[Senate Hearing 106-1050]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 106-1050
 
   NOMINATIONS OF LINDA J. MORGAN, TO BE A MEMBER OF THE SURFACE 
      TRANSPORTATION BOARD; AND DR. STEPHEN D. VAN BEEK, TO BE 
      ASSOCIATE DEPUTY SECRETARY AND DIRECTOR, OFFICE OF INTERMODALISM,
      AND MICHAEL J. FRAZIER, TO BE ASSISTANT SECRETARY FOR GOVERNMENT
      AFFAIRS, OF THE U.S. DEPARTMENT OF TRANSPORTATION
=======================================================================


                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION
                               __________

                           SEPTEMBER 28, 1999
                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation








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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West  Virginia
TRENT LOTT, Mississippi              JOHN F. KERRY, Massachusetts
KAY BAILEY HUTCHISON, Texas          JOHN B. BREAUX, Louisiana
OLYMPIA J. SNOWE, Maine              RICHARD H. BRYAN, Nevada
JOHN ASHCROFT, Missouri              BYRON L. DORGAN, North Dakota
BILL FRIST, Tennessee                RON WYDEN, Oregon
SPENCER ABRAHAM, Michigan            MAX CLELAND, Georgia
SAM BROWNBACK, Kansas                
                       Mark Buse, Staff Director
                  Martha P. Allbright, General Counsel
     Ivan A. Schlager, Democratic Chief Counsel and Staff Director
               Kevin D. Kayes, Democratic General Counsel













                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held September 28, 1999..................................     1
Statement of Senator Breaux......................................     6
Statemenmt of Senator Burns......................................    10
    Prepared statement...........................................    10
Statement of Senator Cleland.....................................     9
Statement of Senator Dorgan......................................     8
Statement of Senator Hollings....................................     2
    Prepared statement...........................................     2
Statement of Senator Hutchison...................................     1
Prepared statement of Senator McCain.............................     5
Statement of Senator Rockefeller IV..............................     3

                               Witnesses

Frazier, Michael J., nominee, Assistant Secretary for Government 
  Affairs, U.S. Department of Transportation.....................    28
    Prepared statement...........................................    30
    Biographical information.....................................    30
Morgan, Linda J., nominee, Member of the Surface Transportation 
  Board..........................................................    11
    Oral statement...............................................    12
    Prepared statement...........................................    14
    Biographical information.....................................    21
Kennedy, Hon. Edward M., U.S. Senator from Massachusetts.........     6
Lofgren, Hon. Zoe, U.S. Representative from California...........     7
Van Beek, Dr. Stephen D., nominee, Associate Deputy Secretary and 
  Director, Office of Intermodalism, U.S. Department of 
  Transportation.................................................    36
    Prepared statement...........................................    37
    Biographical information.....................................    39

                                Appendix

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared 
  statement......................................................    69
Response to written questions submitted by Hon. Ernest F. 
  Hollings to:
    Michael J. Frazier...........................................    69
Response to Written Questions Submitted by Hon. John McCain to:
    Dr. Stephen D. Van Beek......................................    70
    Michael J. Frazier...........................................    73












     NOMINATIONS OF LINDA J. MORGAN, TO BE A MEMBER OF THE SURFACE 
  TRANSPORTATION BOARD; AND DR. STEPHEN D. VAN BEEK, TO BE ASSOCIATE 
DEPUTY SECRETARY AND DIRECTOR, OFFICE OF INTERMODALISM, AND MICHAEL J. 
FRAZIER, TO BE ASSISTANT SECRETARY FOR GOVERNMENT AFFAIRS, OF THE U.S. 
                      DEPARTMENT OF TRANSPORTATION

                              ----------                              


                      TUESDAY, SEPTEMBER 28, 1999

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:01 a.m., in 
room 253, Russell Senate Office Building, Hon. Kay Bailey 
Hutchison presiding.
    Staff members assigned to this hearing: Virginia Pounds, 
Republican professional staff; and Jonathan Oakman, Democratic 
staff assistant.

        OPENING STATEMENT OF HON. KAY BAILEY HUTCHISON, 
                    U.S. SENATOR FROM TEXAS

    Senator Hutchison. Good morning. Our hearing will come to 
order.
    The Commerce Committee meets today to examine the 
qualifications of three individuals, who have been nominated to 
serve in important transportation posts in the government.
    I am pleased the President has decided to renominate Linda 
Morgan for another term as Chairman of the Surface 
Transportation Board. I think Ms. Morgan has done an excellent 
job in the face of difficult circumstances and issues.
    I believe that Congress could help Ms. Morgan by passing an 
STB reauthorization and provide her guidance on some of the 
major issues facing the rail industry and the STB. I also think 
we can do that this year.
    I have discussed it with Senator McCain, and he, too, 
desires a reauthorization. I am committed to working with him 
and all the affected parties so that we can get a bill out of 
the committee before Congress adjourns this year. I plan to sit 
down with the parties and Senator McCain in the near future.
    I know that there are multiple views on this committee 
about this issue. But I think we all agree that full and fair 
competition is really the answer to any problems that are being 
experienced in the rail industry. Fostering that competition 
would be the best thing that we could do for our transportation 
industry.
    Let me also welcome before the committee our other two 
nominees. Mr. Michael Frazier has been nominated to be 
Assistant Secretary for Government Affairs at the Department of 
Transportation. And Dr. Stephen Van Beek has been nominated to 
be Associate Secretary and Director of Intermodalism for the 
department.
    I would also like to take a moment to welcome the family 
members and special guests of our nominees in the audience.
    At this time, let me turn the podium over to the ranking 
member for a statement. And then I will invite the nominees and 
Senator Kennedy and any other Members of Congress who will be 
introducing the nominees today.
    So, Senator Hollings, welcome.

 STATEMENT OF HON. ERNEST F. HOLLINGS, U.S. SENATOR FROM SOUTH 
                            CAROLINA

    Senator Hollings. Thank you, Madame Chairman. You have made 
my statement, in essence.
    I support the confirmation of Michael Frazier and Dr. Van 
Beek. And I particularly wanted to be here--I have another 
conference ongoing--for the confirmation of Linda Morgan. She 
served as counsel for our committee for years here, and did an 
outstanding job. I have reviewed her statement.
    The Surface Transportation Board under her guidance has 
done an outstanding job in my opinion, really has accelerated, 
handled more cases and everything else of that kind, and has 
given satisfaction to the shipping community that they have so 
long sought for.
    And I know her. She is a better lawyer than me on these 
things. And I will leave her to her own wits with all the cross 
examination. But I appreciate it very, very much. I have a 
prepared statement that I will insert in the record.
    [The prepared statement of Senator Hollings follows:]

   prepared statement of hon. ernest f. hollings, u.s. senator from 
                             south carolina
    I am proud to say that I have known Chairman Morgan for many years 
and, while she is sitting on the other side of the table, I am pleased 
to see her back in this room. Although we may not always agree, I have 
a great deal of respect for her and know that two qualities she 
possesses in abundance are fairness and integrity. Those qualities, 
coupled with her commitment to public service, make her an outstanding 
Chairman.
    As many of you know, Linda Morgan served as counsel for the Surface 
Transportation Subcommittee for eight years and then as General Counsel 
for the Full Committee for seven years. During that time I found Linda 
Morgan to be one of the most intelligent and thorough professionals 
that I have worked with. She is smart and she cares about the issues -- 
I know that she is committed to her position as Chairman of the Surface 
Transportation Board.
    Linda Morgan has served as Chairman of the Surface Transportation 
Board (STB) since it was created in 1995. Prior to that, she served as 
Chairman of the ICC. In 1995 she was responsible for implementing the 
changes that Congress envisioned in the Interstate Commerce Commission 
Termination Act. She pared down the ICC and established a new, more 
streamlined agency in its place, the STB.
    Chairman Morgan is to be commended for her achievements and 
commitment to the mission of the STB. The STB operates with only 135 
people, half the staff of it predecessor, but it is charged with 
regulating the entire railroad industry. Among her accomplishments, 
Chairman Morgan has facilitated creating a more efficient process for 
resolving rate disputes between shippers and carriers. Under her 
leadership, she has helped the private sector come to agreements on 
short line access and agricultural services arbitration which have 
benefitted the entire transportation industry.
    Chairman Morgan has done an outstanding job moving the agency 
through several different phases. She successfully transitioned the 
agency in 1995 from the ICC to the STB. She has seen the railroad 
industry through three very large merger transactions. She helped 
resolve the service issues in the West. And last year she ended the 
practice of using product and geographic competition in determining 
appropriate rates for shippers.
    Linda Morgan has done a lot of heavy lifting during her tenure as 
Chairman of the STB. She has my full confidence and support and I look 
forward to working with her in the future.
    I look forward to hearing from Michael Frazier, who is nominated to 
be Assistant Secretary for Governmental Affairs at the Department of 
Transportation. I am sure that he knows what he is getting into, but I 
can imagine that keeping up with Secretary Slater, the U.S. Congress 
and state and local elected officials will be enough to keep him very 
busy. There are many transportation priorities before this Committee 
that we will work together on: aviation, motor carrier, maritime, 
pipelines and hazardous materials issues to name a few. I look forward 
to hearing your thoughts on how we will coordinate our efforts on these 
matters.
    Since Dr. Van Beek has spent several years at the Department of 
Transportation already, he seems well qualified for his position as 
Associate Deputy Secretary and Director of Intermodalism. I have a 
great interest in this office since my state has many modes of 
transportation which are critical to the survival and growth of the 
manufacturing industry. Intermodal traffic is the largest growth 
segment of the transportation industry and one that certainly merits a 
comprehensive review and the focus of the office which you have been 
nominated to lead. I look forward to hearing how you will strengthen 
the nation's ability to compete in the global economy and obtain the 
optimum yield for the nation's transportation system.
    I appreciate all three of the nominees appearing here before us 
today and look forward to working with them.

    Thank you.
    Senator Hutchison. Thank you, Senator Hollings.
    Senator Rockefeller, would you like to make a statement?

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. I would, Madame Chairman. I do not 
really have an opening statement, but I have some comments.
    Obviously, we are going to have all three witnesses before 
us. I am going to focus on Linda Morgan for the chairmanship 
and where we are today and where I think we are going on 
railroad issues. Ms. Morgan knows I have been very outspoken in 
my views about the railroad industry and what I consider to be 
their inexcusable and really destructive pattern of behavior in 
terms of competition in key segments of our national rail 
system.
    As you know, Madame Chairman, together with Senators 
Dorgan, Burns and Senator Roberts and Breaux and others in this 
committee, including the chairman herself in other iterations, 
we have expressed a lot of interest in curing some of these, 
what I consider, outrageous behavior on the part of the 
railroads.
    I have introduced a bill. It addresses some of these 
egregious practices. I am serious about the bill. It is a good 
bill. It is an important bill. It proposes a solution to the 
bottleneck issue, which is enormous. It codifies the market 
dominance aspect that the STB made earlier.
    It emphasizes competition as our rail policy. It eliminates 
the rail revenue adequacy task, which is silly and beneath all 
of us. As I say, it is an important bill.
    I have invited feedback from the railroads. I have invited 
compromise from the railroads. I have had an absolute open door 
policy to the railroads. And in spite of my frustration with 
them, I might say, and in spite of the fact that they have made 
a very large issue in my home state of West Virginia, where I 
remember everything and forget nothing, of saying that I am 
trying to take jobs away from West Virginians and cause safety 
problems, which further angers me and further causes me to--in 
my motivation, rather than what they should be doing, which is 
to improve rail competition and the economy of West Virginia.
    As you might predict, the railroads have refused my 
overtures. I have met with executives of various levels, of 
various kinds. They refuse that there is even a problem, almost 
laughing at me, at the situation, at the problems that I bring 
up. And, of course, they refuse to come to the table.
    In fact, many of them refuse to acknowledge that there 
even, as I said, is a problem around. They sort of enjoy the 
sparring, it seems to me, sort of verbal competition, no 
concern about the economic consequences in our chemical 
industry, coal industry and other industries at all.
    And all of this, Madame Chairman, despite all of the 
testimony brought before Ms. Morgan, before the STB, before 
this committee by many of us on many occasions, the series of 
GAO studies, which were absolutely devastating to the railroad 
industry, absolutely devastating.
    They ignore that, showed that some 70 percent of shippers 
view the current system as fundamentally flawed, not to speak 
of the intimidation, which is a routine part of their practice.
    In any event, I am obviously very committed to making some 
changes in this industry. And I would like to see us take up 
and demand an STB authorization bill this year. I recognize the 
high caliber and the deep nature of the lobbyists that this 
very small group of class A railroads has assembled. Usually 
when we have these meetings, it is the fullest hearing of any 
of our sessions.
    But we need to debate, Madame Chairman, in this committee 
this year the tough issues about railroad competition. We 
cannot avoid that. We need to talk about STB's serious 
underfunding and understaffing. We need to talk about STB's 
undermining of collective bargaining rights. And we need to 
look at a variety of other things.
    Now, Ms. Morgan knows that I have had my differences with 
her. And yes, I would probably prefer to see somebody else as 
chairman of the STB. But I honestly believe that the real 
problem does not lie with her, but it relies with the law, 
which is us, which is this committee to begin with. She has 
made that clear in the past, and I will have questions for her 
about this.
    But I want to take up my bill. I want to take up your bill. 
And I want to do it this year. And there are some very ugly 
rumors going around here, some of which have been published, 
that the leadership of the full committee on both sides is 
talking about an effort to attach a clean, multi-year STB 
reauthorization bill to an omnibus budget bill at the close of 
the session.
    That would be, in plain terms, a breaking of the word that 
I had with the chairman of the committee and the ranking member 
of the committee.
    They had agreed to prevent this kind of deal from happening 
in conversations that some of us have had with them earlier in 
the year, last year and again earlier this year. Both of them 
committed to allow us the opportunity, both of us, the 
opportunity to bring amendments to an STB bill during committee 
authorization this year.
    I want to say publicly I would be very troubled and would 
be inclined to be more mischievous and obnoxious on the floor 
if there was a back room or a stealthy deal to circumvent this 
word to this member and other members of this committee. And I 
hope that the chairman will work with me and with Senator 
Dorgan and others to make sure that this does not happen.
    I thank the chairman.
    Senator Hutchison. Thank you, Senator Rockefeller. I would 
just respond by saying that I think it is very important that 
we have a reauthorization. And I do not think a reauthorization 
that does not address the issues and concerns that have been 
brought forward since the emersion of the STB would not be in 
anyone's best interest. I think it is important that we address 
those concerns.
    I think it is important that we come to terms so that we 
assure a healthy rail system in our country and assure that 
shippers have access to competition and fair pricing.
    So I very much want that to happen. I have spoken to 
Senator McCain about it. Even though we differ on substance, he 
has said that we will be able to bring forward his bill and 
then have the ability to amend. And that is fair.
    So as long as we have the ability to discuss it, offer our 
amendments, let the majority rule, that is the process. So that 
is what I am pushing. And I hope very much for that to happen 
this year.
    I ask unanimous consent that Senator McCain's statement be 
put in the record. Without objection, it will be.
    [The prepared statement of Senator McCain follows:]
   Prepared Statement of Hon. John McCain, U.S. Senator from Arizona
    As Chairman of the Committee, I would like to thank Senator 
Hutchison for chairing today's hearing on several pending nominations. 
I also want to take this opportunity to express my strong support for 
the reconfirmation of Linda Morgan to serve as a member, and Chairman, 
of the Surface Transportation Board (STB).
    Ms. Morgan's extensive professional experience and impressive 
qualifications have been invaluable to the Board. Throughout her 
tenure, she has consistently worked to enforce the transportation 
policies and public interest standards as established by law. Ms. 
Morgan further deserves our commendation for the leadership she 
demonstrated in managing the closure of the Interstate Commerce 
Commission (ICC) and the establishment of the STB. That was no small 
feat. We owe thanks to both Chairman Morgan and her very dedicated and 
capable staff.
    Since its creation, the STB has made tremendous strides. It has 
dealt with some of the most challenging rail transportation matters 
that have arisen in many years, including the very difficult service 
crisis in the West. It has also managed to reduce the backlog of 
pending cases which it inherited from the former ICC. I can think of no 
other federal entity that has carried out such a vast work load with 
such a limited level of resources.
    Many critical transportation decisions and responsibilities remain 
before the STB and these challenges are not expected to diminish. The 
achievements already attained by the Board are greatly attributed to 
Chairman Morgan's tireless dedication and commitment. Therefore, in my 
judgement, Linda Morgan's reconfirmation as Chairman of the STB should 
be a top priority. The American citizens would be well served by Ms. 
Morgan's reappointment. We need more forward-thinking and committed 
individuals like Linda to serve in the federal government.
    It is my intent for the Committee to act swiftly on her 
confirmation.

    Senator Hutchison. Senator Breaux, did you have an opening 
statement?
    Senator Breaux. Good morning.
    Senator Hutchison. The best opening statement of the day. 
Thank you.
    [Laughter.]
    Senator Hutchison. With that, I would like to ask Senator 
Kennedy and Congresswoman Lofgren to come forward. If there any 
other Members of Congress wishing to introduce nominees, I 
would ask them to come forward at this time. And then after 
their statements, I will call the nominees, and we will 
proceed.
    Senator Kennedy, I welcome you to the committee. And as you 
can see, our committee is just easy going----
    Senator Kennedy. Thank you very much, Madame Chairman.
    Senator Hutchison. --just like judiciary, just what you are 
used to.
    Senator Kennedy. I thought the Human Resource Committee and 
the Judiciary Committee were the only committees where we had 
differences.
    Senator Hutchison. Right.
    Senator Kennedy. It is good to see that Senator Rockefeller 
is in good spirits here this morning.
    [Laughter.]
    Senator Hutchison. Mischievous and devious, I think is what 
he said.
    [Laughter.]

    STATEMENT OF HON. EDWARD M. KENNEDY, U.S. SENATOR FROM 
                         MASSACHUSETTS

    Senator Kennedy. Madame Chairman, I know we have a full 
agenda here, but I wanted to take this opportunity to bring to 
the attention of this committee really an outstanding public 
servant, someone who has been a long and dear friend of mine, 
and someone who has had a very distinguished life of commitment 
in terms of public service. And that is Mike Frazier, who has 
been nominated by the President with the support of the 
Secretary to be Assistant Secretary of Transportation in the 
area of Intergovernmental Affairs.
    Michael Frazier worked in my office for a number of years, 
starting in 1985. And in 1986, when we had the real debate here 
in the Congress of the United States on the issue of apartheid, 
in which I was very active with a number of other members of 
the Senate, Mike Frazier was one of the very strong and 
effective staff members whose knowledge about the situation and 
whose help and assistance in the development of legislative 
strategy were absolutely invaluable, not only working with one 
side of the aisle, but working on both sides of the aisle.
    It was at that time when I became enormously impressed with 
his ability. Since that time, he has been involved in a number 
of different areas of important responsibilities, serving as 
Senator Moseley-Braun's chief of staff, where he gained 
experience in terms of management techniques and budgetary 
factors.
    Over the period of recent years, he has worked very 
effectively as Deputy Assistant to the Assistant Secretary in 
the area of intergovernmental affairs.
    He has a broad and wide understanding, I believe, of local 
government, of state government, as well as a broad experience 
in terms of the functioning of the House and the Senate. He 
also has experience in the Department of Transportation.
    I find him diligent. I find him hardworking. I find him 
absolutely trustworthy. And I find him strongly committed to 
the best in terms of public service.
    I think we are very lucky to have him as a nominee. I know 
he will do an outstanding job in this position, if approved by 
this committee.
    I know his mother is here today. I know she will be 
recognized by Christine Cooper and the Cook family and the 
Qualter family and a number of other friends. I know how proud 
they are of Mike Frazier for all that he has represented in 
terms of someone who has been a loving son and devoted to his 
mother and members of his family. He is really an extraordinary 
individual.
    I have the highest recommendation for him. Many times we 
are in situations where we make representations and appear 
before committees on the basis of individuals we have some 
knowledge of or some awareness of. But today is a very special 
privilege and a real pleasure because of my very, very high 
regard for him. I know he will do an outstanding job. I would 
hope the committee would consider him favorably.
    Senator Hutchison. Thank you, Senator Kennedy. I certainly 
appreciate your taking the time to come on behalf of your 
friend and colleague, Mr. Frazier.
    Representative Zoe Lofgren for Dr. Van Beek.

      STATEMENT OF HON. ZOE LOFGREN, U.S. REPRESENTATIVE 
                        FROM CALIFORNIA

    Ms. Lofgren. Thank you, Madame Chairman, members of the 
committee. I am pleased to be here today to talk about someone 
I have known for years and whom I respect a great deal. That is 
Stephen Van Beek.
    Following his graduation with a bachelor of arts degree in 
political science from the University of California Santa 
Barbara, Steve served as a legislative assistant in the House 
of Representatives from 1983 to 1986. He then returned to study 
at the University of Virginia, earning both a master's degree 
and a doctorate in government and foreign affairs.
    Afterwards, he taught as a professor of political science 
at San Jose State University, a position from which he is 
currently on leave. It was there, while teaching at that fine 
university in the heart of my district, that we met.
    Steve's knowledge of and experience in public 
administration and transportation is impressive by any 
standard.
    While at San Jose State, he taught and wrote about the 
American political system in transportation. He has published 
more than a dozen studies and articles and was also a research 
associate at the Norman Manetta International Institute of 
Surface Transportation Policy Studies, where he participated in 
studies on transit policy and transportation education.
    He has already proven himself as a capable administrator at 
the Department of Transportation in the Research and Special 
Program Administration (RSPA), where he has served as Special 
Assistant and Deputy Administrator for Modal Administration.
    As chief operating officer responsible for 870 employees 
and a $300 million budget, he shaped the RSPA's strategic plan, 
research and technology strategies, emergency preparedness and 
response activities, and new regulations for the pipeline and 
hazardous material safety programs.
    Also as a member of the Secretary's management council at 
the Department of Transportation, he has been a leader in 
establishing a quality award process and championing a 
management development process for the future of the DOT. He 
played a strong role in strengthening ties with minorities 
serving institutions, colleges and universities.
    His distinguished career inside the educational world and 
within government demonstrates his strong ability to serve as 
the senior advisor and representative of the Department of 
Transportation. I know absolutely that he would be an asset to 
our government at the Department of Transportation in the 
position of Associate Deputy Secretary.
    I am so pleased that the President has recognized him with 
this nomination. I hope that you will advise that the Senate 
should consent to his nomination. I would further add that 
Steve is someone with whom you will enjoy working. He is 
responsive, smart, and public spirited. Indeed I think we are 
lucky that he is willing to take time out of his academic 
career to serve in the public sector for this short period of 
time.
    Thank you very much for listening to me this morning.
    Senator Burns [presiding]. We thank you for your statement 
today. Since the chairman has jumped up and run away--what did 
she do, get scared or what?
    [Laughter.]
    Well, let me see. I guess I am about the only Marine up 
here, right? The odds are about right.
    [Laughter.]
    Senator Burns. I think--Senator Dorgan, I understand that 
you have come late, and I just got here. Do you have an opening 
statement that you would like to give at this time, before we 
call the witnesses?

  STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH 
                             DAKOTA

    Senator Dorgan. Mr. Chairman, I will just briefly mention 
that I am interested in a number of issues. I specifically will 
want to ask Linda Morgan a couple of questions about the Rail 
Shipper Protection Act and the issues related to the 
overcharging of consumers and shippers in my State of North 
Dakota and around the country. She well knows my concern about 
that and the concern of a number of us who have introduced 
legislation.
    I was going to inquire, and I understand Senator 
Rockefeller has inquired, about the opportunity to offer 
amendments to the Surface Transportation Board reauthorization, 
about the opportunity to get a hearing on the piece of 
legislation that you have worked with us on, the Rail Shipper 
Protection Act.
    These are very important issues. We have not made as much 
headway as we should and as we will. So we need the 
opportunity, and a hearing is one opportunity. The ability to 
amend the STB Reauthorization Act is another.
    And one other opportunity, of course, is with the 
renomination of Linda Morgan to hope and expect that we will 
also have a very aggressive administrator and commissioner to 
work on these issues.
    But I will ask Linda Morgan some questions about that. My 
understanding is that the response to the request for hearings 
on the Rail Shipper Protection Act has been positive and that 
we will be able to expect to have a hearing on that, which I 
think will be a positive development.
    Senator Burns. That is correct.
    Oh, you are back.
    Senator Hutchison. Yes.
    [Laughter.]
    Senator Hutchison [presiding]. I would like to call the 
nominees forward. Was there someone else who wanted--were you 
trying to give an opening statement?
    Senator Burns. I have a little statement I would like to 
make, if the chairman does not mind.
    Senator Hutchison. All right. Let me just say that we have 
had a period for opening statements. And then we went forward 
with the hearing. I will drop back for anyone who wishes to 
make an opening statement, but we also have the ability to 
question witnesses.
    So with that, however----
    Senator Burns. Well, I have been since 6 o'clock making it 
in from Tysons Corner this morning. So----
    Senator Hutchison. So because of that and because----
    Senator Burns. I have been on the world's largest----
    Senator Hutchison.--these nominees are going to have the 
power to ease the traffic jams----
    [Laughter.]
    Senator Hutchison. So let us not make them too mad.
    Well, in that case then----
    Senator Burns. Mr. Dorgan has made his statement.
    Senator Hutchison. I see. OK.
    Senator Burns. I will submit my statement for the record.
    Senator Hutchison. No. I understand.
    Senator Burns. And I will be very short.
    Senator Hutchison. That is fine. Say what you would like to 
say, and then I will call on Senator Cleland. And then we will 
ask the nominees to come forward.

   STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR FROM MONTANA

    Senator Burns. Madame Chairman, thank you very much. I just 
want to--I will have some questions for Ms. Morgan also this 
morning.
    But anybody that thinks that the Surface Transportation 
Board is working on behalf of shippers right now and on behalf 
of the majority of people in this country, I have a little 
piece of land out in Montana that I will guarantee that you 
will get gold and silver on. It is just not working right now.
    And when I come home this time, after meeting some of my 
shippers in Montana, which is principally agriculture, we are 
getting killed. And I will go back. We have some real problems 
in agriculture, and some of it goes right back to 
transportation. It goes back to 3 years. And now it is rates. 
Everybody is living on the backs of this producer, including 
our good friends that are in rail transportation.
    And I realize we have to have them, but there has to be 
some fairness. And small shippers and big shippers alike have 
got to have some kind of a way to gain forum before this 
transportation board.
    And we need to move our bill that Senator Rockefeller and I 
and a host of us, and Senator Dorgan, have worked on to get rid 
of this bottleneck and to get some equity on shippers, because 
we cannot continue to see this kind of a situation continue.
    So I thank the chairman for holding this hearing. I have 
some questions for the witnesses, and I have a prepared 
statement that I will insert in the record.
    [The prepared statement of Senator Burns follows:]

   prepared statement of hon. conrad burns u.s. senator from montana
    Thank you Madam Chairwoman, I would like to thank you for chairing 
this full committee hearing in the absence of the chairman.
    Today, we will be discussing the renomination of Linda Morgan to 
the Surface Transportation Board. During the last couple of weeks many 
rumors have been reported about the intent of members regarding this 
nomination. I also understand this nomination is very important to the 
ranking member of this committee.
    However, there are many questions that, although they have been 
responded to in past proceedings before this committee, remain 
unanswered.
    I want answers to those questions. I want to know what the Surface 
Transportation Board is going to do about the excessive rates Montana's 
farmers pay to transport their grain to market. I want to know what the 
STB is going to do to make the rail rate complaint process more 
accessible and affordable for small shippers.
    It remains a mystery to me how this body can continue to support 
the Surface Transportation Board's policy that has a very poor record 
of providing an adequate forum to the nation's small shippers.
    I ask my farmers why they aren't more vocal. Their response? They 
have given up. Let me remind my colleagues about McCarty Farms vs. 
Burlington Northern. McCarty Farms was a group of Montana grain farmers 
that brought a class action suit against the Burlington Northern in 
1980 challenging the rates charged for transporting wheat from Montana 
to Portland. This suit was presented to the STB's predecessor, the ICC 
(Interstate Commerce Commission) in 1980 and eventually awarded in the 
favor of Burlington Northern in 1997. And the case remains in appeal.
    I would also like to say that the STB's decision on product and 
geographic competition was an admirable effort to discontinue railroad 
legal strategies but that will not have a significant impact on 
providing competitive rail service. In fact, Montana's rail 
transportation is so desperate that very few elements of S. 621 would 
even have an impact on my state.
    I must say that I am not impressed with the actions of the STB and 
until I start to see the scales of justice leveled out between the 
shippers and railroads, I will continue to oppose the continued 
policies of this Board.
    I have a few questions I would like to ask Mrs. Morgan in a few 
moments. Thank you, Madam Chairwoman.

    Senator Hutchison. And, Senator Cleland, did you have an 
opening statement?
    Senator Cleland. Madame Chairman, thank you very much. I do 
not have an opening statement today. We are just delighted to 
have the witnesses with us.
    Thank you very much.
    Senator Hutchison. I would like to ask the three nominees 
to come forward. And as they are coming forward, I will say 
Senator Breaux won the award for best opening statement.
    Senator Breaux. Thank you.
    [Laughter.]
    Senator Hutchison. Before we start, I would like to ask any 
of the nominees whose families are with them, if they would 
like to take this opportunity to introduce them. They are very 
important to the work that you do, and they should be 
recognized.
    Ms. Morgan. Well, I do have my husband, Michael Karam, in 
the audience. And I do want to take this opportunity to thank 
him for all of his encouragement and patience during these last 
few years.
    Needless to say, it seemed many times as though there was 
no friend in sight, but I could always count on his friendship 
and support. I could not have survived these last few years 
without him. I am grateful for that.
    Senator Hutchison. Thank you.
    Mr. Frazier.
    Mr. Frazier. Madame Chairwoman, I do have my mother in the 
audience, who I would like to acknowledge during the course of 
my statement. So I will pass until then.
    Senator Hutchison. Thank you.
    Dr. Van Beek.
    Dr. Van Beek. Yes. Madame Chairwoman, I would like to 
introduce Elizabeth Tucker Van Beek, my wife, who has been 
generous in her support as I have gone through this process. 
And she is also an ex-Senate staffer.
    Senator Hutchison. That will win you points.
    All right. Ms. Morgan.

 STATEMENT OF THE HON. LINDA J. MORGAN, NOMINEE, MEMBER OF THE 
                  SURFACE TRANSPORTATION BOARD

    Ms. Morgan. Yes. Well, I know that there will be many 
questions for me today. And I do have an oral statement. But as 
I see the situation here, I think what I would like to do is to 
ask your indulgence that I be able to insert in the record my 
written statement, which you already have, and my oral 
comments, so that I do not take up the time of the committee 
today, as I know there will be time spent on questions.
    But I did want to spend just a couple of minutes now. First 
of all, I do want to recognize the presence of my two fellow 
board members, Vice Chairman William Clyburn and Commissioner 
Wayne Burkes. I appreciate their support here today and every 
day, as we strive at the Board to remain committed to 
competence, fairness, professionalism and collegiality.
    I also have some Board employees in the room. I always say 
that the leader is only as good as those who are led. And the 
Board employees are some of the finest public servants around, 
and I feel privileged to have had the opportunity to work with 
them over the last few years.
    I particularly thank members of my personal staff, who are 
in the audience. They have had quite a challenge these last few 
years, but have met the challenge without skipping a beat. I 
did not want to miss this opportunity to thank my fellow Board 
members and the staff.
    With that, I think I will just let the other two nominees 
give their oral statements, or however you want to proceed, 
because I know that the time is limited.
    [The oral statement, prepared statement, and Biographical 
Information of Ms. Morgan follow:]

  Oral Statement of the Hon. Linda J. Morgan, Nominee, Member of the 
                      Surface Transportation Board
    Thank you for the opportunity to appear before you on the occasion 
of my renomination by President Clinton for a second term on the Board. 
I am honored that President Clinton has reappointed me, and I look 
forward to assisting the Committee as it considers my qualifications 
for reappointment.
    I would like to spend a few minutes making some personal remarks 
and then a few minutes making some substantive remarks.
    Turning to my personal remarks, a few introductions and related 
comments are in order.
    I understand that my husband, Michael Karam, is in the audience. I 
thus take this opportunity to thank him for all of his encouragement 
and patience, particularly during the last few years. When it seemed as 
though there was no friend in sight, I always could count on his 
support. I could not have survived these last few years without him, 
and I am eternally grateful.
    The other important family member I wish to recognize is my 14-year 
old daughter, Meredith, who is not here but instead is enjoying, I am 
sure, another challenging day in 9th Grade. I want the record to show 
that I could not have managed these last few years without her 
resilience and understanding, for which I also am eternally grateful.
    I also wish to note the presence of my two fellow Board Members, 
Vice Chairman William Clyburn and Commissioner Wayne Burkes. I 
appreciate their support here today and every day as we strive at the 
Board to remain committed to competence, fairness, professionalism, and 
collegiality in our work.
    There are also some Board employees in the room. I always say that 
a captain is only as good as the team; that a leader is only as good as 
those being led. The Board employees are some of the finest public 
servants around, and I feel privileged to have had the opportunity to 
work with them and to lead them over the last few years. And I 
particularly thank the staff members from my personal office, who have 
had quite a challenge in the last few years but who have nevertheless 
met the challenge without missing a beat. I could not have done it 
without the commitment of all of these employees.
    I also wish to make a few personal comments to you, Senator 
Hollings. As I was mentally preparing myself for this hearing today, I 
was reminded of my first nomination hearing over 5 years ago, which you 
kindly chaired, and of my swearing-in ceremony at which you did the 
honors. While at that time I had a general understanding that I would 
face challenges, I had no idea how challenged I really would be.
    In this regard, Senator Hollings, you need to know that not one day 
goes by without my feeling grateful for the 11 years I spent under your 
tutelage. You taught me toughness, intellectual rigor, and fairness in 
understanding all sides of an issue. By your example, I learned the 
value of responsible public service, of loyalty to purpose, and of 
personal and professional integrity. If I have erred during my first 
term, it was not because you did not provide me with the necessary 
tools. I am eternally grateful for your good training and good example.
    And finally, let me say to the other Members of this Committee that 
I certainly have appreciated the professional courtesy and interest of 
Members as we have tackled the many challenging transportation issues 
that have confronted all of us during the last few years. If confirmed, 
I look forward to our continued constructive interactions.
                                 ______
                                 
    Now, let me turn to my substantive comments. I have submitted 
written testimony with attachments that I ask be included in the record 
in full. I will make a few additional oral remarks, focusing 
specifically on rail matters.
    During my Chairmanship, I have faced many challenges, including the 
termination of the ICC and the significant restructuring that has gone 
on in the rail industry. This has been a period of transition, 
volatility and unrest in the rail sector as all elements have struggled 
with the changing environment. During this time, shippers have raised 
concerns about inadequate service, rate levels, and the complexity of 
the regulatory process for resolving disputes and obtaining redress. 
And employees have raised concerns about the negative effects of this 
railroad restructuring on their rights.
    I believe that the Board has heard these concerns and has responded 
to them appropriately and to the fullest extent in accordance with the 
law. We have applied a common sense approach to these issues, promoting 
private-sector initiatives and resolution where appropriate and 
undertaking vigilant government oversight and action where necessary.
    With respect to rate and service issues, I believe that in the past 
few years, we have done more to address specific shipper concerns than 
anyone had done in a long, long time. We have decided rate complaints 
promptly; we have streamlined the rate review process; we have repealed 
the product and geographic competition standards; and we have adopted 
small rate case guidelines. We have also adopted rules permitting a 
shipper receiving poor service to obtain the services of a new carrier.
    And we have brought together large and small railroads, and 
railroads and their customers, to communicate commercially with each 
other as they have not done in years. As a result, we have seen large 
and small railroads work out an unprecedented agreement that sets rules 
for more balanced dealings; we have seen the Association of American 
Railroads and the National Grain and Feed Association reach 
groundbreaking agreements providing for arbitration or mediation to 
settle disputes; and we have seen the railroad industry and the shipper 
community getting together for regular and ongoing formal outreach 
sessions that would have been unheard of before.
    I know that some shipper groups say that we have not done enough. 
However, I believe that significant steps have been taken to alter the 
rail environment in a positive way, and the support that we have 
received from shippers for what we have done testifies to that.
    In addition to the broader initiatives that have been undertaken to 
address shipper concerns, the Board has been faced with specific 
matters that have affected the shipping community. Shippers of course 
were significantly impacted by the service crisis in the West. We 
vigilantly monitored the situation; we worked informally with shippers 
to fix specific problems; and we formally redirected operations in a 
focused and constructive way. In addressing this situation, the Board 
had to be careful not to take actions that would inadvertently harm 
certain shippers and regions while helping others. And we ensured that 
our actions did not undermine, but rather encouraged, important 
private-sector initiatives that facilitated and were integral to the 
service recovery that has occurred.
    Under my Chairmanship of the Board and the ICC before that, four 
mergers involving large railroads have been approved, which were 
supported in varying degrees by the shipping community, as well as 
employees and various localities. To address concerns raised by those 
mergers, we encouraged private-sector agreements, and where agreements 
were not reached, we imposed many significant conditions protecting 
competition, the environment and safety, and employees, and providing 
for oversight of both competitive and operational issues. We concluded 
that these mergers as conditioned would not diminish competition and in 
fact could enhance competition, would produce transportation benefits, 
and were otherwise in the public interest. The Board will continue to 
exercise its oversight authority in accordance with these objectives.
    With respect to rail labor matters, employees have raised concerns 
about the direction taken by the ICC starting in the mid-1980s 
regarding the override of collective bargaining agreements (CBAs) in 
connection with rail consolidations. I believe that we have acted on 
these concerns. Even in the face of statutory language and court 
precedent on CBAs not favorable to rail labor's position, I believe 
that the Board under my Chairmanship has worked to move the disposition 
of these matters in what I view as a more positive direction for rail 
employees. The Board*s focus on narrowing what can be overridden by 
arbitrators in its Carmen III decision, the messages that it has sent 
in recent merger decisions regarding overrides, its use of stays in the 
arbitration appeals process, and its efforts to leave labor matters to 
private negotiation as much as possible, I believe, have all resulted 
in a more level playing field that has produced more privately 
negotiated agreements between labor and management than we have seen in 
recent memory.
    I understand that labor concerns remain. As I suggested in my 
December 21 letter, to ensure that the positive trend is secured, and 
that consolidations found to be in the public interest can be carried 
out with minimal disruption to all involved, legislation would be an 
appropriate way for Congress to reflect an interest in preserving CBAs 
and the wisdom in promoting private negotiation.
    In closing, let me say that I believe that my record exemplifies a 
focus on constructive change to address concerns that have been raised 
during this period of transition and unrest. Under my Chairmanship, the 
Board has changed in significant, and I believe positive, ways the 
rules applicable to shipper issues regarding rates and service. We have 
brought about positive change in the way in which the railroads are 
interacting with their customers, and in the way larger railroads are 
interacting with smaller railroads. We have worked to make the playing 
field more level between labor and management and encouraged private 
negotiation as the way of resolving employee issues. And we have 
addressed environmental and safety issues in innovative and 
constructive ways. I have listened to the concerns of the various 
segments of the rail community, as well as those of Members of this 
Committee, and have acted on these concerns in accordance with the law 
that the Board is charged with implementing.
    I realize that concerns remain. I am committed to continuing the 
positive momentum that has been brought about by the change that has 
been initiated under my Chairmanship, and I will continue to look for 
appropriate ways to address ongoing concerns. At the same time, as I 
have indicated to this Committee in my December 21 letter and in prior 
testimony, there will be areas in which legislation will be necessary 
if Congress believes that the current direction is still not good 
enough.
    During my first term, I have been committed to implementing the law 
as I believe Congress intended. I have had no personal or political 
agenda. If confirmed, I look forward to continuing to work with this 
Committee and interested parties on the transportation issues that 
confront us, particularly in hopes that we can bring more stability and 
certainty to the rail sector.
    I would be happy to answer any questions that you may have at this 
time.
                                 ______
                                 
Prepared Statement of the Hon. Linda J. Morgan, Nominee, Member of the 
                      Surface Transportation Board
                              introduction
    My name is Linda J. Morgan, Chairman of the Surface Transportation 
Board (Board). I am appearing at the request of the Committee to 
discuss my renomination to the Board. I have already appeared before 
this Committee twice over the past two years in connection with the 
Board's reauthorization hearings, and have discussed at great length 
the issues before the Board and the accomplishments of the Board under 
my Chairmanship. For easy reference, I have appended as Attachments 1 
and 2 the written testimony (without attachments) that I submitted for 
those two hearings [available in S. Hrg. 105-1062 and S. Hrg. 106-624].
    This hearing is a bit different from the two recent reauthorization 
hearings, in that it is intended to focus more on me personally and on 
my record than on the Board as an institution. Nevertheless, as I have 
been Chairman of the Board since its creation, I have been of necessity 
an integral part of everything that the Board has done. Therefore, any 
questions that might arise in this hearing, particularly regarding rail 
matters, could overlap with those that have been previously addressed 
at the reauthorization hearings. Accordingly, this written testimony 
briefly reviews my approach and my record, with an emphasis on major 
rail issues that have been raised in connection with Board decisions.
                      the transition to the board
    I was named Chairman of the Interstate Commerce Commission (ICC), 
the Board's predecessor, in March 1995, just as the Congressional 
deliberations over what was to become the ICC Termination Act of 1995 
(ICCTA) were getting underway. I faced several challenges during that 
first year of my Chairmanship. I had to motivate the ICC's staff to 
continue to produce notwithstanding the uncertainty surrounding their 
personal futures and the future of the agency at which many of them had 
worked for their entire professional careers. I worked with Congress to 
ensure that whatever bill was ultimately passed would be workable. And 
I had to figure out, once the ICCTA became law, how to make the 
transition from the ICC to the Board on just a few days' notice between 
Christmas and New Year's Day. The days after the passage of the ICCTA 
presented many logistical challenges of their own. Fewer than half of 
the personnel who had worked for the ICC were retained by the Board. 
Yet, the case load remained heavy, and indeed increased in complexity 
and degree of challenge, particularly with the significant 
restructuring taking place in the rail industry and the focus of 
parties on testing the law in certain areas. We had to find ways to do 
more with less.
    We hit the ground running, and quickly became what I believe to be 
a model Federal agency. We were given many rulemaking deadlines in the 
ICCTA, and we met each and every one of them. We revamped the old ICC 
regulations to reflect the new law; we streamlined the regulations that 
remained relevant to make them work better; and we issued new 
regulations so that we could move cases to resolution more quickly. And 
we did move cases faster, and as a result have made great strides in 
clearing up the docket.
    Many of the cases that we have tackled at the Board--some of which 
had been pending at the ICC for many years, and some of which have been 
new--have been extremely difficult and controversial. But one of the 
messages that I have delivered to the Board's staff repeatedly is that 
parties that bring disputes to the Board want and should have the 
certainty of resolution and that we are here to make decisions in hard 
cases. Not everyone will like every decision we issue, but our job is 
to take the controversies that come our way, review the records 
carefully, and then put out decisions as expeditiously as possible that 
implement the law to the best of our ability. The competence of our 
staff and the integrity of our decisionmaking process are reflected in 
our record of success in court: since I became Chairman on March 24, 
1995, of the several hundred ICC and Board cases decided, 134 decisions 
have been challenged, and only 8 of those challenges were successful, 
with 19 not yet decided by the courts. Fair and expeditious case 
resolution and the certainty and stability that come from success on 
appeal will continue to be objectives of mine if I am confirmed for 
another term at the Board.
         the board's overall approach to its responsibilities 
                         under my chairmanship
    I believe that the Board under my leadership has been a model of 
``common sense government,'' promoting private-sector initiative and 
resolution where appropriate and undertaking vigilant government 
oversight and action where necessary. In many circumstances, private 
sector initiative can provide for better solutions because it can be 
tailored to the needs of the individual parties, can go beyond what 
government is able to do under the law and with its resources, and can 
create a dynamic in which all the parties to the initiative have been 
involved in its development and thus are invested in its success. And 
government can use its presence and its processes to encourage such 
results.
    The work of the Board exemplifies the balance of private-sector and 
government action. With regard to the rail crisis in the West, for 
example, the Board required substantial and unprecedented operational 
reporting, engaged in substantial operational monitoring, and 
redirected operations in a focused and constructive way. The Board was 
successful in working on an informal basis with affected shippers to 
resolve service problems, and it was careful not to take actions that 
might have helped some shippers or regions but inadvertently hurt 
others. And the Board proceeded in such a way as not to undermine, but 
rather to encourage, important private-sector initiatives that 
facilitated and were integral to service recovery, such as the 
unprecedented creation of the joint dispatching center near Houston, 
TX, and the significant upgrading of infrastructure.
    With the active encouragement of the Board, the National Grain and 
Feed Association and the Association of American Railroads recently 
reached groundbreaking agreements on issues of concern to agricultural 
shippers that provide dispute resolution procedures that are more 
tailored to the interests of both parties. These agreements will 
hopefully provide a model for other such carrier/customer agreements. 
Furthermore, the Board has attempted to move in the direction of 
private negotiation rather than government fiat as the way of resolving 
employee matters, a trend which I discuss later in my testimony.
    There are circumstances in which more direct government action is 
necessary, and in such situations, the Board has used its authority 
appropriately, creatively, and to the fullest extent in accordance with 
the law. For example, responding to the concerns of Members of this 
Committee, and in particular Chairman McCain and Senator Hutchison, we 
held extensive hearings on access and competition in the railroad 
industry, which resulted in a broad mix of private-sector and 
government initiatives, summarized in my letter to Senators McCain and 
Hutchison dated December 21, 1998 (December 21 letter). Those 
initiatives included the revision of the market dominance rules to 
eliminate product and geographic competition as considerations in rate 
cases and the adoption of formal rules providing for shipper access to 
a new carrier during periods of poor service. They also included the 
formal railroad/shipper customer service ``outreach'' forums (which I 
have attended) that are continuing to be held on a regular basis, and 
that have produced, for the first time, the public dissemination of 
performance data by the major railroads. And they included the 
unprecedented formal agreement between large and small railroads 
addressing certain access issues of concern to the smaller carriers and 
to various members of the shipping public, the implementation of which 
the Board will be closely monitoring.
    In individual cases brought to it, the Board has used its authority 
fully as well. For example, in a case in which Amtrak sought to carry 
certain types of non-passenger traffic, we interpreted the statute in 
such a way as to bring about a private agreement between Amtrak and 
individual freight railroads on the matter after the Board's decision 
was rendered. In railroad consolidation and construction proceedings, 
our process has encouraged private-sector solutions with respect to 
environmental and other issues, but where the private parties have been 
unable to reach resolution, the Board has imposed conditions to remedy 
the concerns expressed in a way that preserves the benefits of the 
transaction under consideration. And with respect to the ``bottleneck'' 
rate complaint cases (involving rates for a segment of a through 
movement that is served by a single carrier), while shipper parties 
argued that the Board should have gone farther in granting rate review, 
the Board's decisions do provide for rate relief where there is a 
contract for the non-bottleneck segment, based on a pragmatic reading 
of the statute that is being challenged in court by the railroads.
    I should note that there have been times when a more expansive 
reading of the statute by the Board has not been upheld. Of the handful 
of court cases that the Board has lost, one involved an abandonment in 
West Virginia that the Board disallowed in reliance on a broad view of 
the ``public interest''; another involved a labor case in which the 
court found that the Board acted beyond the scope of the law by 
interpreting the labor protection provisions of the ICCTA as covering 
too broad a class of employees of class II railroads.
    If confirmed, I will continue the theme of common sense government. 
I will continue to apply the Board's authority as necessary and 
appropriate, acting directly or promoting private-sector initiative.
                      rail mergers and competition
    One of the areas in which the Board has issued some high-profile 
decisions under my Chairmanship involves rail mergers. Some have said 
that rail mergers are inherently anti-competitive, that they cause 
service problems, and that we should be discouraging them. Although 
mergers and other changes in corporate structure have been going on in 
the rail industry for many years, I recognize that there has been 
substantial rail merger activity since the Staggers Rail Act of 1980 
was passed, reflecting what has been occurring throughout the Nation's 
economy. In 1976, there were, by our calculations, 30 independent 
``class I'' (larger railroad) systems; nine of those systems have since 
then dropped down to class II or III (smaller railroad) status because 
the revenue thresholds for class I status were raised substantially 
some years ago; two large carriers went into bankruptcy; and the 
remaining 19 systems have been reduced to 7 independent systems in the 
past 23 years. Not all of that has happened under my Chairmanship, nor 
has it occurred because the Board (or the ICC) has sought out mergers. 
When market conditions motivate two class I railroads to want to merge, 
our statute tells us to review the proposal presented to us, applying 
certain statutory standards, and to approve the merger if it is in the 
public interest.
    On the basis of the governing statute, under my Chairmanship of the 
ICC and the Board, four class I rail mergers have been approved. These 
mergers were not approved, however, without many significant Board-
imposed competitive and other conditions. The conditions in a variety 
of ways provide for substantial post-merger oversight and monitoring 
that permit us to stay on top of both competitive and operational 
issues that might arise. They provide for the protection of employees 
and the mitigation of environmental impacts, and our recent decisions 
provided for the compilation of a ``safety integration plan'' that 
draws on the resources of the Board, the Federal Railroad 
Administration, and the involved carriers and employees. And they 
assure that no shipper's service options were reduced to one-carrier 
service as a result of a merger.
    In varying degrees, these mergers have had the support of segments 
of the shipping public, as well as employees and various localities, 
and were considered by interested parties to be in the public interest. 
A variety of shippers actively supported the Burlington Northern/Santa 
Fe merger, the inherently procompetitive Conrail acquisition, and the 
recent Canadian National/ Illinois Central (CN/IC) merger. And the 
Union Pacific/Southern Pacific merger, which segments of the shipping 
community opposed while others supported it, was necessary, the Board 
believed, not only to prop up the failing Southern Pacific, but also to 
permit the development of a rail system in the West with enough of a 
presence to compete with the newly merged Burlington Northern/Santa Fe.
    Some say that, while each merger, reviewed individually, might seem 
acceptable, the cumulative effect is that the industry is now too 
concentrated, and so competition must be added throughout the industry 
to temper this new market power. As I have testified previously, in 
analyzing this premise, we must carefully review proposals intended to 
address it. We should want to make sure that the rail system will look 
the way we want it to look for now and for the future. We have to be 
sure about the mix of shippers that will be served, about the level of 
rates that will be charged and the service that will be provided, about 
the quality and extent of the infrastructure that will exist, and about 
the impact on employees, and that the result in those areas is what we 
want. As I have also testified before, as we examine proposals for 
change, we must be sure that we do not take actions that, while perhaps 
benefitting some shippers or regions, could hurt others in an 
unintended way. Of course, if I am confirmed, I will faithfully 
implement any changes to the law that Congress might adopt.
    In any event, the Board will continue its active oversight of rail 
service and the implementation of these four mergers. In approving 
these four mergers, the Board (and the ICC before that) concluded that, 
with all the conditions imposed, they would not diminish competition 
and in fact could enhance competition; would produce significant 
transportation benefits; and were otherwise in the public interest. The 
Board will continue to exercise its oversight authority in accordance 
with these objectives.
                      rail rate and service issues
    Since becoming Chairman of the ICC and then of the Board, I have 
tackled several important rail rate and service matters, and in this 
regard I believe that I have been responsive to shipper and other 
concerns in accordance with the law. In particular, I have been 
committed to resolving formal and informal shipper complaints 
expeditiously, clarifying applicable standards for resolution of formal 
complaints, and leveling the playing field to ensure that the formal 
process is not used simply to delay final resolution and that it 
encourages private-sector resolution where possible. I believe that my 
record reflects those objectives.
    With respect to rate matters, the Board has established deadlines, 
never before in place, and procedures to expedite the decisional 
process, and decisions resolving large rail rate complaints have 
refined the standards for developing the record in these cases. 
Furthermore, as I have already noted, we eliminated the product and 
geographic competition elements from the market dominance rules, and I 
feel confident that this action will be upheld by the court in the 
appeal brought by the railroads. The ``constrained market pricing'' 
(CMP) procedure for determining whether a rate is reasonable or not is 
now a well accepted way of measuring rate reasonableness for larger 
rate cases, and of the three large rail rate cases that have been 
decided by the Board, the shippers won two, while the defendant 
railroad won one. Some new large rate cases are pending, and several 
others have been settled without involvement of the Board.
    Although most parties agree to the use of CMP in major rate cases, 
not all agree as to how it should be applied. Thus, much debate over 
the past two years has centered on the Board's ``bottleneck'' decisions 
that I referenced earlier, which construed the statute as permitting 
challenges to bottleneck rates (as explained before, rates for a 
segment of a through movement that is served by a single carrier) only 
when the shipper has a contract over the non-bottleneck segment. The 
court reviewing the challenge to those decisions brought by the 
shippers--which sought a broader interpretation of the availability of 
bottleneck segment rate challenges--found that the Board had correctly 
interpreted the existing statute. With respect to the relief granted by 
the Board, the appeal of the bottleneck decisions brought by the 
railroads--in which the railroads are asking the court to require the 
Board to adopt a more narrow interpretation of the availability of 
bottleneck segment rate challenges--is still pending before the D.C. 
Circuit. Two bottleneck rate challenges pursuing the rate relief 
provided in the Board's bottleneck decisions are currently before the 
Board.
    The Board at the end of 1996 adopted simplified rules for small 
rail rate cases. However, no such cases have been brought to date under 
these rules. Concerns remain that those rules are still too complex. In 
my December 21 letter, I explained that the Board's rules reflect the 
statute and the standards that must be balanced, but I also recommended 
that Congress consider adopting a single benchmark test or some other 
simplified procedure for small rate cases to address those process 
concerns.
    On the matter of service, as I discussed previously, the Board 
applied its formal and informal powers judiciously in dealing with the 
recent rail service crisis in the West. And it is actively monitoring 
and dealing with service issues in the East in connection with the 
implementation of the Conrail acquisition. In addition, as I also have 
noted, we have adopted new rules that permit a shipper to obtain the 
services of an alternative railroad when service is poor. Those rules, 
which require prior consultation among all of the involved parties to 
ascertain whether the problem can be readily fixed by the ``incumbent'' 
carrier, and, if not, to make sure that the proposed service will solve 
the problem without creating new problems, have been invoked in three 
cases thus far. In one, the Board granted relief; in the other, the 
parties worked out their concerns privately before the Board acted; and 
the third case is still pending. I believe that the Board can fully 
address service disruptions.
                          rail employee issues
    Background. Under the law, the Board becomes involved in rail 
employee issues as a result of its approval of various types of rail 
transactions. Certain significant employee issues are raised by class I 
consolidations. When larger railroads consolidate, the individual 
collective bargaining agreements (CBAs) and protective arrangements 
into which the merging railroads earlier entered are not always 
compatible. The law that the Board administers provides for imposition 
of the so-called New York Dock conditions upon such transactions. The 
New York Dock conditions have their origins in the negotiated 
Washington Job Protection Agreement of 1936, which sets up the 
framework within which consolidations are to be carried out. New York 
Dock provides (1) substantive benefits for adversely affected employees 
(including moving and retraining allowances, and up to 6 years of wage 
protections for employees dismissed or displaced as a result of the 
consolidation), and (2) procedures under which carriers and employees 
are to bargain to effectuate changes to their CBAs if necessary to 
carry out the transaction, with resort to arbitration and, as a last 
resort, limited Board review if bargaining is not successful.
    When the parties go to arbitration, the arbitrator must make a 
determination in all areas of disagreement, including, the extent, if 
any, to which it is necessary to override a particular CBA where a 
change in a CBA is being proposed. In 1991, the Supreme Court confirmed 
that the law provides that agency approval of a consolidation overrides 
all other laws, including the carrier's obligations under a CBA, to the 
extent necessary to permit implementation of the approved transaction.
    Thus, among the issues that may come to arbitration are whether a 
particular CBA change is necessary to effectuate a transaction, and 
whether a particular transaction that implicates a CBA at issue is 
sufficiently connected to an approved transaction. Neither the 
arbitrator nor the Board can override ``rights, privileges, or 
benefits.'' And the Board's review of the often fact-bound decisions 
made by arbitrators chosen under the auspices of the National Mediation 
Board with substantial experience in labor law is based on a 
deferential standard of review.
    Labor Concerns. Certain employee interests have argued that the 
Board under my Chairmanship has stacked the deck against rail 
employees. They assert, for example: that the override of CBAs is 
purely an administrative remedy that the Board could readily reverse if 
only it chose to do so; that the Board has too broadly construed the 
``transactions'' pursuant to which a CBA may be overridden; that the 
Board has too broadly construed the ``necessity'' of an override of a 
CBA; and that the Board has too narrowly construed the rights, 
privileges and benefits that may not be abrogated. They have also 
argued that the Board has handled arbitration appeals in such a way as 
to favor management.
    I understand the concerns of rail labor about the law concerning 
CBA overrides. In fact, in my December 21 letter, I suggested that 
Congress consider addressing these issues through legislation. Where I 
disagree with the arguments made by labor in this area is not with 
their concerns about the wisdom and propriety of CBA overrides, but 
rather with their argument that CBA overrides were the Board's idea, 
that we have caused labor concerns in this area, and that we have gone 
out of our way to implement the law in a way that they term as ``anti-
labor.'' It is in this vein that I feel compelled to respond. 
Accordingly, I make the following points concerning how the agency has 
implemented the existing law under my Chairmanship.
    First, while I do understand the concerns of rail labor regarding 
CBA overrides, I do not view the override of a CBA as simply an 
administrative remedy that the Board could readily reverse if only it 
chose to do so. The 1991 Supreme Court decision (often referred to as 
the ``Dispatchers'' case, rendered before I arrived at the ICC) and 
other court decisions have made that clear. The Supreme Court pointed 
out that ``the consolidation provisions of the Act . . . were designed 
to promote `economy and efficiency in interstate transportation.''' 
Citing a 1939 Supreme Court opinion, it recognized that consolidations 
may result in dismissals and transfers, involving the loss of seniority 
rights. And the Court pointed out that it was for this reason that 
``the Act imposes a number of labor-protecting requirements to ensure 
that the Commission accommodates the interests of affected parties to 
the greatest extent possible.'' However, the Supreme Court found that, 
once the consolidation is approved and those labor protection 
requirements are met, the law ensures that obligations imposed by 
contracts such as CBAs, or by other laws such as the Railway Labor Act, 
``will not prevent the efficiencies of consolidation from being 
achieved.'' In short, given its view of the statutory scheme, the 
Supreme Court did not simply hold that the ICC had the ``discretion'' 
to decide whether to find that CBAs could ever be overridden, but 
rather stated that CBAs are to be overridden, when necessary to do so, 
because that is what the law and Congressional intent require. Thus, to 
change this overall approach and to prevent any override of a CBA would 
require a change in the law.
    Second, with respect to ``necessity,'' court precedent established 
in a 1993 D.C. Circuit decision (rendered before I came to the ICC), 
followed by another D.C. Circuit decision in 1994 reviewing a 1992 ICC 
decision, established that the necessity standard is met by a showing 
that override of the CBA is necessary to produce transaction-related 
transportation benefits beyond those resulting simply from the override 
itself. Moreover, the application of the standard of necessity was 
explicitly approved in a more recent D.C. Circuit decision, in which 
the court stated that it is ``obvious on its face'' that incompatible 
agreements for work crews would impede a consolidation and interfere 
with the ability of the merged carriers to offer ``reduced rates to 
shippers and ultimately to consumers.'' Thus, the discretion with 
regard to the determination of necessity has been shaped by court 
precedent, although in its ``Carmen III'' decision, discussed later, 
the Board limited what could be overridden in this regard. That 
unappealed decision is now binding on all arbitrators in addressing CBA 
override issues, although, of course, legislation could codify such 
limitations.
    Third, with respect to the transactions pursuant to which a CBA may 
be overridden, again court precedent in a 1994 D.C. Circuit decision 
(affirming an ICC decision voted on before I became a Commissioner) 
established that the test for determining a covered transaction is not 
based on the passage of time, but rather is based on a linkage to the 
original transaction. The court noted that carriers sometimes 
effectuate their consolidations gradually; that when employees are 
adversely affected in those instances, they are entitled to their 
substantial New York Dock protections; but that ``the passage of time 
does not diminish a causal connection.'' Again, the discretion to 
determine a covered transaction has been shaped by court precedent. A 
limit on covered transactions to a particular time period following 
approval of the underlying consolidation would need to be adopted 
through legislation.
    Fourth, with respect to the preservation of ``rights, privileges, 
and benefits,'' the Board did rule that they include benefits such as 
life insurance, hospitalization and medical care, sick leave, and so 
forth. At the same time, the Board ruled that, in accordance with prior 
court precedent arising out of review of ICC decisions issued before I 
came to the ICC, mergers of seniority districts could not be included 
as ``rights, privileges, and benefits.'' Indeed, the D.C. Circuit in a 
1997 decision upheld the Board's decision, finding that under this 
approach, ``the public interest in effectuating approved consolidations 
is ensured without any undue sacrifice of employee interests. In our 
view, this is exactly what was intended by Congress.'' Again, the 
determination of ``rights, privileges, and benefits'' was made in light 
of prior court precedent. Of course, what is not absolutely protected 
as ``rights, privileges and benefits'' could only be overridden if 
necessary to implement the approved transaction, subject to the 
limitations of the Carmen III decision discussed herein.
    With respect to arbitration, employee interests believe that 
railroads have the upper hand in the collective bargaining process, 
because of their perception that, during the 1980s, the ICC would 
always agree to break CBAs at the merging railroads' request whenever 
the issue was presented to it by way of an arbitration appeal. 
Therefore, their sense is that railroads have no incentive to bargain 
in good faith over implementing agreements. I understand that concern; 
it is my clear impression that, prior to 1985, more agreements were 
bargained, while during the next several years, more were imposed by 
arbitration.
    Agency Approach. Since I have been Chairman of the ICC and the 
Board, I have attempted to make the playing field more level in this 
entire area. As I have already noted, by the time I arrived at the ICC, 
court precedent in addition to the 1991 Supreme Court decision dealing 
with the override of CBAs had already established standards with 
respect to the definition of necessity and the standard for determining 
the necessary nexus to the approved transaction. Even given this 
precedent, the Board has worked to move away from the breaking of CBAs, 
has taken action to limit overrides in the decisions that it has 
rendered, and has encouraged private negotiation as a preferred way of 
resolving related issues.
    Indeed, in its landmark 1998 Carmen III decision already 
referenced, the Board specifically held that the authority of 
arbitrators to override CBAs is limited to that which was exercised by 
arbitrators during the years 1940-1980, a period marked by peaceful 
relationships between rail labor and rail management with regard to 
mergers. Responding to the concerns of rail labor that CBA overrides 
were more expansive starting in the 1980s, this decision thus restores 
the pre-1980 way of handling CBA overrides. In connection with its 
approval of the Conrail transaction and the CN/IC merger, the Board 
expressly confirmed, as requested by rail labor, that approval of a 
transaction did not indicate approval of any of the CBA overrides that 
the applicants may have indicated are necessary, and it admonished the 
carriers to bargain in good faith with their employees with respect to 
necessary changes to CBAs. I am aware that certain rail labor interests 
have cited an arbitration award by Arbitrator Fredenberger in 
connection with the Conrail transaction as evidence that the Carmen III 
decision was not favorable to employees because, while purporting to 
rely on Carmen III, he did not limit the override of a CBA accordingly. 
But I should note that, after the Fredenberger Award was appealed to 
the Board, the involved railroads reached an agreement with the 
Brotherhood of Maintenance of Way Employes (BMWE) and the International 
Association of Machinists and Aerospace Workers (IAM) rather than risk 
having the Board reverse the award. Thus, the matter was resolved 
through negotiation among the parties, and, as a result, the 
Fredenberger Award cannot be used as an indication of how the Board 
will implement its Carmen III decision.
    Moreover, while the Board has generally deferred to the expertise 
of arbitrators, it has reversed arbitrators' decisions or otherwise 
used the appeal process with favorable results for labor. In one case, 
the Board granted a United Transportation Union (UTU) appeal as it 
pertained to health benefits; in another arbitration appeal brought by 
a railroad, the Board supported the Transportation Communications 
International Union's position that dismissed employees do not forfeit 
their dismissal allowances if they refuse to accept a recall to work 
that would require them to relocate to a location that would require a 
change of residence. In other cases, the Board has stayed arbitration 
awards for the following reasons: to provide time for consideration of 
labor appeals (at the request of the American Train Dispatchers); or to 
provide time for the parties to negotiate further (at the request of 
UTU and the Brotherhood of Locomotive Engineers, in two related cases, 
and BMWE in another case). The disputes impacted by those stays were 
ultimately settled by the parties, except for the American Train 
Dispatchers case, which remains the subject of a stay at the union's 
request due to safety concerns. In another arbitration review case 
(involving BMWE and a smaller railroad), the Board issued three 
separate decisions favorable to labor.
    The Board has specifically placed emphasis on negotiation as the 
preferred way of resolving labor implementation matters, which is 
consistent with the tenor of the Railway Labor Act. In connection with 
the four mergers approved under my Chairmanship, many if not most 
employees were covered by negotiated rather than imposed agreements. 
Some employee interests have said that they have entered into 
unsatisfactory agreements only to avoid arbitrations that would have 
left them in even worse positions. But in connection with the recent 
Conrail transaction, the Board's action on appeal in staying the 
Fredenberger Award, referenced earlier, was credited by the 
representative of one of the major unions as ``enabling the parties to 
reach agreement.'' And in supporting for the first time ever a merger 
of two class I railroads in the recent CN/IC merger, the BMWE stated 
that the implementing agreement it negotiated with the applicants 
should serve as a guide as to how the New York Dock implementing 
process should work. Thus, the focus on leveling the playing field has 
resulted in negotiated agreements viewed more favorably by labor 
interests.
    Even in the face of court precedent on CBAs not favorable to rail 
labor's position, I believe that the Board under my Chairmanship has 
worked to move the disposition of these matters in what could be 
characterized as a more positive direction for rail employees. The 
Board's focus on narrowing what can be overridden by arbitrators in its 
Carmen III decision, the messages that it has sent in recent merger 
decisions regarding overrides, its use of stays in the arbitration 
appeals process, and its efforts to leave labor matters to private 
negotiation as much as possible, I believe, have all resulted in a more 
level playing field that has produced more privately negotiated 
agreements between labor and management than we have seen in recent 
memory. However, to ensure that this trend is secured, and that 
consolidations found to be in the public interest can be carried out 
with minimal disruption to all involved, legislation would be an 
appropriate way for Congress to reflect an interest in preserving CBAs 
and the wisdom in promoting private negotiation. As I have indicated 
before in my December 21 letter, I understand the concerns of labor 
regarding the existing law and court precedent on CBA overrides, and 
have indicated that legislative relief would be necessary to fully 
address these concerns.
                               conclusion
    Under my Chairmanship, the Board, pursuant to Congressional 
directive in eliminating the ICC, has been a model of doing more with 
less in a common sense way--of putting its limited resources to the 
most efficient use in handling its caseload expeditiously and resolving 
complex matters before it in an effective and responsible manner in 
accordance with the ICCTA. The Board has approached its work with 
fairness, balancing the many varied and often conflicting interests 
under the statute in reaching its decisions on the record.
    During the hearings before this Committee in the recent past, not 
all of the Members of the Committee have agreed with my position as to 
the law governing each of the several difficult issues that come before 
the Board. I have heard the concerns raised, I have understood them, 
and I have not ignored them. At the same time, I have made decisions 
that I believe have been appropriate based on the records compiled and 
the mandates of the existing law. There may be areas in which certain 
Members of this Committee would like to see legislative changes, and 
indeed I have recommended in my December 21 letter changes that 
Congress could consider, particularly with respect to small rail rate 
cases and rail labor matters. However, until the law is changed, I will 
continue to implement current law as I believe Congress intended, using 
my existing authority fully and fairly, in accordance with the goals of 
common sense government and the decisional directions that I have 
outlined. If confirmed, I look forward to continuing to work with the 
Committee, other Members of Congress, and all other interested parties 
as we tackle the many important transportation issues that confront us.
                                 ______
                                 
                      A. Biographical Information
    1. Name: (Include any former names or nick names used.) Morgan, 
Linda Joan.
    2. Position to which nominated: Member, Surface Transportation 
Board, with Presidential Redesignation as Chairman Once Confirmed.
    3. Date of nomination: August 5, 1999.
    4. Address: (List current place of residence and office addresses.)
    Residence:6206 Newburn Drive, Bethesda, MD 20816-1134;
    Office: Surface Transportation Board, 1925 K Street, N.W., 
Washington, D.C. 20423.
    5. Date and place of birth: May 19, 1952, in Chester County, PA.
    6. Marital status: (Include maiden name of wife or husband's name.) 
Married to Michael E. Karam.
    7. Names and ages of children: (Include stepchildren and children 
from previous marriages.) Meredith Lyn Morgan Karam, 14 years old.
    8. Education: (List secondary and higher education institutions, 
dates attended, degree received and date degree granted.) Harvard 
University's John F. Kennedy School of Government, August 1991, Program 
for Senior Managers in Government; Georgetown University Law Center, 8/
73-5/76, JD; Vassar College, 9/69-5/73, AB, Hispanic Studies; and The 
Sidwell Friends School, 5/59-6/69, High School Diploma.
    9. Employment record: (List all jobs held since college, including 
the title or description of job, name of employer, location of work, 
and dates of employment.) l/96-present, Chairman, Surface 
Transportation Board; 4/94-1 2/95, Member, Vice Chairman, and Chairman, 
Interstate Commerce Commission; 1/87-4/94, U.S. Senate Committee on 
Commerce, Science, and Transportation, General Counsel; 10/78-12/86, 
U.S. Senate Committee on Commerce, Science; and Transportation, 
Democratic Staff Counsel; 9/76-10/78, Welch & Morgan, Attorney/
Associate; 6/74-1/76, Georgetown University Law Center, Research 
Assistant for Professor of Administrative and Antitrust Law, and 
Tutorial Program Coordinator and Student Assistant, Office of the Dean; 
and Summer of 1974 and 1975, Bowl America, Part Time Administrative 
Work (5-10 hours/week).
    10. Government experience: (List any advisory, consultative, 
honorary or other part-time service or positions with Federal, State, 
or local governments, other than those listed above.) None.
    11. Business relationships: (List all positions held as an officer, 
director, trustee, partner, proprietor, agent, representative, or 
consultant of any corporation, company, firm, partnership, or other 
business enterprise, educational or other institution.) None.
    12. Memberships: (List all memberships and offices held in 
professional, fraternal, scholarly, civic, business, charitable and 
other organizations.) Civic: President, Board of Directors, Sumner 
Square Condominium, 1982-85, elected but nonpaying position which 
involved operating the condominium and interacting with local 
governmental entities on issues of importance to the community.
    Co-President and Co-Vice President, Board of Directors, Wood Acres 
Citizens Association, 1990-92, elected but nonpaying positions which 
involved coordination of neighborhood activities and interaction with 
local governmental entities on issues of importance to the 
neighborhood.
    In addition, I have held various volunteer positions in connection 
with my daughter's school, and before that with the Senate Day Care 
Center.
    Professional: Member, D.C. Bar; Member, Women's Bar Association; 
Member, American Bar Association; Member, Women's Transportation 
Seminar.
    Other: At various times throughout the last 30 years, I have served 
in various alumni fundraising positions for my high school, college, 
and law school.
    13. Political affiliations and activities:
    (a) List all offices with a political party which you have held or 
any public office for which you have been a candidate.
    (a) None.
    (b) List all memberships and offices held in and services rendered 
to all political parties or election committees during the last 10 
years.
    I have been a registered Democrat all my adult life.
    (c) Itemize all political contributions to any individual, campaign 
organization, political party, political action committee, or similar 
entity of $500 or more for the past 10 years.
Linda J. Morgan
5/97 Citizens Committee for Ernest F. Hollings $1,000
8/98 Citizens Committee for Ernest F. Hollings $1,000
Michael E. Karam
9/98 Citizens Committee for Ernest F. Hollings $1,000
9/98 Citizens for a Competitive America $1,000
Joint Checking Account Contributions
11/92Democratic National Committee Federal Account $1,000
10/95Democratic National Committee Federal Account $5,000
10/98Citizens for a Competitive America $5,000
    14. Honors and awards: (List all scholarships, fellowships, 
honorary degrees, honorary society memberships, military medals and any 
other special recognitions for outstanding service or achievements.) 
Georgetown University Law Center Alumna of the Year Award, 1999; 
Women's Transportation Seminar's Woman of the Year Award, 1998; One of 
The Washington Post's Five People in Business to Watch in 1998; 
Cooperstown Conference Award for Contributions to the Rail Sector, 
1994; One of the Outstanding Young Women in America, 1980; Georgetown 
University Law Center Award for Most Outstanding Student Contribution, 
1976; Athlete of the Year/President of the Student Athletic 
Association, Vassar College, 1972-1973, and Cum Laude Graduate, Sidwell 
Friends School, 1969.
    15. Published writings: (List the titles, publishers, and dates of 
books, articles, reports, or other published materials which you have 
written.) None. During law school, in my capacity as a Research 
Assistant to a professor, I did research for, and worked on draft parts 
of, articles on administrative and antitrust law that were later 
published under his name. In my staff positions with the Senate 
Commerce Committee, I worked on statements and articles submitted by 
Members whom I staffed. During my service at the ICC and more recently 
at the Board, I have issued several commenting opinions in decisions on 
which I have voted, and I have submitted two letters to the editor in 
my capacity as Chairman of the Board--one on the computer advancements 
at the Board and the other clarifying the Board's actions in dealing 
with the recent rail service problems in the West and the recent 
acquisition of Conrail in the East.
    16. Speeches: Provide the Committee with two copies of any formal 
speeches you have delivered during the last 5 years which you have 
copies of on topics relevant to the position for which you have been 
nominated. During my tenure at the ICC and the Board, I have given 
numerous speeches. I write my own speeches and talk primarily from my 
notes, and I do not put my speeches on the Board's web site nor do I 
formally or widely circulate them. Also during my tenure at the ICC and 
the Board, I have presented statements at oral arguments and voting 
conferences. In addition, I have submitted formal written testimony to 
Committees in both the Senate and the House during this period, and as 
referenced in the previous question, I have voted on numerous decisions 
and have submitted commenting opinions in certain of them.
    17. Selection:
    (a) Do you know why you were chosen for this nomination by the 
President?
    I was President Clinton's first nominee to the ICC. He then 
designated me as ICC Chairman, in which capacity I managed the closure 
of the ICC in accordance with his directive and that of Congress. I was 
designated by the President as Chairman of the Board, the ICC's smaller 
successor, in which capacity I have managed the agency during a period 
of dramatic change in the rail industry. Throughout my time at the ICC 
and the Board, I have remained committed to this Administration's 
articulated goal of common sense government.
    (b) What do.you believe in your background or employment experience 
affirmatively qualifies you for this particular appointment?
    My 15 years in various staff counsel positions with the Senate 
Commerce Committee, including staff responsibility for many relevant 
surface transportation issues, and my 5 years at the ICC and the Board, 
particularly as Chairman, clearly provide me with the necessary 
qualifications for this particular appointment.
                   b. future employment relationships
    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate? Not applicable.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? Not applicable.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.
                   c. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers. None.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None of which I am 
aware.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated? None.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy. As staff counsel 
to the Senate Commerce Committee, I was involved of necessity in the 
passage of legislation. During my 5 years at the ICC and the Board, I 
have been called upon by Members of Congress for my expertise and 
counsel, including testimony before relevant Congressional Committees, 
related to the legislation that eliminated the ICC and created the 
Board, bills reauthorizing the Board and providing appropriations, and 
proposals to amend the law that the Board implements. And as a Member 
and Chairman of the ICC and the Board, I have necessarily been involved 
in the administration and execution of law and public policy.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.) During 
the 5 years that I have served at the ICC and the Board, I have 
conducted myself with the utmost integrity. I would continue to 
approach my work in that way. If there are any conflicts of interest 
that might prevent me from performing my adjudicatory responsibilities 
impartially and ethically, I will recuse myself from deliberations on 
any matters that would be so affected.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes.
                            d. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a compliant to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details? No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination.
    I am not aware of anything else in this regard that should be 
considered in connection with my nomination.
                     e. relationship with committee
    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.
                  f. general qualifications and views
    1. Please describe how your previous professional experience and 
education qualifies you for the position for which you have been 
nominated. My legal education, my 15 years in various staff counsel 
positions with the Senate Commerce Committee, including staff 
responsibility for many relevant surface transportation issues, and my 
5 years at the ICC and the Board, particularly as Chairman, all provide 
the qualifications necessary for the position for which I have been 
nominated.
    2. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? None that I can think of. Given the many 
challenges that I have faced during my 5 years at the ICC and the 
Board, I believe that I have acquired and honed the skills necessary to 
successfully carry out the position for which I have been nominated.
    3. Why do you wish to serve in the position for which you have been 
nominated? I have spent 20 years in public service, and continue to 
believe that public service is an honorable profession and one in which 
I can continue to contribute in a positive way. In addition, I would 
like the opportunity to continue to advance the positive initiatives 
that I have undertaken during my 5 years at the ICC and the Board 
particularly with respect to the furtherance of both common sense 
government and the appropriate balance among the interests of the 
various constituencies associated with the rail sector. Given the 
dramatic changes that have taken place in recent years particularly in 
that sector, a steady, conscientious, attentive and common sense 
regulatory hand at the helm of the Board is critical, and I believe 
that I can provide the needed leadership to that end.
    4. What goals have you established for your first two years in this 
position, if confirmed? During my last 5 years at the ICC and the 
Board, I have been committed to common sense government. Two goals for 
the next two years relate to that objective. One is to continue to 
strive for efficient, expeditious and fair decisionmaking, and the 
rendering of decisions that withstand judicial challenge. The other is 
to continue to strive for the appropriate balance between private 
sector initiative and resolution and governmental oversight and action. 
Both goals would continue to be pursued in the context of the spirit of 
the law that the Board implements.
    I also want to continue to foster improved and more productive 
relationships among rail shippers, rail carriers, rail employees and 
other affected interests. Under my chairmanship, for example, the Board 
has taken several initiatives to improve commercial communication 
between railroads and their customers, to establish better mechanisms 
for dispute resolution between railroads and their customers whether at 
the Board or privately, to ensure more balanced dealings between larger 
and smaller railroads, to promote private-sector negotiation of 
employee concerns, and to further safety and the environmental 
interests of state and local communities. In accordance with the law, 
if confirmed I would be committed to continuing the positive momentum 
begun by those initiatives.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary. As 
my record over the last 5 years at the ICC and the Board reflects, I 
believe that government as a general rule should facilitate appropriate 
market-based initiatives and private-sector solutions to problems, 
intervening when the private sector is unable to provide a suitable 
resolution. The Board is principally an adjudicatory agency, and 
therefore, many of the cases that we handle either must come to us 
before certain market-based commercial transactions can be effectuated, 
or they involve situations where private-sector resolution has not 
proven possible. Nevertheless, even within the framework of the Board's 
mission, there are ways in which private-sector initiative and 
resolution can and should be encouraged and promoted. Private-sector 
initiative can provide for better solutions because it can be tailored 
to the needs of the involved parties, can go beyond what government is 
able to do under the law, and can create a dynamic in which all the 
parties to the initiative have been involved in its development and 
thus are invested in its success.
    As an example, during the western rail service emergency of 1997 
and 1999, the Board required substantial reporting and conducted 
significant oversight, but it intervened operationally in a focused and 
restrained way, allowing the involved railroads, with the active 
involvement of employees, to work as much as possible through their 
operational issues themselves. The Board's restraint, in my view, 
permitted a more rapid and comprehensive service recovery than the 
Government could have produced through more direct and expansive 
intervention.
    As another example, several legal issues arose in connection with 
the recent Conrail transaction. Although the Board promptly and fairly 
resolved all questions that remained before it, as it has done in other 
cases the Board strongly encouraged the acquiring railroads to enter 
into privately negotiated settlements that advanced competition and 
resolved labor and environmental issues. I believe that the agreements 
that were worked out in response to the Board's prodding were superior 
to those that the Government could have imposed under the law.
    Finally, various interests that appear before the Board have, with 
the Board's strong encouragement, entered into private-sector dispute 
resolution programs. The large railroads have reached a ``Railroad 
Industry Agreement'' with their smaller railroad connections, and the 
railroads and the National Grain and Feed Association have entered into 
agreements under which certain disputes are to be resolved through 
mandatory arbitration. These industry-wide agreements can provide 
effective means by which parties can resolve their differences in the 
private sector without any governmental involvement.
    On the other hand, there are circumstances when the marketplace is 
imperfect and where the playing field is not level. It is in these 
situations that government intervention is necessary, to ensure that 
disputes can be resolved fairly and that the interests of all involved 
can be appropriately balanced.
    Accordingly, when it has been involved with dispute resolution, the 
Board, I believe, has been vigilant in implementing the law fairly and 
expeditiously. For example, the Board has been committed to moving rail 
rate complaints to resolution, issuing deadlines and simplified 
procedures for various cases. Where rail rates are reasonable, the 
Board has allowed them to stand, but where they are not, the Board has 
set them aside and afforded shippers full relief. While concern has 
been raised that the Board's rail ``bottleneck'' rate decisions did not 
go far enough to protect shippers, I do believe that the Board's 
decisions were creative in providing certain bottleneck rate regulatory 
relief within the confines of existing law. The Board has focused on 
leveling the playing field by eliminating product and geographic 
competition from ``market dominance'' rules that apply to maximum rate 
cases. And it has promulgated specific regulations dealing with 
situations involving inadequate rail service.
    The record of the ICC and the Board under my leadership, I believe, 
clearly stands as a model of good government. If the marketplace and 
the private sector are able to achieve the public interest goals 
reflected in a particular governmental program, then those goals are 
better met without governmental involvement. At the same time, if the 
marketplace is imperfect, then governmental action is appropriate in 
accordance with the policies established in the applicable law.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives. The Board 
is responsible for economic regulatory oversight of surface 
transportation in accordance with the laws that it implements. It is 
principally an adjudicative body that resolves disputes and handles 
other matters, based largely on a written record, to advance the 
policies embodied in the law. Its responsibilities involve primarily 
rail issues, although it has certain other responsibilities relating to 
motor carriers, pipelines, and noncontiguous domestic water trade.
    In carrying out its regulatory responsibilities, the Board must act 
independently and balance many oftentimes competing public interest 
objectives, reflected in the law, that involve carriers, shippers, 
employees, state and local communities, and other affected interests. 
The decisions that the Board issues are often controversial, but one of 
our most important missions, I believe, is to tackle the hard cases and 
move them to resolution.
    7. In reference to question number six, what forces are likely to 
result in changes to the mission of this agency over the coming five 
years? There continues to be strong support for retaining an 
independent forum in the form of the Board to adjudicate the matters 
now brought to it. Any changes relating to the Board and its mission 
would likely come by way of substantive changes to the law that the 
Board implements, particularly with respect to railroads. Certain of 
the changes being proposed raise fundamental questions about the 
current law. These proposed changes principally reflect a view that the 
current regulatory scheme does not provide for the appropriate balance 
among the interests of the carriers, shippers and employees. Certain 
parties have expressed the position that, particularly in view of the 
recent consolidations in the rail industry, there is not enough rail-
to-rail competition and thus that rates are not as low as they could be 
and service is not as good as it should be. In addition, concern has 
been expressed that those aggrieved by what they perceive to be 
inadequate service or unreasonably high rates do not always have real 
and sufficient access to regulatory relief. And rail employees have 
expressed the view that, in the context of railroad consolidations, 
their rights with respect to collective bargaining agreements are not 
protected as fully as they should be. The parties that have expressed 
these concerns have sought legislative changes that would alter the law 
that the Board implements and that could accordingly change the Board's 
mission.
    8. In further reference to question number six, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
board/commission and why? Notwithstanding the questions that have been 
raised about what the Board's mission should be, and despite the 
Board's more limited resources, I believe that the Board has fulfilled 
the mission reflected in the law that it implements. With strong 
leadership and focus, the Board should continue to be able to pursue 
this mission. However, the Board continues to be faced with uncertainty 
and controversy surrounding its reauthorization, its mission and the 
law that it implements. Depending on the Board's membership and 
leadership, this uncertainty and controversy can have a negative impact 
on the Board's ability to function. As long as the Board is not 
reauthorized and the law remains at issue, the Board will be challenged 
to continue to make decisions fairly and independently, even in the 
face of political uncertainty. Additionally, if the debates about the 
law persist indefinitely, the Board will continue to be challenged to 
focus on what it believes its mission to be as reflected in the law, 
despite a variety of divergent messages from individual Members of 
Congress. Finally, this debate, if left unresolved, could challenge the 
Board with more regulatory contention reflected in cases brought to the 
Board, as parties try to argue their view of policy before the Board 
while the Board's mission is still being debated in Congress. In 
general, the Board will continue to be challenged to adjudicate matters 
independently and on the written record in a manner that reflects what 
it believes Congress intended with the current law until Congress 
affirmatively and clearly expresses its position on the various 
legislative issues that have been raised.
    9. In further reference to question number six, what factors in 
your opinion have kept the board/commission from achieving its missions 
over the past several years? As I have already indicated, I believe 
that, even with limited resources and in the face of much pressure, 
controversy, and disagreement among certain Members of Congress as to 
its mission, the Board has been able to achieve the objectives 
reflected in the existing law that it implements.
    10. Who are the stakeholders in the work of this agency? The 
stakeholders cut across a broad spectrum of our Nation's economy. They 
include shippers, carriers, employees, and communities and individuals 
throughout the country. They also include Congress, as well as the 
Administration and other Federal agencies.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question number ten. 
Obviously, the policies that the Board implements and the individual 
decisions that it issues will affect the various stakeholders. But all 
of the stakeholders have a right to influence those policies and 
decisions by participating formally in any proceeding before the Board. 
The Board typically decides matters based on the entire written record 
before it and must not be partial to any one stakeholder. With 
particular respect to the Administration, the Board as an independent 
agency must be careful to afford Administration representatives 
appropriate regard as parties along with the other parties. With 
respect to Congress, the Board, as a creation of Congress, must be 
prepared to explain its actions in the context of the law that the 
Board implements, but it also must consider Congressional views on 
pending matters in the same manner as it considers the views of other 
parties.
    12. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you? I believe in a team 
and consensus building approach to reaching decisions. Thus, in my 4 
years as Chairman of the ICC and then of the Board, and before that as 
General Counsel for the Senate Commerce Committee, I have been 
committed to seeking out the views of involved staff and have worked at 
coming to a final resolution that reflects those views as much as 
possible. While my management style is one of mutual respect for a 
divergence of views, equality among employees in their importance to 
the finished product, and expansive inclusion during the deliberative 
process, I also feel strongly that deliberations must be brought to a 
conclusion, decisions must be rendered expeditiously, and the one who 
is in charge has ultimate responsibility to make the necessary 
decisions and must assume that responsibility fully. No employee 
complaints have been brought against me personally; in fact, I believe 
that you would find that those who have worked for me and with me would 
comment favorably on their experience.
    13. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe. During my 15 years in various staff 
counsel positions with the Senate Commerce Committee, I developed an 
appreciation for having a good working relationship with Congress and 
believe that during my 5 years at the ICC and the Board I have built on 
my experience and have developed a good working relationship with 
Congress.
    14. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your board/commission 
comply with the spirit of the laws passed by Congress. During my 5 
years at the ICC and the Board, I have strived to ensure that my 
decisions and the Board's decisions are in compliance with the spirit 
of the laws that the agency implements. While I recognize that there 
have been legitimate differences of opinion in this regard, they are 
just that, and I do believe that no one could reasonably disagree with 
the good faith efforts and commitment to uphold the spirit of the law 
that the Board has shown, which is confirmed by the success experienced 
by the ICC and the Board in having their decisions upheld by the 
courts. I will continue to be committed to this end if confirmed for 
another term.
    15. In the areas under the board/commission jurisdiction, what 
legislative action(s) should Congress consider as priorities? Please 
state your personal views. Congress must consider reauthorizing the 
Board as a priority. The Board was affirmatively created by Congress 
and needed to be reauthorized last year. The Board has implemented the 
law as Congress intended in creating the Board; has tackled many 
difficult issues with fairness, professionalism, and resolve; has been 
a model of good government; and continues to perform an important 
function. The uncertainty associated with not having a reauthorization 
can have a negative impact on the retention of qualified staff, and on 
the decision-making process. Apart from the reauthorization issue, 
there are pending proposals to amend the law that the Board implements. 
I believe that it is important for Congress to decide on these 
proposals, sooner rather than later, one way or the other so as to 
provide the needed certainty and predictability for the Board and the 
transportation community with respect to the regulatory rules of the 
road for the future.
    16. Please discuss your views on the appropriate relationship 
between a voting member of an independent board or commission and the 
wishes of a particular president. A Board member is an independent 
adjudicator and must make decisions in pending matters based on the 
record and free of bias or political influence from any quarter. At the 
same time, there are certain general good government policies, such as 
the streamlining of governmental processes, that an independent Board 
can and should pursue voluntarily in accordance with Administration 
policy.

    Senator Hutchison. Yes. I would like to ask each one to 
give opening statements first up to 5 minutes. And then we will 
open it for questions.
    So, Mr. Frazier.

 STATEMENT OF MICHAEL J. FRAZIER, NOMINEE, ASSISTANT SECRETARY 
  FOR GOVERNMENTAL AFFAIRS, U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Frazier. Thank you, Madame Chairwoman and members of 
the committee. It is an honor to appear before you today as you 
consider my nomination to be Assistant Secretary for 
Governmental Affairs of the Department of transportation.
    I am pleased that Secretary Slater has recommended me to 
President Clinton for this position and that the President has 
sent my nomination forward to this committee. I am deeply 
honored to serve President Clinton and am gratified to serve 
the American people.
    Let me take a moment to express my deepest appreciation to 
Senator Kennedy, not only for his gracious introduction but 
also for his invaluable support for the past two decades. He 
has taught me to believe in the principle, ``To whom much is 
given, much is required.''
    From the time Senator Kennedy invited me to join his staff 
in 1985 as a legislative assistant until my departure in 1992, 
he reminded me that those who serve the American public at the 
highest levels have a special obligation to preserve the values 
of this country and to advance the goals of truth, integrity, 
justice and responsibility for all Americans. I will not forget 
his kindness nor his support.
    Senator Kennedy, I thank you.
    Also, let me take the opportunity to introduce my mother, 
Mrs. Christine Cooper, who has been an indomitable source of 
strength, inspiration and support all of my life. I have asked 
her here today because it is an honor to my family, as well as 
myself, to be considered for this office.
    I am also accompanied today by several of my dearest 
friends from Pennsylvania, as well as from here in Washington, 
D.C. I have no doubt that they will help me to ensure that I 
honor my commitment to this committee, to the President and to 
Secretary Slater to deliver honest, dedicated, compassionate 
and efficient service to the American people during the balance 
of this administration.
    Madame Chairwoman, as you know, the Department of 
Transportation has enormous responsibilities that touch the 
fabric of American life. Indeed, the Department must strive to 
ensure that American citizens can travel the nation's transit, 
waterways, highways, railways and air routes into the next 
millennium with confidence, efficiency and safety; that 
businesses can transport their products to domestic and 
international destinations in a manner that promotes economic 
development and fiscal responsibility; that the Nation will 
invest in transportation infrastructure and technology to 
maintain the United States at the pinnacle of international 
economic leadership for generations to come; that state and 
local governments can rely upon the Department of 
Transportation for guidance, leadership and responsiveness to 
the individual local needs; and that the American public can 
rest assured that American transportation policy during this 
administration will reflect our national commitment to hold our 
environment in trust for our children and the generations who 
follow them.
    During my brief tenure with the Department of 
Transportation, I have been impressed by Secretary Slater's 
dedication to ensuring that transportation services are 
delivered to the American people in a safe, efficient and 
responsible manner, recognizing that these objectives may only 
be accomplished by the interplay between public and private 
partnerships, between national and local governments, and by 
the interdependence of the executive and legislative branches 
of the Federal Government.
    If confirmed as Assistant Secretary for Governmental 
Affairs, I would welcome the responsibility of assisting 
Secretary Slater in achieving those objectives.
    Indeed, in nearly 10 years of working on Capitol Hill, 
initially with Senator Kennedy and later as chief of staff to 
Senator Moseley-Braun, I learned to appreciate the need for a 
close working relationship between the public and private 
sectors, the various levels of government, between the White 
House and the Congress and, as I learned more recently, 
especially between the Department of Transportation and this 
committee.
    Moreover, I offer to you, Madame Chairwoman, my solemn 
commitment to work closely with this committee in an open, 
frank and collegial manner to carry out the transportation 
policies of this nation for the benefit of your constituents 
and the American people as a whole.
    For these reasons, if I am confirmed, I am confident that 
my service to this country will honor the decisions of the 
President, Secretary Slater and the U.S. Senate to the best of 
my abilities during the balance of this administration.
    Madame Chairwoman, I thank you and the committee for your 
time today. If I might aid your deliberations by responding to 
any questions you might have, I am happy to do so.
    Thank you.
    [The prepared statement and Biographical Information of Mr. 
Frazier follow:]

Prepared Statement of Michael J. Frazier, Nominee, Assistant Secretary 
       for Government Affairs, U.S. Department of Transportation
    Thank you, Madame Chairwoman and Members of the Committee. It is an 
honor to appear before you today as you consider my nomination to be 
Assistant Secretary for Governmental Affairs of the Department of 
Transportation. I am pleased that Secretary Slater has recommended me 
to President Clinton for this position, and that the President has sent 
my nomination forward to this Committee. I am deeply honored to serve 
President Clinton and I am gratified to serve the American people.
    Let me take a moment to express my deepest appreciation to Senator 
Kennedy-not only for his gracious introduction, but also, for his 
invaluable support for the past two decades. He has taught me to 
believe in the principle: ``To whom much is given, much is required.'' 
From the time Senator Kennedy invited me to join his staff in 1985 as a 
legislative assistant, until my departure in 1992, he reminded me that 
those who serve the American public at the highest levels have a 
special obligation to preserve the values of this country, and to 
advance the goals of truth, integrity, justice and responsibility for 
all Americans. I will not forget his kindness, nor his support. Senator 
Kennedy, I thank you.
    Also, let me take the opportunity to introduce my mother, Mrs. 
Christine Cooper, who has been an indomitable source of strength, 
inspiration and support all of my life. I have asked her here today 
because it is an honor to my family, as well as myself, to be 
considered for this office. I am also accompanied today by several of 
my dearest friends from Pennsylvania as well as from here in 
Washington, D.C. I have no doubt that they will help me to ensure that 
I honor my commitment to this Committee, to the President and to 
Secretary Slater to deliver honest, dedicated, compassionate and 
efficient service to the American people during the balance of this 
Administration.
    Madame Chairwoman, as you know, the Department of Transportation 
has enormous responsibilities that touch the fabric of American life. 
Indeed, the Department must strive to ensure that American citizens can 
travel the Nation's transit, waterways, highways, railways and air 
routes into the next millennium with confidence, efficiency and safety; 
that businesses can transport their products to domestic and 
international destinations in a manner that promotes economic 
development and fiscal responsibility; that the Nation will invest in 
transportation infrastructure and technology to maintain the United 
States at the pinnacle of international economic leadership for 
generations to come; that State and local governments can rely upon the 
Department of Transportation for guidance, leadership and 
responsiveness to their individual local needs; and that the American 
public can rest assured that American transportation policy during this 
Administration will reflect our national commitment to hold our 
environment in trust for our children and the generations who follow 
them.
    During my brief tenure with the Department of Transportation, I 
have been impressed by Secretary Slater's dedication to ensuring that 
transportation services are delivered to the American people in a safe, 
efficient and responsible manner, recognizing that these objectives may 
only be accomplished by the interplay between public and private 
partnerships, between national and local governments, and by the 
interdependence of the Executive and Legislative Branches of Federal 
Government. If confirmed as Assistant Secretary for Governmental 
Affairs, I would welcome the responsibility of assisting Secretary 
Slater in achieving those objectives. Indeed, in nearly ten years of 
working on Capitol Hill, initially with Senator Kennedy and later as 
Chief of Staff to Senator Moseley-Braun, I learned to appreciate the 
need for a close working relationship between the public and private 
sectors, the various levels of government, between the White House and 
the Congress, and--as I learned more recently--especially between the 
Department of Transportation and this Committee.
    Moreover, I offer to you, Madame Chairwoman, my solemn commitment 
to work closely with this Committee in an open, frank and collegial 
manner to carry out the transportation policies of this Nation for the 
benefit of your constituents and the American people as a whole. For 
these reasons, if I am confirmed, I am confident that my service to 
this Country will honor the decisions of the President, Secretary 
Slater and this Committee, to the best of my abilities, during the 
balance of this Administration. Madame Chairwoman, I thank you and the 
Committee for your time today. If I might aid your deliberations by 
responding to any questions you might have, I am happy to do so.
                                 ______
                                 
                      A. BIOGRAPHICAL INFORMATION
    1. Name: Michael James Frazier
    2. Position to which nominated: Assistant Secretary for 
Governmental Affairs United States Department of Transportation
    3. Date of nomination: August 3, 1999
    4. Address: Residence: 7620 Old Georgetown Road, #117 Bethesda, 
Maryland, 20814. Office: 400 7th Street, S.W., Room 10408 Washington, 
D.C., 20590
    5. Date and place of birth: August 3, 1956 Somerset, Pennsylvania
    6. Marital status: Divorced
    7. Names and ages of children: None
    8. Education: Central Connecticut State College, 1976-1979 Bachelor 
of Arts, Political Science, May 1979
    9. Employment record: Perry-White Associates, Computer Personnel 
Placement Service, Waltham, Massachusetts, June, 1979 - December, 1979; 
Kennedy for president, 1980 Field Organizer, Washington, D.C., 
December, 1979 - August, 1980; Carter/Mondale for President, 1980, 
Field Organizer, Washington, D.C., August, 1980 - November, 1980; 
Office of the Mayor, Special Assistant, Washington, D.C., February, 
1981 - March, 1982; Marion Barry for Mayor Campaign, Field Organizer, 
Washington, D.C., March, 1982 - November, 1982; Mondale for President, 
1984, Advance/Field Organizer, Washington, D.C., February, 1983 - 
November, 1984; Fund for a Democratic Majority, Political Action 
Committee, Field Organizer, Washington, D.C., January, 1985 - July, 
1985; United States Senate, Office of Senator Edward M. Kennedy, 
Legislative Assistant, Washington, D.C., July, 1985 - January, 1993; 
United States Senate, Office of Senator Carol Moseley-Braun, Chief of 
Staff, Washington, D.C., January, 1993 - December, 1993; United States 
Department of Commerce, Consultant/Office of the Secretary, Washington, 
D.C.; January 1994 - December 1994; United States Department of 
Commerce, Deputy Assistant Secretary for Intergovernmental Affairs, 
Washington, D.C., January, 1995 - June, 1998; L.Clinton/Gore 1996 
General Campaign, State Director, Pennsylvania, August, 1996 - 
November, 1996; United States Department of Transportation, Deputy 
Assistant Secretary for Governmental Affairs, Washington, D.C., June, 
1998 - present.
    10. Government experience: Mayor Sharon Pratt Kelly Transition Team 
Transition Team Leader, Washington, D.C., November, 1990 - January, 
1991.
    11. Business relationships: None.
    12. Memberships: None.
    13. Political affiliations and activities:
    (a) List all offices with a political party which you have held or 
any public office for which you have been a candidate.None
    (b) List all memberships and offices held in and services rendered 
to all political parties or election committees during the last 10 
years. Clinton/Gore 1996 Campaign, State Director/Pennsylvania, August, 
1996 - November, 1996.
    (c) Itemize all political contributions to any individual, campaign 
orqanization, political party, political action committee, or similar 
entity of $500 or more for the past 10 years. None.
    14. Honors and awards: None.
    15. Published writings: None.
    16. Speeches: None.
    17. Selection:
    A. I believe I have been chosen for this position because of my 
service in the Clinton Administration since 1994. I also believe that I 
have proven my capabilities to Secretary Rodney Slater since joining 
the Department of Transportation in June of 1998. I am most 
appreciative of this recognition, and if confirmed, I will do 
everything in my power to justify the confidence shown in me.
    B. I believe my staff experience with two United States Senators 
from 1985 through 1993, as well as my tenure as Deputy Assistant 
Secretary at both the Transportation and Commerce Departments have 
served to prepare me well for the position for which I have been 
nominated.
                   b. future employment relationships
    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate? Yes.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? None.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? If confirmed, 
I would hope to serve until the end of this Administration.
                   c. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers. None.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated? None.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy. As legislative 
assistant to Senator Kennedy, I worked on a wide variety of issues. I 
worked specifically on the Fair Housing Act of 1989 and the Americans 
with Disabilities Act. While here at the Department of Transportation 
and serving in an acting capacity since December of 1998, I have worked 
on legislation concerning DOT FY 2000 appropriations, FAA 
reauthorization, motor carrier safety, rail safety, and various other 
legislative matters.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. Please refer to the Deputy General Counsel opinion letter.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes.
                            d. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a compliant to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details? No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination. None.
                     e. relationship with committee
    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes, to the 
best of my ability.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Please explain how you will review regulations issued by your 
department/agency, and work closely with Congress, to ensure that such 
regulations comply with the spirit of the laws passed by Congress. My 
intention is to work closely with the Department's Office of General 
Counsel to ensure that regulations issued by the Department comply with 
the spirit of enacted laws. The Office of Governmental Affairs will 
also continue to work closely with the Congress to apprise members and 
staff of important regulatory developments.
    5. Describe your department/agency's current mission, major 
programs, and major operational objectives. The Department of 
Transportation is a visionary and vigilant Department leading the way 
to transportation excellence in the 21st century. The mission is to 
serve the United States by ensuring a fast, safe, efficient, accessible 
and convenient transportation system that meets our vital national 
interests and enhances the quality of life of the American people, 
today and into the future. The strategic goals are - Safety: Promote 
the public health and safety by working toward the elimination of 
transportation-related deaths, injuries, and property damage; Mobility: 
Shape America's future by ensuring a transportation system that is 
accessible, integrated and efficient, and offers flexibility of 
choices; Economic Growth and Trade: Advance America's economic growth 
and competitiveness domestically and internationally through efficient 
and flexible transportation; Human and Natural Environment: Protect and 
enhance communities and the natural environment affected by 
transportation; National Security: Advance the nation's vital security 
interests in support of national strategies such as the National 
Security Strategy and National Drug Control Strategy by ensuring that 
the transportation system is secure and available for defense mobility 
and that our borders are safe from illegal intrusion.
    6. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.
                  f. general qualifications and views
    1. How have your previous professional experience and education 
qualified you for the position for which you have been nominated.
    I believe my past experience in the legislative branch has been 
enormously helpful in teaching me the legislative process and the 
related skills necessary to perform the job for which I have been 
nominated. I also believe that my experiences at both the Department of 
Commerce and here at Transportation have given me insight into the 
balance needed between the executive and legislative branches.
    2. Why do you wish to serve in the position for which you have been 
nominated?
    First, I am proud that Secretary Slater has developed an 
appreciation for my abilities and has chosen me to carry out 
theDepartment's legislative initiatives and strategies. Second, I am 
equally proud of the fact that President Clinton has concurred with 
Secretary Slater's decision and is giving me such an outstanding 
opportunity to serve him and the American people. I cannot think of a 
better way to continue my role in public service.
    3. What goals have you established for your first two years in this 
position, if confirmed?
    In the remaining 16 months of the Clinton Administration, my only 
goal is to do the best job that I am capable of to show both the 
Secretary and the President that they made the right choice.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills?
    Patience may be the skill I most lack. Continued self awareness may 
be the best vehicle for improving that skill. It is most likely there 
are other skills that need improvement as well, but I believe I am 
fully capable of doing this job given the opportunity.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary.
    I believe the role of Government is to help those who are not in a 
position to help themselves. That means equal opportunity for all in 
getting an education, the ability to compete for employment, to 
guarantee equal access for the physically challenged, etc. The 
government's role in the private sector should be to primarily 
guarantee equal opportunity, individual employment rights, and help 
American corporate interests compete in markets around the world. 
Society's problems can be left to the private sector only when the 
private sector proves itself free from discrimination or barriers both 
in the board room as well as the workplace. Applicable standards for 
Government intervention in the private sector may best be done on a 
case by case basis.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives.
    The Department's primary goal and objective, along with Congress, 
is to develop and promote the safest and most efficient transportation 
system possible. Our mission is to have the safest skies, surface 
transportation systems and waterways in our nation's history. But, it 
is also important to find ways to provide economical and expedited 
movement of goods to markets worldwide.
    7. In reference to question number six, what forces are likely to 
result in changes to the mission of this agency over the coming five 
years.
    Over the next five years, we are likely to face increased air 
passenger travel and cargo shipments. These likely increases are why it 
is so critically important to begin our FAA modernization program now 
so that we can begin to address our anticipated delays and safety 
concerns. We can likely anticipate increased highway use as well and 
therefore it is our mission to find ways to make highway travel safer 
yet somehow less congested.
    8. In further reference to question number six, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
department/agency and why?
    I am not certain that any outside forces actually exist in keeping 
DOT from reaching its mission, however, there is always the possibility 
of the unforeseen, such as, a lack of cohesion between management and 
labor or budgetary constraints. Concerning the top three challenges 
this agency faces, I believe the amount of time left in this 
Administration to fulfill its mission is the biggest challenge. The 
second biggest challenge is to be able to fulfill our mission under 
difficult budget restraints. Third, the difficulty of an agency this 
size to work in unison in fulfilling our mission.
    9. In further reference to question number six, what factors in 
your opinion have kept the department/agency from achieving its 
missions over the past several years?
    I believe the Department has, in fact, done a good job in 
accomplishing its mission. The number of aviation related deaths over 
the last year has declined dramatically. The aviation industry 
continues to develop new technology to improve air service for both 
passengers and cargo. The number of passengers flying continues to 
increase at a record pace. The Administration has successfully 
negotiated thirty-five ``open skies'' agreements with foreign 
governments opening the way for increased services for U.S. carriers. 
The Administration has begun a thoughtful ``safe skies'' program to 
bring along underdeveloped foreign aviation partners to a higher 
standard of aviation safety decreasing the risk of aviation related 
fatalities. We have significantly increased seatbelt use through our 
``Buckle Up America Program'', which at the same time has decreased the 
number of automobile related fatalities. We have successfully decreased 
drunk driving through an aggressive incentive program designed to work 
in partnership with the States. These are just some of a number of 
examples of how this agency has achieved its mission thus far.
    10. Who are the stakeholders in the work of this agency?
    The American public in general, but more specifically, State and 
local governments, industry, labor, safety groups, environmentalists 
and others with an interest in transportation.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question number ten.
    If confirmed, I will make every effort to work with all 
stakeholders to develop the best transportation policy possible.
    12. The Chief Financial Officers Act requires all government 
departments and agencies to develop sound financial management 
practices similar to those practiced in the private sector.
    (a) What do you believe are your responsibilities, if confirmed, to 
ensure that your agency has proper management and accounting controls?
    I would, to the best of my ability, work in concert with the Office 
of General Counsel and the Office of Inspector General to insure that 
DOT is adhering to all rules of law set forth by Congress.
    (b) What experience do you have in managing a large organization?
    As former Chief of Staff for former Senator Carol Moseley-Braun, I 
hired and managed a staff of fifty nine people. Also, while serving as 
State Director of the Clinton/Gore Pennsylvania Campaign, I supervised 
a staff of forty-seven people. Lastly, while serving as Acting 
Assistant Secretary since December 1, 1998, I have been supervising a 
staff of twenty-three in this office.
    13. The Government Performance and Results Act requires all 
government departments and agencies to identify measurable performance 
goals and to report to Congress on their success in achieving these 
goals.
    (a) Please discuss what you believe to be the benefits of 
identifying performance goals and reporting on your progress in 
achieving those goals.
    Performance goals are beneficial in assessing strengths and 
weaknesses within an organization in two ways. First, they give a 
reasonable assessment, in most cases, regarding personnel. Second, they 
give some assessment, over a period of time, as to whether goals are 
realistic and/or achievable.
    (b) What steps should Congress consider taking when an agency fails 
to achieve its performance goals? Should these steps include the 
elimination, privatization, downsizing or consolidation of departments 
and/or programs?
    Congress' role in assessing performance goal achievement should be 
decided on a case by case basis. Agencies have different track records 
in achieving stated goals and therefore should be judged on those 
records. In fact, in a recent study released jointly by GAO and the 
Senate Governmental Affairs Committee, the Department of Transportation 
was lauded for having the best performance plan in Government.
    (c) What performance goals do you believe should be applicable to 
your personal performance, if confirmed?
    My performance should be judged on a variety of factors including 
accessibility to Members of Congress and their staffs' timely responses 
to Congressional questions before the Department, supplying witnesses 
and testimony for Congressional hearings, adequate grant notification 
to Congressional offices, and practicing sound judgment when giving 
advice to other officers of the Department.
    14. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you?
    My own personal philosophy of supervisor/employee relationships 
does not necessarily relate to any one known model, but instead it is 
more of a composite of what I have experienced over the course of my 
professional career in Washington, D.C. I believe that every supervisor 
should have an open door policy for all of his/her employees. I believe 
it is important to lay out your expectations early on as a supervisor 
and to let your employees know that they will be meritoriously judged 
based on those expectations.
    15. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe.
    I believe that I have a good working relationship with Congress. My 
experience here at the DOT in both capacities as the Deputy Assistant 
Secretary and Acting Assistant Secretary have given me excellent 
opportunities to build what I would consider solid working 
relationships with both Members and staff on a range of issues. My time 
spent working in the Senate (eight years) for Senators Kennedy and 
Moseley-Braun, were invaluable in teaching me the legislative process 
as well as affording me the opportunity to build work-related 
relationships.
    16. Please explain what you believe to be the proper relationship 
between yourself, if confirmed, and the Inspector General of your 
department/agency.
    I believe that the Inspector General of this agency commands and 
deserves the utmost respect of all DOT employees. I believe it is 
important for the Inspector General to maintain as much independence 
from other DOT officers and offices as his job requires. If the 
Inspector General were doing any type of audit or investigation, which 
in any way, would require my participation, I would treat that action 
with the utmost seriousness and attention.
    17. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your department/
agency comply with the spirit of the laws passed by Congress.
    If the Committee or others were to call into question regulations 
issued by this Department, I would, to the best of my ability, work to 
find the answer to that question.
    18. In the areas under the department/agency's jurisdiction, what 
legislative action(s) should Congress consider as priorities? Please 
state your personal views.
    DOT's top legislative priorities are as follows: A fully funded FY 
2000 budget, FAA reauthorization, rail and motor carrier safety 
legislation and Surface Transportation Board reauthorization.
    19. Within your area of control, will you pledge to develop and 
implement a system that allocates discretionary spending based on 
national priorities determined in an open fashion on a set of 
established criteria? If not, please state why. If yes, please state 
what steps you intend to take and a time frame for their 
implementation.
    Yes. The criteria for discretionary funds are, in fact, determined 
not by this office, but by the mode responsible for the actual funding. 
The role of this office is to insure that members of Congress who are 
recipients of discretionary funds are properly notified and given the 
opportunity to release that information to their constituents. If, in 
fact, there is some question about DOT's discretionary spending, I 
would be willing to help find the answers to whatever concerns there 
are.

    Senator Hutchison. Thank you, Mr. Frazier. Dr. Van Beek.

STATEMENT OF DR. STEPHEN D. VAN BEEK, NOMINEE, ASSOCIATE DEPUTY 
     SECRETARY AND DIRECTOR, OFFICE OF INTERMODALISM, U.S. 
                  DEPARTMENT OF TRANSPORTATION

    Dr. Van Beek. Madame Chairwoman, Senator Hollings, members 
of the committee, let me first thank Representative Lofgren for 
coming and speaking on my behalf today. I genuinely appreciate 
it, as I appreciate the support of Senator Dianne Feinstein, 
who I know could not be here today.
    First, I want to thank you for convening this hearing today 
to consider my nomination to the position of Associate Deputy 
Secretary of Transportation and Director of the Office of 
Intermodalism.
    My professional life has been dedicated to public service. 
And should the Senate honor me with confirmation to the 
position, I pledge to you that I will carry out the 
responsibilities entrusted to me in an ethical and professional 
manner, which justifies your, President Clinton's and Secretary 
Slater's confidence.
    As you know, the Associate Deputy Secretary is charged with 
helping the Secretary and Deputy Secretary of the Department 
provide leadership to the Department's agenda and management 
concerns. In this capacity, the position acts as a senior 
policy advisor to the Secretary with a special emphasis on 
issues that cut across modal boundaries. These include safety, 
environment protection, mobility, technological innovation and 
security.
    As the Director of Intermodalism, the position is an 
important voice in articulating the needs of all transportation 
users, including those in the intermodal community. Government 
policy needs to promote the seamless operation of the nation's 
transportation system, so that the Department, Congress and 
American citizens receive the optimal yield on their 
transportation investments.
    In order to accomplish these ends, I will work with the 
Department's leadership, including Secretary Rodney Slater, 
Members of Congress, the states, industry and other 
stakeholders to advocate an intermodal systems perspective of 
our transportation network and make it a reality in 
departmental programs and initiatives.
    The Department and Congress have together made great 
progress in supporting an intermodal transportation system. 
Thanks to the innovative provisions of recent authorizations, 
such as ISTEA and TEA-21, more intermodal projects are eligible 
for support, and many have been funded, promising significant 
gains in both the passenger and freight sectors.
    But there is more to be done to improve services, 
performance, safety and economy for all modes and combination 
of modes. Future changes, whether in demographics on the 
passenger's side or the projected increases in trade on the 
freight side, will require further adaptability of the 
transportation system. If the system is to be responsive to 
these changes, increases in capacity must be predicted and 
built into the policy and investment decisions of the 
Department.
    To accomplish these goals, one priority will be to 
buildupon Secretary Slater's ONE DOT management initiative that 
has improve teamwork among the different modal administrations 
and offices in the Department, using such mechanisms as the 
Secretary's Safety and Policy Councils.
    These tools are essential for implementing priority 
initiatives, such as the development of the 21st Century Marine 
Transportation System, MTS, an initiative which will involve 
extensive interactions with stakeholder groups and DOT modal 
administrations, such as the Maritime Administration, the 
United States Coast Guard, and the surface modes which 
transport maritime commerce to and from the interior of the 
United States.
    For the MTS to be successful, we must make transportation 
connections responsive to the demands which will be placed upon 
them. These demands will be significant indeed, given forecasts 
that marine trade will double in the next 20 years.
    With the increase in international land and sea trade, 
international ports and border crossings pose special 
challenges of administrative complexity and national standards.
    To deal with these potential choke-points and to promote 
the free flow of freight generally, the Department and the 
state transportation agencies are addressing the border 
crossing and trade corridor provisions of TEA-21.
    In addition, in conjunction with other Federal agencies, we 
are examining how to use innovative technologies, such as 
intelligent transportation system and electronic manifests, to 
streamline clearance processes at border crossings.
    Another personal priority of mine is to address key 
intermodal projects in the ten Federal regions which will 
enhance regional mobility. Among many others, these include the 
Alameda Corridor, the Salt Lake City Olympics, and the Miami 
Intermodal Center. Other sponsors of intermodal projects, 
seeking to emulate these innovative solutions, will have my 
office as a departmental point of contact and lead in providing 
assistance on these initiatives.
    On these and other initiatives, I look forward to working 
with the professionals in the Office of Intermodalism to 
advance the nation's transportation system. I especially look 
forward to working with Congress and intermodal stakeholders to 
tackle these issues and resolve outstanding challenges.
    Once again, thank you for the opportunity to appear before 
you today. I also would be happy to answer any questions you 
might have.
    [The prepared statement and Biographical Information of Dr. 
Van Beek follow:]

   Prepared Statement of Dr. Stephen D. Van Beek, Nominee, Associate 
Deputy Secretary and Director, Office of Intermodalism, U.S. Department 
                           of Transportation
    Madam Chairwoman, Senator Hollings, members of the Committee:
    I want to thank you for convening this heating today to consider my 
nomination to the position of Associate Deputy Secretary of 
Transportation and Director of the Office of Intermodalism. My 
professional life has been dedicated to public service and should the 
Senate honor me with confirmation to the position, I pledge to you that 
I will carry out the responsibilities entrusted to me in an ethical and 
professional manner which fully justifies your and President Clinton's 
confidence.
    As you know, the Associate Deputy Secretary is charged with helping 
the Secretary and Deputy Secretary provide leadership to the Department 
of Transportation's agenda and management concerns. In this capacity, 
the position acts as a senior policy advisor to the Secretary with a 
special emphasis on issues that cut across modal boundaries. These 
issues include safety, environmental protection, mobility, 
technological innovation and security.
    As the Director of Intermodalism, the position is an important 
voice in articulating the needs of all transportation users, including 
those in the intermodal community. Since the creation of the Office of 
Intermodalism by the Intermodal Surface Transportation Efficiency Act 
of 1991 (ISTEA), this position has included the responsibility of 
ensuring that government policy promotes the seamless operation of the 
Nation's transportation system so that the Department, Congress, and 
American citizens receive the optimum yield for their transportation 
investments.
    In order to accomplish these ends, I will work with the 
Department's leadership, including Secretary Rodney Slater, members of 
Congress, the states, industry, and other stakeholders to advocate an 
intermodal, systems perspective of our transportation network and make 
it a reality in departmental programs and initiatives.
    Secretary Slater has been a leader in expanding our vision about 
what transportation means for our nation. He has challenged us to help 
create additional economic opportunity by increasing accessibility to 
transportation, to consider how we can enhance the environment and the 
livability of communities, and to establish a climate for innovation as 
we work with public and private partners to insure that new 
technologies are developed and deployed in the transportation system.
    As Deputy Administrator of the Research and Special Programs 
Administration (RSPA), I have had the opportunity to work on these and 
many other intermodal initiatives of the Department. These include 
response to man-made and natural disasters, hazardous materials 
transportation, university programs, and research and technology 
issues. In addition, I have had direct responsibility for the Volpe 
National Transportation Systems Center, a leading government center 
supporting transportation programs of the Department, states, and other 
transportation organizations.
    Five years ago the National Commission on Intermodal Transportation 
issued its report to Congress stressing the benefits of intermodalism 
and the need for DOT leadership in developing a consistent intermodal 
policy. Congress reaffirmed this need when it passed the Transportation 
Efficiency Act of the 21st Century (TEA-21). Potential benefits of 
intermodalism include lowering transportation costs, increasing 
economic productivity and efficiency, reducing the burden on over-
stressed infrastructure, generating higher returns from public and 
private investments, improving accessibility for under-served 
populations, and reducing energy consumption and contributing to 
improved air quality and environmental conditions.
    The Commission found that while the private sector had adopted an 
intermodal perspective, the public institutions were not evolving as 
swiftly as necessary to keep up with new developments and look for 
intermodal solutions to transportation problems. In short, all levels 
of transportation agencies--federal, state and local--must stay in 
touch with the intermodal transportation community to make sure that 
decision-making, public infrastructure and management practices are 
adapting to and complimenting user needs.
    The Department and Congress have together made progress in 
supporting an intermodal transportation system. Thanks to innovative 
provisions of ISTEA and TEA-21 more intermodal projects are eligible 
for support and many have been funded, promising significant gains in 
both the passenger and freight sectors.
    But there is more to be done to improve services, performance, 
safety, and economy for all modes and combinations of modes. Future 
changes, whether in demographics on the passenger side, or the 
projected increases in trade on the freight side, will require further 
adaptability of the transportation system. If the system is to be 
responsive to these changes, increases in capacity must be predicted 
and built into policy and investment decisions of the Department.
    To accomplish these goals, one priority will be to build upon 
Secretary Slater's ONE DOT management initiative that has improved 
teamwork among the different modal administrations and offices in the 
Department, using such mechanisms as the Secretary's Safety and Policy 
Councils.
    These tools are essential for implementing priority initiatives 
such as the development of the 21 st Century Marine Transportation 
System (MTS), an initiative which has, and will, involve extensive 
interactions with stakeholder groups and DOT modal administrations such 
as the Maritime Administration, the U.S. Coast Guard, and the surface 
modes which transport maritime commerce to and from the interior to the 
United States. For the MTS to be successful, we must make 
transportation connections responsive to the demands which will be 
placed upon them. These demands will be significant indeed given 
forecasts that marine trade will double in the next twenty years.
    With the increase in international land and sea trade, 
international ports and border crossings pose special challenges of 
administrative complexity and national standards. To deal with these 
potential choke- points and to promote the free flow of freight 
generally, the Department and the state transportation agencies are 
addressing the border crossing and trade corridor provisions of TEA-21. 
We will continue to advance innovative projects to advance 
intermodalism. I will also lead the Department's efforts to work with 
other federal agencies, such as the U.S. Customs Service and its 
counterparts, to identify potential means of streamlining clearance 
processes through the use of compatible databases and electronic 
manifests.
    Another personal priority is to address key intermodal projects in 
the ten federal regions which will enhance regional mobility. Among 
many others, these include the Alameda Corridor, the Salt Lake City 
Olympics, and the Miami Intermodal Center. Other sponsors of intermodal 
projects, seeking to emulate these innovative solutions will have my 
office as a departmental point-of-contact and lead in providing 
assistance on their initiatives. The office's organizational structure 
supports this by giving its transportation specialists regional 
responsibility for following projects and establishing working 
relationships with state agencies, Metropolitan Transportation 
Organizations (MPOs), and private industry.
    The tools for achieving a truly intermodal transportation system 
include promoting, advancing, and deploying technology, creating 
innovative financing tools, and expanding research and education 
initiatives. New applications of technologies whether in logistics, 
collision avoidance systems, or location technologies such as Global 
Positioning Satellites, offer promises of new efficiencies, capacities 
and services. Only by working multimodally and intermodally can the 
full promise of these technologies be realized.
    I will continue efforts of the Department to use innovative 
financing to further intermodal connections and linkages. The Office of 
Intermodalism was instrumental in devising a funding strategy for the 
Alameda Corridor project, and supports TEA-2l's innovative financing 
provisions in the Transportation Infrastructure Finance and Innovative 
Act (TIFIA) and the Railroad Rehabilitation and Improvement Financing 
program (RRIF). These programs use federal funds as leverage to 
encourage the use of private investment capital. The ultimate aim of 
innovative finance should be to establish a climate whereby federal 
funds are but one resource of many available to create transportation 
infrastructure.
    Having come from the university environment and having had direct 
responsibility for university programs at RSPA, I believe we can expand 
DOT's education efforts to focus more attention on the intermodal 
components of the transportation system. Topics for more research and 
education include rail and highway grade crossing safety; automated 
equipment identification; vehicle location systems; safety performance 
standards; high-speed rail technology; multimodal revenue accounting 
and ticketing systems; and transit information networks. Already the 
Office of Intermodalism has sponsored, and will continue to develop, 
intermodal training materials for transportation professionals at all 
levels of the transportation sector. On these and other initiatives, I 
look forward to working with the professionals in the Office of 
Intermodalism to advance the nation's transportation system.
    I especially look forward to working with Congress and intermodal 
stakeholders to tackle these issues and resolve outstanding challenges.
    Once again, thank you for the opportunity to appear before you 
today. I would be happy to answer any questions.
                                 ______
                                 
                      A. BIOGRAPHICAL INFORMATION
    1. Name: (Include any former names or nick names used.) Stephen 
Dart Van Beek (Steve).
    2. Position to which nominated: Associate Deputy Secretary, U.S. 
Department of Transportation.
    3. Date of nomination: August 2, 1999.
    4. Address: (List current place of residence and office addresses.) 
Residence: 1631\1/2\ 19th Street, Apt. B, N.W., Washington, D.C. 20009; 
Office: Research and Special Programs Administration, Department of 
Transportation, 400 7th Street, S.W., Washington, D.C. 20590.
    5. Date and place of birth: November 9, 1961, Washington, D.C.
    6. Marital status: (Include maiden name of wife or husband's ame.) 
Married, Elizabeth Tucker Van Beek, maiden name: Tucker
    7. Names and ages of children: (Include stepchildren and children 
from previous marriages.) I have no children.
    8. Education: (List secondary and higher education institutions, 
dates attended, degree received and date degree granted.) University of 
Virginia (1986-1991), Ph.D. Government and Foreign Affairs, 1991; 
University of Virginia (1986-1991). M.A. Government and Foreign 
Affairs, 1988; University of California Santa Barbara (1980-1983), B.A. 
Political Science, 1983; University of Maryland College Park (1979-
1980), no degree; Albert Einstein Senior High School, Kensington MD 
(1976-1979), Diploma 1979.
    9. Employment record: (List all jobs held since college, including 
the title or description of job, name of employer, location of work, 
and dates of employment.)
    Full-Time Positions; Deputy Administrator, Research and Special 
Programs Administration (RSPA), Department of Transportation, 
Washington, D.C. (August 1998-present); Special Assistant to the 
Administrator, RSPA, U.S. DOT, Washington, D.C. (February 1998-August 
1998); Assistant/Associate Professor of Political Science, San Jose 
State University (August 1990 to January 1998). Also served as 
Assistant to the Academic Vice President (1993 to 1995); Assistant 
Chair of the Department of Political Science (1995 to 1997). I am 
currently on professional leave as a professor from this assignment. 
Lecturer, Department of Politics, Washington and Lee University, 
Lexington VA (April 1990 to June 1990); Teaching Assistant, University 
of Virginia, Charlottesville VA (Fall and Spring Semesters between 
August 1987 and June 1989); Consultant, Democratic Congressional 
Campaign Committee, Washington, D.C. (May 1986 to August 1986); 
Legislative Assistant/Staff Assistant, Representative Tony Coelho, 
Washington, D.C. (September 1983 to May 1986).
    Part-Time Positions; Research Associate, Norman Y. Mineta 
International Institute of Surface Transportation Policy; Studies (non-
profit entity of San Jose State University), (August 1995 to January 
1998); Teacher-Consultant, Working Partnerships USA, AFL-CIO, (January 
1997 to December 1997); Visiting Professor, De Anza Community College, 
Cupertino, CA, (1993 and 1995); Temporary Work, Manpower Inc., 
Charlottesville VA (May 1987 to August 1987).
    10. Government experience: (List any advisory, consultative, 
honorary or other part-time service or positions with Federal, State, 
or local governments, other than those listed above.) Member, Santa 
Clara County Charter Review Commission (California), (September 1997 to 
January 1998). I resigned after my acceptance of the DOT position. 
Member, Mayor's Blue-Ribbon Panel on Ethics (San Jose, 
Califomia),(September 1997 to December 1997).
    11. Business relationships: (List all positions held as an officer, 
director, trustee, partner, proprietor, agent, representative, or 
consultant of any corporation, company, firm, partnership, or other 
business enterprise, educational or other institution) (listed above).
    Research Associate, Norman Y. Mineta International Institute of 
Surface Transportation Policy; Studies (non-profit entity of San Jose 
State University), (August 1995 to January 1998); Teacher-Consultant, 
Working Partnerships USA, AFL-CIO, (January 1997 to December 1997).
    12. Memberships: (List all memberships and offices held in 
professional, fraternal, scholarly, civic, business, charitable and 
other organizations.)
Previous Memberships:
    California Faculty Association (served as a member, and as a member 
of the statewide political/legislative action committee); American 
Political Science Association; Western Political Science Association; 
Midwest Political Science Association; Research Committee of 
Legislative Specialists (International Political Science Association); 
Pacific Islands Political Science Association; California Studies 
Association; Phi Kappa Phi Honor Society.
    13. Political affiliations and activities:
    (a) List all offices with a political party which you have held or 
any public office for which you have been a candidate.
    I have not been a candidate for any office.
    (b) List all memberships and offices held in and services rendered 
to all political parties or election committees during the last 10 
years.
    California Faculty Association. Statewide Political Action and 
Legislative Committee (1993 to 1997); Clinton-Gore Rapid-Response 
Volunteer, Victory 1996, Northern California (1996); Coordinated 
Campaign (South Bay Central Labor Council and Santa Clara County 
Democratic Party), Unpaid Advisor and Volunteer (1990 to 1996); Ken 
Yeager for California State Assembly, Advisor and Fundraiser (1995 and 
1996); Democratic Century Club (Santa Clara County) (1993 to 1997)
    (c) Itemize all political contributions to any individual, campaign 
organization, political party, political action committee, or similar 
entity of $500 or more for the past 10 years.
    I have not contributed $500 to any candidate, committee or entity.
    14. Honors and awards: (List all scholarships, fellowships, 
honorary degrees, honorary society memberships, military medals and any 
other special recognitions for outstanding service or achievements.) 
Member, Phi Kappa Phi Honor Society (for faculty service to San Jose 
State University)
    15. Published writings: (List the titles, publishers, and dates of 
books, articles, reports, or other published materials which you have 
written.)
    Haas, P., S.D. Van Beek, et. al. 1997. Capital Versus Operating 
Grants for Transit: Economic Impacts for California. San Jose, Calif.: 
Norman Y. Mineta International Institute for Surface Transportation 
Policy Studies. [Mineta Institute Report, one of six team members]
    Van Beek, S.D. 1997 (Editor). Toward a Cooperative Future? Labor-
Management Relations in Surface Transportation. San Jose, Calif.: 
Norman Y. Mineta International Institute for Surface Transportation 
Policy Studies. [An edited collection of a conference session held in 
March 1997]
    Van Beek, S.D. 18 May 1997. ``Why Single-Shot Primary Favors 
Incumbents.'' San Jose Mercury News. [electoral reform]
    Van Beek, S.D. 8 July 1996. ``The Simple, Cheap, Fair Solution.'' 
San Jose Mercury News. [electoral reform]
    Van Beek, S.D. 1995. When the House and Senate Meet: Bicameral 
Resolution in Congress. Pittsburgh, Penn.: University of Pittsburgh 
Press. [An analysis of congressional action on savings and loan, trade, 
and budget policy-making]
    Van Beek, S.D. 1995 (Contributor). C-SPAN Guide to the 1996 
Election. Washington, D.C.: C-SPAN. [A guide for college professors on 
using the resources of C-SPAN to follow the election]
    Van Beek, S.D. 1995. ``Pacific Island Governments.'' In the Survey 
of Social Science. Government and Politics, ed. Joseph Bessette. 
Pasadena, Calif.: Salem Press. [An analysis of pacific island 
governments, economies, and culture]
    Van Beek, S.D. 1995. ``Legislative Function of Government.'' In the 
Survey of Social Science: Government and Politics, ed. Joseph Bessette. 
Pasadena, Calif: Salem Press. [An analysis of representational and 
progressive models of lawmaking]
    Van Beek, S.D. 1995. ``Elections and Democracy.'' In Politics in 
the United States and California, ed. Julian Foster. Dubuque, Iowa: 
Kendall/Hunt Publishing. [Comparison of 1992 and 1994 national and 
state election results]
    Van Beek, S.D. 1994. ``Three Efforts at Managing Crises from 
Franklin D. Roosevelt's White House.'' In the Handbook of Bureaucracy, 
ed. Ali Farazmand. New York: Marcel Dekker. [Description of crisis 
leadership]
    Van Beek, S.D. 4 November 1993. ``Spending Constraints Handcuff 
State Lawmakers.'' San Jose Mercury News. [legislative budgeting]
    Van Beek, S.D. 18 March 1992. ``Let the House and Senate Judge One 
Another's Ethics.'' Los Angeles Times. [congressional reform]
    Butler, D.O. and S.D. Van Beek. 1990. ``Why Not Swing? Measuring 
Electoral Change.'' PS: Political Science and Politics, 13: 178-84. 
[Comparative piece analyzing British and United States elections]
    16. Speeches: Provide the Committee with two copies of any formal 
speeches you have delivered during the last 5 years which you have 
copies of on topics relevant to the position for which you have been 
nominated.
    17. Selection:
    (a) Do you know why you were chosen for this nomination by the 
President?
    I am honored to be selected by the Secretary and nominated by the 
President for this job. I believe I was selected because of my 
knowledge, education and experience in the transportation field and in 
public administration. In addition, my service to the Research and 
Special Programs Administration as Deputy Administrator has 
demonstrated my skills for this position.
    (b) What do you believe in your background or employment experience 
affirmatively qualifies you for this particular appointment?
    First my education qualifies me. My graduate and undergraduate 
education centered on public administration and public policy, American 
political institutions, and political economy. Second, I have taught 
and written about the American political system and transportation for 
seven years, involving a wide set of topics. Third, I have practical 
experience, serving as a legislative assistant to a member of Congress, 
and serving as Deputy Administrator for a modal administration with 870 
employees and a $300 million budget. Finally, many of the issues, such 
as technology applications and emergency transportation, and people 
with whom I have dealt, inside and outside of DOT, are important to the 
Associate Deputy Secretary position. This is significant as the 
Secretary has made ``One DOT,'' unifying the disparate parts of the 
Department into a team focusing on systemic goals reflected by the 
Secretary's Strategic Plan, an important management strategy.
                   b. future employment relationships
    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate?
    I am currently on leave. uncompensated, as an Associate Professor 
of Political Science at San Jose State University; please refer to 
questions 3-5 below.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization?
    I intend on returning to teaching at San Jose State University.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service?
    No, my current professional leave expires in December 1999. I 
intend on seeking an extension until January 2001.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.
                   c. potential conflicts of interest
    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers.
    1. My only continuing association remains my professional leave 
granted by San Jose State University.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated.
    I will continue to be recused, as I have been since my employment, 
from any Department of Transportation business with San Jose State 
University. Please refer to attachment 2.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated?
    There are none.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy.
    I have visited the California legislature to argue on behalf of 
higher educational funding for the California State University system.
    Since joining the Department, I have represented the agency on Year 
2000 issues, hazardous materials reauthorization, pipeline safety 
reauthorization, and appropriation bills for RSPA.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.)
    Please refer to the Deputy General Counsel opinion letter.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes.
                            d. legal matters
    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a compliant to 
any court, administrative agency, professional association, 
disciplinary committeeor other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details? No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination.
    I know of no additional information.
                     e. relationship with committee
    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Please explain how you will review regulations issued by your 
department, agency, and work closely with Congress, to ensure that such 
regulations comply with the spirit of the laws passed by Congress.
    I will work closely with the members and staff of the Senate 
Commerce Committee to ensure that there is an open line of 
communication between my office and the committee. I will make myself 
available to the committee to discuss the ways in which the Department 
executes laws consistent with their letter and spirit. From my 
experience in RSPA, I believe the Department and Administration have in 
place a thorough regulatory review process that ensures consistency 
with the intent of the law.
    5. Describe your department/agency's current mission, major 
programs, and major operational objectives.
    The Associate Deputy Secretary is responsible for designing, 
planning and implementing intermodal transportation policies, 
procedures, and operations. This includes developing and implementing 
Departmental initiatives that will develop a national intermodal 
transportation system in the United States that moves people and 
freight in an energy efficient and cost-efficient manner. By working 
within the immediate Office of the Secretary, the Associate Deputy 
Secretary is empowered to examine transportation policies within the 
Department to ensure they are compatible with intermodal concerns and 
take full advantage of the public investment in transportation.
    Intermodal exchange involves connections, those hubs for the 
transport of people and goods which involve more than one mode of 
transportation. There is a growing recognition that passenger terminals 
connecting modes such as aviation, rail, ferries, highways and transit 
provide an availability of choices and convenience that allow for less 
congestion and greater ease of travel. Similarly, major freight hubs 
such as seaports, airports, intermodal rail terminals, and transfer 
facilities provide efficiencies which improve productivity growth and 
strengthen the nation's ability to compete in the global economy. A key 
responsibility of the Associate Deputy Secretary is to develop 
relationships with state and local transportation officials as well as 
other federal agencies, with transportation responsibilities that 
impact the performance of transportation systems.
    6. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.
                    general qualifications and views
    1. How have your previous professional experience and education 
qualified you for the position for which you have been nominated.
    They have provided me with managerial, policy expertise, and a full 
understanding of the legislative process. I have an established track 
record of managing organizations, demonstrated by my service to the 
university and my service as the Deputy Administrator of RSPA, where I 
have acted as the Chief Operating Officer of an agency with a diverse 
mission and a disparate collection of direct constituent offices. I 
have policy expertise, reflected by my collection of writings and 
teachings on public policy (including transportation) and my direct 
experience as a legislative assistant. In addition, I have an extensive 
academic background in American political institutions, with a 
specialization on the U.S. Congress.
    2. Why do you wish to serve in the position for which you have been 
nominated?
    I find the Associate Deputy Secretary position a challenging one to 
both help the Secretary and Deputy Secretary provide leadership to the 
Department's agenda and management, but also to be an important voice 
in articulating the needs of the transportation system. The many issues 
that cut across the different modes of transportation--such as 
mobility, technological innovation, and security--require that there be 
an office accountable for connecting modes and promoting a systemic 
analysis of transportation system performance. This office provides a 
single point of contact, for example, for those reliant on the smooth 
flow of freight in the nation, particularly as the role of global trade 
increases in the U.S. economy and requires the intermodal movement of 
goods across domestic and international boundaries. Where bottlenecks 
in the system exist, I will employ a problem-solving approach to work 
with all responsible officials, both in the private and public sectors, 
to help improve connections to ports, airports, rail, and other 
facilities. In carrying out these responsibilities I will work with the 
different modal administrations, the DOT leadership, members of 
Congress, the states, industry, and other stakeholders to improve the 
transportation system. Congress itself, in 1991, recognized the 
importance of intermodalism by naming the major authorizing legislation 
the Intermodal Surface Transportation Efficiency Act (ISTEA) and 
creating the Office of Intermodalism. Advocacy for this principle 
remains a priority both within and outside of the Department.
    3. What goals have you established for your first two years in this 
position, if confirmed?
    My immediate goal is to meet with transportation organizations and 
agencies in order to understand how my position and office can be a 
catalyst for improving services, quality, safety and economy for all 
modes or combination of modes in an environmentally sound manner. I 
will continue to address key intenmodal projects in each of the ten 
federal regions. Among many others, these include the Alameda Corridor, 
the Salt Lake City Olympics, and the Miami Intermodal Center. In 
addition, seeking to emulate these innovative partnerships, sponsors of 
other intermodal projects from across the nation are currently working 
to address their own transportation problems. I will be the 
departmental point-of-contact and lead on these initiatives.
    It is also important to provide the leadership for ensuring the 
seamless operation of the Nation's transportation system. An intermodal 
perspective is required at the planning stage, before projects are 
built, and during the construction and implementation stages. A key 
duty of the position is making certain that the Department and Congress 
receive the optimum yield for the Nation's transportation investments. 
To accomplish these ends, one priority will be to build upon the 
teamwork established among the different modal administrations and 
offices at the Department, using such mechanisms as the Secretary's 
Safety and Policy Councils. Another priority initiative will be to 
facilitate development of the 21st Century Marine Transportation System 
(MTS), an intermodal initiative of the Secretary which involves 
extensive interactions with stakeholder groups and DOT modal 
administrations such as the Maritime Administration, the U.S. Coast 
Guard, and the surface modes which transport maritime commerce to and 
from the interior of the U.S. For the MTS to be successful, 
transportation connections between waterborne traffic ports and 
highways and aviation modes must be responsive to the new demands which 
will be placed upon them.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills?
    I believe I possess the requisite skills for the position. However, 
intermodalism is a dynamic process and I will reach out to listen to 
those who are the customers and operators of the intermodal 
transportation system. Accordingly, I will strengthen and establish 
contacts in the freight and passenger communities to facilitate the 
best decision-making possible by the Department.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary.
    I believe the government should play a leadership role in 
protecting and enhancing public goods. These are goods valued by the 
public, which individual private concerns cannot profitably provide. 
Examples include education, environmental protection, national defense, 
and safety and security. In these instances, government can provide the 
service directly, contract with a private concern and regulate it, work 
with states, or subsidize a service through the tax code. Generally, 
the more market forces can be used in the provision of a good, the more 
likely that public intervention will be successful. For example, the 
U.S. Coast Guard has the responsibility for saving lives and provides 
that service directly through its operational responsibilities. But 
much of the equipment and the vehicles it uses are produced by the 
private sector and many services which do not require direct provision 
by public employees are contracted out. Once a service can be 
profitably provided by the private sector, government's role should be 
reduced or eliminated.
    I also believe that the government plays an essential role in 
representing U.S. interests in international arenas both to ensure that 
U.S. companies and workers are treated fairly in foreign markets and 
are able to compete on an equal basis. As intermodal transportation is 
a global reality, and an integral part of the U.S. economy, it is 
imperative that the Department take a leadership role in dealing with 
foreign governments by setting the agenda for intermodal 
transportation.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives.
    The charge of the work of the Associate Deputy Secretary is to work 
with the Secretary and Deputy Secretary on management initiatives for 
the Department as well as other assignments, particularly those that 
require the participation of more than one mode of transportation. 
Examples include the innovative use of technologies such as Intelligent 
Transportation Systems (ITS) and the Global Positioning Satellites 
(GPS) which have benefits that cross modal boundaries, and security and 
disaster response duties which necessarily involve more than one mode 
of transportation.
    As the Director of the Office of Intermodalism, the position 
requires an examination of the transportation system to ensure that it 
is planned and structured in a way that allows for the efficient 
movement of people and freight. To be successful in implementing 
intermodal policies, initiatives, and program strategies, extensive 
consultation and collaboration with the modal administrations, 
intermodal stakeholders, and state and local governments are required.
    7. In reference to question number six, what forces are likely to 
result in changes to the mission of this agency over the coming five 
years.
    I identify at least three forces that will remake the 
transportation system as we know it. The first is the increase in 
intermodal freight due to the expansion of trade and the efforts by 
shippers to find the most efficient way to move goods. More and more 
pressure will be placed on the connectors within the transportation 
system. For example, the movement of air cargo is anticipated to grow 
rapidly in the next decade and will place increasing demands on 
capacity issues. Accounting for over 50% of the total value of all 
goods imported and exported, the value of domestic air freight is 
expected to double. To accommodate a general increase in intermodal 
traffic, airports, water-based transportation, and surface modes must 
be tied into national, regional, state and local intermodal strategies. 
Second, technological innovations are offering new ways to build 
efficiencies into the transportation system. Whether with logistics, 
collision avoidance systems, or location technologies such as the 
Global Positioning Satellites, applications of private sector 
initiatives offer promises of new efficiencies, capacities, and 
services for the transportation system. Only by working both 
multimodally and intermodally can the full promise of these 
technologies be realized. Third, new patterns of passenger movement--
suburb to suburb movement, reverse commuting, and an aging demographic 
profile--require intermodal solutions that allow riders and drivers to 
have access to transportation and the ability to move seamlessly from 
one mode to another. Only by addressing these challenges can the 
Department aid in the reduction of congestion and adverse environmental 
impacts which troubles many of our Nation's regions.
    8. In further reference to question number six, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
department/agency and why?
    Adapting to the new intermodal environment remains a challenge. If 
the passenger and freight systems are to be facilitators rather than 
barriers to commerce and movement, they require all concerned to have 
an intermodal perspective. Traditional approaches which advocate the 
interests of one mode need to be shifted to examine the role each mode 
individually plays in a transportation system that must serve a diverse 
set of public and private interests. While more and more participants 
in the system recognize the necessity of an intermodal perspective, 
individual budgetary demands for investments in highways and transit 
properties may crowd out intermodal investments. In short, the lack of 
an intermodal constituency vis-a-vis traditional lobbies such as those 
which represent highways and transit, pose a challenge for policy and 
budgetary decisionmaking. For example, if additional investments are 
required to implement the 2lst Century Marine Transportation System 
(MTS), present-day interests may fight against future investments in 
port facilities or connectors, seeing them as competitors for scarce 
federal resources. The truth is that everyone has at least some 
interest in a safe, environmentally sustainable, and intermodal MTS.
    The top three challenges facing the Associate Deputy Secretary and 
the Office of Intermodalism are:
    First, shifting the transportation paradigm from a modal 
perspective to an intermodal one, which focuses on moving people and 
goods as seamlessly and as efficiently as possible. Our challenge is to 
highlight the benefits of an intermodal perspective and to continue to 
shift the Department to a ``One DOT'' approach and stakeholders to an 
``integrated transportation system'' approach.
    Second, facilitating the improvement of intermodal connectors. 
Across the nation there is a pent-up demand for addressing harbor 
improvements, grade-crossing conflicts, airport and port access, and 
special challenges such as the movement of visitors during the Salt 
Lake City Olympics in 2002.
    Third, addressing these and other intermodal challenges will pose 
capacity and fiscal constraints requiring prioritization and innovative 
financing strategies. Prioritization can only happen with extensive 
communication with congressional committees, Members of Congress, state 
and local transportation agencies, industry, and other stakeholders. 
Among other sources, guidance is provided by the Secretary's Strategic 
Plan.
    9. In further reference to question number six, what factors in 
your opinion have kept the department/agency from achieving its 
missions over the past several years?
    The paradigm shift from a modal perspective to a transportation 
system perspective, shaped by intermodalism, is not yet complete. 
Having said that, a few important projects have been started and few 
major discussions about transportation have occurred that considered an 
intenmodal perspective. Greater efficiencies are possible, however, and 
many regions continue to need assistance with planning and supporting 
connectors. Therefore, the Department needs to continue to advocate an 
integrated approach to transportation problems, both internally and 
with stakeholders.
    10. Who are the stakeholders in the work of this agency?
    Stakeholders include a variety of interests beginning with 
passengers and those providing services to them, including airport, 
ferry, rail, intercity bus, transit, highway and bicycle interests. 
Freight interests are a significant constituency, including carriers 
(shiplines, airfreight, railroads, highways and those moving intermodal 
containers) and those involved with logistics and the development of 
intelligent transportation systems to increase system efficiency. 
Stakeholders include decisionmakers at the Federal, state, regional, 
and local levels and those engaged in transportation research and 
analysis at many of the Nation's universities and research centers with 
which the Department is a partner.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question number ten.
    Stakeholders should be valued as those with information and 
experience that help the Department make intelligent decisions about 
how we do our job. They must be seen as partners in the transportation 
enterprise. After gathering different perspectives and information, 
however, it is the Department's job to make decisions in the public 
interest and consistent with laws and directions passed by the 
Congress. We also have a responsibility to conduct ourselves fairly 
with regard to individual and organizational interests, ensuring no 
group gains an unfair advantage by virtue of their relationship with 
us.
    12. The Chief Financial Officers Act requires all government 
departments and agencies to develop sound financial management 
practices similar to those practiced in the private sector.
    (a) What do you believe are your responsibilities, if confirmed, to 
ensure that your agency has proper management and accounting controls?
    As the Associate Deputy Secretary, I share the responsibility that 
all Federal employees have to ensure efficient and effective management 
of government programs. I will ensure that the Office of Intermodalism 
has the internal controls and accounting systems which meet the 
standards of the Federal Managers' Financial Integrity Act.
    (b) What experience do you have in managing a large organization? 
For one year I have been the Deputy Administrator of the Research and 
Special Programs Administration (RSPA). In addition to managing the 
daily operations of the agency (870 employees, $300 million budget, 
with two fee-for-service organizations), I have served on the 
Secretary's Management Council which has management oversight 
responsibility for departmental management issues. I also have held 
significant management positions at San Jose State University, a public 
university in California with 28,000 students.
    13. The Government Performance and Results Act requires all 
government departments and agencies to identify measurable performance 
goals and to report to Congress on their success in achieving these 
goals.
    (a) Please discuss what you believe to be the benefits of 
identifying performance goals and reporting on your progress in 
achieving those goals.
    I have found managing toward goals in my current position very 
helpful in two important respects. First, it provides information about 
the ultimate success of agency initiatives. A cold, hard statistic 
often tells more than an intricate analysis. Second, once data 
baselines are established, it allows an agency to manage with the 
information. If agency goals are not being met after the first quarter, 
for example, it provides the opportunity to make adjustments of 
personnel, resources, or policies in the short-term.
    (b) What steps should Congress consider taking when an agency fails 
to achieve its performance goals? Should these steps include the 
elimination, privatization, downsizing or consolidation of departments 
and/or programs?
    Given that the Department will provide performance results 
beginning with the end of the Fiscal Year 1999 budget, the Department's 
leadership will have the opportunity to work with Congress to interpret 
the results. Failing, meeting, or exceeding a performance goal for a 
particular year should begin, not end, the analysis of programs and 
management. Often times, a one-year piece of data is better understood 
as part of a trend analysis. External factors, too, need to be 
evaluated to determine whether they were accurately predicted when the 
goal was formulated. Finally, after receiving performance results and 
analyzing the cause of success or failure, certainly changes in public 
policy should be considered. These could include eliminating, 
privatizing, downsizing, or consolidating programs or offices, but it 
also may require more resources or expansion if a particular area is 
not being adequately addressed despite a well performing agency and 
management.
    (c) What performance goals do you believe should be applicable to 
your personal performance, if confirmed?
    As a member of the Department's senior leadership, I have the 
responsibility to assist in achieving the goals of the Department and 
Secretary. I also have the direct responsibility for fulfilling the 
agenda and goals listed in the above questions and answers as well as 
the sound management of resources made available to my Office.
    14. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you?
    I believe in empowering employees by delegating work to them, 
monitoring its quality and timeliness, and assessing their performance. 
Delegating work effectively requires constant communication between 
employees and supervisor. What this means in a large organization is 
working with senior managers to collaboratively set organizational 
goals and expectations. In RSPA, I have tried to align all individual 
performance plans with the Department and agency's strategic plans, 
thereby tying individual work with organizational need. Ultimately, 
organizations work most effectively when there is trust and loyalty 
among the employees. This is most often successful when there is 
frequent contact and a sense of shared mission. No employee complaints 
have been brought against me in any capacity.
    15. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe.
    As Deputy Administrator I have worked with the Transportation 
Committees in each chamber as well as a great number of individual 
Member offices. Typically this interaction has been on our 
authorization legislation, both pipeline safety and hazardous 
materials, and the annual appropriation hills. In addition, I have 
traveled occasionally to announce grants and have invited Members and 
their staffs to participate. I also worked during the mid-1980s for 
former Representative Tony Coelho, where I served as a legislative 
assistant and worked with several committees on the House side. 
Included in my professional background is extensive academic work 
focusing on the Congress. My dissertation, published book, several 
papers, and teaching all centered on the work of the Congress. This has 
provided me with a great appreciation for our bicameral legislature.
    16. Please explain what you believe to be the proper relationship 
between yourself, if confirmed, and the Inspector General of your 
department/agency.
    My responsibility is to provide all of the information necessary 
for the Office of Inspector General to fulfill its statutory 
responsibilities. Having been impressed by the analytical capability of 
the Office, I have also benefitted from the advice and publications of 
the Inspector General and will continue to support its work in any way 
I can.
    17. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your department/
agency comply with the spirit of the laws passed by Congress.
    I will work closely with the members and staff of the Senate 
Commerce Committee to ensure that there is an open line of 
communication between my office and the committee. I will make myself 
available to the committee to discuss the ways in which the Department 
executes laws consistent with their letter and spirit. I believe the 
Department and Administration have in place a thorough review process 
that ensures consistency with the intent of the law. The key for me in 
working with stakeholders is to gain information about the ways in 
which they conduct their operations. For example, I have often made 
myself available for meetings and tours of facilities to assure that I 
had adequate knowledge about important issues facing them. This is a 
view not adequately acquired by simply reviewing a proposed regulation. 
Once proposed regulations are put out for comment, I treat each comment 
we receive with respect and due consideration.
    18. In the areas under the department/agency's jurisdiction, what 
legislative action(s) should Congress consider as priorities? Please 
state your personal views.
    As one of its many legislative priorities, I believe that Congress 
must continue to fund the Office of Intermodalism as a separate Office 
within the immediate Office of the Secretary to promote the intermodal 
policies and advance the integrated solutions to transportation needs 
that Congress sought in establishing the Office under ISTEA and in the 
TEA-21 reauthorization. The Associate Deputy Secretary, as Director of 
the Office of Intermodalism, is empowered by the Secretary to assemble 
the resources and make the commitments on behalf of the Department to 
address intermodal issues of importance to public officials and 
transportation users.
    I do not think that it would be advisable to consolidate the Office 
of Intermodalism within the Office of the Assistant Secretary for 
Transportation Policy, as proposed by the House appropriations bill 
(H.R. 2084) and accompanying committee report (106-180). The two office 
functions are diverse and reflect different missions. The Office of 
Intermodalism carries out crosscutting Departmental intermodal 
initiatives at the Secretary's direction and serves as a field-oriented 
communications and coordination resource. in addition to formulating 
intermodal policy. The OST Policy Office, by comparison, has broader 
responsibility in matters of general transportation policy.
    If the Senate should confirm me, I intend to review the 
organizational and operational role of the Office of Intermodalism and 
alternative funding sources, such as the Highway Trust Fund as proposed 
in the Senate appropriations bill (S. 1143) and accompanying committee 
report (106-55).
    In addition to legislation directly impacting intermodal concerns, 
there are a number of legislative proposals currently before the 
Congress which are important to the sound functioning of the intermodal 
transportation system. These include the Federal Aviation 
Administration, the Railway Safety program, Hazardous Materials 
Reauthorization and the U.S. Coast Guard reauthorization.
    19. Within your area of control, will you pledge to develop and 
implement a system that allocates discretionary spending based on 
national priorities determined in an open fashion on a set of 
established criteria? If not, please state why. If yes, please state 
what steps you intend to take and a time frame for their 
implementation.
    Yes. The charge I have is to implement the Congressional and 
Administration priorities as detailed in authorizing legislation and 
yearly appropriation bills. For further information, I will also refer 
to the President's Budget, the Secretary's Strategic Plan, and my 
individual performance agreement which I will negotiate with the 
Secretary. I am also committed to providing Members and committees of 
Congress with information about my office's decisions.

    Senator Hutchison. Thank you very much, Dr. Van Beek.
    I would like, if everyone is comfortable with this, to ask 
if there are questions of Mr. Frazier and Dr. Van Beek in our 
first round. And then if they wish to stay, fine, or if they 
wish to go. I think the focus on the STB is a little different 
from the other two, that are more related. So that is what I 
intend to do.
    So I would like to start the questioning, because I am very 
concerned about truck safety, particularly with NAFTA and the 
trucks that are coming in from Mexico and Canada, and making 
sure that they are meeting the same safety standards that 
American trucks are required to meet for the safety of other 
people traveling on the highways.
    I was very interested, Dr. Van Beek, in your opening 
statement regarding border crossings.
    So I would like to ask first, Mr. Frazier, if you have 
looked at the Inspector General report that was critical of the 
Department's safety programs for commercial trucks coming in 
from Mexico especially, and Canada somewhat, and that this 
report cited that too few of the inspected trucks met U.S. 
safety standards. And, in fact, cited at one crossing in El 
Paso, Texas, which receives an average of 1,300 trucks daily, 
only one inspector is on duty, and he can inspect 10 to 14 
trucks daily. Well, I am concerned about the safety issue.
    Dr. Van Beek, I am concerned about being able to get the 
trucks through because if we are talking about trucks that have 
fresh vegetables, if they meet the safety test a week later, 
that is not going to help consumers very much. And it is 
certainly not going to promote commerce.
    So I would like to ask the two of you to speak to the I.G. 
report, Mr. Frazier; and the ease of transportation on our 
borders and what you think is the next step to provide safety 
and commerce, Dr. Van Beek.
    Mr. Frazier.
    Mr. Frazier. Thank you, Madame Chairwoman.
    Yes, I am familiar with the I.G.'s report as it relates to 
truck safety, particularly in the border crossing area. And I 
believe that we have taken steps to, in our motor carrier 
legislation, which the Administration has put forward, deal 
with some of the concerns that are raised in the Inspector 
General's report, specifically to the issues of how we conduct 
inspections first and foremost, but also to deal with increased 
funding to pay for additional inspectors that we believe need 
to be placed at the border, the process in which we do this.
    I think we recognize in a number of areas that we need to 
do more, particularly as we talk about the possibility of NAFTA 
moving forward.
    I would also say that we feel it is very important for the 
states as well to make an effort to increase the number of 
inspectors at the border. I believe you know, Madame 
Chairwoman, that the State of California has done an aggressive 
job of hiring truck inspectors for the trucks that come across 
their border.
    We are hopeful that New Mexico, Arizona and Texas will in 
some fashion be able to increase the number of inspectors on a 
state-wide basis as well. But I think that we have taken steps, 
again, in our legislation to try to deal with this issue. We 
realize it is a very important issue.
    I will also add, that I remember when the Secretary met 
with you in your office not long ago, you expressed these very 
same interests. And we have pledged to work with you to try to 
figure out a way to make sure that when we do come through this 
situation, particularly with NAFTA, that we are able to work on 
this problem together.
    Senator Hutchison: Well, I certainly think this is Federal 
issue. And I would hope that you are not going to rely on the 
states to pick up the burden that really is a Federal 
responsibility. These are trucks that go through the border 
states, but today they are in 24 states. They are going on the 
highways in 48 states in the near future. And it is a huge 
safety concern.
    Dr. Van Beek.
    Dr. Van Beek. Yes, Madame Chairwoman. I look forward to 
working with the committee on this issue increasingly, should I 
be confirmed.
    Two areas that I am familiar with now where the 
Department's activities, I think, are supporting trying to 
reduce this choke-point in commerce right now: First is the use 
of intelligent transportation systems, which would help 
identify risky carriers or carriers that should have a very 
thorough inspection as they come across the border.
    This would allow a sifting out or a targeting of the 
enforcement which Mr. Frazier has spoken to about the 
Secretary's position and increasing our resources there to 
ensure that safety is first at the border and everywhere else 
in the United States.
    The other place is a current project that the Department is 
working on with the U.S. Customs Service, where I will have an 
important role on the ITDS program, which will create an 
electronic manifest and data base, which will allow the 
agencies to cooperate so that you are talking to each other in 
real time and you are sharing records and data with each other, 
so decisions can be made quickly and not allowing that to back 
up and suffering mobility with the fresh vegetables or whatever 
commerce may be moving across the border.
    Senator Hutchison. Thank you.
    Senator Rockefeller, do you have questions of these 
nominees?
    Senator Rockefeller. No. Although I respect them both and 
will vote for them both, I do not have questions.
    Senator Hutchison. Thank you.
    Senator Breaux.
    Senator Breaux. I support them both and welcome them on 
board.
    Senator Hutchison. Senator Burns.
    Senator Burns. I have none.
    Senator Hutchison. Senator Cleland.
    Senator Cleland. Senator Hutchison, I would like to thank 
Mr. Frazier and Secretary Slater for meeting with me and other 
members of the Georgia delegations on the possible assistance 
of the Georgia Regional Transportation Authority there in 
Atlanta.
    It is a new approach that is an effort to deal with the 
growing issues of quality of life and deteriorating air quality 
by balancing out our transportation system in Georgia.
    We want to thank the Secretary and you, Mr. Frazier, for 
your efforts, particularly your efforts to make sure that the 
Georgia Regional Transportation Authority is eligible for 
Federal funds to deal with our daunting transportation and air 
pollution problems.
    So I thank you very much for that support. And it means an 
awful lot to us.
    I would just like to move on now to a wonderful innovative 
program that the Department of Transportation has. The effort 
to award slots to communities for air service: I think it is a 
very innovative program.
    The Department was very kind in selecting the Savannah-
Hilton Head area on an experimental basis to assist communities 
like that in acquiring nonstop air service, in this case to 
O'Hare. The Savannah-Hilton Head area was the biggest and 
fastest growing area in America that did not have nonstop air 
service to Chicago O'Hare. And your Department has made that 
possible. And I thank you very much for that. And I understand 
that maybe today will be able to make those slots permanent.
    We were hoping to get another slot. And you and I have 
discussed this from time to time. And we hope that in the very 
near future the Department can expand its limited service from 
Savannah to O'Hare and back.
    Is that your hope as well, that in the very near future we 
can continue to march down this road and allow communities, 
like Savannah and Hilton Head, to expand based on the wonderful 
air service that you are granting those communities?
    Mr. Frazier. Well, Senator, it is our hope that in some 
fashion we are able to help you in the very near future. As you 
know with the slot process, there are criteria that have to be 
followed by the Department.
    But I will say that I am very aware of your request of the 
Department. I will make every effort to work with you to try to 
make that happen as quickly and efficiently as possible.
    Senator Cleland. All right. Thank you very much, Mr. 
Frazier. I will support you and Dr. Van Beek.
    Madame Chairman, I return the program to you.
    Senator Hutchison. Thank you.
    Senator Dorgan, for Dr. Van Beek or Mr. Frazier, did you 
have questions?
    Senator Dorgan. Let me just--I do not have a question, but 
I do want to say I think they are extraordinarily well 
qualified. I am happy to support their nomination and will be 
pleased to vote for confirmation.
    Senator Hutchison. Thank you.
    Senator Brownback.
    Senator Brownback. I do not have any questions of the 
nominees. I will be supporting both nominees.
    Senator Hutchison. Thank you.
    I want to say I appreciate the cooperation of the 
committee. I think this is merciful to the other two nominees.
    [Laughter.]
    Senator Hutchison. I do appreciate the cooperation, because 
I really do think that Mr. Frazier and Dr. Van Beek will be 
working together on one area that we have discussed, safety and 
ease of commerce in the intermodal system. And we will want to 
work very closely with you, because I think these are major 
issues coming forward.
    I would just say if you would like to stay, you are welcome 
to. But if not, I think you will have a quick confirmation. And 
we will be pleased to support you.
    Now I would like to start with Ms. Morgan and say that I 
want you to know that I appreciate very much that you have not 
taken responsibilities and rights into the STB that were not 
specifically given to you by Congress. I think that your 
approach to staying within the delegated authority has been 
commendable. And I thank you for that.
    I think that Senator Rockefeller was correct in his opening 
statement, that it is the fault of Congress for not being 
clearer.
    The STB is a relatively new agency. I think when it was 
created, Congress tried to cover all the bases. But I think it 
has been clear that in implementation there have been a few 
gaps. So I think it is our responsibility to fill those gaps. 
And I hope we can meet that responsibility so that the STB will 
have the authority it needs to do the job.
    My view is that we need a healthy rail industry, and we 
need to have fair shipping costs and rights for the people who 
are depending on rail for that transportation. And I think 
there should be a balance. And I think we need to give the 
power to the STB to keep that balance.
    So having said that, I want to ask you to start by telling 
us what you believe are the key areas that you have not been 
able to address, that would make an impact on a strong rail 
industry and a fair shipping climate.
    Ms. Morgan. Let me answer that in a couple of ways. First 
of all, I think that the Board has gone as far as it believes 
it can go under the statute, based on the way we read the 
statute and the judicial precedent. Now----
    Senator Hutchison. What I am asking you, though, is to tell 
us where the gaps are.
    Ms. Morgan. If Congress does not feel that the direction in 
which we have gone is enough, then legislation is necessary. 
The legislative proposals that have been out there in various 
degrees focus on opening up access, adding competition. And the 
way I view those proposals is that they would be a fundamental 
change in the statute that we administer.
    So if Congress feels that the tenets of the statute that we 
administer now no longer work, then we would have to have 
legislation. And I think it would be based on the notion that 
we want to add competition. And we do not have a statute now 
that is what I would term an open-access statute.
    Now the second half of your question----
    Senator Hutchison. Let me just ask you: Do you think that 
competition is part of your mandate?
    Ms. Morgan. Yes, it is part of my mandate. But there are 
balancing--other interests that are balanced, as I implement 
the statute. So competition----
    Senator Hutchison. Would you consider those----
    Ms. Morgan. --is one of the elements that we look at, but 
it is not the only element that we look at. So if that were the 
key element to be looked at, then Congress would need to change 
the law in order for that to be the case.
    Senator Hutchison. Let me just ask you one other question, 
because I am going to have a 5-minute rule. And I think we 
started a couple minutes after I started.
    You said in your testimony that in the last 23 years, 30 
class-one railroads have been reduced to 7. Do you believe that 
that does continue to allow competition? And is that, in your 
opinion, a steady number that we canlook at in the future, or 
do you see that dwindling as well?
    Ms. Morgan. Well, first of all, there has been a 
significant restructuring in the rail industry, as in other 
parts of economy. Obviously, we did not believe, in approving 
the mergers, that they were not in the public interest and that 
they were anticompetitive.
    We approved them with significant conditions that we felt 
would protect competition. So we believe that those mergers 
were not anticompetitive.
    Now, will there be more mergers? I cannot really answer 
that. Obviously, I would have to rule on that if another one 
were to come my way. And I would not want to prejudge or 
speculate about that. But I think we have been through a period 
of restructuring. And now it is time to stabilize and to 
solidify the restructuring that has been approved, and that has 
been ongoing.
    Senator Hutchison. Thank you.
    Senator Rockefeller.
    Senator Rockefeller. Thank you, Madame Chairwoman.
    Chairman Morgan, there are two areas that I want to focus 
on. And I will submit my other questions for the record and 
would hope for a response from you within a short period of 
time.
    Competition obviously is one of them. But the one that you 
and I have not discussed before is the whole cram-down issue. 
And it is a very dramatic and rather graphic term, but I think 
in this case it is a very appropriate term. It is not 
overblown. And cram-down refers to the decisions of the STB, 
and most recently under your leadership, to abrogate rail 
employees' collective bargaining rights at a time that 
railroads either merge or make an acquisition.
    We had recently the sale of Conrail to CSX and Norfolk 
Southern. The STB basically inserts--it inserted, inserts, 
whichever you want--its own opinion in place of actual 
contractual agreements that have been reached between the 
railroad and the labor unions.
    So, for example, in West Virginia, one of the people that I 
have talked to, who is a senior rail employee, who would have 
been No. 3 on the list--and this is technical, but it makes my 
point--on the seniority list, which entitled him to work within 
ten miles of his home. All of a sudden, because of what you 
did, your commission did, now he is ranked 351st, which means 
he is entitled to work 80 miles from his home.
    It is not so much the mileage, but it is the arbitrariness 
of the way it was done that concerns me. This happened without 
any requirement that rail management negotiate with its 
employees, even though seniority lists and duty stations are 
specifically bargained for in employee rights.
    Now I find this to be extraordinary and outrageous. I fully 
support rail labor's efforts to change the law and to clarify 
that STB does not have the authority to toss out contract 
rights in merges and acquisitions.
    Cram-down is an issue that I am determined to address in 
the bill. And people may agree or disagree with me, but that is 
why I think it is so important we bring it up.
    So my questions of you are three. Is this similar to some 
of the shipper issues, in that you believe that the law has to 
be changed in order to fix the cram-down problem, or do you--
well, no.
    The second question would be: Do you support a bill like 
Senator Crapo's that would eliminate any authority, 
discretionary or otherwise, for the STB to abrogate collective 
bargaining agreements that have been worked through and fought 
for?
    If you do support that concept, what are you going to do to 
help get it accomplished? And if you do not support that 
concept, how do you justify what has happened?
    Ms. Morgan. First of all, in your statement before your 
question, you discuss my record as it relates to collective 
bargaining agreements. And I understand and respect your view 
on that.
    My written testimony goes into a little more detail about 
how I believe that I have not been the cause of this problem. 
In fact, I was faced with law and judicial precedent, and I 
have tried to move the matter in a more positive direction. But 
that is--I just wanted to make that point and then move on to 
your questions.
    With respect to your first question, which is, does the law 
need to be changed in this area to better reflect the concerns 
of rail labor as it relates to the override of collective 
bargaining agreements? The answer is yes.
    I have communicated that in my December 21 letter to you, 
Senator Hutchison, and to Senator McCain, as well as indicating 
that there are certain areas in which Congress would need to 
act to change the statutory provisions as they apply to shipper 
concerns. So, yes, that is the first answer.
    The bill that Senator Crapo has introduced obviously goes 
that route. It suggests that the law does need to be changed 
and accordingly moves in that direction. And I think that in 
order to address this concern, legislation is needed. And I 
have already on the record indicated my support for a 
legislative approach to correcting this area.
    Senator Rockefeller: Thank you. Now, let us get to 
competition, and specifically, because my time will run at the 
end of this question, bottleneck reform. You know very well, 
Chairman Morgan, that that is the issue that disturbs me the 
most.
    Ms. Morgan. Yes, I understand.
    Senator Rockefeller. We have a 15-year history on this.
    Ms. Morgan. Yes, we do.
    Senator Rockefeller. I simply cannot understand how or why 
we have created a system in which railroads are allowed to 
exploit bottleneck segments, which are really nothing more than 
local monopolies, to the extent that they are.
    I have no problem with differential pricing. That is called 
the marketplace. What I have a problem with is allowing the 
railroads to use their power over bottlenecks to control prices 
over non-bottlenecks. I think, again, it is egregious that a 
railroad can refuse to quote a price, a separate price, in a 
bottleneck segment.
    I have used this before. If I were flying to Dallas and I 
was going via two or three other cities, which one often does 
from West Virginia, I would expect to know the price of each of 
the segments of the flights that I was going to take. I mean, 
every American would. Only railroads are allowed not to have to 
quote a price. And that is extraordinary.
    So what we have done, I think, by protecting railroads in 
this situation is taken local monopolies and turned them into 
national monopolies, particularly now that we have so few class 
A railroads. That is not what the Staggers Act, in my judgment, 
ever intended to do.
    So now let me walk through the STB bottleneck decision with 
you and get your reaction as to how we might fix it. And I will 
just ask you a few questions sequentially.
    First, am I correct in saying that what the STB's 1996 
bottleneck decision said was that the Board would order a 
railroad to provide a separate rate for a bottleneck segment, 
if a shipper first got a contract from a competing railroad for 
the non-bottleneck portion of the journey?
    Ms. Morgan. I would clarify that to say that if the non-
bottleneck contract would take a shipper to a new source, then 
the bottleneck rate would have to be automatically provided. If 
it was to the same source as the bottleneck carrier already 
served, then you would go through the competitive access rules 
that we have at the Board.
    Senator Rockefeller. All right. Does this mean that a 
shipper has to have an actual signed contract from the 
competing carrier, or would a written offer or other evidence 
suffice?
    Ms. Morgan. Well, this issue--we have had three bottleneck 
cases before us. One has recently settled. We have two pending 
before us now. In both of those cases, the record indicates a 
contract, an agreement between the parties. We have not had 
this issue come up, where there is some disagreement on that. I 
hope we will not have such an issue, but I certainly do not 
want to prejudge a record on that down the road.
    Senator Rockefeller. I thank you. Rail customers tell me 
that one of the reasons that the STB's approach does not have a 
real effect on the industry is that the major railroads are now 
so few, 50 or so when we started this and 4 or 5 or whatever 
now, is that they all benefit from the current state of play on 
this bottleneck question.
    So none is willing really to poach on another's area or 
territory. It is kind of a silent acquiescence. Nobody 
complains; and, you know, no poaching on each other's captive 
customers by giving them a contract or an offer for the non-
bottleneck segments.
    Several shippers have told me that they have requested such 
contracts, and they have always been refused. Do you know of 
any signed contract or formal offer--perhaps signed contract is 
not what you want to focus on--for the non-bottleneck segments 
since your 1996 decision? Have any shippers approached you with 
such a contract and asked you to get them a rate on a 
bottleneck segment?
    Ms. Morgan. Well, we do have two pending cases. We had 
three, and one was settled.
    Senator Rockefeller. So far.
    Ms. Morgan. So far. That is correct. And I have heard this 
concern on the part of shippers. And I would just make a couple 
of points on that. One is----
    Senator Rockefeller. The answer to this point is no, not 
pending, but of any--since 1996 there have been none.
    Ms. Morgan. Well, if the cases are pending, the shippers 
obviously have contracts. And they are trying to get the 
bottleneck rate. And the FMC case has been the case that, as 
you know, involved the market dominance proceeding and what to 
apply and so forth. And that has been a big case in this 
context.
    So I am not sure I--I may not be answering your question, 
but my understanding is--are you asking me whether there have 
been contracts that have been obtained and then a case 
following from that? The answer is yes.
    Senator Rockefeller. Yes. But in my question, what I said 
was, since your 1996 decision.
    Ms. Morgan. Yes. These cases have come to us since the 1996 
decision.
    Senator Rockefeller. Are those the pending cases that you 
referred to?
    Ms. Morgan. Yes.
    Senator Rockefeller. So that they----
    Ms. Morgan. But they are pending since 1996.
    Senator Rockefeller. Yes. So technically the answer is no. 
And we do not know, since they are pending, what the matter 
will be, what the answer will finally be.
    Ms. Morgan. Well, you do not know what the answer will be 
from us, no.
    Senator Rockefeller. OK.
    Ms. Morgan. But I will say that in a separate commenting 
opinion on the bottleneck decision, I made it clear that the 
relief that we were providing was real and that we would be 
following along this course.
    Senator Rockefeller. Are these matters that have been 
pending for 3 years?
    Ms. Morgan. No. I cannot recall when the FMC case was 
actually filed. The second one that is pending has been a 
recent filing that we have been involved in discovery on. The 
FMC case, as you recall, because we had a discussion about this 
in March, had something to do with the market dominance 
proceeding and whether product and geographic competiton would 
be reviewed in that particular case. So that came in earlier.
    Senator Rockefeller. I still--I ascribe to your answer a 
no.
    Ms. Morgan. I guess we are just not----
    Senator Rockefeller. But we may disagree on that----
    Ms. Morgan. I do not want to----
    Senator Rockefeller. --because of the word ``pending.''
    Senator Hutchison. Senator Rockefeller.
    Senator Rockefeller. Can I ask----
    Senator Hutchison. Your time is up.
    Senator Rockefeller. Well, then, I will wait and have a 
second round, I hope.
    Senator Hutchison. We will have a second round.
    Senator Breaux. Senator Dorgan.
    Senator Dorgan. Thank you very much.
    Let me just understand the answer you just gave to Senator 
Rockefeller. You indicated that these cases were pending since 
1996. And then he asked you if they had been pending for 3 
years, and you said no.
    Ms. Morgan: Well, I cannot recall. They came in after the 
bottleneck decision. What I cannot recall--and I just--I will 
be happy to get you that information. I have a lot of cases 
pending, and I do not always remember exactly when they were 
filed. I do not recall when the FMC case was actually filed.
    The Minnesota Power case has been--was filed more recently, 
and we have just been in a round of discovery on that and have 
issued decisions regarding discovery.
    Senator Dorgan. But you had said they were pending since 
1996. And I guess the point is: We want to get things moving. 
If something is spinning for 3 years, the question is: Why?
    Ms. Morgan. Let me say that my record on moving rate cases 
is a good one. Now----
    Senator Dorgan. All right. Let me ask you about a number of 
other issues. You and I have talked about this. Let me describe 
to you a shipper's angst.
    You raise wheat and you put it on a railhead in Bismarck 
and ship it to Minneapolis. And they charge you roughly $2,300 
for a rail car to ship to Minneapolis; or you raise wheat and 
you put it on a railhead in Minneapolis and ship it to Chicago, 
about the same distance. It is $1,000.
    Why more than double charge to the North Dakota shipper for 
the same distance? Lack of competition or monopoly pricing. We 
have a public service commission in North Dakota that say North 
Dakota shippers, mostly farmers, are overcharged $100 million a 
year. I have just described a small circumstance of 
overcharging.
    But do you agree with the proposition that with massive 
concentration in the rail industry occurring very quickly, we 
have less competition and, therefore, overcharging and 
overpricing, and something must be done? Would you agree with 
that?
    Ms. Morgan. I believe that the Board is there to make sure 
that no rate is unreasonable, in accordance with the statute 
that we implement. And I hope that we have done that in the 
cases that we have pursued.
    Your example and the discussion that I had just a minute 
ago with Senator Rockefeller both relate to the concept, as you 
know, of differential pricing, which we have discussed, that is 
inherent in the statute that I now implement. Equalization of 
rates is not inherent in the statute that I implement.
    So within this construct of not having an open access 
statute and not having a rate equalization statute, what the 
Board is responsible for doing is trying to make sure that no 
rate is unreasonable.
    Now I realize that some shippers would like lower rates. I 
understand--you know, you and I have had this conversation. And 
I understand----
    Senator Dorgan. Now let us assume that either you or I have 
that weight, and we put it on the railhead in Bismarck. And we 
are being charged $2,300 a car. And we say, that is outrageous. 
That is piracy. We want to complain about that.
    What does it cost me to file a complaint with your agency? 
I am just a farmer, maybe part of a group of farmers, with a 
country elevator. What does it cost me to file a complaint?
    Ms. Morgan. If you are a small shipper, it would be $5,400.
    Senator Dorgan. $5,400?
    Ms. Morgan. Yes.
    Senator Dorgan. How many of those complaints have been 
filed in the last year, two, 3 years?
    Ms. Morgan. Well, under the small rate guidelines that we 
have discussed, that I issued at the end of 1996, no one has 
filed any cases.
    Senator Dorgan. No one has filed any cases?
    Ms. Morgan. We had one case that was an older case, 
Southwest Car Parts, which was then resolved under those 
guidelines. But then it was settled. So----
    Senator Dorgan. No one has filed a case since 1996?
    Ms. Morgan. Not since we issued those rules, no.
    Senator Dorgan. None, in all of America?
    Ms. Morgan. Not in the small rate case arena, no.
    Senator Dorgan. Let me ask you what you think that means. 
Does that--do you think that means that everyone out there is 
pretty well satisfied with their rail rates, or is there 
something wrong with the complaint process, if no one in the 
country has filed a complaint?
    The reason I ask you this question is--this is not on your 
watch, but you know that a Montana complaint, which my friend, 
Mr. Burns, will well recognize, I think took roughly 14 years--
--
    Senator Burns. Seventeen.
    Senator Dorgan. Seventeen years. A Montanan had the 
temerity to complaint about rail rates. And 17 years later, I 
do not know if they ever got a real answer to that.
    Senator Burns. They lost.
    Senator Dorgan. But one wonders whether the process itself 
works at all. And I would just say to you that given the 
concern about rail rates and the knowledge that shippers have 
that they are radically overcharged--you put corn on in Iowa 
and run it to the West Coast and run it through North Dakota, 
you pay less money than putting it on in North Dakota and 
moving it less distance. We pay more money to move it less 
distance.
    You know, our shippers understand that that does not make 
sense. They are being cheated. And yet no one files a 
complaint. What does that say about the complaint process?
    Ms. Morgan. Well, let me say in response to that, that in 
my letter of December 21 to you, Madame Chairman, and to 
Senator McCain, I indicated that there continued to be concern 
about the complexity of the small rate guidelines, and that if 
that is the case, I suggested some sort of legislative relief 
to respond to those concerns, as the guidelines that we had 
issued, we felt, were within the parameters of the statute.
    Now, with respect to processing cases, we have procedures 
and I believe that we have made great strides. And I have been 
committed to this, and I will continue to be committed to it, 
to processing these cases.
    I know about the Montana case, and I was the one that, you 
know, got on top of that. I am sorry we did not get the result 
you would have wanted, but I did step up to the plate and get 
it done.
    That has been a commitment of mine. It will continue to be. 
And I think I have tried to improve the processes of the Board. 
I have tried to indicate to Congress when I thought the statute 
needed to be changed and if concerns still remain.
    And I have encouraged arbitration. For example, as to the 
agreement with the National Grain and Feed Association, dealing 
with mandatory arbitration of certain matters with the 
railroads, you know, I was very active in that.
    Senator Dorgan. Well, my time is up, and I do not know that 
I will be able to stay for another round.
    But let me just make this point. The import of my question 
is not that all of this has happened under your watch. We have 
had massive concentration occurring in galloping fashion in the 
railroad industry. In my judgment, the complaint process is 
broken. It is unfathomable to me that the overcharging that is 
occurring in some areas is not subject to complaint. And I 
understand why, because this process does not work.
    You indicate you work within the parameters of the statutes 
and so on, but we need to fix all this. We need to fix it. Our 
public service commission in North Dakota says we are 
overcharged $100 million a year in rail overcharges. That is 
not fair.
    We must, as a Federal agency and as a group of legislators, 
decide that we are going find out what is wrong and take action 
to fix it and do it soon. We cannot talk about this 14 more 
years.
    Senator Hutchison. Senator Burns.
    Senator Burns. Thank you, Ms. Morgan. This morning I have 
just one question, I guess, and I would like your opinion on 
it. And it comes from page four of your testimony this morning.
    It is the second paragraph, and I quote, ``With the active 
encouragement of the Board, the National Grain and Feed 
Association and the Association of American Railroads recently 
reached ground-breaking agreements on issues of concern to 
agricultural shippers that provide dispute resolution 
procedures that are more tailored to the interests of both 
parties. These agreements will, hopefully, provide a model for 
other such carrier customs agreements.''
    I guess these agreements were made about a year ago, I am 
told. And I have a couple of questions. Have they worked? And I 
would just like a little more of an explanation on that 
particular issue.
    Ms. Morgan. Well, first of all, there actually have been 
two agreements that have been entered into. One, I believe, in 
the last two, 3 months, and one earlier last year. And they 
focus on dispute resolution of matters that come up daily 
between shippers and carriers. And they are favorably looked 
upon and are being pursued.
    I would have to go to the National Grain and Feed 
Association to ask them specifically what cases might have been 
filed under that because we are not involved in that process. 
That is a private sector arbitration process.
    But I know there was quite a bit of good feeling on the 
part of shippers about those two agreements. And I think it is 
a process that can work to remove from the regulatory process 
disputes that perhaps can be better handled privately so that 
the bigger disputes can be handled by the regulatory----
    Senator Burns. Now were these disputes based on rates, or 
was it based on service?
    Ms. Morgan. The agreements relate to both issues, issues 
such as discrimination and car supply and interchange. So I 
would say, as a general matter, they relate to both issues.
    Senator Burns. Well, I guess we have learned a lot since 
the meltdown in Houston 3 years ago, whenever we tried to -- UP 
and SP, you know, just got in a regular bind down there.
    Of course, it involved Burlington Northern, which they 
tried to help out the situation. And they got some cars tied up 
down there. As a result, we had grain on the ground in Montana. 
And in fact we lost some markets.
    Then the next year the Pacific Rim goes down financially. 
And that is our biggest export market from the northern tier 
states. And we have not recovered from that. So I guess there 
is a little bit of animosity, because everywhere I go in my 
country, I will tell you, in Montana--you know, Senator Dorgan 
was talking about, you know, you can--the disparity of shipping 
corn from Kansas to Portland less than you can ship wheat from 
North Dakota.
    Well, I will tell you an instance. I do not know if it 
still exists today. I will have to look at it. But there was a 
time where we could ship wheat to North Dakota and then 
reassign it and ship it back to Portland cheaper than we could 
ship it from Montana directly to Portland. Now for those of you 
who flunked geography, that is going the other way to go 
somewhere else.
    It is disparities like that that we really ought to try to 
address. And also, I think on that meltdown down there, I think 
it lends a little bit of credibility to S. 621. And we would 
like to get this resolved.
    But those are the areas that I am concerned with. I am 
going to continue to be, because even as I look at the National 
Grain and Feed Association, do they accurately reflect the 
interest of the producer? That is who is getting kicked in the 
teeth right now, the guy on the farm. That is the person that I 
am going to be looking out for as this thing goes on.
    So I thank the chairman for the time. I cannot make the 
next round, but I am going to watch this very, very closely. I 
guess we will have a dialog before it is all over.
    I thank you for coming this morning and understanding. I 
think you understand. Not sure. Those first two, there is no 
comment.
    Senator Hutchison. Thank you, Senator Burns.
    Senator Cleland.
    Senator Cleland. Thank you, Madame Chairman.
    Let me just say that this committee is absolutely 
fascinating to me. I am new, Ms. Morgan, on this committee and 
relatively new to the Senate. But every time I attend a hearing 
here, I learn something. It is like going to graduate school 
very quickly on these issues.
    It is fascinating to hear the son of John D. Rockefeller, 
grandson of John D. Rockefeller, complain about monopolistic 
pricing of railroads.
    [Laughter.]
    Senator Cleland [continuing]. It is a great moment in 
American history. My friend and colleague.
    Let me just say that I am curious as to what you really do.
    Ms. Morgan. I sort of wonder about that myself.
    Senator Cleland. I understand that in the deregulation 
frenzy of the eighties that the Interstate Commerce Commission, 
which was created around the turn of the century ostensibly to 
iron out these issues, particularly between businesses, that 
that was abolished and in its place has become the Surface 
Transportation Board. And we have a deregulated environment, 
but not really.
    I mean, where are we? What do you do and what is the 
mission of your Board? And after 5 years, how would you change 
it?
    Ms. Morgan. Well, I think the mission of the Board is the 
subject of the discussion here today. I think, in terms of 
pursuing legislation, that one of the issues is what is 
expected of the Board.
    But right now under the statute, the Board is there to 
allow competition where that exists and to provide protection 
where effective competition does not exist. So with respect to 
shippers that do not have competition, we are there to make 
sure that they are not abused and that their rates are not 
unreasonably high.
    We also, of course, oversee restructuring in the rail 
industry. So we approve abandonments, line sales, mergers and 
so forth. And then, of course, as part of that, there is an 
important labor component, which we discussed earlier, that 
deals with the impact of that restructuring on employees and 
the labor protective arrangements that we impose.
    Senator Cleland. Do you see yourself as a pro-competition 
entity acting on behalf of the American people and on behalf of 
businesses, when they feel that they are unfairly charged or 
unfairly competed against or unfairly taken advantage of? Are 
you a citizens advocate? Are you an advocate for shippers? Are 
you an advocate for railroads? Where are you?
    Ms. Morgan. Well, I think that the Board is an entity with 
interests outlined in the statute that I am supposed to 
balance. There is shipper interest, carrier interest, employee 
interest, locality interest, economic interest. So I view my 
role as balancing--as I understand it, Congress intended 
several different interests in implementing the law.
    Senator Cleland. What do you do, or what does the ICC do, 
that you do not do?
    Ms. Morgan. Well, with respect to railroads, we pretty much 
do what the ICC was doing when I arrived at ICC.
    Senator Cleland. Does not the ICC set tariffs and charges 
and things like that? But you do not do that, do you?
    Ms. Morgan. No.
    Senator Cleland. They did, but you do not.
    Ms. Morgan. Well, back in the old days there was--you know, 
the ICC before 1980 was quite involved in rate setting and in 
route choice.
    Senator Cleland. Right.
    Ms. Morgan. But that has not been the case, obviously, 
since the reform legislation. But in terms of the--you know, I 
was first a commissioner at the ICC. So what I did at the ICC 
as it relates to rail matters is essentially what I do today.
    Now there was some other streamlining as it relates to the 
trucking industry, but that is a separate matter.
    Senator Cleland. The Railway Labor Act has been around a 
long time. There is some feeling in the organized labor 
community that somehow the Surface Transportation Board has the 
authority to modify or cancel privately negotiated collective 
bargaining agreements. What is going on?
    Ms. Morgan. Well, the law, as interpreted by the Supreme 
Court in 1991 and further judicial decisions since that time, 
provides for the override of collective bargaining agreements, 
if necessary, to implement an approved transaction. And the 
Supreme Court in 1991 upheld that notion. So the Board has been 
involved in that implementation.
    Senator Cleland. Did the ICC have that authority before the 
Surface Transportation Board had that authority?
    Ms. Morgan. Well, prior to 1980, which is important perhaps 
to your later questions, those issues that surfaced as a result 
of restructuring in the rail industry were negotiated between 
labor and management under what was called the Washington Jobs 
Protection Agreement of 1936. Changes were made in agreements, 
but they were made privately.
    Then during the 1980's, which of course preceded my time at 
the Commission, there was a change in direction and then 
subsequent cases that followed therefrom. And the Commission 
got a little more involved, in my view, in this whole process.
    What I have tried to do, since I have joined the 
Commission, but more importantly the Board, is to get out of 
this business of overriding. We issued an important decision, 
the ``Carmen III'' decision, which limits overrides in 
accordance with the law.
    There have been other decisions that I have rendered and 
processes that I have used to level the playing field more, 
with the result that, in the recent mergers, more agreements 
have been privately negotiated than before.
    Senator Hutchison. Senator Cleland, your time is up.
    Senator Cleland. Thank you very much, Madame Chairman.
    Thank you, Ms. Morgan. I would be glad to support you.
    Ms. Morgan. Thank you.
    Senator Hutchison. I want to ask another question, and then 
I know Senator Rockefeller wants a second round, as well.
    Senator Rockefeller started talking about the situation 
that I have also heard discussed, and that is the inability of 
shippers to even get a contract quotation by a railroad in a 
captive shipper situation. And I am troubled by that.
    I want to make sure that railroads are not forced to use 
their railroad spurs at a time that would keep them from being 
able to use them in another way, as they see fit. I think that 
is a legitimate rail argument.
    But on the other hand, if we require a contract in order to 
get a quotation, and you cannot, in reality, get one, how would 
you address that issue? I think that is the biggest, one of the 
biggest, concerns we have in trying to right something that is 
balanced.
    Ms. Morgan. Well, I believe that you are speaking 
specifically about the bottleneck situation----
    Senator Hutchison. Yes.
    Ms. Morgan. --which is the crux of that problem. I believe 
that your bill, Senator Rockefeller, would essentially direct 
that a railroad provide a rate and a route upon demand of the 
shipper, which is not what our bottleneck decision says.
    Now our bottleneck decision is based----
    Senator Hutchison. That is not what is in my bill. My bill 
is more----
    Ms. Morgan. Well, your bill goes beyond the bottleneck 
decision, but I do not believe as far as that.
    Senator Hutchison. Because it really codifies what you have 
done, but does try to determine that the rail can set the 
timing. But I am concerned that if, in reality, the railroads 
will not give quotations without contracts, that that is a bar.
    Ms. Morgan. Well, as I--I appreciate that. What I was 
starting to say was that in our bottleneck decision we balanced 
several different interests in the law. The Staggers Act does 
provide for rate and route initiative on the part of railroads, 
which was a big part of the reform in 1980. Prior to that, the 
ICC had directed routes and had established rates.
    The whole view was to move away from that so that the 
railroads would, in the marketplace, have the ability to direct 
routing and rates. And there are also some other provisions 
with this in mind, which I will not go into.
    But we balanced that against other provisions in the law 
and came up with, as you know, relief, which is now pending in 
the D.C. Circuit--we may or may not win that case--providing 
for shipper relief in the situation where there is a non-
bottleneck contract. And we discussed that earlier.
    Senator Hutchison. Are there any other legal challenges to 
the rule, to your rule?
    Ms. Morgan. Well, as you know, there were two parts to the 
bottleneck decision. The one did not go as far as the shippers 
would have liked. The other went further than the railroads 
would have liked.
    On the shipper end, that was on appeal in the 8th Circuit. 
We did win that. But then the provision providing for shipper 
relief is pending in the D.C. Circuit. We have filed a brief in 
that case, and argument is in November.
    Senator Hutchison. So we are basically getting it from both 
ends.
    Ms. Morgan. So we could win that or not.
    Senator Hutchison. What is the current legal status of the 
Board's decision to eliminate product and geographic 
considerations?
    Ms. Morgan. We had a petition for reconsideration before 
us, which we denied. So that case is now on appeal in court.
    Senator Hutchison. Let me just ask you, in looking at the 
bills that have been introduced, you have, I am sure, seen the 
Burns/Rockefeller bill, you have seen mine and you have seen 
Senator McCain's, I would like to ask you to comment if you 
think there is a good approach in any of those bills. If so, if 
you would point out which ones would be a positive. Or 
secondly, if there is something that all of us have missed, 
that you think would not be a balancing of the competing 
interests, would you state that?
    Ms. Morgan. Well, just by way of summary, as between your 
two bills, I think there is language that would elevate 
competition in the rail transportation policy. There are 
bottleneck provisions, slightly different in each bill. There 
are provisions dealing with market dominance, which of course 
the Board has taken care of. At least we are on appeal, in any 
event.
    Then finally, if I recall, there are some small shipper 
provisions in each of the bills. I believe yours provides for 
arbitration. And if I recall correctly, there is one bill that 
provides a statutory revenue to variable cost ratio above which 
a rate would be found unreasonable. I think that summarizes the 
bills.
    Getting back to something I said earlier, obviously if 
competition is elevated and bottleneck relief is provided 
beyond where the Board has provided it, that is in my view a 
change in the policy, in the statute. And if that is the 
direction in which Congress wants to go, then that is the 
decision of Congress. But that is a fundamental change.
    In terms of how that will impact the rail system and so 
forth, I think that is something we have discussed previously. 
And I am sure you will have further study on that.
    On small shippers, I did recommend in my letter to you that 
something perhaps be done in that area. And I have had 
conversations on that subject. So I----
    Senator Hutchison. That is the other thing. I understand 
that you are not going to take a position on policy. But the 
small shipper issue, obviously we have tried to deal with it in 
both of our bills to varying degrees. Are you doing anything 
else that would streamline or make more open the ability for 
small shippers to come to you with this agreement?
    A $5,400 fee is pretty high for a real small shipper, just 
a farmer, I think. Are you looking at anything else that would 
open your access for a small shipper, other than what you are 
doing now?
    Ms. Morgan. Well, let me answer that in two ways. First of 
all, with respect to the fees--and obviously this has been a 
discussion that I have had with members previously--the user 
fee process is not my idea. This is something that has come 
through the appropriations process. As you may know, the 
Administration has suggested that the Board be totally funded 
by user fees.
    If I could be funded straight out of appropriated funds, 
that would be fine. The fees are not my idea. This is something 
I have had to come up with in order to meet the revenue needs. 
I do need the money that I am getting now. And I cannot afford 
to have that number reduced.
    Now in that context, we have tried to be responsive when it 
comes to special needs of individuals who want to file before 
us. And we have kept down some fees below what the cost of 
actually processing some of these cases is. In fact, the DOT 
Inspector General was concerned about some of the fees that 
they felt were lower than the cost of taking care of those 
cases.
    So I understand your concern along those lines. Now with 
respect to small rate cases and processing those, of course the 
market dominance decision applies across the Board to all rate 
cases, and discovery rules and procedures. We have applied 
procedures to large cases, because we have not had any small 
ones. But certainly, if we had small ones, streamlining of the 
process would certainly be a way we would go. And we have also 
put deadlines on both types of cases.
    So we have done what I consider to be a significant amount 
in trying to streamline. I will continue to focus on ways to 
improve the process and to streamline access to the regulatory 
process. This has been a commitment that I have made 
previously. And I will continue, if confirmed, to do that.
    Senator Hutchison. Senator Rockefeller.
    Senator Rockefeller. Thank you, Madame Chairperson.
    Chairman Morgan, I want to actually make two unrelated 
comments. In answering a question, you, just recently in this 
last round, from our chairwoman, used the word ``on appeal.'' 
And that occurs to me as a very, very important phrase, that 
virtually anything that is going to be done -- and this is one 
of the problems that you face.
    This is why I think this is not about Linda Morgan, but it 
is about us and the way we do law in this committee and this 
Congress. The railroads are going to take everything, 
everything, on appeal, and they will keep it there for years 
and years and years. And you said that. I mean, you have done 
something, and it is on appeal. And I suspect you say that a 
great deal, and I suspect it is very frustrating to you.
    Actually, I want to also, Madame Chairperson, reflect on 
something, on a joke that Max Cleland said. My great-
grandfather was a master at rebates, and a monopolist he 
certainly was. And I have often said those four railroads would 
be only one, were he still living. But there is a little 
difference. And that is the rebates he forced from the 
railroads.
    My interpretation of the current situation is that the 
railroads are allocating to themselves rebates. It has nothing 
to do with the shipper, which is what my great-grandfather did. 
But they are giving to themselves the rebates because of a 
whole series of things.
    He also indicated that the ICC, what was the difference 
between the ICC and you. And what failed to be made clear was 
that the ICC kind of, if it was a captive shipping situation, 
they went ahead and protected the shipper. Under the new 
situation, somebody has to bring a case, a reasonableness case.
    One of the problems is that in order to bring that, case 
one, you have to pay $54,500 to be able to bring it, if it is 
not a small shipper, but a regular shipper. Second, it is going 
to take forever.
    Third, as the GAO report pointed out--I forget whether it 
was 65 or 70 or 75 percent of them--believe that there is no 
point in bringing them, because they will never win. So they do 
not bring them. So the whole sort of system is skewered to 
discourage captive shippers from helping themselves.
    With respect to again that problem, let me just assume for 
the moment that a shipper cannot get the railroads to compete 
for a non-bottleneck segment. Make that assumption. And that 
they do not want the railroads to poach on each other's captive 
customers. So they will not even get in the game.
    My question to you would be: What can a shipper do? Can a 
shipper have any remedies with you? Does the shipper have any 
options? Can the shipper go to court? What can a shipper do?
    Ms. Morgan. Well, in that particular circumstance the 
shipper could pursue competitive access, which I know is 
controversial, but that is--that is a remedy at the Board. And 
shippers would argue anticompetitive conduct in that 
circumstance.
    Senator Rockefeller. But they would have to go through this 
what I have just described.
    Ms. Morgan. They would have to file a case. That is 
correct.
    Senator Rockefeller. So very, very few have, because of 
reasons that I have just described, all of which, it would seem 
to me, would make you want to, as you have been--this is to 
your credit--encourage this committee and this Congress to 
change the law, so that some of these things do not raise their 
heads, and that competition can flow more easily. And I will 
give you credit for saying that we have to change the law.
    I also am not sure how far you would push that. But you 
have been, I think, forthright, at least, on that part.
    Ms. Morgan. May I just say, for the record, shippers do win 
some cases that come to us.
    Senator Rockefeller. There have been a couple.
    Ms. Morgan. So I do not want the record to reflect that 
they never win, because that is not the case.
    Senator Rockefeller. Yes. I am just thinking, you know, of 
the thousands of people from Montana and Texas and West 
Virginia, thousands of people that would want to, if they 
could. The word goes around, do not do it, it will not work. 
And I think that is correct.
    One last question on this. If you could decide the 
bottleneck decision today and you were hampered in no way by 
precedent, by law, by circumstance, it was just Chairman Morgan 
and her commissioners, or just Chairman Morgan, and you are 
unrestrained by judicial precedent, you are unrestrained by 
Staggers, and you had that option, would you opt for opening 
bottlenecks? Would that be your instinct, to increase 
competition, if you could write the law for us?
    A subset of that question, obviously, which you may want to 
answer first, is: Are you not very troubled by the anti-
competitive effects of bottlenecks?
    Ms. Morgan. Well, let me go through that with a couple of 
points. The first point I am going to make, which I think we 
have talked about previously, is that in any comment that I 
make to any answer to any question, I never want to be viewed 
as prejudging a situation that could come.
    If Congress changes the law and presents me with a 
situation, something similar to what you have just described, I 
do not want to have answered in such a way that parties feel 
that I would not come to the table willing to implement the law 
fairly and unbiasly. So let me just say that first of all.
    Second of all, I think your description of the situation 
obviously goes to the heart of whether we agree that it is 
anticompetitive in the context of the way we want to regulate 
railroads. I know it appears that way, but I think what we need 
to ask ourselves is what areas do we want to regulate 
differently from the way we are regulating now.
    One of the underpinnings of the current law is that there 
will be captive shippers and that we do not have an open access 
statute. To change that and to go in a different direction, of 
course, is what this debate that we are having is all about. 
And that is fundamental, and that raises, obviously, as you and 
I have discussed previously, serious questions about what it 
will mean down the road.
    I think your comment earlier about how you are not sure how 
far I would go, I think what I have tried to share with 
everyone here is that when you make fundamental changes, there 
may be consequences. And we just need to understand what those 
are. And I am prepared to work with you through that process.
    But I feel obligated to at least say that there are some 
questions that I think we all collectively need to answer as we 
proceed ahead with changes.
    Senator Rockefeller. I expected that.
    Do I have a last one? OK.
    This just has to do with revenue adequacy. And we have been 
through this so many times before. It is the most absurd. It is 
not the most damaging compared to bottlenecks, but it is the 
most absurd, I think. The STB's annual survey came out, I guess 
it was, last week. And every major railroad but one was found 
to be revenue inadequate in 1989.
    Now, traffic world is a big deal in that world. And they 
point out how ridiculous that is, given that in 1998, three 
examples, lenders gave CSX and Norfolk Southern $10 billion in 
cash to buy Conrail; two, Burlington Northern CEO told his 
stockholders that 1998 was a record-breaking year ``no matter 
what measure was used,'' including a 20 percent increase in 
their dividends; and three, so many investors approached Union 
Pacific last year to buy into a $1.5 billion bond issue that 
the railroad had to turn people away.
    Gus Owens used to say that this ought to be repealed. I 
think it is one of the most self-evident changes that needs to 
be made. And if you want to comment on that, I would be happy.
    Ms. Morgan. Well, I indicated in my December 21 letter that 
the revenue adequacy determination required by Congress could 
be eliminated. We do not really apply it specifically in any 
particular case.
    But I also offered up in that letter that, if Congress did 
not want to eliminate that finding, that requirement that we 
determine revenue adequacy, the issue of how we determine it is 
controversial. And I suggested that a panel of experts come 
together and determine what would be the right way of 
determining revenue adequacy.
    Now as a general matter, I think that, in any regulatory 
scheme that we decide on, the financial health of the industry 
is important. And we need to understand what that health is and 
have some general idea about it as we regulate it, along with 
the other interests that we need to pay attention to--shippers, 
employees, and so forth.
    But I understand what you have said, and I have indicated 
in my letter a way Congress could go on this, but also 
indicating that as a general matter we continue to need to have 
some understanding of what the financial health of the industry 
is.
    Senator Hutchison. Thank you, Senator Rockefeller. I want 
to say that I do agree that financial health of the industry 
should be a factor. I would hope that we could promote 
competition. But the last thing we want is not to have that as 
a factor, as a safety net. Now how we get there, I think 
perhaps there could be a fairer basis that would be looked at 
by a panel of experts.
    But I just think balance is the important factor here. And 
I hope we can strike that balance. And I hope we can do it this 
year.
    With that, if there is no further comment, I will adjourn 
this hearing and look forward to continuing to work with you, 
Chairman Morgan. I think you are doing a terrific job, and I 
hope we can give you a law that will make it even easier for 
you to make the right decisions. Thank you.
    Ms. Morgan. Thank you.
    [Whereupon, at 11:50 a.m., the hearing was adjourned.]
                            A P P E N D I X

       prepared statement of hon. daniel k. inouye, u.s. senator 
                              from hawaii
    Madam Chairwoman. First of all, I'd like to thank you for your 
leadership in convening this hearing to consider these nominations. The 
three nominees we are considering today will play a vital role in 
shaping our nation's transportation policy. Intermodalism and 
transportation issues are critical to the continued economic growth 
that our country is experiencing. The professionals before us are 
veterans of both the Hill and the Administration--they are clearly well 
qualified for the positions they have been nominated for. I look 
forward to hearing from them.
    Linda Morgan has already served as the Chairman of the ICC and 
following the sunset of that agency, as Chairman of the Surface 
Transportation Board (STB). I have known and respected Linda Morgan for 
many years and I believe that she has served with great enthusiasm and 
commitment during her first term as Chairman of the STB.
    The magnitude of the job we require the STB to do is staggering and 
under the leadership of Chairman Linda Morgan the STB has had some 
notable successes. I commend her for efforts in leading the STB from 
its creation as an agency. It was no easy task to pare down an agency, 
and create a new one in its place. She also has helped to eliminate the 
rail crisis in the Western United States, and has spear headed the 
initiative to review the regulatory structure as it pertains to 
railroad service and railroad rate cases.
    I do not to claim that nothing more needs to be done, rather, I 
want my colleagues and to know that I appreciate how far Chairman 
Morgan has come in helping the Board fulfill its mission.
    Mister Frazier in his capacity as Assistant Secretary of 
Governmental Affairs will be charged with working with all of us and 
our staff on a regular basis--surely that will be a challenge. I have 
no doubts that he can handle such a role given his experiences in the 
past. I look forward to hearing of your plans and goals as we consider 
your appointment to this position.
    The Associate Deputy Secretary and Director of Intermodalism is a 
position which I have a great deal of interest in, Dr. Van Beek. As you 
know, my state relies heavily on multiple modes of transportation for 
not only commerce, but to ensure its existence. I am particularly 
interested in your ideas about enhancing federal intermodal 
transportation policy.
    To all of the nominees here today, thank you for your attendance 
and I look forward to working with you in the future.
                                 ______
                                 
 response to written questions submitted by hon. ernest f. hollings to 
                           michael j. frazier
    Question 1. You are replacing Steve Palmer, who watched carefully 
the needs of South Carolina. As you know, notice to all of our offices 
is critical. You also will play a crucial role in negotiations with the 
House on the aviation bill. Do you see a way to take the Airport and 
Airway Trust Fund off budget, or at least spend what is in the Trust 
Fund on key safety and capacity projects?
    Answer. As has been communicated to Congress, the Administration 
strongly opposes off-budget treatment of the Airport and Airway Trust 
Fund. At some point in the future, it may be possible to spend down the 
balances of the trust fund, but unless reasonable offsets are found, 
that is not possible under the discretionary caps without jeopardizing 
the funding of other necessary federal programs. The President's Budget 
has proposed what we consider to be adequate funding for aviation 
safety and capacity projects, particularly when viewed in conjunction 
with our proposal to raise the cap on Passenger Facility Charges. As we 
saw in 1996, when aviation taxes lapsed and trust fund balances 
plummeted, it is important to keep some balances in the trust fund.

    Question 2. What are the major initiatives that DOT will be pushing 
in the coming year?
    Answer. During the coming year, DOT's top transportation priorities 
(beyond a fully funded DOT budget) are reauthorization of critical 
transportation programs and agencies such as the Federal Aviation 
Administration, Coast Guard and the Surface Transportation Board; and 
building upon Secretary Slater's commitment to safety, thereby reducing 
deaths and injuries across the modes through securing passage of strong 
motor carrier safety, rail safety, and hazardous materials legislation.
                                 ______
                                 
    response to written questions submitted by hon. john mccain to 
                          stephen d. van beek
    Question 1. During your tenure at DOT, both in your capacity as 
Deputy Administrator of Research and Special Programs (RSPA) and as 
Special Assistant to the Administrator, what do you consider your 
greatest accomplishment or contribution?
    Answer. I believe that the enhancement of RSPA's transportation 
emergency response capabilities is my greatest accomplishment. I worked 
hard to make sure that RSPA could support the Emergency Response Plan 
issued by the Federal Emergency Management Agency (FEMA) to address 
natural and man-made disasters. RSPA's Office of Emergency 
Transportation (OET) plays a key role in assuring that federal assets 
are pre-positioned and available during and after disasters to help 
those coping with the consequences of a severe event. In the last 18 
months, we built up capacity to address emergencies through staffing 
and planning. This has served us well in working with FEMA and the 
states on the recent transportation emergencies caused by severe 
hurricanes such as Georges, Mitch and Floyd. In addition, the Office 
has played key roles in the Department's efforts on Year 2000 
contingency planning and its development of procedures for Continuity 
of Operations and Continuity of Government functions required by 
Presidential Decision Directives.

    Question 2. As Deputy Administrator, what were your highest 
priorities? What goals did you establish in that position and to what 
extent were those goals achieved?
    Answer. Working with the Administrator of RSPA, I had the lead 
responsibility for management issues in the agency, including the 
development of RSPA's Strategic and Performance Plans, evaluating 
senior leadership, and reorganizing the agency to better reflect our 
changing responsibilities. In addition, addressing Year 2000 issues was 
a top priority, both internally with RSPA's own systems (all of which 
are compliant), and externally working with stakeholders and the 
President's office to support federal sector working groups. 
Implementation of the Transportation Equity Act for the Twenty-First 
Century (TEA-21) was an important priority, particularly with the 
Office of Pipeline Safety where we have initiated, with congressional 
support, efforts at preventing third-party damage to the underground 
infrastructure -- through supporting One-Call programs of the states, 
launching a national education campaign on damage prevention, and 
producing a well-received study of best practices. We have also awarded 
grants to each of the 33 University Transportation Centers authorized 
in TEA-21 and assured that their educational and research agendas meet 
national transportation goals. Lastly, RSPA has moved forward on 
several safety-critical rule-makings for hazardous materials 
transportation and oil and gas pipelines.

    Question 3. The Office of Intermodalism is responsible for 
providing the Secretary and the heads of each DOT Operating 
Administration with information and recommendations on projects, 
programs, and policies involving or affecting more than one mode of 
transportation. How will your previous work experience enable you to 
successfully fulfill the responsibilities of the Associate Deputy 
Secretary and Director of Intermodalism?
    Answer. My experience with DOT as RSPA Deputy Administrator has 
provided direct experience both with offices within the Department as 
well as with external stakeholders who are interested in intermodal 
issues, including members of Congress, state, and private sector 
representatives. RSPA performs many multi-modal functions such as 
university research, preparation and response to natural and man made 
disasters, and the development of hazardous material regulations. As 
Deputy Administrator, I also sit on the Secretary's Management Council, 
a senior leadership team examining management issues for the 
Department. My academic training and experience also provided me with 
experience with a wide variety of issues important to public policy and 
public administration.

    Question 4. If confirmed, what policies would you initiate to 
promote efficient intermodal freight and passenger transportation 
throughout the United States? How should the Office of Intermodalism 
coordinate federal policy on intermodal freight transportation? 
Likewise, how should the Office of Intermodalism coordinate federal 
policy on intermodal passenger transportation?
    Answer. Should the Senate honor me with confirmation, I would 
advance our country's intermodal freight and passenger transportation 
through program development, planning and investments that enhance 
transportation access and capacity, and through cooperative and 
innovative partnerships with our stakeholders in State and local 
government, industry and others. Intermodalism uses modal choice and 
innovation as an evolving and dynamic solution to transportation 
challenges. To coordinate federal policy on intermodal freight 
transportation, I would lead a Department group including FHWA, FRA, 
FAA, USCG, and the Maritime Administration and rely on input from other 
federal agencies, such as the Department of Defense, and industry. One 
of the goals of this group should be to advocate for better recognition 
of the importance freight transportation plays to the economic health 
of the United States. Similarly, with federal policy on intermodal 
passenger transportation, I would participate in efforts to examine 
current and future needs of the system and its users, and lead DOT 
efforts to fashion policy recommendations for addressing critical 
needs. This would be done in consultation with DOT operating 
administrations, advocacy groups, public officials and members of 
Congress.

    Question 5. In your opinion, what do you see as the major role for 
the federal government in promoting intermodalism? What are the 
appropriate state, local, and private roles in promoting intermodalism?
    Answer. A major role for the federal government is to take and 
advocate a systems perspective of the nation's transportation network 
to make sure that it operates in a seamless fashion, enabling American 
citizens to receive the optimum yield for their transportation 
investments. This requires a focus on improving the connectors for both 
passenger (e.g. terminals) and freight (e.g. ports) movement, as well 
as ensuring that the various modes of transportation are working 
together. When the National Commission on Intermodal Transportation 
released its report to Congress five years ago, it emphasized that 
public institutions were not responding quickly enough to keep up with 
new developments which required intermodal solutions. This requires 
that the federal government provide leadership and work with the states 
and local governments to ensure that decision-making and management 
practices are complementary and focused on user needs. It also requires 
assessing the needs of industry by working with both the shipping and 
the carrier organizations.

    Question 6. What strategic initiatives will you undertake to 
improve interagency cooperation at the Department of Transportation?
    Answer. I would continue to build upon Secretary Slater's ONE DOT 
management initiative that has improved teamwork among the different 
modal administrations and offices in the Department, and use mechanisms 
such as the Secretary's Safety and Policy Councils. In addition, the 
Department will be forming intermodal groups to deal with policy 
initiatives such as the Marine Transportation System and freight 
issues.

    Question 7. In your opinion, are state Departments of 
Transportation and metropolitan planning organizations expending their 
transportation dollars on improving regional intermodal transportation 
facilities? What should the U.S. DOT do, if anything, to broaden state 
involvement in enhancing intermodal facilities?
    Answer. State Departments of Transportation and metropolitan 
planning organizations (MPOs) are doing a better job of investing in 
intermodal transportation facilities to address regional transportation 
needs, but much work remains to be done. For example, more improvements 
are needed to upgrade the NHS intermodal connector projects that serve 
as vital links to join segments of our national transportation system. 
The short length (2 miles or less) and generally low project cost of 
these NHS connectors does not reflect their significant role in 
enhancing movements of people and goods. Other regional needs could be 
met by intermodal projects that are quite costly--ones that exceed the 
funding that is typically available to MPOs and transportation 
agencies. The Office of Intermodalism is a principal member of the ONE 
DOT credit programs working group that is implementing the loan 
provisions of the Transportation Infrastructure Finance and Innovation 
Act (TIFIA) and Railroad Rehabilitation and Improvement Financing 
(RRIF) programs. Office staff and other working group members assisted 
sponsors of potential TIFIA projects in preparing applications for FY 
1999 loans, and a number of the projects selected have intermodal 
functions. Office staff will work with financial advisors to evaluate 
future applications for TIFIA credit assistance and help DOT negotiate 
the terms of the assistance for those projects selected.
                          technology questions
    Question 1. What role do you believe the Office of Intermodalism 
should play in expanding the Department of Transportation's research 
and technology development activities?
    Answer. I believe that the Office of Intermodalism should play a 
leadership role within the Department to advance transportation 
research and technology to shape a safe, fast, efficient, accessible 
and convenient transportation system for the 21st century. To do this, 
we must rely upon strategic planning, world-class research, better 
exchange of information on useful technological innovations, 
partnerships, research and education and training. The Office of 
Intermodalism would work with the National Science and Technology 
Council (NSTC) on Technology and DOT's Research and Technology 
Coordinating Council to implement the Department's Transportation R&D 
Plan and pursue a common set of performance measures for R&D that is 
consistent with DOT strategic goals. The Office of Intermodalism would 
also ensure that its contributions to strategic plans for R&D support 
the priorities identified in the DOT Strategic and Performance Plans, 
the annual OMB/OSTP R&D priorities guidance, the DOT Transportation R&D 
Plan, and the NSTC Transportation Technology and National Strategic 
Research Plans.
    The Office of Intermodalism would also work with other Federal 
agencies, state and local governments, industry and academia to move 
technology into the market place more efficiently and effectively. We 
would lead or participate in major multi-agency, multi-modal 
partnerships for the National Science and Technology Council (NSTC) and 
the Department. We would lead or participate in major multi-agency, 
multi-modal partnerships such as the Intermodal Freight Technology Core 
Group and the International Trade Data Systems Office on behalf of the 
NTSC and the Department.

    Question 2. What is your view on Intelligent Transportation Systems 
(ITS) technology and what role do you foresee for ITS in the area of 
intermodalism?
    Answer. DOT believes that operational deployments are needed to 
test concepts for a national ITS architecture and greater harmonization 
of tracking technologies and electronic data interchange (EDI) 
standards in the intermodal freight arena. Federal initiatives are 
essential to convene the public and private interests that have a stake 
in transportation improvements in intermodal transport by providing 
both financial resources and the forum for operational deployments. DOT 
believes that sharing information through linked ITS systems can 
facilitate movements of intermodal freight by identifying and bypassing 
transportation bottlenecks, and eliminating stops for vehicle and cargo 
documentation that increase operating costs and contribute to 
congestion. It is important to note that these transportation system 
improvements will not just benefit the intermodal freight industry or 
even the freight industry at-large; these operational improvements 
benefit all transportation users -- both passengers and freight. Given 
my experience as RSPA Deputy Administrator, I would also strive to 
ensure that the technologies applicable to multiple modes, such as 
Global Positioning Satellites and Fuel Cells, are fully exploited to 
address outstanding transportation challenges.
                           maritime questions
    Question 1. Our nation's maritime transportation system is facing 
increasing demands from users as the role of maritime changes in an era 
of increased intermodalism. This includes increased demands on our 
nation's waterways and associated infrastructure. What role should the 
federal government take in port maintenance and development, 
maintenance of locks, dams and bridges, and the development of 
navigational aids?
    Answer. Except for the Coast Guard's roles regarding navigational 
aids, DOT's statutory authority for port infrastructure is limited to 
landside access issues. Congress has given the U.S. Army Corps of 
Engineers, along with local and state port authorities the 
responsibility for waterside infrastructure. However, DOT programs and 
planning processes have had some success in increasing awareness and 
cooperation among diverse maritime interests such as in the Alameda 
Corridor in California, Washington State's Freight Strategic Mobility 
Investment Board, and the eight States working in the Gulf Rivers 
Intermodal Partnership.
    Additionally, the Administration has submitted legislation to 
address the issue of funding and maintenance of our harbors and 
channels. H.R. 1947, the Harbor Services Fund Act of 1999, was 
introduced by Representatives Shuster and Oberstar on May 26, 1999. The 
bill seeks to ensure necessary harbor channel capabilities for our 
Nation's waterborne commerce through the establishment of user fees. 
The proposed Harbor Services Fee is intended to approximate the harbor 
benefits and services received, and would be imposed on the commercial 
vessel and not the cargo. The fee structure is based on the harbor 
services required and benefits received by four different categories of 
commercial vessels.

    Question 2. What role does our maritime transportation system play 
in intermodal transportation and what can be done to improve its 
integration into our intermodal system?
    Answer. As the world's leading maritime and trading nation, the 
United States relies on an efficient and effective maritime 
transportation system to maintain its role as a global power. More than 
95 percent of our international trade moves through the Nation's ports 
and waterways. More than 2 billion metric tons of domestic and 
international commerce moves on the water, and 134 million passengers 
travel annually by ferries. Furthermore, our maritime transportation 
system supports military deployment, commercial fishing, and 
recreational uses. Last September, under the leadership of Secretary 
Slater, the Department released A Report To Congress on An Assessment 
of The U.S. Marine Transportation System. A highlight of the assessment 
is that integral to the Marine Transportation System (MTS) are inland 
rail, highway and pipeline intermodal connections that permit freight 
and passengers to reach the marine facilities. The report provides a 
blueprint for the Nation's maritime transportation system and its 
integration into our intermodal system. The report calls for strategic 
areas of action including the creation of a National Advisory Council 
to advise on MTS issues.
                                 ______
                                 
     response to written qestions submitted by hon. john mccain to 
                           michael j. frazier
    Question 1. During your tenure as a Deputy Assistant Secretary for 
Governmental Affairs at DOT, what do you consider your greatest 
accomplishment or contribution? What were your highest priorities? What 
goals did you establish in that position and to what extent were those 
goals achieved?
    Answer. Before coming to the Department of Transportation, I had 
minimal experience relating to transportation. As Deputy Assistant 
Secretary, my biggest accomplishment was in learning about 
transportation issues, the Department, and the concerns of the various 
stakeholder groups.
    My priorities included assisting Secretary Slater and the Assistant 
Secretary of Governmental Affairs in promoting the Department's 
commitment to safety, mobility, and economic growth. My goals included 
improving relationships with the Congress, state and local governments 
and transportation interests and providing a high level of 
responsiveness.

    Question 2. During the past nine months that you have been Acting 
Assistant Secretary for Governmental Affairs at DOT, what do you 
consider your greatest accomplishment or contribution? What were your 
highest priorities? What goals did you establish in that position and 
to what extent were those goals achieved?
    Answer. While serving as Acting Assistant Secretary for 
Governmental Affairs, I was instrumental in promoting and securing 
support for major transportation initiatives and legislative proposals. 
I have worked closely with Secretary Slater and others in the 
Administration in coordinating DOT efforts and providing technical 
assistance to Capitol Hill on FAA reauthorization legislation. I have 
played a key role in negotiations with the conferees and their staff in 
addressing issues to help secure passage of reauthorization 
legislation.
    As truck and bus safety are of paramount importance, I have also 
worked to help craft legislation that meaningfully addresses motor 
carrier safety issues.

    Question 3. Recognizing the limited time period left in this 
Administration, could you identify for the Committee the top three 
transportation priorities for the administration during the next year?
    Answer. Beyond a fully funded DOT budget, DOT's top transportation 
priorities are reauthorization of critical transportation programs and 
agencies such as the Federal Aviation Administration, Coast Guard and 
the Surface Transportation Board; and building upon Secretary Slater's 
commitment to safety, thereby reducing deaths and injuries across the 
modes through securing passage of strong motor carrier safety, rail 
safety, and hazardous materials legislation.

    Question 4. If confirmed, what initiatives will you undertake to 
improve interagency cooperation at the DOT?
    Answer. I am committed to Secretary Slater's ONE DOT initiative, 
which seeks to bring an intermodal approach to transportation 
decisionmaking. If I am fortunate enough to be confirmed, I will work 
to establish a better integration of efforts within the Office of the 
Secretary (OST) and between OST and the modes. I have already 
established a framework for representatives of OST and the modal 
governmental affairs offices to meet and work together on issues of 
importance.
                           nafta/truck safety
    Question 1. As you probably know, last December the DOT Inspector 
General issued a critical report on the Department's safety program for 
commercial trucks at the U.S. borders. The report cited that "far too 
few" trucks were being inspected and "too few" of the inspected Mexican 
trucks met U.S. safety standards. More recently, the IG reported that 
Mexican trucks were found traveling widely throughout the United 
States. Mexican carriers were found in 24 states beyond the border, 
including New York, Florida, Washington, Montana, North Dakota, 
Colorado, Iowa, South Dakota, and Wyoming.
    (a) What is your view regarding the Administration's preparedness 
to fulfill the cross-border traffic requirements of NAFTA and more 
important, what is the Department doing in response to the report that 
Mexican trucks are already traveling throughout the U.S.?
    (b) What specific actions has the Department taken to address the 
shortcomings identified by the Inspector General and what future 
initiatives are planned?
    (c) Given that the border states were scheduled to open almost 4 
years ago, why has it taken so long for the Department to take these 
actions?
    (d) Under NAFTA, Mexican trucks are scheduled to have access to the 
contiguous 48 states in 2000? What are the chances the ratified 
treaty's schedule will be met?
    Answer. (a) DOT believes it has made substantial progress in 
addressing the safety concerns associated with cross-border 
transportation. However, it recognizes that additional improvements are 
needed. In light of the support extended by Congress in this effort and 
the additional resources made available in TEA-21 for safety related 
projects, I believe DOT will be able to fully implement the safety 
initiatives that it has put in place and ensure that cross-border 
operations do not present an undue safety risk to the American public. 
DOT and the Inspector General's findings that trucks are already 
traveling throughout the U.S. reaffirm that a more aggressive 
enforcement program is needed to make certain the Mexican trucks are 
properly registered and do not operate outside the scope of their 
registration. It should be noted that there are several types of 
exemptions in law for Mexican-based carriers to operate within the 
United States.
    However, carriers found to be in violation are currently subject to 
civil penalties and loss of operating privileges.
    DOT is considering a variety of other enforcement options that may 
be available to encourage greater compliance. Since the majority of the 
States do not have authority to enforce federal registration 
requirements, enforcement remains a federal responsibility. DOT 
supports legislation that would allow it to deny entry to all carriers 
that are not properly registered and to place vehicles out-of-service 
if they are found to be operating outside the scope of their 
registration authority.
    (b) The Department agrees with the Inspector General 
recommendations and is taking steps to implement them as follows:

         The Department has hired an additional 27 Federal 
        inspectors for ports of entry in Texas. This will supplement 
        the existing DOT staff of 13 (10 in Texas and 3 in Arizona) and 
        will complement the enforcement activities of the four border 
        States.
         The Department is strengthening partnerships with the border 
        States in border enforcement activities. TEA-21 provides for a 
        5 percent takedown from the Motor Carrier Safety Assistance 
        Program for border enforcement activities ($25 million from FY 
        1999 through FY 2001). In FY 1999, $4.5 million was made 
        available for this purpose. Since 1995 we have provided the 
        southern border States with over $10 million in additional 
        grants.
         The Department is also encouraging the border States 
        to apply for a share of the discretionary funds available in 
        the TEA-21 for new border infrastructure and corridor planning 
        to build inspection stations at key locations.
         The Department expects to publish new operating 
        authority application procedures to address the NAFTA traffic 
        that will be operating beyond the commercial zones. This 
        includes an identification number to ensure that only those 
        carriers with authority to operate beyond the commercial zones 
        are so identified.
         The Department expects to establish a NAFTA Program 
        Director to coordinate all our NAFTA activities.
         The Department continues to play a very active role in 
        the coordination of Federal and State border activities.

    In all border enforcement activities, the Department's approach is 
to create multiple points within the system where unsafe vehicles and 
carriers can be identified before problems occur. This system begins 
with the application process, makes use of Mexican oversight and 
information systems, continues with inspections at the ports of entry, 
and includes additional checks with roadside inspections in the 
interior of border States.
    (c) Since December 1995, when the Administration made the decision 
for safety reasons to postpone implementation of NAFTA's truck access 
and investment provisions, DOT has worked with the States, the 
Commercial Vehicle Safety Alliance (CVSA), the International 
Association of Chiefs of Police (IACP) and Mexico to improve the safety 
infrastructure on both sides of the U.S.-Mexico border. During this 
time DOT's view has been that the most effective means to ensure safe 
cross-border operations is through continued strengthening of the long-
standing Federal-State partnership created by the Motor Carrier Safety 
Assistance Program (MCSAP). Since 1984, federal funds received by the 
states under MCSAP have been instrumental in improving highway safety 
and increasing uniformity in the enforcement of motor carrier safety 
regulations throughout the country. While much more remains to be done, 
over the years DOT has been using this successful partnership to 
effectively address both the border and national safety issues.
    (d) While the United States and Mexico have been working for some 
time on truck safety issues and much has been accomplished, additional 
work remains to be done. In light of this, no decision has been taken 
with respect to when Mexican commercial truck vehicles may be allowed 
more liberalized access into the United States.

    Question 2. The Transportation Equity Act for the 21st Century, 
TEA-21, included a provision directing the Secretary to conduct a 
review of the qualifications of any foreign motor carrier who has 
applied to operate in the U.S. but whose application has not been 
processed due to the current operating moratorium. The Secretary was 
required to report his findings to the Committee 120 days after 
enactment (October 6, 1998), yet, to date, the Secretary has failed to 
meet this statutory directive.
    (a) Given that you have served at the Department since the law was 
enacted, when can the Committee expect to receive this long-awaited 
report? Let me point out that back in April, this same question was 
asked of Mr. Conti and we were told ``the report is in the final stages 
of preparation and approval.'' But again, we have received nothing.
    (b) If confirmed, what, if any, initiatives will you take to 
strengthen the Department's commitment to meeting statutory 
requirements, carrying out timely rulemakings, and improving 
responsiveness to Congressional inquires?
    Answer. (a) The report is currently in the Office of the Secretary 
for concurrence, and I will make it a priority to get the report issued 
quickly in final form.
    (b) I pledge to work closely with those offices that have the major 
responsibilities for meeting statutory requirements and carrying out 
timely rulemakings. Since my arrival at the Department, I have made it 
a top priority to increase overall responsiveness to the Congress. I 
will continue to make that a top area of emphasis.

    Question 3. TEA-21 further provides that one year after enactment, 
most Federal Motor Carrier Safety Regulations would apply to all 
commercial vans carrying more than 8 passengers except to the extent 
that DOT, after a rulemaking proceeding, provides for exemptions. As 
you know, there have been a number of deadly accidents involving these 
vans-the so-called ``camionetas,'' particularly in the border states of 
Texas and Arizona. DOT failed to issue an implementing rule by the June 
9, 1999 deadline and is not enforcing the law in this regard.
    Let me remind you that the Department was directed to address this 
van safety issue 4 years ago as part of the ICC Termination Act of 
1995. The TEA-21 provision was included out of frustration over the 
lack of action by the Department to regulate these vehicles. Yet, DOT 
is still not regulating these potentially deadly vehicles, and instead, 
has actually ``exempted'' the entire class of vehicles from regulation 
until further notice.
    When can we expect DOT to uphold the law and require these van 
operations to comply with our federal safety regulations?
    Answer. On September 3, 1999, the Department's Office of Motor 
Carrier Safety (OMCS) issued (1) an interim final rule that amends the 
definition of ``commercial motor vehicle'' (CMV) to include vehicles 
designed or used to transport between 9 and 15 passengers (including 
the driver) for compensation, but temporarily exempts the operators of 
such vehicles from the Federal Motor Carrier Safety Regulations 
(FMCSRs); and (2) an NPRM that would propose to learn more about 
operational safety of small passenger-carrying CMVs by requiring 
operators of these vehicles to file a motor carrier identification 
report, mark their CMVs with a USDOT identification number, and 
maintain an accident register.
    Additionally, I am aware of a provision concerning this issue in S. 
1501, the Motor Carrier Safety Improvement Act of 1999, which you 
introduced on August 5. I understand the serious concerns about the 
extended length of time it has taken to address this issue. I promise 
to work with the various offices in the Department, which have 
responsibility for this issue and with the Committee to move more 
expeditiously on this important issue.
                           maritime questions
    Question 1. In recent years, we have experienced a serious decline 
in the number of American-flagged carriers in the international 
maritime trade. In your view, what can and should be done to improve 
the competitiveness of American-flagged carriers engaged in the 
international trade?
    Answer. The differences between U.S. and foreign standards-of-
living, taxes, business and labor practices, public safety, and 
environmental protection contribute to higher production costs in the 
United States, relative to other nations. These disparities make it 
more difficult for U.S.-flag companies, and the national-flag lines of 
other advanced economies, to compete internationally.
    While we cannot eliminate these differences, we can seek to ensure 
the availability of a U.S.-flag fleet and related transportation 
infrastructure that is committed to support Department of Defense 
sealift requirements and our Nation's economic security. The most 
effective means to accomplish this objective is to continue full 
funding of the Maritime Security Program.
    In addition, we are working to reduce or eliminate trade barriers 
that restrict U.S.-flag carriers' access to foreign markets. Our 
strategies include negotiating agreements, understandings and 
arrangements to reduce barriers that restrict U.S.-flag carrier access 
to foreign transportation markets, add to costs, limit revenues, and 
impede efficient operations of the U.S. maritime industry in 
international trade. An example of this effort is the new maritime 
agreement with Brazil that was signed on October 20, 1999. This 
agreement achieved the removal of several discriminatory practices that 
had burdened the operations of U.S. carriers serving the Brazil trade.

    Question 2. There is a growing concern that the rise in 
international organized crime, rogue states and terrorism pose a 
serious threat to our nation's maritime transportation system. What 
should be done to insure the safety of our maritime transportation 
system and prevent costly cargo losses?
    Answer. We must be aware that, while there is a need to invoke 
safeguards to protect against the array of security threats, there 
should also be a balance with the rising demands for efficient/
uninterrupted maritime transportation system operations to service 
projected growth in passenger and cargo movements.
    The Presidential Interagency Commission on Crime and Security in 
U.S. Seaports (established in April 1999) will heighten national 
awareness of security issues in the areas of cargo crimes, smuggling, 
and terrorism. It will develop a coordinated interagency approach to 
port security, which addresses seaport organized crime and terrorism. 
The Commission will be addressing security awareness, system 
transparency, public and private sector coordination, and international 
cooperation. A goal of the Commission is to provide recommendations for 
improvements in security. A final report is due in Spring 2000.
    The Department of Transportation plays a major role in the 
Commission. The Maritime Administrator serves as one of the three co-
chairs and the Commandant of the U.S. Coast Guard is a member of the 
Commission. Under their leadership, the critical issues related to 
cargo and other seaport crime, smuggling, and terrorism will be 
considered by the Presidential Commission.

    Question 3. In a report to Congress earlier this month, Secretary 
Slater stopped short of providing detailed recommendations on how port 
maintenance and development should be funded. What is the 
Administration's view on how port maintenance and development, 
including dredging, should be funded?
    Answer. My understanding is that the purpose of the report was not 
to solve the funding issue. The Task Force recognized that funding is 
at the core of many issues relating to the Marine Transportation System 
(MTS). While a consensus could not be reached on all funding issues, 
the Task Force recommended a four-step process to gain a better 
understanding of MTS funding. This process included:

         Coordinating Federal funding processes.
         Defining existing MTS funding mechanisms (public and 
        private).
         Forecasting future demands on the MTS.
         Exploring innovate funding mechanisms.

    With respect to funding channel improvements and maintenance, the 
Administration believes that user fees are a proper approach to 
ensuring that the U.S. has the necessary harbor channel capabilities to 
handle our nation's waterborne commerce. As you know, the 
Administration submitted legislation to address the issue of funding 
the development and maintenance of our harbors and channels. The 
Administration's bill, Harbor Services Fund Act of 1999 (H.R. 1947), 
was introduced by Congressmen Shuster and Oberstar (by request) on May 
26, 1999.AVIATION QUESTIONS
    Question 1. What will you do to ensure that the DOT complies with 
deadlines set by congressional committees for information or reports?
    Answer. As I stated in Question 2(b) under ``NAFTA/TRUCK SAFETY,'' 
a high level of responsiveness has been and will continue to be a major 
emphasis area in this office. I will also continue to work closely with 
the various offices within the Department which have the lead 
responsibility for reports to Congress and ensure that deadlines are 
closely adhered to.

    Question 2. It appears as if ``open skies'' negotiations with the 
United Kingdom have stalled. What is DOT doing to open up the 
restricted UK market?
    Answer. The Department shares your frustration with the British 
unwillingness to eliminate the restrictions in the U.S.-U.K. Air 
Services Agreement. During informal discussions with the British on 
October 18-19, U.S. representatives began exploring the U.K. offer to 
open up all-cargo operations, while also emphasizing our continuing 
interest in liberalizing the passenger regime.
    Establishing new opportunities for U.S. carriers and U.S. cities 
for U.K. services remains our international aviation priority. We are 
continuing to assess all options for changing this unsatisfactory 
aviation relationship.

    Question 3. Some observers of the FAA believe that the agency has 
difficulty controlling the costs of many of its programs, particularly 
those that involve acquisition of major air traffic control 
modernization systems. What role does DOT play in ensuring that the FAA 
spends taxpayer dollars wisely? Should DOT shoulder any of the 
criticism when the FAA makes mistakes?
    Answer. Spending taxpayer dollars wisely is a high priority for the 
Department of Transportation, and the Office of the Secretary (OST) 
does have the responsibility to set overall policy for agency 
management. To keep abreast of major programs, we ask that project 
status reports be submitted to OST that describe these programs and 
progress against baseline cost and schedule goals. When FAA is not 
meeting those goals, we meet to discuss the problems and FAA's intended 
solutions. With the management freedoms provided by the Congress, only 
FAA can implement the needed changes to solve programmatic problems, 
but establishing a healthy dialogue concerning management issues is 
beneficial to both FAA and OST.

    Question 4. The DOT has been without an Assistant Secretary for 
Aviation and International Affairs for quite some time, and the 
department just lost one of the key deputies in that office who had a 
great deal of expertise and institutional knowledge. There are many 
important international issues, however, that need attention. When can 
the Congress expect to receive a nomination for that Assistant 
Secretary position?
    Answer. The Department expects that a nomination will be forwarded 
in the near future.

    Question 4a. What is the current status of efforts to get the 
European Union to withdraw its discriminatory rule restricting the use 
of hushkitted and re-engined aircraft? What role is DOT playing in 
those efforts?
    Answer. U.S. officials, including those from DOT, have continued to 
meet with EU officials at various levels to resolve this issue. To 
date, the Commission has remained unwilling to agree to proposing 
withdrawal, and as yet has not produced a credible alternative to 
withdrawal of the rule. DOT has been deeply involved in these efforts.

    Question 5. If the President is presented with an FAA 
reauthorization bill that provides budgetary firewalls for FAA 
spending, will the Secretary advise him to veto the bill?
    Answer. The Administration would strongly oppose a proposal to 
create a discretionary budget category (a.k.a. firewall) for a specific 
program. A firewall would provide the FAA with a guaranteed funding 
stream without providing incentives to use those funds efficiently.

    Question 6. The Transportation Research Council recently issued a 
congressionally-ordered report on domestic airline competition. The 
members of the committee that prepared the report apparently differed 
on the extent to which the DOT should formally police anti-competitive 
practices in the industry. But all members agreed that the DOT should 
do what it can to increase airline competition, and it made numerous 
recommendations. What is the DOT's response to this report: What 
actions, if any, are being taken to implement its specific 
recommendations? Are there any conclusions or recommendations with 
which the DOT disagrees?
    Answer. I am glad to make available to you a copy of the 
Department's response, which was submitted to Congress on October 21.
    The Department, at Secretary Slater's direction, has already 
undertaken a number of actions that are consistent with the 
recommendations of the TRB, as follows:

         DOT has just released a major study ``Airport Business 
        Practices and Their Impact on Airline Competition,'' which 
        deals with the critical importance of airport access.
         DOT has proposed legislation that would eliminate over 
        time the slot restrictions at JFK, LaGuardia, and O'Hare.
         DOT is currently conducting a study of the 
        Department's Computer Reservation System rules that will 
        encompass consideration of the TRB's recommendations regarding 
        changes in the airline distribution system and the multiple 
        listing of code share services.

    The Department's attached response to the TRB report noted that 
some of the TRB's recommendations would require legislation, some were 
worthy of further study, some would be difficult to implement, and some 
did not appear to be necessary. The Department agrees with the TRB that 
the Department has an important role to play in promoting competition 
in the airline industry, shares the TRB's vision that "preserving and 
expanding opportunities for competition should remain the principal 
goals of aviation economic policy," and agrees with the TRB on the lack 
of adequate competition in some markets and the importance of providing 
travelers with viable competition that will produce lower fares and 
better service.

    Question 7. Section 337 of the Department of Transportation and 
Related Agencies Appropriations Act, 1998, P.L. No. 105-66, 111 Stat. 
1425, 1447 (October 27, 1997) (``the Shelby Amendment'') authorizes 
carriers at Love Field to operate nonstop flights to Mississippi, 
Alabama, and Kansas. Do you agree that federal law is clear as to the 
type of flights that can be operated under this statute?
    Answer. Yes. In December 1998, the Department issued an order 
stating that the Shelby Amendment expressly allows airlines to operate 
nonstop flights from Love Field to points in Kansas, Mississippi, and 
Alabama, using any kind of aircraft. Order 98-12-27 (December 22, 
1998), affirmed on reconsideration, Order 99-4-13 (April 13, 1999). The 
Department simultaneously held that it had the authority to interpret 
the federal statutes that apply to Love Field services and that govern 
Dallas' authority to limit Love Field operations. Order 98-12-28 
(December 22, 1998), affirmed on reconsideration, Order 99-4-14 (April 
13, 1999).
    Question 8. Do you agree that local authorities do not have 
authority to limit and/or bar such nonstop services to those states?
    Answer. The Department's orders stated that federal law does not 
allow the City of Dallas, the owner of Love Field, to bar airlines from 
operating the kind of services authorized by the Shelby Amendment, 
notwithstanding claims by the City of Fort Worth that Dallas' 
contractual obligations to Fort Worth require Dallas to prohibit those 
services (and certain services authorized by section 29 of the 
International Air Transportation Competition Act of 1979, 94 Stat. 35, 
48-49 (1980), known as the Wright Amendment). While airport owners like 
Dallas have legitimate management needs allowing them to impose 
reasonable regulations for airport operations, as the Department 
stated, federal law prohibits them from engaging in route regulation.
    Question 9. Do you recognize that under the Airline Deregulation 
Act, control over airline routes is entirely a federal issue, which 
cannot be limited by state and local parties' agreements?
    Answer. The Department's order stated that 49 U.S.C. 41713(b), a 
provision enacted by the Airline Deregulation Act, preempts state and 
local governments from regulating airline routes. The Department 
recognized that a state or local government operating an airport may 
exercise its proprietary rights. The Department noted that the courts 
had upheld a perimeter rule imposed at LaGuardia Airport by the Port 
Authority of New York and New Jersey on the ground that the Port 
Authority's demonstrated need to alleviate severe congestion problems 
at LaGuardia justified its adoption of the perimeter rule. Virtually no 
other airport operated by a state or local government has adopted a 
perimeter rule, and neither the courts nor the Department have upheld 
any such rule. The Department determined that there was no 
justification for Dallas' imposition of any perimeter rule at Love 
Field or any other restriction that would prevent airlines from 
operating the types of service authorized by the Wright and Shelby 
Amendments.

    Question 10. Is it not true that airport funding grants awarded to 
airport proprietors are dependent upon airport proprietors' actions 
that demonstrate nondiscriminatory behavior and that such actions are 
in compliance with all federal aviation requirements?
    Answer. In accepting a grant, each airport operator is required to 
provide assurances to the FAA that the airport will be operated in 
accordance with a number of Federal requirements, including the 
requirement to make the airport available for public use on reasonable 
conditions and without unjust discrimination. The FAA enforces those 
assurances through its grant compliance program, with sanctions that 
include withholding of grant funds.

    Question 11. There is a lawsuit before the Fifth Circuit Court of 
Appeals that questions the authority of the Department of 
Transportation to address discriminatory actions involving the 
regulation of routes. Can we expect that the Department will continue 
to aggressively pursue this litigation to ensure that decisions that 
pertain to interstate commerce are made at the federal level?
    Answer. In the Fifth Circuit Court of Appeals litigation, Fort 
Worth, American Airlines, and the Dallas-Fort Worth International 
Airport Board are challenging the Department's December 1998 and April 
1999 orders on Love Field service. They contend that the Department did 
not have the authority to issue its interpretation of the federal 
statutes applicable to Love Field service and that Dallas may bar 
airlines from operating Love Field services authorized by the Shelby 
Amendment or the Wright Amendment. The Department believes that its 
conclusions are correct. I understand that the Department will continue 
to defend its decision in that litigation and will enforce that 
decision against Dallas if the city violates its obligations under the 
federal statutes interpreted by that order.

    Question 12. Do you agree with independent studies that show that 
competition, particularly from low fare carriers, increases passenger 
loads and results in significant consumer savings?
    Answer. In 1996, the Department released a study, The Low Cost 
Airline Service Revolution, that showed that at that time low-fare 
competition was saving consumers $6.3 billion annually. The effects of 
low-fare competition are tremendous. When a low-fare carrier enters a 
market for the first time traffic often doubles or triples, and average 
fares decline by 50 percent to two-thirds.
    Low-fare airlines serve a demand sector that is greatly underserved 
when only the large network airlines serve a market. This means in the 
absence of low-fare service, literally millions of consumers who would 
like to travel by air are not able to do so. The presence of low-fare 
service promotes substantial economic growth to the benefit of local 
communities, travel related industries, and the aerospace industry.

    Question 13. A recent draft FAA/DOT report on airport practices and 
competition emphasized how important new entrants are to competition 
and fares and notes that the lack of facilities keeps new entrants out 
of airports. Do you agree that DOT should take immediate steps to 
eliminate barriers to entry?
    Answer. The Department issued its final report on this subject, 
``Airport Business Practices and Their Impact on Airline Competition,'' 
on October 21. The report sets out a number of steps that the DOT and 
the FAA can and will undertake today to improve airline competition. In 
particular, the DOT/FAA will:
    Encourage airports to adopt a set of ``best practices'', as 
appropriate for the airport, as cited in FAA/DOT report ``Airport 
Business Practices and Their Impact on Airline Competition.''
    Designate the Assistant Secretary of Aviation and International 
Affairs as DOT's ``competition advocate'' for promoting competitive 
access to airports.
    Ensure that airports meet their legal obligation to provide 
reasonable access in support of competition and provide training and 
guidance to field offices and airports for assistance in meeting this 
goal.
    Ensure that passenger facility charge applications for terminal 
projects include the required explanation for any competitive 
limitation at the airport before approving terminal development 
projects.
    Provide AIP funding only for airport master plans that include a 
description of competitive effects resulting from the addition of gates 
or related facilities.
    Implement a new database that will provide current information on 
various aspects of PFC projects, including the number of terminal 
gates, ticket counters, baggage carousels built or renovated, the net 
increase in those facilities and their respective funding source (PFC 
or non-PFC), and the types of air carriers to which the facilities are 
or will be leased and the specific terms that apply.
    Conduct a public outreach effort to explain how the PFC program can 
enhance airline competition.
    Encourage airports to establish a ``terminal use monitoring 
program'' before any PFC applications are approved for terminal 
projects.
    Require airport operators to (1) resolve new entrant access 
complaints within a reasonable period, and (2) clearly specify and 
publish what is required for a new entrant to acquire a gate and for an 
incumbent carrier to expand.

    Question 14. Do you agree that noise at high-density airports is 
significantly lower than it's ever been and is likely to continue to 
decrease with the phase out of Stage 2 aircraft and the introduction of 
even quieter aircraft?
    Answer. Yes, for the most part. The key factors that determine the 
direction and extent of the airport noise exposure change are the 
aircraft fleet mix and operational growth rate. Those airports that are 
capacity constrained and have a high proportion of Stage 2 aircraft 
should show the greatest reduction in both noise contour area and 
number of people impacted. Absent any new regulation, FAA would 
anticipate that, on average, the reduction in noise contours will level 
off after 2000. The reason for this is that as aviation continues to 
grow, the natural replacement of older aircraft by newer (quieter) 
airplanes compensates for the greater numbers of aircraft flying.

    Question 15. Isn't it difficult for a carrier to compete in 
important East-West and North-South markets when it cannot operate at 
LaGuardia and Reagan National?
    Answer. I believe that it is vital that air carriers have adequate 
access to all airports within their base of operations. Large cities in 
particular provide substantial traffic to support a carrier's 
operations. For example, AirTran's service between Atlanta and New York 
is an important source of feed for its operations beyond Atlanta.
    And it is also important for a carrier to be able to meet a 
traveler's needs, particularly business travelers' needs, for service 
to important business centers such as New York and Washington. 
LaGuardia and Reagan National are the airports preferred by business 
travelers in the New York City and Washington metropolitan areas. 
Unfortunately, entry in some highly constrained airports is difficult. 
This problem is felt most acutely by the smaller, new entrant carriers, 
although Southwest has operated successfully without serving slot-
controlled airports.

    Question 16. The Transportation Research Board's report entitled 
``Entry and Competition in the U.S. Airline Industry: Issues and 
Opportunities'' calls on the federal government to take actions to 
increase domestic airline competition. In particular, it notes that 
slots and perimeter rules make it extremely difficult for new entrant 
and low fare carriers to get into important airports. Do you agree with 
the TRB report that slots and perimeter rules should be modified in 
order to open important markets to new entrant and low fare carriers? 
If not, please explain in detail why not?
    Answer. We agree with the TRB report that the High Density "slots" 
Rule has outlived its usefulness and has become an impediment to 
competition, especially for new entrants. For this reason, Secretary 
Slater proposed legislation to terminate the slots rule by 2004 at New 
York LaGuardia and Kennedy Airports and Chicago O'Hare, with earlier 
elimination of the slot restrictions at those cities for the new 
generation of very quiet regional jets.
    As you know, in recent years the Department has used its slot 
exemption authority to allow low-fare airlines access to these three 
slot constrained airports, most recently granting JetBlue 75 slot 
exemptions at JFK to be phased in over a 3-year period. Regarding the 
TRB's recommendation regarding the perimeter rules, we noted that any 
modification to the rules should be addressed by Congress.

    Question 17. Can you explain why more slots have been given to 
foreign carriers at high density airports than to new entrants? How 
many permanent slots at LaGuardia and National have been given to new 
entrants in the last five years?
    Answer. U.S. and foreign air carriers can gain access to the High 
Density Rule (HDR) airports in three ways: (1) the allocation of 
international slots (seasonally) by the FAA; (2) the open market 
pursuant to the "buy/sell rule"; and (3) slot exemptions granted by the 
Secretary of Transportation.
    FAA regulations provide that if an international slot is not 
available to accommodate an international request from a foreign air 
carrier that has the right to serve O'Hare International Airport, a 
domestic slot will be withdrawn from a domestic carrier for allocation. 
Due to a statutory cap on the number of slots that may be withdrawn 
from domestic carriers and allocated for international requests, the 
U.S. continues to provide access to O'Hare through the grant of 
exemptions by the Secretary. In return, U.S. carriers have received 
market access to foreign markets that would otherwise be unavailable.
    In 1994, Congress gave the Secretary the authority to grant 
exemptions for certain operations at LaGuardia, JFK, and O'Hare 
airports. Since that time, 30 permanent slot exemptions have been 
granted to new entrant carriers at LaGuardia Airport. The Secretary has 
no statutory authority to grant slot exemptions that would increase the 
total number of operations at Reagan National Airport.

                                
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