, also are engaged on the year 2000 issue.

                       host computer replacement

    Mr. Wolf. Well, everybody will state that, but I think this 
thing should have been looked at long ago.
    In June of '96, IBM advised Lockheed-Martin officials that 
the company might not be able to continue support forthe HOST 
computer, the main brain in our en route centers today, beyond the year 
2000. Despite the urgency, apparently FAA officials waited until 
February of 1997 to ask IBM for detailed documentation.
    Do you know why the agency waited so long, 8 months, to 
take that step?
    Mr. Mead. No, sir. I am incredulous as to why at this late 
hour they are saying ``by the way, we want to replace the HOST 
computer,'' when they have had all this advance knowledge. So I 
thought it was incredible when I saw the letter. And you know, 
I don't believe there is any money for the HOST computer in the 
'98 budget.
    Mr. Wolf. We are going to get to that. In October of 1997, 
IBM wrote Lockheed-Martin, quote, ``IBM remains convinced that 
the appropriate skills and tools do not exist to conduct a 
complete year 2000 test assessment on the HOST computer. IBM 
believes it is imperative that the FAA replace this equipment 
prior to the year 2000. IBM has invested considerable resources 
to research this situation and communicate needed action to 
Lockheed-Martin and the FAA.'' Yet 18 months after the original 
letter from IBM, this committee has no budget request, and no 
reprogramming request from the FAA to begin this apparently 
urgent program.
    Is it urgent for the HOST computer system to be replaced by 
the year 2000?
    Mr. Mead. It is urgent for the HOST computer to be 
compliant with the year 2000 issue by January 1st, 2000. You 
probably can afford some lag over that date for replacing 
because, remember, we are going to be replacing systems at 20 
en-route centers. But doing that in less than 23 months time, I 
couldn't vouch that FAA could swing that and get it certified 
too. It is urgent though that the HOST be replaced.
    Mr. Wolf. That was the next question. How much time is 
needed to make that change and how much money?
    Mr. Mead. I believe the Committee is looking at at least 
$160 million for replacement: this is the interim replacement 
of the HOST computer.
    Mr. Wolf. Do you know why the FAA hasn't requested any 
money for the effort?
    Mr. Mead. It is in the process of doing so from what I 
understand.
    Mr. Wolf. Do you think they will make the supplemental?
    Mr. Mead. I believe they are considering a reprogramming 
request. I think they are considering two reprogramming 
requests, one dealing with the year 2000 problem and STARS and 
some security issues, and perhaps a second one for HOST. Now, 
once you get to the HOST, we are starting to squeeze a rock. 
What programs are we going to squeeze to come up with the 
money? You won't need the whole $162 million in fiscal year 
1998. But I can't tell you exactly what amount, Mr. Chairman, 
will come in under the reprogramming request. But it is going 
to be tight, and you will hear from FAA, the community, and 
probably from us, about programs that may have to suffer in 
terms of their schedule, if it all is going to come out of 
fiscal year '98 appropriation.
    Mr. Wolf. I am going to recognize Mr. Sabo, but I will give 
him a moment to collect his thoughts.
             NAS MODERNIZATION AND FAA'S ARCHITECTURE PLAN
    Mr. Wolf. What are the five most important modernization programs, 
in your view?
    [The information follows:]
    The National Airspace System (NAS): Modernization is critical to 
the continued safe and efficient operation of the air traffic control 
system. In our view, the five most important NAS modernization programs 
include the Interim HOST Replacement, Display System Replacement, 
Standard Terminal Automation Replacement, Wide Area Augmentation 
System/Local Area Augmentation System, and Flight 2000.
    Interim HOST Replacement: The HOST computer system currently is the 
primary en-route air traffic control computer used in the NAS air 
traffic control system. It provides various services for center, 
terminal, and tower controllers. Two serious problems exist which may 
affect the ability to provide full services. Critical parts are in 
short supply and there is an absence of trained service personnel to 
make repairs. Further, IBM, the manufacturer of the HOST Computer 
System, claims the HOST Year-2000 problems cannot be properly assessed 
and recommends replacement of the equipment.
    Display System Replacement and Standard Terminal Automation 
Replacement System: The Display System Replacement and Standard 
Terminal Automation Replacement System programs are automation system--
for the en-route and terminal airspace, respectively--that will replace 
controller workstations, computer software and processors necessary to 
handle increased air-traffic volume. Due to age and design, the 
existing systems have limited capacity and increased maintenance costs.
    Wide Area Augmentation System/Local Area Augmentation System: These 
two systems will augment the Global Positioning System to provide the 
accuracy, integrity, availability, and continuity of service necessary 
to meet the navigation and landing requirements of the National 
Airspace System.
    These systems are but two of many systems that need to be developed 
and deployed to effectively shift to satellite-based technology.
    Flight 2000: Flight 2000 is a precursor of Free Flight, a 
revolutionary air-traffic management concept that greatly increases 
users' flexibility to plan and fly their preferred routes. Flight 2000 
will demonstrate advanced communications, navigation, surveillance, and 
air-traffic management capabilities to validate system benefits to all 
airspace users. The potential benefits of Free Flight include fuel and 
time savings and a more efficient use of airspace.
                GPS WIDE-AREA AUGMENTATION SYSTEM (WAAS)
    Mr Wolf. One of the FAA's largest modernization programs is the 
Wide Area Augmentation System (WAAS), which would use signals from the 
GPS satellite to guide and land aircraft. From what we see, this 
program seems to have serious cost and schedule problems. In 1995, WAAS 
was estimated to cost $604 million to develop. The current estimate is 
$958 million--and doesn't include satellite costs. According to SAIC, 
the current program is about seven months behind its baseline schedule. 
You've been reviewing this program at our request. Can you give us a 
general overview of the status and health of the program?
    [The information follows:]
    The WAAS program is in flux. While the WAAS contract appears to be 
on track to meet all established milestones, technical and program 
uncertainties must be resolved. Resolution of these uncertainties will 
affect WAAS costs. The current WAAS life-cycle cost estimate is $3.049 
billion. It includes $1.007 billion in Facilities and Equipment funds 
to develop the system and $2.042 billion for operation and maintenance. 
Communications satellite costs now are estimated at $1.282 billion.
    The WAAS program is subject to interference from deliberate sources 
(jamming), unintentional sources and ionospheric changes. The program 
has yet to finalize the number of satellites needed, Phase 3 software 
requirements, access to a second GPS civil frequency, and the schedule 
for decommissioning ground-based navigation systems. FAA has 
established mitigation plans to address the uncertainties. However, in 
our opinion, theseissues, coupled with plans to reduce funding for WAAS 
in fiscal year 1999 and the potential need for a back-up system, may 
affect the WAAS requirements, schedule, and costs.
    Mr. Wolf. FAA has recently announced that the life cycle cost 
estimate for this program has risen from $2.4 billion to $3 billion. 
How much confidence should we have in the $3 billion figure?
    [The information follows:]
    FAA formally approved the WAAS life-cycle cost estimate of $3.049 
billion at the Satellite Navigation Investment Analysis and Acquisition 
Program baseline briefing to the Joint Resources Council on January 9, 
1998. FAA is 80 percent confident that the program will be accomplished 
within the $3.049 billion baseline. However, due to uncertainties 
associated with the costs of the communications satellites, selection 
of a second civil frequency, and whether a backup system for WAAS will 
be needed, we would not place as much confidence in the FAA's life-
cycle cost estimate for the WAAS program.
    For example, FAA estimated that if the second civil frequency is 
the current L2, there would be an estimated one-time cost of about $50 
million to equip all WAAS reference and master stations with the 
capability to receive and process the coded signal. However, if the 
second civil frequency is not the current L2, then costs to the 
Department of Transportation to modify the satellites to use a new 
frequency could reach $250 million.
    After baselining WAAS life-cycle costs, WAAS program officials were 
informed that funding for fiscal year 1999 may be reduced by $20 
million. The impact of this proposed funding cut is expected to cause a 
slip in the WAAS program of about six months. Although we can not 
estimate the associated dollar impact, in our opinion, a schedule slip 
to the WAAS program will result in an increase to the WAAS life-cycle 
cost.
    Mr. Wolf. What are the remaining technical risks to achieving 
satellite navigation capability and how significant are they?
    [The information follows:]
    On February 11, 1998, the Secretary of Transportation provided the 
``Wide Area Augmentation System (WAAS) Report on Program Status, 
Management, and Satellite Communications'' to Congress. The report 
acknowledged there are technical uncertainties relating to interference 
from unintentional and intentional (jamming) sources and ionospheric 
variations related to solar activity. The report also identified 
program uncertainties associated with finalizing the number of 
communication satellites needed, defining Phase 3 software 
requirements, access to a second GPS frequency, and the schedule for 
decommissioning ground-based navigation systems.
    Resolution of these issues will have an impact on when, and to what 
extent, FAA will be able to decommission its ground infrastructure. 
Additionally, these technical issues may affect the cost estimate for 
the WAAS program. According to the Secretary's report to Congress, FAA 
has initiated a study to assess the technical uncertainties and will 
determine if there is a need for an independent back-up system for the 
WAAS. FAA indicated that based on the results of this study, FAA will 
evaluate various alternatives and their potential impact on WAAS 
requirements, including cost implications.
    Mr. Wolf. On November 26, 1997, you reported to the Subcommittee 
that ``FAA has not completed a comprehensive, agreed-upon, lucid plan 
and strategy for transitioning to satellite technology''. Has that plan 
been completed at this point? If not, why not?
    [The information follows:]
    FAA has not completed a comprehensive, agreed-upon lucid plan and 
strategy for the shift to satellite technology for communications, 
navigation, and surveillance. We discussed this with FAA and the FAA 
Administrator. The Administrator concurs on the need for such an action 
plan. FAA has taken steps to begin formulating a comprehensive plan.
    FAA's revised National Airspace System (NAS) Architecture for 
modernizing the system was issued in draft in December 1997 and is 
being reviewed by FAA and the aviation industry. FAA has stated that 
this new architecture will serve as its plan for transitioning to 
satellite technology. In our opinion, the revised architecture can 
provide a good foundation for a successful transition to satellite 
technology if it addresses systems, components, and avionics 
requirements, acquisition timeframes, costs, andfunding requirements. 
The usefulness and credibility of this plan, however, will depend on 
FAA's ability to achieve a consensus.
    The Administrator's National Airspace System Modernization Task 
Force is addressing the issue of developing a comprehensive plan. One 
of the action items of the task force is to develop an integrated, 
agency-wide plan that includes architecture, operations concept, and 
certification plans. This action item is scheduled to be completed in 
October 1998.
    Mr. Wolf. The SAIC report says ``current analysis suggests six 
satellites, but requirements could drive the system to eight 
satellites. The program office has four leased satellites budgeted, but 
only two are currently on contract.'' Why is it so difficult for FAA to 
determine how many satellites are needed?
    [The information follows:]
    The two satellites currently contracted for make WAAS' Phase I 
possible. FAA needs additional satellites to meet the performance 
requirements of the end-state WAAS. That would include triple coverage 
over the continental United States, and at least dual coverage over the 
remaining portions of the airspace where WAAS will be available, 
including Alaska, Hawaii, the Caribbean, and surrounding oceanic 
airspace.
    Myriad factors make it difficult to determine the exact number of 
satellites needed. For example, the types of satellites to be used 
(payload capabilities and size) and their orbital location 
(geostationary earth orbit versus medium earth orbit) must be 
determined, and decisions must be made whether to lease or purchase the 
satellites, and on the performance and life span of the satellites.
    Additionally, FAA has only limited experience in acquiring 
satellites. To assist its efforts in acquiring the communications 
satellites, FAA is using the Department of Defense's National 
Reconnaissance Office. On January 8, 1998, FAA issued a Request for 
Information to industry for qualified vendors to provide approximate 
costs for the communications satellites services. Responses to the 
request have been received and will be used by FAA to refine cost 
estimates.
    Mr. Wolf. The President's Commission on Critical Infrastructure 
Protection recently concluded that FAA's plans to adopt GPS as the sole 
means for aircraft navigation provided ``the most significant 
vulnerabilities'' for catastrophic outages within the entire 
transportation industry. What does this mean, and how might this affect 
FAA's plans for pursuing satellite navigation?
    [The information follows:]
    The augmented Global Positioning System was slated to be the sole 
source of radionavigation for aircraft landing guidance systems by the 
year 2010. The investment analysis for the WAAS assumed that all ground 
navigation and Category I instrument landing systems would be 
decommissioned by the end of 2010. Although cost-efficient, this 
creates the potential for single-point failure. That is, if the WAAS 
failed, there would be no back-up system to perform WAAS navigation 
functions. FAA's intent was to use operational procedures (rerouting, 
missed approaches) to achieve the required safety levels in the event 
of a loss of service.
    The President's Commission on Critical Infrastructure Protection 
report states that systems with air-ground communications and data 
links such as the WAAS/LAAS are ``susceptible to interference and 
signal jamming''. The low signal strength of GPS makes it particularly 
vulnerable. For example, lightweight, hand-held, battery powered 
jammers could interfere with the signal reception, as could 
malfunctioning satellite-based cellular phones. Interference can cause 
a loss of navigation capability for aircraft within the line-of-sight 
of the interference source, but it cannot distort information.
    FAA is reconsidering the need for a backup system for WAAS. 
According to the Secretary's report to Congress on the WAAS Program, 
FAA has initiated a study to assess the technical uncertainties which 
have been identified and will determine if there is a need for an 
independent backup system. FAA plans to evaluate various alternatives 
(such as surveillance and air traffic control procedures, inertial 
navigation, a skeletal VOR/DME network, an advanced Loran network, and 
advanced avionics) to provide the backup. FAA staff plan to brief the 
results of this analysis to the Joint Resources Council and the 
Administrator in the spring of 1998. The recommendations of the Joint 
Resources Council will be subsequently reported to the Congress.
    Mr. Wolf. What is the local area augmentation system (LAAS) and how 
does it relate to WAAS, and who will provide its funding, according to 
FAA?
    [The information follows:]
    FAA has two programs to augment GPS. They are the Wide Area 
Augmentation System (WAAS) and the Local Area Augmentation System 
(LAAS). WAAS will ensure accuracy and operational integrity so GPS can 
support en-route navigation and Category I precision approaches to 
airports. The Local Area Augmentation System (LAAS) will complement 
WAAS by broadcasting navigation information in a localized service 
area--typically one airport, or multiple airports in close proximity. 
LAAS should be able to provide Category I/II/III precision approaches 
and surface navigation at the airports where it is located. 
Additionally, LAAS will let GPS be used for all Category I precision 
approaches in areas not reached by WAAS.
    On January 9, 1998, WAAS held the Joint Resources Council 
investment decision briefing for the LAAS program. Approved at that 
meeting was the WAAS acquisition program baseline, which set cost and 
schedule boundaries. The recommended approach was FAA and an industry 
consortium sharing the funding for full-scale development of four 
initial systems. That phase is scheduled to be completed in 2002. FAA 
would then fund 139 additional LAAS ground stations for NAS 
implementation, bringing 143 LAAS systems on line. Total FAA life-cycle 
costs for 143 systems, estimated through 2021, are $877.1 million.

                            acquisition plan

    Mr. Wolf. The FAA's capital plan was originally called the 
NAS plan. In the early 1990s, it was named the CIP. Now the FAA 
is calling it the NAS architecture. FAA officials claim that 
the 3.0 version of this architecture is the key documentation 
for modernizing the NAS over the next 20 years. They have been 
working on this document for about 2 years.
    Two parts. One, the most recent draft of the architecture 
plan assumes an average annual F&E appropriation of $2.9 
billion over the next 3 years. This is approximately 1 billion, 
55 percent more each year than was appropriated in the 1998 
budget.
    First question, do you believe it is realistic and sensible 
for the FAA to plan for such huge increases? Secondly, if the 
Administrator has established a NAS modernization off-site team 
to review and provide recommendations on how modernization 
efforts should proceed. This is separate from the acquisition 
organization which is running the program and developing the 
architecture. You are one of the off-site team members. What 
are the main findings of this group and how are they being 
coordinated with development of the NAS architecture? So we are 
asking two questions, do you believe it is realistic and 
sensible for the FAA to plan for such huge increases and what 
are the main findings of this group and how are they being 
coordinated with development of the NAS architecture plan?
    Mr. Mead. I would have to say regarding the $2.9 billion, 
it would depend on what the trust fund receipts were going to 
be over that period as to whether that figure is going to be 
reasonable or not. I am sure they could absorb 2.9 billion a 
year. On whether they could do it prudently in every year, I 
have some reservations about that. In terms of the off-site, 
the basic conclusions of that were that there should be a 
greater understanding and disclosure to the Hill and to others 
about risks that were associated with the acquisitions; that 
there needed to be greater clarity in program definition; that 
there wasn't necessarily a consensus on program definition for 
some of these key undertakings; that the schedules needed to be 
more realistic; that there needed to be focus; and, that with 
free flight--of which I am sure you have heard--there needed to 
be a better consensus around that. Now I don't believe all that 
has been folded into the architecture to which you refer, and 
that that will have to reflect some adjustments based on this 
off-site, as you put it. In some ways, I think that even though 
you will hear that some of the stated schedules will slip, once 
they have a dose of realism injected into the process, I 
believe the approach being taken will result in getting those 
systems earlier than we otherwise would, notwithstanding what 
the document says the scheduled date was.
    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman.

                  inspectors general--roles and duties

    Let me understand a little bit what your office does. Do 
you serve really two functions? One is to make sure that money 
is spent appropriately, and then, secondly, look for 
significant problems that are ongoing in the programs run by an 
agency; is that a pretty good summary for what you do?
    Mr. Mead. Yes, sir. And part of the organization deals with 
problems that are no longer economy and efficiency and 
effectiveness issues, but have crossed into a criminal 
category. And we call that part of the operation 
investigations. The law says that our job is to prevent, and 
detect fraud, waste and abuse and promote the effective, 
efficient, economic running of programs.
    Mr. Sabo. I am curious; how many inspector generals do we 
have, do you have any idea?
    Mr. Mead. I believe there are 26 presidential appointment, 
Senate confirmed, who are the Cabinet-level Inspectors General. 
Then there might be another 20 or 25 for the smaller units of 
governments, sir.
    Mr. Sabo. Is there any mechanism where all of you meet--do 
you meet regularly?
    Mr. Mead. Yes, sir. There is the President's Council on 
Integrity and Efficiency, of which the deputy director of OMB 
is the chair, and Eleanor Hill, who is the inspector general 
for the Department of Defense, is currently the vice chair. 
They meet every month and discuss problems of mutual interest.

                   problems with federal acquisitions

    Mr. Sabo. The reason I ask, I am a generalist, I get lost 
in lots of the technology and what it is and what it does and 
all of this. But I have observed Federal Government now for a 
good number of years, and it strikes me that there is one thing 
that we simply have major problems doing, regardless of agency, 
and that is making big acquisitions. It is not unique to FAA, 
IRS has problems; it just seems like every agency, we decide 
that when we head off into some major acquisition, particularly 
in a new computer technology, we end up with just massive 
problems. And somehow I think at some point, we have to figure 
out--it is quite an issue we have to deal with, we have to 
figure out some solution.
    I don't know what the problem is, but my hunch is that we 
take and put on operating agencies responsibility for major 
acquisition, which is, you--I wouldn't know how to begin to 
handle a major computer acquisition. And so we have operating 
agencies with responsibility for major acquisition, and it just 
doesn't work. And then we tend to make villains out of people 
who don't make it work; that probably was not within their 
skill level. We need to figure out some mechanism, then we 
decide generally where we want to make the agency independent. 
So we have done some of that on FAA, we are going to do some of 
that on the Internal Revenue Service.
    I am not sure where all that works out, but somehow that is 
going to solve this inherent problem, and my hunch is it 
doesn't do anything. It is still the same people, with the same 
background, being operational folks, all of a sudden having 
responsibility for major acquisition. Lots of it requires very 
precise early planning, and some uncertainty in the software. 
It seems to me it is an issue that is unique--not to any 
agency, it has been ongoing for years--and that at some point, 
we need to take a pretty close look at how we handle the 
things.
    I don't know what the problem is, if it is law, if it is 
our personnel rules. And I have had people suggest we should be 
able to bring in outside folks for a period of time, but they 
probably don't want to deal with all of our conflict of 
interest rules so they probably wouldn't want to come. I don't 
know. But it just seems to me it is an inherent major problem 
and it goes on from year to year, from agency to agency, and we 
keep stepping along and the same thing happens from agency to 
agency.
    Mr. Mead. I would like to make several general observations 
on your thoughts, and then I will yield to Mr. Weintrob and Mr. 
DeCarli, who have tenure, at the Department of Defense. I would 
say, first of all, I wish you were going to be in town next 
Thursday orFriday because we are having an annual retreat for 
the inspectors general, we will discuss congressional expectations and 
concerns, and you would be a great speaker. But we are having 
difficulty finding members of Congress in town on that particular day.
    But things are better at FAA in acquisitions today than 
they were three or four years ago, no question about it. What 
we are seeing now are, for example, in STARS, is the issue of 
human factors. That procurement was ongoing with no obvious 
problems and all of a sudden, at the 11th hour, the controllers 
realized they might have some fundamental concerns about how 
they were going to interface with the STARS equipment. So FAA 
put together a human factors team to try to analyze what to do 
with the STARS acquisition which was already long underway.
    But things are a lot better now. I believe FAA is spending 
a lot more time up front and not trying to reinvent the wheel 
when something already exists out there. When we talk about the 
WAAS system, we are not talking about the advanced automation 
system or anything like that. Do you remember the advanced 
automation system from several years ago? I do want to say that 
with STARS, there has been quite a bit of progress. Now I will 
ask Mr. DeCarli to comment on it. He has been a keen observer 
of the entire process.
    Mr. Sabo. I think a major impetus for that improvement on 
the human factors was the Chairman's hearing.
    Mr. Mead. It was this committee. Yes, that is exactly 
right. And what we found was not a problem isolated to that 
acquisition; it was an entire human factors discipline process 
that needed to be built in, up front, and throughout the 
process, for all acquisitions. This problem is not confined to 
STARS.
    Mr. DeCarli. I think the government as a whole has tried to 
address the issue two different ways. First of all, we tried to 
do the acquisitions in-house, using our own technical 
expertise, and we fall short when we try to use our own 
expertise because we just don't have it. In the case of the 
advanced automation system, we basically went out and hired a 
major contractor, IBM, and said, ``You go out and build this 
for us, we think you have the expertise to do that.''
    But the problem that occurs in most of the systems is that 
you don't have a well-defined requirement when you start these 
acquisitions. They are basically incremental. You keep adding 
on and adding on and adding on. And without a good 
understanding of what you want up front, without a very tight 
statement of work that doesn't continue to change, you can't 
deliver these kinds of programs. It has all got to start with 
the up-front definition of what the requirement is.
    Mr. Sabo. Do you know of any major acquisition for any 
agency that has worked well?
    Mr. Mead. There is one that may potentially work quite well 
at the FAA. It is called the display system replacement. You 
are funding it here. It is going to come in roughly on 
schedule, late this year. I think the acquisition has clearly 
benefited from some of the up-front design attention, adherence 
to schedule, not adding on a lot of bells and whistles. Display 
system replacement is the display that the controllers will use 
at en-route centers. Is that correct, Lex?
    Ms. Stefani. Yes.
    Mr. Weintrob. There is another one we know of that we 
issued a report on. Before I came to transportation 8 years 
ago--as Mr. Mead said, I was at the IG at the Department of 
Defense, responsible for audits of naval forces, major 
acquisitions, and I saw a lot of programs. The Coast Guard has 
an ongoing program up in Marinette, Wisconsin on coastal and 
seagoing buoy tenders. We issued a report saying it was an 
outstanding program. The boats have come in with less than 2 
percent change orders, and on a 3-year construction program, it 
was less than 5 percent for inflation. They came in and they 
were delivered on time. In fact, the first boat was operating 
seagoing tests off of New York the evening that TWA 800 
crashed. It was the first boat on the site. It is an 
outstanding program, the best one I have seen, and we 
congratulate the Coast Guard for it.
    The key there is they had the right acquisition 
professionals in the Coast Guard monitoring the program, and 
they held the contractors' feet to the fire. And when I met 
with the president of the firm, just myself--the Coast Guard 
was unhappy I didn't invite them to the meeting--I asked if he 
had any complaints, and his biggest complaint was the Coast 
Guard was holding them too close to the specs, and I said that 
is what I like to hear, both as an IG and as a taxpayer.
    Mr. Mead. I will raise your point at the PCIE Conference if 
it's okay with you.
    Mr. Sabo. Yes, I would be happy to have you do that. But it 
just seems to me, someplace, I don't know if it should be with 
OMB or where it should be, but we need, probably rather than 
further and further decentralization, we need more 
centralization, putting in place the planning requirements for 
major acquisitions. I don't know the answer, it just strikes 
me--I happened to be at a panel sometime ago in which our 
colleague, Harold Rogers, was, and I raised my concerns; and 
his immediate response is he had seen the same problems at the 
State Department and the FBI. And, you know, it seems to me it 
is systemic throughout the Federal Government.
    Mr. Mead. I believe we are past the days at FAA, where the 
agency would come up to the Hill and say, well, we have a 
program we would like to start--just say, for example, to 
detect wind shear. But at the point the FAA is called up to the 
Hill, the technology may have to be invented. FAA and Congress 
don't realize it has to be invented, so you start funding this 
thing that needs to be invented and we are really funding an 
R&D, project or some lightly generalized concept. And I truly 
believe FAA has learned its lesson there.
    Mr. Sabo. Thank you.
    Mr. Mead. Thanks for that very thoughtful observation.
    Mr. Wolf. I thank you, Mr. Sabo. We are not going to ask 
any more questions on the GPS, except a series we will submit 
on the record, because so many Members have asked about it 
already. FAA recently announced that the life cycle cost 
estimate for the program had risen from 2.4 to 3 billion.
    Then in December of 1997 there was a report for the FAA by 
prime contractor SAIC that concluded that the O&M costs and 
satellite costs are understated in the FAA's cost estimate, and 
that the life cycle of WAAS--and this is what Mr. Sabo was 
talking about--could grow by 1.874 billion over the existing 
budget of 2.411. This indicates the costs could go as high as 
$4.3 billion, not the $3 billion reported by the FAA.
    How does the FAA's number differ from that of the 
contractor?What are your feelings about that? I mean, could it 
go that high?
    Mr. Mead. I don't know. I certainly hope not.
    Mr. Wolf. Have you seen the SAIC report?
    Mr. Mead. No, I am not familiar with that. We will get 
familiar with it.
    Mr. Wolf. It was December of 1997. Well, if you would do 
it, because it is the same thing Mr. Sabo was talking about. 
They are talking about $1.87 billion over the existing $2.4, 
which could go as high as $4.3, not the $3 billion that was 
reported by the FAA.
    Also, one other question, all the others will be for the 
record. There was testimony last October, where Mr. Donahue 
testified before the House T and I Committee that when WAAS is 
fully implemented, taxpayers will save over $100 million a year 
because the satellite-based navigation systems are cheaper to 
maintain than today's land-based system. However, the FAA is 
now talking about keeping a land-based system in operation as a 
backup. What does that do to the cost-benefit ratio of WAAS?
    Mr. Mead. I think the cost-benefit ratio would remain 
positive, certainly not as much so if you have the ground-based 
system, and that is for two reasons: one, as a cost to the 
government of maintaining a ground-based system; and secondly, 
because you want every airplane to be able to use a backup 
system if they need a backup. There is a set of user avionics 
costs that must be factored in also. I would say the cost-
benefit ratio would be lower, but it is my understanding based 
on work GAO did, it would still remain on the positive side.

                              STARS Update

    Mr. Wolf. STARS, very briefly. Could you update the 
subcommittee on what has happened in the STARS program since 
our hearing in December?
    Mr. Mead. Yes, sir; 98 problems, human factor issues, were 
identified. That is not an unusual number to identify, so I 
don't want to overstate that. However, only 33 of those have 
been resolved. It is my recollection that we were going to 
resolve all of these things by the end of January. We are now 
in the middle of February, and a substantial number of these 
have not been resolved. By resolved, I mean agreement on what 
we are going to do about them, and advising the contractor of 
what needs to be done and then attaching a price to the fix, 
and then assessing what the schedule implications will be.
    This is a two-way issue. The controllers need to be 
included and included absolutely in these decisions, but there 
also has to be an exit strategy. At some point we have to move 
on and make the decisions about what we are going to do.
    Mr. Wolf. When do you think that should be and how is that 
being set up to have a definite time?
    Mr. Mead. That needs to be done, Mr. Chairman. They have 
not set a date.
    Ms. Stefani. They are still working on the 98 identified 
areas to determine a potential solution to each. They still 
have to go through a process of agreement on all 98, 
identifying the costs and identifying the schedule.
    Mr. Wolf. All of the air traffic controllers, as well as 
everybody else, have felt a good spirit, that they have all 
been able to participate.
    Mr. Mead. Yes, sir. I think that is a very positive aspect. 
The committee should take credit for that. Now the task is to 
us decide what we want to do, figure out how much it is going 
to cost, and move on.
    Mr. Wolf. The FAA requested $183.5 million in its 
submission to OMB for STARS program costs in fiscal year 1999. 
How much is included in the final President's budget, and is it 
adequate for the STARS program needs?
    Mr. Mead. Probably not, because they have not costed out 
the human factor issues. In fact, you will be receiving a 
reprogramming request.
    Mr. Wolf. I understand that it will be 28.9.
    Mr. Mead. A question I have is on what is that figure 
based? How does it cover the human factor issues? If we haven't 
resolved what we are going to do with human factor issues, how 
do we know how much it is going to cost?
    Mr. Wolf. Your office is still participating in that.
    Mr. Mead. We are participating in that, yes. There is one 
issue about our involvement with the human factors team. I 
don't want them to get in the practice of looking too much to 
the inspector general to resolve human factor issues. That has 
to be a job ultimately between FAA and the union, or the 
controllers.
    Mr. Wolf. Given the delays in STARS software development, 
will the schedule for the Boston TRACON slip?
    And also, I have heard the FAA may not be able to meet 
their schedule for deploying the ``early deployment system'' of 
STARS at Washington National Airport. Is a schedule slip likely 
here, for Boston TRACON and the Washington National Airport?
    Mr. Mead. Washington National is going to be very tight, 
because a number of these human factor issues relate to the 
display, and the display is what is going to go in. It is now 
February; we haven't resolved issues with this display, and so, 
yes, I would say the date is in jeopardy.
    Mr. Wolf. For Boston.
    Mr. Mead. Boston is definitely in jeopardy.
    Ms. Stefani. On human factors.
    Mr. Weintrob. National will have something by December of 
1998, but it may be the new body with the old engine and 
transmission; it certainly won't be the end piece of STARS. 
They are already actually shipping some stuff in.
    Mr. Wolf. At the hearing in December, we had a discussion 
about the Sony monitors for the STARS system. It is the 
committee's understanding FAA cannot find the money to continue 
production of the system; is that right? If so, what is FAA 
planning to do to procure the extra monitors they need?
    Mr. Mead. That is another one I thought would be resolved 
based on the last hearing we had with this committee, but it 
wasn't. Lex?
    Ms. Stefani. At this point in time, FAA does not have a 
definitive plan to acquire the remaining 1,200 monitors it 
needs. In the Sony plant that was manufacturing this, the 
production run for the FAA has stopped. The unit produced in 
Japan is different than the one that was produced in the United 
States, and that it doesn't give the same clarity of 
resolution, so when you look at the screen, it won't be the 
same monitor. Though FAA doesn't physically need these monitors 
until the year 2001, they must identify a plan that will get 
them a monitor that will providesimilar attributes that the 
controllers--we don't want to create new human factors issues because 
you have two different monitors being used. We have asked FAA to 
provide us with a plan to acquire the remaining units.
    Mr. Mead. You are not going to get them from the original 
source in California.
    Mr. Wolf. One of the factors is the aircraft symbols go 
fuzzy as they get to the end of the screen.
    Mr. Mead. The visual acuity on the screens with the Sony 
tubes was constant throughout the screen. In models that are 
not quite as good as that, the visual acuity that is sharpest 
and best in the dead center of the screen does not extend to 
all four corners. There are other issues too, but that is one 
of the major ones; the controllers want constant visual acuity 
throughout their display screen, which seems to be a reasonable 
point.
    Mr. Wolf. I think so. Okay. We will submit the others for 
the record.
                                 STARS
    Mr. Wolf. The original STARS contract required software development 
to be completed by September 1, 1997. Raytheon did not meet this date, 
and FAA subsequently modified the contract, extending the completion 
date to November 15, 1997. What is the status of software development 
today?
    [The information follows:]
    FAA and the contractor have indicated that software development for 
the early display configuration and the initial system configuration 
was completed in late January.
    Mr. Wolf. FAA requested $183.5 million in its submission to OMB for 
STARS program costs in fiscal year 1999. How much is included in the 
final President's budget, and is that adequate for STARS program needs?
    [The information follows:]
     The President's budget includes $210 million for STARS. We cannot 
say at this time whether this amount is sufficient because all of the 
human factors issues have not been identified, resolved, and priced. In 
addition, formal testing has not been conducted which may identify 
other issues that need to be addressed.
    Mr. Wolf. The Department is expected to seek a reprogramming of 
$28.9 million, to provide additional fiscal year 1998 funding for 
STARS. FAA also requested, and Congress did provide, an additional $10 
million for this program in a fiscal year 1997 reprogramming. Why is 
additional money needed in fiscal year 1998, and does this represent a 
growth in total development costs?
    [The information follows:]
    FAA offers two reasons for seeking the additional $28.9 million. 
Additional funding of $23.5 million will sustain increased software 
development and testing to stay on schedule, to accelerate equipment 
deployment at Ronald Reagan Washington National Airport, and to address 
recently disclosed human-factors issues. An additional $5.4 million 
will be needed for site survey and preparation at New York and Dallas/
Fort Worth TRACONs to facilitate installation of the Early Deployment 
Configuration (EDC). However, FAA has not yet determined if the EDC 
will be installed at these facilities.
    STARS development costs have increased over initial estimates. 
Costs, including personnel needed, have been higher-than-expected for 
contract software development and contractor productivity has been 
lower than planned. Further, human-factors issue resolution and the 
early EDC deployment at Washington National will increase fiscal year 
1998 contract costs.
    Mr. Wolf. Have the controllers and FAA management reached agreement 
on which issues need to be resolved, and in what timeframe?
    [The information follows:]
    As of February 12, 1998, members of the STARS rapid prototyping 
team agreed on recommendations to address 81 of 98 air traffic control 
issues. Resolution of the remaining 17 items is expected by February 
28, 1998. STARS program officials are developing information on the 
cost and schedule implications of designing, developing and testing the 
proposed solutions. This program data should be available in March or 
April of 1998.

                           potomac metroplex

    Mr. Wolf. Last year the Secretary asked you to investigate 
FAA's actions on the Potomac Metroplex program, following up an 
investigation done by this committee's S&I investigative staff. 
What were your findings?
    Mr. Mead. We found the committee had been ``misled,'' and 
that the cost-benefit analysis thathad been represented to the 
committee as indicating that the Potomac Metroplex was not the best 
choice was not based in fact. Since then, the FAA has announced that 
they will proceed with the Potomac Metroplex, and they are proceeding 
accordingly.
    Mr. Wolf. Hopefully that will mean quieter and less 
expensive, too. That was quite a battle.
    Did that tell us anything about the management culture--and 
none of this has to do with Ms. Garvey, I want the record to 
show that--did that tell us something about the management 
problems over at the FAA?
    Mr. Mead. It spoke volumes.
    Mr. Wolf. Because when they write the history of the FAA, 
this won't be in the history, it will be a footnote in the 
back; but it did speak volumes, it seems.
    Mr. Wolf. Does the FAA's benefit-cost analysis indicate 
that a single, consolidated facility in the Washington 
metropolitan area is the most cost-effective option?
    [The information follows:]

    FAA performed a series of studies between 1994 and 1997 to examine 
the costs and benefits associated with the Potomac Metroplex program. 
While the studies varied to reflect changes in the underlying 
assumptions, they all concluded that a seamless airspace, controlled 
from a single facility, offered the greatest benefit at lower cost.
    In 1997, FAA asked Booz-Allen & Hamilton to perform an independent 
assessment of the costs and benefits of the Potomac Metroplex program. 
The firm weighed FAA's cost-benefit studies. In its August 27, 1997 
report, Booz-Allen & Hamilton concluded that full consolidation was the 
most cost-beneficial option.

                           runway incursions

    Mr. Wolf. Your office has been involved over the past years 
in aviation safety. Two months ago you issued a report--and 
this issue came up yesterday--on FAA's runway incursion 
program. As your report shows, runway incursions are increasing 
around the country.
    Why has the FAA been ineffective in addressing runway 
incursions, especially after they received so much attention a 
few years ago?
    Mr. Mead. In short, the FAA put together a plan that looked 
pretty good overall, but it wasn't being implemented. We went 
to the FAA regional offices, and they were unaware of the plan. 
They were unaware of FAA's goal to reduce runway incursions to 
40 a year, when in fact----
    Mr. Wolf. Where are they now?
    Mr. Mead. Between 250 and 260.
    Mr. Wolf. And growing yearly.
    Mr. Mead. I don't know what it has been in the last couple 
of months, but most of 1997, they were on an upward trend. 
There is an article in the paper today, incidentally.
    Mr. Wolf. What paper?
    Mr. Mead. The Post, that identifies runway incursions. It 
is the last paragraph of the article.
    Mr. Wolf. Staff said it was 318 at the end of 1997.
    Mr. Mead. Oh, it went way up. I don't have the end of the 
year, 1997 data. I was using 1996, which is approximately 260.
    Mr. Wolf. That is quite dramatic.
    Mr. Mead. The article in the paper identifies this today as 
one of the top safety issues, and it is one that FAA must make 
real inroads on. We talk about putting more planes in the air 
and reducing separation minimums between planes. All that leads 
to more planes landing at airports, and if you have more 
traffic at airports, you can have just as bad an accident 
there.
    Mr. Wolf. We will go into depth on that with Ms. Garvey.
    Because of the attention this received in 1994, the FAA 
expressed their concern and developed a Runway Incursion Action 
Plan. However, as your auditors discovered, after the immediate 
interest waned, the FAA did not follow through on implementing 
this plan. Now you point out to them that runway incursions are 
increasing--my staff said 318 at the end of 1997--and they are 
now quote, ``very, very concerned,'' and they will develop a 
new plan. How do we know that 3 years from now we won't learn 
that they stopped working on it when the spotlight is not on 
this particular safety issue?
    Mr. Mead. That is why, as part of our strategic plan, we 
are going to take this high-profile work, our important work, 
and we are going to keep following up. This ties into the 
performance measure issue you were mentioning earlier, and we 
are going to follow up on this.
    Mr. Wolf. I think it does, because then the group could say 
quarterly, here is how many runway incursions happened and here 
is what happened at the half year and here is what happened 
after three quarters of the year.
    Mr. DeCarli. On that issue, when we issued that document, 
we told FAA to establish a specific performance element to 
track that measure, so hopefully that will put some spotlight 
on those numbers, rather than having them forgotten after the 
report is issued.
    Mr. Wolf. What if the report had not been issued? You know, 
it is like the fad of the day; this is a big issue, it is a big 
story; they go to it and deal with it and kind of move on.
    The committee added funds to the FAA's budget for runway 
incursion devices such as the AMASS computer in past years. Are 
these useful technologies for helping to address the runway 
incursion problem?
    Ms. Stefani. Yes, they are. Runway incursions are normally 
human error based. The technology will provide immediate 
information to the controller to try to avert the situation. 
But in addition to technology, you have low cost, doable 
procedural changes and local initiatives that can be performed.

                           inspector training

    Mr. Wolf. Another important safety concern is adequacy of 
training for FAA inspectors. In that regard, let me quote 
testimony you offered the subcommittee way back, in 1991, 7 
years ago, when you were just a young boy out of college. 
[Laughter] You said at that time--you were at GAO, let the 
record show that--``Aging aircraft requires inspectors to 
assess airline corrosion control programs and evaluate major 
structural repairs. New technology, on the other hand, places 
additional demands on the inspector staff. So be prepared for 
FAA investing heavily in training to keep inspectors current.''
    The FAA was aware they needed more training in 1991. Why, 
then, were they in a position for you to report in November of 
1997, now as the DOT Inspector General, that FAA inspectors, 
quote, ``were not routinely provided basic technical training 
or recurrent training for the aircraft systems they were 
assigned to inspect''?
    Mr. Mead. Because they have never adequately dealt with the 
problem. Training is one of the first cost items to get slashed 
when budget times are hard. And it is not my place to give 
gratuitous advice to the committee, but this, like runway 
incursions, is one where FAA's feet need to be held to the 
fire. We keep putting more people over there. It is important 
that these be people be proficient in what we are asking them 
to do.

                            airport security

    Mr. Wolf. Closely allied with aviation safety is the issue 
of aircraft security. Your office has been reviewing FAA's 
plans to procure and deploy new explosive detection machines at 
our high threat airports. Is the FAA managing this effort well?
    Mr. Mead. From what we can see, this is an ongoing effort, 
so I don't want to pass judgment on it. But I would say anytime 
you see a lot of money being infused in an area, that is the 
time one starts experiencing some management problems. That is 
why we are going in now.

                 simulator training for faa inspectors

    Mr. Wolf. This past December you criticized the FAA for a 
``quid pro quo'' arrangement with the airlines where FAA 
requires the airlines to provide free simulator training to FAA 
inspectors in return for FAA approval of air crew program 
designees. You found at least one case where this arrangement 
precluded FAA officials from pursuing needed enforcement action 
against an air carrier. You said, quote, ``This type of 
agreement could very well preclude the grounding of an 
aircraft, airman or an air carrier for a prolonged period, even 
if there was a high safety risk.'' Has the FAA agreed to 
discontinue this ``quid pro quo'' arrangement?
    Mr. Mead. Yes. We just thought it was inappropriate for FAA 
to say, in exchange for free training, we won't take 
enforcement action. Short and sweet. That is what the report 
was, a very short and to-the-point report.
    Mr. Wolf. Last year we had a considerable discussion with 
the acting IG about an audit showing deficiencies in FAA's 
regulations on aircraft deicing. Mr. Pastor asked that question 
yesterday. Can you update us on the FAA's response to your 
recommendations on deicing?
    Mr. DeCarli. Not at this time. We will provide that for the 
record.
    [The information follows:]

    In last year's testimony, the Acting IG noted that we were 
pursuing several followup issues with FAA regarding our report. 
In particular, we had requested that FAA: (1) provide air 
carriers and aviation safety inspectors with ``best practice'' 
information on deicing procedures; (2) provide instruction to 
inspectors on using surveillance data to perform followup 
inspections or to change air carriers' deicing programs, (3) 
provide a listing to OIG of enforcement actions taken, and (4) 
reconsider requiring airport operators to participate in the 
development and implementation of local deicing plans. On the 
first three items, FAA took the requested actions. On the 
fourth item, however, FAA still sees no need to require the 
development of deicing plans or the participation by the 
airport operators in such plans. FAA notes it knows of no 
situation that occurred in deicing operations during the 1993-
1997 winter seasons which could have been alleviated if the 
airport operator had developed a deicing plan. We agree with 
FAA's actions and consider all recommendations closed.

                         cost accounting system

    Mr. Wolf. Your office has been reviewing FAA's development 
of a new cost accounting system. Will the FAA be able to meet 
its commitment to field a fully functional cost accounting 
system?
    Mr. Mead. The commitment, I think, was October 1. The 
answer is no. And just a postscript on that one: It is better 
that we do this right than to try and meet a deadline and 
create a system that is fundamentally flawed.
    Mr. Wolf. Two other questions on that issue will be for the 
record.

            COST ACCOUNTING AND FINANCIAL MANAGEMENT ISSUES

    Mr. Wolf. Will the system be able to account for full 
costs, support performance measurements, and provide a basis 
for user fee calculations?
    [The information follows:]
    No. FAA has acquired an off-the-shelf cost accounting 
package, and plans to modify this package to meet its needs. 
FAA is gathering its cost-accounting and performance-
measurement requirements. We identified several key issues 
which, if not resolved, could result in incomplete cost 
capturing and implementation delays. These issues include 
determining and capturing costs related to: asset appreciation; 
accounting adjustments valued at hundreds of millions of 
dollars, air traffic services provided by other agencies, and 
National Airspace System project development.
    For example, the Department of Defense expends over $600 
million per year as a partner to FAA's air traffic control 
operations. The General Accounting Office has recommended these 
costs be included in any new user fee calculations. Decisions 
are needed on how these costs will be captured and allocated 
within CAS.
    The value of CAS is directly related to the quality of the 
underlying data collected by the system. CAS collects its 
financial data from the departmental financial system, which 
also supports financial statements. For FAA's FY 1997 financial 
statement, we were unable to validate $11.6 billion of reported 
property and equipment and $763 million of inventory due to 
inaccurate subsidiary records, documentation, and unreconciled 
discrepancies. Until FAA corrects these material weaknesses 
and, ultimately, obtains a clean opinion on its financial 
statement, the reliability of CAS data will be vulnerable to 
dispute when used as a basis for calculating user fees. Also, 
FAA has not begun to develop a pricing strategy for user fees.
    Mr. Wolf. Would you give an FAA an ``A'' for how it has 
proceeded on this effort?
    [The information follows:]
    No. To their credit, senior FAA managers recognize they 
have to change the agency's management culture to embrace 
agencywide cost-accounting, and have employed a contractor to 
assist in implementing CAS. However, FAA was not able to meet 
initial commitments to Congress to have pilot baseline 
implementations in place for selected activities by the end of 
FY 1997. FAA also did not have a contingency plan for an 
adverse judicial ruling on the validity of their overflight fee 
structure. Additional work needs to be done to clean up 
longstanding problems with basic accounting data CAS will rely 
upon.
    Mr. Wolf. FAA was to have finished development of their new 
cost accounting system by October 1998. If successful, this 
might enable them to begin collecting overflight fees in a way 
acceptable to the court. As currently planned, is it likely 
that, by October 1998, FAA's cost accounting system will be 
sufficiently developed and tested to meet the requirements for 
user fees set forth by the court?
    [The information follows:]
    No. FAA clearly will not be ready to implement user fees by 
October 1998. FAA needs to develop a pricing schedule for its 
services. This effort has not started. Further, in our opinion, 
FAA should have at least several months of fully supported 
trend data from CAS before a proposed user fee schedule is 
published.
    Mr. Wolf. The Subcommittee recently requested your office 
look into deficiencies in budget execution controls at FAA. I 
know it's early to ask you for a report, but have you found any 
indications so far of problems in this area which you might 
share today?
    [The information follows:]
    We are not far enough along to have even preliminary 
indications of problems. If we do identify problems, we will 
bring them to the attention of the FAA Administrator and the 
Subcommittee.

                         User Fees--Overflights

    Mr. Wolf. In Asiana versus Federal Aviation Administration, 
the D.C. court recently invalidated the FAA's overflight user 
fees because they were based on an economic principle known as 
Ramsey pricing. Briefly explain the findings of the court.
    Also, the FAA's fiscal 1999 budget assumes the collection 
$93 million in overflight fees, which, as it currently stands, 
cannot be collected because the court has ruled them illegal. 
Doesn't that give the FAA a 93 million hole in their operating 
budget? Please comment and then go indepth for the record. 
Could you explain the court decision, and does that give them a 
hole of $93 million?
    Mr. Mead. Well, the answer to the first part is that Ramsey 
pricing--which is what the court of appeals invalidated, and I 
don't know whether the government is going to appeal the 
decision or not--essentially states that when you set a user 
fee, it has to be cost-based. It cannot be based on what the 
value of the service is to me or to you. In other words, an 
analogy might be that if you take a fully loaded 777, that 
plane is getting a more valuable service from air traffic 
control than a general aviation aircraft with just one person 
in it.
    But this court seems to be saying that, no, we mean cost-
based; you can't differentiate. The ruling applies to the 
international overflight fees. I gather, from what I 
understand, the law was written cleverly, and it said if your 
user fees don't stand, DOT still must fund the FAS program. So 
I don't recall whether that 90 million is coming from an FAA 
account or an OST account, but they have to come up with the 
money.
    Mr. Wolf. There will be a hole then.
    Mr. DeCarli. I think about half of that is going to an OST 
account as essential air services.
    [Additional information follows:]

    On January 30, 1998, the court ruled that FAA's allocation of fixed 
and common costs, using a value-oriented Ramsey methodology, violated 
the Federal Aviation Reauthorization Act of 1996. The law requires 
overflight fees be directly related to the agency's cost of providing 
such services as air traffic control, navigation, weather, training and 
emergency response. According to the court, the Ramsey method 
distributes fixed costs among classes of users based on the elasticity 
of their demand for services, in an effort to minimize the effect of 
the regulation on user behavior. Under this method, classes of users 
less sensitive to changes in price are allocated a relatively greater 
share of fixed and common costs. The court concluded: (1) there may be 
methods to reasonably determine an appropriate fraction of the FAA's 
fixed costs to assign to each overflight, and (2) if FAA does not have 
information to precisely determine the burdens imposed by individual 
flights, it may proceed based on the best data available.
    Yes, the court decision will create a ``hole'' in the essential air 
services and rural airport improvement program, and FAA's general 
operations program. The Federal Aviation Reauthorization Act of 1996 
(Public Law 104-264), authorizes FAA to recover $100 million in 
overflight fees. In the FY 1999 budget submission, $50 million is 
proposed for the essential air services program and $43 million in 
FAA's operating costs are to be supported from user fees.
    FAA officials said the ``hole'' would be mitigated by any funds 
that can be collected consistent with the court ruling. However, new 
user fee rules would take time to implement. By March 13, 1998, FAA has 
the option to appeal the court's decision. Absent new rules or winning 
a court appeal, FAA advised they will have to reduce program funding 
levels.

                    Highways--Boston Central Artery

    Mr. Wolf. In a recent audit, the OIG concluded that the 
Federal Highway Administration has participated in costs to 
relocate a utility company's transformer substation which were 
not eligible for Federal participation. The federal share of 
the relocation and construction costs subsequently paid was $37 
million. Furthermore, your audit work revealed the Federal 
Highway Administration staff did not perform their own analysis 
on the relocation but relied on the Massachusetts Highway 
Department's analysis. What action has the Federal Highway 
Administration taken in response to your findings, and are you 
satisfied that Federal highway management and oversight 
activities are now sufficient to provide adequate oversight?
    Mr. Weintrob. The Federal Highway Administration has yet to 
reply to our last correspondence on that issue. There was what 
is termed a ``betterment.'' We are not questioning the need to 
relocate the utility. The rules stated that when the government 
participates in those kind of costs, it should not pay for 
betterments. If they are moving over a 200-amp circuit breaker 
to a new location, you pay to move that over. If, in fact, the 
electric company made it 400 amps to service more people, the 
Federal Government shouldn't participate in that betterment.
    Mr. Wolf. So they should get the money back.
    Mr. Weintrob. They did recoup 2.6 of the 10. We believe 
they ought to recoup the rest.
    Mr. Wolf. Could you follow up and let us know whetherthey 
get it?
    Mr. Weintrob. We can let you know whether they get it. We 
can't make sure they get it.
    Mr. Wolf. We will ask somebody else, but if you could let 
us know.
    [The information follows:]

    FHWA has not changed its position on accepting only $2.6 
million of the $10 million paid for substation betterments.

    Mr. Wolf. The Federal Highway Administration has indicated 
that over the past several years, staff years dedicated to 
oversight of the Central Artery project have increased to over 
20 staff years. In your opinion, has the staff year increase 
translated into more effective oversight, or has staff 
continued to rely upon Massachusetts Highway Department's 
oversight of the project?
    Mr. Mead. I believe the FHWA oversight has had value added. 
I am not saying they don't rely a little too much on Central 
Artery personnel, but there has been clear value added having a 
presence there, just as for the Federal Transit Administration 
with L.A. Metro.
    Mr. Wolf. The Big Dig's final design is nearly 94 percent 
complete and was scheduled to be substantially complete in mid-
1998. Can you share with the committee your observations or 
concerns about Massachusetts Highway Department or contractor 
staff charges to the project, given the completion of the 
design phase?
    Ms. Thompson. Currently the Bechtel people who are working 
on the project--who were involved in the early phases of the 
project--are actually being reclassified. The end result is 
that the same number of Bechtel people on the project at the 
outset are currently still on the project; they have been given 
other of duties.
    Mr. Weintrob. At this point in the plan, there should have 
been significantly fewer Bechtel folks there. That hasn't 
materialized. The number is about the same, 961.
    Mr. Mead. The bottom line, Mr. Chairman, is I think the 
initiatives of this committee have made a difference at the 
Artery. They are on a cusp, though, of another cost increase.
    Mr. Wolf. They are.
    Mr. Mead. I know there is disagreement on this, but I am 
not prepared to say the costs are going to definitely go over 
11 billion. I will be pleasantly surprised, I should say, if 
they do not, but if the Artery does not, one, get a handle on 
the cost overruns that are running actuarially now at about 14 
percent, and, two, reduce the number of the support staff from 
Bechtel, you are going to see a cost increase. I believe the 
Artery is aware of that, too.
    Mr. Wolf. Over the past several years your office has 
presented three options for controlling costs, and I appreciate 
your work and the GAO's work. A combined cap on the federal 
funding and a reduced federal participation rate have been 
recommended as a preferred method. Has your opinion on the need 
for a cap or reduced federal participation rate changed over 
the past year?
    Mr. Mead. My opinion on that is just what the committee 
report language for fiscal 1998 appropriations says. If there 
are further cost increases that are consequential, I think we 
should consider various capping formulations.
    Mr. Wolf. As you know, a revised financial plan for the 
project was submitted this past fall. What has your review of 
the plan revealed, and how reliable is the financial data 
reported?
    Ms. Thompson. Our preliminary review found that there were 
some misdirections, if you will, in the way the plan was 
worded; that in some respects it was a public relations 
document; and that in fact the numbers they used for the cost 
containment goals were extremely overly optimistic, to the 
point they would never achieve them. We and GAO met with 
Federal Highway to work on some of these areas, and in fact, 
those changes were made to the finance plan, so that the cost 
containment goals, for example, are more realistic, at least in 
Federal Highway's eyes. As for the State of Massachusetts, we 
believe their cost containment goals, and they are in fact 
still running higher than those projections, but that if they 
implement some of the recommendations, such as reducing the 
number of Bechtel employees, they should be able to come closer 
to what they projected would be the costs of the Artery.
    Mr. Wolf. I think if they don't, that is going to be a sign 
that they just don't care.
    Mr. Mead. I would say the Artery has been very responsive 
to our inquiries and suggestions.
    Mr. Wolf. In January, the Associated Press reported when 
Big Dig project manager Peter Zuk learned CBS's ``60 Minutes'' 
was headed to Boston for an expose, he hired a media consultant 
and a former CBS news producer to prep him. Taxpayers footed 
the $24,210 bill. Soon after that, the Boston Herald reported 
that Big Dig managers are seeking 2 million dollars to pay top 
name advertising talent for a feel-good campaign to hype the 
$11 billion project. While the Massachusetts Turnpike Authority 
will pick up a portion of the 2 million, the Herald reports 
that the Federal Highway Administration, or taxpayers all over 
the country, will pick up the rest.
    What can you tell us about these reports and whether 
Federal Highways is participating in these costs? I mean, that 
would be terrible. You are talking about ABC, your money, your 
business. I mean, I hope that is not the case.
    Mr. Weintrob. The problem you have in determining whether 
Federal Highway or the State of Massachusetts itself is paying 
for those costs is that all the funds--the funds they get from 
Federal Government as well as State funds--go into the same 
account that loses the money. So when we raise these types of 
issues, they say, ``Oh, no, we are not paying that fee or 
expense or consultant out of Federal funds, that is coming out 
of our 15 or 20 percent that we are matching,'' and there is no 
way to say which dollars they are taking itfrom.
    We have not determined whether it exceeds their portion of 
matching funds or not. But that is the kind of answer you would 
get if you asked Federal Highways or Peter Zuk and there is 
really no way of differentiating.
    Mr. Wolf. There is no way of finding out? For Peter Zuk to 
hire a guy for $24,000, if he is not competent enough to 
explain what he has been doing, I mean, he is in trouble.
    Mr. Weintrob. They can explain what the people do, but they 
can't tell you whose money paid for them.
    Mr. Wolf. Why would you hire a $24,000 media consultant to 
tell you how to talk to ``60 Minutes'' ?
    Mr. Weintrob. Because you have a 7-mile project for $11 
billion. It is almost unheard of in the cost per mile and it 
gets all kinds of attention, and somehow you need good public 
relations folks to keep the pressure down.
    Mr. Wolf. That wouldn't be an eligible cost, though, would 
it?
    Mr. Mead. That is a key question. The first question is, is 
it legal?
    Mr. Wolf. It is probably not, is it?
    Mr. Mead. I wouldn't speculate on that. We will have to get 
you an answer. Just because we think it is philosophically 
inappropriate does not mean that it is unlawful. So the first 
question is the legality; the second question is, is it wise. 
We will put those questions to FHWA and we will get back to 
you.
    [The information follows:]

    The Central Artery has decided to return the Federal funds 
($19,000) related to the issue.
    Mr. Wolf. Do you believe it is appropriated that FHWA participate 
in these expenditures and to what extent has the FHWA questioned them?
    [The information follows:]
    Philosophically, we have long maintained that the Federal 
Government should not participate in expenditures that are not 
supported by demonstrated project requirements or are otherwise 
ineligible. While the services of a media consultant may be eligible 
for funding with Federal funds, we have seen no evidence of a 
demonstrated project requirement. FHWA has not questioned these 
expenditures. FHWA participated in the cost for the media consultant, 
and has accepted the concept of the advertising campaign.

    Mr. Wolf. Are they going to have this $2 million program to 
promote the Big Dig?
    Mr. Mead. I surely hope not.
    Mr. Wolf. I think if they do that, that is going to tell 
the committee something. If we find out there is a $2 million 
program to hype it, I think that will really tell the committee 
that there is something wrong. And, you know, I am not going to 
say what we are going to be doing, because I don't think it is 
appropriate, and certainly we want to talk to all of the 
Members, but I think that would really, really be a 
fundamentally wrong thing. And for the taxpayers of Virginia 
and Minnesota and California and Arizona and Ohio and 
everywhere else to be paying for that, I think would be wrong. 
And if they do it, we are going to make it clear they ought not 
be doing that. They have their own PIO officers on, and I think 
that is the way to handle it, not to go out and hire 
advertising.
    Mr. Weintrob. The answer back to them might be if you have 
this $2 million, you are not taking it from the federal highway 
grant part, you have it in your own checkbook. Then maybe you 
need 2 million less from Uncle Sam and you take the 2 million 
and spend it on the highway construction.
    Mr. Wolf. That is right, or the State could just authorize 
a new $2 million program, their State legislature could.
    Mr. Weintrob. That is where our recommendation a few years 
ago came in on a sliding scale. As you go over a pegged number, 
the Federal share goes down percentage wise because if you have 
enough money to do all these other things, you don't need as 
much in Federal funding.
    Mr. Wolf. These are the kinds of things that create a 
problem in the public's mind, and you obviously don't believe 
it would be appropriate for the Federal Government to 
participate in these expenditures. Do you know to what extent 
the Federal Highway Administration has raised these issues with 
them?
    Mr. Mead. I don't think they have.
    Mr. Wolf. Is anybody here from the Federal Highway 
Administration?
    I think the new Administrator really has to raise these 
issues, and I am going to ask him when he comes up, but for the 
taxpayers of America to be paying for coaching on ``60 
Minutes'' would be a mistake, and for the taxpayers of Kansas 
to be paying for a public relations program would be wrong, and 
I think they ought to take it out of their own account. If they 
want to be appropriate, that is the only way. But under no 
circumstances should it be done.
    Mr. DeCarli. That is similar to the issue raised about a 
year ago on the police flaggers.
    Mr. Wolf. Yes, they worked that out.
    Mr. DeCarli. They probably will on this one, too. The State 
ended up paying for those.
    Mr. Wolf. If the Federal Highway Administrator would write 
a letter to them and get a commitment that they would do that, 
that would helpful and I think the issue would be resolved.

                            emergency relief

    Mr. Wolf. Your office conducted an audit of the Federal 
Highway Administration's emergency relief program, revealing 
the Federal Highway Administration had not used emergency 
relief funds in accordance with regulations for nearly 30 
projects and squandered $104 million. What else did your audit 
reveal?
    Mr. Mead. Most people think emergency relief is something 
that occurs close in time to the emergency, and in some of 
these instances a number of years had passed before the 
emergency relief came in, and we raised a number of questions 
about that.
    Mr. DeCarli. The biggest issue, Mr. Chairman, dealt, again, 
with the issue of betterments in the emergency relief 
legislation. The way it is worded, basically, is that if you 
have a problem as a result of a storm, you use emergency relief 
funds to put the road back in the condition it was.
    Mr. Wolf. Which is a good idea, I think.
    Mr. DeCarli. Absolutely. What we have found is, under 
certain conditions you have to go out and do an environmental 
study, which could tell you to do things that are beyond the 
current condition of the project. Then we are expanding that 
project without criteria to do betterments that were beyond 
what the original project was and then saying it was due to the 
environmental study and you need to have better controls on 
that.
    Mr. Wolf. Did you find the Emergency Relief Fund was 
provided on a consistent basis among the States and various 
projects?
    Mr. DeCarli. I believe most of the money we looked at that 
was given out went to the West; most of it was for California, 
Oregon, Washington, the west coast.
    Mr. Wolf. What must Federal Highways do to improve its 
program administration as well as its guidance and regulation 
on the eligible uses of federal emergency relief assistance? 
What do you think they should do?
    Mr. DeCarli. I think the biggest thing they have to do is 
define what a betterment is and under what conditions you can 
pay for a betterment using emergency relief funds. I think that 
is the critical issue there.

    Mr. Wolf. Your audit indicated that FHWA did not determine whether 
certain improvements or ``betterments'' associated with the Cypress 
Freeway replacement project in California were economically justified. 
These betterments included replacing the 1.5-mile, two-tier highway 
with five miles of single-tier freeway, while adding new interchanges 
to improve access to local streets and port facilities. Is it your 
opinion that certain costs associated with the Cypress Freeway 
replacement project are ineligible for emergency relief funds?
    [The information follows:]
    Yes. Betterments that are not economically justified to prevent 
future damage are not eligible for funding through the Emergency Relief 
Program, but may be funded through regular apportioned Federal aid. We 
are of the opinion that FHWA should have demonstrated that the 
betterments included in the Cypress Replacement Project were so 
justified, or they should have limited the use of emergency relief 
funds to the cost of replacing the necessary aspects of the freeway, 
and betterments needed to prevent future damage from natural disaster.
    Mr. Wolf. What must FHWA do to improve its program administration 
as well as its guidance and regulation on the eligible uses of Federal 
emergency relief assistance?
    [The information follows:]
    FHWA program guidance must clearly define what costs can be funded 
with emergency relief funds. Further, FHWA headquarters staff should 
consult regularly with field staff to ensure compliance with program 
guidance; develop and implement, by the end of fiscal year 1998, a 
training course specifically on the emergency relief program; and 
continue workshops to discuss regulations and guidance with FHWA, state 
and local agency field personnel involved in the program.

                                 amtrak

    Mr. Wolf. Moving to Amtrak--and there is going to be a vote 
fairly soon and then another vote, so we will probably have 
about a 20-minute break; you can go grab a sandwich or 
something.
    Last year, this committee clarified that you had 
jurisidction to inspect the operations of Amtrak, and we 
encouraged you to become involved in reviewing their major 
programs. What work does your office have under way regarding 
Amtrak?
    Mr. Wolf. Moving to Amtrak--and there is going to be a vote 
fairly soon and then another vote, so we will probably have 
about a 20-minute break; you can go grab a sandwich or 
something.
    Last year, this committee clarified that you had 
jurisdiction to inspect the operations of Amtrak, and we 
encouraged you to become involved in reviewing their major 
programs. What work does your office have under way regarding 
Amtrak?
    Mr. Mead. Two pieces. First, the new law that was passed 
required that within 15 days of its passage, we let a contract 
to review the financial requirements of Amtrak through 2002 on 
the glidepath.
    Well, we thought we really ought to put all of our horses 
into coming up with a methodology and a statement of work, 
which is now out on the street. We didn't do it in 15 days. I 
think that would have been haste makes waste. Also, it probably 
would have been illegal because we would have been awarding a 
contract without going through the competitive process. But 
anyway, we have been applying our energies to that.
    I will ask Todd Zinser to speak to some issues that he is 
handling.
    Mr. Zinser. Yes, we have ongoing right now one 
investigation concerning Amtrak. We were requested to look at 
some issues by the Inspector General at Amtrak concerning 
compensation for some of the officers. There is an issue as to 
what the total compensation package is for six officers, 
including whether or not Amtrak was properly reporting to 
Congress any compensation over certain limits, and we are in 
the process of concluding that now and hope to report that to 
the Amtrak board in the near future.
    Mr. Mead. And, Pat, on the Northeast corridor.
    Ms. Thompson. We have done some work for the last several 
months on the Northeast corridor, from Washington to Boston. 
Primarily we have been focusing on the New York-to-Boston 
route. As you know, Amtrak is spending considerable funds in 
that area, and we have been overseeing that area to see whether 
or not they are on schedule and within their projections in 
terms of the dollars for the project. They are not currently on 
schedule.
    The impact of that slippage we don't know over the long-
term. The January report from the contractor shows them to be 
as much as 9 months behind schedule. They ran into some 
unanticipated problems in digging for the poles for the 
catenary wire. They have run into some problems with respect to 
the design and finding a contractor who can build the catenary 
wire. So, again, we don't know whether or not they will be on 
schedule. Amtrak maintains they will be able to make up the 
lost time, but at this point in time we are still watching it 
to see whether or not they can.
    Mr. Wolf. The Taxpayer Relief Act of 1997 included a tax 
credit for Amtrak, providing approximately cash of $2.3 billion 
for investment in capital programs. Amtrak has long said if we 
could jump start their revitalization with a significant 
capital investment, they would be okay in the long run. Now 
Congress has given them that jump start. Would you agree that 
Amtrak should be expected to reach self-sufficiency without too 
much difficulty?
    Mr. Mead. Two questions there. Yes, they should be expected 
to reach self-sufficiency. Whether it will be without 
difficulty is an entirely different matter, and the answer to 
the two questions may well be yes to the first and no to the 
second.
    But yes, Amtrak receives $2.2 billion. I think an 
interesting piece of trivia, that the $2.2 billion, plus the 
$620 million that the administration has requested for capital 
equate to about $2.8 billion, which is very close to the figure 
you were using earlier for the F&E account at FAA.
    Mr. Wolf. Well, the administration's request for Amtrak in 
fiscal year 1999 is a little confusing. They propose to 
eliminate operating assistance entirely and allow use of tax 
credit resources provided last year, as we talked about, for 
that purpose.
    Have you reviewed DOT's request for Amtrak, and would you 
comment on the sufficiency to enable Amtrak to continue 
operating through the year 1999?
    Mr. Mead. Yes. The $621 million that the administration has 
requested is in a different format than the committee is 
accustomed to receiving in Amtrak budgets. Usually they come up 
and say, we want operating assistance, we want a capital grant, 
we want a Northeast corridor grant. This time, they come in and 
say, we want $621 million, over and above the $2.2 billion for 
capital assistance. That capital assistance will be for 
maintenance of equipment and facilities otherwise know as 
capital maintenance.
    The Amtrak Board of Directors believes that if they get the 
flexibility to use that $621 million, combined with the TRA 
(the Taxpayer Relief Act money), they ought to be able to make 
ends meet. That will leave over $1 billion in revenues--normal, 
nonsubsidy, nongrant revenues--to cover traditional things like 
salaries and other operating expenses.
    Mr. Wolf. How much short-term borrowing is Amtrak doing at 
the present time, and where are they getting the funds?
    Mr. Mead. Well, I think at the end of the year they had to 
borrow about $85 million. That is just to cover the end of the 
year balance sheets. There is also borrowing for capital 
equipment.
    I can't speak to the capital equipment borrowing yet; we 
have that under review. The short-term credit--the $85 
million--I am advised that with Chase Manhattan operating as 
the executive agent, that some of the other participants 
providing that financing were the Bank of America, Bank of 
Tokyo.
    Mr. Wolf. Bank of Tokyo?
    Mr. Mead. Mitsubishi, NationsBank, First National of 
Maryland, and Industrial Bank of Japan.
    Mr. Wolf. Why would they be going abroad?
    Mr. Mead. I don't know.
    Mr. Wolf. So, Amtrak, Americas' railroad, is borrowing 
money from foreign banks.
    Mr. Mead. I don't know the terms of all the notes. I know 
Chase Manhattan was the agent, and we were told by Amtrak that 
participants are, in the short term, the institutions I named. 
I cannot explain at this point why they were going there and 
not exclusively to domestic borrowers or lenders.
    Mr. Wolf. We will ask about that. I am a little surprised 
they are going to foreign banks.
    Mr. Mead. It is probably a consortium of lenders of which 
Chase is the executive agent, but these foreign institutions 
are participants.
    I should also add that on the capital side, for the longer-
term loans, some Canadian interests are involved, but we will 
have to provide you with the details.
    Mr. Wolf. Is that because of the current manufacturers?
    Mr. Mead. Almost certainly. I think Bombardier is up there.
    Mr. Wolf. That one I would understand; the other ones I am 
a little confused about.
    Last year, the DOT advised the authorizing committees that, 
in their opinion, the Federal Government would assumeno 
financial liability if Amtrak were to go bankrupt. For many years, 
Amtrak has said the government would have to pay billions in losses if 
they entered bankruptcy.
    Would you explain the DOT's position, and do you agree with 
it?
    Mr. Mead. I haven't reviewed their position. I will, and I 
know GAO will, too.
    Mr. Wolf. Excuse me, I am sorry.
    Mr. Mead. We will do that.
    Mr. Wolf. If you will for the record tell us.
    [The information follows:]

    While Amtrak, its employees, and any of its other creditors may 
invoke an equitable argument as to why the Federal Government is liable 
to them, we agree with the October 9, 1997, DOT General Counsel and the 
October 20, 1997, Comptroller General opinions that the United States 
is not legally liable to Amtrak's employees or other creditors should 
it file for bankruptcy.
    That conclusion is premised upon the fact that:
    Amtrak's organic legislation, the Rail Passenger Service Act of 
1970, provides that it is not a department, agency, or instrumentality 
of the United States;
    The United States has neither explicitly nor implicitly guaranteed 
any obligations of Amtrak; and the Federal Government does not in any 
way control the day-to-day operations of Amtrak. This is so even though 
the Board of Directors is essentially controlled by the Federal 
government, the Federal government holds Amtrak's preferred stock, and 
Amtrak receives operating and capital grants administered by the 
Federal Railroad Administration.
    To be legally liable in bankruptcy there needs to be some 
contractual relationship with a creditor or, at the very least, as 
indicated, some implicit guarantee of the debtor's (Amtrak's) 
obligations. There are none. For years the Supreme Court has maintained 
that absent some clear indication that the legislature intends to bind 
itself contractually, the presumption is that a law is not intended to 
create private contractual or vested rights, but merely declares a 
policy to be pursued until the legislature ordains otherwise.
    This is so because it is the function of a legislature to make laws 
and not make contracts. Moreover, unlike Amtrak which has no claim of 
sovereign immunity from suit since it is a for profit corporation, the 
United States has immunity under the bankruptcy laws unless by statute, 
it waives that immunity. In this regard, the only applicable waiver of 
sovereign immunity is under the Bankruptcy Act and then only to the 
extent that the United States is a creditor of the bankrupt. The United 
States is not.
    The equitable argument for imposing liability, which no doubt would 
be raised by Amtrak's employees and other creditors, rests on an 
assertion that the United States is the putative parent or agent of 
Amtrak and that is so because Congress:
    Created Amtrak;
    Endowed it with governmental powers;
    Keeps it afloat every year by subsidizing its losses;
    Otherwise provides it with its funding; and
    Left it insufficiently capitalized to meet its obligations.
    Additionally, the Federal government owns all its voting stock and 
appoints or approves all board members. Hence, under principles of 
corporate law known as ``piercing the corporate veil,'' the Federal 
government and Amtrak are one. These arguments, however, have 
previously been rejected.

    Mr. Wolf. You are currently reviewing Amtrak's progress on 
the high-speed rail and you covered that from New York City to 
Boston, but in that, if there are any delays and any penalties, 
and--we will just submit a whole series of these for the 
record.
    Have you found any delays in production of the high-speed 
rail trainsets? If so why did these delays occur? Are the 
delays so significant penalties will be imposed? Are there 
delays in construction and electrification work? If so, how did 
they occur? Do you believe Amtrak will meet the October 1999 
implementation date?
    [The information follows:]

    The trainsets are early in production but appear to be progressing 
on or close to schedule. Some components of the trains, including the 
air-conditioning system, are currently three months behind schedule, 
but Amtrak believes these delays will have no effect on the overall 
schedule for train production. As such, it would be premature to 
anticipate penalties based on late delivery.
    The electrification project has fallen three to four months behind 
schedule. These delays relate to contract management, field conditions, 
and safety issues. The contractor, in conjunction with Amtrak, has 
instituted several recovery plans which Amtrak believes will remedy the 
delays allowing Amtrak to begin high-speed service in October, 1999. 
The acting president and CEO of Amtrak has committed to starting 
service on that date, and it appears that Amtrak intends to take 
whatever steps are necessary to push its contractor to accelerate 
progress and meet this deadline.
    We will continue to monitor the progress of both the trainset and 
electrification contracts and keep the Committee informed of potential 
schedule or cost impacts these might have on the high-speed rail 
program.

             FEDERAL RAILROAD ADMINISTRATION SAFETY PROGRAM

    Mr. Wolf. In last year's hearings, the acting IG advised us 
your office would be conducting an audit of FRA's new safety 
inspection program toward the end of fiscal year 1997 to see if 
the program was working.
    Did you conduct that audit, and, if so, can you share the 
findings with us?
    Ms. Thompson. We are in the process, perhaps at midpoint, 
Mr. Chairman, of conducting that audit on what is known as the 
FRA Safety Assurance and Compliance Program. This was developed 
as kind of a systems approach by the FRA to correct the 
problems that are occurring in the railroads.
    Preliminarily, we are finding that the implementation of 
the SACP program, as it is known, is perhaps not as efficient 
as it could be and that they have not fully addressed the 
training of their own people on the SACP program. The 
inspectors for the FRA have not fully addressed the 
documentation requirements for recording the SACP process as 
they are out there doing the inspections. We are finding that 
there are some holes that do need to be addressed by FRA in 
order to make SACP a very viable program and get it up and 
running properly.
    Mr. Mead. I don't want to provide a bottom line answer to 
that question now until it is done. I know your bottom line 
question goes to, is this partnership more a collegial approach 
and the safety program effective and yielding substantial 
safety results?
    Mr. Wolf. Right, because we had yesterday the question with 
regard to the Union Pacific. There had been, I think, 10 people 
killed during the period of time, and we were just wondering if 
this has been a successful approach or an unsuccessful 
approach. But if you could just check that.
    Mr. Mead. That is the focus of it.
    [The information follows:]

    We will provide those results when the audit is completed.

                 FEDERAL TRANSIT ADMINISTRATION ISSUES

    Mr. Wolf. Your office recently concluded its audit on the 
FTA's Project Management Oversight Program. In your draft 
report, you identified 11 PMO-funded management activities for 
which, in your opinion, the use of PMO's was highly 
questionable. What were your final conclusions?
    Mr. Mead. The list initially provided, where we had 
reservations, was reduced in number. I take responsibility for 
that, and the reason was a question of whether the law allowed 
funds for what were basically general, broad management 
initiatives to be used on these projects; the law was not as 
clear as it could be.
    Mr. Wolf. Okay.
    Mr. Mead. It was not a question, Mr. Wolf, of the 
expenditures not being useful, it was a legal question. I think 
we have gotten things straightened out now with FTA, and Larry, 
do you want to add anything to that?
    Mr. Weintrob. I do think we have things straightened out, 
both where FTA has come in as well as with the requirements 
that the committee has levied on them and with their annual 
budget request listing those monies they are going to use and 
where they are going to use them.
    The confusion in the law and the interpretation in the law 
had to do with whether those funds could only be used with 
grantee-specific programs, as opposed to more generic FTA 
overall issues.
    Mr. Wolf. In your final report, you identified four 
management initiatives with links too indirect to specific 
projects or grantees for which Project Management Oversight 
funding is intended and said these activities should be funded 
through direct appropriations. These activities include the 
national transit database, turnkey demonstration oversight, 
drug and alcohol management information systems, and electronic 
grant-making activities.
    Are these activities proposed to be funded in fiscal year 
1999 from the PMO set-asides or from regular appropriations?
    Mr. Weintrob. We will have to check on that, sir, but in 
talking with the chief counsel of FTA on several issues, I find 
he has been on top of it. In fact, he has called us on two 
occasions to get our support for his rejection of some 
proposals that the folks at FTA wanted to make.

    Mr. Wolf. Are these activities proposed to be funded in fiscal year 
1999 from PMO set-asides or from regular appropriations?
    [The information follows:]
    FTA will use regular appropriations (e.g., Section 5314 funds), not 
PMO set-asides, to fund these activities.

    Mr. Wolf. Oh, he wants your support to help him?
    Mr. Weintrob. Yes, so I would take that as a good 
indication they are monitoring it much closer.
    Mr. Wolf. Well, that is a compliment. We have some others 
on that issue, but we will submit them for the record.
    Do you share FTA's opinion that 7 of the 11 
managementactivities meet the eligibility criteria for PMO funding 
under a reasonable interpretation of section 23? Should funding for 
these management activities be funded through the PMO program, based on 
your interpretation of the law?
    [The information follows:]

    We reviewed FTA information and program documentation and 
found the seven management activities met the eligibility 
criteria for PMO funding under an expansive interpretation of 
sections 23 (a) and (h).

    Mr. Wolf. The committee requires that the FTA submit with 
its annual budget submission a detailed program plan by 
activity and detailed justifications of its oversight function. 
Are there any activities proposed in fiscal year 1999 to be 
funded from the PMO set-aside that you believe are not 
consistent with section 23?
    [The information follows:]

    No. FTA's FY 1999 budget request identifies $300,000 for 
PMO related to its Rail Control Technology initiative. This 
initiative is grantee specific and, in our opinion, is eligible 
for Section 23 funding. However, FTA advises us that $300,000 
was in error, and they are only requesting $150,000 in FY 1999, 
with the possibility of another $150,000 in FY 2000.

    Mr. Wolf. Has the FTA planned to set aside PMO funds in 
excess of planned requirements and obligations in fiscal year 
1999?
    [The information follows:]

    FTA's fiscal year (FY) 1999 Oversight Program Budget 
Justification showed it has not planned to set aside PMO funds 
in excess of planned requirements and obligations. However, our 
review of documentation provided by FTA, disclosing obligations 
to date, shows FTA may not succeed in obligating available FY 
1998 funds and will carryover excess set aside PMO funds to FY 
1999. FTA has only obligated $20.2 million as of February 23, 
1998, leaving $15.7 million to be obligated in FY 1998. In FY 
1999, FTA plans to set aside an additional $27 million. If FTA 
carries over substantial funds from FY 1998, then the FY 1999 
set aside will exceed planned requirements and obligations.

                     los angeles metrorail project

    Mr. Wolf. The general manager and the board of the Los 
Angeles County Metropolitan Transportation Authority recently 
suspended work on the Eastside and Mid-City and downtown-to-
Pasadena rail extensions until the agency can overcome the 
disarray of its finances and the costly disorganization in its 
construction program. In your opinion, is this the appropriate 
action for the general manager and the board to take, and 
should Congress endorse their recommendations?
    Mr. Mead. Yes, I do think so; this is truly a case where 
Julian Burke, the CEO, and Mayor Riordan have come together and 
made some important decisions and recommendations that deserve 
support. I do not see how the several rail extensions in the 
project could move forward concurrently. I don't see where the 
money is to pay for that scenario.
    Mr. Wolf. Last year, Congress provided a total of 
$61,500,000 for the Los Angeles metrorail project, of which $24 
million is for the Eastside extension. None of these funds are 
available until after the LACMTA produces a financially 
constrained recovery plan which complies with the consent 
decree for enhanced bus service and that plan is accepted by 
the FTA and reviewed by the IG, the GAO, and the committee.
    When do you believe the LACMTA will complete its recovery 
plan and forward it to the FTA?
    Mr. Mead. I am hoping within the next 2 months.
    Mr. Wolf. That is important because they had a 6-month 
delay; right?
    Mr. Mead. Yes. In fact, next week, we are going out to Los 
Angeles to establish the parameters of the contents of that 
recovery plan. By parameters, I mean what the recovery plan 
will include. The parameters established will be the outline of 
what will be submitted to the FTA and it is important that we 
get a consensus on that up front.
    Mr. Wolf. The next question is really a political question 
and an LACMTA question. But in December of 1997, the Los 
Angeles MTA CEO acknowledged that MTA does not have revenue 
sources to fund all bus and rail projects. The CEO therefore 
recommended suspending the Eastside and Mid-City extensions of 
the Red Line segment 3 and the non-federally-funded Blue Line 
to Pasadena. He recommended completing segment 2 in the North 
Hollywood extension of segment 3.
    Do you think that is the best option?
    Mr. Mead. Yes, sir. And it is going to be a close call just 
to cover the costs of that.
    Mr. Wolf. Is the current Hollywood/North Hollywood segment 
within budget and on schedule?
    Ms. Thompson. Yes, but I think that segment has a little 
bit of slippage, maybe as much as a couple months. However, for 
all intents and purposes, they are on schedule. And if LACMTA 
gets their funding, they are on target with the dollars as 
well.
    Mr. Wolf. Again, this is a political issue we get into, but 
just to get your comments, given the recommended construction 
cost for the Eastside and Mid-City projects, in your opinion, 
should a $24 million set-aside in fiscal year 1998 
appropriation for Eastside be made available for the North 
Hollywood project? That is policy, I understand that.
    Mr. Mead. Well, it is very clear that making that funding 
available for North Hollywood would make the financial recovery 
plan easier to meet.
    However, I think the situation in Los Angeles is such that 
LACMTA would want a place holder for the $24 million and would 
also want the full funding agreement. Then, when they are ready 
to resume the postponed projects and have a good financial plan 
in order, they would not have to come back to Congress and 
stand in line for the money. That is how I think the issue has 
to be viewed.
    Mr. Wolf. We are going to take a break for about 15 minutes 
and go vote. But my sense is, I am sympathetic to the people on 
the Eastside. I think you need a full system, and I don't know 
how the committee would do it, but working with Mr. Pastor--or 
with Mr. Torres and Mr. Dixon, I think they need transportation 
as well as the others. There may be some mechanism.
    There was a bus system in Curritiba, Brazil, which is not 
really a bus system, because when you use buses, you think in 
terms of standing in line. It is a rail system on wheels, a 
fixed guideway. I don't know how the committee would do it, but 
we, I think, would be sympathetic to doing something that 
balanced out to make sure that every area was treated fairly.
    Maybe you are saying about North Hollywood that it is all 
you can afford, but you might do a fixed guideway to the other 
area; that is really their decision. Our decision gets into 
costs and overruns and the problems and things like that. But I 
understand how you can do this in perhaps different creative 
ways, and I don't think our mind should be limited by what is 
out there today. There may be some other creative things that 
really help the people of all regions that help them get 
together and integrate a system that helps them very well.
    Mr. Mead. I think LACMTA and Mr. Burke and others should be 
commended, and not penalized, for making a fiscally prudent 
decision.
    Mr. Wolf. I agree. I commend the mayor and all the city 
council people on all they did. I think they are being very, 
very realistic.
    Mr. Wolf. The hiatus in the rail construction program is 
currently slated for six months. Do you believe a lengthier 
delay is warranted?
    [The information follows:]

    OIG believes a lengthier delay is not only warranted but likely. 
LACMTA's Chief Executive Officer had recommended a suspension of the 
extensions until the North Hollywood extension of MOS 3 was completed 
in fiscal year 2000. However, the LACMTA Board changed the suspension 
period to 6 months pending a staff review of the agency's finances. 
Given the shortfall of funds and the requirements of the bus consent 
decree, it is highly unlikely the East Side and Mid-City extensions 
will be re-started at the end of the 6-month hiatus. Whether they can 
be re-started even in the next 4 years appears doubtful. LACMTA is 
still facing a capital shortfall of over $500 million through fiscal 
year 2004. FTA's Financial Management Oversight consultant concluded 
that meaningful advancement of the three rail lines was extremely 
unlikely through 2004.
    Mr. Wolf. At this point in time, can the LACMTA produce such a 
financially constrained recovery plan which complies with the consent 
decree for enhanced bus service and continues either the Eastside or 
Mid-City rail extensions?
    [The information follows:]
    Given the following financial challenges and the lack of current 
funding sources, it is unlikely LACMTA can at this point in time 
produce a financially constrained plan that would continue the East 
Side and Mid-City extensions.
    LACMTA faced a $1.3 billion shortfall in its capital budget 
forecast through fiscal year 2004. Even after suspension of the three 
rail lines, the capital funding shortfall would be over $500 million. 
Furthermore, according to LACMTA's own projections, the ``operating'' 
budget would have a shortfall of nearly $200 million by fiscal year 
2004 and would increase to approximately $1.5 billion in fiscal year 
2013 if the agency built only one additional rail line. LACMTA needs to 
achieve efficiencies in the operating budget of roughly $100 million 
per year in order to erase the deficit. As a result, there is a high 
risk the agency would be financially strained to operate the rail 
system if the operating efficiencies were not met. In addition, LACMTA 
has a court-ordered consent decree to improve the city's bus service, a 
program which will cost the agency over $1 billion through fiscal year 
2013.

                       faa budget execution audit

    Mr. Wolf. The subcommittee recently requested your office 
to look into deficiencies in budget execution controls at FAA. 
I know it is early to ask you for a report, but have you found 
any indications so far of problems in this area which you might 
share today?
    [The information follows:]

    We are not far enough along to have even preliminary 
indications of problems. If we do identify problems, we will 
bring them to the attention of the FAA Administrator and the 
subcommittee.

                             fhwa--controls

    Mr. Wolf. The GAO has reviewed the revised financial plan 
and has indicated that the remaining costs to complete the 
project total some $5.6 billion and that net project costs 
total $10.8 billion. In your opinion, have the Department and 
the Federal Highway Administration fully exercised their 
authority and ability to control costs on this federally-
financed project?
    [The information follows:]

    No. Our ongoing audits have disclosed the need for FHWA to 
strengthen its control of Project costs in a number of areas. 
We have long maintained that Federal funds should not be used 
to pay for inefficiencies resulting from local Project 
decisions not supported for demonstrated need and not eligible 
for Federal participation. For example, our recent audit 
disclosed FHWA participated in certain costs to relocate a 
utility company's transformer substation. Two independent 
assessments identified approximately $10 million, of the $43.7 
million relocation and construction costs, as ``betterments,'' 
not eligible for Federal participation. FHWA, however, accepted 
a total recovery of only $2.6 million of the $10 million. A 
similar situation was disclosed in our review of the State's 
exclusive use of police to direct motorists at construction 
sites. Again, this represented part of a pattern by the State 
of engaging in costly practices shaped by local political and 
economic pressures, when less expensive and more efficient 
means are available to accomplish requirements.

    Mr. Wolf. Your audit indicated that FHWA did not determine 
whether certain improvements, or ``betterments,'' associated 
with the Cypress Freeway replacement project in California were 
economically justified. These betterments included replacing 
the 1.5-mile, 2-tier highway with 5 miles of single-tier 
freeway while adding new interchanges to improve access to 
local streets and port facilities. Is it your opinion that 
certain costs associated with the Cypress Freeway replacement 
project are ineligible for emergency relief funds?
    [The information follows:]

    Yes. Betterments that are not economically justified to 
prevent future damage are not eligible for funding through the 
Emergency Relief Program, but may be funded through regular 
apportioned Federal-aid. We are of the opinion that FHWA should 
have deomonstrated that the betterments included in the Cypress 
Replacement Project were so justified, or they should have 
limited the use of emergency relief funds to the cost of 
replacing the necessary aspects of the freeway, and betterments 
needed to prevent future damage from natural disaster.

                         amtrak cost-accounting

    Mr. Wolf. There is a lot of talk about the FAA not having a 
cost accounting system which enables them to see exactly what 
their services cost. FAA is now developing such a system. Does 
Amtrak have a similar problem, or is their cost accounting good 
enough to help inform decision-makers on which services are the 
most cost effective?
    [The information follows:]

    As requested in the Amtrak Reform and Accountability Act of 
1997, our office will oversee an independent assessment of 
Amtrak's financial needs and financial status. As part of this 
review, we have asked the contractor to look at how Amtrak 
allocates costs and revenues over and among its various 
business operations, and to determine whether these are 
accurate, appropriate and reasonable. If and where the 
contractor disagrees with Amtrak's methods of allocating costs, 
it will propose alternative means which it believes are more 
accurate.
    The independent assessment should identify weaknesses in 
Amtrak's cost accounting system and provide a foundation for 
developing a more accurate system.

    Mr. Wolf. Let us take an adjournment for about 15 minutes. 
There will be two votes, and then I will be back and we will 
conclude.
    [Recess.]

                     jfk airport light rail project

    Mr. Wolf. Welcome. We have just a few more questions. There 
is going to be another vote in a little while. Hopefully we can 
finish before that.
    New York/JFK Airport, fixed guideway, revenue diversion. As 
you know, the New York-New Jersey Port Authority submitted an 
application to impose and use a PFC for a $1.6 billion light 
rail system at JFK Airport. If approved, this would be one of 
the largest surface transportation projects in the country. 
Furthermore, the approval of the application might become a 
precedent for an array of airport projects whose proponents 
will justify them as enhancing the capacity of the air 
transportation system. You issued a management advisory 
concerning the JFK application. What are your concerns?
    Mr. Mead. That this will not be the only project of its 
type, and that we need a policy about when we should approve 
passenger facility charges--which are, of course, imposed on 
people that are traveling in the aviation system--for these 
land-side projects.
    Mr. Wolf.  The staff tells me that it was approved this 
week.
    Mr. Mead. Yes, it was.
    Mr. Wolf. All the money is going to come from PFCs?
    Mr. Mead. Most of it. There is no federal surface 
transportation money going to this project. Over $1 billion of 
the project will be paid for through a PFC. It is a land-side 
project. Part of it is a circulator at the airport itself, and 
there is precedent for that.
    Mr. Wolf. The staff said that maybe the airport will not 
come in and ask for any more AIP grants, or will they come in 
and ask for AIP grants based on the fact of these PFCs? The 
documentation would indicate that the system, and I think New 
York makes decisions for New York, although we did go through 
this with Denver and with the BART system, if you recall, that 
it would consume all PFC-imposed revenues for LaGuardia and 
Newark as well as JFK through the year 2009. Is that accurate?
    Mr. Mead. That is correct. They will sustain a reduction in 
AIPs. The Administrator received our advisory on the 21st. On 
the 23rd she wrote to the port authority. Soon thereafter the 
port authority responded. A fair reading of the port 
authority's response is a commitment to fund all of the capital 
projects: the air-side capital projects, and safety and 
congestion relief project, that were in their capital plan. But 
it seems to us that you need a policy for this type of PFC 
expenditure. For example, take the Dulles access road.
    Mr. Wolf. We are next. We are going to get enough money to 
get the sleek system straight out to Dulles.
    Mr. Mead. After you get rid of those trams----
    Mr. Wolf. Hooray for LaGuardia and New York. It sets a 
precedent for us. I am just teasing. I am kind of joking.
    I think, frankly, you have got to admit, New York has a 
terrific traffic problem, and to get to the airport is very, 
very difficult. I respect that, but we were concerned with 
regard to the precedent that is set, and we will take a look at 
what they say.
    Also if it would consume all of the PFCs to the year 2009, 
what would the impact be on airport safety and security and 
also congestion? I guess that is a question that maybe you all 
cannot answer, but do you have any comments on it?
    Mr. Mead. I would tell you that what Port Authority 
officials have will essentially be nonexistent because they 
assure us they have enough money from other sources and 
commitments to fund airport safety and security and congestion. 
As to the question about why on a surface transportation 
project in the spirit of intermodalism, there is no surface 
transportation contribution, they said they don't have any 
surface transportation money.
    Mr. Wolf. Well, if it is all coming out of PFCs, I guess I 
can see both sides of it, obviously. I can see that they do 
have a significant transportation problem in New York City, and 
that is a fact. If you have ever tried to get out to the 
airport at 4 o'clock in the afternoon, it is tough.
    On the other hand, what will the impact be on these other 
things? What you seem to be saying is that they really have to 
come up with a policy. The FAA needs to come up with a policy.
    Mr. Mead. Yes, sir. It is not our place to make a judgment 
as to what that policy ought to be, just that there ought to be 
one. A great deal of money is involved here.
    Mr. Wolf. Because you were involved in the BART thing, or 
your office was involved in the BART thing. I did not know that 
it had been granted yesterday.

                 basis for transit funding allocations

    There is a great increase in interest by Members in funding 
fixed guideway mass transit projects. Has there been any 
evaluation whether funding decisions are based on accurate 
demographics or reliable ridership projections?
    Mr. Mead. We haven't done one.
    Mr. DeCarli. There have been some in the past but nothing 
recent. I think the last one I saw was probably 5 or 6 years 
ago, and the indication at that point in time was the traffic 
projections were consistently grossly overstated.
    Mr. Wolf. What additional process does FTA need to put in 
place to ensure that in such a competitive environment, funding 
decisions are made which are supported by the strongest 
economic analysis?
    Mr. DeCarli. We honestly haven't looked at that part of the 
decision-making process. Most of the funding that has taken 
place on those kinds of projects has been included and 
specifically identified in the appropriations request, so 
Congress and the administration are basically jointly agreeing 
that those are the chosen projects. We have not looked at the 
criteria.
    Mr. Mead. In other words, if most all of the pot will be 
earmarked, to what will you apply this type of analysis? That 
would be the question.
    Mr. Wolf. Yes.

              NEW YORK/JFK AIRPORT FIXED GUIDEWAY PROJECT

    Mr. Wolf. The Port Authority's documentation indicates that the 
light rail system is expected to consume all PFV-imposed revenue for 
LaGuardia and Newark as well as JFK through at least the year 2009. 
Will this result in delays and postponements of airside projects which 
will have a direct impact on airport safety, congestion and security?
    [The information follows:]
    Funding for future airside projects was addressed in our January 
21, 1998 management advisory to FAA on the New York and New Jersey Port 
Authority's application to use PFCs at JFK. We recommended FAA direct 
the Port Authority to address the following decisional elements:
    The extent to which the light rail project is likely to result in 
additional air transport passengers;
    That sufficient funding is available to meet the capital needs of 
airside projects through the year 2009; and
    Whether cost-sharing or the use of surface transportation funds to 
finance at least part of what is essentially a surface transportation 
project is appropriate in this instance.
    In a January 23, 1998 letter to the Federal aviation administrator, 
the New York and New Jersey Port Authority assured the administrator 
that all its airside projects are fuly funded and will proceed 
according to its Capital Improvement Plan schedule.

                    USE OF PFCS FOR TRANSIT PROJECTS

    Mr. Wolf. Clearly, the FAA has failed to enunciate a well-defined 
policy about the eligible uses of PFCs and airport revenue for transit 
projects, and appears to apply eligibility standards on an ad hoc 
basis. You will recall similar issues were raised during consideration 
of the BART extension to the San Francisco Airport. Why has the FAA 
been unable to define a policy for the appropriate use of PFC and other 
airport revenue? What has been taking so long?
    [The information follows:]
    We are not certain why FAA has not articulated a comprehensive 
policy or criteria for use of PFCs for landside projects. FAA has 
published Order 5100.38A, issued October 24, 1989, which contains some 
guidance as to what constitutes an eligible landside project. According 
to the order, access roads are eligible projects provided they are 
located on the airport or within a right-of-way acquired by the airport 
sponsor and the access road serves exclusively airport traffic. It 
further provides that rapid transit facilities within the airport 
boundary that are necessary to provide a connection to a rapid transit 
system may be eligible if that system would primarily serve the 
airport.

                   denver transit project to airport

    Mr. Wolf. In the conference report accompanying the fiscal 
year 1998 Transportation Appropriations Act, the conferees 
expressed their concerns that the City of Denver may be 
considering the diversion of airport revenues to buy rights-of-
way from the Union Pacific Railroad for a rail extension to the 
airport and directed the IG to review the situation.
    What have you concluded so far?
    Mr. Weintrob. We have recently begun that particular audit. 
So far we have found out that there are preliminary indications 
of some revenue diversion. We are at a fairly early stage. We 
have identified some diversion. We also know there is a good 
deal of money going from DIA to help market the old Stapleton 
and make it attractive. I believe that preliminarily we are 
finding that the money to market Stapleton is over what the 
original estimates said that amount would be.
    Mr. Wolf. I think the record shows that if you ever want to 
build an airport, it is helpful to have the Secretary of 
Transportation be from that area. There was tremendous pressure 
on the FAA during the whole period when Mr. Pena was the 
Secretary with regard to all of these things, and now you tell 
us they are using money from Denver International, where the 
gates are probably the highest cost anywhere in the country, 
and then you are using those funds to promote Stapleton. 
Stapleton, promoting to do what?
    Mr. Weintrob. Buy it up and sell it and get the money back. 
It is supposed to come back to the airport.

                    advanced technology transit bus

    Mr. Wolf. On the advanced technology transit bus, a year 
ago you issued an audit of FTAs advanced technology transit 
bus. You concluded that, notwithstanding the high cost of the 
development project, $47.3 million thus far, FTA could not show 
the ATTB would be more cost-effective or safer than those on 
the roads today. In particular, your audit raised questions 
about the adequacy of the life cycle cost estimates for the 
ATTB.
    What has FTA done to respond to these concerns and whencan 
the committee expect a comprehensive life cycle cost analysis to be 
completed?
    Mr. Weintrob. I can't answer the question about when they 
will have a life cycle cost completed. FTA did commit to have 
these buses tested at the bus testing facilities that FTA uses 
before they are put into revenue service, even for 
demonstration purposes. We haven't done a follow-up audit yet, 
so we don't have any details on it.

                      departmental reorganization

    Mr. Wolf. In regard to Office of the Secretary issues, in 
your most recent semiannual report, you stated, ``DOT needs to 
develop an appropriate management structure to achieve the most 
cost effective delivery of services.''
    What specific reorganizations are needed? A lot?
    Mr. DeCarli. Well, that, Mr. Chairman, reflects on the 
field structure of the department. Once again, a couple of 
years ago this committee took $25 million from the Department 
of Transportation in an effort to change the field structure. A 
lot of those cuts filtered down and in fact did not have any 
impact on the field structure at all.
    Mr. Wolf. The Federal Highway Administration hasn't changed 
anything yet.
    Mr. DeCarli. That is correct. They are still thinking about 
where they ought to take their field structure.
    Mr. Wolf. That was 4 years ago.
    Mr. DeCarli. That was the issue about how the department 
ought to be structured. If you look, there are personnel 
offices and various administrative functions that duplicate 
each other, and it is a question of how you can pull those 
together.
    Mr. Mead. I am sorry for my silence. I was trying to tie 
the question to something else. But on the regional office 
issue, there is a draft proposal. A weakness in it is how much 
savings is the restructuring expected to accrue and when will 
it happen? So without those two elements, the draft plan they 
have--and I don't know if it has been shared with the staff 
here or not--is weak. FHWA needs to say when it is going to do 
it and how much they think it is going to save.

                        safety as a dot priority

    Mr. Wolf. The last question on this, from a number of your 
audits it appears that almost all of the DOT agencies are 
negligent or lax in firmly enforcing their safety regulations. 
In a question for the record of last year's hearing, your 
office wrote, ``The perception by DOT safety inspectors 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.'' Has Secretary 
Slater made such a pronouncement?
    Mr. Mead. The Secretary repeatedly says that safety is his 
number one priority. I can tell you that from the standpoint of 
our Inspector General operation, he has reinforced that. 
Before, in my oral summation, I mentioned that a very high 
priority area for us is motor carriers, the falsification of 
driver's licenses and the falsification of hours of service. I 
don't mean by one or two hours, I mean highly consequential 
violations. We have over 20 criminal investigations ongoing 
right now.
    I did not know about the response to that question for the 
record. I have to follow up on it.
    Mr. DeCarli. I think I can add to that. I have personally 
been at senior staff meetings with the Secretary where he has 
made it very clear what his expectations were in the safety 
arena, and that included enforcement. I think he has been 
pretty straightforward on that issue, and very forceful in 
talking to the modal administrators on what his expectations 
were.
    Mr. Wolf. The last two questions for the day deal with the 
Highway Trust Fund and revenues. We have heard that in an 
ongoing audit of the Highway Trust Fund financial statement, 
your auditors have raised a concern that the Department of 
Treasury may not have an accurate understanding of how much 
money is in the trust fund because of deficiencies at the IRS. 
Would you explain this concern to us?
    The second part of the question is, how much could the 
trust fund balance be off?
    Mr. Mead. Yes, I understand your question. The first 
question is what is the problem? And the second part is, so 
what?
    The problem seems to be that the Internal Revenue Service 
receives reports of gas tax collections that ultimately go to 
the trust fund. An office in the Treasury Department makes 
estimates which are given to main Treasury. The estimates that 
main Treasury is given come to us, to the department, and they 
are certified as the balance for the Highway Trust Fund and the 
receipts that are creditable to the trust fund.
    The General Accounting Office is conducting an audit of the 
Treasury under the Chief Financial Officer's Act, trying to 
determine if the Treasury estimates could be validated and if 
there was documentary support behind them.
    We are advised that the General Accounting Office has 
serious difficulties of validating those estimates. That means 
that when we, the office of Inspector General, have to certify 
to the financial statements of the department, we must do so 
for the Highway Trust Fund. If we do not have assurances that 
the balance of receipts is reasonably accurate, we cannot 
certify. I cannot give an unqualified opinion that the trust 
fund has as much money in it and the right amount of money 
being credited to it as is being claimed. So we are dependent 
on GAO and the Treasury Department to straighten this out.
    How much money is involved? We do not know. It could be an 
excess issue, it could be an undercount.
    Mr. Wolf. Do you think it has been overstated or 
understated?
    Mr. Mead. I think it has been overstated.
    Mr. Wolf. This is a big issue up here. Let us have 
something on that for the record.

    DOT is required to report, in its financial statement, the 
financial activity for four DOT Trust Funds--Highway, Airport 
and Airway, Oil Spill Liability, and Aquatic Resources. The 
Department of Treasury, not DOT, has control over the 
collection, reporting, and investment of the excise tax revenue 
for these Trust Funds. Excise tax revenue is received daily, 
while supporting information (tax returns) on how the revenue 
should be distributed is submitted generally quarterly. 
Therefore, Treasury estimates the initial distribution of this 
revenue. Subsequently, the Internal Revenue Service (IRS) uses 
the tax returns to certify the amount that should have been 
transferred, and Treasury makes the appropriate adjustment. 
Neither the Treasury OIG or the General Accounting Office have 
audited the process Treasury uses to estimate the initial 
distribution of excise tax revenue, or IRS's certification 
process. The fiscal year excise tax revenue for the Trust 
Funds, as reported by Treasury, is a combination of actual and 
estimated excise tax revenue, and adjustment to the estimates.
    Since September 1995, the actual quarterly excise tax 
revenues, certified by IRS, for the Highway Trust Fund (HTF) 
have fluctuated greatly from the estimates, ranging from an 
understatement of $903 million to an overstatement of $638 
million. Errors in the reporting of actual/estimated excise tax 
revenue could result in a similar problem which occurred in FY 
1994 when a Treasury clerical error understated HTF revenue by 
$1.59 billion.

    Mr. Mead. It is mentioned in the prepared statement, I 
mention it in the oral statement. I want to elevate this, 
because I think it deserves attention. This is totally external 
to the DOT. We are in a sense hostage to the Treasury 
Department determination.
    Mr. Wolf. I have not read your full statement. But I will.
    Mr. Mead. When GAO comes up this afternoon, Mr. Wolf, they 
may be in a position to give you a number but we are very 
concerned about it. We are working with GAO. But it is going to 
require a high level of attention. The Deputy Secretary is 
aware of this and so is the Secretary.
    Something like this happened several years ago, and it 
amounted to a couple billion dollars.
    Mr. Wolf. A couple billion dollars?
    Mr. Mead. So that is why I don't want to mislead the 
committee into saying this is just an issue of a few hundred 
thousand dollars.
    Mr. Weintrob. It is important to say were it not for the 
question of this number, and us not being able to rely on this 
number, everything else we have seen in the department with 
regards to the Highway Trust Fund is accurate and most likely 
Federal highways will get on their statements an unqualified 
opinion as they did last year.
    Mr. Mead. Mr. Chairman, you will recall also something like 
this happened on aviation, in which the Treasury Department was 
crediting billions of dollars that they did not have, and as a 
result of that, Congress had to move up its timetable for 
reauthorizing the aviation taxes. My recollection is Congress 
had not planned to do that for several more months, and when 
they learned there was little money left in the Aviation Trust 
Fund, they had to do something quickly.

                            closing remarks

    Mr. Wolf. Okay. Well, I appreciate your testimony very, 
very much. I just want the record to show that I and the 
Members of the committee appreciate so much you and your staff, 
the degree of professionalism, the degree of honesty, the 
degree of candor, and also, in an appropriate way, not to 
attack other people or seek a headline. We haven't tried to 
make headlines here, but just good, honest information that 
helps us.
    I think the Secretary should be commended for selecting you 
for the job, because I think it strengthens him and his 
operation of the department and the operation of all of his 
people. So I do appreciate it very, very much. You can take 
back to the people who are not here from your office how much 
we appreciate it. We will submit a number of other questions. 
It is 1 o'clock and we are going to vote soon. We will submit a 
number of other questions for the record, and thank you very 
much.
    Mr. Mead. Thank you very much, and, for the staff too, your 
comments, we will pass those on.


[Pages 560 - 677--The official Committee record contains additional material here.]



                                       Thursday, February 12, 1998.

                     U.S. GENERAL ACCOUNTING OFFICE

                               WITNESSES

JOHN H. ANDERSON, JR., DIRECTOR FOR TRANSPORTATION ISSUES, RESOURCES 
    COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION
JOEL WILLEMSSEN, DIRECTOR FOR CIVIL AGENCIES INFORMATION SYSTEMS
JOSEPH CHRISTOFF, ASSISTANT DIRECTOR
ROBERT LEVIN, ASSISTANT DIRECTOR
JAMES RATZENBERGER, ASSISTANT DIRECTOR
MARNIE SHAUL, ASSISTANT DIRECTOR
RONALD STOUFFER, ASSISTANT DIRECTOR
ROBERT WHITE, ASSISTANT DIRECTOR
RANDALL WILLIAMSON, ASSISTANT DIRECTOR

                          Introductory Remarks

    Mr. Wolf. Welcome to the Committee. We appreciate your 
coming up. Your full testimony will appear in the record as 
read, and you can proceed as you see fit.
    Mr. Anderson. All right. Thank you, Mr. Wolf. I am pleased 
to be here today to discuss some important challenges facing 
the Department of Transportation in 1999 and beyond.
    With me are the cast of characters that are responsible for 
the bulk of work that GAO does for you in the transportation 
area, and I will just introduce them. First, on my right is 
Joel Willemssen. He is responsible for reviewing DOT's year 
2000 problems, along with year 2000 issues at other Federal 
agencies.
    I also have my assistant directors who head up the work we 
do in the various areas, Joe Christoff, Bob Levin, Jim 
Ratzenberger, Marnie Shaul, Ron Stouffer, Bob White, and Randy 
Williamson. And I will summarize my statement and ask that the 
entire statement be entered into the record.

                    surface transportation programs

    First, I will discuss the Department's challenges in 
managing its surface transportation programs. Improved 
oversight of highway and transit projects, costing hundreds of 
millions to billions of dollars, is needed to ensure that they 
are well managed, can be successfully financed, and costs are 
controlled.
    At your request, Mr. Chairman, we have reviewed the cost 
and financing of eight major infrastructure projects that are 
estimated to cost a total of $23 billion, and that report is 
being issued to you today. We found that cost increases, 
schedule delays, and financing problems continue to be 
associated with most of these projects. For example, regarding 
the Los Angeles Red Line subway, construction has been 
suspended for at least 6 months on two key extensions because 
of severe financial difficulties.
    Second, DOT's budget calls for accelerating the deployment 
of intelligent transportation systems. Before widespread 
deployment can occur, however, major obstacles such as the lack 
of technical knowledge at the State and local level need to be 
addressed.
    Third, we have testified before this subcommittee that DOT 
could potentially save millions of dollars by reorganizing its 
extensive field office structure. DOT has begun to examine 
restructuring FHWA's nine regional offices and co-locating 160 
field offices at 50 sites. It is unclear, however, when any 
reorganizations will take place and whether any cost savings 
will result from these efforts.
    Additional challenges face the Department as it tries to 
achieve improvements in rail and highway safety. For example, 
10 rail accidents and collisions in the summer of 1997 have 
raised questions about the effectiveness of the Department's 
new rail safety program. In addition, the Department's efforts 
to use performance-based data to better target commercial 
carriers for safety reviews will be hampered by the lack of 
complete timely data from the States.

                    federal aviation administration

    I will now turn to the Federal Aviation Administration, 
which faces several formidable challenges. For example, FAA has 
been too slow in making its computer systems ready for the year 
2000. At its current pace, it will not make it in time. As a 
result, hundreds of computer systems that are critical to FAA's 
operations, such as monitoring and controlling air traffic, 
could fail to perform as needed. In addition, despite a number 
of assessments over the past year, a consensus does not exist 
regarding FAA's future funding needs or an appropriate 
financing mechanism.
    However, any estimate of those needs will likely increase 
as FAA confronts the challenge of preparing its computer 
systems for the year 2000, addresses cost growth associated 
with projects to modernize its aging air traffic control 
system, and implements security initiatives in response to the 
changing terrorist threat.
    Additional challenges face the agency in improving the 
safety of our aviation system. For example, FAA needs to 
improve its oversight of aircraft repair stations, enhance its 
guidance and oversight of pilot training and crew resource 
management--human resource management issues--and resolve data 
protection issues to enhance the usefulness of recorded flight 
data to improve safety.

                              coast guard

    Turning now to the Coast Guard, with a relatively flat 
budget in recent years, the Coast Guard will need to continue 
cost cutting efforts and achieve savings far beyond its 
accomplishments from recent streamlining efforts. Such efforts 
are particularly important as the organization embarks on a 
costly capital improvement program to replace or modernize its 
aging fleet of cutters and aircraft. This effort is estimated 
to cost as much as $15 billion over the next 20 years.
    Mr. Wolf. Did you say billion?
    Mr. Anderson. Yes. We have urged the Coast Guard to develop 
a more comprehensive strategy to achieve additional cost 
savings which may necessitate a fundamental reassessment of the 
agency's missions, goals, services, and customer needs. Such a 
reassessment could point to other cost-cutting measures, such 
as closing facilities and perhaps scaling back activities that 
will involve very difficult choices.

                                 amtrak

    Another area of continuing concern is Amtrak. Despite 
congressional action last year to improve Amtrak's financial 
health by injecting the corporation with $2.2 billion that may 
be used for capital improvements, Amtrak is still in a very 
precarious financial position and remains heavily dependent on 
Federal assistance.
    Amtrak's net loss for fiscal year 1997 was $762 million. 
DOT has requested $621 million for Amtrak's capital expenses 
but not funds for operating expenses in 1999. However, Amtrak's 
capital requirements go well beyond the amount proposed in 
DOT's budget and the $2.2 billion made available during 1998 
and 1999 by the Taxpayer Relief Act.
    Amtrak's ability to meet its capital needs could be further 
reduced to the extent that it uses a portion of the $2.2 
billion for expenses historically funded with operating 
subsidies. In our view, Amtrak will continue to require Federal 
financial support, both operating and capital, well into the 
future.

                 transportation department-wide issues

    Finally, DOT must confront Department-wide issues that 
affect its ability to effectively manage programs and address 
performance concerns. We have repeatedly pointed out serious 
problems with the Department's information resources and 
database management. These problems will be exacerbated by 
challenges facing the Department in addressing the year 2000 
problem.
    In addition, DOT needs to address the issue of unreliable 
financial management information due to problems with its 
financial reports, accounting systems and internal controls.
    And, finally, if DOT can develop more results-oriented, 
performance-based management information, as envisioned by the 
Government Performance and Results Act, this could lead to 
improvement in the return taxpayers receive for their 
investment in transportation programs. The Results Act provides 
DOT with a useful tool to improve its program management, 
address performance challenges, and enhance the quality of 
information needed for congressional oversight.
    That concludes my oral statement. I will be glad to answer 
questions.
    [The prepared statement of Mr. Anderson follows:]


[Pages 682 - 727--The official Committee record contains additional material here.]



                        highway trust fund audit

    Mr. Wolf. Thank you very much, Mr. Anderson.
    Let me just begin by thanking you and your very capable 
staff for the good work that you do. It has been very helpful 
to the committee over the many years to have both the GAO and 
the IG come up before our modal hearings. I don't know if other 
subcommittees use this service, but I think it has been very, 
very helpful. I think it has been good for the taxpayer. I 
think it has been good for the Congress. I think it has just 
been a very, very good thing. So I do want you and the people 
who are not with you today to know that we do appreciate it. I 
think the system has been very effective.
    We have a number of questions, and you raised a number of 
issues on the year 2000 and other things. We will get to them.
    We heard that an ongoing--and we mentioned this to Mr. Mead 
today, who is your predecessor--that in an ongoing audit of the 
Highway Trust Fund financial statement, your auditors have 
raised a concern that the Department of the Treasury may not 
have an accurate understanding of how much money is in the 
trust fund because of deficiencies at IRS.
    Would you explain that to us, and could you tell me how 
much money could the trust fund balance be off? This is very 
important.
    Mr. Anderson. Yes.
    Mr. Wolf. And we are going to need this relatively soon, 
because there is a great debate raging as to what do you do 
with the trust fund money.
    Mr. Anderson. Sure. We have an ongoing review right now, 
and I know that our Accounting and Information Management 
Division is planning on getting a report, I think, by the end 
of this month, to Ken Mead to let him know the results.
    So I can't really talk specifics. I know that they have 
found some errors.
    Mr. Wolf. How much could it be off?
    [The information follows:]

    Our procedures were designed to assist the IG's in 
assessing controls surrounding the collection and allocation of 
excise taxes to various trust funds. Our work was not designed 
to determine whether the balances in the funds were correct or 
not--that overall determination must be made by the IG. 
However, we did determine that there are some serious control 
problems related to the whole process. Therefore, the potential 
for the balance to be misstated certainly exists. I understand 
that the DOT IG's report is expected to be issued in early 
March.

                  boston central artery/tunnel project

    Mr. Wolf. Your testimony indicates that the net project 
costs and funding needs on the Big Dig have remained relatively 
constant in the 6 months since you reported on them last summer 
but that further cost increases of some magnitude are likely 
before the project is complete.
    Why are the construction costs still increasing despite 
additional actions taken by the State?
    Mr. Anderson. I think that there are just some things that, 
even though the State is taking a number of actions to try to 
control costs and reduce them, there are some increases that 
are occurring that they just can't control. They set some 
fairly stringent cost containment goals: such that if they 
don't incur any additional cost increases on their ongoing 
construction contracts, the 30-some additional construction 
contracts that they have left to award would have to grow by 
less than 1 percent over current estimates in order for them 
not to incur any additional cost increases.
    Mr. Wolf. Did you hear--this is not necessarily a question. 
We asked the IG today, the head of the Big Dig hired an outside 
coach to coach him for the CBS 60 Minutes.
    Mr. Anderson. I read those articles, yes. We didn't look 
into that at all, but I read those articles.
    Mr. Wolf. I understand that the State of Massachusetts did 
not have a cost containment program in effect until 1995. Since 
that time, the State has established aggressive goals to 
contain and control the project's construction. However, your 
report indicates that it is not meeting the goals. Are the 
goals too aggressive and too unrealistic?
    Mr. Anderson. You know, in discussions that my staff have 
had with the project staff and FHWA, there is always a little 
bit of honest disagreement about, well, should you set the 
goals real high in the hopes that you are going to be more 
successful?
    Clearly, they have not been successful in meeting their 
goals. They have set fairly high goals. They have recently 
reduced cost growth on on-going construction contracts, I 
believe, from 17 percent to about 14 percent or something like 
that. But they are still not meeting their goal of 10.7 
percent.
    [The information follows:]

    These goals form the basis for the cost estimate and finance plan. 
Last July we recommended that the state decouple its goals from its 
cost estimate. In other words, keep the aggressive goals to manage your 
contractors and try to hold costs down, but revise the cost estimate to 
be more realistic with respect to what the actual experience has been.

                      central artery finance plan

    Mr. Wolf. Your report indicates that the State's finance 
fund does not adequately consider how additional needs would be 
met if cost increases or funding is less than predicted. The 
recent finance plan includes a discussion of your 
recommendation and states that such contingencies were 
addressed in an earlier finance plan. Why is that discussion 
insufficient, and how has the Federal Highway Administration 
responded to your concerns?
    Mr. Anderson. Overall, we made a number of suggestions, and 
I know we spoke with your staff about some concerns we had with 
the latest finance plan, and I believe that they have taken 
into account many of our concerns. One of them that they 
haven't addressed, though, is this idea about having a 
contingency plan and what they are going to do if costs 
increase or funding is not sufficient.
    And I can understand from a political point of view, that 
they might want to keep close to the vest what their 
alternatives might be if costs increase and they have to get 
some more funds somewhere else. But we continue to believe that 
they need to disclose to the taxpayers and others that are 
interested in the project just what the risks are and what the 
possibilities are for dealing with it.

                             cost estimates

    Mr. Wolf. Your report further indicates that the Big Dig's 
cost estimate does not include the cost of borrowing. Borrowing 
costs for grant anticipation notes and other bridge financing 
are estimated to cost roughly $776 million. Why are the costs 
not included in the project's cost estimate?
    Mr. Anderson. This has been sort of a standard practice, I 
believe. FHWA does not require states to prepare total cost 
estimates for projects and none of the highway projects we 
looked at included this cost.
    Mr. Wolf. What about in transit projects?
    Mr. Anderson. In transit projects?
    Mr. Stouffer. Yes.
    Mr. Wolf. The interest is included in transit projects?
    Mr. Stouffer. The full funding grant agreement does lay out 
the interest charges in the FTA grants, right. This is the 
difference between FTA and FHWA.
    There is a difference between FHWA and FTA. FTA full 
funding grant agreements do outline or lay out the costs of 
borrowing. FHWA, as a matter of tradition, has not done that. 
One of the changes we were able to persuade FHWA and the state 
to make in their finance plan was to disclose the value of some 
of the borrowing costs and the fact that all borrowing costs 
were not included in the Big Dig cost estimate.
    Mr. Wolf. But it is close to a billion dollars?
    Mr. Stouffer. It could be.
    Mr. Wolf. Well, it would seem to me the recommendation 
ought to be enacted by the Federal Highway Administration so 
that we have total actual costs. On your credit cards, your 
interest is a cost, you have to pay for it, and it is something 
you have to budget in your overall monthly budget or else you 
are in trouble.
    Mr. Anderson. Right.
    Mr. Stouffer. One of the things that we point out in our 
February 1997 large dollar report is that FHWA has not defined 
what total costs are. That is one of the weaknesses in the 
system in terms of managing highway projects.

                  central artery total cost estimates

    Mr. Wolf. Well, ultimately what do you think the total 
costs of the Big Dig will be?
    Mr. Anderson. You know, Mr. Chairman, I wish I could tell 
you what that number was. I think it is likely to grow, and it 
is likely to grow in terms of hundreds of millions of dollars. 
They still have a number of construction contracts to award, 
and if they can't control their cost growth or find savings in 
other areas, it could potentially go up significantly.
    Mr. Wolf. If it does, what would that be in? What would we 
be talking about? How many billions of dollars?
    I mean overall, if you added these concerns to what the 
base is, what do you think the costs could be potentially?
    Mr. Anderson. There could be exposure, of up to another 
$400 million.
    Mr. Wolf. For a total of?
    Mr. Anderson. That would bring the total net cost to $11.2 
billion if they would go up that much, but there is no real way 
of knowing until the things actually happen. That is why I 
think it is a good idea to keep tracking, keep monitoring the 
project closely.

                         public relations cost

    Mr. Wolf. We have heard that they were going to hire a 
public relations firm to put the good image on. Do you think 
that should be paid by the Federal Highway Administration or 
any tax dollars, or do you think that should be paid out of a 
separate fund that is not----
    Mr. Anderson. You know I would have to look into that to 
find out whether or not that would be an authorized use of the 
funds. I really don't know whether that would be.
    Mr. Wolf. If you would supply that, if you could.
    Mr. Anderson. Okay.
    [The information follows:]

    In a February 20, 1998, letter FHWA informed the state that federal 
funds could only be used for public information activities that 
contributed to helping motorists and better moving traffic through 
construction areas, or activities that encouraged motorists to use 
alternate means of transportation during the construction. FHWA further 
told the state that federal funds could not be used for public 
information activities with any other objectives. However, according to 
the solicitation the state sent to prospective contractors, the goals 
of the 1-year, $2 million public information campaign are to increase 
awareness and public support for the Central Artery/Tunnel project, 
remind residents and businesses of the long-term benefits of the 
project (including new parks, playgrounds, and transit service), 
encourage residents to continue using downtown businesses and places of 
entertainment, and thank the public for its patience and understanding 
to date--as well as persuading motorists to use alternate means of 
transportation particularly during the construction.
    The project's public information campaign has not yet been 
designed; prospective firms have submitted proposals and Massachusetts 
plans to award a contract to one of these firms in mid to late March 
1998. FHWA has informed the state that it reserves the right to review 
each element of the program once it is designed to verify that it meets 
the conditions laid out in its February 20, 1998, letter. State and 
FHWA officials told us that the state is prepared to use its own funds 
for those elements of the program that FHWA determines is not eligible 
for federal funding.

    Mr. Olver. Mr. Chairman.
    Mr. Wolf. Yes.
    Mr. Olver. If I may, if you are going to go on, would it be 
possible to just piggy-back on to a couple of things in 
relation to the Big Dig?
    Mr. Wolf. Yes. I was finished, and I was going to recognize 
Mr. Packard.
    Mr. Olver. Okay.
    Mr. Wolf. Mr. Packard.

                        alameda corridor project

    Mr. Packard. Thank you very much, Mr. Chairman.
    I apologize for not being here for your testimony. I have 
been holding hearings of my own, and it has interfered and 
conflicted. But I will read your testimony.
    I am pleased, Mr. Anderson, to hear the GAO's report on the 
Alameda corridor project, which is of great importance to 
southern California and to me, too, and to the Nation 
generally. I would like to underscore my deep commitment to the 
national significance of this project. It is expected to cost a 
significant amount. It is a 20-mile dedicated rail link.
    What is the status of the project, and what challenges do 
you find that it currently faces?
    Mr. Anderson. I think the biggest challenge that it faces 
right now is preparing for construction, I think it is supposed 
to start in 1999 and be completed by 2001--if I am correct on 
that, Joe.
    Mr. Christoff. Yes.
    Mr. Anderson. I think the biggest challenge is trying to 
meet that rather ambitious construction schedule. They are 
going to be using a design-build technique where they award the 
same contractor the contract to design and build the thing. 
And, you know, 10 miles of that project is going to be a trench 
that is going to be 30 feet deep and 50 feet wide, and there 
are problems that could come up in terms of hazardous 
materials, groundwater, electrical utility lines, and things 
like that that they are going to encounter. And I think that is 
probably the biggest unknown associated with the project.
    There is also some concern--I think MTA owes another $218 
million to help fund the project, and, you know, they are in 
dire straits.
    Mr. Packard. Is that not, though, a binding contract and 
thus they will have to come up with that--their share of that 
contract?
    Mr. Anderson. I understand that they are committed to it, 
yes.

                        Alameda Corridor Funding

    Mr. Packard. And from what source will those funds come?
    Mr. Anderson. I don't know.
    Joe?
    Mr. Christoff. It seems to be changing every month in terms 
of where MTA believes that it will be getting the funds. MTA 
official believe that of their $218 million commitments, $68 
million will come from revenue bonds based upon local 
Proposition C sales taxes, and they are hoping another $150 
million will come as a grant from the State that they could 
then pass on to the Alameda corridor.
    Mr. Packard. Okay. How will the IRS ruling limit segments 
of the project that can be financed through tax-exempt revenue 
bonds, and how will that affect the schedule?
    Mr. Anderson. Well, the IRS ruling, I think, could just 
drive up the long-term cost of financing the project because 
they won't be able to issue the, full amount of the project's 
bonds as tax-free bonds.
    Mr. Christoff. That is correct. The IRS is saying that 
there are certain parts of the Alameda corridor that are for 
public purposes like highways and therefore you can issue tax-
exempt bonds for these project segments.
    The rail line itself would be for private sector purposes, 
and must be financed with taxable bonds. So they are trying to 
figure out the mix of these $866 million in taxable and tax 
exempt, revenue bonds, and that would affect the long-term 
interest rates on the bonds.
    Mr. Packard. Has FHWA required a financing plan, and do you 
feel that one is necessary?
    Mr. Christoff. The Alameda corridor does have a preliminary 
finance plan, as required by the $400 million Federal loan 
agreement. It is a finance plan that is going to be constantly 
revised as project officials try to assess the IRS ruling.
    Mr. Packard. In your review, do you feel that the project 
is moving along then as it should and all the parts are coming 
together?
    Mr. Anderson. As far as we can tell right now. In fact, we 
toured the project last summer, and you can actually see a need 
for it. There is a lot of congestion that occurs along the 
corridor.
    Mr. Packard. And it could become a prototype for other 
places in the country, I would imagine.
    Mr. Anderson. Yes.
    Mr. Packard. Thank you very much, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Packard.
    Mr. Olver.

            boston central artery/tunnel project management

    Mr. Olver. Thank you, Mr. Chairman.
    I would like to go back and ask a couple of things about 
the Big Dig situation. Do you think that this project is well 
managed?
    Mr. Anderson. Yes. Overall, we can see that there is a 
concerted effort on the part of the folks involved with that 
project to try to keep the costs controlled and that sort of 
thing, yes.
    Mr. Olver. I think--I may have missed this, but did the 
chairman ask whether there had been a cost containment program 
in effect prior to 1995?
    Mr. Anderson. Yes.
    Mr. Olver. Or is this cost containment program a very 
recent thing?
    Mr. Anderson. No; I think they have had a cost containment 
program for some time.
    Mr. Olver. For some time?
    Mr. Anderson. Yes. I am not sure when they actually 
instituted it.
    [The information follows:

    Massachusetts did not have a formal cost containment program in 
place until 1995. Certainly they were doing things such as value 
engineering before that time; but a formal program with specific goals 
and strategies for managing costs was not instituted until 1995.

    Mr. Olver. So some of the changes you are seeing--by the 
way, you said that maybe $400 million or something like that 
was the number that might be expected as additional costs. That 
does not, apparently, include the $776 million, which is the 
borrowing costs of the anticipation notes.
    Mr. Anderson. That is correct.
    Mr. Olver. Which are not included, we have discovered, in 
these type of highway projects as opposed to transit projects.
    Mr. Anderson. That is correct.
    Mr. Olver. So would I be right in saying that we should 
expect the total costs to go up $1.2 billion? Or have I somehow 
missed something in here?
    Mr. Anderson. As sort of a standard operating procedure, 
none of the highway projects we looked at include the interest 
costs. So when you add those in, you are being unique with 
regard to the central artery. But yes, if you want to add 
those, you can.
    Mr. Olver. Okay. But whatever the costs are, are then--
whatever cost changes are here are not now attributable, in 
your view, to any kind of poor management, any kind of lack of 
management----
    Mr. Anderson. Not anything----
    Mr. Olver [continuing]. That has taken place?
    Mr. Anderson. Not anything that we have seen. These are 
unforeseen things that happen. You have construction problems 
that occur. Once you basically design, when you actually get in 
there and dig up the ground, you find some unique unexpected 
problems that increase costs.
    But we are not aware of any particular management problems 
or anything like that.
    Mr. Stouffer. No. In fact, over the past couple of years, 
management has worked very hard to come up with savings to 
offset the cost growth in the construction area. They have come 
up with about a billion dollars in savings to offset it against 
the construction costs growth.
    Mr. Olver. To the point where you are using this as a 
suggestion as to what we ought to be doing for other big 
projects in terms of the general mechanisms, the pattern of 
mechanisms?
    Mr. Anderson. Clearly. The cost containment processes that 
they are trying to use are things that should be emulated 
elsewhere, yes.
    I think our biggest concern with the Big Dig over the 3 
years or so that we have been looking at it for the chairman, 
is having more full disclosure in terms of the finance plan, in 
terms of what is at risk and what is the current total 
estimated cost of the project. And I think this finance plan, 
with the recent changes that have been made to it, comes much 
closer to it than ever before.
    Mr. Olver. Well, Mr. Chairman, given that I am from 
Massachusetts but from the far end of the State from where the 
Big Dig is, I can't but concur that it would be nice to know 
what the implications might be for us in this process. But it 
is also good to know that the project is managed well and that 
these cost changes which have occurred over time are not some 
error in that process.
    That is all. Thank you.
    Mr. Wolf. Thank you. Thank you, Mr. Olver.
    We have been a bit concerned, you know, about that. So what 
the committee did several years ago is to develop a 
relationship with the IG and the GAO and the Federal Highway on 
these large megaprojects to catch them, and we learned a lot 
from the Big Dig, and we are doing that on other ones.
    So I think that knowing that the IG and the GAO are going 
to be looking at it, I think, puts a certain incentive in for 
the Federal Highway Administration and for whatever project is 
involved. So it has worked very, very well.
    Do you have any other questions?
    Mr. Olver. No; that is all. Thank you, Mr. Chairman.

                 bart project to san francisco airport

    Mr. Wolf. Another large project is the BART extension to 
San Francisco. The project is estimated to cost $1.2 billion. 
Can you bring the committee up to date? We had asked you to 
look at this project, too.
    Mr. Anderson. Yes. Basically, this project has moved along 
considerably. The biggest question it faces now is that it is 
going to have some construction coming up, too. Some of the 
concerns in the past in terms of the negotiations with the 
airport and what were going to happen with some of those things 
have been resolved.
    Joe, do you want to expand on BART at all?
    Mr. Christoff. Since we talked about BART last year, the 
Federal Transit Administration signed a full funding grant 
agreement with BART in June of 1997 and committed the Federal 
Government to provide $750 million. Their big construction 
effort is going to begin this year. Next month, they are going 
to be signing four very important construction contracts that 
are expected to cost about $400 million.
    Our key concern is that BART's current finance plan comes 
up a bit short in terms of having a complete package. They have 
to have some additional short-term financing or debt financing. 
We are estimating that they will need an additional $30 million 
just for their short-term borrowing program, primarily to 
reflect the slower pace in receiving Federal appropriations 
than was expected under the full funding grant agreement and 
their current finance plan.

                 bart rights-of-way through cemeteries

    Mr. Wolf. The proposed alignment of the BART extension goes 
through cemeteries, we were told, in the area of Colma. These 
rights-of-ways were to be resolved in the legislation that 
passed both houses of the California legislature but were 
vetoed by the Governor. How will the issue be resolved, and how 
will it impact on both the schedule and the costs of the 
extension?
    Mr. Christoff. I think when we talked to BART about that 
just a couple of weeks ago, they are trying to resolve the 
cemetery issue.
    Mr. Wolf. Is it one cemetery?
    Mr. Christoff. I don't know. I am not certain.
    Mr. Wolf. I thought it was several cemeteries six of eight.
    Mr. Christoff. Six of eight?
    Mr. Wolf. Yes, so it is not just one.
    Mr. Christoff. We can look into that further.
    Mr. Wolf. Would you, please?
    Mr. Christoff. Sure.
    Mr. Wolf. I cut you off. You were finishing something.
    Mr. Christoff. No. I mean, when we talked about----
    Mr. Wolf. Do you have any indication of what it will do 
with regard to the schedule and the costs?
    Mr. Christoff. The schedule, I don't know. I don't know. I 
am sure it wouldn't affect the costs, but it might affect the 
schedule just in terms of the delays.
    Mr. Wolf. Well, if it affects the schedules it could affect 
the costs?
    Mr. Christoff. Yes.
    Mr. Wolf. If you could look at that and get back to us----
    Mr. Christoff. Certainly.
    Mr. Wolf [continuing]. Relatively soon before we move 
ahead.
    Mr. Christoff. Absolutely.
    [The information follows:]

    BART has reached agreement with all seven of the Colma Cemeteries 
for construction activities during the airport extension. The final 
agreement, with Cypress Lawn Cemetery, was completed in January 1998. 
BART agreed to shorten the construction time affecting the cemetery 
from 36 to 18 months, monitor cemetery irrigation wells, not disrupt 
services, and not harm cemetery structures such as historic mausoleums. 
Cypress Lawn Cemetery agreed to drop its lawsuit against BART, and 
there are no other lawsuits pending with the cemeteries. The airport 
extension completion date has not changed as a result of these 
agreements. BART must still complete its acquisition of right-of-way 
from the cemeteries.

                          bart cost estimates

    Mr. Wolf. How often are they required to submit the 
periodic cost estimates to FTA?
    Mr. Christoff. They are not. There is no requirement that a 
finance plan, for example, be updated. But BART does intend to 
update their finance plan in March, primarily for two reasons. 
Number one, their current finance plan is not reflective of 
what the full funding grant agreement says that they are to get 
from the federal government. It is overly optimistic. Second, 
once BART receives final bids on its construction contracts, it 
is going to tell them how accurate their estimates were. So 
they are going to have to update that finance plan, and they 
intend to do so in March.
    Mr. Wolf. They are going to do it, but they are not 
required, is that it?
    Mr. Christoff. Correct. All recipients of full funding 
grant agreements are required to work with the Federal Transit 
Administration and submit quarterly reports about the projects' 
schedule and financing. But there is no requirement that a 
finance plan be periodically updated.

                      los angeles red line project

    Mr. Wolf. In January, the Los Angeles Metropolitan 
Transportation Authority decided to suspend construction for at 
least 6 months on two of the four remaining extensions of the 
Los Angeles Red Line Subway project while it addresses severe 
financial difficulties. ABC News reported that the termination 
costs exceed $75 million. Are these reports accurate?
    Mr. Anderson. We think--we don't know exactly what the 
potential is in terms of increasing the costs; but it could--in 
terms of known costs, growth and the slippage, was it something 
like $28 million?
    Mr. Stouffer. We were told $28 million by the MTA that that 
would be their demobilization costs for the Red and Blue lines. 
That is the cost of suspending the contracts, terminating the 
contracts and making sure that the designs are preserved so 
that they can be picked up again in the future. Now, that $28 
million did not include employee severence costs.
    Now there could be increased costs in terms of picking up 
these designs after a given shelf life and moving on with them 
in the future. That could account for some of the difference 
between the number they told us and what ABC reported.
    Mr. Anderson. I think that this is going to be one thing, 
Mr. Chairman, that they are going to have to flesh out in their 
restructuring plan that they come up with, too, because there 
undoubtedly will be some additional costs associated with this.

                       red line funding shortfall

    Mr. Wolf. Your report indicates that the total Red Line 
funding shortfall has increased to $617 million and that the 
Congress has provided $302 million less than FTA committed in 
the full funding grant agreement.
    While construction has been suspended on the east side and 
mid-city extensions, construction has not been suspended on the 
North Hollywood segment, which we thought was on schedule but 
we heard today that maybe it has fallen a little bit behind 
schedule. What funding shortfalls exist solely for this 
segment?
    Mr. Anderson. I don't know that we have the numbers that 
break it down for that segment. I know the $302 million was the 
shortage in Federal funds, and $315 million was the shortfall 
for State and local funds. Do we have it by segment?
    Mr. Stouffer. I believe there is another about $185 million 
that was committed by the Federal full funding grant agreement 
for the North Hollywood segment of the Red Line; and, of 
course, they have asked for another $100 million, I believe, 
this year.
    Mr. Wolf. Well, do you believe it is on budget and on 
schedule?
    Mr. Stouffer. Fairly close, yes.
    Mr. Wolf. What is your definition of fairly close? Because 
the----
    Mr. Stouffer. As far as we know, within a month or so of 
May 2000. They are scheduled to complete North Hollywood by May 
2000, ahead of the December 2000 date set in the full funding 
grant agreement.
    Mr. Wolf. Are there any potential problems for completing 
this segment?
    Mr. Stouffer. None that we are aware of. The extension is 
about 50 percent constructed.
    Mr. Wolf. Your report indicates that California has 
withheld $20 million for the Red Line. What is the status of 
these funds?
    Mr. Stouffer. I don't know what the status of the state 
commitment is. I would suspect--and maybe I shouldn't hazard a 
guess--but, the whole Red Line program has suffered a series of 
problems, including construction problems on the other 
segments, design problems, sinkholes, that perhaps they, like 
the Federal Government, have been reluctant to follow through 
with their funding commitments until a recovery plan is 
approved.
    Mr. Wolf. So what do you think is going to happen out 
there? Do you think that they are going to go ahead with the 
North Hollywood segment and what do you think is going to 
happen on the east side and mid-city extension?
    Mr. Anderson. I don't think we really know.
    Mr. Wolf. What do you think should happen?
    Mr. Anderson. Well, I would really like to see the 
restructuring plan come forth and see them actually lay out 
just exactly what they have in mind. I don't think that this is 
going to happen anywhere in the near time frame. It might be 
more than 6 months away.
    Mr. Wolf. Do you think they may go ahead with North 
Hollywood and then do some other bus or fixed guideway to the 
other?
    Mr. Anderson. I would imagine that that would be an option 
that they would have to consider. Then, of course, the question 
comes up how many--how much of the Federal funds that had 
originally been approved as part of the full funding grant 
agreement and should continue to go if it is not the same 
project as originally envisioned.
    Mr. Wolf. Well, my own sense--and I am only speaking for 
myself--but I would think that whatever the Federal Government 
committed ought to be continued, because they certainly have a 
transportation problem.
    But if they in good faith had the courage to come in and 
say, this system--North Hollywood is good, the east side and 
mid-city is not but we want to do an aggressive fixed guideway, 
rail/bus system that would move people, then I would think--I 
would hope this committee would be understanding of that.
    I commend Mayor Riordan and the city council because it is 
very tough to tell people that you are not going to build what 
you said but yet you have a system that will move as many 
people or more people with a reliable, dependable rail, bus, 
new type system that will get people in and out. And I would 
hope that Congress could be sympathetic. Because whether you do 
that--and I think they are going to have a hard time funding 
this thing on rail--they do have a transportation problem.
    Mr. Stouffer. Sir, if I could clarify one statement I just 
made.
    MTA has requested $100 million for segment 3 for fiscal 
year 1999. The President's budget includes $100 million for the 
L.A. subway. $62 million of that would be for the North 
Hollywood extension; $38 million of it would be for the east 
side, which is almost 100 percent designed. The mid-city line 
is much farther behind that.
    Mr. Wolf. So you recommend that Congress not give them 
that, then?
    Mr. Stouffer. I am not sure I would say that. But what MTA 
has told us, that if the suspension holds longer than the 6 
months--and MTA received the full $100 million--that they would 
transfer the $38 million that was originally targeted for----
    Mr. Wolf. To the North Hollywood.
    Mr. Stouffer. To North Hollywood, right, which is to 
receive about $185 million more in federal funds under the 
existing full funding grant agreement.

                federal funding for new transit projects

    Mr. Wolf. The administration's budget for new starts calls 
for a total of $876 million for transit--Mr. Olver, any time 
you have something, just come on in--for transit new starts 
projects. This level represents the funding commitments 
contained in the 14 full funding grant agreements currently in 
place and any accumulated shortfalls, with the exception of 
L.A., for which funds are only requested for the North 
Hollywood segment.
    Of the $876 million, $144 million is for accumulated 
shortfalls. To what extent have these accumulated shortfalls 
affected the individual project's ability to proceed with their 
construction activities?
    Mr. Anderson. I am not sure which portion of that $144 
million is applicable to the projects that we looked at.
    I know, Joe, you have looked at it for three of them, 
right?
    Mr. Christoff. Uh-huh. Some of that $144 million, I think 
about $40 million of the L.A. subway would be in addition; 
another $24 million for St. Louis.
    [The information follows:]

    Some of that $144 million, for example about $24 million of 
the St. Louis-St. Clair extension request, is above the amount 
due the projects through fiscal year 1999 under their full 
funding grant agreements.

    Mr. Stouffer. Right.
    Mr. Christoff. Overall, most projects can adjust to 
whatever funding levels the Congress provides. For example, 
BART has not received all of the commitments under the full 
funding grant agreement, it has adjusted by establishing a 
short-term borrowing program to make up some of the funding 
gaps during construction.
    Certainly, all the projects would prefer to have the 
commitments that the Federal Government has made to keep on 
schedule and keep costs down. But, at the same time, the 
projects do have the capabilities to have short-term debt 
financing to fill in some of the funding gaps.

                       south boston piers project

    Mr. Wolf. The South Boston Piers project has an accumulated 
shortfall of over $34 million. To what extent can individual 
projects spend these additional resources effectively and 
efficiently this fiscal year, should they be appropriated?
    Mr. Christoff. Well, I think all the projects probably can 
effectively spend the additional money, because oftentimes they 
have not gotten the full funding grant commitments from 
previous years. If projects get more money, that means they can 
speed up construction and reduce debt financing.
    We haven't looked at Boston. Or all 15 transit projects 
that have full funding grant agreements.
    Mr. Wolf. Is there an urgency for the $144 million?
    Mr. Christoff. Again, from the project's perspective, the 
additional funds could be used. But we have seen in our review 
of mega-projects that, if the money isn't necessarily 
forthcoming to the full levels in the full funding grant 
agreement, projects adjust. They have debt financing mechanisms 
in which they can fill in those funding gaps.

                      discretionary highway grants

    Mr. Wolf. Okay. You recently completed a report that 
reviewed the selection process and criteria that DOT uses to 
fund projects under its discretionary highway programs to 
determine how the process has changed over the years and how 
these changes may have affected which projects the Department 
selects for discretionary funding. What were the conclusions of 
your report?
    Mr. Anderson. Basically, what we found was that, from 1992 
to 1994, there was a slightly different process that was used 
to select projects in the discretionary programs. It has always 
been a two-phase process where program staff will first look at 
the projects and make recommendations and then it goes to the 
Office of the Administrator for decisions.
    From 1992 to 1994, 98 percent of the projects that the 
program staff recommended were finally selected. From 1995 to 
1997, I think the Office of the Administrator took advantage of 
the discretion that the program allows, and there wasn't nearly 
the same level of match. I think 73 percent of the projects 
recommended by staff.
    Mr. Wolf. What was it?
    Mr. Anderson. 73 percent of the selected projects were 
ranked either most promising or promising projects.
    Mr. Wolf. Were you able to determine that the 
administrator-funded projects were projects that the program 
staff had evaluated as not qualified?
    Mr. Anderson. No.
    Mr. Christoff. No. There were several bridge program 
projects that were administratively not qualified. However, 
there were many projects that were rated as qualified.
    FHWA has a four-tiered priority category ranking system: 
most promising, promising, qualified, and not qualified. There 
were many projects, particularly within the public lands 
discretionary program, that were rated qualified that were 
selected over projects that had been rated most promising.
    Mr. Wolf. What do you personally believe the Administrator 
used to select the final project awards?
    Mr. Anderson. We were told that they wanted to get some 
geographic distribution in terms of having projects spread 
throughout the country. That was the explanation that we were 
given.
    Mr. Wolf. Is that political or is that scientific?
    Mr. Anderson. I don't know. They were very careful in the 
words that they chose, and we couldn't find any evidence to say 
otherwise.
    Mr. Wolf. You have looked at all the places that they have 
done?
    Mr. Anderson. We didn't look at any of the individual 
projects. We looked at them in total.
    Mr. Wolf. I think you ought to do that. Why don't you do 
that?
    Mr. Anderson. Okay.
    Mr. Christoff. For some of the projects, FHWA was 
administratively and statutorily required to select projects 
from certain States. For example, in the public lands program 
there is a requirement that DOT give preference to projects 
from States with at least 3 percent of their lands that are 
Federal. So most of the public lands money you will see went to 
California, Montana, Arizona.
    Mr. Wolf. Well, why don't you just look at the different 
projects?
    Mr. Christoff. We will.
    Mr. Wolf. And your report indicated that the Administrator 
relies on other factors, including congressional earmarks--you 
did say that, didn't you?
    Mr. Christoff. We did. We were quoting FHWA.
    Mr. Wolf [continuing]. In making final determinations. Did 
it seem strange to you that this was a factor used by the 
Administrator over the last several years, notwithstanding the 
fact that the Congress has discontinued the practice of 
earmarking discretionary highway funding since 1996?
    Mr. Anderson. I guess we didn't see anything in there that 
specifically prohibited him from doing what he did.
    [The information follows:]

    In addition, even though no earmarks were in the conference 
reports, earmarks were listed in the Senate reports, which FHWA 
did factor into its selection process. FHWA views this as 
addressing congressional interest in a project.

    Mr. Wolf. Yes, but, see, we don't do that anymore. We 
turned that back, the funding to the Governor, and of course, 
in ISTEA, they deal with that.
    Mr. Christoff. Well, the switch did occur when you banned 
the use of demo projects, the switch in the process that FHWA 
used.
    Mr. Olver. Can I follow up on that?
    Mr. Wolf. Sure. Go ahead.
    Mr. Olver. The switch did occur. What am I supposed to 
infer from that?
    Mr. Christoff. Well, the process changed. Between 1992 and 
1994, the process that FHWA used relied on the staff's 
recommendations. Ninety-eight percent of the time, the 
Administrator went with the staff's recommendations.
    Mr. Olver. But there were, prior to that time, 
congressional earmarks?
    Mr. Christoff. Pardon me?
    Mr. Olver. There were, prior to that, congressional 
earmarks?
    Mr. Christoff. That is correct.
    Mr. Olver. Which would not have had staff recommendations.
    Mr. Christoff. Beginning in 1995, the Office of the 
Administrator felt that, since it was a discretionary program, 
he needed to consider other factors that were important in 
addition to the staff input. Those additional factors that the 
FHWA staff told us were things such as congressional earmarks, 
congressional interests and geographic dispersion.
    Mr. Olver. But there were no congressional earmarks.
    Mr. Wolf. But there were no earmarks.
    Mr. Olver. So that certainly was not one of the factors.
    But what I was wondering is that we were just substituting 
for congressional earmarks his use of discretion for 
geographical distribution, and perhaps the same percentage of 
projects were coming up. There must have been some 
congressional earmarks before that time.
    Mr. Christoff. Uh-huh.
    Mr. Olver. I am amazed that 98 percent of the projects used 
to come up without congressional earmarks. That seems 
surprising to me. This is very interesting. Okay.
    Mr. Wolf. Well, I think Mr. Olver raises a valid point. 
There will be a day that I am not the chairman of the committee 
and, whoever is the next chairman can do whatever they want to 
do. I think most members have been pleased with the fact that 
this has been a bipartisan, a nonpartisan process, that the 
funding goes back to the States. Then, you can work with your 
governor in the process. But I do think it raises a little bit 
of a question when there were not the earmarks.
    Mr. Olver. May I follow one other question here?
    Mr. Wolf. Yes.
    Mr. Olver. The point of your analysis of not qualified, 
qualified and----
    Mr. Anderson. Promising and most promising.
    Mr. Olver [continuing]. Promising and most promising, do 
you feel the staff had an objective set of criteria in which 
they were doing that in the first place? I mean, sometimes 
those processes that staff are using--and staff have been in 
place for a long period of time--aren't terribly objective, 
either.
    Mr. Anderson. That is true.
    Joe, do you have anything?
    Mr. Christoff. I don't----
    Mr. Olver. They are certainly different. Whether they are 
objective or not, I don't know.
    Mr. Christoff. Yes, that is true. A lot of the criteria 
that was used, either under the old process or the new process, 
oftentimes is statutory criteria. So in many respects the 
process was similar in terms of the criteria. Such as in public 
lands, there are certain States that have a higher percentage 
of public lands that would get most of the funds. Overall, we 
felt the staff's criteria was objective.
    Mr. Olver. All right. I am not going to get anywhere with 
that.
    Mr. Wolf. Well, we need to be candid with the committee, 
because the Congress shifts back and forth to Republican and 
Democrat. The administration shifts back to Republican and 
Democrat. Members have the right to know that there is a 
consistency.
    If you had a Republican administration, I mean, Mr. Olver 
would have to know that he had a fair----
    Mr. Christoff. Certainly.
    Mr. Wolf. You know, a fair shot.
    I do sense that you have been a little withholding. You 
haven't been as forthright as you really could have been on 
this.
    We have attempted to make it truly as nonpartisan as it 
possibly can be and this is a political process. We have worked 
very hard up here to make it that way, knowing that, everyone 
who is up is going to eventually be down, and everyone who is 
down is eventually--I mean--it just moves. In my time, it has 
flipped. I came in with Ronald Reagan, and now we have Bill 
Clinton; and we had Tip O'Neill, and now we have Mr. Gingrich--
Speaker Gingrich from Speaker O'Neill. So everything flows.
    I think that the members of this committee and the Members 
of Congress have to know that if they are not in the party in 
the majority in the Congress or if they are in a party that is 
not in a majority with regard to the administration, they all 
have some sense of fairness in this process so that a 
Republican Congress isn't doing a Democratic Member in or a 
Democratic administration is not doing a Republican Member in.
    So I think you ought to look at these and see if there is 
more there than meets the eye. Just so everyone knows.
    Mr. Christoff. We can. We looked at the process, not 
particularly at the specific projects.
    Mr. Wolf. Yes.
    Mr. Anderson. Part of the problem, too, is I get the 
impression that there is not a lot of documentation that is 
going on in terms of the final decisions that were made by the 
Office of the Administrator. So we can go back and see what we 
can find.

                                 amtrak

    Mr. Wolf. All right. We will have a number of other 
questions for the record.
    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. How is Amtrak doing 
to date?
    Mr. Olver, any time you want to come in, just go ahead.
    Mr. Anderson. I think Amtrak is still in dire financial 
straits. They came up with strategic plans and that sort of 
thing, and they have been making some progress. They have 
improved. But they still have a long way to go. They had a loss 
of some $762 million in 1997.
    Mr. Wolf. $762 million. How did that compare with the 
previous year?
    Mr. Anderson. I believe in 1996 the loss was about the same 
as in 1997, $762 million; and, in 1995, it was $808 million.
    A piece of the loss in 1997, it would have been about $63 
million more if not for the sale, one-time sale, of some assets 
that they had, too. So that helped.
    Mr. Wolf. Really, though, that doesn't count, because you 
can't sell your shoes more than once if you only have one pair 
of shoes.
    Mr. Anderson. Right.

                        Amtrak Operating Subsidy

    Mr. Wolf. I think the loss of Mr. Downs, who was a pretty 
good fellow and understood, is really a blow to Amtrak. I 
thought he was getting a handle there.
    I am going to ask one more question, and then I am going to 
defer to Mr. Aderholt.
    Congress recently enacted the Amtrak Reform and 
Accountability Act, which makes the corporation eligible for $5 
billion in funds and significantly reforms Amtrak's operations. 
Also, with the passage of this Act, $2.3 billion in capital 
funds is released. And you have got to be candid here, because 
we have got to find out, will this legislation cure Amtrak's 
problem and eliminate the need for a Federal operating subsidy 
by the year 2000?
    Mr. Anderson. Not necessarily.
    There are a number of other things that Amtrak has got to 
do. We do believe Amtrak is in dire financial straits. There is 
no question that injecting another $2.2 billion, after you take 
out about $100 million that has to go to States that don't have 
Amtrak service and that sort of thing, leaves $2.2 billion from 
the Taxpayer Relief Act.
    If they have to end up using a significant portion of that 
money to help cover some costs that were traditionally paid out 
of operating funds, then that reduces the amount of money that 
you have got left to do capital improvements. And the heart of 
fixing Amtrak's problems first lies with getting it properly 
capitalized with enough equipment and getting the equipment and 
the facilities in good shape so you can attract ridership.
    Mr. Wolf. Well, that is what the act was meant to do, 
that----
    Mr. Anderson. That is right. But it remains to be seen, 
because the administration's budget request this year is only 
asking for funds for capital. And I hear some discussions are 
going on that maybe they will allow some use of the money, as 
well as what is allowed under the Taxpayer Relief Act, for 
maintenance types of costs and things like that.
    But it is almost like you are robbing Peter to pay Paul. 
You are taking it out of one pocket and funding something else 
out of the other pocket.
    Mr. Wolf. Well, I want Amtrak to survive. I have always 
been a strong supporter of it.
    The members of this committee will move on. Mr. Olver may 
be ranking on another committee next year or a chairman or who 
knows what. Mr. Aderholt may go. I may go to something else, 
and then Amtrak will come in again.
    They really have to do what they said they were going to 
do. I think you are going to have to be very forthright when 
you look at these things because it will be a new person coming 
in and saying, well, okay, well, we are going to go another 5 
years.
    Everything possible should be done to make sure that they 
can economically survive; and they have said, correct me if I 
am wrong, that they can do it without an operating subsidy by 
the year 2002.
    Mr. Anderson. That is right.
    Mr. Wolf. So we are looking for GAO to say it is going to 
work or if it is not going to work. This is the reason. But the 
year 2002 is really almost----
    Mr. Anderson. Very close.
    Mr. Wolf [continuing]. Almost here.
    Mr. Anderson. You know, besides the capital--I will just 
say a couple more things, Mr. Chairman. Besides the capital, 
you know, their revenue forecasts have got to come through for 
them, which is partly dependent upon their capital and their 
getting the trains and the equipment working like they want 
them to.
    They have also got to get some of their nonpassenger 
revenue operations going the way that they want. They have got 
to reduce their costs. They have got to get some concessions 
from labor, and they have got to reduce their costs. And I know 
that the legislation has given them the authority to do that, 
but now they have got to carry it through.
    Mr. Wolf. Mr. Aderholt.
    Mr. Aderholt. I don't have anything right now.
    Mr. Wolf. Okay. We will have a series of questions.
    One is, what progress has Amtrak made in eliminating its 
need for a federal operating subidy. You don't have to answer 
this, now but we would like information as detailed and as 
specific as we possibly can. Would all of you bet your life on 
the fact that there will be no subsidy in the year 2003?
    Mr. Anderson. No.
    Mr. Wolf. Would you guess the percentage of getting there 
are--what--80 percent? 50 percent? 30 percent? 30 percent?
    Mr. Anderson. I believe they are going to need it for the 
foreseeable future, and I think that goes beyond 2002. They are 
going to need Federal operating and capital support.
    Mr. Olver. Mr. Chairman, may I follow up on one thing 
there?
    Mr. Wolf. Yes, Mr. Olver.
    Mr. Olver. Do you believe that the Taxpayer Relief Act of 
1997 that carried the Amtrak Reform and Accountability Act--
carries their capacity to use some of those monies for 
operating assistance?
    Mr. Anderson. Oh, yes. The Taxpayer Relief Act clearly does 
allow them to upgrade their maintenance facilities and maintain 
existing equipment. That is included as part of the 
authorization. That is correct.
    Mr. Olver. So you can--we can live with the fact that there 
is no direct operating money in the President's budget?
    Mr. Anderson. The key here, Mr. Olver, is that their 
capital needs far exceed that $2.2 billion.
    Mr. Olver. If you rob that, then some of their capacity to 
see operations in the black down in the future, getting some of 
these capital needs in place, that is the robbing Peter to pay 
Paul?
    Mr. Anderson. Exactly.
    Mr. Olver. Thank you.

                  Amtrak Routes and Labor Obligations

    Mr. Wolf. We tried to get, and were not able to, a base 
closing commission concept. Then we were going to have GAO look 
at it, and pretty soon it got down to the nothing.
    What percentage of the routes do you think ought to be shut 
down?
    Mr. Anderson. Well, we are looking now at the revenue of 
each of the routes. Ultimately, what route should be shut down 
is really going to come down to a policy call that you are 
going to have to make at the Congress and whether or not there 
are other transportation alternatives.
    Mr. Wolf. But the Congress doesn't know if you don't really 
tell us. There are some routes that are legislated. There is 
the Cardinal. That is legislated. The Northeast Corridor is 
certainly the cream, and the opportunities from Washington to 
Boston, that is never going to be shut down.
    Mr. Anderson. You know, that is why we supported--I think 
in our big report that we issued when Ken Mead was still here 
in 1995--we supported a base closure commission type of a 
process. Because, under that process, you can take more factors 
into account than the dollars, revenue and costs associated 
with particular routes.
    The types of policy decisions were: are you going to cut 
out train service to this community or are you going to find a 
way to help subsidize it and keep a true national system? These 
are the types of decisions that--you know, the GAO can't make 
those. Those are going to, you know, be policy calls.
    Mr. Wolf. Yes, they are policy calls. But by the fact that 
we were not able to do something, we are actually hurting 
Amtrak. Because I think many of the States and many of the 
governors--if I were governor of a State, I would want Amtrak 
operating in my State. So I would look at some creative ways to 
take some of my money to help.
    The fact that we have not forced this issue has meant some 
States that would normally come forward have not come forward. 
So we haven't really helped Amtrak stay in existence. We have 
actually hurt it.
    Last year, Mr. Downs testified it will cost the Federal 
Government between $6 million and $10 billion if Amtrak went 
bankrupt. However, in October, GAO informed Mr. Kasich and Mr. 
Shuster that, ``the United States is not liable for the labor 
protection obligations arising from a partial or complete 
discontinuance of passenger service, and the United States is 
not liable for Amtrak's pending nonlabor protection obligations 
in the event of bankruptcy.'' In brief, please explain how you 
reached this conclusion.
    Mr. Anderson. I might have our attorney come up if this 
isn't sufficient. But the bottom line is the United States was 
not a party to any of the contracts that Amtrak has let or any 
of the financial obligations that they have committed to, the 
United States Government is not a guarantor of any of that. So 
technically, legally speaking, the Federal Government is not 
liable.
    Mr. Wolf. You don't believe there is any liability at all 
if it went bankrupt?
    Mr. Anderson. That is correct.
    Mr. Wolf. So it would cost us nothing. It would cost the 
country a lot.
    Mr. Anderson. Exactly.
    Mr. Wolf. But the liability of the Federal Government would 
be zip?
    Mr. Anderson. That is correct.

                   FAA's Oversight of Repair Stations

    Mr. Wolf. Let me get to this issue of the FAA for a second. 
Mr. Aderholt walked in, he wasn't here when it was brought up 
yesterday, but Mr. Olver was. There were a lot of questions 
from Members. Questions on runway incursion and turbulence by 
Mr. Pastor. Questions on repair stations by Mr. Sabo. We don't 
really have the ability on a day-to-day basis to monitor the 
FAA.
    We hold oversight hearings, we complain, and we get some 
things moving. But what we want to do is establish a group that 
can set up a measurement device whereby we can say, for 
instance, aviation is safer today than it was 5 years ago.
    Mr. Pastor raised a very good issue on the 737s. We have 
the delay in WAAS, we have the delay in STARS, we have the year 
2000 issue that we are going to get into later. What we would 
like to get is your commitment to be part of a team that can 
develop a measurement stick on FAA's progress in solving 
critical safety issues so that any Member of Congress can look 
at it and understand it. Also the group would issue quarterly 
progress reports. On that team, Jim Hall has agreed to have 
representation, the IG has agreed to have representation, we 
would have the Flight Safety Institute. We would have NASA, 
maybe ALPA, we would like the GAO to be part of it. Otherwise 
these things come and go and there is no measurement stick.
    The FAA has a significant number on the most wanted list. 
Now, Administrator Jane Garvey, I think, is very open. She is 
not defensive, she is open to new ideas, she is open to this. I 
think this could be an arm for Jane Garvey who has agreed to 
stay on for 5 years. Somebody ought to take a picture of her 
today and then 5 years from now. She will really have aged.
    Mr. Olver. She will not. I have known her for many years.
    Mr. Wolf. But I appreciate that she has given a commitment 
for 5 years. I think this will be an opportunity for her to go 
and use this. Can we get the participation of GAO in this?
    Mr. Anderson. We will participate, yes, sir.
    Mr. Wolf. Good. I will appreciate it. Currently half of the 
maintenance, renovation and repair of commercial aircraft owned 
by U.S. airlines is conducted by independent repair stations 
rather than the air carriers themselves. These are located 
worldwide and their use has grown significantly in recent 
years.
    In a recent audit of repair station oversight, you found 
that the FAA was not deploying their staff efficiently to 
oversee these stations, and they had no standards on what 
documentation should be kept by their inspectors. Is that 
accurate? And would you explain?
    Mr. Anderson. Yes. When we looked at the repair stations 
issue, I think there are something like 2,800 independent 
repair stations. Twenty-five hundred of them are domestic. 
About 270 are foreign repair stations. Basically, what we found 
was FAA was meeting its requirement to inspect each repair 
station once a year. That was a plus.
    We also found that 84 percent of the inspectors that we did 
a survey instrument, a questionnaire to believed that the 
repair station compliance was good or excellent. However, half 
of the inspectors thought that the compliance could improve. I 
think one of the biggest findings that we had was that they 
rely too much on an individual inspector to go out there and 
inspect a repair station. We found some instances where they 
were using teams of inspectors to go out and do it. Those 
inspections ended up being more comprehensive, better 
inspections. They would uncover things even though there might 
have been an individual inspector at this facility just a few 
months earlier. When the team came in, they found some systemic 
problems. So it was obvious that it wasn't being caught by the 
individual inspector. So we do believe that they do need to use 
more teams of inspectors.
    The documentation problem is a serious one because this has 
implications for their targeting system. They are supposed to 
be developing a system to target their inspections to those 
areas that are the greatest risk. You need good information in 
your files and recorded in your information system in order for 
that targeting system to work. And then another thing that was 
more of a minor finding, but it is an irritant, since 1989 they 
have been working to try to revise the regulations that exist 
for repair stations and it still hasn't happened and it is 
1998.
    Mr. Wolf. That is the type of thing we are talking about. 
Two hundred seventy of these are abroad. I am sure a lot of the 
stations are excellent. Are some in countries where it is wide 
open and nobody is monitoring anything? China? Places like 
that?
    Mr. Anderson. Bob, are you familiar with where the foreign 
ones are?
    Mr. White. The majority of the foreign ones are in Europe, 
but there are some smaller ones scattered around the world.
    Mr. Wolf. Turkey was mentioned yesterday.
    Mr. White. Turkey was implicated in the ValuJet engine 
explosion that occurred.
    Mr. Wolf. How were they implicated in the ValuJet 
explosion?
    Mr. White. Not the ValuJet crash, but the case in which an 
engine exploded on the ground while the ValuJet aircraft was 
taking off. The engine had been serviced in Turkey.
    Mr. Wolf. ValuJet didn't fly to Europe, if my memory serves 
me. Did ValuJet fly to Turkey, get the job done and bring the 
plane back?
    Mr. White. I would assume that is true, but I don't know.
    Mr. Wolf. Was that just to save money?
    Mr. White. I don't know the answer to that. It sounds 
likely.
    Mr. Anderson. Often that is the case. You have cheaper 
labor rates overseas and that sort of thing. This is not 
something that we have looked at specifically, but reports that 
I have read and news media accounts and things like that 
indicate that that is part of the problem.
    Mr. Wolf. I think you might want to look into that. If we 
have a spare parts problem, bogus parts problem in this 
country, imagine what you might have down in some of the 
southern republics, I will start with Russia. They had killed 
five members of the Russian duma, gunned them down in the 
streets. Do you think they are going to have a hesitation on 
putting a bogus part in? I think we really have to look at 
that. The documentation, if there is no documentation, how will 
we know how to have follow-up inspections?
    Mr. Anderson. That is part of the problem. You don't. It is 
relying on the judgment of the inspectors. I do want to 
interject one point here.
    Mr. Wolf. One is inspected every year?
    Mr. Anderson. Once every year. What we found was that the 
documentation that existed for the foreign repair station 
inspections was much better than existed for the domestic 
inspections. So I think FAA has taken it seriously, recognizing 
that they are dealing with foreign companies that are doing 
this sort of thing. So it was better documented. They also use 
team inspectors almost exclusively to do the foreign 
inspections. So they are more thorough.
    Mr. Wolf. Why has it taken since 1989?
    Mr. Anderson. To update the regs? I have to think it hasn't 
been given the priority it needs. Of course there have been 
changes in aircraft, components and things that should be 
reflected in the regs, but they are not there.
    Mr. Wolf. Do we know of any accidents that have occurred 
other than the one whereby a loss of life was involved?
    Mr. White. No, I don't think any directly attributable to a 
lack of new regulations.
    Mr. Wolf. Do we know for a fact that none have been?
    Mr. White. No, we don't.
    Mr. Wolf. There were reports of life-taking accidents of 
bogus parts here in the U.S.. We are also talking about private 
aviation, too. Can you say that there have been no accidents or 
no life-taking accidents that have been the result of any of 
this?
    Mr. White. I thought your question went to the lack of 
updating the regulations. It is hard to tie that--but on the 
bogus parts?
    Mr. Wolf. On bogus parts or on foreign repair operations. 
Not on the regulations.
    Mr. White. I would be hard put to cite one right now. But I 
have no doubt that there have been accidents related to those 
concerns where fatalities have been involved.
    Mr. Wolf. What was the make of the aircraft off the 
Dominican Republic that was switched where the people, most of 
them were Germans, were killed?
    Mr. White. I don't know.
    Mr. Wolf. Do we know where that plane came from? I thought 
it came from Turkey.
    Mr. Anderson. I am not aware.
    Mr. Wolf. Do we know where that plane was inspected?
    Mr. White. We could get you that information.
    Mr. Anderson. We can check on it.
    [The information follows:]

    Both accidents--the Valujet accident in which an uncontained engine 
explosion resulted in several injuries and the Birgenair crash in the 
Dominican Republic--have some link to Turkey, but the probable cause of 
the accidents as determined by the investigating authorities was quite 
different. The engine that exploded in the Valujet aircraft had been 
purchased from Turkish Airways and had been installed on an aircraft 
purchased from Delta Airlines. The installation took place just three 
months before the accident in June 1995. (Neither the aircraft nor the 
engine were subsequently serviced in Turkey.) The National 
Transportation Safety Board concluded that the probable cause of the 
accident was the failure of personnel at the repair station operated by 
Turkish Airways to identify a crack in an engine disk during the 
engine's last major overhaul in 1991, nearly four years before its 
purchase by Valujet.
    Birgenair is an air charter operation headquartered in Istanbul, 
Turkey. It provided the aircraft and crew for a charter flight 
organized by a German travel agency to the Dominican Republic. The 
Dominican Directorate General of Civil Aviation, under whose authority 
the accident was investigated, concluded that the probable cause of the 
crash was pilot error. The crew was confused by contradictory airspeed 
indications and failed to respond properly to stall warnings. The final 
accident report also found that faulty maintenance was a contributing 
factor to the accident. It concluded that the erroneous airspeed 
indication was caused by partial blockage of the air intake tube for 
one of the aircraft's airspeed indicators, and that this, in turn, most 
likely resulted from the failure of Birgenair's ground crew to cover 
the intake tubes during the aircraft's extended stay on the ground in 
the Dominican Republic. The report, however, did not identify any 
repair station deficiency as a factor in the accident.

    Mr. Wolf. I think it would be helpful to see if that plane 
which came out of Turkey before it crashed and a lot of people 
were killed, if it was serviced at one of the foreign repair 
stations that ValuJet or somebody else used.
    Mr. Olver. Mr. Chairman?
    Mr. Wolf. Yes, Mr. Olver.
    Mr. Olver. May I clarify, did I hear you say that you felt 
that the documentation on these type of repair stations outside 
the country are generally more reliable than what we have?
    Mr. Anderson. The documentation of the inspections that 
were done by the inspectors of the foreign repair stations was 
much better overall than it was for the domestic repair 
stations.
    Mr. Olver. Documentation of the inspections. But is there a 
protocol for what follow-ups there have to be at a series of 
times as opposed to inspections of the stations themselves? Of 
the stations themselves.
    Mr. Anderson. The stations themselves.
    Mr. Olver. Not some sort of monitoring or accountability on 
the actual repair.
    Mr. Anderson. That is right. What FAA inspects is the 
repair station itself, in terms of whether or not the repairs 
are done and that sort of thing. I don't know to what extent 
they get into that on each individual inspection.
    Mr. Olver. Follow-up performance and follow-up monitoring 
of what has happened over time?
    Mr. Anderson. Right. I don't know to what extent they do 
that.
    Mr. Olver. Thank you. Thank you, Mr. Chairman.
    Mr. Wolf. Would it be fair to say that the airlines which 
contract out a large percentage of their maintenance work to 
repair stations receive less safety oversight than others?
    Mr. Anderson. I don't think that we could say that that is 
the case. They do have a minimum requirement of inspecting the 
repair stations once a year. In terms of the inspection of the 
in-house repairs that are done by the airlines themselves, I 
don't know what that requirement is. I would have to check.
    Mr. Wolf. Getting back to the ValuJet, some airlines 
contract this work out because they don't have the money to 
perform it in-house. That was obviously the reason that they 
did it. Couldn't this also be an indicator that they might not 
have the highest maintenance standards overall, thereby 
justifying a potential concern?
    Mr. Anderson. I don't know. We haven't done the work to be 
able to make that leap. I know the biggest concern is that 
especially newer airlines that don't have the funds or don't 
want to invest in the capital to do their own repairs rely on 
repair stations to do the work. But jumping and saying that 
therefore, their standards are lower, I don't think that that 
is necessarily the case.
    Mr. Wolf. As a follow-up to Mr. Olver's question, should 
the domestic surveillance be increased to be at the same level 
as the foreign surveillance?
    Mr. Anderson. I think what they need to do is they need to 
do more team inspections. If that gives you increased 
surveillance, I think that that would help. And they clearly 
need to do better documentation of what they find. Because that 
is going to enable you to then use that history to target your 
inspections for the future. If you go out and you have 
documented that you found a lot of problems at repair station 
X, that repair station might show up on your screen for next 
year's inspection. You might want to look at them more closely.
    Mr. Wolf. Your report concludes that it is the requirement 
for an annual certificate renewal, which accounts for much of 
the difference in Europe. Since stations must be annually 
approved, FAA officials have a stick to ensure enforcement. 
They must be able to document their decisions. Your report says 
the FAA headquarters does not want to extend the annual 
certificate renewal to domestic repair facilities, which Mr. 
Olver was talking about. However, field inspectors who have 
worked both domestically and overseas strongly support such a 
move. Inspectors based in the U.S. are more wary because they 
fear an increase in their workload. The least amount of support 
came from the FAA management. Why would the FAA management not 
support this idea? What do you think about it?
    Mr. Anderson. Do you recall the discussion of that in the 
report? On what we found?
    Mr. White. No, but generally there was a question as to 
whether it would be cost-effective to impose that 
recertification on domestic stations. Apparently many members 
of FAA management did not think so, although as you pointed 
out, inspectors with service both in foreign and domestic 
stations, the majority of them did.
    Mr. Wolf. Based on the fact that the FAA hasn't acted in 8 
years, are there changes that should be made in the 
regulations?
    Mr. Anderson. Yes. And that was one of our recommendations 
that they needed to get on with it and make the regulation 
changes.
    Mr. Wolf. Are they weak?
    Mr. Anderson. They are outdated. They definitely need to be 
updated.
    Mr. Wolf. Is that potentially an aviation safety problem 
that everyone who flies should be a little bit concerned about?
    Mr. Anderson. I think it is something they need to get on 
with. We can't directly say it has been a direct cause of any 
particular problem.
    Mr. Wolf. I didn't say that, but it is a potential.
    Mr. Anderson. I think it has the potential. I think it 
needs to be updated.
    Mr. Wolf. We have funded a 41.8 percent increase in the 
number of aviation safety inspectors. That is 984 inspectors, 
between 1994 and 1998, and additional increases are proposed 
for 1999 to fund 45 new inspectors. Your report indicates FAA 
may have wasted some of the additional resources by not 
deploying them in teams and not training them effectively. 
Would you comment on the findings with regard to the training? 
We already talked about deployment.
    Mr. Anderson. I don't recall with regard to the training. 
Do you recall, Bob? We might have to provide that for the 
record. I know the biggest issue with the team inspections is 
having more than one set of eyes to look at a repair station, 
especially if it is a larger repair station, is going to give 
you better findings and give you more thorough review.
    Mr. Wolf. We understand that your survey of safety 
inspectors show that 80 percent of them believe more training 
was needed on inspection skills and almost half said that 
inadequate training undercut their ability to ensure compliance 
with existing safety regulations.
    Mr. Anderson. This has been a problem that I think we have 
heard over the years from the inspectors' point of view. They 
don't believe that there is sufficient training. I know, I 
believe it was 2 years ago that additional funds were given for 
training, but I think it is still a problem in the view of the 
inspectors.
    Mr. Wolf. Then that could be a potential safety issue, 
right?
    Mr. Anderson. Yes. Potential.
    Mr. Wolf. I would hate to be flying on an aircraft thatwas 
repaired or inspected in some foreign country by a safety inspector 
that felt he wasn't adequately trained to inspect it.

                  wide area augmentation system (waas)

    The FAA is currently planning to lease communication 
satellites for the WAAS program rather than buy them. Has the 
FAA conducted an adequate lease versus buy trade-off analysis?
    Mr. Anderson. Not that we are aware of. That is one of the 
questions that we have got. As you are aware, we are supposed 
to report to your subcommittee and the Senate subcommittee on 
WAAS by March 1. That is one of the things we will be talking 
about.
    Mr. Wolf. Under this innovative type of lease, the FAA 
would guarantee to the contractor that funding would be 
provided even if the program were terminated. Only with such a 
guarantee would a contractor agree to assume the capital costs 
up front to do the work. However, if the government decided 
later to discontinue, we would have wasted a lot of the 
taxpayers' money. Would that be accurate?
    Mr. Anderson. We have got some questions that we are going 
to be addressing in our report, Mr. Chairman, in terms of the 
lease versus the cost idea. Bob, do you want to expand on that 
a little?
    Mr. Levin. Sure. For budget scoring purposes, there is a 
real question about whether this is a capital lease or an 
operating lease the FAA is proposing. My understanding is that 
FAA is supposed to report to you by February 15 on its 
strategy. I haven't seen that information. It was not part of 
the report that FAA just brought up here this week. We are 
probing FAA's strategy.
    My understanding is that if the lease is scored as a 
capital lease, then all the funds have to be approved by 
Congress up front, which would make it very, very difficult for 
FAA to put it into its budget. It is a real question that 
probably has to be resolved here in the next month or so.
    Mr. Wolf. If we had tried this strategy with the AAS or the 
MLS or other major FAA procurements, would we have saved or 
wasted money?
    Mr. Levin. For a leasing of the equipment in service? It is 
hard for me to say. The preliminary information we have seen on 
the cost for leasing versus buying is that FAA is going to pay 
a premium to lease. It is like buying a car, in a way. You are 
going to pay a little extra for leasing.
    Mr. Anderson.  It might be a lower monthly payment, but 
over the long term you might end up paying more.

                          controller staffing

    Mr. Wolf. In a study last year, GAO concluded that FAA's 
process for determining the number of air traffic controllers 
may result in excessive requests for new hires. This was partly 
because FAA's model used eligibility for retirement figures 
rather than the actual retirements, so eligibility versus 
actual. Have they revised the process in a way which addresses 
the GAO's findings?
    Mr. Anderson. Yes, sir, they have. They are taking our 
recommendation into account now; they actually have data in 
their system and they are using actual information as opposed 
to guesstimates. We think that that will lead to better 
estimates.
    Mr. Wolf. Is the relationship with the unions getting 
better, staying the same or worse?
    Mr. Anderson. We haven't done any work recently on that. I 
know they are in the process of undergoing some negotiations 
with the unions now. I really don't have a view on that one way 
or the other.

                        year 2000 program at faa

    Mr. Wolf. The year 2000 problem, would you summarize for 
the committee your concerns with regard to that?
    Mr. Anderson. Joel?
    Mr. Willemssen. Mr. Chairman, our concerns on FAA's 
approach to the year 2000 program can be summed up as follows. 
One, FAA got a very late start in addressing this issue.
    Mr. Wolf. How late?
    Mr. Willemssen. They should have been on top of this 
beginning no later than 1997.
    Mr. Wolf. When did they start?
    Mr. Willemssen. They began some of the key basic awareness 
activities just within the last year. In fact, we saw some of 
the key basic awareness activities were still not completed at 
the end of calendar year 1997. Just to continue, from a wide 
year 2000 program perspective, awareness and assessment 
activities are the easy part, relatively speaking.
    Mr. Wolf. They were late on the easy part?
    Mr. Willemssen. Right. Now you have constricted the amount 
of time for fixing and testing. That is the difficult part, 
where you need more time. We believe just from a testing 
perspective, you need to think at least in terms of a year, to 
thoroughly test your fixes. Leading experts in the area say 
that for a year 2000 program, you have to think in terms of 
about 50 percent of the time and cost of your program going 
into testing. Now we have got an unfortunate situation where 
the time left is beginning to be constricted and the amount of 
time remaining for actually fixing the code and then thoroughly 
testing it is diminishing.
    Mr. Wolf. I was out at Reston the other day in a store, a 
guy came up to me and said that he thought that the FAA and 
every other agency would have a hard time getting the people to 
do it because, I think the State of Virginia is giving bonuses 
of $10,000 or $15,000 to hire people. Industry is doing the 
same. Do you think the FAA has the people on board now with the 
capability to do it?
    Mr. Willemssen. The personnel issue would be one of our 
biggest concerns at FAA. Frankly, within the personnel issue, 
the biggest concern is retaining some of the key staff that 
they have who have been around a long time, who know these 
systems inside and out. Unfortunately, for many of these key 
system environments, we are talking about a handful of folks. 
As I testified last week, it is imperative that the 
administrator, OMB, OPM, do whatever is necessary to not let 
those people leave, frankly.
    Mr. Wolf. What is the probability that the FAA will avoid 
significant disruption to the air traffic control system when 
the year 2000 hits?
    Mr. Willemssen. We are on record as saying that FAA and 
many other government agencies have to accept that there is not 
time to fix everything.
    Mr. Wolf. Just for us so we all know, what should we expect 
when they don't make it? If they don't?
    Mr. Willemssen. What we are pushing----
    Mr. Wolf. Practically speaking.
    Mr. Willemssen. What we want to see FAA do and what they 
have not done as well as we would like to see it is to set 
priorities and put as much attention as possible into the most 
mission-critical business processes and systems. For example, I 
would assume, if I am in the Administrator's shoes, the most 
important business processes I would want to deal with would be 
separation of aircraft in the en route and TRACON environments. 
That is where I would put my resources, where I would put as 
much effort as possible in thoroughly testing the fixes before 
I frankly even considered fixing some of the other lower 
priority systems. So it remains to be seen where, in fact, 
those impacts will be felt. It is almost totally dependent on 
the priorities that FAA decides upon and the actions that are 
taken in the remaining 22\1/2\ months.
    Mr. Wolf. Mr. Olver, go ahead.
    Mr. Olver. Thank you, Mr. Chairman. I am going to show my 
ignorance here. In your testimony, you say for the past several 
decades, systems have typically used two digits to represent 
the year, such as 97 for 1997 to save electronic storage space 
and reduce operating costs. In such a format, however, the year 
2000 is indistinguishable from 1900. I don't exactly remember 
my history precisely, but I thought Orville Wright started 
flying around 1903. It is hard for me to imagine what critical 
data are in the FAA's computer systems that have an 00 tag to 
it.
    Why could one simply not archive that stuff, that is the 00 
stuff, and then have the 00 be for the year 2000? And what data 
are we likely to want to put into the computer that is 
attributable to the year 00 that we might mistake for data for 
the year 2000 instead of the year 1900?
    Mr. Willemssen. Let me give you an example, Congressman,of 
what can happen. In the host computing environment, we are looking at 
about 3.5 million lines of code. In that 3.5 million lines of code, we 
have got about 8,800 modules. In looking at the assessment package 
using some scanning tools on those modules, frankly, you are right.
    Less than 5 percent of the modules have any date 
dependencies in them. So from an air traffic control standpoint 
in the en route environment, it is not a real frequent 
occurrence. The problem is it only has to happen a couple of 
times, and those kind of impacts can infiltrate the rest of the 
system and not allow the system to work properly unless you 
identify every single date dependency. You make the necessary 
fix, you look at the system and process from an end-to-end 
perspective, address all interface issues with all the other 
incoming data, whether it is from the airlines, the Department 
of Defense, the National Weather Service, whatever the case may 
be.
    Date dependencies within these systems compared to other 
ones I have seen are not as frequent. But the magnitude of the 
number of lines of code is very significant and you have got to 
go through the tedious process of making sure that you have 
found everything in there. Because just one item can infiltrate 
and disrupt operations, whether it is providing bad data or 
actually aborting a system.
    Mr. Olver. With the explosion of data and information 
nowadays, for practical purposes it remains hard for me to see 
what data would be important that we have back a 100-year scan. 
Anything up to a 100-year scan, since we are now in the point 
of doubling information about every 5 years or something like 
that, maybe somewhat less, once the magnitude of the increase 
has gone by several doublings, at least during this century and 
is obviously going to go on much faster for the future, it is 
going to get to a doubling in far less than even 5 years, would 
be my guess.
    It still remains rather hard for me to visualize, to 
conceptualize in practical terms, in practical operations of 
these systems why there should be such a problem. Once one gets 
into research applications or where you are trying to think 
about a much longer time frame, you have to be able to 
distinguish and we have been used to doing that by having hard 
copy, I suppose, of whether we were talking about 1800 or 1900 
or whatever. But in any practical terms, particularly with 
FAA--it is hard to see why there is anything much in there that 
would be before 1925 that could be of any----
    Mr. Willemssen. It doesn't have to be before 1925. Let's 
say the 97, for example, is just shorthand for 1997. The 
logic----
    Mr. Olver. Are we putting in data relating to 2097?
    Mr. Willemssen. If you were building a system, for example, 
in the mid 70s----
    Mr. Olver. This isn't worth pursuing.
    Mr. Wolf. I think it is important. Go ahead.
    Mr. Olver. It is all right. We will take it another time. 
We are not going to get very far with this, I think.
    Mr. Wolf. I know Ms. Garvey is concerned about it. I give 
her a lot of credit. I think it is a problem that she cannot be 
held accountable for. I think she has this sense of emergency 
to move ahead. Practically speaking, so we all know, what would 
it mean, December 31, 1999 and January 1, 2000, what would it 
mean for everyone here?
    Mr. Willemssen. If the worst case situation occurred and 
the most mission-critical systems associated with aircraft 
separation in the en route and terminal environments weren't 
fully addressed after thorough testing indicated that not all 
the necessary fixes had been made, our conclusion would be that 
the impact would most likely be economic in nature.
    Mr. Wolf. A plane just wouldn't fly?
    Mr. Willemssen. That would be the worst case scenario. My 
experience working in systems issues in and out of FAA for 10 
years, safety has always been a paramount concern. To the 
extent that there are any issues outstanding related to the 
reliability of those air traffic control systems, I think that 
is why the impact would be economic rather than safety.
    Mr. Wolf. They are not going to fly? They are not going to 
let them fly?
    Mr. Willemssen. And that is the airlines' concern frankly. 
They are very concerned that if FAA systems aren't compliant, 
at least substantially so, they won't be able to get off the 
ground. The Air Transport Association has recently assigned an 
individual to monitor the effectiveness of FAA's program to 
make sure they are done in time.
    Mr. Wolf. Could this go on for a while?
    Mr. Willemssen. Possibly.
    Mr. Wolf. They just wouldn't fly January 1 or maybe it 
would go on for a while?
    Mr. Willemssen. Possibly. One of the areas, though, that we 
are pushing not only FAA, but other critical Federal agencies 
is you have to start thinking now about contingency plans.
    Mr. Wolf. What do you mean?
    Mr. Willemssen. If your main system isn't going to work, we 
have to look at backup situations.
    Mr. Wolf. The FAA has said they have a suitable contingency 
plan. Do you believe that they do?
    Mr. Willemssen. I haven't seen that yet. They have 
contingency----
    Mr. Wolf. Could you look at it and then make an analysis 
and get back to the committee if you think it is suitable?
    Mr. Willemssen. Certainly. I might add, we are issuing a 
guide in less than 2 weeks in exposure draft form to the entire 
government talking about what to do to put together a 
contingency plan.
    Mr. Wolf. It is better to be close to home on December 31, 
1999.
    Mr. Willemssen. I am still optimistic that FAA will crank 
it up and put the appropriate attention. I was encouraged that 
the Administrator has now made this a top priority.
    Mr. Wolf. Yes, she has.
    Mr. Willemssen. Which frankly during the course of our 
assignment we didn't see that.
    Mr. Wolf. I wish the previous ones had. She has. I have 
spoken to her. I think she is totally committed to this. The 
FAA is talking about a plan to replace the host computer 
hardware and rehost the existing software onto the new 
equipment before the year 2000. The last time the software was 
rehosted, it took 3 years according to the IG's office.
    Assuming the FAA can do the current effort in a shorter 
amount of time, they would have to start right away and they 
don't have a budget request before Congress to begin. Are there 
significant risks in rehosting the existing software to new 
equipment? And how long is it likely to take?
    Mr. Willemssen. There are significant risks to rehosting 
new hardware onto the additional software. Thinking that FAA is 
going to be able to do it at 20 centers in a little less than 2 
years is highly optimistic.
    Mr. Wolf. Do you think it is possible?
    Mr. Willemssen. I think it is possible.
    Mr. Wolf. Probable?
    Mr. Willemssen. Probable is dependent upon the kind of 
effort we see within FAA and the kind of focus. If we can 
continue to see sustained effort that we have seen over the 
last few weeks, then I am more optimistic than what I had seen 
in the prior 6 to 9 months.
    Mr. Wolf. Do you believe they should be coordinating their 
effort with the airlines?
    Mr. Willemssen. Most definitely.
    Mr. Wolf. Are they?
    Mr. Willemssen. They are beginning to. The new program 
manager, Ray Long, in fact, sent me a----
    Mr. Wolf. Is he literally the person now for the FAA? He 
has been given----
    Mr. Willemssen. That is right. The Administrator announced 
him last week and said he is reporting to her. That is an 
important distinction, because somebody has got toset 
priorities. You can't have every individual organization saying mine is 
the most important. Or otherwise this isn't going to work.
    Mr. Wolf. I also heard that they determine the payroll for 
the whole Department of Transportation, using the FAA computer.
    Mr. Willemssen. I believe under their outsourcing 
arrangement, that may be correct. I am not positive on that.
    Mr. Wolf. You have met him?
    Mr. Willemssen. Oh, yes, I know Mr. Long.
    Mr. Wolf. Two years ago, what was his job?
    Mr. Willemssen. He was within the air traffic service area, 
in the computer side but not with any kind of overall 
responsibility. I think they made a good choice. He is very 
aggressive and he knows systems.
    Mr. Wolf. Have you been to the ``war room?''
    Mr. Willemssen. I have not personally been to the war room. 
All of my staff have been to the war room.
    Mr. Wolf. Is it a war room or is it just an office with 
some desks? I have heard this expression, ``there is a war 
room.'' In my mind I think of charts and bright lights. What is 
the dimension of the war room?
    Mr. Willemssen. I am going to let my staff come up and 
describe it for you. This is Colleen Phillips.
    Ms. Phillips. Not having seen a true war room, I can't draw 
you a comparison. I can describe the room to you.
    Mr. Wolf. How big is it?
    Ms. Phillips. Long and narrow, maybe 20-foot long, 10-foot 
narrow. About ten computers.
    Mr. Wolf. Not a big war.
    Ms. Phillips. Lots of very experienced people sitting 
around at the computers.
    Mr. Wolf. How many people?
    Ms. Phillips. I should back up a second and tell you there 
are actually several war rooms in niches around the building. I 
saw two. People, maybe 6 in one, 3 in the other.
    Mr. Wolf. I have been a little concerned, I have heard them 
say--``we have a war room.'' My mind, my imagination goes 
through a movie of great war rooms and I was very reassured. 
Then I began to say, I wonder how big it is? I wonder if they 
have all these charts. I think the war room can give the 
impression of more activity than maybe there is.
    Mr. Olver. Mr. Chairman, I am utterly crushed. I thought I 
was going to hear about Star Trek.
    Mr. Wolf. That is what I thought.
    Mr. Olver. It is terrible.
    Mr. Wolf. I would like to ask Mr. Efford, our aviation 
expert, to go visit the war room, just so the staff can know 
what it is; 20 by 10, that is not as big as my family room. It 
is very serious and we are going to have a number of other 
questions. We don't want to let this thing get out of hand.
    I think in all fairness, it did get out of hand. Again, I 
have prefaced my comments all the time because I like Ms. 
Garvey, not that she has allowed it, but I think it has gotten 
out of hand. I think the fact that there was a hiatus where 
there was no Administrator for over a year and all those things 
took place. FAA just let this thing go. People who were getting 
ready to retire said it wasn't going to happen on their watch, 
they weren't going to get active. I think as a result of that, 
it has almost become a crisis situation. Is the DOD involved 
with them because they would also be controlling the DOD 
aircraft?
    Mr. Willemssen. That is correct. In terms of exchange of 
information from different air traffic control facilities, that 
would be correct.
    Mr. Wolf. I asked you the question, but they don't have a 
budget request before Congress to begin the work.
    Mr. Willemssen. I think their 1999 request is around 38----
    Mr. Wolf. But 1999 won't pass until October. Are they going 
to ask for a reprogramming in a supplemental?
    Mr. Willemssen. They are in the process of reprogramming 
quite a bit of the money. They estimate they are going to spend 
in 1998 about $89 million. Much of that is either through 
reprogramming or absorbing about $33 million of it from other 
accounts.

                     FTA Grant Management Oversight

    Mr. Wolf. In 1992, the GAO identified the FTAs grant 
management oversight activities as a high risk area. After 
significant improvement in its Grants Management Program, the 
FTA was removed from the GAO high-risk list in 1995. Since then 
the GAO has been monitoring the FTA's grant management 
activities. How are they doing 3 years after it was removed 
from high risk?
    Mr. Anderson. Mr. Chairman, we have got a report that is 
going to be coming out in the next few months on that. The 
bottom line is it is a mixed view. There has been some 
improvement. The guidance and training for staff and grantees 
has actually improved. They have developed some standard 
oversight procedures and processes. They are using contractors 
to expand their oversight authority. All the regions seem to be 
doing better at oversight. But where the problem still exists 
is the grantees still aren't meeting the deadlines that are set 
for fixing problems and they often have to get additional time 
to fix the problems.
    Mr. Wolf. Why do you think noncompliance takes so long?
    Mr. Anderson. I don't know. I don't know if it comes down 
to a staffing issue or what but this is something that I think 
FTA needs to stay after and get the grantees to get into 
compliance on.
    Mr. Wolf. Do you think they are really serious?
    Mr. Anderson. Yes, I think they are. I think FTA has taken 
a more concerted effort since we first looked at them back in 
1992 and before and they are serious about it. I think they are 
doing some things. Another problem that we found is that the 
information system that they use, and this is a typical problem 
throughout the Department of Transportation, but for the 
oversight of the grantees, the information system is lacking 
current and accurate data.
    Again, the information system is there to give you an early 
warning of things that might go wrong, if grantees aren't 
complying with a large number of requirements. And if the 
system is not working, it doesn't give you that early warning. 
Another thing that we found is that the New York region of FTA 
that is responsible for more of the grant dollars than any 
other region, their documentation is woefully inadequate.
    Mr. Wolf. The only political appointee in any of the region 
offices happens to be in New York.
    Mr. Anderson. I understand that is correct, yes.
    Mr. Stouffer. I understand that FTA is seeking to make a 
change in that. The other thing I would add in terms of FTA 
grant oversight improvement is that since 1995 when we last 
looked at this, we have seen a change in attitude in terms of 
enforcement actions on the part of FTA--the withholding of 
funds, stern letters, those types of things. They have moved 
ahead in a positive direction, but there are still improvements 
to be made.
    Mr. Wolf. With the implementation of the Government 
Performance and Results Act, how is FTA able to assess its own 
oversight to determine the effectiveness of the program?
    Mr. Anderson. We haven't actually seen any of the specific 
goals and things that they have established for that yet, but 
that is one of the things we are going to be looking at in the 
future.
    Mr. Wolf. Is there a wide variation between different 
offices?
    Mr. Anderson. I don't know. I haven't seen it.
    Mr. Stouffer. One of the things we say in our report is 
that the FTA information system could prove to be a very useful 
tool in terms of looking at improvements made by the grantees. 
If they would get that system up and running, make it a little 
more user friendly, they certainly would be able to measure 
results much more effectively.

                              Rail Safety

    Mr. Wolf. FRA has been working with railroad labor and 
management to identify safety hazards and develop corrective 
measures to eliminate these hazards before they become 
problems. To accommodate FRA's new collaborative study 
initiatives, FRA has shifted some resources away from site-
specific inspections.
    GAO recently reported these inspections declined by 23 
percent from 1994 to 1995. As a result, a greater number of 
railroads are not being inspected and FRA inspectors are 
conducting fewer reviews of the railroads own inspection 
efforts. Are you satisfied that FRA's safety assurance and 
compliance program is not compromising rail safety?
    Mr. Anderson. No, we are not. This is something that I 
think we are going to continue to watch to see what happens. 
Overall there has been improvement in terms of statistics, in 
the number of accidents, but history shows that when there is a 
drop, it is followed by a rise--it is like three steps forward 
and two steps back. Sometimes the improvements are taken away 
with some other things that occur. I mentioned in the statement 
there were 10 accidents that occurred in 1997 with Union 
Pacific and CSX in terms----
    Mr. Wolf. And 10 people died.
    Mr. Anderson. Yes. That raises questions about the overall 
effectiveness of FRA's program because the FRA had to send in a 
large team of inspectors in each case to find outwhat was going 
on and they found some other problems.
    Mr. Wolf. Wouldn't it mean if 10 people died from Union 
Pacific since 1995 or since they put this in effect that there 
is something wrong? Yesterday, I think it came out that there 
were 14 accidents.
    Mr. Anderson. One of the concerns that we have got is you 
talk about going--the pendulum swinging----
    Mr. Wolf. Those are from 1997.
    Mr. Anderson. That is right.
    Mr. Wolf. I think that was actually more if memory serves 
me than you had from 1990 to 1996.
    Mr. Anderson. I believe that is right. But there is some 
concern about whether or not the pendulum in terms of the 
enforcement process and procedures that you use, it swings too 
far from a cooperative, collaborative approach and gets too far 
away from the actual inspection enforcement side. That is why 
we think we need a little more time to tell. There is no 
question that they will never have enough inspectors to be able 
to inspect everything that they need to inspect. But there has 
to be a proper balance of the inspection versus the 
collaboration. Joe, do you want to elaborate at all?

                       state infrastructure banks

    Mr. Wolf. It is hard for those families.
    Last year, Mr. Anderson, you testified there was not 
sufficient data to determine if the State Infrastructure Bank 
Program was effective in assisting States to cover shortfalls 
in transportation programs.
    Can you share with us any insight into how well the State 
Infrastructure Bank Program is meeting this goal now that it 
has been in existence for approximately 2 years?
    Mr. Anderson. The only information I have that I can share 
with you, we have not done a specific follow-up review yet, but 
there are certainly a number of additional States that are 
participating. I believe right now in some form or another, 
there are 38 States plus Puerto Rico that are going to be 
participating in SIBs, State infrastructure banks.
    I think the 10 original pilot States are involved, 12 
additional States have already finalized agreements and there 
are 12 others that are working on revising their agreements. 
There are some other States, I think, that still have to do 
some legislative changes within their States in order to be 
able to utilize State infrastructure banks.
    Mr. Wolf. Are they meeting the goal now?
    Mr. Anderson. I don't know. We haven't gotten any 
information. I don't think it has progressed far enough yet in 
terms of the actual number of projects that they have started 
to finance with it. I know that they have drawn down some of 
the money. This is something that will probably be on our 
window to look at again in terms of follow-up review.
    Mr. Wolf. What is the difference between the proposed 
funding for the State Infrastructure Bank Program and the 
Transportation Infrastructure Investment Program?
    Mr. Anderson. I am not sure if I know the difference in 
that. Is that the one where they would use loans like they have 
with Alameda or is that a different thing?
    [The information follows:]

    A primary difference is that State Infrastructure Banks will help 
states finance smaller state or local projects that have a revenue 
stream and are part of a state's transportation program. This is 
especially true during the early years of the SIBs when states have 
limited funds they can provide before they build up revenues to finance 
larger projects. The Infrastructure Credit Enhancement Program is 
envisioned to assist larger projects of national significance--projects 
of at least $100 million or 50 percent of a state's federal-aid 
apportionment. The program could finance projects that cross state 
boundaries or projects that would otherwise deplete a state SIB.

    Mr. Christoff. The Transportation Infrastructure 
Enhancement Credit Program, last year was proposed as a loan 
program. This year, if I read the budget appendix correctly, 
they are asking for $100 million in grant money, to fund what 
they are terming transportation projects of national 
significance. This would be similar to Alameda corridor, even 
though that was a loan.
    Mr. Wolf. So the difference is one is a loan and one is a 
grant?
    Mr. Christoff. This year they are proposing it as a grant. 
Last year, they wanted it as a loan program.
    Mr. Wolf. I wonder why they haven't fixed their own bridge, 
the Woodrow Wilson Bridge that they have owned for some years.
    Last year, before the committee you indicated that the 
Department of Treasury raised a number of concerns about tax 
exempt debt in relation to the transportation infrastructure 
investment credit. Specifically, the IRS restricts private 
involvement in tax-exempt debt. How have these program concerns 
been allayed, if at all, and how will they affect the overall 
program?
    Mr. Christoff. I think they were allayed in the sense that 
what the administration is proposing this year is not a loan 
program. Treasury raised those questions last year on the 
Transportation Enhancement Credit Program when it was proposed 
as a loan program. This year it is saying this is a straight 
grant program. DOT would give the money directly to projects of 
national significance and not make it into a loan that would 
have to be tied to a project that has a revenue stream that 
would pay back the loan over years.
    Mr. Wolf. So the States would clamor for that versus the 
other?
    Mr. Christoff. Clamor for a grant? Well, all States clamor 
for grants. You don't have to pay back a grant.

                           dot reorganization

    Mr. Wolf. Over the past several years, GAO has indicated 
the opportunities for streamlining and downsizing at the 
Department by consolidating headquarters. What has the 
Department done over the past year to consolidate its field 
presence?
    Mr. Anderson. I don't think they have actually done any 
consolidation. They have issued a couple of interim reports and 
I understand they are supposed to be coming up to youshortly at 
the end of this month with a report on FHWA and proposal to go from 
nine regions----
    Mr. Wolf. They have been talking about that for years.
    Mr. Anderson. When we met with them the other day, it looks 
like they have made a policy decision to go from nine to four 
regional offices. But it looks like--it is not clear when it is 
going to happen and how much it is going to save because this 
report, they are going to be bringing to you at the end of this 
month, as we understand it, is not going to have a lot of the 
details worked out. They are going to plan to go back and in 
June work out--by June work out some more of the details.
    Mr. Wolf. We are going to ask the Administrator. If he 
can't answer that, he ought to just leave the job. This has 
been going since the Secretary was the Federal Highway 
Administrator. If they can't do that, then they can't do 
anything. Frankly, from my own point of view, they have no 
credibility, none whatsoever.
    I remember Mr. Slater mentioned it 4 years ago or 5 years 
ago. I think he mentioned it when Bob Carr was Chairman of this 
Subcommittee. The Coast Guard has done it, haven't they?
    Mr. Anderson. The Coast Guard has done some streamlining, 
yes. Part of the problem, too, has been the turnover in 
leadership. I think, this is one of the reasons that they cited 
about why they have been delinquent in terms of getting a 
report to you.
    Mr. Wolf. We are going to ask you the rest of these, but 
this issue is something we know the answer to. The answer is 
they haven't done a good job; is that correct?
    Mr. Anderson. They have not made any progress to speak of.
    Mr. Wolf. How serious are they?
    Mr. Anderson. I believe when I met with them----
    Mr. Wolf. You can't say they are serious if they haven't 
done it. How serious have they been over the years?
    Mr. Anderson. I don't believe there has been the push there 
to get it done. I think if you keep pushing, I think that that 
would help get it done. It is the closest we have seen in terms 
of some specifics in terms of the briefing that I got a couple 
of weeks ago. They have some meat on the bone. They are talking 
from nine to four regional offices. What is not clear is what 
is going to be the actual impact in terms of savings.
    Mr. Wolf. Who would that be done by?
    Mr. Anderson. They don't indicate. That is a part of the 
problem. That is one of the details to be worked out.
    Mr. Christoff. Over the next 4 years is what we were told.
    Mr. Anderson. I think you have got some good questions for 
them.

                        FHWA Compliance Reviews

    Mr. Wolf. GAO recently completed a review of the Federal 
Highway Administration's compliance reviews, which are used to 
determine whether each motor carrier is fit to operate safely. 
In this report, you concluded that the Federal Highway 
Administration needs to improve the way it selects motor 
carriers for safety reviews. Will you explain what your 
concerns were?
    Mr. Anderson. Part of the problem here is that they rely on 
the States to report data to them on accidents that they can 
then use to target inspection resources and that sort of thing. 
A number of the States are slow in reporting the data and the 
data is incomplete. So they need a process to be instituted 
where they will get better data that they can use in the 
system. Jim, is there anything you want to expand on there?
    Mr. Ratzenberger. FHWA received about 74 percent of the 
data on accidents. The less data you receive on accidents, the 
less able you are to target inspections and compliance reviews. 
Specifically, what we recommended was that for those States 
that are not doing a very good job in reporting data, that FHWA 
identify why they are not doing it and start working with them 
to increase their data reporting.
    Mr. Wolf. That is what I was going to ask you. Why can't 
they? What is the barrier?
    Mr. Ratzenberger. It is a very decentralized system. For an 
accident, the report starts with a trooper at the scene of an 
accident. Often that trooper is more concerned with securing 
the scene, making sure that people head to the hospital and 
cleaning up the accident.
    Mr. Wolf. People have died as a result of this. There have 
been a number here in my area on the beltway.
    Mr. Ratzenberger. Died as a result of----
    Mr. Wolf. As a result of the nonreporting and the laxity in 
this.
    Mr. Ratzenberger. That is not something we would have 
looked at. The idea here is the better the data is, then FHWA 
can use that to go in and find those trucking firms that have 
the worst accident rates. FHWA can then go in and start 
cleaning up their operations.
    Mr. Wolf. Is it your sense that there have been deaths as a 
result of this?
    Mr. Ratzenberger. Obviously, there have been a lot of 
deaths--there are 5,000 deaths every year as a result of 
accidents involving trucks.
    Mr. Wolf. There was one death in the district where the 
truck driver had 30 some violations. We know there have been 
deaths. There have. My wife and children drive on the road. 
Your family drives on the road. Everyone does. The number of 
accidents on the beltway with regard to trucks, sure there have 
been deaths. The lack of action on the part of the Federal 
Highway Administration has resulted in deaths.
    I must say, you all have been almost too laid back today. I 
don't think you ought to be mean, but I think you ought to be 
candid. In some respects, you have almost testified today as if 
you are on the payroll of the Department of Transportation and 
not the GAO. Sure, these things have gone on and we have had a 
number of accidents. We have had a number of people killed on 
the beltway because of these things.
    Mr. Anderson. Mr. Chairman, if I could, I would just like 
to address that comment. One of the things that we pride 
ourselves in is making sure that we gather the evidence to have 
a direct cause-effect relationship before we can draw 
conclusions and make recommendations. Some times as a lay 
person, you can say that, well, obviously there is something 
that has happened here. But we have to see the evidence in 
order to be able to relate it to a particular death or fatality 
or something like that. Clearly, these systems are designed to 
make the system safer, there is no question about that. When 
they don't work as intended, then the system is not as safe.
    Mr. Wolf. We will just submit the rest of the questions. I 
do think that you have pulled your punches a little bit today 
with regard to the Department. I don't think anybody ought to 
ever be mean or be hurtful of anybody but by speaking out 
aggressively the way the IG has done, you actually help the 
Department.
    One of the positive things with regard to Ms. Garvey is 
that she is open to these things. Frankly, if I had a problem 
in my office, I would want you to come and tell me. If I get a 
complaint from a constituent that something is not being done, 
that is the only way I know. I can't be everywhere. The same 
applies here.
    I think you do a disservice to the Secretary. Obviously the 
Secretary can't know everything that is going on throughout the 
Department. I really think you ought to be more aggressive and 
more forthright. I don't mean mean and I don't mean damaging 
people's reputations and saying things that aren't accurate, 
but I think you honestly have held back a little bit.
    Anyway, I appreciate you all taking the time. I appreciate 
it very much. The hearing is adjourned.

              BOSTON CENTRAL ARTERY/TUNNEL COST INCREASES

    Mr. Wolf. Cost increases of what magnitude can be anticipated if 
the State is unable to hold to its construction cost goals?
    [The information follows:]
    While we cannot predict the total increase in the costs of all the 
project's construction contracts, cost increases of some magnitude seem 
likely. For example, as outlined in our March 1997 report, if recently 
awarded and yet-to-be awarded contracts experienced cost growth in the 
same 14 to 16.5 percent range being experienced by recent contracts 
that are 25 percent or more complete, it would add between $270 million 
to $400 million to cost of the project.
    The state's cost containment goals form the basis for its cost 
estimate and its finance plan. In July 1997, we recommended that 
Massachusetts decouple its cost containment goals from the project's 
cost estimate and revise that estimate to more closely reflect the 
state's actual experience with its cost containment program.

                        PROJECT COST MANAGEMENT

    Mr. Wolf. Why doesn't FHWA have standards or requirements in place 
for States to follow in preparing costs estimates for projects? If they 
did, wouldn't it avoid many of the problems and discrepancies 
identified by the GAO in the Big Dig's finance plans?
    [The information follows:]
    While FHWA can best address why they have chosen not to adopt 
standards or requirements to date, certainly one contributing factor 
may be that cost management has not been an explicit statutory or 
regulatory goal of FHWA's oversight to date. FHWA has done little to 
ensure that cost management practices, such as assuring that states 
prepare early, accurate estimates of projects' costs and a plan to 
finance them, are considered as it oversees and commits federal funds 
to projects.
    We believe that having the states prepare total cost estimates for 
projects would assist policy makers in understanding the full extent of 
the proposed federal, state, and local investment in these projects and 
assist program managers in accurately estimating the total financing 
requirements. In addition, as you have noted in your question, having 
uniform standards for how such estimates should be prepared would avoid 
the problems we have seen on the Central Artery/Tunnel and other 
projects. We have found that one reason why costs increase on large-
dollar projects over time is that the initial cost estimates are not 
very reliable. They are preliminary estimates done in conjunction with 
the environmental assessment process and not designed to be accurate 
predictors of a project's total cost. Furthermore, the type of costs 
included in initial estimates can vary widely among states and 
projects.
    As you point out, we have raised a number of concerns over the past 
3 years concerning how Massachusetts calculates costs for the Central 
Artery/Tunnel project; concerns that could have been avoided had FHWA 
promulgated uniform standards for preparing project cost estimates. For 
example, in 1996, Massachusetts estimated the total costs of the 
project at $7.8 billion because it reclassified over $1 billion in 
costs as off-budget ``support'' items, credited the project with 
proceeds from the development of future real estate, and excluded the 
effects of inflation after 1994. In 1998, we discussed the issue of 
whether $776 million in projected future interest costs should be 
included in the project's cost estimate. As we reported, in the absence 
of federal standards, Massachusetts' practice has been, according to 
state officials, not to include the costs of borrowing in its cost 
estimates for transit and highway projects. This is particularly 
significant because the state borrows nearly all the state funds it 
spends on transportation. In other words, the $1.1 billion expended by 
Massachusetts for the Central Artery/Tunnel project since the 1980s was 
borrowed funds. If the $776 million in future borrowing costs is 
included in the project cost estimate, should we then also include the 
interest costs that were incurred to borrow the $1.1 billion? These and 
other difficult questions point to the benefits that could be attained 
by having uniform standards for preparation of project cost estimates 
across states.

                            ALAMEDA CORRIDOR

    Mr. Wolf. Another mega-project that you have reviewed for the 
committee is the Alameda Corridor project. Expected to cost $2 billion, 
this 20-mile dedicated rail link has not been fully designed and only 
limited construction has begun. What is the status of the project and 
what challenges does it currently face?
    [The information follows:]
    The project is at the 20 percent design level with less than 5 
percent of the project constructed. About 48 percent of the project's 
total funding has been obtained; the remainder is Los Angeles County 
Metropolitan Transportation Authority's (MTA) commitment to provide 
$218 million to the project and $866 million in revenue bonds to be 
issued in November 1998. Construction is scheduled to begin in February 
1999.
    The project's major challenges are to control costs, secure 
financing, and meet an ambitious schedule.
    The project must take steps to control costs, since there are 
several issues that could increase the project's costs. For example, 
the 10-mile trench will be built in an industrialized area where many 
utility lines are buried. Relocating these lines could be costly, as 
could any delays in relocating them. Clearing hazardous wastes from the 
trench area could also increase the project's costs, as could removing 
underground water from the trench, and managing traffic along Alameda 
Street and its cross streets. To cover potential construction cost 
increases, the project has established contingency reserves that, as of 
December 1997, totaled about $221 million. Because the complete terms 
of the project's construction contracts will not be available until the 
fall of 1998, it is unclear whether these reserves are adequate to 
cover potential increases in the project's costs.
    The project also faces the challenge of demonstrating to financial 
markets that the project is a good credit risk and obtaining all of the 
funds committed by a financially strapped MTA. The project plans to 
raise $866 million or more from revenue bonds that will be issued in 
late 1998. MTA currently plans to raise $68 million of its $218 million 
commitment by issuing revenue bonds that are backed by countywide sales 
taxes. MTA plans to secure $150 million of its $218 million commitment 
from state funds that would be passed on to the Alameda Corridor.
    The other major issue facing the project is whether it can adhere 
to its challenging schedule. This is a key concern because any delays 
in beginning operations in 2001, such as those associated with 
potential delays in constructing the trench, could postpone generating 
revenue that will allow the project to repay its bonds and the $400 
million federal loan. Both the project and federal and local 
transportation officials agree that the project has an ambitious 
schedule, and many tasks must be completed before construction of the 
trench can start in February 1999. Time savings from design-build 
contracting, expected to be 1 year less than if separate contracts for 
design and construction had been let, could be less dramatic than 
anticipated.
    Mr. Wolf. A major piece of the financing plan is $218 million from 
the Los Angeles MTA. These funds are to be raised by LAMTA issuing its 
own revenue bonds that are based on sales taxes. These revenues are 
currently below projected levels and have contributed in part to the 
cash crisis facing the LAMTA and the subsequent suspension of the rail 
projects. Is the MTA able to make good on its commitment to the Alameda 
Corridor project and comply with the bus consent decree?
    [The information follows:]
    Project and MTA officials say that MTA will fulfill its October 
1997 agreement to make the $218 million in funds available to the 
project starting in 1999. However, several factors make this commitment 
the least secure part of the project's funding. First, MTA continues to 
face a serious fiscal crisis that has already required them to choose 
among planned projects. Second, MTA could have difficulty in providing 
its funding when the project needs the funds to pay for construction if 
the Corridor meets its schedule. Currently, MTA officials are expecting 
project delays that would allow them to provide their funds later than 
scheduled, when it may be easier for them to do so.
    Mr. Wolf. When do you anticipate that all financing mechanisms will 
be in place to proceed to construction?
    [The information follows:]
    The last major piece of the project's financing is $866 million in 
revenue bonds, which project officials now hope to issue by November 
1998. The issuance of revenue bonds would not occur until final project 
costs are available. Total costs will not be known until the project 
receives contractors' proposals on the largest segment of the project, 
the mid-corridor trench section. These proposals are due by July 1, 
1998.
    Mr. Wolf. How will the IRS' ruling limiting the segments of the 
project that can be financed through tax-exempt revenue bonds affect 
the schedule and of the project?
    [The information follows:]
    The IRS ruling will not affect short-term project costs during 
construction. However, long-term costs will rise as the project's use 
of taxable bonds arise. For example, if the project chooses to use more 
taxable bonds than previously planned, higher interest and financing 
costs would raise the long-term costs of the project.
    The project's schedule now assumes that revenue bonds will be 
issued by November 1998. If that date is delayed, the project's overall 
financing package would be delayed, and it is likely that the start of 
construction would also be delayed.
    Mr. Wolf. Has the FHWA required a finance plan for the Alameda 
Corridor project, and in your opinion, is one necessary?
    [The information follows:]
    We agree that adequate monitoring by FHWA requires a finance plan 
or similar document, particularly after the bond issue is completed and 
the project begins construction. Although FHWA has not expressly 
required a finance plan, FHWA has received periodic financial reports 
from the project, detailed financial planning information, and 
information on its projected revenue stream. When its financing package 
is complete, the project will have to make available a detailed final 
finance plan in order to proceed with its bond issue of about $866 
million in late 1998. FHWA is now developing a semi-annual reporting 
schedule that will include a finance plan that FHWA can use to monitor 
the project's financial decisions.

                         BART AIRPORT EXTENSION

    Mr. Wolf. BART's use of design-build contracting is intended to 
save time by expediting the project's design and construction. However, 
because these activities will be expedited, the project will incur 
expenses faster than it will receive funding, requiring BART to borrow 
funds to fill the gap between revenues and expenses. Borrowing costs 
will increase given the anticipated shortfalls between appropriations 
levels and the levels assumed in the finance plan and the full funding 
grant agreement. Given these circumstances, is it likely that this 
project will be a model for design-build contracting?
    [The information follows:]
    The BART airport extension may prove to be a relatively unique 
project, rather than a model for design-build contracting for the 
following reasons: (1) the project has four separate design-build 
contracts, not one overall contract that would reduce administrative 
and overhead costs, (2) not all of the project uses design-build since 
the airport, not BART, is building the airport station and structures 
using traditional design-bid-build contracting, and (3) much of the 
project was already designed by BART, thereby reducing the advantages 
of combining design and construction under one contractor. In addition, 
the cost efficiencies which design-build contracting proponents cite 
are best realized when a sufficient revenue stream exists to pay 
construction costs as they become due. Securing a revenue stream 
sufficient to accomplish this is difficult for large-dollar ``mega-
projects'' such as the BART airport extension.

                      LOS ANGELES RED LINE PROJECT

    Mr. Wolf. Can you give the committee an update on the status of the 
North Hollywood segment? In your opinion, is it on budget and on 
schedule and are there any potential problems in completing this 
segment?
    [The information follows:]
    As of January 1998, the North Hollywood extension is scheduled for 
completion in May 2000, about 5 months ahead of the December 2000 date 
established in the full funding grant agreement. Construction on this 
extension is about 55 percent complete and most of the potential 
tunneling problems (e.g. tunneling through the Santa Monica Mountains) 
have already been addressed. According to FTA's PMO consultant, some 
slippage to the May 2000 date could occur but the December 2000 date in 
the grant agreement is achievable.

                      NEW STARTS FUNDING REQUESTS

    Mr. Wolf. Haven't these shortfalls been funded in many cases by 
borrowings and other bridge financing, the costs of which are borne by 
the local sponsors?
    [The information follows:]
    Yes, they have.

                       FHWA DISCRETIONARY GRANTS

    Mr. Wolf. Your report indicated that the high level of consistency 
between the staff's recommendations and the Administrator's selections 
changed after fiscal year 1994. How and why?
    [The information follows:]
    Our analysis of the discretionary program's selection process 
revealed that FHWA used two different selection processes during the 
period we reviewed (fiscal years 1992-97). The process that FHWA used 
affected the extent to which the Office of the Administrator selected 
higher priority projects. Under the selection process FHWA used during 
fiscal years 1992-94, FHWA staff ranked projects in order of priority 
and recommended specific projects and funding amounts to the Office of 
the Administrator. During this period, the Office of the Administrator 
selected over 98 percent of all projects that the program staff 
recommended. Under the selection process used in fiscal years 1995-97, 
staff placed projects into priority categories ranging from most 
promising to not qualified. During this period, the percentage of the 
highest priority projects selected by the Office of the Administrator 
was 73 percent.
    According to officials in FHWA's Office of the Administrator, the 
new process was designed to provide the Office with more flexibility in 
making project selections. This flexibility was designed to allow the 
Office of the Administrator to take into account issues such as 
geographic distribution of funding and the interests of Members of 
Congress.
    Mr. Wolf. Though the Office of the Administrator did not document 
the factors it uses in determining which project it ultimately selects 
for discretionary funding, what factors or rationale do you believe the 
Administrator used to select the final project awards? For example, was 
it evident that projects were funded in ``swing'' districts or States?
    [The information follows:]
    Because the Office of the Administrator does not document its 
project selection criteria or its justification for selecting any given 
project, we were unable to clearly identify the factors it used to 
supplement the staffs' analyses. However, subsequent to our review, we 
conducted further analysis of the final selections to determine the 
proportion of projects awarded to democratic and republican 
congressional districts during fiscal years 1995-97. Our analysis 
revealed that for 4 of the 5 programs (Discretionary Bridge, Interstate 
4-R, Interstate Discretionary, and Ferry Boats and Facilities), the 
Office of the Administrator selected more projects and provided more 
funding to democratic districts. However, FHWA also received more 
requests from states for projects located in democratic districts. In 
contrast, in the Public Lands program, we found that FHWA awarded a 
greater number of projects and dollars to democratic districts even 
though FHWA received more requests for funding for projects in 
republican districts. For example, in fiscal year 1997, states 
requested funding for 48 projects ($93.5 million) in democratic 
districts and 55 projects ($148.7 million) in republican districts. Of 
the 28 projects FHWA selected for funding in 1997, 27 projects ($50.9 
million) went to democratic districts, and 1 ($274 thousand) project 
went to a republican district.

    Mr. Wolf. In 1982, Congress directed FHWA to establish a rating 
factor for each candidate project. What is the benefit of these rating 
factors if they are not adhered to in determining final awards?
    [The information follows:]
    The only program for which FHWA developed a rating factor and that 
we reviewed was the discretionary bridge program. The other four 
programs we reviewed had no comparable rating factor. The benefit of 
the bridge rating factor is that it allows FHWA to screen out 
ineligible projects and help staff develop priority rankings. However, 
FHWA uses the bridge rating factor as one of several factors to select 
projects for bridge discretionary program funding. Another factor FHWA 
would use in the final selections would be the extent to which the 
bridge project received discretionary funding in prior years. Projects 
receiving prior year funding would most likely be selected for 
continued funding.
    Mr. Wolf. In 1997 you report that just over half of the 
discretionary awards made by the Administrator came from the 
``promising'' or ``most promising'' categories, and a growing number 
came from the ``qualified'' or lowest-priority category. In your 
opinion, is the Administrator making wise transportation investment 
decisions if he is relying more on his discretion rather than on 
staff's analyses and recommendations?
    [The information follows:]
    The discretionary programs allow the FHWA Administrator to use 
discretion in selecting eligible projects. All the projects that the 
Administrator selected in the programs we reviewed met the basic 
eligibility criteria--no statutorily unqualified projects were 
selected. Whether all the projects selected were wise transportation 
investments is unclear, because the Office of the Administrator did not 
document its criteria for making final selections or its justification 
for selecting any given project. FHWA's selection of lower priority 
projects in three of the five programs we reviewed raises serious 
questions about the relative merit of those projects.

                       AMTRAK OPERATING SUBSIDIES

    Mr. Wolf. What progress has Amtrak made, to date, in eliminating 
its need for operating subsidies by the year 2002?
    [The information follows:]
    It appears Amtrak has made limited progress in eliminating its need 
for federal operating support but Amtrak continues to rely heavily on 
federal support--both capital and operating--to make ends meet. In 
fiscal year 1997, Amtrak exceeded its goals for ridership, passenger 
revenues, and overall revenues and its net loss (total revenues minus 
total expenses) of $762 million was about the same as that of fiscal 
year 1996. However, its financial condition is still precarious. 
Betweeen fiscal years 1996 and 1997, the gap between Amtrak's operating 
deficit (net loss minus noncash items) and its federal operating 
subsidy continued to increase (from $82 million to $149 million); the 
amount of debt and capital lease obligations increased from about $987 
million to $1.3 billion; and Amtrak's working capital position (the 
difference between current assets and current liabilities) deteriorated 
from a $195 million deficit to a $300 million deficit. In addition, as 
of September 30, 1997, Amtrak had to borrow $75 million to make ends 
meet. The propsects for fiscal year 1998 may also be dim. Based on 
results through the first quarter of fiscal year 1998, Amtrak was 
projecting its net loss could be about $820 million (compared with a 
$762 million net loss at the end of fiscal year 1997) and a cash flow 
deficit of about $200 million by the end of September 1998. Amtrak 
currently has a $150 million line of credit. While Amtrak's strategic 
business plans have helped reduce operating losses to some degree, 
Amtrak continues to face challenges in eliminating federal operating 
support by 2002.
    Reducing the need for federal operating subsidies is also heavily 
dependent on capital investment. The Taxpayer Relief Act of 1997 will 
make available to Amtrak in fiscal years 1998 and 1999 a total of $2.2 
billion that may be used to acquire capital improvements. However, 
Amtrak's capital investment needs are great and go beyond the funds 
made available in the Taxpayer Relief Act. Amtrak has estimated that 
its federal capital funding requirements total more than $4 billion. 
These funds will be used for such things as completing the Northeast 
Corridor high speed rail project between New York and Boston, 
recapitalizing the Northeast Corridor to preserve its ability to 
operate in the near-term at existing service levels; and accomplishing 
other projects.
    Mr. Wolf. What impact does the recent union agreement have on 
Amtrak's ability to be free of Federal operating subsidies by the year 
2002?
    [The information follows:]
    Implementation of the recent agreement with the Brotherhood of 
Maintenance of Way Employees (BMWE) will likely make it harder for 
Amtrak to eliminate its need for federal operating subsidies by 2002. 
In fiscal year 1998 alone, Amtrak estimates this agreement can be 
expected to increase its labor costs between $3 and $5 million over 
that which was budgeted in its strategic business plan. If the terms of 
this agreement were extended to Amtrak's other unions, Amtrak believes 
its fiscal year 1998 labor costs would be about $30 million more than 
that budgeted. According to Amtrak, extending a BMWE type settlement to 
all of Amtrak's unions could cost between $60 and $70 million more per 
year than currently budgeted from fiscal years 1999 to 2002. This is 
net of any one-time payments, productivity increases, or efficiency 
gains negotiated with the unions. Given this scenario, it is clear that 
without offsetting revenue gains or cost reductions Amtrak's net losses 
could be much higher than planned further increasing the gap between 
Amtrak's operating deficits and federal subsidies. To make ends met, 
Amtrak may be required to borrow additional money or seek additional 
federal subsidies. In fact, based on Amtrak's first quarter financial 
performance, Amtrak is forecasting it may need to borrow about $200 
million--about $100 million more than planned--by the end of fiscal 
year 1998, in part due to higher than expected net labor cost 
settlements,.
    Mr. Wolf. The Administration's 1999 budget request does not seek an 
operating subsidy for Amtrak, as opposed to the $344 million the 
Corporation received in fiscal year 1998. Given this scenario, will the 
President's budget request address Amtrak's financial needs or will it 
make the situation more precarious?
    [The information follows:]
    As noted in the budget, the President's budget would provide Amtrak 
with unprecedented amounts of capital funding. Not only will $2.2 
billion be available over 2 years from the Taxpayer Relief Act but the 
Administration's budget would provide an additional $621 million in 
fiscal year 1999 to make capital improvements. As we have reported, 
capital investment continues to play a critical role in supporting 
Amtrak's business plans and ultimately in progressing toward and 
maintaining Amtrak's financial viability.
    Although historic levels of capital would be provided, the 
President's budget could make Amtrak's long-term financial situation 
more precarious. Instead of providing a direct operating grant, the 
Administration anticipates that some portion of the $2.2 billion 
provided to Amtrak by the Taxpayer Relief Act of 1997 would be used to 
finance maintenance expenses of existing equipment used in intercity 
passenger rail service. These expenses have traditionally been 
considered operating expenses. While Taxpayer Relief Act funds may be 
used to pay for maintenance of existing equipment, using them to do so 
could have financial ramifications on Amtrak. In particular, it could 
reduce the amount of money available to Amtrak to (1) acquire new 
equipment and (2) acquire those capital improvements necessary to 
reduce costs and/or increase revenues.
    Both could affect Amtrak's long-term financial viability and/or 
ability to reduce federal operating support.
    Mr. Wolf. Instead of operating assistance, the President's budget 
notes that up to $400 million, provided to Amtrak by the Taxpayer 
Relief Act of 1997, could be used for operating assistance. Do you 
believe that these funds can legally be diverted to operating 
assistance?
    [The information follows:]
    The President's budget would provide Amtrak with a capital grant of 
about $621 million and no operating grant. In addition, under the 
Administration's proposal, Amtrak would fund progressive overhauls and 
equipment maintenance, activities traditionally funded with operating 
grants, with funds made available by the Taxpayer Relief Act of 1997. 
The $2.2 billion made available by the act is to be used for 
``qualified expenses.'' The act specifically defines the term 
``qualified expenses'' to mean expenses incurred for ``(1) the 
acquisition of equipment, rolling stock, and other capital 
improvements, the upgrading of maintenance facilities, and the 
maintenance of existing equipment in intercity passenger service, and 
(2) the payment of interest and principal on obligations incurred for 
such acquisition, upgrading, and maintenance . . .'' (emphasis added).
    We note that Amtrak's recently issued Legislative Report and 
Federal Grant Request for Fiscal Year 1999 proposes two alternatives 
for Amtrak funding, both of which would provide Amtrak with the 
flexibility to use its capital grant for preventive maintenance. 
According to Amtrak, either of the alternatives would help ensure that 
Taxpayer Relief Act funds are available for ``high rate of return 
capital projects.'' We have not evaluated the impact that the 
alternatives might have on Amtrak's long term operating or capital 
needs. However, regardless of the form of federal assistance, Amtrak is 
likely to continue to require substantial federal financial support 
well into the future.
    Mr. Wolf. Since capital funds will not be available until July 1, 
1999, will the Administration's budget, if enacted, result in any 
short-term funding shortfalls?
    [The information follows:]
    Whether Amtrak will experience a short-term operating or capital 
funding shortfall as the result of receiving capital funds on July 1, 
1999, cannot be determined at this time. In general, this will depend 
on Amtrak's general need for funds, its cash flow, and the timing of 
capital expenditures. Amtrak currently receives its federal capital 
funds in July of each year. Therefore, any capital expenditures Amtrak 
plans to make with the funds provided for in the Administration's 
fiscal year 1999 budget will likely have to be made in July 1999 or 
thereafter. However, Amtrak's short-term funding needs may be 
influenced by the availability of Taxpayer Relief Act funds. According 
to Amtrak, the second installment of Taxpayer Relief Act funds could be 
available to Amtrak as early as March 1999. Since the Administration 
anticipates that some portion of these funds will be used for 
maintenance of existing equipment used in intercity passenger rail 
service, Amtrak may be in a position to use these funds to meet any 
short-term funding needs it may have related to maintenance of 
equipment.
                   amtrak labor protection obligation
    Mr. Wolf. What are the cost estimates associated with labor 
protection obligations and nonlabor protection obligations?
    [The information follows:]
    Current labor protection arrangements for Amtrak's employees are 
contained in Appendix C-2 to the Basic Agreement between Amtrak and the 
railroads from which Amtrak assumed passenger service obligations. 
Among other things, Appendix C-2 provides 1 year of salary protection 
for each year of prior service, up to a maximum of 6 years' pay, for 
employees affected by a discontinuance of passenger rail service. 
Alternatively, affected employees could elect to receive a one-time 
lump sum severance payment. In a September 1997 draft analysis entitled 
``Budget Implications of a Zero Federal Grant: Why Zero Isn't Zero,'' 
Amtrak estimated the total maximum theoretical 6-year impact of labor 
protection obligations attributable to a complete discontinuance of 
rail passenger service at $6 billion. Amtrak also estimated that the 
cost of its labor protection obligations would be $1 billion if all 
employees accepted the alternative one-time lump sum payment.
    The Amtrak Reform and Accountability Act of 1997 eliminates these 
labor protection arrangements as of May 31, 1998, and requires that 
Amtrak and its employees negotiate any new arrangements. Therefore, 
after May 31, 1998, Amtrak's obligations to employees affected by a 
discontinuance of service, and the associated costs, will depend on the 
results of these negotiations.
    Amtrak's September 1997 analysis also identified about $3 billion 
in ``pre-bankruptcy obligations'' such as those associated with the 
financing of Amtrak's equipment and facilities, leases, and claims for 
personal injuries. It identified another $1 billion to $5 billion in 
``direct government budget and cash effects'' if Amtrak were to be 
liquidated, such as railroad unemployment and retirement tax losses. We 
have neither verified Amtrak's estimate of the costs of its labor 
protection and non-labor protection obligations nor independently 
estimated such costs. Further, any costs associated with a possible 
Amtrak liquidation would depend on uncertainties such as Amtrak's debt 
and financial obligations at the time of liquidation.
    Mr. Wolf. What do you believe is the Federal liability, if any, if 
Amtrak went bankrupt? What are the associated costs?
    [The information follows:]
    In our view, the United States would not be legally liable for 
Amtrak's obligations in the event of an Amtrak bankruptcy. The United 
States is neither a party to nor an explicit guarantor of Amtrak's 
contractual and financial obligations. Further, the United States has 
not implicitly guaranteed Amtrak's obligations. To the contrary, the 
governing statutes and case law make it clear that the United States 
has insulated itself from liability for Amtrak's financial obligations. 
In short, Amtrak's organic legislation provides specifically that 
Amtrak is not a department, agency, or instrumentality of the United 
States Government. Further, in various contexts, federal district 
courts and courts of appeal have relied on this explicit disclaimer of 
agency status to find that Amtrak should not be identified with the 
United States. Finally, in the 1995 case holding that Amtrak was part 
of the United States Government for purposes of the First Amendment, 
the Supreme Court clearly stated that the language in Amtrak's organic 
legislation would deprive Amtrak of the ability to incur financial 
obligations pledging the credit of the United States.
    Amtrak has estimated that the net costs to creditors and others of 
a liquidation could be as much as $10 billion to $14 billion over a 6 
year period. However, as we recently pointed out (see GAO/RCED-98-60), 
costs associated with an Amtrak liquidation are difficult to predict 
because they will depend on uncertainties such as Amtrak's debt and 
financial obligations at the time of liquidation, the market value of 
its assets, the proceeds from the sale of assets, and the extent to 
which other railroads decide to provide service currently provided by 
Amtrak. In our view, the United States would not be legally liable for 
these costs; rather, they would be borne by Amtrak's creditors and 
others. However, the United States may nonetheless assume some or all 
of these costs as a result of policy decisions concerning passenger 
rail service in the United States.

                   faa's oversight of repair stations

    Mr. Wolf. Your audit said, ``When there was evidence that 
problems had been found, evidence of corrective action was 
usually absent.'' If FAA doesn't specify what documentation is 
to be kept on safety deficiencies, how do they know, when they 
conduct follow-up inspections, that the problems have been 
corrected?
    [The information follows:]

    Prior to conducting follow-up inspections of a repair station, 
inspectors review the deficiency letter sent to the repair station to 
determine what areas need to be revisited. These follow-up inspections 
are typically conducted by the same inspector who performed the 
original inspection when problems were identified, and there may be 
some institutional knowledge along with this continuity.
    The documentation problems we identified become more serious when 
the inspector has left the office, be it for a transfer, retirement or 
a position outside of FAA. Without accurate information on what has 
been identified in the past, a new inspector would not have ready 
access to previous inspection results. We found that records in both 
FAA files and the automated system provide incomplete documentation of 
inspection activities. In the event that no information on corrective 
actions has been indicated, an inspector would determine if 
deficiencies have been corrected. If, however, there is no indication 
of what those deficiencies were, the inspector would have to provide a 
comprehensive review of the facility to confirm that the repair station 
is operating in accordance with regulations.
    Mr. Wolf. Your report notes that both GAO and the IG have been 
reporting on FAA's shortcomings in documenting their inspection 
activities as far back as 1987. Why is this such an intractable 
problem?
    [The information follows:]
    FAA's guidance is limited in specifying for inspectors what 
documents to include in repair station files. The guidance points out 
generally that the kinds of documentation of inspections and 
surveillance activities include inspection reports and related 
correspondence, but the guidance does not specifically require that any 
document be included. The only explicit requirement is a single 
statement in the Airworthiness Inspectors' Handbook that the letter to 
the repair station describing all deficiencies should be included in 
the case file. Although guidance for FAA's automated record system is 
less vague, it does not specify what information should be included in 
that system.
    According to FAA field office managers and supervisors, much of the 
value of inspection activity is not in finding and listing problems but 
in resolving the problems effectively. Inspectors place a much greater 
emphasis on fixes than on documentation; consequently, if time is 
scarce, documentation, which can be a labor-intensive and frustrating 
task, suffers first.
    We, along with FAA inspectors and supervisors, identified key items 
needed for useful management reporting, including: (1) an indication 
that a repair station was inspected and the results; (2) an indication 
that all deficiencies were communicated to the repair station in a 
deficiency letter; and (3) an indication that the deficiencies were 
``closed out'' when corrective actions by the repair station were 
determined to be acceptable by the inspector. In addition, FAA 
officials agreed that these key items were necessary in developing 
complete supporting information about the extent to which deficiencies 
were being resolved.
    Mr. Wolf. Your report expresses concern over ``the relatively 
limited amount of oversight that FAA gives repair stations compared 
with the oversight it gives air carriers . . . each repair station was 
to have a minimum of one facility inspection, while each air carrier 
was required to have many more.'' Why is there a different standard?
    [The information follows:]
    During our work, we did not assess why the standard for inspections 
differs between air carriers and repair stations. Each year FAA 
prepares guidance on inspections that are to be completed by its 
aviation safety inspector staff. This guidance is in the form of the 
National Flight Standards Work Program Guidelines (Notice N1800.136 for 
fiscal year 1997). Although this guidance addresses all areas under 
FAA's jurisdiction, it has continually emphasized inspection of air 
carrier operations over that of repair station operations. In fact, the 
number of required repair station inspections under the guidelines has 
not changed since at least 1989.
    Mr. Wolf. Your interviews with FAA inspectors at European field 
offices found that, in Europe, inspectors spend about 80 percent of 
their time on surveillance and oversight of repair stations, whereas in 
the U.S., inspectors spend only about 30 percent of their time on 
surveillance--and this includes all types of facilities, not just 
repair stations. Why is there such a difference, and what could 
Congress do to help bring the level of domestic surveillance up to the 
level found at FAA's overseas offices?
    [The information follows:]
    Inspectors assigned to flight standards district offices in the 
United States perform four principal functions: (1) routine 
surveillance; (2) certification of an airline's operation; (3) accident 
and incident investigations; and (4) safety promotion. Inspectors in 
the International Field Offices located in Europe are not faced with 
all of these functions. The primary focus of their work program is on 
the certification and surveillance of repair stations along with 
limited surveillance of US air carriers. They do not cover other 
responsibilities that domestic offices must handle--such as overseeing 
pilot and maintenance schools, agricultural aircraft, and certificate 
management of air carriers. Consequently, inspectors at the European 
offices are able to spend more time on the surveillance of repair 
stations than their U.S.-based domestic counterparts.
    Without significant commitments to both FAA's inspector and 
inspector support staff, the level of surveillance for U.S.-based 
inspectors will not be able to meet the a level similar to what we saw 
in Europe, because of the difference in the scope of work 
responsibilities. In order to improve FAA's level of surveillance over 
domestic repair stations, we have recommended that FAA make greater use 
of teams at repair stations that have large or complex facilities, have 
higher rates of noncompliance, or meet predetermined risk indicators. 
By adopting a team approach to inspection of larger facilities, FAA 
would make a more effective use of its limited resources.
    Mr. Wolf. Should we make further increases contingent on the FAA 
making some of the changes you recommend in your report?
    [The information follows:]
    Placing such a contingency on additional FAA resources is not an 
option that we examined during our review of repair station oversight. 
FAA's inspection resources are limited, and FAA must determine how to 
use what they have in the most efficient and effective manner possible.
    The recommendations that we have made in our report, particularly 
using teams at large, complex, or problem facilities; establishing 
reporting requirements for tracking inspection activities, and revising 
repair station regulations will provide some of the efficiencies that 
the FAA needs to improve its surveillance of repair station facilities.
    Some of the FAA field offices we visited have developed new 
approaches to surveillance which place a greater emphasis on repair 
stations. In both Scottsdale and Seattle, inspector responsibilities 
have been shifted to allow more time to be spent at larger repair 
stations. In some cases, annual inspections at larger facilities will 
be conducted by teams. Both of these locations made these changes with 
limited increases in staff resources.
    This approach provides a more thorough inspection of repair station 
facilities, and provides a better record of inspection activities, 
which can be used by FAA to further identify trends and weaknesses 
which, in turn, can be used in subsequent surveillance planning.

                     WIDE AREA AUGMENTATION SYSTEM

    Mr. Wolf. Why doesn't the FAA just request these funds in the 
appropriations process like other programs and other Federal agencies 
would do?
    [The information follows:]
    Requesting funds for buying or leasing communication satellites in 
the current year FY 1999 was not viewed by FAA as very realistic from a 
funding standpoint. Purchasing satellites would have required 
substantial funding from FAA's F&E appropriation--on the order of $100 
million annually for at least two years and lease payments would have 
been on the order of $35 million to $50 million starting in fiscal year 
1999. FAA officials said that this level of investment was not 
reflected in FAA's current capital investment plan and fiscal year 
budget request, and the agency would have to request decreased funding 
for other projects to fund the acquisition of communication satellites 
for WAAS.

                    CONTROLLER STAFFING REQUIREMENTS

    Mr. Wolf. Does the FAA need to make further improvements in the way 
it determines how many controllers are needed?
    [The information follows:]
    Not at this time. FAA has begun to implement our recommendations to 
use actual information about controllers' age, years of service, and 
retirement eligibility date to better determine the number of 
controllers that need to be hired.
    Mr. Wolf. Would you say the FAA's relationship with its labor 
unions is getting worse, better, or staying the same? Why?
    [The information follows:]
    Over the years, FAA has had a good working relationship with its 
unions. However, over the past year, the relationship with the air 
traffic controller union has been strained due to lengthy contract 
negotiations. The controller union's (NATCA) contract expired in August 
1997. During negotiations, the FAA and the union representative have 
had disagreements about issues such as restrictions that FAA places on 
the performance of union work during a controller's work shift and how 
the alternative work schedule is applied to the controller workforce.

                           YEAR 2000 PROGRAM

    Mr. Wolf. Would you provide, for the record, a copy of your 
testimony on year 2000 computer issues before the appropriate 
committees?
    [The information follows:]


[Pages 773 - 784--The official Committee record contains additional material here.]



                     FTA GRANT MANAGEMENT OVERSIGHT

    Mr. Wolf. Your review indicates that FTA regional offices are not 
fully utilizing the TRIS system and that headquarters is not requiring 
data to be updated. In light of this finding, how is the FTA able to 
focus staff and financial resources efficiently and effectively if data 
is insufficient and unreliable?
    [The information follows:]
    Because of the unreliability of the data in TRIS, FTA headquarters 
officials are not able to identify the full extent to which grantees 
are or are not complying with federal transit requirements nor assess 
the effectiveness of its oversight activities. In addition, because 
regional staff are not uniformly updating TRIS with information from 
its various reviews, FTA headquarters officials are not able to 
identify trends in getting grantees into compliance from one regional 
office to the next. As such, FTA cannot adequately determine whether 
additional, or a different mix of staff or other resources should be 
placed in one region over another.
    Mr. Wolf. Given the lack of data and the reliability of that data 
in the TRIS system, does the FTA know fully the extent to which 
grantees are in noncompliance and placing Federal resources at risk?
    [The information follows:]
    No. Until FTA's regional staff uniformly provide data--on a current 
and continuing basis--from its triennial and other oversight reviews, 
FTA headquarters officials will not be able to accurately determine the 
extent to which transit grantees are or are not in compliance with 
federal requirements.
    Mr. Wolf. Are there wide variations in grant management activities 
of the various regional offices? For example, are some regions doing 
better or worse than others?
    [The information follows:]
    FTA regional staff are not consistently and uniformly applying 
established procedures in carrying out their oversight activities which 
causes variations in FTA's grants management oversight. For example, 
few regional staff are consistently updating TRIS or using TRIS to 
monitor unresolved noncompliance findings; however, staff in some 
regional offices have established their own monitoring systems. In 
addition, the adequacy of documentation being maintained by regional 
staff varied. In some regional offices we visited, we found instances 
in which we were unable to determine whether completed oversight 
reviews still had unresolved noncompliance findings due to the lack of 
documentation. In other instances, documentation was old and there was 
no evidence of recent contact with the grantee on resolving open 
noncompliance findings. In FTA's New York Regional Office--which 
oversees the most transit grant dollars--the lack of documentation was 
more serious and problematic. Most of the triennial review files we 
reviewed for fiscal years 1995 and 1996 at this regional office were 
missing back-up documentation, correspondence, and, in some cases, the 
triennial review report itself. In addition, the Triennial Review 
Coordinator was unable to produce any files for fiscal year 1994 
triennial reviews that, according to FTA records, still contained 
unresolved noncompliance findings. This lack of documentation in FTA's 
New York Regional Office provided little confidence that adequate 
follow-up on open compliance issues is being conducted.
    Mr. Wolf. In your opinion, is there a correlation between staff 
resources, time allocated to grants management activities, or the 
number of grantees in a given region? Do staffing adjustments need to 
be made in the regional offices?
    [The information follows:]
    In 1992, we criticized FTA for inconsistent and unfocused 
allocation of oversight staff. At the time, we found that FTA regions 
varied dramatically in the number of staff and proportion of staff time 
they devoted to oversight. Despite FTA's assurance to address these 
concerns, we found that this condition still remains today. An internal 
task force in May 1993 recommended that FTA should consider doing a 
detailed study of staff allocations to determine how regional and 
headquarters staffs' oversight efforts should best be focused. The 
study was to include a determination of the regional staffing levels 
necessary to perform oversight functions. FTA ultimately did not follow 
through on this recommendation. According to FTA's Office of Oversight, 
these issues were to be addressed as part of FTA's 1995 reorganization. 
However, FTA's reorganization does not appear to have addressed the 
inconsistent and unfocused allocation of regional oversight staff. As a 
result, we believe there is still no strong relationship between the 
number of grants, the number of staff performing oversight, and the 
time spent on oversight from one regional office to another. Until such 
a study is completed, staffing adjustments will be difficult to 
address.
    Mr. Wolf. What actions is the FTA taking in response to your 
findings?
    [The information follows:]
    FTA staff are currently reviewing our draft report and will be 
providing as with their comments over the next few weeks. We will be 
happy to discuss their comments on our findings with you and your staff 
at that time.

                              RAIL SAFETY

    Mr. Wolf. In 1995, FRA and Union Pacific developed a safety action 
plan focusing on this railroad's systemic hazards in rail facilities, 
rolling stock, equipment, and operations. FRA and Union Pacific had 2 
years to fix a number of problems; however, during the summer and fall 
of 1997, Union Pacific Railroad has had a spate of recent accidents and 
10 employees died. According to the railroad, this is more employee 
deaths than the railroad's combined total from 1991 through 1996. Do 
you believe FRA's rail safety program has worked effectively to reduce 
or eliminate certain problems within the industry?
    [The information follows:]
    FRA conducted SACP reviews of systemic safety problems at Union 
Pacific, Southern Pacific (which merged with Union Pacific in 1996), 
and CSX during calendar year 1995. As part of each SACP, FRA identified 
systemic problems and root causes of the problems at each railroad, and 
worked with the railroads to address these problems. However, if FRA 
did identify systemic problems at these railroads during the 1995 
safety reviews, its reviews appear to have overlooked some critical 
safety problems that contributed to the collisions and fatalities that 
subsequently occurred in the summer of 1997. As a result, FRA spent 
additional resources sending 80 Federal and state inspectors to review 
CSX's operations. During these reviews, FRA found additional safety 
deficiencies at both railroads and made several recommendations 
targeted to improving railroad operations.

                     INNOVATIVE FINANCING PROPOSALS

    Mr. Wolf. The Administration has indicated that the transportation 
infrastructure investment program would support large, nationally 
significant projects. Why would these types of projects not be able to 
be supported by State infrastructure banks, either by single- or multi-
State banks?
    [The information follows:]
    Most State Infrastructure Banks may not be large enough to finance 
an expensive infrastructure project. The Infrastructure Credit 
Enhancement Program is envisioned to assist projects of $100 million or 
more. SIBs will likely be targeted toward much smaller projects. The 
largest SIB, for example, is Texas', which in the fall of 1997 was 
capitalized at just over $100 million. Other states' SIBs are much 
smaller. The Credit Enhancement Program would likely be targeted at 
providing grants to a limited number of larger programs. For example, 
providing $50 million grants to two nationally significant projects.
    Mr. Wolf. If these concerns are not addressed by proposing 
modifications in the Tax Code, does it make sense to start up this new 
program?
    [The information follows:]
    Changing the program from a loan program to a grant program appears 
to address Treasury's concerns. The IRS had two concerns about direct 
loans: that loans would imply a federal guarantee against default where 
no such guarantee existed, and that loans might increase the use of 
tax-exempt bonds, thereby resulting in less federal tax revenue.
    Mr. Wolf. In your opinion, are States clamoring for these new types 
of creative financing or are they more anxious to obtain greater 
apportionments and higher obligations limitations?
    [The information follows:]
    States are always seeking more money to meet their transportation 
needs. In general, states would rather have greater apportionments and 
higher obligation limitations. However, many states also are willing to 
take advantage of flexible financing mechanisms available through DOT's 
innovative initiatives.

               DEPARTMENTAL RELOCATION AND REORGANIZATION

    Mr. Wolf. DOT has begun to examine its organizational structure and 
has prepared two interim reports--one that examined restructuring 
FHWA's nine regional offices and a second that proposed collocating DOT 
field offices. Please elaborate for the committee the recommendations 
of these reports and any observations or concerns you can have about 
them.
    [The information follows:]
    The first interim report followed an FHWA task review of the FHWA's 
field office structure. It recommended that the agency retain all of 
its 52 division offices and restructure its nine regional offices by 
replacing them with four resource centers. The report further 
recommended transferring some functions currently performed by regional 
offices to headquarters or specific division offices and relocating 
most regional staff to the new resource centers, divisions, or 
headquarters. The report did not identify any long term savings 
resulting from this reorganization and projected that costs may 
actually increase over the short term as staff are relocated. 
Furthermore, the roles and responsibilities of the new resource centers 
are unclear. On one hand, many of the roles of the new resource 
centers, such as providing technical assistance and training to the 
division offices, are similar to the roles of the current regional 
offices. On the other hand, FHWA noted that most of the roles of the 
current regional offices could be delegated to FHWA's divisions or 
headquarters.
    The second interim report was issued after a department-wide review 
of the existing space inventory of over 530 field offices. It 
identified 160 field offices as potential candidates to be colocated at 
50 sites over a 5-year period. The report estimated that this and other 
efforts would reduce by 19,356 square feet the amount of space needed 
by the Department over a 2-year period. The report did not estimate any 
budgetary savings resulting from these colocation opportunities, and 
officials said that the moves could increase costs in the short term as 
staff are relocated. DOT's review was limited to those field offices 
that provide customer service or technical assistance, thereby 
excluding about 70 percent of DOT's more than 1,700 field offices.
    Mr. Wolf. The Department proposes new resource centers. How will 
these new resource centers differ from the existing regional offices? 
What duties will these new resource center perform and why can't these 
duties be devolved to the division offices?
    [The information follows:]
    It is unclear from FHWA's interim report, how the roles and 
responsibilities of the four proposed resource centers will differ from 
the nine existing regional offices. Many of the new resource centers' 
responsibilities are similar to the current responsibilities of the 
regional offices. In addition, FHWA's interim report notes that most of 
the current responsibilities of the regional offices could be delegated 
to either the division offices or headquarters. FHWA will not be making 
its final decisions on the new resource centers until June 1998.
    Mr. Wolf. In your opinion, can we expect real reductions in staff 
or is the Department simply shifting the chairs on the deck?
    [The information follows:]
    DOT and FHWA officials expect to shift staff with no significant 
reduction in FTE's.
    Mr. Wolf. What are the short- or long-term costs or savings 
associated with these proposals?
    [The information follows:]
    No cost savings from DOT's colocation and FHWA's regional office 
restricting initiatives are expected. In contrast, it may cost up to $2 
million for FHWA to close each regional office that it no longer needs. 
In addition, DOT projects that its colocation efforts will result in 
limited dollar savings in the short term and could require additional 
funding for the long term.
    Mr. Wolf. Will these resource centers duplicate the work of the 
newly established metropolitan offices in Chicago, Los Angeles, New 
York and Philadelphia in your opinion?
    [The information follows:]
    Duplication is possible particularly in Chicago, should FHWA turn 
its current regional office into a new resource center while 
maintaining its Chicago metropolitan office. In addition, FHWA 
considers the Chicago metropolitan office to be a satellite office of 
its division office in Springfield, IL. Clarifying the role and 
responsibilities of all these offices is clearly needed.
    Mr. Wolf. Last year, Mr. Anderson, you noted that headquarters 
reorganization had ``totally fallen off the table.'' Where is 
headquarters reorganization today?
    [The information follows:]
    FHWA intends to begin headquarters reorganization efforts in June 
1998, after its makes final decisions on its regional office structure.

                      TRUCK SAFETY FITNESS REVIEWS

    Mr. Wolf. What can be done to assure States submit more complete 
and timely data to the Federal Highway Administration?
    [The information follows:]
    A key element in implementing performance-based criteria for 
targeting motor carriers for compliance reviews is ensuring that the 
Safetynet database contains complete, accurate, and timely data about 
each motor carrier's safety performance. Our November 1997 report 
entitled ``Commercial Motor Carriers: DOT Is Shifting to Performance-
Based Standards to Assess Whether Carriers Operate Safely'' found that 
many states have made substantial improvement in improving the 
timeliness of inspection and accident data that they transmit to 
Safetynet. However, we also found that, during fiscal year 1997, five 
states submitted accident data to Safetynet more than 180 days, on 
average, after an accident occurred.
    The Office of Motor Carriers (OMC), in its draft response to our 
report, stated that the administration's National Economic Crossroads 
Transportation Efficiency Act proposed to increase funding for motor 
carrier information systems and analysis that would provide funding, 
for example, to purchase laptop computers. OMC also stated that it is 
working with the states to improve their data reporting by, for 
example, identifying institutional barriers to data collection, entry, 
and analysis. We plan to continue to monitor whether states' accident 
and inspection data are complete, accurate, and timely, as well as 
other actions OMC is taking to better identify motor carriers with 
safety problems for compliance reviews.

                 GOVERNMENT PERFORMANCE AND RESULTS ACT

    Mr. Wolf. The GAO has been tasked to review the strategic plans of 
each of the government's 24 major agencies; strategic plans which are 
required under the Government Performance and Results Act. Please 
summarize for the committee your key observations of the Department of 
Transportation's strategic plan.
    [The information follows:]
    We reviewed a draft of DOT's strategic plan in July 1997 and 
subsequently reviewed DOT's formally issued plan that was submitted to 
OMB and the Congress on September 30, 1997. The September plan reflects 
significant improvements to the July draft plan. The three components 
of the draft plan that already met the requirements of the Results Act-
mission statement, long-term goals, and a description of program 
evaluations--were improved by more closely following OMB guidance for 
preparing strategic plans. In addition, the September plan meets two of 
three additional requirements of the Results Act that the draft plan 
did not meet. It meets requirements to describe (1) a linkage between 
DOT's long-term goals and annual performance goals and (2) those key 
external factors that could significantly affect DOT's achieving its 
goals. The September plan, however, does not meet the act's requirement 
to describe strategies for achieving the goals. The plan does not 
describe the operational processes, skills, technology, and resources 
required to meet the long-term goals, as required by the Results Act.
    Mr. Wolf. While the Department of Transportation's strategic plan 
has been characterized as one of the best, it only received a rating of 
75 percent--or the equivalent of a ``C'' on a grade school report card. 
What omissions did you find in the plan and what improvements are 
necessary to improve the overall quality of DOT's plan?
    [The information follows:]
    The plan does not describe the operational processes, skills, 
technology, and resources required to meet the long-term goals, as 
required by the Results Act. In addition, the plan could be improved by 
following OMB's guidance on strategic plans and providing additional 
detail when achieving a goal is predicated on a significant change in 
resource or technology levels. For example, we have reported that 
successful implementation of certain aviation security measures 
mentioned in the plan is contingent upon deciding who will finance the 
security improvements and developing the needed technology. The plan 
could be further improved by following OMB's guidance on including time 
frames for initiating or completing significant actions. The plan 
contains time frames for some significant actions, such as addressing 
the Year 2000 problem and obtaining reliable financial statements by 
fiscal year 2000, but it does not include time frames for other 
significant actions, such as completing air traffic control 
modernization and improvements to Amtrak's Northeast Corridor.
    Mr. Wolf. Your report indicated that the strategic plan did not 
demonstrate a firm commitment to improve the oversight of highway and 
transit projects, which are continuing to incur costs increases, 
experience delays, and have difficulties acquiring significant funding 
commitments. The plan did not provide specific strategies or sufficient 
details to address these problems. What specific strategies and actions 
are necessary to improve DOT's oversight of highway and transit 
projects and how might these changes be reflected in the plan?
    [The information follows:]
    We have suggested several options for improving the management of 
highway projects. One option-once an appropriate dollar threshold and 
definition for large-dollar highway projects is established--would be 
for states to prepare total cost estimates for such projects. We have 
found that one reason why costs increase on large-dollar projects over 
time is that the initial cost estimates are preliminary and not 
designed to be reliable predictors of a project's total cost. Another 
option would be to have states track progress against their initial 
baseline cost estimates. While cost growth has occurred on many large-
dollar projects, the amount of and reasons for their increases cannot 
be determined because data are not readily available from FHWA or state 
highway departments. As a large-dollar project moves through its design 
and construction phases, another option would be to establish 
performance goals and strategies for controlling costs. A final option 
would be to establish a process for the federal approval of large-
dollar projects at the outset. FHWA approves the cost of a large-dollar 
project in segments when those project segments are ready for 
construction. However, by that time, a public investment decision may 
have already been made because substantial funds will already have been 
spend on designing the project and acquiring property.
    To improve the management of transit grants, we have found that 
FTA's existing oversight information system lacks complete, timely 
data; hence, the information cannot be used effectively by FTA's 
headquarters officials to manage and monitor grantees' compliance with 
FTA's requirements. The system is intended to track the resolution of 
oversight findings and has the potential to be a useful tool in 
monitoring compliance, identifying problems, and assessing the overall 
effectiveness of the oversight program in meeting performance 
standards.
    The highway issue could be addressed in DOT's strategic plan under 
discussions of strategies for achieving its goals and the transit issue 
could be included under a discussion of data issues.
    Mr. Wolf. DOT is in the process of completing its performance plans 
which support its strategic plan. What review does the GAO expect to 
make of these performance plans?
    [The information follows:]
    We will be reviewing DOT's fiscal year 1999 plan to determine its 
adherence to the Results Act and OMB guidance. We will be briefing the 
requestors' staffs on our findings in early April 1998 and issuing a 
report shortly after.


[Pages 790 - 966--The official Committee record contains additional material here.]



                                           Thursday, March 5, 1998.

                            U.S. COAST GUARD

                                WITNESS

ADMIRAL ROBERT E. KRAMEK, COMMANDANT

                          Introductory Remarks

    Mr. Wolf. Admiral, welcome to the open portion of the 
hearing.
    I just want to say personally and publicly, I appreciate 
the good job you have done for the Coast Guard and also for the 
country. I was quite surprised to see the announcement of your 
retirement, but then I understand that the rotation comes 
along.
    I wish you well. On behalf of the Committee and all the 
members of the Congress, we appreciate the good job that you 
have done. I think you have set a fine example. I wanted to 
publicly let you know we appreciate that.
    Admiral Kramek. Thank you, Mr. Chairman.
    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Again, welcome, thank you for your good work.
    Mr. Wolf. You can begin; read the whole statement or submit 
it for the record.

                             budget request

    Admiral Kramek. I would like to submit the statement for 
the record and make a few brief comments, Mr. Chairman.
    The statistics of what the Coast Guard did this past year 
are well documented. We had a very, very productive year in all 
the missions that serve America. The budget before you I 
consider a current service budget, and the President's' budget 
asks for sufficient funds for the Coast Guard to continue our 
current services to the American public in all of our mission 
areas.
    I ask for your support and approval of that. It will allow 
me to carry out my operations almost to the same levels as last 
year in every mission area.
    As you know, and I met with you several years ago, you 
agreed that the Coast Guard should be able to streamline and 
reengineer itself in order to meet budget deficit reduction 
targets.
    This year finally accomplishes that. We have saved close to 
4,000 people. We are now the smallest we have been since 1965. 
From a uniform standpoint, we are smaller than the New York 
City Police Department.
    We also have saved about $400 million a year in overhead 
operating expense money through efficiencies, economies, good-
quality management programs and bringing on new acquisitions 
that this committee appropriated that I can man with less 
people, like our new buoy tenders being built at Marinette.
    So we have completed our streamlining. The only downside is 
having to work very, very hard--many of the people in our 
stations work over 80 hours a week. Our target is 68 hours a 
week. I think we can meet that as new equipment is brought on 
line. In our acquisition, construction and improvements budget 
this year, we ask for sufficient resources to maintain our boat 
building contracts, but they are at minimum order quantities.
    My point is the faster we bring them on, the more money I 
save in the outyears in operations and maintenance and I can 
reduce the work load on my people down to a more tolerable 
level.

                               recruiting

    I would like to make just some brief comments about 
tomorrow's Coast Guard, because the budget provided this year 
provides for tomorrow's Coast Guard both in recruiting and 
obtaining the people we need to do our work. We consider 
ourselves to be the premier maritime agency in the world. I 
feel we have gained that reputation. To do that you need the 
very best people, and to have the very best people you need to 
be an employer of choice. We are doing very well in obtaining 
people but it is very difficult. We have a robust economy, 
which is good; there is not a leaning among many young 
Americans to want to put on the uniform and go to work. My 
recruiters have to meet with over 100 qualified high school 
graduates to get 1 to join the Coast Guard--and we are better 
off than many other areas of the Armed Forces.

                       waterways management needs

    So we are recruiting the young people who will serve us in 
the 21st Century. We are looking for the best. In the next 10 
or 15 years--this country is still an island nation with 
respect to trade. Ninety-five percent of our imports and 
exports go by sea. It is a major Coast Guard initiative to make 
sure that our ports and sea lines of communications are 
properly linked in an intermodal way with other facets of 
transportation, all of which appear before your committee.
    This trade will triple in the next 15 years. I am very, 
very concerned about that because our ports and waterways are 
not up to that now. We do not have a world-class waterways 
management system. I believe we need one. The Coast Guard has 
taken the leader in pulling together all the Federal agencies 
that contribute to this: the Corps of Engineers, NOAA, local 
municipalities.
    The Secretary of Transportation has agreed that 
transportation should take the leadership role in this. Next 
month, I will present to him an implementation plan on how to 
go about this. I don't believe we need a lot more resources to 
do it. I think we need better coordination amongst Federal 
agencies and then better coordination as one team in the 
Department of Transportation to make sure all the modes work 
together in an intermodal sense rather than as individual 
agencies.
    Secretary Slater agrees with that. Why are we concerned? 
The size of the ships is a good concern. The container vessels 
will carry 6,000 to 8,000 containers. They draw a lot of water. 
They go fast. It is hard to do something with them when they 
are in trouble, which is a Coast Guard responsibility. We have 
to be sure they receive the proper training so they can do it 
safely. Six-thousand containers line up 20 miles long on the 
highway or on a railroad. So if this is not done right, we have 
problems.
    Passenger vessels are another major concern--whether they 
be cruise ships which carry over 6 million U.S. passengers a 
year, high-speed ferries under development, or other passenger 
ships being developed in the United States. These passenger 
ships are becoming megaships. Ships used to carry 700 or 800 on 
a cruise. New ones being built will be 130,000 tons, bigger 
than aircraft carriers. They will carry 3,500 passengers, 1,500 
crew, and newer ones on the drawing boards will carry 8,000 
passengers.
    So when these types of things happen, Mr. Chairman, the 
role of the Coast Guard in making sure the maritime 
transportation system that provides for safety of the people, 
cleanliness of our oceans, and safety of the mariners gives us 
interesting challenges here in the next couple of years.
    This budget provides research and development projects and 
acquisition projects and waterways management projects that are 
moving in that direction to satisfy these future needs.

                               fisheries

    The stress on the waterways will be more--more people 
moving to the coast, more demand for Coast Guard services, a 
tremendous depletion in our fisheries. There were questions 
before in our closed session about the fisheries.
    The United States has the largest exclusive economic zone 
in the world, 47,000 miles of coastline extending out 200 miles 
from the coast, and the greatest richness of fisheries of any 
Nation in the world.
    Developing nations with huge populations, whether they be 
China, India, or Russia, depend on the sea for 40 percent of 
their protein. Fisheries around the world are hugely depleted. 
Some of the only remaining robust ones are in the United 
States' waters. When the Magnuson Act was passed in the 1970s, 
the Coast Guard was given the responsibility to patrol this 
huge fisheries area and make sure that we didn't have foreign 
incursions and that we didn't deplete it ourselves.
    I am very happy to report that our domestic fisheries are 
about as healthy as can be, considering all the closed areas. 
It terms of our own fishermen, we have 98 percent compliance 
with our fisheries laws.
    We made 8,500 boardings last year and seized Korean 
vessels, Russian vessels, and Chinese vessels making incursions 
into our fisheries zones. So we have been very, very busy in 
this tremendous geographic area. You can imagine up in Alaska, 
the Aleutians, the Bering Sea and the north coast of Alaska, 
why it is so difficult doing this mission.

                           migrant incursions

    We talked about drug enforcement. That seems to be a 
continuing challenge for us. We are very busy. The migrant 
challenge is always there. Last night and yesterday we 
intercepted 4 different migrant incursions--3 from the 
Dominican Republic. We encountered over 60 Dominicans on 3 
different boats, and one vessel with 18 Cubans trying to reach 
the United States.
    So we are busy with our migrant role. Our role as a joint 
member of the Armed Forces in ``operations other than war'' has 
increased. We used to call it peacekeeping or, limited 
intensity conflict. ``Operations other than war'' are the 
Cubas, the Haitis, Bosnias, even Iraq--even though it is a 
major military contingency it is not a global war.

                            defense function

    In these types of situations I allocate assets to the 
commanders-in-chief of various areas. As you know, we are 
provided again in this budget--the administration asked for 
over $300 million for the Coast Guard in defense function 054.
    I ask that be approved by the Congress. The high endurance 
cutter CHASE is going to the Gulf of Arabia, because we do 
maritime interceptions and we don't want weapons and illegal 
material going to Iraq to further strengthen Saddam Hussein's 
regime. I have stood up a port security unit, ready to be 
recalled if necessary, as well as other assets. That is our 
normal role, to do Coast Guard type missions for the regional 
commanders-in-chief who then don't have to use high-value 
military assets to do that.
    Forty of the navies in the world today are coast guards. We 
have been asked to help train them. There are questions: Why 
did I send a crew to the Baltic and the Black Sea last year? 
Well, I was going to train the Ukrainian Coast Guard, the 
Russians, Lithuanians, Estonians, the Latvians, the Bulgarians. 
In all this strategy it is better that they not be offensive in 
posture but, rather, defensive and be able to take care of 
their economic zone. The State and Defense Departments have 
felt we are the best investment and I am augmented with Nunn-
Lugar funds, State Department funds; it doesn't come all out of 
my appropriation.

                           acquisition needs

    This next 2 decades will be of knowledge and information 
technology. We are working hard to work smarter. Many of our 
acquisitions are systems to allow us to do that. It is very, 
very hard to use 50-year-old ships to pursue the types of 
missions we have. Recently, in enforcing the embargo against 
high seas drift net fishing, I had to chase a Chinese boat with 
a 12-knot buoy tender that was built in World War II. We 
intercepted the vessel south of Japan, and had to go 1,200 
miles to Guam. We seized the ship, sold it at salvage, and the 
money went to the U.S. Treasury.
    The people were great doing this. The equipment I have is 
old, it is scheduled for replacement.
    That is what our deep water acquisition is all about. It is 
acquiring a system of cutters, C4-I, command-control computers 
intelligence system totally compatible with all other Armed 
Forces, so I need less ships, less planes, and so we are 
intelligently working together to conduct all these missions 
that we have.
    These are not just Coast Guard investments, Mr. Chairman. I 
feel this is a national investment for the United States. We 
are the only member of the Armed Forces that has law 
enforcement authority and that is why we have so many and such 
far-flung missions in this day and age. Because many of the 
things the Armed Forces do end up in law enforcement action at 
the end and we are usually the ones asked to pursue that.
    Mr. Chairman, we had a most successful year with the funds 
provided last year, especially with the counternarcotics fund 
and the $35 million we used. I have given you briefings and you 
have seen our success with Frontier Shield in Puerto Rico and 
the Virgin Islands. We have had our best year ever, and with 
continued support by this committee we will continue to perform 
at that level. Thank you very much.
    [The prepared statement and biography of Admiral Kramek 
follows:]


[Pages 972 - 979--The official Committee record contains additional material here.]



    Mr. Wolf.  Thank you very much. There is a vote on. We are 
going to recess for about 10 minutes and be right back.
    [Recess.]

                           user fee proposal

    Mr. Wolf. Let me begin on the user fee proposal. This will 
be your final budget that you are going to present us, and in 
it, your operating budget would rise by a little over 2 percent 
and the reserve program remains flat. We have already spoken 
about that in my office. The capital program would go up 11.3 
percent.
    Could you explain a little about the priorities, and then 
could you also talk about the proposed language that you have 
with regard to user fees; how that fits in, what the user fee 
would be used for in the budget and what the impact would be if 
you did not get the user fee?
    Admiral Kramek.  This acquisition, construction and 
improvements portion of our budget, which is the 
recapitalization portion of our budget, is unique this year in 
that it is to be capitalized by the collection--partially 
capitalized by the collection of user fees for Coast Guard 
navigational services. I am working very, very hard right now 
to use existing user fee statutes to determine how we can 
charge direct users of our navigational services a fee--cargo 
vessels, as an example--for those services, in the amount of 
$35 million in the fourth quarter of 1999; and then the 
appropriations language, as a result of this committee, would 
permit those collections to be put in the Coast Guard 
acquisition, construction and improvements (AC+I) account to 
finance our shipbuilding and boat building projects. The 
Administration asked some, and I asked some, over $440 million 
for our AC+I funds.
    If the user fee somehow is not appropriate, not authorized, 
then I am at risk for $35 million in AC+I funds, so that I 
can't get the boats and the ships and the planes I need for our 
people. It is more dramatic in the year 2000, in that I am 
expected to collect $165 million from the these fees, which 
includes those user fees for navigational services, plus $25 
million in domestic ice-breaking fees for the Great Lakes.
    Mr. Wolf. I spoke to members of the authorizing committee 
just the other day, and they gave me every impression, or just 
said they were absolutely opposed, that they did not plan on 
going ahead with the user fee.
    Admiral Kramek.  I feel that we have existing statute and 
authority to go forward with the user fee, but it would be this 
committee's decision, and you would have to have report 
language, which would then allow that user fee to go to our 
acquisition, construction and improvement budget to offset 
those costs. Yesterday at my authorization hearing, members 
were concerned whether legally we could do that, and they were 
studying case law history. We are not far enough along right 
now, Mr. Chairman, to determine who exactly the users are, how 
we can collect it, how we can do this fairly for all those who 
use our waterways so that it would meet that user fee statute. 
My goal is to construct it so that it will meet that statute 
and it will be fair and that it will not be other than a fee 
for direct services, which would meet the intent of the 
statute.

                           user fee authority

    Mr. Wolf. The proposed bill language, which would give the 
Secretary the broadest authority possible to impose new fees, 
actually mandates the Secretary to establish and adjust user 
fees for any services provided, and requires it be done within 
150 days of enactment. It would actually require the Secretary 
really to establish a new range of fees. Why are you requesting 
such blanket user fee authority?
    Admiral Kramek. I think because our waterways are 
complicated on the number of users. I think the language 
exempts, as an example, recreation vessels, fishing vessels. In 
sorting out who should pay and what they should pay for, it 
needs broad authority to determine whether it should be just 
for cargo and perhaps types of cargo, or maybe it should be 
tonnage of ships or size of ships, or maybe the types of ships 
that pose the greatest risk to our environment. All those 
things have to be considered.
    This fee is often compared to what other nations have 
done--in particular, Canada. I don't think it can be compared, 
because in Canada they have passed a law that requires it. This 
is a completely different situation. So the Coast Guard has a 
lot of work to do to come up with a fee, I feel, that the 
committee would find acceptable.

                             user fee basis

    Mr. Wolf. Would you explain what activities would serve as 
a basis for these fees and would you include amortization of 
capital equipment such as buoys and buoy tenders?
    Admiral Kramek.  I can't answer that question right now. We 
just started our study because we have now just gotten the pass 
back information from OMB which has asked us to do this, and we 
are not in it deeply enough to know that that is proper to do.
    Mr. Wolf. Two last questions, then. Mr. Obey has to go to 
another meeting and I am going to jump ahead and recognize him. 
But how do you define commercial vessels? For example, if a 
fisherman goes out to sea, would you assess them for using the 
navigational lights and buoys?
    Admiral Kramek.  No, we would not. The direction, as I 
understand it, and it is pretty thin, really focuses on cargo, 
not on fishing vessels, and not on recreational vessels. So I 
would say it does not include them.

                          user fee collection

    Mr. Wolf. Would you need more people to collect the fees?
    Admiral Kramek.  It depends how you go to collect them. If 
you can recall, several years ago the Coast Guard was asked to 
come up with a recreational boat user fee. Congress passed it 
and rescinded it the next year. In that case, I think we used 
the Post Office to collect the fees. So there are other ways to 
do that. But certainly we would need an increase in staff which 
would be offset by the user fees to do it, but I think if we 
did it cleverly, we wouldn't need a large increase.

                            user fee amount

    Mr. Wolf. Lastly, how did they arrive at the $35 million 
figure?
    Admiral Kramek.  I have no idea how they did that.
    Mr. Wolf. Okay. Mr. Obey.

                          mackinaw replacement

    Mr. Obey. Thank you, Mr. Chairman.
    Good morning. Let me simply ask you about a parochial issue 
which concerns Mr. Oberstar and myself and a number of others 
along the Great Lakes. As you know, Congress provided $2 
million last year for the Coast Guard to accelerate work on a 
replacement ice breaker for the 54 year old Mackinaw. If I 
stayed up around the clock looking through the administration 
budget to see where funding is to proceed with that, I couldn't 
find it in the budget presentation this year.
    Can you tell me, did the Coast Guard make the decision not 
to request those funds or did OMB make that decision?
    Admiral Kramek.  I asked for funds to continue the project 
in 1999 and they were not provided in the President's budget.
    Mr. Obey. Well, Mr. Chairman, I simply recall what Silvio 
Conte used to say from time to time when discussing the OMB. I 
remember him once saying he thought it stood for the Office of 
Mindless Bumbling, and in this case, I think he has understated 
it. Won't this project come to a screeching halt if Congress 
does not provide the funds?
    Admiral Kramek.  I don't think it will come to a halt. I 
think it has the potential for some delay. I am required----
    Mr. Obey. Well, excuse me for interrupting because I don't 
want to take a lot of the committee's time. But if you will 
take a look at the committee report from last year, you will 
see that the committee recommended the initial funding 
specifically so we would avoid any undue future delay. You are 
saying OMB's decision will certainly result in a significant 
delay.
    Admiral Kramek.  I am not certain of that. I am required to 
report to this committee, the alternative analysis that looks 
at either replacement or renovation of the Mackinaw--the bottom 
line to provide the tools we need to conduct heavy ice breaking 
on the Great Lakes. That report is on track. I looked at it 
this morning. I will send it to the Secretary on the 1st of 
April and then to OMB. It should be delivered to Congress in 
May. It will present the alternatives; whether you buy a new 
ship, renovate the old ship, have different types of vessels to 
accomplish this. Then funds will be required to go into the 
design phase. Those are the funds that have not been provided 
because they were not provided in the 1999 budget by the 
Administration. I have every intention of requesting them in my 
year 2000 budget, which goes to the administration in June, so 
that is only 1 month after the alternative analysis is due, and 
I can see some potential for several months delay. But I would 
hope it wouldn't be too long in the meantime.
    I have done all that needs to be done to keep the Mackinaw 
in service until such time as we have a replacement. Right now 
she is programmed to stay in service until the year 2006, so I 
think we have enough time, just barely, to do all of this. It 
would be smoother if we had the funds in 1999, as requested, 
but I don't see it as fatal not to have them. The big test will 
be after the alternative analysis is reported to Congress, 
whether or not we get funds in the next year's budget.
    Mr. Obey. What was the Coast Guard's request to OMB for 
this project?
    Admiral Kramek.  I believe it was $5.3 million.

                   deepwater project funding request

    Mr. Obey. Your 1999 budget includes $28 million for the 
deepwater fleet replacement analysis. You are proposing to 
begin the concept analysis phase to replace deepwater assets, 
much like the concept studies we provided $2 million for 
Mackinaw last year.
    I guess just a rhetorical question: Why should I support 
funding to begin a major new multibillion dollar acquisition 
program when OMB has failed to request funding to continue an 
existing ongoing acquisition project that is critical to 
transportation and commerce and the Great Lakes? Why should I, 
given the competing needs around here, cast my vote to provide 
one penny for that under these circumstances?
    Admiral Kramek.  Well, I think you should cast your vote 
for the deepwater project because it is the exact same project 
that I asked money for last year for Mackinaw that this 
committee approved. It was for the alternative analysis, 
preliminary to doing a complete design. The deepwater project 
is a two-phase project that simply pays for three consortiums 
and one government contractor as a balance to that to do the 
same type of work we have underway for Mackinaw right now, for 
the replacement of Mackinaw right now. The build funds for that 
program pend the successful outcome of the $28 million 
investment, just like the build program for replacement or 
renovation of Mackinaw pends the successful outcome of the $2 
million investment you have given us to do this study. It is 
the same type of thing. You mentioned the Mackinaw was 53 or 54 
years old. You should support the deepwater project because my 
other ships are that old too, and it is not right to continue 
to try to operate ships built in World War II to do today's 
mission.
    Mr. Obey. I think that is a perfectly reasonable answer. I 
just wish that OMB respected other people's priorities the way 
we are supposed to respect theirs.
    I have a number of other questions I will submit to you for 
the record on this subject as well as some questions on what 
the Chairman was pursuing with respect to the fees. And I would 
just suggest that in this case, with respect to the 
administration's request, I have been around here a long time 
and I understand that the administration often will cut 
programs that they fully expect Congress to provide the funds 
for so that they can pretend that they have, for the moment, 
funded other programs that are of a higher priority to the 
administration.
    In the case of the fees, it seems to me that the 
administration needs to understand that it is not useful for 
them to send up something which people on both sides of the 
aisle or on both ends of the avenue regard as dead on arrival. 
I appreciate that many of those decisions are made above your 
pay grade. Thank you, Mr. Chairman.

                       drug interdiction funding

    Mr. Wolf. Mr. Callahan.
    Mr. Callahan. Thank you, Mr. Chairman.
    Admiral, in reviewing your budget, and I guess going back 
into past history, and I have expressed my concerns not only to 
you but to your predecessors, Admiral; you should feel 
embarrassed coming before the Congress and asking for a budget 
whereby 50 percent of the utilization of that budget for the 
next fiscal year is going to be used in enforcing fishery laws, 
when you admittedly have problems and have some areas of--blank 
areas in the Caribbean, and where resources would afford you 
the opportunity to stop drugs. You are advocating that nearly 
50 percent of the time of Coast Guard cutter operations, 50 
percent of the time of air flight carriers, and fisheries 
enforcement boardings to the tune of 13,000 projected for next 
fiscal year, would indicate to me that you are turning into the 
meter maid for the national fisheries. They come up every month 
with new regulations, pass them onto you to enforce, and the 
Coast Guard--and I know your problems with OMB--but when Barry 
McCaffrey, when the Secretary of Transportation, when you go to 
the President and they simply tell you that there is not enough 
money for your programs to be adequately funded because of 
budget constraints imposed by the Congress, that is not true. 
The President requested numerous other new programs, and for 
you to come--and I know the good soldier that you are and I 
know that the restrictions you have with respect to the 
organization and what the Secretary of Transportation instructs 
you to do--but you have got to realize that the Coast Guard is 
not a meter maid group of people.
    To spend 13,000, to have 13,000 boardings, private boats 
out fishing, it is ludicrous, when you admit that you have 
problems with resources available to interdict drugs. Now 
something is wrong, and something has got to be changed, and 
you cannot even have a sufficient number of drug interdiction 
monies unless you pass a user fee.
    Well, we are going to create a user fee, we are going to 
allow you to assess the National Marine Fisheries a boarding 
fee. If they want you to enforce their rules and regulations 
which are not law, they meet every 2 or 3 months and they come 
up with an entirely new group of rules and regulations and they 
come to you and they say spend your resources enforcing the 
size of a fish that is caught off the coast of Alabama, that is 
wrong, Admiral, that is absolutely wrong. It is a disgrace to 
the Coast Guard.
    If they want enforcement capability, let them take it out 
of their own hide. So why not let's impose a fee of $100 per 
boarding and assess the National Marine Fisheries. Wouldn't 
that be beneficial to you to have that money available if you 
are going to do nothing but enforce or spend half of your time 
enforcing those rules and regulations? I mean, would you think 
that it would be a fairer way to fund that if they paid for it 
and wouldn't they think twice before they promulgated some new 
rule indicating that the size of the shrimp--I mean the size of 
the fish this year, instead of being 13 inches, is going to be 
14 inches, and they call you down to Tampa, just simply because 
a bunch of scientists from Yale or some place up in New 
England, who don't know anything about fisheries to begin with, 
tell you that, listen, Admiral, I know you have problems in the 
Caribbean, I know drugs are coming into the United States in 
horrible numbers, and I know you have got to spend some time in 
the Persian Gulf or the Middle East trying to protect the 
integrity of the national defense of this country, but forget 
about all of that.
    Admiral, that is wrong, and even though the good soldier 
that you are, you have got to step out in front and do 
something about that. The President found new monies for other 
programs. Why couldn't he find new monies and permit you to 
submit a budget to adequately fund drug enforcement?
    We are not going to pass any new user fees, and if you will 
remember the situation of the recreational boat fee, I was the 
only one in America, I think, that paid the hundred dollars for 
my boat, and the only reason I did that is because I was taking 
one of your predecessors out for dinner one night on it and I 
didn't want to embarrass him.
    We are not going to pass any legislation, or if there is 
any authorization in this bill that allows you to do it, I am 
not going to vote for the bill. Now I am going to vote, or I am 
going to offer an amendment to this bill to provide you with 
the resources you need for drug interdiction, but I am not 
going to get you more money or allow you to spend this amount 
of your budget, this percentage of your budget, on enforcing 
fishery laws.
    So how much money do you need to have the most effective 
drug interdiction capability in the world, how much money do 
you need? Now we are talking about ships, and just give me a 
rough guess. We are talking about acquisitions, we are talking 
about manpower, we are talking about airplanes, we are talking 
about helicopters. How much money do you need, because whatever 
figure you give me, I am going to offer an amendment somewhere 
in this process, taking the money from some other agency, like 
the National Marine Fisheries, and giving it to you. So how 
much money do you need to have the best drug interdiction 
program that you could possibly conceive of? How much money? 
Just give me a $50 million guess.
    Admiral Kramek. This is the question that someone always 
likes to be asked but it is almost impossible to answer for 
you.
    Mr. Callahan. You have got to have some idea, Admiral.
    Admiral Kramek. I will answer it this way. The President 
promulgated a 10-year strategy and a 5-year budget plan that 
was rolled out 3 weeks ago for the counternarcotics budget for 
the United States. It sets goals and targets in there. I 
submitted a budget to meet those goals and targets in fiscal 
1999. I wasn't allocated all the money, although I felt they 
made a good argument.
    Mr. Callahan. How much money do you need? Just give me a 
hundred dollars, million dollars, guess then; do you need a 
billion dollars?
    Admiral Kramek. Of course not.
    Mr. Callahan. Do you need $100 million?
    Admiral Kramek. In order to carry out the targets and the 
strategy, I requested $98 million more than I was allocated.
    Mr. Callahan. So you think with $100 million you could more 
effectively have a drug interdiction program?
    Admiral Kramek. I could meet the strategy that has been 
allocated for me to carry out what my responsibilities are in 
fiscal year 1999 as part of the 10-year strategy.

                     domestic fisheries enforcement

    Mr. Callahan. Wouldn't it make a little bit more sense to 
have less boardings of motor yachts out trying to catch snapper 
off the Gulf of Mexico, and utilize those resources as a part 
or in addition to the hundred million? Would that not make more 
sense to you, to have less boardings of private fishing 
vessels?
    Admiral Kramek. I would say that in my personal 
opinion,drug law enforcement has a higher national security priority 
than fisheries enforcement. However, as you know, sir, I report to four 
different committees, and I would tell you that I am not sure the 
committees in the Senate, who have huge interests in proper enforcement 
of the fisheries, particularly in the Pacific and the coast of Oregon 
and Washington and the Bering Sea and the Pacific Ocean, where the 
tremendous economy of those regions depends on proper fisheries 
enforcement, that they may agree with that. I would say it takes a 
balanced approach.
    Mr. Callahan. We will allow Senator Stevens and others to 
worry about the Pacific and the coast of Alaska, but I remind 
you, you have three members of this subcommittee, all from 
Alabama, who are interested in this. I would remind you that 
the Chairman's counterpart in the Senate is from the State of 
Alabama, so let's just talk about the Gulf of Mexico where you 
are spending too much time boarding, and most of these 
boardings are in the Gulf of Mexico, they are not off the coast 
of Alaska, they are not off the coast of California, they are 
in the Gulf of Mexico.
    Admiral Kramek. Let me take a look at the Gulf of Mexico 
because there is an interesting statistic with our boardings in 
the Gulf of Mexico, and that is, the fishermen there have been 
so responsible as to produce a 98 percent compliance rate with 
fishery laws. That is astounding. That is astoundingly good. So 
perhaps as a reward for their good compliance, maybe we could 
do a little bit less. But I would say most of the boardings 
that are done there are done with small utility boats from 
stations, not from the type of equipment utilized down deeper 
in the Caribbean; but a transfer of funds could be made because 
of their great compliance rate with the existing laws. That is 
something worthwhile to look at.
    Mr. Callahan. Well, but the National Marine Fisheries are 
coming out with additional rules and regulations within 60 days 
that is going to require additional devices called birds, and 
shrimp nets, and they are coming out with additional quota 
regulations on the catch of snapper, so isn't that going to 
compound your problems----
    Admiral Kramek. You are right, it is compounded, and it is 
more work than I can do. And I have asked my fisheries 
enforcement staff to meet with the Commerce Department because, 
quite frankly, I don't have the resources to enforce some of 
the new rules. And, as I mentioned in my opening statement, we 
have got the longest and largest exclusive economic zone in the 
world. Fisheries are important to our economy, they contribute 
$20 billion a year to the U.S. economy. And there are over 
110,000 United States commercial fishing vessels, so there is a 
big industry we are talking about. It is an important industry. 
People's mortgages on their boats depend on them making a good 
catch. But if it continues to be depleted, everybody loses, 
including the consumer. Now the last time you and I have been 
down to the fish market to buy a pound of fish, it cost 
probably $10 or $15 a pound.

                       prioritized budget request

    Mr. Callahan. That is because 80 percent of them are coming 
from other countries. Eighty percent now are being imported, of 
our fisheries, maybe 90 percent of our shrimp, simply because, 
as you say, China and all those other countries do not have the 
programs we have. So, yes, we have created a huge market for 
imports.
    My time is going to run out. But last year and the year 
before that, I suggested to the Coast Guard that they submit a 
budget to this committee prioritizing their monetary needs, and 
I am going to request once again that you submit next year a 
budget to this committee that prioritizes your 
responsibilities.
    You tell us first how much you need for a full drug 
interdiction program, how much you need for navigational aids, 
how much you need for search and rescue, and how much you need 
for fisheries enforcement, and let us decide a priority. We 
can't do it giving you all the money, with you telling us how 
you are going to spend it, when you are being forced by the 
administration, I think, to police these environmental rules 
and regulations or these fisheries rules and regulations. Why 
do you all continue to refuse to submit a prioritized budget? 
Do you think the Congress would cut your drug interdiction 
request if you submitted it to the Congress?
    Admiral Kramek. No, I don't think they would.
    Mr. Callahan. Then why will you not submit a budget saying 
this is how much money I need for the most effective drug 
interdiction policy possible?
    Admiral Kramek. I submit a prioritized budget like that to 
the Secretary and to the administration.
    Mr. Callahan. Why don't you insist that they send this to 
the Congress? Do you mean to tell me that you submitted to the 
President and to the Secretary and to OMB a prioritization, and 
they cut drug interdiction and did not cut fisheries 
enforcement?
    Admiral Kramek. I would say that they--with the funds that 
were available, which was limited funds, they couldn't do it 
all. There is no question in my mind that in law, in 
regulation, in policy, the Coast Guard has about 15 to 20 
percent more than it can do in any of these places, and that is 
why I am the administrator; to try to put the resources where 
they will do the best for all Americans, and the Americans that 
we serve.
    There is a small pamphlet that is at your place, and that 
indicates what percentage we are spending in each mission this 
year and it is about 17 percent in fisheries but only 13 
percent for drugs, so you are certainly right on that count. 
But that was a balance through the administration's budget 
process that we used to satisfy all stakeholders in America for 
our services, which far exceeds our capability to provide them 
all.
    Mr. Callahan. I understand. But, Mr. Chairman, rather than 
prolong this, I want to let you know that I already have a 
sufficient number of votes in this subcommittee to add another 
$100 million to the Coast Guard budget for drug interdiction, 
and I am going to submit it sometime in this process. It is not 
that I disagree with your professionalism in drafting the 
budget, I am just telling you that the Coast Guard is being 
shorted at the request of the administration, and as a result 
of that, people are dying by using drugs, and we would be 
derelict if we did not provide the United States Coast Guard 
with adequate facilities to fulfill what the Admiral is telling 
us he needs for the next fiscal year. So I don't know if it 
would be $100 million, Admiral, maybe it will be $200 million, 
and maybe I will try to take it from Amtrak like I did last 
year. And I didn't ask for a vote last year, Mr. Chairman, but 
I am going to have to ask for a vote this year.
    This submitted budget is inadequate to provide the needs of 
the United States Coast Guard for effective druginterdiction 
policy, and this committee would be irresponsible if they did not 
change that. If you want, Mr. Chairman, to rearrange this and say you 
are going to use X millions of dollars plus $100 million for drug 
interdiction, and less for fisheries, we will do it from within; but 
we, at some point in this process, are going to give the United States 
Coast Guard, at least my attempt is going to be to give them $100 
million more for drug interdiction.
    So I would appreciate, and I know your concerns about drug 
interdiction, Mr. Chairman, and I would appreciate your 
cooperation in instructing the staff to find a way. If we can 
limit the utilization of monies for these fisheries enforcement 
rules and regulations, and give the Commandant the authority to 
utilize that money instead, then let National Marine Fisheries 
give him the money for boardings, let National Marine Fisheries 
pay for the 16,000 hours of aircraft flight, let somebody else 
pay that.
    This is not the priority that drug interdiction is, and I 
am sorry to take so long, Mr. Chairman, but I am very adamant 
about this, I am going to insist on it. I hope that this 
subcommittee will do it, so we won't have to take this type of 
fight to the floor. So I solicit your assistance in this and I 
am happy to hear the Commandant tell me that he could have a 
more effective drug interdiction program if he had another $100 
million. Thank you.

                       drug interdiction funding

    Mr. Wolf. In following up on that, we will look at 
everything. It is very easy for Members to be for this and then 
for something else. We are dealing in a zero sum game in 
everything we do, and in some respects, when the administration 
says they have a major war on drugs, and yet the additional 
funding is appealed all the way up to the President and it 
doesn't come through, clearly the Members are not going to 
support the user fee. That pretty much knocks out, if the math 
is accurate, 11 percent of your capital program, it pretty much 
goes by the board. So it is going to be very, very tough to do 
what you want to do, Mr. Callahan, but we will see.
    Where would you take the money out of the current Coast 
Guard to do what Mr. Callahan said, if you were given the 
authority to move it around?
    Admiral Kramek. Well, there is no more slack. We just 
streamlined $400 million a year on 4,000 people, and as I 
mentioned in my opening statement, we are the smallest we have 
been since 1965.
    I would look at other maritime law enforcement. At our 
migrant interdictions, what we are doing with trying to 
interdict Cubans, Dominicans, Chinese from entering the country 
illegally at the fisheries, those are the only two places that 
we should look to take it from, you know, not from search and 
rescue, not from maritime safety or those types of programs, 
from our maritime law enforcement area.

                        training center petaluma

    Mr. Wolf. Mr. Sabo.
    Mr. Sabo. Thank you, Mr. Chairman. On behalf of a 
colleague, I am asking some questions and I will have several 
questions for the record that I would like you to respond to 
and send them to me personally too, and that relates to the 
Coast Guard Training Center in Petaluma.
    Admiral Kramek. Petaluma, California, right off of San 
Francisco, about 40 miles.
    Mr. Sabo. My understanding is the closing of this training 
center was discussed in the last couple years, and decisions 
were made not to close it.
    Admiral Kramek. That is correct.
    Mr. Sabo. It is the one training center for the Coast Guard 
that is on the West Coast, several on the East Coast. And our 
friends from California thought the issue had been decided, and 
apparently in the new budget, there is, again, an indication 
that that site might be under consideration for closing. Is 
that accurate?
    Admiral Kramek. I am analyzing all of our training sites. I 
did 4 years ago when we streamlined and I found we had excess 
capacity. I consolidated and closed a lot of training 
infrastructure, not unlike the Department of Defense, where 
they needed to close bases and training infrastructure. As we 
have downsized 4,000 people, we need less infrastructure to 
train them. So in our analysis that we are doing--to make sure 
our classrooms are full and our instructors are all fully 
utilized--like you do with any school district, Petaluma is one 
of the four sites we are looking at. It has caused quite a stir 
out in California from the local people. But on the other hand, 
I have an 800-acre army communications station that I inherited 
that I am teaching people to do things there with, that I may 
be able to teach them to do things more efficiently somewhere 
else.
    We are looking at the entire training picture, Mr. Sabo. 
Petaluma is one of four or five sites that is being considered. 
Everybody shouldn't get nervous until the analysis is done, 
which will take a few months. But I am obligated, like in this 
year's budget, to come up with $50 to $60 million worth of good 
management savings each year because the increase in the 
President's budget is less than the cost of inflation, and I 
can't pay the pay raise, the health care costs, or our current 
costs of doing business unless I continue to save. This is one 
of the areas we are looking at very closely, and Petaluma is 
involved as one of those entities.
    Mr. Sabo. I will have a series of questions for the record. 
If you would respond both for the record and send me a copy of 
the answers that relate to how that study is being done.
    Admiral Kramek. We will do that
    Mr. Sabo. Thank you, Mr. Chairman.
    Mr. Wolf. Thank you, Mr. Sabo. Mr. Tiahrt.

                    drug interdiction effectiveness

    Mr. Tiahrt. Thank you, Mr. Chairman.
    I don't want to shoot the messenger. I think we are seeing 
that with Judge Starr today, and I think it is a barbaric 
practice, and I think your credibility and integrity and job 
performance is without question. So I want that clearly 
understood, that I think not attacking the messenger.
    With that being said, I do want to say I am disappointed, 
not in the safety that you daily provide Americans, I think you 
are doing a great job, and not in the quality of the dedicated 
service; my disappointment, like Representative Callahan's, is 
in the drug interdiction efforts. According to a GAO report 
that you have shown us earlier that collectively with the Coast 
Guard and the Department of Defense and the Customs Service and 
the State Department and the DEA, there has been a dramatic 
decline in the Federal Government's efforts between 1992 and 
today, fiscal year 1992 and fiscal year 1998. We are at 
approximately two thirds of the funding levels, approximately 
three fifths of the shipdays for drug interdiction, 
approximately half of the flight hours for drug interdiction.
    Now, I am from Kansas and we are geographically the center 
of the 48 contiguous States. We don't see much of the ocean and 
we don't see much of the major waterways, but we do see the 
effects of drugs on our streets and in our schools and in our 
emergency rooms and in child abuse and in spouse abuse, and 
frankly we are sick of it.
    My disappointment is in the level of drug interdiction. I 
would like to see the restoration as a first step, the 
restoration of funding back to the 1992 level. I don't think 
that that is enough, and it can't fall solely on the shoulders 
of the Coast Guard to restore that funding level, but you are 
the front line of our defense in many respects, and I think it 
is important that you have adequate ships. And I know we are 
decommissioning ships in the Navy; however, it seems like you 
always get the hand-me-downs. And just from my own family, I 
know my younger son does not like the hand-me-downs he gets 
from his older brother; yet that seems to be the pattern that 
often falls on the Coast Guard.
    You should have the state of the arts with electronics and 
we have seen some advances with forward-looking infrared, and I 
appreciate what we can do to help that process along. But, you 
know, what is the next thing that would be effective? We need 
to know the next thing that would be effective.
    Aircraft. I would like to see you look at something like 
the V-22, the Osprey. Some of these new aircraft can be very 
effective in interdiction efforts instead of just getting the 
hand-me-downs. Now, General McCaffrey has submitted this plan 
to cut drug abuse by, I believe, 50 percent by 2007.
    Admiral Kramek. Yes.
    Mr. Tiahrt. Based on the last 5 years, if the next 5 is any 
indication, it is not going to be sufficient. Instead, we are 
seeing this focus on Forrest Gump and others who make a living 
by fishing, and, you know, they better straighten up because 
they are certainly increasing the amount of effort going to--
well, what Sonny Callahan just explained in this oversight 
function that you have.
    But in Wichita, Kansas we are concerned about drugs, we are 
concerned about the massive amount that comes over our borders 
and up our highways, and they are not as concerned as much 
about dolphins and their tuna as they are about drugs in the 
streets. And so I think that the Coast Guard budget as well as 
our Federal Government's budget should reflect that higher 
priority that every congressional district faces when it comes 
to drug and drug abuse, illegal drugs. But yet I really don't 
see that here. I see the increase in the fisheries enforcement 
and I see a reduction in drug interdiction.
    So I don't want us to limp through this war on drugs, you 
know, we have had kind of a Vietnam mentality, as has been 
expressed by others, a Vietnam mentality in this war, where we 
don't have a clear objective and we are not getting to that 
clear objective. I think General McCaffrey's plan falls short 
of that clear objective that we should have of winning, the 
World War II-style victory plan for the war on drugs. Again, I 
am using the words of others. And I know it is three-phased, or 
as you said earlier to us, it was--education, treatment, as 
well as drug interdiction--and I believe that, and I know that 
is not all on the Coast Guard's shoulders; but, again, I want 
to emphasize, where it affects my district and the people in 
the central part of this country, that don't have the oceans at 
their front door or nearby and don't have access to the major 
waterways. We are concerned about drugs and we would hope your 
budgets in the future would reflect that, and I think that is 
probably the most important thing that we could do. That is not 
just money, and you can throw money in the wrong pocket and it 
will be wasted, as you know. We want to know what would be 
effective, as well as how much it is going to take to be 
effective. I think that comes in the areas of new technology. 
So I would ask that we have that type of information available. 
Rather than drag on a lot, I will submit some questions for the 
record and I would like to have responses on that.
    Mr. Callahan. Will the gentleman yield?
    Mr. Tiahrt. I would be glad to yield to the gentleman from 
Alabama.
    Mr. Callahan. You mentioned Forrest Gump, who is a 
constituent of mine. He is in Bayou La Batre, Alabama. The 
author of that book, Winston Bloom, is also a constituent of 
mine, he lives in Point Clear. Winston tells me that in his 
next book, because of all of these enforcement provisions and 
all of these rules and regulations promulgated by the National 
Marine Fisheries, he is going to have to move from Bayou La 
Batre to Shanghai in order to make a decent living because they 
don't have those types of enforcement regulations over there. 
So in the next book that comes out, Forrest Gump is going to be 
living either maybe in South Vietnam where he can fish for a 
living or shrimp for a living without all these onerous rules, 
or else he is going to have to be digging ditches somewhere in 
Alabama if he wants to earn a living.
    So I thank you for bringing up Forrest Gump. He personifies 
my problem. This was the dream that he had, along with his 
friend who died, if you will recall, was to go and to have the 
ability to make a living shrimping off the coast of Alabama and 
live in Bayou La Batre, Alabama. Thank you for your time.
    Mr. Tiahrt. Thank you, Mr. Chairman.

                           user fee proposal

    Mr. Wolf. Thank you.
    OMB directives make it clear that a user fee should only be 
proposed where there is a direct link between the service 
provided and the fee proposed. Yet in this case, you are 
proposing to collect fees for operational services, then turn 
around and use them to defray the cost of new capital 
equipment. In other words, the bulk cargo ship, which pays you 
a fee for using navigational aids, would see you use those fees 
not to defray your expenses of providing that service, but 
instead to buy new equipment which may be wholly unrelated to 
the service he received. Doesn't this violate the principle of 
the user fees that has been established by OMB?
    Admiral Kramek. I think if it is crafted properly, it won't 
violate the principle of user fee. As an example, the long-
range aids to navigation system in the United States, which I 
manage, has over 50,000 floating aids to navigation, 45,000 
private aids to navigation. Of the 50,000 floating aids to 
navigation, they are serviced by a service fleet of buoy 
tenders. These buoy tenders now are being replaced with 
shipbuilding contracts at Marinette Marine in Wisconsin. One 
contract--there are two contracts, another we are out on bids 
for now. The total replacement value of this fleet over perhaps 
8 years--and it's about a third of the way finished now--is 
perhaps $1.2 billion. The cost of the service fleet, the cost 
of the vessel traffic systems--and you and I have had in past 
hearings long discussions on VTSs--in fact decided not to 
proceed with the national VTS system which, as you recall, Mr. 
Chairman, was about a $200 million price tag and it was 
suggested there would be user fees to pay for that which is 
what killed the project.
    The direct cost of those navigation systems can be 
attributed to the users. They are part of the acquisition 
budget, so I can see a direct correlation between them. Eighty 
percent of the cost of the aids to navigation system are the 
service vessels, the ships we have to buy in order to do that. 
They are very unique, they are very different, it is very hard 
work to do that. So I think we can meet the intent of the rule 
in that sense, and it can go into the acquisition budget.

                     domestic icebreaking user fee

    Mr. Wolf. What about user fees for the Great Lakes, for ice 
breaking?
    Admiral Kramek. The debate there is what users benefit. The 
studies that are going on now, one of which I have recently 
submitted to the Secretary, look at who benefits. If in fact it 
is decided by the Administration and by Congress that perhaps 
only two or three or four industries directly benefit and 
nobody else does, then perhaps an ice-breaking user fee to 
target only them is appropriate. If they don't, then it can't 
meet the user fee statute.
    That we are looking at very closely also, and that is part 
of what I have to do, 150 days or so after I have been told, 
and I have already started. So the test has to be made. We 
haven't completed the analysis to make that test. It has to do 
with inventory cost of taconite, steel and coal that would move 
during the winter. It is a very complicated transportation 
study. There are competing transportation industries, for 
instance. A lot of this can go by rail, but it is less 
expensive to go by sea. You have to break the ice for it to go 
by sea, and the cost of automobiles depends on this. It is not 
trivial, and so that is what we are looking at, Mr. Chairman.

                      caribbean support initiative

    Mr. Wolf. According to your justifications, the only new 
initiative in your operating budget for next year is the so-
called Caribbean international support tender, which would be 
used to train and support foreign Coast Guards in the 
Caribbean. How was this program conceived? Was this in your 
original budget request to the Secretary and OMB?
    Admiral Kramek. Yes, in fact, it was even for a little bit 
more than that. However, we have been able to use excess 
defense equipment to reduce my request.
    Mr. Wolf. Maybe we could take this out of Mr. Callahan's 
foreign operations budget.
    Admiral Kramek. Well, I think it is a good force multiplier 
on what we are doing. I believe that nations should be 
responsible for their own sovereignty and exclusive economic 
zone and prevent illegal migration and drugs from entering 
their country. Right now that doesn't happen in the Caribbean. 
Their regional security forces are inadequate to meet the task. 
During the Caribbean summit, where the President went to 
Barbados, Secretary Slater and I accompanied him, we met with 
the leaders of all those nations. We have worked with these 
nations for years, the Coast Guard has, with search and rescue. 
We have a network of search and rescue in the Caribbean which 
we provide the international leadership for, so we are used to 
working with them.
    So the President thought it was right for the Coast Guard 
to meet with all of them, to look at their regional security 
forces and decide with the National Security Council what they 
needed to do the job: 10 commissioned Coast Guard cutters, the 
82 footers that are over 30 years old, and spare parts will be 
provided to them as defense excess equipment. The Defense 
Department will pay out of some of their funding for the 
operation and maintenance of these vessels.
    Mr. Wolf. How much will that be for?
    Admiral Kramek. I think it is probably 2 or $3 million a 
year. The Coast Guard role in this is to provide the training 
for them to put together their little Coast Guards to maintain 
those vessels and to use them in a viable law enforcement role. 
So they go to our schools in Yorktown, Virginia, where we train 
them to be seamen and boatswains, mates and quartermasters. 
This 50-year-old ship will have a crew of Coast Guard personnel 
and 13 members from the foreign nations also, and it will go 
from port to port, a month at a time training them in how to 
use the boats, conducting joint operations with them, and 
training them how to communicate with us so that we don't have 
to operate there. I see it as a savings in the long run.
    Mr. Wolf. How long would the program operate?
    Admiral Kramek. I think forever.
    Mr. Wolf. From a budgetary point of view.
    Admiral Kramek. I think that the--I thought it was almost 
$4 million or so being asked for this year, those would be 
recurring funds.
    Mr. Wolf. There would be a recurrence.
    Admiral Kramek. Yes. My experience is when you train one of 
those countries and leave and go away for a year, the boats 
don't operate anymore, so the structure is incapable of 
maintaining that level of technical expertise necessary to do 
that operation.
    Mr. Wolf. So if you were going to put $4 million in this 
year, it was going to be $4 million for the foreseeablefuture?
    Admiral Kramek. Yes, it is.
    Mr. Wolf. So if we are not prepared to put it in next year, 
you should not put it in this year?
    Admiral Kramek. That is correct.
    Mr. Wolf. Your budget proposes to reduce international law 
enforcement training by $1.1 million and cut patrol hours for 
the HH-65 helicopter and the C-130 fixed wing aircraft. As a 
result, aircraft flight hours in support of antidrug missions 
would be reduced in 1999, leading to an estimated decrease in 
drug related seizures. Wouldn't restoring some of these 
reductions contribute more to the Coast Guard's mission 
achievement than providing $4 million for the Caribbean 
initiative, or do you think it is a fair trade off?
    Admiral Kramek. I can't equate one to the other until the 
training gets accomplished and I watch them do that.
    Mr. Wolf. But we are dealing with a very tight budget. We 
had a meeting yesterday of all the chairmen of the 
appropriations subcommittees. There is a supplemental which 
will have to be offset, except perhaps for the Bosnia part, I 
am not sure completely there, so every dollar does make a 
difference, particularly if you are trying to shift around and 
set priorities.
    So on a priority basis, if you were to match the 
interdiction versus this, knowing that nobody likes to make 
those choices, what would your choice be? Because basically 
what has happened, as you well know, the administration has 
pretty much said we are going to doctor this in such a way, the 
President will give a very good statement with regard to drugs, 
he will go on the radio on a Saturday morning and tell the 
American people of his total and complete commitment. There 
will be a lot of publicity surrounding it. I think General 
McCaffrey has done an excellent job. I personally think he is a 
good person for the job. But the average American doesn't know 
about OMB. Who is that? What is that? They are the people who 
call you over Friday afternoon at 6:30, before you come up the 
following day, to say, you can say this you cannot say that.
    My sense is you are being more candid today than you would 
have been 4 years ago because you are getting ready to leave. I 
have watched this over the history of my service in Congress, 
and my service also for a cabinet officer. The closer you come 
to the end, when the person is leaving, and that I guess is 
just human nature.
    The candor would be great earlier as well as later. But 
what they have pretty much said is let them do it up there, we 
have gotten all of our credits, we are going to make the case 
and do the public relations, but the fundamental underlying 
point, if you look at the flight hours--and we won't get into 
the classified briefing--it really isn't there, so it really is 
a choice. So there can be two very good programs, but you have 
to make a choice. Is this one, if you look at one or the other?
    Admiral Kramek. I have already made the choice. The choice 
is in my budget presentation where I asked for the Caribbean 
initiative to be funded at the cost of reducing flight hours, 
so I have already made the choice.
    Mr. Wolf. But is that your choice or OMB's choice?
    Admiral Kramek. It is my choice. It is my choice because 
internationally it is the right thing to do. We have the 
opportunity for this small investment to reap large benefits 
if, in fact, the regional security force operates the way we 
have envisioned it. If it doesn't, then it wasn't a good 
choice. In the choice of a zero sum game, like you said, that 
was my choice to make and I thought I would get more bang for 
the buck out of that than I would for some helicopter flight 
hours.

           use of lethal force as a drug interdiction option

    Mr. Wolf. On the drug interdiction question, how many 
people have been killed by gunfire on behalf of either the 
Peruvians, Bolivians or Colombians with regard to drug 
smugglers?
    Admiral Kramek. I can't answer that but I will look into it 
and see if I can provide it for the record. There are different 
rules in different countries. The Peruvians will shoot drug-
laden planes down. The Colombians choose to strafe them on the 
ground, once the crews have left the aircraft. We tell 
everybody to move aft, because we don't want to hurt anybody 
when we use disabling fire to bring a vessel to a stop, so 
there are different rules of engagement for every country.
    Mr. Wolf. Does anyone with you know how many people, with 
your staff here, how many people have been killed in the last 
several years?
    Admiral Kramek. I don't think so. I would ask Captain Boyer 
if he would know. I don't think we keep track of that at that 
end. We don't have that.
    Mr. Wolf. With regard to American fire, how many have been 
killed?
    Admiral Kramek. None, to my knowledge. That is for Coast 
Guard. I mean, that may not be true for Customs or DEA.
    Mr. Wolf. I am talking about Coast Guard, Navy.
    Admiral Kramek. None.
    Mr. Wolf. Why would it not be a good idea--and forget the 
convention, the international convention, I understand the 
potential problem--why would it not be a good idea for American 
military, both Navy and Coast Guard and Air Force, to open fire 
on either a ship or a plane that we clearly know is carrying 
drugs, because there have been a number of----
    Admiral Kramek. If your premise is that you clearly know.
    Mr. Wolf. Yes.
    Admiral Kramek. That, in my opinion, as a member of the 
Armed Forces, it is not a good idea to use lethal force unless 
lethal force is being used in your direction, too. 
Proportionality, our whole nation is based on this, all our 
training is based on this, we use proportional force to bring 
something to a conclusion, short of lethal force to shoot 
somebody and kill them, unless we are actually threatened that 
way. That is true in Bosnia or Haiti or any other place on the 
war on drugs.
    Mr. Wolf. When a policeman is in pursuit of a murderer, 
they have the right to shoot at the individual. Is it not the 
same analogy here when you look at the number of young people 
and older people who are being killed by the drugs coming into 
the country?
    Admiral Kramek. I think you can make an indirect 
comparison, but I think that would be your opinion, and that 
10,000 people die from the use of drugs every year; but I think 
it would also have to be law--legislation would have to be 
passed to permit us to do that.

                      use of force and deterrence

    Mr. Wolf. In the briefing, you were showing where they knew 
they might be shot down, the success rate was higher.
    Admiral Kramek. Very much higher, like 90 percent.
    Mr. Wolf. So if the people operating the fast boats 
andplanes coming out of Colombia knew that the United States military 
was prepared not only to fire a warning shot but shoot to hit the boat, 
hit the ship, hit the plane, that would have a positive effect?
    Admiral Kramek. Studies show most of them wouldn't leave to 
begin with.
    Mr. Wolf. I have always felt that was the weakness of our 
policy. It really isn't a war on drugs when you go into the 
high schools and see the amount of drug use and the aching and 
the pain and the suffering taking place in families. We really 
don't have a war on drugs. I think it is a term politicians 
posture and like to use; but when it really comes down to it, 
very, very few people are prepared to do what they have to do.
    There has been a reluctance in our government to actually 
go down and pick up the people. We know where the different 
operations are taking place in certain parts of South America. 
We actually know who the individuals are. We have the ability, 
like President Bush did with Noriega, to go and pick them up, 
and yet there has been a reluctance to even begin to get 
involved in that.
    We also know that most of the governments we are dealing 
with are corrupt. Although they have some tremendously heroic 
men and women in the governments--in the Colombian government, 
the number of justices who have been killed and the number of 
military who have been killed and the number of attorneys 
general, it is a profile in courage. But we also know at the 
upper level, the political process in this country at times can 
be corrupt. We know that. So we also know that down in those 
areas, many, many times the political process is corrupt. When 
a cardinal can be assassinated in Tijuana, and nobody is 
arrested.
    So I think until we are prepared to do those two things--it 
is very easy for Mr. Callahan to talk in terms of offering 
those amendments, and I hold a back seat to no one with regard 
to wanting to be tough and aggressive on drugs, but I think you 
also have to carry out--there are two other things. You have to 
be willing to go to the source country and deal with it in an 
aggressive way. This is a war.
    I think people ought to go into the emergency rooms and 
then talk to the moms and dads who have kids who have gotten so 
involved in this. Most of the crimes, perhaps 90 percent of the 
people down at Lorton prison are there because of drugs, or 
involved in drug use. It is a major issue. So until we are 
prepared to go to the source, and until we are prepared to also 
permit the military to shoot them down, I think it is a very, 
very weak response.
    I may actually offer in this bill, and I don't think most 
of the Members will support it, but I will call them and 
hopefully they will, to change it to give you the permission 
and to give the Navy the permission to fire and to disable the 
plane and to shoot the plane down and to stop the boat in the 
water; not having to get on the phone and call the Commandant 
of the Coast Guard at his house and go back and forth in a 
liaison that will take 2 or 3 hours and spend the resources you 
spend.
    If you could for the record, tell me how much money was 
spent on the one case where the individual was leaving and then 
you tracked him back, how much military with regard to Navy, 
Coast Guard, DEA, time on satellites, what that operation cost. 
What that actually cost in regard to resources, gasoline, time 
in the air, Coast Guard pay and all of it.
    And I may very well offer, and frankly call the Congress' 
bluff on this issue, perhaps not the Congress because maybe the 
Congress would be very, very supportive, but call the 
administration's bluff. You have watched this thing. You had 
Mr. Brown, big hat, no cattle, nothing ever happened. The 
President went on television and said on MTV that he tried it 
but he never inhaled. You had the message being sent. You had 
the drug czar's office being dramatically cut, and yet you 
still have the Saturday morning speeches and the political 
posturing.
    [The information follows:]

    While patrolling off the west coast of Colombia on the 
morning of September 27, 1997, the USS CALLAGHAN located a 
small, fast contact on radar. CALLAGHAN began a high-speed 
pursuit and after sunrise identified the contact as a black-
hulled go-fast vessel with four outboard engines, flying no 
flag and carrying a large quantity of bales. CALLAGHAN launched 
its helicopter to assist in the chase. When the go-fast was 
overflown by CALLAGHAN's helicopter, the vessel began to dump 
the bales overboard. CALLAGHAN was unable to close the vessel 
and discontinued the pursuit to recover the bales, which 
totaled 3.3 metric tons of cocaine. A U.S. Navy's P-3 aircraft 
monitored the go-fast, but was unable to continue the effort 
due to low fuel.
    The September 27 seizure did not involve any Coast Guard 
platforms, but did include the eight-person Coast Guard Law 
Enforcement Detachment (LEDET) embarked in CALLAGHAN. The 
following summarizes the personnel costs associated with this 
LEDET:

------------------------------------------------------------------------
                                    Travel per   Personnel              
                                       diem        costs        Total   
------------------------------------------------------------------------
USCG LEDET (29 days).............       $6,142      $28,514      $34,656
------------------------------------------------------------------------

    The Coast Guard did not have costs data for the other 
agency assist in this case.

    Mr. Wolf. I have a number of other questions on the drug 
issue. I know you are leaving at 3:30, is that it?
    Admiral Kramek. Three o'clock.

                  appropriate use for governors island

    Mr. Wolf. Fine. Let me go back to a couple others, but 
before I do, let me ask you about Governors Island. I was out 
on Governors Island and saw chiefs, Coast Guard chiefs. They 
tell me they were raking--I did not see them actually raking 
the leaves that day, but they said they had been out raking the 
leaves.
    On the island, I saw a very historic building which you 
know about better than anyone, where President Reagan met with 
Gorbachev and Vice President Bush, and I sense it may have been 
the opportunity for President Reagan to introduce Bush to 
Gorbachev, to let them know that this is my successor and this 
is who you will be dealing with. Also, Mitterrand stayed in one 
of the buildings. The history that your people and the Library 
of Congress compiled for me of the number of people, 
interestingly enough, who served out there and also who served 
time in the brig out there is very, very interesting.
    Coming from the grandson of an immigrant family, both came 
from Germany, my grandmother and my grandfather--looking out on 
Ellis Island. And you have been out on Ellis Island, which is--
I mean, it is a special place to go and visit. I don't think it 
is visited enough, perhaps there is difficulty getting out 
there with the ferry, but you can go out there and spend a day 
and you get a greater appreciation of what this country is all 
about.
    Then you go and look just off to the side and you see the 
Statue of Liberty, which was the symbol of the students in 
Tiananmen Square, which they made in a paper mache in 1989, and 
then we find out that some want to bring gambling out to 
Governors Island. My sense is that the Park Service should have 
an operation out there, perhaps move the boundaries of Ellis 
Island to also include Governors Island; also have the 
opportunity for consortiums of universities, and there are so 
many in the New York City area; also an opportunity for 
students who come from California a place to stay under a 
cooperative arrangement. And thirdly, provide 60 to 70 acres 
for parkland so moms and dads who live in the Bronx or wherever 
the case may be or come from California or North Dakota when 
they come can go out and see that.
    Do you think it is appropriate, with the history and the 
general picture out there, to have gambling out on Governors 
Island?
    Admiral Kramek. No. I have lived there for 4 years. I was 
the Mayor of Governors Island. And no. It is historic, it has 
been historic since before we were a nation. The house I lived 
in was built in 1709. It was the oldest standing house in New 
York. And all those things you said are true, in particular, in 
the shadow of the Statue of Liberty and overlooking Ellis 
Island where my family came from also. So no, I don't think it 
is appropriate.

                     presidential advisory council

    Mr. Wolf. Good. Next we will move to Coast Guard roles and 
missions study. Your justifications indicate that a 
Presidential Advisory Council will review the Coast Guard's 
missions in early 1998. What is the council and who is on it? 
Who appoints it, what is the makeup?
    Admiral Kramek. I just met with the Secretary last Friday 
evening and gave him a proposal on the structure of the council 
and how it should be done. The proposal is--and the proposal 
has not been approved by OMB yet, but it has been approved by 
the Secretary. The proposal is that a Presidential Advisory 
Council, designated by the Secretary, of Federal government 
employees which would include the Departments of Defense, 
Commerce, Justice and others, all of whom we do business with 
and serve in one way or another, would prepare a report on the 
Coast Guard's roles and missions in the deep waters of the 
world and the United States that this system is required to 
operate in. In other words, what are the missions that affect 
us? Cruise ship safety isn't one, but certainly fisheries, 
certainly drug enforcement, certainly our contribution to the 
Department of Defense, are all part of that.
    That commission would then conduct a mission validation 
study. They would be given 6 months to do this. Then the 
Secretary would submit that to the President, and I assume that 
OMB would be the President's agent for accepting this report. 
That report is necessary as input to phase 2 of the deepwater 
procurement.
    The money that I am asking for this year accomplishes all 
that is required of Phase 1. Phase 2 does not require funding. 
In Phase 2, whoever wins the design competition would then go 
on to do detailed specification and contract costs. In fact, 
all three contractors who do the design competition could go 
on, as an input to Phase 2. They need verification of the Coast 
Guard's roles and missions that are given to us in law or by 
policy--the things we have been asked to do--to verify that for 
now and the next 20 years, those will still be important.
    Mr. Wolf. Who would serve on it, for instance? Can you just 
give us an example?
    Admiral Kramek. All I did was put respective agencies down.
    Mr. Wolf. Just give us the people.
    Admiral Kramek. I would assume people like perhaps the 
Deputy Secretary might even be the head of it, the Assistant 
Secretary for Fisheries in Commerce, the Assistant Secretary of 
Defense for Special Operations and Counternarcotics in the 
Department of Defense would be a member of it. It would be that 
level.

                   deepwater project funding request

    Mr. Wolf. The justifications indicate that the council's 
review will place special emphasis, as you just said, on 
deepwater missions of the Coast Guard in order to help shape 
the deepwater capability replacement analysis project. This 
program is budgeted at $28 million for fiscal year 1999, which 
makes it the fourth largest item in your budget. Why would you 
be requesting so much for this project if the details await the 
recommendations from the advisory council to review what the 
Coast Guard needs?
    Admiral Kramek. We have a good idea, Mr. Chairman, of the 
validation of our missions already. You know, we know pretty 
much what we have to do by law. It needs to be verified; it 
should be verified. I would give you one example. The Coast 
Guard is tasked with enforcing the U.N. moratorium on high seas 
drift net fishing in the north Pacific Ocean, between Midway 
and the Aleutian Islands, and we have a treaty with Canada and 
with Japan to do that together. And I think that this 
commission wants to validate that, and that if they do, then we 
have to continue to do that. If they don't, and say we 
shouldn't be doing it, that will affect the number of ships and 
planes and people that we currently use. And so as input to how 
many we need and where we need the system, I think the study is 
pointed in that direction. The $28 million is used as, and I 
think in a very economic proportional way, a competition 
between major consortiums in this country that have already put 
their hats in the ring. For instance, Avondale Shipyard is 
teaming with Boeing, McDonald Douglas, and J. J. McMullen, 
Incorporated as one of the teams. There are six or seven other 
national teams over our major aviation and shipyard contractors 
that are going to compete, and the three winners of that 
competition will each receive about $6 million or $7 million to 
spend over the next 18 months to develop the concept design of 
the system. The study will then tell the winner how many and 
where.
    Mr. Wolf. This is the last vote for the day. Let me go vote 
and I will come back. You are leaving at what time?
    Admiral Kramek. We were going to leave for the airport by 
about a quarter after 2, in order to meet Chairman Livingston.
    [Recess.]

                           staffing estimate

    Mr. Wolf. That is the last vote so we will have a little 
time.
    Your budget justifications indicate you have discovered a, 
quote, ``structural error'' in your estimates of Coast Guard 
staffing. Apparently your systems failed to update your 
staffing estimate for actions taken by Congress or internal 
management decisions, which had the effect of reducing 
staffing. As a result, you now conclude you have significantly 
less staff resources than you thought. For example, your 
corrected staff estimate for fiscal year 1997 is 1,727 staff 
years less than you estimated last year. Can you explain how 
this error went undetected for so long?
    Admiral Kramek. It is the way we structured our budget, Mr. 
Chairman. Before we structured our budget only based on 
programs, and the accountings we made on personnel were based 
on what we asked for and not what we actually received. We 
corrected that with the help of your staff this last year. They 
pointed it out to us. I feel that we are now on--have a good 
system to account for that, and our 1999 budget reflects the 
amount of money we need to hire the personnel to run the Coast 
Guard.
    Mr. Wolf. So it is in place now, it won't happen again?
    Admiral Kramek. It is in place this year; that is correct.

                       defense-related activities

    Mr. Wolf. According to your fiscal 1999 program and 
financing schedule, the Coast Guard plans to obligate 
$69,135,000 in fiscal year 1999 for defense readiness 
activities. How then can the President's budget request an 
earmark of $309 million for defense-related activities?
    Admiral Kramek. It depends on what you do. I could give you 
a list of what I would call national security missions that we 
are doing that will total $700 or $800 million. Whether or not 
they are exactly defense related or not is another matter.
    As an example, it is totally defense-related when I send a 
ship and I am asked to send a ship to the Gulf of Arabia to 
enforce the embargo on Iraq. It is less defense related when I 
am asked to train the Colombian and Venezuelan components of 
their navy, which they call Coast Guards. In those cases, those 
funds wouldn't be attributed to that. They would probably be 
attributed to drug law enforcement, as an example.
    Defense-related activities are when I have a ship or plane 
actually operating for the Department of Defense. The Defense 
Department pays for all the weapons I have on all of my ships, 
all of our bullets, all of our guns, and all of our defense-
related communications systems. We clearly use, and each year I 
have to certify to the Department of Defense, over $300 million 
in national security defense types of expenditures.

                coast guard in the department of defense

    Mr. Wolf. You know, I know I am in a minority in the 
Congress on this next question, but wouldn't it make more sense 
for you to be in the Department of Defense?
    Admiral Kramek. It is a question that is often asked.
    Mr. Wolf. I have asked it before. I know it has been asked. 
I think it is easier to get the necessary resources if you were 
in DOD, and although you are the only military agency that has 
a police role, if you will, it just seems to me, frankly, if I 
were in charge, which I am not, I would take the Coast Guard 
out of DOT. I would take the FAA out of the Department of 
Transportation, too. I think it becomes an orphan child. I 
think the decisions--and we won't get into that for lack of 
time--are political, and therefore the thing just kind of gets 
shoved down. Secretary Pena went through this game several 
years ago with vacuum tubes, and he would go on television 
about vacuum tubes and the Speaker would talk about vacuum 
tubes. It was kind of a game. But the FAA never had the 
leadership. It was vacant. If you recall, you have been over 
there when Mr. Hansen walked out and nobody was minding the 
ship. They are going to have a year 2000 problem on their 
computers, which you are going to read about wherever you are 2 
years from now, and I hope you are some place good. But the 
same thing holds true, really, for the Coast Guard. Do you have 
any feelings about that?
    Admiral Kramek. I have some opinions and strong opinions, 
and I will say it is something we have closely looked at. And 
the officer who is going to relieve me of this job, Vice 
Admiral Jim Loy, is here today. He is my chief of staff. He and 
I have looked at this a lot, especially 4 years ago when 
Secretary Pena himself mentioned to me he thought we might be 
better off in some other department; why weren't we?
    I think it is good to take a look at the 1990 GAO study 
that was done to answer the question of Congress on this. Their 
conclusion was we are best in the Department of Transportation, 
and I guess that is why we are still there.
    If you would have to do this with a clean sheet of paper, 
based on that budget book, our budget and brief, you might 
decide the Justice Department would be the department that we 
would be better off in, and that 40 percent of our total costs 
and operations are in support of law enforcement type missions.
    In fact, just 2 years ago, the person who received the 
Department of Justice award for doing most of the Department of 
Justice was a rear admiral in charge of the 7th Coast Guard 
district, because of the migrants, the drugs, the fisheries and 
the environmental crime and all that that was being committed 
there. The fact of the matter is I don't believe we would be 
better off in the Department of Defense. Secretary Perry has 
suggested that to me. General Shalikashvili has suggested that.
    Mr. Wolf. The Secretary suggested you would be better off, 
or would not?
    Admiral Kramek. He wanted a discussion and we discussed 
going to the Department of Defense with both he and General 
Shalikashvili. Quite frankly, I don't think we would stand well 
there. The Department of Defense has a $255 billion budget, the 
Coast Guard is $4.3 billion.
    The Department of Defense exists today, and their budget 
allows them to be ready to carry out national security 
missions, but then in order to do it, they have to have a 
supplemental to go to Bosnia, a supplemental to go to Iraq. The 
Coast Guard, when you appropriate the money as our Chairman, I 
can't recall the last time we came back and asked you for 
anything substantial as a supplemental. With what you have 
given us, we buy ships, operate ships, inspect for safety. We 
do it all with everything, ``one stop shopping.'' I think we 
are a unique agency of government.
    Somebody had the foresight over 50 years to put us together 
from a law enforcement standpoint, lifesaving standpoint, a 
steamboat inspection standpoint, and perhaps in the future, 
maybe even more ocean-type responsibilities. In Japan, for 
instance, the Japanese Coast Guard has hydrographic charting 
responsibilities.
    Mr. Wolf. Where are they? Where is the Japanese Coast 
Guard?
    Admiral Kramek. In a department, Minister of Transport. But 
parochially we set them up in 1949. We were part of Treasury 
then.
    Mr. Wolf. Yes, I know. Where are most Coast Guards?
    Admiral Kramek. Most Coast Guards are either a component of 
their navy or in their Minister of Transport, either one or the 
other. In intermodalism today, Mr. Chairman, I strongly believe 
the Department of Transportation is the right place for us. 
When I, in my opening comments, related about our maritime 
trade tripling, we are still an island nation. The things that 
the Coast Guard does for our transportation system are growing, 
not reducing in size. They are more important from an economic 
commerce standpoint. I feel we are in the right place, doing 
what we are doing as a unique agency. It was Secretary Pena's 
thought for a short time that perhaps we should be independent. 
I don't share that view. We need a Cabinet Secretary, we need 
chairmen of appropriations and authorizations committees who 
can properly hear what we have to do. We are different and I 
think we are treated a little different. We comprise 50 percent 
of the people in the Department of Transportation but only have 
10 percent of their budget, and that puts us in another 
interesting position. But we are also the leaders for the 
Department in things like strategic planning, quality 
management, leading the charge in the National Performance 
Review.
    Mr. Wolf. Maybe we should put the Department of 
Transportation in the Coast Guard.
    Admiral Kramek. I wouldn't be so bold as to suggest that.

                       overseas housing authority

    Mr. Wolf. The military construction appropriations bill 
proposes the establishment of an overseas housing authority 
which would be funded through increases in individual housing 
allowances. Does the Coast Guard agree with this concept and 
will you participate in it, or have you even looked at it?
    Admiral Kramek. I would like to look at that further and 
provide it for the record.
    [The information follows:]

    The Coast Guard is aware of the Army's proposed 5-year 
pilot project to transfer up to five overseas housing 
installations from appropriated funds to non-appropriated 
funds. The proposal would increase housing allowances to 
personnel assigned so they can pay rent. The Coast Guard 
supports the Department of Defense's privatization efforts, but 
with few Coast Guard personnel assigned overseas, the Coast 
Guard's overseas housing need can be met through commercial 
leases. There are no plans to participate in this proposal.

    Admiral Kramek.  I will say that we had housing authorities 
which were new last year, brought about by Senator Mikulski's 
interventions in the Senate. And we are just starting to take 
advantage of those things, where contractors will build housing 
and then lease it to us for long-term leasing. It is called 801 
authorities, and there are some other vernacular associated 
with it. We are just starting to become involved in that now.

                         performance plan--1999

    Mr. Wolf. The Coast Guard has submitted its annual 
performance plan, as required by the Government Performance and 
Results Act, and obviously I think you should be commended for 
a lot of good work. But you would think of goal setting as a 
way of pushing oneself--I mean, I ran in the Boston Marathon 
one year and I set a goal that was far beyond where I was. And 
one year, on a lark promised I would run in a marathon, and I 
couldn't believe it, and I set a tremendous goal, but I just 
forced myself. And by setting the goal--we are all goal 
oriented. But many of the 1999 performance goals the Coast 
Guard has set are the same, and in some cases actually less, 
than already achieved.
    Do you really think you have been aggressive enough in 
setting the goals? In some respects, some of them will be easy 
to achieve because you are already there. Should you have been 
more aggressive, or should you look at that with the idea that 
if I said I am 190, I want to go down to 178?
    Admiral Kramek. There are two things you see in our budget; 
one is goals and one is targets. I feel our strategic goals are 
the right ones. I feel they are aggressive enough. They are 
more than I can ever achieve in fisheries enforcement or drug 
enforcement or perhaps even migrant interdiction. More 
achievable perhaps in the marine safety area; very achievable 
in search and rescue, and there are some reasons for that, 
because we drop everything when somebody says, ``May Day. We 
need help.''
    That is why the statistics show how achievable it is, 
because it is less a matter of choice and more what you 
absolutely have to do to save someone's life. But the things 
that don't look very challenging I would call targets, not 
goals. And the targets are very much influenced by what we 
expect to get in the budget, and the targets work both ways. 
The targets for drug law enforcement make a lot of Members 
unhappy because it doesn't look like we are doing enough, but 
the reality is there isn't any more to do it with, so it 
doesn't make any sense to set a target so extremely high that 
you can never reach it. Rather, I agree, it always should be a 
little bit more, maybe even 5 or 15 percent in some cases, in 
order to give you the incentive to do that.
    I think, overall, our goals do that. Also, you reach a 
steady state in performance goals. As an example, in our 
performance goals to reduce oil spills, wouldn't it be nice if 
we brought that to zero, but it is impossible because 80 
percent of accidents happen because of people, not because of 
the equipment, the machinery, or the safety of the navigation 
system. So you try to bring it to a level that is sustainable, 
that meets the public's interest.
    So in some of those cases, our goals will level out. Search 
and rescue is like that now. Ninety to 93 percent of the lives 
we are able to save when we are called for help. To make it 
more than that would take an extraordinary investment in more 
stations and more communications. It is a goal that we found on 
working with our customers--because we asked them, we are a 
quality organization, what they want--they are usually 
concerned with the 7 or 10 percent that we are not going to 
save, but one that has met satisfaction in the public domain. 
So we set our goals based on discussing these with our 
customers and on what is realistic and what we can achieve. And 
I think for the first time Congress--this is the first hearing, 
the first question I can recall recently, and I really applaud 
you for that, asking us what do you think about these goals, 
that this is the first year we have put them forth. I think 5 
years from now, most of our hearings will be based on what 
those goals are and what your objectives were and did you meet 
them, rather thanon how much money you have in each one of 
these accounts.

                      use of performance measures

    Mr. Wolf. Also, some of the strategies identified are 
somewhat vague. For example, under the goal to eliminate crew 
member fatalities on commercial vessels, your strategies are, 
and I quote, to promote fishing vessel safety activity, enforce 
applicable laws and regulations and conduct the merchant marine 
licensing program. These are not quantifiable measures, and you 
are already doing them in the normal course of your routine 
activities.
    Are the performance plans designed to promote more 
specificity so the agencies can measure how you are doing, so 
the Congress can measure, or are they more to drive you to meet 
them? One says this is the thing that is going to drive me; the 
other says this is to see how I am doing.
    Admiral Kramek. They are both. In fairness, it is very 
difficult to make up some of these goals. It takes a while to 
survey your customers. In this particular case, let's use 
fishing vessel safety, I think that is a darn good example. 
About 4 years ago it was identified as the most dangerous 
industry we have in terms of lives lost for people working in 
that industry, and it was on the number one hit list, if you 
will, for the National Transportation Safety Board for the 
Coast Guard to do something about it, and our goal was to at 
least bring it down to a much less dangerous industry, on par 
with other types of industry of like type. In order to do that, 
we saw we needed to have better safety features on the vessels, 
the people needed to be trained more, we wanted to license the 
masters. And we proposed a whole bunch of legislation which was 
soundly defeated by Congress, because the fishing vessel 
industry doesn't want to be regulated, period.
    Mr. Wolf. Nobody does.
    Admiral Kramek. They were, though, they were--and I need to 
give them a lot of credit--very cooperative in having us work 
together in a partnership, and I have partnerships with them 
now. We tell them what they need to know about stability and 
loading their crab boats and how to put out fires and things of 
that nature, and they have set up their own schools and we have 
them come to our schools and we train them and we train 
together. They were happy now, after the fact, that from the 
safety standpoint, we were able to legislate that they needed 
life rafts, that they needed firefighting equipment, that they 
needed certain exposure suits, because the level of deaths in 
that industry has been reduced by about 50 percent. So these 
things are measured within the degree of what Americans will 
subject themselves to.
    The same thing is true for the cruise ship industry. We 
have a partnership with them. There has only been one death in 
10 years, even with these thousands of passengers per ship, 5 
to 6 million passengers on board them last year. So we try to 
work on what the goals should be. This was our first effort at 
it. I think they will improve.
    I want to say one thing about measurement. It is not 
simple. A year ago, I had to train 6,000 Coast Guard personnel 
in measurement in order to measure ourselves on how we do these 
types of things and put things together based on cycle time and 
repeatabilities. The normal recruit that you get in doesn't 
know very much about this, but he is the person out there 
boarding and doing the inspections, and they have to know about 
this. So it takes a while for the system to be developed. I 
think it will be a very good system to run the government, and 
we will have much better performance measures and be able to 
measure ourselves in the future. That is our first cut at what 
you are saying.

                     cocaine smuggling success rate

    Mr. Wolf. I have a number of questions on drug 
interdiction, which receives so much attention. According to 
your performance plan, you will measure the success of your 
antidrug effort by trying to reduce the smuggler success rate. 
You define this as the amount of cocaine transported aboard a 
noncommercial vessel into the U.S., expressed as a percentage 
of all the cocaine that would be transported if the Coast Guard 
was not present to deter or seize it. What methodology will you 
use to calculate this unknown amount of cocaine? How do you do 
that?
    Admiral Kramek. Well that doesn't sound too very astute, 
but this is the way it works. Remember earlier in our closed 
session we talked a little bit about the supply and the demand. 
The demand for cocaine in the United States is about 240 to 
300--scientists disagree exactly what it is, but it is in that 
range--metric tons of cocaine a year.
    Mr. Wolf. Does that remain relatively stable?
    Admiral Kramek. That has gone down a little bit, but only 
because the amount of users has gone down by about 40 percent 
in the last 10 years. Therefore the demand for it has gone 
down. The amount of supply is very, very flexible. Three or 4 
years ago--the supplying countries can produce up to 700 or 800 
tons a year, twice as much as we need. This last year, we think 
only 430 tons were shipped because of the disruption in Peru.
    What we were able to achieve in the transit zone, we seized 
like 103,000 pounds of cocaine just by ourselves in the Coast 
Guard. The goals are to reduce the amount--long-term goal is to 
reduce the amount of cocaine entering the United States below 
the demand level of the United States. But you have to take it 
in steps to get there. It is based on scientific studies.
    It is based on a Rockwell study right now which shows that 
if you have a certain presence in the transit zone, some of it 
you will seize and some will be deterred by your very presence. 
I have sent this model to ONDCP, to General McCaffrey, and I 
suggested it be the model that all Federal agencies be measured 
on, that we should all have the same measure of effectiveness. 
ONDCP has let a study for quite a bit of money to have these 
things validated.
    I think our goal is the right one right now. It needs to be 
validated. I can say 2 years ago we didn't have a goal, it was 
just to go out there and do the best you can, and I think it is 
in total consonance with the long-term goals in the strategy we 
talked about this morning, the 1998 strategy. It is in 
synchronization with that, if not a little more rigorous than 
the overall national goals.
    Because the goals and the strategy will say, and I would 
commend it to your staff to look at this, because I called my 
staff in the other day and said wait a minute, our performance 
goals don't meet the goals of this new strategy. They said, 
``Read the rest, Admiral,'' and the rest said the goal over 10 
years to reduce flow and demand by 50 percent can't be achieved 
by the Federal budget alone. It has to be achieved by the 
participation of teachers, families, churches, schools, 
coalitions, all working together we can achieve this goal. The 
federal budget is only one portion of it.
    So I feel the portion we put in there is correct for 
ouragency on what the art of the possible is within the constraints of 
the budget and the priorities of the people.
    Mr. Wolf. Speaking of the art of the possible with regard 
to the budget, 10 years from now when you are 68 and we open up 
this hearing again and you are able to see how wise you were, 
like Solomon, how successful do you think we as a country will 
have been? I am not just talking about the Coast Guard, but you 
have an overall capacity to look at other areas. Where do you 
think we will be?
    Admiral Kramek. We will be the world's leading economic 
power.
    Mr. Wolf. I am talking about solely with regard to drugs.
    Admiral Kramek. Oh, with drugs. In 10 years, if we follow 
the plan that General McCaffrey put down--and I helped make 
that plan, as other people in this room did, along with the 
Commissioner of Customs and the head of the DEA and Janet Reno 
and Donna Shalala and Bill Riley and all these other folks that 
work so hard on it--we will have met our 50 percent goal. I 
think that is totally achievable in 10 years and we will have 
less than 3 million drug users in the United States. If we want 
it to be less than that, we have to work harder on it and put 
more effort on it. If we want to do it in half the time, that 
might be possible from an interdiction standpoint; it may not 
be possible from an education, social and treatment standpoint.
    In other words, this is something that takes a lot of 
diverse interests working together, but in a 5- to 10-year 
period I think it is totally achievable if you keep it on the 
front burner. Americans have to have the will to win, and if it 
is not on the front burner and the President and a bipartisan 
Congress are not talking about it all the time and making it an 
issue and keeping it right up front, I don't think we will be 
successful.
    Mr. Wolf. So you are basically saying you doubt we will be 
successful because the chances of us keeping--we have already 
fallen behind, based on the numbers?
    Admiral Kramek. I think there were reasons for that, 
though. I mean, we have all jacked ourselves up not to let that 
happen again. We saw some successes during the Reagan years and 
the Bush years and then everybody said, ``Wow, we are doing 
really good'' and then didn't do anything more for about 4 
years. That is what all the graphs of both demand and resources 
and everything we have talked about look like to me.
    Mr. Wolf. I think it is harder now because it has gotten 
deeper, and overall, I think people are somewhat suspicious of 
the commitment, and I also think it is also not only a dollar 
thing, it is a spiritual thing. You have more child abuse, more 
spouse abuse, more teen pregnancies, more teen suicides, more 
teen violence, more families breaking up, and so it is not only 
economics. You cannot track that report only on the economic 
spending. It is on so many others, and on those other 
indicators, they are almost all, but for perhaps maybe one, 
going the wrong way and going fairly rapidly, at a rapid rate.
    I spoke to a young lady the other day who had a nephew who 
committed suicide, a good boy, and they went into his room and 
they pulled out his writings, and the drug culture had pretty 
much wrapped itself around that boy and had taken him away, 
with the music. One night I was getting home late, I had been 
at an event and I heard, I forget the guy's name, Marilyn 
Manson, something or another, I forget what, but he was being 
interviewed. The whole drug culture has kind of come in and 
captured many of these children.
    I don't think many of you, or any of you, spend the time 
that I spend with young people, not only going in and talking 
to them but just listening. That is not as a criticism; many 
people are busy. I know Secretary Riley is coming out to my 
district next Monday, going into Chantilly High School, talking 
about class sizes and things.
    But really, there is something happening out there among 
society. You can put all the money in for interdiction and you 
can do all these other things, and if the social fabric is not 
restored and if the spiritual aspects are not looked at, my 
sense is we have already slipped from the plan. You 
acknowledged that the difference, and correct me if I am wrong, 
was $98 million less than what you asked for for the Coast 
Guard. Is that correct?
    Admiral Kramek. That is right.
    Mr. Wolf. We have already slipped in this year, we have 
fallen further down, and there is nothing in that with regard 
to families staying together and those other things. So really 
I am not as optimistic. But it will be interesting to see, and 
you did qualify it where you said if we stick to it.
    Admiral Kramek. If we stick to it. Because, you know, you 
have hearings from all the Transportation agencies. The 
Secretary's number one goal is safety. That is the Coast 
Guard's number one goal, is safety. Why is it safety? Look at 
the lives lost in transportation accidents.
    There are 10,000 lives a year lost due to drug abuse in the 
country. Isn't it worthwhile to do as much or more than we are 
doing about that? We can save more lives that way than probably 
on some of our safety systems in the transportation sector. 
There is talk of going on the blood alcohol count to point 08, 
and that will save 500 or 600 lives, and I think we should do 
that.
    Mr. Wolf. I do too, but you will find----
    Admiral Kramek. We can save more if we do more on the war 
of drugs.

                       drug interdiction funding

    Mr. Wolf. You find Members wrapping themselves in States' 
rights issues and saying we cannot do that, and clearly the 
reason is because the liquor lobby is coming up here and plying 
the place with certain activities and therefore there will be a 
reluctance. There are a few Members who will say they want to 
be very active and deal with this issue and will not be there 
in support of it.
    I guess the point I was trying to make about the question 
is to ask you, and you did say the condition was ``if.'' We 
have already failed your ``if,'' and in addition, I think what 
has been left out of the drug strategy is the whole spiritual 
aspect in keeping families together.
    Let us move on. I am really trying to get you out of here 
on time. We have a couple of other questions.
    On drug interdiction, last year you requested a $34 million 
increase in antidrug activities above the fiscal year '97 base 
of $319.7 million. It was stated these additional funds were 
needed to beef up the war on drugs. But you actually spent far 
more in '97 on antidrug activities, $471.4 million. This is 
$151.7 million more than you thought at the time of your budget 
submission. So this was obviously due to intelligent borrowing 
you took from different things and things like that. Will you 
explain how you were able to absorb that so effectively and how 
you view theopportunities, not just for this year but for the 
following years?
    Admiral Kramek. It was really the first year of the 
President's new budget strategy, and General McCaffrey, he put 
together a 5-year budget plan with goals. That was my first 
year, on asking you for that, and we did a lot of demonstration 
projects like Frontier Shield.
    Some of that was done with the money you appropriated from 
this committee, some was done with money I received from ONDCP, 
and some of it I took away from migrants. Some of it, which 
would make Mr. Callahan very happy, I took away from fisheries, 
to demonstrate that we could get a lot of bang for the buck 
with this investment, and I think our statistics demonstrated 
that. I think we had a 1,000 percent increase in some of our 
performance figures, 300 percent in others. We have seized more 
drugs than we ever seized before. I feel we had a dramatic 
impact on the welfare and safety of the people of Puerto Rico 
and the Virgin Islands, as an example.
    I actually honestly believed that this year would be the 
second year, and I would be funded and the Administration would 
ask for me to continue those programs, and I wasn't. And so I 
am disappointed in that, but that happens to be a fact. And so, 
in other words, I was already moving in that direction because 
I thought that that would be sustained. I was not correct in 
that, so I need to go back to the 1996 levels, which is where I 
am at, plus the few extra dollars that we got.
    Mr. Wolf. The frustration, as I listened to everything 
today was, you appealed.
    Admiral Kramek. As well as the Secretary.
    Mr. Wolf. Secretary Slater appealed. He apparently talked 
to the President of the United States, who is the boss, 
basically, and yet it was rejected, and yet you get the 
Saturday morning show. And so it is big hat, no cattle. It is 
like the guy who lives in Texas in a condominium on the 13th 
floor, but wears a cowboy hat and Levis and drives a red pickup 
truck with a gun rack on the back, but he lives in a 
condominium and he doesn't have any cattle.
    Admiral Kramek. In real terms over what was appropriated 
last year and what was asked for this year, it is almost a 9 
percent increase. It is all in the acquisition, construction 
and improvements portion of the budget.
    Mr. Wolf. But we are talking about with regard to the drug 
interdiction.
    Admiral Kramek. We are talking about just with regards to 
drug interdiction, and OMB felt that was enough, compared to 
all of the things they had to pay for, so I was not able to 
stay on the slope that I was on.
    Mr. Wolf. You missed my point. The point was the 
accountability was to the President of the United States. I am 
one of two or three Members of Congress--I got the idea from 
former Congressman Stuart Udall--I send out my voting record to 
every house in my district telling them how I voted on every 
issue, abortion, gun control, every issue, because I have an 
obligation for people to know.
    The same thing is, I think we have an obligation to know 
what is the President's position on all of these issues. And 
apparently he made that decision not to fund this, and I think 
from an intellectual, honesty point of view, when that decision 
is made, I think there has to be an explanation why. But to 
then go out and give the impression all this activity is going 
on, to say that we are meeting the plans and doing the 
necessary things and we have a war on drugs, I think you lose a 
little bit of confidence. It is the big hat, no cattle thing.

                          streamlining program

    Over the past 3 years, the Coast Guard has implemented a 
streamlining program which has resulted in reduced staff and 
consolidated field offices. About a year ago, you began 
indicating that this was all the streamlining that was 
envisioned. For example, in an interview in an Alaskan 
newspaper last August, you were quoted as saying that the 
reduction in Coast Guard size that marked the 1990s has gone 
about as far as it is going to go. Is this an accurate 
reflection of your view?
    Admiral Kramek. From the streamlining studies that we did, 
we stopped short of reengineering because that was too risky, 
but the answer is no. We had to find $50 or $60 million more 
dollars of savings this year; we suspect we are going to have 
to find that again next year. I already know Admiral Loy as 
Chief of Staff has already had our programs submit to him what 
they intend to come up with as management savings. The training 
infrastructure is a good example on what we talked about a 
little before concerning Petaluma.
    Mr. Wolf. I was going to get to that.
    Admiral Kramek. We streamlined our training infrastructure 
one time four years ago. It is time to look at it again. There 
are new methods of teaching, using computers, using the 
Internet. There are new simulators we have. We have 4,000 less 
people, we have too much training infrastructure, so it is time 
to streamline that again.
    What I was referring to in the interviews with the Kodiak, 
Anchorage and Juneau newspapers is, based on where we were and 
what we had cut down to, we couldn't just keep giving the Coast 
Guard new missions which I was starting to get. Fisheries is a 
good example. I no longer had any capacity, any flexibility to 
do any of that, and so we had to look at putting in amendments 
or deltas to our budget.
    In last year's budget I was asked to do more on drug law 
enforcement. I asked you for the funds and you provided it. 
This year I am asked to do the Caribbean initiative as a new 
initiative and I hope that those funds will be provided. That 
is why our budget is a current services budget based on what I 
consider to be the most efficient organization, which is what 
we streamlined to.

                   acquisition funding and user fees

    Mr. Wolf. Where do we get the capital program money, the 11 
percent? If there is no user fee, where would you make up that?
    Admiral Kramek. I don't know where they thought the 
chairman of this committee would get it from.
    Mr. Wolf. That is a good answer.
    Admiral Kramek. On the other hand, on the other hand, just 
as an interested observer, I observe what both houses of 
Congress are doing with ISTEA and the transportation bills, and 
there is talk of $20 billion more, $30 billion more. We are not 
talking about $20 billion more or $30 billion more here, we are 
talking about a few pennies in comparison, but responsible 
nonetheless to achieve a great deal, so I would hope the 
chairman of this committee as well as other committees would 
take that into account.
    Mr. Wolf. Admiral, we will do that and make every effort. 
Let me just say, I completely and totally agree with you. 
Senator Byrd is trying to get additional money for a road which 
half the people in the area of West Virginia do not even want. 
They are going to take a pristine area and destroy it, and with 
just a portion of that money youcould do the necessary efforts, 
but do you think many Members of Congress want to stand up to Senator 
Byrd?
    You probably wouldn't find a lot of people down at the 
Department of Transportation who want to stand up to Senator 
Byrd, or a lot of the different administrators who will want to 
say no. There was a time when Senator Byrd was going to move 
the CIA out of my congressional district into West Virginia, 
and I couldn't get anybody in the Bush administration to speak 
out because they were afraid to speak out. And now you have a 
Democratic administration with a Democratic Senator, and people 
won't want to speak out.
    But I completely agree with you. You are 100 percent right. 
Some of that money in the Appalachian Regional Commission could 
be taken. But now if we had a motion to take money from the 
Appalachian Regional Commission, which maybe I will offer, boy, 
you will find people bailing out and saying I don't want to 
deal with this. I mean, I don't want to have to take on this 
person and that person. You are exactly right. They can make 
speeches about the men and women using drugs and all, but 
nobody wants to challenge it.
    So when you look at the money that is spent, and I won't 
say wasted because I don't have the right to say it is wasted, 
but certainly the priorities you are asking for are much 
greater and much higher in the national interest for all of us, 
whether we be from one State or whether it be for the West 
Coast or Maine or wherever, or living in the Caribbean or 
wherever the United States flag flies. I think those priorities 
are much higher than some of these others.
    And I don't understand when I look at the additional money 
that I see they are talking about, and then they say it is 
going to be within the caps. Mr. Sabo and I were talking about 
it when we went to the first vote. Where do you get it? Where 
do you go? And there will be a vote and somebody will say, yes, 
we want more money for X, but then they won't say, well, this 
cuts veterans or this cuts cancer research or this cuts health 
care or this cuts defense, and so I completely agree with you.
    The problem is this place operates on fear, and fear is a 
very intimidating factor, something I hope never to get and 
never to have. It is better to go and try and get wiped out, 
and sometimes you will find you aren't even wiped out and you 
are successful. Senator Byrd never moved the CIA out to his 
district. There is a road that they wasted, called Route 9, 
they still have going out there.
    So it is better to try, but I completely and totally and 
emotionally and in every other way agree with what you are 
saying. And I have to understand from your vantage point, and 
your men and women who are out there freezing and doing 
whatever they are doing, and hanging out in the Caribbean 
waiting, must feel that. "You mean they spent that for that, 
when I am living in this base housing in an area that is not 
very good, working 60 to 80 hours a week?" I think you are 
exactly right.
    Anyway, let me just recognize Mr. Sabo, and then I will 
just end with a couple of other questions.
    Mr. Sabo. I don't even need to start. I think I agree with 
you.
    Mr. Wolf. You have no questions?
    Mr. Sabo. No.
    Mr. Wolf. We have some streamlining questions, but I know 
you are waiting to go, so you just can answer them for the 
record. You are going with Rich, too, right?
    Admiral Kramek. Is he going to ask all these questions on 
the plane, too?

                     loran clean up and remediation

    Mr. Wolf. This one here, the global positioning system, the 
FAA is now trying to decide whether or not the GPS satellite 
navigation system will require a land-based backup and whether 
the backup should be the existing VOR system, Loran, or some 
other equipment. The Coast Guard currently operates the Loran 
system. We understand that you will incur about $80 million 
dollars in clean-up and remediation cost if Loran is 
discontinued. Is that accurate?
    Admiral Kramek. That is accurate. I think what I would like 
to do, either for the record or send up to your committee, a 
new little briefing and study that was given to me the other 
day that puts all of this in perspective, because you not only 
have to look at it today but you have to look from now until 
the year 2000, to 2008, and then from 2008 to the year 2015, 
and really look at what the remediation cost and the investment 
cost would be if this nation decided to use Loran as a backup 
system to GPS.
    This is a leadership issue. I am recommending to the 
Secretary that the Administrator of FAA, the Assistant 
Secretary for Policy and myself get together and advise him 
very soon, in a month or so, exactly what tact we should take 
here, because it is an affordability issue of not just--it is 
an affordability issue of, in my view, hundreds of millions of 
dollars if we are going to maintain a backup system, which has 
some great desirability by a lot of the aviation and maritime 
users of the system.
    [The information follows:]

    The briefing, entitled ``What is the Future of LORAN-C; An 
Update,'' was provided to the subcommittee under separate 
correspondence on April 30, 1998.


[Pages 1014 - 1029--The official Committee record contains additional material here.]



                      loran cost-benefit analysis

    Mr. Wolf. Your costs, should they be considered in the 
FAA's cost-benefit analysis and the trade-off?
    Admiral Kramek. Yes, it needs to be with the Department of 
Transportation, and a radio navigation plan cost-benefit 
analysis, not just FAA or Coast Guard.
    Mr. Wolf. Are they considering your cost at the FAA?
    Admiral Kramek. They have, but I don't think they see the 
complete picture, and that is why I think it is time for the 
Secretary to look at this top down, which I am suggesting to 
him. I will tell you at the meetings I have recently had, I 
have had the FAA there participating, as well as the policy 
shop.
    I think now we have finally seen what the right picture is. 
People have changed their minds because of what customers want. 
Two years ago it looked like a very good idea from a balanced 
budget perspective, now that we had the global positioning 
system, to go with that and to terminate Loran C by the year 
2000. It caused an uproar among the noncommercial aviation 
community and the maritime industry, especially fishing vessels 
and all that, saying you are supposed to use all means at your 
disposal.
    There were a lot of things that weren't considered in that 
initial input into balancing the budget. I think we need to 
look at all the things now on the investments it would take to 
keep Loran C, as well as the clean-up costs if you terminated 
it.
    I was at St. Paul Island in the Pribilofs, north of the 
Aleutians this summer to visit our Loran station. I think I may 
have been the first Commandant ever to go, but certainly the 
first one in the last 25 years. There is nothing there but a 
few Indians running a fishing business and our Loran station, 
and tremendous environmental problems concerning what to do 
with waste and all the fuel. It would cost us several million 
dollars to remediate that site over the years because our 
standards are so much higher today than they were years ago.
    The total picture has to be looked at, and I think we have 
to make an informed economic decision.

                            year 2000 issue

    Mr. Wolf. The last question I have, and I will recognize 
Mr. Sabo to see if he has anything final, is on the year 2000, 
the computer issue. FAA is really having a hard time. I think 
the advantage you have is that they didn't have an 
administrator for really over a year, and I think they are in 
trouble. I don't think they can make it. Are you okay? Are you 
confident?
    Admiral Kramek. We are okay. We put together a good 
program. We had about 78 systems that needed to be corrected. 
We already corrected over 25 of them. We have a plan for each 
system now that needs to be taken care of, that will cost us 
approximately $8 million, will be done 6 months before the 
deadline.
    Mr. Wolf. When did you start?
    Admiral Kramek. I started over a year ago, maybe a year and 
a half ago. I also did one other thing. We have gone out to 
industry that we relate to.
    This February, for instance, in New York, we had all the 
maritime users together to educate them to the problem, because 
even if we solve all of our problems, the customers we 
interface with could have problems and therefore the system, 
the maritime system won't work. I was surprised at how little 
they knew about it, so I put together an outreach plan for the 
entire maritime industry. I have shown that to Deputy Secretary 
Downey. He has instructed all the other modes, including FAA, 
to use our outreach as a model and show them how we have done 
that.
    So I am satisfied we know exactly where we are going, but 
we do have an interrelationship with industry and we have to 
show a lot of attention to that. It is more than just the 
Federal Government cleaning their own house on this, it is the 
industries we relate with.
    Mr. Wolf. In closing, then, I will say this is probably the 
last time you will appear before the committee, and I want to 
thank you for your candor and, I think, for the outstanding job 
you have done, and wish you well in the future.


[Pages 1034 - 1347--The official Committee record contains additional material here.]














                           W I T N E S S E S

                              ----------                              
                                                                   Page
Anderson, J.H., Jr...............................................   679
Christoff, Joseph................................................   679
DeCarli, R.J.....................................................   479
Kramek, Admiral R.E..............................................   967
Levin, Robert....................................................   679
Mead, K.M........................................................   479
Ratzenberger, James..............................................   679
Shaul, Marnie....................................................   679
Slater, Hon. R.E.................................................     1
Stefani, A.M.....................................................   479
Stouffer, Ronald.................................................   679
Thompson, P.J....................................................   479
Weintrob, L.H....................................................   479
White, Robert....................................................   679
Willemssen, Joel.................................................   679
Williamson, Randall..............................................   679
Zinser, T.J......................................................   479

 
                               I N D E X

                              ----------                              

       Architectural and Transportation Barriers Compliance Board

                                                                   Page
Accessibility Guidelines.........................................   914
Accessible Transportation........................................   931
Architectural Barriers Act:
    Compliance and Enforcement............................920, 933, 947
    Guidelines...................................................   944
Budget Request.................................................911, 949
Census Data......................................................   935
Guideline Development............................................   939
Mission and Long-Range Goals.....................................   912
Model Codes......................................................   934
Participation in Codes and Standards.............................   936
Research.........................................................   946
Rulemaking Plan and Status Report................................   960
Statement of Thurman Davis.......................................   911
    Accessibility Guidelines........................................914
    Architectural Barriers Act Compliance and Enforcement...........920
    Mission and Long-Range Goals....................................912
    Technical Assistance............................................925
Technical Assistance.............................................   925

                            U.S. Coast Guard

Academy:
    Moderation of Cost per Graduate..............................  1109
Acquisition, Construction, and Improvements (AC&I):
    Aircraft, see: Aircraft
    BUSL, see: Stern-Loading Buoy Boat (BUSL)
    Deepwater, see: Deepwater Capability Replacement Analysis
    EDENTON, see: EDENTON
    Funding for Capitalizable Projects...........................  1258
    GLIB, see; Great Lakes Heavy Icebreaking Capability 
      Replacement Analysis
    HEALY, see: HEALY
    Housing, see: Housing
    Land Acquisition.............................................  1196
    MLB, see: Motor Lifeboat (MLB)
    NDS, see: National Distress System (NDS) Modernization
    Offsetting Collections (Federal Sources).....................  1152
    Personnel Costs, see: Personnel
    Personnel, see: Acquisition, Construction, and Improvements 
      (AC&I) Personnel
    Project Deviation Reports....................................  1172
    Project Outyear Cost--Project Changes........................  1169
    Project Outyear Cost Estimates...............................  1166
    Shore Facilities, see: Shore Facilities
    Unobligated Balances.........................................  1159
    Unobligated Balances over $1,000,000.........................  1164
    WLB, see: Seagoing Buoy Tender (WLB)
    WLM, see: Coastal Buoy Tender (WLM)
    Written Statement............................................   976
Acquisition, Construction, and Improvements (AC&I) Personnel:
    AC&I Funded Personnel........................................  1206
    AC&I Funded Personnel by Program, Project, and Activity......  1210
    Project Resident Office Personnel............................  1214
    Staffing.....................................................  1152
Aids to Navigation (ATON):
    Aids to Navigation Projects..................................  1197
    Battery Disposal, see: Battery Disposal
    BUSL, see: Stern-Loading Buoy Boat (BUSL)
    Coast Guard Support of NOAA/Department of Commerce...........  1136
    GPS, see: Differential Global Positioning System (DGPS)
    LORAN-C, see: Long Range Aids to Navigation (LORAN-C)
    OMEGA, see: OMEGA Navigation System
    Project Backlog..............................................  1206
    Repair and Maintenance.......................................  1113
    Tampa Bay Aids to Navigation Project.........................  1205
    WLB, see: Seagoing Buoy Tender (WLB)
    WLM, see: Coastal Buoy Tender (WLM)
    Written Statement............................................   975
Air Stations:
    Air Station Brooklyn.........................................  1125
    Air Station Miami Design Status..............................  1204
    Air Station Miami Design Schedule............................  1204
    FAA Use of AIRSTA Brooklyn Property..........................  1125
    Long Island Air Facility Closure.............................  1123
    Personnel Assigned to Air Stations...........................  1086
Aircraft:
    HC-130 Capability Preservation Program.......................  1185
    HC-130 Engine Conversion.....................................  1185
    HU-25 Inventory..............................................  1126
    Productivity and Technology Improvements.....................  1101
    Selected Operational Adjustments.............................  1101
Asset Sales:
    Assumptions Regarding Asset Sales............................  1156
    Excess Property O&M Costs....................................  1156
    Expected Asset Sale Collections..............................  1154
    Governors Island, see: Governors Island, New York
    LORAN Station Upolu Point, Hawaii............................  1157
    Properties Expected to be Surplus............................  1152
    QUESTAR Search and Rescue Case, see: QUESTAR Search and 
      Rescue Case
Battery Disposal:
    Battery Removal Plans........................................  1339
    Change in Policy.............................................  1138
    Coast Guard Activities on Lake Guntersville..................  1338
    Other Parties Involved in Battery Disposal...................  1340
    Policy on Lake Guntersville..................................  1338
    State/Local Cooperation for Battery Removal..................  1339
Boating Safety (BS):
    Boating Safety Grant Funding for Fiscal Years 1992-1998......  1221
    Federal and State Funding....................................  1220
    State Matching Funds.........................................  1216
Bridge Alteration (AB):
    Alteration of Bridges Program Status.........................  1214
    Outlays......................................................  1216
Budget:
    AB, see: Bridge Alteration (AB)
    AC&I, see: Acquisition, Construction, and Improvements (AC&I)
    Budget Growth by Mission.....................................  1100
    BS, see: Boating Safety (BS)
    Defense, see: Defense Readiness
    Drug Interdiction Budget, see: Drug Interdiction
    EC&R, see: Environmental Compliance and Restoration (EC&R)
    Cutter Operating Costs, see: Cutters
    Fuel and Energy Costs, see: Fuel and Energy Costs
    GPRA, see: Government Performance and Results Act (GPRA)
    MWR, see: Morale, Well-Being, and Recreation
    OE, see: Operating Expenses (OE)
    OSLTF, see: Oil Spill Liability Trust Fund (OSLTF)
    Pay and Compensation, see: Pay and Compensation
    Personnel Costs, see: Personnel
    RDT&E, see: Research, Development, Test, and Evaluation 
      (RDT&E)
    RT, see: Reserve Training (RT)
    RP, see: Retired Pay (RP)
    Streamlining, see: Streamlining
    Training, see: Training
    Travel Costs, see: Travel
Buoy Boat Replacement Program:
    BUSL, see: Stern-Loading Buoy Boat (BUSL)
Caribbean Support Tender:
    General Discussion...........................................  1032
    Funding......................................................  1032
    Missions.....................................................  1033
Coastal Buoy Tender (WLM):
    Contract Deliveries..........................................  1177
    Final Sailaway Costs.........................................  1176
    Fiscal year 1999 Sailaway Costs..............................  1175
    Primary Crew Assembly Facility...............................  1174
    Primary Crew Assembly Facility Funding.......................  1175
Coastal Patrol Boat (CPB)
    Effect on Contractor Due to Increase in Fiscal Year 1998 
      Funds......................................................  1178
    ``Waterfall'' Schedule.......................................  1178
    Status of Fiscal Year 1998 Funds.............................  1177
Coast Guard Personnel Command:
    Budget.......................................................  1110
    Staffing.....................................................  1110
Coast Guard Supply Fund:
    Fuel Purchased, see: Fuel and Energy Costs
Congressional Review Act, see: Regulations and Rules
Cost Of Living Adjustment (COLA):
    CONUS COLA...................................................  1083
    CONUS COLA--Eligible Locations...............................  1084
    CONUS COLA--Criteria.........................................  1084
Cutters:
    BUSL, see: Stern-Loading Buoy Boat (BUSL)
    Carribbean Support Tender, see: Caribbean Support Tender
    CPB, see: Coastal Patrol Boat (CPB)
    EDENTON, see: EDENTON
    Fleet Operating Costs--Annual Average per Cutter.............  1106
    Fleet Operating Costs--270 Foot Class Increase...............  1105
    Fuel Costs, see: Fuel and Energy Costs
    HEALY, see: HEALY
    MACKINAW, see: MACKINAW
    MLB, see: Motor Lifeboat (MLB)
    Personnel Assigned to Cutters................................  1086
    WLB, see: Seagoing Buoy Tender (WLB)
    WLM, see: Coastal Buoy Tender (WLM)
Data Centers:
    OSC, see: Operations Systems Center (OSC), Martinsburg, WV
    Data Center Cost-Benefit Analysis Policy.....................  1140
Deepwater Capability Replacement Analysis:
    Contracts....................................................  1183
    Contract Scope...............................................  1184
    Funding-General..............................................  1347
    FY 1999 Funding..............................................  1337
    Independent Analysis Government Contract.....................  1184
    Opening Statement............................................   983
Defense Readiness:
    Defense Related Activities...................................  1122
    Resources....................................................  1121
    Written Statement............................................   976
Differential Global Positioning System (DGPS):
    EUROFIX Test.................................................  1190
    GPS Corrections Using LORAN/EUROFIX..........................  1190
    GPS World Magazine Story.....................................  1191
    GWEN Sites as Supplement to DGPS.............................  1191
    Interagency Coast Guard Billet...............................  1192
    LORAN-C, see: Long Range Aid to Navigation (LORAN-C)
    Site Upgrades................................................  1193
    Written Statement............................................   975
Drug Interdiction:
    Additional Drug Interdiction Funding.........................  1334
    Anti-Drug Level of Effort....................................  1039
    Costs per Drug Seizure.......................................  1116
    Drug Seizures vs. Operating Hours............................  1113
    Funding Requests.............................................  1331
    FY94 Marijuana Seized per Cutter Hour........................  1116
    FY98 Anti-Drug Activities....................................  1038
    Marijuana Seized per Cutter Hour.............................  1115
    ONDCP Analysis of Coast Guard Drug Budget....................  1040
    ONDCP Certification of Coast Guard Drug Budget...............  1040
    Opening Statement (Drug Interdiction)........................   995
    Performance Evaluation.......................................  1334
    Perry Class Frigates, see: Perry Class Frigates
    Reallocation of Resources for Drug Interdiction..............  1333
    Reductions in Seizures and Violations........................  1037
    USS CALLAGHAN Case...........................................   997
EDENTON:
    Affordability................................................  1118
    Coast Guard Yard Conversion..................................  1118
    Conversion Risk..............................................  1119
    Fiscal Year 1999 O&M Costs...................................  1120
    Annual O&M...................................................  1120
    Age and Overhaul Project.....................................  1121
Environmental Compliance and Restoration (EC&R):
    Environmental Compliance Evaluation Program..................  1227
    Environmental Compliance Programs and Activities.............  1224
    List of Cleanup Sites Under $500,000.........................  1221
    Personnel Compensation and Benefits..........................  1223
    Vessel and Aircraft Compliance Funds.........................  1226
FAA Franchise Fund...............................................  1053
Facilities Design and Construction Centers (FDCCs):
    Budgetary Implications of Closing One FDCC...................  1257
    Coast Guard Study of FDCCs...................................  1257
    Reduction of FDCC Personnel..................................  1258
Fisheries Enforcement, see: Living Marine Resource Management
Foreign-Flagged Cruise Ships:
    Inspection of Foreign-Flagged Cruise Ships...................  1144
    Inspection Fees..............................................  1145
Fuel and Energy Costs:
    Assumptions..................................................  1093
    Coast Guard-Owned Housing....................................  1095
    Cutter Fuel Costs--by PPA Category...........................  1094
    Fiscal Year 1999 Costs.......................................  1092
General Services Administration (GSA):
    Martinsburg, WV Rent Increase................................  1139
    Rent.........................................................  1138
    Rent Reduction...............................................  1138
Great Lakes Heavy Icebreaking Capability Replacement Analysis:
    Analysis of Alternatives.....................................  1341
    Funding and Schedule Assuming New Ship Construction..........  1342
    Funding and Scheduled Delivery Date with FY99 Funding........  1343
    Funding and Scheduled Delivery Date without FY99 Funding.....  1343
    Funding and Schedule Factors for Life Schedule Costs.........  1343
Global Positioning System (GPS), see: Differential Global 
  Positioning System (DGPS)
Government Performance and Results Act (GPRA):
    Performance Evaluation.......................................  1036
    Performance Measures.........................................  1036
Governors Island, New York:
    Caretaker Activities.........................................  1158
    Coast Guard Fiscal Year 1999 Budget..........................  1157
    Coast Guard Fiscal Year 1999 Services........................  1064
    Coast Guard's Status at Governors Island.....................  1044
    GSA FY99 Budget Request for Upkeep.......................1064, 1158
    Maintenance..................................................  1158
    Opening Statement............................................   998
    Status.......................................................  1063
Health Care:
    Costs........................................................  1092
    Retiree Medical Care, see: Retired Pay (RP)
HEALY:
    Fiscal Year 1999 Operating Cost..............................  1121
Housing:
    Energy Costs, see: Fuel and Energy Costs
    Family Housing Schedule......................................  1197
    Fiscal Years 1996 and 1997 Family Housing Update.............  1199
    Fiscal Year 1999 Housing Estimate............................  1201
    Funding for New Housing......................................  1104
    General Discussion...........................................  1202
    Housing Maintenance Funding..................................  1104
    Kodiak, AK Housing...........................................  1201
    Overseas Housing Authority...................................  1003
    Parity with Department of Defense............................  1035
    San Juan Housing.............................................  1201
Icebreaking:
    Accounting for Icebreaking Services..........................  1346
    Commercial Cargo Users of Icebreaking Services...............  1344
    Great Lakes Economic Analysis................................  1346
    Great Lakes, see: Great Lakes Heavy Icebreaking Capability 
      Replacement Analysis
    HEALY, see: HEALY
    Icebreaking Fees.............................................  1344
    MACKINAW, see: MACKINAW
    Other Users of Icebreaking Services..........................  1346
    Reimbursement................................................  1345
    Written Statement............................................   975
Illegal Migration:
    Opening Statement............................................   969
Law Enforcement:
    Drugs, see: Drug Interdiction
    Illegal Migration, see: Illegal Migration
    Intelligence, see: Intelligence Coordination Center
    International Law Enforcement, see: Training
    Priorities Under Law Enforcement Missions....................  1332
    Written Statement............................................   975
Living Marine Resource Management:
    Fisheries Goals vs. Resource Allocation...................986, 1037
    Increase in Fisheries Law Enforcement (FY92-FY95)............  1331
    Opening Statement............................................   969
    Reductions in Seizures and Violations........................  1037
Long Range Aid to Navigation (LORAN-C):
    Briefing.....................................................  1014
    Booz-Allen Hamilton Report...................................  1186
    GPS Corrections Using LORAN/EUROFIX..........................  1190
    LORAN Station Upolu Point, Hawaii............................  1157
    Opening Statement............................................  1012
    Termination/Decommissioning Costs............................  1189
MACKINAW:
    Icebreaking see: Icebreaking
    Opening Statement............................................   982
    Operations and Maintenance Costs.............................  1147
    Replacement, see: Great Lakes Heavy Icebreaking Capability 
      Replacement Analysis
Marine Environmental Protection (MEP):
    Ballast Water Management Program Activities..................  1142
    Ballast Water Management Program: Budgeted Costs Fiscal Years 
      1995-1999..................................................  1142
    Battery Disposal, see: Battery Disposal
    Edible Oil Transportation....................................  1050
    OSLTF, see: Oil Spill Liability Trust Fund (OSLTF)
    Recoery of Oil Spill Costs from Responsible Parties..........  1260
    Spill Prevention Funding.....................................  1265
    Written Statement............................................   974
Marine Safety (MS):
    Licensing, see; Merchant Mariner Licensing
    Opening Statement............................................   969
    Passenger Vessel Safety Data.................................  1049
    Regulations, see: Regulations and Rules
    Riverboat Casinos, see: Riverboat Casinos
    Rules, see: Regulations and Rules
    Tanker Design, see: Tanker Design
Mass Transit Subsidy Benefit Program:
    Budget Request...............................................  1082
    Cost.........................................................  1082
Merchant Mariner Licensing:
    Issuance of Merchant Mariners' Credentials...................  1256
    Review of Mariner Licensing by Quality Action Team...........  1256
Missions Study, Coast Guard:
    Availability.................................................  1034
    Scope and Schedule...........................................  1034
Morale, Well-Being, and Recreation (MWR):
    Current Appropriated Fund Support............................  1096
    FY97 Appropriated Funds Support..............................  1097
    FY99 Appropriated Funding Support............................  1096
    Non-Appropriated Funding Support.............................  1097
    Percentage of Appropriated Funds Support.....................  1097
    Retail Exchange Support......................................  1096
Motor Lifeboat (MLB):
    General Discussion...........................................  1181
    Program Acceleration.........................................  1181
    Status Report on Program.....................................  1181
National Distress System (NDS) Modernization:
    Budget Submission............................................  1194
    Schedule.....................................................  1194
National Oceanic and Atmospheric Administration (NOAA):
    Coast Guard Support of NOAA/Department of Commerce...........  1136
    Intragovernmental Reimbursement to NOAA and NTIA.............  1135
National Telecommunications and Information Administration 
  (NTIA):
    Intragovernmental Reimbursements to NOAA and NTIA............  1135
North Alabama, Coast Guard Activities in.........................  1340
Oil Spill Liability Trust Fund (OSLTF):
    Emergency Fund Obligations...................................  1229
    Payment of Claims............................................  1228
OMEGA Navigation System:
    OMEGA System Decommissioning Cost............................  1146
Opening Statement:
    Acquisitin, Construction, and Improvements (AC&I)............  1011
    Acquisition Needs............................................   970
    Budet Request..............................................967, 987
    Caribbean Support Initiative.................................   993
    Deepwater Capability Replacement Analysis..................983, 999
    Defense Function.............................................   970
    Defense-Related Activities...................................  1000
    Department of Defense, Coast Guard in the....................  1001
    Drug Interdiction.........................984, 988, 990, 1006, 1008
    Fisheries Enforcement, Domestic..............................   986
    Governors Island.............................................   998
    Illegal Migration............................................   969
    Living Marine Resource Management............................   969
    LORAN........................................................  1012
    MACKANAW Replacement.........................................   982
    Marine Safety................................................   969
    Overseas Housing Authority...................................  1003
    Performance Measures, Use of.................................  1004
    Performance Plan-1999........................................  1003
    Presidential Advisory Council................................   999
    Recruiting...................................................   968
    Staffing Estimate............................................  1000
    Streamlining.................................................  1011
    Training Center Petaluma.....................................   989
    Use of Force (Drug Interdiction).............................   995
    User Fees............................................980, 992, 1011
    USS CALLAGHAN Drug Enforcement Case..........................   997
    Waterways Management Needs...................................   968
    Year 2000 Issue..............................................  1030
Operating Expenses (OE):
    Annualization of Positions Funded in Fiscal Year 1998........  1069
    Breakdown of Request of OST by Function and Activity.........  1329
    Breakdown of Request to OMB by Function and Activity.........  1330
    Budget, see: Budget
    Cutter Operating Costs, see: Cutters
    Defense, see: Defense Readiness
    Department of Transportation Initiatives.....................  1137
    Effects of Reduction in International Law Enforcement 
      Training...................................................  1102
    Fiscal Year 1997 Offsetting Collections......................  1054
    Funding for Capital Projects.................................  1259
    Funding for Capitalizable Projects...........................  1258
    Headquarters-Managed Units...................................  1147
    Housing, see: Housing
    Lapsed Operating Expenses (OE) Funds.........................  1054
    Offsetting Collections Fiscal Year 1999--``Other 
      Miscellaneous Agencies''...................................  1055
    ``Other Activities'' Breakdown...............................  1149
    ``Other Services''--Aids to Navigation.......................  1113
    ``Other Services'' Obligations...............................  1111
    ``Other Services'' Obligations--FY97.........................  1112
    Productivity and Technology Improvements.....................  1101
    Reserve Training (RT) Assessments to Operating Expenses (OE) 
      Appropriations.........................................1235, 1247
    Selected Operational Adjustments.............................  1101
    Staff Funding................................................  1069
    Streamlining, see: Streamlining
    Travel Costs, see: Travel
    Work Force Expansion.........................................  1041
Operations Systems Center (OSC), Martinsburg, WV:
    Data Center Cost-Benefit Analysis Policy.....................  1140
    Rent Increase................................................  1139
Pay and Compensation:
    Average Total Earned Compensation Table......................  1081
    Breakdown of the Total Pay Raise by Type.....................  1068
    Bonuses for Non-Senior Executive Service Employees...........  1086
    College Fund.................................................  1088
    College Fund, Critical Ratings Eligible for..................  1089
    CONUS COLA, see: Cost Of Living Adjustment (COLA)
    EC&R Personnel Compensation and Benefits.....................  1223
    Fiscal Year 1998 Basic Military Compensation (BMC) Tables....  1078
    Fiscal Year 1998 Regular Military Compensation (RMC) Tables..  1075
    Fiscal Year 1999 Pay Breakdown...............................  1083
    Health Care, see: Health Care
    Military Compensation Parity with Department of Defense......  1087
    Pay Raise Base Explanation...................................  1068
    Payroll Funding, Restoration of..............................  1073
    Retirement Pay, see: Retired pay (RP)
    Senior Executive Services Bonuses............................  1084
    Senior Executive Services Bonuses by Appropriation...........  1085
Performance Measures, Use of:
    Opening Statement............................................  1004
Performance Plan--1999:
    Opening Statement............................................  1003
Personnel:
    AC&I personnel, see: Acquisition, Construction, and 
      Improvements (AC&I) Personnel
    Academy, see: Academy
    Active Duty Accessions and Workforce Strength................  1070
    Annualization of Positions Funded in Fiscal Year 1998........  1069
    Aviation Workforce Restructuring.............................  1122
    Coast Guard Personnel Command, see: Coast Guard Personnel 
      Command
    Commandant and Vice Commandant Staff.........................  1132
    CONUS COLA, see Cost Of Living Adjustment (COLA)
    District Office Billets......................................  1107
    Diversity of the Military Workforce, Measuring...............  1107
    FTE Staff Years, Restore Reduction for.......................  1336
    Headquarters Billets.........................................  1126
    Headquarters Public Affairs Staff............................  1133
    Health Care, See: Health Care
    Housing, see: Housing
    Mass Transit Subsidy Benefit Program, see: Mass Transit 
      Subsidy Benefit Program
    Military/Civilian Conversion PPA Presentation................  1087
    Military/Civilian Mix........................................  1066
    Military/Civilian Mix Comparison to Other Military Services..  1067
    Officer-Enlisted Ratios..................................1074, 1042
    Officer Expansions...........................................  1041
    Overseas Billets.............................................  1049
    Pay and Compensation, see: Pay and Compensation
    Personnel Assigned to Cutters and Air Stations...............  1086
    Project Resident Office Personnel............................  1214
    Project Changes to Military/Civilian Mix in Fiscal Year 1999.  1066
    Public Affairs Staffing......................................  1134
    Recruiting, see: Recruiting
    Reserves, see: Reserve Program
    Staff Funding (OE-Funded)....................................  1069
    Travel Costs, see: Travel
    Work Force Expansion.........................................  1041
Port Security Units (PSUs):
    New Requirements.............................................  1247
    Requirements.................................................  1246
Presidential Advisory Countil:
    Opening Statement............................................   999
Questions For the Record:
    Chairman Wolf................................................  1052
    Representative Aderholt......................................  1338
    Representative Cramer........................................  1347
    Representative DeLay.........................................  1265
    Representative Obey..........................................  1341
    Representative Rogers........................................  1329
    Representative Sabo for Representative Woolsey...............  1261
    Representative Tiahrt........................................  1335
Recruiting:
    Active Duty Accessions and Workforce Strength................  1070
    Active Duty Recruiting Success Rate..........................  1251
    Additional Funding...........................................  1073
    Funding for Recruiting and Retention Initiatives.............  1072
    Opening Statement............................................   968
    Reserves, see: Reserve Program
    Success of New Recruiting Initiatives........................  1108
Regulations and Rules:
    Availability of Economic Analyses in Rules Between 1989-1993.  1320
    Availability of Economic Analyses in Rules Since 1993........  1321
    AWO Query on Streamlined Oversight and Enforcement of Coast 
      Guard Regulations..........................................  1051
    Basis for Rules..............................................  1316
    Budgeted Resources for Developing Rules......................  1315
    Coast Guard Requirements vs. International Requirements......  1047
    Collection of Information Requirements.......................  1322
    Congressional Review Act Procedural Changes..................  1312
    Court-Ordered Rules..........................................  1319
    Current Regulatory Policies Critical to Agency Goals.........  1314
    ``Deregulatory'' or ``Reinventing Government'' Rules.........  1321
    Determining When a Rule is Necessary.........................  1313
    Edible Oil Transportation....................................  1050
    GAO Reports on Rules.........................................  1312
    Higher Standards and Greater Safety..........................  1046
    Interim Rule on Lifesaving Systems...........................  1048
    Passenger Vessel Safety Data.................................  1049
    Percentage of Rules Terminated Once Commenced................  1326
    Procedures for Future Congressional Review Act Compliance....  1313
    Public Expectations..........................................  1324
    Review of Regulations........................................  1327
    Routine and Administrative Rules.............................  1318
    Rulemaking Priorities and Strategic Planning.................  1326
    Rules Reviewed by OMB and OIRA...............................  1325
    Statutory Cost-Benefit Prohibitions..........................  1320
    Timeframe for Developing and Issuing Rules...................  1319
    U.S. vs. International Regulations...........................  1044
Research, Development, Test, and Evaluation (RDT&E):
    Appropriation Language.......................................  1230
    Offsetting Collections.......................................  1232
    Research and Development Center Operating Costs..............  1230
    Unobligated Balances.........................................  1231
Reserve Program:
    Comparison of Reserve Enlisted Personnel Onboard and Billets.  1235
    Number of Selected Reservists................................  1335
    Pay and Compensation, see: Pay and Compensation:
    Prior Service Reserve Recruiting.............................  1250
    Prior Service Reserve Recruiting Initiatives.................  1250
    Report on Reserve Requirements...............................  1247
    Reserve Affiliation Bonus....................................  1246
    Reserve Mobilization Needs...................................  1335
    Reserve Recruiting Funding...................................  1244
    Reserve Recruiting Performance...............................  1244
    Reserve Recruting Report.....................................  1245
    Reserve Recruiting Success Rate..............................  1251
    Reserve Training, see: Reserve Training (RT)
    Selected Reserve Reduction from 7,800 to 7,600...............  1251
    Selected Reserve Strength....................................  1244
Reserve Training (RT):
    Assessments to Operating Expenses (OE) Appropriation.....1235, 1247
    Headquarters Administration..................................  1251
    Number of Selected Reservists................................  1335
    Reservists in Initial Training...............................  1245
    O&M of Training Facilities for Reservists....................  1234
    Operating Expenses, see: Operating Expenses (OE)
    ``Other Services''...........................................  1252
    Training Days................................................  1248
    Training Funds...............................................  1249
Retention Initiatives:
    Funding for Recruiting and Retention Initiatives.............  1072
Retired Pay (RP):
    Average Retired Pay by Grade.................................  1232
    Liability....................................................  1260
    Merchant Marine Retired Pay..................................  1233
    Pay and Compensation, see: Pay and Compensation
    Retiree Medical Care.........................................  1234
Riverboat Casinos:
    Inspection of Riverboat Casinos..............................  1254
    Inspection Fees..............................................  1255
    Savings from Inspection Fees.................................  1255
Roles and Missions, see: Missions Study, Coast Guard
Seagoing Buoy Tender (WLB):
    ``B Class'' Full Production Award............................  1173
    Design and Construction Status...............................  1172
    Primary Crew Assembly Facility...............................  1174
    Primary Crew Assembly Facility Funding.......................  1175
    Sailaway Costs...............................................  1173
    Unfunded Liabilities, Hulls 8 &9.............................  1174
Search and Rescue (SAR):
    Long Island Air Facility Closure.............................  1123
    NDS, see: National Distress System (NDS) Modernization
    SARSAT, see: Search and Rescue Satellite-Aided Tracking 
      (SARSAT)
Search and Rescue Satellite-Aided Tracking (SARSAT):
    Intergovernmental Reimbursements to NOAA and NTIA............  1135
Shore Facilities:
    Activities, see: Streamlining
    Air Stations, see: Air Stations
    Bayonne, NJ Pier Plan and Schedule...........................  1203
    Excess Properties, see: Asset Sales
    FDCCs, see; Facilities Design and Construction Centers
    Operational Dates............................................  1102
    Relocation of Group/Station New Orleans, Louisiana...........  1203
    Survey and Design............................................  1195
    Training Facilities, see; Training Facilities
Small Arms Repair Facility Audit.................................  1253
Stern-Loading Buoy Boat (BUSL):
    Delivery Schedule............................................  1182
Streamlining:
    Activity Command Evaluation..................................  1059
    Activity Evaluation Customer Survey..........................  1059
    Need for Environmental Assessment............................  1043
    Opening Statement............................................  1011
    Streamlining Reorganization and Facility Consolidation.......  1061
    Streamlining Savings.........................................  1060
    Training Facilities, see; Training Facilities
    Written Statement............................................   977
Tanker Designs:
    Central Ballast Tanker Concept and the American Underpressure 
      System.....................................................  1309
    Coast Guard Interpretation of Congressional Intent...........  1310
    Criteria for Evaluating Ulterior Tanker Designs..............  1266
    IMO Guidelines and American Tanker Designs...................  1309
    International Guidelines for Evaluating Alternative Tanker 
      Designs....................................................  1267
    Safety Concerns of Double-Hull Tankers.......................  1311
Training:
    Operational Adjustments......................................  1101
    Reduction in International Law Enforcement Training, Effects 
      of.........................................................  1102
Training Facilities:
    Environmental Studies........................................  1065
    Fiscal Year 1999 Plans.......................................  1043
    Fiscal Year 1999 Training Infrastructure Budget Request 
      Details....................................................  1263
    Opening Statement (Training Center Petaluma).................   989
    NEPA Study Costs.............................................  1065
    Training Capacity Study......................................  1261
    Training Capacity Study Options..............................  1261
    Training Capacity Study Criteria.............................  1262
    Training Center Petaluma Closure.............................  1264
    Training Center Infrastructure Excess Capacity...............  1042
    Training Facility Consolidation Process......................  1264
    Training Infrastructure Consolidation........................  1263
Transportation Administrative Service Center.....................  1052
Travel:
    Operating Expenses (OE) Travel Funding.......................  1057
    Permanent Change of Station Moves............................  1095
    Travel Costs.................................................  1057
Troops to Teachers Program:
    Funding......................................................  1075
    Participation................................................  1075
User Fees:
    Foreign-Flagged Cruise Ships, see: Foreign-Flagged Cruise 
      Ships
    Icebreaking, see: Icebreaking
    Navigation Assistance User Fee...............................  1205
    Opening Statement....................................980, 992, 1011

    User Fee Report..............................................  1149
Vessel Traffic Service (VTS):
    Operations and Maintenance Data..............................  1098
Waterways Management:
    Opening Statement............................................   968
    Written Statement............................................   975
Written Statement:
    Biography of Admiral Robert E. Kramek, USCG..................   979
    Conclusion...................................................   978
    Investing in the Future......................................   976
    Maritime Security............................................   975
    Mobility.....................................................   975
    National Defense.............................................   976
    Operating the Coast Guard....................................   974
    Protection of Natural Resources..............................   974
    Safety.......................................................   974
    Today's Coast Guard..........................................   977
Year 2000 Issue:
    Opening Statement............................................  1030

                      Office of Inspector General

Acquisition Plan.................................................   526
Administrative Support Offices...................................   677
Advanced Technology Transit Bus..................................   556
Aeronautical Charting............................................   597
Air Traffic Controller Labor Agreements..........................   580
Air Traffic Controller Workforce Labor Agreements, FAA...........   586
Air Traffic Modernization........................................   481
Airport Certification Program....................................   560
Airport Security.................................................   536
Amtrak...........................................................   544
Amtrak Cost-Accounting...........................................   553
Amtrak Financial Requirements....................................   482
Amtrak/Rail Issues...............................................   617
Amtrak's Northeast High Speed Rail Program.......................   617
Assistant Inspector General for Auditing.........................   656
Assistant Inspector General for Investigations...................   674
Audit Financial Statements Pursuant to the CFO Act...............   658
Average Time to Complete OIG Program Audits......................   671
Basis for Transit Funding Allocations............................   554
Bio of Alexis M. Stefani, Deputy Assistant Inspector General/
  Aviation.......................................................   479
Bio of Lawrence H. Weintrob, Assistant Inspector General/Auditing   479
Bio of Patricia J.Thompson, Deputy Assistant Inspector General/
  Surface........................................................   479
Bio of Raymond J. DeCarli, Deputy Inspector General..............   479
Bio of Todd J. Zinser, Assistant Inspector General for 
  Investigations.................................................   479
Buyout Abuses at the FAA.........................................   564
Central Artery/Tunnel Project....................................   612
Chief Information Officer........................................   633
Closing Remarks..................................................   559
Coast Guard Issues...............................................   623
College Recruitment Data.........................................   673
Commission on Critical Infrastructure Protection.................   635
Contract Tower Program...........................................   578
Controller Workforce Labor Agreement Audit Report................   586
Cost Accounting and Financial Management Issues..................   537
Cost Accounting System...........................................   537
Cost Accounting System--FAA......................................   577
Denver Transit Project to Airport................................   555
Departmental Reorganization......................................   556
Display System Replacement.......................................   573
Emergency Relief.................................................   543
FAA and the Year-2000 Computer Problems..........................   513
FAA Budget Execution Audit.......................................   552
FAA Field Office Consolidation...................................   512
FAA Financial Reform/Cost Savings................................   512
FAA Funding Predictability.......................................   512
FAA Personnel Reform.............................................   510
FAA's Estimate of Official Time Granted for Union Activities.....   590
FAA's Financial Statement for Fiscal Year 1996...................   561
FAA's Management Culture.........................................   509
FAA's Year-2000 Timetable........................................   521
FAA--Anti-Terrorism Activities...................................   517
FAA--Management Accountability...................................   518
Facilities Design and Construction Centers.......................   626
Federal Aviation Administration..................................   665
Federal Highway Administration...................................   666
Federal Railroad Administration..................................   667
Federal Railroad Administration Safety Program...................   547
Federal Transit Administration...................................   667
Federal Transit Administration Issues............................   548
FHWA--Controls...................................................   552
Financial Accounting.............................................   482
Fine Air.........................................................   599
Focal OIG Issues--Aviation Safety................................   480
Government Performance and Results Act...........................   482
Government Performance and Results Act (GPRA)....................   636
GPS Wide-Area Augmentation System (WASS).........................   524
Health Care Costs................................................   649
Highway Issues...................................................   608
Highways--Boston Central Artery..................................   539
Host Computer Replacement........................................   516
Host Computer Replacement........................................   522
Host Computer System.............................................   570
Immediate Office of the IG.......................................   651
Inspection of Riverboat Casinos..................................   623
Inspector Training...............................................   535
Inspectors General--Role and Duties..............................   527
Interactive Video Training.......................................   597
Internal Audit FTEs..............................................   640
Introductory Remarks.............................................   479
Issuance of Reports..............................................   670
Its Commercial Vehicle Operations................................   614
JFK Airport Light Rail Project...................................   553
Locality Pay and General Schedule Pay............................   647
Locality Pay by Geographical Area................................   647
Los Angeles Metrorail............................................   618
Los Angeles Metrorail Project....................................   549
Megaprojects.....................................................   634
Merchant Marine Licensing........................................   625
Most Staff-Intensive Audits......................................   672
NAS Modernization and FAA's Architecture Plan....................   523
National Advanced Driving Simulator..............................   616
New York/JFK Airport Fixed Guideway Project......................   555
NHTSA Issues.....................................................   616
Ninety-Day Safety Review.........................................   569
OE-Funded Capital Projects.......................................   628
Office of Legal Counsel..........................................   675
Office of the Secretary Issues...................................   633
Office of the Secretary of Transportation........................   667
Office-Wide Operating Costs......................................   652
OIG Accomplishments..............................................   489
OIG Authorized FTE by Fiscal Year................................   643
OIG Budget Justifications........................................   638
OIG Budget Request...............................................   480
OIG's Audit and Investigative Work...............................   490
Ongoing Audits...................................................   659
Ongoing Audits/Bureau of Transportation Statistics...............   662
Ongoing Audits/Federal Aviation Administration...................   659
Ongoing Audits/Federal Highway Administration....................   660
Ongoing Audits/Federal Railroad Administration...................   661
Ongoing Audits/Federal Transit Administration....................   661
Ongoing Audits/Maritime Administration...........................   661
Ongoing Audits/Office of the Secretary...........................   661
Ongoing Audits/Research and Special Programs Administration......   662
Ongoing Audits/U.S. Coast Guard..................................   659
Planned Audit Assignments/U.S. Coast Guard.......................   663
Planned Audit Assignments........................................   669
Planned Audit Assignments/Bureau of Transportation Statistics....   664
Planned Audit Assignments/Federal Aviation Administration........   663
Planned Audit Assignments/Federal Highway Administration.........   664
Planned Audit Assignments/Federal Railroad Administration........   664
Planned Audit Assignments/Federal Transit Administration.........   664
Planned Audit Assignments/Office of the Secretary................   664
Planned Audit Assignments/Research and Special Programs Admin....   664
Polor Class Icebreaker Reliability Improvement...................   630
Potomac Metroplex................................................   566
Problems with Federal Acquisitions...............................   527
Recovery of Oil Spill Costs from Responsible Parties.............   629
Rental Payments..................................................   654
Research and Special Programs (RSPA) Issues......................   632
Resources Dedicated to Motor Fuel Tax Evasion....................   674
Retired Pay......................................................   631
Revenue Diversion--Denver........................................   607
Revenue Diversion--Overall.......................................   601
Runway Incursions................................................   534
Runway Incursions................................................   568
Safety as a DOT Priority.........................................   557
Satellite-Based Navigation.......................................   516
SES Bonuses and Awards...........................................   650
Simulator Training for FAA Inspectors............................   536
Small Arms Repair Facility.......................................   623
St. Lawrence Seaway Development Corporation......................   667
STARS............................................................   533
STARS............................................................   574
STARS Update.....................................................   531
State-by-State Listing of Unexpected FHWA Obligations............   610
Statement of Kenneth M. Mead, Inspector General..................   484
Statement of the Honorable Kenneth M. Mead, February 12, 1998....   484
Surface Safety...................................................   481
The OIG Budget Request...........................................   488
The OIG Philosophy...............................................   486
Transit Issues...................................................   618
Travel Reform....................................................   637
U.S. Coast Guard.................................................   665
Unliquidated Balances--Transit...................................   620
Use of PFCs for Transit Projects.................................   555
User Fees--Overflights...........................................   538
Wide-Area Augmentation System Costs..............................   519
Year 2000 Computer Issue.........................................   481
Year-2000 Computer Issue.........................................   514

               Office of the Secretary of Transportation

OST Hearing Record:
    Aviation Data:
        Existing Data Bases......................................   245
        New System...............................................   247
    Budget-Miscellaneous:
        Advisory Committees......................................   420
        Aging Operators..........................................   240
        Airport Planning Policy..................................   241
        Airport Revenue--Use for Surface Transportation..........   242
        Authorizing Legislation--Programs Requiring..............   430
        Automated Rulemaking System..............................   256
        Capital Region Congestion Mitigation Study...............   231
        CBO Scoring Differences..................................   432
        Chief Information Officer (CIO)..........................   200
        Contract Appeals Board...................................   411
        Custody of Airline Tariffs...............................   197
        Data Entry Systems.......................................   250
        Environmental Justice....................................   236
        Global Climate Change....................................   233
        Global Positioning System................................   243
        Information Technology (Clinger-Cohen Act)...............   291
        Integrated Personnel and Payroll System (IPPS)...........   424
        Intelligent Transportation Systems (ITS).................   251
        Miscellaneous Expenses...................................
          211, 212...............................................
        Multimodal Transportation Study (Albuquerque and Santa 
          Fe)....................................................   232
        National Performance Review..............................   293
        North American Free Trade Agreement (NAFTA)..............   249
        Printing and Reproduction................................   198
        Reception and Representation Expenses....................   409
        Reimbursables (Salaries & Expenses)......................   415
        Sustainable Transportation Research......................   238
        Transportation Planning, Research & Development (TPR&D)..   252
    Civil Rights:
        Alternative Dispute Resolution...........................
          216, 222...............................................
        Cases Over 180 Days Old..................................   218
        Complaints...............................................
          219, 222...............................................
        Other Personnel Compensation.............................   223
        Other Services...........................................   223
        Regional Offices.........................................   221
        Staffing.................................................
          213, 217...............................................
    Docket Management System:
        Automated Coordination and FOIA Systems..................
          254, 256, 258..........................................
        Progress Update..........................................   253
        Remaining Elements.......................................   254
        Total Cost and Schedule..................................   255
    Electronic Grants System:
        Cost and Schedule by Element.............................   260
        Obligations by Element...................................   261
        Total Cost...............................................   259
    Essential Air Service and Safety Projects at Rural Airports:
        Appropriation Language Restrictions......................   197
        Coping With the Loss of Anticipated User Fees in FY 1998.   191
        Safety Projects at Rural Airports........................   190
        New Subsidy Rates........................................   189
        Program Levels...........................................   187
        Reinstatement of Communities.............................   188
        Safety at Rural Airports.................................   189
        Service Restorations.....................................   188
        Tables...................................................   178
    Garrett A. Morgan Initiative:
        Activities to Date.......................................   204
        Authorization............................................   204
        Math, Science and Technology Literacy....................   206
        Measures of Effectiveness................................   210
        Other Agencies...........................................
          205, 208...............................................
        Outyear Costs............................................   208
        Separate Funding Sources.................................   203
        Total Amount Requested...................................   203
        Washington, D.C. Area....................................   211
    Government Performance and Results Act:
        Consideration of Actual Performance......................   159
        Cross-Cutting Goals......................................   170
        DOT--Wide Goals..........................................   169
        External Factors.........................................   161
        Linking Performance Goals to Budget Activities...........   157
        Measuring OST Effectiveness..............................   156
        OST Stakeholders.........................................   157
        Performance Measures and Data............................   160
        Performance Planning Structure...........................   158
        Performance Report--March 31, 2000.......................   168
        Problems With Meeting Goals..............................   171
        Problems With Strategic Plan.............................   163
        Revisions in the Strategic Plan..........................   160
        Significance of Safety Improvements......................   169
        Strategic Plan and Performance Measures..................   156
        Tax Expenditures for Achieving Performance Goals.........   161
        Waivers of Administrative Requirements...................   162
    Minority Business Resource Outreach:
        Goals and Performance Measures...........................   227
        Modal Activities.........................................   226
        Other Services Obligations...............................   225
        Special Program Initiative...............................   225
    Nassif Building:
        Status and Cost..........................................   192
    Office of Acquisition and Grant Management:
        Actions to Reduce Staff..................................   154
        Budget by Object Class...................................   155
        FAA ``Best Practices''...................................   147
        FARA, Clinger-Cohen, and GPRA............................   148
        Grants Information System................................   150
        Grants Reinvention Lab...................................   151
        Major Acquisitions and Formal Reviews....................   145
        Positions................................................   152
    Olympics Games in Salt Lake City:
        Planning.................................................   232
        Funding..................................................   303
    ONEDOT:
        Issues...................................................   164
        Organizational Realignments..............................   165
    Personnel Benefits:
        Contributions to FERS....................................   427
        Pay and Non-Pay COLAs....................................   428
    Personnel and Staffing--DOT:
        Authorized Positions.....................................   331
        Employment Bonuses and Awards............................   371
        Personnel Savings........................................   333
        Political Appointees.....................................   377
        Senior Management Positions--FTE Savings.................   337
        SES Bonus Awards Funding.................................   370
        Streamlining Plan........................................   335
    Personnel and Staffing--OST:
        Admnistration............................................   360
        Authorized Positions and EOY Employment..................   328
        Average Grades...........................................   405
        Aviation and International Affairs.......................   349
        Clerical/Professional Workers............................   403
        FTEs by Office...........................................   342
        General Counsel..........................................   353
        Government Affairs.......................................   346
        Immediate Office of the Deputy Secretary.................   345
        Immediate Office of the Secretary........................   343
        Office of Acquisition and Grants Management..............   152
        Political Appointees.....................................   373
        Political/Career Employment Ratio........................   393
        Positions by Office......................................   341
        Positions Eliminated.....................................   339
        Public Affairs...........................................   347
        SES Bonus Awards.........................................   365
    Rental Payments:
        Aggressive Space Requirements............................   194
        Office Space Utilization.................................   406
        OST Headquarters Office Space............................   407
        OST Office Space Utilization.............................   408
        GSA Common Space Rent Charges............................   228
        GSA Rental Payments......................................   193
        Security Enhancement Identified by GSA...................
          197, 230...............................................
        Space Reductions.........................................   195
    Training:
        Training and Executive Development.......................   425
        Workforce Diversity Training.............................   426
    Transportation Administrative Service Center (TASC):
        Aeronautical Charting....................................   262
        Inspector General Audit..................................   269
        Non-DOT Clients..........................................   287
        Obligations by Cost Category.............................   266
        Operating Plan...........................................   266
        Reason for Increase......................................   262
        Staffing.................................................   267
        TASC Payments............................................   199
    Travel:
        Budget Increase..........................................   198
        Budget Office Travel.....................................   326
        DOT Transportation Expenses..............................   325
        DOT Travel Expenses......................................   323
        Overseas Travel..........................................   310
        Salaries and Expenses Travel Cost Data...................   307
        Travel Expenses Paid by Other Operating Administrations..   308
    Year 2000 Computer Problem:
        Assessment Phase.........................................   174
        Awareness Phase..........................................   174
        Cost Estimates...........................................
          172, 174...............................................
        Plans for Meeting Deadlines..............................   167
        OST Costs................................................   175
        OST System Status........................................   175
        Tracking Report..........................................   176

             Saint Lawrence Seaway Development Corporation

1997:
    Accomplishments by PBO Performance Areas.....................   868
    Navigation Season Overview...................................   868
    U.S. Port Traffic Through the Seaway System..................   896
1997 Accomplishments by PBO Performance Areas....................   868
1997 Navigation Season Overview..................................   868
1997 U.S. Port Traffic Through the Seaway System.................   896
Accidents........................................................   905
Budget:
    Request for FY 1999..........................................   873
    FY 1999 Estimate.............................................   867
Budget Request for FY 1999.......................................   873
Canadian:
    Laker Cargo--Total System and St. Lawrence River.............   900
    Legislation..................................................   887
Canadian Laker Cargo--Total System and St. Lawrence River........   900
Canadian Legislation.............................................   887
Capital:
    Needs........................................................   880
    SLSDC Five Year Project Plan.................................   881
Capital Needs....................................................   880
Consulting Services..............................................   904
Cruise Shipping Returns to the System............................   870
Dates:
    Opening and Closing..........................................   894
    Seaway Operating.............................................   894
Domestic Trade Mission...........................................   869
DOT 30th Anniversary Event in Massena, NY........................   871
Emergency Reserves...............................................   909
FY 1997 Financial Audit..........................................   871
FY 1999:
    Budget Estimate..............................................   867
    Budget Request...............................................   873
FY 1999 Budget Estimate..........................................   867
Garret A. Morgan:
    Garret Morgan................................................   910
    Garret A. Morgan Initiative..................................   872
Garret Morgan....................................................   910
Garret A. Morgan Initiative......................................   872
Global Positioning System........................................   907
Health Costs.....................................................   903
International Seaway Tonnage.....................................   899
Long and Short-Term Reliability..................................   869
Management Accountability, Including Customer Service, Fiscal 
  Performance and Cost Effectiveness.............................   871
Mission:
    Domestic Trade...............................................   869
    Overseas System Trade........................................   870
Opening and Closing Dates........................................   894
Ocean Vessel:
    Incidents....................................................   868
    Inspections..................................................   869
Ocean Vessel Incidents...........................................   868
Ocean Vessel Inspections.........................................   869
Overseas System Trade Mission....................................   870
Performance-Based Organization...................................   873
Pilotage Issues..................................................   891
Reimbursable Agreements..........................................   886
Reprogrammings...................................................   904
Revenues.........................................................   886
Safety...........................................................   868
Seaway:
    1997 U.S. Port Traffic.......................................   896
    International Tonnage........................................   899
    Montreal Lake Ontario Section Traffic........................   897
    Operating Dates..............................................   894
    Statistics...................................................   895
    Usage........................................................   904
Seaway Operating Dates...........................................   894
Seaway Statistics................................................   895
Seaway Usage.....................................................   904
SLSDC:
    Authorized FTEs and On-Board Strength........................   902
    Estimated Other Services.....................................   895
    Five Year Capital Equipment and Project Plan FY 1999-2000....  3881
SLSDC Authorized FTEs and On-Board Strength......................   902
SLSDC Estimated Other Services...................................   895
SLSDC Five Year Capital Equipment and Project Plan FY 1999 1999-
  2003...........................................................   881
St. Lawrence Seaway/Montreal Lake Ontario Section Traffic........   897
Staffing.........................................................   901
Statement by Acting Administrator David G. Sanders...............   866
System:
    1997 U.S. Port Traffic Through the Seaway....................   896
    Availability.................................................   869
    Canadian Laker Cargo Total...................................   900
    Cruise Shipping Returns to...................................   870
    Global Positioning...........................................   907
    Overseas Trade Mission.......................................   870
System Availability..............................................   869
Trade:
    Trade........................................................   889
    Development..................................................   869
    Domestic Mission.............................................   869
    Overseas System Mission......................................   870
Trade............................................................   889
Trade Development................................................   869
Trade Mission:
    Domestic Trade Mission.......................................   869
    Overseas System Trade Mission................................   870
Travel...........................................................   890
Union:
    Contract.....................................................   871
    Unions.......................................................   893
Union Contract...................................................   871
Unions...........................................................   893
Vessel:
    Accidents....................................................   906
    Ocean Incidents..............................................   868
    Ocean Inspections............................................   869
    Transits.....................................................   898
    Transits Through the U.S. Locks..............................   905
Vessel Transits..................................................   898
Vessel Transits Through the U.S. Locks...........................   905
Year 2000 Data Systems Compliance................................   871

                  Secretary Of Transportation Hearing
                          (General Discussion)

Aviation:
    Airport Improvements......................................... 3, 44
    Aviation Reauthorization.....................................     3
    DOT Regulation of Airline Pricing............................    89
    FAA Information Technology...................................    30
    FAA Management...............................................40, 88
    FAA Management And Year 2000 Program.........................    21
    Funding System for FAA.......................................    86
    Perimeter Rule at Ronald Reagan Washington National Airport..    92
    Proposed American Airlines--TACA Group Alliance..............    55
    Slot Withdrawals in Chicago..................................   125
    Small- And Medium-Sized Airports.............................    46
    Stars And Year 2000 Programs.................................    44
Coast Guard:
    Administration's Shift in the Drug War.......................    68
    Budget Request...............................................    63
    Coast Guard Drug Interdiction Budget.........................    59
    Coast Guard Hearing March 5..................................    23
    Coast Guard Issues...........................................    95
    Coast Guard Priorities.......................................    65
    Effect of DOD Drawdown On Drug Interdiction..................    63
    Projected Coast Guard Drug Interdiction......................    69
    Proposed Coast Guard User Fee................................    62
Highway:
    Appalachian Highways (Corridor X)............................   142
    Cafe Standards...............................................    56
    Discretionary Grant Awards...................................    78
    DOT Request For Highway Spending.............................    24
    Emergency Relief Program.....................................    41
    Federal Funding for Media Consulting.........................    52
    FHWA Field Office Consolidation..............................58, 99
    Highway Trust Fund Account...................................    36
    Innovative Financing Proposals...............................    60
    I-69 Designation............................................28, 137
    ISTEA and Texas..............................................   137
    National Highway Safety......................................    33
    Seat Belts...................................................   107
    Surface Transportation Reauthorization....................... 3, 25
NAFTA:
    Border Crossing..............................................37, 83
Office of the Secretary:
    Immediate Office of the Secretary--Staffing..................   102
    OST Oversight of FAA.........................................   124
Railroad:
    Amtrak Cash Flow.............................................    53
    Amtrak Reform Council.......................................51, 134
    Authorized Use of Taxpayer Relief Act (TRA) Funds............    66
    Budget Request For Amtrak.................................... 2, 47
    Capital Definition For Amtrak................................    48
    Rail Mergers.................................................    46
    Renegotiation Of Amtrak Agreement............................    50
    Union Pacific-Southern Pacific Merger........................    45
Transit:
    Access to Jobs Program.......................................   105
    Houston Metro................................................    27
    Los Angeles Red Line.........................................   134
    New Starts Funding Requests..................................   104
    Transit Capital Funding......................................     2
Transportation, Department of:
    Acquisition Process..........................................    24
    Announcements Without Informing Members......................    32
    Budget Request...............................................     1
    Conclusion...................................................    18
    Conditions And Performance Report............................    43
    Congressional Justifications.................................   109
    Congressional Review Act....................................56, 435
    Disadvantaged Business Enterprise (DBE) Regulations..........    28
    Economic Growth And Trade....................................    13
    Environmental Programs.......................................3, 142
    Funding Priorities...........................................    53
    Human And Natural Environment................................    16
    Infrastructure Investment.................................2, 10, 75
    Intelligent Transportation System............................     3
    Intermodal Issues............................................   111
    Lack of Transportation Data..................................   140
    Local Involvement and Flexibility............................   139
    Luxury Tax...................................................    57
    Major Project Oversight.....................................52, 103
    Measuring Performance........................................7, 472
    Mobility.....................................................    10
    New Headquarters Building....................................   111
    Opening Remarks..............................................     1
    Overview.....................................................     5
    Paperwork Reduction..........................................   463
    Research.....................................................   128
    Reorganization and Collocation...............................   116
    Rule Development Process....................................56, 435
    Scoring Change for the Transportation Obligation Limitations.   131
    Strategic Goals.........................................6, 435, 471
    Transportation Fund for America..............................    76
Transportation Safety:
    Critical Operations..........................................    12
    Firing Directly At Drug Smugglers............................    63
    National Highway Safety......................................    33
    National Security............................................    17
    NTSB Recommendations.........................................   132
    Safety Programs................................................2, 7
Year 2000 Problem:
    FAA Schedule.................................................    44
    OST Oversight................................................    94
    Validation...................................................    46

                     U.S. General Accounting Office

Acquisition reform...............................................   830
Advanced technology transit bus.................................817-818
Airport improvement program............................710-711, 843-845
Air traffic control modernization..........................680, 705-708
Air traffic controller staffing.................................708-710
``Alameda Corridor Finally Gears Up''...........................861-864
Alameda corridor project........693-694, 731-733, 765-766, 807-808, 860
    Funding......................................................   732
Amtrak............................................681, 722-725, 742-743
Amtrak labor protection obligation..............................770-771
Amtrak operating subsidy...............................743-745, 768-770
Amtrak routes and labor obligations.............................745-746
Automated highway system program................................813-814
Aviation:
    Recorded flight data........................................716-717
    Repair stations....................................713-715, 846-853
    Safety.......................................................   680
    Security......................................680, 711-713, 832-839
    Weather information for.....................................717-718
BART project to San Francisco Airport........694, 734-735, 766, 803-804
    Cost estimates...............................................   736
    Rights-of-way through cemeteries............................735-736
Boston Central Artery/Tunnel project..........691-692, 728-729, 799-802
    Cost estimates...............................................   730
    Cost increases...............................................   764
    Finance plan.................................................   729
    Management..................................................733-734
    Public relations cost........................................   731
    Total cost estimates........................................730-731
Cherry Capital airport..........................................856-857
Coast Guard.......................................680, 718-722, 858-859
    Deepwater Acquisition Program...............................720-721
    Drug control efforts........................................721-722
Colocation study................................................809-810
Computer systems at FAA...............................680, 703-705, 725
Controller staffing........................................752, 840-842
Controller staffing requirements.................................   773
Deepwater Acquisition Program...................................720-721
Departmental relocation and reorganization......................786-787
Discretionary highway grants....................................739-743
DOT reorganization..................................................762
Federal Aviation Administration............................680, 701-718
    Acquisition reform at.......................................830-831
    Finances.....................................................   819
    Funding for.................................................702-703
    Oversight of repair stations.......................746-752, 771-772
Federal funding for new transit projects........................738-739
Federal Highway Administration..................................688-691
    Office of Motor Carriers....................................700-701
Federal Transit Administration..................................687-688
    Grant management............................................758-759
    Grant management oversight..................................785-786
    Oversight of grant management program.......................790-792
FHWA compliance reviews..........................................   763
FHWA discretionary grants........................................   767
FHWA project cost management.....................................   764
FHWA study of regional offices..................................811-812
Flight operational quality assurance programs..............716-717, 855
Government Performance and Results Act.....................727, 788-789
Highway trust fund audit.........................................   728
Highway safety.............................................680, 700-701
Human factors...................................................853-854
Innovative financing proposals......................................786
Intelligent transportation systems................680, 694-696, 815-816
Large-dollar highway projects...................................797-798
Los Angeles Red Line project...679, 692-693, 736-739, 767, 793-796, 865
    Funding shortfall............................................   737
    State funding for............................................   737
NCARC recommendations...........................................820-822
New starts funding requests......................................   767
Pilot training..................................................715-716
Rail safety.....................680, 698-700, 759-760, 786-787, 805-806
Reorganization of DOT's field office structure..................696-697
South Boston Piers project.......................................   739
Standard Terminal Automation Replacement System........707-708, 828-829
State infrastructure banks......................................760-761
Statement of Congressman Esteban E. Torres.......................   860
Statement of John H. Anderson, Jr................................   679
Surface transportation programs............................679, 686-701
Transportation department-wide issues......................681, 725-727
Truck safety fitness reviews....................................787-788
Year 2000.......................................................823-824
``Year 2000 Computing Crisis: FAA Must Act Quickly to Prevent 
  Systems Failures''............................................774-784
Year 2000 problem at FAA...............................753-758, 773-785
Wide Area Augmentation System................705-707, 752, 773, 825-828