    [Senate Hearing 107-395]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-395

                    DEPARTMENT OF TRANSPORTATION AND RELAT-
                ED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2002

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 FIRST SESSION

                                       on

                               H.R. 2299/S. 1178

     AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF TRANSPORTATION AND
    RELATED AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2002, AND FOR
                                 OTHER PURPOSES

                                   __________

                          Department of Transportation
                           General Accounting Office
                National Railroad Passenger Corporation (Amtrak)
                           Nondepartmental witnesses

                                   __________

             Printed for the use of the Committee on Appropriations

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     senate
                                     ______

                        U.S. GOVERNMENT PRINTING OFFICE
                                 WASHINGTON : 2002
    ____________________________________________________________________________
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                        COMMITTEE ON APPROPRIATIONS \1\

                         TED STEVENS, Alaska, Chairman
    THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
    ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
    PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
    CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
    MITCH McCONNELL, Kentucky            TOM HARKIN, Iowa
    CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
    RICHARD C. SHELBY, Alabama           HARRY REID, Nevada
    JUDD GREGG, New Hampshire            HERB KOHL, Wisconsin
    ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
    BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
    LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
    KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
    MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
                                         MARY L. LANDRIEU, Louisiana
                       Steven J. Cortese, Staff Director
                     Lisa Sutherland, Deputy Staff Director
                  Terrence E. Sauvain, Minority Staff Director
                                     ------

              Subcommittee on Transportation and Related Agencies

                      RICHARD C. SHELBY, Alabama Chairman
    ARLEN SPECTER, Pennsylvania          PATTY MURRAY, Washington
    CHRISTOPHER S. BOND, Missouri        ROBERT C. BYRD, West Virginia
    ROBERT F. BENNETT, Utah              BARBARA A. MIKULSKI, Maryland
    BEN NIGHTHORSE CAMPBELL, Colorado    HARRY REID, Nevada
    KAY BAILEY HUTCHISON, Texas          HERB KOHL, Wisconsin
    TED STEVENS, Alaska                  RICHARD J. DURBIN, Illinois
      (ex officio)

                               Professional Staff

                                 Wally Burnett
                                 Joyce C. Rose
                                  Paul Doerrer
                            Peter Rogoff (Minority)
                            Kate Hallahan (Minority)

                             Administrative Support

                                 Candice Rogers
                             Angela Lee (Minority)

        \1\ Committee and subcommittee memberships--January 25, 2001 to
    June 6, 2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.

                        COMMITTEE ON APPROPRIATIONS \2\

                    ROBERT C. BYRD, West Virginia, Chairman
    DANIEL K. INOUYE, Hawaii             TED STEVENS, Alaska
    ERNEST F. HOLLINGS, South Carolina   THAD COCHRAN, Mississippi
    PATRICK J. LEAHY, Vermont            ARLEN SPECTER, Pennsylvania
    TOM HARKIN, Iowa                     PETE V. DOMENICI, New Mexico
    BARBARA A. MIKULSKI, Maryland        CHRISTOPHER S. BOND, Missouri
    HARRY REID, Nevada                   MITCH McCONNELL, Kentucky
    HERB KOHL, Wisconsin                 CONRAD BURNS, Montana
    PATTY MURRAY, Washington             RICHARD C. SHELBY, Alabama
    BYRON L. DORGAN, North Dakota        JUDD GREGG, New Hampshire
    DIANNE FEINSTEIN, California         ROBERT F. BENNETT, Utah
    RICHARD J. DURBIN, Illinois          BEN NIGHTHORSE CAMPBELL, Colorado
                                         LARRY CRAIG, Idaho
                                         KAY BAILEY HUTCHISON, Texas
                                         JON KYL, Arizona
                      Terrence E. Sauvain, Staff Director
                     Charles Kieffer, Deputy Staff Director
                   Steven J. Cortese, Minority Staff Director
                Lisa Sutherland, Minority Deputy Staff Director
                                     ------

              Subcommittee on Transportation and Related Agencies

                       PATTY MURRAY, Washington, Chairman
    ROBERT C. BYRD, West Virginia        RICHARD C. SHELBY, Alabama
    BARBARA A. MIKULSKI, Maryland        PETE V. DOMENICI, New Mexico
    HARRY REID, Nevada                   ARLEN SPECTER, Pennsylvania
    HERB KOHL, Wisconsin                 CHRISTOPHER S. BOND, Missouri
                                         ROBERT F. BENNETT, Utah
                                         BEN NIGHTHORSE CAMPBELL, Colorado

                               Professional Staff

                                  Peter Rogoff
                                 Kate Hallahan
                            Wally Burnett (Minority)
                            Paul Doerrer (Minority)

                             Administrative Support

                                   Angela Lee
                           Candice Rogers (Minority)

        \2\ Committee and subcommittee memberships--June 6, 2001 to July
    10, 2001.

        Note.--From January 3 to January 20, 2001 the Democrats held the
    majority, thanks to the deciding vote of outgoing Democratic Vice
    President Al Gore. Senator Thomas A. Daschle became majority leader at
    that time. Starting January 20, 2001, the incoming Republican Vice
    President Richard Cheney held the deciding vote, giving the majority to
    the Republicans. Senator Trent Lott resumed his position as majority
    leader. On May 24, 2001, Senator James Jeffords of Vermont announced
    his switch from Republican to Independent status, effective June 6,
    2001. Jeffords announced that he would caucus with the Democrats,
    changing control of the evenly divided Senate from the Republicans to
    the Democrats. Senator Thomas A. Daschle became majority leader once
    again on June 6, 2001.

                                C O N T E N T S

                                  ----------

                          Wednesday, February 14, 2001

                                                                       Page
    Department of Transportation.....................................     1
    General Accounting Office........................................     1

                            Thursday, March 15, 2001

    Freight Rail.....................................................    91

                            Thursday, April 26, 2001

    Department of Transportation: Office of the Secretary............   157

                              Friday, June 1, 2001

    Department of Transportation: Coast Guard........................   251
    Nondepartmental witnesses........................................   273

                            Wednesday, June 13, 2001

    Department of Transportation:
        Coast Guard..................................................   303
        Office of the Inspector General..............................   303

                            Thursday, June 28, 2001

    Department of Transportation: Federal Aviation Administration....   361
    National Railroad Passenger Corporation (Amtrak).................   387

        Material Submitted by Agencies Not Appearing For Formal Hearings

    Department of Transportation:
        Federal Transit Administration...............................   405
        Research and Special Programs Administration.................   475

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                          WEDNESDAY, FEBRUARY 14, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2 p.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Richard C. Shelby (chairman)
    presiding.
        Present: Senators Shelby and Murray.

                          DEPARTMENT OF TRANSPORTATION

    STATEMENT OF HON. KENNETH M. MEAD, INSPECTOR GENERAL

                           GENERAL ACCOUNTING OFFICE

    STATEMENT OF JOHN H. ANDERSON, MANAGING DIRECTOR,
                PHYSICAL INFRASTRUCTURE

    Oversight Hearing on Department of Transportation Management Challenges

                  opening statement of hon. richard c. shelby

        Senator Shelby. The committee will come to order. This
    oversight hearing of the Subcommittee on Transportation
    Appropriations is now in session. Welcome to the first hearing
    held by the Subcommittee on Transportation in 2001.
        This afternoon's hearing has a different focus than most
    hearings held by this committee. Normally, the Appropriations
    Committee responds to the administration's budget proposal with
    a series of hearings and submitted questions that are designed
    to get more information about the budget, to compare the new
    request to ongoing efforts by the administration and to justify
    new initiatives proposed by the President. This information
    helps the committee make informed decisions as it develops
    appropriations legislation.
        However, there is another side to the responsibilities of
    the Appropriations Committee. This other responsibility is the
    oversight of the Federal agencies we fund. It is imperative to
    ensure that Federal taxpayer dollars are spent wisely and spent
    well. While we await the administration's fiscal year 2002
    budget request, I thought it would be useful to assess how the
    Department is doing and where there is room for improvement.
        Proper management of Federal funds cannot be taken for
    granted. That's the reason the Federal agencies have Inspectors
    General to audit and to investigate agency management and
    detect cases of fraud, waste, or abuse. The General Accounting
    Office, an investigative arm of the legislative branch, also
    performs audits and evaluations of Government programs and
    activities, often at the direction of Congress.
        Today we are joined by John Anderson, Managing Director of
    Physical Infrastructure at the General Accounting Office, and
    by Ken Mead, Inspector General, the Department of
    Transportation. Both GAO and the IG have published recent
    reports on management issues at the Department of
    Transportation.
        The January 18, 2001, Inspector General report titled,
    ``Top 10 Management Challenges, Department of Transportation'',
    sets out 10 top priority management issues. The report closely
    parallels prior reports, with only slight modifications to last
    year's list, and with the notable establishment of the
    Departmental business practices challenge that incorporates and
    broadens a range of administrative activities at the
    Department.
        The last 2 years Congress has provided substantial
    supplemental funds to the U.S. Coast Guard for operations and
    for capital acquisitions. I am becoming more concerned about
    this practice. It seems to me to be a poor practice to get into
    the habit of always providing additional funds for operations
    through supplemental appropriations acts. This practice leads
    to expectations on the part of the Coast Guard that they will
    always get bailed out of funding shortfalls and provides a
    disincentive to management operations and personnel to adhere
    to the annually appropriated funding level.
        In addition, it could actually encourage the Coast Guard to
    neglect those programs that provide the strongest case for
    supplemental funding. I am committed to funding Coast Guard
    operations, but I am increasingly troubled by how that funding
    is cobbled together during the course of the year. It is one
    thing to address an unanticipated funding shortfall, but the
    recent addiction to 0supplemental funding for routine
    operations, I believe, is not good for the Coast Guard.
        No management challenge hearing would be complete without
    some reference to the financial condition of Amtrak. In
    November 1998 an independent assessment of Amtrak's financial
    requirements was published, as required by the Amtrak Reform
    and Accountability Act. The Inspector General's Office closely
    monitored the assessment process and probably has the clearest
    view of Amtrak's current financial condition, and of whether
    the projections on which the railroad has based its plan to
    reach self-sufficiency by 2002 are realistic and achievable.
        The GAO has prepared many reports on Amtrak's financial and
    operating performance, including the May 1998 report on the
    financial performance of Amtrak's 40 routes Nation-wide. Which
    shows that only one route, the Metroliner, actually makes a
    profit and that, overall, Amtrak's expenses are almost twice as
    great as its revenues. This is a management issue, a labor
    issue, and a political issue, and it is an issue that has cost
    the American taxpayers to date over $23.7 billion.
        Oversight is an important part of the Appropriation
    Committee's responsibilities. The committee allocates Federal
    funds based on informed decisionmaking. This requires a close
    examination of the administration's budget and oversight of how
    funds, once allocated, are managed. I hope that today's hearing
    will help us better perform this duty by exploring together
    some management challenges that have been raised by both the
    executive and legislative branch investigative bodies. In
    addition, I hope that an oversight hearing of this breadth
    helps our new subcommittee members and our ranking subcommittee
    member, Senator Murray of Washington State, who I understand
    will join me shortly, and it will give them a flavor for the
    scope of the focus of the subcommittee.
        I would ask first that my entire statement be made a part
    of the record. Senator Durbin, one of our newest members to the
    subcommittee, could not be here today and has asked that his
    statement also be included in the record. Mr. Mead and Mr.
    Anderson, your entire statements will be made a part of the
    record as well. Without objection.
        Would each of you take about 5 or 6 minutes, if you could,
    to hit on the high spots of the thrust of what you want to do,
    and then we will have time for questions and enter a dialogue.
        [The statements follow:]

                Prepared Statement of Senator Richard C. Shelby

        Good afternoon. This oversight hearing of the subcommittee on
    transportation appropriations will come to order. Welcome to the first
    hearing held by the subcommittee on transportation in 2001. This
    morning's hearing has a different focus than most hearings held by this
    committee. Normally, the Appropriations Committee responds to the
    Administration's budget proposal with a series of hearings and
    submitted record questions that are designed to get more information
    about the budget, to compare the new request to ongoing efforts by the
    Administration, and to justify new initiatives proposed by the
    President. This information helps the Committee make informed decisions
    as it develops appropriations legislation. However, there is another
    side to the responsibilities of the Appropriations Committee--oversight
    of the federal agencies that we fund. It is imperative to ensure that
    federal taxpayer dollars are spent wisely and well. While we await the
    Administration's fiscal year 2002 budget request, I thought it would be
    useful to assess how the Department is doing and where there is room
    for improvement.
        Proper management of federal funds cannot be taken for granted.
    That's the reason federal agencies have inspectors general, to audit
    and investigate agency management and detect cases of fraud, waste or
    abuse. The General Accounting Office, an investigative arm of the
    Legislative Branch, also performs audits and evaluations of government
    programs and activities, often at the direction of Congress.
        Today, we are joined by John Anderson, Managing Director for
    Physical Infrastructure at the General Accounting Office, and by Ken
    Mead, the Department of Transportation Inspector General. Both GAO and
    the IG have published recent reports on management issues at the
    Department of Transportation.
        The January 18, 2001 Inspector General report, titled ``Top Ten
    Management Challenges--Department of Transportation'', sets out ten top
    priority management issues. The report closely parallels prior reports
    with only slight modifications to last year's list and with the notable
    establishment of the ``Departmental Business Practices'' challenge that
    incorporates and broadens a range of administrative activities at the
    department.
        The last two years, the Congress has provided substantial
    supplemental funds to the U.S. Coast Guard for operations and for
    capital acquisition. I'm becoming more concerned about this practice--
    it seems to me a poor practice to get into the habit of always
    providing additional funds for operations through supplemental
    appropriations acts. This practice leads to expectations on the part of
    the Coast Guard that they will always get bailed out of funding
    shortfalls and provides a disincentive to manage operations and
    personnel to the annually appropriated funding level. In addition, it
    could actually encourage the Coast Guard to neglect those programs that
    provide the strongest case for supplemental funding. I'm committed to
    funding Coast Guard operations, but I'm increasingly troubled by how
    that funding is cobbled together during the course of the year. It is
    one thing to address an unanticipated funding shortfall, but the recent
    addiction to supplemental funding for routine operations is not good
    for the Coast Guard.
        No management challenge hearing would be complete without some
    reference to the financial condition of Amtrak. In November 1998, an
    independent assessment of Amtrak's financial requirements was
    published, as required by the Amtrak Reform and Accountability Act. The
    Inspector General's office closely monitored the assessment process,
    and probably has the clearest view of Amtrak's current financial
    condition, and of whether the projections on which the railroad has
    based its plan to reach self-sufficiency by 2002 are realistic and
    achievable. The GAO has prepared many reports on Amtrak's financial and
    operating performance, including the May 1998 report on the financial
    performance of Amtrak's 40 routes nationwide, which showed that only
    one route, the Metroliner, actually makes a profit, and that overall,
    Amtrak's expenses are almost twice as great as its revenues. This is a
    management issue, a labor issue, and a political issue and it's an
    issue that has cost the American taxpayers over $23.7 billion over the
    last 30 years.
        Oversight is an important part of the Appropriations Committee's
    responsibilities. The Committee allocates federal funds based on
    informed decision making. This requires a close examination of the
    administration's budget, and oversight of how funds, once allocated,
    are managed. I hope that today's hearing will help us better perform
    this duty, by exploring together some management challenges that have
    been raised by both the executive and legislative branch investigative
    bodies.
        In addition, I hope that an oversight hearing of this breadth helps
    our new subcommittee members and our new ranking subcommittee member,
    Senator Murray of Washington State, get a flavor for the scope and
    focus of the subcommittee. Senator Murray, do you have an opening
    statement?
                                     ______

                Prepared Statement of Senator Richard J. Durbin

                             management challenges
        Mr. Chairman, Senator Murray, thank you for holding this important
    hearing today on the various management challenges facing the U.S.
    Department of Transportation.
        As you know, this is my first hearing as a member of this
    subcommittee. Some of my fondest memories from my days in the House of
    Representatives involve the House Transportation Appropriations
    Subcommittee. I'm happy to join this distinguished panel and look
    forward to working with you, Mr. Chairman, as well as Senator Murray
    and my subcommittee colleagues.
        I represent the State of Illinois which includes O'Hare
    International Airport. Illinois has often been referred to as the
    transportation hub of the nation, and aviation issues, especially in
    the Chicagoland region, are page one news.
        In fact, I'd suggest that we are at a cross roads in my home state
    when it comes to aviation. The issues revolve around ensuring that
    Downstate Illinois communities enjoy access to the Chicago and St.
    Louis markets, expanding O'Hare, building a third Chicago airport, and
    protecting the rights of consumers.
        Mr. Mead, I noted in the materials that you provided to the
    Committee, a top ten list of sorts that details various management
    challenges. Prominent in that list are several aviation issues. Let me
    take a minute to detail a few.
        As we all know, the proposed United/US Airways merger is currently
    under review by the U.S. Department of Justice. The American/TWA buyout
    is under the jurisdiction of a bankruptcy court. Both may have a major
    impact on O'Hare and Downstate air service. I prefer to let these
    authorities work through the details and pass final judgement.
        However, I continue to be concerned about Downstate Illinois air
    service in a consolidated industry.
        A number of downstate communities have struggled to gain or
    maintain access to Chicago O'Hare. This service is vital to community
    economic development and tourism. As we've faced concern over O'Hare
    access, the one constant has been St. Louis service for these
    communities. Obviously, the American/TWA buyout announcement has caused
    great concern in the eight downstate communities currently served by
    TWA/TWE. I will continue to watch these mergers to ensure that smaller
    communities are not left behind.
        With regard to consumers, let me say that although the airlines
    have made strides toward more responsive customer service plans--ones
    that treat the traveling public with respect, provide timely
    information, and attempt to remedy problems as quickly and fairly as
    possible--there's still a long way to go. Your February 12 report--a
    one year analysis of voluntary customer service enhancements by 17
    airlines--gives the airlines credit for some improvements but expresses
    disappointment that the progress has not been more substantial. I'm
    interested in your opinion as to whether legislation commonly referred
    to as a ``passengers bill of rights''--is needed at this time. With or
    without legislation, I hope the airlines will continue to aggressively
    address the consumer challenges that still exist.
        Mr. Mead, there are a number of other issues that I could raise,
    Amtrak self-sufficiency, Metro Link's Full Funding Grant Agreement
    amendment, and O'Hare's benchmark capacity. But, I will save those for
    another day and reserve the right to submit some written questions to
    you on those important topics.
        I would like to mention one other issue. In your ``Top Ten'' list
    report, you mention rail-grade crossing safety. This is a topic of
    great concern in my home state and particularly in northeastern
    Illinois.
        Illinois has the dubious distinction of being the site of more
    train related incidents than nearly every other state. The state ranks
    second nationally for the number of train wrecks and the number of
    people injured in collisions involving trains and automobiles. More
    people are killed in these accidents in Illinois than anywhere else.
        A recent DePaul University study estimates one motorist violation
    occurs at the average northeastern Illinois crossing for every three
    trains. That adds up to between 15,000 and 26,000 preventable railroad
    crossing violations per day in that region alone.
        Safety must be our number one priority. While we can and should
    make Illinois railroad crossings safer, though, we should do so while
    keeping in mind the needs of those who live with trains on a daily
    basis.
        Railroad crossings must be made safer, but mandating the use of
    train whistles is not the only way to solve this problem. We need to
    focus on cooperative ways to make Illinois's crossings safer through
    enhanced educational outreach and stronger enforcement. We shouldn't
    wait for a federal rule to spur us into action.
        I have been working with state officials, prosecutors, suburban
    mayors and residents to find alternatives to the use of train whistles
    at railroad crossings. This past summer, I hosted two roundtable
    discussions to bring all of these interests together. The plan I've
    developed with the help of the Illinois Congressional Delegation and
    the State of Illinois establishes a comprehensive strategy for
    improving the safety of railroad crossings through voluntary
    participation in education and enforcement initiatives. This program
    will increase awareness of and participation in crossing-safety efforts
    already in place. It is also intended to identify state and federal
    resources available to communities for improvements in crossing safety.
        I hope that we can put together a national model in Illinois that
    improves rail-grade crossing through aggressive education and
    enforcement efforts and that the Department will work with us on it.
        Mr. Chairman, thank you for the opportunity to raise these
    important issues today. I look forward to working with you this
    Congress.

                          statement of kenneth m. Mead

        Mr. Mead. Thanks, Mr. Chairman. I just want to congratulate
    you on having a hearing on these top 10 management challenges
    and GAO's high risk and their management accountability work.
    These sometimes are not the flashiest of issues, but they go to
    the core of how we run the Transportation Department and areas
    in which we need to improve, so thank you for holding the
    hearing.
        Senator Shelby. Well, a lot of transportation issues are
    not flashy, but they are very important.
        Mr. Mead. Yes, sir. It is one of those areas where it
    affects each of us every day of our lives in a very immediate
    and direct way.
        Sir, we have up here a list of the top 10 management
    challenges that we identified.

        Senator Shelby. Are you going to run through them?
        Mr. Mead. I will run through the highlights, and I am going
    to combine them into four areas. One is on safety, the second
    is on the stewardship and oversight of Federal funds. In the
    third I wanted to highlight some immediate budget issues that
    are before the committee that are included in these top 10, and
    finally talk about the aviation system a bit, some of the
    capacity issues, the performance issues, and possibly touch on
    the report we issued yesterday on airline customer service.

                             Transportation safety

        First, on transportation safety, the top issues we see
    there, especially in the aviation area, have to do with runway
    incursions. While everybody is talking about congestion and
    delays and so forth, and where we are going to put planes,
    especially when it gets on the ground. What this chart shows is
    that planes are coming too close together on the ground, and
    that this past year there was a record 429 runway incursions.
    That is where planes come too close together, and I know, Mr.
    Chairman, you will recall that the worst aviation disaster in
    civil aviation history was a runway incursion between two
    747's.

        Second, controller operational errors.
        Senator Shelby. Before you leave this, what is in your
    judgment the root cause of this, and what is the cure?

                               Runway incursions

        Mr. Mead. Well, certainly one of the root causes for the
    spike is the increased traffic on runways. FAA has a plan for
    addressing runway incursions, and it is a good plan, and we
    have said it is a good plan for each of the last 3 or 4 years.
    The issue is their follow-through on the plan.
        There are two distinct elements of that plan, sir. One is
    technology. The technology that FAA has been working on to deal
    with runway incursions so that it would alert the controllers
    to when one is about to occur has been delayed. It is not
    operational.
        Senator Shelby. Is that a question of communication, and is
    management involved in that?
        Mr. Mead. Yes, and it is a question also of really false
    alarms, when the system says there is a runway incursion about
    to happen and one is not about to happen. The controller who
    sees the indication that there is one about to happen takes
    some countermeasure and there is just a false alarm, so they
    have to get those down.
        The second area is runway incursions these are inherently
    local. You need regional and local action plans to deal with
    them, and there are regions and localities in the airports.
    They all need to be held accountable. This is not something
    that can be run from inside the beltway.

                               Operational errors

        The next one is on operational errors. This is where planes
    are allowed to lose their separation, usually in the air. They,
    too, are on the increase, and you can see that the year 2000
    was a record year for those as well, so when we talk about
    congestion and the efficiency of the system, we would recommend
    strongly that you keep those two indicators in mind. You often
    do not hear about them because people are focused on the delay
    and the inconvenience and so forth.

        Other top safety issues is NAFTA, Mexican trucks, and when
    the border should be opened, and what to do to make sure those
    are safe. We have found there is a real correlation between the
    provision of inspection staff at the border and the condition
    of the trucks, a very strong correlation.

                  Federal motor carrier safety administration

        A third safety issue is implementing the Federal Motor
    Carrier Safety Administration, a new law passed a year ago. You
    need leadership, you need to get their new rulemakings out, and
    you need to take enforcement action when you run up against an
    egregious offender.

                                   THREAD Act

        Implementing the THREAD Act, which also was a redress for
    the Firestone situation. There is a lot of activity that needs
    to take place this year on that. Most of it centers on the
    information that NHTSA uses to assess whether there is a defect
    or not. They have been relying heavily on consumer complaints
    coming over the transom.

                             Pipeline safety issues

        Finally, longstanding pipeline safety issues. There is a
    lot of business left undone, in my judgment, in the last
    Congress; and there is much to do, and for our part we intend
    to keep highlighting that.
        Senator Shelby. We have worked with you on that in this
    committee.
        Mr. Mead. The Senate cleared a bill just the other day.
    This is an issue where it is a very safe mode of transportation
    of cargo, but when there is a problem there is a big problem
    with terrible consequences. I have sat through hearings, as I
    know Senator Murray has, where you hear the families of the
    victims describe it. It is something that makes an impact on
    you for the rest of your life.

                     stewardship of Transportation funding

        Stewardship of transportation funding. My message here is
    real simple. The past several years the Congress has authorized
    a major infusion of funds into highways, bridges, and
    airports--and I am going to go over just a bit.
        Senator Shelby. Go ahead.
        Mr. Mead. It is unprecedented infusion in absolute dollars,
    but the last time there was a proportionate infusion of funds
    like this was during the Eisenhower and Kennedy
    administrations. When they launched the interstate, and there
    were a lot of scandals and embezzlements and kickbacks that
    were occurring during that period. I am here to say, Mr.
    Chairman, that I think the Federal Highway Administration and
    the FAA should exercise a lot more vigilance over the funds.
        You know, one aspect, or one side of my office follows the
    fraud. We are seeing the indicators creep up there.
    Particularly in the highway area, and you know last year what
    happened with the Central Artery, disclosures there. You tell
    me--well, I do not know, so you cannot tell me. How could
    somebody miss $4 billion? I think that was a fairly shocking--
    --
        Senator Shelby. You would have to work at it, would you
    not?
        Mr. Mead. You sure would. Anyway, that is what happens, and
    so we are seeing this in the highway, bridge, and aviation
    area, and it is one I just wanted to call to the committee's
    attention.

                   Full funding grant agreements for transit

        Another point that you are going to face this year is on
    full funding grant agreements for transit. The fact is, there
    are so many full funding agreements out there, there is not
    enough money to really come clean on the commitments that were
    made. In addition to that, you overlaid that with more and more
    earmarks, and the people that have the full funding grant
    agreements are going to say, ``Can we have our full payment?''

                            immediate Budget issues

        Immediate budget issues. You have three big issues coming
    together this year all at once. It is like that book, The
    Perfect Storm. Amtrak, they usually come in for $500 or so
    million. This year you know the bond bill, where they were
    looking for $1 billion extra a year, that did not pass last
    Congress, and that is on the agenda again, so that is one big
    issue.
        The second is the Coast Guard. The Coast Guard is going to
    be coming in for a fairly substantial plus-up. Depending upon
    what OMB proposes for what is called the Deepwater Acquisition,
    it is a near-total replacement of all Coast Guard afloat and
    in-the-air assets 50 miles out.
        A third big issue is the FAA operations account. At some
    point it becomes an affordability issue--$5.9 billion in 2000,
    $6.5 billion in 2001, going up to about $7 billion for 2002,
    and another $\1/2\ billion for 2003. All that money has to come
    out of the general fund. It will not be coming out of a trust
    fund.
        We see those issues coming together.
        Senator Shelby. Where is enough money going to come from?
    There is really not going to be enough, is there?
        Mr. Mead. No, not judging--usually you do not have this
    many things coming together at once with that type of request,
    but those are going to be big requests, unless one of them just
    goes away, and I do not see that happening.
        Senator Shelby. Maybe you can help us to steer it in a
    different direction, if not go away.

                          Aviation system performance

        Mr. Mead. On the aviation system performance, I will not
    dwell on that because I imagine you will have some questions on
    it. When we issued our report on customer service yesterday,
    people wanted to know, well, how did the airlines do on these
    12 different commitments that they made. What we found is, on
    the commitments that they made that did not have anything to do
    with delays or cancellations they did very well on.
        Things like offer the lowest fare, they were doing that at
    a remarkably good rate, and things like holding the
    nonrefundable reservations, answering complaints, increase the
    baggage liability limit, they did all those things and they are
    doing quite well at it.

                                    Bumping

        Bumping, I think there are some real improvements that are
    needed in the bumping practices. They need to be better on
    refunds.
        But the basic area where things are falling short was on
    telling the customer what was happening with respect to a delay
    or cancellation. The airlines were all trying, but based on our
    observations they have a long way to go, plus taking care of
    people's essential needs when you get stuck on a plane for a
    long, on-board-aircraft delay. They also were doing reasonably
    well in returning luggage that did not show up when you
    arrived.
        Senator Shelby. But they have got a long way to go.
        Mr. Mead. Yes, they do. But I wanted to make a point
    though, that it is, of course, not just the airlines. We have a
    situation here where the capacity is just not enough for the
    demand, at least where the airlines want to fly. The capacity
    is just not up to meeting the demand, and you are going to have
    to require a combination of technology, air traffic control
    redesign, air traffic control procedures, and new runways. The
    process for getting a new runway approved can be rather
    tortuous.
        I will conclude with that, sir. Thank you for the extra
    time.
        [The statement follows:]

                     Prepared Statement of Kenneth M. Mead

                          management oversight issues
        Mr. Chairman and Members of the Subcommittee: As we begin the
    fiscal year fiscal 2002 appropriations cycle, we appreciate the
    opportunity to appear today. As you know, each year we issue a report
    on the major management challenges facing the Department of
    Transportation (DOT). We have discussed our report with Secretary
    Mineta and are pleased to note that in his confirmation hearing,
    Secretary Mineta stated that he would be keeping a copy of the Top 10
    Management Challenges report on his desk and would be using it as a
    blueprint for addressing the management challenges facing DOT.
        For purposes of our statement, I would like to take this
    opportunity to highlight some of the most pressing issues facing
    Congress and DOT. These issues need to be dealt with to support safe
    and reliable transportation service, to prepare for necessary budget
    decisions related to DOT programs, and to ensure that Federal
    transportation infrastructure dollars are well spent. Attached to our
    testimony is a summary of our recommendations in each of the top 10
    management challenge areas.
                     summary of immediate issues facing dot
        The most important, immediate, core thematic issues confronting the
    new Administration and the new Congress, can be divided into four
    areas:
        Transportation Safety:
      --Reducing the record number of runway incursions (429 in the last
            calendar year) and controller operational errors (1,154 in the
            last fiscal year).
      --Staffing the oversight of Mexican truck safety.
      --Focusing the new Federal Motor Carrier Safety Administration
            (FMCSA).
      --Implementing the TREAD Act to prevent future ``Firestones.''
      --Addressing longstanding pipeline safety issues.
        Stewardship of Transportation Funding:
      --Streamlining process requirements, while respecting environmental
            protection laws.
      --Fighting fraud.
      --Implementing new infrastructure grant oversight requirements.
      --Monitoring contract expenditures.
        Immediate Budget Issues:
      --Controlling FAA's operating costs.
      --Implementing a cost accounting system at FAA.
      --Managing multi-billion dollar FAA systems acquisitions.
      --Justifying and reconciling Coast Guard capital investment
            requirements.
      --Addressing Amtrak's financial viability.
        Aviation System Performance:
      --Making FAA accountable as a results-based organization.
      --Developing a multifaceted approach to addressing capacity
            restraints.
      --Improving aviation customer service.
        Transportation Safety.--Safety is central to DOT's mission. Looking
    Department-wide, the most immediate safety issues are:
      --Reducing the Record Number of Runway Incursions (429 in the last
            calendar year) and Controller Operational Errors (1,154 in the
            last fiscal year).--To reverse the upward trend in runway
            incursions, FAA must follow-through on its planned initiatives
            at the national and local levels. FAA had three good plans to
            reduce runway incursions since 1991, but they all lacked
            follow-through. FAA must ensure that local action plans are
            prepared to address airport-specific problems. Emerging
            technologies to reduce runway incursions must be identified and
            evaluated and advanced quickly to high-risk airports. Reducing
            runway incursions demands strong and consistent leadership,
            however, FAA has experienced significant turnover in the
            management of its Runway Safety Program. With the anticipated
            departure of the current program director this spring, this is
            the fifth turnover in that position in the last 5 years. To
            reduce operational errors, FAA must approach reducing
            operational errors with a sense of urgency. Strong national
            oversight is needed to ensure that efforts made to reduce
            operational errors at facilities with high numbers of
            operational errors are effective in correcting facility-
            specific problems.
      --Staffing the oversight of Mexican truck safety.--Strengthening U.S.
            inspection capability at the southern border crossings can have
            a real world impact. Recent increases in Federal border
            inspectors correlated with a 4 percent reduction in Mexican
            trucks that were placed out of service for significant safety
            violations after inspections when entering the United States.
            While it is encouraging that a total of 60 inspectors are
            scheduled to be on board in 2001, in 1998 we estimated that 126
            additional Federal inspectors were needed during port operating
            hours. On February 7, 2001, Senator Ernest F. Hollings and
            Congressman James L. Oberstar requested us to provide a status
            report on existing conditions and the conditions necessary to
            safely open the border to Mexican trucks. Specific areas to be
            addressed are staffing and inspections facilities, out-of-
            service rates, verification of registration information, and
            harmonization of safety regulations.
      --Focusing the New Federal Motor Carrier Safety Administration
            (FMCSA).--DOT must fill key leadership positions in FMCSA and
            issue statutorily directed rulemakings. FMCSA also needs to
            take a multifaceted approach to enforcement such as issuing
            shut down orders. While education/outreach efforts can be
            effective with most carriers, strong enforcement is needed for
            the minority of carriers that are egregious offenders.
          Similarly, FMSCA must employ a very firm hand with scams
            involving fraudulent Commercial Driver Licenses (CDL), which
            are occurring in an alarming number of States. For example, in
            the states of Florida and Illinois, 35 individuals have been
            found guilty of charges related to the issuance of fraudulent
            CDLs. Since November 1999, investigations of fraudulent CDLs
            have also resulted in multiple indictments in Georgia, Iowa,
            Mississippi, New York, North Carolina, Pennsylvania and South
            Carolina. Also, criminal investigations of fraudulent CDLs are
            ongoing in four other states.
      --Implementing the TREAD Act to Prevent Future ``Firestones''.--The
            TREAD Act requires NHTSA to conduct 10 rulemakings in the areas
            of defect reporting by manufacturers, improving and updating
            tire standards, and vehicle rollover testing and evaluation.
            Six of the 10 rulemakings must be completed in 2001 or 2002.
            For example, by June 2002, NHTSA is required to complete a
            rulemaking establishing early warning reporting requirements
            for motor vehicle and equipment manufacturers. This will be
            important because it will include guidance for how and when
            manufacturers report data to NHTSA in incidents involving
            fatalities or serious injuries alleged or determined to be
            caused by a possible defect. Since we found that it takes DOT,
            on average, 3.8 years to complete a rule, significant
            management effort will be required to issue these rules in the
            time required by the Act.
          Also, NHTSA currently relies on consumer complaints to determine
            whether potential defects warrant investigation and ultimately
            a recall. These data are too narrowly focused and are not
            comprehensive or reflective of the nature and extent of
            potential safety defects. Other NHTSA databases, such as the
            Fatality Analysis Reporting System (FARS) and the National
            Automotive Sampling System (NASS), as well as other sources of
            information, such as manufacturer warranty claims, and
            insurance claims data should be routinely analyzed.
      --Addressing Longstanding Pipeline Safety Issues.--Recent tragic
            pipeline incidents have emphasized the need for RSPA to develop
            and implement a comprehensive, effective plan for pipeline
            safety oversight. RSPA has been working on various facets of
            pipeline safety, but needs to proceed expeditiously on several
            fronts.
        --Originally due to Congress in the mid-1990s, RSPA issued two
                Congressionally-mandated pipeline safety rulemakings in
                December 2000. These two rulemakings are now being reviewed
                by the Bush Administration. Currently, these rulemakings
                are scheduled to become effective later this Spring (60
                days from their original effective dates). These
                rulemakings (1) define high-density population areas and
                areas unusually sensitive to environmental damage, and (2)
                specify how operators of large hazardous liquid pipelines
                (large meaning 500 miles of pipeline or more) will report
                to RSPA on their plans to assess and monitor the integrity
                of their pipelines in these areas.
        --RSPA is currently working with the natural gas pipeline industry
                to develop a rulemaking for integrity management plans for
                natural gas pipeline operators to be issued later this
                year.
        --Further, RSPA needs to ensure that all pipeline operators
                continue to voluntarily submit pipeline location data to
                the National Pipeline Mapping System.
        --RSPA should fund pipeline research and development to improve
                internal inspection devices, called ``smart pigs,'' and
                develop inspection technologies for pipelines that cannot
                be pigged. RSPA must ensure its pipeline inspectors receive
                training in new inspection technologies and up-to-date
                information on the operators' integrity management plans.
        --Finally, RSPA utilization of state inspectors may ease the strain
                on limited Federal inspection resources while increasing
                state and community awareness of the benefits and dangers
                that pipelines pose, thereby increasing the safety of the
                pipelines, and the public.
        Stewardship of Transportation Funding.--Congress responded to the
    nation-wide problems of transportation congestion and capacity by
    passing TEA-21 and AIR-21, which provide an unprecedented infusion of
    funds for highway, transit, and airport infrastructure projects. To
    date, highway and transit funding have increased by over 40 percent and
    airport funds have increased 75 percent. TEA-21 provided $218 billion
    for highway and transit projects in fiscal years 1998 through 2003,
    while AIR-21 made $12.4 billion available for airport infrastructure
    projects from fiscal year 2000 through fiscal year 2003.
      --Streamlining Process Requirements, while Respecting Environmental
            Protection Laws.--The Department also needs to address concerns
            over process requirements and resulting project delays
            associated with environmental (including noise) clearances. All
            of the modes face this challenge. DOT has an opportunity here
            to provide leadership on how to move major infrastructure
            projects forward more expeditiously, while respecting the
            letter and intent of environmental laws.
      --Fighting Fraud. The last comparable funding jump was during the
            Eisenhower and Kennedy Administrations, when inadequate
            protection and monitoring of funds used to build the interstate
            highway system led to scandal and widespread fraud schemes
            involving public corruption, bid rigging, and false claims. A
            repeat must be avoided.
          The Office of Inspector General, with the support of American
            Association of State Highway and Transportation Officials, the
            Justice Department, and the Federal Bureau of Investigation,
            has a major proactive fraud initiative. In fiscal year 2000
            alone, our efforts in the area of contract and grant fraud led
            to 54 indictments (a 54 percent increase over 1999), 36
            convictions (a 24 percent increase over 1999), and over $10
            million in fines, restitution and other monetary recoveries
          DOT needs to greatly improve its stewardship and oversight of
            transportation funding across all the modes. In the last 2
            years, several events served to reinforce the important lesson
            that DOT agencies must take their financial oversight
            responsibilities more seriously:
        --an alarming lapse in FHWA's oversight of the Central Artery
                Project, despite our warnings, left FHWA unaware of
                mounting cost overruns and allowed the Department to be
                blindsided when the Project disclosed a $1.4 billion
                increase;
        --a DOT OIG investigation that led to seven guilty pleas from
                individuals charged with Federal racketeering and false
                claims violations for their role in submitting inflated and
                bogus claims on federally funded highway construction
                projects in Illinois and $15 million in fines and
                restitutions from the two companies involved;
        --an extensive investigation that resulted in five criminal
                prosecutions and two steel product suppliers recently
                agreeing to pay the United States and the State of
                Louisiana a total of $30 million to settle allegations that
                they supplied unapproved materials for federally funded
                highway projects;
        --a 5 year prison term for a highway construction company owner who
                defrauded the Disadvantaged Business Enterprise (DBE)
                program on federally funded road projects in West Virginia;
        --a case involving two FHWA Program Managers who accepted over
                $250,000 in bribes in exchange for awarding multi-million
                dollar intelligent transportation system research
                contracts: the Program Managers pled guilty, were ordered
                to make restitution, and were sentenced to 27 and 36
                months' incarceration, respectively, and five contractors
                were prosecuted;
        --a 2 year prison term and nearly $1 million in fines and
                restitution against a contractor for inflating the costs of
                aerial photography and ground surveys on federally funded
                highway construction projects in Virginia; and
        --plea agreements and fines totaling over $2 million for two
                companies involved in a bid rigging and price fixing
                scheme. As subcontractors, the companies provided specialty
                construction in the areas of post tensioning, cable-stayed
                bridges, and mechanically stabilized earth. The former head
                of another company was also indicted. He fled the country
                and remains a fugitive.
      --Implementing new infrastructure grant oversight requirements.--
            Improving financial oversight must begin with vigorous
            implementation of new mega-project finance plan requirements,
            as well as implementation of recent Task Force recommendations:
        --FHWA must enforce the new guidance on mega project finance plans
                that it issued on May 23, 2000, perform independent
                analyses of the data reported in mega project finance
                plans, and perform ongoing oversight project management.
        --All DOT agencies overseeing large projects must implement the
                recommendations of the Task Force on Oversight of Large
                Transportation Infrastructure Projects, which was adopted
                on December 29, 2000.
        --FTA faces a special challenge in maintaining oversight of large
                infrastructure projects. At this time last year, FTA had 15
                approved full funding grant agreements and 13 pending grant
                agreements. As of January 19, 2001, FTA had 28 approved and
                6 pending full funding grant agreements.
          --LBecause FTA's oversight is funded by a fixed percentage of New
                Starts appropriations, doubling the number of projects had
                the effect of decreasing the oversight on each individual
                project.
          --Moreover, 9 of the 28 approved projects are not scheduled to
                receive appropriations in fiscal year 2002, so FTA receives
                no funding for overseeing those projects. Likewise, FTA
                also receives no funding for oversight of pending or
                proposed projects (absent appropriations). Nonetheless,
                they may still have oversight requirements, for such things
                as construction wind-up, finalizing outstanding claims, and
                grant close out.
          --Finally, New Start transit projects require intensive oversight
                because many grantees are new to major capital construction
                projects for transit. This situation has resulted in
                oversight being severely stretched to cover all the
                approved, pending, and proposed grant agreements.
                Meanwhile, TEA-21 authorization levels for transit new
                starts have been exhausted and projects with full funding
                grant agreements have, over the past 4 years, not received
                the full funding they were supposed to receive under their
                grant agreements. Although FTA has made significant
                progress in project oversight in the last few years (so
                much so that it has been removed from the GAO High Risk
                List), to prevent slipping, back FTA must work with
                Congress to address anticipated shortfalls in FTA project
                oversight funds.
      --Monitoring Contract Expenditures.--During the 5 years ended April
            2000, DOT (excluding FAA) closed 864 cost-reimbursable
            contracts valued at $559 million. Since DOT internal agencies
            took over responsibility for contract audits, independent
            audits of DOT contracts by the Defense Contract Audit Agency
            have dropped from 397 in 1996 to 68 in 1999, resulting in
            minimal oversight over millions of dollars in contract costs.
            Cost-reimbursable contracts are generally more risky for the
            Government because contractors have little incentive to control
            costs. We found that most contracts (1) were closed without
            independent audits, (2) were not supported with annual
            certified contractor incurred cost proposals, (3) were not
            properly adjusted during contract performance for changes in
            billing rates, and (4) were awarded without determining whether
            the contractors' accounting systems were adequate to handle
            cost-reimbursable contracts. In short, we saw little evidence
            of review of the amounts billed by contractors. We also found
            DOT had more than 400 cost-reimbursable contracts with
            obligations of $232 million that were overdue for closure from
            1 to 9 years.
          Our work on a diverse set of FAA acquisitions shows that FAA also
            needs to strengthen contract oversight. In some cases, we found
            that the contractor prepared Government cost estimates or
            estimates were not prepared at all. FAA needs to make greater
            use of earned value management techniques and cost controls
            (cost ceilings). In addition, FAA needs to analyze variances
            between agency and contractor cost estimates to ensure costs
            are fair and reasonable. Greater use of the Defense Contract
            Audit Agency for assessing costs is also needed to protect the
            Governments interest. FAA needs to use the procurement and
            personnel flexibility granted in 1996 to hold contractors and
            FAA staff more accountable.
        Immediate Budget Issues.--There are several major budget issues
    that will have a profound impact on DOT's budget over the next decade.
      --Controlling FAA's Operating Costs.--In past testimonies we have
            repeatedly cautioned that FAA's operations costs must be
            contained. AIR-21 provides a powerful incentive for this
            because the general framework calls for FAA's airport
            improvement program (AIP) and facilities and equipment (F&E)
            accounts to be funded at the authorized levels before
            allocating any Trust Fund revenue to FAA's Operations account.
            Barring a tax increase, Trust Fund receipts and interest will
            clearly be inadequate to fund all of FAA's operations costs.
          As shown in the following chart, FAA's operations costs, which is
            primarily salary driven, have risen by over $1.2 billion, or 25
            percent, from fiscal year 1998 to fiscal year 2001, and are
            expected to grow to about $7.4 billion by fiscal year 2003.

          New pay systems, developed as a result of FAA's personnel reform
            efforts, have fueled much of the increase. For example, FAA
            estimates the new pay system negotiated with the National Air
            Traffic Controllers Association (NATCA) will require nearly $1
            billion in additional funding over the 5-year life of the
            agreement. Now, other FAA workforces want pay increases as well
            and these must be negotiated under FAA's personnel reform
            authority.
          To offset the additional costs of the NATCA agreement and
            increase productivity, FAA and NATCA negotiated a series of
            workplace changes. The bottom-line is that workplace
            productivity changes are not yet in place system-wide--fiscal
            year 2001 and 2002 will be watched closely to determine to what
            extent they are implemented and quantified. Key elements
            include:
        --increasing the use of controllers-in-charge and reducing the
                number of first line supervisors while mitigating potential
                safety implications;
        --evaluating the controller staffing ceilings established in the
                collective bargaining agreement and addressing pressures
                from various groups to hire additional controllers over and
                beyond the cap; and
        --assessing the viability of closely related factors that bear on
                system performance and controller productivity such as
                facility consolidation, the future of FAA's successful
                contract tower program, and delivery of Oceanic air control
                services.
      --Implementing a Cost Accounting System.--Finally, to achieve
            meaningful cost control and give Congress and FAA management
            the information needed to make informed decisions on the FAA
            operations budget, FAA must have a cost accounting system,
            including a labor distribution component.
          FAA also needs a cost accounting system to know what it costs to
            perform its various services and effectively manage its complex
            organization. The FAA cost accounting system must measure the
            overall costs of providing specific services, including
            operations cost and the cost of labor. With good cost
            accounting information, FAA could identify areas of low
            productivity and high cost. Conversely, high productivity and
            cost efficiency also would be highlighted.
          FAA originally planned to have its cost accounting system fully
            operational by October 1, 1998. Now September 2002 is the
            planned date. However, even if FAA meets the September 2002
            date, it will still be 9 months from implementing its labor
            distribution system, which if properly developed, will provide
            the information necessary to properly allocate labor costs to
            specific services. Labor accounts for more than half of FAA's
            total costs, but it is the labor distribution system that part
            FAA plans to develop last.
      --Managing Multi-Billion Dollar FAA Systems Acquisitions.--Within the
            next 6 months, DOT will need to make ``go forward, slow down,
            stop, or modify'' decisions on major air traffic control
            systems acquisitions. The most important of these systems are:
        --WAAS--a $2.9 billion project in a watershed year. Over the years,
                WAAS has proven more difficult to develop and field than
                FAA anticipated. The key cost and schedule driver now
                focuses on integrity-the ability of WAAS to alert pilots
                when the signal should not be relied upon. Although an
                independent review board has concluded that WAAS is
                conceptually sound, a decision is needed in early 2001 on
                how FAA will proceed with this program--but, still unknown
                are how much WAAS will cost, how it will be certified as
                safe, and when the satellite-based system will be
                completed.
        --STARS--a $1.4 billion acquisition to replace controller displays
                and software, which has experienced cost and schedule
                difficulties. A major risk still remains to deploying all
                STAR's systems at FAA's 171 terminal radar approach control
                facilities with a combined installation of 119 Department
                of Defense facilities. Early this year, FAA must develop a
                realistic deployment schedule and identify additional funds
                that will be needed for deployment.
        --Oceanic Air Traffic Control--Currently estimated at $279 million,
                Oceanic services will have significant international
                ramifications for one of the worlds fastest growing
                aviation markets. FAA must avoid past problems with
                modernizing Oceanic facilities. As we testified in February
                2000, if Congress should choose to make any major changes
                to FAA's structure or commercialize air traffic control
                services, Oceanic services could provide a test for this
                experience. Oceanic services also provide FAA a better
                opportunity for the collection of user fees as Congress has
                already approved the collection of over flight fees, and
                other countries collect user fees for Oceanic services.
      --Justifying and Reconciling Coast Guard Capital Investments
            Requirements.--Preliminary estimates indicate that capital
            improvement funding of $15 billion or more will be needed over
            the next 20 years to modernize assets that are critical to the
            Coast Guard's Marine Safety, Search and Rescue, Law
            Enforcement, and Marine Environmental Protection programs. To
            meet the Coast Guard's stated requirements, its capital
            acquisition budget will need to more than double from $400
            million annually to at least $850 million annually on a
            sustained basis. However, the Office of Management and Budget
            (OMB) targets for the Coast Guard's acquisition budget range
            from $520 million to $552 million annually for fiscal year 2002
            through fiscal year 2005. Immediate issues that the Coast Guard
            needs to address are:
        --Reconciling Capital Investment Priorities and Budget Targets.--
                Coast Guard's capital acquisition needs exceed OMB targets
                by more than $300 million per year for the foreseeable
                future. Coast Guard needs to establish capital investment
                priorities and continue working with OMB to reconcile their
                respective capital funding proposals and budget targets.
        --Justifying the Fiscal Year 2002 Budget Request for Deepwater.--
                The planning process for Deepwater has been endorsed and
                praised by many organizations. However, the Coast Guard
                wants to proceed with a budget request for this project
                even though the planning process is not complete and it has
                not selected an acquisition strategy. Given this, Coast
                Guard should be prepared for questions on which Deepwater
                assets need to be acquired or modernized, how this will be
                done, what it will cost, and when funding will be needed.
        --Justifying the Fiscal Year 2002 Budget Request for the National
                Distress and Response System Modernization Project.--Like
                Deepwater, Coast Guard plans to proceed with a procurement
                request for the Distress and Response System Project in
                fiscal year 2002 before completing its separate planning
                process. The major task for Coast Guard is to present a
                specific system modernization plan for this important
                search and rescue capability that details what assets need
                to be acquired or modernized, how it will be done, what it
                will cost, and when funding will be needed.
      --Addressing Amtrak's Financial Viability.--Amtrak's ability to
            achieve operational self-sufficiency by 2003, as required by
            law, depends substantially on closing a $737 million gap in
            projected but undefined savings and revenue gains and fully
            ramping up high-speed (Acela) rail service in the Northeast
            Corridor. Beginning in 2001, Amtrak's cash losses must drop by
            an average of nearly $100 million each year for Amtrak to reach
            operating self-sufficiency by 2003.

          Amtrak initiated Acela Express revenue service on December 11,
            2000. For the first 4 weeks of operations, Acela Express posted
            an overall on-time performance of 94 percent. Amtrak plans to
            phase in two additional Acela Express roundtrips in early March
            and fully implement all 20 high-speed trainsets by September
            2001.
          Even if Amtrak meets its operational self-sufficiency mandate,
            its long-term viability will still depend on continued,
            significant, funding for capital improvements, including
            recapitalization of the Northeast Corridor, life-safety needs
            in the tunnels approaching Penn Station, and development of new
            high-speed corridors. Amtrak estimates the annual price-tag for
            these investments to be about $1.5 billion, which it hopes to
            secure through some combination of a high-speed rail bond bill
            and annual appropriations from Congress.
        Aviation System Performance.--Aviation system performance has
    become a front burner issue. Last year was the worst on record, with
    FAA reporting a 90 percent increase in delays compared to 5 years ago.
    Cancellations grew at an even faster pace during this time period,
    increasing 104 percent. Over 1 of every 4 flights was delayed,
    cancelled, or diverted in 2000, affecting approximately 163 million
    passengers, with the average arrival delay exceeding 52 minutes. Much
    of the delay time is spent on the runway, with the number of flights
    experiencing taxi-out times of 1 hour or more increasing. Addressing
    the ability of the aviation system to effectively meet soaring consumer
    demand will require concerted efforts on the part of FAA and the
    airlines in several areas--transitioning FAA into a results-oriented
    organization, developing a multifaceted approach to addressing capacity
    constraints, and improving customer service.
      --Making FAA Accountable as a Results-Based Organization.--Proposals
            for FAA to operate as a results-based organization are not new.
            They go back to at least 1996 (when Congress exempted FAA from
            Federal procurement and personnel rules and directed the agency
            to implement a cost accounting system). In 1997, the National
            Civil Aviation Review Commission also recommended that FAA
            establish a cost accounting system to manage its resources in a
            businesslike manner. These proposals were reinforced by AIR-21,
            which significantly increased FAA's budget and directed various
            ``structural'' reforms within the agency. There are several
            preconditions that FAA must first address if the agency is to
            make the transition into a results-based organization.
        --Implementing Requirements of AIR-21.--FAA is in the very early
                stages of implementing the various reforms directed by AIR-
                21, including forming the Management Advisory Council, and
                the Air Traffic Services Subcommittee (whose members were
                just named); however, a Chief Operating Officer has not yet
                been selected. While these measures have the potential to
                assist FAA in transitioning into a more results-oriented
                organization, it is much too early to tell if they will be
                successful.
        --Developing a Cost Accounting System.--A credible cost accounting
                system is a necessary precondition to develop needed
                financial and cost data and thereby serve as the foundation
                for any results-based organization, public or private. With
                good cost accounting information, FAA could identify areas
                of low productivity and high cost. Conversely, high
                productivity and cost efficiency also would be highlighted.
                In 1996, Congress directed FAA to develop a cost accounting
                system, and FAA originally planned to have the system in
                place by October 1998. FAA's cost accounting system is long
                overdue.
      --Developing a Multifaceted Approach to Addressing Capacity
            Constraints.--Effectively addressing constraints on capacity
            will require a multifaceted approach. First, FAA and DOT must
            establish and implement a uniform system for tracking delays,
            cancellations, and their causes. In the final months of the
            prior Administration, a Task Force made recommendations to
            accomplish this. Those recommendations still need to be
            implemented.
          Second, FAA must also develop capacity benchmarks for the
            Nation's top 30 airports. This will provide a common framework
            for understanding what maximum arrival and departure rate can
            physically be accommodated by airport, by time of day under
            optimum conditions. A set of capacity benchmarks is essential
            in understanding the impact of air carrier scheduling practices
            and what relief can realistically be provided by new
            technology, revised air traffic control procedures, new
            runways, and related airport infrastructure.
          Finally, FAA must develop a strategic plan for addressing
            capacity shortfalls in the immediate, intermediate, and long
            term. These three points in time are important because the new
            runways or airports or air traffic control technology that may
            be in place 2, 5, or 10 years from now holds promise for the
            future, but offer limited or no bottom-line relief in the
            immediate term. Actions that are necessary in the short term
            may become unnecessary in the longer term with the addition of,
            for example, new runways. An immediate issue is scheduling, at
            peak travel times, flights beyond the established physical
            capacity of the airport and air traffic control system under
            optimum conditions. The dilemma an individual Airline faces is
            if it takes action and reduces flights, would competitors then
            fill those slots, resulting in no change in the overall flight
            scheduling at the airport.
      --Improving Aviation Customer Service.--Airline customer service took
            center stage in January 1999, when hundreds of passengers were
            stuck in planes on snowbound Detroit runways for up to 8\1/2\
            hours. Following that incident, both the House and Senate
            conducted hearings on the air carriers' treatment of air
            travelers and considered whether to enact a ``passenger bill of
            rights.'' Following hearings after the January 1999 incident,
            Congress, DOT, and the Air Transport Association (ATA) agreed
            that the air carriers should have an opportunity to improve
            their customer service without legislation. To demonstrate the
            Airlines' ongoing dedication to improving air travel, ATA and
            its member Airlines executed the Airline Customer Service
            Commitment on June 17, 1999. The Commitment covered 12 specific
            areas, including: offering the lowest fare available; notifying
            customers of known delays, cancellations, and diversions; and
            being more responsive to customer complaints. Each airline
            agreed to prepare a Customer Service Plan (Plan) implementing
            the twelve provisions of the agreement.
          At the request of Senator John McCain, Chairman of the Senate
            Committee on Commerce, Science, and Transportation, we reviewed
            the Plans and evaluated the extent to which each Airline met
            all provisions under its Plan. On June 27, 2000, we issued an
            Interim Report on the 6-month progress of the Airlines in
            implementing their Plans, and on Monday February 12, 2001, we
            issued our final report on Airline Customer Service.
          Overall, we found the Airlines \1\ were making progress toward
            meeting their Customer Service Commitment and that the
            Commitment has been a plus for air travelers on a number of
            important fronts. The voluntary Commitment to customer service
            and the circumstances under which it was entered into are
            noteworthy because, based on our observations, it prompted the
            Airlines to take the matter of improving customer service more
            seriously. Also, the Airlines generally were responsive to
            suggestions made in our Interim Report. But, the Airlines,
            airports, the FAA and, most important, the traveling public
            know the aviation system is not working well--the road ahead is
            long, and aggressive progress will be required by the Airlines,
            airports, and FAA if consumer confidence is to be restored.
    ---------------------------------------------------------------------------
        \1\ ATA signed the Commitment on behalf of 14 ATA member Airlines
    (Alaska Airlines, Aloha Airlines, American Airlines, American Trans
    Air, American West Airlines, Continental Airlines, Delta Air Lines,
    Hawaiian Airlines, Midwest Express Airlines, Northwest Airlines,
    Southwest Airlines, Trans World Airlines, United Airlines, and US
    Airways).
    ---------------------------------------------------------------------------
          Notwithstanding progress by the Airlines toward meeting their
            Customer Service Commitment, we continue to find significant
            shortfalls in reliable and timely communication with passengers
            by the Airlines about flight delays and cancellations. Further,
            we find the Airlines' Commitment does not directly address the
            most deep-seated, underlying cause of customer
            dissatisfaction--flight delays and cancellations, and what the
            Airlines plan to do about them in the areas under their control
            in the immediate term. Action by the Airlines to reduce flight
            delays and cancellations is critical because major improvements
            in providing capacity to meet demand, such as new runways and
            the fielding of new air traffic control capacity enhancing
            technology, are not going to be in place for at least the next
            several years. Spring/summer 2001, when the next major crunch
            in air travel is likely to occur, is just around the corner.
          Provisions for quoting lowest fare, holding nonrefundable
            reservations, timely responses to complaints, and higher pay-
            outs for lost baggage. In general, we found the areas where the
            provisions of the Commitment were working well and where the
            greatest progress was being made were not directly or
            necessarily associated with whether a flight is delayed or
            canceled. These areas were: quoting the lowest fare (compliance
            between 88 and 100 percent of the time for a fixed itinerary);
            holding nonrefundable reservations without penalty (compliance
            between 88 and 100 percent); timely responses to complaints
            (compliance between 61 to 100 percent, with 13 Airlines between
            93 and 100 percent compliant); and larger pay-outs for lost
            luggage. Over the past year, we also have seen air carriers
            competing on the basis of customer service through such steps
            as more legroom between seats, size of overhead baggage
            compartments, and deployment of portable passenger check-in
            stations to reduce long lines-measures that go beyond actions
            required by the Commitment.
          Provisions that trigger when there is a flight delay or
            cancellation. The progress made this past year is often
            obscured when the traveling public experiences widespread
            delays and cancellations. We found the customer service areas
            most in need of improvement are for those provisions that
            trigger when there are delays and cancellations. One such
            provision is to keep customers informed of delays and
            cancellations, another promises to meet customers'
            ``essential'' needs during ``extended'' on-aircraft delays, and
            another commits to making reasonable efforts to return delayed
            or mishandled checked baggage within 24 hours.
          The evidence shows significant investment and progress by the
            Airlines toward meeting these commitments, and improvement is
            evident since our Interim Report. Still, there are persistent
            problems. We frequently found, among other matters, untimely,
            incomplete, or unreliable reports to passengers about flight
            status, delays and cancellations as follows.
        --In 21 percent of our observations of nearly 550 flight delays
                nationwide, the flight information display system showed
                the flight as on time when, in fact, the flight had been
                delayed for more than 20 minutes; timely announcements
                about the status of the delay were made in the gate areas
                66 percent of the time; when status announcements were
                made, the information provided about the delay or
                cancellation was adequate about 57 percent of the time.
                Performance varied by Airline and non-ATA airline, with
                Hubs generally performing better than non-Hub airports.
        --Baggage that did not show up with the passenger was delivered
                within 24 hours 58 to 91 percent of the time. Again,
                performance among the Airlines and non-ATA airlines varied.
        --All Airlines have taken steps to accommodate passengers'
                ``essential'' needs during ``extended'' on-aircraft delays.
                However, we found that the Airlines differ in what
                qualifies as ``extended.'' The trigger thresholds for this
                provision vary from 45 minutes to 3 hours. We think it is
                unlikely that a passenger's definition of an ``extended''
                on-aircraft delay will vary depending upon which air
                carrier they are flying.
        We also found that the provisions within the Commitment do not
    directly address the root causes of customer dissatisfaction: extensive
    flight delays, flight cancellations, and baggage not showing up with
    the passenger. Since air travelers in 2000 stood a greater than 1 in 4
    chance of their flight being delayed, canceled, or diverted, we believe
    the Airlines should go further and address steps they are taking on
    matters within their control to reduce over-scheduling, the number of
    chronically late or canceled flights, and the amount of checked baggage
    that does not show up with the passenger upon arrival.
        According to the Bureau of Transportation Statistics (BTS),
    chronically delayed and/or canceled flights are those regularly
    scheduled flights \2\ that, at least 80 percent of the time, arrived at
    least 15 minutes later than scheduled and/or were canceled during a
    single calendar month. For example, according to BTS data, in December
    2000, one Airline's flight with daily non-stop service between Chicago
    and Miami was delayed and/or canceled 27 of the 31 days it was
    scheduled to operate. In this case, the flight was delayed and/or
    canceled 87 percent of the time. Our analysis of BTS data found
    regularly scheduled flights that were at least 15 minutes late and/or
    canceled 80 percent of the time increased from 8,348 to 40,868 (390
    percent) between 1999 and 2000.\3\
    ---------------------------------------------------------------------------
        \2\ A regularly scheduled flight is a flight segment representing a
    city-pair (e.g., Chicago to Miami).
        \3\ Our intent is not to attribute the cause of the delays or
    cancellations associated with these flights to the Airlines, but to
    highlight the extent to which such flights are occurring.
    ---------------------------------------------------------------------------
        Using BTS data, we increased the amount of arrival delay to 30
    minutes or more and identified all scheduled flights that, when grouped
    by individual flight number, were delayed and/or canceled at least 40
    percent of the time during a single calendar month. Overall, for
    calendar year 2000, we identified over 240,000 regularly scheduled
    flights that met our criteria (representing over 10,300 individual
    flight numbers affecting approximately 25 million passengers).
    Currently, the Airlines are required to disclose on-time performance
    only upon request from the customer. Passengers should not have to ask
    when making a reservation if the flight is chronically delayed or
    canceled 40 percent of the time or more; the Airlines should notify the
    passenger of this information without being asked.
        Airline mitigation measures in the above areas will not solve the
    delay and cancellation problem since it is caused by multiple factors,
    some outside the airlines' control, but the airlines should be doing
    their part. For both the short and long term, the Airlines' Commitment
    to customer service must be combined with comprehensive action to
    increase system capacity to meet demand. FAA's efforts to modernize air
    traffic control through new technology, satellite navigation at
    airports, airspace redesign and, importantly, new runways will be
    central elements in any successful effort to add capacity and avoid
    gridlock.
        Provisions regarding fairness and consistency in ``bumping''
    practices, and prompt refunds for tickets.--Regarding the provision for
    fairness and consistency in bumping practices on flights that are
    oversold, we found a need for improvement. Among other things, the
    rules about who gets bumped first varied among the Airlines, and the
    compensation limit for those who are involuntarily bumped is inadequate
    and has not been changed since 1978. In fact, we found that passengers
    who volunteer to be bumped stand a good chance of receiving greater
    compensation than passengers who are involuntarily bumped. As for the
    provision in the Commitment to provide prompt ticket refunds, which
    refers to Federal regulations in place for over 17 years, our tests at
    five Airlines showed excellent performance. However, four Airlines and
    two non-ATA airlines were clearly deficient in this area and need to
    improve their processing of ticket refunds.
        Contract of Carriage.--In our Interim Report, we noted that the
    Airlines' Commitment, while conveying promises of customer service, was
    not necessarily legally enforceable by consumers unless these
    protections were also incorporated into an Airline's contract of
    carriage, which is a binding and legally enforceable contract. In fact,
    one Airline explicitly said as much in its Plan. We recommended that
    the Airlines ensure that their contracts of carriage are changed to
    fully reflect the benefits afforded by their Plans and the Airlines'
    Commitment to customer service. Our review of the 14 Airlines'
    contracts of carriage showed that all of the Airlines responded to this
    recommendation to some degree. For example:
      --Eleven of the 14 Airlines incorporated the Commitment provision to
            inform the customer of delays, cancellations, and diversions
            into their contracts of carriage and eight of the Airlines
            incorporated the Commitment provision to meet customers'
            essential needs during extended on-aircraft delays.
      --Eleven of the 14 Airlines incorporated the Commitment provision for
            quoting the lowest fare; and 12 Airlines incorporated the
            provisions for holding a nonrefundable reservation for 24 hours
            and for returning misrouted or delayed baggage within 24 hours.
      --There were differences among the Airlines in exactly what they
            decided to incorporate, and we found instances where the
            contract of carriage placed limits on what appeared to be a
            more expansive provision in the Plan. For example, one Airline
            limited the provision to quote the lowest fare to only domestic
            travel whereas the others did not. Another Airline limited its
            baggage return provision to passengers not traveling on a
            reduced rate ticket. The Airlines also varied in what their
            contracts of carriage said about accommodating ``essential''
            needs during ``extended'' on-aircraft delays, including the
            definition of what constituted an ``extended'' delay.
        An area of particular concern is when an Airline will provide
    overnight accommodations occasioned by a delay or cancellation. Most of
    the Plans said generally that overnight accommodations would be
    provided if the passenger was required to stay overnight due to a delay
    or cancellation caused by the Airline's operations (as defined by the
    Airline). However, the contract of carriage for seven Airlines appeared
    to limit this to situations such as when a flight was diverted to an
    unscheduled destination or a flight delay exceeded 4 hours between the
    hours of 10:00 p.m.and 6:00 a.m. The circumstances in which overnight
    accommodations will be provided needs clarity so that passengers will
    know what to expect.
        Consumer Protection by the Department of Transportation.--Oversight
    and enforcement of consumer protection and unfair competition laws and
    regulations are the responsibility of the DOT. We found the resources
    available to the Department to carry out these responsibilities to the
    traveling public are seriously inadequate-so much so that they had
    declined at the very time consumer complaints quadrupled and increased
    to record levels-from roughly 6,000 in 1995 to over 23,000 in 2000.
    Nearly 20 staff are assigned these functions today, down from 40 in
    1985. The oversight and enforcement expectations for the Office of the
    Assistant General Counsel for Aviation Enforcement and Proceedings
    significantly exceed the Office's capacity to handle the workload in a
    responsive manner.
        Recommendations.--As directed by AIR-21, in our final report we
    made over 25 recommendations for improving accountability, enforcement,
    and the protection afforded commercial air passengers. A full list of
    these recommendations can be found in our report, Final Report on
    Airline Customer Service Commitment, OIG Report Number AV-2001-020,
    issued February 12, 2001. The report is available on our website:
    www.oig.dot.gov.
        Mr. Chairman, this concludes my statement. Thank you for inviting
    me to testify this morning. I would be happy to answer any questions
    the Subcommittee may have.
                      top 10 management challenges report
        This attachment summarizes the key recommendations in our ``Top 10
    Management Challenges Report, issued January 18, 2001. Taken as a
    whole, this year's DOT top management challenges list encompasses
    programs that require continual attention to ensure ever safer
    transportation, programs on which there are significant economy and
    efficiency concerns, and programs with questionable success in
    achieving results.
        The following table shows how we grouped the top management
    challenges in this year's DOT report, as compared to last year's
    report.

        The key differences from last year's list are:
        1. We expanded the Air Traffic Control Modernization area to
    include issues of aviation capacity--including runway and airport
    capacity--and the impact this is having on customer service,
    particularly cancellations and delays. Meeting the anticipated demand
    for air travel and reducing delays is an urgent issue because the
    National Airspace System is operating at the fringes of capacity. Over
    the last 2 years, DOT's Air Travel Consumer Report has ranked flight
    problems (delays, cancellations, and missed connections) as the number
    1 complaint out of 11 complaint categories reported.
        2. We created a new, comprehensive item on Departmental Business
    Practices by: (1) combining the Government Performance and Results Act,
    FAA Financing and Reauthorization, and Financial Accounting/Chief
    Financial Officers Act items; and (2) adding other key Department-wide
    concerns, including human resources management, the new DOT
    headquarters building, the appropriate role for TASC in providing
    Departmental headquarters administrative services, and the pace of
    Departmental rulemakings. This new combined item enables us to cover
    new or emerging issues. It also seemed logical to combine our previous
    business practice items--since FAA has been reauthorized, the
    Department achieved a clean opinion on its financial statements in
    fiscal year 1999, and the Department's GPRA reports are consistently
    rated among the best in the Government.
        The following describes each of the top 10 management challenges
    identified by the DOT OIG and describes the key recommendations the OIG
    makes in each area.
    1. Aviation Safety
        Given the continued growth in demand for air travel and the limited
    capacity of the National Airspace System, FAA must be more aggressive
    in evaluating known risks and identifying and evaluating unknown risks
    that may cause future accidents. The aviation industry expects
    continued growth in air traffic as a result of increased demand and the
    emergence of new technologies may result in closer spacing between
    aircraft due to more precise, satellite-based tracking and navigation
    capabilities.
        Our key recommendations in this area are to:
      --Reduce the number of runway incursions and operational errors; two
            indicators of serious aviation safety risks. Record levels of
            runway incursions (429) and operational errors (1,154) are
            occurring amid increasing runway and airspace congestion.
      --Reduce protracted delays in responding to identified safety issues.
            FAA's failure to sufficiently and timely repond to independent
            laboratory test results on fastener quality and FAA's year-long
            delay before informing air carriers of defective cables
            suggests a weaknesses in FAA's process for evaluating safety
            issues brought to the agency's attention.
      --Train and certify the controllers-in-charge (CICs) FAA proposes to
            have replace non-union supervisors. Before FAA can begin a
            reduction in supervisors, it must provide increased training to
            these non-supervisory air traffic controllers on their new
            roles and responsibilities for ensuring safe air traffic
            operations. FAA is currently conducting this training.
          We found, however, that in a February 2000 memorandum the
            Director of Air Traffic Services essentially allowed all air
            traffic controllers to become CICs without going through the
            required CIC selection process. This contravenes FAA's
            established requirements and assurances that the CIC Program
            would not become an entitlement. The OIG has recommended FAA
            take action to correct this problem.
      --Pursue productivity gains promised by the National Air Traffic
            Controllers Association (NATCA) agreement with FAA. The NATCA
            agreement includes a new pay system for controllers that will
            require $1 billion in additional funding over the 5-year life
            of the agreement. Between 1998 and 2001, FAA's operations costs
            have risen over $1.2 billion or 25 percent. The controller pay
            system has contributed to the rise in these operations costs.
            Now other FAA workforces want pay increases as well, which must
            be negotiated under FAA's personnel reform authority.
            Productivity gains are needed to offset the additional payroll
            costs of the new pay systems and free up a greater portion of
            FAA's overall budget for important safety measures.
      --Develop an air traffic controller pipeline to backfill for
            retirements. FAA will have to increase its efforts in
            recruitment and training of air traffic controllers to backfill
            for retirements, while adhering to the NATCA agreement's
            staffing ceiling (15,000 controllers in fiscal year 1999,
            15,300 in fiscal year 2002, and 15,606 in fiscal year 2003).
            FAA and NATCA should also weigh potential staffing and cost
            benefits of contracting out low level non-radar towers, limited
            consolidation of air traffic control facilities, and operating
            Oceanic air traffic control more like a business financed
            through user fees.
      --Strengthen FAA's new Air Transportation Oversight System (ATOS) for
            inspecting air carriers. To benefit from ATOS, the agency must
            evaluate and correct problems such as obtaining management and
            workforce acceptance of ATOS, training inspectors on how to
            monitor an air carrier's operations using ATOS guides, and
            developing consistent, accurate safety data.
      --Improve FAA procedures for reviewing air carriers' maintenance
            programs. FAA needs to follow up on the results of special
            safety inspections made at major carriers and change its
            inspection procedures to ensure that carriers have continuing
            analysis and surveillance programs in place that will
            adequately monitor the quality of the carriers' aircraft
            maintenance programs.
      --Issue long delayed rulemakings affecting important aviation safety
            subjects such as pilot hours of service and rest periods, air
            tour safety, and repair stations and repairman certification
            standards. FAA also needs to resolve the concerns related to
            waiving inspection enforcement actions against air carriers,
            which are central to issuing the Flight Operations Quality
            Assurance (FOQA) rule and getting the air carriers to provide
            voluntarily the detailed safety data that would be available
            under FOQA. It is unlikely that FAA alone can make further
            progress in this area without the support of the Department of
            Justice and the Office of Management and Budget.
    2. Surface Transportation Safety
        Surface transportation--motor vehicle, large truck, railroad, and
    pipeline transportation--accidents in the United States continue to
    account for over 42,000 fatalities annually. In 1999, over 36,000
    fatalities resulted from motor vehicle accidents not involving large
    trucks, over 5,000 resulted from crashes involving large trucks, and
    over 1,000 resulted from railroad, rail transit and pipeline accidents.
    While down from the over 46,000 fatalities a decade ago, the number of
    surface fatalities remains high, and the Department needs to continue
    its efforts on reducing fatalities.
        Our key recommendations in this area include:
      --Implement, as a matter of priority, the Transportation Recall
            Enhancement, Accountability, and Documentation (TREAD) Act. DOT
            must quickly implement the TREAD early warning reporting
            requirements and improve NHTSA's ability to proactively
            identify potential safety related defects, so NHTSA can more
            quickly identify and work to eliminate safety risks such as the
            Firestone tread separations that led to several deaths across
            the United States before a recall was made.
      --Work with the States to curb fraud, abuse and mismanagement in
            issuance of Commercial Drivers Licenses (CDLs). Investigations
            in Illinois and Florida led to 35 convictions and at least 9
            deaths were attributed to drivers who illegally obtained CDLs
            in Illinois.
      --Implement the Motor Carrier Safety Improvement Act of 1999. The
            Department must fill key leadership positions and expedite
            required rulemakings to realize the benefits of the many safety
            initiatives Congress provided in the Motor Carrier Safety
            Improvement Act. Stronger enforcement, including shut down
            orders, is needed for the minority of carriers that are
            egregious offenders and a risk to public safety.
      --Review comments on the proposed hours-of-service regulation
            reducing the allowable driving time for commercial truck and
            bus drivers from 16 to 12 hours within a 24 hour period and
            requiring on-board electronic recorders to document hours of
            duty. FMCSA will need to address opposition to the regulation
            in the trucking and bus industries and concerns in the
            Congress, which has prohibited the Department from adopting a
            final rule in fiscal year 2001.
      --Improve Mexican truck safety oversight in readiness for opening the
            southern border under the North American Free Trade Agreement.
            There are still shortfalls in Federal border inspection
            staffing and facilities. However, recent increases in the
            number of Federal border inspectors correlated with a reduction
            in the percent (down from 39 percent in fiscal year 1999 to 35
            percent in fiscal year 2000) of Mexican trucks entering the
            United States that were inspected and placed out of service for
            significant safety violations.
      --Issue overdue safety regulations and update inspector training for
            pipelines. RSPA needs to complete maps showing location of
            hazardous material pipelines; establish inspection frequencies
            for natural gas pipelines; train RSPA inspectors in advanced
            pipeline inspection technologies, and work with Congress on the
            pipeline program reauthorization.
      --Improve cross-modal coordination on DOT's Hazardous Materials
            programs. DOT needs to improve deployment, training, and
            coordination of the Department's Hazardous Materials inspection
            and enforcement resources, which are dispersed in FAA, FRA,
            FMCSA, Coast Guard, and RSPA; and work with Congress on the
            Hazardous Materials program reauthorization.
      --Ensure that Amtrak, the States of New York and New Jersey, and the
            Federal Government develop an action plan for addressing the
            nearly $900 million in unfunded fire and life safety projects
            in the jointly-used rail tunnels approaching Penn Station-New
            York.
    3. Aviation System Capacity and Air Traffic Control Modernization
        Against a backdrop of growing demand for air travel, there has been
    a rapid increase in flight delays and cancellations. Between 1995 and
    2000, FAA reported a 90 percent increase in flight delays. Likewise,
    the Bureau of Transportation Statistics reported a 104 percent increase
    in cancellations. For 2000, over 1 in 4 domestic flights-affecting
    approximately 163 million passengers-were delayed, canceled, or
    diverted, with the average arrival delay exceeding 52 minutes.
        In early 1999, Congress considered passing a ``passenger bill of
    rights'' but instead agreed to defer legislation and allow the airlines
    an opportunity to improve the situation on their own. On June 17, 1999,
    the airlines issued their Airline Customer Service Commitment.
        In January 2000, Congress passed the Wendell H. Ford Aviation
    Investment and Reform Act for the 21st Century, more commonly known as
    ``AIR-21''. AIR-21 will provide FAA with nearly $8.6 billion to
    modernize the air traffic control system and almost $10 billion in
    airport improvement program funds from fiscal year 2001 through 2003.
        Our recommendations for beginning to address the crisis in aviation
    capacity fall into four areas: developing strategies for addressing
    delays; establishing FAA's air traffic control services as a results
    based organization; managing FAA's efforts to use new technology to
    increase safety, efficiency, and capacity; and assessing FAA's role in
    planning for nationwide airport infrastructure needs.
      --Develop Strategies for Addressing Delays.
          Develop a strategic plan for addressing aviation capacity
            shortfalls, delays and cancellations in the short (1-2 years),
            intermediate (4-5 years), and long terms (8-10 years).
          Develop and implement a uniform system for tracking delays,
            cancellations and their causes.
          Develop ``capacity benchmarks'' for the Nation's top 30 airports
            describing the number of operations the airport can handle at
            various times of the day under various weather conditions. Such
            benchmarks are critical to understanding the true impact of
            airline scheduling practices and what relief can be expected
            from new technology and airport infrastructure enhancements.
      --Establish FAA's Air Traffic Control Services as a Results-Based
            Organization.
          Implement structural reforms directed in AIR-21, including an
            expanded role for the Management Advisory Council, the creation
            of an Air Traffic Services Subcommittee (whose members were
            just named), and the appointment of a Chief Operating Officer.
          Establish a cost accounting system. FAA originally planned to
            have the cost accounting system in place by October 1998 but
            completion dates have slipped many times--FAA now anticipates
            completing the system at the end of fiscal year 2002.
      --Manage FAA's efforts to use New Technology to Increase Safety,
            Efficiency, and Capacity.
          Strengthen management oversight of multi-billion dollar software-
            intensive development contracts designed to modernize the air
            traffic control system and increase system capacity. FAA needs
            to use the procurement flexibilities Congress granted it in
            1995 to hold contractors and FAA staff accountable for cost-
            effectiveness and reasonable adherence to established
            schedules. Key milestone decisions need to be made this year
            with several modernization efforts, including Wide Area
            Augmentation System (WAAS), Standard Terminal Automation
            Replacement System (STARS), and the Oceanic Replacement
            Program.
          Define and implement plans for transitioning to satellite-based
            navigation and landing systems.
          Provide modernized air traffic control services over the Pacific
            and the Atlantic Oceans to implement International Civil
            Aviation Organization (ICAO) delegations.
          Move forward with airspace redesign efforts and linking them with
            plans for implementing free flight technologies.
      --Assess FAA's Role in Planning for Nationwide Airport Infrastructure
            Needs.
          Consider whether FAA should move from a passive role
            (distribution of grant funds) to a more active one of
            facilitating a strategic view of airport expansion, leveraging
            grant funds to capacity-constrained locations, and helping to
            resolve local opposition.
          Address severely capacity-constrained airports with no realistic
            near-term hope for meeting demand. Options that will be debated
            run the gamut from ``do nothing and let the market straighten
            things out,'' to peak hour or congestion pricing, authorizing
            airline scheduling discussions under antitrust supervision, and
            lotteries--another form of slot control.
    4. Surface and Airport Infrastructure
        The Transportation Equity Act for the 21st Century (TEA-21) and the
    Aviation Investment and Reform Act for the 21st Century (AIR-21)
    provided an unprecedented infusion of funds for highway, transit, and
    airport infrastructure projects. Highway and transit funding increased
    by over 40 percent and airport infrastructure funding by about 75
    percent. TEA-21 provides $218 billion for highway and transit projects
    while AIR-21 makes $12.4 billion available for airport infrastructure
    projects.
        The painful Boston Central Artery Project disclosures last year,
    several internal embezzlement/kickback cases, and the $14 million in
    fines and jail terms in the Palumbo Brothers/Monarch Construction cases
    illustrate the need for improved stewardship and oversight. While
    Federal agencies must take the lead role, the states also have an
    obligation as front line authorizers, to ensure stewardship and
    oversight of Federal funds.
        The most pressing issues are ensuring that available funds are used
    as intended by (1) exercising stewardship and oversight to prevent
    fraud and mismanagement; and (2) expeditiously advancing projects to
    improve capacity, relieve congestion, and enhance safety while
    respecting the letter and intent of environmental laws.
        Our key recommendations in this area are:
      --Follow through on commitments to enhance DOT oversight capacity and
            practices in order to identify problems and mitigate risks on
            mega-projects (such as Central Artery, Woodrow Wilson Bridge,
            and San Francisco Bay Area Rapid Transit (BART) Airport
            Extension).
      --Ensure adequate oversight (including audits and investigations,
            where appropriate) for Federal funds to prevent fraud, waste
            and abuse and avoid scandal in administering TEA-21 and AIR-21.
      --Advance projects to improve capacity, relieve congestion, and
            enhance safety while respecting the letter and intent of
            environmental laws.
      --Mitigate risks on FTA projects with full funding grant agreements.
            When annual Federal appropriations are less than scheduled
            payments in grant agreements, grantees may need to find
            alternate funding sources or extend the construction schedules.
            In both instances, project costs may increase.
    5. Coast Guard Capital Acquisition Budget
        To meet the Coast Guard's goals, its capital acquisition budget
    would need to more than double from $400 million annually to at least
    $850 million annually on a sustained basis.
        Preliminary estimates indicate that capital improvement funding of
    $15 billion or more will be needed over the next 20 years to modernize
    assets critical to the Coast Guard's Marine Safety, Search and Rescue,
    Law Enforcement, and Marine Environmental Protection programs. Although
    Coast Guard has not yet provided definitive cost estimates for all its
    planned acquisitions, it has reported that the Deepwater Capability
    Replacement Project will cost more than $10 billion, the National
    Distress and Response System Modernization Project will cost from $240
    to $300 million, and the annual capital investment in shore facilities
    will increase from $61 million in fiscal year 2001 to $129 million in
    fiscal year 2005.
        Not only are there competing demands within the acquisition budget,
    our ongoing audit of Coast Guard's search and rescue program is
    identifying additional management challenges. Specifically, we are
    finding the search and rescue program is understaffed and many staff
    are not fully qualified for their positions; the small boats used in
    search and rescue missions are aging and consistently failing to meet
    Coast Guard standards; and the search and rescue program budget has
    declined relative to other Coast Guard programs. Despite these long-
    standing problems, the Coast Guard is maintaining a relatively high
    level of program effectiveness. Nevertheless, Coast Guard faces a
    challenge in remedying these problems while trying to satisfy its
    capital acquisition requirements.
        Our key recommendations in this area are:
      --Work with OMB to reconcile differences between Coast Guard's
            capital acquisitions proposals (i.e., $760 million in fiscal
            year 2002) and budget targets (i.e., $520 million in fiscal
            year 2002).
      --Complete the planning process for the estimated $10 to $15 billion
            Deepwater project in order to justify budget requests. Coast
            Guard needs to be able to justify what is to be purchased, at
            what cost, and in what time frame.
      --Establish realistic budget and schedule estimates for the National
            Distress System--an important search and rescue safety
            capability first discussed in the early 1980s--that the Coast
            Guard plans to deploy between 2003 and 2006.
    6. Transportation Security
        The terrorist attacks against the U.S.S. Cole and U.S. embassies in
    Kenya and Tanzania highlight the global nature of terrorism. To oppose
    this threat and advance the Nation's vital interest, DOT must do all it
    can to identify and address risks in the massive U.S. transportation
    system. This includes not just the Nation's aviation industry (with
    over 5,000 public use airports), but all forms of U.S. surface
    transportation (including 3.9 million miles of public roads, 2.2
    million miles of oil and natural gas pipelines, 123,000 miles of major
    railroads, and 508 transit operators in 316 urban areas) and U.S.
    marine transportation (with over 24,000 miles of commercially navigable
    waterways and 145 major ports on the coasts and inland waterways).
        Our recommendations include:
      --Maximize the effectiveness and usage of explosives detection
            equipment at airports.
      --Complete pending rulemakings on certification of screening
            companies, airport access requirements and accounting for
            active airport identification cards.
      --Implement the Airport Security Improvement Act of 2000, which will
            strengthen background investigation requirements for airport
            personnel.
      --Finalize the draft DOT surface transportation security research
            strategy, based on recommendations from the National Research
            Council.
    7. Computer Security
        E-Government is becoming an important part of Government
    operations. Web sites are powerful tools for the Federal Government to
    improve the quality of its services. However, recent denial-of-service
    attacks on e-commerce sites and e-mail systems serve as ``wake-up''
    calls for enhancing Internet security. In addition to managing
    unauthorized access or attacks by outsiders, agencies also need to
    enhance security over insiders, including employees, contractors, and
    grantees.
        Our recommendations to DOT include:
      --Complete the vulnerability assessments of infrastructure mission-
            critical systems.
      --Evaluate the security impact of the proposed integration of
            National Airspace System air traffic control and FAA
            administrative systems.
      --Complete background checks on contractor and DOT employees.
      --Implement security measures against attacks on DOT computers and
            improve controls over passwords to prevent fraud.
    8. Amtrak Financial Viability and Modernization
        The 1997 Amtrak Reform and Accountability Act mandated that Amtrak
    develop a plan to eliminate its need for Federal operating support
    after fiscal year 2002. In fiscal year 2000, Amtrak's cash loss was
    $561 million ($120 million worse than projected), largely as a function
    of longer-than-projected delays in the Acela high-speed rail program.
    While revenues and ridership improved markedly in 2000, expense growth
    kept pace, preventing Amtrak from making significant progress on
    reducing its losses and achieving its glide path to operational self-
    sufficiency. Amtrak's progress along its glidepath will need to
    accelerate rapidly if it is to reach operational self-sufficiency by
    2003. Beginning in 2001, Amtrak's cash losses will need to be reduced
    by nearly $100 million each year in order to meet the congressionally
    mandated deadline.
        Even if Amtrak becomes operationally self-sufficient by 2003, it
    will continue to require significant and sustained capital funding for
    the foreseeable future. Amtrak estimates its needs to be in the
    neighborhood of $1.5 billion each year in order to bring the Northeast
    Corridor back to a state of good repair, invest in new corridor
    development, and address general capital needs across the entire
    system. Amtrak hopes to secure this funding through some combination of
    a high-speed rail bond bill and annual appropriations from Congress.
        Our recommendations in this area include:
      --Close the $737 million gap in projected cost savings and revenues,
            which Amtrak pledged to achieve through undefined management
            actions.
      --Deliver and generate revenues from all 20 trainsets planned for
            high-speed service in the Northeast Corridor.
      --Explore options for securing a significant and sustained long-term
            capital funding source.
    9. MARAD's Ship Disposal Program
        MARAD currently has 116 obsolete vessels in the National Defense
    Reserve Fleet (NDRF) awaiting disposal. These vessels are deteriorating
    and pose an immediate environmental threat in Virginia, Texas, and
    California. They contain hazardous substances such as fuel oil,
    asbestos, solid and liquid polychlorinated biphenyls, lead, radium, and
    chromates. Immediate state and Federal action would be required, should
    the hazardous materials escape into the water.
        The approach of selling MARAD's vessels for domestic scrapping has
    not worked. Since 1995, only eight obsolete vessels have been scrapped.
    The number of vessels awaiting disposal has grown from 66 in 1997 to
    116 today and is expected to reach 155 by the end of fiscal year 2001.
        Congress has directed MARAD to work with the Navy and the
    Environmental Protection Agency to:
      --Develop and implement an environmentally and financially
            responsible program to dispose of the 116 ships in the NDRF by
            the statutory deadline of September 30, 2006.
    10. Departmental Business Practices
        DOT has established corporate management strategies (departmental
    business practices) that cut across all organizational boundaries
    within DOT and are key to performing its missions efficiently and
    providing its customers with consistent and seamless transportation
    policy and services.
        Our work has identified five areas of DOT business practices we
    think rise to the level of the agency's top management challenges. They
    are: ensuring financial accountability; improving the timeliness of DOT
    rulemakings; improving oversight of contract costs and closeouts;
    maintain and improve DOT's successful Government Performance and
    Results Act (GPRA) implementation; and administrative issues concerning
    space requirements for a new DOT headquarters building and the
    Transportation Administrative Service Center's (TASC) role in providing
    administrative support.
      --Ensure Financial Accountability. Complete implementation of the new
            Department-wide financial system (Delphi), ensure the accuracy
            of FAA's multi-billion dollar property account, and develop a
            credible system for tracking FAA's property, in order to
            sustain a clean opinion on the financial statements covering
            DOT's $58 billion budget.
          Develop and implement a Department-wide cost accounting system--
            particularly in FAA where its proposed cost accounting system
            has been under development for over 4 years. FAA will not be
            able to operate as a results-based organization or accurately
            account for the cost of air traffic control operations without
            a credible cost accounting system.
      --Improve the timeliness of DOT rulemakings. For the significant
            rules completed in 1999, DOT took an average of 3.8 years to
            issue a final rule. Several important safety related rules are
            overdue (e.g., railroad grade crossings) and others (e.g., the
            rules implementing new motor carrier program safety
            enhancements) may not be done by their statutory due date.
            Although the previous Secretary committed the Department to a
            course of corrective action, the key to improving the
            rulemaking process is effective implementation, particularly
            the establishment of a Department-wide tracking and monitoring
            system.
      --Improve oversight of contract costs, particularly through use of
            independent contract close-out audits. Some DOT contracting
            officers are closing out cost-reimbursable contracts without
            independent audits and with minimal oversight. We found little
            evidence of review on the amounts being billed by contractors.
      --Maintain and improve the Department's highly rated Strategic Plan
            and combined Performance Report/Performance Plan under GPRA. A
            major factor that will impact DOT's ability to achieve its
            goals is the effective use of human resources.
      --Resolve space requirements for the new DOT headquarters building.
      --Resolve TASC's role in providing administrative support services
            for the Department's headquarters units.

                         statement of john h. Anderson

        Senator Shelby. Mr. Anderson, we are glad to have you with
    us from the General Accounting Office. As I said earlier, your
    complete statement will be made a part of the record. Proceed
    as you wish.
        Mr. Anderson. Thank you very much. A lot of what I am going
    to say is going to echo some of the things Ken has said, and it
    would be surprising if we had a lot of different issues.
        With nearly $60 billion in funding for fiscal year 2001,
    the Department of Transportation faces critical challenges.
    While it has achieved many successes over the years, major
    challenges remain. They are systemic and longstanding. It is
    not surprising that 2 years ago about this time Ken and I were
    here, and we were talking about many of the same issues.
        I am going to cover three areas, surface transportation,
    aviation, and the Coast Guard. First, with surface, about 5,400
    people died on our Nation's highways in 1999 in crashes
    involving large trucks. As the figure on page 4 of my statement
    shows, that number is largely unchanged over the last 10 years.

                                  Truck safety

        To improve truck safety, Congress established and Ken made
    reference to this, the new Federal Motor Carrier Safety
    Administration, and that office has developed a truck safety
    action plan. However, the Office suffers from a lack of
    accurate, current data that is needed to identify the
    underlying causes of accidents so they can take the right
    corrective actions.
        The Office I think also needs to prioritize its projects.
    It has identified, I believe, 47 major projects and there are
    questions whether or not it has resources to do all of them.
    But, of course, without the data it is a catch-22 situation,
    they do not know necessarily which projects are the most
    promising.

                                Pipeline safety

        Concerning major pipeline accidents, Senator Murray, I do
    not have too say much about this for you, but they have claimed
    over 220 lives and injured over 1,000 people from 1989 to 1998,
    and as the figure on page 5 of my statement shows, the number
    of pipeline accidents has been increasing during this period 4
    percent a year.
        DOT's Office of Pipeline Safety's approach to
    comprehensively assess safety risk does hold some promise, but
    the Office needs to continue to use State inspectors wherever
    they can to augment their limited resources. It also needs to
    know whether or not its new practice of relying less on fines
    is working to improve the safety of the pipelines.
        On the management side, in the surface transportation area
    we found that many large highway and transit projects have
    incurred huge cost increases and unscheduled delays, and while
    FTA and FHWA are doing a better job in this area, additional
    challenges remain.
        We really think the main key here is to require good, sound
    financial plans that are closely reviewed by the overseers.
    They are required for new starts transit projects as a course
    of business under full funding grant agreements, but they
    really need to be a part of any major project, whether it be
    transit or highway.

                                     Amtrak

        Turning to Amtrak, despite efforts to improve its overall
    financial condition, Amtrak has made relatively little
    progress. They are still going to need Federal operating
    subsidies, we believe. While revenues have increased, so have
    costs. As a result, they are unlikely to eliminate their need
    for Federal operating subsidies by the end of 2002, as
    required.
        In addition, and Ken made reference to this, too, Amtrak
    has substantial capital needs. It estimates that Federal funds
    totalling $30 billion over the next 20 years are going to be
    needed to help meet these needs.

                              Aviation challenges

        In aviation, I will mention three major challenges. The
    first is air traffic control modernization. We have talked
    about this ad nauseam, but it is still there. It is still a
    problem. Over the last 19 years, this multibillion-dollar
    program has experienced cost overruns, delays, and performance
    shortfalls of very large proportions. While some progress has
    been made in this area, major projects continue to experience
    these problems and because of its size and complexity and cost,
    since 1995 we have designated it as a high-risk management
    problem.
        With a modernized ATC system, FAA would be in a better
    position to help meet the growing demands for air service. The
    congestions and delays that Ken referred to make it critical
    that FAA meet its challenge in this area. Ken touched on this
    as well.
        In addition, improving aviation safety and security are a
    must. As the table on page 8 of my statement shows, DOT did not
    meet any of its 1999 goals for improving aviation safety. They
    must improve the process for improving root causes of
    accidents, and they must correct the implementation problems
    that have plagued their new inspection system.
        In addition, critical security weaknesses still exist in
    protecting the air traffic control computer systems from
    sabotage and reducing, or improving the detection rates for
    baggage screeners at major U.S. airports.
        Another important aviation challenge, and this is a little
    different than the customer service area Ken was talking about
    but it is certainly related is improving airline competition. I
    talked about this a couple of years ago, and you have had some
    special hearings on this, Mr. Chairman.
        When the Airline Deregulation Act was enacted in 1978 the
    hope was that all consumers were going to benefit with improved
    fares and service. However, a lack of effective competition in
    certain markets has contributed to higher air fares and reduced
    service in some communities.
        The proposed mergers between United Airlines and U.S.
    Airways and American Airlines' proposed purchase of TWA have
    raised serious concerns about the impact on consumers. The
    reduction in the number of competitors in certain markets, the
    market share that the new combined airlines would command, and
    the potential domino effects, must be closely examined. The
    figure on page 11 of my statement refers to this issue.

                         Coast guard deepwater project

        Finally, I would like to mention something Ken alluded to
    as well, and that is the Coast Guard's Deepwater Project. This
    is a 20-year, $10 billion project under current estimates and
    the costs could increase. Its purpose is to replace or
    modernize the Coast Guard's fleet of deep water ships,
    aircraft, communications and radar equipment.
        There is no question that the Coast Guard needs to make
    improvements, because they have got some assets that are aging.
    The biggest problem is, I think they need to upgrade their
    communication equipment and their sensors so they can do a
    better job there.
        We have been monitoring and reporting on this project for
    several years, and for the most part the Coast Guard has been
    responsive to our concerns. Now, the project is about to enter
    a crucial stage, and we understand the Coast Guard plans to
    request $350 million this year to begin their procurement
    process for Deepwater.
        However, there are major risks associated with it,
    including awarding a series of contracts to one contractor to
    oversee and acquire all the system components. Such an approach
    has never been used on a procurement of this size or
    complexity.
        We are currently reviewing this effort and working with the
    Coast Guard to try to help mitigate the risks associated with
    this project so we can provide some real-time assistance as
    opposed to coming after the fact and saying, we told you so. We
    plan to report the results of our work this year in time for
    you to use in your appropriations deliberations.
        In closing, I just want to say, sustained oversight like
    this hearing that you are having is going to help DOT keep
    focused on solving the problems that we and the IG have
    identified. Ultimately, the administration and the Congress
    must think and act in a manner that ensures that final
    decisions reflect an intermodal strategy that addresses the
    most pressing needs cost-effectively, and all this must be done
    within a framework that recognizes that there are large human
    capital issues looming that face DOT and the rest of the
    Federal Government.
        That concludes my statement. I will be glad to answer
    questions.
        [The statement follows:]

                  Prepared statement of John H. Anderson, Jr.

        Mr. Chairman and Members of the Subcommittee: We are here today to
    discuss the critical challenges facing the Department of Transportation
    (DOT). My testimony is based on reports we issued in January as part of
    GAO's performance and accountability series on major management
    challenges and program risks facing federal agencies and the federal
    government as a whole.\1\ With $58.5 billion in funding for fiscal year
    2001, the Department faces critical challenges in achieving its goals
    of ensuring the safe and efficient movement of people and goods and in
    making cost-effective investments in the nation's transportation
    infrastructure.
    ---------------------------------------------------------------------------
        \1\ Major Management Challenges and Program Risks: Department of
    Transportation (GAO-01-253, Jan. 2001), Major Management Challenges and
    Program Risks: A Governmentwide Perspective (GAO-01-241, Jan. 2001) and
    High-Risk Series: An Update (GAO-01-263, Jan. 2001).
    ---------------------------------------------------------------------------
        The Department has achieved many successes in accomplishing its
    objectives and improving its operations. For example, it successfully
    addressed the Year 2000 computer challenge and improved the management
    of its transit grant programs so that they no longer are at high risk
    of fraud, waste, abuse, or mismanagement. However, major performance
    and management challenges remain. These problems are systemic and long-
    standing, and their resolution will require sustained attention by the
    Department. Therefore, it is not surprising that many of the challenges
    I am discussing today were also raised 2 years ago in our review of the
    Department's performance and accountability. I will summarize the
    challenges for surface transportation, aviation, the U.S. Coast Guard,
    and for the Department as a whole. Ultimately, the new administration
    and the Congress will need to address these issues in the broader
    context of an intermodal national transportation strategy.
      --For surface transportation safety, DOT continues to face challenges
            in improving the safety of highways and pipelines. For example,
            in 1999, about 5,400 people died in crashes involving large
            trucks. While the Department appears to be making progress on
            some initiatives to reduce the number of large truck crashes,
            it needs to obtain high-quality, timely data on the causes of
            these crashes.
      --For other surface transportation issues, DOT and the Congress face
            challenges in improving the oversight of large-dollar highway
            and transit projects, strengthening the financial condition of
            Amtrak, and enhancing freight rail competition. While the
            Federal Transit Administration (FTA) and Federal Highway
            Administration (FHWA) have improved their oversight of large
            projects, additional challenges exist. For example, FTA may not
            have the resources it needs after fiscal year 2001 to
            adequately oversee a significant number of new transit
            projects, and we recommended that the Department identify any
            funding shortfalls and take steps to address them. In addition,
            it is likely that Amtrak will not eliminate its need for
            federal operating subsidies by the end of 2002, as required by
            the Congress, which will require that fundamental decisions be
            made by the Congress about the continuation and scope of the
            nation's intercity passenger rail system.
      --For aviation, the Federal Aviation Administration (FAA) continues
            to face considerable challenges in managing its multibillion-
            dollar air traffic control (ATC) modernization program,
            addressing shortcomings in its safety and security programs,
            and resolving long-standing weaknesses in its financial
            management. While the Department is making progress in
            addressing some of these issues, more remains to be done. We
            continued to list FAA's ATC modernization program as a high-
            risk information technology initiative because of its size,
            complexity, cost, and problem-plagued past. Congestion and
            record-level airline delays make it critical that FAA fully
            modernize the system so that it can meet the growing demands
            for air service. We have continued to designate FAA's financial
            management as a high-risk area because of the serious and long-
            standing nature of those weaknesses. An additional challenge is
            the lack of effective airline competition in certain markets,
            which has contributed to high fares and poor service for some
            communities. Possible further consolidation of the airline
            industry raises additional concerns about the impact on
            consumers.
      --Improvements are needed in the Coast Guard's 20-year, $10 billion
            project to replace or modernize its fleet of deepwater ships
            and aircraft. While the agency has addressed many of our
            earlier recommendations about the project's justification,
            attention needs to be focused on reducing the risks in its
            contracting approach, fully developing its acquisition
            strategy, and ensuring the project's affordability.
      --Finally, an overriding challenge facing DOT as well as the entire
            federal government is the lack of attention to strategic human
            capital management. In January 2001, we designated this as a
            governmentwide high-risk area. Inadequate attention to human
            capital issues has been a root cause of some of the performance
            challenges facing DOT, such as FAA's problems with its ATC
            program.
                     highway and pipeline safety challenges
        Of the more than 42,000 people who died on our nation's highways in
    1999, about 5,400 died in crashes involving large trucks, a figure
    largely unchanged from a decade ago.\2\
    ---------------------------------------------------------------------------
        \2\ Large trucks are those with a gross weight of more than 10,000
    pounds.@

        DOT has taken several steps to improve truck safety, including (1)
    establishing, at the direction of the Congress, a new organization--the
    Federal Motor Carrier Safety Administration--that is responsible for
    truck safety and (2) developing an overall strategy--called the Safety
    Action Plan--to improve the safety of commercial motor vehicles.
    Nonetheless, the Department must overcome significant barriers to make
    measurable progress in improving truck safety. For example, while the
    Department appears to be making progress on some initiatives in its
    Safety Action Plan, it lacks high-quality, up-to-date information on
    the causes of large truck crashes. Without such data, DOT cannot
    determine the degree to which its initiatives will reduce truck-related
    fatalities. In addition, the Department is just beginning to determine
    whether it will have the resources to complete the activities in its
    plan.
        In addition to highway safety challenges, major pipeline accidents
    have claimed about 22 lives per year.\3\  From 1989 through 1998, the
    number of major pipeline accidents increased by about 4 percent
    annually see figure 2. DOT's Office of Pipeline Safety (OPS) has
    adopted several initiatives to improve pipeline safety, including
    moving toward inspecting entire pipelines rather than segments of
    pipelines to provide a more comprehensive assessment of safety risks.
    We have concerns, however, about OPS' actions, such as relying less on
    states to inspect those portions of interstate pipelines within their
    borders. States' familiarity with the pipeline segments in their
    jurisdictions could aid in identifying the very risks that OPS is
    hoping to mitigate through its new approach. Furthermore, a combined
    federal and state approach to overseeing pipeline safety could better
    leverage federal resources. In addition, OPS has changed its approach
    to enforcing compliance with its regulations by reducing its use of
    fines and, instead, working with pipelines operators to identify and
    correct safety problems. However, the office has not assessed whether
    its revised approach to enforcement is resulting in greater rates of
    compliance. We recommended that DOT determine whether the reduced use
    of fines has improved compliance with pipeline safety regulations.
    ---------------------------------------------------------------------------
        \3\ Major pipeline accidents are those that result in a fatality,
    an injury, or property damage of $50,000 or more.

      challenges facing surface transportation projects and passenger and
                                  freight rail
        Over the years, many large-dollar highway and transit projects have
    incurred cost increases and schedule delays. Under the Transportation
    Equity Act for the 21st Century (TEA-21), at least $198 billion will be
    provided for highway and transit projects from fiscal year 1998 through
    fiscal year 2003. Although FTA and FHWA have improved their oversight
    of large projects, additional challenges exist. FTA may not have the
    necessary level of resources after this fiscal year to adequately
    oversee a significant number of new transit projects. In September
    2000, we recommended that DOT identify any funding shortfalls in its
    budget for fiscal year 2002 and proposed steps to address them. This
    recommendation was reinforced during the last appropriations process
    when the Congress directed DOT to develop a plan to address expected
    shortfalls and to include this information in its fiscal year 2002
    budget submission. We also found that DOT is likely to exhaust its
    commitment authority for the construction of new transit systems or the
    extensions of existing systems before the end of the funding period for
    TEA-21. Therefore, we recommended that DOT prioritize eligible transit
    projects so that funds can be directed to those offering the best
    potential for cost-effective transportation improvements.
        Despite efforts to improve its overall financial condition, the
    National Railroad Passenger Corporation (Amtrak) has made relatively
    little progress in reducing its need for federal operating subsidies.
    Since 1971, the federal government has provided Amtrak with over $23
    billion in operating and capital assistance. In 1994, at the request of
    the administration and later at the direction of the Congress, Amtrak
    pledged to eliminate the need for federal operating subsidies by the
    end of 2002. However, in fiscal year 2000, Amtrak reduced its need for
    operating subsidies by only $5 million--substantially less than its
    planned reduction of $114 million. Over the last 6 years (1995-2000),
    Amtrak reduced its need for operating subsidies by only $83 million and
    must make $281 million in further reductions in 2001 and 2002 to become
    operationally self-sufficient. While revenues have increased, so have
    costs. As a result, it is unlikely that Amtrak will eliminate its need
    for federal operating subsidies as directed. If Amtrak does not meet
    the goal, plans for restructuring intercity passenger rail service and
    liquidating Amtrak are to be submitted to the Congress.
        Even if Amtrak does attain operational self-sufficiency, it will
    require substantially more financial support to meet its capital needs.
    Amtrak estimates that it will need an average of $1.5 billion a year in
    federal funds to meet its identified capital needs over the next 20
    years. Amtrak is also requesting authority to issue $12 billion in tax-
    exempt bonds to meet its capital needs. Bondholders would receive an
    income tax credit equal to the interest they would otherwise receive.
        Continued consolidation in the railroad industry has raised
    concerns about poor service and high rates in certain markets. The
    Surface Transportation Board, which approves rail mergers and
    consolidations, has taken a number of actions to address rail rate,
    service, and merger issues. For example, shippers are now allowed to
    receive expedited temporary relief from inadequate rail service through
    service from an alternative carrier. However, the Board's actions may
    not fully satisfy many shippers who believe that increased competition
    in the rail industry is needed to improve service. Because of the
    divergent views of railroads and shippers, resolving service and
    competition issues will be difficult and may require congressional
    action.
                              aviation challenges
        Over the past 19 years, FAA's multibillion-dollar ATC modernization
    program has experienced cost overruns, delays, and performance
    shortfalls of large proportions. FAA is making progress in addressing
    some of the causes of these problems, but its reforms are not complete,
    and major projects continue to face challenges in all three areas. To
    date, the Congress has appropriated over $32 billion for the program,
    and FAA estimates that the program will need an additional $13 billion
    through 2005. Because of its size, complexity, cost, and problem-
    plagued past, we first designated FAA's ATC modernization program as a
    high-risk information technology initiative in 1995. Since 1995, we
    have made over 30 recommendations to address the root causes of the
    program's problems, which include an ineffective investment management
    structure and inadequate cost-estimating and cost-accounting practices.
    While FAA has initiated activities in response to our recommendations
    in many areas, more must be done. For example, FAA has begun to improve
    its cost estimates, but it has not yet fully instituted rigorous cost-
    estimating practices. With a modernized ATC system, FAA will be in a
    better position to meet the growing demands for air service. The
    congestion and record-level airline delays facing the nation make it
    critical that FAA meet its challenge in this area.
        In 1999, FAA did not meet any of the four performance goals it had
    established for improving aviation safety. (See table 1.) We have
    identified numerous shortcomings in FAA's safety and security programs.
    For example, we recommended that FAA improve the effectiveness of its
    Safer Skies program--a joint government and industry initiative to
    identify and address the root causes of aviation accidents--by
    developing better evaluation procedures. We also recommended that FAA
    clarify program guidance for and improve the usefulness of its Air
    Transportation Oversight System for targeting inspection resources more
    effectively.

                   TABLE 1.--DOT'S FISCAL YEAR 1999 PERFORMANCE MEASURES AND GOALS FOR AVIATION SAFETY
    ----------------------------------------------------------------------------------------------------------------
                                                               Fiscal year 1999
           Performance measure        -----------------------------------------------------------------     Goal
                                                     Goal                         Performance             achieve?
    ----------------------------------------------------------------------------------------------------------------
    Number of fatal aviation           0.034 accidents per 100,000      0.04 accidents per 100,000      No.
     accidents for U.S. commercial      flight hours.                    flight hours.
     air carriers per 100,000 flight
     hours.
    Number of dangerous incidents on   270 incidents..................  322 incidents.................  No.
     airport runways (runway
     incursions).
    Number of errors in maintaining    0.496 errors per 100,000         0.57 errors per 100,000         No.
     safe separation between aircraft   activities.                      activities.
     per 100,000 activities \1\.
    Number of deviations-i.e. when an  0.099 deviations per 100,000     0.18 deviations per 100,000     No.
     aircraft enters airspace without   activities.                      activities.
     prior coordination--per 100,000
     activities.
    ----------------------------------------------------------------------------------------------------------------
    \1\ ``Activities'' are total FAA facility activities, as defined in Aviation System Indicators 1997 Annual
      Report. An example of an activity is an air traffic controller providing guidance to a pilot who needs to make
      an instrument landing.
     Source: DOT.

        Further improvements are needed in hiring and training personnel
    who operate security checkpoints at airports to screen passengers and
    carry-on baggage for dangerous objects. For instance, we have found
    that several factors continue to reduce airport screeners'
    effectiveness in detecting dangerous objects, most notably (1) the
    rapid turnover of screener personnel--often above 100 percent a year at
    large airports (see table 2)--and (2) the human factors associated with
    screening that have for years affected screeners' hiring, training, and
    working environment. Although FAA is pursuing efforts to improve the
    hiring, training, and testing of airport screeners, most of these
    efforts are behind schedule.

     Table 2.--Turnover Rates for Screeners at 19 Large Airports, May 1998-
                                   April 1999

                                  [In percent]

            City (airport)                                            Annual
                                                               turnover rate
    St. Louis (Lambert St. Louis International).......................   416
    Atlanta (Hartsfield Atlanta International)........................   375
    Houston (Houston Intercontinental)................................   237
    Boston (Logan International)......................................   207
    Chicago (Chicago-O'Hare International)............................   200
    Denver (Denver International).....................................   193
    Dallas-Ft. Worth (Dallas/Ft. Worth International).................   156
    Baltimore (Baltimore-Washington International)....................   155
    Seattle (Seattle-Tacoma International)............................   140
    San Francisco (San Francisco International).......................   110
    Orlando (Orlando International)...................................   100
    Washington (Washington-Dulles International)......................    90
    Los Angeles (Los Angeles International)...........................    88
    Detroit (Detroit Metro Wayne County)..............................    79
    San Juan (Luis Munoz Marin International).........................    70
    Miami (Miami International).......................................    64
    New York (John F. Kennedy International)..........................    53
    Washington (Ronald Reagan Washington National)....................    47
    Honolulu (Honolulu International).................................    37
                                                                      ______
    Average turnover rate.............................................   126

    Source: FAA.

        We also identified actions necessary to secure FAA's ATC computer
    systems to reduce the possibility of intrusions or attacks. We made 22
    recommendations through May 2000 to address these problems. For
    example, we recommended that FAA tighten controls over contract
    employees by ensuring that appropriate background investigations are
    performed. While FAA has responded to these recommendations, progress
    in some areas has been slow. We made an additional 17 recommendations
    in December 2000 to address the continuing weaknesses.
        We have reported that a lack of effective airline competition in
    certain markets has contributed to high airfares and reduced service in
    some communities. A number of communities have not benefited from
    increased aviation competition, largely because barriers inhibit the
    entry of new airlines and, as a result, pockets of high fares and poor
    service exist. These barriers include limited access to gates at
    certain airports and ``slot'' controls that limit the number of
    takeoffs and landings at certain congested airports. The Congress has
    begun to address some of these barriers, including requiring the
    phaseout of ``slot'' rules. However, the proposed merger between United
    Airlines and US Airways and American Airlines' proposed purchase of
    Trans World Airlines have raised questions about how such consolidation
    within the airline industry could affect competition in general and
    consumers in particular. If both proposals are approved, United would
    have the largest market share of any U.S. airline--over 27 percent--and
    American would have a 22.6 percent share. (See figure 3.)

        The proposals raise a number of questions--such as how a
    consolidated industry might affect service to small communities and new
    airlines' ability to compete. The Congress, DOT, and the Department of
    Justice must closely evaluate these proposals to assess their impact.
        In addition, major improvements are still needed in FAA's financial
    management systems. In January 1999, we designated FAA's financial
    management as a high-risk area because of serious and long-standing
    accounting and financial management weaknesses. FAA received its first-
    ever unqualified opinion on its fiscal year 1999 financial statements,
    but it did so only through herculean efforts. FAA has not yet proven it
    can sustain this outcome. Because FAA lacks an adequate system to
    account for its physical assets on an ongoing basis, the agency used
    labor-intensive methods to establish baseline and cost information for
    the financial statements. In addition, FAA lacks a cost-accounting
    system or an alternative means to meaningfully accumulate and report
    its costs. FAA has made significant progress in its long-term plan to
    remedy its financial management weaknesses. For example, it is
    developing a cost-accounting capability that is expected to provide
    detailed information about the costs of services that it provides to
    the public. In addition, it has begun implementing new systems to
    remedy its physical assets deficiencies. However, its core cost-
    accounting system is not expected to be fully in place until the end of
    fiscal year 2002 and its physical assets system will not be fully
    operational until fiscal year 2003. Until FAA has financial management
    systems and related procedures and controls that provide reliable
    information, it will continue to be at high risk of waste, fraud,
    abuse, and mismanagement.
                             coast guard challenges
        Improvements are needed in the Coast Guard's Deepwater Project--a
    20-year, $10 billion project to replace or modernize its fleet of
    deepwater ships and aircraft and communications and radar equipment.
    The Coast Guard needs to focus attention on reducing the risks
    associated with its contracting approach, fully developing its
    acquisition strategy, and ensuring the project's affordability.
    Although the agency has addressed many of our earlier recommendations
    about the project's justification, numerous uncertainties still exist.
    For example, the Coast Guard does not expect to finish planning the
    Deepwater Project until July 2001, but we understand that DOT is
    planning to request $350 million for the project this spring. Asking
    for funds prior to completing the planning process and fully addressing
    the risks associated with this project raises uncertainties about
    whether the funds will be used effectively. A major risk is the Coast
    Guard's contracting approach--awarding a series of contracts to one
    system integrator for potentially 20 or more years. Such an approach
    has never been used on a procurement of this size or complexity.
    Because of the uniqueness of this approach, the large dollars involved,
    and the importance of the approach in shaping the future of the Coast
    Guard, the agency's planned contracting strategy requires a carefully
    thought-out and well-documented acquisition plan. We are currently
    reviewing the Coast Guard's efforts in this area and have been
    providing real-time advice to help mitigate the major risks associated
    with the program. We plan to report our results in time for the
    appropriations committees' deliberations on this year's funding
    requests for the project.
                    departmentwide human capital challenges
        This year, GAO designated human capital management as a new
    governmentwide high-risk area. Federal programs rely for their success
    on the performance of the federal government's people--its human
    capital. Workforce and succession planning are central elements of
    successful human capital management. These elements pose both short-
    and long-term challenges for DOT. According to the Office of Personnel
    Management's data, approximately 41 percent of DOT's fiscal year 1998
    civilian workforce of 63,781 will be eligible to retire by the end of
    fiscal year 2006--however, actual retirements may not be that high.
    Responding to this human capital challenge, DOT's strategic plan for
    2000-2005 envisions expanded workforce and succession planning for
    retirements in the next 10 years. According to a DOT official, as of
    December 2000, DOT offices had initiated pilot programs to identify
    future workforce needs for key occupations and DOT had drafted a Human
    Resources Action Plan to meet overall human capital planning needs.
        Clearly, human capital challenges have contributed to the
    performance problems of some DOT programs. For example, a
    ``stovepiped'' culture at FAA has been one of several underlying causes
    of acquisition problems in the agency's ATC modernization program. As
    we have learned, organizational cultures can be barriers to high
    performance and make management improvement efforts more difficult.
        In summary, many of the challenges we identified at DOT are long-
    standing and will require sustained attention by the new administration
    and the Congress. While the Department has initiatives under way to
    address the shortcomings in some of its programs, these activities have
    not been fully implemented. Their success will depend on a strong
    commitment from DOT's new leadership and a sustained effort to identify
    and address critical human capital issues. Finally, as they address the
    problems facing each of the individual components, given the myriad of
    demands for new resources, the new administration and the Congress must
    think and act so as to ensure that their transportation decisions
    reflect an intermodal transportation strategy that addresses the most
    pressing national needs in a cost-beneficial manner.
        This concludes my prepared statement. I would be glad to answer any
    questions.

                       statement of senator patty Murray

        Senator Shelby. Senator Murray.
        Senator Murray. Thank you very much, Mr. Chairman. Let me
    just begin by saying it is a pleasure to work with you on the
    Transportation Subcommittee, and I look forward to a number of
    hearings we will have with you in putting together a bill.
        I think it is really appropriate that we begin hearings
    this year with a discussion of the management challenges facing
    the Department of Transportation, because our Nation's
    transportation needs are so great, and we are so far behind
    where we should be. In terms of investment, we need to make
    sure there is no waste and inefficiency in any of our programs.
    Our needs for transportation investment include all of our
    major infrastructure programs through which we construct and
    renovate highways, airports, and transit systems, but they also
    include critical safety programs through which we compensate
    the tens of thousands of rail inspectors, pipeline inspectors,
    truck inspectors, and air traffic controllers who work to
    protect our lives every day.
        I have a longer statement that I will submit for the
    record, so I can get right to my questions.
        [The statement follows:]

                   Prepared Statement of Senator Patty Murray

        Mr. Chairman, this is the first hearing held by the Transportation
    Subcommittee this year. As the new Ranking Member of the Subcommittee,
    I want to take a moment to welcome the two newest Members of our
    Subcommittee, Senator Durbin and Senator Hutchison of Texas. I look
    forward to their input and contributions as we put together a
    Transportation Appropriations bill for the coming year.
        It is most appropriate, Mr. Chairman, that we begin our hearings
    this year with a discussion of the management challenges facing the
    Department of Transportation. Waste and inefficiency are to be
    condemned wherever they are found in our government. Such waste and
    inefficiency are especially deplorable, however, when they are found in
    our federal transportation programs. That is because our nation's
    transportation needs are so great, and we are so far behind where we
    should be in terms of investment.
        When I speak of the need for transportation investment, I do not
    speak only of our major infrastructure programs through which we
    construct and renovate highways, airports, and transit systems. I
    speak, also, of the critical safety programs through which we
    compensate the tens of thousands of rail inspectors, pipeline
    inspectors, truck inspectors, and air traffic controllers who work to
    protect our lives every day.
        I've spent a great deal of time over the past two years working to
    improve pipeline safety. As you know, a liquid pipeline explosion in my
    state in June of 1999 claimed the lives of three children. More
    recently, a natural gas line in New Mexico killed 12 people.
        Since June of 1999, I have worked with Senator McCain and others,
    members of my delegation, industry, state officials, and interest
    groups to pass comprehensive pipeline safety reform legislation.
        I am proud to note that last Thursday we unanimously passed
    legislation in the Senate. This is the second year in a row the Senate
    has passed comprehensive legislation. That legislation addresses many
    of the concerns that I have about pipeline safety. To make pipelines
    safer, the bill:
      --Improves the Qualification and Training of Pipeline Personnel
      --Improves Pipeline Inspection and Prevention Practices
      --Expands the Public's Right to Know about Pipeline Hazards
      --Raises the Penalties for Safety Violators
      --Enables States to Expand their Safety Efforts
      --Invests in New Technology to Improve Safety
      --Protects Whistle Blowers, and
      --Increases Funding for Safety Efforts
        But passing legislation is only one step. Over the years, Congress
    has required the Office of Pipeline Safety to implement and enforce
    strong safety rules. In many cases, it has failed to do so.
        At my request, both the agencies testifying today--the GAO and the
    Office of Inspector General--issued reports over the course of the last
    year regarding the inadequacies at the Office of Pipeline Safety. I
    want to thank both Ken Mead and John Anderson personally for responding
    to my requests, and compliment them for their work. Both products were
    helpful in crafting the legislation that passed last week. I will be
    asking questions regarding their findings and soliciting their thoughts
    on what further measures can be taken in Congress to improve the
    oversight of pipelines.
        Mr. Chairman, just yesterday, the Inspector General released his
    long awaited report on the poor quality of customer service endured by
    the nation's air travelers. As a frequent flier, I, like many of my
    colleagues, have my own strong views on this topic. I look forward to
    discussing the findings of this report today as well as addressing
    other critical issues such as Amtrak's future, the inadequate fiscal
    controls at the Coast Guard and the FAA, the need to modernize our air
    traffic control system, and the absence of competition in many aviation
    and rail markets.
        Thank you, Mr. Chairman.

                                Pipeline safety

        Senator Murray. As both of you know, I have spent a great
    deal of time on the pipeline safety issue after an accident
    that happened in my home State almost 2 years ago now that took
    the lives of three young children, and we all saw recently
    where another accident in New Mexico fatally injured 12 people.
        I have been working with John McCain and others on this
    issue. As you mentioned in your testimony, we did pass
    legislation this past week out of the Senate. It has gone to
    the House, and I will be working with them to make improvements
    as that bill goes through the process. I do have a number of
    questions on that, Mr. Chairman, and I think I will start with
    that.
        In 1996, the Office of Pipeline Safety started implementing
    a risk management demonstration program that emphasizes self-
    regulation and focuses safety efforts on their high-risk areas.
    Those changes were due in part to the resistance OPS was
    getting from the pipeline industry and the agency's overall
    lack of resources.
        Considering that the Office of Pipeline Safety came out
    with a definition of these high-risk areas only within the last
    several months, how well do you think OPS is implementing its
    risk management approach?
        Mr. Anderson. I will start. We issued a report last May and
    we had some concerns, quite frankly, with them going with a
    risk management approach without good evidence that the
    demonstration program that they based it on was working. They
    did not have good baseline information or performance goals.
        In that regard, I have got to tell you that just on the
    surface a risk management approach seems to make sense. We have
    been encouraging FAA to do that with regard to its inspections
    of commercial carriers for a number of years, but I think it
    remains to be seen how well this is going to work.
        I believe that regardless of what they do, they are going
    to continue to rely to the extent that they can on State
    inspectors. There are approximately 51 pipeline inspectors and
    I think that was one of the reasons they wanted to have the
    self-reporting.
        The Office of Pipeline Safety has some real practical
    problems. I think it remains to be seen if they are going to
    get data, baseline information, and then hold these operators
    accountable. That will be the key.

                              Pipeline inspections

        Senator Murray. I agree that there are fewer than 16
    national inspectors to oversee 157,000 miles of hazardous
    liquid pipelines and more than 2.2 million miles of natural gas
    pipelines. Having fewer than 16 inspectors makes it almost
    virtually impossible to make sure that these pipelines are
    safe. Considering that, and as you mentioned, Mr. Anderson, in
    your testimony there is a need for a State role in this.
        There is lack of money at the Federal level for inspection
    and for enforcement. There are a lot of States who are asking
    to have a larger role in this. Do you have any thoughts, either
    one of you, about increasing the State's role in the inspection
    of these pipelines?
        Mr. Mead. I never understood why the States did not have
    more of a robust role. This past year, the subcommittee has
    heard from a number of States that did. I think it is an
    excellent idea. The States appear willing, and I think it only
    makes good sense that we take advantage of that.
        I know that there is an issue about, whether the States or
    the Federal Government should issue standards, or will there be
    some type of conflict. I do not think that is the central
    issue. I think the States just want a good, solid role, and we
    should really move forward aggressively on that front.
        Secretary Mineta, when he was going over this top 10 report
    highlighted the State role issue.
        Senator Murray. Mr. Anderson.
        Mr. Anderson. The thing I would like to add is that it is
    one thing to think about working cooperatively in a partnership
    type of mode, but you need to have some basis to know whether
    or not that is working.
        One of the things that concerned us in our report that we
    did last May was that they also changed their approach from
    using fines extensively, to trying to use the bully pulpit and
    cooperation, and I know one of the things that is in the
    legislation that you all passed is to require an examination of
    that.
        I guess Ken is going to get to do that if it holds up in
    that same format, but I think that is real important, because
    they were assessing fines at the rate of 50 percent, and they
    reduced it to 4 percent, and sometimes you need a strong
    enticement to get cooperation.
        Senator Murray. Mr. Mead, do you have any thoughts about
    the fines, versus just the compassionate approach?
        Mr. Mead. I think the compassionate approach is great where
    it works, but where it does not, there is no point in using it.
    There are clearly some situations where it does not. We find
    that in every mode of transportation.
        I want to go on the record on the first part of your
    question. We need to get the mapping done for the hazardous
    liquid pipelines. There has been a lot of progress there. The
    National Pipeline Mapping System has received mapping data from
    approximately 85 percent of all hazardous liquid pipeline
    operators.
        The regulations on the frequency of inspections of the
    hazardous liquid pipelines are now under review. You will
    remember these were issued in the last month of the Clinton
    administration, and they are now under review.
        We do not want to lose sight of the natural gas pipeline
    issues. There are no regulations out there. In 1993, the
    Congress directed regulations be done by 1995 or 1996. We are
    still waiting for them.
        So, we need the frequency regulations for natural gas plus
    the mapping on the gas. We are not nearly as far along as we
    are on liquid.
        Senator Shelby. What is the hold-up on the mapping?
        Mr. Mead. Congress saw this in 1993 and said, DOT, go issue
    regulations requiring it to be mapped. Until the accident last
    year, proper attention was not paid to it. The accident focused
    attention. The first one out of the box was the liquid
    pipelines. Now, we have to make sure the natural gas pipelines
    receive equal attention.
        Senator Murray. And those regulations back in 1993 directed
    the Office of Pipeline Safety to do mapping both on natural gas
    and on liquid?
        Mr. Mead. Yes.
        Senator Murray. But so far you are telling us only 85
    percent of the liquid is done, and natural gas has not been
    done?
        Mr. Mead. I think it might be about 30 percent has been
    done on a voluntary basis.
        Senator Murray. Is it a lack of funds, or lack of will?
        Mr. Mead. I think it is just a lack of direction saying
    that this will be done by a specific date.
        Senator Murray. One of the things that I have learned a lot
    more than I ever thought I would know is, they do the
    inspection of pipelines from pigging to other methods. One of
    the things I think that concerns me greatly is, as we are
    requiring more inspections, which I believe we absolutely have
    to do, is the lack of good research and development to find
    better ways to inspect these pipes where the pigs cannot go
    detect all of the areas that we need to be looking at.
        Do either of you have any thoughts on the state of
    technology in monitoring and inspecting pipelines you want to
    share with us?

                              Pipeline technology

        Mr. Anderson. I do not have any specific knowledge on the
    state of the technology. I know as far back as in the early
    1990's smart pig technology was available. Ken and I, when we
    worked together at GAO, were familiar with that, but I cannot
    agree with you more that there needs to be more R&D effort in
    this. That is one of the issues that I saw was covered in the
    legislation as well, so it is definitely a good move.
        Mr. Mead. John is right on the R&D front. Progress was made
    in the last Congress toward setting that in motion. Another
    area where concerns remain is that the Office of Pipeline
    Safety does not have people that know how to read pig reports.
        Senator Murray. The Office of Pipeline Safety does not have
    people who know how to read pig reports?
        Mr. Mead. They are not skilled in pig technology, and how
    to inspect pipes through the pig technology. We pointed this
    out in the last Congress. There was Congressional direction
    that they get trained. There is now a pilot training program
    about to be launched, or maybe it was launched in the last
    several weeks. It was encouraging news. The overseers have to
    understand the inspection technique.
        Senator Murray. I assume the inspectors out in the field
    know how to read those.
        Mr. Mead. I am not sure I would go that far.
        Senator Murray. Well, it does not do them much good to
    require inspections if the people who are reading them do not
    know what they mean.
        Mr. Mead. I have my staff here that knows about the
    pipeline program. I do not think I can sit here and represent
    that they do know how to interpret reports.
        Senator Murray. I assume what you are saying is, we need
    better technology, but we also need people who are doing the
    inspecting to understand the current technology.
        Mr. Mead. Absolutely, especially since the up-and-coming
    technology is pig technology. We are talking about smart pig
    technology, the instrumented pigs, not just the ones where they
    just throw a ball in and the pipeline ruptures if it sees a
    defect. It is where they can read the corrosion on the interior
    of the pipe. That is the type of pig technology that I am
    speaking of.

                                Aging pipelines

        Senator Murray. Mr. Chairman, this is an area that really
    concerns me. I think that what we know is that the pipelines
    are aging. Some of them are 30, 40, 50 years old now, and
    obviously as a result of that there are more anomalies within
    them. I think the Office of Pipeline Safety has been able to
    get by on a shoestring in an era where we are cutting budgets.
    I do not believe this is an area where we want to cut budgets.
        The number of accidents, I think, Mr. Anderson, you said
    were increasing 4 percent annually?
        Mr. Anderson. Yes.
        Senator Murray. And I would assume that you would concur
    with me that as these age we may see that rise if we do not do
    a better job.
        Mr. Anderson. Absolutely. I see no evidence it is going to
    go the other way, and as they get older, the risk gets greater.
        Senator Murray. As they get older the risk does get
    greater, so I would assume that is something that we really
    need to pay attention to and make sure that we have the dollars
    there for training and also for new R&D and to make sure that
    people who have these pipelines around them are safe. I mean, I
    will tell you this, in my State, where the pipelines were laid
    30 or 40 years ago, there was not anybody there. Today there
    are homes and schools and businesses built around them, and I
    continue to believe this has to be a priority in terms of
    funding.
        Mr. Chairman, I have a number of other questions, but I
    will let you go ahead.

                               Deepwater project

        Senator Shelby. Thank you. The Coast Guard's Deepwater
    Project. Mr. Anderson, you alluded to that.
        Mr. Anderson. Yes, sir.
        Senator Shelby. Given the fact that this will be the Coast
    Guard's largest procurement for the foreseeable future, and
    that both of your organizations have looked at this concept
    extensively, would either of you, Mr. Anderson, or you, Mr.
    Mead, stake your credibility on the Coast Guard's ability to
    successfully execute and unprecedented acquisition strategy for
    a procurement of this size, of this magnitude?
        Mr. Anderson. As part of the review we are doing right now
    we are assessing the Coast Guard's capability in this area. We
    are real concerned, because they have never done anything like
    that before. The report that we will be coming out with will
    give you information on that.
        Senator Shelby. Just for the record, give the audience here
    an idea--a lot of them are pros at this--what kind of magnitude
    we are talking about.
        Mr. Anderson. We are talking about $10 to $15 billion over
    the next 20 to 25 years. That is more money than I can imagine.
    This is obviously the largest project the Coast Guard has ever
    undertaken, so there are issues associated with them having the
    in-house capacity to be able to manage and oversee this sort of
    thing, and that is one of the things we are looking at.
        Senator Shelby. Senator Murray, on another subcommittee
    several years ago, Senator Bob Kerrey and I were involved in
    the Treasury and Postal area, and we did oversight of the IRS
    modernization, which was a debacle.
        You will recall they were going to do some of that in-
    house, or whatever they were doing, and it was above somebody's
    pay grade, including mine, and billions of dollars were misused
    or wasted. We came to the conclusion on this, and that just
    came to mind, and we cannot afford to lose that kind of money,
    or waste that kind of money.
        Mr. Anderson. Absolutely not.

                             Deepwater contracting

        Senator Shelby. Isn't this what you are talking about?
        Mr. Anderson. Yes, and what we are talking about here, I
    think the Coast Guard recognizes, and seriously, in the design
    of this project they have competing contractors coming up with
    different designs, so to their credit they are doing some of
    these things. But, like I mentioned in my statement, one of my
    major concerns right now and we are working with the Coast
    Guard to see what they can do to mitigate risks, is the
    contracting approach. Right now they anticipate using one
    contractor and awarding a contract to one contractor with
    renewable contracts every 5 years to basically oversee this
    entire project.
        Well, you know that between now and 25 years from now the
    technology might change. Well, what if something changed with
    regard to the funding scenario? A very key part of this whole
    process is to have a stable, ready source of funding available.
    Well, what if the priorities change and that stable source of
    funding, for whatever reason, is not there? That could throw us
    into a state where there could be major cost increases that we
    would be liable to for the contractor to carry out.
        Senator Shelby. At a future date, Senator Murray, I think
    it would be our responsibility to get the Coast Guard up here,
    and we would probably want you, Mr. Anderson and Mr. Mead, up
    here at the same time, because that is a big-ticket item.
        Mr. Anderson. Absolutely.
        Senator Shelby. Mr. Mead, your thoughts.
        Mr. Mead. I concur with Mr. Anderson, on this issue. I
    would only supplement that by saying this year, you will be
    getting a budget request. Congress has provided slightly over
    $100 million for the planning process on this Deepwater
    acquisition. That planning process is supposed to conclude this
    year. In June, they are planning to make an award for the whole
    thing. Yet, the planning process will not be complete before
    you get Coast Guard's budget request.
        Senator Shelby. That is kind of inconsistent, is it not?
        Mr. Mead. It sounds that way. The Coast Guard will tell you
    they know what they want for fiscal 2002, but it is important
    for the committee to keep in mind that this is launching at
    least a 15-year major acquisition. It is on the same scale,
    except it is more expensive, than the 1983 launch of FAA's
    national aerospace system plan.
        Also, I am a little disturbed, that the cost estimates
    range from $10 billion to $15 billion.
        Senator Shelby. It is always at the high end, isn't it?
        Mr. Mead. Well, we have not seen what has come out of OMB
    yet, at least I have not.

                            Airline customer service

        Senator Shelby. It is sobering. We knew it was a big
    project there.
        I want to shift into airline customer service. Mr. Mead,
    all of us are frustrated with the airlines. I know I am at
    times. Mr. Mead, in reviewing the customer service commitment
    report that was issued on Monday, and listening to your
    testimony before the Senate Commerce Committee, it seemed to me
    that what you were saying is, generally the airlines are
    looking up to their voluntary commitments, but the real problem
    is not addressed by the commitments.
        In fact, the primary source of customer dissatisfaction is
    with delays and cancellation of flights, so while it may be
    popular or advisable to pursue customer service legislation, or
    passenger bill of rights legislation, is it fair to say that
    such legislation alone will not solve the underlying problem?
    That, in fact, what we need to do in addition to customer
    service legislation is to find ways to address what they call
    the overscheduling problem at congested airports, to squeeze
    out all the marginal capacity in the air traffic control
    system, and ultimately and most importantly to build more
    runways.
        Is that a fair characterization of how you saw the issue
    and the challenge, or do you want to elaborate on that?
        Mr. Mead. Yes, sir. It was a very long question.
        Senator Shelby. Was that a fair characterization?
        Mr. Mead. Yes. I was trying to listen to the different
    elements of the question, and I think I can answer yes. I
    should say that the 12 commitments--and could you put up the 12
    commitments for the airlines? The airlines were trying hard on
    all these commitments. Some they were meeting well and others
    not, but you will notice that none of the 12 go to the key
    underlying issue. There is no commitment to reduce delays and
    cancellations. Commitment number 2 says the airlines will
    notify passengers of delays, which is different than saying,
    the airlines will take whatever steps are within their control
    to reduce delays and cancellations.
        On-time bags delivery really is misnamed, because what it
    refers to is not making sure that you get your bags on time
    when you show up, but that if the bags do not show up when you
    do, that they will make sure you get them within 24 hours of
    your arrival.
        Senator Shelby. Whether you need them or not.
        Mr. Mead. The other one, number 8, is to meet customers'
    essential needs during long, on-aircraft delays. That assumes a
    delay to begin with, otherwise you would not have the
    commitment. The idea is that if there is a medical emergency, a
    need for water, or access to the lavatory, a provision will be
    made for that on the airplane.

                        Flight delays and cancellations

        On the scheduling issue we did some analysis, we identified
    240,000 flights operating under 10,000 different flight numbers
    that were consistently delayed or canceled 40 percent of the
    time for at least 1 full month this past year. Those 10,000
    flight numbers represent one-fifth of the total.
        There is different stratifications you can do with that
    analysis. For example, I can point to 37,000 flights that are
    delayed 80 percent or more of the time. It seems to me that you
    can make a persuasive case that the airlines ought to be
    targeting the reduction of flights that are chronically late,
    even though the delay may not be the airlines' fault. When you
    call to book a flight, you should be told whether the flight
    you are about to book is late 40 percent of the time by over a
    one-half hour, or is canceled another 10 percent of the time.
    Because, if you have a tight commitment at the other end, you
    may think twice about booking on that flight. Right now, you
    have to be savvy enough to ask, and only if you ask, do the
    airlines provide the information.
        Senator Shelby. Repeat that figure again. That sort of
    startled me.
        Mr. Mead. We identified 240,000 flights operating under a
    little over 10,000 flight numbers that were late or canceled
    over 40 percent of the time for at least 1 month in 2000. Many
    of those were consistently late for 2, 3, 4 months, and that
    the 10,000 flight numbers represent a little less than one-
    fifth of the total flights in the United States, scheduled
    flights.
        Senator Shelby. We are glad you are here today.
        Senator Murray. I am just curious if those flights all were
    around one time, or did you look at whether they are all
    evening flights, or the majority of them are at any particular
    time or any particular airports?
        Mr. Mead. Yes, we did. We have that type of analysis, and I
    can tell you the months on the table here. Right now, you are
    in good months. The load factors tend to be lower. March,
    April, and May get a little worse. June, July, August, and the
    first week in September are the heavy duty months, and that is
    when a majority of these chronically delayed flights.
        Of the figures I quoted, United Airlines had the lion's
    share. At least some of those were caused by the labor
    disruption, and they tend to predominate in those 4 months. I
    think it is interesting, we had a hearing on airline customer
    service yesterday, and the question today on the scheduling,
    because spring and summer 2001 are right around the corner.
    There are probably some things we can do to make this spring/
    summer easier than last.
        Senator Murray. Such as?
        Mr. Mead. I think it would go a long way if, when you make
    a reservation, you are told of chronic delays and
    cancellations.
        Senator Murray. Right now, you can ask and they have the
    information?
        Mr. Mead. Yes.
        Senator Murray. Do they have to tell you?
        Mr. Mead. Yes, if you ask, they have to tell you. They do
    not have to volunteer.
        Senator Shelby. Do they ever volunteer?
        Mr. Mead. Some of them do on the web sites. I think after
    yesterday's hearing, I would not be surprised if the airlines
    in their current environment might be prepared to do that on
    their own.
        Senator Murray. Just as an aside, it seems to me it would
    be good for them to do that, because if they are overbooking,
    or they know the flights are going to be delayed, they might
    have customers moving to different times that would benefit
    them as well, so I hope they on their own begin to do that.
        Mr. Mead. I think your point is--there is a deep meaning on
    that point. People put a lot of faith in the market as a
    regulator. If people were told about flights they are about to
    book, it might help move the market.

                               trucks from Mexico

        Senator Murray. Let me change the topic for a minute here.
    On the Mexican truck issue--and I noticed in the paper that the
    Bush administration is looking at reversing the position of the
    prior administration allowing Mexican trucks over the border to
    operate in the United States without regard to the serious
    safety deficiencies that have been found on many of those
    trucks. You mentioned it a little bit in your testimony.
        The committee provided funding for 29 truck inspectors for
    the Mexican border last year. Maybe either of you could comment
    on whether you think this level of investment will be
    sufficient good enough now that we now are going to have an
    influx of trucks across the border.
        Mr. Anderson. I know Ken and his folks have done the most
    recent work on the Mexican truck situation, so I will let Ken
    address that.
        Mr. Mead. It was good that the committee funded those extra
    inspector positions. Though, our opinion is not necessarily
    that of the Department of Transportation or the administration
    but the OIG believes that more inspectors are still needed.
        We have seen clear evidence of a correlation between the
    condition of the trucks coming across the southern border and
    the presence of additional inspectors. The average out-of-
    service rate for Mexican trucks crossing the border has gone
    down modestly. I am sure we all want the out of service rate to
    go down more. We probably need at least 100 or 120 inspectors.
    We will give the committee a detailed analysis of that.
        Senator Murray. How many are there currently?
        Mr. Mead. 60.
        Senator Murray. You think that needs to be doubled?
        Mr. Mead. Yes, in 1998 we estimated that 126 additional
    Federal inspectors were needed during port operating hours. I
    think that is a cheap price to pay to prevent the carnage that
    could result from an unsafe truck.
        Senator Murray. Well, Mr. Mead, you also pointed out in
    your report that there is a considerable problem with Mexico-
    domiciled truck companies that are operating illegally in the
    United States. Do you think we have done enough to put those
    operations out of business?
        Mr. Mead. We are looking at that as part of an ongoing
    audit, which we expect to issue this summer. I know at the time
    of our previous work there were a lot of assurances made that
    the regulatory authorities were going to take action. We will
    see what has happened.
        Senator Murray. In your report also, Mr. Mead, you pointed
    out that roughly one out of every four trucks that are stopped
    for roadside inspection in the United States are put out of
    service for safety reasons. However, for the States bordering
    Mexico, that number is one out of three.
        What do you think the safety ramifications of the decision
    to open the border to Mexico trucks will be, and do you think
    that has been adequately reviewed?
        Mr. Mead. We were just asked by Mr. Oberstar and Senator
    Hollings to update our past review. Obviously, we think motor
    carrier safety in general in the United States is an area that
    needs much more attention. So does Congress. They just passed a
    law creating a special agency for it.
        There are 4,000 or 5,000 people killed on our highways each
    year in large truck accidents, and we do not need any more. I
    think when the border is opened, we want to make sure that the
    trucks coming in are properly inspected, and those that are not
    are turned around and sent home.
        I would say there are any number of border crossings. The
    border crossing in California, which is staffed constantly, and
    reasonably well, by State of California officials had out-of-
    service rates comparable to the out-of-service rate in the
    interior United States.
        For the other border crossings, that was not the case. They
    were not staffed well. The truckers knew they stood a good
    chance of not being inspected. When they are inspected at Otay
    Mesa, they get turned around and sent home.
        Senator Murray. Just for our information, for what reason
    is a truck put out of service when it comes across?
        Mr. Mead. Serious safety violations either on the part of
    the driver or the truck. For example, the driver may not have a
    license, or has a fraudulent license. Or, frequently there is a
    mechanical problem with the truck.
        Senator Murray. Like brakes that do not work?
        Mr. Mead. Yes. I have seen where you get in the cab and put
    down the air brake, and there is no air.
        Mr. Anderson. I will just add to what Ken was saying about
    Otay Mesa. When GAO last looked at this issue was in the 1995-
    1996-1997 time frame. It clearly was the best example out
    there, and I think the difference was they were putting the
    effort and the resources into it, and it was a classic
    difference comparing it to the other inspection points.
        Senator Murray. So if we are going to open the border, we
    had better make sure we have inspectors and we are stopping
    those unsafe trucks, I assume you would agree.
        Mr. Anderson. Absolutely.
        Senator Murray. Thank you, Mr. Chairman.

                                Transit projects

        Senator Shelby. Thank you. Transit new starts was talked
    about earlier. Within the past year, new start projects with
    full funding grant agreements increased from 15 to 29. Eight of
    these projects closed out in fiscal year 2001.
        FTA anticipates executing two more funding grant agreements
    this year. If these two newest projects are added to the list,
    and if Congress honors the funding schedules outlined in the
    full funding grant agreements, there will be, and I repeat, no
    funding available for any new start transit projects that do
    not have a full funding grant agreement.
        The purpose of a full funding grant agreement is twofold,
    to establish with a transit property a project scope of work
    and a Federal and local funding schedule that makes sense, and
    to limit the level of Federal funding. Congress is not bound by
    full funding grant agreements, though the appropriations
    history has generally been to honor these agreements unless
    there are dramatic changes in the cost, the scope, or the
    schedule.
        Mr. Mead, you have done a lot of work in this area. I
    understand you are currently undertaking a review of several
    new start projects. I may have a couple to add to your list, or
    the staff would. The staff will get with you on that. In fact,
    I will count on both the IG and the GAO to assist this
    committee in identifying any major issues or problems with the
    current panel of full funding grant projects.
        I think we have to do this, because it will totally be out
    of control will it not?
        Mr. Anderson. Absolutely, and one of the effects, as we
    have seen, is there might not be enough funds. In fact, I
    believe they have asked for more funds, or are supposed to
    submit a plan so they can oversee these grants.
        Mr. Mead. We are starting to see it in L.A. and seeing it
    in other places around the country. When the project comes in
    for a full funding grant agreement, it is in phase 1, and then
    there is a phase 2, and then a phase 3. Each phase gets
    approved separately as a full funding grant agreement.
        Senator Shelby. Yet it is all part and parcel of the same,
    is it not?
        Mr. Mead. Yes, and you wonder should we be examining all
    phases at one time. The situation in L.A. was very interesting.
    I think you will recall that one. The thing got approved and
    then----
        Senator Shelby. We fenced money on that. We worked with you
    on that.
        Mr. Mead. Remember, they backed off. They decided they did
    not have enough money to complete their end of the bargain, so
    part of the project was pared back, but I think we will
    probably be hearing from them again.

                                     Amtrak

        Senator Shelby. The Amtrak end game, the next couple of
    years I believe are pivotal for Amtrak. The 1997 Amtrak Reform
    and Accountability Act requires that the railroad be able to
    operate without using Federal funds to cover operating expenses
    by the end of fiscal year 2002.
        Mr. Anderson, you have done some work in this area. If
    Amtrak is not able to cover its operating expenses out of its
    own revenues by then, the act, in other words the law, provides
    that Congress will consider a plan to reform or liquidate the
    railroad, Amtrak. The Amtrak Reform Council is charged with
    drawing up the reform plan and submitting it to Congress,
    right?
        Mr. Anderson. That is correct.
        Senator Shelby. Amtrak is required to submit a liquidation
    plan if this goal has not been reached, is that correct?
        Mr. Anderson. That is correct.
        Senator Shelby. It seems to me that over the past 30 years
    we have taken the approach of subsidizing Amtrak's operations
    and making selective capital investments while maintaining the
    illusion that Amtrak represents a viable national passenger
    rail system.
        Is there any reason to believe that if we continue the same
    approach of the last 30 years we will see a substantially
    different result? In a general sense, what are the possible
    alternatives if Amtrak is unable to reach self-sufficiency in
    2002?
        Mr. Anderson, you first.
        Mr. Anderson. I would just think that ultimately the
    Congress is going to have to make some basic decisions on what
    should be a national rail system.
        Senator Shelby. If we are going to have one.
        Mr. Anderson. Absolutely, and I think that what you have
    put in motion with the laws that now exist, is going to require
    and force that decision, hopefully.
        I agree, we have been subsidizing Amtrak since 1971 you
    mentioned almost to the tune of $24 billion. The only route
    that makes any money is the Metroliner route, and I think, and
    as best as we can tell--I mean, there are positive things
    happening with the Acela right now, but the bottom line is,
    that expenses are still outstripping revenue.
        Then we are going to have to decide--I made mention in my
    oral statement about making intermodal decisions. This is part
    of what I am talking about. If we do not have the funds to do
    everything, then we have got to decide where passenger rail
    makes sense, where aviation is a better solution, and that sort
    of thing, and I think that is--the monkey is basically going to
    be put back on the Congress' back at that point in time.
        The foreign countries subsidize their passenger rail
    systems extensively, and if that is a decision and a policy
    call that the Congress decides that we need to do, that is
    fine, but we need to make a decision one way or another, I
    believe.
        Senator Shelby. Yes. We cannot suffer under the illusion
    that we have been playing around with, can we?
        Mr. Anderson. No. It seems to be piecemeal and everyone
    hopes it is going to get better, but it has not so far.
        Senator Shelby. Mr. Mead.
        Mr. Mead. This year is going to tell a lot about the course
    of Amtrak meeting its path to self-sufficiency.

                          Amtrak's northeast corridor

        I think the dynamic of Amtrak is kind of instructive. You
    know, all the money that has been poured into the Northeast
    Corridor has taken the backing of the entire Congress. The
    dynamic that Amtrak operates in is that without a national
    network, there is not a huge constituency for Amtrak in the
    Congress. The Northeast Corridor is what it is today because
    other constituencies in the Congress have authorized money
    going into it.
        Senator Shelby. Pumped in the money into this area.
        Mr. Mead. Yes, they have, and I do not know what would
    happen to the Northeast Corridor if Amtrak stopped being
    Amtrak, or did not have a national network, because I think
    that holds it together. One concern I have over this bond bill
    is, that there are a lot of people who will be waiting to get
    part of that money. The amount of $10 billion does not go that
    far in the area of creating high-speed rail.
        Senator Shelby. The bond lawyers get their piece first, do
    they not?
        Mr. Mead. I would imagine. I suspect the capital issue for
    Amtrak needs to be addressed, and it needs to be addressed real
    soon.
        Senator Shelby. Mr. Anderson, have you seen any significant
    change in Amtrak's track record that would indicate that they
    have the potential to operate in the black?
        Mr. Anderson. No, not yet. And, of course, we look at the
    hard bottom lines and still, even though the revenues have gone
    up, so have the expenses, so I will say that a Acela offers
    promise. Maybe this year might be the turning point. We would
    love to see that, but based upon what we have seen so far, no.
        Mr. Mead. In 1996, $558 million was the cash loss. In the
    year 2000, $561 million was the cash loss, so it is a kind of
    steady trend. When you get up to the $900 millions, that is
    where they count depreciation.
        Senator Shelby. Mr. Mead, in your review of Amtrak's
    business plan you identified a budget gap of $737 million,
    which Amtrak plans to close through undefined management
    initiatives. In the railroad's recently released plan update,
    Amtrak claims to have shrunk that gap to $125 million over the
    next 5 years through a cost management program. Have you
    reviewed this so-called cost management program and, if you
    have, what are the specific steps that Amtrak will take to
    close this budget gap. Are these steps realistic and practical
    steps that could be made, or are they playing games?
        Mr. Mead. You are right. As we reported very recently, and
    in the top 10 report, there was this gap of $750 million.
    Subsequent to this report, I think almost exactly a week-and-a-
    half ago, we received their new strategic plan that does
    purport to close the gap. We have not gotten to the point where
    we can comment on that. I would caution, though, that having
    something in a plan and executing it are two different things.
        Senator Shelby. Mr. Anderson.

                            Amtrak's strategic plan

        Mr. Anderson. We have just received the plan, too, and are
    just starting to look at it, but I can tell you from looking at
    past plans there have been lots of generalities but not a lot
    of specifics about how things were going to be accomplished. We
    will be looking very closely to see if there is any meat to
    back up any of these statements.
        Senator Shelby. Senator Murray.
        Senator Murray. Thank you, Mr. Chairman. I know we have a
    vote on, so let me just ask whether you think Amtrak's lack of
    progress is due to poor management or just a reflection of the
    difficulty of the task.
        Mr. Anderson. I think from what I have seen it is largely a
    reflection of undercapitalization in prior years and not
    catching up and having a system deteriorate, and then they have
    been trying to catch up, and I think not making some of the
    tough decisions because of the political pressures on some of
    the routes that just do not seem to make any sense to continue
    from a business perspective, but they are continued for a
    political perspective.
        Mr. Mead. I agree fully with that. Amtrak is always calling
    us. They ask for our views on things. They are responsive. At
    the senior levels they have pretty good management, but it is
    just as John says. You are dealing with a situation where
    Amtrak has been undercapitalized. In addition, I think there
    are some basic questions about how profitable one should expect
    rail to be.
        Senator Murray. Do you think it would be in the national
    interest to liquidate Amtrak if it does not reach its goal by
    2003?
        Mr. Mead. I do not know. I would have to think that one
    through. It is a very good question, but I would like to give
    you a more thoughtful response.
        Senator Murray. Fair enough. Mr. Chairman, I will submit my
    other questions for the record.

                               ATC modernization

        Senator Shelby. Mr. Mead and Mr. Anderson, I know we have a
    vote on the floor, but I would like to get this in.
        It seems like every year we talk about the oceanic
    procurement program, and the answer seems always to be the
    same. I ask where the procurement is, and you answer that the
    FAA has a real opportunity but they keep dropping the ball.
    Where are we now, Mr. Mead?
        Mr. Mead. They are finally going to make an award or a
    decision this summer, June supposedly, for a modernization of
    oceanic air traffic control. The only point I would like to
    make is whether FAA should operate maybe a little more like a
    business, on commercial principles.
        There is possibly an opportunity here in the oceanic
    environment where Congress might want to look for user fees.
    You do not have a lot of discount airlines out there. You do
    not have general aviation out there. You have airlines that are
    used to flying in a user fee environment. It is a different
    part of the air traffic control system.
        But I do not think FAA wants to--my own sense is that there
    is a lot of internal resistance to looking at oceanic as an
    opportunity like that, just as there is to the successful
    contract tower program.
        Senator Shelby. How important is it?
        Mr. Mead. It is very important.
        Senator Shelby. Mr. Anderson.
        Mr. Anderson. I would just echo what Ken said. In terms of
    the people issue, we have identified over the years some basic
    problems at the way they have approached air traffic control
    modernization, but clearly a culture issue exists at FAA.
        Ken found it most recently when he looked at the WAAS
    program. You have got folks that are working at cross-purposes,
    and you need to get a handle on that and find a way to get
    these folks to cooperate, and that is going to be one of the
    major things that needs to be addressed. It is a real
    challenge, a human capital challenge.
        Senator Shelby. If you will bear with me, I will ask you
    these last questions, and the others we will ask for the
    record.

                            Coast Guard procurement

        The promise of reduced operating expenses is typically
    given as a justification for a Coast Guard procurement program.
    The assumption is that a new and modern asset will be more
    efficient to operate, often requiring a smaller crew, and it
    will be easier to maintain than the equipment it replaces. We
    hear this all the time. Clearly, in order to justify the cost
    of new assets they should be more efficient and more capable.
        The Deepwater procurement, as we learned earlier, is
    justified in large part upon estimated life cycle savings and
    the total ownership cost model put forward by the Coast Guard.
    This is an appealing concept, but I question anyone's ability
    to accurately--which we are getting into--figure operating
    costs 30 years down the road.
        To Mr. Mead and Mr. Anderson, if the premise is to award to
    the team with the lowest total ownership cost, should we not
    assess how well the Coast Guard is evaluating and estimating,
    Mr. Anderson, downstream operational cost?
        Mr. Mead, do you want to comment on that?
        Mr. Mead. I think the answer to that question is yes. We
    look out over a lot of agencies, and we see the operating
    expenses that are projected, and it is always good to scrub
    them very carefully.
        Senator Shelby. The committee would like for you to look
    into the Coast Guard's performance in achieving operational
    savings that were projected in recent major procurement
    programs. Is this something you can do, both of you?
        Mr. Anderson. I think we can work it out.
        Senator Shelby. And can you report back to the committee.
    You have helped us a lot, and what you do gives us context and
    perspective and insight in our responsibilities.
        Mr. Mead. We will see if we can work out a joint effort.

                         Additional committee questions

        Senator Shelby. We appreciate you being here today. We also
    appreciate your candor in approaching these issues. They are
    very important.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

             Questions Submitted to the Office of Inspector General

                Questions Submitted by Senator Richard C. Shelby

                        most pressing challenges at dot
        Question. The Office of Inspector General has identified many
    important challenges for the Department of Transportation. Which of
    them, in your opinion, are the most important for the new Secretary to
    act on first? Which require the most urgent Congressional attention?
        Answer. As we did in our testimony before the Subcommittee, we
    would summarize our top concerns into four areas: Transportation
    Safety; Stewardship of Transportation Funding, Immediate Budget Issues,
    and Aviation System Performance. There are several safety issues which
    require close attention:
      --FAA's implementation of its National Blueprint for Runway Safety,
            including whether: (1) the new nine full-time regional runway
            safety program managers conduct evaluations of 130 airports
            this year; and (2) the long delayed Airport Movement Area
            Safety System (AMASS) designed to alert controllers to
            potential collisions is implemented at the 34 largest airports.
      --FAA's development (pledged for this spring) of a method to
            determine the severity of every operational error, and plans to
            tie follow-up on operational errors to the severity of the
            incidents.
      --Strengthening motor vehicle inspections at the southern border.
            Given the correlation between increases in inspectors and
            decreases in Mexican trucks put out of service for safety
            violations, it is encouraging that 60 inspectors are scheduled
            to be onboard in 2001. However, in 1998 we estimated that 126
            additional inspectors were needed.
      --Promulgating statutorily required safety rulemakings, including
            rulemakings to: expand the data NHTSA looks at when determining
            if there is a vehicle defect requiring a recall; strengthen
            enforcement of the nation's motor carrier safety laws; and
            extend monitoring of the nation's pipelines.
        FHWA, FTA, and FAA contract and grant oversight also requires
    attention. Congress authorized over $230 billion in funds for highways,
    bridges, and airports, from fiscal year 1998 to 2003. The last
    proportionate infusion of funds was during the Eisenhower and Kennedy
    administrations, when there was a great deal of scandal in overseeing
    those funds. We do not want to repeat this history. Yet, in fiscal year
    2000 alone, OIG contract and grant fraud investigations led to 54
    indictments (a 54 percent increase over 1999), 36 convictions (a 24
    percent increase over 1999), and over $10 million in fines,
    restitutions, and other monetary recoveries. Already in fiscal year
    2001, our investigations in these areas have resulted in 25
    indictments, 10 convictions, and over $34 million in fines,
    restitution, and other monetary recoveries. The Department and the
    Congress are confronted by three budget issues this year.
      --FAA Needs to Control Operations Costs.--FAA's operations costs,
            which are primarily salary driven, are projected to rise
            approximately half a billion every year through 2003 when they
            are expected to reach about $7.4 billion. Most of those funds
            come from the General Fund, not the Aviation Trust fund.
            Consequently, FAA's operations account must compete with other
            transportation modes, such as Amtrak and Coast Guard, for
            available funding. FAA needs to increase productivity and lower
            costs, as further operations account increases become
            affordability issues. Offsetting the rising costs of the
            agency's payroll will be key. The new pay system negotiated
            with controllers requires nearly $1 billion in additional
            funding alone over the 5-year life of the agreement. Other FAA
            workforces want similar increases, which FAA must negotiate
            under its personnel reform authority.
      --Justifying and Reconciling Coast Guard Capital Investments
            Requirements.--Preliminary estimates indicate that capital
            improvement funding of $15 billion or more will be needed over
            the next 20 years to modernize assets that are critical to the
            Coast Guard's Marine Safety, Search and Rescue, Law
            Enforcement, and Marine Environmental Protection programs. The
            Coast Guard capital acquisition budget will need to more than
            double from $400 million annually to at least $850 million
            annually to meet its stated requirements. The budget plus up
            being sought by the Coast Guard is not just a fiscal year 2002
            phenomenon. Once the Deepwater acquisition gets underway,
            sustaining it and meeting other acquisition needs will require
            a Coast Guard acquisition budget of at least $850 million
            annually for the foreseeable future.
      --Amtrak Operational Self-Sufficiency in Jeopardy if Short-Term
            Capital Funding Not Forthcoming.--If Amtrak is to succeed in
            achieving its mandate without starving the basic minimum needs
            of the system, it will need additional capital funding in the
            short term. In the past few years, Amtrak has underspent on the
            kinds of projects that maintain the sustainable integrity of
            its infrastructure--namely operational reliability projects and
            life-safety needs--investing instead in capital projects
            designed to provide quick revenues or cost savings. Amtrak's
            ability to achieve operating self-sufficiency is contingent on
            Amtrak's ability to define and deliver on the $737 million plan
            in undefined management actions we identified in last year's
            business plan, fully implement high-speed rail in the Northeast
            Corridor, and aggressively pursue Mail and Express business
            initiatives. The challenges associated with these actions put
            Amtrak at risk for not achieving self-sufficiency; insufficient
            short-term capital funding will likely make failure a
            certainty.
        Our final issue is aviation system performance. Our February 2001
    report on the Airline Customer Service Commitment shows that, overall,
    the airlines are making progress toward meeting their Commitment.
    However, the Commitment does not directly address the root cause of
    customer dissatisfaction--that one in four flights are delayed,
    cancelled, or diverted. Airline actions to reduce flight delays and
    cancellations in the immediate term are critical because major capacity
    expansions, such as new runways and new air traffic control
    technologies are not going to be in place for the next several years.
        Attention is needed on FAA efforts to: (1) establish and implement
    a uniform system for tracking delays, cancellations, and their causes;
    (2) develop capacity benchmarks for the Nation's top 30 airports: and
    (3) develop strategic plans for addressing capacity shortfalls in the
    immediate, intermediate, and long terms.
                           infrastructure investment
        Question. Both the Inspector General and GAO reports cite concerns
    with oversight and management of large-dollar highway, transit, and
    airport projects. TEA-21 requires that the Federal Transit
    Administration enter into a full funding grant agreement for new
    transit projects with a federal funding share above $25 million. The
    FFGA, as it's called, caps the federal share of the project, ensuring
    that even if the project goes over budget, the government will not bear
    additional costs. And the Federal Aviation Administration uses a
    somewhat similar mechanism, the Letter of Intent (LOI), to outline the
    federal share of an airport construction project. Do you believe that
    the Federal Highway Administration should have a similar tool--an FFGA
    or LOI--for high-dollar highway projects such as the Boston Central
    Artery, Woodrow Wilson Bridge, and the Cypress Freeway, capping the
    federal government's share?
        Answer. We agree that the Federal Highway Administration should
    have the tools and the clear authority to limit the Federal exposure to
    cost growth on highway projects. There are several alternatives to
    protect against Federal exposure to cost overruns. First, Congress can
    set an absolute cap on a projects' cost, such as it did for the Central
    Artery. Second, limits could take the form of a sliding scale for
    Federal participation in costs above a high-dollar project's initially
    agreed upon price. Once a large project exceeds its original cost
    estimate, expenses could be reimbursed at decreasing rate until
    reaching a point above which further cost overruns would be ineligible
    for Federal reimbursement. This method would allow for limited Federal
    participation in some cost growth that may occur due to unforeseen
    circumstances, but would still provide a cap to safeguard against
    Federal exposure to rampant cost growth. Finally, by requiring a
    balanced statewide transportation plan as a condition for mega-project
    funding, Congress can help ensure that the state's formula funds are
    not all used for the mega projects' cost overruns in the event of cost
    growth.
        In the Transportation Equity Act for the 21st Century, Congress
    directed that financial plans be prepared for all projects over $1
    billion. Although FHWA approves the financial plans and any updates for
    highway projects, doubts about its role and reluctance to take limiting
    measures against state ``partners'' prevented FHWA from using the plans
    to effectively protect against Federal exposure to cost growth. As a
    result for example, Congress stepped in and imposed a cap on Federal
    participation in the Central Artery Project last year. Subsequently, a
    DOT Task Force on Oversight of Large Infrastructure Projects
    recommended in December 2000 that DOT agencies enter into written
    agreements with recipients of DOT financial assistance that would
    establish, among other things, the maximum amount of Federal assistance
    the project would receive. The former Secretary directed DOT agencies
    to implement those recommendations on December 29, 2000.
        Finally, the recognition and inclusion of all planned and potential
    Federal contributions to a project are essential to ensure the
    effectiveness of safeguards against Federal exposure to cost growth.
    For example, FHWA sometimes approves ``advance construction,'' which
    authorizes a state to carry out and pay for work in the current year
    and ``convert'' the cost to a Federal cost in a future year by paying
    itself back out of that future year apportionment. There is no time
    limit for converting an advance construction authorization. Costs that
    will be converted to Federal funding in future years should be
    recognized as such and all appropriate oversight requirements should be
    met. For example, FHWA did not initially acknowledge $545 million in
    advanced construction as a Federal contribution to the Central Artery.
    Therefore, the true cost of that project to the Federal government
    would not have been evident until years after the project's completion.
    For the cap it established on the Central Artery, Congress ensured the
    limits would not be circumvented, by specifically including advance
    construction authorizations in the cap.
        Question. I understand that the Central Artery project is a 7-mile
    long road project that will cost in excess of $14 billion. Now, that's
    more than $2 billion per mile. Wouldn't you agree that we need to have
    some sort of cap to ensure that projects don't get out of hand and end
    up costing the taxpayers such an outrageous sum?
        Answer. We agree with the action Congress took last year to cap
    Federal participation in the project at $8.549 billion. The events of
    last year (a $3.3 billion cost increase from $10.8 billion to $14.1
    billion in the 9th year of construction) represents an expensive lesson
    in the need for Federal agencies to insist on accurate cost estimates,
    to closely monitor the financial performance of projects, and to take
    early action to limit the Federal exposure to cost growth.
        Limiting the Federal exposure to cost growth on high-dollar highway
    projects can also promote better project planning. A central problem in
    transit projects as well as highway projects has been that the Federal
    Government's agreement to participate is made very early in the design
    phase. Cost estimates at this stage are notoriously incorrect because
    of the incomplete design and project sponsors sometimes understating
    costs to better their project's chances for approval. Establishing a
    cap at the time high-dollar projects are approved for Federal
    participation would spur project sponsors to be more diligent in
    ensuring accurate cost estimates.
        Even with candid cost estimates and diligent management, some cost
    growth may occur. Therefore, for other projects, the Committee may wish
    to consider alternatives to an absolute cap. For example, the Committee
    could consider establishing a sliding scale for Federal participation
    in costs above a high-dollar project's initially agreed upon price.
    Once a large highway project exceeds its original cost estimate,
    expenses could be reimbursed at decreasing rate until reaching a point
    above which further cost overruns would be ineligible for
    reimbursement. This method would allow for limited Federal
    participation in some cost growth that may occur due to unforeseen
    circumstances, but would still provide a cap to safeguard against
    Federal exposure to rampant cost growth.
                                pipeline safety
        Question. On Thursday, February 8, the Senate passed S. 235, the
    Pipeline Safety reauthorization bill. This bill includes many specific
    requirements that will strengthen liquid and natural gas pipeline
    safety. Many of the provisions in the Senate bill are based on
    recommendations by the DOT Inspector General's office. How would you
    characterize the Office of Pipeline Safety's responsiveness to your
    recommendations over the course of the last year?
        Answer. Our audit report contained six recommendations to the
    Research and Special Programs Administration (RSPA). RSPA has made
    progress on a number of our recommendations but more work remains.
        Recommendation 1: Finalize actions required by the 1992 and 1996
    Congressional mandates.
        Status: (see table on next page)

    ------------------------------------------------------------------------
                                         Congressional
                Operator                    Mandate             Status
    ------------------------------------------------------------------------
    Natural Gas Pipelines...........  Establish criteria  No regulatory
                                       to identify high-   action taken yet;
                                       density             however, OPS held
                                       population areas.   a 2/12/01 public
                                                           meeting to
                                                           address a number
                                                           of issues related
                                                           to new integrity
                                                           management rules
                                                           being considered
                                                           for gas
                                                           transmission
                                                           pipelines. The
                                                           agenda included
                                                           how to define
                                                           high consequence
                                                           areas for these
                                                           pipelines.
                                      Inventory           29 percent of all
                                       pipelines located   natural gas
                                       in high-density     pipelines have
                                       population areas.   submitted mapping
                                                           data to the
                                                           National Pipeline
                                                           Mapping System
                                                           (as of February
                                                           2001).
                                      Establish           No regulatory
                                       additional safety   action taken yet;
                                       standards for       however, at a 2/
                                       periodic            12/01 OPS public
                                       inspections in      meeting to
                                       high-density        address new
                                       population areas.   integrity
                                                           management rules
                                                           being considered
                                                           for gas
                                                           transmission
                                                           pipelines, the
                                                           agenda included a
                                                           review of
                                                           numerous
                                                           Interstate
                                                           Natural Gas
                                                           Association of
                                                           America and
                                                           American Gas
                                                           Association
                                                           proposals and
                                                           discussion of
                                                           standards
                                                           proposed for
                                                           development and
                                                           use in this
                                                           rulemaking.
    Hazardous Liquid Pipelines......  Establish criteria  Issued Integrity
                                       to identify high-   Management final
                                       density             rule in December
                                       population areas.   2000 for large
                                                           hazardous liquid
                                                           operators, which
                                                           contained the
                                                           definition of
                                                           high-density
                                                           population areas.
                                                          EFFECTIVE DATE
                                                           (March 31, 2001)
                                                           postponed 60 days
                                                           for re-
                                                           examination.
                                      Establish criteria  Issued a
                                       to identify         rulemaking that
                                       critical drinking   establishes
                                       water sources and   criteria for
                                       ecological          identifying
                                       habitats as         unusually
                                       unusually           sensitive areas
                                       sensitive areas     in December 2000.
                                       to environmental   EFFECTIVE DATE
                                       damage.             (February 20,
                                                           2001) postponed
                                                           60 days for re-
                                                           examination.
                                      Inventory           86 percent of all
                                       pipelines located   hazardous liquid
                                       in high-density     pipeline
                                       and unusually       operators have
                                       sensitive areas.    submitted mapping
                                                           data to the
                                                           National Pipeline
                                                           Mapping System
                                                           (as of February
                                                           2001).
                                      Establish           Issued Integrity
                                       additional safety   Management final
                                       standards for       rule in December
                                       periodic            2000 for only
                                       inspections in      large (500 miles
                                       high-density        of pipeline or
                                       population areas    more) hazardous
                                       and unusually       liquid operators,
                                       sensitive areas.    which requires
                                                           initial pipeline
                                                           assessments
                                                           within 7 years
                                                           with up to 5 year
                                                           intervals for
                                                           periodic
                                                           inspections.
                                                          EFFECTIVE DATE
                                                           (March 31, 2001)
                                                           postponed 60 days
                                                           for re-
                                                           examination.
    ------------------------------------------------------------------------

        Recommendation 2: Expand the focus of Research and Special Programs
    Administration research and development programs to include (a) smart
    pigs that can detect material pipe defects and (b) alternative pipeline
    inspection and monitoring technologies for pipelines that cannot
    accommodate smart pigs.
        Status: In fiscal year 2001 RSPA is funding investigation into
    smart pig technology that will help to better detect existing
    excavation-related damage, as well as stress corrosion cracking. RSPA
    has requested resources in research and development funding for fiscal
    year 2002 to develop real-time monitoring technologies, non-destructive
    testing methods, and advanced pipeline leak detection systems.
        Recommendation 3: Design and implement a program to train Office of
    Pipeline Safety (OPS) inspectors on the use and capabilities of
    pipeline inspection technologies and the reading and interpreting of
    the results of inspections.
        Status: RSPA used existing resources to design and conduct a pilot
    training program for Federal and state inspectors on internal
    inspection technologies and the analysis of data resulting from
    internal inspections during fiscal year 2001. RSPA is seeking resources
    in fiscal year 2002 to expand a final version of this training program
    during fiscal year 2002.
        Recommendation 4: Implement revisions in the collection and
    processing of pipeline accident data to expand accident causal
    categories for more detailed trend analysis and to clarify accident
    form instructions so that operators will be more consistent and
    accurate in reporting accident causes.
        Status: RSPA submitted a proposed rule in January 2001 to the
    Office of Federal Register that would modify the pipeline accident form
    to require additional information on failure cause categories. However,
    this rule was subsequently withdrawn due to the moratorium imposed by
    the new Administration. The moratorium on this rule is now lifted and
    RSPA will issue the revised rule in March 2001.
        RSPA is drafting regulations to implement this recommendation for
    both natural gas transmission and hazardous liquid pipeline operators.
        In August 2000, RSPA officially proposed revisions to the incident
    and operator annual reports for natural gas transmission operators that
    will provide more detailed information on cause categories. RSPA
    anticipates finalizing this proposal in Spring 2001. In addition, in
    January 2001, RSPA submitted a rulemaking to the Federal Register that
    would lower the reporting threshold for hazardous liquid pipeline
    accidents from 50 barrels to 5 gallons.
        Recommendation 5: Revise OPS regulations to establish an
    enforcement mechanism to ensure operators submit revised accident
    reports when required.
        Status: Current OPS regulations provide for enforcement action when
    an operator does not comply with the regulatory requirements for
    submitting revised accident reports. OPS is increasing oversight of
    accident reporting by operators. As a result, OPS has internally
    reviewed and is changing procedures used to examine accident reports
    submitted by pipeline operators. These improvements include
    implementing a process that will insure that operators report complete
    information and that all cause and consequence information requested on
    the accident reports are known and reported. OPS is also implementing a
    new ``open'' and ``closed'' concept with the accident reports that will
    address erroneous and incomplete report information by keeping accident
    reports ``open'' until all information is finalized and complete. The
    new tracking procedures being implemented will identify which operators
    are non-compliant. OPS will pursue enforcement action on operators
    found to be non-compliant with reporting requirements.
        Recommendation 6: Comply with DOT order by establishing timetables
    to implement open NTSB pipeline safety recommendations with which they
    agree and transmitting the timetables to NTSB.
        Status: Closed. RSPA established timetables to implement open NTSB
    pipeline recommendations and transmitted the timetable in November
    2000.
        Question. The Senate authorization bill increases the authorized
    levels for Federal pipeline safety efforts, state grants, and research
    and development. Do you feel that the focus on research and development
    is appropriate? What are the specific challenges to be met in the
    research program?
        Answer. Yes, we think the focus on research and development is
    appropriate. Our March 2000 audit report found that OPS has conducted
    research to improve the capability of smart pigs to detect corrosion
    and mechanical damage. However, we recommended OPS expand the focus of
    RSPA research and development programs to include (a) smart pigs that
    can detect pipe material defects, and (b) alternative pipeline
    inspection and monitoring technologies for pipelines that cannot
    accommodate smart pigs.
        RSPA's current pipeline research and development program has
    resulted in beneficial technical data on internal inspection devices.
    The research concluded that smart pigs are reliable for detecting
    internal pipe corrosion, certain types of external mechanical damage,
    and pipe metal loss, but they have limited capabilities in pinpointing
    stress corrosion cracks, longitudinal mechanical damage, and defects in
    seam welds and pipe materials. OPS's program now needs to focus on
    three areas:
      --Improving the capabilities of smart pigs to detect defects such as
            stress corrosion cracks, longitudinal mechanical damage, and
            defects in seam weld and pipe materials,
      --Enhancing technologies to better characterize pipeline corrosion
            and its severity, and
      --Developing technologies for internal inspection and monitoring of
            pipelines that cannot accommodate smart pigs.
                  amtrak financial viability and modernization
        Question. For fiscal year 2000, Amtrak reported that its ridership
    and ticket revenue reached record levels, yet your Top Ten report
    indicates that Amtrak is still experiencing heavy cash losses. Why is
    this happening?
        Answer. Although ridership and revenue trends are positive,
    increases in labor costs and train operation expenses have fueled
    continued growth in operating expenses. Amtrak's fiscal year 2000
    operating revenues grew by over 12 percent, to about $2.1 billion. In
    comparison, operating expenses increased by 9 percent over fiscal year
    1999, to $3.0 billion (includes depreciation which is a non-cash
    expense). This resulted in a cash loss of over $560 million. Amtrak
    must reduce growth in expenses over the next 2\1/2\ years or it will
    not achieve operating self-sufficiency in 2003.
        Question. Amtrak recently began its high-speed Acela Express
    service between Washington, DC, New York, and Boston--almost a year
    later than planned and projected. When does Amtrak expect to fully
    implement this high-speed service with the full fleet of 20 trainsets?
    How has the Acela delay affected Amtrak's revenues for fiscal year 2001
    and beyond?
        Answer. Amtrak plans to phase in the new Acela Express service
    throughout the year and fully implement the 20 high-speed trainsets by
    October 2001. Amtrak estimates that revenues in fiscal year 2001 will
    be reduced by approximately $83 million due to the delays. According to
    Amtrak, it will be able to offset this shortfall with funds from sale-
    leaseback transactions and other cost-cutting measures. Assuming the 20
    high-speed trainsets are fully implemented by October 2001, Amtrak's
    2002 revenues will not likely be affected by the delays, which will
    improve its financial outlook considerably in the out years.
        Even if Amtrak meets this schedule, we still have concerns that
    Amtrak's revenue and ridership projections are overly optimistic.
    Assuming the same operating characteristics as Amtrak, in 2002 and
    2003, we project $78 million and $79 million less, respectively, in net
    Northeast Corridor revenues than Amtrak. If our projections are
    accurate, Amtrak will need to develop fallback revenue or cost-savings
    actions to cover the shortfalls.
        Question. In your assessment report on Amtrak's fiscal year 2000
    Strategic Business Plan, you identified a gap of $737 million in
    undefined management initiatives in Amtrak's plan. Does Amtrak's new
    2001 plan close this gap? Are these management initiatives well-defined
    and achievable? Are the savings associated with the management actions
    realistic?
        Answer. We just received Amtrak's 2001 Strategic Business Plan.
    Amtrak has identified a number of initiatives to close the gap we
    identified in the 2000 plan, including reducing employee overtime,
    revamping management travel practices, and reducing administrative
    costs associated with benefits for employees no longer with Amtrak. We
    will evaluate these actions and verify the savings that Amtrak projects
    will result from these actions during the course of our 2001
    assessment. These actions appear to close over half of the gap, but a
    cursory review of the full plan indicates that there are still over
    $300 million in initiatives that do not appear to be clearly defined.
    We will be looking closely at these as well as all other business plan
    initiatives as part of our assessment of Amtrak's 2001 business plan.
    It is not enough for Amtrak to simply define actions to fill the gap,
    it must make these actions deliver. A plan is good, but the proof will
    be in the financial results. In the next few months, we will be looking
    at Amtrak's projections related to future plans as well scrutinizing
    results from plans implemented in prior years. We will report our
    findings later this year.
                              pennsylvania station
        Question. How is the work in the rail tunnels below the existing
    Penn Station related to the redevelopment of the Farley Post Office
    Building as a new intermodal transportation center?
        Answer. The urgently needed fire and life safety work required in
    the tunnels is separate from the redevelopment project, which began
    in1992 but is still under design. The estimated cost of the
    redevelopment project is $817.5 million, while the current estimate to
    complete the needed safety work in the tunnels by 2010 is $898 million.
    Amtrak, the Long Island Railroad, and New Jersey Transit will jointly
    fund the life-safety work. The Penn Station redevelopment project will
    be funded through a variety of sources including Federal
    appropriations, a Federal TIFIA loan, state and local funds, and funds
    from the U.S. Postal Service. While the projects are in close physical
    proximity, the scope, oversight and funding of the projects are
    predominantly separate and distinct.
        Question. Are the Federal Railroad Administration and the
    Pennsylvania Station Redevelopment Corporation observing Congressional
    intent that the appropriated funds provided in fiscal year 2001 and
    prior years be used for life/safety improvements?
        Answer. We found that Federal funds used for the redevelopment
    project have, to date, been spent as directed in the funding
    legislation. In 2001, Congress appropriated $20 million for the
    redevelopment project, but stipulated that the funds could only be used
    for fire and life safety improvements. Funds appropriated for 2001 have
    not yet been committed.
                                  rail safety
        Question. The Federal Railroad Administration instituted its Safety
    Assurance and Compliance Program 6 years ago as a new approach to
    partner with railroad management and labor to address systemic railroad
    safety issues This approach was intended to complement and coordinate
    with FRA's ongoing traditional inspections of railroad conditions. What
    are the Office of Inspector General's concerns about the Safety
    Assurance and Compliance Program? How effective has this new approach
    been in improving railroad safety?
        Answer. The close partnerships with the railroads that had been
    developed under the Safety Assurance and Compliance Program (SACP) have
    been effective in improving communications between railroad management
    and labor on a wide range of safety issues. However, concerns with
    several of the railroads' inspection programs, and the compliance
    agreement that FRA entered into last year with CSXT to address
    systemwide track deficiencies, led us to institute a review of FRA's
    Safety Assurance and Compliance Program. Specifically, SACPs identified
    deficiences in CSXT track but were not effective in ensuring
    corrections were made. Track and human factors have consistently been
    the major two causes of railroad accidents, and the number and rate of
    train accidents has begun to increase in recent years, in spite of
    FRA's emphasis on partnering with railroads through SACP. We are
    currently reviewing how FRA uses information contained in its railroad
    safety inspection database to plan its inspections. We are also
    evaluating overall effectiveness of the Safety Assurance and Compliance
    Program. We expect to report on our findings this summer.
                         hazardous materials evaluation
        Question. Regarding the March 2000 Hazardous Materials Program
    Evaluation Report, what progress has the Department made to implement
    recommendations to better coordinate hazardous materials resources to
    place a greater emphasis on shippers, to develop strategies to reduce
    human error as a cause of hazmat incidents, and to review and analyze
    existing databases to improve data quality?
        Answer. In December 2000, the Office of Intermodalism filled a
    senior-level position and detailed staff from the Operating
    Administrations to implement the report's recommendations. Since then,
    staff has begun identifying cross-modal training for inspectors; is
    working on methods to identify undeclared hazardous materials prior to
    acceptance in commerce; and is assessing ways to improve data
    collection and quality.
                           faa contract tower program
        Question. Presently, there are 199 airports participating in the
    FAA Contract Tower Program, which continues to enjoy bipartisan support
    from Congress as a cost-effective way to improve air traffic safety at
    smaller airports. The program also receives high marks from the
    National Transportation Safety Board, airports and aviation users. Your
    office issued a comprehensive report last year that supported the
    current contract tower program and recommended that FAA revise its
    draft study of expanding the program to the 71 remaining FAA-operated
    visual flight rule towers to give Congress a better perspective of the
    feasibility, costs, and benefits of including these facilities in the
    program. Can you please update the Committee on the status of this
    overdue study and what steps FAA or the Congress should consider to
    further enhance the contract tower program?
        Answer. As of February 2001, FAA had not issued the revised study
    or announced a date of when they intend to issue it. In our review of
    the Contract Tower Program last year, we found that contract towers
    continue to provide cost-effective services that are comparable to the
    quality and safety of FAA-operated towers. Steps FAA and the Congress
    should consider in enhancing the Contract Tower Program include
    developing better methodology for determining which additional towers
    to contract out, updating estimated cost savings, and evaluating the
    benefits that controllers from contracted locations could provide in
    meeting projected growth in air traffic activity.
                            airline customer service
        Question. In discussions with the airlines, they have indicated
    that their goal in canceling or delaying flights is to inconvenience
    the fewest number of passengers--a notable goal. Unfortunately,
    cancellations and delays have become a normal part of every airlines'
    daily schedule and your own report shows that some flights are
    chronically delayed or regularly canceled. Accordingly, my sense is
    that airlines have too few aircraft available on any given day to fly
    their entire published schedule and accordingly they cancel or delay
    the flights with the lightest loads. Do you think a case can be made
    that airlines should not schedule more flights than what they can
    reasonably expect to fly under perfect conditions given their average
    equipment unavailability rate as evidenced by their incidence of
    chronic delays or cancellations?
        Answer. Yes, airline scheduling is one of the factors that needs
    attention in reducing delays and cancellations but in order to truly to
    understand the impact that airline scheduling has on flight delays and
    cancellations three things need to happen: (1) DOT needs to establish a
    uniform system to track delays, cancellations, and their causes; (2)
    FAA needs to develop a set of capacity benchmarks for the Nation's top
    30 airports; and (3) the airlines need to disclose to customers, at the
    time of booking and without being asked, those flights that are
    chronically delayed or cancelled.
        We found DOT's ability to address delays and cancellations is
    significantly handicapped by the lack of a uniform system for tracking
    delays, cancellations, and their causes. This has led to misleading and
    inconsistent data. Without good causal data, it is difficult to
    determine the extent to which delays and cancellations are resulting
    from unavailable aircraft or flight crews. While individual airlines
    maintain some causal data relating to equipment and crew problems, DOT
    or FAA does not maintain similar data. Another important step in
    addressing the delay problem is a set of capacity benchmarks for the
    Nation's top 30 airports. Capacity benchmarks are defined as the
    maximum number of flights an airport can routinely handle in an hour.
    Establishing benchmarks is critical to understanding airline scheduling
    practices and what relief can be expected from technology and new
    runways. Over the last few months, FAA has made substantial progress in
    developing the benchmarks and anticipates issuing them later this
    month.
        Lastly, the airlines need to disclose to passengers at the time of
    booking, without the passenger being required to ask, the prior month's
    on-time performance for those flights that have been chronically
    delayed (i.e., 30 minutes or greater) or canceled 40 percent or more of
    the time.
                               runway incursions
        Question. Runway incursions continued to rise significantly in 2000
    and reached a new high of 429 incidents. Why has the FAA not made
    progress in reducing runway incursions and what should they be doing to
    achieve a significant reduction on this serious safety issue?
        Answer. The increasing number of runway incursions is an important
    safety matter. We attribute the lack of progress in reducing runway
    incursions to two reasons. First, we have seen three FAA plans since
    1991, all with good initiatives, but FAA did not follow-through to
    ensure that initiatives were completed, evaluated, and the best ones
    spread to other airports where they could make a difference. We found
    that FAA had not implemented 50 percent of the initiatives in its 1998
    Action Plan with scheduled milestones through April 2000. In addition,
    evaluations of two promising technologies, loops technology \1\ and
    Runway Status Lights \2\, have not been completed. FAA has reassessed
    the completion of its 1998 Action Plan initiatives and has incorporated
    these and new initiatives into the National Blueprint for Runway Safety
    issued in October 2000. Now FAA must ensure completion of its
    initiatives and determine whether they are effective in reducing runway
    incursions or whether other actions are needed.
    ---------------------------------------------------------------------------
        \1\ Loops technology uses sensor wires buried into runways and/or
    taxiways to sense the passing or presence of vehicles or aircraft
    (similar to roadway stoplight sensors).
        \2\ Runway status lights is a radar-based system comprised of a set
    of automatically controlled lights that indicate when a runway is
    unsafe to either enter or cross.
    ---------------------------------------------------------------------------
        Secondly, FAA needs to deploy technologies to assist controllers
    and pilots in reducing runway incursions and preventing accidents.
    After 9 years of development, FAA has still not deployed the Airport
    Movement Area Safety System (AMASS) to alert controllers of potential
    collisions at any of the 34 largest airports. FAA now plans to begin
    deploying AMASS in June.
        FAA also has experienced significant turnover in the management of
    its Runway Safety Program. With the anticipated departure of the
    current program director this spring, this is the fifth turnover in
    that position in the last 5 years.
                             atc operational errors
        Question. Operational errors, the errors made when air traffic
    controllers allow the distance between two aircraft to fall below FAA's
    minimum separation standards, have increased by 51 percent for 764 to
    1,154 from fiscal year 1996 to fiscal year 2000. Why has the FAA been
    unable to reduce these incidents?
        Answer. In our December 2000 report, we stated that FAA has not
    approached reducing operational errors with a sense of urgency and does
    not have strong national oversight to ensure that regional actions to
    reduce operational errors are effective.
        We found that facilities with the most reported operational errors
    over the past 5 fiscal years have shown little progress at reducing
    operational errors. For example, four of the five facilities with the
    most operational errors have had no reduction in operational errors. We
    attribute the lack of progress in reducing operational errors to
    inadequate regional plans that were not based on assessments at
    facilities and did not include specific actions to reduce operational
    errors. We also found that, while operational errors can pose a serious
    safety risk, the true extent of the safety risk remains unknown because
    FAA does not determine the severity of every incident. We recommended,
    and FAA agreed, to strengthen its oversight of actions to reduce
    operational errors.
                       faa air traffic controllers costs
        Question. I know you have been taking a look at whether the cost
    savings and productivity gain under the contract with the air traffic
    controllers have been realized. Can you update the subcommittee on
    whether the cost savings and productivity gains envisioned under the
    contract have been forthcoming? Is this contract one of the largest
    drivers in the FAA's operating cost growth or is it an insignificant
    issue in the overall FAA budget?
        Answer. To offset the additional costs of the NATCA agreement and
    increase productivity, FAA and NATCA negotiated a series of workplace
    changes. However, nearly 2\1/2\ years into the 5-year contract, there
    has been no indication that the cost savings or productivity gains
    envisioned in the agreement with NATCA have been realized.
        FAA issued a first year report on the NATCA Agreement but was
    unable to demonstrate any correlation between variances in the
    statistics measured (such as overtime expenditures) to the workplace
    changes in place. Other workplace changes that were intended to trigger
    reductions in staff and supervisory positions (such as expanding the
    Controller-In-Charge Program) are only now starting up. Actual cost
    savings or productivity gains, if any, will not be determined until
    fiscal year 2001 and fiscal year 2002.
        Many factors have fueled the increase in FAA's operating costs.
    However, new pay systems, developed as a result of FAA's personnel
    reform efforts, have significantly contributed to the increase. FAA
    estimates the new agreement with NATCA will require nearly $1 billion
    in additional funding over the 5-year life of the agreement. Now, other
    FAA workforces want pay increases as well, which must be negotiated
    under FAA's personnel reform authority.
                                 mexican trucks
        Question. In light of the recent ruling from the dispute resolution
    panel regarding the Mexican border, what do you think needs to be done
    to ensure appropriate oversight of Mexican trucks?
        Answer. First, FMCSA should have a comprehensive implementation
    strategy and plan that identifies specific actions with completion
    dates. This plan should identify all resources needed to reasonably
    ensure the safety of Mexican trucks and include provisions for ensuring
    safety not only upon entry to the United States but also as the
    commercial vehicles transverse the United States. It is reasonable to
    assume that the plan would include an assessment of the progress that
    Mexico has made in developing, enforcing and overseeing its own safety
    system and the compatibility of Mexico's system with the U.S. safety
    regulations. Secondly, FMCSA must place the resources needed at the
    southern border to perform the safety inspections of the commercial
    vehicles and drivers that enter the United States.
        Question. Are you satisfied with the actions that the Department
    took in response to your recommendations to increase inspectors and
    facilities at the U.S.-Mexico border? Do you have any ongoing or
    planned work that will address implementing the cross-border trucking
    provisions of the North American Free Trade Agreement?
        Answer. In our opinion, staffing is still inadequate. In 1998, we
    estimated that 126 additional Federal inspectors were needed during
    port operating hours. At that time there were 13 Federal inspectors.
    Since then, additional inspectors were added bringing the total to 60
    inspectors as of January 2001, still only one-half of what we estimated
    were needed.
        On February 7th Senator Ernest F. Hollings and Representative James
    L. Oberstar requested us to provide a status report on existing
    conditions and the conditions necessary to safely open the border to
    Mexican trucks. Specific areas to be addressed are staffing and
    inspection facilities, out-of-service rates, verification of
    registration information, and harmonization of safety regulations. We
    expect to provide a status report by Summer 2001.
                  federal motor carrier safety administration
        Question. The Top Ten report and your testimonies emphasized the
    need for strong leadership with a strong enforcement program as
    essentials for a successful Motor Carrier Safety Administration. During
    its first year of operation, what happened in these areas?
        Answer. Key leadership positions remained unfilled during the year
    including the Administrator, the Associate Administrator for
    Enforcement and Program Delivery and the Associate Administrator for
    Policy and Program Development. These Associate Administrator positions
    were filled on December 31, 2000, by moving two Senior Executives
    within FMCSA. However, in February 2001 these Senior Executives were
    reassigned to different Associate Administrator positions in FMCSA. As
    for stronger enforcement in 2000, while enforcement activity, such as
    compliance reviews performed and enforcement cases initiated,
    increased, the number of carriers shut down remained relatively
    constant from prior years, 4 freight motor carriers and 34 hazardous
    material or passenger carriers. In February 2001, FMCSA announced the
    shut down of two carriers under the ``unfit carrier'' rule required in
    the June 1998 Transportation Equity Act for the 21st Century.
        Question. Congress provided the Department with new and stronger
    motor carrier safety enforcement tools. Have these been implemented?
        Answer. Not well enough. FMCSA implemented the Transportation
    Equity Act for the 21st Century provision requiring that unfit motor
    carriers not be allowed to operate commercial vehicles in interstate
    commerce. In February 2001, FMCSA announced the first shutdowns under
    the new regulation, ``an unsatisfactory safety rating equals an unfit
    carrier''. This enforcement tool is a huge leverage point. However,
    FMCSA needs to expedite rulemaking actions to realize the benefits of
    the many safety initiatives provided by the Motor Carrier Safety
    Improvement Act of 1999. These include enhancements to the Commercial
    Driver's License (CDL) Program and additional civil penalties and
    sanctions for noncompliance with safety regulations. FMCSA identified
    29 rulemakings in the new Act, including 6 Congress mandated to be
    issued by December 9, 2000. Three of the six rules were completed by
    the deadline. Since we found it takes on average 3.8 years to complete
    a rule, significant management effort will be needed to ensure all of
    the rulemakings implementing safety initiatives are timely implemented.
    These include rules on including non-commercial vehicle offenses for
    CDL holders, establishing new motor carrier entrant requirements, and
    using certified safety auditors for all safety reviews.
        Question. Articles about Commercial Driver's License scandals and
    scams continue. Does your office have any ongoing work addressing the
    testing and licensing of commercial drivers?
        Answer. We have several ongoing criminal investigations related to
    the fraudulent testing and licensing of commercial drivers and an
    ongoing audit. In fiscal year 2000 investigations in this area led to
    over 21 Federal indictments in 6 states. The investigations range from
    corruption in third party testing facilities and state motor vehicle
    departments to fraudulent acts by individual interstate truck drivers.
    For example, a joint investigation with the FBI, Postal Inspection
    Service and IRS into the illegal sale of CDLs by Illinois Secretary of
    State (SOS) employees disclosed unqualified drivers made illegal
    payments through SOS employees ranging from $800 to $1,500 to
    fraudulently obtain a CDL. The investigation disclosed that between 750
    and 1,000 CDLs were issued in Illinois and another 2,000 by two
    examiners in Florida who sold CDLs through the Florida state-licensing
    program. Thirty-seven individuals have been found guilty, including the
    former IG of the Illinois Secretary of State who pled guilty to related
    obstruction of justice charges. Additional individuals and companies
    are still being investigated.
        As a result of this investigation, a CDL Program Review Panel was
    formed by DOT and the State of Illinois to identify drivers that were
    issued fraudulent CDLs and to determine weaknesses in the CDL program.
    The Panel cited several vulnerabilities within the Illinois and Florida
    CDL programs and made recommendations on how to improve and protect the
    programs from abuse.
        In another case, a U.S. District Court judge in St. Louis sentenced
    Dennis Auten, former driver for Speidel Transportation, to 1 month in
    jail, 36 months' supervised release and was prohibited from driving a
    commercial vehicle. Auten pled guilty in September 2000 to falsifying
    his medical history to fraudulently obtain a CDL. In 1998, Auten's
    tractor-trailer crashed into a passenger vehicle, killing its two
    occupants. Upon inquiry by the Georgia State Highway Patrol that Auten
    ``blacked out,'' FMCSA asked OIG to investigate Auten's DOT medical
    certification. Our investigation determined Auten lied during his
    medical examination by hiding a pre-existing medical condition
    involving seizures, convulsions and fainting spells. These could
    preclude him from driving a commercial vehicle. Speidel Transportation
    has ceased all operations.
        Also, Wayne D. McAllister was sentenced by a U.S. District Court
    judge in Florence, South Carolina to 6 months' house arrest for using a
    false social security number and forging a doctor's signature on
    medical and drug testing forms to illegally obtain a commercial
    drivers' license. McAllister knew that he was not medically eligible to
    drive a commercial truck. OIG investigated this case with the South
    Carolina Transport Police and FMCSA.
        Our ongoing audit is focusing on the Federal Motor Carrier Safety
    Administration's oversight of how the states administer commercial
    driving tests, and on the controls in place to make sure commercial
    licenses are only issued to qualified applicants. During the audit, we
    are assessing the periodic reviews that the Federal government does of
    each states' CDL program. We are also examining the basis for annual
    certifications required from state officials that Federal standards in
    the program are being met. The periodic reviews and the annual
    certifications are the key mechanisms being used by the Department at
    this time to find and correct vulnerabilities in the commercial
    driver's license program. If these mechanisms are not effective, the
    potential increases for future fraud or abuse in the testing and
    licensing process. The audit team is completing analysis of information
    obtained during reviews of 13 states and visits to about 100 testing
    and licensing facilities. We expect to issue the report by May 2001.
        Question. The Office of Inspector General recommends that the FMCSA
    needs to address trucking and bus industry opposition to the proposed
    rulemaking on drivers hours-of-service, and the concerns in Congress,
    which led to the Department being prohibited from adopting a final rule
    this year. A significant basis of industry's opposition to the
    rulemaking was the way in which FMCSA performed the cost-benefit
    analysis to justify the proposed rule. Many stakeholders believe that
    the agency's initial analysis was flawed and biased. As a remedy,
    industry has proposed that FMCSA contract with an independent, non-
    governmental entity to perform a professional and unbiased cost-benefit
    analysis of the agency's proposal and of the various alternatives
    offered by stakeholders, prior to the agency publishing a new proposed
    rule for public comment. Do you agree that this might be a good way
    address industry concerns and move the hours-of-service rulemaking
    process forward?
        Answer. Yes, this is an option that could be considered, but it
    should not serve as a delay to issuing a revision to the driver hours-
    of-service rule. FMCSA is currently reviewing more than 51,000 comments
    received on the proposed rule and is conducting further analysis to
    address the comments, particularly in the area of economic impacts.
    FMCSA plans to make a recommendation in the spring and options that
    will be considered include collecting more information, finalizing all
    or part of the rule, and issuing a supplemental rule.
        Question. The OIG report indicates strong support for FMCSA's
    proposal to require electronic onboard recorders in trucks. Yet, a GAO
    investigation found that the agency itself was unable to produce any
    evidence that such a requirement would produce safety benefits in terms
    of reduced accidents. Do you believe that trucking companies'
    operations will be made safer by requiring them to purchase onboard
    recording equipment? If so, what evidence do you have to support this
    belief?
        Answer. Yes, we believe that operations will be made safer by
    requiring the purchase of onboard recording equipment. From our
    investigations and audits, we found that driver fatigue and hours of
    service violations are among the top problems. Furthermore,
    falsification of logbooks constitutes a major problem, which would be
    overcome by electronic recorders, because electronic recorders do not
    lie.
        The need for automatic information recording devices has been an
    item on the National Transportation Safety Board's ``Most Wanted'' list
    since 1990. In that year, the Board recommended requiring automated on-
    board recording devices, such as tachographs or computerized logs as a
    result of the Board's safety study on fatigue, alcohol, and other
    drugs, and medical factors in fatal-to-the driver heavy truck crashes.
    This safety recommendation was reiterated in 1995 in a Board study on
    truck driver fatigue. The Board views such devices as important tools
    in accident investigation and for use in hours-of-service regulation
    compliance. The European Union attributes improved accident rates to
    the European Tachograph Regulation requiring the use of the tachograph
    for commercial vehicles, trucks over 3.5 tons, and buses with more than
    9 seats. Since its introduction in 1970, the tachograph has contributed
    highly to road safety in Germany where the accident performance of
    trucks has improved in comparison to the comparable performance of
    passenger cars.
        Question. It appears that the Department and industry are very near
    agreement on a majority of hazardous materials transportation issues.
    Do you believe that reauthorization of the Hazardous Materials
    Transportation Act should be a priority this year for both Congress and
    the Administration?
        Answer. Yes, we do. Over the past several years, there have been
    extensive discussions on the hazardous materials reauthorization with
    industry and other groups, and industry's views are well represented by
    an extensive submission to the open hazardous materials reauthorization
    Docket Management System docket. Reauthorization of the Hazardous
    Materials Act would enhance the Department's enforcement authority,
    expand the uses of hazardous materials registration fees, and generally
    improve the effectiveness of this program.
                                seat belt usage
        Question. A recent report from the 2001 Seat Belt Summit held in
    January states that increasing belt use is ``the most effective short-
    term way to significantly reduce deaths and injuries from traffic
    crashes'' and that ``increasing safety belt use, therefore, must be one
    of the nation's highest traffic safety priorities.'' Although seat belt
    use is at its highest level ever, I would like to point out that the
    rate has remained constant over the past few years; nearly 30 percent
    of the population still rides unbuckled; and, the percentage of
    unbuckled in fatal crashes is much higher. And even though several
    states have belt use rates between 80 and 90 percent, there are many
    other states that are well below the national average. Last year's
    Conference Report directed the Inspector General to investigate NHTSA's
    strategies and activities to increase seat belt use, and I have been
    told that IG staff participated in this Seat Belt Summit. What is the
    status of the investigation of NHTSA programs and what are you learning
    about the efforts of NHTSA and the states to increase seat belt use?
        Answer. We are completing our audit work and plan to issue a report
    in the 3rd quarter of fiscal year 2001. Our work to date discloses that
    despite the combined efforts of Federal, state, and local governments,
    fiscal year 2000 seat belt use rates are at 71 percent nationwide, far
    below the national goals of 85 percent for 2000 and 90 percent for
    2005. Further, seat belt use rates have increased a total of only 5
    percent in the past 7 years. Given this fact, NHTSA is unlikely to
    reach and sustain its 90 percent goal by 2005, unless it focuses its
    technical assistance efforts on evaluating seat belt programs to
    determine their effectiveness and encouraging the use of those programs
    that are working, particularly among the high-risk groups such as young
    males and non-seat belt users in rural areas. The states are using a
    variety of approaches to increase seat belt usage including
    partnerships, educational enforcement campaigns, and secondary and
    primary enforcement laws. Forty-nine states have adopted secondary
    enforcement laws mandating some form of adult seat belt use. Primary
    enforcement laws, adopted by 18 states, are highly controversial
    because of concerns about individual rights and racial profiling.
    States have also used strategies that have proven successful in other
    states. These successful programs include the ``Click It or Ticket''
    Program for enforcing seat belt laws which involves an intensive
    publicity campaign and highly visible law enforcement checkpoints for
    enforcing seat belt and other traffic safety laws. Originated in South
    Carolina, this program resulted in a reported 7.4 percent jump in seat
    belt usage.
        Another program that has proved successful and used in more than
    one state is the use of law enforcement liaisons to help convince peers
    of the importance of seat belt use. By hiring current or former law
    enforcement personnel as liaisons, the state highway safety offices
    provide the law enforcement community with a contact that ``speaks the
    language'' and has credibility as a fellow law enforcement officer.
    Increased communications between the law enforcement liaisons and the
    law enforcement departments has reportedly led to increased
    participation by law enforcement departments in national mobilization
    efforts, such as ``Buckle Up America Week.''
        Question. Please inform the Committee how NHTSA plans to implement
    the recommendations that were made at the Summit.
        Answer. According to NHTSA, there are no specific plans to
    implement recommendations made at the Summit. NHTSA advised us that
    many of the Summit recommendations reflect the current policy and
    direction of its occupant protection programs. NHTSA officials believe
    that other recommendations, especially those suggesting the reform of
    current Federal funding programs, are policy decisions best left for
    the new administration to consider during reauthorization of Federal
    highway safety legislation.
                         ntsb financial accountability
        Question. The National Transportation Safety Board justly deserves
    its reputation as the premier accident investigative agency in the
    world. The board, however, has been subject to criticisms of its
    financial management capability, especially regarding accounting
    management, debt collection, non-accident related travel, and property
    and inventory control. I believe the Board's decision last year to hire
    an independent consulting firm was a positive step. I also believe
    passage of the National Transportation Safety Board Amendments Act of
    2000 further addresses fiscal accountability at the Board by granting
    the DOT Inspector General the authority to review the financial
    management and business operations of the Board and to determine
    compliance with applicable Federal laws, rules, and regulations. Based
    on your initial reviews of NTSB practices and the findings of the
    Pricewaterhouse Coopers audit, what are the top management challenges
    facing the Board, and how do they compare to the business practices and
    management challenges you have identified at the Department?
        Answer. Based on our initial review of the PricewaterhouseCoopers
    (PwC) audit, we find that NTSB faces some of the same management
    challenges as DOT. As examples, both NTSB and DOT need (1) systems to
    track and account for property; (2) cost accounting and labor
    distribution systems to measure cost by project; and (3) improved
    security measures over access to computer systems and password
    controls. According to the PwC report, NTSB has major challenges ahead
    to ensure all its invoices are entered into the accounting system and
    to prepare auditable financial statements. NTSB also needs better
    procedures for authorizing procurements and reviewing credit card
    purchases.
        Question. The Safety Board Amendments Act also authorized overtime
    pay for certain employees directly involved in accident-related work.
    Is the Board's senior management taking the appropriate steps to
    account for this in their budget planning process and in financial
    management?
        Answer. Yes. Although the DOT Office of Inspector General has not
    done any work concerning overtime pay at NTSB, we discussed this issue
    with NTSB's Acting Chief Financial Officer. He informed us that the
    Board's senior management is taking appropriate steps to account for
    overtime pay in their budget planning process and in financial
    management. In November 2000, NTSB's Managing Director notified Safety
    Board employees via e-mail of the new authority and its statutory
    limitations (15 percent of the employee's annual rate of basic pay, and
    1.5 percent of the agency's appropriation), as well as internal agency
    guidelines on the use of this authority. Since this is a new overtime
    authority, NTSB is working with the Federal Aviation Administration to
    have the payroll system automatically account for this overtime pay.
    Until then, NTSB is keeping up manually with the statutory limitations.
    He mentioned that OMB would not support funding for the new overtime
    authority, so NTSB draws the overtime funds from other appropriated
    accounts, but the monies have been set aside within the Board's current
    available funding to cover these costs.
                 national highway traffic safety administration
        Question. What is the status of the Firestone investigation?
        Answer. According to NHTSA, the investigation is continuing and
    there is no set deadline to complete the investigation. Firestone and
    Ford have completed their investigations into the cause of tire
    problems and NHTSA is finalizing its testing program to determine
    whether the recall should be expanded to include additional tires.
    NHTSA is in the process of contracting with laboratories and experts to
    conduct independent testing.
        Question. What is the status of your audit of NHTSA's Office of
    Defects investigation?
        Answer. We expect to issue a report in the 3rd quarter of fiscal
    year 2001. We found that NHTSA's current database is seriously flawed
    and does not function as an early warning system for comprehensively
    and promptly detecting safety defects. Although NHTSA is aware of its
    database weaknesses, it does not routinely use additional information
    sources to supplement complaints during the screening process. Based on
    our work to date, NHTSA needs to (1) update its data systems and
    procedures to identify emerging safety issues, (2) use available data
    from informational sources, such as safety organizations and
    manufacturers to facilitate the identification of systemic safety
    problems, (3) increase public awareness by more effectively publicizing
    ongoing investigations and recalls, and (4) implement the requirements
    in the TREAD Act, which are designed to enhance NHTSA's ability to
    proactively identify and correct potential defects.
        Question. What are the challenges facing NHTSA with implementing
    the TREAD Act? What actions has NHTSA taken since the TREAD Act was
    enacted?
        Answer. The TREAD Act requires NHTSA to conduct 10 rulemaking in
    the areas of defect reporting by manufacturers, improving and updating
    tire standards, and vehicle rollover testing and evaluation. Six of the
    10 rulemakings must be completed in 2001 or 2002. Since the OIG found
    that it takes DOT on average, 3.8 years to complete a rule, significant
    management effort will be required to issue these rules in a timely
    manner, as required by the Act. NHTSA has already issued two interim
    final rules regarding the Safe Harbor provisions and the sale or lease
    of defective or non-compliant tires. However, the remaining four rules
    may take significantly longer to complete since they are more
    controversial and complex and cover topics such as the early warning
    system reporting requirements for vehicle manufacturers and updating of
    the tire standards.
                                     ______

             Questions Submitted by Senator Ben Nighthorse Campbell

                            airline customer service
        Question. As a frequent airline traveler, I have an interest in the
    report your office released earlier this week on airline customer
    service. Unfortunately, like many other US airline passengers, I have
    been subjected to numerous delays and cancellations, often with very
    little information as to why these are occurring. These mishaps
    interfere with vacation plans, business trips, or any other reason
    someone might fly. What steps is the Department of Transportation going
    to take to ensure that all airlines promptly inform passenger of the
    reasons for delays and cancellations and also inform them of their
    options when these hardships occur?
        Answer. As the OIG, we are not in a position to speak for
    Department management. However, in our Final Report on Airline Customer
    Service Commitment, we recommended both DOT and the airlines need to
    provide consumers with information on chronically delayed and canceled
    flights through existing web sites and on-line publications, or at the
    time of booking without being asked. We also recommended for the
    airlines that have not already done to implement a system that contacts
    passengers prior to arriving at the airport when a known, lengthy
    flight delay exists or a flight has been canceled. Furthermore, as a
    result of our Final Report, the Senate Committee on Commerce, Science
    and Transportation reported out a bill on March 15, 2001, which
    addresses the issue of assuring that the airlines notify passengers of
    delays and cancellations. This legislation requires each large air
    carrier to institute within 60 days of enactment, practices which
    provide ``customers at an airport and on board an aircraft, in a
    timely, reasonable, and truthful manner, the best information available
    to the air carrier regarding a delay, cancellation, or diversions
    affecting the customers' flight.'' This information is to include the
    cause of the delay, cancellation or diversion as well as the air
    carrier's best estimate of the departure time. If this legislation is
    passed, the Department would be responsible for ensuring that all
    airlines promptly inform passenger of the reasons for delays and
    cancellations. However, Department's capacity to monitor such practices
    is severely hampered by a lack of resources.
                                 motor carriers
        Question. For the fiscal year 2001 Transportation Appropriations
    Bill, I had language inserted to prohibit the adoption of the Hours of
    Service regulation. I wanted the Department of Transportation to
    further study economic and other factors that would have been impacted
    should this rule have been implemented. The Federal Motor Carrier
    Safety Administration (FMCSA) extended the comment period through
    December 15, 2000. Now that this deadline has passed, are you aware of
    any changes to the rule that are being proposed by the FMCSA?
        Answer. No, the Agency is reviewing more than 51,000 comments and
    conducting further analysis to address the many comments and filings to
    the official public record on the hours-of-service regulation,
    particularly in the area of economic impacts. FMCSA plans to make a
    recommendation in the spring and options include collecting more
    information, finalizing all or part of the rule, and issuing a
    supplemental rule.
                                 mexican trucks
        Question. On February 6, 2001, the North American Free Trade
    Agreement Arbitration Panel issued its final report regarding ``Cross-
    Border Trucking Services'' between the United States and Mexico. What
    are the administration's plans?
        Answer. As the OIG, we are not in a position to speak for
    Department management. The question could best be referred to the
    Federal Motor Carrier Safety Administration. We understand that plans
    have not been finalized to carry out the NAFTA obligations.
        Question. If the administration plans to further open the U.S. to
    Mexican trucking, what is the time frame for implementation?
        Answer. As the OIG, we are not in a position to speak for
    Department management. The question could best be referred to the
    Federal Motor Carrier Safety Administration. We understand that plans
    have not been finalized to carry out the NAFTA obligations.
         Question. Will it be phased in or implemented all at once?
        Answer. As the OIG, we are not in a position to speak for
    Department management. The question could best be referred to the
    Federal Motor Carrier Safety Administration. We understand that plans
    have not been finalized to carry out the NAFTA obligations.
        Question. I understand that there have been discussions to build 8
    new safety inspection stations near the U.S. Mexico border at 8 of the
    busiest ports of entry. The total cost of construction is expected to
    be around $80 million, or $10 million a piece. How long will it take to
    get these new safety inspection stations up and running?
        Answer. The time frame will probably vary significantly by
    location. Before starting construction, funding and land acquisition
    questions must be resolved and coordination is needed among all
    agencies involved. We reported in December 1998 that the state of New
    Mexico was planning construction of an inspection site at the Santa
    Teresa border crossing. It is our understanding that construction of
    that inspection site has just begun.
        Question. What will the U.S. do to inspect trucks in the meantime?
        Answer. As the OIG, we are not in a position to speak for
    Department management. The question could best be referred to the
    Federal Motor Carrier Safety Administration. Except in the state of
    California, Federal and state inspectors currently use limited space
    within the U.S. Customs Service facilities to inspect Mexican trucks
    upon entering the United States. Also, within the commercial zones in
    the southern border states, state inspectors inspect trucks at the
    roadside.
        Question. If these stations are built at major ports of entry, what
    will we do about those smaller ports of entry, where it is all the more
    likely that the unsafe trucks will try to enter?
        Answer. As the OIG, we are not in a position to speak for
    Department management. The question could best be referred to the
    Federal Motor Carrier Safety Administration. However, in our 1998
    report, we recommended placing inspectors at every border crossing. We
    continue to believe that this is necessary and we will evaluate the
    Department's plans during our ongoing audit to ensure that inspectors
    are at each crossing during operating hours.
        Question. With the increased flow of trucks over the border, how
    many new safety inspectors will be required to make sure that trucks
    entering the U.S. are safe?
        Answer. In our ongoing review, we are updating our estimate of the
    number of inspectors needed. In 1998, we estimated that 126 additional
    Federal inspectors were needed during port operating hours. Our
    estimate may be a very conservative number. In 1998, there were 13
    Federal inspectors. Since then, additional inspectors were added
    bringing the total to 60 Federal inspectors as of January 2001, still
    only one-half of what we estimated was needed. Our 1998 estimate may be
    a very conservative number.
        Question. Both the states and the federal government play important
    roles in making sure that the trucks operating on our nation's roads
    are safe. What kind of Federal-state coordination do you envision to
    ensure that the states are also up to the task of conducting safety
    inspections on trucks entering their respective states?
        Answer. In the current model for Federal-state coordination FMCSA
    enforces safety standards through compliance reviews of motor carriers
    and provides grants to states who then use their own personnel to
    inspect commercial trucks and drivers at the roadside. In fiscal year
    2001, these grants, under the Motor Carrier Assistance Program, were
    funded at $177 million, a significant increase over prior years. The
    additional dollars provide more inspectors to inspect trucks and
    drivers and to enforce U.S. safety regulations. Groups such as the
    Commercial Vehicle Safety Alliance, a non-profit organization of
    federal, state, and provincial government agencies and representatives
    from private industry, also provide a useful mechanism for promoting
    Federal-state coordination on safety issues. The Alliance has
    established standards used across the country for conducting roadside
    inspections.
        Question. ``Hours of Service'' rules have become a hot topic in
    truck safety. What kind of ``Hours of Service'' rules, if any, does
    Mexico have and are they actively enforced?
        Answer. In 1998, we reported that Mexico did not restrict drivers'
    hours of service. We understand that Mexico has made substantial
    progress in developing standards and a safety oversight system.
    However, at this time, we have no specific knowledge of an hours of
    service rule or its enforcement in Mexico. We are updating differences
    in safety oversight systems in our ongoing audit, which will include
    the drivers' hours of service.
        Question. What kind of joint cooperation do you expect the U.S. and
    Mexico will take--and also in conjunction with the U.S.'s lower 48
    states--to make sure that groggy Mexican truck drivers do not exceed
    our Hours of Service rules? For example, if a driver coming over the
    border from Mexico has already put in 8 or more hours behind the wheel,
    what precautions will be in place to make sure that he does not put in
    another 8 hours and end up wrecking on a highway deep within the United
    States?
        Answer. Until the Department's plans for carrying out the NAFTA
    obligations are finalized, we cannot make a prediction as to the
    specific procedures that will be implemented at the border. In 1998 we
    reported that Mexico did not restrict drivers' hours of service. We
    understand that Mexico has made substantial progress in developing
    standards and a safety oversight system. However, at this time, we have
    no specific knowledge of an hours of service rule or its enforcement in
    Mexico. Currently, when Mexican commercial drivers are inspected at the
    border, Federal inspectors enforce the U.S. regulations on drivers'
    hours of service.
        Question. With the potential opening of our border, it is expected
    that hundreds of Mexican motor freight companies may apply for licenses
    to operate throughout the U.S. What actions will the administration
    take to make sure that the safer motor freight companies are allowed in
    rather than those who may be operating unsafe fleets?
        Answer. Until the Department's plans are finalized, I cannot say
    what specific actions will be taken. The Department has drafted a
    proposed rule to govern applications by Mexican carriers to operate
    beyond the commercial zones at the U.S.-Mexican boarder, but has not
    issued a Notice of Proposed Rulemaking on the subject. The process to
    be employed for ensuring that Mexican carriers understand the safety
    regulations of the United States and how the United States will ensure
    that Mexican carriers comply with U.S. regulations is being evaluated
    in our ongoing audit.
        Question. How do you plan on distinguishing the better actors from
    the bad actors?
        Answer. We have observed that recent increases in the number of
    Federal border inspectors correlated with a reduction in the percent of
    Mexican trucks entering the United States that were inspected and
    placed out of service for significant safety violations. The Department
    has drafted a proposed rule to govern applications by Mexican carriers
    to operate beyond the commercial zones at the U.S.-Mexican boarder, but
    has not issued a Notice of Proposed Rulemaking on the subject. We would
    expect this rule to address the issue of distinguishing between
    acceptable and unacceptable carriers seeking to do business within the
    U.S.
                                     ______

                  Questions Submitted by Senator Patty Murray

     can we speed up runway construction while preserving the environment?
        Question. Mr. Mead, your report speaks to the challenges we face in
    expanding the nation's airports. At the Seattle-Tacoma Airport, we have
    been working on constructing a third runway for over a dozen years.
    That runway is finally expected to be opened in 2006. I am a strong
    believer in expanding our nation's airport capacity, but also a strong
    believer that local communities must have input into the planning of
    these facilities. Do you believe it is possible to effectively speed up
    the pace at which we build new airport capacity and, simultaneously,
    respect the environment and the views of the surrounding communities?
        Answer. Without question, there is a need to increase airport
    capacity while simultaneously respecting the views of the surrounding
    communities and protecting the environment. A number of actions have
    been suggested to address this important matter, such as having the
    state and Federal environmental impact assessments done concurrently,
    rather than completing them consecutively. Related concerns are that
    there are at least 13 separate agencies involved in the environmental
    review process and the absence of a set time line for completing an
    environmental review.
        AIR-21 requires the Secretary of Transportation to conduct a study
    of Federal environmental requirements related to the planning and
    approval of airport improvement projects. The study will assess (1) the
    current level of coordination among Federal and state agencies in
    conducting environmental reviews; (2) the role of public involvement;
    (3) the staffing and other resources associated with conducting
    environmental reviews; and (4) the time line for conducting
    environmental reviews. The study is to be conducted in consultation
    with other Federal agencies, airport sponsors, state aviation agencies,
    representatives of the design and construction industry, and
    representatives of public interest groups. The study is to be provided
    no later than April 2001 to the Committee on Transportation and
    Infrastructure of the House of Representatives and the Committee on
    Commerce, Science, and Transportation of the Senate. This report's
    recommendations will be key to any revised FAA policy or procedure to
    speed up the pace of runway construction.
        Question. Do you believe the FAA Airports Office has the necessary
    authority and funding to speed up the process through which we
    construct new runways?
        Answer. Funding is not the problem. AIR-21 will provide FAA with
    almost $10 billion in Airport Improvement Program (AIP) funds from
    fiscal year 2001 through 2003. However, under present law, decisions to
    build new runways or airports ultimately rest with state and local
    authorities. However, both airport owners and the Federal government
    must address the potential environmental impact of building runways and
    airports. The FAA's April 2001 report on environmental streamlining
    will be key to any revised procedures to speedup the process to build
    runways. The results of this study should also help Congress and FAA
    determine if additional FAA authority is necessary to speed up the
    environmental review process.
        Question. Some critics have observed that the nation does not lack
    sufficient airport capacity. Rather, the capacity is just in the wrong
    place. While we desperately need a new runway at SEA-TAC, there may be
    excess runway capacity in other parts of the nation. Do you believe
    that the FAA has done an effective job to ensure that airport capacity
    is being expanded in a targeted way?
        Answer. No. FAA prioritizes funding for new airport projects based
    on grant applications received from local jurisdictions. This process
    has resulted in millions of dollars being spent on an airport like Mid-
    America that sits idle, while airports like Chicago O'Hare lack the
    necessary capacity to meet demand.
        Ground capacity is limited to a large extent due to the airlines'
    hub and spoke system. A key aspect of the system is the concentration
    of flights and passengers into the various hub airports. For example,
    just five airports (Atlanta, O'Hare, Dallas/Ft. Worth, Los Angeles, and
    Phoenix) comprise nearly a third of the passengers handled by the 10
    major airlines in 1999. While the concentration of passengers and
    flights at these airports is seen by the airlines as providing
    significant operational efficiencies, the hub and spoke system also
    prevents some operational inefficiencies, especially when one or more
    of the hubs break down.
        Question. Are we currently targeting airport grant funds in a way
    where our national aviation system gets the most bang for the buck?
        Answer. There is no national system of airports similar to efforts
    to build a national highway system. Currently, decisions to build new
    runways or airports ultimately rest with state and local authorities.
    FAA prioritizes funding for new airport projects based on the grant
    applications received from those authorities. This process has resulted
    in millions of dollars being spent on an airport like Mid-America that
    sits idle, while airports like Chicago lack the necessary capacity to
    meet demand. Both the Administration and Congress need to decide
    whether FAA should have a more active role to include leveraging grant
    funds to capacity-constrained airport locations versus a passive role
    of essentially distributing grant funds to airports.
                             audit of sound transit
        Question. Mr. Mead, your agency is currently conducting an audit of
    the Sound Transit Light Rail Project in Seattle. The Administration
    signed a Full Funding Grant Agreement for this project just last month.
    I am pleased that you are taking an in-depth look at this agency
    because I believe all concerned parties must be confident that this
    project's cost and schedule estimates are accurate. Could you tell me
    the expected time frame in which you expect to complete your audit of
    Sound Transit?
        Answer. On January 25, 2001, the Office of Inspector General
    initiated an audit of the Seattle Central Link light rail project in
    response to a January 16, 2001 request by Chairman Harold Rogers of the
    Subcommittee on Transportation and Related Agencies Committee on
    Appropriations. As one of the largest transit projects in the country,
    a review of the Seattle Central Link had been a part of the OIG
    strategic plan, pending the issuance of a full funding grant agreement.
    We currently plan to complete our audit of the Seattle Central Link
    light rail project in the fourth quarter of fiscal year 2001. We will
    also report our findings on an interim basis, as necessary, to keep the
    Congress and the Administration informed of significant issues
    encountered during our audit.
        Question. I think it is important that this subcommittee get a
    formal, written report on the findings of your audit. In this way, no
    one can exaggerate your findings, whether it is the Press, the
    project's supporters or the project's detractors. Can you assure me
    that you will submit a formal written report on your Sound Transit
    audit in a timely fashion?
        Answer. Yes, we will issue a written report on the Seattle Central
    Link light rail project in a timely fashion after completing our audit
    work. We will also report our findings on an interim basis, as
    necessary, to keep the Congress and the Administration informed of
    significant issues encountered during our audit.
             airline customer service--are the airlines lying less?
        Question. Mr. Mead, in your airline customer service report which
    you issued on Monday, you point out that the airlines have a long way
    to go in disclosing accurate information on a regular basis to
    passengers enduring delays. When you conducted your interim report half
    a year ago, you found numerous instances in which the airlines blamed
    their delays on fictitious causes. Did you find in your recent annual
    report that the airlines are, at least, being more accurate when they
    do tell the passengers why their flight is delayed?
        Answer. Yes, since our Interim Report, we found during our
    observations that the accuracy of information provided passengers about
    the cause of the flight delay improved considerably when information
    was provided. However, we reported that considerable improvement is
    still needed in the timeliness and adequacy of information provided
    passengers about delays. We found airlines provided adequate
    information on delays, including the cause, between 38 and 75 percent
    of the time.
        In conducting our tests, we gave the airlines flexibility in
    determining what constituted adequate information, looking for as
    little information as ``the flight will be delayed 30 minutes due to
    weather at the connecting airport.'' We did not expect gate agents to
    provide a detailed or complex explanation on the reason for the delay.
    In most cases where we found the information was not adequate, it was
    because no information was provided at all (no announcements made).
        Question. In your view, are the gate agents not providing timely
    information to passengers because they do not have the information, or
    because they don't take their commitment to disclose the information
    seriously?
        Answer. Some of the larger airlines have systems that are directly
    tied into the operations departments and the gate agents have real-time
    information on flight delays and cancellations. However, we found
    instances where these same airlines' gate agents were not providing any
    information to the passengers, even though we confirmed that the
    information was available at the time of the delay. We also found that
    the level of performance in notifying passengers about known delays and
    cancellations was significantly higher at the airlines' Hub airports
    than at non-Hub airports, and that the level of performance did not
    vary significantly between large, medium or small airlines.
        Question. Your report pointed out that, even though all the major
    airlines committed to the identical voluntary customer service
    standards last year, several of the airlines have not fully
    incorporated their passenger service commitments into their contracts
    of carriage. As a result, it is impossible to enforce the commitments
    that the airlines made. How do you interpret the fact that the airlines
    have not incorporated these commitments into their contracts of
    carriage? What does it tell you about their commitment to these
    customer service standards?
        Answer. Our review of the 14 Airlines' contracts of carriage showed
    that as of January 17, 2001, all of the Airlines responded to this
    recommendation to some degree. For example:
      --Three of the 14 Airlines incorporated the entire text of their
            Plans into their contracts of carriage.
      --Eleven of the 14 Airlines incorporated the Commitment provision to
            inform the customer of delays, cancellations, and diversions
            into their contracts of carriage; 8 of the 14 Airlines
            incorporated the Commitment provision to meet customers'
            essential needs during extended on-aircraft delays.
      --Eleven of the 14 Airlines incorporated the Commitment provision for
            quoting the lowest fare; 12 Airlines incorporated the
            provisions for holding a nonrefundable reservation for 24 hours
            and for returning misrouted or delayed baggage within 24 hours;
            and all Airlines incorporated the baggage liability limit
            increase, which is required by Federal regulation.
        Since January 17, 2001, at least three other ATA member airlines
    have incorporated the entire text of their Plans into their contracts
    of carriage.
        There were differences among the Airlines in exactly what they
    decided to incorporate, and we found instances where the contract of
    carriage placed limits on what appeared to be a more expansive
    provision in the Plan. An area of particular concern is when an Airline
    will provide overnight accommodations occasioned by a delay or
    cancellation. Most of the Plans said generally that overnight
    accommodations would be provided if the passenger was required to stay
    overnight due to a delay or cancellation caused by the Airline's
    operations (as defined by the Airline). However, the contract of
    carriage for seven Airlines appeared to limit this to situations such
    as when a flight was diverted to an unscheduled destination or a flight
    delay exceeded 4 hours between the hours of 10:00 p.m. and 6:00 a.m.
    The circumstances in which overnight accommodations will be provided
    needs clarity so that passengers will know what to expect.
        In our Final Report on Airline Customer Service Commitment, we
    recommended that the Commitment be enforceable either by including all
    the provisions in the contract of carriage or requiring them by
    regulation. Furthermore, as a result of our Final Report, the Senate
    Committee on Commerce, Science and Transportation reported out a bill
    on March 15, 2001, which addresses the issue of assuring that the
    provisions in the Commitment were incorporated in the airlines'
    contracts of carriage. The legislation requires that within 60 days of
    enactment, each large air carrier shall incorporate the provisions of
    the Airline Customer Service Commitment executed by the Air Transport
    Association and 14 of its member airlines on June 17, 1999, in its
    contract of carriage.
        On March 14, the passenger airlines of the Air Transport
    Association announced a second phase of their voluntary customer
    service commitment. As part of this commitment, the airlines that have
    not already done so, have agreed to place all customer service
    commitment provisions into their contracts of carriage.
        Question. I understand that, at yesterday's hearing before the
    Commerce Committee, the airlines and others raised the fact that the
    Department of Transportation does not have enough personnel to enforce
    their regulations in the area of customer service. Do you believe the
    absence of enforcement personnel is a sufficient reason to explain why
    the airlines are not living up to their customer service commitments?
    Do we excuse the behavior of drunk drivers just because there are not
    enough police officers to pull them all off the road?
        Answer. No, clearly the lack of enforcement personnel is not a
    sufficient reason airlines did not effectively implement all the
    customer service commitments. Our concern is that the resources, for
    the Department of Transportation Office responsible for overseeing and
    enforcing aviation consumer protection rules, are inversely
    proportionate to the office's workload. In 1985 the office had a staff
    of 40, in 1995 it was down to 20 and by 2000 it had 17 staff. This
    decline in staffing occurred at the same time workload dramatically
    increased. Sufficient resources and effective oversight would have
    identified areas where airlines were not meeting current Federal rule
    or regulations.
        Question. Since the airlines committed to these customer service
    standards voluntarily, why are enforcement personnel necessary to make
    the airlines live up to these standards?
        Answer. Given the dramatic increase in complaints and potential for
    consolidation in the airline industry, it would be wise to bolster
    DOT's enforcement workforce. Also, several of the commitment provisions
    are not new but were already required by Federal rules or regulations,
    which the airlines should have been following and DOT should have been
    overseeing. For example, the commitment provision to provide prompt
    ticket refunds has been a Federal requirement for over 17 years.
    However, we found six airlines that met the cash or credit card refund
    requirement less than 94 percent of the time. Two airlines were meeting
    the credit card refund requirement less than 62 percent of the time.
    Clearly the airlines still need to improve on their implementation of
    the commitment provisions and DOT should be active in overseeing their
    compliance.
        In cases where an airline failed to provide prompt ticket refunds,
    it is extremely unlikely that the customer is going to take the airline
    to task such as file a lawsuit to get the refund. In that case, DOT
    should have the resources available to examine the situation to see if
    the refund problem is systemic with that airline and to take broad
    based enforcement action, which the consumer cannot do.
        Question. Given the millions of passengers that fly on the major
    air carriers each year, how great an impact would a few more additional
    enforcement personnel have on the behavior of the major airlines in the
    area of customer service?
        Answer. We recognize that additional personnel is not a panacea.
    Additional personnel for government oversight and enforcement, coupled
    with airline quality assurance programs, could help address the
    traveling public's dissatisfaction with air travel. If the airlines
    establish quality assurance and performance measurement systems to
    evaluate their own compliance with the commitment, then DOT personnel
    could focus their efforts on reviewing these quality assurance and
    performance measurement systems. This would allow DOT to more
    efficiently identify areas of potential noncompliance.
        On March 14, the passenger airlines of the Air Transport
    Association agreed to a second phase of their voluntary customer
    service commitment. As part of this second phase, the airlines
    committed to establishing internal performance measurement systems and
    audit procedures to ensure compliance with their individual customer
    service plans. The airlines have agreed to make these internal systems
    open to scrutiny and review by the Department of Transportation.
                            classification of spills
        Question. Gentlemen, both of your agencies have been critical of
    the manner in which OPS classifies the causes of pipeline accidents. Do
    either of you believe that the OPS's current system for identifying the
    causes of pipeline accidents is effective in providing the information
    we need to help decrease spills and ruptures?
        Answer. No. As stated in our March 2000 audit report, RSPA's
    current mechanisms do not provide sufficient data to accurately
    identify accident causes and trends. However, RSPA is seeking to revise
    all pipeline accident reporting requirements in 2001. RSPA expects
    collection of improved information beginning in Summer 2001 for natural
    gas transmission pipeline incidents.
        Question. Mr. Mead, I know your report called for reforming the way
    this is done. Could you elaborate on that?
        Answer. Our March 2000 audit report found that OPS does not collect
    sufficient data to precisely identify accident causes and trends. When
    accidents occur, pipeline operators are required to submit an accident
    report to OPS. Although the reports include information on the accident
    cause and origin, deaths, or injuries, and estimates of property
    damage, the information is not adequate. For example, operators use the
    ``Other'' causal category to list unknown accident causes or causes not
    clearly defined in specific causal categories. As a result, 21 percent
    of natural gas and 29 percent of hazardous liquids accidents list
    ``other'' as its cause. OPS needs to expand the causal classification
    categories to collect more precise information about causes of
    accidents, and to clarify the instructions so that operators will be
    more consistent and accurate in reporting accident causes.
        Additionally, the OPS accident database contains inaccurate
    accident causal information and understates property damage. This is
    partially due to the fact that erroneous accident reports are not
    corrected. OPS needs an enforcement capability to ensure that operators
    revise submitted accident reports later found to be inaccurate. Even
    when OPS knows the information in the original accident report is
    inaccurate, the database is not immediately modified without an
    operator's written revision because it consists of ``operator
    reports''.
        To reduce these inaccuracies, OPS plans to implement a new ``open''
    and ``closed'' concept with the new revised accident reports that will
    address erroneous and incomplete report information. RSPA will mail the
    operator a hard copy of the initial incident report filed by a pipeline
    company to have the company review the information RSPA records in the
    database against the company's filing to help insure that data entry is
    correct. Further enhancing the completeness and usefulness of the
    submitted accident information, the new revised reports will have a new
    ``FINAL REPORT'' check box that will be used with an automated process
    to periodically request status of reports that have not been finalized.
    RSPA will automate a mailing of the existing report back to the
    operator every 6 months asking for supplemental reports until a final
    report is received.
                    implementation of congressional mandates
        Question. One very troubling aspect of improving pipeline safety is
    OPS's failure to implement Congressional mandates. Until very recently,
    OPS had not issued requirements dating back as far as 1992. Both of
    your reports were critical of this inaction on the part of OPS.
    Considering OPS's recent issuing of some outstanding rules, do you
    think OPS is turning over a new leaf?
        Answer. OPS has made progress in issuing outstanding rules mandated
    by Congress in 1992 and 1996, but more remains to be done. In the area
    of hazardous liquid pipelines, OPS has issued:
      --A final rule defining unusually sensitive environmental areas in
            December 2000;
      --A final rule (Pipeline Safety: Pipeline Integrity Management in
            High Consequence Areas (Hazardous Liquid Operators with 500 or
            More Miles of Pipeline) in December 2000 for only large (500
            miles of pipeline or more) hazardous liquid operators, which
            requires initial pipeline assessments within 7 years with up to
            5 year intervals for periodic inspections; and has initiated
      --A rulemaking that would extend these requirements to the remainder
            of regulated hazardous liquid pipelines (499 miles or less).
            This proposed rule is under review by the new Administration.
            All three rulemaking actions, however, in accordance with the
            Administration's request, have been postponed 60 days and
            returned to the modal administrations for reexamination. As of
            February 2001, OPS through the National Pipeline Mapping System
            has voluntarily obtained 86 percent of all hazardous liquid
            pipeline miles and 29 percent of all natural gas pipeline
            miles. OPS is preparing to begin the rulemaking process for
            natural gas pipelines; however it needs to:
      --Establish criteria to identify high-density population areas.
      --Establish additional safety standards for periodic inspections in
            high-density population areas. OPS expects to complete natural
            gas rulemakings by early 2002. An OIG audit of rulemaking
            determined DOT took an average of 3.8 years to issue a final
            rule. RSPA needs to maintain management focus to complete these
            rules in a timely manner.
        Question. Is there anything you'd suggest we do in Congress to
    ensure that they continue to implement overdue as well as new pipeline
    safety requirements?
        Answer. We suggest that Congress continue to monitor RSPA's
    progress to ensure that they expeditiously work toward implementing
    overdue Congressional mandates. Congress should also consider
    reauthorization provisions to: (1) further research in pipeline
    inspection technologies, (2) require the development of a comprehensive
    accident data collection plan; (3) expand the states' role in pipeline
    inspections; and (4) ensure pipeline operators are qualified to do
    their job, reducing the probability and consequences of serious
    accidents.
                    growing cost of coast guard procurements
        Question. Gentlemen, both of your agencies reported concerns
    regarding Coast Guard procurements and the agency's plan to replace its
    vessels and aircraft. I know we all agree that the replacement of these
    assets is critical to the Coast Guard's ability to execute its many
    essential missions. Mr. Anderson, your report specifically criticized
    the Coast Guard's procurement strategy for the ``Deepwater Project''.
    You stated, ``There are no models in the federal government to guide
    the Coast Guard in developing its acquisition strategy for this
    approach.'' Given the trouble that the Coast Guard has had in the past
    in procuring helicopters and ships, do you believe the Coast Guard is
    giving enough attention to your recommendations in this area?
        Answer. As this question is addressed to Mr. Anderson, we have left
    it to the General Accounting Office to answer.
        Question. Mr. Mead, your report points out that once the Deepwater
    acquisition gets underway, the Coast Guard will require an acquisition
    budget of least $850 million each year. That compares with a current
    budget of roughly $415 million in fiscal year 2001. Is this the only
    way to go about the business of replacing the Coast Guard's assets?
        Answer. No, this is not the only way for the Coast Guard to replace
    its assets. The Coast Guard is currently planing for the replacement of
    it Deepwater capability as a coordinated system of assets. The Coast
    Guard's planning process will produce estimated cost data that will
    permit greater flexibility in evaluating alternative procurement
    strategies. Using this cost data, the Coast Guard can compare
    alternative procurement methods such as acquiring an integrated system
    proposed by one of the competing industry teams, a combination of the
    industry teams' proposals, or some other alternative developed by the
    Coast Guard. The Deepwater acquisition strategy will not be finalized
    however, until a procurement contract is awarded in January 2002. Our
    ongoing review, which is scheduled for completion in the 3rd quarter of
    fiscal year 2001, will assess the Coast Guard's progress in developing
    its Deepwater acquisition strategy.
        Question. Are you convinced that this procurement cannot be made
    more affordable through a different procurement strategy?
        Answer. No, we are not convinced that the Coast Guard's procurement
    strategy can not be made more affordable. The current strategy of
    awarding one contract in a limited competitive environment for a 20-
    year period is high risk. The prospect of price increases and cost
    escalation over a period this long is very great. Further, once the
    procurement contract is awarded there will no longer be a competitive
    environment for executing changes to incorporate new technologies.
    Finally, there will be less incentive for the contractor to control
    costs and to meet performance requirements as the contract progresses.
    Our ongoing review, which is scheduled for completion in the 3rd
    quarter of fiscal year 2001, will provide greater insight into the
    strategy and cost of this procurement.
                    delays in certifying new boeing products
        Question. Gentlemen, you have both been critical of the FAA's
    ability to develop a cost accounting system that accurately captures
    what the agency is spending on each of its functions. My state is home
    to Boeing, which manufactures many state-of-the-art products in
    aviation. Each of these new products must be certified by the FAA. For
    several years, the FAA Administrator has had to raid the funding of the
    certification office to make up for funding shortfalls in other
    offices. As a result, companies like Boeing have had to endure longer
    and longer delays in getting their products to the market. This past
    year, in order to put an end to that practice, the appropriations bill
    made it impossible for the FAA Administrator to shift funds out of the
    certification office. In fact, it prohibited the Administrator from
    shifting funds between the sub-accounts in her operations budget. Given
    the status of the FAA's cost accounting system, what confidence should
    we have in the accuracy of the budget estimates that are submitted to
    this subcommittee?
        Answer. FAA's partially implemented cost accounting system is not
    used by FAA as a basis for budget estimates submitted to the committee,
    and therefore the benefits to be derived from a cost accounting system
    are not yet available for preparing budget estimates. In the future, a
    fully functioning cost accounting system should prove to be very useful
    to FAA and the committee in preparing and reviewing budget estimates,
    plus provide detailed cost information to support its expenditures by
    lines of business, projects, and specific activities and services FAA
    performs. Actual cost data will provide better bases for estimating and
    justifying future budget requests.
        Question. Do you believe the FAA's new cost accounting system is
    progressing to the point where we can accurately know precisely what
    amount is spent on certification of new aviation products each year?
        Answer. No. FAA currently cannot determine the cost of
    certification of new aviation products because it has not yet started
    to develop its cost accounting system for the Regulation and
    Certification line of business. FAA currently plans to start
    development of this portion of its cost accounting system in the second
    quarter of fiscal year 2002 and estimates completion of this phase by
    September 30, 2002. As of March 14, 2001, FAA has not yet identified
    the business requirements for its Regulation and Certification line of
    business. If FAA should decide during system development to capture
    cost by specific product requiring FAA certification, then the cost
    accounting system will be able to identify the amount spent on
    certification of new aviation products each year. However, because the
    business rules for Regulation and Certification have not yet been
    finalized, FAA cannot confirm today that it will be able to accurately
    identify amounts spent on certification of new aviation products.
        Question. Do you believe the Committee took the appropriate step in
    prohibiting the FAA Administrator from shifting funds between her
    operations sub-accounts?
        Answer. We believe the Committee took the appropriate step in
    prohibiting funds from being shifted between FAA's operations sub-
    accounts. Each of FAA's lines of business plays a critical role in the
    safe and efficient operation of the National Airspace System. By
    designating specific funding levels for each line of business in FAA's
    fiscal year 2001 Appropriations, Congress has ensured that those
    activities will be funded as intended and not reprogrammed to cover
    shortfalls in other areas. In fiscal year 1999, FAA experienced a $284
    million shortfall in its operations account, most of which ($204
    million) was in the Air Traffic Services line of business. The
    shortfall required cuts in all lines of business including safety and
    non-safety activities alike such as delaying plans to hire additional
    safety inspectors and reducing technical training for controllers.
                                     ______

                Questions Submitted by Senator Richard J. Durbin

                                    aviation
        Question. In your view, what have the airlines done correctly to
    improve service over the past year? On the other side, what to you
    think the airlines could improve upon? What practices have worked and
    which ones have not?
        Answer. We found areas where the greatest progress was being made
    and practices worked well were areas such as quoting the lowest fare,
    holding nonrefundable reservations without penalty and larger pay-outs
    for lost luggage. The airlines have also taken actions to improve
    customer service in areas not directly related to the commitment, such
    as increasing the space between seats and installing larger overhead
    bins.
        Areas most needing improvement were the areas that trigger when
    there are flight delays and cancellations such as notifying passengers
    of known delays and cancellations, delivering baggage that did not
    arrive with the passenger within 24 hours and clarifying essential
    needs that will be met during long on-aircraft delays. We also found
    room for improvement in handling bumped passenger and prompt ticket
    refund practices.
        Question. Do you think legislation--commonly referred to as the
    ``passengers bill of rights''--is needed to address basic consumer need
    in the airline industry?
        Answer. Effectuating good airline customer service is a tough thing
    to legislate. In our report, we made several recommendations that
    cannot be implemented except through law or regulation. For example,
    increasing the compensation for bumped passengers and requiring
    disclosure to customers at the time of booking those flights that have
    been chronically delayed will have to be put in regulations. In other
    areas, you may want to give the Airlines the opportunity to take action
    voluntarily. For example, when defining ``an extended period of time''
    or ``food'' during long on-aircraft delays, we should have a minimum
    level of consistency, but beyond that the airlines should use customer
    service as a form of competition.
        Question. Chicago O'Hare International Airport in my state is one
    of the world's busiest airports. As more people choose air travel, and
    as airports become more populated with aircraft, what do you see, from
    a management perspective, to be possible solutions to addressing air
    traffic flow?
        Answer. There has been much debate over the last year as to the
    role airline scheduling plays in causing delays--especially at the
    larger Hub airports, like Chicago O'Hare, during peak periods of
    operation. Questions being debated include whether airline scheduling
    discussions for specific airports should be permitted under antitrust
    supervision, whether peak-hour pricing (if legal) will provide
    meaningful relief, and whether implementing a lottery for airport usage
    (such as New York's LaGuardia) will work. Clearly the airlines cannot
    solve the delay and cancellation problem themselves, since many factors
    lie at its cause, but they should be doing their part.
        Last year we made a recommendation to the Federal Aviation
    Administration to develop capacity benchmarks for the Nation's top 30
    airports. This will provide a common framework for understanding what
    maximum arrival and departure rate can physically be accommodated by
    airport, by time of day under optimum conditions. A set of capacity
    benchmarks is essential in understanding the impact of air carrier
    scheduling practices and what relief can realistically be provided by
    new technology, revised air traffic control procedures, new runways,
    and related airport infrastructure. FAA has completed its capacity
    benchmarking and preliminary results are being circulated to industry
    for their comments.
        Also, last year, before the Senate Committee on Commerce, Science
    and Transportation, we reported that the key question is what traffic
    load the air traffic control and airport systems can reasonably be
    expected to accommodate in the short, intermediate, and long term. FAA
    needs to explain in clear terms the extent to which the air traffic
    control modernization effort can be expected to provide material relief
    to the current problem of delays and cancellations. This is because
    much of the modernization effort is not geared to making quantum leaps
    in increasing capacity. The answer lies in a cumulative mix of
    solutions-- scheduling and technology are among them. However, the role
    played by ground infrastructure (runways and airports) is of enormous
    importance, mainly because of the large impact that ground
    infrastructure has on capacity. This is further complicated by the fact
    that decision-making associated with building and locating a new runway
    or a new airport requires clearance by local communities.
        Question. Do you have the O'Hare capacity benchmark data as
    described in the February 12, 2001 report?
        Answer. We recently received the benchmark data for O'Hare, as well
    as 30 other major airports. As part of our follow on audit of flight
    delays and cancellations, we will be reviewing FAA's capacity
    benchmarks for O'Hare as well as the other major airports.
                                  rail/transit
        Question. Illinois is second in the nation in the number of at
    grade crossings, more than 14,300. What steps will D.O.T., and
    specifically, the FRA, take to ensure rail-grade crossing safety in
    this new administration?
        Answer. As the OIG, we are not in a position to speak for
    Department management; however, we will pass along your concerns to FRA
    for consideration and response.
        Question. Illinois has 899 locally passed and FRA recognized
    whistle bans. About 64 percent the state's population lives within one
    mile of a public highway-rail crossing. Last year the FRA proposed to
    do away with those whistle ban zones as a way to improve public safety.
    After many hearings, here and in my state, there is still a possibility
    the FRA's rule may include overturning the whistle ban. Do you believe
    this to be the best and most reasonable approach in assuring public
    safety?
        Answer. We have not done any work in this area to date. We will
    continue to monitor highway rail-crossing safety issues and anticipate
    more in-depth work in the future related to methods for improving and
    assuring public safety.
        Question. Following a DePaul University study showing the mandatory
    use of train whistles at all railroad crossings could decrease Chicago-
    area property values by more than $1 billion, I worked to create a new
    pilot program to improve crossing safety in four Illinois communities
    with the help of the ICC and the FRA. Might this approach to rail-grade
    crossing safety be included in the structure of the DOT under this new
    administration?
        Answer. The study offers what its authors refer to as ``a
    preliminary assessment of a complex issue'' and includes concepts to
    promote grade crossing safety that might well be included in the
    structure of the DOT under the new administration. The study emphasized
    the need for intergovernmental cooperation and improvements to
    strengthen the role of public education and enforcement in reducing the
    number of motor-vehicle violations at crossings, concepts that FRA has
    supported in its efforts to improve grade crossing safety. The use of
    video surveillance to abet enforcement and the effective imposition of
    penalties, as discussed in the study, are also areas FRA has previously
    highlighted.
        Question. The St. Clair County Extension project of Metro Link in
    Southern Illinois is under a Full Funding Grant Agreement (FFGA). In
    recent months, a proposal has been made to amend the FFGA to extend the
    line to Scott Air Force Base/Mid America Airport. Your office initially
    expressed some concerns. Since that time, more information has been
    supplied and a site visit has taken place. Please tell me the current
    IG's position on the FFGA amendment.
        Answer. The Office of Inspector General agrees with FTA's
    assessment that the project's New Starts rating for the ``cost
    effectiveness'' criteria is not sufficient to support a ``recommended
    rating'' because of the low ridership forecast. In our December 21,
    1999 report on the St. Clair Extension of the St. Louis MetroLink
    System, we recommended that the FTA Administrator base the final
    decision to award $60 million of Federal funds for the second phase of
    the extension on an evaluation and rating of the second phase under its
    New Starts criteria. On December 12, 2000, FTA assigned an overall
    project rating of ``not recommended.'' On January 7, 2001, Congressman
    Jerry Costello asked the Office of Inspector General to review the new
    ridership numbers and adjustment factor submitted by Bi-State and the
    Transit district for FTA's consideration. The Office of Inspector
    General verbally briefed Congressman Costello on March 7, 2001 on the
    results of our latest review. We informed the Congressman that we
    agreed with FTA's latest assessment of the ridership numbers. However,
    we suggested that Bi-State revalidate its ridership model and resubmit
    the new numbers with out having to use an adjustment factor.
    Congressman Costello agreed with our assessment and suggestion.
                                 motor vehicle
        Question. Last year the Congress passed two important legislative
    measures. One being the .08 percent BAC measure with was included in
    the Transportation Appropriations Bill, and the TREAD Act (Tire Recall
    Enhancement, Accountability, and Documentation Act) to deal with the
    Ford/Firestone tires issue. Can you please provide the committee with
    any insight on the implementation of these measures at your level?
        Answer. Regarding .08 percent BAC, NHTSA is in the process of
    developing a guide for states on how to implement a 0.08 BAC program,
    once states enact 0.08 BAC legislation. The guide will contain
    information on (1) how to conduct public education programs; (2)
    suggested new training for law enforcement officers; and (3) new
    signage for highways. NHTSA expects to issue this guide to the states
    in summer 2001.
                                     ______

              Questions Submitted to the General Accounting Office

                Questions Submitted by Senator Richard C. Shelby

                        most pressing challenges at dot
        Question. Both the DOT Inspector General and General Accounting
    Office have identified many important challenges for the Department of
    Transportation. Which of them, in your opinion, are the most important
    for the new Secretary to act on first? Which require the most urgent
    Congressional attention?
        Answer. It is vital that the agency persists in its efforts to
    address the safety issues discussed in our Performance and
    Accountability report on the Department of Transportation. Given the
    forecast for an increased rate of air travel, reducing accident rates
    is of the utmost importance, and the Federal Aviation Administration
    (FAA) has some good opportunities to do so. For example, our
    recommendations regarding FAA's Safer Skies Initiative could help
    improve and measure the effectiveness of the program. While DOT's
    Office of Pipeline Safety is implementing several new programs, such as
    a risk-based approach to pipeline regulation and a more cooperative
    approach to enforcement, it has not yet tested these approaches to
    determine if they result in better compliance and improved safety.
        DOT must also press forward with its air traffic control
    modernization projects. The future capacity and safety of the airspace
    system rests largely on the successful completion of this effort. DOT
    has begun to implement systems to address the delays and cost overruns
    that have plagued its past modernization efforts. Congressional
    oversight will be needed to encourage DOT to stay on track with these
    projects.
        Both DOT and the Congress face continued pressure to make decisions
    about the structure of the airline industry. Lack of competition in
    certain airports has led to poor service in some communities. The
    Aviation Investment and Reform Act for the 21st Century required that
    airports submit plans to DOT on how they will improve access for new
    entrant airlines; Congress may want to conduct oversight as this
    information becomes available. Proposed mergers, if they go forward,
    have the potential to result in a significantly different profile for
    the industry and will certainly affect its consumers. In making
    decisions about the mergers, consideration of the extent to which they
    improve or reduce access to service and affect airfares is of paramount
    importance.
        Finally, Congress will need to make decisions about Amtrak next
    year. Since Amtrak's ability to significantly reduce its need for
    operating subsidies next year is questionable, Congress will have to
    decide whether or how to continue to subsidize inter-city passenger
    rail. Amtrak also has significant capital needs that it will not be
    able to fund on its own.
                                pipeline safety
        Question. The Office of Pipeline Safety has tried to work
    constructively with pipeline companies and reduced the office's
    reliance on penalties. How have the pipeline companies' compliance with
    safety regulations been affected by this reduction in the use of fines?
    Has the risk-based, cooperative approach been successful?
        Answer. In May 2000, we reported that the Office of Pipeline Safety
    (OPS) had not assessed whether its new enforcement approach--
    dramatically reducing its use of fines and substituting letters of
    warning and letters of concern--has had a positive impact on safety. In
    addition, at the time of our review, OPS did not have the information
    (such as differentiating whether a letter of concern addressed a safety
    violation or communicated information on a best practice in the
    industry) needed for us to assess whether its cooperative approach
    improved pipeline safety. At that time, OPS was installing a data
    system to better track the results of its enforcement actions. We
    recommended that OPS assess the effectiveness of its new approach and
    it agreed to do so. We will continue to monitor whether the cooperative
    approach has had a positive impact on safety.
        Question. The Senate authorization bill that was passed on February
    8, 2001 increases the authorized levels for Federal pipeline safety
    efforts, state grants, and research and development. Do you feel that
    the focus on research and development is appropriate? What are the
    specific challenges to be met in the research program?
        Answer. We believe that the Office of Pipeline Safety (OPS) should
    focus its research and development activities on supporting its
    regulatory and enforcement activities and gaining the technical
    background that it needs to oversee the pipeline safety program. For
    example, in May 2000 we reported that OPS had difficulty quantifying
    benefits from its risk management demonstration program, but that it
    went ahead and broadened its use of this approach to pipeline safety
    without a thorough understanding of the benefits (and attendant risks)
    that might result. Research and development that would support
    quantifiable measures of the risk management program's impact on safety
    would be an example of a useful undertaking. Other examples, also drawn
    from our report, that would support OPS' regulatory and enforcement
    activities include developing (1) standards for conducting and
    reviewing internal inspections of pipelines and (2) criteria for
    reviewing the sufficiency of operators' integrity management plans.
           increasing competition in the airline and rail industries
        Question. The lack of effective competition has contributed to high
    fares and rates and poor service for some markets in both the
    commercial aviation and freight rail industries. What are the most
    important factors for the Department of Transportation and Congress to
    consider as they evaluate proposed mergers of airlines and railroads,
    or as they look at other measures that could enhance, or impede, access
    to competition?
        Answer. We and others have found that airfares to and from
    dominated airports (i.e., airports where one airline provides the
    majority of service) tend to be higher than those at nondominated
    airports. We have long reported that various operating and marketing
    barriers curtail the benefits of a deregulated airline industry by
    impeding market entry by new airlines that seek to initiate service in
    a given market (or, in the case of established airlines, expand their
    limited existing competing service).
        We recently reported on the potential effects of the proposed
    merger between United Airlines and US Airways, as well as American
    Airlines' proposed acquisition of the assets of Trans World Airways. If
    the mergers proceed as proposed, the merged airlines would decrease
    competition in hundreds of markets affecting millions of passengers,
    and create hundreds of new dominated markets as well. We also reported
    that the consummation of either of those mergers would likely trigger
    additional consolidation in the industry.
        We believe that these proposed mergers raise a number of important
    public policy issues for consideration. These include:
      --What barriers to market entry might the proposed mergers exert? The
            success of deregulation stems in part from competition spurred
            by the entry of new airlines. A January 2001 DOT report on
            exclusionary practices concluded that major airlines have the
            opportunity and the means to protect their market power by
            frustrating new entry. DOT found there had been instances in
            which incumbents drove new entrants out of markets by cutting
            fares and flooding the market with capacity. Once the new
            entrant was driven out of the market, the incumbent sought an
            increase in fares and reductions in service.
        If both the United-US Airways merger and American-TWA acquisition
    are consummated, new United and new American together would carry
    nearly half of all domestic air passengers. If this occurs, a key issue
    that policy makers may need to address is whether or not new low-cost
    carriers will be able to enter markets and compete. Because established
    carriers will control vast numbers of facilities (including slots and
    gates) at key airports, will those new carriers even be able to offer
    service in major markets? Will American's and United's sales and
    marketing efforts (such as their frequent flyer programs and code-
    sharing affiliations such as the Star Alliance and OneWorld) present
    barriers that are too great for new entrants to overcome? How
    effectively will those new carriers be able to compete if the American
    and United transactions spur additional consolidation in the industry,
    possibly raising entry barriers even higher?
      --Would the transactions between American and United alter how they
            would compete in key markets? The proposed United and American
            arrangements--including the agreements in which American would
            share the US Airways shuttle with United and compete in certain
            markets between United and US Airways hubs--raise questions
            regarding the extent to which the carriers may compete
            vigorously. Economic literature and empirical evidence indicate
            that when there are fewer firms in a market and those firms
            meet in many markets (e.g., city-pairs), they are likely to
            recognize their interdependence and compete less vigorously.
      --How might a consolidated industry affect service to small
            communities? The quality of air service to smaller communities
            and the fares that passengers in those communities pay relative
            to those paid in larger communities have been issues that the
            Congress has been concerned about for some time. At the same
            time, one of the benefits of airline mergers and alliances has
            been the ability of the larger carrier to provide online
            service to increased numbers of destinations. The airlines have
            also claimed that small communities would gain greater access
            to international markets through their global alliances.
            However, the mergers could erode service to many small
            communities where the merging airlines compete, even if the
            service provided is over different hubs. Would a more dispersed
            and competitive market structure offer better promise of
            providing affordable air access for small and medium sized
            communities to major business centers in the United States? How
            might the potential effect of industry consolidation on new
            entry affect small and medium sized communities?
        With regard to rail competition, we have not studied proposed
    railroad mergers or the statutory and regulatory scheme under which the
    Surface Transportation Board reviews and approves proposed mergers. The
    Board is currently considering changes to the approach that it uses to
    ensure that a merger is in the public interest and to assess the
    potential effects a merger could have on competition among rail
    carriers. In this respect, the Board is considering moving from a
    standard in which competition must be preserved to one in which
    competition must be enhanced.
        As a general rule, the overall expectations with respect to the
    public interest should include at least two concepts. First, what is
    the expected effect on shippers and consumers? As the rail industry
    continues to consolidate, rail carriers should not be allowed to
    exercise their market power to unreasonably raise rates, reduce
    service, or both to the detriment of shippers and consumers in general.
    Second, what is the expected effect on the railroad industry? Railroads
    need to have sufficient financial health to allow them to renew and
    replace infrastructure and maintain safe, reliable operations. Although
    the financial health of railroads has improved over the last 20 years,
    railroads are still not in good financial health and industry
    profitability frequently lags behind the cost of capital. This makes it
    difficult to attract the capital necessary to invest in infrastructure
    and other items required for maintaining and growing the business and
    providing the service needed and expected by shippers and others.
                           infrastructure investment
        Question. Both the Inspector General and GAO reports cite concerns
    with oversight and management of large-dollar highway, transit, and
    airport projects. TEA-21 requires that the Federal Transit
    Administration enter into a full funding grant agreement for new
    transit projects with a federal funding share above $25 million. The
    FFGA, as it's called, caps the federal share of the project, ensuring
    that even if the project goes over budget, the government will not bear
    additional costs. And the Federal Aviation Administration uses a
    somewhat similar mechanism, the Letter of Intent (LOI), to outline the
    federal share of an airport construction project. Do you believe that
    the Federal Highway Administration should have a similar tool--an FFGA
    or LOI--for high-dollar highway projects such as the Boston Central
    Artery, Woodrow Wilson Bridge, and the Cypress Freeway, capping the
    federal government's share?
        Answer. Our work on large transit and highway projects has made us
    aware of the advantages of the full funding grant agreement process on
    the transit side, which effectively caps the government's capital
    investment in a given project. Furthermore, the Federal Transit
    Administration's (FTA) increased scrutiny of a transit project
    sponsor's financial capacity and program management capability before
    it commits to a full funding grant agreement seems to be bearing good
    fruit. We recognize, however, that highway projects are planned and
    funded somewhat differently than transit projects. For example, states
    generally have a great deal of discretion over how federal dollars that
    are allocated to them by formula from the Highway Trust Fund are spent
    among the STIP projects. This limits the Federal Highway
    Administration's ability to cap the amount of federal dollars directed
    to any one project. However, as the Central Artery project so vividly
    demonstrates, this does not preclude the need for better planning,
    accurate cost projections, and good project management.
        Question. I understand that the Central Artery project is a 7-mile
    long road project that will cost in excess of $14 billion. Now, that's
    more than $2 billion per mile. Wouldn't you agree that we need to have
    some sort of cap to ensure that projects don't get out of hand and end
    up costing the taxpayers such an outrageous sum?
        Answer. The Central Artery project is by far the most expensive
    (about $14 billion) and most complex highway project in the country. As
    such, it has warranted special attention for many years. Our work on
    the Central Artery and other large dollar highway projects led us to
    recommend several years ago that state highway project managers submit
    finance plans for these projects to the Federal Highway Administration
    (FHWA). We suggested that these plans carefully discuss (1) how they
    are going to pay for a project, (2) the project's completion schedule,
    (3) how the project will affect the rest of the projects included in
    the state's STIP, and (4) contingencies. Finance plans are now being
    prepared and reviewed by FHWA for all highway projects that are
    expected to cost over $1 billion. In addition, FHWA is trying to use
    the latest (November 2000) Central Artery finance plan as a tool to
    limit the amount of federal dollars ($8.549 billion) to be spent on the
    project. As noted above, however, in most instances states have a lot
    of flexibility when deciding where to spend the federal highway trust
    fund dollars provided to them. Our earlier report on managing large
    dollar projects identified other steps that could be used to improve
    the management of these projects such as the early preparation of a
    comprehensive cost estimate and the systematic tracking of actual costs
    against these initial cost goals.
                                     amtrak
        Question. Amtrak says it is on the road to operational self-
    sufficiency. Do you agree? And what are the alternatives if Amtrak is
    unable to reach self-sufficiency in 2002?
        Answer. We are not optimistic that Amtrak can reach operational
    self-sufficiency. It has made relatively little progress so far: from
    1995 through 2000 it closed its budget gap by $83 million. In the next
    2 years it must reduce the gap by an additional $281 million. For the
    most part, Amtrak has been unable to meet its planned reductions in the
    budget gap. Most notably, it reduced the gap by $5 million in 2000,
    instead of by $114 million as planned.
        We believe that this is an opportune time for the Congress to begin
    to examine the future of Amtrak. In doing so, the Congress should
    systematically examine both the costs and the benefits of supporting
    Amtrak either in its current form as a national system or in a
    different form or not at all. Beginning this discussion now could lay a
    solid foundation for decisions that would need to be made if Amtrak
    does not reach its goal of achieving operational self-sufficiency by
    the end of 2002.
                            airline customer service
        Question. In discussions with the airlines, they have indicated
    that their goal in canceling or delaying flights is to inconvenience
    the fewest number of passengers--a notable goal. Unfortunately,
    cancellations and delays have become a normal part of every airlines'
    daily schedule and your own report shows that some flights are
    chronically delayed or regularly canceled. Accordingly, my sense is
    that airlines have too few aircraft available on any given day to fly
    their entire published schedule and accordingly they cancel or delay
    the flights with the lightest loads. Do you think a case can be made
    that airlines should not schedule more flights than what they can
    reasonable expect to fly under perfect conditions given their average
    equipment unavailability rate as evidenced by their incidence of
    chronic delays or cancellations?
        Answer. We are initiating work on the extent to which airlines
    contribute to the problems of congestion and delay. One factor that we
    will likely examine involves airline scheduling practices, including a
    consideration of equipment availability.
                               runway incursions
        Question. Runway incursions continued to rise significantly in 2000
    and reached a new high of 429 incidents. Why has the FAA not made
    progress in reducing runway incursions and what should they be doing to
    achieve a significant reduction on this serious safety issue?
        Answer. As our airports become more and more crowded, runway
    incursions will continue to rise unless we can significantly reduce the
    rate at which they currently occur. While many of these events may be
    only technical violations of runway areas, some represent close calls
    in which a catastrophe was narrowly averted.
        Over the past decade, the Federal Aviation Administration (FAA) has
    developed a number of promising plans to reduce runway incursions. The
    agency has relied on both technological and operational approaches to
    achieve their goal. The Airport Movement Area Safety System (AMASS)
    technology was developed to alert controllers and air crews to
    potential runway conflicts, but AMASS is behind schedule and it is
    unclear that it will prove as effective as originally hoped. FAA is now
    assessing the potential of newer technology. FAA has achieved some
    success through the use of ``tiger teams'' that target airports with
    high rates of incursions. It is probably too early to evaluate how
    long-lasting this success will be. Ultimately, however, we agree with
    DOT's Inspector General that the high rate of turnover in the
    management of runway safety programs, and the consequent lack of
    consistency and stability, has weakened the effectiveness of FAA's
    initiatives in this area.
                             atc operational errors
        Question. Operational errors, the errors made when air traffic
    controllers allow the distance between two aircraft to fall below FAA's
    minimum separation standards, have increased by 51 percent for 764 to
    1,154 from fiscal year 1996 to fiscal year 2000. Why has the FAA been
    unable to reduce these incidents?
        Answer. As is the case for runway incursions, operational errors
    will continue to rise at least as quickly as the number of aircraft
    operations unless the Federal Aviation Administration (FAA) is
    successful in reducing the current controller error rate.
    Unfortunately, this rate has been increasing in recent years. FAA's
    lack of success in this area has been attributed to a number of
    factors, most of them stemming from a lack of firm management of
    regional activities from FAA's headquarters that requires detailed
    regional improvement plans, evidence of follow-through, and regional
    accountability for error rates.
        Recently announced changes in air traffic control management, if
    implemented prudently, may help alleviate the problem. Working jointly
    with the National Air Traffic Controllers Association, FAA is beginning
    a program to better determine the safety risk posed by individual
    errors, identify their root causes, and take necessary action to avoid
    them in the future. The National Transportation Safety Board, however,
    has expressed concern that this program could result in a lessening of
    safety standards.
        Several factors combine to make FAA's challenge to improve
    controller error rate even more difficult. A disproportionate number of
    experienced air traffic controllers are expected to be lost through
    retirement over the next few years. In response, FAA has committed to
    decreasing the number of operational supervisors and instead
    designating ``controllers-in charge'' at many facilities. As air
    traffic and the consequent pressure to minimize delays intensify, FAA
    must try to keep aircraft at minimum separation distances without
    jeopardizing safety. As FAA attempts to respond with a more efficient
    and productive controller workforce, the performance of its new
    programs must be constantly monitored by their record in reducing
    operational errors.
                               faa reorganization
        Question. What actions will make the most difference in avoiding
    cost overruns and delays associated with modernizing the nation's air
    traffic control system? Will the creation of a Performance-Based
    Organization, as envisioned in a December 2000 executive order, be a
    step in the right direction?
        Answer. Over the years, we have pinpointed some of the root causes
    of the cost overruns and delays associated with the Federal Aviation
    Administration's (FAA) modernization program, and made recommendations
    to address these root causes. FAA has taken some action in response to
    our initiatives. For example, in response to a recommendation that the
    agency improve its software acquisition capabilities, FAA has taken
    action to improve its software acquisition, software development, and
    systems engineering processes. However, FAA does not yet require all
    systems to achieve a minimum level of software process maturity before
    being funded. Likewise, in response to our finding that FAA's
    organizational culture impaired its acquisition process, the agency
    developed an organizational culture framework in 1997 and is working to
    implement it. However, both we and DOT's Inspector General recently
    reported that FAA's organizational culture remained a barrier to
    successful acquisition projects. The challenge for FAA is to fully
    implement the recommendations so that it can modernize the system to
    meet the growing demands for air service.
        A new organizational structure, as would be envisioned by the
    creation of a performance-based organization for air traffic services,
    is one option for improving the air traffic control (ATC) system. Among
    the stated goals of the new organization are improvement of the
    efficiency of the ATC system and acceleration of the modernization of
    the system. The new organization would have flexibility in the
    procurement and personnel area and would be managed by a chief
    operating officer, who would be held accountable for achieving specific
    measurable goals. The new organization would also continue efforts
    underway to increase customer focus. These are laudable goals. However,
    it is important to recognize that the creation of a new organization,
    in and of itself, does not assure success. The new organization will
    likely face some of the same challenges faced by FAA. Presumably,
    incentives that would be available through the new structure will play
    a role in helping FAA to improve its performance and achieve desired
    results.
                              faa security issues
        Question. Your report last year and your testimony today point out
    continuing problems with the effectiveness of airport screening
    checkpoints. Is FAA's response to your recommendations likely to
    address these problems?
        Answer. The Federal Aviation Administration (FAA) has a number of
    efforts to address the problems with the effectiveness of airport
    screening checkpoints. These include (1) a computer-based training
    program to improve screener skills, (2) a Threat Image Projection
    System that tests screeners as well as helps keep them alert, and (3) a
    screening company certification program to raise screener standards
    that could potentially increase screener pay and reduce turnover. These
    efforts could achieve the needed improvements in screener performance
    in detecting dangerous objects. However, we found that the
    implementation of these efforts was behind schedule and that FAA did
    not have an effective means to manage them.
        Our recommendations focused on two areas of FAA's management of its
    efforts to improve screening. The first area was FAA's lack of an
    integrated plan that ties together its various initiatives for
    improving screeners' performance, and the second area was an inadequate
    system for measuring progress in achieving performance improvement
    goals. FAA has implemented our recommendations by issuing an integrated
    checkpoint screening management plan and by revising its measurement
    goals. Together, these actions will provide a method for the agency and
    others to examine and evaluate screening improvement actions,
    timetables, funding, and progress, and will help the agency to better
    ensure that it is successfully addressing the problems at screening
    checkpoints.
        Question. What are the most significant weaknesses in FAA's
    computer security program and what steps are still necessary to address
    these weaknesses?
        Answer. In September 2000, we reported on serious and pervasive
    problems in the Federal Aviation Administration's (FAA) computer
    security program. Specifically, we noted that in the area of personnel
    security, FAA was working to complete background searches on thousands
    of its contractor employees, but much remained to be done. Also, in the
    area of facilities' physical security, FAA was not yet in compliance
    with its own policy requiring that all air traffic control (ATC)
    facilities be assessed and accredited as secure. Further, in the area
    of systems security, FAA did not know how vulnerable the majority of
    its operational ATC systems were and could not adequately protect them
    until it performed the appropriate risk assessments and addressed
    identified weaknesses. We also reported that FAA's efforts to ensure
    that computer operations continue without interruption were limited and
    that FAA had not yet fully implemented an intrusion detection
    capability that would enable it to quickly detect and respond to
    malicious intrusions.
        In December 2000, we made recommendations to address these
    weaknesses. These recommendations included suggestions to
      --complete the required background searches of contractor employees;
      --complete facilities assessments, perform corrective actions on any
            weaknesses identified, and accredit the facilities;
      --complete assessments of all operational air traffic control
            systems, address weaknesses, and accredit these systems; and
      --increase efforts to establish a fully operational computer security
            and intrusion response capability that allows for the
            detection, analysis, and reporting of all computer systems
            security incidents promptly.
        DOT and FAA officials agreed with our recommendations and reported
    that they are working to implement them. We will continue to monitor
    FAA's efforts to address its computer security weaknesses.
                                aviation safety
        Question. Your testimony explains that DOT did not meet the 4 goals
    established for improving aviation safety in the United States.
    Nevertheless, GAO's recent report on Safer Skies, the FAA's joint
    effort with industry to identify and fix threats to aviation safety,
    was critical of the program. Why is it your view that Safer Skies is
    insufficient for improving aviation safety?
        Answer. Our report supports the systematic, data-driven approach to
    enhancing aviation safety that Safer Skies represents, and we concluded
    that the Safer Skies program can be expected to further reduce the
    already low accident rate. However, we identified some areas where we
    believe Safer Skies could be improved. For example, we recommended that
    FAA:
      --set up more formal procedures to ensure that the program's
            recommendations are actually implemented and their
            effectiveness is evaluated;
      --consider setting a more challenging goal for general aviation
            safety (commercial aviation's long term goal is an 80 percent
            reduction in fatal accidents; general aviation's goal is much
            less ambitious, and was, in fact, achieved last year);
      --base its safety priorities not purely on past accidents, but
            consider how current and future changes to the air
            transportation system (like congestion, delays, or increased
            automation) may pose new safety threats.
                                     ______

                  Questions Submitted by Senator Patty Murray

                            classification of spills
        Question. Gentlemen, both of your agencies have been critical of
    the manner in which OPS classifies the causes of pipeline accidents. Do
    either of you believe that the OPS' current system for identifying the
    causes of pipeline accidents is effective in providing the information
    we need to help decrease spills and ruptures?
        Answer. The information that the Office of Pipeline Safety (OPS)
    currently collects is not sufficiently detailed to help it identify
    causes of spills and ruptures and assess where to put its efforts in
    improving pipeline safety. We did not make recommendations in this area
    in our May 2000 report because the Inspector General had already done
    so in its March 2000 report on OPS activities and because OPS was
    beginning to use new forms to collect more detailed information on the
    causes of pipeline spills and ruptures.
                    implementation of congressional mandates
        Question. One very troubling aspect of improving pipeline safety is
    OPS' failure to implement Congressional mandates. Until very recently,
    OPS had not issued requirements dating back as far as 1992. Both of
    your reports were critical of this inaction on the part of OPS.
    Considering OPS' recent issuing of some outstanding rules, do you think
    OPS is turning over a new leaf?
        Answer. We reported in May 2000 that the Office of Pipeline Safety
    (OPS) had not completed action on 22 congressional directives. Through
    mid-February 2001, OPS has issued final rules in response to two
    congressional directives (emergency flow restriction devices and
    underwater abandoned pipeline facilities) and made significant progress
    on three others (reporting requirements for pipeline operators,
    criteria for identifying high-density population areas and areas that
    are environmentally sensitive to damage from pipeline accidents, and
    requirements for internal inspections of pipelines).
        Actions remain uncompleted on 10 other congressional directives.
    For example, OPS has not completed a 1992 requirement to develop an
    approach for regulating gathering lines, nor has the agency addressed
    the use of remotely controlled valves as required in 1996.
        Finally, OPS did not complete actions on the 7 remaining
    directives, but considers them closed and will take no further action
    on them. In OPS' view, actions on these 7 requirements are unnecessary
    because:
      --the requirements were superseded by other legislative changes or
            were duplicative of other requirements (5 requirements),
      --the requirement to issue a biennial report has expired (1
            requirement), or
      --issuing a report on underwater abandoned pipeline facilities is no
            longer needed because OPS had issued final rules in that area
            (1 requirement).
        While OPS is making some progress, we believe that continued
    congressional oversight would be worthwhile to ensure that all
    congressional mandates are completed in a timely fashion.
        Question. Is there anything you'd suggest we do in Congress to
    ensure that they continue to implement overdue as well as new pipeline
    safety requirements?
        Answer. The Office of Pipeline Safety (OPS) appears to be making
    some progress in implementing legislative requirements. At least some
    of this progress can be attributed to increased congressional attention
    on OPS' activities since 1999. Continued congressional oversight in
    this area would be beneficial to help improve pipeline safety.
                    growing cost of coast guard procurements
        Question. Gentlemen, both of your agencies reported concerns
    regarding Coast Guard procurements and the agency's plan to replace its
    vessels and aircraft. I know we all agree that the replacement of these
    assets is critical to the Coast Guard's ability to execute its many
    essential missions. Mr. Anderson, your report specifically criticized
    the Coast Guard's procurement strategy for the ``Deepwater Project''.
    You stated, ``There are no models in the federal government to guide
    the Coast Guard in developing its acquisition strategy for this
    approach.'' Given the trouble that the Coast Guard has had in the past
    in procuring helicopters and ships, do you believe the Coast Guard is
    giving enough attention to your recommendations in this area?
        Answer. We have worked with the Coast Guard to mitigate risks in
    the Deepwater Project. As part of our current review, we have
    identified risks in four key areas: (1) the affordability of the
    project, (2) the ability of the Coast Guard to obtain fair and
    reasonable prices and performance improvements in a sole-source non-
    competitive environment, (3) management issues related to overseeing
    the contractor, and (4) risks associated with the development of new
    technology. We believe that attention is needed to mitigate the risks
    in each of the four areas.
        1. Last year, the Office of Management and Budget (OMB) indicated
    that the Coast Guard should plan on receiving about $550 million a year
    for its entire budget for capital spending between fiscal years 2002-
    2006, or the amount of funds that would be needed to fund Deepwater
    alone. If this is the case, the Coast Guard will experience a
    substantial funding shortfall, particularly from 2003 and beyond. Such
    a scenario means that (1) the Coast Guard's plans for the Deepwater
    Project cannot be executed as planned or (2) the Coast Guard will need
    to eliminate other capital projects.
        We believe that the Coast Guard may need to develop its funding
    plan for the Deepwater Project based on budget targets promulgated by
    OMB rather than notional numbers that will not likely be approved. To
    do so, improvements are needed in the Coast Guard's capital planning
    process. Currently, the Coast Guard's five-year capital plan shows that
    the Coast Guard only includes about $75 million for the Deepwater
    Project in fiscal years 2002-2006. Prioritizing projects within
    existing budget limits should provide a more realistic view of what is
    affordable for the Deepwater Project.
        2. Any contracting strategy will have risks, and in this regard,
    the Coast Guard's strategy is no different. The Coast Guard's strategy
    involves contracting with a single company to replace or upgrade eight
    classes of deepwater ships and aircraft for as long as the next 20 or
    more years. In doing so, the Coast Guard must mitigate a major risk of
    dealing with the same contractor in a sole-source environment for this
    extended period of time. Put simply, the Coast Guard faces a higher
    risk of cost overruns and performance shortfalls with the potential
    absence of downstream competition. In September 2000, we discussed our
    concerns with Coast Guard managers about the lack of downstream
    competition in the approach it had selected. We suggested that the
    Coast Guard conduct a peer review to evaluate ways to mitigate risks
    associated with their approach because it was unique and had never been
    tried before. As of February 2001, the Coast Guard is still developing
    plans for the peer review. The agency has had a consultant review
    alternative contracting strategies and the consultant endorsed the
    Coast Guard's approach. We believe that any comments or concerns raised
    by a peer review should be addressed before the Coast Guard issues its
    Request for Proposal in May 2001.
        The Coast Guard recognizes the potential lack of downstream
    competition as a potential weakness in its approach and plans to use
    financial incentives as a way to mitigate this problem. Despite this
    mitigation strategy, we remain concerned because even with financial
    incentives, there is no guarantee that competition will occur. Unless
    competition is a requirement for extending the contract award, many
    experts view incentives as a secondary means of encouraging
    competition.
        3. Managing performance of the contractor will be a critical factor
    in the success of the Deepwater Project. The Coast Guard will need to
    pay attention to developing good relations with suppliers. In one of
    our earlier reviews on DOD acquisition practices, we showed that how
    DOD managed suppliers was a key element in the success of a project
    (see GAO/NSIAD-98-87). Effectively dealing with suppliers provides key
    benefits to the success of a project. The Coast Guard should have
    detailed plans on how it plans to develop, maintain, and foster
    effective supplier relations. Furthermore, the Coast Guard should have
    a detailed plan for training staff, maintaining staff with key
    expertise in acquisition and technical areas, and aligning the
    expertise with the program needs of the Deepwater Project (see GAO/GGD/
    NSIAD-00-120).
        4. Our prior work on DOD acquisition projects show that the
    development of new technology is the single greatest source of problems
    in major acquisition projects. The Coast Guard has taken this lesson to
    heart and has emphasized the use of commercial-off-the-shelf technology
    to minimize cost growth and schedule delays. A key will be to continue
    this emphasis and to evaluate the maturity of key technologies before
    the Coast Guard plans to procure them. Currently, the Coast Guard does
    not have objective criteria in place to conduct such an evaluation and
    we believe that this would be a useful tool to have.
           can amtrak survive with the current levels of investment?
        Question. Mr. Anderson, your report is particularly critical of
    Amtrak's efforts to wean itself of a federal operating subsidy. You
    point out that Amtrak still has a long way to go toward meeting its
    goal of operating self-sufficiently by the year 2003 as required in the
    Amtrak Reform Act. Given the fact that no other national railroad in
    the world operates without a federal operating subsidy, do you think it
    was reasonable for us to put this requirement in the Amtrak Reform Act?
        Answer. The requirement probably had some positive effect because
    it has created an incentive for Amtrak to be more entrepreneurial.
    Amtrak has worked diligently recently to find ways to increase
    revenues. It is now turning its attention to exploring ways to manage
    expenses. In this respect the operational self-sufficiency requirement
    has benefited both Amtrak and the American taxpayer.
        However, Amtrak was created because railroads could not make a
    profit from their passenger train operations. The operational self-
    sufficiency requirement may be asking Amtrak to achieve something that
    was viewed as unachievable in the decade before it was created. We
    believe that the time is right for the Congress to begin to assess the
    benefits to the public and to the national transportation system of
    Amtrak, intercity passenger rail, and high-speed rail. This would
    include whether and how continuing having a national network is in the
    public interest and the level of federal financial and other support
    that such a system would require.
        Question. Has the Reform Act had a positive effect in getting
    Amtrak to get its costs under control?
        Answer. In 1999 we reported on three of the act's reforms aimed at
    improving Amtrak's financial condition: (1) elimination of existing
    labor protection arrangements that provided for up to 6 years of
    compensation for employees who lost their job because of route
    discontinuance and required negotiation over new arrangements; (2)
    repeal of a statutory ban on contracting out work that would lead to
    layoffs; and (3) placing a $200 million cap on the aggregate amount
    that Amtrak and others must pay rail passengers for all claims
    resulting from a single accident. We concluded that the act would have
    little impact in the short term, but could provide flexibility in
    Amtrak's ability to control costs.
        We have not studied this issue since that time. However, at least
    in the area of labor protection we do not believe our conclusion would
    change. This is because Amtrak plans to expand its route network.
    Because providing new service could lead to employment increases,
    rather than decreases, labor protection arrangements would be unlikely
    to be triggered in any major way. Finally, Amtrak's emphasis in recent
    years has been on increasing revenues (such as through its network
    growth strategy and introducing Acela high-speed service), rather than
    controlling expenses. According to Amtrak, its Strategic Business Plan
    released in February 2001 places greater emphasis on controlling
    expenses.
        Question. Do you believe it will be in the national interest to
    liquidate Amtrak if it does not reach its goal by 2003?
        Answer. We believe that this question should be preceded by an
    understanding of the benefits, if any, to the public and to the
    national transportation system that accrue from federal investments in
    Amtrak and intercity passenger rail. Once those benefits are firmly
    understood, the Congress can determine whether continuing investments
    in Amtrak and high-speed passenger rail are in the national interest
    and whether the intercity passenger rail system should be national in
    scope.
        Question. Do you believe, given the increasing delays that aviation
    passengers are experiencing because of an overburdened air traffic
    control system, that we need to give careful consideration to the
    elimination of Amtrak service because of its failure to meet this goal?
        Answer. The question might otherwise be posed ``in what
    circumstances might Amtrak contribute to reducing congestion, including
    at airports?'' The answer might be different where Amtrak is time-
    competitive with air lines (such as along the Northeast Corridor) than
    for other situations, such as longer-distance travel. Amtrak is not
    time-competitive for longer-distance travel and thus might not be
    expected to affect airport congestion for this type of travel. For
    example, the scheduled travel time between Chicago and Washington, D.C.
    is 18 hours for Amtrak and 2 hours by airplane. In summary, decisions
    on the role of intercity passenger rail should be guided by careful
    assessments of the degree to which intercity passenger rail provides
    public benefits and enhances our national transportation system and in
    what circumstances these might occur.
        Question. Do you believe Amtrak's lack of progress in closing its
    budget gap is a reflection of poor management or a reflection of the
    difficulty of the task?
        Answer. We have not assessed Amtrak's overall strategies to attempt
    to close its budget gap. Therefore, we cannot comment on whether its
    strategies were appropriately conceived and carried out. However, we
    believe the task given to Amtrak to become operationally self-
    sufficient was difficult, particularly in light of Amtrak's legislative
    mandate to operate a national system that ties together existing and
    emerging regional rail passenger service.
        There are at least two reasons for the difficulty of the mandate.
    First, Amtrak is not and will never be competitive with airlines over
    longer distances. For example, the scheduled travel time between
    Chicago and Washington, D.C. is 18 hours for Amtrak and 2 hours by air.
    Therefore, if Amtrak continues to operate a route structure similar to
    the one it operates today, it will continue to lose large amounts of
    money on many of those routes. Second, Amtrak, like any other railroad,
    is a capital-intensive business. Capital investments are needed to
    establish safe, reliable, and comfortable travel that will attract and
    retain riders. However, Amtrak has not been able to acquire the capital
    needed to meet its capital investment needs. In May 2000, we reported
    that Amtrak has estimated that it needs at least $9 billion (in 1999
    dollars) through 2015 to meet its capital needs.
                    delays in certifying new boeing products
        Question. Gentlemen, you have both been critical of the FAA's
    ability to develop a cost accounting system that accurately captures
    what the agency is spending on each of its functions. My state is home
    to Boeing, which manufactures many state-of-the-art products in
    aviation. Each of these new products must be certified by the FAA. For
    several years, the FAA Administrator has had to raid the funding of the
    certification office to make up for funding shortfalls in other
    offices. As a result, companies like Boeing have had to endure longer
    and longer delays in getting their products to the market. This past
    year, in order to put an end to that practice, the appropriations bill
    made it impossible for the FAA Administrator to shift funds out of the
    certification office. In fact, it prohibited the Administrator from
    shifting funds between the sub-accounts in her operations budget. Given
    the status of the FAA's cost accounting system, what confidence should
    we have in the accuracy of the budget estimates that are submitted to
    this subcommittee?
        Answer. To the extent that historical cost information is used to
    help prepare the Federal Aviation Administration's (FAA) budget
    estimates, if that information does not come from an accounting system
    that appropriately accounts for costs, those budget estimates may be
    unreliable. For example, in the absence of an effective system to
    allocate labor costs by activity, labor costs charged to an
    appropriation account may be inaccurate. At this time, the accuracy of
    FAA's costs is uncertain because FAA's cost accounting system is still
    in the process of implementation.
        When implemented, FAA's cost accounting system is expected to
    provide a number of benefits including the ability to link its costs
    with programs and projects. Information about the cost of program
    activities can also be used as a basis to help estimate future costs
    both in preparing and reviewing budgets.
        Question. Do you believe the FAA's new cost accounting system is
    progressing to the point where we can accurately know precisely what
    amount is spent on certification of new aviation products each year?
        Answer. Although the Federal Aviation Administration (FAA) has
    begun implementing portions of its cost accounting system, so far these
    have been focused on Air Traffic Services. Therefore, the system cannot
    currently be used to help determine what amount is spent on the
    certification of new aviation products each year.
        FAA's core cost accounting system is not expected to be fully in
    place until the end of fiscal year 2002 and a related labor cost
    distribution system is expected to be in place in July 2003. Until
    these systems are in place, FAA will be limited in its ability to
    determine the costs of certifications and its programs and services.
        Question. Do you believe the Committee took the appropriate step in
    prohibiting the FAA Administrator from shifting funds between her
    operations sub-accounts?
        Answer. In fiscal year 2001, Congress included nine organization-
    specific line-item appropriations (``buckets'') within the Federal
    Aviation Administration's (FAA) operations appropriation. Thus, the
    Administrator would need statutory authority to transfer funds among
    the nine organization-specific line items in the fiscal year 2001
    appropriation. In the past, the Administrator was given a lump sum
    appropriation for operations which gave FAA greater flexibility to
    shift funds--below a specified percentage limitation--among the nine
    organizations to meet new or changing priorities. The process for
    shifting funds above the percentage limitation--through a formal
    congressional notification procedure--was much less arduous than the
    requirements that must be satisfied for affecting a transfer.
        The fiscal year 2001 appropriations language could have several
    consequences. For example, if a new requirement arose in FAA's
    certification office, the Administrator would have to either fund the
    new requirement by taking funds from other areas within that office or
    delay funding the new requirement. Either action could have an impact
    on that office's ability to provide services to aviation manufacturers.
    FAA has indicated that the agency has delayed funding a new requirement
    in fiscal year 2001 for additional safety staff for the certification
    office. On the other hand, the new statutory language serves to impose
    additional fiscal discipline on FAA's operations and keep them within
    congressional earmarks that had been previously set forth in committee
    and conference reports.
                      vulnerabilities in airport security
        Question. Mr. Anderson, your report speaks to the fact that our
    aviation system is vulnerable to terrorist attacks. This is, in part,
    because the screeners at the airport security checkpoints are quite
    ineffective. I was surprised to see the very high turnover rate of the
    screeners at the airports. At SEA-TAC airport, the turnover rate is 140
    percent per year, meaning that the entire workforce turns over almost
    one and a half times per year. Isn't the high turnover rate among
    security personnel at these airports attributable to the very low wages
    that these screeners are paid by the airports?
        Answer. The simple answer to this question is yes. Virtually all
    sectors of the aviation security community--from FAA to the screeners
    themselves--state that low wages is a primary reason for the high rates
    of turnover. Screeners across the country told us that they could not
    adequately support themselves or a family on the wages they received--
    often at or just above minimum wage. For the most part, they viewed
    screening as an entry-level position and did not intend to stay with
    their screening position.
        However, there are other factors that can also affect screener
    turnover. These include the stress of the job (from dealing with a
    sometimes hostile public) and the boredom associated with the
    repetitive nature of screening work. Additionally, the locations of
    airports are often difficult to get to, particularly for those that
    must rely on public transportation.
        Question. You pointed out that the FAA is two years behind schedule
    in issuing regulations requiring the certification of screening
    companies. Do you believe that the certification process for these
    screening companies, once it is established, will be sufficiently
    rigorous to improve the accuracy of the screeners at the airports and
    bring down the turnover rate?
        Answer. Since this program has not yet been finalized, my answer to
    this question must be based on the planned screening company
    certification program FAA has detailed in its proposed notice of
    rulemaking. On this basis, it appears that the program can be
    sufficiently rigorous to improve the accuracy of screeners. The notice
    of rulemaking calls for the establishment of screening company
    performance standards that must be met for companies to maintain
    certification and consequently remain in this business. This type of
    rigor has not existed before and appears to be a viable method to
    attaining improved screener accuracy. This program may in turn require
    screening companies to raise wages in order to attract and retain
    individuals with the skills needed to perform at higher levels.
        While this approach is promising, the final program has not yet
    been established. A key factor will be the establishment of strong
    performance standards and the level to which FAA attempts to ``raise
    the bar'' of screener performance. Another factor will be FAA's
    enforcement policy if and when companies fail to meet standards.
    Finally, it remains to be seen if screening companies are willing or
    able to raise wages to attract and retain highly capable individuals.
    In short, because it is still in the development phase, many
    uncertainties remain regarding the ultimate impact and rigor of the
    screening company certification program.
        Question. Should a high turnover rate be an automatic disqualifying
    criteria for a security company seeking certification from the FAA?
        Answer. We do not believe that a high turnover rate should be an
    automatic disqualifying criteria for companies seeking certification.
    In our view, the key test of a screening company is how well the
    company performs in detecting dangerous objects and preventing them
    from being brought into secure areas of airports and onto aircraft. The
    Federal Aviation Administration's approach of setting a performance
    standard appears to be an appropriate method to achieve the goal of
    improving airport screening. The turnover rate may be a factor that
    causes poor factors. Moreover, some turnover may be out of the
    screening companies' performance in detecting dangerous objects, but it
    is only one of many control (such as when individuals find the work
    either stressful or boring). Lastly, an automatic disqualification for
    high turnover could have an adverse impact. Concern over turnover rates
    could put screening companies in the position of having to retain
    poorly performing individuals--instead of terminating them--in order to
    stay below turnover levels that are deemed ``high.''
                           declining rail competition
        Question. Mr. Anderson, I have often heard complaints from the
    farmers throughout my state regarding the high rates they must pay for
    rail service to bring their products to market. Your report points out
    that continued consolidation of the railroad industry has reduced the
    number of Class I railroads from 30 to just 7. You also point out that,
    ``Because of the divergent views of railroads and shippers, resolving
    service and competition issues will be difficult and may require
    congressional action.'' What specific congressional remedies do you
    believe would serve to improve competition between the freight
    railroads and bring the rail rates down for isolated farm communities?
        Answer. This is a difficult question that could be fully explored
    when the Congress considers reauthorizing the Surface Transportation
    Board. In this regard, the Staggers Rail Act made it federal policy for
    railroads to rely on competition and the demand for service to
    establish transportation rates. Under this policy, shippers with less
    effective transportation alternatives pay a higher proportion of a
    railroad's fixed costs than those with more effective competitive
    alternatives (this is called ``differential pricing''). Under this
    approach, shippers with fewer transportation alternatives could be
    expected to pay more to transport their products by rail than shippers
    with more transportation alternatives. The Staggers Rail Act is widely
    viewed as contributing to improving railroads' financial health and
    competitiveness. However, many shippers are unsatisfied with the rates
    that they pay, particularly in view of the poor service quality
    attributed to railroads.
        Actions have been taken by railroads and the Surface Transportation
    Board to address service problems. Railroad actions have included
    decentralizing railroad operations, creating service centers better
    equipped to handle customer problems, and making capital investments
    designed to improve infrastructure and expand capacity. Board actions
    have included working with the U.S. Department of Agriculture to create
    a Grain Logistics Task Force to better identify grain transportation
    requirements. In December 1998, the Board also adopted new procedures
    providing expedited temporary relief from serious service problems,
    through service by an alternative carrier. These expedited procedures
    do not require a showing that the rail carrier has engaged in anti-
    competitive conduct. Since a number of these actions were only taken
    recently, it may be too early to determine how, if at all, these
    changes may affect competition and service levels in the rail industry
    and whether specific congressional actions are needed.
        Finally, some recent rail mergers are still in the process of being
    implemented. According to Board officials, it can take up to 5 years to
    fully implement a merger and for benefits to start being achieved.
    Since the recent wave of rail mergers began around 1995-96, we are just
    now at the point where benefits should start accruing. Again, it may be
    too early to determine how these mergers might ultimately affect rates,
    service, and competition and whether specific congressional actions are
    needed.
        Question. Are you optimistic that the measures taken to date by the
    Surface Transportation Board will have a demonstrable effect on the
    rates that are being paid by farming communities around the country?
        Answer. We have not reviewed measures taken by the Board to
    determine their effectiveness in addressing such issues as rates and/or
    service in the rail industry. We note that some of the Board's actions
    and measures were taken only recently and may not have had time to show
    an effect.
        As we reported in April 1999, in general, rail rates have decreased
    since 1990, including rates for farm products. However, not all rail
    rates changed the same way and to the same extent. The specific rates
    charged to transport commodities are dependent on a variety of factors.
    This includes the competitive environment within which rates are set.
    As we discussed in this report, railroads use differential pricing to
    set rates. Differential pricing is a means by which railroads set rates
    reflecting the demand characteristics of shippers, with the result that
    shippers with similar cost characteristics (such as the number of
    railcars to be shipped or length of haul to destination) can pay
    different rates.
        The Congress envisioned differential pricing as benefiting both
    railroads and shippers. Railroads were expected to benefit from gaining
    the pricing flexibility to retain or attract shippers that would
    otherwise choose other transportation modes. Those shippers with
    competitive alternatives were expected to benefit from lower rail
    rates. Shippers without competitive alternatives were also expected to
    benefit. In theory, these shippers would pay less than if competitive
    traffic were diverted to an alternative transportation mode, thus
    leaving those shippers without alternatives to bear the unattributable
    costs previously assigned to the diverted traffic. The Congress
    expected that the transition to differential pricing and a more market-
    oriented system would not affect all shippers equally because, in
    general, transportation characteristics and market conditions vary
    among commodities.

                              subcommittee recess

        Senator Shelby. This hearing is recessed. We will send
    notices around and notify members of the next subcommittee
    hearing. Thank you.
        [Whereupon, at 3:20 p.m., Wednesday, February 14, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                            THURSDAY, MARCH 15, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:03 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Richard C. Shelby (chairman)
    presiding.
        Present: Senators Shelby, Murray, and Specter.

                                  FREIGHT RAIL

    STATEMENT OF HON. PERRY DOZIER, STATE PRESIDENT,
                WASHINGTON ASSOCIATION OF WHEAT GROWERS

                 OPENING STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. After holding a number of hearings on the
    commercial airline industry, and the first hearing on the
    freight rail industry this past year, it is fair to say that I
    am very interested in competition. I am a staunch advocate for
    deregulation. Accordingly, I have an unrelenting faith that
    free markets, through the pricing mechanism, will bring about
    the optimal allocation resources, and maximize economic growth.
        These benefits will not be realized, however, without
    robust competition. That is why I believe the transportation
    system, not to mention our economy as a whole, is best served
    by rigorous and frequent inspection of the competitive nature
    of various transportation industries, with a vigilant pursuit
    of policies that promote competition.
        Deregulation will not succeed without healthy competition
    between the carriers. Without competition, firms lose
    innovation and dynamism, and instead become preoccupied with
    protecting what they have, maximizing revenues from customers
    without improving service, and often seeking regulatory
    blessing to further isolate them from competitive pressures.
    This is not competition. That, my friends, is the sign of an
    industry in decay.
        Transportation services are too vital to the American
    economy, to the American way of life, to our quality of life,
    to our national security, and to our international
    competitiveness to allow our transportation industries and
    infrastructure to stagnate and to deteriorate.
        Most, if not all, of legislation that becomes law reflects
    compromise that is inherent to the American system of
    government. Consequently, many efforts to deregulate end up
    only partially deregulating in the industry. There are numerous
    examples of this, the airlines, savings and loans, and more
    recently, electricity in California.
        The problem is that deregulating part, but not all, of the
    market does not bring all the benefits of a free market, and,
    therefore, does not necessarily make things better for
    consumers. So it is for freight rail.
        It is clear that the Staggers Act has not beneffited some
    shippers, the captive ones, who have fewer transportation
    options, or lack genuine rail-to-rail competition. Sometimes it
    is as important to assure adequate competition as it is to
    pursue deregulation.
        That is one of the reasons I wanted to have this hearing on
    rail competition and mobility today. Although, I understand and
    appreciate that the ability to engage in differential pricing
    is important to the rail industry's financial health, I would
    like to better understand why the rail industry feels that it
    needs to keep so many of its customers hostage to a single
    railroad in order to engage in differential pricing.
        Like the railroads, companies in other industries engage in
    differential pricing, and consider it critical to success, and,
    again, like the railroads, companies in these other industries
    are characterized by a high proportion of fixed and capital
    costs. Movie theaters charge less for matinees than for evening
    showings, and give discounts to children and senior citizens.
        Phone companies offer long-distance service at different
    rates, depending on time of day or customer monthly call
    volume.
        Hotel rates vary for weekends and weekend stays, and for
    high-demand events, such as the Super Bowl, or other
    conventions.
        Unlike the railroads, however, companies in these other
    industries compete with each other. They are not allowed by the
    Federal government to maintain monopoly control over particular
    customers. Companies, and some of the other industries I
    mentioned, thrive in competitive markets, so I do not believe
    that free and open competition will undermine the ability of
    railroads to charge differential rates, but competition will
    ensure that the optimal level of rates is achieved, a rate that
    raises sufficient revenue to continue capital investment
    programs and provides efficient service to its customers.
        I also want to better understand why a shipper who orders a
    unit train of chemicals has to talk with a, quote, ``chemical
    salesman'' from a railroad, while if the same shipper wants to
    ship a unit train of milk, or molasses, or grain, he has to
    talk with a salesman for that product and pay a different rate,
    even if the entire shipment is headed to roughly the same
    location.
        I think the reason is that railroads compete with other
    modes of transportation, but the railroads do not compete with
    each other. This practice has the result of alienating
    customers, focusing the salesman more on maximizing revenues
    than that on servicing customers, and discouraging cost
    efficiencies within the railroad.
        The problem is not that railroads have an incentive to
    antagonize or gouge some of their customers, but rather that
    the railroads lack an incentive not to antagonize or gouge some
    of their customers. That comes from not enough competition
    between the railroads.
        When each of the railroad companies testifying here today
    came to the Hill to quell opposition to the individual mergers,
    they stressed the resulting service improvements that would
    come from each merger. In fact, at one of the first hearings as
    subcommittee Chairman in this very room, the Norfolk Southern
    Chairman and CEO, David Goode, testified that the proposed CSX/
    Norfolk Southern buyout of Conrail was, quote, ``A pro
    competitive proposal that would bring the benefits of better
    service to shippers throughout the United States, and that
    there will be a blossoming of competition, the likes of which
    the Northeast has not experienced in decades.''
        I hate to break the bad news, but I am not hearing from any
    shippers about how services improved or how overwhelmed they
    are with the competitive alternative. Neither have I heard of
    any new service awards that have been presented to the
    railroads, nor any management consultant firms touting railroad
    customer service practices as a model to improve any other
    industry, except maybe the airlines.
        In some ways, the railroads and the airlines are uniquely
    similar. They both have substantial, if not insurmountable
    barriers to entry for new competitors. They have both moved
    from rate regulation to an economically deregulated
    environment.
        Both industries are currently more focused on merging and
    expanding their network franchises. Both are increasingly
    focused on maximizing revenues from customers, rather than
    working with customers to meet and grow their businesses, and
    they only compete with others in their industries in either a
    non-price manner, such as frequent-flier programs, or when they
    absolutely have to.
        Now, I know that many railroads and airlines will say that
    Congress should not re-regulate them. I totally agree. Let me
    repeat that, and say it really slowly for some of the people
    here today. I have no interest in re-regulation, but if the
    railroads want to be re-regulated, they should just keep doing
    what they are doing.
        You will not hear me in support of open access, but you
    might hear of my support for policies to enhance rail
    competition as an alternative to rail re-regulation. The
    problem with crying re-regulation whenever someone expresses an
    interest in the health of competition in an industry is that
    when the re-regulators come along, you might look back fondly
    at some of the suggestions made by free-market advocates such
    as myself.
        Before we hear the opening statements of witnesses, Senator
    Murray.

                       STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. Thank you very much, Mr. Chairman. I want
    to commend you for calling this hearing this morning.
        The topics of free competition and free mobility are
    critically important to my State. It is estimated that one out
    of every three jobs in Washington State are related to
    international trade, and a great many of those jobs are found
    in our agriculture and wood products industries. They are also
    found at our ports, which move billions of dollars of goods
    between Asia and the rest of the United States each year.
        While I am looking forward to hearing from all of the
    witnesses this morning, I especially want to welcome Mr. Perry
    Dozier, the President of the Washington Wheat Growers
    Association, who is testifying on our first panel, and on the
    second panel, we will hear from Mr. Mic Dinsmore, who is the
    Chief Executive Officer of the Port of Seattle, which, in
    combination with our port facilities in Takoma and Everett,
    represents the third largest container port in the Nation.
        We will also hear from Karen Schmidt. She is the Executive
    Director of Washington's Freight Mobility Strategic Investment
    Board. Ms. Schmidt was the leader on transportation issues
    during the 19 years she served in the Washington State
    legislature, and she will share with us some important insights
    as to how we as legislators should approach the challenge of
    easing freight congestion.
        Last year, this subcommittee held hearings on aviation
    competition, and as I review the issues pertaining to railroad
    competition, I am struck by the remarkable number of parallels
    between the current state of competition and the airline and
    railroad industries.
        Basically, deregulation in the airlines has brought those
    passengers who live in large cities greatly reduced fares and
    greater choices between airlines, but those passengers who live
    in isolated communities get soaked when the time comes to buy a
    ticket. That is largely because the air service to those
    communities is infrequent and competition between airlines is
    either minimal or non-existent. That is why it currently costs
    nearly as much to fly from Pomon, Washington, to Seattle, the
    distance of about 250 miles, as it costs from Seattle to
    Washington, D.C., which is a distance of 2,800 miles.
        In the railroad industry, things are much the same;
    although, it is much more common for rail shippers to be served
    by only one railroad. The isolated and low-volume shippers, the
    small grain elevators, for example, pay much higher rates and
    suffer from service-quality problems. There were a number of
    legislative proposals introduced in the last Congress to
    mandate increased competition by allowing railroads access to
    each other's track.
        While such proposals may have merit, I think there is
    another important lesson to be learned here from the aviation
    industry. In the case of the rural and isolated airports that
    have very little air service at very high cost, other airlines
    are free to enter that market whenever they wish.
        The runways are not crowded, and the local airports would
    welcome new airlines with open arms. Even so, competing
    airlines have not rushed into these markets; rather, the
    airlines have continued to focus on the higher profits that can
    be extracted from the higher-volume markets. So just providing
    railroads with the opportunity to compete in all markets does
    not automatically mean that they will choose to do so.
        On several occasions, our subcommittee has heard witnesses
    sounding the alarm that with the expected growth in air
    traffic, we must take aggressive action to expand airport
    capacity and modernize the air traffic control system. However,
    we have not spent enough time talking about the fact that
    freight traffic is expected to grow just as rapidly, and we
    must find a way to build the infrastructure to handle it. If we
    do not, we can just expect worse gridlock on the rails and on
    our highways.
        Just in my region of the country, container traffic is
    expected to grow by more than 130 percent in the next decade,
    and grain traffic is expected to grow by 50 percent. Too often,
    Federal policymakers get vague and non-committal when we talk
    about Federal expenditures to address freight traffic, because
    our railroads and trucking firms are privately owned.
        The fact is that expediting the movement of freight is as
    critical to our national prosperity as moving people, and it is
    foolhardy to think that we can address one aspect of surface
    congestion without addressing the other.
        When a parent cannot get to a daycare center to pick up a
    child, because they are waiting 20 minutes for a unit train to
    clear through a grade crossing, they do not care about a debate
    over private versus public ownership. They just want a
    solution.
        Increasingly, our citizens are demanding more commuter rail
    options, and many of those transit systems, like the Sounder
    Commuter Rail, serving the Puget Sound area, must share the
    rails with freight traffic. Without adequate investment in that
    rail infrastructure, neither the private rail company, nor the
    commuter rail system, can prosper.
        In my State, we have taken an aggressive approach towards
    addressing those challenges. Our State and city governments, in
    concert with the ports in the Puget Sound area, and the
    railroads, have negotiated cost-sharing arrangements to develop
    a program of congestion relief projects.
        The Burlington Northern Santa Fe Railroad should be
    commended for putting up a good bit of its own capital funding
    to help finance this FAST Corridor initiative. The Union
    Pacific Railroad has participated as well. I, along with my
    colleagues in the Washington State delegation, have provided
    more than $82 million in Federal funds towards the initiative,
    though, we have had to cobble that money together from a wide
    variety of sources. One of the reasons my State has moved out
    on this is because we recognize that if the freight cannot
    travel efficiently through our State, it is going to go
    elsewhere.
        Mr. Chairman, what you see over here on this easel is an
    advertisement from the Port of Vancouver, B.C. That port is
    only 160 miles to the north of Seattle, and has new state-of-
    the-art container loading facilities. They are appealing to our
    traffic, and appeals such as this represent a very serious
    threat to the economy of my State.
        As Mic Dinsmore, of the Port of Seattle, will tell us in a
    little while, shippers using the Port of Seattle already pay
    $125 per container more than they do at the Port of Vancouver.
    So we have to take aggressive steps to ensure that our ports
    remain competitive, and that freight-related jobs stay within
    our borders.
        While my State has started to address these issues head on,
    a national effort is really what is called for. More than 70
    percent of the freight containers entering the United States
    through our ports are heading out of State. There is little
    value to our easing freight congestion in Washington if the
    situation is not addressed between our border and Chicago.
        So I hope we will use this hearing this morning to think
    about how the Federal government can play a more active role at
    improving mobility for our citizens and our freight
    simultaneously. With the right policies, I believe we can both
    prosper. Thank you, Mr. Chairman.
        Senator Shelby. Thank you, Senator Murray.
        We have two panels of witnesses. On the first panel today
    is Mr. Perry Dozier. He is the State President of the
    Washington Association of Wheat Growers, welcome, Mr. Dozier;
    Mr. Lamar Self, who is the Director of Distribution and
    Customer Service for the Mississippi Chemical Corporation, and
    Mr. Michael Snovitch, Manager of Fossil Fuel Supply of
    Pennsylvania Power and Light.
        Gentlemen, we appreciate you coming today. Your entire
    statements will be made a part of the record in their entirety.
    You proceed as you wish.
        Mr. Dozier, I will call on you first.

                          STATEMENT OF PERRY L. DOZIER

        Mr. Dozier. Good morning. My name is Perry Dozier, and I am
    the current President of the Washington Association of Wheat
    Growers, and I farm in Southeastern Washington State, raising
    wheat, barley, and peas.
        I would like to thank the members of the Subcommittee on
    Transportation, of the Senate Appropriations Committee, and
    especially Senator Patty Murray, for the opportunity to express
    the concerns the growers have on issues of rail, freight rail
    access, and mobility.
        I am in a unique area of the State, where I can choose to
    utilize three modes of transportation for my crop, road, rail,
    or water; however, the majority of the growers within our State
    do not have the luxury of choices. Approximately 35 percent of
    Washington's grain moves by rail, with over 60 percent by
    barge. Growers are not able to make a competitive
    transportation choice between barge and rail, based on
    competitive rates.
        The rails are located too far away from the grain that is
    now being moved by barge, and even if it could, the rail system
    is not adequate to handle the volume of grain moving by barge.
    Even the dramatic changes in fuel prices recently have not
    caused intermodal tonnage changes. Approximately 90 percent of
    all wheat grown in Washington State is being exported.
    Transportation costs and service are vitally important.
        In Washington, we grow and export five of the six classes
    of wheat grown in the United States, contributing approximately
    $1.8 billion to the total State output, $537 million to gross
    State income, and $83 million in State and local taxes. This
    commodity has no value until the market demands the grain, and
    the grain is transported to the market.
        The majority of farmers who rely on road or rail as their
    only means of transportation are at the mercy of the carriers.
    Competition is vital in cost control. There are many options to
    choose on road transportation, four on barge transportation,
    but only two by rail.
        Wheat growers operate in a market environment, much like
    the stock market, where timing of sales and delivery can gain
    the grower thousands of dollars. Unpredictable or inconsistent
    service will negate these gains, with the loss being absorbed
    by the grower. Sadly, with lack of competition in one industry,
    we see the costs increasing and service decreasing to the
    growers.
        Many rail lines have been abandoned in Washington, leaving
    rural areas of the State with no choice but to use truck
    transportation. The costs to the growers, and the State, and
    the Federal government rises, due to the use of the least cost-
    effective mode of transportation and increased road
    maintenance.
        In some cases, small short-line rail companies have bought
    the abandoned track then serving these rural areas, only to be
    saddled with staggering costs to upgrade the lines. As a class
    one railroad moves to larger and more efficient freight cars
    and loading terminals, many of the small short-line operators
    cannot utilize these advancements due to track conditions.
    Again, the loser is the grower or local grain merchandiser.
        We have experienced delays in obtaining freight cars,
    damaged and unuseable cars, and non-competitive rates. For
    example, in a 26-car train, only 24 may be loadable. The train
    must be sent to market with two empty damaged cars. This is
    costly from both a marketing and operational standpoint. The
    export elevator does not receive the grain needed for shipping.
    While the railroad brings the other two railcars to the country
    elevator at some later date, it takes the same crew to load two
    single cars at which it did the entire unit train, which is a
    costly endeavor.
        Even the way in which cars are obtained is mind-boggling.
    Elevators and growers establish a want date when the cars are
    needed. The railroad gives itself an additional 15 days in
    which to supply the cars. Customers really never know when the
    cars will actually show up for loading, a fact, again, that is
    costly and hinders efficient marketing.
        This type of business environment would not be allowed to
    continue in other industries, because the customer would go
    somewhere else to obtain service. With rail, however, we have
    nowhere else to go, and the monopoly railroads know it.
        The rail companies dictate the handling system for local
    grain elevators as they are moving to 52- and 104-car unit
    trains, leaving small-elevator operators only a single mode of
    transportation. Our industry is also moving towards an identity
    preservation system, meeting our customers' needs for qualities
    and blends of grain. Many times the grain merchandiser cannot
    fill these large unit trains, and thus must use truck
    transportation.

                               PREPARED STATEMENT

        The growers and the rural grain companies in Washington
    State cannot pass on the increase in freight cost to the buyer.
    We operate in a price-take environment for our product. We know
    that rail access and competition is vital to our industry to
    promote service and keep costs in line. Moving to a system of
    monopolistic carriers will cripple the already wounded
    agricultural economy of Washington State. I ask you to take
    this into consideration, and promote rail access and increased
    competition within the U.S. rail system.
        Thank you for this opportunity to testify before the
    committee on behalf of the Washington wheat and barley growers.
        [The statement follows:]

                     Prepared Statement of Perry L. Dozier

        My name is Perry Dozier. I am the current President of the
    Washington Association of Wheat Growers and I farm in S.E. Washington
    State raising wheat, barley and peas. I would like to thank the members
    of the subcommittee on Transportation of the Senate Appropriations
    Committee and especially Senator Patty Murray for the opportunity to
    express the concerns the growers have on issues of rail, freight rail
    access, and mobility.
        I am in a unique area of the State where I can choose to utilize
    three modes of transportation for my crop: road, rail or water.
    However, the majority of the growers within our State do not have the
    luxury of three choices. Approximately 35 percent of Washington's grain
    moves by rail with over 60 percent moving by barge. Growers are not
    able to make a competitive transportation choice between barge or rail,
    based on competitive rates. The rails are located too far away from the
    grain that is now moving by barge, and even if it could, the rail
    system is not adequate to handle the volume of grain moving by barge.
    Even the dramatic changes in fuel prices recently have not caused
    inter-modal tonnage changes.
        Approximately 90 percent of all wheat grown in Washington State
    being exported, transportation cost and service are vitally important.
    In Washington we grow and export 5 of the 6 classes of wheat grown in
    the U.S., contributing approximately $1.18 billion to the total state
    output, $537 million to gross state income and $83 million in state and
    local taxes. This commodity has no value until the market demands grain
    and the grain is transported to market.
        The majority of farmers who rely on road or rail as their only
    means of transportation are at the mercy of the carriers. Competition
    is vital in cost control. There are many options to choose on road
    transportation, 4 options on river, but only 2 by rail. Wheat growers
    operate in a market environment, much like the stock market, where
    timing of sales and delivery can gain the grower thousands of dollars.
    Unpredictable or inconsistent service will negate these gains with the
    loss being absorbed by the grower.
        Sadly, with lack of competition in one industry, we see the cost
    increasing and service decreasing to the growers. Many rail lines have
    been abandoned in Washington, leaving rural areas of the State with no
    choice but to use truck transportation. The cost to the growers, the
    State, and Federal Government rises due to use of the least cost-
    efficient mode of transportation and increased road maintenance. In
    some cases small short line rail companies have bought the abandoned
    track, then serving these rural areas, only to be saddled with
    staggering cost to upgrade the line.
        As the Class 1 railroad moves to larger and more efficient freight
    cars and loading terminals, many of the small short line operators
    cannot utilize these advancements due to track conditions. Again the
    loser is the grower or local grain merchandiser. We have experienced
    delays in obtaining freight cars, damaged and unusable cars, and non-
    competitive rates. For example, in a 26-car train, only 24 cars may be
    loadable. The train must be sent to market with two empty, damaged
    cars. This is costly from both a marketing and operational standpoint.
    The export elevator does not receive the grain needed for shipping.
    While the railroad brings the other two railcars to the country
    elevator at some later date, it takes the same crew to load two single
    cars as it does a unit train--a costly endeavor. Even the way in which
    cars are obtained is mind-boggling. Elevators and growers establish a
    want date, say March 1, when the cars are needed. The railroad gives
    itself an additional 15 days in which to supply cars. Customers really
    never know when the cars will actually show up for loading, a fact that
    is costly and hinders efficient marketing.
        This type of business environment would not be allowed to continue
    in other industries, because the customer would go somewhere else to
    obtain service. With rail, however, we have nowhere else to go and the
    monopoly railroads know it. Sometimes, it's as if the railroads don't
    want to be bothered by stopping in Washington to haul our grain the
    shorter distance to market. They only want the long haul from the
    Midwest, where they obtain more revenue. The monopolistic rail
    companies dictate the handling system for local grain elevators as they
    move to 52 and 100 car unit trains, leaving small elevator operators
    only a single mode of transportation. Our industry is also moving
    toward an IP system (Identity Preservation System) in qualities and
    blends of grain to meet customer needs. Many times the grain
    merchandiser cannot fill these large unit trains and thus must use
    truck transportation.
        The growers and the rural grain companies in Washington State
    cannot pass on the increase in freight cost to the buyer. We operate in
    a price-take environment for our product. We know that rail access and
    competition is vital to our industry to promote service and keep cost
    in line. Moving to a system of monopolistic carriers will cripple the
    already wounded agricultural economy of Washington State. I ask you to
    take this into consideration and promote rail access and increased
    competition within the U.S. rail system.
        Thank you for this opportunity to testify before the Committee on
    behalf of Washington Wheat and Barley growers.

        Senator Shelby. Mr. Self.
    STATEMENT OF LAMAR SELF, DIRECTOR, DISTRIBUTION AND
                CUSTOMER SERVICE, MISSISSIPPI CHEMICAL
                CORPORATION
        Mr. Self. Thank you, Mr. Chairman, Senator Murray. Again,
    my name is Lamar Self, and I am the Director of Distribution
    and Customer Service for Mississippi Chemical Corporation,
    headquartered in Yazoo City, Mississippi.
        I have been in this current position for approximately 3
    years, and have been employed by Mississippi Chemical for 34
    years, all of which has been in the area of transportation and
    distribution.
        Mississippi Chemical, through its wholly owned
    subsidiaries, produces and markets all three primary crop
    nutrients, otherwise known as fertilizers. Nitrogen-based
    products are produced at facilities in Yazoo City, Mississippi,
    and in Donaldsville and St. James, Louisiana. Diammonium
    phosphate is produced at Pascagoula, Mississippi. Potassium-
    based products are produced at two mines and refineries near
    Carlsbad, New Mexico.
        In addition to these six production facilities, we have
    twenty-six distribution facilities located in the States of
    Alabama, Arkansas, California, Georgia, Indiana, Kentucky,
    Louisiana, Mississippi, Missouri, Ohio, and Texas. All of our
    production facilities are rail served. The majority of the
    distribution facilities are also rail served. None of the
    facilities are served by more than one rail carrier.
        On an annual basis, Mississippi Chemical and its subsidiary
    companies ship approximately 1.8 million tons by rail, 1.4
    million tons by inland river barges, and 1.4 million tons by
    truck.
        The cost of rail transportation is a significant part of
    our production and marketing costs. Because the ultimate price
    of fertilizer is set by the marketplace, we need to have
    reasonably priced rail transportation if we are to compete
    effectively.
        In recent months, we have experienced a large increase in
    the price of natural gas, which is an important component in
    the manufacture of fertilizers of various types, and there has
    been extreme pressure on the price of fertilizer in the world
    market. Thus, the need to ensure that our other production
    costs are competitive, including the cost of transporting our
    goods to market, has become even more important in this
    environment.
        Moreover, the transportation service requirements of the
    fertilizer industry are very important. Fertilizer is not sold
    evenly throughout the year, but rather sales are keyed to the
    growing season. This means that the demand for transportation
    in the fertilizer industry is generally compressed into just a
    few months of the year.
        We at Mississippi Chemical believe that both rail service
    and price needs can best be met through a system of increased
    rail-to-rail competition. Competition provides the spur for
    companies of all types to eliminate inefficiencies in their
    system, to place the primary focus on the needs of their
    customers, and respond quickly to changes in the marketplace.
        In the years following the enactment of the Staggers Act,
    the railroads made great strides in developing new markets and
    identifying and using new routes, which resulted in improved
    service. However, in recent years, the rail industry has become
    increasingly consolidated through mergers, and there has been a
    reduction in rail-to-rail competition.
        Service has suffered in these mergers, and the carriers
    have reduced staff. The reduction in competition has recently
    been accompanied by increasing pressure on the part of the
    carriers to increase revenue, with the shipper having few
    alternatives. We believe that the system needs to be re-
    balanced in order to provide for additional rail-to-rail
    competition.
        We note that the Surface Transportation Board has recently
    proposed to require enhanced competition when considering
    mergers between Class I rail carriers. We applaud this
    proposal, and hope that the Board approves it as a final rule.
        Finally, we think that the Congress should strongly
    consider reforms that would simplify and speed the process of
    resolving problems between shippers and carriers. The Board
    staff and resources are limited. Proceedings at the STB have
    usually taken many months to resolve, and are extremely
    expensive from the point of view of most shippers.
        For example, we have been told that a stand-alone cost case
    at the Board to obtain a ruling as to a maximum reasonable rate
    would cost well over $1 million, and up to 2 years to resolve.
        We believe that the Congress should consider changes that
    would require mandatory expedited arbitrations of disputes
    between shippers and carriers. We believe that such a change
    would provide a quicker, easier, less expensive way to resolve
    problems between shippers and carriers. Although the Board has
    approved rules that permit arbitration, those rules do not
    require it. Because one party to a dispute usually has an
    incentive to delay, voluntary arbitration under the Board's
    rules has not been used to date, and is not likely to work in
    the future.

                               PREPARED STATEMENT

        Arbitration is a proven means of expeditiously resolving
    disputes between companies, and we see no reason why mandatory
    arbitration could not be used in disputes between shippers and
    rail carriers over rate and service issues. We, therefore, urge
    the committee to consider changes that would require mandatory
    expedited arbitration to resolve rate and service disputes
    between shippers and rail carriers. Thank you, Mr. Chairman.
        [The statement follows:]

                        Prepared Statement of Lamar Self

        My name is Lamar Self and I am the Director of Distribution and
    Customer Service for Mississippi Chemical Corporation, headquartered in
    Yazoo City, Mississippi. I have been in this current position for
    approximately 3 years and have been employed at Mississippi Chemical
    thirty-four years, all of which has been in the area of transportation
    and distribution.
        Mississippi Chemical Corporation, through its wholly owned
    subsidiaries, produces and markets all three primary crop nutrients.
    Nitrogen based products are produced at facilities in Yazoo City,
    Mississippi, and in Donaldsonville and St. James, Louisiana. Diammonium
    phosphate is produced at Pascagoula, Mississippi. Potassium based
    products are produced at two mines and refineries near Carlsbad, New
    Mexico. In addition to these six production facilities, we have twenty-
    six distribution facilities located in Alabama, Arkansas, California,
    Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Ohio and
    Texas. All of our production facilities are rail served. The majority
    of the distribution facilities are also rail served. None of the
    facilities are served by more than one rail carrier.
        On an annual basis Mississippi Chemical and its subsidiary
    companies ship approximately 1.8 million tons by rail, 1.4 million tons
    by inland river barges and 1.4 million tons by truck.
        The cost of rail transportation is a significant part of our
    production cost. Because the ultimate price of fertilizer is set by the
    marketplace, we need to have reasonably-priced rail transportation if
    we are to compete effectively. In recent months, we have experienced a
    large increase in the price of natural gas (an important component in
    the manufacture of fertilizer of various types), and there has been
    extreme pressure on the price of fertilizer in the world market. Thus,
    the need to insure that our other production costs are competitive,
    including the cost of transporting our goods to market, has become even
    more important in this environment.
         Moreover, the transportation service requirements of the
    fertilizer industry are very important. Fertilizer is not sold evenly
    throughout the year, but rather sales are keyed to the growing season.
    This means that the demand for transportation in the fertilizer
    industry is generally compressed into just a few months of the year.
        We at Mississippi Chemical believe that both our rail service and
    price needs can best be met through a system of increased rail-to-rail
    competition. Competition provides the ``spur'' for companies of all
    types to eliminate inefficiencies in their system, to place their
    primary focus on the needs of their customers, and respond quickly to
    changes in the marketplace. In the years following the enactment of the
    Staggers Act, the railroads made great strides in developing new
    markets and identifying and using routes which resulted in improved
    service. However, in recent years, the rail industry has become
    increasingly consolidated through mergers, and there has been a
    reduction in rail-to-rail competition. Service has suffered in these
    mergers, and the carriers have reduced staff. The reduction in
    competition has recently been accompanied by increasing pressure on the
    part of the carriers to increase revenue, with the shipper having few
    alternatives. We believe that the system needs to be re-balanced in
    order to provide for additional rail to rail competition.
        We note that the Surface Transportation Board has recently proposed
    to require ``enhanced competition'' when considering mergers between
    Class I rail carriers. We applaud this proposal, and hope that the
    Board approves it as a final rule.
        However, we believe that more needs to be done in the area of
    ``enhancing competition'' outside of the merger context. We believe
    that the Congress should strongly consider ways to increase rail to
    rail competition, such as through the use of ``bottleneck'' rates where
    requested by the shipper. As I stated, our production or distribution
    facilities are served by one rail carrier--a ``bottleneck'' carrier--
    but often there is another rail carrier not too far away who could
    provide competitive rail service for the movement beyond the bottleneck
    to the destination. But under existing rules, a shipper cannot
    generally get a rail rate over the ``bottleneck,'' and therefore we
    can't use the competitive carrier beyond the bottleneck.
        Another means of increasing competition would be to give a shipper
    access to another rail carrier through competitive switching in rail
    terminal areas. Existing rules for obtaining such competitive switching
    are extremely onerous, and we think that the process of obtaining such
    competitive relief should be made significantly easier.
        Finally, we think that the Congress should strongly consider
    reforms that would simplify and speed the process of resolving problems
    between shippers and carriers. The Board's staff and resources are
    limited. Proceedings at the STB have usually taken many months to
    resolve, and are extremely expensive from the point of view of most
    shippers. For example, we have been told that a ``stand alone cost''
    case at the Board to obtain a ruling as to a maximum reasonable rate
    would cost well over $1 million, and take up to 2 years to resolve.
        We believe that the Congress should consider changes that would
    require mandatory, expedited arbitration to resolve rate and service
    disputes between shippers and rail carriers. We believe that such a
    change could provide a quicker, easier, less expensive way to resolve
    problems between shippers and carriers. Although the Board has approved
    rules that permit arbitration, those rules do not require it. Because
    one party to a dispute usually has an incentive to delay, voluntary
    arbitration under the Board's rules has not been used to date, and is
    not likely to work in the future. Arbitration is a proven means of
    expeditiously resolving disputes between companies, and we see no
    reason why mandatory arbitration could not be used in disputes between
    shippers and rail carriers over rate and service issues. We therefore
    urge the Committee to consider changes that would require mandatory,
    expedited arbitration to resolve rate and service disputes between
    shippers and rail carriers.

        Senator Shelby. Mr. Michael Snovitch, Manager of Fossil
    Fuel Supply for Pennsylvania Power and Light.
        Welcome, sir.
    STATEMENT OF MICHAEL W. SNOVITCH, MANAGER, FOSSIL FUEL
                SUPPLY, PENNSYLVANIA POWER AND LIGHT
        Mr. Snovitch. Good morning, Senators.
        My name is Michael W. Snovitch, and I am here today on
    behalf of PP&L Generation, LLC. I have more than 10 years of
    experience dealing with railroads. Our coal-fired power plants
    in Pennsylvania and Montana burn approximately 10 million tons
    of coal a year, and we could not operate without railroads.
    They are necessary.
        These volumes of coal cannot be transported efficiently any
    other way. PPL is not anti-railroad. We never have been.
    However, we have never been willing to pay whatever our
    railroad partner wanted to charge us. Where we could negotiate
    rates that seemed reasonable, we did so, and we signed long-
    term transportation contracts; however, as a captive shipper
    with no competing railroad to turn to, PPL has a legal right to
    seek relief from excessively high rates.
        We attempt to approach these issues rationally. We
    understand that there are commodities the railroads carry at
    low rates, because of truck competition, and that other
    commodities may have to move at higher rates. Even so, there
    must be some limits. As manager of Fossil Fuel Supply, I am
    responsible for controlling PPL fuel costs, including the cost
    of delivering coal to our power plants.
        Prior to utility deregulation, excessive rail rates meant
    higher prices for PPL customers. In today's marketplace for
    electric power, excessive rail rates can threaten the
    competitiveness of generating companies, and affect its long-
    term growth and survival.
        On three occasions, when we have disagreed with the
    railroad over rates, we have taken the dispute to the ICC, or
    more recently the STB. We are in a rate case today against
    BNSF, because we could not reach agreement over rail rates to
    our Corrette plant in Billings, Montana.
        BNSF offered a small rate reduction when PPL's contract
    expired, but we concluded these rates were well above maximum
    reasonable levels on the current legal standards, and when the
    negotiations broke down, BNSF raised PPL's rates. Since we have
    filed a rate case with STB last July, there have been no
    further negotiations.
        Despite this litigation, I feel we are on friendly terms
    with BNSF, but negotiations between railroads and captive
    shippers do not take place on a level playing field. Without
    effective regulation, or competitive alternatives, even large
    shippers may get the short end of the stick, and we consider
    ourselves a large shipper.
        Although PPL has beneffited from regulatory remedies in the
    past, things could be better. There are many shippers with no
    effective means of challenging high rail rates before the STB.
    They are very complex, costly cases, as has previously been
    stated.
        In addition, some major rail mergers have led to service
    problems, as has been discussed. The STB has tried to help, but
    there is a limit to what a regulatory agency can do to complex
    railroad service problems. PPL believes that more competition
    will be beneficial for shippers, and for large and small
    railroads. The STB is considering new rail merger regulations
    that would require enhanced competition. PPL supports this
    idea, but more is needed.
        For example, there should be better remedies against anti-
    competitive conduct by railroads that are not seeking to merge
    at the present time. Reasonable access remedies should be
    explored, and railroads should not be able to leverage their
    market power over entire routes when they have a bottleneck
    monopoly, which I am very familiar with, because we are
    involved in that case.
        As shown by deregulation in the trucking industry----
        Senator Shelby. Mr. Snovitch, explain what you mean by
    bottleneck.
        Mr. Snovitch. Bottleneck is where there is, say from the
    origin to the destination, and between that final destination
    you have a point in there where just one railroad serves, but
    there is some place in there where you can deal with two
    railroads. In our case, we were trying to get coal from Central
    Appalachia up to our power plants in Pennsylvania. The final 60
    miles were served by Conrail.
        At Hagerstown, they interchange with both CSX and Norfolk
    Southern. When we tried to negotiate rates with Conrail, they
    charge a very high rate to keep us from going either to Norfolk
    Southern or CSX. The rates that CSX and Norfolk Southern were
    charging were competitive, because they were competing with one
    another. Conrail, on the other hand, was charging some
    excessive rate, and we ended up before the STB on that.
        What the STB requires to do was litigate the whole rate
    from destination to the actual origin, rather than just the
    bottleneck portion.
        Senator Shelby. Go ahead.
        Mr. Snovitch. Okay? As shown by deregulation in the
    trucking industry, competition and the risk of lost business
    provide powerful incentives for a carrier to make sure its
    service quality is high, and its prices are fair. There has
    been big success stories since the 1980s with the trucking
    industry.
        Utility deregulation and customer choice in my home State
    of Pennsylvania have also been beneficial. I believe the
    problems in California are severe, but I believe they are
    temporary, and we should not turn our backs on competition.
    Further mergers in the railroad industry may produce greater
    efficiency, but they may also cause service problems, and they
    will certainly increase the size and market power of the
    surviving railroads.

                               PREPARED STATEMENT

        The STB has determined that its merger regulations need to
    be modernized, and we applaud them for that. Congress should
    continue to hold hearings on ways to improve the statute that
    promote competition of the railroad industry, and I really
    appreciate the opportunity to appear before you, and I will
    answer any questions that I can.
        Thank you.
        [The statement follows:]

                   Prepared Statement of Michael W. Snovitch

        My name is Michael W. Snovitch, and I am Manager, Fossil Fuel
    Supply for PPL Generation, LLC, a subsidiary of PPL Corporation. I have
    held this position with PPL, and the former Pennsylvania Power & Light
    Company, since 1989.
        PPL Corporation is a rapidly growing global energy company with
    revenues of nearly $5.7 billion. PPL, which has its headquarters in
    Allentown, PA, has four principal subsidiaries.
        PPL EnergyPlus is our marketing arm, marketing wholesale and retail
    electric power and energy services. PPL Electric Utilities serves 1.3
    million industrial, commercial and residential electricity customers in
    Pennsylvania. PPL Global distributes electricity to over 4 million
    customers in the United Kingdom and Latin America, and also develops
    and acquires generation in key U.S. markets.
        PPL Generation, where I work, owns and operates power plants in the
    U.S, including nearly 10,000 megawatts of electric generating capacity
    in Pennsylvania, Maine and Montana. In the East, our 8,500 megawatts
    come primarily from coal-fired and nuclear generation. PPL's 1,150
    megawatts of Montana generating capacity are coal-fired and
    hydroelectric. Our Montana power plants were acquired from The Montana
    Power Company (MPC) in 1999, and most of our generation is sold under
    contract to MPC, which MPC uses to meet its obligations to serve
    Montana customers.
        PPL's coal-fired power plants in the East consume over 7.5 million
    tons of coal annually, most of which is delivered by railroad. Because
    no power plant is served by more than one railroad, and because the
    volumes of coal we burn cannot be delivered by truck or barge, we are
    captive customers of the railroads serving our power plants. In the
    East, the railroad handling deliveries used to be Conrail, and is
    Norfolk Southern today. In Montana, the Burlington Northern and Santa
    Fe Railway delivers coal to PPL's Corette power plant, near Billings.
        Rail rates make up a significant portion of the delivered cost of
    coal, and the delivered cost of coal is a major portion of the cost of
    operating these coal-fired power plants. For this reason, PPL has been
    active in proceedings before the ICC and STB concerning railroad
    regulation, railroad pricing and railroad mergers.
        In past years, under regulation, we challenged excessive rail rates
    on behalf of our ratepayers, since the costs of rail service were
    recovered through our electric bills. More recently, utility
    deregulation has made reliable rail service at reasonable rates even
    more necessary, because electric power that costs too much may become
    unmarketable, or may affect the competitiveness of our customers.
    However, utility deregulation has coincided with railroad
    consolidation. We have therefore supported efforts before the STB and
    in Congress to increase competition among major railroads.
        I know from personal experience that, without effective regulation
    or effective competition, railroads may abuse their market power, even
    when dealing with a large customer. The railroads may demand excessive
    rates or fail to maintain service standards. They may also try to
    influence where a customer obtains its raw materials or sells its
    products.
        For example, when we attempted to negotiate reasonable rates with
    Conrail, their representative told me he would rather see PPL go out of
    business than accept the rates we were attempting to negotiate. At that
    time, PPL was Conrail's biggest utility coal customer. Also, we
    determined that we wanted to burn low-sulfur coal from mines served by
    other railroads, along with higher sulfur coal from mines served by
    Conrail, as part of our Clean Air Act compliance program. Conrail tried
    to prevent us from reaching our preferred sources of low-sulfur coal,
    because they wanted to keep our business for themselves.
        In my opinion, a railroad should not be allowed to use its monopoly
    power to charge excessive rates, or force customers to use the vendors,
    customers and routings that are preferred by the railroad. These abuses
    drive up costs and lead to distortions in the marketplace.
        PPL attempted to resolve its disputes with Conrail through
    negotiation. However, twice since 1980 we felt we had no choice but to
    file rate cases against Conrail before the ICC and STB. In our
    situation, both cases were settled on favorable terms, but some
    shippers are too small to litigate, and others ship to or from so many
    points that litigation is not feasible.
        Today, PPL is involved in a third rate case, this time against
    BNSF. As with Conrail, we attempted to negotiate rail rates that are
    lower than the rates the railroad wanted to charge, but still highly
    profitable for the railroads. Under current law, the STB cannot even
    consider a rate challenge unless the rate is 180 percent of the
    variable cost of the rail service, and PPL has only challenged rates
    that were significantly higher than that.
        Because BNSF was unwilling to negotiate seriously with PPL over
    rates to our Corette power plant in Billings, Montana, we once again
    decided that we had no choice but to ask the STB to set reasonable
    rates. The coal we burn at our Billings facility is actually delivered
    by Montana Rail Link, a small railroad connecting with BNSF a few miles
    outside Billings. We attempted to negotiate directly with Montana Rail
    Link but were told that BNSF controls Montana Rail Link's pricing.
    Smaller railroads can be as captive to major railroads as shippers are.
        PPL was once a regulated public utility, and we understand
    regulated rates, whether they are based on the familiar public utility
    standard of costs plus a reasonable profit, or on the stand-alone cost
    test used by the STB. Unfortunately, the railroads seem unwilling to
    discuss costs at all, preferring to charge ``whatever the market will
    bear.''
        PPL is also familiar with this approach to rates. PPL Generation is
    deregulated, and we must compete with other generators to sell power.
    The competition we face heightens our concern about excessive rail
    rates. Charging what the market will bear only makes sense where there
    is competition. In fact, I think competitive markets are more likely to
    produce fair prices than regulatory agencies.
        Much of the freight the railroads carry is subject to competition
    from trucks or barges. But too many captive shippers lack both
    competitive options and effective regulatory solutions. More
    competition is needed to encourage dependable service. Recent mergers
    have produced severe service problems. More competition would also help
    keep rates reasonable without the need for lengthy and burdensome
    regulatory proceedings.
        The STB has done some good things, like deciding not to consider
    product and geographic competition when it makes market dominance
    determinations in rate cases. It has also made some mistakes, like
    refusing to let shippers challenge rates over the bottleneck portion of
    joint line movements. PPL's last rate case against Conrail was one of
    the Bottleneck cases before the Board, and it is extremely difficult to
    understand why PPL could not just challenge Conrail's rates to our
    power plants, where Norfolk Southern and CSX were willing to compete to
    haul our coal from the mines to their connection with Conrail. As a
    result of the Bottleneck decision, PPL had to sue all three railroads,
    even though only Conrail exercised monopoly power over PPL coal
    shipments.
        Ultimately, however, the best thing Congress can do is to rely more
    on competition and less on regulation to produce good rail service at
    reasonable rates. The Board has proposed to amend its rail merger
    regulations so that if transcontinental mergers occur, the merging
    railroads will be required to enhance competition. PPL supports this
    concept, but believes more needs to be done.
        There should be better remedies against anticompetitive conduct by
    railroads that are not seeking to merge. Smaller railroads like Montana
    Rail Link should not be prevented from competing with their major
    railroad connections. In addition, reasonable access remedies should be
    explored. Other companies are allowed under FERC regulations to use
    PPL's transmission system, and consumers have benefitted from the
    resulting competition. Competition may sometimes fall short of
    producing dependable rail service at reasonable rates, particularly for
    smaller or isolated shippers. Effective regulation, which can simulate
    the effects of a competitive marketplace, should be preserved and
    enhanced in such situations.
        I appreciate the opportunity to testify before the Subcommittee.

        Senator Shelby. Thank you. Most of you say that you are
    captive to rail, but can not each of your companies use truck
    instead? Mr. Dozier, is that a drawback?
        Mr. Dozier. Yes. Usually, with truck traffic that we have,
    we have a limited amount of trucks----
        Senator Shelby. Okay.
        Mr. Dozier [continuing]. If I am using my own trucks to
    haul. So what we do is, like I say, I myself am in a unique
    area, where I can use both rail on a short line, and water, but
    the majority of my growers that are up north in the State----
        Senator Shelby. Railroad?
        Mr. Dozier [continuing]. Do not have that, and to be able
    to truck their grain down, you can do it with far less rail
    cars than you can with the trucks, and the amount of pollutants
    released by the trucks are far greater than the rail line.
        Senator Shelby. Did you say earlier, if I heard it right,
    that most of the grain in Washington State is exported?
        Mr. Dozier. Over 90 percent of our grain is exported. We
    rely on getting our grain to Portland.
        Senator Shelby. Whenever you want to move your product, you
    have to negotiate a contract with the railroad that services
    you, is that right?
        Mr. Self. That is correct.
        Senator Shelby. Why do you not just negotiate a better
    contract? Is that because you do not have enough competition
    there? Is that it?
        Mr. Self. There is very limited competition. As far as
    rail-to-rail competition, there is none. If you have a
    competitive mode of transportation, such as truck or inland
    barge, the railroads are much more willing to negotiate, but in
    the absence of that competition----
        Senator Shelby. It is their price or no price?
        Mr. Self [continuing]. It is their price, and also, they
    tend to protect the markets that they are already serving,
    possibly from another source, which blocks you from being able
    to market your product in a given----
        Senator Shelby. Give us an example of what you mean.
        Mr. Self. I do not have a specific example right at the
    moment. I will be glad to get that and get back to you.
        Senator Shelby. Okay. If the railroads improved their
    service, would you ship more of your products by rail, if they
    improved their service? Mr. Dozier? Does it depend on--you have
    three options, do you not?
        Mr. Dozier. Yes, I do, and I am trying to think of the
    majority of our growers, and I would have to get in touch with
    those that their only choice is rail. The southern part of the
    State is where we have our options, where we can go from short-
    line railroad to the Columbia River, and then barge it;
    however, if we were to lose our barge traffic, then we have
    only one choice, and that is the Union Pacific in the southern
    end, and in the northern end, it is Burlington Northern. So
    whether or not we could get our grain efficiently to market, I
    am not sure.
        Senator Shelby. Okay. Mr. Self?
        Mr. Self. I would like to respond to that. In the West
    right now, service is pretty good. It is back to what I will
    call near normal prior to the mergers. In the East, however, we
    are still having service problems, and we are having to serve
    some of our customers by truck at a higher cost to them and to
    us then it would be if we could depend on rail service.
        Our plant at Pascagoula is an example. It is extremely
    difficult to get rail equipment to ship covered hopper cars
    with fertilizer out of there.
        Senator Shelby. You ship all over the country, do you not?
        Mr. Self. Yes, we do.
        Senator Shelby. Mr. Snovitch? You are more of a captive,
    are you not?
        Mr. Snovitch. We are captive shippers to Burlington
    Northern Santa Fe, in the West, for our correct station, and we
    are to Norfolk Southern in the East.
        There were service problems in the break up of Conrail, but
    they have since been solved by Norfolk Southern and CSX, and
    our service is, I think, satisfactory to us. So I cannot think
    that improved service would solve the problem, but I want to
    mention as far as truck as an alternative, I will give you an
    example of a problem for us with truck.
        Our Montour plant takes one unit train a day to serve it.
    If we did it by truck, it would take 550 truckloads of coal a
    day to serve that plant, and we would be running through a lot
    of local communities. So that is just not a practical
    alternative.
        Senator Shelby. Okay. As I mentioned in my opening
    statement, I want to better understand why a shipper who orders
    a unit train of chemical has to talk with a chemical salesman
    from the railroad, while if the same shipper wants to ship a
    unit train of milk, or molasses, or grain, he has to talk with
    the salesman for that product, and pay a different rate, even
    if the entire shipment is headed to roughly the same location.
    If that is true, why do railroads engage in this type of
    practice?
        Mr. Self, are you familiar with this?
        Mr. Self. Well, yes. We have specific salesmen from company
    to company that we deal with, but since we are only dealing in
    fertilizers, that does not really present a problem.
        Senator Shelby. He is dealing in coal, and he is dealing in
    rain.
        Mr. Snovitch. We also deal in petroleum----
        Senator Shelby. Okay.
        Mr. Snovitch [continuing]. And we have cases where the
    petroleum-coke person is different than the coal person. In
    fact, for the same shipment, you will get a different rate.
        Senator Shelby. Okay. Do the class one railroads impede
    short-line from offering competitive service to shippers? Mr.
    Self?
        Mr. Self. Yes, sir, I feel they do.
        Senator Shelby. Mr. Dozier?
        Mr. Dozier. Yes, I do feel the same.
        Senator Shelby. Mr. Snovitch?
        Mr. Snovitch. I know that for a fact.
        Senator Shelby. You have seen it, have you not?
        Mr. Snovitch. Yes, I have, in the East and in the West.
        Senator Shelby. Can you give specific examples of how
    consolidation in the rail industry has affected your rail
    service, the rates, and overall rail transportation costs? Mr.
    Snovitch, I will start with you.
        Mr. Snovitch. To us, there was the breakup of Conrail. We
    were fortunate enough that we had a case before the STB among
    all three, Norfolk Southern, CSX, and Conrail. As a result of
    that, to resolve some issues with them, during the breakup we
    were able to succeed in getting what we consider pretty
    successful or useful rates, economic rates. So it has not
    affected us adversely at this present time, other than there
    were some service problems during the initial breakup of
    Conrail.
        Senator Shelby. Mr. Self?
        Mr. Self. I do not know how far back we want to go, but
    stop me if I go too far back. I will start with the first major
    railroad, which was between the ATSF and the BN. As I mentioned
    earlier, we have two mines at Carlsbad, New Mexico, and they
    were vastly affected by that merger. Service shortly after the
    consummation of that merger was very poor. We had cars that sat
    typically for 21 days in Carlsbad before leaving town to go to
    our customers, and this hit at the height of the spring season,
    when we could stand at least.
        Shortly on the heels of recovering from that, the union
    Pacific and the SP merger, I will not reiterate the problems
    that we all experienced with that, and then about the time that
    began to quiet down, we had the split up of Conrail, and we
    went through it all again in the East. So I have yet to see a
    merger that has resulted in improved service and lower cost.
        Senator Shelby. Mr. Dozier?
        Mr. Dozier. I do not have any specific example that I could
    give you right now, but I can get that from one of the
    northern----
        Senator Shelby. The record will stay open, Senator Murray,
    and I will keep the record open, because----
        Mr. Dozier. Okay.
        Senator Shelby [continuing]. This is important.
        Mr. Dozier. Thank you.
        Senator Shelby. Are the existing dispute resolution options
    provided to rail customers by the Surface Transportation Board
    adequate? Mr. Snovitch?
        Mr. Snovitch. We have been successful, and we have used
    them, but like I say, they are very costly, very complex, and
    there are some--it makes it almost impossible for certain
    shippers, captive shippers, to come before the Board.
        Senator Shelby. Are they efficient?
        Mr. Snovitch. Not as efficient as they could be.
        Senator Shelby. Okay.
        Mr. Snovitch. They could be more efficient. Absolutely.
        Senator Shelby. Mr. Self?
        Mr. Self. As I stated earlier, it is extremely expensive to
    present a case and go through the process at the STB, and I do
    not mean to be critical of that. However, in our particular
    case, we are serving many, many destinations, many of which
    would be considered small volume, and it simply does not make
    economic sense to carry a case to the STB----
        Senator Shelby. How long do the cases last, on average?
        Mr. Self. I have heard typically 2 years. Having never
    actually presented one and gone through it, I really do not
    know, but I have heard 2 years or better.
        Senator Shelby. Mr. Dozier, do you have any comment?
        Mr. Dozier. No. As a grower, we do not work directly with
    the STB.
        Senator Shelby. Okay. One protection for rail customers
    from the risk of market power abuse is the STB's competitive
    access regulations that enable a customer to secure access to a
    second carrier if it is shown that the existing carrier has
    abused its market power through its rates or service. Are you
    folks aware of this provision, and has it ever been applied?
    Mr. Snovitch?
        Mr. Snovitch. I am not really familiar with the provision.
    I do not know of it being applied.
        Senator Shelby. You do not know. Okay. Senator Murray,
    thank you for coming.
        Senator Specter. Senator Murray, would you yield to me for
    just one question, because I cannot stay too long.
        Senator Murray. Yes.
        Senator Specter. You made a comment that the situation was
    aggravated with the breakup of Conrail. Could you be more
    specific about what happened there?
        Mr. Self. Well, in our particular case, shortly after the
    break up of Conrail, we began to notice service deteriorate in
    our primary area, which is south Alabama, south Georgia.
        We have a pretty sizeable terminal at Bainbridge, Georgia,
    and another one at Albany, Georgia, and where typically it had
    taken 6 to 7 days consistently for cars to reach origin to
    destination, it suddenly began to be 10 days, 2 weeks, and 3
    weeks, and then addition to that, once they arrived at the
    destination, the terminal, it would take a week or more for
    cars to be spotted, and what we were told was that because of
    problems in the Northeast, power and personnel were being sent
    north to work on those problems, and that resulted in worse
    service for us.
        Then as they began to correct those problems, they brought
    equipment back south, and it began to ease somewhat, but it is
    still far from what it was prior to the breakup.
        Senator Specter. Thank you for letting me ask that
    question. I question whether the resources were directed to the
    Northeast. I hear so many complaints in my State of a similar
    nature that I just wanted to pursue that.
        Senator Shelby. If I could just take one second. Do you
    ship from Pascagoula all the way up into the Northeast
    everywhere?
        Mr. Self. No, sir.
        Senator Shelby. You do not.
        Mr. Self. No.
        Senator Shelby. You ship from where to where, generally?
        Mr. Self. From Pascagoula, as far as rail service, we go to
    Alabama, to Missouri----
        Senator Shelby. Okay.
        Mr. Self [continuing]. Tennessee, primarily the South and--
    --
        Senator Shelby. The South and Midwest, a little.
        Mr. Self. Right.
        Senator Shelby. Thank you. Senator Murray.
        Senator Murray. Thank you very much, Mr. Chairman. Mr.
    Dozier, you stated in your opening remarks that wheat farmers
    have experienced delays in obtaining freight cars, and that
    some of those cars have arrived in damaged or unstable
    conditions. The Burlington Northern has maintained that they
    have not experienced grain car shortage problems in Washington
    State since 1997. Would you concur in those observations? Have
    you experienced any problems since 1997?
        Mr. Dozier. Well, the only thing I can elaborate on that
    would be the fact that if there has not been--the State of
    Washington, I believe, has purchased over 100 cars in the last
    3 years.
        Now, if there was a shortage of cars, or if there was not a
    shortage of cars, then why would the State spend the money to
    do--to purchase more cars? I would think that would be to help
    the efficiency and availability of cars. I am not real sure why
    the State did that.
        I also know that in our area, down in Southeastern
    Washington, the short-line railroad that has taken over and
    abandoned track, a third party has purchased cars there to make
    sure that that short line can meet the needs of the rural
    communities, and not be held captive to the unit trains that
    come in, and have to load 26, or 52, or 104 cars from some of
    those small towns that are 50 miles from the Columbia River. So
    that is about the only experience that I could have on that.
        Senator Murray. Mr. Dozier, again, what observations can
    you share with this committee regarding the trends in rates
    that the wheat growers have been paying the railroads over the
    last dozen years?
        Mr. Dozier. There, again, being a grower, we deal directly
    with the grain merchandisers, and I know that based on where we
    deliver, whether it is to a terminal facility, or to a port, or
    if it is by truck, we can gain more of a premium for wheat.
        Now, if we had, I think, more competition or more access to
    rail, then I think we could move our grain at a lower price. I
    am not sure if their pricing structure has changed over the
    years, because I do not have to deal with that directly as a
    grower. It is through the merchandiser.
        Senator Murray. Okay. You may not know, but do you know if
    rail rates changed when the diesel fuel prices started to rise
    a year ago?
        Mr. Dozier. I am not sure if they have. I know that the
    trucking industry obviously have passed on those increased
    expenses to us growers as we try to move our grain, and it may
    have been the same way in the other industries.
        Senator Murray. How much flexibility do you have in
    shifting between transportation modes? You said where you are
    you can use the Columbia River, or trucks, or train. Are you
    very flexible on that, or is it difficult to----
        Mr. Dozier. As long as we have a short-line railroad
    operating, we can use the rail service. If that short line goes
    out of business, we just have truck or barge. If a barge goes
    out of business, we have only rail, which for that would
    require truck to one terminal, because we are not served inland
    60 miles from the Columbia River by any rail service other than
    short line.
        Senator Murray. This is more for all three of you. I think
    you are all familiar with certain legislative proposals that
    would require railroads to grant their competitors access to
    their tracks in order to bring competition to more shippers.
        If those kinds of legislative proposals were enacted, are
    you confident that other class one railroads will want to
    commit their resources and equipment to providing competitive
    rate service?
        Mr. Dozier. In Eastern Washington, it is hard to tell,
    because we are at the end of the line right there, and whether
    or not they will compete with one another to get the grain to
    pour it, I am not sure. I would hope that they would do that,
    be more competitive, but being at the end of the line of a rail
    company, I am not sure that they would.
        Mr. Self. I really do not know what the answer to that is.
    I am not certain I understand how that would work, but I
    certainly lack the concept, and would pursue it further. I
    would hope that if there was some real way to make competition
    available there, that more than the railroad that is now
    serving us would also want to serve us.
        Mr. Snovitch. I believe it would, and my analogy is the
    electric utility business. I mean at one time we never wanted
    to go into other people's service territory and build an own
    generation, but once you see if you can make money, you are
    going to try to compete, and you are going to--they are going
    to go into that service territory, and I think the same thing
    would happen with the railroads. The best one will win, or the
    best ones will win.
        Senator Murray. Well, thank you, Mr. Chairman, and I do
    have some other questions, and I might submit a few of them.
        Senator Shelby. Sure. The record will stay open. Gentlemen,
    we thank you for being our first panel, and we appreciate your
    views, and some of the questions that were asked, you were
    going to furnish the information to the committee, and we would
    appreciate that very much. Thank you for appearing here with
    us.
        Our second panel will be Mr. Richard Davidson, Chairman,
    CEO, and President of Union Pacific Railroad; Mr. Rob Martinez,
    Vice President of Marketing Services and International, Norfolk
    Southern Corporation; Mr. Peter Rickershauser, Vice President,
    Network Development, Burlington Northern Santa Fe; Mr. Mic
    Dinsmore, Chief Executive Officer, Port of Seattle; and Ms.
    Karen Schmidt, Executive Director, Freight Mobility Investment
    Panel, State of Washington.
        We welcome all of you here as our second panel. Your
    written statements will be made part of the record of this
    hearing in their entirety, and if you would basically sum up
    your comments.
        We will start with you, when you are ready, Mr. Davidson.
    STATEMENT OF RICHARD K. DAVIDSON, CHAIRMAN, CEO, AND
                PRESIDENT, UNION PACIFIC RAILROAD
        Mr. Davidson. Thank you, Senator. My detailed comments,
    graphs, and charts will be much more explanatory, I suppose,
    than my remarks.
        Senator Shelby. Take your time on it, and explain it. We
    want to learn.
        Mr. Davidson. Absolutely. We just have a few that we are
    going to show, but first off, let me thank you for inviting us
    here.
        I am Dick Davidson, Chairman of the Union Pacific
    Corporation. I have had 41 years in the business this coming
    July, so I have seen it all, the good, the bad, and the ugly,
    and I am happy to say we are seeing better times today.
        The Union Pacific has recovered from the problems we had a
    few years ago, and we are strong and healthy today. In the year
    2000, our traffic grew by 4 percent, on top of 8 percent growth
    in 1999, but as you know, we are in the midst of a slowing
    economy right now, which is displayed on this chart. You can
    see how we sort of fell off a cliff in the fourth quarter of
    last year, and I am happy to say in the first quarter of this
    year, we saw it bounce back in January----
        Senator Shelby. Do you want to run through your chart with
    us just slowly?
        Mr. Davidson. Surely. Can I extend my 5 minutes?
        Senator Shelby. Yes, sir. Slowly. Take your time.
        Mr. Davidson. We saw a record growth actually in the month
    of October. We were up year over year in the months by about 7
    percent.
        Senator Shelby. Why was there record growth? Was that
    because the economy was hot? Was it cold? Grain? Was it a
    combination of things?
        Mr. Davidson. It crossed all commodity lines.
        Senator Shelby. Okay.
        Mr. Davidson. Our automotive traffic was very strong, coal
    growth was good. Basically everything was hitting on all
    cylinders. In the month of November, though, we saw a decided
    softening, particularly in the automotive and chemical
    business, and those sorts of commodities, with only 1.3 percent
    growth, and then in December, when we were hit with extremely
    tough winter weather, and a huge slowdown in automotive
    production, we were actually down 5 percent year over year.
        Then in the beginning of 2001, in the month of January,
    once again we saw a 5 percent growth, and that was driven
    mostly by strong energy loadings, coal----
        Senator Shelby. Cold winter, maybe?
        Mr. Davidson. Cold winter. No question about it.--and a
    good operation in the Powder River Basin, and also Utah and
    Colorado, plus we saw strong agricultural loadings, too.
        Grain picked up markedly, and so in the month of February,
    once again, bad weather hit, and it kind of slowed things down
    again, but I am happy to say that in March we are up about 4
    percent so far for the month, once again, driven primarily by
    strong coal loadings and agriculture, but I am happy to say the
    automotive business is not as weak as it was earlier in the
    year. Our auto business has only down about 3 percent for the
    month, so it has been a pleasant surprise.
        Senator Shelby. When you say auto business, is that the
    shipping of parts, of cars, or what?
        Mr. Davidson. It is both. Our business, we have a very
    strong market share in the western part of the United States,
    fortunately. About 75 to 80 percent of our movement is finished
    automobiles, and about 25 percent is parts, and parts is a
    great growth area for us as our service gets better and better.
    We are replacing truck in many categories.
        We have recently introduced a broad range of new products,
    service innovations that have brought to us and have made
    possible by the mergers we have gone through. A number of those
    are laid out, nine or ten, in number, in my written testimony,
    that I will not go through, but I want to mention one as an
    example.
        This is a new service we call Speed Link, which is shown
    here on the easel, that runs between Portland and Los Angeles,
    and it is actually a combination of truck and rail service,
    coupled. We are running a fixed consist of boxcars between
    those two cities, with truck bringing less than boxcar loads of
    business to the rail system, and transloading these commodities
    from truck, to rail. We run expedited service to Southern
    California, and then do just the reverse. We take the products
    out of the boxcar, put it on truck, and deliver it in small
    lots to the customer. So it is an innovative new service that
    is going to start up in the middle of next month, once again
    made possible by the merger.
        It would not have been possible, except for the merger of
    the Union Pacific and the Southern Pacific. There was no
    contiguous rail line that ran from the Pacific Northwest to
    Southern California. Today, there are two.
        We have also created new alliances with our connecting
    railroads to provide new service and improved existing
    services. Again, there are a number that I have pointed out in
    my written testimony, but I wanted to just point out one today,
    that we call Express Lane service, with the CSS Railroad, that
    originates in the central part of California and the Pacific
    Northwest, and this is aimed at agricultural products, like
    grapefruits and vegetables.
        As an example, in our annual report this year, we have
    featured one of those customers, Sunkist Growers. The wine
    shippers and a number of other customers have availed
    themselves of this service. It is guaranteed service from the
    West Coast to New York, Boston, Atlanta, and Florida.
        Senator Shelby. How many days?
        Mr. Davidson. Eight days to New York, and nine days to
    Boston. Now, you will say that is not as fast as truck, and it
    is not. Trucks could probably do it in six or seven, but the
    customers are looking more for reliability. In fact, in our
    service guarantee, we offer your money back if we do not meet
    the target.
        We charge a little premium for that guarantee, but our
    service has been so reliable that none of the customers use
    that guarantee. They just rely on our service without it.
        Senator Shelby. How much more can you ship per car than
    they can put on a truck?
        Mr. Davidson. At least three truckloads per car. So it has
    been meeting with phenomenal success. We are bringing a lot of
    that good West Coast wine to the East, you will be happy to
    know.
        Senator Shelby. Senator Murray would, in the Columbia
    Valley, right?
        Senator Murray. The Washington State wine. Correct.
        Mr. Davidson. I have heard service mentioned a number of
    times this morning, and we were certainly part of that when we
    had trouble with our merger integration, but I am happy to say
    today we are offering, in most cases, very good service. In
    fact, we make customer surveys every month to measure their
    satisfaction with us, and we are at all-time high levels of
    customer satisfaction today.
        But the key to that, to good service and improving service
    is investment. Over the past 5 years, we have put $10.5 billion
    in capital in our system to provide better and better service.
    This year, we intend to spend almost $1.9 billion again, even
    though this is a tough year for us economically.
        Last year, we acquired over 450 new locomotives, replaced
    about 1,200 miles of rail, installed over 3.3 million ties. A
    good example of investment power, and the relationship between
    investment and service, was a project we had across central
    Nebraska, where we actually, in one case, built the fourth main
    track, and in another case built a third main track for part of
    this railroad, and upgraded the other two at a cost of over
    $325 million, which you can see the results that have flown
    from this.
        Our trades per day are up substantially, and we have
    capacity for many more. Our velocity has increased over 50
    percent. Our re-crew rates have dropped by 80 percent, and we
    have the capability to grow by about another third.
        Senator Shelby. What do you mean by re-crew rates----
        Mr. Davidson. Re-crew rates is where you have so much----
        Senator Shelby [continuing]. Because we do not know.
        Mr. Davidson. I am sorry. I should have been more explicit,
    but----
        Senator Shelby. No, no. She might know, but I do not know
    what----
        Mr. Davidson. I am probably taking too much of your time.
        Senator Shelby. No, no. This is important.
        Mr. Davidson. A re-crew is when you have congestion or do
    not have adequate capacity, and your train does not get from
    its point of origin to its destination within the prescribed
    time, which is 12 hours, and then you have to transport another
    crew out, and----
        Senator Shelby. That runs up labor costs, does it not?
        Mr. Davidson. Oh, it is terribly expense. That is exactly
    right. So that is why it is important that we, as our business
    grows, that we have the revenue to support capital investment
    to extend that capacity. That is just one example. There are
    many, many more.
        The number one focus on railroads, though, is safety of our
    employees. We have $50,000 people working day in and day out on
    the Union Pacific, and I am happy to say that we have been
    able, through continued strong investment, to provide a safer
    place to work, as you can see on this chart.
        You can see what has happened in the trend with employee
    personal injury since deregulation in 1980----
        Senator Shelby. How have you done this?
        Mr. Davidson. Well, through improved processes, procedures,
    improved----
        Senator Shelby. Training?
        Mr. Davidson [continuing]. Training, and improved
    workplace, a better track structure, better signal systems,
    better equipment for the employee to work on, and certainly,
    training. So it has been a great story, and one that reduced
    spending would certainly jeopardize.
        I wanted to talk about our merger with the Southern Pacific
    a little bit. People have said there is reduced rail-to-rail
    competition.
        The truth of the matter is, that is the furthest thing from
    the truth, because wherever our two railroads serve a common
    customer, we substituted, through a cooperative effort with the
    Burlington Northern, to step in the role of the SP, and to
    provide competition, so what we had was a dying railroad with
    the Southern Pacific, they were losing $500,000 a day, 365 days
    a year, when we acquired them, and we substituted the
    Burlington Northern, which has enormous reach, enormous
    strength, and strong finances, to compete, instead of the SP.
    So actually, competition was strengthened, and not weakened.
        Additionally, as I mentioned, we brought railroad
    competition along the I-5 corridor in the Western part of the
    United States. Where before there was not even one railroad
    with a contiguous operation, there are now two.
        New competition has also been introduced, with the ability
    to introduce transload facilities, like I talked about between
    Portland and Southern California, BN now has the right to build
    in or build out to places where the SP had that right prior to
    our merger. In fact, it has just been exercised, where it was a
    recent announcement, where Burlington Northern is building in
    to a Union Carbide facility in Southern Texas, where they have
    the economic incentive to do so, and will provide head-to-head
    competition for their business.
        It also happened in the Powder River Basin. The Union
    Pacific built into the Powder River Basin in the early 1980s,
    where we had an economic incentive to do so, not because of
    forced government regulations. It was a free market that
    permitted that to happen.
        The challenges we have facing us today are the cost of
    capital, and once again, you can see the chart displayed here.
    Red shows what the range of what the cost of capital is, yellow
    shows what the railroads are achieving today, and as you can
    see, is far short of what the market would require. You could
    put your money in a government bond and be better off than
    buying a railroad stock.
        Senator Shelby. But are you not doing better?
        Mr. Davidson. We are doing better. I am happy to say we are
    doing better.
        Senator Shelby. You have to do better.
        Mr. Davidson. You are exactly right, or nobody is going to
    invest in us. Railroads are making progress, uniformly making
    progress. However, a strong group of shippers, some shippers,
    now would like to see us re-regulated, or would like to see
    forced access to give our competitors access to the facilities
    we serve. This is something they would resist to the death if
    their competitors suggested the same thing with their plants.
    They would fight to the death against it.
        Senator Shelby. How do we work that out? How do we do
    this----
        Mr. Davidson. Just like I said----
        Senator Shelby [continuing]. Because we are not interested
    in re-regulation, but we are very interested in competition,
    and the shippers, you were here earlier, and you heard them,
    and we hear from them every day.
        Mr. Davidson. Let me mention----
        Senator Shelby. That is the problem, how do we bring real
    competition to where you have captive shippers?
        Mr. Davidson. Today, railroads enjoy about 9 percent of the
    freight revenue produced in the United States. Trucks have over
    80 percent. Barges and pipelines have the rest. I would say
    there is an awful lot of competition in this country today, or
    we would certainly have revenues far stronger than that.
        Senator Shelby. But in certain areas, there is no real
    truck competition. We just heard from the gentleman from
    Pennsylvania here, coal and others, and the one from
    Mississippi, Mr. Self, and so forth. What we are interested in
    is----
        Mr. Davidson. Mr. Self, I am happy to say, is a great
    customer of ours.
        Senator Shelby. I know that. He did not say he was not.
        Mr. Davidson. No, he is, and we enjoy a great relationship,
    and I would also tell you that his facilities where their
    fertilizer is produced are located on the Mississippi River,
    and you heard him say he ships over $1 billion in
    transportation costs out of those facilities every year, and I
    would love to crack more of that and put it on the rail.
        In fact, we are working very hard today to convert more and
    more water competition to the rail, and I will give you another
    example.
        In the Houston Port area, which is the largest chemical
    complex in America, you hear about lack of competition, but the
    truth of the matter is, according to our best estimates, only
    about 30 percent of the product produced in the Port area moves
    by rail. The rest moves by truck, by pipeline, or water. So
    there is a huge amount of competition out there, and where
    there is an economic incentive for a rail to build in or build
    out, or a customer to build in or build out, they will do it,
    and I have seen it time after time.
        There is a large power plant down just south of Houston
    that was served with just the Burlington Northern. They built
    25 miles of railroad to get to us. There were a group of
    chemical customers just south of Houston that were served just
    by the Southern Pacific before we acquired them. We made a deal
    to build into them.
        The Burlington Northern today is building a new railroad
    into a chemical customer, so where the economics of the deal
    will support that sort of competition, it will happen, but it
    is not because of forced access by the government. That is the
    difference. It will happen, if there is an economic reason to
    do so.
        Senator Shelby. Well, we have been hearing that there is an
    economic reason to do so. That is why we wanted to have you up
    here today.
        Mr. Davidson. Well, I will tell you, and I commensurate
    with the gentleman from Washington, quite honestly, where he
    has short-line railroad serving his grain elevators, but I have
    been in the situation, from a big railroad point-of-view, where
    those branch lines are not economic to serve, and we have tried
    to reach accommodations with short-line operators to put them
    in our stead, because their costs many times are lower than
    ours, and they can be more nimble than we can, and we have seen
    it succeed many times, where they were to grow the business,
    and we have not, but it is just a case of economic reality, if
    there is not enough business there to support the operation, I
    mean no amount of wishing can make that go away.
        Senator Shelby. What about competition----
        Mr. Davidson. It is a fact of life.
        Senator Shelby [continuing]. Between the railroads
    themselves? Most of you are railroad people, but we have
    examples, and have been told of this, where there is really no
    competition between railroads. I do not know how we work this
    out. I do not want to re-regulate, but I certainly want to
    bring competition. If we do this, that is why we are holding
    these hearings.
        Mr. Davidson. Senator, I must tell you, I think in some
    cases that is going to be very difficult to do, if there is not
    the density of traffic there to make it economically possible.
    Obviously, everybody loves rail service, because it is far more
    economic than trucks, or in many cases, even water, but you
    have to have the economics there, unless the government wants
    to own it and subsidize it through the taxpayers.
        Senator Shelby. Oh, no, we do not want that.
        Mr. Davidson. You had a dose of that once, and----
        Senator Shelby. The North has had a lot of doses of it,
    have they not?
        Mr. Davidson. Excuse me?
        Senator Shelby. The Canadians have had a big dose of it.
        Mr. Davidson. Well, sure, and the Europeans, and Mexico. In
    fact, as you know, the government used to own all the railroads
    in Mexico. Today, they are privatized, every one of them, and
    you know the model they used was the U.S. rail system.
        Senator Shelby. I personally do not want the government to
    own anything, you know, not in----
        Mr. Davidson. That would be an unintended consequence, so
    if you tried to force government-forced access, that is--if
    there is not an economic motive to do it, if there is not an
    economic support system, it will fail. It is just--however
    unintended the consequences are, that would be the outcome of
    it.
        Senator Shelby. What about people who have brought up to
    me, and they say, well, you know, in the utility business, the
    transmission of electricity wheeling, which FERC has mandated
    basically that the power lines be used by the non-owners in a
    sense----
        Mr. Davidson. Right.
        Senator Shelby [continuing]. What is wrong with the
    competition, I mean the analogy of wheeling of electricity to
    railroads? I am talking about the free competition between the
    railroads themselves.
        Mr. Davidson. Let me say this, I am certainly not an expert
    on utility deregulation.
        Senator Shelby. Well, none of us are.
        Mr. Davidson. I guess it has worked out in some cases, and
    in other cases, it has been a miserable failure. I would say
    this, though, nobody has ever talked, when they talk about
    taking away our assets, they have never talked about
    reimbursing us for those assets, or reimbursing us for lost
    revenue.
        As I understand the electricity business, and we have a
    gentleman here from PPL who could explain it a lot better, as I
    understand it, they have been able to capture their standard
    costs somehow, and that is something nobody has ever talked
    about in the railroad business, is somebody handing us a check
    and saying we are going to expropriate your assets, and here,
    we want to compensate you for that. They talk about it like it
    is free, and it is not free.
        Senator Shelby. Nothing is free. We are not advocating that
    at all.
        Mr. Davidson. Nothing is free.
        Senator Shelby. In fact, I am not advocating anything
    except competition.
        Mr. Davidson. That little 108 miles I talked about right
    there, that was the $350 million project to do that, so the
    railroad business is a very, very expensive business, and
    anything that reduces our return on assets or our profits is
    going to take away our ability to reinvest.
        You saw that we put 21 percent of our revenue back into the
    railroad every year in capital improvements. The next most
    costly capital industry, capital-intensive industry, in the
    United States takes 5.5 percent of their capital to go back
    in----
        Senator Shelby. Well, we want you to make a profit, but now
    I believe everybody does better when there is more competition,
    and that is what we are talking about.
        Mr. Davidson. Well, I understand, but let me reiterate----
        Senator Shelby. You are talking about the return on your
    investment, and we are talking about competition, which more
    competition might bring you a better return.
        Mr. Davidson. Well, I know. A lot of people espoused that
    theory, but I will tell you this, if putting two railroads,
    where one has been running, if there is inadequate capacity,
    and that sort of thing, is a foolhardy way to approach it, and
    we saw that when we had our merger trouble, because we had some
    railroads that were introduced that were supposedly going to
    help us, and it just made things worse, because of the
    congestion it created, but anyway, I will get through my
    remarks here.
        Senator Shelby. You go ahead.
        Mr. Davidson. If you force access, along with that you are
    going to have price controls, which is what we had before 1980,
    when the current-day STB, which was then the ICC, used to have
    to approve all of our rate increases, or decreases, and we
    could have no contracts. Twenty-five percent of the railroad
    industry was bankrupt in those days, when the government
    controlled the pricing.
        We figure today, if forced access came about, as a number
    of people have advocated, it would result in a minimum of 40
    percent of our operating revenue going away, which would
    virtually put us under water, and take away the ability to
    reinvest in our railroad, so obviously, you can tell that I
    feel rather strongly about that.

                               PREPARED STATEMENT

        I would urge you to reject any of those attempts to take
    our assets away, and force access, and not put us back in the
    bad old days before Staggers became the rule of law in 1980.
    That is it. I would be happy to answer any more questions that
    you might have.
        Senator Shelby. Thank you.
        [The statement follows:]

                   Prepared Statement of Richard K. Davidson

        Good morning. My name is Dick Davidson, and I am the Chairman and
    CEO of the Union Pacific Corporation. I am pleased to be here today,
    and I thank you for the opportunity to testify about competition in the
    rail industry and freight mobility.
        However, before discussing these issues, I should probably tell you
    a little about my background. I started as a brakeman on the Missouri
    Pacific Railroad in 1960. I worked my way through the operating ranks
    at Missouri Pacific to become the Vice President of Operations. Union
    Pacific Railroad then acquired the Missouri Pacific, and I have held
    various positions with the UP including Executive Vice President of
    Operations, Chairman and CEO of the Railroad, and Chairman and CEO of
    the Corporation. I have been part of the rail industry all of my
    working career. I tell you this because our industry's history is
    critical to the future of our success. I was part of this industry when
    the government heavily regulated it. I have seen first-hand the lack of
    investment and stagnation that occurs when the government, rather than
    the marketplace, determines what constitutes competition. Since 1980,
    the shackles of government regulation have been lifted. This has meant
    increased investment, increased productivity and increased safety. At
    the same time, rates have fallen over 50 percent. There are some who
    want to go back towards reregulation. As one who lived through those
    dark times, I can safely say that would be a terrible mistake.
        As you know, our industry has gone through a series of mergers, and
    service disruptions followed for many rail customers. In our case, we
    came out of those problems in 1998, and I am happy to tell you that UP
    is once again strong and healthy. As you can see in 2000 our traffic
    grew by 4 percent on top of a 7 percent growth in 1999. Although we are
    still in the midst of a slowing economy, we are optimistic about
    continued growth in the future.
        To aid that growth, we have recently introduced a broad range of
    new service products. These include:
      --I-5 service that provides express service from the Pacific
            Northwest to Oakland, Los Angeles, and Phoenix;
      --Intermodal outreach;
      --Auto parts transload; and
      --Speed Link.
        The I-5 service is a product we would not have been able to offer
    without the UP/SP merger. Prior to our merger with the SP, no railroad
    had single line service up and down the West Coast. As you can see both
    the UP and BNSF have this capability as a result of the merger. This
    service allows us to take traffic from the Pacific Northwest to various
    cities in the Southwest in a 5, 7, or 9-day timeframe, depending on the
    customer's needs.
        The other three services expand our market reach by providing high
    quality transportation designed to meet our customers' requirements.
    Some of these products combine premium train service with truck and
    transload service. Our goal is to offer products where we can partner
    with trucks to offer our customers services based on what each of us
    does best--rail for the long haul and trucks for the short haul.
        The Intermodal outreach program is truly unique. Partnering with
    trucks based on what each of us does best, we have been able to expand
    our market reach. With this program, we go to customers who have not
    been able to use rail service because they don't have a rail spur. A
    truck picks up or drops off the merchandise, brings it to us or takes
    it from us, and we handle the long haul. As you can see this has
    allowed us to reach into places like Detroit and Columbus.
        The auto parts transload is another example of partnering with
    trucks. With this product, three truckloads of auto parts are shipped
    to St. Louis and put into one boxcar. We then take the auto parts by
    train to Mexico City. Shipping these parts by truck alone takes 8 days.
    By partnering with trucks, we can now deliver the parts in 6 days.
        Our newest product offering is Speed Link, and it will start in
    mid-April. As with the other services, this product also has us
    partnering with trucks. Speed Link is focused in the I-5 corridor along
    the West Coast. It again is geared to customers who have not
    traditionally used rail. A truck will go to the customer, pick up or
    drop off the merchandise, bring it to us or take it from us at a
    transload center, and we will handle the long haul. This service is
    aimed at business that would normally go by truck from the Portland
    area to Los Angeles, and we will be able to get our customers' goods to
    destination in 45 hours.
        We have also created new alliances with our connecting railroads to
    provide new services and improve existing ones. These include:
      --Express lane service with CSX for food and food products;
      --UPS coast-to-coast with Norfolk Southern;
      --Pacific Canadian-American service with the Canadian Pacific; and
      --Joint dispatching with the BNSF.
        While Speed Link and the other services I talked about have us
    partnering with trucks, these products have us forming alliances with
    other railroads to offer new services.
        One of our most exciting new products is express lane service with
    CSX. With this service, we offer seamless transcontinental service to
    bring perishable food and food products from California and the Pacific
    Northwest to the East Coast. This started out with 40 cars on one train
    going from the Pacific Northwest to New York and Boston. It has been so
    successful that we are now expanding the service to Georgia, Florida,
    Boston, New York and Baltimore. We guarantee this service, but because
    our service has been so consistent, only two of our many customers have
    purchased the guarantee. These are customers like Sunkist and Grimmway
    Farms who haven't used rail for years because the commodities they are
    shipping are perishable. In addition, 40 percent of this business
    originates on shortline railroads that interchange the business to us.
    Using alliances with shortline and Class I railroads, we are able to
    bring these customers back to rail.
        Another great example is our alliance with the Norfolk Southern to
    bring new, improved seamless service to UPS, one of our major
    customers. UPS came to us requesting 5 day, coast-to-coast service. By
    working with the Norfolk Southern, as if we were operationally one
    railroad rather than two, we were able to meet that customer's needs,
    and I am proud to say that we have gone eight months without missing a
    single sort. (A sort is our deadline that requires us to arrive at our
    destination within a prescribed two-hour window.)
        The Pacific Canadian-American Service with the Canadian Pacific
    Railroad is another example of how alliances work. The Canadian Pacific
    sweeps the Pacific Northwest for products such as potash, lumber, and
    paper. Then we partner with them to provide seamless service to central
    California. We can do this 2 to 3 days faster than before, and it is so
    successful that we have been able to increase the volume of this
    traffic by about 30 percent over the last couple of years.
        The final example is not a new service line, but it is an example
    of how the rail industry is working together to provide better, faster
    service to our customers. There are many places the BNSF and the UP
    operate together, both in the same vicinity and over each other via
    trackage rights. To facilitate the movement of our trains in busy
    corridors and terminals, we have opened joint dispatching centers.
    Instead of each railroad controlling operations from their own control
    center, we have combined dispatching into a single office, enabling
    both of us to move more trains and better service our customers.
         As anyone in a service industry will tell you, service is always
    an issue, but as these products illustrate, we are constantly striving
    to improve. We are also introducing new improved services for other
    segments of our customers. For instance, we have created what we call
    the Freeport Pipeline for Dow and Occidental Chemical.
        Working in a true partnership with Dow and Occidental, the Freeport
    Pipeline creates trainload movements out of what was previously carload
    movements. Working with our customers to change their shipment
    patterns, we are able to bypass terminals, dramatically reduce cycle
    times, and meet our customer's 95 percent on-time delivery objective.
    In return, they are able to reduce costly inventory carrying charges,
    as well as the number of cars in their fleets.
        In all these cases, it is important to note that rather than just
    offering these products, we started by designing reliability into the
    product itself thereby increasing our service dependability. By doing
    so, we can expand our revenue base, increase our productivity by
    getting better and more use out of the equipment we have, take more
    trucks off the road, and provide first-class service to our customers.
        Having said that, the real key to service is investment. Capital
    investment in the rail industry is like food to the human body. Without
    it we will wither and die. As a percentage of total revenues, the rail
    industry is the most capital intensive in the world. As you can see we
    invest over 20 percent of our revenues back into the system. The
    closest industry to us in that regard is the paper industry, and they
    only re-invest 5.5 percent of their revenue. Unfortunately, this level
    of investment is still not enough. We still do not earn our cost of
    capital, which I will discuss later, and as a result, the financial
    marketplace will not allow us to invest as much as we would like.
        Over the past 5 years, Union Pacific has invested over $10.5
    billion in our plant and equipment. This year we expect to invest up to
    $1.9 billion. Last year we acquired 451 new locomotives at nearly $2
    million a unit. We replaced 1,185 miles of rail and installed 3.3
    million ties. This is money we have to spend to keep the railroad in
    the shape it needs to be in to meet the demands of our customers.
        A good example of the power of investment is the triple tracking we
    did from North Platte, Nebraska to Gibbon, Nebraska. This is one of the
    busiest stretches of rail in the world, and triple tracking this
    segment of line cost $327 million. Was it worth it? Absolutely. As the
    chart indicates, prior to the triple track project, we were able to get
    107 trains a day over this segment of line, and our average speed was
    23.8 mph. Today we are able to get 139 trains a day over that line at
    an average speed of 36.4 mph. That is a 30 percent increase in trains
    and a 53 percent increase in speed. This also has allowed us to cut our
    recrew rate by 80 percent. (The recrew rate is how many times we have
    to change the crew on the locomotive.) This makes us more efficient,
    with our customers being the ultimate beneficiaries.
        Without the ability to generate capital, we would not be able to
    take on this kind of project or offer the kinds of improved services I
    outlined earlier. Capital also allows us to make sure we run a safe
    railroad for our employees and the public. As a service company, our
    main goal is to serve our customers, but our number one priority is the
    safety of our employees. As you can see, since deregulation, we have
    made huge strides in this area as well. Accidents, injuries, and loss
    or damage to our customers' merchandise are all down substantially. We
    would submit that there is a direct correlation between the ability to
    invest and the safety of our workforce.
        All of this could be put in jeopardy by injecting the government
    back into the rail industry. Some of our customers complain that as a
    result of mergers, there is a lack of competition in our industry. We
    believe these complaints are not really about consolidation in the rail
    industry, but rather they are attacks on our ability to differentially
    price our services. One of the major benefits of the Staggers Act (the
    act that partially deregulated the rail industry) is that it allows us
    to act like any other business in the United States with regard to
    pricing. This is called differential pricing, and it is the ability to
    charge those with fewer options more than those with more options.
    Every business in the U.S. does this. However, with the rail industry,
    while we can price differentially, the Staggers Act provides for high-
    end rate protection for shippers. This formula has worked exceedingly
    well over the past 20 years.
        So how is competition in the rail industry? We believe it is
    healthy.
        For instance, our merger with the Southern Pacific did not reduce
    competition; it increased it. The SP was a struggling railroad. Prior
    to our merger, the SP had a negative cash flow in 15 of its last 17
    years. At the time of our merger, it was losing a half a million
    dollars a day in cash flow. It could not invest, and with the merger of
    the Burlington Northern and the Sante Fe Railroad, the SP knew it could
    not survive. So how did our merger increase competition? First, no
    customer that had been served by both the SP and the UP went to only
    having the UP. We negotiated an arrangement where the BNSF received
    roughly 4,000 miles of trackage rights over our lines so it could
    provide competition previously provided by the SP. BNSF is, of course,
    a much stronger and more effective competitor than was the financially
    weak SP.
        Second, with the merger we introduced direct-line competition along
    the I-5 corridor on the West Coast that previously did not exist. Prior
    to our merger, no railroad had direct-line service along the West
    Coast. As part of our merger, both the UP and the BNSF now have this
    service. In fact, some of the new product offerings I discussed earlier
    in my testimony would not be possible without this direct-line
    capability.
        Third, new competition is introduced on a regular basis with the
    construction of new transload facilities and new build-ins and build-
    outs to add service by a second railroad. This kind of market-based
    competition is worth taking a few moments to explain. A transload
    facility, as I've discussed before, is a facility where trucks and rail
    interchange traffic. A build-in or build-out is the capability of a
    railroad or customer to build a line to a competing railroad. A current
    example of how this works is the plan of BNSF and Union Carbide to
    build a section of rail out to the BNSF from Union Carbide's plant in
    North Sea Drift, Texas. This will give Union Carbide the ability to
    ship via UP and BNSF. The government didn't dictate the decision. BNSF
    and Union Carbide negotiated it, and neither would have made the
    decision without a financial incentive.
        Of course competition from other modes of transportation remains
    fierce. For example, contrary to popular belief, in the area served by
    the Houston Port Terminal Railroad, one of the largest chemical
    complexes in the country. We estimate that rail carries only
    approximately 30 percent of the traffic. The rest goes by pipeline,
    barge or truck.
        The important thing to note about all this competition is that it
    is the product of the free marketplace at work. Another example is the
    Powder River Basin coal fields, where we spent over $500 million
    building into the region and a third railroad is now attempting to do
    the same. This is not the result of artificial, governmentally
    regulated competition.
        What challenges lie ahead for the rail industry?
        One is the cost of fuel. As you can see from the cost of fuel has
    sky rocketed over the past year. Union Pacific uses 1.3 billion gallons
    of fuel a year. We manage our fuel prices as best we can, but with this
    kind of consumption, rising fuel prices takes a big bite out of our
    revenue. Last year we spent roughly $450 million more on fuel than we
    did in the previous year.
        Another challenge is to earn our cost of capital. This is basically
    our need to get an adequate rate of return on what we invest in our
    system. As I mentioned earlier, we are the most capital-intensive
    industry in the country. We have to plow a lot of money back into our
    system. However, we do not get back in revenue what we invest. Another
    way to look at it is it's like buying things on your credit card at a
    15 percent interest rate and loaning them out at 8 percent. Long term
    we cannot continue to operate like this, but as you can see we are
    closing the gap.
        Finally, our biggest challenge is regulation--it is the one thing
    that could take all the progress and gains we have made over the past
    20 years and make them for naught.
        As you can see prior to the Staggers Act, our industry was in
    shambles. I know because I saw it firsthand, and it is a painful
    memory. Over 20 percent of the mileage was in bankruptcy. We got a 2
    percent rate of return on our investment. Nearly 50,000 miles of track
    were under slow orders. We had $16-20 billion in deferred maintenance.
    Our market share was down 35 percent. We had rising rates and declining
    service, and safety was a serious issue.
        Congress recognized the problem and passed the Staggers Act,
    partially deregulating the rail industry. From 1964 to 1980,
    productivity, volume, revenue and rates, on a ton-mile basis, were all
    flat. The Staggers Act passed and, as the attachment shows, our
    industry has regained health and vibrancy. Productivity and volume per
    ton-mile are up. Rates and revenue per ton-mile are down. The gap
    between productivity and volume, and revenue and price shows that while
    the railroads benefited from the Staggers Act, our customers gained
    even more as we shared most of these productivity gains with them. The
    productivity and efficiencies we gained through the Staggers Act
    allowed us to lower rates by over 50 percent and at the same time
    generate the revenue we need to re-invest in the system. By any
    standard, the U.S. rail system is the envy of the world.
        Unfortunately, there is a select group of powerful shippers who now
    want to reregulate railroads by forcing us to give our competitors
    access to our facilities and eliminating our ability to differentially
    price. They are trying to do something to us that they would fight to
    the death over if it were proposed for their businesses.
        To make matters worse, along with giving access to our competitors,
    they are advocating price controls limiting what we should be paid for
    this access to something far below what a recent FRA-chartered study
    found would be fair and proper (see attached study).
        This type of forced, price controlled, governmentally imposed
    access would trigger a 40 percent loss in our net revenue that would
    virtually wipe out our profits. In 1999 as an industry, we grossed
    $33.5 billion in revenue. Of this, $28 billion went toward operating
    expenses, resulting in $5.5 billion in net revenue. The proposals
    advanced by this select group of shippers would, on a conservative
    basis, eliminate $2.4 billion of this net revenue. Obviously, this
    would make it virtually impossible to make the investments necessary
    for our future. This type of needless, governmentally imposed revenue
    transfer from our industry to others would devastate the rail industry
    with the customers we serve being the ultimate loser.
        We strongly urge you to reject their attempts at reregulation and
    allow the railroads to continue on our path of progress since the
    Staggers Act.
        This hearing is also on freight mobility, and I turn now to that
    subject.
        Union Pacific serves every major western port, and we are always
    interested in exploring productive ways to enhance the ability to move
    freight and to make these ports more competitive. One of the biggest
    projects this country has undertaken to enhance the ability to move
    freight is the Alameda Corridor in California. This project essentially
    funnels all the traffic to and from the ports into one corridor. It
    allows the freight to move faster and, at the same time, helps
    eliminate congestion in the crowded Los Angeles basin. It is an example
    of how all levels of government and business can come together to make
    a project work.
        Union Pacific is also involved, at least tangentially, in a similar
    project in the State of Washington called the FAST Corridor. This
    project is similar in nature to the Alameda Corridor project in that it
    is attempting to facilitate the transportation of goods into and out of
    the Ports of Seattle and Tacoma and to eliminate congestion in the
    surrounding neighborhoods. A large part of the project is the
    elimination of grade crossings where highways cross over the railroad.
        I said we are tangentially involved in this project because the
    bulk of the project involves the BNSF Railroad. As I discussed earlier
    in my testimony, all railroads have huge capital needs, and we try to
    direct our resources where they will do the most good. We are
    supportive of the FAST Corridor Project because it will help the area
    and the Port. However, the benefit to rail will flow primarily to the
    BNSF. This does not mean we are unwilling to support the project, in
    fact we have agreed to participate in the cost of the grade separation
    structures which will cross our tracks. We have also urged Congress to
    provide funding for this project in TEA 21.
        One of the other aspects of this project is commuter rail, and I
    will now take a few moments to discuss our general views on commuter
    rail.
        Urban sprawl and congestion are problems facing city planners, and
    many commuter agencies are looking at passenger rail to solve their
    problems. We can empathize with these planners as we operate in many
    large cities and have employees there who must get around.
    Unfortunately, many of these agencies look at our tracks as a way of
    solving their commuter problems without considering that our rights of
    way are private, not public easements. We have limited capacity, and
    with that capacity we are in business to move freight. Moreover, if
    rail freight capacity is captured for commuter trains, more freight
    will be forced into trucks, and road congestion will get worse, not
    better. Preserving rail freight capacity is essential for the public
    interest. That is not to say we oppose commuter rail. We have partnered
    with many commuter agencies where the commuter agency can replace the
    capacity it takes from our business. These agreements have been
    negotiated on an arms-length, case-by-case basis.
        Today the American Public Transit Association (APTA) is calling for
    legislation that would force commuter rail on our tracks regardless of
    our position or the impact it would have on our ability to move
    freight. Not only do we believe this to be fundamentally unfair, but we
    also believe it to be a taking of private property. More importantly,
    it presents an interesting question for Congress, particularly in light
    of the subject matter of this hearing.
        You have heard from some shipper groups that want to reregulate our
    industry and curtail our ability to earn the revenue necessary to
    invest in our system. Congress will also be hearing from commuter
    authorities that want to use our tracks without fully compensating us
    for their use or without fully replacing the capacity that commuter
    rail consumes. Both proposals have the same objective, and that is to
    have the government take revenue from the rail industry and
    redistribute it to others, thereby reducing the ability of our industry
    to move the freight that makes up the building blocks of our economy.
    At the same time, you are hearing from others today who talk about how
    important it is to provide the infrastructure investment necessary to
    remain a competitive nation and to sustain economic growth. The
    dichotomy of these two schools of thought is striking and very
    frightening to us because we know we cannot have it both ways. We tried
    it once, and it did not work.
        Again, I want to thank the Subcommittee for giving me the
    opportunity to testify today. I would be pleased to answer any
    questions.

        Senator Shelby. Mr. Martinez.
    STATEMENT OF ROB MARTINEZ, VICE PRESIDENT, MARKETING
                SERVICES AND INTERNATIONAL, NORFOLK
                SOUTHERN CORPORATION
        Mr. Martinez. Thank you very much. By way of introduction,
    my name is Robert Martinez. I serve as Vice President of
    Marketing Services and International at Norfolk Southern.
    Previously, I served as a George Bush appointee, as Associate
    Deputy Secretary of Transportation at USDOT, and I was the
    first director of the Office of Intermodalism at USDOT.
        I also served as Secretary of Transportation for the
    Commonwealth of Virginia under then governor, now Senator
    George Allen. In my current capacity, I am responsible for the
    ports under NS System, I handle international business
    development, and I oversee market research and economics.
        Today, I would like to talk about competition in
    transportation markets. We believe that the free market is the
    best determinant of a fair price, and that government should
    consider stepping in only when there is a serious problem which
    prevents the market from functioning efficiently. Any company
    with true market power would charge high prices. Since Staggers
    rail revenue, in inflation-adjusted terms, has fallen 57
    percent.
        Large rate reductions have occurred across the board,
    including in such commodities as coal, grain, and chemicals.
    The STB, the U.S. Department of Energy, and the USGAO have all
    issued studies within the last 2 years which confirm a
    significant decline in rail rates. This documented decline
    continues as recently as 1999, per the most recent STB
    analysis, which just came out in December, which for that
    single year topped with a decline in rates of 2.7 percent in 1
    year.
        Railroads face effective competition. Motor carriers,
    barges, and pipelines are competitors. Other railroads are
    competitors. In addition, rail shippers have considerable
    market leverage arising from a combination of competitive
    forces, including product and geographic competition, and a
    shipper's countervailing power due to its size, important to
    the railroad, ability to shift production among its multiple
    plants, and so forth.
        U.S. producers enjoy the lowest average freight rates per
    unit of output anywhere in the world. That is an important
    competitive advantage. It would be foolish to expect that
    market prices will move uniformly on every commodity across
    every market segment. That is not how markets work. Yet, the
    reality is that since 1980, virtually every shipper has
    beneffited from deregulation, and the rate declines have been
    substantial in almost every instance.
        Were you to compare the trajectory in rail rates versus
    commodity prices, upon virtually every commodity, rail rates
    have fallen faster than the prices for the product transported,
    whether that is steam coal, final bread prices, or soybeans.
        In a couple of commodities like corn, the rates have
    declined at about the same amount, although more recent data on
    corn indicates a slightly greater decline in corn prices than
    in their rail rates, although, still roughly equivalent.
        In others, like autos, rail rates have declined
    substantially, while finished product costs of the goods have
    risen. U.S. producers enjoyed the lowest rail rates available
    anywhere in the industrialized world. That is not to say that
    railroads never have market power, but even in those relatively
    rare instances, rail shippers are provided special protection.
        Any time a railroad is found to be, quote, ``market
    dominant,'' the STB may limit the rate it charges. This means
    that in the few situations where there is an absence of
    effective competition, a railroad cannot charge more than a
    reasonable rate.
        Some shippers are hoping that the government will give them
    what the market will not. They want you to force us to give
    another railroad the right to use our tracks at an artificially
    low below-market rate. If they relied on the market, they would
    have to build a line to reach the other railroad, or pay fair
    market value for the use of our line. It is precisely because
    the market will not help them get lower prices that they turn
    to government.
        Railroads charge some customers more than they charge other
    customers, because that is what the market allows. Differential
    pricing is in the nature of how market works, and that
    principle extends quite apart from the rail industry. Customers
    who pay the higher rate want to pay less. They do not like
    differential pricing, even though it is clearly the most
    efficient way for the rail industry to price its services, and
    even though differential pricing is practiced throughout the
    economy, not just by railroads.
        For example, airlines charge last-minute business travelers
    more than individuals going on long-planned vacations. There is
    no reason for the government to step in and try to manipulate
    this market, given that it is functioning officially.

                               PREPARED STATEMENT

        The current regulatory scheme in place since the passage of
    Staggers over 20 years has allowed railroads to return to
    profitability, invest large sums in infrastructure, increase
    productivity, and return most of that productivity to customers
    via lower rates. Any review that government determines may be
    in the public interest should depart from recognition of the
    broad benefits that the Staggers model has facilitated.
        I thank you very much.
        Senator Shelby. Thank you.
        [The statement follows:]

                  Prepared Statement of Dr. Robert E. Martinez

        By way of introduction, my name is Robert Martinez. I serve as Vice
    President of Marketing Services and International for Norfolk Southern.
    Previously, I served as a George Bush appointee as Associate Deputy
    Secretary of Transportation at U.S. DOT. And, I was the first Director
    of the Office Intermodalism at U.S. DOT. I also served as Secretary of
    Transportation for the Commonwealth of Virginia under then Governor,
    now Senator, George Allen. In my current capacity, I am responsible for
    the ports on the Norfolk Southern system, I handle international
    business development, and oversee market research and economics. Today
    I would like to talk about competition in transportation markets.
        We believe that the free market is the best determinant of a fair
    price and that the Government should consider stepping in only when
    there is a serious problem which prevents the market from functioning
    efficiently. Any company with true market power would charge high
    prices. Since Staggers, rail revenue per ton-mile in inflation-adjusted
    terms has fallen 57 percent. Large rate reductions have occurred across
    the board, including in such commodities as coal, grain and chemicals.
    The STB, the U.S. Department of Energy and the U.S. General Accounting
    Office have all issued studies within the last 2 years which confirm a
    significant decline in rail rates. This documented decline continues as
    recently as through 1999, per the most recent STB analysis. In fact,
    just for the single year of 1999, the STB's analysis released in
    December indicates that rates declined an average of 2.7 percent--just
    for that 1 year.
        Railroads face effective competition. Motor carriers, barges and
    pipelines are competitors. Other railroads are competitors. In
    addition, rail shippers have considerable market leverage arising from
    a combination of competitive forces, including product and geographic
    competition and a shipper's countervailing power due to its size,
    importance to the railroad, ability to shift production among its
    multiple plants, and so forth.
        U.S. producers enjoy the lowest average freight rates per unit of
    output anywhere in the world. It would be foolish to expect that market
    prices will move uniformly on every commodity, across every market
    segment, to the same degree. That's not how markets work. Yet, the
    reality is that since 1980, virtually every shipper has benefited from
    deregulation and the rate declines have been substantial in almost
    every instance. Were you to compare the trajectory in rail rates versus
    commodity prices, on virtually every commodity, rail rates have fallen
    faster than prices for the product transported, whether that is steam
    coal, final produced bread prices, or soybeans. In a couple of
    commodities, like corn, the rates have declined about the same amount,
    although the most recent data on corn indicate a slightly greater
    decline in corn prices than in their rail rates, although still roughly
    comparable. In others, like autos, rail rates have declined
    substantially while finished product costs of the goods transported
    have risen. U.S. producers enjoy the lowest rail rates available
    anywhere in the industrialized world.
        This is not to say that railroads never have market power. But even
    in those relatively rare instances, rail shippers are provided special
    protection. Anytime a railroad is found to be ``market dominant,'' the
    STB may limit the rates it charges. This means that in the few
    situations when there is an ``absence of effective competition,'' a
    railroad cannot charge more than a ``reasonable'' rate.
        Some shippers are hoping that the Government will give them what
    the market will not. They want you to force us to give another railroad
    the right to use our tracks at an artificially low, below-market rate.
    If they relied on the market, they would have to build a line to reach
    the other railroad or pay fair market value for the use of our line. It
    is precisely because the market won't help them get lower prices that
    they turn to Government. They call it ``access'' and cloak it in terms
    of enhancing market competition, but nothing could be further from the
    truth. Railroads charge some customers more than they charge other
    customers because that is what the market allows us to do. Differential
    pricing is in the nature of how markets work, including quite apart
    from the rail industry.
        Customers who pay the higher rate want to pay less. They don't like
    differential pricing even though economists will tell you it is clearly
    the most efficient way for the rail industry to price its services and
    even though differential pricing is practiced throughout the economy,
    not just by railroads. Auto dealers have greater margins on luxury cars
    than on economy models. Airlines charge last-minute business travelers
    more than individuals going on planned vacations. There is no reason
    for the Government to step in and try to manipulate this market given
    that it is functioning efficiently.
        The current regulatory scheme in place since the passage of
    Staggers over 20 years ago has allowed railroads to return to
    profitability, invest large sums in infrastructure, increase
    productivity and return most of that productivity to its customers via
    lower rates. Any review that Government determines may be in the public
    interest should depart from recognition of the broad benefits that the
    Staggers model has facilitated.

        Senator Shelby. Mr. Peter Rickershauser, Vice President for
    Network Development, Burlington Northern Santa Fe. Sir.
    STATEMENT OF PETER RICKERSHAUSER, VICE PRESIDENT,
                NETWORK DEVELOPMENT, BURLINGTON NORTHERN
                SANTA FE
        Mr. Rickershauser. Good morning, Mr. Chairman, Senator
    Murray, and members of the subcommittee.
        My name is Pete Rickershauser, and I am Vice President for
    Network Development at the Burlington Northern Santa Fe Railway
    Company. I have served for over 29 years in the railroad
    industry in a variety of operating and marketing roles before
    assuming my current position. It is a pleasure to be here today
    in order to testify on matters that are of great importance to
    BNSF and the entire rail community.
        I regret that our Chairman, Rob Krebs, and our CEO, Matt
    Rose, could not be here this morning. They both wanted to
    testify, but both are tied up today in Fort Worth, Texas, at
    our BNSF Board of Directors meeting.
        I understand my full statement will be included in the
    hearing, so I will only take a few minutes to briefly summarize
    the contents of my prepared testimony, and I am pleased to join
    with my rail colleagues to discuss these matters. Since they
    have already covered most of the competitive issues, I want to
    focus my remarks on the subject of freight mobility.
        BNSF has also enjoyed a close and cooperative working
    relationship with the other panel members, the Port of Seattle
    and Karen Schmidt, as we have tried to facilitate the movement
    of rail freight to and from the ports in the Pacific Northwest.
    Because of the critical nature of this issue, BNSF, last year,
    assigned a full-time person from my area at BNSF at Seattle to
    lead and coordinate our port business development issues.
        In addition, a member of our governmental affairs team has
    served on a freight mobility task force in Seattle since its
    inception several years ago.
        A good deal of progress has been made to foster freight
    mobility, and there are two primary reasons for this. One is
    the nature of the innovative public/private partnership that
    has been established to address the issue, and the willingness
    of all parties to commit funding to advance the project.
        Second, is the total support of the Washington
    congressional delegation for it, led by Senator Murray. I want
    to publicly thank her for her leadership and her help in
    securing the necessary Federal funding for the FAST Corridor.
    Without this congressional support, and the full cooperation of
    my fellow panelists from Washington State, this freight
    mobility effort would not have gotten off the ground.
        We recognize that the rail industry encounters significant
    service problems in the mid- and late 1990s. These problems
    were serious, and to a great extent eroded the confidence of
    our customers and our ability to provide reliable service.
        BNSF got the service message from its customers, and we
    listened attentively to their concerns. We concluded that the
    problems which they raised were primarily caused by inadequate
    rail capacity due to increased business volumes, and the
    growing service demands of our customers.
        We also concluded that the only way to remedy this problem
    was by a massive investment in our rail infrastructure. As a
    result, BNSF spent $11 billion over the last 5 years for
    capital projects, including $1.7 billion for track and facility
    expansion. This, of course, is based on a corporation whose
    annual revenues are just over $9 billion a year.
        Some $135 million was spent to reopen the Stampede Pass
    Line in Western Washington, another $100 million was spent to
    redo the Argentine Yard in Kansas City, and approximately $200
    million has been spent to construct and equip our state-of-the-
    art network operations center in Fort Worth, Texas.
        In addition, we invested over $350 million to improve the
    infrastructure along our lines between the Pacific Northwest
    and Chicago.
        These investments have paid off and have enabled us to
    provide timely and efficient service to our customers. In fact,
    we have set record levels for on-time performance, dock-to-
    dock, over the past 2 years, with that service averaging over
    90 percent on time.
        BNSF has also been actively involved in promoting freight
    mobility in the Pacific Northwest. We have been an active
    partner in the FAST Corridor project, and have committed some
    $18 million for the grade separations encompassed by the
    project. The growth and container traffic for West Coast ports
    has been substantial, a seventy percent growth rate over the
    past 4 years.
        With this growth rate, we face enormous challenges, such as
    the elimination of rail and highway congestion, prevention of
    train delays, and responding to community concerns. These
    challenges will continue to increase, and we must make efforts
    to meet them. We must also continue to promote freight
    mobility, which is critical not only to BNSF and the Pacific
    Northwest ports, but also to our mutual customers around the
    country.
        We are also seeing increased demands placed on our freight
    system by public initiatives, such as the desire to institute
    commuter rail systems in the Seattle area, and proposals to
    expand inner-city passenger service. Again, we are working
    closely with all the concerned parties to accommodate these
    urgent public needs, but at the same time, not to jeopardize
    our ability to move freight officially and at the service
    levels our customers demand.
        I can assure the members of the subcommittee that we will
    continue our efforts to respond to these challenges, to satisfy
    our customers' concerns, to work with the ports and public
    agencies to expand our freight capacity, to relieve highway
    congestion, and to increase passenger mobility.
        While other rail witnesses have addressed the access and
    competition issues, I want to say just a few words about BNSF's
    perspective of them. As mentioned in my prepared statement, we
    have vigorous rail-to-rail competition in the western United
    States across our business lines.
        In addition, we have diligently pursued business growth
    along the 4,000 miles of trackage rights we obtained during the
    1996 UPSP merger proceeding, and the hundreds of customers we
    gained access to, and we have already developed business worth
    well over $400 million on these lines, as we told the Surface
    Transportation Board we would do.
        My prepared statement also mentions a building that BNSF
    and Dow Chemical recently announced to serve a Dow facility in
    south Texas. This demonstrates that the marketplace can provide
    the appropriate level of competition, and we will continue to
    examine ways to more effectively compete with Union Pacific for
    additional business to points we do not already commonly serve
    in this important petro-chemical marketplace.

                               PREPARED STATEMENT

        The fact of the matter is that all industries, including
    all of our customers, utilize differential or demand-based
    pricing, whether they are selling manufactured goods,
    agricultural products, coal power, or bulk commodities. There
    is certainly nothing unusual about it. Such pricing was fully
    anticipated by Congress when it passed the Staggers
    Deregulation Act, granting railroads the routing and pricing
    freedoms, which ultimately saved our industry. There is not a
    need to change that system now.
        Mr. Chairman, that concludes my statement. I will be
    pleased to respond to questions.
        [The statement follows:]

                  Prepared Statement of Peter J. Rickershauser

        My name is Peter J. Rickershauser. I am Vice President--Network
    Development for The Burlington Northern and Santa Fe Railway Company
    (``BNSF''), 2650 Lou Menk Drive, Fort Worth, Texas. I have over 29
    years of experience in the railroad industry, and have held positions
    in operations, marketing and planning, working for different railroads
    in both the eastern and western United States. I joined BNSF in 1996 as
    Vice President--Marketing, UP/SP Lines.
        The purpose of my testimony today is to provide information to this
    Subcommittee about certain important transportation issues, including
    freight mobility between modes, how we work with the ports to
    facilitate the efficient movement of commerce vital to our economy, and
    the competitiveness of our railroad and the environment in which we
    operate today. I will first provide some perspective on our industry
    and BNSF, in particular.
        The service problems that some members of our industry faced in the
    late 1990's were serious. They shook the confidence of many rail
    customers and created the image that the railroads could not meet
    customers' needs for efficient and reliable service. Throughout these
    difficulties, BNSF listened to its shippers and worked with them to
    meet their needs to improve service, reliability and consistency as we
    worked with our connecting railroads to proactively reduce congestion
    and improve service. However, as shippers, industry representatives,
    and the Surface Transportation Board (``STB''), which regulates
    railroads, have observed, the industry's service problems were not
    caused by lack of competitive access, as some have argued. Rather, the
    problems were caused by insufficient rail capacity to meet the growing
    demand of our customers for consistent, reliable service. This can only
    be remedied by continued substantial investment in infrastructure. A
    key public policy issue, therefore, is how best to position the rail
    industry to be able to continue making the on-going infrastructure
    investments required to meet the growing transportation needs of
    shippers and the public in our increasingly interdependent
    international marketplace, as evidenced by the constantly growing
    volumes through the nation's ports which I will describe shortly.
         bnsf has made the investments to improve our service offerings
        Since the end of 1995, the year the Atchison, Topeka & Santa Fe
    Railway merged with Burlington Northern to create BNSF, our unit
    volumes have increased 17 percent. From the standpoint of efficiency,
    in the past 5 years, gross ton miles (``GTM's'') handled by BNSF have
    increased 17 percent to 875 billion, while our operating expenses per
    thousand GTM's have declined 14 percent. This increase in demand for
    our product offerings and growth in traffic and improved efficiency
    have been accompanied by significant improvements in service and safety
    and by substantial reductions in rates.
        Our capacity to handle increased shipper demand has grown through
    our massive investment in yards, intermodal facilities, locomotives and
    freight cars. In the five-year period 1996 through 2000, BNSF's capital
    spending has totaled approximately $11 billion, with about $1.7 billion
    for track and facility expansion. Major projects include the reopening
    of the 229-mile Stampede Pass line in western Washington to increase
    our capacity to handle intermodal, grain and general merchandise trains
    to and from the Midwest; investments in grain gathering lines to reach
    outlying farms and elevators across the northern United States;
    rehabilitation of the 194-mile former Southern Pacific Iowa Junction-
    Avondale line and Lafayette Yard in southern Louisiana; and double
    tracking of about 500 miles of line on some of our most important
    Transcontinental routes.
        We have also spent hundreds of millions of dollars to expand our
    intermodal and carload yard facilities, including the Argentine Yard in
    Kansas City and the Hobart Yard near Los Angeles, where last year BNSF
    handled more than one million lifts, closely tied to the expansion of
    international container traffic worldwide. In addition, all BNSF
    shippers, most notably unit train customers such as coal, grain and
    intermodal shippers, have benefited from the $200 million investment in
    BNSF's state-of-the-art Network Operations Center in Fort Worth, Texas,
    to enhance the on-time performance and safety of train movements on
    BNSF's 33,500-mile network. BNSF has also made significant investments
    in locomotive and freight cars since 1996 to improve our competitive
    service offerings to customers and increase our efficiency, and in our
    information systems to provide better control over assets, to improve
    information flow between BNSF, our railroad connections and our
    customers, and to improve overall service reliability.
        The improved transit times and reliability made possible by these
    investments enable BNSF to better serve its shippers by becoming an
    integral part of their supply and distribution chains. With more
    accurate and timely information on its shippers' needs and how well its
    service meets those needs, BNSF is better able to identify areas where
    service improvements are necessary. BNSF is continually working with
    shippers to find solutions to today's shipping and distribution
    challenges and to make it easier for them to do work with us through
    eBusiness solutions.
        Safety on BNSF has also improved dramatically since the Staggers
    Act, due to BNSF's ability since our 1995 merger to make the necessary
    capital and other investments to assure safe operations. We have made
    substantial investments in developing our train collision avoidance
    systems. In order to reduce the risk of accidents at highway-rail
    intersections, we make ongoing significant expenditures to grade
    separate highway-rail intersections, and to upgrade signals and highway
    surfaces at highway-rail intersections. BNSF is also leading the
    industry in the use of electronic braking systems on unit trains. The
    development and deployment of these new technologies and the steady
    improvements in safety and efficiency they can bring will require
    ongoing substantial capital investment in the years ahead.
                                freight mobility
        A vital part of our growth strategy at BNSF and our industry's
    growth potential for the future is intermodal traffic, which relies on
    freight mobility--the fluidity of transportation through vital channels
    such as the Ports. Using the Pacific Northwest as an example, BNSF
    views working cooperatively with the Ports as critical to its future.
    We maintain an open dialogue with every major Port on the West Coast
    from Southern California to the Pacific Northwest. We do this because
    it is an important part of our business--we estimate we will move over
    1.7 million 20 foot international container equivalents (TEU's) this
    year systemwide. We recognize that if we cannot provide capacity for
    international traffic to grow, it won't. That affects all of us.
        An important aspect of BNSF's contribution to the nation's
    transportation system is our participation in the movement of
    intermodal containers between ports on the West Coast and markets in
    the midwest and the east. The volume of goods in the Trans-Pacific
    trade, particularly on the import side, has grown enormously over the
    last 10 years. Illustrating this growth, total international container
    volumes through all U.S. West Coast ports increased from about 3.3
    million TEU's in 1996 to more than 5.6 million TEU's in 2000, yielding
    a 70 percent growth rate over the four-year period.
        On-time performance and commitment to customers' expectations are
    critical elements for railroads to advance freight mobility. We have
    been providing shippers with constantly improving service. BNSF's on-
    time performance for all of our customers has been in the 90 percent
    range in 1999 and 2000, record levels for us and the entire industry,
    compared with 79 percent in 1997 and 82 percent in 1998.
        The Ports are the critical link between the steamship lines, local
    markets and the long distance rail movements performed by U.S.
    railroads. As West Coast Ports become busier, increasing pressure will
    be exerted on the business and public infrastructure that is already
    struggling to keep up with the demand. One need only attempt a drive
    around the streets surrounding the Port of Seattle to see the mobility
    challenge we all face. Trucks, trains and automobiles all compete to
    occupy the same space. The costs: delays to trains and trucks,
    pollution, traffic congestion and, at the end of the day, more
    expensive goods for American consumers. I would like to highlight two
    examples of investments we have made to work with the Pacific Northwest
    Ports to improve their capacity and competitiveness in world markets:
      --Since the merger of Burlington Northern and Santa Fe in 1995, we
            have invested over $350 million in the improvement of
            infrastructure along our lines between the Pacific Northwest
            and Chicago. We have added sidings and double track, and
            improved signal systems to improve the performance of grain and
            intermodal trains.
      --We re-opened the Stampede Pass line in Washington State at a cost
            of over $135 million to provide the ability for our customers'
            business to and from the Pacific Northwest, including the
            ports, to grow well into the future.
        BNSF has also been an active partner in a very important public-
    private initiative called the Freight Action Strategy, or FAST
    Corridor. In 1996, a group including the Washington State Department of
    Transportation, BNSF, Union Pacific, the Ports of Everett, Seattle and
    Tacoma and cities such as Seattle, Tacoma, Auburn, Sumner and Puyallup
    all worked together to take a close look at the region's highway-rail
    intersections. By identifying those locations where conflict between
    trains and highway vehicles is greatest, and by agreeing on which
    highway-rail intersections need to be grade separated through
    construction of overpasses or underpasses in order to preserve regional
    freight mobility on both highways and railways, this group was able to
    achieve a rational consensus on which projects should go forward to
    seek federal and state funding. Phase I of the project is now underway
    and includes 15 projects, 13 of which are grade separation projects.
    There are plans for an additional seven projects comprising Phase II of
    the FAST Corridor program. BNSF committed $18 million to this effort,
    but we need to thank Senator Murray and the Washington congressional
    delegation for stepping forward and securing the necessary Federal
    resources to support this essential transportation initiative.
        Investment in freight mobility is critical to our future. BNSF is
    doing what it can, but we face significant challenges. We are under
    intense pressure from our shareholders and the investment community to
    reduce our capital expenditures in light of our returns, yet these
    needs will not diminish. If we overlay the renewed public interest in
    the initiation and operation of commuter and intercity passenger trains
    on our infrastructure, the investment and mobility challenges only
    increase to ensure growth of our freight capacity as well as to relieve
    highway congestion and increase passenger mobility.
        From the perspective of the long term funding of transportation
    infrastructure, we hope you will consider the following:
      --Port areas and the regions surrounding them will need highway-rail
            grade separations to handle greater traffic volumes. It will
            take innovative partnerships like FAST to complete them on a
            timely basis.
      --Railroads will invest as much as they can to support their line
            haul infrastructure, but currently the prospects for additional
            investments are bleak because of the earnings pressures we face
            from our shareholders and the investment community.
      --As public agencies propose commuter rail services or expanded
            intercity passenger services, careful and thoughtful
            consideration must be given to the impact these services will
            have on rail freight capacity. We have worked and will continue
            to work with all interested parties to accommodate the public's
            needs for these services, but we cannot allow them to diminish
            our ability to serve the ports and our customers.
                        the rail industry is competitive
        The industry's post-Staggers capacity expansion and safety
    achievements have been attained while the industry has become price and
    service competitive with other modes. There is vigorous competition
    between rail carriers in the West. The existence of competition is
    determined by the quality of the competitive service offerings
    available to customers, not by the number of competitors.
    Competitiveness, demonstrated by declines in real rates, is provided
    not only by other rail carriers, but also by motor, barge and pipeline
    carriers. Product and geographic competition restrain many other
    markets. For instance, in the critical carload grain markets, there is
    substantial downstream source competition that restrains the rates we
    can charge. Export grain markets, for example, are extremely
    competitive, and if we try to impose inappropriate rate increases we
    will simply price ourselves out of the market. Thus, if one of our
    export grain customer's prices are too high because our transportation
    rates are too high, then that customer will be unable to participate in
    the export market, and both the customer and BNSF would lose that
    business opportunity.
        BNSF's growth in traffic has been accompanied by significant
    reductions in transportation rates to meet customer expectations,
    changing markets and intense competition. Between the early 1980's and
    late 1990's, the average system-wide revenue per ton-mile on BNSF
    decreased by just over 50 percent in inflation-adjusted dollars, from
    $2.42 to $1.20. These rate reductions have been realized for all of
    BNSF's traffic commodities. Virtually every customer has benefited from
    post-Staggers rail rate reductions, whether or not it is served
    exclusively by one rail carrier. As the STB itself has recognized in a
    recently released report, inflation adjusted rail rates have declined
    over 45 percent in constant dollars since 1984. But not every customer
    can or should pay the same rates. Some customers pay more than the
    overall average cost of transportation while others pay less than the
    average cost. The demand-based rate structure under Staggers leads to
    different rates for customers in different circumstances, but
    ultimately results in lower rates for all customers than otherwise
    would be possible. However, because all customers contribute to
    covering the huge fixed costs of railroad plants, they all enjoy rates
    and services that would not be available if all rates had to reflect
    average cost. This system of rates can work if, and only if, carriers
    are permitted to continue to differentiate rates according to customer
    and market demand.
        Similarly, because electric utilities have multiple alternatives
    for acquiring the coal they need, the prices we can charge for coal
    transportation to a particular plant without losing the business
    altogether are strictly limited. That is all the more true since the
    advent of utility deregulation, which is forcing utilities to pursue
    such alternatives even more aggressively. In addition, the recent
    merger activity among electric utilities has created massive firms with
    negotiating leverage that are more than holding their own in
    negotiations involving rates to exclusively served plants.
        Congress and the ICC/STB recognized that the shift to a demand-
    based pricing system required the adoption of measures designed to
    protect customers when competition is found to be inadequate or there
    is a risk of market-power abuse. For instance, the STB's competitive
    access regulations enable a customer to secure access to a second
    carrier if it is shown that the existing carrier has abused its market
    power through its rates or service. Further, the STB rules provide a
    mechanism for determining maximum reasonable rates where a rail carrier
    is ``market dominant''. In addition, Congress mandated and the STB has
    implemented streamlined and simplified procedures for rate challenges
    by small customers, i.e., non-coal rate guidelines.
        Further, the ICC/STB has acted to preserve existing competition in
    each of the rail merger and control transactions submitted for review
    by imposing significant pro-competitive conditions on many of those
    transactions. A key area in which BNSF has also demonstrated our
    competitiveness is in our vigorous exercise of the competitive rights
    we obtained as part of the UP/SP merger, in order to remedy its effects
    on competition at affected points. As we have documented in extensive
    quarterly reports to the STB, BNSF has aggressively utilized those
    rights since September 1996 to compete with UP on specific sections of
    the UP/SP lines, where BNSF gained customer access to replace SP as
    competitor to UP. We continue to be successful and effective in
    marketing our services over those lines, and establishing a major
    presence in handling the traffic at so called 2-to-1 points to which we
    gained access. BNSF's capabilities and business are growing steadily as
    a result of BNSF's proactive approach in resolving problems, its
    commitment to infrastructure and operational improvements to provide
    better service, and its continuing customer support. As a result of
    these efforts, customers are benefiting from BNSF's new access, as
    reflected in our business levels: from zero units in September, 1996,
    BNSF handled over 407,000 loaded units to, from, or via the merger
    condition lines in 2000. Also, using the UP/SP merger competitive
    conditions, BNSF and Dow Chemical recently announced a build-in from a
    former SP line to a Dow facility along the south Texas Gulf coast. BNSF
    remains fully committed to securing new business and additional
    business from its customers in the future on these lines.
        In his column ``Surface Reflections'' last Thursday, March 8, 2001,
    appearing in ``The Journal Of Commerce'', transportation journalist
    Larry Kaufman wrote:
        ``The news of the BNSF-Dow build-in reminded me that for more than
    4 years shippers in the West have had the ability to create their own
    transportation competition. That is the build-in/build-out condition
    the Surface Transportation Board attached to its approval of UP's 1996
    acquisition of Southern Pacific. Some of the biggest shippers who have
    been most vociferous in demanding legislation that would assure them
    competitive access as a way of overcoming the railroads' alleged abuse
    of market power have failed to avail themselves of competitive options
    they already have . . . If more shippers were to take advantage of
    their build-in/out rights, there might be less pressure for legislation
    as some in the competitive access lobby would no longer take an active
    role. It seems that some find it easier to demand legislative relief
    than to take a long-term view of competitive opportunities and put
    their money where their lobbying mouths are.''
     the ongoing need for capital investment to remedy the current lack of
                 capacity would be jeopardized by reregulation
        Continued improvements in the industry infrastructure and service
    can only be achieved through continued capital investment. If railroads
    are not given the opportunity to recover and achieve a fair return on
    their investment costs, they will not attract the capital at the right
    cost necessary to invest in track construction and maintenance, to
    upgrade yards, and to undertake other infrastructure and service
    improvements required to keep them competitive. The service and safety
    improvements which have been achieved also cannot be maintained and
    expanded without continued massive capital investments. While rail
    continues to be the cheapest and safest form of transportation for most
    goods, it has achieved that recognition because of our ability to
    invest. Anything that interferes with the ability to attract capital
    would lessen our ability to be the lowest cost, safest, most energy
    efficient and most environmentally friendly provider of land
    transportation services.
        Witnesses before this subcommittee have suggested that the
    government inject additional artificial competition into the
    marketplace to respond to customer concerns about rates and service.
    Some have even recommended that government regulators should mandate
    competitive access to our infrastructure. We strongly oppose these
    suggestions and recommendations.
        Forced rail access cannot remedy the problem of insufficient
    capacity. Indeed, forced rail access only exacerbates the capacity
    problems and would require massive reregulation of the rail industry.
    While implementation of the Staggers Act has reversed the long-term
    decline of the rail industry, the recovery is not complete. While
    returns on investment have shown improvement since 1980, the average
    return on investment for railroads, even in peak years, has continued
    to be well below the cost of capital as determined by the ICC/STB.
        The service problems of the late 1990's were caused by insufficient
    investment and undercapacity. These problems can only be remedied by
    adhering to policies that are sensitive to the needs and requirements
    of the investment community. Investors expect reasonable earnings and
    reasonable growth, and seek a stable and consistent regulatory
    environment. Forced rail access would, however, undermine investor
    confidence and reverse the post-Staggers trend of improved earnings,
    enhanced financial stability and increased investment. Forced rail
    access would also increase regulatory uncertainty and market risk, and
    undercut growth expectations. Each of these would in turn chill the
    enthusiasm of investors and drive their capital to other uses.
    Moreover, forced rail access would reverse many of the network and
    system efficiencies benefiting our customers brought about by the
    Staggers Act.
        The pre-Staggers regulatory scheme effectively compelled the
    railroads to operate numerous inefficient routes. They were unable to
    concentrate traffic on the most efficient routes and gateways, and
    their ability to compete was diminished. Staggers reversed that system
    and allowed the railroads to invest in a streamlined and much more
    efficient and competitive network. Forced rail access would result in
    the breaking up of a nationwide network of single-line and run-through
    train service and efficient blocking in favor of a splintered, slower
    and less competitive service with inefficient car utilization and
    supply. In addition, under a system of forced rail access, the Board
    would have to reinject itself into the ratemaking process, establish
    the priorities, terms and conditions for allocating rights to use
    tracks. The deregulatory direction of the Staggers Act and the industry
    progress made in the past 20 years would be reversed.
        Forced rail access is shorthand for a return to regulatory models
    that failed in the past. Such an experiment would both exacerbate the
    problems caused by the current insufficient capacity and undercut the
    success achieved by regional and shortline carriers in keeping branch
    lines operative and in preserving rail service to shippers on those
    lines.
                                   conclusion
        In conclusion, I believe that we play a vital role in providing
    freight mobility for our nation's commerce, working with the ports to
    facilitate the efficient movement of commerce essential to our economy.
    We do this in a competitive environment in which it is critical that
    public policy foster a climate that will promote profitable capital
    investment in infrastructure necessary for us to be able to provide the
    service our customers require. The current demand-based or differential
    pricing system is functioning well and as anticipated by Congress when
    it adopted the Staggers Act. Any fundamental changes in the existing
    structure would necessarily imperil the service and safety achievements
    that have been reached, restrict the rail industry's ability to compete
    with other modes of transportation, and would inhibit the capital
    investment that is required to maintain and increase the capacity of
    the domestic rail system so that the United States can maintain its
    ability to compete in the expanding global economy.
        Thank you for your time, and I would be pleased to answer any
    questions you may have.

        Senator Shelby. Mr. Mic Dinsmore, Chief Executive Officer
    of the Port of Seattle.
        Welcome, Mr. Dinsmore.
    STATEMENT OF MIC DINSMORE, EXECUTIVE DIRECTOR, PORT OF
                SEATTLE
        Mr. Dinsmore. Thank you, and good morning. My name is Mic
    Dinsmore, and I am the CEO of the Port of Seattle, which does
    include both the seaport as well as the Seattle-Tacoma
    International Airport. I would also like to thank the committee
    for the opportunity to testify today, and I especially thank
    Senator Shelby for his leadership role on these very, very
    critical issues.
        I would be remiss not to express my sincere appreciation to
    Senator Murray for all her hard work over the years on behalf
    of the Port of Seattle and the State of Washington. She has
    been an extraordinary asset to us both, at the seaport and the
    airport. We are, indeed, grateful.
        I have had the opportunity to lead the Port of Seattle and
    Sea-Tac International for the last 9 years. Prior to my current
    position, I headed the Port Sea Port Division, and before
    coming to the Port of Seattle, I had 18 years in the private
    sector, and the movement of commerce on an international basis,
    both with shipping lines and the rail industries.
        Mr. Chairman, there are really five messages I would like
    to leave you with today. First, it is important to recognize
    the huge local investment our communities make in port terminal
    and cargo handling facilities that are used to provide the
    movement of cargo throughout this Nation.
        Second, the large container ports of Seattle and Tacoma
    are, indeed, as Senator Murray mentioned, located very near the
    foreign competition. Help from the United States government is
    needed to reduce taxes that hinder our ability to move jobs,
    business, and tax revenues that come with international trade
    and commerce.
        Third, it is critical, absolutely critical that rail
    competition be maintained, and when major changes in rail
    ownership are considered, local communities ought to be a
    factor in that decision-making process.
        Fourth, our FAST Corridor in the Seattle area is, indeed, a
    model for the sort of cooperation, congestion relief, goods
    movement, and job creation that ought to be supported by the
    Federal government.
        Lastly, I would like to leave you with some thoughts on how
    the Federal system, designed to support freight mobility
    through TEA-21 can, indeed, work better.
        Please allow me to add some specificity to these five
    issues. One local investment, combined, the Ports of Seattle
    and Tacoma will be spending about $700 million, locally
    generated dollars, over the next 5 years to upgrade and improve
    our seaports. We are doing this to continue to bring goods from
    Asia, through our communities, so that they can be consumed and
    used across this Nation.
        In addition, we are creating jobs, both in our region and
    throughout this Nation. More than 70 percent of the goods that
    go through our port end up or originated in the Midwest and the
    East Coast. Last year, we were the third largest container load
    center in North America, behind the heavily populated LA/Long
    Beach and New York/New Jersey areas.
        Foreign competition. Our ability to maintain
    competitiveness in the midst of a rapidly changing world
    depends on a myriad of different things, but one of the biggest
    factors is fair taxation, so that we can compete on a level
    playing field with ports from other Nations.
        For instance, shippers today using our port pay an
    additional $125 per container in harbor maintenance tax, while
    there is no such fee at the Port of Vancouver, about 160 miles
    to the north. They recently enhanced their cargo handling
    facilities, and we are talking about ships in today's
    vernacular that hold between 2,000 and 7,000 containers each.
        A very, very good example is, 5 years ago Vancouver,
    British Columbia, as a port, handled 300,000 containers. Last
    year, they handled over a million containers. Let me assure you
    that incremental growth, extraordinary growth, came from U.S.
    Commerce diversion heading into Canadian ports.
        We are anxious to capture the jobs and additional economic
    benefits that stem from a projected doubling of West Coast
    international waterborne commerce by 2015. We cannot afford to
    be penalized by our own government through the Harbor
    Maintenance Tax.
        Railroad competition and the rail merger issue. A very high
    percentage of our containerized import/export cargo moves on
    unit trains, as you heard earlier, with fast service to the
    Midwest and East Coast from ports along the Pacific Coast. We
    simply cannot officially move these boxes by truck. It would be
    far too expensive, fuel inefficient, and requires more labor,
    and it would, indeed, be slower.
        Rail competition provides us with better service and price
    to our customers if and only if they have a choice of railroads
    to use. We also want the railroads to work with us to improve
    infrastructure so that goods can move quickly in and out of our
    region.
        The railroads are a critical component in our success, and
    changes in ownership and partnering could and would have major
    impacts on our communities. When change occurs, keep in mind
    that ports are the only asset in the intermodal chain that
    cannot relocate.
        Traffic congestion, looking at that advertisement, Senator
    Murray, brings back lots of memories, and it is no secret that
    there is congestion in the Puget Sound area, and we are already
    threatened in our trade dominance. Senator Murray has shared
    with you this ad recently. As you can see, the Vancouver ad
    speaks to the fact that we are too congested, and becoming more
    congested, the third most congested city in this Nation.
        While congestion is not perhaps as bad as that ad would
    purport it to be, increasing traffic congestion is having a
    huge impact on our ability to continue to be a leadership in
    the role of international trade and commerce, creating tens of
    thousands of good family wage jobs each year.
        We believe the FAST Corridor project that we had begun in
    partnership with the Federal government, State Department of
    Transportation, 17 port cities, counties, and regional
    government agencies, will help solve this congestion, and for
    the first time, we have two railroads, the Burlington Northern
    Santa Fe and the Union Pacific partnering to help fund the
    first phase of the FAST Corridor, and for that, gentlemen, we
    do thank you.
        The Freight Action Strategy Corridor, or FAST Corridor,
    project is a series of 22 complementary grade separation and
    port access projects within the Everett, Seattle, Tacoma area
    of our State. These projects are designed to move export
    product from around the Nation to Asia, and move import cargo
    through the State to points east. They will separate the rail
    traffic from the surface traffic, allowing trains and trucks
    better access to ports, letting passenger vehicles move more
    rapidly through our region.
        The first phase of FAST Corridor is 15 projects. Three are
    currently under way, with the first the Port of Tacoma Road,
    which actually opens in June. Then this year, eight more
    projects will begin, and an additional four will be started in
    2003.
        The total cost of phase one is $470 million. The Federal
    government, as Senator Murray alluded to, is picking up 27
    percent of that total, and we do thank you for that
    contribution. State funds make up 42 percent, local dollars, 14
    percent, and about 4 percent of the total comes from these two
    railroads, with the bulk from the Burlington Northern Santa Fe.
        Lastly, improvements I mentioned to the TEA-21 process.
    While the FAST Corridor project has already turned into huge
    success, obviously we all have worked extremely hard. Demand
    for infrastructure improvements to the freight area is
    substantial.
        I applaud you for creating the Section 118 program, but as
    you know, there was only $700 million in the fund, and there
    was over $7 billion worth of requests.
        There are a number of things that Congress could do to
    improve the way funds are allocated to freight projects.
    Unfortunately, the gas tax funds available through TEA-21 are
    mostly to passenger-only purposes, and projects like the FAST
    Corridor really have no adequate place to go for funding.
        In closing, the Federal government ought to recognize the
    importance of freight mobility, provide a bigger, more easily
    accessible source of funds for freight purposes, because just
    like our airports, our seaports are an integral part of our
    Nation's transportation system.

                               PREPARED STATEMENT

        I hope my observations will be helpful as you craft new
    policy in regarding transportation funding. Speaking on behalf
    of all the partners who are here for FAST Corridor, I want to
    thank you for giving me the time to make this presentation.
        Thank you.
        Senator Shelby. Thank you, Mr. Dinsmore.
        [The statement follows:]

                       Prepared Statement of Mic Dinsmore

        Good Morning. My name is Mic Dinsmore and I am CEO of the Port of
    Seattle. I would like to thank the committee for the opportunity to
    testify. I would also like to thank Chairman Shelby for his leadership
    role on critical transportation issues. I especially want to express my
    appreciation to Senator Murray for all her hard work over the years on
    behalf of the Port of Seattle. She has been a huge asset to us both at
    our seaport and airport. We are very grateful.
        Let me begin by giving you a bit of my background. I have spent
    most of my life in the port and maritime shipping industry. I have been
    in charge of the Port of Seattle and Sea-Tac Airport for the last 9
    years, but for almost 20 years before that I have held senior positions
    with railroads, stevedoring firms and shipping lines.
        There are five messages I would like to leave you with today:
    First, it is important to recognize the huge local investment our
    communities make in port terminal and cargo handling facilities used to
    provide goods throughout the nation. Second, the large container ports
    of Seattle and Tacoma, are located very near foreign competition. Help
    from the US government is needed to reduce taxes that hurt our
    competitiveness. Third, it is critical that rail competition be
    maintained and when major changes in rail ownership are considered,
    local ports ought to be a factor in the decision-making. Fourth, our
    FAST Corridor in the Seattle area is a model for the sort of
    cooperation, congestion relief, goods movement and job creation that
    ought to be supported by the federal government. Lastly, I'd like to
    leave you with some thoughts on how the federal system designed to
    support freight mobility through TEA 21 can work better.
                                local investment
        Combined, the Ports of Seattle and Tacoma are spending about $700
    million in locally generated funds over the next five years to upgrade
    and improve our terminals. We are doing this to continue bringing goods
    from Asia through our communities so that they can be consumed across
    the nation and exports can access Asian markets. In addition, we are
    creating jobs, both in our region and throughout the nation. I have
    included a color map that shows, state-by-state, the positive
    employment impact of our ports on the nation. More than 70 percent of
    all the goods that come into our ports go to the midwest and east.
        Last year, we were the third largest container load center in North
    America behind the heavily-populated LA/Long Beach and New York New
    Jersey areas.
                              foreign competition
        Our ability to remain competitive in the midst of a rapidly
    changing world depends on a number of things, but one of the biggest
    factors is fair taxation so that we can compete on a level playing
    field with ports from other nations. For instance, shippers using our
    port, pay about $125.00 per import container while there is no such fee
    at the Port of Vancouver, BC, about 160 miles to the north of us and
    with recently enhanced container loading facilities. When the typical
    ship carries anywhere from 2000 to 7000 containers each, the tax is
    substantial.
        We are anxious to capture the jobs and additional economic benefits
    that stem from a projected doubling of West Coast international
    waterborne trade by 2015. We cannot afford to be penalized through the
    harbor maintenance tax.
                   railroad competition/merger consideration
        A very high percentage of our containerized import-export cargo
    moves on unit trains with fast service to the Midwest and east coast
    from ports on the Pacific Coast. We simply could not efficiently move
    these boxes by truck--it would be too expensive, fuel inefficient,
    require more labor than is available, and it would be slower. Rail
    competition provides us with better service and price to our customers.
    The railroads are critical components in our success and changes in
    rail ownership and partnering can have major impacts on our
    communities. When changes occur, keep in mind that Ports are the only
    assets in the intermodal chain that can't move.
                               traffic congestion
        Traffic congestion is a huge problem in the Puget Sound area and
    could threaten our trade dominance. Senator Murray has shared with you
    a recent ad run by the Vancouver, British Columbia Port Authority. As
    you can see, the Vancouver ad speaks to the fact that we are too
    congested to move goods efficiently. While congestion in our area is
    not as bad as the Vancouver ad would lead you to believe, increasing
    traffic congestion could have a huge negative impact.
        The FAST Corridor project that we began in partnership with the
    federal government, our state Department of Transportation and
    seventeen ports, cities, counties and regional government agencies,
    will help solve our congestion crisis. And for the first time, we have
    our two railroads, the Burlington Northern/Santa Fe and the Union
    Pacific, partnering to help fund the first phase of the FAST Corridor.
        The Freight Action Strategy Corridor or FAST Corridor project is a
    series of 22 complementary grade separation and Port access projects
    within the Everett-Seattle-Tacoma area of the state. These projects are
    designed to move export product from around the nation to Asian
    destinations and move import product through the state to points east.
    They will separate the rail traffic from the surface traffic allowing
    both trains and trucks better access to our ports and allowing
    passenger vehicles to move more easily.
        The first phase of FAST includes 15 projects. Three are currently
    underway and our first, the Port of Tacoma Road, will actually open in
    June. This year, eight more projects will begin and the additional four
    will be started before 2003. The total cost of FAST Phase I is $470
    million. The federal government is contributing 27 percent of the
    total, state funds make up 42 percent and local dollars account for 14
    percent. About 4 percent of the total comes from the railroads, with
    the bulk from the Burlington Northern/Santa Fe Railroad.
                       improvements to the tea 21 process
        While the FAST Corridor project has turned into a huge success and
    we have had to work very hard and get the distinct impression that
    freight is not a priority in the allocating of TEA 21 dollars. The
    demand for infrastructure improvements in the freight area is
    substantial, I applaud you for creating the Section 1118 program, but
    you need to know that there was only $700 million in the fund over five
    years, yet there has been $7 billion worth of requests.
        Unfortunately, the gas tax funds available through TEA 21, go
    mostly to passenger-only purposes and projects like the FAST Corridor,
    which benefits both freight and passenger movement, have no adequate
    place to go for funding. We have cobbled together federal funds from
    four different sources to come up with the 27 percent federal share. It
    would have been easier if we had one place where freight mobility funds
    could be accessed, like with airports, for example, which are entities
    that enjoy significant federal funding support from a designated
    program. The federal government ought to recognize the importance of
    freight mobility and provide a bigger and more easily accessible source
    of funds for it.
        I hope my observations will be helpful as you craft new policy in
    regard to transportation funding. Speaking on behalf of the partners in
    the FAST Corridor, I want to thank you for giving me this time.

        Senator Shelby. Ms. Karen Schmidt, Executive Director of
    the Freight Mobility Investment Board of the State of
    Washington.
        Ms. Schmidt.
    STATEMENT OF KAREN SCHMIDT, EXECUTIVE DIRECTOR, FREIGHT
                MOBILITY INVESTMENT BOARD, STATE OF
                WASHINGTON
        Ms. Schmidt. Thank you, Mr. Chairman and Senator Murray. We
    are pleased to be here today.
        I am Karen Schmidt, of the Freight Mobility Strategic
    Investment Board, of Washington State, and Strategic is an
    important part of our name, because we cannot fund everything,
    and we cannot help all parts of the network.
        The Board is an independent State agency, created to focus
    on freight transportation needs, and work with the public and
    private partners as an independent broker to develop and fund
    solutions. Mic has explained to you that the competition we
    face and the challenges presented in our area with the growing
    congestion in the Central Puget Sound region caused us to form
    this Board.
        Our ports are working hard to accommodate the growing
    demand, but they recognized early that their efforts would not
    be successful if traffic congestion stopped cargo from getting
    to and from the docks. Partnerships were essential, because,
    first of all, the price of any of these improvements was too
    great for a single entity to pay for, but also because the
    ownership of the entire delivery system is fragmented over
    various governmental jurisdictions and the private sector.
        Rail, truck, and barge transportation would all be needed
    in our area, and smooth intermodal connections continue to be
    an essential component. Our agricultural and manufacturing
    communities rely on a cost-effective way to move their products
    to domestic and international markets.
        The large volume of inbound containers of high-value goods
    provides a price break for many of our lower-value products
    that would be unable to compete without the backhaul price
    breaks made possible due to the repositioning of surplus
    equipment.
        The FAST Corridor that Mic referred to brought the public
    and private sectors together in a partnership to relieve the
    identified barriers to freight movement. By eliminating at-
    grade crossings in the extremely congested Everett-Seattle-
    Tacoma corridor, we will not only improve the movement of
    freight, but will also mitigate some of the impacts of that
    freight movement on our local communities.
        The 22 projects in the FAST Corridor is the first step in
    relieving some of the most serious bottlenecks impacting
    freight movement north and south in the Puget Sound area. The
    partners are currently studying traffic flows and identifying
    the next series of projects, which will become FAST II.
        The Federal Section 1118 and 1119 program dollars have been
    very helpful to us in our State, and we support continuing this
    highly successful program focusing on the movement of freight
    that improves our trade position. The improvements made to
    benefit freight obviously have additional benefits to improve
    service for not only our new commuter rail service, but also
    for Amtrak's Cascade service between Seattle and Vancouver,
    B.C., as well as from Seattle to Portland and Eugene, Oregon.
        While the FAST Corridor is the centerpiece of our freight
    efforts, it is not the only focus for the Freight Mobility
    Board. In Eastern Washington, Spokane is investigating a
    proposal to bridge the valley. Currently, BNSF and UPSF have
    separate rail lines through the Spokane area, with a total of
    36 railroad crossings. The proposal would put the two railroads
    on the same tracks and grade-separate the remaining 18
    crossings.
        Rail lines bisect Yakima, in Central Washington, where much
    of our State's agriculture is located, and are premium lines.
    The community is developing a series of grade-separations and
    road closures there to relieve backups that can take up to 20
    minutes to clear. The improvement obviously will also allow
    train speeds to increase through town.
        To bring our agricultural and manufacturing products on to
    the strategic corridors, we are working to improve truck and
    short-line intermodal connections, and in 1994, the State
    purchased 29 grain cars to ease the rail car availability
    problems the wheat farmers in southeast Washington were
    encountering.
        The grain train has been so successful that a second grain
    train of 36 cars has now been purchased, partially using
    profits from the original train that will now assist farmers in
    the central part of our State, also in need of grain car
    availability.
        Washington is also developing a program to add refrigerated
    cars to Amtrak trains that will expedite the delivery of apples
    and pears to Midwest and East Coast consumers. This is called
    the Washington Fruit Express, and it will not only benefit the
    soft fruit movement, but also Amtrak, by providing additional
    operating revenues.
        The railroad rehabilitation and improvement finance program
    announced last fall could be very helpful for our short-line
    operations; however, the threshold requirements make it nearly
    impossible to access these low-cost funds. If the thresholds
    were changed, I think the program would be of great assistance
    to many of our short-line operators.
        In Southeast Washington, barge movement is also a central
    cost-effective way to move grain, as you heard earlier. By
    providing the three choices, all of our modes of moving our
    product obviously have a very competitive position.
        The Snake/Columbia River is an important link in product
    movement from our region. You heard from Mr. Dozier about the
    volume of products shipped from our region, but let me add some
    other statistics.
        Forty-three percent of all U.S. wheat is shipped on the
    Snake River/Columbia system. Eleven percent of all U.S. corn
    goes down this same system. We are a conduit for much of the
    agricultural production, and outflow into international
    markets.
        If barge service was eliminated, it would take an
    additional 120,000 rail cars, or 700,000 semis to carry these
    shipments annually to our deep-water ports. Dredging the
    Columbia is also crucial to the movement of these products.
        In Washington, we have made a commitment to do our part and
    keeping our economy vibrant and our businesses competitive. We
    are not targeting our efforts just on rail or just on trucks.
    It is clear to us that if we are to be successful, we have to
    develop a strategic plan to keep freight moving using trucks,
    mainline rail, short-line rail, ships, barges, and air freight.
        We simply need to keep all the modes working well, and
    working together for a total freight delivery system.
        We believe that we can become a model for other States
    wanting to open their freight corridors and develop the
    partnerships necessary for successful freight corridor. After
    all, if we have a highly successful program within our State,
    it will do us no good if the bottleneck is only moved to
    another area.

                               PREPARED STATEMENT

        We look forward to working with these other States and with
    the Federal government to also improve and keep our Nation
    competitive domestically and internationally.
        Mr. Chairman, I look forward to answering any questions.
        [The statement follows:]

                      Prepared Statement of Karen Schmidt

        Good Morning. I'm Karen Schmidt the Executive Director of the
    Freight Mobility Strategic Investment Board in Washington State. The
    Board is an independent agency that focuses on freight transportation
    needs and works with public and private partnerships to develop and
    fund solutions.
        Prior to taking this job, I served in the state legislature for 19
    years where transportation was my principle committee--I served as
    Chair and Co-Chair of the committee for the last 5 years I was in the
    legislature.
        Mic has explained to you the competition we face and the challenges
    presented by the growing congestion in the central Puget Sound region.
        Our ports are working hard to accommodate the demand, but
    recognized early that their efforts would not be successful if
    congestion stopped cargo from getting to and from the docks.
    Partnerships were essential if we were to maintain a healthy economy.
    Rail, truck and barge transportation would all be needed, and smooth
    intermodal connections were required. Similarly, freight needed to be
    part of the planning efforts for state and local governments, as well
    as for the Federal Government, if we expected to have a seamless,
    efficient movement of our commerce.
        Our agricultural and manufacturing communities rely on a cost
    effective way to move their products to domestic and international
    markets. The large volume of inbound containers of high value goods
    provides a price break for many of our lower value products that would
    be unable to compete without the backhaul price breaks made possible
    due to surplus equipment being repositioned.
        The FAST Corridor that Mic referred to brought the public and
    private sectors together in a partnership to relieve the identified
    barriers to freight movement. By eliminating at-grade crossings in the
    extremely congested Everett-Seattle-Tacoma (MAP?) corridor we will not
    only improve the movement of freight, but also mitigate some of the
    impact of freight movement on our local communities. We recognized that
    for every grade separation that improved freight rail travel, we also
    improved local road traffic delays and had the ability to add passenger
    movement on the same rail lines.
        The 22 projects in the FAST corridor is the first step in relieving
    some of the most serious bottlenecks impacting the freight movement
    North and South in the Puget Sound Corridor. The partners are currently
    studying traffic flows and identifying the next series of projects.
    Many of the projects anticipated in FAST II will be East-West
    connectors as well as more grade separations and intermodal connections
    between rail and trucks.
        The Federal Section 1118 and 1119 programs are very helpful to us
    and we support continuing this highly successful program focusing on
    the movement of freight that improves our trade position.
        The improvements made to benefit freight, obviously has additional
    benefits that improve service for not only our new commuter rail
    service but also the Amtrak Cascade Service between Seattle and
    Vancouver, British Columbia as well as from Seattle to Portland and
    Eugene, Oregon. This is one of the original 5 high-speed rail corridors
    designated under ISTEA identified by Congress in 1992.
        While the FAST Corridor is the centerpiece of our freight efforts,
    it is not the only focus for our state's Freight Mobility Strategic
    Investment Board.
        In Eastern Washington, Spokane is investigating a proposal to
    ``Bridge the Valley''. Currently the BNSF and the UPSF have separate
    rail lines through the Spokane area with a total of 36 road-rail
    crossings. The proposal would put both railroads on the same tracks and
    grade-separate the remaining 18 crossings.
        Yakima, in Central Washington where much of our states agriculture
    is located, is bisected by rail lines and the community is developing a
    series of grade-separations and road closures to relieve backups that
    can take up to 20 minutes to clear, and which will also allow train
    speeds to increase through town.
        In Kalama, which is located just north of Portland, a number of
    rail projects will allow better operations and will eliminate the
    current situation where north/south trains have to stop and wait for
    railcars traveling to the port with export grain to clear the mainline.
    The port has been handling about 90,000 grain cars annually, which is
    roughly the equivalent of over 800 unit trains.
        To bring our agricultural and manufacturing products onto our
    strategic corridors, we are working to improve truck and short line
    intermodal connections. The state also provides a limited amount of
    direct financial assistance to repair damaged bridges and tracks,
    rebuild and improve existing tracks and construct new loops and spurs
    to accommodate needs.
        The state appreciated the opportunity to do more when the Local
    Rail Freight Assistance (LRFA) program provided federal assistance
    funding, but 1995 was the last year that funding was made available.
        The state purchased 29 grain cars in 1994 to ease availability
    problems wheat farmers in S.E. Washington were encountering. The Grain
    Train has been so successful that a 2nd grain train of 36 cars has now
    been purchased, partially using profits from the original train, to
    assist farmers in the central part of the state also in need of grain
    car availability.
        Washington is also developing a program to add refrigerated cars to
    Amtrak trains to expedite delivery of apples and pears to Midwest and
    east coast consumers. This is called the Washington Fruit Express and
    will benefit both soft fruit movement and Amtrak by providing operating
    revenue.
        The Railroad Rehabilitation & Improvement Finance Program (RRIF)
    announced last fall could be very helpful for our short line
    operations; however, the threshold requirements make it nearly
    impossible to access the low cost loan funds. If the thresholds were
    changed, I think the program would be of great assistance to many of
    our short line operators. The two biggest barriers are the provision
    that the program would become the lender of last resort and the risk
    premium requirements.
        In Southeast Washington barge movement is an essential, cost
    effective way to move grain at a rate that allows it to compete
    internationally, and by providing a 3rd choice for transportation,
    price competition is improved for all modes. The Snake/Columbia river
    system is an important component in our product movement from the
    region. You heard from Mr. Dozier about the volume of products shipped
    from our region, let me add a few other statistics. 43 percent of ALL
    U.S. Wheat is shipped on the Snake/Columbia River System and 11 percent
    of ALL corn exports. If barge service was eliminated, it would take an
    additional 120,000 railcars or 700,000 semi's to carry the shipments to
    our deepwater ports.
        Successful businesses are innovative and constantly evolving with
    changing conditions. We in government must also be ready to respond to
    these changes if we are to maintain a healthy business climate. To be
    successful, it will take a partnership of private and public sector
    discussions, analysis, planning, barrier removals and investment to
    keep from being surpassed by others who are competing for the same
    business.
        Recent studies indicate that by 2020, Washington can expect to see
    container shipments through Puget Sound ports increase by 131 percent
    and grain traffic is expected to grow by 50 percent.
        In Washington we have made a commitment to do our part in keeping
    our economy vibrant and our businesses competitive by focusing our
    planning and investments not just on the movement of people, but the
    increased movement of goods as well. We are not targeting our efforts
    just on rail or just on trucks. It is clear if we are to be successful,
    we have to develop a strategic plan to keep freight moving using
    trucks, mainline rail, short line rail, ships, barges and airfreight.
    We simply need to keep all the modes working well together as a total
    freight delivery system.
        We believe that we can become a model for other states wanting to
    open up their freight corridors and develop the partnerships necessary
    for a successful freight program. After all, we can have a highly
    successful program within our state's boundary, but if the bottleneck
    is just moved to another state in the path, our efforts will only
    produce modest successes. We look forward to working with other states
    interested in moving freight and with our partner, the federal
    government in keeping our nation competitive domestically and
    internationally.

        Senator Shelby. Senator Murray.
        Senator Murray. Thank you very much, Mr. Chairman.
        Let me start by asking each of the railroad witnesses
    whether or not you thought that if legislation were adopted
    that mandated that you each give your competitors access to
    your shippers, should we assume that all shippers would
    actually retain competitive rail service?
        Mr. Rickershauser. Let me start with that. My personal
    belief on that would be that the answer is no, and that is, we
    are a volume business. As we talked earlier with an airline
    example, not all markets can support two or more competitors,
    and be economically viable over the long term. By economically
    viable, I mean not only provide the service over the long term,
    but reinvest in the physical plant so it is there tomorrow. So
    my answer would be, no.
        Mr. Davidson. Senator, I agree with Mr. Rickershauser
    that--in fact, the very fact that we have abandoned railroads
    and we have sold some of our railroads to short-line operators,
    and that sort of thing, are they economically viable? It is an
    unfortunate fact that in many, many cases two railroads would
    be able to compete for the traffic. There has to be an economic
    motivation like we talked about during the presentation period.
        Mr. Martinez. I believe such legislation would be
    disastrous, and I concur with both of my colleagues here from
    the industry. I recommend to yourselves to make a comparison
    between two different models that have been pursued overseas.
        Mr. Davidson made a reference to the Mexican model, where
    they privatized using a vertical industry structure, which is
    what we have in the United States, and in Mexico, you are
    seeing a successful rail renaissance, with market share
    increasing, costs being lowered for shippers, et cetera.
        If you look at what they are doing in Europe, basically,
    that is a forced access regime, where they are allowing one
    railroad onto the tracks of others, and separating the traction
    from the infrastructure. It is a disaster.
        Senator Shelby. Why is it a disaster?
        Mr. Martinez. Because----
        Senator Shelby. We do not know. We just want to hear.
        Mr. Martinez. Because every year you are seeing that rail
    is becoming less competitive, and market share held by the
    railroads is becoming lower and lower. Here in the United
    States, we hold a 40 percent market share on a ton-mile basis,
    40 percent, the rail industry does, and that has been
    relatively stable.
        In fact, it has been growing very modestly over the past 12
    years; although, as Mr. Davidson pointed out, our share of
    revenues are going down every year, and that is a different
    story.
        In Europe, they have a 13 percent, one-three percent,
    market share for intra-city freight traffic, 13 percent, and
    every year it goes down, and it is because there is no adequate
    pricing mechanism, when basically you have infrastructure in
    one hand, and operation in another, and that is what would
    happen here.
        Senator Murray. Okay. Thank you. Mr. Dinsmore, both the
    Union Pacific and BNSF have access to the Port of Seattle.
    However, some shippers have questioned whether the two
    railroads are really competing in a fashion that brings down
    rail rates.
        Would you comment on your observations as to whether rail
    competition exists?
        Mr. Dinsmore. Senator Murray, I think currently there is
    competition. I think over the last few years, particularly on
    behalf of the BN Santa Fe there has been substantial investment
    in infrastructure that makes it more of a competitive
    environment.
        That being said, there still are areas, such as the serving
    of terminal five, that does not have equal access. Terminal 18
    does, indeed, have equal access. So there is competition, but
    there is room for some additional adjustments for better
    competition.
        Senator Murray. Thank you very much.
        I have one more question, Mr. Chairman.
        Senator Shelby. Go ahead.
        Senator Murray. I have another commitment. I am a co-
    sponsor of the High-Speed Rail Investment Act, and that is a
    bill that would provide bond revenue of $12 billion to enable
    Amtrak to launch new high-speed rail corridors around the
    Nation.
        Except for the northeastern United States, all of the
    proposed new high-speed rail corridors would run over existing
    freight track, and I understand that all of the freight
    railroads are actively supporting the High-Speed Rail bill,
    except Union Pacific. Mr. Davidson, would you explain why UP is
    not supporting this?
        Mr. Davidson. Yes. It is a rather complex issue, Senator,
    but if you have time, I will. As you know, Amtrak came to life
    in 1971, because the rail industry was losing their shirt
    trying to provide passenger service, so rather than
    discombobulate the public all at one time by ceasing passenger
    service, the government agreed to set up a quasi-government
    organization called Amtrak to do an orderly transition out of
    the passenger business. Of course, that has not happened.
        There has been about $25 billion of taxpayer money spent
    since 1971 to support Amtrak, and probably some of it makes
    sense, like in the heavily traveled parts of the West Coast,
    the Northeast part of the United States, and other areas that
    may develop over time.
        However, these long-distance passenger trains that operate
    across this country--now, this is my personal view, and I will
    say I know it is very controversial--my person view is that
    it----
        Senator Shelby. It might not be.
        Mr. Davidson [continuing]. Makes no sense at all. In fact,
    it loses so much money that they have resorted to running
    freight trains, instead of passenger trains, and while they
    call them passenger trains, in some cases they may have one or
    two passenger cars, and the rest are freight, which is business
    that we should be hauling ourselves.
        Not only do they do that, they do it at a favorable pricing
    from us. We only are allowed to charge marginal prices for them
    to use our rail facilities, and then they have government-
    mandated superiority over all of our other trains, so that when
    there is a passenger train coming, we have to get the men,
    women, and children, and everything, out of the road, and let
    them go, while we let our priority freight set, in spite of the
    fact that our customers are demanding higher and higher levels
    of service.
        So to the extent that the money is going to be invested
    where it is truly needed to support a social good, where the
    highways are congested, and the roads are congested, and high-
    speed transit makes sense, I absolutely support it, but to be a
    moving mausoleum, going across the central part of the United
    States, where there is no demand for that traffic, I think it
    makes no sense.
        Now, having said that, I will tell you, Tommy Thompson, who
    has served as the Chairman of the Amtrak Board is a friend of
    mine, he is a wonderful man, he supports Amtrak wholeheartedly,
    George Warington, the President of Amtrak, is, in my opinion,
    the best president they have ever had. He is a man of his word,
    and when he tells you something, he means it, and we have a
    great relationship, and he probably would hate to hear me say
    this, but I think the current way it is structured makes little
    sense.
        Senator Murray. Mr. Rickershauser, can you comment on why
    you are supporting the legislation?
        Mr. Rickershauser. We are supporting it from several
    perspectives. Number one, we do see the need developing for
    increased passenger service. Number two, we have a commitment,
    first of all, to our freight customers, and so if additional
    passenger service is going to be introduced on lines that are
    Burlington Northern Santa Fe lines, we want to make sure that
    our core freight business, meeting the needs of our core
    freight customers, is not disturbed. So to the degree that
    infrastructure needs to be added to derive this kind of
    service, we are in favor of that.
        Senator Murray. Mr. Martinez.
        Mr. Martinez. I cannot specifically comment for Norfolk
    Southern on that issue, because, frankly, I do not know what
    the position is on that piece of legislation. I will tell you
    that on a personal basis, Mr. Davidson makes a good point on
    the issue of the fact that Amtrak is given preferential access,
    and they are moving freight, and that is a concern.
        Also, secondly, I do think that Congress's intent to make
    Amtrak financially viable, or insistence on it, was also a good
    notion. That is my personal view. I will submit something for
    the record on the corporate view regarding that specific
    effort.
        Senator Murray. Okay.
        Mr. Chairman, thank you very much.
        Senator Shelby. We have a vote on the floor, and I have a
    number of questions. What I would like to do in a minute is
    recess this for about 15 minutes. Mr. Davidson, I want to tell
    you, your views on Amtrak 100 percent coincide with mine. I
    commend you for that.
        The committee will be in recess for 15 minutes.
        The committee will come back to order.
        Mr. Davidson. Okay. I will be happy to address that,
    Senator.
        Senator Shelby. Sure.
        Mr. Davidson. There are a number of examples, just as you
    said, where we operate on each other, and probably the biggest
    example in the United States is between the Burlington Northern
    and Union Pacific. If my numbers are somewhere halfway right,
    Burlington operates on about 6,000 miles of trackage rights on
    us, and we operate on something under 5,000 miles from them.
        Senator Shelby. How do you work that out? Explain it to us.
        Mr. Davidson. Well, the last allocation of trackage rights
    occurred when we merged with the Southern Pacific. Particularly
    along the Gulf Coast, there were a number of miles of track
    where Union Pacific and Southern Pacific ran parallel and
    served the same customer. Well, we saw, and, of course----
        Senator Shelby. Are you talking about the California coast?
        Mr. Davidson. No. The Gulf Coast.
        Senator Shelby. The Texas area?
        Mr. Davidson. The Texas area----
        Senator Shelby. Okay.
        Mr. Davidson [continuing]. From the Houston area over to
    New Orleans.
        Senator Shelby. Okay.
        Mr. Davidson. We served the same customer, so the customer
    had two-railroad service. We knew that it would not make sense
    that we would become one railroad and eliminate the two
    railroad competition, where the customer had previously had two
    competitors vying for his business.
        Senator Shelby. Out of choice.
        Mr. Davidson. That is right. So in this case, we worked
    with the Burlington Northern to put them in the shoes of the
    SP, so the customer would not be disadvantaged----
        Senator Shelby. How did you do that?
        Mr. Davidson. Well, through arms-length negotiation. In
    some cases, through quid pro quo. Along the West Coast, where I
    talk about----
        Senator Shelby. They use your tracks and you use theirs, is
    that what you----
        Mr. Davidson. No. In this case, it was 99 percent they use
    ours----
        Senator Shelby. Okay.
        Mr. Davidson [continuing]. Because we were the ones----
        Senator Shelby. They pay you for that, do they not?
        Mr. Davidson. Yes. We negotiated the trackage rights
    payment.
        Senator Shelby. Do you use those same tracks yourself?
        Mr. Davidson. Yes. In some cases, we do. In some cases, we
    actually sold a piece of railroad to the Burlington Northern.
    That was a small part of it, though. Most of it is on trackage
    rights, and where they run on us, they pay us, and where we run
    on them, we----
        Senator Shelby. How did you get the agreement on pay? Did
    you do it by negotiation?
        Mr. Davidson. We did, and in some cases I will tell you we
    were out-negotiated. They are a pretty smart bunch, and they
    took advantage of us, I think, in a number of cases, but we
    tried our best.
        Senator Shelby. It sounds like you have been thrown in the
    briar patch.
        Mr. Davidson. We have been. It is like the lamb laying down
    with the lion, so to speak.
        Senator Shelby. But anyway, in every case, and I could
    point to other cooperative efforts we have had, too. As an
    example, where we have trackage that overlaps considerably in
    the Western part of the United States, in order to benefit the
    customer from a service standpoint, and help our sales from an
    operations standpoint, we have actually set up joint
    dispatching centers, where our employees work side-by-side to
    try to figure out the best benefit for the customer and for our
    own operations. We have four places like that in the Western
    part of the United States.
        Senator Shelby. How does that work?
        Mr. Davidson. It is working wonderful. Well, we started it
    in Spring, Texas, and the reason was, is that, and you probably
    heard rumors at one time, our service was not very good.
    Shortly after----
        Senator Shelby. I think we heard it here in the committee.
        Mr. Davidson. And it was more than a rumor. It was
    absolutely true.
        Senator Shelby. Why, I am sure it was.
        Mr. Davidson. So we were having trouble operating our
    trains between Houston and New Orleans, is what started it, so
    Rob Krebs and I, and our people, our team, sat down and said,
    ``You know, our dispatchers fight with each other, because we
    have one in Omaha Nebraska and one in Fort Worth, Texas, and we
    probably--it might make sense to put them in one office, all
    together, in Houston, where they have to look at each other and
    come to work every day, and cooperate,'' and lo and behold it
    did work that way. We set it up as an experiment, and it was a
    great success. Since then, we have done it in San Bernandino,
    in Fort Worth, and in Kansas City.
        Senator Shelby. How is it working now?
        Mr. Davidson. Terrific. Terrific. It has benefitted both
    the railroads and the customer.
        Senator Shelby. What if you could not have gotten together,
    and I mean after extensive negotiations between you on use of
    trackage rights? Some people have suggested if you could not
    get together on it, that those should be arbitrated, mandatory
    arbitration. We are trying to learn this.
        Mr. Davidson. Yes. I do not----
        Senator Shelby. You reached an impasse, but trackage rights
    would give the other railroad, and give you, too, the use of
    their road for a price, and if you could not agree on the
    price, it would do it, but it looks to me, just superficially,
    that that would give the shippers more options. Maybe I am
    wrong.
        Mr. Davidson. Well, here is what I think about that,
    Senator. I think if we can arrive at it, and there is an
    economic inducement, or a service inducement to do it smartly,
    it will be done.
        As I pointed out, where there is an economic inducement,
    and it makes economic sense, such as the Union Carbide, which
    is now a Dow Chemical plant, or the Houston Power and Light
    Plant, in Houston, it will be done, but having someone
    arbitrate it that does not understand the huge complexities of
    this railroad business, I think makes no sense.
        In fact, prior to 1980, the old Interstate Commerce
    Commission, which is today the STB, used to do that sort of
    thing, somewhat, and it was a dismal, absolute, unmitigated
    disaster.
        Senator Shelby. Given the common use of trackage rights in
    some markets, which you have been talking about, and switching
    in terminal areas, why is it unreasonable for rail customers to
    want railroads to just quote a rate over a specific portion of
    a route, or for those customers to be able to have their
    traffic switched among carriers in a terminal area? Do you see
    what we are getting at?
        Mr. Davidson. Yes. You are getting--I think there are two
    issues----
        Senator Shelby. What we are trying to get at is
    competition.
        Mr. Davidson. Yes, and we have a ton of it. As I told you,
    coming out of Houston, which is the biggest complex in America,
    I think probably less than 30 percent of the traffic moves by
    rail. Most of it goes by truck, pipeline, or water. So there is
    lots of competition.
        You asked one of the better questions today when you asked
    about the bottleneck issue. I think----
        Senator Shelby. I think the gentleman from Pennsylvania
    Power and Light was----
        Mr. Davidson. He did. He addressed that issue.
        Senator Shelby. He addressed that. Do you want to get back
    on that?
        Mr. Davidson. The reason that it is there is a very
    compelling argument. If I had an easel and a chart, I could
    draw a picture that would kind of demonstrate this.
        Senator Shelby. Try to just explain it slowly to me.
        Mr. Davidson. Well, I did not mean that. It is just----
        Senator Shelby. No. Seriously.
        Mr. Davidson [continuing]. Very complex. I will just give
    an example.
        Senator Shelby. The reason we are holding these hearings,
    we are trying to learn----
        Mr. Davidson. I will give you an example.
        Senator Shelby [continuing]. A lot about this.
        Mr. Davidson. Say we have a railroad track that runs from
    St. Louis to Houston, Texas----
        Senator Shelby. Okay.
        Mr. Davidson [continuing]. And Burlington Northern has a
    railroad track that runs from St. Louis to Houston, Texas----
        Senator Shelby. Yes.
        Mr. Davidson [continuing]. But then only one of us has a
    track that maybe runs the next hundred miles to serve a
    customer. What you are saying is, why can we not be forced to
    quote a rate from the customer that is a hundred miles away to
    Houston, and then turn it over to the Burlington Northern.
        Well, it is a complex answer, but just the most simplistic
    way to get at it would be, that might work in the short term,
    but in the long term, if we had plowed a lot of money in the
    infrastructure from Houston, to St. Louis, and built facilities
    to serve that customer, and gear it up to handle it, and then
    all of a sudden that business goes away to the other person,
    and there is not enough traffic on that line to support what is
    left----
        Senator Shelby. Well, that would not go away if you were
    competitive. That is the issue, is it not? I mean I would----
        Mr. Davidson. Well, we will just----
        Senator Shelby. Let me just say this. I would first concede
    that you would have a proprietary interest in your trackage,
    you know, your lines, because you had built it privately, you
    had put a lot of money in it, and if anybody used it, then they
    should pay a reasonable, whatever, you know, a price to use it.
    It should not be free at all, but go ahead.
        Mr. Davidson. Right. Well, today, he is running over a
    parallel track of ours at a price that you could not replicate
    to the railroad today for, so just say that he took that
    traffic at maybe a price that he should not have, and our
    railroad no longer has enough traffic on it to support that
    infrastructure. We do away with our railroad.
        Senator Shelby. You are saying there is not enough
    capacity, in other words.
        Mr. Davidson. There is not enough for both parties. That is
    the whole----
        Senator Shelby. Okay.
        Mr. Davidson. That is the key issue here, Senator, capacity
    and business levels. If there was enough business at that
    customer in the first place, he would build his own railroad in
    there----
        Senator Shelby. That is right.
        Mr. Davidson [continuing]. Just like he has done with Union
    Carbide at North Seedruth, Texas.
        Senator Shelby. Okay. Mr. Rickershauser, do you have a any
    comments on this?
        Mr. Rickershauser. Yes. I wanted to--if I may, Senator, I
    would like to back up about three paragraphs here.
        Senator Shelby. Okay.
        Mr. Rickershauser. You asked some questions about trackage
    rights, and what I wanted to do was just get into that a little
    bit further.
        Mr. Shelby. We are trying to understand all this.
        Mr. Rickershauser. Okay.
        Mr. Shelby That is why we are holding these hearings.
        Mr. Rickershauser. We do appreciate that. When we talk
    about trackage rights in the rail industry, there are two
    types. The historic long-term rights that we have had, that
    have been here since the 19 century, quite frankly, is where
    railroad A runs over railroad B's track.
        As Mr. Davidson indicated, it is an agreement that is
    struck between the two carriers, and as I said, that has been
    in place in this industry since----
        Senator Shelby. How much do we have of that in this
    country?
        Mr. Rickershauser. I could get back to you with that.
        Senator Shelby. Could you furnish this, any of you, for the
    record and the committee----
        Mr. Rickershauser. Sure.
        Senator Shelby [continuing]. Because we are very interested
    in this.
        Mr. Rickershauser. We can get that. But the point I am
    trying to make is (a) that is a cooperative agreement between
    the carriers, and (b) it has been in place for a long time, and
    (c) almost without exception, that does not provide for
    customer access along that stretch. It is a case where we have
    two lines, we put the traffic on one line, and we run overhead,
    but the railroad that owns the trackage is the one that
    continues to serve the customer.
        There are some examples in the Pacific Northwest. Our
    access up to----
        Senator Shelby. When you say the customer, now, they would
    be serving the customer, would they not, in the sense, if they
    were running on the track. They might not be serving the
    customer's own--the other man's track.
        Mr. Rickershauser. That is what----
        Senator Shelby. Is that your point?
        Mr. Rickershauser. That is my point.
        Senator Shelby. Yes. Okay.
        Mr. Rickershauser. Now, the second example, and Mr.
    Davidson referred to it, as I did in my comments, the UPSP
    merger conditions, in that case, what happened, and an example
    exists just east of Houston at a place called Mount Bellvue,
    where historically customers were served by the Southern
    Pacific, and as a result of the merger settlement agreements
    that Mr. Davidson referred, BNSF gained access to those
    customers.
        Well, at that point, several things happened. Number one,
    of course, we are running trackage rights over Mr. Davidson's
    railroad to reach those customers, but the other thing that
    then happens is that the infrastructure has to be put in place
    at our expense to provide for service so that Mr. Davidson's
    service is not interrupted, and so that we can provide service.
        Senator Shelby. Sure.
        Mr. Rickershauser. So we build sidings, tracks, we put in
    supervision, and we provide the service, and the driving force
    of that is that economically it makes sense for us to do so, in
    terms of the volume of business and what it is we can do with
    that business.
        I guess one of the points that we have made, hopefully, is
    that not everywhere in the country is there that type of
    opportunity to establish a service, and be profitable, and
    replicate the service over a long term.
        Senator Shelby. Let me ask you a question, all of you.
    Sooner or later most railroad tracks can converge, can they
    not, they can run together? I mean could you connect just
    about--Norfolk Southern could connect to Union Pacific
    somewhere----
        Mr. Rickershauser. And does.
        Senator Shelby [continuing]. And does, and vice-versa. I
    mean it is an integrated track, tracking system.
        Mr. Rickershauser. It is a network operation----
        Senator Shelby. Sure. Sure.
        Mr. Rickershauser [continuing]. Is what we call it.
        Senator Shelby. Sure. Sure.
        Mr. Rickershauser. You can ship a car from Halifax, Nova
    Scotia, over interconnecting railroads, all the way down to the
    deepest part of Mexico, and----
        Senator Shelby. It is all the same gauge, and same----
        Mr. Rickershauser. It is a network business.
        Senator Shelby. Let us talk about differential pricing. The
    argument is that it is important for your financial health. How
    do we better understand differential pricing and the
    justification by that? Mr. Davidson?
        Mr. Davidson. Senator, you could look at almost any
    business in America and see differential pricing.
        Senator Shelby. Between products?
        Mr. Davidson. Well, yes, between products, and the same
    producer can even have differential pricing, and he does.
    Chemical producers charge a different price to certain
    customers than they do the others. They do not charge the same
    price for everything. I mean any business in America, as you
    said earlier, you can go to a matinee in the daytime cheaper
    than you can go at night, and we do the same thing.
        One of the new services we are offering in California, an
    intermodal service operating from the Pacific Northwest to
    California, we found that on certain days of the week there was
    more traffic than the train could handle, and on other days of
    the week there was less traffic than justified to run the
    train, so we differentially priced by day of the week, and gave
    an economic inducement to the customer to ship on those light
    days when there was not enough traffic, and discouraged him
    from shipping on the heavy days.
        It made our service better, and it made our profitability
    better, and it made the customer happier. So there are all
    sorts of justification for differential pricing.
        Senator Shelby. Mr. Snovitch said that the Pennsylvania
    Power and Light worked with different salesmen, one for coal
    and one for coke, and that they charged different rates for
    service for basically the same origination and destination. How
    can that happen?
        Mr. Davidson. Well, once again, sir, for our chemical
    customers in particular, we haul some of the most dangerous,
    explosive, toxic contents known to mankind. We also haul
    products like baled hay. I guarantee you, you have to charge
    more for hauling those explosive, toxic----
        Senator Shelby. It is a risk.
        Mr. Davidson. Absolutely.
        Senator Shelby. Is there any more risk in coal than there
    is in coke, which is a by-product?
        Mr. Davidson. I really cannot address the coal and coke
    thing, but I will tell you this, we look at our business----
        Senator Shelby. The risk factor in it.
        Mr. Davidson [continuing]. In six different segments. So we
    do have sales and marketing people who are trained to deal with
    specific commodities, because it takes different investment,
    different levels of service, different everything to deal with
    it, so it is really not realistic to think that you have one
    size fits all for everybody.
        Now, Mr. Rickershauser has a lot of marketing experience. I
    am an old operating boy, so Mr. Rickerhauser probably has----
        Senator Shelby. I am glad to have this panel together.
        Ms. Schmidt. Senator Shelby----
        Senator Shelby. Ms. Schmidt?
        Ms. Schmidt. [continuing] If I could excuse myself. If you
    have any questions for me, I would be happy to answer them.
        Senator Shelby. Oh, no. We appreciate you coming. I think
    we are going to focus on the railroad right now----
        Ms. Schmidt. I suspected that.
        Senator Shelby [continuing]. And in all aspects we
    appreciate your contribution today.
        Ms. Schmidt. I hope we can come back and talk about
    mobility and what works.
        Senator Shelby. Whatever you want to do.
        Ms. Schmidt. Thank you.
        Senator Shelby. Mr. Dinsmore, the same way, if you want.
        Mr. Dinsmore. Thank you.
        Senator Shelby. Go ahead, Mr. Rickershauser.
        Mr. Rickershauser. I would like to touch on two points that
    were raised. First of all, the comment about, say, petroleum
    coke versus coal. Certainly, from the standpoint, I would
    suspect, of the user in this case, PPL, at the end of the day,
    it looks like the same product going to the same purpose when
    it arrives at their power plant.
        As a practical matter, the handling characteristics of
    those commodities are different, and they do not come from the
    same place. They come from different places.
        Senator Shelby. Yes. One of them is a by-product, is it
    not?
        Mr. Rickershauser. Yes. Of petroleum refining. So it is not
    going to come from a coal mine, it is going to come from some
    other place, and what they are looking at, I would suspect, is
    the cost for BTU, what they are getting out of that, but as a
    practical matter, when the railroad looks at it----
        Senator Shelby. Of course, BTU, you are getting it out of
    the coke, right?
        Mr. Rickershauser. Right. Well, whether it is coal or coke,
    they are burning it for the BTU----
        Senator Shelby. Is coke or coal explosive? I know it
    could----
        Mr. Rickershauser. Under certain circumstances. The second
    point I wanted to touch on was the sales and marketing thing.
    At BNSF, we have an initiative, and I do not think we are
    unique among the railroads, but historically, we have looked at
    our businesses by a marketing group.
        For instance, agriculture dealt with the agriculture
    customers on agriculture commodities, and coal with the energy
    folks, and intermodal and automotive, and then we had what I
    will call the all-other bucket that we refer to as industrial
    products, and that would include our chemical customers, that
    would include paper, forest, you run right on down the list,
    iron, steel. It is the single carload traffic that is so much
    of our business. We at BNSF do not believe we handle that very
    well.
        Senator Shelby. What do you mean by the single carload
    traffic?
        Mr. Rickershauser. Well, the difference would be intermodal
    traffic, such as Mr. Dinsmore talked about, that comes off a
    steamship. The steamship company will load an entire train with
    containers of goods, and it will go to the Midwest, or a power
    plant will consume an entire trainload of coal from a mine----
        Senator Shelby. It is a commodity.
        Mr. Rickershauser [continuing]. To a generating station,
    whereas a good deal of our book of business in this industry is
    single carload traffic. It will be the carload of lumber that
    originates at a sawmill, and it is going to a lumber
    distributor in Southern California from the Pacific Northwest,
    or anywhere.
        What we have done at BNSF is several things. Number one, we
    launched last year, and we have a long way to go, and we would
    be the first to agree, an ease of doing business initiative. We
    recognize we are not easy for our customers to do business
    with.
        Within the last week, number two, we just announced for the
    industrial products type of commodities, that we have
    reorganized our commercial effort, and separated marketing from
    the customer contact piece, and the reason why is exactly the
    kind of frustrations that we heard, and that is, our customers
    want to interface with one person, and they want that one
    person to be able to deal with if today it is a carload of
    lumber, and tomorrow it is a carload of paper, wood chips, or
    whatever, they do not want them to deal with a variety of
    people, they want one person who understands their needs.
        So we are just in the process of putting that type of
    organization into place, but it is in response to hearing the
    same thing you heard this morning from customers, and that is
    that they are frustrated, at least in that venue, with dealing
    with a multiple number of folks at the railroad.
        Senator Shelby. Yes, sir, Mr. Martinez?
        Mr. Martinez. If I could pick up on something that Mr.
    Rickershauser was going in the direction of. I am talking about
    this loose, single carload pieces of business. From the outside
    certain moves may look very similar, when, in fact, they are
    not.
        The economics of running a unit train, which is to say a
    train composed entirely of a single commodity, from one origin
    to one destination, is very different than the single carload
    move, which may be coming from a similar location, origin,
    close by to a destination very close by, because of the
    economics of the train.
        The basic unit of production in the industry is the train,
    it is not the railcar, and how you build trains, and how you
    successfully configure trains and their movements is going to
    determine whether or not you are going to make money.
        There are many different commodities that may look very
    similar, but actually have different equipment. Even with unit
    trains, which is a train that is composed just for a single
    commodity, even with unit trains, there is a difference if they
    are in sort of a closed loop that is continuous, or whether
    there is less frequency in whether or not you are going to be
    running a unit train at a particular point in time, but when
    that train--those railcars have to be redeployed during a
    different period of time, say, like in the agriculture, or some
    of the cereals, where you may be running unit trains during
    harvest periods and the like, but not year-round. The cost of
    that rail equipment has to be accounted for in how you price
    the product, and that may not be the case in other instances.
        If I could also just very quickly talk about--make one
    point about differential pricing, which Mr. Davidson spoke at
    some length about the infrastructure capacity issue. Do not
    forget also that railroads are networks, and as networks we
    need to recover our costs on a network basis.
        That means that where there is more competition--there is
    virtually always competition, there is virtually always
    competition. The issue is that shippers would like to pay lower
    rates than, for example, what you would have to pay to truck a
    particular product is going to be much more expensive than to
    rail it, and that is why they would rather see even lower rail
    rates than what they already have.
        However, as a network, differential pricing is an efficient
    way for us to recapture the costs that we need in order to
    reinvest in the network. It is the case that some shippers are
    going to get rates where the price is basically set at an
    incremental cost, at a fully variable cost, for that individual
    shipper.
        If we had to basically homogenize the way prices are set,
    which did not take into account the level of competition, what
    would happen is that the average rate would increase, and a lot
    of those shippers who are right now being charged incremental,
    would move to other modes, whether that is water or it is
    truck, and then the remaining costs for the remaining shippers
    would be higher, and the cost to the economy would be greater.
        Senator Shelby. Mr. Dinsmore, I believe you had a comment.
        Mr. Dinsmore. Thank you, Mr. Chairman. I have enjoyed
    listening to the three senior officers of three independent
    railroads, and they gave me a wonderful opportunity to take the
    case they have just made and tell you what is one of, if not
    the most significant concerns of ports, and it is differential
    pricing. We do not want it. We want all things to be equal.
        Just think for a minute, if they do, and at times they do,
    differential price with unit trains, whether it is through the
    port I have, or through Oakland, or through Los Angeles, de
    facto, they are diverting cargo, and we have over $3 billion
    worth of infrastructure that cargo will go where the cheapest
    differential price is given. We do not want a better one, but
    we do not want a worse one. We want the same price for the same
    amount of mileage and for the same amount of service.
        Senator Shelby. Is what you are saying, and I am just
    asking this rhetorically, is that the size of the load of the
    cars is the determining factor in the price charged? Is that
    fair? Is that----
        Mr. Martinez. First of all, we serve a number of ports on
    the Atlantic Coast. Of course, we do not go where Mr. Dinsmore
    is most concerned. There are seven major factors that dictate
    sort of the cost structure of Norfolk Southern, and those
    factors will vary from every point on our network.
        Those factors include things like length of haul, the type
    of equipment that is used, the terminal, terminal costs. I am
    going to start forgetting these if I do not look at my notes
    here.
        The route, of course, which has to do with--here we go--
    length of haul is number one, empty return, which is to say
    whether or not you have an empty backhaul or a loaded backhaul,
    days on line, which is to say that the fewer the days on line,
    the lower the equipment costs, the length of train, which is to
    say how many railcars on the train.
        Typically, the longer the train, the better the economics;
    however, it is really a balance between locomotive power and
    the number of railcars. Terminal costs, which are how many
    times you have to handle the rail cars between the time that
    you originate the train and the final destination. The type of
    equipment, and then the weight of the product. On the weight of
    the product, we have virtually no control over that.
        We at Norfolk Southern, for the ports on our network, try
    to do our darndest to make certain that we do not prejudice any
    port versus--relative to another port. However, the rates that
    we provide for a particular commodity from one port relative to
    another port will always differ, because the length of haul is
    going to be different, backhaul opportunities are going to be
    different, et cetera, et cetera.
        If I could just quickly give you one example?
        Senator Shelby. Take your time. That is why we have this
    hearing.
        Mr. Martinez. One example. There is one major port on the
    Atlantic Coast that has a very heavy local consumption of metal
    products in the vicinity of the ports. In that particular area,
    it is uniquely positioned in an area that has a lot of metal
    consumption. It competes against other ports where you do not
    have that situation.
        When we handle import steel coming into the United States
    on the Atlantic Coast, that port has a huge competitive
    advantage, and why? Because the primary rail movement into that
    region, where that port is located, is coming from the Midwest,
    where steel is produced, moving east, to arrive in the general
    vicinity of that port, and then we have empty railcars.
        That is the head haul move. That is the move where,
    frankly, we are making money on moving the traffic, and then we
    have empty railcars that we need to reposition back to the
    Midwest.
        So when it happens that you have tonnage of steel coming
    through that port, they are going to have a better rate than
    other ports located on the Atlantic Coast, where we would have
    to move the rail equipment, which is specialized equipment for
    that commodity, and basically it would be an empty move, and
    then the rate for that product would be the head haul rate.
    Here, you are able to give a backhaul rate, and, frankly, the
    rate is going to be different at each point.
        Senator Shelby. Sure. While I am pleased to hear that each
    of you represent the railroads--that you believe that there is
    a healthy amount of competition between the railroads,
    something continues to puzzle me here. Maybe you can help me.
        If your companies embrace competition, as you claim, then
    why do your companies routinely force short lines, that operate
    on the track you sold them, to enter into contracts that keep
    them from competing with the major railroads, or from hauling
    freight to another class-one railroad? How do you reconcile
    what is on its face protectionist contracting with your
    rhetorical support of competition? Mr. Davidson.
        Mr. Davidson. Well, I would give you the answer from my
    point of view. First off, we resorted to selling marginal
    branch lines to short-line operators as an act to try to
    preserve business flowing across that branch line, and to
    continue to provide service to our customers rather than
    abandoning the railroad and just ceasing service to that
    customer. That was the first thought.
        So we sold or leased those short lines, or those branch
    lines to the short-line operators on that basis, and the price
    that we charged the short-line operator, or the lease rate that
    we charged the short-line operator was designed to be able to
    let him operate and make profit, and continue to provide
    service there.
        It did not contemplate him becoming a major railroad and
    operating over us. I mean it would have been entirely different
    economic scenario if we were going to convey to him a piece of
    our railroad with the thought in mind that he is going to
    operate over us for another 5,000 miles or something.
        It was a contractual agreement that was entered into
    between two consenting adults, and now they would like to
    change that equation. It is just that that was not the
    agreement that was made when the line was conveyed to them.
        Senator Shelby. Mr. Rickershauser.
        Mr. Rickershauser. I agree with all of Mr. Davidson's
    comments. Building on that a little bit, in a number of
    instances, the short lines that we have spun off, as the Union
    Pacific did, and created to preserve service in the rural
    areas, the contracts that we struck with those folks provides
    the opportunity for the short-line operator to contact us, and
    essentially buy out of the contract.
        Senator Shelby. Okay.
        Mr. Rickershauser. In other words, these are leases of
    property. They have the right to purchase the property, and
    when they do, they can connect with anyone their tracks touch.
    As a point of fact, we are very close to concluding one of
    those deals right now, even as I speak, and we are in
    conversation with two other short lines that have contacted us
    with the same desires. So the contracts provide the
    opportunity, and we are open to dialogue if the short lines
    want to talk about that.
        Senator Shelby. Mr. Martinez, do you have any comments?
        Mr. Martinez. I would just add that we have over 200 short-
    line partners, and we deal very closely with them, and
    obviously we pursue opportunities jointly with them. They were
    set up, as Mr. Davidson----
        Senator Shelby. Are they important to all of you?
        Mr. Martinez. Absolutely. Our network would not--we would
    not be carrying the level of traffic that we currently carry
    were it not for our short line----
        Senator Shelby. Are they basically feeders? They feed
    business to you.
        Mr. Martinez. As a general characterization, yes.
        Senator Shelby. Mr. Davidson.
        Mr. Davidson. In fact, if you added together all of our
    short-line partners, they would be our single largest customer.
        Senator Shelby. Okay.
        Mr. Rickershauser. If I may add on that as well, we talked
    earlier about our single carload business, our industrial
    products business, and I guess I would point out two facts.
        Number one, BNSF connects with approximately 160 of these
    carriers around our network. Number two, they handle, in terms
    of our industrial products business, they touch about 25
    percent of our total book of business, and number three, they
    have grown their business last year at a rate that we wish we
    could replicate on our rail. So we view it as an active and
    viable partnership.
        Senator Shelby. When railroads voluntarily propose that
    certain benefits will be achieved as part of a merger, usually
    in terms of service improvements, and those benefits do not
    emerge, is it appropriate for the STB to take some action?
        In other words, in order to meet the public's interest
    standard in the law, why should not merger approval be a
    condition on the merger partners producing those benefits? We
    hear a lot about it, but I just wondered. Sometimes I know it
    is achieved, sometimes it is not. Mr. Rickershauser.
        Mr. Rickershauser. As I am sure you are aware, the Surface
    Transportation Board is currently going through a rule-making
    process. There will be oral arguments on April 5th.
        For some reason, sometimes we feel like we are the guilty
    parties, because we announced a combination with Canadian
    National in 1999 that got everybody excited. It was our way of
    saying Merry Christmas, but most people did not take it that
    way.
        But in that transaction that we were going to propose, and
    I think you see it in the rules that are emerging, there is the
    concept that carriers not only submit to oversight, that is,
    did you produce, in fact, what it is you said you were going to
    produce, but if, in fact, carriers do not produce the service
    that they promised shippers, that there is some sort of
    remedial action that applies.
        Senator Shelby. We have heard a lot about the capital
    investment that the railroads have made, and I know it is real,
    I have seen your chart that Mr. Davidson put up there over the
    last--would each of you provide for the record of the hearing,
    not at this minute, a description of where you have made these
    capital investments, and so forth? We would just like to know,
    because we are trying to learn a little more about this----
        Mr. Davidson. For what period of time would you like to
    have that, Senator?
        Senator Shelby. The last 10 years.
        Mr. Davidson. Sure.

                              SUBCOMMITTEE RECESS

        Senator Shelby. I want to thank all of you, one, for your
    patience, and also for your contribution to the hearing, and
    for waiting patiently while we had to vote. Thank you all.
        Mr. Davidson. Well, thank you for letting an old brakeman
    talk a long time.
        Senator Shelby. Thank you.
        [Whereupon, at 1:05 p.m., Wednesday, March 15, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                            THURSDAY, APRIL 26, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:06 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Richard C. Shelby (chairman)
    presiding.
        Present: Senators Shelby, Specter, Bond, Bennett, Stevens,
    Murray, Byrd, Mikulski, and Durbin.

                          DEPARTMENT OF TRANSPORTATION

                            Office of the Secretary

    STATEMENT OF HON. NORMAN Y. MINETA, SECRETARY OF
                TRANSPORTATION

                 opening statement of senator richard c. Shelby

        Senator Shelby. The Subcommittee on Transportation will
    come to order. This morning we welcome Norman Mineta, who will
    make his first appearance as Secretary of Transportation before
    this subcommittee. I am anticipating that this hearing will be
    widely attended and I know that a number of members of the
    subcommittee are interested in your proposed budget, Mr.
    Secretary, and the activities of the Department. One or two of
    my colleagues may be interested in a particular airport,
    transit, or highway project. You never know.
        Mr. Secretary, I commend you for preparing the most honest
    budget request that I have seen since becoming chairman of the
    subcommittee. At first blush and as widely reported in the
    press, it would appear that the President's budget decreases
    Federal spending on transportation by several billion dollars.
    But, Mr. Secretary, upon closer inspection, the budget for
    transportation does have real growth over last year after
    backing out some one-time transit and highway spending from
    last year's appropriations.
        Mr. Secretary, the administration's request honors the
    authorized levels for highways, transit, and aviation; resists
    for the most part unobtainable diversions of funding from the
    highway account for non-highway uses; and avoided, again for
    the most part, tried and rejected budget gimmicks such as user
    fee taxes that were dead even before they were considered for
    this budget. Mr. Secretary, what a refreshing departure from
    last year. I commend you again.
        As encouraged as I am about this budget request at this
    point, there are a few areas of concern that I will mention
    this morning. Although the President's budget request avoided
    the wholesale reliance on new user fees and taxes that
    characterized the last administration's submissions, somewhere
    the budget gnomes just could not let go completely. They
    continued the proposed new $77 million in taxes for rail safety
    inspections and the hazardous materials safety program, even
    though these proposals have been submitted to Congress each
    year that I have been chairman of the subcommittee, and each
    year I have told your immediate predecessor, Mr. Secretary,
    that Congress, I believe, is not interested in enacting new
    user fee tax increases on the transportation community.
        Although the hole in the budget created by user fees is
    smaller than years past, even a small hole will have to be made
    up somewhere. Because of the funding distortions caused by
    special budget treatment, closing this gap will likely come at
    the expense of just those accounts that have the greatest
    difficulty absorbing the shortfall. With that in mind, Mr.
    Secretary, I will entertain your suggestions for addressing the
    $77 million shortfall.
        Another area of concern is the pressure put on the aviation
    and Coast Guard operating accounts. The structure of
    transportation funding under the two most recent authorization
    bills for aviation and surface transportation creates pressure
    on FAA operations, Coast Guard operations, and Amtrak
    subsidies. Even with that pressure, the administration has
    found the resources to commit 6 percent growth to both the
    Coast Guard and the FAA operating accounts in a 4 percent
    growth budget.
        As for Amtrak, I wish I was not concerned at all.
    Unfortunately, I have not heard much about self-sufficiency
    lately and many of my colleagues do not seem to be troubled by
    the prospects of paying tens of billions of dollars more on
    this failed experiment. According to independent assessments of
    passenger rail by the GAO and DOT Inspector General, Amtrak
    continues to experience heavy cash losses and things seem to be
    getting worse, not better.
        It carries roughly, Mr. Secretary, the same number of
    passengers that it did 20 years ago, at great cost to the
    American taxpayer, while eroding and encumbering what little
    remains of the company's asset base. No matter what the new
    mantra is for Amtrak--route expansion, Acela, growth in non-
    passenger business, commuter rail services--the answer is the
    same, an annual taxpayer bailout. The unavoidable truth, the
    bottom line, is that Amtrak is a guaranteed loser, not a viable
    business.
        I am troubled by the most recent claim that Amtrak is a
    solution to aviation and highway congestion. If the proposition
    were not so costly, it would be laughable. Let us presume
    Amtrak's passenger base could be doubled to roughly 40 million
    people annually. Now, I will acknowledge that after 30 years of
    history with roughly the same number of riders, this is a
    completely unrealistic proposition. But so many assumptions
    about Amtrak are unrealistic that one more to make a larger
    point should not offend anybody here.
        I am curious whether the rail panacea advocates realize
    that 40 million passengers, again a doubling of Amtrak's annual
    ridership, is no more than the number of passengers that are
    carried by the commercial aviation system every 20 days. When
    compared to the number of passengers moving on our highways, it
    would be measured in hours, not days. Furthermore, highway
    congestion is not caused by intercity traffic. It is largely
    the result of people working in urban core and commuting from
    the surrounding areas.
        The solution to highway and airway congestion I believe is
    not Amtrak. To pretend otherwise is misleading, I think, and
    quite disingenuous.
        Mr. Secretary, in reviewing your testimony and in listening
    to what you said before the House subcommittee yesterday, I
    wanted to mention that I agree with you that some of the
    weather identification radars and displays providing
    information to the controller may actually contribute to
    delays. We need to do a better job proactively at safely
    managing the flow of aircraft through the system, particularly
    when weather is an issue.
        I also believe that increased traffic demand at peak times
    at critical airports contributes to delayed flights. The system
    simply has great difficulty absorbing a shock, be it driven by
    weather, airport scheduling, congestion, or air traffic
    control.
        I have heard you say, Mr. Secretary, that you expect to
    spend 70 percent of your time on aviation matters. Considering
    the many challenges facing the aviation system, from excessive
    flight delays, the over budget and underperforming ATC
    replacement equipment, to exploding personnel costs, I can
    understand the need to devote significant attention to aviation
    issues.
        Nevertheless, there will be several watershed events that
    will deserve your personal attention and perhaps take up more
    than 30 percent of your time. Let me just go over a few of
    them. The Coast Guard wants to proceed with the procurement
    phase of the Deepwater contract, committing the Department to a
    20-year, $10 billion recapitalization of its Deepwater assets.
    The Class 1 railroads engage in many business practices that
    have the effect of stifling competition in the freight rail
    industry. NHTSA is struggling to comply with issuing 10 new
    regulations on an accelerated schedule, as required by the
    TREAD Act. The Big Dig project in Boston is probably worthy of
    some attention to make sure that the almost 500 percent cost
    overrun does not get any worse. And rumor on the street is that
    the Woodrow Wilson Bridge is already $200 million over budget
    and is the leading candidate to become a mini-Big Dig.
        I guess what I am trying to say, Mr. Secretary, is that you
    have a lot of challenges facing you at the Department. Along
    those lines, after reading your Budget in Brief, I know that
    transportation safety is a personal priority to you. If you
    step back from day-to-day challenges for a moment or from an
    occasional sensational event to reflect on where the fatalities
    are occurring in the transportation system, I would argue that
    a substantial portion of your safety-related efforts should be
    directed to the highway system.
        Every year more than 40,000 Americans lose their lives on
    the roadways, while less than 3,000 die in the rest of the
    system. What is especially alarming is that the highway
    fatality rate per million vehicle-miles crept up last year. So
    we are not headed in the right direction on our highways as far
    as safety is concerned.
        I would encourage you, Mr. Secretary, to review the
    operations of NHTSA to make sure that the focus of the agency
    is on those programs and initiatives where the greatest
    potential to save lives exists. My sense of the prior regime's
    focus on safety programs was largely driven by press releases.
    I am confident that your approach will be to dig into programs
    to find out what works. I would urge you to do this with NHTSA
    and refocus the agency on their core mission. The agency has
    lost focus recently and I think that your oversight of NHTSA's
    programmatic priorities and regulatory actions would be time
    well spent.
        I look forward to the hearing today and working with you in
    the future.
        Senator Murray.

                       statement of senator patty Murray

        Senator Murray. Well, thank you very much, Mr. Chairman.
        Secretary Mineta, I want to welcome you here this morning
    for your first appearance before our subcommittee. Last week
    you were kind enough to come out to my home State to honor the
    air traffic controllers for their work during Seattle's
    earthquake, and I again want to thank you for doing that.
        While this hearing is focused on President Bush's
    transportation budget for fiscal year 2002, I hope that we will
    use this opportunity to discuss more broadly the many
    challenges facing the Department in the year ahead. As the new
    ranking member of this subcommittee, I want to make clear at
    the outset that I do not view the development of the
    transportation budget as just an accounting exercise or just as
    an opportunity to fund projects in my State. I view this
    process as a way to meet our broad national goals, such as
    improving aviation safety, reducing highway fatalities, cutting
    traffic congestion, and improving air quality.
        In my region of the country, people are calling out for
    less traffic and more aviation capacity. The people of the
    Puget Sound area are choking on road congestion. The SEA-TAC
    Airport has been working toward the completion of a third
    runway for more than a dozen years and we are still waiting for
    the final permits to be issued.
        Fortunately, the subcommittee now has better tools to
    evaluate the progress that the Transportation Department, is or
    is not, making towards those goals. The law now requires that
    on the same day the Secretary transmits his budget to us, he
    must also submit a performance plan. This plan tells us whether
    the Transportation Department has achieved its stated goals for
    the year just passed and it also articulates new goals for the
    coming year.
        A review of Secretary Mineta's performance plan makes it
    very clear that he has a great many challenges ahead of him. It
    also reveals certain aspects of how the Bush Administration
    intends to change the direction of the Department of
    Transportation. For example, the performance plan states that
    despite the fact that transportation is the fastest growing
    source of greenhouse gas emissions, the DOT's former goal of
    minimizing those emissions has been formally suspended. I
    personally do not agree with that policy change, but for those
    goals where we do agree I think that the most important
    question we should ask this morning is whether the President's
    budget for 2002 provides the resources necessary for Secretary
    Mineta to meet those goals.
        I have to admit that my preliminary assessment of this
    budget is that it does not do the job. While there are a number
    of initiatives to applaud, such as the 15 percent increase in
    requested funding for pipeline safety, there are too many
    examples where the level of funding requested will undermine
    rather than help the Secretary in achieving his goals.
        For example, the Secretary's performance plan states that
    the Bush Administration has established the goal of reducing
    the amount of oil spilled in our waterways by 22 percent. Two-
    thirds of the amount of oil spilled in our waters in 2000 came
    from oil facilities on our shorelines. Yet the President's
    budget for 2002 for the Coast Guard proposes to reduce
    significantly the number of inspectors available to ensure that
    these oil facilities are complying with our environmental laws.
        Similarly, the Bush Administration has endorsed the goal of
    reducing the number of overstocked fish species by a
    considerable extent in the coming fiscal year. Yet we know
    that, as we speak, the Coast Guard is cutting back fisheries
    enforcement missions this year due to inadequate funds, and
    there is no proposal in the administration's budget to provide
    supplemental assistance to restore those efforts.
        The Bush Administration's performance plan has endorsed the
    goal of increasing Amtrak ridership. But just 2 months ago the
    Amtrak Board, chaired by HHS Secretary Tommy Thompson, stated
    clearly that Amtrak will require $1.5 billion in capital
    investment each year in order to draw passengers off our
    clogged highways and provide first class high-speed rail
    service across the Nation. The budget before us requests a
    freeze on Amtrak funding at $521 million, roughly a third of
    what is required.
        In the area of aviation safety, the performance plan sets
    critically important goals for improvement in the safety of
    airline operations. However, the budget before us proposes a
    freeze on the number of FAA inspectors. The FAA's safety review
    commission that was convened in the wake of the ValuJet crash
    stated that a minimum of 3,300 flight standards safety
    inspectors would be necessary to maintain safe operations. The
    level proposed in this budget does not reach that. In fact, the
    level proposed in the budget is even further below the level
    anticipated in the National Civil Aviation Review Commission
    that Secretary Mineta chaired.
        Mr. Chairman, I see a number of problems with the budget
    before us, but I am especially troubled by budget proposals
    that seem to fly in the face of the stated goal. I do not raise
    these issues for the purpose of being critical of the
    administration. Indeed, what I want more than anything is for
    Secretary Mineta to come before the subcommittee next year and
    say that he has succeeded in meeting all of his stated goals.
    But I want him to have the budget that will give him that
    opportunity, and I am not sure that the budget before us will
    do that.
        So as the year progresses, Mr. Chairman, I look forward to
    working with you and the Secretary towards putting together a
    budget that truly does meet the needs of our shared agenda for
    improved mobility and safety.
        Thank you.
        Senator Shelby. Senator Stevens.

                        Statement of senator ted Stevens

        Senator Stevens. Well, thank you, Mr. Chairman.
        I agree partially with what the Senator from Washington
    said, Mr. Secretary. The delays in the construction of that new
    runway in SEA-TAC have really been a problem for people from
    Alaska as well as from the South 48 that are trying to get into
    Alaska. I am not sure that all the burden falls upon the
    Department of Transportation, whether it was the last
    administration or this one. However, I think it is time that
    the people of Seattle resisted taking to court every single
    report that comes out pertaining to that airport.
        I do hope that we can get to our Commerce Committee a bill
    that will give us some kind of a fast track for the new runways
    at our airports that are absolutely necessary in the national
    interest to stop this clogging of our main hubs in the air
    transportation system.
        Having said that, Mr. Secretary, I have two points to
    raise. I do hope that you heard Chairman Shelby talk about the
    Big Dig. I think, having been the target of so many people
    talking about the little amounts that I add to budgets for
    Alaska, that when I look at the Big Dig, the tremendous loss of
    taxpayers' funds up there ought to be brought to the attention
    of the Nation. I intend to go into that as deeply as possible
    to find out what has happened up there, because that project,
    when it first was brought to us, was $2.4 billion. It is almost
    $14 billion now.
        Now, those of us who struggle to get little sums for things
    like our airports--and that is my second point--I have raised
    it with you before. I know that you are as concerned as I am.
    We have over 80 airports that exist in near-total darkness half
    of the year because they have no runway lights. We have
    insufficient safety and other navigation aids up there in the
    rural parts of our State. Yet we have the highest death rate
    per capita in terms of aviation travel. Why? Because we have no
    highways or trains to connect our rural communities to the
    national transportation system.
        Every time I try to do something for those little airports,
    I am again attacked for ``pork''. I have to tell you, that is
    not ``pork''; that is real sound bacon to me. It is the kind of
    thing that we have to have if our small communities are going
    to be part of world commerce.
        So I look forward to working with you to try and make sure
    that not in only Alaska, but in all areas of the country, the
    airports that connect these little towns and little villages
    first to intrastate, and then to interstate commerce are safe,
    and that they are accessible by air, that they have the kind of
    safety devices, such as runway lights and, information about
    runway obstructions which we now have lost because of the loss
    of basic ground facilities in these small airports. I hope we
    can get back to looking at that.
        I looked at this budget and I am fairly pleased at the way
    the budget was prepared and presented to us. I think that it
    has a sufficient amount of money if we use common sense to
    allocate it fairly among the needs of the Department of
    Transportation, and I do not see much real reason for any vast
    increase in this bill.
        I do want to note that many of the items that used to be
    appropriated are now coming out of trust funds and out of
    entitlements, and we have to take that into account when we
    look at how much money is spent for transportation in the
    country.
        Thank you very much, Mr. Chairman.
        Senator Shelby. Senator Mikulski.

                     statement of senator barbara Mikulski

        Senator Mikulski. Thank you very much, Mr. Chairman.
        First of all welcome Secretary Mineta, a dear colleague
    from when we served in the House together and a fellow
    Marylander. I look forward to your testimony and really
    discussing with you the important crucial transportation needs.
        I am going to be following up with Mr. Mineta on the
    question that you have raised, Mr. Chairman, the Woodrow Wilson
    Bridge and this whole idea of flashing yellow lights that it
    could be another Big Dig or, as Senator Bond knows, as we knew
    it in VA-HUD, the Boston Harbor. Remember the Boston Harbor,
    Senator Bond? So we in Maryland, and I know I speak for my
    colleagues in Virginia, do not want this to become another Big
    Dig.
        Mr. Secretary, I am going to ask you to assign someone in
    your office to stand sentry on the Woodrow Wilson Bridge and
    then to work with the chairman and ranking member and also with
    the Congressional delegations, because the two governors worked
    together. It was bicameral. When we worked on the Woodrow
    Wilson Bridge, it was Governor Gilmore and Senators Warner and
    Robb. Congressman Wolf really was a prime mover, and on the
    Maryland side, Senator Sarbanes, Governor Glendening, and
    myself.
        So now that we have the money, we want to make sure that we
    accomplish what we want, which is to build the only Federal
    bridge in the United States of America, and we do not want it
    to get out of control. So we look forward to working with you
    on the Woodrow Wilson Bridge.
        Second, we want to thank you and the administration for
    your increases in the Coast Guard budget. The Coast Guard's
    motto is ``Semper Paratus,'' which means ``Always Prepared.'' I
    think we have to be prepared to help them with their mission.
    Their equipment is quite dated. It goes back to the Vietnam
    War. They have new missions, whether it is guarding our coast
    against drug dealers, environmental pollution, and so on.
        So we look forward to working with you on the Deepwater
    initiative, again being cost conscious, but also helping to
    protect our borders.
        On the issues of trains--Amtrak is very important to those
    of us in the Northeast Corridor. We welcome the
    administration's innovative policy of giving the cash to Amtrak
    up front and not waiting until the end of the fiscal year, or
    at least over the course of the year. I think this is going to
    result in greater efficiencies and wiser uses of the money.
        In terms of mass transit, Senator Shelby is absolutely
    right. Most people are trying to use rail or trying to live in
    the suburbs and commute to the urban cores. The commuter rail
    systems in our country I think are a very important aspect of
    rail. Again, we need to look at what we can do.
        Highways, byways, and subways are always important to me,
    but also protecting and guarding our coast, as well as getting
    our hands on the Amtrak situation, laying the rail track for
    perhaps a high-speed rail initiative where we can begin to
    shift the burden from the taxpayer and attract the ridership we
    need. I think we are at a juncture. We are either going to make
    Amtrak selfsufficient by 2002--or we have to be looking at this
    closer.
        So we thank you. We look forward to your testimony.
        Mr. Chairman, I want to acknowledge the validity of many of
    your concerns and I look forward to working with you, and
    particularly on standing sentry on the Woodrow Wilson Bridge.
        Senator Shelby. Thank you.
        Senator Bond.

                    statement of senator christopher s. Bond

        Senator Bond. Thank you very much, Mr. Chairman.
        Let me begin by saying I strongly support the comments and
    the direction that Chairman Shelby has laid out for this
    subcommittee. I would associate myself with many of the remarks
    made by our ranking member Senator Murray, Senator Mikulski,
    and Senator Stevens. I think this is a very active subcommittee
    and has ideas that must be considered.
        We are delighted to have you, sir, with your experience,
    not only in local government, but on Capitol Hill, to help get
    our concerns into the bureaucracy. We have not had much of a
    chance to work together in the past, but I am certainly looking
    forward to it. We are delighted with your leadership.
        Mr. Secretary, all of us know that we must improve our
    existing infrastructure and determine better ways to manage our
    transportation demands, not only to address the safety needs,
    but our economic competitiveness. We cannot forget that
    Americans depend on our transportation infrastructure, down in
    the flatlands, the middle part of the country, mainly on roads
    and bridges, each day to get to and from work, school, shopping
    centers, doctor's appointments, and elsewhere.
        But as has already been mentioned, we have a tremendous
    congestion backup and it is caused by the delays in moving
    forward on these projects. I am told that to move forward on a
    highway project the environmental challenges, redundancies,
    redoing, overdoing, guessing, reguessing, and second guessing
    leads to an 8- to 10-year delay. When it comes to airport
    runways, that delay can be 10 to 15 years.
        Obviously, we want to make sure that all legitimate
    environmental concerns are raised. But they ought to be raised
    once and we need to move on.
        Now, I am very pleased that the Commerce Committee is going
    to be taking a look at the environmental streamlining and
    expediting the process for runways. I am on the Environment and
    Public Works Committee. We need to look at that as well. We
    need your leadership, sir, to help us figure out how we can do
    the needed job of seeing that legitimate environmental concerns
    are dealt with, but that we do not have these delays, because
    they are resulting in deaths of people who travel overcrowded
    highways and deaths of people in airplane accidents that result
    from inadequate air facilities.
        So I think this is one of the big challenges out there and
    we want to work with you.
        But speaking of working with us, Mr. Secretary, I invite
    you to come to Missouri and let me show you first-hand how
    important transportation is in the heartland. Missouri is
    geographically privileged to be located not only near the
    geographic center, but the population center of the country, at
    the confluence of our two greatest waterways, the Mississippi
    and Missouri. It has long been said to be the gateway between
    the East and the West. It is also North and South. Missouri's
    roads and bridges are the arteries that, if they were
    adequately upgraded, would expedite commerce throughout our
    country's heartland and all of North America.
        According to the Federal Highway Administration, Missouri
    has the country's sixth largest highway system. We are the home
    of the second and third largest rail hubs, one of the fastest
    growing airports in the world, the second largest inland port
    in the United States.
        But having said that, with all of the transportation needs
    in Missouri, we are players in the world market, and in the
    spirit of concern for the national transportation system, I am
    submitting to you today a letter urging that your Department
    designate American Airlines to continue Trans-World Airline's
    current non-stop air service between Washington's Reagan
    National Airport and Los Angeles International Airport. I am
    joined on the letter by my colleagues Senator Boxer from
    California, Senator Brownback and Senator Roberts of Kansas,
    and Senator Carnahan of Missouri.
        We in the heartland are interested in seeing that we have
    good service coast-to-coast and, yes, we are very much
    concerned that American Airlines, to which we are most grateful
    for having come to the rescue of TWA, maintains a strong
    competitive posture, and we believe that this fits in with the
    national needs. I will have a question for the record, but I
    will submit this letter to you and probably send some more
    signatures along.
        Thank you, Mr. Chairman. Thank you, Mr. Secretary. We are
    looking forward to working with you.
        Senator Shelby. Senator Byrd.

                      statement of senator robert c. Byrd

        Senator Byrd. Thank you, Mr. Chairman. I commend you for
    holding this hearing so that we can hear from our newest
    Secretary of Transportation, Mr. Norman Mineta. Mr. Mineta is
    well known to many of us. We have had the opportunity to work
    with him, not only at the Department of Commerce, but also when
    he served as chairman of the House Committee on Public Works
    during the development of the Intermodal Surface Transportation
    Efficiency Act, or ``ISTEA.''
        Since the early 1980's our national investment in
    infrastructure has declined dramatically as a percentage of our
    gross domestic product. I would point out, Mr. Chairman,
    however, that we are beginning to do slightly better in
    reversing that trend. Just 4 years ago when you assumed the
    chairmanship of this subcommittee, the total size of the
    Transportation Appropriations bill was close to $38 billion. In
    just the last 4 years that figure has grown by more than $20
    billion to around $59 billion. That represents a 53 percent
    increase in transportation investment in just 4 years under
    your chairmanship.
        I will accept a modest bit of credit for this increased
    investment as one of the authors, together with Senators Gramm,
    Baucus, and Warner of a $26 billion amendment to TEA-21 which
    ensured that all of the funds collected in gasoline taxes and
    deposited into the Highway Account of the Highway Trust Fund
    would be spent on our Nation's highways. You too, Mr. Chairman,
    deserve a good deal of credit for being an effective and
    forceful advocate for the Nation's transportation system.
        Even with this healthy level of growth over the last 4
    years, we are just beginning to address the full range of needs
    and reverse the trend of Federal disinvestment in our Nation's
    infrastructure that began in the early 1980's. I must point out
    that Secretary Mineta's prepared statement asserts that the
    Bush Administration's budget fully funds the guaranteed levels
    for surface transportation as articulated in TEA-21. I should
    point out, however, that the Bush budget includes several new
    statutory proposals which, if enacted, would change TEA-21 in
    several fundamental ways. Taken together, these proposals have
    the effect of prioritizing research programs and discretionary
    grant programs at the expense of highway construction dollars
    to the States.
        Under this budget, the States would receive almost $430
    million less in direct highway construction funds than they
    would under TEA-21. I cannot and I will not support proposals
    that would take critical highway construction dollars
    guaranteed by TEA-21 away from the States and divert these
    dollars into other programs. We said that when we enacted TEA-
    21 we were putting the ``trust'' back into the Highway Trust
    Fund, and I am not prepared to change TEA-21 in ways that would
    detract from that promise.
        I emphasize that I have not leveled this criticism only at
    the Bush Administration. Last year I was equally critical of
    Secretary Slater's proposals contained in President Clinton's
    budget which proposed even more shenanigans with TEA-21. The
    Clinton proposal took roughly $1.2 billion in construction
    dollars away from the States for other transportation programs.
    I opposed that program and, thankfully, it was not enacted.
        I trust that you agree with me, Mr. Chairman, that similar
    proposals in the Bush Administration budget should also be
    rejected.
        Let me also express my support for Amtrak. In the first
    place, we cannot have large airports in West Virginia. In the
    second place, weather conditions prevent us from utilizing the
    airports as we otherwise might be able to.
        As to high-speed rail transit, we, of course, in our
    terrain cannot have high-speed rail. But I have been
    instrumental in helping to bring a modicum of rail facilities
    to West Virginia. Several years ago when I was chairman of the
    Transportation Subcommittee on Appropriations, I was able to
    get money for the Hill-Topper and the Mountaineer. I was able
    to promote the Cardinal, and today we have Amtrak service 3
    days a week into West Virginia and 3 days a week out of West
    Virginia.
        As a result of deregulation--and I have kicked myself in
    the seat of the britches all the way to the bank since we voted
    to deregulate the airlines--the big airlines immediately pulled
    out of West Virginia and those that remained, of course, have
    charged exorbitant prices for air travel in West Virginia.
        Now, you can walk up to the counter today and get a round
    trip ticket to Charleston, West Virginia, for somewhere between
    $800 and $900. You can do much better just to fly to London and
    return. But you can go to Charleston, West Virginia, and back
    by Amtrak and have a very comfortable ride and see the
    beautiful landscape along the way for $100, give or take.
        Amtrak is very important to our land-locked State of West
    Virginia. I want to state that I am a supporter of Amtrak. I
    hope that more people will take advantage of the opportunity to
    ride Amtrak to West Virginia, through West Virginia, and back
    to Washington.
        So I say that we need to continue to build our
    infrastructure, which has fallen behind. We have disinvested in
    infrastructure. I hope you will go with me at some point, Mr.
    Secretary, to West Virginia and see the beautiful highways that
    we are building down there. When I was in the State legislature
    55 years ago, we had 4 miles of divided four-lane highways in
    West Virginia. I want you to think about that for just a
    minute, 4 miles of divided interstate highways in all of West
    Virginia. That was just 55 years ago when I was in the State
    legislature.
        Well, today we have around a 1,000 miles of divided four-
    lane highways in West Virginia, and our people need those
    highways. People walk up to me in motels when I go to West
    Virginia and they recognize me, I suppose by my white hair,
    which was at one time as black as yours, Mr. Secretary, and
    they tell me----
        Secretary Mineta. Mine is getting as white as yours.
        Senator Byrd. They tell me how much they admire my State of
    West Virginia, how they love to come to it, and they compliment
    the State on the highways that we now have.
        So I would hope that we would continue to focus on these. I
    join with my colleague from Alaska who deplores the criticism
    that is leveled at him and the State of Alaska for what he has
    been able to do for that State with regard to transportation.
    Now, it is ``pork'' if it goes to Alaska, it is ``pork'' if it
    goes to West Virginia, but it is not ``pork'' if it is building
    bridges here across the Potomac. It is not ``pork'' if it is
    for transit here in this great city.
        Let me tell you something. I do not begrudge the billions
    of dollars that we have spent for our Metro here in this city.
    This is the capital city, and it is not ``pork'' here. I was
    one of the ones on the Appropriations Committee years ago when
    we started appropriating money to build a transit system in
    this city.
        Senator Stevens. Would the Senator yield for just one
    moment?
        Senator Byrd. Yes.
        Senator Stevens. We are one-fifth the size of the United
    States and we have less than 200 miles of divided highway in
    Alaska.
        Senator Byrd. Senator, what we need today is Daniel Webster
    and Henry Clay to take on those people. The criticism of rural
    States for attempting to build up their highway systems--just
    read the Webster-Haynes debate. Read the Webster-Haynes debate
    if you want to see how Webster felt about building highways and
    canals, and he even used the words ``building a highway across
    the Alleghenies.'' He was talking about West Virginia when he
    said that.
        Senator Durbin. Very impressive.
        Senator Byrd. Well, enough of that. Mr. Mineta, we thank
    you for being here and I will have further questions later.
        Thank you, Mr. Chairman.
        Senator Shelby. Senator Bennett.

                     statement of senator robert f. Bennett

        Senator Bennett. Thank you, Mr. Chairman.
        Mr. Secretary, welcome. I do not think I can add anything
    to all of the comments that have been made, so I will not
    prolong this. I do want to thank the Department for the work
    that has been done to gear up for the Olympics in Salt Lake
    City. If anyone wants to submit a bid for the Olympics for
    their home State or for the District of Columbia, let them come
    to me and I will explain a few things to them. One of the
    things that we must understand anywhere in the United States if
    we are going to enter an Olympic bid is that the Olympic Games
    cannot be supported anywhere in this country without massive
    Federal help.
        The primary area where we need Federal help is in
    transportation. The Department of Transportation under the
    Clinton Administration has stepped up to that challenge in a
    way that has been very heartening to see. We are very grateful
    to the people in your Department for the way they have
    assisted. We are going to have fabulous games in Salt Lake City
    in 2002 and your Department is a significant part of that.
        Now, my grandfather used to have a phrase, he said
    gratitude is the expectation of favors to come. I express my
    gratitude that this can continue in the future. But we really
    have had complete support from the Department of
    Transportation, and we are grateful for it, and we do look
    forward to it continuing.
        With that, Mr. Chairman, I will wait until the appropriate
    time for questions.
        Senator Shelby. Senator Durbin.

                     statement of senator richard j. Durbin

        Senator Durbin. Mr. Chairman, first let me thank you for
    the opportunity to serve on this subcommittee. I am new to this
    appointment. I am looking forward to working with you, Mr.
    Chairman, as well as Senator Murray. It was my good fortune in
    the House of Representatives to serve on the Transportation
    Appropriations Subcommittee and I had completely forgotten all
    the battles I had with the current Secretary concerning
    committee jurisdiction.
        I do want to say a word about new Secretary Mineta.
    President Bush, the U.S. Department of Transportation, and the
    Nation have really had the great benefit now of your service.
    This is the place where Norm Mineta should be. I was glad that
    you had an opportunity to serve as Secretary of Commerce, but I
    know from our service together in the U.S. House of
    Representatives that this is your passion. I know that you are
    going to be one of the greatest in our history and I am looking
    forward to working with you.
        Norm, it is going to be a good experience for all of us. I
    think that when it is all over, you will write an enviable
    record as Secretary of Transportation.
        I want to address just very briefly two or three things
    which we have talked about that I would like to put on the
    record. The first, of course, is the situation concerning
    O'Hare Airport. This is not just a local matter, not even a
    regional matter. It is certainly national. It could be
    international in scope.
        The Federal Aviation Administration (FAA) released the
    airport capacity benchmark report just yesterday. Much of the
    information was not a surprise. It adds to the urgency to find
    ways to improve the national airport system and to increase
    aviation capacity. O'Hare is one of the world's busiest
    airports. It also posted the third highest number of delays,
    about 63 out of every 1,000 flight operations. The airport is
    running at capacity, and under some circumstances over
    capacity, for portions of every day.
        The FAA estimates that O'Hare will see operational growth
    of 18 percent a year over the next decade. The question is, Mr.
    Secretary, how do we solve this crisis at O'Hare and
    nationwide? It is my understanding that technology can help;
    new takeoff and landing procedures might be of assistance; and
    some capacity can be created, but maybe not enough to make any
    measurable difference.
        For that, I am told we need infrastructure. I think you
    understand as well as anyone that that involves some very tough
    political choices. I applaud the city of Chicago for
    reconvening the Chicago delay task force, a group including the
    Chicago Department of Aviation, the FAA, and the major
    carriers. I am looking forward to working with you on this
    because some people have identified the problems at O'Hare as
    central to the problems facing aviation in America. I think it
    could be a matter of that gravity.
        Let me shift from the skies to the rails. For years freight
    railers have complained about the bottleneck in Chicago. There
    used to be an old saying that it took 2 days from the East
    Coast to Chicago, 2 days through Chicago, and 2 days to the
    West Coast. Sadly, that has changed. Now it takes 72 hours to
    move freight through the city of Chicago. In fact, some
    railroads park their trains on the edge of town and move their
    freight by truck to another train waiting on the other side of
    town.
        We have addressed this issue I am afraid with very modest
    efforts, and we need to look at it more seriously. I have
    talked to my colleague and our mutual friend Congressman Bill
    Lipinski about initiating a study. The impact of this freight
    congestion just does not impact the national economy and the
    cost of goods for people across America, it has a direct impact
    on the quality of life of people living in the city of Chicago
    as trains are idling and stalled and cannot move with dispatch
    across this great city.
        Finally, the issue of rail crossing safety is one which
    comes with the fact that Illinois, I think, has the largest
    number of rail crossings in the Nation and the largest number
    of accidents at rail crossings in the Nation. A DePaul
    University study estimated that one out of every three trains
    is involved in some type of incident, some of them extremely
    serious. I am looking forward to working with you, Mr.
    Secretary, to improve safety while we also talk about improving
    the efficiency of rail service in the city of Chicago.
        I have not mentioned highways. We can save that for another
    day. I have a long speech on that which I will be glad to give
    to you personally when you have time to take notes.
        Thank you very much, Mr. Chairman.
        Senator Shelby. Senator Specter.

                       statement of senator arlen Specter

        Senator Specter. Thank you, Mr. Chairman.
        At the outset, Secretary Mineta, I thank you for taking on
    this job. Your background in public service in the House of
    Representatives gives you unique insights into one of the
    toughest jobs in government. I appreciate the promptness, let
    me say for the record, that you responded to me when we had a
    very critical issue on Wings Field in the Philadelphia suburban
    area.
        There are many issues which vitally affect the Nation and
    my State, obviously. I have been in touch with your Department
    on the issue about radar, and the adequacy of noting what
    planes are coming into the Philadelphia International Airport.
    I am very concerned that at Philadelphia Airport and many other
    places in the country, we are just a step away from the
    problems of potential tragedy. I appreciate the attention which
    your Department and the FAA are giving to that.
        We are looking at very, very difficult funding issues, with
    so many requests for dollars in transportation. One brief
    mention of Maglev, which has been on my mind for all of my
    tenure in the Senate. There is a potential for enormous
    progress and economic growth and development if we are able to
    span Philadelphia to Pittsburgh in about 2 hours with many
    intermediate stops. We now have competition with Greensburg,
    Pennsylvania, to the Pittsburgh Airport and the District of
    Columbia to Baltimore. My thought is that we really need a
    national constituency for Maglev.
        As expensive as it is, it is something that we really have
    to find a way to do. If we were as timid in the nineteenth
    century as we are today, we never would have built the
    transcontinental railroads. There are so many issues, which I
    will not dwell on now, as we take a look at transit in the big
    cities and in our rural areas.
        I regret that I cannot stay. We have multiple hearings
    scheduled, as you know Mr. Secretary, from your work in the
    Congress, and I am chairing one on ergonomics a floor above.
    But I do thank you for your assistance and look forward to
    working with you on many, many problems.
        Thank you, Mr. Chairman.
        Senator Shelby. Secretary Mineta, we welcome you again.
    Your prepared statement will be made part of the record in its
    entirety. You may proceed as you wish. I am going to be gone a
    few minutes to the floor, but you will be in good hands with
    both sides of the aisle here.

                    statement of secretary norman y. Mineta

        Secretary Mineta. Thank you very much, Mr. Chairman and
    members of the subcommittee. It is a great pleasure for me to
    have this opportunity to be before all of you today to testify
    on President Bush's $59.5 billion transportation budget.
        When I was Mayor of San Jose, California, I learned that
    the tool that made the most difference for my community was
    transportation. Nothing else had as great an impact on our
    economic development, on our pattern of growth, or on the
    quality of our life. Today the most fundamental transportation
    challenge that we face is not congestion, it is not delays, and
    it is not modernization of the aviation system. Our biggest
    challenge is to get everyone working together to solve
    problems.
        I intend to devote my energies to work across party lines
    and build consensus to achieve solutions. I will look to you,
    Mr. Chairman, to Senator Murray, and to the members of this
    subcommittee to help me do this.

                                     Safety

        Transportation safety is the Department's number one
    priority, and the 2002 budget includes $7.3 billion for
    transportation safety programs, 7.5 percent above 2001. The
    funding requested will help us address our safety challenges,
    which include reducing runway incursions, increasing seatbelt
    use, overseeing improved pipeline safety measures, improving
    the Coast Guard's ability to respond to those in distress, and
    allowing the United States to honor the North American Free
    Trade Agreement safely and responsibly.

                                    Mobility

        When I took this job, I knew that, in addition to safety, a
    central challenge was addressing the gap between the demand for
    transportation and the capacity of our transportation
    infrastructure. That gap is what generates the traffic that we
    all face on our highways, at our airports, and our seaports.

                               Aviation capacity

        All of you know that nowhere else is that challenge more
    evident than in air traffic control. In 1997 the National Civil
    Aviation Review Commission, which I had the privilege to chair,
    saw the coming storm. We predicted that there would be a
    gridlock by the turn of the century, and by May 2000 it struck.
    I take no satisfaction in saying we told you so, but we told
    you so.
        Now we face the stiff challenge of building the necessary
    capacity to match that demand. President Bush's budget includes
    the aviation capital and grant levels authorized in AIR-21 and
    the highway and transit funding levels contained in TEA-21.
    This investment is not the sole answer to our capacity
    constraints, but it will help.
        Yesterday the FAA released its report on capacity
    benchmarks and I believe that this benchmark data confirms that
    we must take action in three areas: placing additional focus on
    the choke points, increasing runway capacity, and encouraging
    reviews of airline practices, including scheduling. We also
    have to be sure that we get what we pay for. I have seen too
    many instances of large cost increases in transportation
    projects, as outlined this morning. We at the Department need
    to be in front of this, not behind it.

                            management of Resources

        We need to be aware of the potential for waste, fraud, and
    abuse and improve our mechanisms to identify it early and
    prevent it. If we pay for a 10-sack concrete job, we should get
    a 10-sack concrete job and not a seven-sack concrete job.

                           mobility of all Americans

        President Bush also wants to help close the mobility gap
    for Americans who do not have mobility options. So the budget
    requests $145 million for the transportation component of the
    New Freedom Initiative to provide more transportation options
    to those with disabilities.

                               National security

        I cannot conclude my testimony without mentioning the
    Department's role in national security and the Coast Guard's
    performance in drug interdiction. In this fiscal year alone,
    the Coast Guard has seized 27 metric tons of cocaine. Our
    budget invests $759 million for the Coast Guard to conduct drug
    law enforcement activities.
        As all of you are so very well aware, the United States
    enjoys the safest and the best transportation system in the
    world. However, we do face capacity and safety challenges. The
    funding requested in President Bush's 2002 budget, as well as
    the management and the accountability improvements that we will
    make over the next year, will help us to address those
    challenges.

                               prepared statement

        Again, Mr. Chairman, thank you very much for this
    opportunity to be before this subcommittee, and at this time I
    will be happy to entertain your questions.
        [The statement follows:]

                     Prepared Statement of Norman Y. Mineta

        Mr. Chairman, Members of the Subcommittee, it is a great pleasure
    to appear before you today and to have the opportunity to work with you
    on President Bush's fiscal year 2002 budget and on the challenges that
    face our Nation's transportation system.
        As Mayor of San Jose, California, I learned that the tool that made
    the most difference in my community was transportation. Nothing else
    had as great an impact on our economic development, on the pattern of
    growth, or on the quality of life. What I have found in the years since
    is that this is true not just locally, but also nationally.
    Transportation is key to the productivity and, therefore, the success
    of virtually every business in America.
        For example, congestion and delay not only waste our time as
    individuals, they also burden our businesses and our entire economy
    with inefficiency and higher costs. The bottom line is that
    transportation is key in generating and enabling economic growth, in
    determining the patterns of that growth, and in determining the
    competitiveness of our businesses in the world economy. In short, three
    decades of experience tell me that transportation is vital to our
    national well being, whether measured as economic growth, as
    international competitiveness, or as quality of life.
        As a whole, the multi-modal transportation system of this Nation
    works well in maintaining the strong economic performance of the United
    States and, more broadly, world commerce. This Subcommittee and the
    rest of Congress deserve a great deal of the credit for this sustained
    good performance. The Bush Administration has done its part in
    requesting full funding of the guaranteed levels for surface
    transportation and the authorized capital and operating levels for air
    transportation as part of the President's Budget.
        The most fundamental challenge we face--and the most daunting--is
    not just congestion or delays or modernizing the aviation system. Those
    are enormous challenges, to be sure, but our biggest challenge is to
    get everyone working together in a spirit of partnership to solve these
    problems. There is no one solution; we all created these problems and
    we can solve them--only by working together. So, as Secretary, I intend
    to devote the bulk of my energies to working across party lines,
    reaching across divides, and building consensus to achieve solutions.
        Nowhere is the congestion challenge more evident than in air
    traffic control. In 1997, those of us on the National Civil Aviation
    Review Commission, which I had the privilege to chair, saw the coming
    storm, as did earlier commissions, and we predicted there would be
    gridlock by the turn of the century. I take no pride or satisfaction in
    saying--we told you so. As most of you know, today's aviation system in
    major areas is literally working up to capacity. In the year 2000, some
    700 million passengers flew on U.S. airlines, a 43 percent increase in
    just 9 years. And, as you may have heard announced at the FAA's recent
    aviation forecast conference, the number of passengers on U.S. airlines
    is expected to hit one billion by the year 2010. Now we face the stiff
    challenge of building and managing the necessary capacity to match that
    demand. And do it safely.
                                     safety
        Strengthening our commitment to safety as our paramount concern
    cannot be over-emphasized. Without a doubt, safety is our number one
    priority. The 2002 budget includes $7.3 billion for transportation
    safety programs, 7.5 percent above 2001.
        $4.1 billion, four percent above 2001, is requested for aviation
    safety to support the Administration's goal of an 80 percent reduction
    in the U.S. commercial carrier fatal aviation accident rate by the year
    2007. To address the increase in runway incursions, the 2002 budget
    includes $112 million, 13 percent above 2001. These funds will allow us
    to make automated alerts of pending runway incursions operational and
    increase education and training programs. In 2000, there were 403
    runway incursions; the Administration's goal is to reduce the number of
    runway incursions to 236 by 2002.
        Our highways claim more lives than any other mode of
    transportation. Preliminary data for 2000 reveals that the number of
    highway fatalities increased slightly while the number of vehicle-miles
    traveled remained essentially the same. And this occurred even though
    seat belt use rose to a record high 71 percent. Over the coming year,
    the Department will relook at our motor vehicle safety efforts, with
    emphasis on identifying the most effective means to provide the public
    the greatest possible safety improvement for each dollar spent. Highway
    safety improvements, including increasing our citizen's use of seat
    belts, are critical to reducing these fatalities.
        The 2002 budget includes $400 million, 49 percent above 2001, for
    motor carrier safety, with a total of $100 million, $88 million above
    2001, devoted to enforcement and infrastructure needs on our southern
    border. This increase is essential to allowing the United States to
    honor the North American Free Trade Agreement safely and responsibly.
        The National Highway Traffic Safety Administration (NHTSA) budget
    includes funding to implement the Transportation Recall Enhancement
    Accountability and Documentation (TREAD) Act mandates to update the
    tire safety standard, increase crash data collection to include
    information regarding tire failure, develop dynamic rollover tests and
    improve the safety of child restraints. It also includes the TEA-21
    level of $223 million for highway traffic safety grants, an increase of
    almost five percent from 2001.
        In 2000, despite an increase in rail traffic, preliminary data
    indicate that the Federal Railroad Administration's safety efforts
    resulted in the lowest level fatality rate in two decades. In order to
    continue that effort, the budget includes $154 million, nine percent
    above 2001. This funding will support national outreach programs,
    continue FRA's information technology initiatives, and provide staff
    and support for ongoing and expanded regulatory and enforcement work
    and other critical safety-related programs.
        In 2000, U.S. Coast Guard personnel were recognized for rescuing 34
    crewmembers off of the sinking cruise ship Sea Breeze by hoisting them
    to helicopters in 65 knot winds and seas over 25 feet high. This
    represents just a few of the 3,365 mariners lives saved and over $1.4
    billion in property recovered over the past year. The challenges of
    preserving maritime safety in the United States and international
    waters will increase as the numbers of ships and individuals using the
    high seas, coastal, and inland waterways grow. The budget includes over
    $1 billion, 12 percent more than 2001, for Coast Guard safety efforts.
        And finally in 1999 and 2000, we saw tragic pipeline accidents in
    Bellingham, Washington and Carlsbad, New Mexico where lives were lost
    in some of the worst pipeline accidents in 25 years. A total of $54
    million, 15 percent above 2001, is requested to allow the Research and
    Special Programs Administration to begin oversight and enforcement of
    recently strengthened Federal standards for the integrity of pipeline
    systems operation and management.
                                    mobility
        When I took this job, I knew that a central challenge for the
    Department would be to address the gap between demand for
    transportation and the capacity of our transportation infrastructure.
    Even though the physical condition of our infrastructure--the highway
    and runway pavement conditions and the condition of our bridges--is
    improving, the demand for the use of that infrastructure is increasing.
    That gap is what generates the traffic we all face on the highways, at
    our airports, and at our ports. Congestion and inefficiency in
    transportation are not just inconvenient and aggravating--though they
    certainly are that--they are also a tax that burdens every business and
    every individual. Congestion on our highways and delays at our airports
    are increasing. We have to find ways to lighten that burden.
        Total investment in transportation infrastructure would equal
    almost $43 billion in 2002 under President Bush's budget, 39 percent
    above the 1994-2001 average annual investment. This investment is not
    the sole answer to our capacity constraints, but it will help. It
    includes:
      --A Federal-aid highway obligation limitation of $31.6 billion,
            almost 7 percent above 2001.
      --An airport grant obligation limitation of $3.3 billion, the level
            contained in AIR-21.
      --Total transit investment of $6.7 billion, almost eight percent
            above 2001.
    Addressing Aviation Capacity
        The budget also includes the level authorized in AIR-21 for air
    traffic control equipment modernization. We need to commit to long-term
    initiatives and make use of the latest technology for managing air
    traffic, detecting and disseminating weather information, and
    redesigning the Nation's airspace to make more efficient use of it. New
    communications and surveillance systems, satellite-based navigation,
    and other technological advances have the potential to bring
    improvements to many parts of the aviation system.
        Nearly 70 percent of all Air Traffic control system delays are
    caused by weather--meaning that conditions do not allow for visual
    separation. It takes surprisingly little to curtail the capacity of our
    system,either at airports or in the enroute environment. We cannot
    reduce delays in any meaningful way without finding a better way to
    respond to the 70 percent of delays that are weather-related. We simply
    have to work smarter in this area.
        The $2.9 billion proposed for aviation capital modernization
    includes funding for delay reduction initiatives, such as weather
    systems and improved automation aids. In the case of air traffic
    control, proposed funding puts new emphasis on reducing congestion-
    related problems--for instance, the budget funds weather systems for
    towers in 2002, allowing controllers to minimize disruptions to traffic
    flow from severe weather and reduce delays and diversions caused by
    imperfect knowledge of the location of severe weather. The budget
    proposes $6.9 billion for FAA operations, up almost 6 percent. Included
    within this is $32 million to hire and train an additional 600 air
    traffic controllers.
        In cooperation with the airlines, the FAA is developing an
    operational evolution plan for the National Airspace System (NAS) that
    spells out what is required over the next 10 years. It not only
    discusses needed changes in air traffic control technology, but also
    the operational procedures, the avionics that the airlines will need to
    install, and the certifications requirements necessary to implement all
    these changes. We hope to publicize this plan later this spring. And
    FAA Administrator Garvey and I are committed to more business-like
    operations at the FAA, and to hiring the Chief Operating Officer called
    for by AIR-21.
        The budget proposes the AIR-21 level of $3.3 billion for airport
    grants. We are working hard to expedite environmental reviews of
    important airport capacity projects. There are 19 runways currently
    proposed by airport proprietors at large hub primary airports through
    the year 2010. Of these 19 runways, ten already have received
    environmental approval by the FAA. Another five runways have
    environmental impact studies (EISs) underway, with draft EISs issued on
    four of the five. Of the remaining four, two runways are under
    consideration at Washington-Dulles airport where an FAA EIS team has
    already been established and preliminary EIS discussions held. The
    other two runway proposals--at Dallas-Ft.Worth and Baltimore-Washington
    airports--are beginning the environmental planning process to address
    increased traffic forecasts.
        Improving our aviation infrastructure and enhancing the level of
    capacity can also address concerns about the competitiveness and
    openness of our aviation system. After all, the traveling public is
    entitled to more than the opportunity to have its flights depart and
    arrive on time. It should also have a range of services and fares from
    which to choose.
    Improving Management of Our Resources
        While expanding our transportation system capacity is necessary, it
    is not the only answer to managing growth and congestion. We need to
    make more efficient use of our existing infrastructure capacity. The
    search for new technological and innovative solutions to our mobility
    challenges is well supported in the 2002 budget, with investment in
    technology, research, and development proposed at $1.2 billion, 7.5
    percent above 2001. The budget includes a total of $504 million for
    highway-related research, 30 percent above 2001.
        Highways are the very backbone of our Nation's transportation
    system, and the Eisenhower Interstate Highway System did an
    extraordinary job of knitting our country together and making efficient
    Nation-wide highway transportation a reality both for people and for
    goods. The Appalachian Development Highway System is designed to do
    this same thing for the Appalachian region. The result was a quantum
    leap in the productivity and the competitiveness of our economy. But we
    are now losing that productivity to specific bottlenecks in the system,
    and gains made Nation-wide are too often being lost to lack of
    coordination among the affected parties. Effective solutions to these
    bottlenecks have to involve a high degree of local, metropolitan, and
    State involvement in order to build the broad spectrum of support
    necessary to overcome resistance and to get the problem solved. We
    recognize that this cannot be a one-size-fits-all approach, and that
    the combination of solutions needed in one location will not be the
    same combination of solutions needed in another location.
        Every instance requires its own mix of new highway capacity, better
    management of existing capacity, Intelligent Transportation Systems,
    transit, pedestrian improvements, and so on. To be effective in dealing
    with these bottlenecks we have to be prepared to use whatever mix of
    transportation alternatives will work, and we have to take a balanced
    approach to all alternatives. We have to constantly be looking for what
    works and what is the most cost-effective solution to the problem.
        Major action is underway at the Department to tackle surface
    transportation congestion. Technology offers particular promise for
    transportation. Federal research helps build stronger roads and
    bridges. With new technologies and new, longer lasting materials that
    are easier to apply, we can ``get in, get it done, and get out.'' The
    safer and less disruptive that infrastructure repairs and improvements
    are to the user, the better.
        We are working closely with our partners in the urbanized areas to
    develop a national architecture that will support ITS and operations
    technologies. These technologies will be a key in reducing travel delay
    and improving mobility for the traveling public and the freight
    industry. The technologies include: traveler information systems,
    emergency response systems, electronic toll collection, traffic
    responsive signal systems, and state-of-the-art transportation
    management systems. The Bush Administration proposes $253 million in
    ITS initiatives for 2002, a 32 percent increase over the current year.
    I have said a number of times that our ITS program needs to be more
    customer-oriented: it does not help me to read a sign that the highway
    is congested because, if I'm reading the sign, I'm most likely already
    sitting in traffic. What would help is for that sign to tell me where
    to get off and how to get around the congestion. That must be our
    management goal.
        In addition to maximizing our system capacity via improved
    operations, we recognize that we must improve our capacity with new
    facilities when appropriate. We commit ourselves to work with all of
    our partners and stakeholders in the other modes, environmental
    community, and others when instituting new facilities. We are working
    very closely with the States, MPOs, and local governments to integrate
    land use policies with the planning process. These issues remain under
    the purview of State and local officials, but we can serve as a
    technical resource to encourage positive land use planning. In
    addition, we are committed to better understanding and responding to
    the needs of the freight community, in all areas of land use and
    transportation planning, and system operation. If we are to balance the
    mutual goals of productivity, safety, environment, and quality of life,
    we must consider both passenger and freight concerns in the planning
    and program development processes.
        Transit clearly has a role to play in easing congestion. Certainly
    there is increased local interest in transit, as evidenced by the fact
    that States flexed up to $1.6 billion in FHWA program funds to transit
    in fiscal year 2000, as well as passage of a number of referenda on
    transit, such as the effort in Santa Clara County to extend BART to San
    Jose. But as transit ridership has grown steadily since 1993, we are
    now seeing transit--as demonstrated in Washington's METRO system--where
    trains are full during several peak hours, and where people sometimes
    have to wait for one or two trains to pass to get on. New York City
    Transit has been reporting similar events. Well established commuter
    rail systems are experiencing record growth and new systems are being
    planned in other metropolitan areas to improve access to the urban core
    from fast growing suburbs. Amtrak passenger rail service also helps
    ease congestion, especially along the heavily traveled Northeast
    Corridor, and President Bush proposes $521 million for Amtrak in 2002.
        I also must let you know that one of my priorities is to ensure
    that the Federal government gets what it pays for and that major
    transportation projects are managed wisely and appropriately. I have
    seen too many instances of large cost increases in transportation
    projects that makes the projects appear unconstrained and out of
    control. We at the Department need to be in front of this, not behind
    it! The Department will improve the oversight processes used to monitor
    the progress of major transportation projects and identify problems
    early; establish core competencies for project managers; and hold
    project managers accountable for the quality of project oversight and
    performance. I feel strongly that with the increased Federal investment
    in transportation infrastructure in the past few years, we also need to
    be especially aware of the potential for waste, fraud and abuse and
    develop mechanisms to identify it early and prevent it. If we pay for a
    10-sack concrete job, we should get a 10-sack concrete job, not a 7-
    sack concrete job.
        Management of the Department is also critical to management of
    Federal funding and programs. The Department employed approximately
    63,000 permanent civilian employees in 2000. The Comptroller General
    has identified human resource needs as a critical area that must be
    attended to in the coming years. I see that clearly at the Department,
    where 61 percent of our career executives, 47 percent of our GS-15s and
    33 percent of our GS-14s in the leadership cadre of the Department,
    will be eligible to retire by 2005.
    Ensuring Mobility for All Americans
        Despite the capacity challenges we face, many of us take the
    tremendous mobility options we have for granted. President Bush wants
    to close the mobility gap for Americans who do not have mobility
    options. The budget requests funding for the New Freedom Initiative
    that will help Americans with disabilities by increasing access to
    assistive technologies, expanding educational opportunities, increasing
    the ability of Americans with disabilities to integrate into the
    workforce and promoting increased access into daily community life.
    $145 million is requested for the transportation component of this
    program within Revenue Aligned Budget Authority (RABA). In addition,
    the Federal Transit Administration's Job Access and Reverse Commute
    Program is funded at $125 million in 2002 and will help provide
    transportation services from low-income neighborhoods to areas of job
    growth.
        The budget also includes the mandatory funding for the Essential
    Air Service program, which plays a critical role in connecting small
    communities to the national air transportation network. Due to the fact
    that this mandatory funding is capped at $50 million and that the costs
    of the program have been increasing, the budget proposes to tighten the
    eligibility criteria to keep within the funding cap.
        Additional staff are also requested in 2002 to enhance DOT's
    activities in investigating aviation consumer complaints and in
    pursuing ``open skies'' agreements that permit unrestricted air service
    by authorized carriers to, from and beyond the territories of their
    partners.
                                  environment
        The Administration's goal is to lessen the environmental effects of
    transportation, and the budget includes $6.6 billion, an almost eight
    percent funding increase, for these efforts. They include Coast Guard's
    response to oil spills, the Federal Highway Administration's Congestion
    Mitigation and Air Quality Improvement (CMAQ) Program and our efforts
    to reduce airplane noise.
        Without compromising environmental protection and concern for
    public sensitivity about noise, air and water quality and other natural
    resources, we are looking at ways to make the process of environmental
    review more efficient. Options include improving staff resources,
    improving interagency cooperation, and better use of current
    streamlining tools.
        Slow decision-making does not translate into better environmental
    results. The important thing is to get the appropriate Federal and
    State environmental safeguards identified early and built in as the
    project progresses. Local cooperation is a key component of speeding
    the environmental process. Local officials must be our active partners
    in this effort if we are to make significant progress. That means, for
    example, that we have to continue to reduce the problem of aircraft
    noise and deal with local problems of surface traffic congestion and
    air pollution near airports.
        The Department also is taking steps to streamline the environmental
    process for highway and transit actions. This is a complex process,
    with conflicting interests among stakeholders, but it is one that the
    USDOT must work on expeditiously because it is critically important to
    our transportation system and our economy. FHWA and FTA have enhanced
    interagency coordination by signing a National Memorandum of
    Understanding on Environmental Streamlining between the USDOT and six
    other Federal agencies, meeting regularly with other agencies, and
    conducting a national training workshop for Federal agencies.
    National Security
        The USDOT plays a critical role in ensuring that the U.S.
    transportation system is secure and that our Nation's borders and ports
    are safe from illegal activity. Coast Guard's expertise in interdiction
    at sea has put us on the front line of defending America's seaward
    frontier against a virtual onslaught of threats, such as trafficking in
    illegal drugs and human cargo, poaching of living marine resources, and
    the threat of weapons of mass destruction. In this fiscal year alone,
    the Coast Guard has seized 27 metric tons of cocaine. In support of the
    President's drug control strategy and the Western Hemisphere Drug
    Elimination Act, our budget will invest $759 million for the Coast
    Guard to conduct drug law enforcement activities; this is up 19
    percent.
        Total Coast Guard funding is proposed at $5.1 billion, up 12
    percent. This is not only for national security but also for Coast
    Guard's multi-missioned operations to enhance safety, mobility, and the
    environment. Coast Guard capital funding is proposed at $659 million,
    up 59 percent. It includes $338 million for the Deepwater program, to
    modernize and replace aging Coast Guard ships and airplanes that
    operate in this environment. Coast Guard Deepwater cutters are the 37th
    oldest of 39 similar fleets worldwide. The Deepwater Program seeks to
    renovate, modernize, or replace Coast Guard Deepwater assets with an
    integrated system of surface, air, command, control, communications,
    computers, intelligence, surveillance, reconnaissance and logistics
    systems.
        The 2002 budget also includes funding to enhance airport security
    and FAA information security. For airport security, the budget includes
    $97.5 million to continue the purchase of explosive detection systems
    as well as $50 million for continuing research on improving airports'
    ability to detect and prevent dangerous articles from being carried
    aboard aircraft.
                                   conclusion
        In conclusion, the United States enjoys the safest and the best
    transportation system in the world. However, we face capacity and
    safety challenges. The funding requested in President Bush's 2002
    budget, as well as the management and accountability improvements we
    will make over the next year, will help us to address those challenges.
        I look forward to working with this Subcommittee and all Members of
    the House of Representatives over the coming year to enact the
    President's 2002 budget.

        Senator Bennett [presiding]. Thank you very much, Mr.
    Secretary. I cannot resist a personal comment. Some 31 years
    ago I sat at that same table as a very young aid to John Volpe
    while he discussed basically the same issues you have discussed
    here today. The transportation problems continue to stay in the
    same vein, but as the country grows the problems grow with it.
    I congratulate you on your foresight in outlining them for us.
        Senator Murray.

                                Pipeline safety

        Senator Murray. Thank you very much, Mr. Secretary, for an
    excellent statement. I think we all look forward to working
    with you on these challenges.
        You mentioned pipeline safety in your testimony. Expanding
    the scope and quality of oversight of our pipeline
    infrastructure has been one of my highest priorities for the
    last several years. One of the real bright spots in the budget
    is the proposed 15 percent increase in pipeline safety funding.
    For the past 2 years this Senate has passed pipeline safety
    reauthorization legislation by unanimous consent, but the House
    has yet to pass a bill.
        The tragic pipeline safety accidents in Billingham,
    Washington, in my home State and in Carlsbad, New Mexico, have
    underscored the need to pass this critical pipeline safety
    legislation this year. Can we get a commitment from you and
    your Department to help work with us to urge the House to pass
    this legislation in this session?
        Secretary Mineta. Senator Murray, as you know, the last
    administration supported the pipeline safety bill. I am also
    anxious to have a bill passed and will work towards that end.
    Since you have already passed the pipeline safety bill again
    this year, I will explore with the House their plans.
        Senator Murray. We would very much appreciate that. One of
    the real problems is that too few people in their communities
    know about the pipelines that go through their community. One
    of the elements in the Senate bill is a right-to-know provision
    that I worked on with Senator McCain, because I think people
    have a right-to-know about the pipelines and I think when
    problems exist and they are aware of their existence, we get
    much faster action.
        In your budget you have $3.4 million for the Damage
    Prevention Community Assistance Program and talk about
    activities like mapping and developing community right-to-know
    programs. Can you explain to us how this program would increase
    the awareness of communities about the potential threats of
    pipeline access?
        Secretary Mineta. Well, as you have indicated, part of this
    issue is education. As an example, many rail lines have
    pipelines running very close to them, and in the past, the
    conflict of the rail and the pipelines have created safety
    issues. I think that over a long period of time we have become
    better about engineering and construction of those pipelines,
    their placement and how they are buried.
        I can recall very vividly the accident that occurred in San
    Bernadino, California. There was a tremendous rail accident and
    loss of life as a result of a freight train collision and
    exposing a pipeline. I think there are a number of areas that
    we should be working on in terms of a community assistance
    program and educational efforts.

                           Aviation safety inspection

        Senator Murray. Very good.
        Let me explore one other topic and then I will turn it over
    to my colleagues. I have a number of questions, but I will come
    back to them after they have an opportunity. In your opening
    statement, your performance plan actually sets out goals for
    improvement in the safety of airline operations. At the same
    time, your budget proposes a freeze on the number of FAA
    inspectors at 3,229. I know we all remember the ValuJet crash
    and a task force after that time that was headed by then-Deputy
    FAA Administrator Linda Daschle found several deficiencies in
    the training and capabilities in the FAA's inspector force and
    concluded that the FAA should require at least 3,300 inspectors
    to ensure the public safety.
        We have been making progress towards that target every year
    and your own National Civil Aviation Review Commission report
    anticipated that by 2002 the FAA would have 3,500 inspectors on
    board. Are you concerned that freezing the inspection work
    force at 3,200 will undermine your own safety performance
    goals?
        Secretary Mineta. I think productivity increases through
    the use of technology will help in terms of the difference
    between the 3,200 and the 3,300. We have more information
    technology, and computer systems, to interrelate, and we will
    be better informed and keep track of the inspection process.
    Given the limited financial resources and by trying to
    prioritize as we improve our information technology, we feel
    that we can still do the work effectively and efficiently,
    without having to increase the manpower that much.
        Senator Murray. I think we are all aware of the budget
    constraints and I am, too. We are also concerned about the
    safety constraints. At some point I would like to hear more
    about the technology that you think will help us keep the cost
    down and how that will really protect safety, at some time in
    the future.
        I also wanted to ask you, the aviation trade press has been
    reporting that your FAA administrator is poised to remove the
    current head of the Flight Standards Office in order to reform
    and invigorate the inspection function. What can you tell us
    about the accuracy of that report and your plan to strengthen
    the airline inspection function?
        Secretary Mineta. I am not that knowledgeable about this
    personnel issue. Let me inquire and I will get back to you.
        Senator Murray. I would very much appreciate that.
        Thank you.
        [The information follows:]

        The FAA is tapping the leadership talents of former flight
    Standards Director Nick Lacey to advance the Operational Evolution Plan
    to the next level and continue the FAA's international safety
    initiatives. Lacy's keen understanding of the operational side of the
    aviation industry from his extensive experience in civilian and
    military air transportation systems will add an important dimension to
    the agency's action plan for capacity and delay issues.
        Nicholas A. Sabatini has been named to serve as the new director of
    the FAA's Flight Standards Service. For the past 10\1/2\ years,
    Sabatini has managed the FAA's Eastern Region Flight Standards Division
    and has served in a variety of senior management positions at the
    agency over the past 20 years. He is a pilot as well as a former safety
    inspector.
        The President's fiscal year 2002 budget includes funding for the
    strengthening of FAA's oversight of air carriers. The FAA will
    accomplish this by tailoring its safety oversight process to individual
    companies, based on the systems they embody. This approach is referred
    to as System Safety Oversight. System Safety Oversight rejects
    traditional ``one-size fits all'' surveillance and designs surveillance
    plans that are specific to each carrier. FAA inspectors use unique risk
    assessment tools to help them focus on each company's areas of greatest
    risk based on historical performance and other indicators. By
    collaboratively identifying risks and early alerts with the carrier,
    FAA can identify mitigating action for the carrier to take before a
    risk manifests itself in an accident or incident. In addition, research
    analysts are now part of the FAA work force to assist principal
    inspectors' identification of systemic-type safety problems. FAA's
    mission is to proactively mitigate safety concerns through risk
    assessment processes that are collaborative with industry, thus
    providing the flying public with an aviation industry performing at a
    higher level of safety than basic regulatory compliance would provide.

        Senator Bennett. Senator Byrd.

                          Environmental review process

        Senator Byrd. Thank you, Mr. Chairman.
        Mr. Secretary, you have made repeated statements regarding
    the need to streamline the process by which environmental
    approvals are obtained to construct new runways. I applaud this
    initiative, but I emphasize that equal attention should be
    spent on streamlining the approval process for highways. At the
    present time, the process for allowing highway projects to move
    forward is painfully long. The resulting delays in critical
    highway construction projects run the risk of killing people.
        The two largest Federal highway projects currently underway
    in West Virginia are designed to replace its two most dangerous
    segments of roadway, namely West Virginia Route 9 and
    Appalachian Development Corridor H. We also have a project in
    southern West Virginia known as the Coalfields Expressway. That
    project will provide the first segment of four-lane highway in
    all of McDowell County. It will replace a series of inadequate
    mountainous two-lane roads that pose a danger to my
    constituents every day.
        The same is true in the chairman's State, where his efforts
    to complete Appalachian Corridor X are intended to replace the
    most dangerous segments of highway in Alabama. Thus, delay in
    completing these and similar highway projects can mean a
    substantial increase in the cost to complete construction and,
    more importantly, will undoubtedly result in additional
    unnecessary tragic accidents and their accompanying injuries
    and loss of lives.
        I and a great many of my colleagues have been dismayed by
    the extraordinarily long time that it has taken many highway
    projects to complete all of the environmental reviews necessary
    to allow a highway project to break ground. Last May the
    Department of Transportation proposed a new planning and
    environmental regulation which some felt would increase the
    burden on the communities and lengthen the time it takes to
    gain environmental approval.
        What are your plans, Mr. Mineta, for this pending
    regulation and when can we expect to see a new one?
        Secretary Mineta. Let me get a written response to you on
    that.
        Senator Byrd. Very well.
        [The information follows:]

        The Department is working to achieve concurrent review of projects
    by the Federal agencies and have already had some success. The
    Department will accelerate partnerships among Federal, State and local
    agencies that will support innovations and efficient project delivery.
        However, the Department cannot, nor can the other Federal agencies
    involved, ignore the more than 40 environmental laws that incidentally
    apply to transportation. It is the Secretary's goal to have the
    Department's proposed regulations fully reflect the Congressional
    intent to speed the approval of projects within the context of existing
    environmental law. All options for achieving this goal will be
    considered. The Secretary will defer further regulatory efforts until
    the Federal Transit Administrator and Federal Highway Administrator are
    in place.

        Secretary Mineta. On the general issue of environmental
    streamlining, I want to speed up the process, but at the same
    time not do any injury to current environmental laws. I think
    there are a lot of things we can do. For instance, right now
    there are environmental reports that are State mandated and
    Federally mandated. Rather than having those done sequentially,
    let us do them simultaneously and move the two reports at the
    same time so that we do not have this kind of situation.
        In the case of Federal highways or airports, we always have
    a local Federal Highway Administration or FAA team dealing with
    the project. Generally, the local offices will deal with the
    project and then send it to Washington, DC, for the national
    office to take a look at it. What I am saying is that whenever
    we put that local team together, we should put the national
    team together at the same time so that it is not sequential,
    but we are doing it at the same time to shorten the time
    period.
        There is no reason to do it sequentially. All we have to do
    is piggyback the national effort and the local effort at the
    same time so that the project will move forward, and it cuts
    down the time.
        Senator Byrd. That would seem to me to be a very logical
    and sensible proposal, Mr. Mineta.
        As you develop the new regulation to which I alluded, may I
    ask you to specifically review the history of the approval
    process for Corridor H in West Virginia and West Virginia Route
    9? I believe you will find it to be instructive.
        Secretary Mineta. I will look at that. I am familiar with
    the Coalfields Highway because I remember being with
    Congressman Nickie Joe Rahall when we held hearings in
    Bluefield. I remember going through the whole area as we
    outlined the Coalfields Highway.
        Senator Byrd. Yes. Well, Nick Rahall is a good man.
        Secretary Mineta. Absolutely.
        Senator Byrd. He does a good job. I can remember his
    grandfather who came from Lebanon, and I watched him many times
    when I lived in the coal camps of southern West Virginia as he
    walked up and down the highways carrying the bag of laces and
    linens on his back that he had shipped in from Lebanon.
        He went on to raise a fine family. He ended up with a hotel
    in Beckley, a ladies apparel shop, a radio station in Beckley,
    several radio stations around the country, in Pennsylvania and
    Florida, and TV stations. That was the American dream come
    true.
        Nickie Joe is a chip off the old block. He was an intern in
    my office many years ago, and he went on to Duke University,
    graduated, and made a fine, fine Congressman.
        Secretary Mineta. He is indeed.
        Senator Byrd. I am happy to work with him.
        Secretary Mineta. Absolutely.
        Senator Byrd. Let me just ask this question. Are there
    other ways that we can better expedite the environmental review
    process so that we can save lives sooner?
        Secretary Mineta. A lot of this is the issue that certain
    agencies--EPA, Corps of Engineers--are delegated certain
    aspects of the process. I think it just requires tightening the
    working relationship between the agencies. Unless the laws are
    changed, we would not be able to shortcut what we have to do
    under environmental law.
        I think what we can do is cut down the overlap and the time
    among the agencies.
        Senator Byrd. Mr. Secretary, if you would please respond in
    writing to the first question that I asked.
        Mr. Chairman, I will have additional questions that I shall
    submit for the attention of the Secretary.
        Secretary Mineta. Absolutely. Thank you very much, Senator
    Byrd.

                         design-build Highway projects

        Senator Bennett. Mr. Secretary, as I listen to Senator Byrd
    and some of the others talk about time, at the risk of being
    parochial, may I suggest you take a long look at what has
    happened in Utah. The brief history is that as we got ready for
    the Olympics, we recognized that our highway system simply
    would not be adequate. The traditional time period for fixing
    I-15 would be 9 years and the Olympics required that we do it
    in 5 years. A design-build system was undertaken. It will be
    done in 4\1/2\ years.
        It is not only ahead of schedule. It will be done actually
    in less than 4\1/2\ years. But it is under budget.
        One of the things that has produced great consternation and
    outflow of protests in letters to the editor is the fact that
    there are bonus payments to the contractor if he comes in early
    and if the contractor meets certain deadlines he gets an extra
    million dollars, and if he comes in earlier than that he gets
    $2 million or whatever. We are having people complain to the
    editor that this is a great waste of public funds.
        Well, we have done it in 4\1/2\ years. We have done it much
    faster, much cheaper than a 9-year project would cost. As I
    say, with these incentive payments built into the contract we
    have saved money even more. I do not know of a comparable sized
    design-build project in the United States. That does not mean
    that there is not one, but I do not know of one.
        I think we may have a model here, driven by the imperatives
    of the Olympics, that could then be of great use even in West
    Virginia, to see to it that things get built faster and
    cheaper. I would just suggest to you that you might take the
    opportunity to focus in on the design-build project. This was
    about a $1.6 billion project and we are now very close to being
    completely finished and we will have this highway, ten lanes in
    some places, ready for the influx of visitors that we will get
    during the Olympics.
        So as I listen to the Senator from West Virginia, I share
    that with you in the hope that it might spur more activity on
    the part of the Department to look at what has been done and
    see where we want to go.
        Senator Byrd. Mr. Chairman, did I understand you to say
    that the Olympics were going to be shifted to West Virginia?
        Senator Bennett. I am not sure that you want them, but I am
    sure that if the Olympics decide to come to West Virginia the
    senior Senator from West Virginia will make sure that they are
    adequately funded.
        Senator Mikulski. It is called going for the gold.
        Senator Bennett. Senator Mikulski.
        Senator Mikulski. Thank you very much.
        This hearing has been most instructive, both from the
    Secretary of Transportation and the issues raised by my
    colleagues. I think it shows that we are facing some serious
    national crises with the convergence of congestion in the air
    and congestion on the roads.

                                 Highway safety

        Mr. Mineta, first of all I applaud your emphasis on safety.
    I congratulate the President on wanting to expand opportunities
    for the disabled. We really do need to take a look at safety in
    the air and safety on the road. These are not some little
    marshmallow programs. This morning, once again, it took me
    close to an hour and 45 minutes to come from Baltimore because
    of two very serious accidents that shut down the Beltway both
    on the Maryland side as well as on the Virginia side.
        I believe the safety issues need to be resolved, not only
    in terms of smart transportation and other technology; I also
    think people do not know how to drive any more, and I also
    think they do not know how to behave behind the wheel any more.
    You cannot be doing your nails, talking on your phone, doing
    stock trades, answering your e-mail, and maybe having a
    popsicle, and trying to drive the Beltway. Multiple tasking is
    not behind the wheel.
        In my 20-plus years of commuting from Baltimore--you know,
    the Maryland delegation does that--I have seen not only the
    volume increase, and that is part of what America is facing,
    but the nature of driving has changed as well. I think those
    are larger issues to be looked at, and I look forward to
    working with you.

                            Patuxent River oil spill

        On another issue of safety, I am going to applaud Senator
    Murray's questions on pipeline safety. We had a terrible oil
    spill in the Patuxent River 18 months ago and we are still
    enduring the vestiges of that accident. I think our questions
    on pipeline safety are quite valid. The oil that went into our
    beloved Patuxent River and even leached down into our
    Chesapeake Bay raises the importance of the Coast Guard. There
    are many fears that we have on the Chesapeake Bay, but oil
    spills are an obsession with us because of their impact on the
    environment in the bay, on real estate, and on our crabs,
    oysters, and other species.
        The Coast Guard is really crucial. I want to tell you, the
    ones that were in the Chesapeake Bay are fabulous in terms of
    oil spill readiness, rapid response, and working with several
    States in the Bay, primarily Maryland and Virginia.

                              Coast Guard funding

        This takes me to the Coast Guard. I know the President has
    increased the Coast Guard funding by 6 percent. With all of the
    new missions from fighting drugs to fighting poachers and
    fighting polluters, do you think that the increase is enough?
    Do you think we also need to look at perhaps targeted or
    strategic increases in other areas? What is your response to
    where we are with that?
        Secretary Mineta. From the perspective of a capital budget,
    the Coast Guard budget in 2002 is adequately funded for the
    Deepwater program. From an operational perspective, there will
    probably be some shortfalls. When you look at all the
    priorities that are being placed on the Coast Guard, whether it
    is search and rescue, enforcement of fisheries laws, drug
    interdiction, or security of our national borders in terms of
    illegal immigrant activities or entry, given the budget, I am
    saying do 100 percent of the search and rescue operations, but
    we are going to have to cut back operations for drug
    interdiction, border control, and fisheries.
        That is just reality. You cannot put 15 gallons into a 5-
    gallon bucket. So for fiscal year 2002, there are going to be
    certain areas where we have to cut back on our operations.
        On top of that, as you know so very well, the Coast Guard
    is one of the five uniformed services.
        Senator Mikulski. Yes.
        Secretary Mineta. When pay and entitlements are increased
    for the uniformed services, it includes the Coast Guard. The
    Army, Navy, Air Force, and Marines are under function 050 of
    the budget. The Coast Guard is under function 400. Invariably,
    funding for function 050 goes up, but funding for function 400
    does not. So it becomes an aggravated problem for the
    Department of Transportation and especially, of course, for the
    Coast Guard.
        Pay and entitlements, fuel, and spare parts are three very
    big issues for us.
        Senator Mikulski. Well, Mr. Mineta, that is a very
    instructive list.
        Senator Murray, I know that all of our committees are
    starting later this year than usual, but I wonder perhaps as
    the year goes along, if the window presents itself, that we
    could have a hearing on the Coast Guard because of their very
    specific challenges? I think the personnel issue is one issue.
    You have the same recruitment and retention issues that the
    other uniformed services have. The cost of fuel is going to be
    horrific, and we need to protect the environment, protect our
    borders, particularly against drugs. Yet some of these issues
    are what we call the mundanes--the certification of mariners,
    the inspection of seaworthiness of vessels--I consider crucial
    to safety because they are the ones that are at sea or in the
    Chesapeake Bay or in Puget Sound.
        So Madam Ranking, future to be, one day chair, I will not
    continue to go over this. But I think it is a very, very
    important issue.
        I do support the deepwater project because I think when you
    look at how dated the vessels are, we need the right type of
    vessels for these new missions--some very rapid in terms of
    patrol, rescue is a different one, and then of course the
    ability, should the President ask them to convert in a national
    emergency to the Navy, to respond effectively.
        Of course, I know that you visited many areas. We want you
    to be aware that we have the Coast Guard Yard in Baltimore that
    employs 600 dedicated people, all ready to handle whatever you
    want.
        Secretary Mineta. I will visit Curtis Bay any time you
    want.
        Senator Mikulski. Thank you.
        Senator Murray. Mr. Chairman, let me respond really quickly
    to Senator Mikulski. I share her concern and her passion and
    her advocacy on behalf of the Coast Guard from the other coast,
    Washington State, where, as you well know, the Coast Guard is
    very critical to much of what we do there. You outlined it
    well, from drug interdiction to preventing oil spills, and
    safety of people who are in our boats and fisheries.
        It is an extremely demanding and increasingly important
    task. I have shared with Senator Shelby my request for a
    hearing on Coast Guard, as we discussed. We are discussing an
    opportunity to do that, and in fact this morning we again
    talked about it, and we will work with you to try and establish
    that.

                                     Maglev

        Senator Mikulski. Thank you.
        Madam Chair, I have other questions related to rail, but I
    am going to just bring them to the Secretary's attention at
    another time. We are all competing for Maglev and I think
    Senators Specter, Santorum, Sarbanes, and I would like to
    discuss national support with you, a way of not having us be in
    competition where it is political muscle, etcetera. We would
    like to be able to discuss that with you.
        Also, the issues around Amtrak. The chairman raised issues
    and I know you have, too, in terms of what we need to do to
    modernize Amtrak, move it to self-sufficiency in 2002, and lay
    the groundwork for a high-speed rail initiative. Let us save
    that for our conversation.
        Again, I am so pleased that when President Bush chose you,
    when you said there are not Republican or Democratic highways,
    byways, or air traffic control.
        Secretary Mineta. Only the left wing and the right wing of
    an airplane.
        Senator Mikulski. Well, I am ready to be a propeller here.
    No, a jet.
        Secretary Mineta. Senator Mikulski, let me mention that I
    am recused from talking about Maglev----
        Senator Mikulski. Oh, that is right.
        Secretary Mineta [continuing]. Because of my prior civil
    employment. But we will have someone from the Department talk
    to you about that.
        Senator Mikulski. Thank you very much.
        Secretary Mineta. Yes, ma'am.

                          consolidation of OST offices

        Senator Bennett. Mr. Secretary, Senator Shelby is still
    delayed and I will ask some of the questions that he would have
    asked, having run out of my own. We understand that you are
    considering merging some of the functions and offices within
    the Office of the Secretary. Once again, I cannot help but
    reminisce that John Volpe was doing that 30 years ago, and it
    seems to be a constant kind of a challenge.
        Can you give us a preview of what you are considering?
        Secretary Mineta. The biggest area is the policy office.
    Right now there is an Associate Deputy Secretary for
    Intermodalism, an Assistant Secretary for Policy, and an
    Assistant Secretary for Aviation and International Affairs. I
    am thinking of combining those offices. They had been one
    office before.
        Senator Bennett. Yes, that is my memory.
        Secretary Mineta. Then they were split. Frankly, from my
    perspective, we do not have the critical mass necessary for an
    effective policy function. When it comes to financial
    resources, so much of what the Department gets is either
    earmarked or distributed by formula. So we have very little
    discretionary money available to us. So policy becomes that
    much more important.
        I am trying to find some way to combine the policy offices
    and have the critical mass and the firepower to deal with
    policy issues.
        Senator Bennett. As I say, my memory is that there was at
    one point only one Assistant Secretary for Policy and
    International Affairs and he was the most powerful Assistant
    Secretary in the Department, was the Acting Secretary when the
    Deputy Secretary and the Secretary themselves were not there.
    So my personal reaction is that that is the right way to go.
    The fragmentation of that function probably has not served us
    well.

                              NHTSA administrator

        Senator Shelby has some concerns about NHTSA and once again
    that has been a shop that has always attracted some interesting
    attention. Conflict between the automobile manufacturers and
    safety groups over candidates for the NHTSA Administrator seems
    to have produced compromise that has had what Senator Shelby
    considers to be lackluster appointments. He says in his
    question that he is not worried about that if it were not for
    the fact that there are lives of Americans that are on the line
    with respect to NHTSA and what it does.
        There have been new initiatives that have come out from
    time to time that are simply duplicative of programs that are
    already in the core. He is urging that you get personally
    involved in this selection of a new NHTSA Administrator. This
    is Senator Shelby's advice, but I can join it. He says get a
    business person or an economist, someone with the experience of
    having to allocate capital or staff resources on the best
    return, rather than someone who has a political stake one way
    or the other in the various fights that have surrounded NHTSA.
        There is no portion of the Department that came into being
    with more controversy than NHTSA in the first place. If you
    recall, it came out of the appearance of Ralph Nader on the
    scene with the attack on the Corvair, and the pulling and
    hauling that has gone on every since has been primarily in the
    spotlight of public glare and publicity.
        I think Senator Shelby's advice to try to find someone who
    might operate away from that spotlight in a more management
    fashion would be the right thing to do.
        His final question is, do you not agree with him, which is
    usually what goes on here. I simply share that with you and ask
    you to take it into consideration.

                        Delta airlines at salt lake city

        I cannot resist another. Hearing Senator Bond talk about
    the slot into National, I hope you pay close attention to
    Delta's request to see to it that that slot comes to Salt Lake
    City. We all have letters to you on that and we understand
    that.

                             Central artery project

        Now, looking through some of Senator Shelby's other
    questions, this one would be appropriate in the conversation
    that we have had. Have you had an opportunity to look into the
    Boston Central Artery-Third Harbor Tunnel project, the Big Dig?
    I have experienced trying to catch an airplane in Boston and
    understand what the Big Dig can do to get in and out of Logan
    Airport. Could you give the subcommittee an update on whether
    the project is likely to stay within the cost cap included in
    the fiscal year 2001 appropriations bill?
        Secretary Mineta. The Federal Government intends to stay
    within the cap. Even though the cost of the project may go up,
    the cap will not be impacted. The cap will still be in place
    and we will be at that level and no higher.
        Senator Bennett. That means, therefore, that if the cost
    goes up the State pays it?
        Secretary Mineta. That is correct. The Turnpike Authority
    and the Commonwealth of Massachusetts are the responsible
    parties. The Federal contribution is capped at a dollar figure.

                               Project oversight

        Senator Bennett. Have the cost overruns and, some would
    say, abuses that have occurred in this project, given you pause
    for looking at other projects of this magnitude?
        Secretary Mineta. Absolutely. As I mentioned in my
    statement about paying for a 10-sack concrete job, and whether
    we are getting a 10-sack or 7-sack concrete job. There are two
    things that are very important to me. One is accountability and
    the other is accessibility.
        One of the things I want to make sure of in our Department
    is that timetables and specifications are adhered to. I have
    scrutinized projects, as Senator Murray is well aware.
    Unfortunately, I had to focus on one, a major project in the
    State of Washington. But we are going to work through those
    problems.
        Where necessary, I am going to focus on where there are
    problems and make sure that costs do not go out of control. So
    yes, I intend to look at these projects and follow them.
        Senator Bennett. I think your determination to see to it
    that the local folks have to pay the price if there are abuses
    and overruns is a very salutory thing and it is a good way to
    get their attention. I wish we could retroactively do that in
    the Denver Airport.
        With that, Senator Murray.

                     Puget sound light rail transit project

        Senator Murray. Let me just follow up on that question. We
    have had several discussions about the problems encountered in
    Seattle in launching a desperately needed light rail system,
    and the Inspector General published a report that was very
    critical of the way Sound Transit was executing that project.
    Those Sound Transit officials, as you know, Mr. Secretary, have
    a lot of work to do to convince your agency and the Congress
    that they have gotten their costs under control.
        But the IG's report was equally, if not more, critical of
    the oversight abilities of the Federal Transit Administration.
    Your budget requests that we increase slightly the amount of
    money that goes to that function. But we have seen in the past
    that increased money for oversight does not necessarily get you
    improved program integrity.
        Can you talk about what initiatives you are planning to
    ensure that oversight activities will be improved and that
    project costs will be carefully monitored at the FTA?
        Secretary Mineta. First, the primary oversight
    responsibility is with the project sponsor. To the extent that
    we ride herd on the project sponsor, we will have a good handle
    on our ability to track these projects.
        In terms of tracking, I think we can do a lot better job in
    utilization of computer techniques to track these projects. I
    do not think we have done that sufficiently.
        Based on my background representing Silicon Valley for over
    20 years in the Congress, I do not think that the Department of
    Transportation is up to snuff in terms of the use of technology
    in dealing with a lot of these issues. I intend to make sure
    that we have the tracking capability right within the
    Department.
        Senator Murray. Well, Senator Bennett, I can assure you
    that there is a new heightened level of scrutiny on New Start
    projects at the FTA.
        I would just like to ask you, Mr. Secretary, if you are
    going to have as much scrutiny for New Start projects as we are
    for those that are amending their Full Funding Grant
    Agreements?
        Secretary Mineta. Yes. Part of that scrutiny will also be
    an evaluation of what we should be doing in terms of Federal/
    local share. In the President's budget we have submitted a
    suggestion that the Federal share go down to 50 percent in year
    2004.
        Senator Murray. For New Starts?
        Secretary Mineta. For New Starts. Part of this is to put
    the heat on the local authorities. If it is a good project,
    then they are going to have to share the responsibility of the
    financing, as well as the accountability.
        Senator Murray. Well, I look forward to continuing to work
    with you. I know Sound Transit is working very diligently to
    meet the IG report request and we have work ahead of us there.
    But the Federal Government has the responsibility to support
    them when they finish that.

                                     Amtrak

        On a different topic, Amtrak, in my opening statement I
    talked about the Amtrak Board, which as you know is chaired by
    Secretary Thompson, issued its assessment of Amtrak's long-term
    capital needs. They concluded that in order to bring high
    quality rail service and launch the new high-speed rail routes
    that are being demanded in this country, that Amtrak would
    require funding of $1.5 billion a year.
        In your performance plan you talk about a goal to increase
    Amtrak ridership, but the budget actually freezes Amtrak
    funding at $521 million. Do you believe that the new high-speed
    rail systems outside the Northeast Corridor need to be a part
    of the solution for relieving congestion and solving our energy
    problems?
        Secretary Mineta. First, the $521 million in the
    President's fiscal year 2002 budget will keep Amtrak on a glide
    path to self-sufficiency. On the other hand, the whole issue of
    intercity rail and related capital development needs is an area
    which I have not focused on yet, but I intend to.
        I have not set a time schedule yet on how to go about doing
    that, but I intend to look at the whole area of intercity rail.

                              High-speed rail act

        Senator Murray. I am co-sponsor of the High-Speed Rail Act,
    along with a bipartisan group of 57 Senators. That bill would
    provide $12 billion in capital funding for Amtrak in order to
    build some of these new high-speed rail systems. Has the
    administration taken a position on that legislation?
        Secretary Mineta. We have not taken a position on the high-
    speed rail bond bill.
        Senator Murray. Do you know if you intend to? Is that part
    of what you are looking at?
        Secretary Mineta. We will be taking a look at that as well.
    We will have to have a Statement of Administration Position
    (SAP) on it.
        Senator Murray. Do you have any idea of the time line of
    that?
        Secretary Mineta. Not right now, not until the bill comes
    to the floor.

                             Presidential nominees

        Senator Murray. Let me ask you another question, on
    nominations. You have been on the job for 3 months and
    President Bush has nominated three senior level positions
    within the Office of the Secretary and two modal
    administrators. The Commerce Committee only has official papers
    for one of the nominees and there remain a number of important
    safety-related positions for which there have been no nominees,
    including the administrators for the Research and Special
    Programs Administration, the Federal Motor Carrier Safety
    Administration, and the National Highway Traffic Safety
    Administration.
        Mr. Secretary, when do you expect to have your nominees for
    all of these senior positions?
        Secretary Mineta. Those names, and a few others, have been
    submitted to the White House for consideration.
        Senator Murray. At what point do we start being concerned
    that these delays affect some of your goals on safety?
        Secretary Mineta. The President wants to have these clear
    his desk by May 1. So hopefully these will be announced in that
    time frame.

                          FAA chief operating officer

        Senator Murray. When you first took office, you identified
    as a priority the hiring of the first Chief Operating Officer
    for the Federal Aviation Administration. How close are you to
    filling that slot?
        Secretary Mineta. Frankly, not very close. I am trying to
    find a highly experienced operating officer with the kind of
    technical and managerial experience we need in that position.
    But the pay is $139,000, which does not, or cannot, attract
    very many people.
        Senator Murray. So it is a lack of getting people
    interested in doing it?
        Secretary Mineta. There are a couple of people that I am
    now focusing on. They are retired chief executive officers of
    very large corporations who probably could afford to do it for
    a dollar a year.
        Senator Murray. Are they interested?
        Secretary Mineta. They are interested and I am trying to
    persuade them to perform a public service. To me it is the
    number one job in the Department of Transportation, and it is
    very difficult. I had a person who was ideal for the job, but
    unfortunately there were some health considerations and it
    precluded him from the job. There are others who I think would
    be equally good, but we have to convince them that this is
    something they ought to do as a duty to their country, given
    their vast experience.
        Senator Murray. Well, I urge you to keep working----
        Secretary Mineta. Absolutely.
        Senator Murray [continuing]. And to get the President to
    put his persuasive powers to use. I am concerned that we are
    not filling some of these critically important posts.
        Secretary Mineta. The other jobs that you mentioned--RSPA,
    Federal Motor Carrier, and NHTSA--those names have been
    submitted.
        Senator Murray. They have been?
        Secretary Mineta. Yes.
        Senator Murray. All right. Thank you very much.
        Mr. Chairman, I have a number of other questions I will
    submit for the record. I do not know if Senator Shelby is going
    to return.
        Senator Bennett. We just heard word that Senator Shelby is
    not going to return. So his questions will be submitted for the
    record.

                         Additional committee questions

        Secretary Mineta. And I will respond in writing.
        Senator Murray. Thank you very much, Mr. Secretary.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                Questions Submitted by Senator Richard C. Shelby

                        securing information technology
        Question. Please provide a breakout of the anticipated spending for
    the $1,000,000 request for this activity (CIO Securing Information
    Technology Functions).
        Answer. The $1,000,000 requested in fiscal year 2002 will support a
    risk assessment of OST LAN environment ($150,000); establishment of the
    DOT Information Technology Security Alert Program (ITAP) ($150,000);
    and work on various IT security efforts including implementation and
    evaluation of the DOT IT security program, implementation of the
    Government Information Security Reform Act (GISRA), implementation of
    Presidential Decision Direction 63 (PDD-63), migration of OST computers
    to a secure operating system with increased configuration security, and
    IT security awareness training ($700,000).
                      general counsel consulting services
        Question. Please provide a description of any consulting services
    and costs anticipated for the General Counsel's Office.
        Answer. The Office of the General Counsel expects to utilize
    consulting services in a number of areas during fiscal year 2002. The
    most significant is to carry out the Accessibility for All America-
    Technical Assistance and Information initiative to implement section
    707(a)(4) of the Wendell H. Ford Aviation Investment and Reform Act for
    the 21st Century (AIR-21). Under the initiative the Office of the
    General Counsel would seek a contractor to operate an ``information
    clearing house'' similar to those that exist in other offices within
    DOT (e.g., NHTSA's Auto Safety Hotline) and other Departments (e.g.,
    information clearing houses operated for the National Institutes of
    Health). Listed below are some of the activities planned.
      --Translate into Braille and Spanish and create large print and
            audiotape versions of the following air travel information
            documents and publications:
        --Air Carrier Access Act (ACAA)
        --14 CFR Part 382 (ACAA rules)
        --New Horizons brochure
        --Fly Rights brochure
        --Plane Talk Fact Sheet on Disability Issues
        --ACAA Complaint Form & Information Sheet
        --Quarterly Newsletter with Q&A's (to be developed)
        --Other Plane Talk Fact Sheets
      --Update and improve the format of all existing ACAA-related
            publications and prepare quarterly newsletter with Q&A's.
            Arrange for publication of all documents.
      --Modify the Aviation Consumer Protection Division (ACPD) website to
            make it fully accessible to the blind.
      --Establish an 800 disability inquiry line and staff the telephones 7
            days per week from 7 a.m. until 11 p.m.
      --Create a fax-on-demand (Fax Back) system for publications.
      --Develop a technical assistance manual for ACAA compliance (i.e., a
            plain language version of ACAA rules with additional guidance,
            such as a model training program for airline employees.)
        Based on discussions with staff of the National Council on
    Disability, the Department of Justice/Civil Rights Division, and
    contractors that have done similar work within DOT, the Department
    estimates that $1,247,000 would be needed the first year to implement
    and staff the 800 disability inquiry line, convert the ACPD website,
    and create the on-demand Fax Back system. The funds would also allow
    for work to begin on the document and publication improvements noted
    above, although this work would not be completed until the following
    year. Based on the annual cost to NHTSA of its 800 Hotline, the 800
    disability inquiry line alone would cost approximately $1 million in
    its initial year.
        Also, consulting services would be used to implement the
    Accessibility for All America-Consumer Rights Protection Initiative.
    Among the functions that could be carried out by consulting services,
    as resources permit, would be (1) the review and coding of aviation
    consumer complaints received by ACPD; (2) upgrading ACPD's computerized
    complaint tracking system to facilitate the filing of e-mail complaints
    by consumers and the review of complaints by air carriers over the
    internet; (3) developing cost-benefit analyses for consumer protection
    and civil rights rulemakings required by statute and currently being
    planned; (4) on-site consultant investigation work to supplement in-
    house capabilities where backlogs necessitate such action; and (5)
    reporter services related to the taking of depositions to support
    enforcement cases.
                        general counsel new initiatives
        Question. Please provide greater discussion of the activities of
    the four highlighted new activities: alternate dispute resolution,
    consumer rights protection activities, air carrier access technical
    assistance, and domestic aviation complaint activities. Where else in
    the Department are activities of this nature conducted? What statutory
    mandate are the establishment of these activities pursuant to? What is
    the current backlog of disability cases, how many cases were resolved
    last year, how many FTE (and at what cost) were committed to the
    resolution of those cases last year, etc.?
        Answer. Alternative Dispute Resolution (ADR).--The Department and
    its operating administrations are using ADR consistent with the
    Administrative Dispute Resolution Act of 1996, to more efficiently and
    effectively resolve disputes in a variety of areas. For example, the
    FAA is using ADR to resolve acquisition disputes and the Department and
    its operating administrations have a cooperative program to resolve
    discrimination complaints through mediation. However, the
    Administrative Dispute Resolution Act of 1996 requires that each
    Federal agency: (1) designate a senior official to be the Dispute
    Resolution Specialist, (2) adopt a policy on ADR, (3) provide ADR
    training on a regular basis, and (4) review standard agreements to
    encourage the use of ADR. Furthermore, the use of ADR is growing as the
    government attempts to work collaboratively with its employees and
    stakeholders. Additional staffing is needed to implement the statutory
    requirements, develop policies, evaluate dispute resolution uses and
    programs, and identify and eliminate barriers to the use of ADR.
        Consumer rights protection.--Due to resource constraints, the
    Department is unable to give special attention to, and resolve, the
    bulk of the complaints received. All complaints received by the
    Department's Aviation Consumer Protection Division (ACPD) are
    acknowledged, reviewed, categorized, provided to the carrier involved,
    and entered into a computer database. The database is then used by ACPD
    in preparing its widely disseminated monthly Air Travel Consumer
    Report, which, in part, ranks the larger airlines on their complaint
    totals. On average this process takes about one-half hour per
    complaint; more than 20,000 complaints were handled this way during
    2000 without additional staff work. In addition, at the Department's
    request, larger airlines send customer service personnel to ACPD on a
    monthly basis to review and discuss the complaints filed with the
    Department that month and the compliance problems they may reflect.
    Approximately one FTE is devoted to this meeting activity over the
    course of a year.
        Some complaints and consumer-related inquiries require more
    specialized consideration and/or investigation. For example, the
    Department received over 1,350 Congressional inquiries and referrals in
    2000 and, for each of these, the airline or other transportation
    company involved was requested to reply directly to the Congressional
    office, with a copy to the Department. Each reply is reviewed to ensure
    it is responsive and consistent with Department consumer protection
    regulations. Follow-up action is taken with the airline or other
    transportation company, the consumer, and the Congressional office, as
    appropriate. An average of 2 to 3 hours is spent on each such
    complaint.
        Disability complaints are required by statute (Section 707 of the
    Wendell H. Ford Aviation Investment and Reform Act for the 21st Century
    (AIR-21) (Public Law 106-181; 114 Stat. 61; April 5, 2000)) to be
    individually investigated and are much more labor-intensive. The
    complaint is reviewed by a senior transportation analyst who prepares
    and sends a preliminary investigation letter to the airline involved
    and an acknowledgment to the consumer. The airline's response is
    reviewed for consistency with Department regulations and the Air
    Carrier Access Act, in consultation with an attorney, if necessary, by
    a senior transportation analyst who also obtains further information
    from either party, as appropriate. In instances involving isolated,
    less egregious violations, the case may be closed with a warning letter
    to the carrier and a closing letter to the complainant. This process
    involves on average 5-10 hours of staff time for each complaint.
        In instances in which an egregious violation or pattern or practice
    of non-compliance is apparent, the matter is referred to an enforcement
    attorney. The attorney would prepare a detailed enforcement
    investigation letter that would be sent to the airline, asking it to
    provide information on similar complaints filed with the carrier and
    other pertinent information, such as internal airline files on the
    incident and training records. A letter would also be sent to the
    consumer to advise him or her of the planned enforcement action and of
    the possible need to provide further information or testify. The
    investigation letter and information request to the airline may produce
    boxes of similar complaints that must, along with the explanation and
    evidence provided by the airline, be reviewed for consistency with the
    Department's regulations. If the situation warrants, a consent cease
    and desist order, including assessed civil penalties, is drafted and
    sent to the airline with an offer to settle the case. Settlement
    negotiations are usually protracted and time intensive. If a settlement
    can be reached, a final consent order reflecting the negotiated
    agreement is prepared and sent to the airline for approval. This
    process may take up to an additional 500 hours of staff time, which
    includes both investigation and legal staff time.
        If no settlement is achieved, the case must be litigated in an on-
    the-record, evidentiary hearing before a Department administrative law
    judge. That proceeding would likely involve a complaint, discovery,
    depositions, procedural motions, and numerous witnesses, and could
    easily take two or more years to complete. The law judge's decision may
    be appealed to the Secretary or his designate, and the final Department
    decision may be appealed to the U.S. Court of Appeals. Many hundreds,
    if not thousands, of additional hours of staff time can be expended in
    each such case. Based on the new requirements of AIR-21, the Department
    expects 10 to 20 disability enforcement cases per year to result in
    settlements or litigation.
        In addition, while not specifically required by statute, the
    Aviation Enforcement Office is treating all discrimination complaints
    regarding alleged civil rights violations similarly. Approximately 75-
    100 non-disability-related civil rights complaints are received yearly.
    In comparison, the office received 676 disability-related complaints in
    CY 2000.
        The additional resources requested will enable the Office of the
    General Counsel to conduct the mandated investigations and resultant
    enforcement actions noted above. It will also enable ACPD to conduct
    proactive consumer protection investigations for which it is not now
    staffed or funded. These investigations would cover issues such as
    deceptive advertising on the internet, unlawful bait-and-switch sales
    tactics, code-share disclosure violations, unfair and deceptive
    frequent flyer program policies, compliance with airport signage and
    consumer information availability requirements, compliance with refund
    timeliness requirements, and violations of the denied boarding
    compensation rules.
        Aviation consumer rights protection activities are conducted
    nowhere else in DOT and the following statutory provisions provide the
    authority for those functions performed by the Office of the General
    Counsel: 49 U.S.C. 40101, 40127, 41113, 41702, 41705, 41706, 41712,
    41721, 41310(a), 41112, and 44909.
        The current backlog of disability complaints that must be
    investigated under AIR-21, as of April 30, 2001, is 463. During CY
    2000, 676 disability complaints were received and 336 cases based on
    those complaints were closed. However, about one-half of the airline
    disability cases closed by DOT in CY 2000 resulted from complaints
    received prior to enactment of AIR-21 and those cases were closed
    without the investigation required by the new statute. Moreover, the
    vast majority of the post-AIR-21 complaints that resulted in closed
    cases in CY 2000 involved straightforward incidents where no ACAA
    violation occurred or were complaints that did not provide adequate
    information to establish whether a violation might have occurred.
    During CY 2000, about 2.5 FTEs were committed to the resolution of
    disability complaints and the processing of disability enforcement
    cases at a cost of about $260,000.
        Domestic aviation.--Over the past 5 years the Department has had to
    confront numerous formal and informal complaints alleging unfair
    competitive practices that it did not face in the past. Under 49 U.S.C.
    41712, unfair competition in the airline industry is prohibited. It is
    important to note that the Department's authority to prevent unfair
    methods of competition goes beyond the Justice Department's antitrust
    responsibilities. In this connection, the Department of Transportation
    not only can enforce the antitrust laws, e.g., the Sherman and Clayton
    Acts, under 49 U.S.C. 41712, but it is responsible for pursuing
    enforcement and regulatory action against activities that do not
    violate those laws if those activities are inconsistent with antitrust
    principles. Accordingly, the Office of the General Counsel has been
    involved in investigations of alleged unfair competition relating to
    the Department's computer reservation system requirements, predatory
    pricing, gate and slot allocations at airports, and airline travel
    agent marketing practices.
        The Office of the General Counsel must also review certain new
    airline joint venture agreements for evidence of unfair competitive
    practices under a recently enacted law (49 U.S.C. 41720). Assisting the
    Office of the General Counsel in carrying out its competition
    responsibilities is the Office of the Assistant Secretary for Aviation
    and International Affairs wherein resides the Office of the Secretary's
    aviation economics expertise.
        Air carrier access technical assistance.--The Office of the General
    Counsel would seek a contractor to operate an ``information
    clearinghouse'' similar to those that exist in other offices within DOT
    (e.g., NHTSA's Auto Safety Hotline) and other Departments (e.g.,
    information clearinghouses operated for the National Institutes of
    Health). Listed below are some of the activities planned:
      --Translate into Braille and Spanish and create large print and
            audiotape versions of air travel information documents and
            publications.
      --Update and improve the format of all existing ACAA-related
            publications and prepare quarterly newsletter with Q&A's.
            Arrange for publication of all documents.
      --Modify the Aviation Consumer Protection Division (ACPD) website to
            make it fully accessible to the blind.
      --Establish an ``800'' disability inquiry line and staff the
            telephones 7 days per week from 7 a.m. until 11 p.m.
      --Create a fax-on-demand (Fax Back) system for publications.
      --Develop a technical assistance manual for ACAA compliance (i.e., a
            plain language version of our ACAA rules with additional
            guidance, such as a model airline ACAA training program for
            employees.)
        Based on discussions with staff of the National Council on
    Disability, the Department of Justice/Civil Rights Division, and
    contractors that have done similar work within DOT, it is estimated
    that $1,247,000 would be needed the first year to implement and staff
    the ``800'' disability inquiry line, convert the ACPD website, and
    create the on-demand Fax Back system. That amount would also allow for
    work to begin on the document and publication improvements noted above,
    although this work would not be completed until the following year.
    Based on the annual cost to NHTSA of its 800 Hotline, the 800
    disability inquiry line alone would entail expenses in its initial year
    of approximately $1 million.
        The personnel providing on-site review and technical assistance to
    airlines will be transportation analysts. They will regularly meet with
    disability interest groups throughout the country to advise them of the
    rights of the disabled under the ACAA and how disabled individuals can
    best avail themselves of the services that the law requires airlines to
    provide. At these meetings, attendees will also be apprised of how to
    pursue corrective action with the airlines in accordance with DOT
    rules, and how and where to file complaints with DOT when the ACAA or
    DOT's regulations implementing the ACAA are violated. Additionally, the
    new staff will arrange and participate in airline/airport/disability
    group forums to discuss problems being faced in the transportation of
    disabled air travelers. Such forums can serve as effective vehicles to
    achieve cooperative solutions to those problems, many of which are not
    amenable to regulatory correction.
        The staff will also regularly meet with major air carrier officials
    to discuss ACAA compliance issues, conduct compliance visits with new
    entrant and smaller carriers to discover and correct ACAA rule
    violations, participate in ACAA training programs for air carrier
    employees, and meet with others having an interest in eliminating
    obstacles to air travel by the disabled, such as airport officials and
    contractors who provide services for airlines at airports.
        The Department's authority for carrying out these activities is
    contained in 49 U.S.C. 40101, 40127, 41702, 41705, 41712 and 41310(a).
    The air carrier access technical assistance activities described above
    are only performed within the Office of the General Counsel.
                   general counsel environmental coordination
        Question. What activities does the General Counsel's Office engage
    in with regard to environmental clearance and coordination activities
    for highway, transit and aviation projects?
        Answer. The General Counsel's Office has a case-by-case involvement
    in environmental clearance and coordination for these projects. The
    specific projects in which it becomes involved, and the nature and
    intensity of its involvement, is dictated by (1) whether program staff
    in the course of their review identify legal issues that should be
    resolved (e.g., a technical question arises as to whether a proposed
    project qualifies for abbreviated NEPA assessment under the language of
    a categorical exclusion); (2) whether an issue arises, typically during
    the coordination process, that requires legal analysis (e.g., Counsel
    is asked to analyze arguments that a project or process fails to meet
    statutory requirements in some regard); (3) whether the Secretary, or
    other senior staff of the Office of the Secretary or a modal
    administration, requests legal involvement in a matter due to the
    magnitude, or controversial or unique aspects, of a proposed project;
    (4) whether a general, especially cross-modal, matter develops that
    requires legal input (e.g., legal assistance is requested on a team
    addressing environmental streamlining initiatives); and (5) whether
    difficult litigation is initiated or expected (e.g., legal advice is
    sought on various matters as the Woodrow Wilson Bridge environmental
    impact statement is developed).
                       accessibility and passenger rights
        Question. What is the breakout of the accessibility v. the consumer
    right protection activities as anticipated in the budget request?
        Answer. Of the 11 positions and $946,000 in additional funding
    requested for Accessibility for All America/Consumer Rights Protection
    activities, about half will be used for air carrier access compliance/
    enforcement activities and half on consumer rights protection work.
    While certain individuals are likely to be assigned to only one of the
    activities, others, for example analysts conducting enforcement
    investigations at airports or airline headquarters, will for efficiency
    reasons review compliance with all the laws the Department enforces,
    including those concerning civil rights and consumer protection.
                technical assistance and information initiative
        Question. Please provide details on what activities at what cost
    will be executed pursuant to the $1.548 million requested for execution
    of the plan developed by the Department pursuant to Section 707(a)(4).
    The justification indicates that the Department staff must meet
    regularly with major air carrier officials. Doesn't the Department
    staff already meet regularly with major air carrier officials on other
    topical and timely issues? What officials do you anticipate meeting
    regularly with major air carrier officials on this issue? What is the
    division of responsibility between the Office of the General Counsel
    and the Office of Public Affairs regarding the activities (1)-(6) ON
    PAGE S&E-21 of the justification?
        Answer. Of the $1.548 million requested to begin the implementation
    of Section 707(a)(4) of AIR-21, $251,000 will be used to add 6 consumer
    specialist/transportation analyst positions, $50,000 will be used for
    travel associated with the office's technical assistance/information
    dissemination activities, and $1.247 million will be used for
    contracting services.
        With respect to the contracting services, the Office of the General
    Counsel would seek a contractor to operate an ``information
    clearinghouse'' similar to those that exist in other offices within DOT
    (e.g., NHTSA's Auto Safety Hotline) and other Departments (e.g.,
    information clearinghouses operated for the National Institutes of
    Health). Listed below are some of the activities planned.
      --Translate into Braille and Spanish and create large print and
            audiotape versions of air travel information documents and
            publications.
      --Update and improve the format of all existing ACAA-related
            publications and prepare quarterly newsletter with Q&A's.
            Arrange for publication of all documents.
      --Modify the Aviation Consumer Protection Division (ACPD) website to
            make it fully accessible to the blind.
      --Establish an ``800'' disability inquiry line and staff the
            telephones 7 days per week from 7 a.m. until 11 p.m.
      --Create a fax-on-demand (Fax Back) system for publications.
      --Develop a technical assistance manual for ACAA compliance (i.e., a
            plain language version of our ACAA rules with additional
            guidance, such as a model training program for airline
            personnel.)
        The six requested positions are necessary to fulfill Congress's
    mandate that DOT develop and implement a plan to provide technical
    assistance to individuals with disabilities and air carriers so they
    will understand their respective rights and responsibilities under the
    Air Carrier Access Act (ACAA). The personnel necessary for this work
    will be transportation analysts and consumer specialists.
        These employees, as well as a limited number of current qualified
    staff, will regularly meet with disability interest groups throughout
    the country to advise them of the rights of the disabled under the ACAA
    and how disabled individuals can best avail themselves of the services
    that the law requires airlines to provide. At these meetings, attendees
    will also be apprised of how to pursue corrective action with the
    airlines in accordance with DOT rules and how and where to file
    complaints with DOT when the ACAA or DOT's regulations implementing the
    ACAA are violated. Additionally, the staff being hired will arrange and
    participate in airline/airport/disability group forums to discuss
    problems being faced in the transportation of disabled air travelers.
    Such forums can serve as effective vehicles to achieve cooperative
    solutions to those problems, many of which are not amenable to
    regulatory correction.
        The people in these positions will also regularly meet with major
    air carrier officials to discuss ACAA compliance issues, conduct
    compliance visits with new entrant and smaller carriers to discover and
    correct ACAA rule violations, participate in ACAA training programs for
    air carrier employees, and meet with others having an interest in
    eliminating obstacles to air travel by the disabled, such as airport
    officials and contractors who provide services for airlines at
    airports.
        The $50,000 request for travel will be used to provide on-site
    reviews of air carriers' Air Carrier Access Act (ACAA) training
    programs, provide technical assistance to improve those programs, and
    participate in the training of key air carrier personnel responsible
    for ACAA compliance. The Department estimates that it can provide 25
    five-day visits in fiscal year 2002 at an average cost of $1,550 per
    trip, for a subtotal of $38,750. In addition, the staff will
    participate in conferences and meetings of organizations representing
    the disability community to educate the attendees on the ACAA and the
    related rights and obligations of disabled air travelers. The
    Department estimates that it would need to make 15 two-day trips for
    such purposes at an average cost of $750 per trip, for a subtotal of
    $11,250.
        Currently, ACPD staff meet once per month with only the largest
    airlines (about 10 meetings per month). Each meeting is with one or two
    airline customer relations personnel and is held in Washington to
    discuss problems evidenced by consumer complaints we receive. As
    resources permit, 1 or 2 day visits are made to airline headquarters
    where higher level airline officials and larger groups of airline
    employees (e.g., station managers or complaint resolution officials)
    are apprised of consumer issues, as reflected by the DOT complaint
    data. In the past, only 3 or 4 of the visits could be accomplished each
    year because of current staffing and funding constraints and the
    duration of each of those visits did not permit the kind of reviews and
    interaction contemplated by the proposed initiative.
        The Office of Public Affairs currently performs none of the
    functions discussed above. If new consumer information publications are
    developed by ACPD, that office will work with the Public Affairs Office
    staff to optimize the quality of the presentations.
                 aviation and international affairs and policy
        Question. Please submit a revised justification reflecting a
    consolidated Office of Aviation and International Affairs. If there are
    not cost savings by virtue of consolidating the office, what is the
    justification for such a consolidation?
        Answer. Consolidation and cost savings are not the goals of the
    current reorganization. The goal is to provide the Secretary with a
    strong, more effective policy office, while maintaining the strong
    leadership in aviation and other issues currently supported in the
    Office of the Secretary. Discussions for the organizational structure
    are still taking place and several options are under active
    consideration.
                           automated staffing system
        Question. What is an ``automated staffing system?''
        Answer. In order to be competitive with other Federal agencies and
    the private sector, the Department needs to be able to bring needed
    talent onboard in a more timely manner. An automated staffing system
    will post announcements, receive applications, rate and rank
    applications (per our agreed-upon criteria), and generate final
    certificates of eligible candidates for line managers. This system is a
    separate application from the Department's human resources information
    system (HRIS). The HRIS core system does not include an automated
    staffing component.
                                 telecommuting
        Question. What cost savings or other quantifiable benefits has the
    Department recognized from current telecommuting activities? What
    additional benefit is anticipated by virtue of the $40,000 request for
    training and materials in this area?
        Answer. Since implementation of the Department of Transportation
    (DOT) telecommuting program in 1994, participation has grown to include
    approximately 5 percent of the eligible workforce, or about 1,600
    employees. In surveys, these employees and managers cite improved moral
    and increased productivity as a result of telecommuting arrangements.
    At least four Operating Administrations (OAs) were able to retain
    experienced employees because these individuals were able to
    telecommute from locations outside of the local commuting area instead
    of resigning from their position or seeking a job with another
    employer.
        The Federal Railroad Administration (FRA) implemented a
    telecommuting program that permitted its safety inspectors to work
    full-time from their homes, thus enabling FRA to release office space
    and the costs associated with maintaining these facilities. In fact, 65
    percent of FRA's safety inspectors participant in this work
    arrangement. Another benefit for FRA is that their inspectors are more
    responsive because they can move closer to the areas in their territory
    where there is a high degree of activity. In addition, the FRA has been
    able to better allocate resources by posting inspector jobs in areas
    that need the greatest amount of attention.
        The requested funding will help DOT further increase the extent of
    telecommuting. This will satisfy recently expressed Congressional
    intent (Public Law 106-346, Section 359), and advance the Departmental
    mission of addressing highway safety and congestion. It will also allow
    the Department to increase the savings realized from the program.
        It is widely recognized that management and employee reservations
    about telecommuting are the key barriers to increased participation.
    The training and information materials developed and/or purchased with
    the requested funds will be targeted to address and overcome these
    reservations and provide tools to assist managers in evaluating
    performance based on results. A portion of the funds will also be used
    to promote telecommuting as an incentive in recruiting efforts.
                       workforce improvement initiatives
        Question. What are the other $60,000 in Workforce Improvement
    Initiatives not articulated in the justification?
        Answer. The $60,000 will be used to fund quarterly human resource
    management policy workshops. These workshops will bring together
    representatives from all of the operating administrations to focus on
    the human capital challenges facing the Department of Transportation.
    They will explore the challenges, identify best practices, and define a
    framework of action to implement selected practices. Funding is needed
    for materials, equipment, best-practice database, and additional
    facilitators and speakers as required.
                      office of the secretary travel costs
        Question. Please provide details on the Office of the Secretary
    travel costs paid by the modes.
        Answer. The following table reflects travel costs paid by the modes
    for Office of the Secretary employees.

                                                           TRAVEL PAID BY THE MODES FOR OST EMPLOYEES
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Paying
      OA       Traveler's Name       Traveler's OA          Travel dates         Amount    Account                           Purpose
    --------------------------------------------------------------------------------------------------------------------------------------------------------
       FAABanks, Maurice A.      OST.............  7/23/00-7/25/00..........   $564.65    6901301  Conducting Diversity and Sensitivity training followup
       FAABanks, Maurice A.      OST.............  3/5/00-3/8/00............    601.92    6901301  Conducting Diversity and Sensitivity training followup
      FHWAGeier, Paul M.         OST.............  3/22/00-3/23/00..........    360.09    69x8083  FHWA/FTA Legal Workshop
      FHWAWood, William M        OST.............  3/14/00-3/14/00..........    426.92    69x8083  Chicago-Newark Intermodal Freight Pilot Steering
                                                                                                    Committee
      FHWAWood, William M        OST.............  5/4/00-5/5/00............    531.14    69x8083  ITS Seattle Intermodal Freight Pilot Test Evaluation
                                                                                                    Committee Mtg.
      FHWAWood, William M        OST.............  6/26/00-6/27/00..........    520.14    69x8083  ITS Seattle Intermodal Freight Pilot Test Meeting w/
                                                                                                    Local Sponsors
      FHWAWood, William M        OST.............  8/14/00-8/17/00..........    767.06    69x8083  ITS Seattle Intermodal Freight Pilot Test Meeting w/
                                                                                                    Local Sponsors
      FHWAWood, William M        OST.............  9/26/00-9/27/00..........    358.86    69x8083  ITS Seattle Intermodal Freight Pilot Test Meeting w/
                                                                                                    Local Sponsors
      FHWAWright, Tami           OST.............  5/20/00-5/22/00..........    785.28    69x8083  Provide Training at the 2000 EEO Counselors Training
       FRABlue, Sheldon          OST.............  6/28/00-6/30/00..........    684.18   69070001  Federal Radionavigation Plan User's Conf
       FRABlue, Sheldon          OST.............  9/9/00-9/13/00...........  1,182.37   69070001  To attend AREMA exhibition
       FTAAsby, Robert           OST.............  10/05/99-10/13/99........  2,167.00    6901120  Meeting of U.S./Japanese Transportation Experts in
                                                                                                    Honolulu, HI
      RSPAFalvey, Thomas J.      OST.............  8/1/00-8/1/00............    207.00    69X4522  Airport Security Conference
      RSPAFrodge, Sally L.       OST.............  6/19/00-6/19/00..........    212.77    69X4522  Friends of Volpe Meeting
      RSPAMacaluso, John J.      OST.............  2/24/00-2/24/00..........    236.70    69X4522  Project Briefing
      RSPAMacaluso, John J.      OST.............  4/5/00-4/5/00............    202.20    69X4522  Project Briefing
      RSPAMacaluso, John J.      OST.............  5/4/00-5/4/00............    236.70    69X4522  Project Briefing
      RSPAPlocki, Peter          OST.............  8/16/00-8/17/00..........    427.00    69 0104  Attend hearing related to hazardous materials
                                                                                                    enforcement case
      RSPAShirer, Heywood O.     OST.............  8/7/00-8/8/00............    509.63    69X4522  Project Briefing
      RSPAWood, William          OST.............  11/1/99-11/3/99..........  1,212.36    69X4522  Rulemaking Session
      RSPAWood, William          OST.............  11/8/99-11/9/99..........    410.11    69X4522  Rulemaking Session
      RSPAWood, William          OST.............  11/14/99-11/15/99........    383.42    69X4522  Rulemaking Session
      RSPAWood, William          OST.............  1/17/00-1/20/00..........  1,572.76    69X4522  Rulemaking Session
      RSPARouck, William         OST.............  11/17/99-11/19/99........    167.73    69 0104  Review DOT R&D Tracking Sys
      USCGBasso, Peter J.        OST.............  5/30/00-6/2/00...........    462.00    6990201  PDI Conference
      USCGKleinberg, David K.    OST.............  5/30/00-6/2/00...........    552.24    6990201  PDI Conference
      USCGPark, A. Thomas        OST.............  5/30/00-6/2/00...........    300.30    6990201  PDI Conference
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                            office of intermodalism
        Question. Please provide details on total current on-board
    personnel and costs related to the Office of Intermodalism.
        Answer. The following table reflects staffing and costs for the
    Office of Intermodalism, as requested in the President's fiscal year
    2002 budget within FHWA's Limitation on Administrative Expenses
    request.

    Associate Deputy Secretary and Director, Office of Intermodalism..  EX-5
    Deputy Director...................................................  ES-4
    Director, HazMat Coordination.....................................  ES-2
    Senior Transportation Specialist.................................. GS-15
    Special Assistant to Director..................................... GS-15
    Transportation Specialist--Freight................................ GS-14
    Transportation Specialist--Maritime............................... GS-13
    Senior Office Assistant........................................... GS-12
    Scheduling Advance Assistant...................................... GS-11
    Secretary.........................................................  GS-9
    Program Assistant.................................................  GS-8

    Personnel Compensation and Benefits...........................$1,150,219
    Travel........................................................    60,000
    Other Contract Services.......................................     5,100
    Supplies......................................................     5,100
                        --------------------------------------------------------------
                        ____________________________________________________

          Total................................................... 1,220,419
                      office of intelligence and security
        Question. Please describe the consulting services anticipated this
    year for the Office of Intelligence and Security and differentiate them
    from the consulting service in fiscal year 2001.
        Answer. Public Law 101-604, section 111 of the Aviation Security
    and Improvement Act of 1990 states that the Director of the Central
    Intelligence Agency, ``shall designate not less than one intelligence
    officer of the Central Intelligence Agency to serve in a senior staff
    position in the Office of the Secretary of the Department of
    Transportation.'' The Department reimburses the CIA for the costs of
    this position. Duties and level of support remain unchanged from year
    to year.
        The CIA representative provides full-time liaison with CIA
    Headquarters and other elements of the intelligence community at a
    level of access not otherwise available to DOT, and also supports
    counter terrorism and security initiatives covered by the Presidential
    Decision Directive (PDD) 62 and critical infrastructure protection
    initiatives, plus specialized support to the Office of the Secretary on
    international issues, travel, and negotiations.
        Question. What activities will be completed in fiscal year 2001,
    and what new initiatives or activities are anticipated for the Office
    of Intelligence and Security for fiscal year 2002?
        Answer. In fiscal year 2001, the Office of Intelligence and
    Security will:
      --Finalize a policy addressing the problem of security on codeshares
            involving foreign carriers.
      --Initiate bilateral security discussions with security counterparts
            in Mexico (similar to the existing bi-laterals with Canada).
      --Inform airports concerning biological agent threats by conducting
            exercises at the ACI-North America Conference.
      --Transfer technology and best practices to state and local police
            and to first responders, in cooperation with the National
            Institute of Justice.
      --Chair two meetings of the APEC Transportation Security Experts
            Group (Miyazaki, Japan, 10/16/00; Bandar Seri Begawan, Brunei
            Darussalam, 4/2/01). The Experts Group's input to the proposed
            Statement for the Ministerial scheduled to be held in Lima,
            Peru in October 2001, addresses not only aviation security but
            also the problem of piracy and armed robbery at sea and
            proposes Ministerial commitment to several constructive steps
            to address this growing problem.
      --Participate in the UN Open Ended Informal Consultative Process to
            Facilitate the Annul Review of Developments in Oceans Affairs,
            seeking support for the language proposed in APEC Ministerial.
      --Sponsor a panel on Intermodal Terminal Security as part of the
            International Transportation Symposium.
      --Identify and work with two private sector coordinators to develop a
            critical infrastructure protection (CIP) training and awareness
            program; assess the vulnerability of critical transportation
            information systems; and develop systems to rapidly disseminate
            and share vulnerability and threat information. To date, two
            transportation sector coordinators have been identified. The
            Office of Intelligence and Security will continue to work
            closely with the private sector to help protect and assure
            critical components of the nation's transportation
            infrastructure:
            a. The Association of American Railroads (AAR) is currently
                Private Sector Coordinator for the Class I rail lines in
                the US, Canada, and Mexico. Future plans may lead to
                expansion of this role to the short line rail companies and
                to rail mass transit. AAR issued a Request for Proposals in
                April 2001 to identify an organization or company to serve
                as the sector's Information Sharing and Analysis Center
                (ISAC). Announcement of the sector ISAC is expected
                shortly.
            b. On May 15, 2001, Airports Councils International--North
                America (ACI-NA) announced they will assume
                responsibilities of Private Sector Coordinator for civil
                aviation.
      --Complete an assessment of the national security communication
            requirements of the Office of the Secretary and for the
            Department overall. This assessment specifically addresses the
            organizational, procedural, and technical requirements for the
            Department to effectively support the National Security
            Strategy, counter-terrorism and anti-terrorism, emergency
            response, critical infrastructure protection, threat
            dissemination and information sharing needs of the Secretary,
            and the intermodal needs of the DOT Operating Administrations.
            External to the Department, the assessment addresses
            information sharing and threat dissemination and warnings with
            state and local governments in the transportation sector and
            transportation industry. This project also assesses the present
            and future national security-related communications
            requirements of the Department, identifies shortfalls, and
            recommends process, organizational, and technological
            improvements, as appropriate, focused especially on those
            needed to meet critical infrastructure protection efforts and
            PDD-62 and PDD-67 mandates.
      --In conjunction with FAA and RSPA project management support and
            funding, the Office of Intelligence and Security sets policy
            direction and planning coordination for the following
            transportation R&D initiatives/activities:
          a. Tests to characterize the biological background in intermodal
                transportation terminals.
          b. A study of the security of the civil aviation sector's
                reservation, ticketing, and e-based systems.
          c. An assessment of critical transportation interdependencies and
                the potential impacts of loss of various elements.
          d. A study to assess cyber vulnerabilities of e-commerce
                transportation systems over the next five years.
          e. A vulnerability assessment of intermodal terminals to
                determine their susceptibility to disruption by
                conventional or other means.
          f. Acquired appropriate trace detector and developed training and
                employment protocol for explosives detection on ACELA
                trains.
          g. Updated 1997 Supervisory Control and Data Acquisition (SCADA)
                Vulnerability Report on pipelines, and conducted limited
                distribution of report to industry to take action to
                correct vulnerabilities.
          h. Assisted FTA in developing a Passenger Security Virtual
                Reality Model to simulate the transit environment; design
                and enhance security countermeasures; train professionals
                to response to acts of terrorism or other destructive acts.
          i. Sponsored Land Transportation Anti-terrorism Training Program
                training courses for state and local police and first
                responders, including one supporting the Winter Olympics.
        The Office of Intelligence and Secretary planned new initiatives/
    activities in fiscal year 2002 include:
      --Conclude an MOU between DOT and DOE on R&D efforts that focus on
            Weapons of Mass Destruction in transportation systems.
      --Conclude an MOU Between DOT and National Institute of Justice (NIJ)
            on R&D efforts that focus on weapons detection.
      --Produce a revised port security manual.
      --Inform airports concerning biological agent threat by organizing a
            panel and speaking at AVSEC World 2001 in October.
      --Implement the results of the Communication Requirement Study.
      --Support the APEC Ministerial to ensure proposed anti-piracy actions
            remain in the Ministerial statement.
      --Chair a meeting of the APEC Transportation Security Experts Group
            (Manila, March 2002) to increase the focus on the security
            aspects of emerging land transportation issues such as the
            proposed high-speed Asia-Europe freight rail link and ITS.
      --Working closely with the private sector, DOT operating
            administrations, and other agencies, identify the need for
            further studies and evaluations on vulnerabilities of critical
            transportation systems. The focus will be on the potential
            vulnerability rising from the growing use of information
            systems and electronic commerce in conducting the business of
            transportation.
        The study, expected to begin during fiscal year 2001 with funding
    provided by the Research and Special Programs Administration (RSPA),
    will address the following issues: a baseline description of the
    world's transportation communication and information systems, including
    interconnectivity with government entities, customers, and other
    business partners; a summary of ongoing and emerging efforts on EDI,
    EC, telecommunications and data transfer, and automated clearance and
    business practices; and a summary of the potential vulnerabilities this
    new system will surface focused primarily on information-based
    vulnerabilities, with specific and business relevant examples.
      --In conjunction with FAA and RSPA project management support and
            funding, the Office of Intelligence and Security plans to set
            policy direction and planning coordination for the following
            transportation R&D initiatives:
            a.A study of the security of the systems that control, manage,
                and operate access control systems at airports.
            b. A definitive study of the security of the civil aviation
                sector's reservation, ticketing, and e-based systems.
            c. A study of the costs and benefits to both security and
                safety of platform edge doors for transit systems.
            d. A study of the increasing level of commercial activity at
                transportation terminals and the impacts on security.
            e. A literature study of environmental background agent hazards
                levels.
            f. A study on developing explosive detection systems applicable
                to screening large numbers of passengers in railroad
                environment.
            g. An advanced weapons detection portal, in conjunction with
                the National Institute of Justice.
                    office of the chief information officer
        Question. Please describe the consulting services anticipated this
    year for the Office of the Chief Information Officer (OCIO) and
    differentiate them from the consulting services in fiscal year 2002.
        Answer. Information Technology Security.--The OCIO will use
    consulting services for the implementation of the DOT IT Security
    Program. This program is required by the Government Information
    Security Reform Act and the recently revised version of OMB Circular A-
    130. The consulting services in fiscal year 2002 will be a continuation
    of those procured in fiscal year 2001. Additionally, consulting
    services may be acquired in fiscal year 2002 to assist in the
    development and implementation of IT security awareness training, the
    DOT Information Technology Alert Program (ITAP), and for testing the
    security of the OST Local Area Network.
        Section 508 Compliance.--The OCIO will obtain consulting service
    and a compliance tool during the last half of fiscal year 2001. The
    same consulting service will be used in fiscal year 2002.
        Capital Planning.--The consulting services in fiscal year 2001 have
    supported: (1) the development of a new DOT IT capital planning and
    investment control (CPIC) process, (2) installation and tailoring of IT
    Investment Portfolio System (ITIPS) software for use as an IT program
    database and tool for systems inventory, and selection, control and
    evaluation of IT initiatives, and (3) migration of IT program data from
    the existing OCIO database into ITIPS. In fiscal year 2002, consulting
    services will support implementation of the new DOT IT CPIC process
    developed in response to requirements contained in the Clinger-Cohen
    Act of 1996 and OMB Circulars A-130 and A-11. In fiscal year 2002, the
    OCIO will continue as a member of the Federal CIO Council, ITIPS Change
    Committee, the purpose of which is to provide government-wide
    improvements in coordination, development, and configuration control of
    the ITIPS software. DOT CIO participation in ITIPS Change Committee
    activity in fiscal year 2002 will be similar to its fiscal year 2001
    participation.
        Government Paperwork Elimination Act (GPEA).--OCIO hired a
    contractor to assist in the development of the Department's
    implementation plan to outline the transition to electronic workflow
    architecture, as required by the Government Paperwork Elimination Act
    (GPEA). Services included collecting and analyzing the Operating
    Administrations' data for conducting public on-line business
    transactions. No consulting service in this area is planned for fiscal
    year 2002.
        CIO Council.--Contractor support in fiscal year 2001 includes
    supporting OCIO staff with planning and facilitating and communicating
    monthly Council activities, such as development of meeting strategies,
    agenda and discussion topics, and minutes and assisting in performing
    annual assessments of the Council's effectiveness. The same consulting
    service will be used in fiscal year 2002.
        Information Technology (IT) Strategic Plan.--Consulting services
    will be used for development and coordination of an IT Strategic Plan,
    to include critical milestones in fiscal year 2002.
        IT Workforce Literacy.--In order to meet the requirements of the
    Clinger-Cohen Act, services will be required in fiscal year 2002 to
    conduct a study that will assess and report on the IT skills and
    knowledge of the current DOT workforce.
        Enterprise Architecture (EA).--OCIO used the consulting services in
    fiscal year 2001 for the development of the IT Enterprise Architecture
    (EA). The Department is required to develop an EA by the Clinger Cohen
    Act of 1996 and the revised OMB Circular A-130. These same consulting
    services will be required in fiscal year 2002.
        Question. What activities will be completed in fiscal year 2001,
    and what new initiatives or activities are anticipated for the Office
    of the Chief Information Officer (OCIO) for fiscal year 2002?
        Answer. Information Technology Security.--During fiscal year 2001,
    OCIO will complete the planning and initiation of the DOT IT Security
    Program. This includes the formation of a CIO Council IT Security
    Committee and development of the DOT IT Security Program. During this
    period, we will also develop and submit the initial response to OMB as
    required by the Government Information Security Reform Act (GISRA).
        In fiscal year 2002, OCIO will continue implementation of the DOT
    IT Security Program within the operating administrations; continue
    implementing the requirements of GISRA; coordinate compliance with PDD-
    63; test and upgrade the security of OST IT systems; provide IT
    security awareness training within OST; and continue the implementation
    of DOT Information Technology Alert Program (ITAP).
        Capital Planning.--During fiscal year 2001, the DOT OCIO will
    complete the development of its new IT CPIC process. Installation and
    tailoring of ITIPS software and data migration are already complete. In
    fiscal year 2002, emphasis will shift to the implementation of the new
    DOT IT CPIC process, and refinement of the ITIPS selection, control and
    evaluation software modules to facilitate overall management of DOT's
    IT capital assets. In fiscal year 2001, the DOT OCIO became a member
    and participant in the Federal CIO Council, ITIPS Change Committee.
    This membership and participation will continue in fiscal year 2002 to
    ensure that ITIPS functionality, reporting and configuration continues
    to reflect the CPIC management needs of DOT and other Federal Agencies.
        E-Government.--The Department of Transportation created an E-
    government staff within OCIO to provide leadership, direction and
    oversight of the implementation E-government initiatives within DOT.
    Moving DOT to E-government involves reengineering business processes as
    a prelude to their becoming web enabled. It also means providing the
    technology and support to enable increasingly sophisticated levels of
    content integration, workplace integration and government-wide
    integration of services.
        In June 2001, OCIO will launch a new revitalized and upgraded
    version of the Department-wide intranet (DOTnet). This is the second
    version of the intranet that was developed to improve communication
    within the Department. The new version includes features to enhance
    communication among DOT leadership and staff. The intranet makes it
    possible for the Secretary to deliver his message directly to all DOT
    staff nationwide and is a way to inform staff of new initiatives as
    well as provide quick access to policies and procedures and other
    information employees need to do their jobs. DOTnet is also a tool to
    help staff do their jobs because it allows for online collaboration,
    including the ability to review and comment on documents and discuss
    issues across modal boundaries. Any future activities on the intranet
    will consist of enhancements to meet new requirements identified by the
    DOT leadership and staff.
        President Bush's fiscal year 2002 Budget Blueprint makes it clear
    that e-government, including becoming citizen focused, is a primary
    goal of his Administration. The planning process has begun already; the
    goal is to move beyond planning to results and make substantial
    progress in delivering services and information to the public in fiscal
    year 2002. As advisors and facilitators to the service providers within
    DOT, the OCIO will work with the operating administrations to develop
    metrics to estimate cost benefits of selecting services and processes
    for migrating to E-government delivery.
        The Federal CIO Council has drafted goals for fiscal year 2001 and
    fiscal year 2002 of which more than half are related to enhancing E-Gov
    capability within and across Departments. Achieving such inter-agency
    collaboration and streamlining will involve developing extranet tools
    to enable collaboration across the Federal Government as well as with
    other identified business partners and stakeholders.
        Government Paperwork Elimination Act (GPEA).--A key component of
    transition to e-government will be the effective implementation of
    GPEA. The Department submitted its plan for moving to electronic
    information collection, reporting and transacting government business
    to the Office of Management and Budget in October 2000. The
    Department's operating administrations identified 402 candidate
    transactions; 129 appear to be priority candidates. The E-government
    staff is responsible for monitoring and reporting progress in
    developing and executing GPEA project plans, and will work with the
    operating administrations to identify opportunities to collaborate on
    cross-cutting initiatives.
        Enterprise Architecture (EA).--During fiscal year 2001, OCIO will
    complete the EA project initiation and planning activities. This
    includes the formation of a DOT CIO Council EA Committee, development
    of a project work plan, development of DOT EA Vision and Principles
    documents, and selection and installation of an automated EA tool. By
    the end of fiscal year 2001, the EA business model and technology and
    systems inventory will be developed. In fiscal year 2002, the OCIO will
    continue development of the EA business model and technology and
    systems inventory.
        Departmental websites.--A snapshot was taken of website(s) and
    submitted to the National Archives and Records Administration for
    preservation in the National Archives of the United States. Related to
    efforts to improve the delivery of services to citizens, the OCIO will
    work to improve and enhance the access to services and information
    through the Department of Transportation website, www.dot.gov.
    Typically information on websites is presented and organized in ways
    that make sense to the organization, rather than in ways that make
    sense to the citizen trying to find a service or information. The OCIO
    will conduct focus groups, do usability tests, and other efforts to
    completely restructure the www.dot.gov to make the website citizen
    focused and ensure that all web pages comply with Section 508
    requirements. An implementation plan will be developed, outlining the
    transition to electronic workflow architecture.
        IT Accessibility.--In response to the Department of Justice's
    Section 508 Self-Evaluation Survey request, surveys were conducted of
    the top 20 websites for each DOT Operating Administration. A
    Departmental plan and policy for implementation of Section 508, which
    requires IT accessibility for all persons with disabilities, will be
    established by the end of fiscal year 2001.
        Information Collection Budget (ICB).--As required by the Paperwork
    Reduction Act, the Department's annual ICB report was completed and
    submitted to the Office of Management and Budget in fiscal year 2001.
    This report included information on DOT's reduction of its burden hours
    on the public as well as the projected increases/decreases for the next
    fiscal year. The existing ICB database system is outdated and does not
    fully meet Departmental needs. Plans are underway to secure a copy of
    another agency's (Health and Human Services) tracking system and, after
    modifications, implement it within DOT by the end of fiscal year 2001.
    DOT will submit the required annual ICB report to OMB in fiscal year
    2002.
        Customer Satisfaction.--A DOT customer satisfaction survey database
    will be established by the end of fiscal year 2001 to determine how
    well DOT is meeting its customers' needs.
        Records Management Tracking System.--Electronic records management
    tracking systems will be evaluated by the end of fiscal year 2001 to
    identify ways to retain electronic documents for the Office of the
    Secretary (OST). An OST tracking system that complies with the
    requirements for electronic records will be developed in fiscal year
    2002. This change will mark the conversion to an electronic IT
    Architecture and the decrease or elimination of paper records outlined
    in the Paperwork Reduction Act of 1995.
        IT Policy and Strategy.--An updated Departmental IT manual will be
    published in fiscal year 2001 and an IT Strategic Plan will be
    developed in fiscal year 2002.
        IT Workforce Literacy.--In order to meet the requirements of the
    Clinger-Cohen Act, an assessment will be done in fiscal year 2002 to
    determine whether the current DOT workforce has the requisite skills
    and knowledge to successfully perform IT jobs. Core competencies will
    be developed.
                                 telecommuting
        Question. Has an evaluation been done recently that assesses the
    relative benefits and disadvantages of the current department
    telecommuting policy? If so, summarize the findings. For the record,
    articulate the policy.
        Answer. Following enactment of Section 359 of Public Law 106-346,
    the departmental telecommuting policy and the internal telecommuting
    policies of the Operating Administrations (OAs) were evaluated in
    preparation for a April 2001 report to the Office of Personnel
    Management (OPM). The evaluation uncovered three opportunities for
    improvement or clarification.
        First, there are significant differences in the way telecommuting
    is defined in the departmental policy compared to some of the OAs. A
    workgroup of the telecommuting coordinators from each of the OAs has
    developed a draft telecommuting definition and telecommuting
    participation eligibility criteria that will provide more consistency
    throughout the Department when adopted.
        Second, the group found that many of the policies could be revised
    to simplify the procedures for requesting a telecommuting arrangement.
    The recommended streamlining may encourage more actual participation,
    and could also lessen the resistance found among some employees and
    managers to the paperwork associated with an official telecommuting
    agreement. Making it easier to document telecommuting instances will
    make participation easier to measure and monitor.
        Finally, the current departmental policy states that participation
    in telecommuting is voluntary with both employees and supervisors, and
    not an employee entitlement. This creates a potential conflict with
    recent OPM guidance, based on the new law, which states that employees
    who meet the eligibility criteria established by the agency, and want
    to participate, must be permitted to do so if they are satisfactory
    performers. The revised policy will clarify and correct this apparent
    conflict.
        The current departmental policy and telecommuting guide can be
    found on the Departmental Office of Human Resource Management website
    at: http://dothr.ost.dot.gov/telecommuting____in____dot.htm
                             civil right complaints
        Question. Please categorize how new complaints are filed with the
    Department in the aggregate. i.e., x percent by letter, y percent by
    appointment initiated by the complainant, z percent by phone call
    initiated by the complainant, v percent by phone call initiated for
    some other reason (interview), etc.
        Answer. Federal sector complaint processing regulations promulgated
    at 29 C.F.R. Sec. 1614, require an aggrieved individual to initiate the
    complaint process by first contacting an EEO counselor. This informal
    counseling program is designed to facilitate a resolution at an early
    stage and these programs are administered by the operating
    administrations. Accordingly, the Office of Civil Rights does not have
    the specific data on the method by which the aggrieved individuals
    initiate the informal stage of the complaint process. However, based on
    experience, most complainants first contact a counselor by phone and
    schedule an appointment.
        If the counselor is unable to resolve the complaint at the local
    level, the aggrieved individual is given the documents necessary to
    file a formal complaint with the Departmental Office of Civil Rights
    (DOCR). Approximately 87 percent of complainants submit their
    complaints via U.S. mail and 2 percent by courier service (FedEx, UPS
    etc.). The remainder deliver their complaints by hand (8 percent) or
    via fax (3 percent). Regulations require that faxed complaints be
    followed up with a mailed or hand delivered hard copy. Current
    regulations do not allow a complaint to be received via telephone or e-
    mail.
                              employee development
        Question. Please outline the employee development goals and
    deliverables associated with the OST request for fiscal year 2002. What
    additional work needs to be done on the DOT Training framework? Is this
    initiative focused specifically on OST employees, and if not, what
    funding is requested for the modes' implementation of the framework?
    What activities in particular are anticipated in fiscal year 2002?
        Answer. The goal of OST's employee development activities is to
    enhance the operation of OST in accomplishing its mission by investing
    in the development and utilization of its human resources. Through this
    investment, we ensure a continuous learning environment required of all
    high performing organizations by implementing policies, providing
    resources and opportunities that enable all OST employees to build the
    job competencies, technical capabilities, leadership and management
    skills, and organizational knowledge required to achieve strategic
    goals.
        The DOT Learning and Development Framework is a Departmental policy
    document that contains a comprehensive explanation of the DOT policies
    and the standards, requirements, and related information associated
    with results-oriented learning and development in DOT. It is initiative
    focused for all DOT. There is no additional work to be completed and no
    funds needed in fiscal year 2002. All revisions will be completed in
    fiscal year 2001.
                                 gsa rent costs
        Question. What are the GSA rental payments for fiscal year 2000,
    and estimated for fiscal year 2001 and 2002?
        Answer. The following table reflects GSA rental costs.

                                                   GSA RENTAL PAYMENTS
                                         [Dollars and square feet in thousands]
    ----------------------------------------------------------------------------------------------------------------
                                                              Fiscal year 2000   Fiscal year 2001   Fiscal year 2002
                                                                   actual            estimate         President's
                                                            --------------------------------------       budget
                                                                                                  ------------------
                                                              Funding   Square   Funding   Square             Square
                                                                         feet               feet    Funding    feet
    ----------------------------------------------------------------------------------------------------------------
    Federal Highway Administration.........................    $19,610     894    $16,537     758    $20,621     759
    National Highway Traffic Safety Administration.........      5,089     185      5,168     192      6,370     194
    Federal Motor Carrier Safety Administration............  .........  ......      4,443     175      5,241     198
    Federal Railroad Administration........................      3,045     140      3,145     137      3,468     143
    Federal Transit Administration.........................      3,917     135      4,074     136      4,213     136
    Federal Aviation Administration........................     79,514   3,363     89,654    3367     96,513   3,729
    U.S. Coast Guard.......................................     32,278   2,016     34,320   2,057     35,554   2,100
    St. Lawrence Seaway Development Corporation............        185       6        191       6        198       6
    Maritime Administration................................      4,657     259      5,219     259      5,025     259
    Research and Special Programs Administration...........      2,389      81      2,654      91      2,734      94
    Office of Inspector General............................      2,787     103      3,056     108      3,166     108
    Office of the Secretary of Transportation..............      6,533     217      7,190     217      7,726     219
    Transportation Administrative Services Center..........      4,318     194      5,681     215      4,786     194
    Bureau of Transportation Statistics....................        860      29      1,257      42      1,415      43
    Surface Transportation Board...........................      1,697      66      1,785      66      1,795      66
                                                            --------------------------------------------------------
          Total, Department of Transportation..............    166,879   7,689    184,374   7,826    198,825   8,248
    ----------------------------------------------------------------------------------------------------------------

                            consolidated ost travel
        Question. What is the consolidated OST travel request? Why is it
    not advisable to appropriate one lump sum for OST travel rather than
    appropriating individual travel allotments to the individual offices in
    OST?
        Answer. The fiscal year 2002 budget includes a total of $875,000
    for travel for offices funded within the OST Salaries and Expenses
    appropriation. This is a ``lump sum'' because, beginning in fiscal year
    2001, the 14 separate appropriations for the various offices within the
    Office of the Secretary were consolidated into a single Salaries and
    Expenses appropriation.
                             office of civil rights
        Question. What part of the $500,000 for automated tracking systems
    outlined on page CR-7 of the justification is to buy new systems?
        Answer. None of the funds will be used to buy new systems. The
    allotted amount now budgeted for systems support for fiscal year 2002,
    $186,000 will be used to provide life-cycle maintenance and minimum
    enhancements.
        Question. Please provide a chart providing the number of final
    agency decisions by the office over the last 10 years, including an
    anticipated number for fiscal years 2001 and 2002. What conclusions
    should the subcommittee draw from the trend in number of final agency
    decisions?
        Answer. The following chart shows Final Agency Decisions (FAD)
    completed since fiscal year 1996. There is no data available prior to
    the development of the case management system in fiscal year 1996.

    FAD's Completed 1994 to 2000 with Projections to 2002

    1996 Actual.......................................................   170
    1997 Actual.......................................................   141
    1998 Actual.......................................................   150
    1999 Actual.......................................................   223
    2000 Actual.......................................................   263
    2001 Projected....................................................   296
    2002 Projected....................................................   325

        The data projections for fiscal year 2001 result from actual
    midyear data (148 FADs completed by March 31, 2000). Fiscal years 1999,
    2000 and 2001 show an approximate increase of 10 percent that was
    projected onward to fiscal year 2002. Beginning in 1998, there was a
    successful effort to eliminate the backlog of overaged cases within the
    Department. This resulted in a corresponding increase in FADs. This
    trend continued in fiscal year 2000 and fiscal year 2001. Fiscal year
    2002 is expected to show a similar increase in the number of FADs
    written.
                         office of civil rights travel
        Question. What was the aggregate Office of Civil Rights travel
    request for fiscal year 1999, fiscal year 2000 and fiscal year 2001?
    What is the aggregate Office of Civil Rights travel request for fiscal
    year 2002?
        Answer. The aggregate travel request for fiscal year 1999 was
    $290,000; for fiscal years 2000 and 2001 it was $278,000 it was
    $205,804; and for fiscal years 2002, $200,000.
                           minority business outreach
        Question. What are the requested FTE and travel funds anticipated
    for the Office of Minority Business Outreach in fiscal year 2002?
        Answer. The Minority Business Outreach funding is used to encourage
    and assist small, disadvantaged, and women-owned businesses to
    participate in DOT and DOT assisted contracts and grants. This is done
    primarily through advocacy, outreach and training. There are no FTEs
    funded by this account. However, the fiscal year 2002 budget includes
    $75,000 for travel, the same level as fiscal year 2001, to allow the
    staff from the Office of Small and Disadvantaged Business program to
    monitor and manage the Outreach programs, and to participate in various
    conferences and seminars to assist small and disadvantaged businesses
    access to contracting opportunities in the Department.
                           advisory committee travel
        Question. What funds are requested for advisory committee travel
    department wide? Please break out these costs by individual advisory
    committee.
        Answer. The total department-wide advisory committee travel funds
    requested for fiscal year 2002 is $464,200. The table below breaks out
    these costs by individual advisory committee.
            Admin./Committee Name                                     Travel
    FHWA: Intelligent Trans. Highway System (IVHS) \1\............   $30,000
    NHTSA: Certification of Vehicles..............................         0
    FRA: Railroad Safety..........................................         0
    FAA:
        Air Traffic Procedures....................................         0
        Aircraft Repair and Maintenance...........................         0
        Radio Tech. Comm./Aeronautics.............................         0
        Aviation Security.........................................    20,000
        Aviation Rulemaking.......................................     5,000
        Commercial Space Transportation...........................         0
        Categories of Delay--On Time Reporting....................         0
                        --------------------------------------------------------------
                        ____________________________________________________

            Subtotal FAA..........................................    25,000
                        ==============================================================
                        ____________________________________________________
    CG:
        Chemical Transportation...................................         0
        Houston/Galveston Navigation Safety \1\...................
        Lower Mississippi Waterway Safety \1\.....................         0
        National Boating Safety \1\...............................    35,000
        National Offshore Safety..................................         0
        Navigation Safety \1\.....................................    33,000
        Towing Safety \1\.........................................         0
        Commercial Fishing Industry\1\............................    43,000
        Merchant Marine Personnel.................................    26,000
        Great Lakes Pilotage......................................    19,000
                        --------------------------------------------------------------
                        ____________________________________________________

            Subtotal USCG.........................................   156,000
                        ==============================================================
                        ____________________________________________________
    SLSDC: Saint Lawrence Seaway Dev. Corporation\1\..............    11,500
    RSPA:
        Tech. Hazardous Liquid Pipeline Safety\1\.................    15,500
        Tech. Pipeline Safety Standards\1\........................    15,500
                        --------------------------------------------------------------
                        ____________________________________________________

            Subtotal..............................................    31,000
                        ==============================================================
                        ____________________________________________________
    OST: Minority Business Resource Center\1\.....................     5,200
    BTS: Transportation Statistics\1\.............................     5,500
    MARAD: Marine Transportation..................................   200,000
                        --------------------------------------------------------------
                        ____________________________________________________

            Total.................................................   464,200
    ---------------------------------------------------------------------------
    \1\ Required by statute.
    ---------------------------------------------------------------------------
               transportation planning, research, and development
        Question. Please discuss the interrelationship between the
    positions/FTE requested for aviation issues analysis on page TPR&D-5 of
    the justification and the aviation related positions on S&E-19 of the
    justification.
        Answer. The 12 new positions (6 FTE) are necessary to build in-
    house expertise that is critical to effective policy development. More
    specifically, priority issues such as aviation congestion and the
    development of new system capacity are inextricably linked to policies
    affecting airline competition, consolidation, and customer service. The
    Department's ability to create a consensus among foreign trading
    partners, as well as within constituencies at home, for continued
    liberalization of international aviation markets is grounded on the
    ability to produce sound empirical analysis of the substantial economic
    and consumer benefits to be derived from that policy. Finally, the
    Department's coordination of all of its international activities,
    including the promotion of U.S. transportation-related business
    throughout the world, is furthered by a strong analytic foundation to
    the development of policies in these areas. The positions in the
    General Counsel's Office will provide alternative dispute resolution,
    consumer rights protection, air carrier access technical assistance and
    information, as well as handle domestic aviation complaints.
                      funding for radionavigation and gps
        Question. Please provide an accounting of all resources spent on
    radionavigation, GPS, GPS jamming, and Ultra-wide band technologies by
    the Department or any operating administration, other than direct staff
    costs, over the past three years. Included in the discussion should be
    dates for when the commitment was made, obligated, and paid. Does the
    Department anticipate any work in this area that is not specifically
    noted in the OST or FAA justifications?
        Answer. The Department, through its operating administrations,
    operates a number of radionavigation systems and has others in
    development. These systems include Loran-C, Maritime Differential
    Global Positioning System (DGPS), Nationwide DGPS expansion (NDGPS),
    Wide-Area Augmentation System (WAAS), Local-Area Augmentation System
    (LAAS), VOR/DME, TACAN, Aero Beacons, ILS systems, and MLS systems.
        The table below summarizes the expenditures over the last three
    fiscal years (excluding direct personnel costs). An itemized expense
    report with dates that commitments were made, obligated, and paid is
    being compiled and is expected to be available by late summer.

    ------------------------------------------------------------------------
         Radionavigation Policy Area         1999        2000        2001
    ------------------------------------------------------------------------
    Federal Radionavigation Plan........    $150,000     $90,000    $150,000
    Civil Pos/Nav Policy & Planning.....      75,000       7,900     100,000
    Spectrum Mgmt (includes UWB)........     100,000     100,000           0
    GPS Jamming/Vulnerability Studies...     346,100     135,000           0
    ------------------------------------------------------------------------

        Additional fiscal year 2002 requirements for DGPS, Loran-C, and
    NDGPS radionavigation systems are also in Coast Guard and FHWA
    justifications in addition to those for OST and FAA.
                  hazardous materials transportation resources
        Question. Please provide a Department-wide summary of resources
    committed to hazardous materials programs by operating administration.
        Answer.

    Fiscal year 2001 Hazardous Materials Program Funding by Operating
    Administration

                            [In millions of dollars]

                                                         Hazardous Materials
            Agency                                                    Budget

    FAA.............................................................\1\ 10.3
    FMCSA............................................................\2\ 1.3
    FRA...............................................................   8.9
    RSPA..............................................................  18.7
    USCG..............................................................   5.1
                                                                      ______
          Total.......................................................  44.3

    \1\ Fiscal Year 2000 FAA data.
    \2\ FMCSA also provides $9.3M in MCSAP funding for state personnel.

                     FISCAL YEAR 2001 HAZARDOUS MATERIALS PROGRAM STAFFING OPERATING ADMINISTRATION
    ----------------------------------------------------------------------------------------------------------------
                                                                       Field     Headquarters/
                                Agency                              Inspectors/     District    Attorneys    Total
                                                                     Specialist    Personnel
    ----------------------------------------------------------------------------------------------------------------
    FAA...........................................................         101             6           12        119
    FMCSA.........................................................      \3\ 25             5            1         31
    FRA...........................................................      \4\ 58             8            1         67
    RSPA..........................................................          35            94            7        136
    USCG..........................................................          60            12            1         73
                                                                   -------------------------------------------------
          Total...................................................         279           125           22        426
    ----------------------------------------------------------------------------------------------------------------
    \1\ FMCSA employs an additional 363 investigators, managers, and field staff, along with 49 border inspectors
      who conduct compliance reviews and inspections on hazardous materials carriers approximately 19 percent of the
      time.
    \2\ Includes presently allocated FRA FTEs for 2001.

        Question. What office acts as the departmental coordinating entity
    for hazardous materials issues?
        Answer. In 1999, the Department conducted a DOT-wide hazardous
    materials program evaluation that concluded that DOT could enhance
    hazardous materials safety by establishing a central focal point to
    administer and deliver DOT-wide hazardous materials program services.
    As a result, changes were made to the existing Secretarial delegations
    of authority (49 CFR 1.74), which placed the focal point with the
    Associate Deputy Secretary and Director, Office of Intermodalism,
    effective August 15, 2000. The Director, Intermodal Hazardous Materials
    Programs, has been delegated the authority to act as the focal point
    for review of hazardous materials policies, priorities, and objectives.
                            hazmat outreach efforts
        Question. Please describe industry and public outreach efforts that
    the Department is involved in related to improving hazardous materials
    transportation safety. Answers. The Federal Aviation Administration
    (FAA) has developed several approaches to involve the industry and
    public in improving HAZMAT safety. They include:
      --Targeted visits to shippers of critical HAZMAT commodities;
      --Issuing Dangerous Goods Advisory Bulletins;
      --Posting information on the Agency's web page;
      --Producing brochures that focus on proper shipping of HAZMAT;
      --Coordinating Federal Register Safety Notices with the Department of
            Transportation's Research and Programs Administration's Office
            of Hazardous Materials Safety; and
      --In coordination with air carriers, deploying informational kiosks
            in major airport terminals that alert the traveling public
            about the types of hazardous materials that are not authorized
            to be carried in luggage or passenger air carriage.
        Also, individual air carriers have taken different approaches to
    raise public awareness. Several air carriers are using dangerous goods
    ``ticket-stuffers'', while others are voluntarily asking passengers
    questions about dangerous goods upon check-in.
        The Federal Motor Carrier Safety Administration (FMCSA) has a
    Hazardous Materials Program Plan that sets forth strategies for
    improving HAZMAT Transportation Safety. One of the four strategies is
    to develop and enhance partnerships and education. Industry and public
    outreach actions being undertaken as part of this strategy include:
      --Conduct Cargo Tank Interactive Seminars.--FMCSA has, in partnership
            with the National Tank Truck Carriers Association, conducted
            eight interactive seminars for cargo tank inspectors during
            each of the past four years. To date, over 1,000 industry
            inspectors have been trained.
      --Publish Outreach to Intrastate HAZMAT Carriers/Shippers.--FMCSA is
            working with the Research and Special Programs Administration
            (RSPA) to publish an outreach pamphlet informing intrastate
            HAZMAT shippers and carriers about the need to report HAZMAT
            incidents to RSPA. Publication is expected in June 2001. FMCSA
            is also developing outreach pamphlets informing the industry
            about its HAZMAT Routing Internet Website and possible hazards
            associated with transporting petroleum contaminated water. In
            recent years, FMCSA has published pamphlets on Uniform State
            HAZMAT Permitting and, in conjunction with RSPA, pamphlets
            about application of the hazardous materials regulations to
            intrastate transportation.
      --Refine FMCSA HAZMAT Website.--FMCSA has a HAZMAT Safety Internet
            Website at http://www.fmcsa.dot.gov/safetyprogs/hm.htm. The
            Website includes extensive information for the public about
            HAZMAT safety, including a 30 page booklet on complying with
            the hazardous materials regulations, that is currently being
            translated into Spanish and a hazardous materials general
            awareness training program that is available in both English
            and Spanish. The Website also has a manual on how to prevent
            HAZMAT incidents, HAZMAT research studies, and general
            information about FMCSA's HAZMAT safety program.
      --Participate in Safety Alliances and Conferences.--FMCSA regularly
            participates in numerous industry conferences to communicate a
            HM safety message. This includes giving presentations at the
            Conference on Hazardous Materials Enforcement Development
            (COHMED) and the Commercial Vehicle Safety Alliance (CVSA)
            meetings. FMCSA also gives presentations and hosts information
            booths at industry association meetings such as the National
            Tank Truck Carriers, the National Propane Gas Association, the
            New England Fuel Institute, the Hazardous Materials Advisory
            Council, and public events such as Public Service Awareness
            Week on the National Mall.
        In addition to these actions outlined in the FMCSA Hazardous
    Materials Program Plan, the FMCSA field staff actively educates any
    motor carrier, shipper, or cargo tank facility they have contact with
    about safe transportation of hazardous materials.
        The Federal Railroad Administration's (FRA) Hazardous Materials
    program is actively involved in numerous and varied industry and public
    outreach efforts in the following areas:
      --Tank car transportation safety
        --Tank car industry design and engineering improvement committees
        --Tank car repair industry committee
      --Reduction of non-accident releases in the rail environment
      --Radioactive materials transportation safety
      --Rail Safety Advisory Committee addressing hazardous materials
            issues
      --Safety Assurance Compliance Program issues and Safety Improvement
            Plans focusing on hazardous materials issues
      --Rail/Highway/Vessel intermodal hazardous materials transportation
            issues
      --Amtrak Hazmat transportation issues
        The United States Coast Guard (USCG) conducts the following
    industry and private outreach activities to improve hazardous material
    (HAZMAT) transportation safety:
      --The Container Inspection Training and Assistance Team (CITAT)
            trains approximately 500 U.S. Customs Service inspectors and
            agents annually through the USCG/USCS MOU and projections
            anticipate increasing those numbers in calendar year 2001.
      --CITAT has been working closely with the Federal Law Enforcement
            Training Center (FLETC) to develop law enforcement specific
            HAZMAT curriculum.
      --CITAT provides direct training and support as well as cooperation
            in multi-agency field operations to the following Federal
            agencies: RSPA, FAA, FRA, FMCSA, INS, ATF, MARAD, DEA, APHIS,
            FBI, DOT IG, USN, U.S. Army, MTMC, and the USCS. Through these
            operations the agencies can conduct a large volume of
            intermodal inspections that would normally take several months
            to accomplish, while minimally impacting customers.
      --CITAT also trains and assists State Police and Highway Patrol
            organizations, municipal fire departments, State National Guard
            units, and industry. Industry representatives are invited to
            attend CITAT/Coast Guard container inspection training to
            understand the scope and particulars of HAZMAT inspections.
        The USCG also partners with the Vessel Operators Hazardous
    Materials (VOHMA) Panel as part of an on-going commitment to hazardous
    materials transportation safety and maritime safety. Forums like this
    conference are an effective way to share real concerns in a timely
    manner.
        The Research and Special Programs Administration (RSPA) outreach
    program has many components, including:
      --The HMIC, by way of a toll-free number, is one of the major
            outreach program operated by RSPA. In calendar year 2000, more
            than 30,000 individual requests for information from the
            general public, shippers, carriers, Federal, State, and local
            enforcement personnel, and emergency responders were handled.
            The HMIC offers callers:
        --Access to trained specialists on regulatory issues.
        --Access to other agency offices, such as Exemptions and Approvals.
        --Access to enforcement personnel to report suspected violations.
        --Access to an automated fax-back system for automated information
                retrieval.
      --The Hazardous Materials Safety web site provides:
        --Online versions of all rulemaking proposals and final rules.
        --Guidance and forms related to registration requirements.
        --Regulatory documents for international and domestic requirements.
        --The Emergency Response Guidebook.
        --Internet and e-Commerce to enable hazardous materials shippers
                and carriers who are required to register with and pay
                associated fees to DOT to do so.
      --A six member Hazardous Materials Safety Assistance Team to make
            industry and the public aware of the hazardous materials
            transportation regulations, help businesses find the resources
            needed to comply with the regulations, and provide technical
            assistance to the emergency response and planning community.
      --The Cooperative Hazardous Materials Education (COHMED) which
            promotes national uniformity of Federal, State, and local
            regulations; improves preparedness and response capabilities to
            emergency response; and, provides information and training to
            enforcement personnel, emergency planners, responders, academic
            institutions, and private industry.
      --Hazardous Materials Multimodal Seminars that provide basic
            awareness training to industry and State and local enforcement
            and emergency responders. In fiscal year 2001, RSPA increased
            the number of these seminars from four to five, and expects the
            number of attendees to increase to 1,500 as a result.
      --RSPA and FMCSA jointly produced an outreach pamphlet on Hazmat
            Incident Reporting to inform small motor carriers about the
            incident reporting requirements.
                hazmat strategic goals and performance measures
        Question. Please summarize the hazardous materials strategic goals
    and performance measures currently in the Department's performance
    plan.
        Answer. The Department's safety strategic goal is to ``Promote the
    public health by working toward the elimination of transportation
    deaths and injuries.'' The performance goal in support of this
    strategic goal is to reduce public safety risks by minimizing the
    possibility of hazardous materials releases in transportation accidents
    or incidents that lead to fatalities or injuries. The Department's
    Hazardous Materials Performance Measure is to reduce the number of
    serious hazardous materials incidents in transportation from a peak of
    464 in 1996, to fewer than 401 in 2001.
                       principal advisor on hazmat issues
        Question. Who acts as the Secretary's primary advisor on hazardous
    materials issues?
        Answer. The Director, Intermodal Hazardous Materials within the
    Office of Intermodalism has been assigned the responsibility of serving
    as the principal advisor to the Secretary, Deputy Secretary, and the
    Associate Deputy Secretary on all intermodal hazardous materials
    matters and serves as the focal point for the review of the entire
    Department's policies, priorities, and objectives in that area.
                            faa overflight user fees
        Question. How much revenue has been collected from overflight user
    fees to date in fiscal year 2001? Has the Department re-estimated the
    anticipated revenues from these fees for fiscal year 2001 and 2002 due
    to this experience?
        Answer. The FAA has billed approximately $26 million in overflight
    fees through the end of April 2001; $18.2 million has been collected to
    date. With the billings increasing significantly for the summer season
    and based on a 90 percent collection rate, the FAA is on track to
    collect an estimated $36 million in fiscal year 2001. And with the
    expected increase in overflight traffic next year, $40 million is a
    reasonable estimate for fiscal year 2002.
                      administrative costs for eas program
        Question. Please provide a salary and administrative cost history
    for the EAS program for the past five fiscal years.
        Answer.

                          ADMINISTRATIVE COSTS FOR EAS
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                  Fiscal years--
                                     ---------------------------------------
                                       1998    1999    2000    2001    2002
    ------------------------------------------------------------------------
    Personnel compensation and           868     879     917     965     996
     benefits.......................
    Travel..........................       4      15       6      15      15
    Other services..................     224      67     140     220     220
    Supplies and materials..........       0      15       2      10      10
    Equipment.......................       0      17       5      10      10
                                     ---------------------------------------
          Total obligations.........   1,096     993   1,070   1,220   1,251
    ------------------------------------------------------------------------

                      commuter rule impact on eas service
        Question. How has the ``commuter rule'' impacted the cost of
    providing EAS service subsidy? What was the aircraft mix utilized by
    EAS providers prior to the Commuter Rule, and what is the aircraft mix
    used today? Please provide a ``EAS fleet mix'' listing for before and
    after implementation of the Commuter Rule.
        Answer. The cost of implementing the commuter safety rule has
    greatly increased the cost of operating 19-seat aircraft, the backbone
    of the subsidized EAS program. As leases on 19-seat aircraft expire,
    they are generally not being renewed as carriers upgrade to larger
    turbo-props or even regional jets. Moreover, other significant changes
    have occurred that have greatly impacted the industry. As the table
    below indicates, the 19-seat aircraft fleet has been cut in half from
    564 in 1995 to 280 now. At the same time, the average size or seating
    capacity of the regional airline fleet has increased from 24 seats per
    aircraft in 1995 to almost 32 seats now. In addition, the number of
    regional jets in service has grown from 61 to 580, helping to explain
    the huge increases in revenue passenger miles and in enplaned
    passengers. Also, as larger aircraft are being deployed in longer-haul
    markets, coupled with the 50 percent drop in 19-seat aircraft fleet,
    the average passenger trip has increased from 210 miles to almost 300.
    The Department expects that carriers will continue to phase-out their
    smaller aircraft, and thus smaller communities, in favor of larger
    aircraft in larger markets. This is even more true for small
    communities that are served to congested hubs where terminals, ramps,
    and gate facilities are at a premium.

    ------------------------------------------------------------------------
                                                         January    January
                                                         1, 1996    1, 2001
    ------------------------------------------------------------------------
    Average Seats per Aircraft........................       23.7       31.8
    Number of 19 Seat Aircraft........................        564        280
    Average Passenger Trip............................        210        299
    Revenue Passenger Miles--Billion..................         12         25
    Number of Enplaned Passengers--Million............         57         85
     ------------------------------------------------------------------------
    Source: Regional Airline Association.

        While it is difficult to isolate the effect of any one variable on
    such a dynamic industry, the impact of regional airlines converting to
    the Part 121 requirements of the commuter safety rule is estimated at
    several million dollars a year in additional subsidies each year. Those
    costs are expected to escalate as maintenance costs for the aging 19-
    seat aircraft fleet increase in future years.
                      dot's performance and budget linkage
        Question. How are the agency's annual performance goals linked to
    the agency's mission, strategic goals, and program activities in its
    budget request?
        Answer. The Department's performance planning process fully links
    the agency's annual performance goals to its mission, strategic goals,
    and program activities in its budget request. The following logical
    model is used by the Department to link activities to outcomes based
    upon agency mission and strategy: Mission--Strategic Goal--Strategic
    Outcome--Performance Goal--Performance Measure with Annual Performance
    Target--Program Activity. The following illustration demonstrates this
    linkage. The Department's basic enabling law, codified at 49 U.S.C.
    101(a), includes safety as a core Departmental mission; thus,
    transportation safety is one of the five overall Departmental strategic
    goals. Three strategic outcomes provide more specific expressions of
    how this strategic goal will be achieved--one of which is ``Reduce the
    number of transportation-related deaths.'' An array of performance
    goals supports this general strategic outcome, and several operating
    administrations within the Department measure progress toward these
    goals, and report annual achievements using an array of performance
    measures with annual performance targets. An array of program
    activities within DOT's operating administrations encourage safer
    operator behavior, vehicle technologies, transportation infrastructure,
    and response systems, resulting in reduced fatalities and fatality
    rates. In the Department's fiscal year 2002 Performance Plan and fiscal
    year 2000 Performance Report, provided to Congress on April 9, 2001,
    each performance goal page includes a graph summarizing budgetary
    resources associated with that goal, and an appendix summarizes each
    Departmental appropriation account's contribution to the six strategic
    and organizational goals. This Performance Plan information, along with
    operating administration performance plans, became an integral part of
    the justification material in the Office of the Secretary's and
    operating administrations' budget requests for fiscal year 2000, and in
    subsequent years.
        Question. Could you describe the process used to link your
    performance goals to your budget activities?
        Answer. In the budget formulation process, each operating
    administration is asked to justify its budget request in performance
    terms. Funding initiatives proposed by the operating administrations
    are evaluated and prioritized based on their relative contribution
    toward meeting the Department's outcome goals. The highest priority
    initiatives are included in the Department's annual budget request to
    OMB. It should be noted that the Department's performance goals are to
    a large extent outcome goals. As such, any given performance goal can
    be supported by several budget activities. For example, DOT's goal to
    reduce highway fatalities and injuries is supported by the programs of
    the National Highway Traffic Safety Administration and the Federal
    Motor Carrier Safety Administration, safety funding and highway
    infrastructure improvements by the Federal Highway Administration and
    safety messages delivered by all Departmental leaders.
        Question. What difficulties, if any, did you encounter, and what
    lessons did you learn?
        Answer. The major difficulty initially encountered in introducing a
    performance-based budget process was for the operating administrations
    to explain not just what it plans to do with the resources requested,
    but also the expected results to be achieved according to specific
    performance goals. This budget process has been used for the last three
    years and the quality of the analysis has improved. A key lesson is
    that it takes time and constant attention to make performance budgeting
    work.
        Question. Which are the top two strategic goals for each operating
    administration?
        Answer. The operating administrations' strategic goals evolve from
    the Department's strategic goals. Accordingly, the top goals of each
    DOT operating administration are provided below in the context of these
    broader Departmental goals.
    Safety Goals
        FAA--Reduce U.S. fatal accident rates.
        USCG--Eliminate deaths, injuries, and property damage associated
    with maritime transportation, fishing, and recreational boating.
        FHWA--Continually provide for safer highway infrastructure.
        NHTSA--Reduce highway-related fatalities and injuries.
        FMCSA--Reduce fatalities and injuries in crashes involving large
    trucks.
        FTA--Reduce transit injuries and fatalities.
        FRA--Reduce rail related fatalities and injuries; Reduce public
    safety risks by minimizing possibility of hazmat releases due to
    accidents or improper shipping.
        RSPA--Protect the public by reducing transportation related deaths,
    injuries, and property damage.
        SLSDC--Promote navigation and workplace safety by reducing vessel
    incidents and employee injuries.
    Mobility Goals
        FAA--Provide an aerospace transportation system that meets the
    needs of users and is efficient in the application of FAA and aerospace
    resources.
        USCG--Facilitate maritime commerce and eliminate interruptions and
    impediments to the economical movement of goods and people, while
    maximizing recreational access to and enjoyment of the water.
        FHWA--Continually improve the public's access to activities, goods
    and services through preservation, improvement, and expansion of the
    highway transportation system and the enhancement of its operations,
    efficiency and intermodal connections.
    Economic Growth Goals
        MARAD--Enhance the competitiveness of the U.S. shipyard industry
    (including repair and related industries). Note: This is from MARAD's
    1998 Strategic Plan.
    Environment Goals
        USCG--Eliminate environmental damage and natural resource
    degradation associated with all maritime activities, including
    transportation, commercial fishing, and recreational boating.
        RSPA--Protect our natural environment and national heritage from
    harmful transportation related consequences.
        SLSDC--Promote environmental protection prevent environmental
    incidents.
    National Security
        FAA--Prevent security incidents in the aviation system.
        USCG--Defend the nation as one of the five U.S. Armed Services.
    Protect our maritime borders by halting the flow of illegal drugs,
    migrants and contraband into this country through maritime routes;
    preventing illegal incursions of our Exclusive Economic Zone; and
    suppressing violations of federal law in the maritime region.
        MARAD--Assure an intermodal sealift capability to support vital
    national security interests. Note: This is from MARAD's 1998 Strategic
    Plan.
        Question. For each of those top two strategic goals, please
    identify the accountable career and political official for managing the
    achievement of such strategic goal.
        Answer. The responsibility for managing the achievement of the
    strategic goals is delegated to the Administrator of each operating
    administration. At this point, several of the Department's
    administrators have not been nominated by the President or confirmed by
    the Senate, except for the Federal Aviation Administration, the Coast
    Guard, and the Bureau of Transportation Statistics. Officials currently
    having responsibility for achieving goals are as follows:
    FAA
        Overall--Jane Garvey, FAA Administrator; Thomas E. McSweeny,
    Associate Administrator for Regulation and Certification; Michael A.
    Canavan, Associate Administrator for Civil Aviation Security; and
    Steven J. Brown, Acting Associate Administrator for Air Traffic
    Services.
    USCG
        Admiral James Loy, Commandant of the U.S. Coast Guard.
    FHWA
        Overall--Vince Schimmoller, Deputy Executive Director; Frederick
    Wright, Safety Program Manager; King Bee, Infrastructure Program
    Manager; and Christine Johnson, Operations Program Manager.
    FMCSA
        Julie Anna Cirillo, Acting Deputy Administrator.
    FTA
        Overall: Hiram Walker, Acting Deputy Administrator; Charlotte M.
    Adams, Associate Administrator for Transit Planning; Arthur Andrew
    Lopez, Director of Civil Rights; and Edward L. Thomas, Associate
    Administrator for Research, Demonstrations and Innovation.
    MARAD
        Overall--Bruce Carlton, Acting Deputy Administrator; Jean E.
    McKeever, Associate Administrator for Shipbuilding; and James E.
    Caponiti (career), Associate Administrator for National Security.
    SLSDC
        Albert S. Jacquez, Administrator, Washington, D.C; and Salvatore L.
    Pisani, Associate Administrator, Massena, New York.
    FRA
        Mark Lindsay, Acting Deputy Administrator.
    NHTSA
        Robert Shelton, Executive Director.
                 dot's performance measures and budget linkage
        Question. Does the agency's Performance Plan link performance
    measures to its budget?
        Answer. Yes. In the Department's fiscal year 2002 Performance Plan
    and fiscal year 2000 Performance Report, each performance goal page
    included a graph summarizing budgetary resources associated with that
    goal, and Appendix II of the Department's fiscal year 2002 Performance
    Plan contains a summary table of budgetary resources for each operating
    administration, by appropriation account.
        Question. Does each account have performance measures?
        Answer. Yes, except for Coast Guard Retired Pay, the Inspector
    General salary and expense account, and the Surface Transportation
    Board salary and expense account. Coast Guard Retired Pay is an
    entitlement for retired Coast Guard military and Lighthouse Service
    personnel and exerts no influence on current Departmental performance.
    The Inspector General and Surface Transportation Board are decisionally
    independent of the Secretary of Transportation and therefore, are not
    included in the Department's performance planning and reporting
    framework.
        Question. What are the top three performance measures for each
    operating administration? In your description of each, please include
    which individual strategic goal each performance measure is most
    directly designed to measure progress toward.
        Answer. The top performance measures and the related strategic
    goals are summarized below on the following table. In some cases, more
    than one measure per strategic goal is listed for an operating
    administration because achieving a particular goal involves a balanced
    set of performance measures:

                                                                                     GOALS AND PERFORMANCE MEASURES
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Human and Natural
            Strategic Goal                         Safety                              Mobility                    Economic Growth             Environment                 National Security
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Measures:
        FAA.......................  Commercial aviation fatal accident   Aviation delays....................  ........................  ........................  Detection rate for explosive and
                                     rate.                                                                                                                         weapons that may be brought
                                                                                                                                                                   aboard aircraft.
        USCG......................  Percent of all mariners in imminent  Eliminate vessel collisions,         ........................  Reduce the amount of oil  Reduce flows of drugs and migrants
                                     danger who are rescued.              allisions, and groundings.                                     discharged into the       into the U.S.
                                                                                                                                         water.
        FHWA......................  Number and rate of highway-related   Percentage of vehicle miles          ........................  ........................  ..................................
                                     fatalities and injuries.             traveled on NHS pavement with
                                                                          acceptable ride quality urban road
                                                                          congestion.
        NHTSA.....................  Number and rate of highway-related   ...................................  ........................  ........................  ..................................
                                     fatalities and injuries.
                                    Seat belt usage....................
        FMCSA.....................  Number and rate of fatalities and    ...................................  ........................  ........................  ..................................
                                     injured persons in crashes
                                     involving large trucks.
        FTA.......................  Transit fatality and injury rates..  Rail and bus transit fleet           ........................  Transit ridership.......  ..................................
                                                                          condition.
                                                                         Accessibility of transit (as
                                                                          indicated by compliance with the
                                                                          Americans With Disabilities Act).
        FRA.......................  Rail-related fatality rate.........  ...................................  ........................  ........................  ..................................
                                    Grade crossing accident rate.......
                                    Number of serious hazmat incidents.
        RSPA......................  Number of serious hazmat incidents.  ...................................  Pipeline hazmat spillage  ........................  ..................................
                                    Natural gas transmission pipeline                                          rate.
                                     failures.
        MARAD.....................  ...................................  ...................................  Gross tonnage (in         ........................  Percent of Ready Reserve Force no-
                                                                                                               thousands) of                                       notice activations that meet
                                                                                                               commercial vessels on                               assigned readiness timelines
                                                                                                               order or under                                     Percent of days that RRF ships are
                                                                                                               construction in U.S.                                mission-capable while under DOD
                                                                                                               shipyards.                                          control.
        SLSDC.....................  ...................................  Lock availability..................  ........................  ........................  ..................................
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                dot's performance planning and budget structure
        Question. To what extent does your performance planning structure
    differ from the account and activity structure in your budget
    justification?
        Answer. The account and activity structure in the budget varies by
    operating administration, and it generally is not organized by
    strategic outcome but by grouping similar kinds of activities, or
    activities with a common funding mechanism. Given that multiple
    programs support single outcomes and single programs support multiple
    outcomes, perfect alignment is not possible.
        Question. Do you plan to propose any changes to your account
    structure for fiscal year 2002?
        Answer. No.
        Question. Will you propose any changes to the program activities
    described under that account structure?
        Answer. No.
                       dot performance measures and data
        Question. How were performance measures chosen?
        Answer. Performance measures were chosen to provide the information
    needed to determine if DOT programs are achieving the desired strategic
    outcome goals. The availability of relevant performance data was also a
    consideration. If acquiring the necessary data for a candidate
    performance measure appeared to require excessive cost and time, an
    alternative measure was selected.
        Question. What performance measures were changed from last year?
        Answer. The following discussion refers to goals and measures in
    the fiscal year 2002 DOT Performance Plan, which is based on the
    Department's fiscal year 2000 through fiscal year 2005 Strategic Plan.
        In DOT's Safety measures, we added fatality and injury rates for
    large trucks in addition to fatalities and injuries, and added a rate
    for runway incursions in addition to the number of such incursions. For
    air traffic operational errors, the denominator for the rate was
    changed to 1 million from 100,000 activities. This had no effect on the
    rate; it simply changed the performance number to a whole number from a
    fraction, which will simplify it.
        In Mobility, we changed the flight route flexibility goal to
    airport capacity and en route efficiency improvements, with associated
    measures for increased airport throughput during peak periods, and for
    greater routing efficiency for aircraft in flight. The Impediments to
    Port Commerce goal was discontinued, and in the Essential Air Service
    goal, one of the two measures was discontinued (2 round trips/day, 6
    days/week).
        In Economic Growth, one of the two measures in the Transportation
    and Education goal was discontinued (Garrett A. Morgan education
    outreach).
        In Human and Natural Environment, we reversed the arithmetic signs
    on Fisheries Protection targets; changed the Environmental Justice
    measure to a percentage rather than a number; and suspended the
    Greenhouse Gas Emissions goal. The model by which Aircraft Noise
    Exposure is calculated was changed to be more comprehensive.
        In National Security, the Coast Guard's military readiness
    reporting methodology gives greater weight to current readiness
    factors. The Sealift Capacity goal is discontinued after 2001, since
    the Administration proposes to transfer the Maritime Security Program
    and associated funding to DOD. We added new measures for Maritime
    Boundary Incursions and Regional Stability, and began calculating the
    Energy Efficiency measure using 1996 constant dollars rather than 1992
    constant dollars.
        Corporate Management strategies were converted to three outcome
    goals under the Organizational Excellence Strategy--Customer
    Satisfaction, Employee Satisfaction, and overall Organizational
    Performance and Productivity.
        Question. How did the agency balance the cost of data collection
    and verification with the need for reliable and valid performance data?
        Answer. Performance measurement is dependent on the availability of
    high quality data. All data are imperfect in some fashion. Pursuing
    ``perfect'' data, however, may consume public resources without
    creating appreciable value. DOT's approach has been to select
    performance measures with current, validated data sources; while
    seeking to improve known problems in those data, and to cover current
    gaps in data coverage.
        Question. Does your plan include performance measures for which
    reliable data are not likely to be available in time for your
    performance report in March 2002?
        Answer. DOT's performance report/plan uses established data systems
    for most of its performance measures. Most of these systems can provide
    preliminary results that are both timely and sufficiently accurate for
    the performance report. The number of measures without timely data is
    minimal. In DOT's fiscal year 2000 Performance Report, five measures
    with no current data required that we project the Department's
    performance from past trends (Pipeline Failures, Highway Pavement
    Condition, Highway Congestion, Mobile Source Emissions, and Energy
    Efficiency). For the Impediments to Port Commerce goal, the measurement
    construct simply did not work, and one of the measures under
    Transportation and Education had insufficient data available for a
    projection of our performance. We expect to resolve the data issues by
    March 2002 for all but Mobile Source Emissions and Energy Efficiency.
    Data for these last two measures comes from the States and from the
    Environmental Protection Agency.
                           key dot performance goals
        Question. What are the key performance goals from your fiscal year
    2002 Annual Performance Plan that you recommend this subcommittee use
    to track program results?
        Answer. While all of the performance goals and measures in DOT's
    annual performance plan are important to track performance in each of
    the DOT operating administrations, the following subset of goals in the
    fiscal year 2002 Performance Plan are important in tracking overall
    progress toward DOT's five mission-oriented strategic goals:
        Safety.--Transportation-related fatalities (outcome);
    Transportation-related injuries (outcome); and Transportation Incidents
    (outcome).
        Mobility.--Highway Pavement Condition (outcome); Highway Congestion
    (outcome); Aviation Delay (outcome); Airport Capacity and En Route
    Efficiency Improvements (outcome); and Amtrak Ridership (outcome).
        Economic Growth.--International Air Service (outcome).
        Human and Natural Environment.--Transit Ridership (outcome); Mobile
    Source Emissions (outcome); Aircraft Noise Exposure (outcome); Maritime
    Oil Spills (outcome); and Pipeline Hazardous Material Spills (outcome).
        National Security.--Ready-Reserve Force Activation (outcome); Coast
    Guard Military Readiness (output); Drug Interdiction (outcome); and
    Critical Infrastructure Protection (output).
        Question. For each key annual goal, indicate whether you consider
    it to be an output measure (``how much'') or an outcome measure (``how
    well'').
        Answer. As explained in detail in each major subdivision of DOT's
    fiscal year 2000 Performance Report, the majority of DOT's performance
    goals are outcome-oriented. Furthermore, each performance goal, and
    related performance measure, is tied to the achievement of longer-term
    strategic goals or objectives. (The answer to the previous question
    indicates whether the key annual goals are outcomes or outputs).
        Question. State the long-term (fiscal year 2005 general goal and
    objective) from the agency Strategic Plan to which the annual goal is
    linked.
        Answer. The information is provided in the following table.

                 dot outcome measures and managing for results
        Question. In developing your Annual Performance Plan, what efforts
    did your agency undertake to ensure that the goals in the plan include
    a significant number of outcome measures?
        Answer. The agency made a decision at the beginning of the fiscal
    year 1999 performance planning process to use outcome measures wherever
    possible. Since then, output measures have been used only if a good
    outcome measure for a strategic outcome goal could not be identified.
        Question. Do you believe your program managers understand the
    difference between goals that measure workload (output) and goals that
    measure effectiveness (outcome)? Please provide examples of changes
    that have been made to shift programmatic priorities from output driven
    to outcome focused goals.
        Answer. Yes. The Department of Transportation has made great
    strides over the past several years in ensuring that program managers
    focus on outcomes. One salient example is the Coast Guard commercial
    vessel safety program's change in emphasis from compliance with
    technical regulations to stress human error as the prime causal factor
    in marine accidents. Programmatic standards changed from one of
    counting inspections to one of training, certification, and proper
    operational practices and risk management practices.
        Question. What are some examples of customer satisfaction measures
    that you intend to use? Please include examples of both internal and
    external customers.
        Answer. The Department has identified customer satisfaction as one
    of its three performance goals in support of the organizational
    excellence goal. The two measures that the Department will use to
    measure customer satisfaction are percent of customers satisfied with
    transportation system performance and percent of customers satisfied
    with the customer service provided by the Department. DOT is currently
    developing and employing survey instruments to collect data on customer
    satisfaction. When the survey instruments are fully implemented, they
    will measure customer satisfaction from a variety of groups, such as
    the traveling public, transportation workers, grant recipients, and DOT
    information users.
                           dot performance budgeting
        Question. How were the measurable goals of your fiscal year 2002
    Annual Performance Plan used to develop your fiscal year 2002 budget?
        Answer. Program performance was considered throughout the budget
    formulation process for the Department's fiscal year 2002 budget. For
    example, the Department requested $975 million--an 18 percent percent
    increase--for aviation safety programs, including initiatives designed
    to help achieve the Department's goal of reducing aviation fatalities
    by 80 percent by 2007. And the Administration's ambitious goals for
    drug interdiction, based on two years of record level seizures by the
    Coast Guard, were reflected in the increased funding requested for
    Coast Guard's operating expenses. These are programs with demonstrated
    successes, and specific expected levels of performance in fiscal year
    2002.
        Question. If a proposed budget number is changed, up or down, by
    this committee, will you be able to indicate to us the likely impact
    the change would have on the level of program performance and the
    achievement of various goals? Please provide examples.
        Answer. The change in expected performance will depend on the
    difference between the President's budget request and the Committee
    mark. In some cases, performance will also be affected by external
    factors. Therefore, cause and effect may not be clear, except where the
    Department directly provides services, such as air traffic control by
    the FAA, or search and rescue by the Coast Guard. For many goals, DOT
    does not provide direct services but rather tries to influence the
    actions of its partners and stakeholders.
                           dot performance management
        Question. Do you have the technological capability of measuring and
    reporting program performance throughout the year on a regular basis,
    so that the agency can be properly managed to achieve the desired
    results?
        Answer. In the instances where DOT relies on data reported by
    States, or local governments, or the private sector, it is more
    difficult and costly to receive performance data on a regular basis.
    Data derived from operations performed directly by DOT can be collected
    on a ongoing basis and used more readily to manage and control the
    effectiveness of DOT programs.
        Question. If so, who has access to the information--senior
    management only, or mid- and lower-level program managers too?
        Answer. To the extent that information and data are available, it
    is available to all levels of management.
        Question. Are you able to gain access easily to various
    performance-related data located throughout your various information
    systems?
        Answer. Appendix I of DOT's fiscal year 2000 Performance Report and
    fiscal year 2002 Performance Plan identifies the data systems used to
    obtain DOT performance data and the limitation of each system,
    including ready access.
                          dot budget account structure
        Question. The Government Performance and Results Act requires that
    your agency's Annual Performance Plan establish performance goals to
    define the level of performance to be achieved by each program activity
    set forth in your budget. Many agencies have indicated that their
    present budget account structure makes it difficult to link dollars to
    results in a clear and meaningful way. Have you faced such difficulty?
        Answer. The Department is assessing this issue. But there is not
    always a one-for-one correspondence between program activities and
    budget accounts. For instance, an investment in transportation
    infrastructure has impacts not only on mobility, but also in safety and
    economic growth. Another example is found in investments in capital
    equipment for the Coast Guard, where ships, aircraft, and command and
    control investments contribute to many different outcomes.
        Question. Would the linkages be clearer if your budget account
    structure were modified?
        Answer. The Department is assessing this issue. As the Department
    continues to evolve and refine overall long-term strategy and annual
    performance plans, it may become apparent that changing some aspect of
    the Department's budget account structure will allow better connection
    of resources to results.
        Question. If so, how would you propose to modify it and why do you
    believe such modification would be more useful both to your agency and
    to this committee than the present structure?
        Answer. The Department does not recommend making changes in the
    budget account structure this year.
        Question. How would such modification strengthen accountability for
    program performance in the use of budgeted dollars?
        Answer. The Department does not recommend making changes in the
    budget account structure this year.
          linking performance measurement systems to financial systems
        Question. Spending significant resources on performance measurement
    systems appears to be a wasteful exercise if this information is not
    linked to: (1) real data about what it costs to perform various
    government functions; and (2) how to allocate agency resources to
    perform these functions. Could you comment on your agency's cost
    accounting expertise and plans to link GPRA to the budget process?
        Answer. The majority of cost accounting expertise at DOT resides
    within the individual modal administrations. For example, FAA is in the
    process of developing a cost accounting system, which will be fully
    implemented by 2002. TASC and the Volpe Research Center operate on a
    fee-for-service basis, and have significant cost accounting expertise.
    The new Departmental financial accounting system will significantly
    enhance DOT's managerial cost accounting capability. In the fiscal year
    2002 Performance Plan, the Department has taken an additional step in
    attributing budgeted amounts for the entire array of program activities
    to specific performance goals listed in the Performance Plan. At
    present, this is an approximation, but as the Department continues to
    more closely connect budgets, costs, and performance, the Department's
    overall ability to link costs and performance will improve.
        Question. Under one of the new accounting standards recommended by
    the Federal Accounting Standards Advisory Board (FASAB) and issued by
    OMB, this year for the first time all federal agencies are required to
    have a system of Managerial Cost Accounting. The clearly preferred
    methodology for such a system, as stated in that standard, is the one
    known as ``Activity-Based Costing,'' whereby the full cost is
    calculated for each of the activities of an agency. What is the status
    of your agency's implementation of the Managerial Cost Accounting
    requirement, and are you using Activity-Based Costing?
        Answer. Implementing managerial cost accounting in the Department
    is a progressive process. Although the FASAB standard was originally
    scheduled to be implemented by fiscal year 1996, it was later deferred
    to allow agencies additional time to obtain the required resources. The
    Board recognized that reporting entities do not have to possess
    sophisticated cost accounting systems that are necessary to meet the
    standard's requirements. Federal agencies were allowed to take a
    gradual approach to the development of cost systems, if necessary,
    while developing basic cost information through other means in the
    short term.
        Departmental policy has been to encourage managerial cost
    accounting to be applied wherever there is a valid need for precise
    cost data, as in the calculation of fees and unit costs, for certain
    management decision making, and selectively for effective performance
    measurement. The costs of implementing and operating a cost accounting
    system to capture such data should not outweigh the benefits derived
    from having precise cost information. DOT operating administrations
    have been encouraged to identify their specific needs for cost data and
    to begin to plan for cost accounting, implementing policies and other
    capabilities to meet these needs.
        The Department is in the process of implementing a new commercial
    off-the-shelf (COTS) core accounting system. It is expected to be
    operational in all DOT entities within the next 18 to 24 months. This
    new core accounting system will provide a platform for DOT to gather
    and assemble the data required for managerial cost accounting. It will
    enable DOT to allocate costs through a variety of methods and over
    different time periods.
        Question. Will you be able in the future to show to this committee
    the full and accurate cost of each activity of each program, including
    in those calculations such items as administration, employee benefits,
    and depreciation? Please provide examples.
        Answer. Yes. In addition to the managerial cost accounting
    capabilities that will be available in DOT's core accounting system,
    the following are some examples of areas where DOT is successfully
    using cost accounting, including calculating such items as
    administration, employee benefits, and depreciation:
        The FAA has been directed to develop, and is in the process of
    implementing, a cost accounting system that adequately and accurately
    reflects investments, operating and overhead costs, revenues, and other
    financial measurement and reporting aspects of operations. The system
    will help track the cost of agency services, support the collection of
    user fees, and meet legislative mandates. The system is being
    implemented in a phased approach by line of business or staff office.
        TASC provides common administrative services to DOT's Office of the
    Secretary and operating administrations as well as other governmental
    entities. It is a business-like organization that recovers its costs of
    operations through customer user fees. Cost accounting in TASC helps
    management to determine which services can be provided by TASC in a
    cost-effective manner.
        The Volpe National Transportation Systems Center under RSPA
    provides transportation and logistics expertise in research, analysis,
    development and deployment of transportation technologies for clients
    within DOT and to other Federal agencies. The Volpe Center operates as
    a business-type entity that provides services and recovers its
    operational and overhead costs on a fee-for-service basis.
        Question. By doing so, would we then be able to see more precisely
    the relationship between the dollars spent on a program, the true costs
    of the activities conducted by the program, and the results of these
    activities?
        Answer. Yes. But it is also important to remember that DOT largely
    has outcome, not output, goals. Many variables may affect the
    achievement of these goals. DOT does not in all cases control all the
    variables that influence program outcomes and therefore does not always
    have complete control over the ultimate achievement of the department's
    strategic goals or objectives. While precise costing of program
    activities and the associated outputs may be possible in the future,
    tracing the activity costs all the way through to outcome results may
    be more elusive.
        Question. Will you be able to show us the per-unit cost of each
    activity and result?
        Answer. Costs must first be accumulated by program area prior to
    their allocation by output or unit. DOT's new COTS core accounting
    system, expected to be operational in all DOT entities within the next
    18 to 24 months, will provide a platform for DOT to gather and assemble
    the data required for managerial cost accounting. It will contain the
    structure needed for building cost accounting elements and the
    functionality to capture costs through a variety of methods at
    differing levels over multiple time periods. Since this system is quite
    new to DOT, many of its cost accounting capabilities have yet to be
    fully explored by program and financial managers. As stated in the
    answer to the previous question, tracing cost to results is more
    difficult to pin down, since many of DOT's partners and stakeholders
    have influence equal to or greater than the Department in achieving
    strategic goals or objectives.
        Question. To what extent do the dollars associated with any
    particular performance goal reflect the full cost of all associated
    activities performed in support of that goal? For example, are overhead
    costs fully allocated to goals?
        Answer. In most cases, program and modal overhead costs are
    reflected in the dollars associated with specific performance goals.
    For example, the program level for the Coast Guard's search and rescue
    program includes direct budget amounts from operating expenses;
    acquisition, construction and improvements; and research and
    development appropriation accounts, as well as an allocated portion of
    the Coast Guard's administrative expenses for staff functions such as
    procurement, personnel, legal, and executive leadership of the
    organization.
                   performance planning and regulatory reform
        Question. Please identify any significant regulatory reform
    measures that have been put in place by your agency in conjunction with
    the development of the agency's performance plan.
        Answer. The Department is committed to improving the rulemaking
    process and to minimizing the regulatory burden on the transportation
    community. This commitment is documented in the Organizational
    Excellence section of the performance plan and report. In 1999, the
    Department implemented an electronic docket for rulemakings and met
    with industry and the general public to identify what could be done to
    improve the rulemaking process. These efforts will continue in fiscal
    year 2000 and 2001.
                     external influences on dot performance
        Question. Does your fiscal year 2002 performance plan--briefly or
    by reference to your strategic plan--identify any external factors that
    could influence goal achievement?
        Answer. Yes.
        Question. If so, what steps have you identified to prepare,
    anticipate and plan for such influences?
        Answer. Although DOT cannot control its entire operating
    environment, by clearly identifying the factors that need to be
    considered in developing and implementing programs, managers are better
    prepared to meet the challenges presented. For example, one external
    factor that is expected to have a significant influence on
    transportation is the growth of the elderly population. This is being
    considered by DOT management in the selection of initiatives that focus
    on ways to make travel for this group safer and easier, (e.g., easier
    to read signs and changes in passenger boarding and alighting time for
    aviation, rail and transit vehicles).
        Question. What impact might external factors have on your resource
    estimates?
        Answer. External factors can have a significant impact on resource
    estimates. For example, a major environmental catastrophe--such as a
    hurricane, earthquake or oil spill--could significantly impact resource
    requirements.
                      programmatic overlap or duplication
        Question. Through the development of the Performance Plan, has the
    agency identified overlapping functions or program duplication?
        Answer. No. DOT has identified areas where crosscutting programs in
    other agencies complement DOT program activities and jointly contribute
    to overall results. Conversely, DOT activities often complement other
    agencies' programs and contribute to results specified in their
    strategic and performance plans.
        Question. If so, does the Performance Plan identify the overlap or
    duplication?
        Answer. See previous question.
                management challenges and performance reporting
        Question. Should agencies address management challenges and
    potential duplication and overlapping functions in their GPRA plans,
    and if so, how?
        Answer. Yes. DOT has gone to great lengths to integrate the
    Department's and operating administrations' approach to addressing
    management issues in conjunction with achieving strategic objectives.
    In the few areas where results have not met expectations, the
    Department is undertaking reviews of performance strategies and will
    find better ways to achieve stated outcomes.
                             agency decisionmaking
        Question. To what extent has GPRA been used by agency leadership to
    guide decision-making? In your discussion, please provide specific
    examples.
        Answer. DOT has a history of using performance measurement in
    managing programs, particularly measures of the safety, condition, and
    performance of the transportation system. GPRA has expanded the use of
    performance measures and has led to two key advances: the integration
    of program performance measures into a single DOT performance plan, and
    a closer linkage of performance measures to the budget process. For
    example, NHTSA has tied individual program performance to intermediate
    outcomes (e.g., increasing seat belt use); and to overall outcomes
    (e.g., reducing fatalities and injuries). These ``top level'' outcomes
    are also integrated into the Department's Performance Plan. Budget
    justifications, in turn, use performance measures to justify the
    allocation of resources and the specific results that programs seek.
        Question. Will this use increase in the future and if so, in what
    ways?
        Answer. As DOT employees gain more experience in managing for
    results, and in linking resources to outcomes, the management processes
    underpinning the Results Act will become more a part of daily activity.
    As a result, overall DOT performance is expected to continuously
    improve.
               agency performance and the appropriations process
        Question. Future funding decisions will take into consideration
    actual performance compared to expected or target performance. Given
    that: to what extent are your performance measures sufficiently mature
    to allow for these kinds of uses?
        Answer. The Department has devised the best set of performance
    measures based on current knowledge of the causal relationships between
    departmental activities and outputs and the achievement of DOT's
    strategic goals or objectives. These measures can and will be improved
    upon in the ensuing years. DOT's performance data indicate to senior
    decision-makers what strategies are working well, and where the areas
    of improvement lie; where strategies need re-examination, or where
    different levels of resources need to be applied. Program evaluations
    are beginning to be utilized to demonstrate the linkage between DOT's
    activities and the achievement of organizational goals.
        Question. Are there any factors, such as inexperience in making
    estimates for certain activities or lack of data that might affect the
    accuracy of resource estimates?
        Answer. DOT exerts influence over highly complex human and
    technological systems, throughout many levels of government and with
    the private sector. Resource estimates and performance estimates will
    always be subject to some level of uncertainty. But, the Department
    expects that these uncertainties will be reduced over time as
    performance, budgeting, management, and financial systems become better
    integrated.
                            waivers of requirements
        Question. Are you requesting any waivers of non-statutory
    administrative requirements?
        Answer. No.
        Question. Specifically, are you requesting any relaxation of
    transfer or reprogramming controls in return for specific
    accountability commitments?
        Answer. No. We have no such plans at this time.
                          future performance reporting
        Question. Please provide for the record, the 1998, 1999, 2000, and
    2001 goals and actual results as well as the target for the current
    fiscal year and the prospective target for fiscal year 2002 in a table
    that simply lists the strategic goal, the individual (sub-goals) under
    that strategic goal (performance progress reports) and the requested
    information by year.
        Answer. The information is provided in the following table. Note
    that there were no specific GPRA goals in 1998.

                 national highway traffic safety administration
        Question. Mr. Secretary. Now, I would like to discuss concerns I
    have with the National Highway Traffic Safety Administration. I believe
    that this is an agency that is adrift and in desperate need of strong
    leadership and, as I mentioned in my opening statement, close oversight
    by you, Mr. Secretary. For too long, the conflict between the
    automobile manufacturers and the safety groups over candidates for
    NHTSA Administrator has resulted in lackluster appointments. I wouldn't
    worry so much about that squabble if the lives of so many Americans
    weren't caught in the middle.
        As a result of poor program focus--coming from the very top of the
    agency--we have witnessed ``new'' initiatives that simply duplicate
    programs that were already in the core program. I understand how easy
    it is to get caught up in the limelight issues in an agency with the
    safety mission that NHTSA has, but getting distracted chasing
    television cameras translates into a failure to save lives on our
    highways.
        I urge you to get personally involved in the selection of the next
    NHTSA Administrator, and if I can offer my advice: get a businessperson
    or an economist--someone with the experience of having to allocate
    capital or staff resources on getting the best return--which in this
    case, would be fewer highway fatalities. Don't you think it would be
    useful to do a comprehensive program review of NHTSA, focusing on which
    factors provide the greatest safety payoff?
        Answer. According to NHTSA's early assessment of motor vehicle
    traffic crashes in 2000, there were 41,800 fatalities and over 3.2
    million injuries on our nation's highways. Alcohol related fatalities
    were 38 per cent of the total. There were over 5,300 truck related
    fatalities. Safety belt use rose to 71 percent. However, highway
    crashes remain a public health crisis. We must do better.
        Overall, improving transportation safety remains the number one
    goal of the Department and we look forward to working with Congress to
    identify effective highway safety strategies and seek support for them
    through the appropriate authorization and appropriation processes. The
    Secretary has been and will continue to be intimately involved in the
    selection of the key political appointees who will be nominated to head
    significant policy and management positions in the Department. The
    individual nominated to serve as the NHTSA Administrator will be
    capable of leading the kind of analysis and decision making that will
    be needed to develop and implement an optimal highway safety program.
                               ost reorganization
        Question. Mr. Secretary, I understand that you are considering
    merging some of the functions and offices within the Office of the
    Secretary. I encourage you to take a wide open look at restructuring
    that office to fit your operating style and management needs. Can you
    give us a preview of what you are considering?
        Answer. The overall goal is to provide the Department with a
    stronger, more effective policy office. Currently there is an Associate
    Deputy Secretary for Intermodalism, an Assistant Secretary for Policy,
    and an Assistant Secretary for Aviation and International Affairs. The
    Secretary is considering combining those offices.
                                  dhl license
        Question. Mr. Secretary, I recently sent you a letter about an
    important public policy issue related to your review of the DOT staff
    action that granted DHL Worldwide Express a foreign airfreight
    forwarder license. I would note that the European Commission found, on
    March 19th, that Deutsche Post--DHL's controlling parent company--was
    unfairly subsidizing (engaging in predatory pricing and fidelity
    rebates) business activities in Europe with profits from its postal
    monopoly. Without asking you to comment on something that is the
    subject of a pending proceeding, I will ask you procedural questions:
    1) whether you view this issue as a significant public policy issue
    deserving of our personal attention, and 2) whether your political
    staff--your General Counsel and your Assistant Secretary for Aviation
    and International Affairs--will be in place before a decision is made
    on this review?
        Answer. On May 11, the Department denied the petition of UPS to
    cancel the foreign air freight forwarder registration of DHL Worldwide
    Express (DHLWE). But the Department will continue to ensure that
    competition in the aviation markets remains fair. The Department has an
    affirmative responsibility to make sure that competition continues to
    protect the interests of consumers. There is no evidence that there has
    been any unfair competition in the U.S. market by any of the DHL
    companies. UPS presented no evidence that Deutsche Post is subsidizing
    DHLWE's operation. There is no evidence that foreign air freight
    forwarders have achieved a significant market share, unlike UPS, which
    holds 53 percent of the domestic market, and FedEx, which has a 26
    percent market share. DHLWE, by contrast, is estimated to have a market
    share of 0.6 percent. However, if specific allegations of unfair
    competition against the company are made in the future, the Federal
    Government can take action to address them.
                                   user fees
        Question. Mr. Secretary. Last year, Congress passed a general
    provision (Section 347) on the Transportation appropriations bill that
    required the Administration to submit proposed reductions to pay for
    any new user fee tax proposals should Congress fail to enact such
    proposals. I assume it is your intent to follow the law, Mr. Secretary.
    Do you have any indication from the Administration that they plan on
    violating the law as enacted in Section 347?
        Answer. This provision would effectively require the President to
    submit a budget proposal to the Congress that identifies prospective
    spending cuts in the event Congress does not enact a portion of the
    President's overall budget proposal. Such a requirement that the
    President spell out for Congress his fallback position in the budget
    negotiation process conflicts with the Constitution's separation of
    executive and legislative powers, and, specifically, with the
    President's constitutional authority to ``recommend'' to Congress
    ``such Measures as he shall judge necessary and expedient'' (U.S.
    Constitution, Article II, Section three). The Department of Justice has
    advised that, if enacted, the President will interpret this provision
    as precatory.
                          withholding slot exemptions
        Question. I would note that under AIR-21 provisions regarding the
    granting of slot exemptions at our nation's slot controlled airports,
    such grants cannot be transferred by one air carrier to another, nor do
    they transfer with the sale of an airline. Accordingly, from time to
    time, the Department may find itself in the position of withholding or
    re-awarding slots during the continuing consolidation of the industry.
        Given that one of the three primary drivers of delays identified by
    Mitre, the FAA, and by numerous aviation experts is airline scheduling
    in excess of airport capacity, do you think that one of the tools you
    have to reduce airway congestion or airport delays would be to withhold
    award of slot exemptions at airports experiencing or contributing to
    delays in the national airspace system?
        Answer. In general, under the law, DOT/FAA have the power to
    withhold slots and slot exemptions for purposes of safety and the
    movement of air traffic. FAA in effect made use of this provision when
    it stepped in at La Guardia and rolled back the number of operations to
    pre-AIR-21 levels and then conducted a slot lottery for only a modest
    increase in operations there. The congestion and delay problems at
    Kennedy and O'Hare airports, while serious, have not been as dire as La
    Guardia's. Before withholding slot exemptions at those airports, the
    Department would have to carefully weigh the benefits of reduced delays
    versus the costs of cutting service to and from those airports.
        The situation at Washington's Ronald Reagan National Airport is
    unique, in that the law requires the Department to issue a certain
    number of slot exemptions. Legislative change would be necessary for
    DOT to withhold any of those exemptions. Reagan National, however, is
    not experiencing a significant congestion and delay problem.
                         central artery/tunnel project
        Question. Mr. Secretary. Have you had the opportunity to look into
    the Boston Central Artery/Third Harbor Tunnel project, the ``Big Dig''
    project? Can you give the subcommittee an update on whether the project
    is likely to be able to stay within the cost estimate in effect at the
    time the cap was included in the fiscal year 2001 appropriations bill?
        Answer. A project cost estimate of $14.075 billion was included in
    the October 2000 financial plan update that was accepted by FHWA and
    the U.S. Department of Transportation (USDOT) Inspector General. The
    Federal funding cap in Section 340(b) of the fiscal year 2001 DOT
    Appropriations Act is $8.549 billion. The annual bottom-up review of
    the project costs and schedule by the Central Artery/Tunnel (CA/T)
    project staff is on track for completion by July 1. The FHWA has also
    begun its independent estimate of the Central Artery/Tunnel project
    costs with completion expected in June 2001. Preliminary indications
    are that the current $14.075 billion project cost estimate is still
    reasonable.
                          transit new starts pipeline
        Question. Mr. Secretary, if all the pending and current transit
    full funding grant agreements are fully funded by Congress, there will
    be about $462 million left in the pipeline for New Starts rail
    projects. When you consider that the Federal share of an average full
    funding grant agreement is somewhere between $100 million and $500
    million, there is only enough contract authority under TEA-21 for FTA
    to enter into just a handful more full funding agreements in the next
    two years. Mr. Secretary, is that your understanding as well?
        Answer. Yes, that is my understanding.
        Question. Mr. Secretary, there are at least 30 New Starts projects
    currently in the preliminary engineering stage that are hoping to
    receive Federal funds this year. And there are even more projects in
    earlier planning stages that are looking for just a little money to
    help determine the best transit alternative for their communities. Your
    budget proposal only funds projects that currently have a full funding
    agreement or that have reached the final design stage. Where does this
    leave projects in earlier stages of development? Doesn't your budget
    proposal shut the door on further Federal funds for these projects, not
    just for fiscal 2002, but also for fiscal 2003?
        Answer. FTA's review of existing and proposed FFGAs indicated high
    level of demand for construction funds. Providing funds for
    construction is a higher priority than providing funds for preliminary
    engineering and design. It has been the policy of FTA to strongly
    encourage grantees to use Urban Formula funds, formula planning funds
    and flexible funds for early planning work, saving New Starts funds for
    actual project construction. The project sponsor should not have to
    rely on New Starts funds for early planning work. In fact, if a grantee
    needs to rely on New Starts funds for early planning, this raises
    questions about its financial capability to carry out a major new
    starts project.
                                   deepwater
        Question. Mr. Secretary, I read a press interview about the Coast
    Guard's Deepwater recapitalization program and wanted to bring it up
    today. The Commandant was saying that he was going to have to cut 13
    ships, 19 aircraft, 500 personnel and flying hours in order to ``help
    the Coast Guard embark on a proposed $9 billion transformation.''
        Basically, I view the Deepwater program as a 20-year, $10 billion
    minimum ``trust me'' program. The GAO and the IG have described this
    procurement as ``high risk''. I don't think it is high risk, I think it
    is a ``sure risk''.
        As the Coast Guard continues to rush headlong into this
    recapitalization program, I wonder about the ability of an organization
    to manage a large, complex, and long-term procurement when each year,
    the very same organization seems to be surprised that they don't have
    enough money to keep the lights on at Buzzard's Point--even when we
    appropriated the entire budget request.
        Mr. Secretary, this is a program and an organization that would
    benefit from some high level attention. Can you tell me how you plan to
    oversee this risky procurement?
        Answer. The Coast Guard has worked with OMB and Congress to produce
    a sound Deepwater procurement strategy that will enable the Coast Guard
    to perform its missions effectively and as economically as possible.
    The Secretary is fully aware of the concerns, the General Accounting
    Office and others have about the potential for cost escalations. DOT is
    developing a long-term strategy for project management oversight. It
    will involve quarterly program reviews for technical feasibility and
    design development, and the Coast Guard will maintain an on-site
    presence with contractors. In addition, the Coast Guard is developing a
    comprehensive Program Management Plan, incorporating best practices and
    lessons learned from Coast Guard, DOD, civilian agencies and commercial
    projects that will be signed prior to contract award.
                                 faa challenges
        Question. Mr. Secretary, thank you for your candid remarks this
    morning. In your opening statement, you said that you ``told us so'' as
    it relates to aviation congestion. I had my staff take a look at the
    National Civil Aviation Review Commission report and I would like to
    summarize the recommendations as they relate to FAA funding and
    management:
        (a) ``FAA's budget treatment must change''--The issue is a red
    herring, but nevertheless we did it last year.
        (b) ``FAA's management must become performance based''--That one is
    more in your hands than mine.
        (c) ``FAA's revenue stream must become more cost-based''--Again,
    more in your hands than mine, although we did give the Department
    specific authority to do just that with the Oceanic program--authority
    which the Department has not utilized for the past three years.
        (d) ``FAA must control its operating costs and increase capital
    investment''--We've given you the resources to increase capital
    investments but the FAA has done nothing to control operating costs--to
    the contrary, the controllers' agreement basically handed Uncle Sam's
    checkbook over to the controllers' union.
        (e) ``Airport capital needs must be met''--This specific
    recommendation called for a minimum of $2 billion per year for the next
    five years. Since I've been chairman of this subcommittee, we have
    achieved the highest levels of airport investment ever. The task is
    really to get the airports' capacity built where it makes a difference
    for the system.
        So, Mr. Secretary. We're paying attention to the report. I suggest
    that the burden of the report's recommendations that still need to be
    implemented fall overwhelmingly on the FAA and on the Department. I
    look forward to working with you to help you do the management job that
    always seems to fall through the cracks at the FAA. Can you give me a
    sense of what is in the President's Budget that addresses the
    challenges that I have identified as in the FAA's court?
        Answer. Congress has indeed been forthcoming with the increased
    funding levels for the FAA authorized by AIR-21. The Administration
    hopes Congress will fund the AIR-21 levels included in the fiscal year
    2002 President's Budget request. The fiscal year 2002 request will
    cover a number of elements, some of them already under way, to increase
    the FAA's productivity. The cost accounting system will be expanded to
    all lines of business by the end of fiscal year 2002, allowing FAA and
    its customers to identify where FAA facilities operate most efficiently
    and to focus attention on addressing the shortcomings of less efficient
    facilities. Cost performance analysis will be further implemented.
    Within the budget request, FAA will also cover the expenses of a Chief
    Operating Officer and the Management Advisory Committee, which will
    help provide performance-oriented oversight to the agency.
        The budget request assumes that any new labor agreements at FAA
    will be cost-neutral. And on the matter of airport capital needs, as
    outlined in the Department's recent report to Congress on environmental
    reviews of airport infrastructure projects, a number of runway projects
    at major airports are now in the review pipeline. To the extent that
    discretionary airports grants funds are available for FAA
    prioritization, FAA will emphasize projects that expand the capacity of
    the national airspace system, along with safety- and security-related
    projects.
                                     ______

                  Questions Submitted by Senator Patty Murray

                     corporate average fuel economy (cafe)
        Question. The CAFE law has served to double the fuel economy of
    America's vehicle fleet, saving 3 million barrels of oil per day.
    However, these energy savings are being eroded by the rising use of gas
    guzzling SUVs which now represent nearly 50 percent of all new vehicles
    sold. Fuel economy for these vehicles has not been increased for 19
    years despite their skyrocketing use. Is the Administration likely to
    propose an increase to the fuel economy of these vehicles as part of
    its energy policy?
        Answer. Light truck CAFE has been established through model year
    2003 at 20.7 mpg. This level has remained unchanged since model year
    1996 as a result of a provision in the Transportation and Related
    Agencies Appropriations Act each year, from 1996 through 2001, that
    prohibits NHTSA from changing the standard. While the fiscal year 2001
    DOT Appropriations Act still included this rider, it also included a
    provision directing the Department to fund a National Academy of
    Sciences study on the effectiveness and impacts of CAFE standards. The
    National Academy of Sciences study is to be submitted to Congress in
    July 2001. This study should provide Congress with comprehensive
    information that will provide an objective basis for addressing the
    issue of future fuel economy standards.
        On May 17, 2001, the Energy Policy Development Group, led by Vice
    President Dick Cheney, issued its National Energy Policy. This report
    made recommendations to President Bush regarding the path that the
    Administration's energy policy should take and included specific
    recommendations regarding vehicle fuel economy and CAFE. The report
    recommends that the President direct the Secretary of Transportation
    to:
      --Review and provide recommendations on establishing CAFE standards
            with due consideration of the National Academy of Sciences
            study to be released in July 2001. Responsibly crafted CAFE
            standards should increase efficiency without negatively
            impacting the U.S. automotive industry. The determination of
            future fuel economy standards must, therefore, be addressed
            analytically and based on sound science.
      --Consider passenger safety, economic concerns, and disparate impact
            on the U.S. versus foreign fleet of automobiles.
      --Look at other market-based approaches to increasing the national
            average fuel economy of new motor vehicles.
        NHTSA will carefully review the results of the National Academy of
    Sciences study, along with other pertinent information on safety and
    economic issues, in responding to the National Energy Policy
    recommendations. Additionally, if the Congressional provision is
    eliminated in the future, NHTSA will resume its CAFE responsibilities
    of setting and reviewing fuel economy standards based on four criteria:
    (1) technological feasibility; (2) economic practicability; (3) the
    effect of other standards on fuel economy; and (4) the need of the
    nation to conserve energy.
                             national energy policy
        Question. What input has DOT had in the development of this
    national energy policy?
        Answer. I was a member of the National Energy Policy Development
    group, and in that role participated in the deliberations and decision-
    making that culminated in the National Energy Policy. During the course
    of the group's deliberations, NHTSA was asked to identify and provide
    background information about fuel economy issues.
                         cafe for light trucks and suvs
        Question. We are told that the Administration is likely to propose
    drilling for oil in the Arctic National Wildlife Refuge (ANWR).
    According to estimates by the U.S. Geological Service, ANWR could
    provide, at best, 3.2 billion barrels of economically recoverable oil,
    or 350,000 barrels of oil per day. It is estimated, however, that
    raising the CAFE standard for light trucks by just 3 miles per gallon
    would save even more oil than drilling in ANWR.
        Given our energy crunch and the fact that the fuel economy
    performance of light trucks and SUVs hasn't changed in almost two
    decades, doesn't it make sense to consider raising the CAFE standard on
    these vehicles before we drill for oil in pristine wilderness areas?
        Answer. The National Academy of Sciences (NAS) study, due in July
    2001, will provide Congress and the Department with valuable
    information to move forward in addressing the issue of future fuel
    economy standards. If the Congressional provision on CAFE is eliminated
    from the appropriations bill, NHTSA will take the NAS report into
    consideration prior to taking action regarding any modifications to the
    CAFE standards, as well as considering the factors specified in the
    CAFE law and the National Energy Policy.
        Question. Do you believe that, without a federally mandated
    increase in the CAFE standards, the auto industry will improve the fuel
    economy of SUVs and light trucks? Why?
        Answer. It is difficult to speculate on what manufacturers would do
    to improve the fuel economy of their SUVs and light trucks if there are
    no increases in the CAFE standards. Since the CAFE standard for light
    trucks was frozen at 20.7 mpg in model year 1996, the average fuel
    economy of SUVs and light trucks has been stable. However, within the
    last year, there have been statements from Ford, General Motors and
    DaimlerChrysler regarding the fuel economy levels of their SUVs and
    light trucks. Last July, Ford pledged to improve the average gas
    mileage of its SUVs by 25 percent by 2005. General Motors responded a
    week later vowing to exceed Ford in the average fuel economy of its
    SUVs and light trucks. In April, DaimlerChrysler said that it would
    keep pace with Ford and General Motors in overall light truck fuel
    economy. While the Department is encouraged by these pledges and has no
    reason to doubt the three manufacturers' commitments, DOT can't
    determine what the entire auto industry would do to improve the fuel
    economy of their SUVs and light trucks if there were no increases in
    the CAFE standards.
                     reductions in marine safety activities
        Question. In the last year of the Clinton Administration, the DOT
    failed to meet its performance goal for reducing maritime oil spills.
    In fact, the volume of oil spilled rose 70 percent over the prior
    year's level. That same data also shows that nearly two-thirds was
    spilled from facilities. The Bush Administration has now endorsed the
    goal of reducing the volume of oil spilled by 22 percent below last
    year's level. That said, your budget request for the Coast Guard
    proposes to reduce the number of inspectors that ensure that oil and
    bulk cargo facilities are complying with the environmental laws.
        How do you reconcile your published goals of reducing oil spills
    with your budget request to eliminate these inspectors?
        Answer. The proposed reduction of 17 billets for facility
    inspectors will not significantly impair the Coast Guard's ability to
    achieve its goal for reducing oil spill volume. The reduction in oil
    spill volume over the last 10 years shows a significant decline. Most
    oil spill volume continues to come from vessels rather than facilities.
    Fiscal year 2000 data contains 9 spills over 10,000 gallons; 7 of these
    are from vessels and 2 from facilities. The Coast Guard did not have
    any inspection jurisdiction for the major facility spills in fiscal
    year 2000. Therefore, the causes of these spills would not have been
    addressed by Coast Guard facility inspectors. The Coast Guard included
    these spill amounts in the reports because the Coast Guard assisted the
    EPA Federal On-Scene Coordinator as part of the response.
        The Coast Guard performance goal is to reduce the volume of oil
    spilled by 20 percent by 2005. This reduction goal is based on a five-
    year rolling average. This methodology is a better measure of overall
    trends than a one-year snapshot because it mitigates the effect of
    anomalies.
                  reductions in fisheries enforcement efforts
        Question. We are hearing reports that the Coast Guard is reducing
    its cutter hours by almost 30 percent because of budget shortfalls in
    the current fiscal year. While the Committee fully funded their budget
    request of last year, the Defense Authorization Act mandated several
    million dollars in new costs that were not covered in last year's
    appropriation. These funding shortfalls are forcing the Coast Guard to
    cut back its fisheries enforcement efforts. How does this reality
    square with your performance goal to reduce the number of fish species
    that are over-fished?
        Answer. Less enforcement aggravates a negative trend of more fish
    stocks being designated as over-fished. However, the President has
    requested $98 million in fiscal year 2001 supplemental funding to
    address Coast Guard shortfall. This funding will help increase
    fisheries enforcement efforts.
        Question. Do you believe that the Coast Guard currently has enough
    resources to fully execute its missions for the current fiscal year?
        Answer. The Coast Guard is facing an immediate fiscal year 2001
    funding shortfall. The President has requested $98 million in fiscal
    year 2001 supplemental appropriations to address this shortfall.
        Question. What is the likelihood that the Administration will be
    requesting a supplemental appropriation for the Coast Guard this year?
        Answer. The President has submitted a request for $98 million in
    fiscal year 2001 supplemental appropriations.
                            increasing seat belt use
        Question. Your performance plan calls for a dramatic increase in
    the number of individuals wearing seat belts. Your goal is to increase
    seat belt usage by 87 percent in fiscal year 2002 and 90 percent by
    2005. That is a dramatic increase over the current level, which is 71
    percent. A review of your budget request for the National Highway
    Traffic Safety Administration doesn't reveal any dramatic new funding
    initiatives to boost seat belt use. How then do you intend to reach
    your goal to boost seat belt use to 87 percent next year?
        Answer. NHTSA recognizes that reaching 87 percent seat belt use
    will be difficult. However, currently eight States, Puerto Rico and the
    District of Columbia have achieved seat belt use of 80 percent or
    higher. The agency believes that a three-tiered approach of programs
    and funding for enforcement and public awareness at the national,
    state, and local level will raise seat belt use rates for this year and
    next.
        At the national level, NHTSA will continue to build upon the cadre
    of over 10,000 law enforcement agencies and hundreds of public and
    private sector partners which will be participating in national seat
    belt enforcement mobilizations. A mobilization was held over the
    Memorial Day weekend and an additional mobilization will be held over
    the Thanksgiving holiday weekend.
        At the state level, NHTSA will continue funding enforcement
    education and outreach activities through the Transportation Equity Act
    for the 21st Century grant programs (i.e., Section 157 and Section
    405). Under Section 157, nearly $90 million will be distributed to the
    States in fiscal year 2001 to increase seat belt and child safety seat
    usage. NHTSA will encourage that a portion of Section 157 funding be
    used for paid media efforts, similar to the recent paid media effort in
    South Carolina that resulted in an 8 percent increase in seat belt use.
        At the local level, NHTSA will utilize a fiscal year 2001
    Congressional earmark of $1 million to fund at least 20 local grants (a
    maximum of $50,000 each) to reach high-risk groups that are not
    buckling up. Similar to the ``Buckle Up Now'' program initiated in
    Elmira, New York, these grants will support highly publicized, enhanced
    enforcement to create the perception of a nearly certain risk of being
    stopped for not using a safety belt. In Elmira, the program achieved a
    seat belt use rate of 90 percent.
        Question. What other initiatives are you considering to reach this
    goal?
        Answer. NHTSA views fatalities and injuries due to crashes for what
    they truly are, a major public health problem. The agency is
    considering other methods to increase seat belt use, which would
    parallel those that have been successful in other public health
    campaigns (e.g., enactment of laws requiring children to be vaccinated
    before beginning school). Reaching the national goal of 90 percent by
    2005 would require a significant change to the traditional approaches.
    Such methods would include: (1) Strong incentives (such as grant
    programs) that encourage States to adopt standard seat belt laws; (2)
    The commitment of significant funds to conduct an expanded national
    educational campaign on the scale of other public health campaigns,
    such as those focusing on drug abuse and AIDS prevention; (3) Support
    from policymakers at all levels for standard seat belt laws. NHTSA is
    committed to working with the Administration and members of Congress to
    provide State legislators the support needed to address standard
    enforcement issues in their states; and (4) Incentives for automobile
    manufacturers to incorporate new technologies in vehicles that ensure
    seat belt use. Such technologies include advanced seat belt reminder
    systems.
                              state seat belt laws
        Question. Is the Administration prepared to endorse a requirement
    that States impose primary seat belt laws so police can stop drivers
    solely because they are not wearing their seat belt?
        Answer. Under Section 405 of the Transportation Equity Act for the
    21st Century, States are encouraged to pass primary seat belt laws as
    one of several criteria to qualify for incentive grants. Additionally,
    other criteria such as public support for enforcement, established
    state and local practices, and availability of funds for law
    enforcement all influence the amount of enforcement conducted in a
    State. However, one consistent indicator of seat belt use is the type
    of seat belt law within a State. States with a standard law are able to
    directly enforce their law without requiring another infraction. As a
    result, the seat belt use rate in standard law States are between 10
    and 15 percentage points higher than in secondary law states.
        Currently, 17 States, the District of Columbia, Puerto Rico, and
    the U.S. territories have standard enforcement belt laws in place; 32
    States have secondary enforcement laws in place. One State, New
    Hampshire, has no adult seat belt law. Overall, based on surveys
    completed in 1999, seat belt use in States with primary enforcement
    laws was 77 percent, while usage in States with secondary enforcement
    laws was only 63 percent.
        In January 2001, a national seat belt use summit was held to assess
    what policies have been effective in increasing seat belt use over the
    past several decades. This summit, sponsored by the Automotive
    Coalition for Traffic Safety, was attended by NHTSA senior staff and
    over 30 other national leaders in traffic safety. One important
    conclusion of the summit was that education alone is not enough to
    increase seat belt use. Such education must be coupled with State
    efforts to strengthen their seat belt laws to cover all passenger
    vehicle occupants. Such laws should provide for standard (primary)
    enforcement and meaningful penalties. There should also be support for
    highly visible law enforcement of seat belt laws, but strong steps
    should be taken to ensure that all citizens are treated fairly during
    traffic stops.
                     pipeline safety--new inspection rules
        Question. The Office of Pipeline Safety has been very active in the
    last year working on new pipeline safety rules--many of which were
    mandated by the Congress long ago. I hope that you will pass on to the
    Pipeline Safety staff my appreciation for the work that they are doing
    to get these rules out. The Department has a rule for the testing and
    inspection of liquid pipelines and is working on a rule for natural gas
    lines. When do you expect the natural gas rule to be completed?
        Answer. The Department is working to complete integrity management
    rules in an expeditious and deliberative fashion. Several regulatory
    steps are needed before the natural gas rule can be completed; however,
    the Department expects to complete all of them before the end of
    calendar year 2002. In the interim, the Department will be: (1)
    summarizing the results of the recent, related public workshop and
    requesting public comment; (2) proposing, and subsequently finalizing,
    a regulatory definition for ``high consequence areas--or HCA's'' that
    apply to natural gas pipelines; and (3) proposing and finalizing the
    integrity management program requirements rule. The request for public
    comment is expected to be published this Summer; the definition for
    natural gas pipeline HCA's will be proposed during the Fall; and the
    natural gas integrity management requirements is expected to be
    published before the end of calendar year 2001.
                 pipeline safety--inspector training & mapping
        Question. Mr. Secretary, when the DOT IG testified before this
    Subcommittee in February, he questioned whether RSPA's pipeline safety
    inspectors even knew how to read the Asmart pig reports that are
    generated after an inspection on a line. Your proposed budget provides
    $1.2 million for 26 new positions in the Office of Pipeline Safety and
    also includes $4.9 million for your new Integrity Management Program.
    Can you tell us a little bit about the new Integrity Management Program
    and how it will assist the current and new inspectors on how to
    evaluate advanced pipeline inspection technologies?
        Answer. The series of Integrity Management Program rules either
    already issued or under development create new requirements that expand
    coverage of the regulations by requiring testing of pipelines in
    predefined high consequence areas. These rules also build on the
    lessons of the past few years to move the regulations beyond a purely
    test-and-repair focus and into the management of risks within pipeline
    companies. These rules require companies to take test results and
    integrate that data with information on all the risks the pipelines
    face, and to take prompt remedial action based on specific repair
    criteria. The Department is preparing the inspection program to cover
    these requirements.
        As part of that preparation, the Office of Pipeline Safety (OPS) is
    using existing resources to begin multi-region, system-wide inspections
    and integrity management audit training and has begun providing
    selected Federal inspectors with supplemental training on internal
    inspection technologies and interpretation of the data they generate;
    an initial pilot conducted in December 2000 will be expanded later this
    year. Inspectors will receive further training in interpreting internal
    inspection results through continued on-the-job-training programs
    during review of pipeline operators' integrity management programs.
    RSPA will continue to take key findings from the Research and
    Development activities back to the Regions through reports and selected
    briefings.
        Question. The Inspector General's report on the top ten management
    challenges for the Department also stated that RSPA needs to complete
    the development of a geographic information system showing the location
    of hazardous liquid and natural gas pipelines. I understand that the
    agency has completed about 85 percent of its mapping of the hazardous
    liquid pipelines but that the mapping for the natural gas pipelines is
    farther behind. When do you expect the pipeline mapping to be
    completed?
        Answer. Because of ongoing and increasing construction of new
    pipelines as well as frequent changes in ownership of existing
    pipelines, maintaining the accuracy of the National Pipeline Mapping
    System (NPMS) will require continuing efforts. As of April 25, 2001,
    the NPMS has received approximately 82 percent of the hazardous liquid
    and 40 percent of the natural gas transmission pipeline data. Combined,
    the pipeline data submitted represents 54 percent of all OPS
    jurisdictional pipelines. The OPS continues to work with the pipeline
    trade associations, State partners, and individual companies to
    encourage pipeline operator participation in the NPMS.
        The Office of Pipeline Safety (OPS) is actively developing the NPMS
    to ensure that it will contain basic information for all major
    hazardous liquid trunk lines and natural gas transmission pipelines
    operating in the United States. This information continues to play an
    important role in the Department's efforts to protect people and the
    environment. The NPMS is already proving important as a regulatory tool
    to improve oversight of Integrity Management Program rules as those
    rules become effective. The compliance dates for rules applicable to
    larger hazardous liquid pipelines are effective at the beginning of
    2001. Related rules for smaller hazardous liquid and natural gas
    pipelines follow.
        In addition, much of the data received by the NPMS to date has been
    made available to communities across the Nation through an internet
    mapping service run by the OPS. Through this service, communities and
    individual citizens can get information on the pipelines and pipeline
    operators who traverse and service their locations. This service is
    accessible through the following link: http://www.npms.rspa.dot.gov
                         tea-21 funding for the states
        Question. As I mentioned in my opening statement, I was one of the
    principal authors of the provision in TEA-21 that guaranteed that the
    receipts in the Highway Trust Fund would be used for the purpose for
    which they were collected--the restoration and construction of our
    Nation's highways. Your budget proposes several changes in TEA-21
    which, taken together, results in the States receiving roughly $430
    million less for highway construction than they would if the TEA-21 law
    was adhered to. One of those changes is to guarantee that highway
    research programs get 100 percent of their authorization while
    construction grants to the States take a pro-rata reduction to pay for
    that increase. Why was it decided that research programs should have a
    higher priority than construction?
        Answer. It is not a question of a giving research a higher priority
    than construction, but of having sufficient funds to continue to
    support a meaningful national research and technology (R&T) program.
    Over the years, working with its partners and customers, FHWA has
    established a coordinated national R&T program dedicated to finding
    innovative solutions to the problems facing the highway community.
        Research is a very small portion of the overall budget, but it can
    lead to major payoffs in terms of improved highway construction. Future
    State highway construction programs will be the primary beneficiaries
    from a coordinated and robust R&T program. In fact, the Board of
    Directors of the American Association of Highway and Transportation
    Officials has passed a policy resolution supporting the
    Administration's proposal for full funding for research.
        Earmarking makes it extremely difficult for FHWA to conduct a
    viable national R&T program. Cancellation of critical on-going work,
    forced reduction in contractor staff, and closure of FHWA research
    laboratories at Turner-Fairbank Highway Research Center are real
    possibilities. Of particular concern is FHWA's ability to remain
    credible and effective in carrying out carefully conceived multi-year
    plans, which have established product schedules and expectations of
    delivery by our State and other partners. The States, through the
    National Cooperative Highway Research Program, have provided funds to
    support national programs and help complete important work that would
    otherwise not be funded. Providing FHWA's R&T program 100 percent of
    its authorization would be one small step toward realizing these goals
    and would free up States' funds for other priorities.
                             new freedom initiative
        Question. Your budget calls for $145 million to be diverted from
    construction grants to the States to improve transportation access for
    the disabled. I support this purpose but I oppose your proposal that
    the funding be diverted from construction dollars to the States.
        Why was it appropriate that funding for this new initiative for the
    disabled should come at the expense of the construction funds to the
    States?
        Answer. Again, it is not a question of a giving access to
    transportation a higher priority than construction. The Administration
    believes that every American should have the opportunity to participate
    fully in society and engage in productive work. Unfortunately, millions
    of Americans with disabilities are locked out of the workplace because
    they are denied the tools and access necessary for success. Through the
    ``New Freedom Initiative,'' the Administration plans to help integrate
    Americans with disabilities into the workforce and funds two programs
    within this budget from $145 million of revenue aligned budget
    authority (RABA).
        It is understandable that the Committee would be concerned because
    this request reduces the amount of RABA funds that would otherwise go
    to the States. However, RABA has grown significantly since its
    inception. The $4.5 billion in RABA funds for fiscal year 2002
    represents a 49 percent and 212 percent increase over the fiscal year
    2001 and fiscal year 2000 RABA amounts, respectively. The $145 million
    the President's budget proposes to set-aside for the New Freedom
    Initiative represents only 3 percent of the total RABA funds--a small
    price for a very important program that will give transportation access
    to those who otherwise would not have it.
        The Department is not the primary agency involved in the New
    Freedom Initiative, and that the President is trying to make a
    significant difference in the life experience of the disabled across-
    the-board. Hopefully, in reviewing the proposal, the Committee will see
    this initiative as an extension of the other programs that assist
    individuals to use transportation successfully.
                  national energy policy and congestion relief
        Question. We have heard that addressing the nation's energy
    problems is one of the top priorities for the Bush Administration. In a
    few weeks, the Administration will reveal its final energy policy
    recommendations. According to a recent study, improving traffic flow at
    our nation's 167 worst bottlenecks would reduce gasoline consumption by
    nearly 20 billion gallons over the next 20 years. Congestion currently
    costs our economy roughly $72.2 billion per year, which includes $48.28
    billion due to wasted fuel. Have you been involved in the
    Administration's energy task force deliberations?
        Answer. I am a member of the Vice President's National Energy
    Policy Development Group and have participated fully in the development
    of our National Energy Policy.
        Question. Is congestion relief a part of the Administration's
    national energy policy? If not, why not?
        Answer. The National Energy Policy Development Group recommends
    that the President direct the Secretary of Transportation to review and
    promote congestion mitigation technologies and strategies, and to work
    with Congress on legislation to implement these strategies. Congestion
    relief is a top priority of mine as congestion is a problem in
    virtually every mode of transportation. Additionally, the benefits of
    reducing congestion go beyond reduced energy consumption. Investments
    made to reduce congestion also provide environmental and quality of
    life benefits and most importantly, reduce overall transportation
    costs. That is why the President's Budget Request proposes full funding
    for the transportation capital improvements critically necessary to
    solving our capacity challenges over the long run. Highway, transit,
    aviation, and rail infrastructure investments total $42.8 billion, 39
    percent above the average annual investment over the prior eight years.
        Nowhere is the congestion challenge more evident than in air
    traffic control. In the year 2000, over 650 million passengers flew on
    U.S. airlines, a 50 percent increase in just nine years. To address
    this, the proposed budget puts new emphasis on congestion-related
    problems--for instance, the budget requests funds for weather systems
    for towers becoming operational in 2002, allowing controllers to
    minimize disruptions to traffic flow from severe weather and reduce
    delays and diversions caused by imperfect knowledge of the location of
    severe weather.
        Question. Are there any other transportation components in the
    Administration's national energy policy? If so, can you comment on
    them?
        Answer. The National Energy Policy Development (NEPD) Group
    recommends that the President direct the Secretary of the Treasury to
    work with Congress on legislation to increase energy efficiency with a
    tax credit for fuel-efficient vehicles. The NEPD Group recommends that
    a temporary, efficiency-based income tax credit be available for
    purchase of new hybrid fuel cell vehicles between 2002 and 2007. Market
    incentives to encourage consumers to purchase energy efficient vehicles
    must be a key element of any plan to introduce more vehicles into the
    national fleet. Technologies currently exist that can help improve the
    fuel economy of highway vehicles. Tax credits for high fuel efficiency
    vehicles would provide a more immediate financial incentive to
    encourage consumers to choose vehicles with better fuel economy and
    will help our automobile manufacturers remain competitive.
        The National Academy of Sciences is currently investigating vehicle
    fuel efficiency and the Corporate Average Fuel Economy program, with a
    report due July 1. The National Energy Policy Development Group
    recommends that the President direct the Secretary of the
    Transportation to review and provide recommendations on establishing
    Corporate Average Fuel Economy (CAFE) standards with due consideration
    of the National Academy of Sciences study. Responsibly crafted CAFE
    standards should increase efficiency without negatively impacting the
    U.S. automotive industry.
        The National Energy Policy recognizes the need to take advantage of
    opportunities for reducing oil demand in the transportation sector by
    increasing conservation and improving transportation efficiency. In
    light of this, the Administration remains committed to investing in
    Intelligent Transportation Systems (ITS) as well as to DOT's transit
    programs such as the fuel-cell-powered bus program and the Clean Buses
    program. Furthermore, the NEPD Group recommends that the President
    direct the EPA and DOT to develop ways to reduce demand for petroleum
    transportation fuels by working with the trucking industry to establish
    a program to reduce emissions and fuel consumption from long-haul
    trucks at truck stops by implementing alternatives to idling, such as
    electrification and auxiliary power units at truck stops along
    interstate highways.
                   access to aviation for smaller communities
        Question. Many people have trumpeted the success of airline
    deregulation. They claim that it has dramatically improved air service
    and brought down air fares. I can tell you that, in West Virginia, we
    have lost an extraordinary amount of air service since deregulation and
    the air fares have gone nowhere but up. Can you please tell me what the
    Bush Administration policy is regarding improving air service to
    smaller communities and ensuring that air passengers in these
    communities get affordable fares?
        Answer. The Department has an affirmative responsibility to make
    sure that competition continues to be sufficient to protect the
    interests of consumers at all communities, large and small; that there
    is adequate infrastructure; and that competitive conditions continue to
    exist. Providing adequate access and enhancing competition so that the
    marketplace can properly function will ultimately result in the best
    service and most competitive prices at cities of all sizes.
        Question. We are currently seeing a significant number of proposed
    mergers in the airline industry. There is a great deal of concern that
    these mergers will result in smaller communities enjoying even less
    service than they receive now. The Department of Transportation
    currently comments on these merger proposals but the Department of
    Justice is charged with ensuring that there are no anti-competitive
    results from these mergers. Does the DOT make any effort to screen
    these merger proposals in terms of their impact on service to less
    popular airports? Would your Administration support a proposed merger
    even if it meant reduced service to smaller communities?
        Answer. Any merger that reduced competition would likely harm
    smaller communities, which is why the government must carefully examine
    whether an airline merger would violate the antitrust laws.
        Question. Do you believe the Department of Transportation should
    have an equal place at the table with the Department of Justice in
    terms of reviewing these mergers?
        Answer. DOT's proper role in reviewing airline mergers and
    acquisitions is to provide advice to the Justice Department, based on
    DOT's expertise in transportation issues. The Justice Department should
    determine whether or not an airline transaction should be challenged on
    competitive grounds, just as it does with transactions in other
    unregulated or deregulated industries.
        A separate review of a merger by DOT would create a potential
    conflict between the decisions of two Executive Branch Departments,
    subject the parties to such transactions to duplicative reviews, and
    result in an inefficient use of Government resources. The FTC has the
    authority to review mergers under its authority to prohibit unfair
    methods of competition in other industries, just as we do in the
    airline industry, but the FTC does not conduct its own investigations
    of mergers that are being examined by the Justice Department under the
    antitrust laws.
        A DOT proceeding would also be contrary to Congress' decision to
    repeal the statutory provision that had required DOT's prior approval
    for all airline mergers and acquisitions. Congress repealed that
    provision as part of its deregulation of the airline industry and its
    decision to treat airlines like firms in other unregulated industries.
        Question. Your Federal Aviation Administration just established new
    benchmarks identifying which airports don't have the capacity to
    accommodate the growing level of air traffic. One of the proposals
    being considered to ease congestion at these airports is to allow the
    airports to charge the airlines much higher rates to land and take off
    at peak travel times. Isn't it possible that this policy could result
    in flights to communities like Charleston, Parkersburg, Huntington, and
    Morgantown being relegated to inconvenient travel times?
        Answer. It is possible that pricing schemes that are designed to
    reduce congestion at crowded airports could result in flights to these
    cities being rescheduled. The fact is that where excessive scheduling
    has resulted in unacceptable delays some flights will have to be moved
    to other times. On the other hand, the Department is well aware of the
    air service needs of small communities and that concern should
    constitute an important consideration in developing any fee-based
    approach to reduce congestion.
        Question. Would you agree that such a policy change must be
    attentive to maintaining fair access to flights service smaller
    communities?
        Answer. Small community access is an important public policy issue
    to be considered in proposals to reduce congestion delays at airports.
                      opening the border to mexican trucks
        Question. The Bush Administration has decided to reverse the
    position of the Clinton Administration and allow Mexican trucks to haul
    cargo to any destination in the United States. Your budget proposes to
    use $56 million in funds that would otherwise go to the states for
    highway construction in order to build new inspection facilities on the
    border to accommodate this influx. Can you guarantee this subcommittee
    that, once your policy is in place (to open the border in accordance
    with NAFTA), your inspections of Mexican trucks will show the same or
    better safety ratings than U.S. trucks?
        Answer. The drop in the Mexican-domiciled carrier out-of-service
    rate from 56 percent in 1995 to the current 36 percent demonstrates
    that increased enforcement activities led to improved compliance.
    However, over one-third of the vehicles being inspected still have
    safety flaws serious enough to warrant repairs before they can be
    allowed on the road. The Department's goal is to bring the out-of-
    service rate for Mexican vehicles to the U.S. National rate, currently
    at 24 percent.
        In support of this goal, the Department is taking significant
    action as outlined below:
      --Working with the Government of Mexico and State partners along the
            Southwest border, DOT has assisted Mexican transportation
            officials in training safety inspectors and in developing an
            information system to support a motor carrier safety oversight
            program, similar to those in the U.S. and Canada.
      --All carriers, commercial vehicles and drivers operating in the
            United States must meet the same safety standards, the Federal
            Motor Carrier Safety Regulations, regardless of country of
            origin. DOT has provided additional funding to the border-
            states through the Motor Carrier Safety Assistance Program to
            address the added enforcement challenges at the border
            associated with the North American Free Trade Agreement and has
            deployed Federal staff to supplement State enforcement staffing
            performing inspections. Approximately $11.6 million was
            dedicated to these activities in fiscal year 2001.
      --On May 3, 2001, the Department proposed regulations to require each
            Mexican-domiciled carrier wishing to operate within or beyond
            the commercial zones to apply and receive authority. Those
            carriers currently operating within the commercial zones must
            reapply for authority. Applicants will have to substantiate
            their knowledge of U.S. safety regulations and their intent to
            comply with all requirements. FMCSA will inform prospective
            carriers of the data they must supply to obtain authority and
            on safety compliance requirements. The information in each
            application will be carefully reviewed and verified by FMCSA,
            and the safety performance of each carrier granted conditional
            operating authority will be closely monitored. Within the first
            18 months of operation each carrier will be subjected to a
            safety audit.
      --The fiscal year 2002 President's Budget request includes $13.9
            million to hire an additional 80 Federal staff to perform
            safety inspections and conduct safety audits of Mexican-
            domiciled carriers. This new staffing supplements the
            authorized fiscal year 2001 level of 60 Federal inspectors
            bringing the total Federal presence at the border to 140
            enforcement personnel. The primary duty of the 80 new Federal
            personnel will be to conduct inspections.
      --$54 million is requested to provide the Federal share for new/
            modified State inspection facilities construction and $2.3
            million for immediate Federal construction needs to provide
            areas to park vehicles placed out of service.
      --$18 million in new funding is requested to support up to an
            additional 178 State inspection personnel--a 100 percent
            staffing increase--for an estimated combined Federal/State
            enforcement staff of 496.
        Question. I understand that, at present, U.S. motor carrier safety
    inspectors travel into Canada to perform compliance reviews on Canadian
    trucking firms that wish to operate in the U.S. We are told, however,
    that under your new policy, your motor carrier inspectors will not
    travel into Mexico to perform compliance reviews on Mexican trucking
    firms. Is this correct (that FMCSA investigators will not travel into
    Mexico to perform compliance reviews on Mexican trucking firms)? How
    can you do a thorough safety review of these Mexican truck operations
    if your inspectors do not travel to their facilities in Mexico?
        Answer. As part of the proposed regulations issued on May 3, 2001,
    governing the process by which DOT will review the safety records of
    Mexican carriers, the Department has included the option to perform
    reviews in either the U.S. or Mexico. Consequently, FMCSA will retain
    the flexibility to either perform these reviews at the border or at the
    firm's place of business. FMCSA is prepared to travel to Mexico to
    complete the safety reviews if necessary to effectively evaluate the
    carriers' records and operations.
        Question. Is it fair to all the trucking firms in the U.S. to
    perform inspections of their facilities but not the facilities of
    Mexican trucking firms?
        Answer. Standards of fairness will be applied equitably. Because
    the standards applied to determine the safety fitness status of the
    carriers are the same regardless of the location of the compliance
    review, no firm will hold an unfair advantage. The compliance reviews
    of Mexican carriers conducted at a U.S. location will be no less
    stringent than those of U.S. carriers conducted at the carrier's place
    of business. Since the primary focus of the review is on the carrier's
    safety systems rather than the actual facility, conducting the review
    on site is not a critical component in assessing their safety
    performance. Additionally, U.S. carriers should find the current
    compliance review process more convenient since they do not have to
    travel or transport their records to another location.
                       inspector general recommendations
        Question. Your Inspector General issued a report recommending that
    you boost the number of truck inspectors along the border by 133
    percent to a total of 140. Your budget follows this recommendation.
    However, the Inspector General's recommendation was based on the
    assumption that the increase in traffic would only be attributable to
    trucks entering certain commercial zones that are close to the Mexican
    border. Your proposal would allow Mexican trucks to travel anywhere in
    the United States. This will bring a much larger number of Mexican
    trucks across the border. Why do you believe that 140 inspectors will
    be enough given your policy to allow Mexican trucks to travel anywhere
    in the United States?
        Answer. The $88.2 million in additional funding requested by the
    Administration in its fiscal year 2002 budget provides for a
    comprehensive Federal and State safety enforcement partnership at the
    U.S./Mexico border. The intent of creating a Federal enforcement
    presence along the southwest border has been, from its initiation, to
    supplement rather than supplant State enforcement efforts. Federal
    inspectors have been deployed in locations where the States do not
    currently have enough resources to provide appropriate coverage. The
    fiscal year 2002 budget request provides resources to support an
    estimated combined Federal/State border enforcement staff of 496. The
    140 Federal enforcement staff provides the minimum level necessary to
    ensure that vehicles and drivers that enter the U.S. have been screened
    for compliance. In addition to increased enforcement activities at the
    border, vehicles and drivers are also subject to State commercial
    vehicle safety inspections throughout the U.S. interior, providing an
    added layer of safety assurance.
        Question. At present, we do not allow U.S. truck drivers to hold
    commercial driver licenses if they have an unacceptable record of
    safety violations. However, the Mexican government has no comprehensive
    system to monitor their licensed truckers. How will you be able to
    guarantee that the truckers coming across the border from Mexico have
    an acceptable driving record? Is it fair to impose this requirement on
    U.S. truck drivers but not on Mexican drivers?
        Answer. Mexican drivers operating in the United States must comply
    with the full range of Federal and State safety requirements applicable
    to U.S. carriers, including driver qualifications. As part of the
    application process, carriers applying for authority to operate in the
    U.S. must ensure that drivers have a valid driver's license and an
    acceptable safety record. Driver information included on the
    application is verified through Mexico's driver license information
    system and by follow-up interviews with the carrier as necessary prior
    to approving the application. The FMCSA will also routinely verify
    driver license information during roadside inspections and monitor
    driver performance in the U.S. to ensure that all drivers operate
    safely. Under no circumstances will drivers with an unacceptable record
    of safety violations be allowed to continue to operate in the U.S.
                                     ______

                    Questions Submitted by Senator Herb Kohl

                              airline competition
        Question. Secretary Mineta, on February 12, 2001, my colleague on
    the Antitrust Subcommittee, Senator DeWine, and I wrote to you to urge
    the Department of Transportation to use its authority under the
    Transportation Act to investigate the competitive effect of all the
    pending airline mergers. As you know, the Transportation Act empowers
    the Transportation Department to prevent ``unreasonable industry
    concentration, excessive market domination, monopoly of powers, and
    other conditions that would tend to allow at least one air carrier
    unreasonably to increase prices, reduce services, or exclude
    competition in air transportation.'' While you initially made several
    statements that your Department was going to take an active role in
    reviewing the competitive effects of these mergers and was preparing
    competitive analyses for use by the Justice Department, more recent
    press reports indicate that you have decided not to conduct this
    analysis.
        Secretary Mineta, I am quite disappointed by this apparent change
    in your position. If these reports are correct, why are you unwilling
    to exercise your statutory authority to prevent unreasonable
    concentration in the airline industry?
        Answer. The Department has had very constructive discussions with
    DOJ about DOT's role in the airline merger review process; DOT and DOJ
    both are comfortable with the process. The Department of Transportation
    conducts an extensive independent analysis of mergers, and in the case
    of United's acquisition of US Airways, DOT had detailed discussions
    with DOJ about this Department's analysis. At DOJ's request, DOT has
    also conducted additional analyses.
        Question. Are you concerned with the level of concentration in the
    airline industry which will be created if all the pending mergers and
    acquisitions are completed as planned?
        Answer. I remain confident that the Department of Justice will not
    allow mergers and acquisitions that would reduce competition in the
    airline industry sufficiently to significantly harm consumers.
        Question. What is your view of the role of the Department of
    Transportation in promoting competition in the airline industry?
        Answer. The Department of Transportation is the watchdog of airline
    competition and has a responsibility to ensure that the benefits of
    deregulation continue. I am committed to fulfilling our responsibility
    to assure that airline markets are at least as competitive as they need
    to be to protect the interests of consumers. Very broadly, the
    Department must do two things to enhance competition. The first is to
    make sure that the transportation infrastructure is adequate to meet
    demand. Nothing so surely restricts competition as inadequate
    infrastructure capacity. The second is to increase DOT's ability to
    analyze the complex airline industry in order to best promote the
    public interest. This dynamic industry is constantly undergoing change
    and DOT must be better able to recognize important issues as they
    evolve, and, where possible, develop remedies that will, in the real
    world, benefit consumers. The Department must also be careful not to
    dabble where we are not sure our actions are benefiting consumers.
        Question. Are you concerned that large airlines are gaining undue
    dominance over essential facilities, such as, for example, gates and
    slots, in the aviation system? Do you favor placing reasonable limits
    on the number of take-off and landing slots large airlines can operate
    at the nation's slot controlled airports?
        Answer. Airport access is a critical issue for us to come to grips
    with for all airlines. As I stated in my testimony at my confirmation,
    one of my highest priorities is to do all I can to promote the
    expansion of the transportation infrastructure so that it is fully able
    to meet the demands of our growing economy and can contribute to that
    growth by providing greater efficiency in the movement of people and
    goods. We are now considering how to deal with access limitations at
    slot-controlled airports.
                                    loran c
        Question. Secretary Mineta, you have previously expressed your
    views about the importance of utilizing both satellite technology and
    existing navigation systems to meet national transportation system
    needs. One of the existing navigation systems that fisherman, boaters,
    and general aviation pilots and other currently rely on is Loran-C. A
    long-overdue report about the benefits of Loran was just recently
    released by DOT and it confirms that the user community
    overwhelmingly--94 percent--supports continuing Loran. Many of us have
    a strong interest in this issue because of growing evidence, including
    the President's Commission on Critical Infrastructure Protection, the
    two recent Rumsfeld reports and other studies, warning that our country
    should not rely on sole-means technology such as the Global Positioning
    System (GPS) for our navigation needs.
        Your predecessor and others from the Department told us that DOT
    saw the benefits of continuing Loran and some of my colleagues and I
    were promised the Department was going to clearly state its policy
    commitment to the long-term continuation of this technology. We are
    still waiting. Mr. Secretary, it concerns me that the Department's
    budget includes only $13 million in fiscal year 2002 for further Loran
    improvements and that DOT has left Loran users, manufacturers and the
    international community in limbo about a long-term commitment to the
    configuration of this well-proven, cost-effective navigation system as
    part of the future navigation mix. Are you willing to promptly make it
    clear that DOT is committed to providing Loran services for the long
    term? If not, what barriers are preventing the Department from making
    such a commitment?
        Answer. The Department is currently assessing the usefulness of
    continuing Loran-C and expects to make a decision on the long-term
    disposition no later than the end of this year.
        Question. How do you reconcile the budget cuts to the Loran program
    with the mounting evidence of its necessity to the national
    transportation system?
        Answer. The President's fiscal year 2002 budget includes $13
    million to continue the recapitalization of Loran-C and continue
    evaluation of the capabilities of and need for an improved system to
    provide a complement or a backup to satellite-based systems. Additional
    investment will be needed in the out years should a decision be made to
    continue Loran-C for the long term. Loran-C is one of several
    technologies which might serve as a backup for satellite-based systems.
                                high speed rail
        Question. At last year's hearings, former Governor Tommy Thompson
    spoke about the importance of developing high-speed rail in America. He
    pointed to countries around the world investing in high-speed trains,
    much more so than in America. We have the opportunity to take a giant
    step towards eliminating this gap with the enactment of S. 250, the
    High-Speed Rail Investment Act. Under the proposal, for each of fiscal
    years 2002 through 2011, Amtrak is authorized to issue up to $1.2
    billion in bonds for qualified projects, such as capital improvements
    in federally designated high-speed rail corridors, for a total of $12
    billion. A majority of the U.S. Senate believes that enacting this
    legislation into law will be a strong first step toward developing a
    truly balanced transportation system that will better address our
    nation's traffic and environmental concerns. Does the Administration
    agree with this position?
        Answer. Improved passenger rail service, including high-speed rail,
    in specific intercity corridors warrants a hard look as a potentially
    cost-effective way to address congestion and add flexibility for that
    part of our national transportation system that must meet passenger
    mobility needs. Improved passenger rail service will require
    substantial capital investment. There are portions of S. 250 that offer
    an interesting approach to providing for a portion of this capital, but
    the Administration has not yet taken a position on whether this is the
    best approach.
        Question. If so, will you work with the Senate to get this
    legislation enacted this year?
        Answer. The Administration has not yet taken a position on S. 250.
    The Department, however, would look forward to working with the
    Congress to identify and evaluate the strengths and weaknesses of
    various approaches for meeting the capital investment needs of improved
    and high-speed rail passenger service.
        Question. What advances should we expect to be made in the coming
    years in regards to high-speed rail?
        Answer. In the short-term, technological advances that help make
    high-speed rail more feasible in the United States. The Department is
    working on several that will help permit the introduction of safe
    passenger rail service in the 100 mph-150 mph speed range on existing
    rail corridors. Of particular note is the 150 mph light-weight non-
    electric locomotive, powered by an FAA certified jet (gas turbine)
    engine, which is currently undergoing tests at the Transportation
    Technology Center in Pueblo, Colorado, and the North American Joint
    Positive Train Control Project which is being developed on a segment of
    the designated high-speed corridor between Chicago and St. Louis.
                                  hoan bridge
        Question. Mr. Secretary, as you know, in December of last year, two
    of three support girders on the Hoan Bridge in Milwaukee snapped,
    thereby necessitating the demolition of a 217-foot span of the bridge.
    The Hoan Bridge is a vital part of the Wisconsin transportation system.
    Expansions in 1999 contributed to a 40 percent increase of vehicle
    trips over the bridge. In fact, statistics demonstrate an average
    annual daily traffic of 30,305 traveling over the bridge last year
    alone. The loss of the Hoan Bridge has had a deeply negative effect on
    the transportation system in Milwaukee.
        I would like to thank you, Secretary Mineta, for accepting the
    application for funding submitted by the Wisconsin Department of
    Transportation under the Discretionary Bridge Program. I know that you
    have taken the time to view the bridge, and appreciate your efforts to
    investigate this matter for yourself. I truly appreciate your and the
    President's promise of helping the state address what we view as the
    catastrophic failure of the Hoan Bridge.
        What specifics can you share with the committee about US DOT's
    provision of funding to the State of Wisconsin to repair the bridge?
        Answer. President Bush considers fixing the Hoan Bridge a priority,
    and the Department is working with Governor McCallum and other State
    officials to identify the quickest way to rebuild this critical artery
    for Milwaukee.
        All possible sources of funding for this effort are being explored.
    The Discretionary Bridge Program solicitation process for fiscal year
    2002 funding is currently underway, and applications from the States
    must be submitted by July 16, 2001. On April 6, 2001, the Governor of
    Wisconsin submitted an application for $8.08 million in Discretionary
    Bridge Program funds for the Hoan Bridge. This application, together
    with all other qualified applications, will be ranked in accordance
    with statutory, regulatory, and administrative requirements. The
    Department will give the project serious consideration during the
    review process for discretionary funds, and will continue to work
    closely with the State of Wisconsin to ensure that the bridge is fully
    repaired as quickly and as efficiently as possible.
        The FHWA also is helping to conduct an in-depth forensic
    examination to determine what caused the bridge's failure. The agency
    is working in partnership with the Wisconsin Department of
    Transportation, Lehigh and Northwestern Universities, and independent
    consultants.
        Question. Can you provide us with a timeline for Federal funding?
        Answer. The Office of the Federal Highway Administrator will make
    the final selections of bridge projects from the list of qualified
    applications and release funding shortly after enactment of the fiscal
    year 2002 Appropriations Act.
                   passenger rail station at mitchell airport
        Question. My state is in the process of developing an airport
    station stop in Milwaukee for Amtrak service coming from Chicago. This
    project is long overdue. I believe train depot service at Mitchell
    airport addresses highway traffic congestion in the area. In addition,
    it will provide an important alternative for air passengers
    experiencing air traffic congestion at O'Hare. I would like to see if I
    can help make this situation happen through the appropriation process.
    What help can the Department of Transportation give to the state on
    this issue?
        Answer. The Department of Transportation does not favor earmarking
    in its annual appropriation process for this project.

                              subcommittee recess

        Senator Bennett. Mr. Secretary, thank you so much for
    coming. This has been a useful morning and we appreciate very
    much your willingness to serve your country. We know you could
    make a lot more money someplace else, too.
        Secretary Mineta. As could you, sir.
        Senator Bennett. Thank you.
        Secretary Mineta. Thank you.
        Senator Bennett. The meeting is recessed.
        [Whereupon, at 11:50 a.m., Thursday, April 26, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                              FRIDAY, JUNE 1, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                           Seattle, WA.
        The subcommittee met at 9:30 a.m., in the Commission
    Chambers at Port of Seattle, Seattle, Washington, Hon. Patty
    Murray presiding.
        Present: Senator Murray.

                          DEPARTMENT OF TRANSPORTATION

                                  Coast Guard

    STATEMENT OF REAR ADMIRAL ERROLL BROWN, 13TH COAST
                GUARD DISTRICT
    ACCOMPANIED BY:
            MASTER CHIEF PETTY OFFICER KEN BROWN, COMMAND MASTER CHIEF,
                13TH DISTRICT
            CAPTAIN MIKE MOORE, COMMANDING OFFICER, MARINE SAFETY OFFICE,
                PUGET SOUND
            CAPTAIN JOHN VENTURE, CHIEF, MARINE SAFETY DIVISION
            CAPTAIN BILL PETERSON, GROUP COMMANDER, PORT ANGELES

          Overview of Coast Guard Activities in the Pacific Northwest

                   opening statement of senator patty Murray

        Senator Murray. Good morning. I'm Senator Patty Murray, and
    we are here today to have a subcommittee hearing with the U.S.
    Coast Guard for the Transportation Committee, U.S. Senate.
    Welcome all of you here.
        We have three panels that we will be talking with this
    morning, and I will begin with an opening statement, and then
    we will move to our first panel. The Coast Guard is absolutely
    critical to the lives and livelihood of the people of
    Washington State.
        We depend on the Coast Guard to perform its missions every
    day, and to perform them flawlessly every time. During this
    subcommittee's hearing with Secretary Mineta last month, I
    discussed a number of instances where I found the
    Transportation Department's 2002 budget request to be
    inconsistent with the agency's own performance goals.
        Now that we are taking the opportunity to focus on the
    Coast Guard, I am discovering much of the same thing. Over the
    years the Coast Guard has been spread too thin as it tries to
    execute all of its missions with limited resources.
        This problem has persisted so long that today I'm worried
    that the Service cannot perform any of its missions to the
    level that the taxpayers expect and deserve. As a Senator with
    the greatest respect for the Coast Guard and its people, that
    is a very painful thing for me to say.
        But as we look across all of the Coast Guard's many
    missions, fishery enforcement, marine safety, marine
    environmental protection, drug interdiction, national defense,
    I think we can agree that first and foremost we expect the
    Coast Guard to never fall short in the area of search and
    rescue.
        Yet, in the Pacific Northwest, the Coast Guard has fallen
    far short of meeting its number one safety goal of saving at
    least 93 percent of mariners in imminent danger for all but one
    of the last 5 years. This has occurred at the same time that
    the Coast Guard nationwide has met the goal every year.
        So clearly we have a uniquely dangerous situation in the
    Pacific Northwest that is not being fully addressed. Just a
    month ago the Coast Guard Pacific Area Commander sounded the
    alarm on just this problem. In his regional strategic
    assessment for 2001, Vice Admiral Riutta pointed out that in
    the 13th District we are woefully short of trained personnel to
    man our search and rescue stations.
        He said, and I quote,

        ``We don't have enough personnel to safely man the watch or
    perform full multi-mission responsibilities. District 13 needs
    an additional 250 billets to staff our 10 surf stations and our
    other four stations. Units are never fully manned with
    qualified personnel. The status quo is unsafe, inequitable,
    reduces readiness, and is not sustainable.''

        Those are not my words. They are the words of the admiral
    responsible for the entire Pacific area. I take that assessment
    seriously. Four years ago I attended the funeral of three of
    the Coast Guard's finest young seaman who died in the act of
    duty, seeking to save the lives of mariners off the Washington
    coast.
        The boat crews that now serve in their place deserve better
    support from the Coast Guard senior leadership, and better
    support from this subcommittee. Last year the subcommittee
    fully funded the Coast Guard's request for additional boat
    crews, but that request provided roughly a quarter of the
    number of additional people for the entire nation that Admiral
    Riutta has identified as being necessary just for the 13th
    District.
        For fiscal year 2002, the Coast Guard is requesting still
    more people in this area, but the budget request still falls
    well short of the stated need in the 13th District. As we look
    across the Coast Guard's other missions, we see similar short
    falls in the Service's ability to fully meet current or
    anticipated needs.
        Another area of great concern to me is the safe operations
    of the commercial fishing fleet. Commercial fishing remains the
    nation's most dangerous profession. In Washington State we had
    another tragic reminder of that. Just 6 weeks ago the Seattle-
    based fishing vessel, Arctic Rose, went down with all hands in
    the Bering Sea. Fifteen lives were lost.
        That's the worst fishing accident in the last 50 years.
    Recently fishing vessel casualties have gone up, even though
    the size of the fishing fleet is going down. In the year 2000
    the Coast Guard made an internal decision to reduce funding for
    commercial fishing vessel safety by 25 percent. Today, the
    Pacific area has only 21 personnel to serve the growing number
    of fishing vessels that request dockside inspections.
        Even when the Coast Guard can accommodate their request,
    fewer than 6 out of every 10 fishing boats are being given
    decals to certify that they are safe. Next, I want to turn to
    pollution prevention. The Coast Guard Pacific Area Commander
    expects to fall short of its goals of eliminating oil
    discharged into the water and reducing the amount of plastic
    and garbage discharged from marine sources.
        The recent findings of suspicious activity on the part of
    Evergreen Container Lines by the Washington State Department of
    Ecology and the Coast Guard point out the importance of
    adequate inspections and oversight. Last year the Department of
    Transportation did not meet its goals for fisheries
    enforcement. We shouldn't be surprised.
        Coast Guard managers have reallocated aircraft hours such
    that the level of aircraft surveillance dedicated to fisheries
    enforcement efforts, like patrolling the boundary lines between
    United States and Russian waters, is now at its lowest level in
    a decade. The number of cutter hours devoted to fisheries
    enforcement has been cut by roughly a third in the last 5
    years.
        The number of aircraft hours devoted to this important
    mission has been cut in half over the same period. At the same
    time, cutter and aircraft hours for other missions have
    increased. So money is not the sole solution to all of these
    problems. Part of the solution rests in the priorities that are
    articulated by the Coast Guard senior managers.
        I am very pleased that all of the witnesses could join us
    this morning. We will hear first from Admiral Erroll Brown, our
    Coast Guard District Commander for the 13th District, along
    with members of his staff. I'm especially pleased that we will
    also get to hear from Master Chief Petty Officer Ken Brown.
        Master Chief Brown is the senior enlisted person in the
    13th District, and he is here to represent all of the Coast
    Guard people who actually do the work. Following our discussion
    with the Coast Guard, we will have two panels representing some
    important partners in our mutual efforts to keep our waters
    safe, clean and prosperous. They include representatives of the
    Washington Department of Ecology, the Washington State Ferries,
    the Fishing Industry, and the Steamship Operators.
        I'm going to ask Admiral Brown and the members of his staff
    to remain at the table so that we can get a dialogue on all
    these issues as we go through the panel. So, Admiral, if you
    will introduce members of your staff, and proceed with your
    opening statement. I appreciate it.

                     statement of rear admiral erroll Brown

        Admiral Brown. Morning, Senator. I'm Admiral Erroll Brown.
    I have with me Master Chief Petty Officer Ken Brown. I'll also
    have joining with me after our opening statements--my staff
    members will include Captain Mike Moore, who is the Commanding
    Officer, MSO, Puget Sound.
        I will also have Captain John Venture who is our Chief of
    Marine Safety Division. I'll also have Captain Bill Peterson
    who is--he is currently a Group Commander in Port Angeles,
    previously on our staff as Chief Liaison. Thank you very much
    for this opportunity. Good morning.
        Again, as I said, I'm Commander Erroll Brown, Commander of
    the 13th Coast Guard District, and on behalf of the--of
    Commandant, Admiral Jim Loy, I thank you for this opportunity
    to appear before you today to proudly share with you our
    successes and, frankly, the broad array of challenges we face
    here in the 13th Coast Guard District, many of which you have
    already highlighted.

                                   Highlights

        Before I get to my comments, which I would like to just
    highlight because they are a bit lengthy, and I appreciate that
    opportunity, I would just like to make a few comments. I think
    that all of our successes are clearly predicated on three
    corner stones. Those are prevention, response, and our
    partnerships in being successful in those.
        We can't be successful in our prevention, or our response
    efforts without the extraordinary partnerships that we have
    here in the Pacific Northwest. And, finally, there is a clear
    budget nexus between the success we have in our budget, and the
    success we have here in the 13th District, and hopefully we can
    make those connections as we have in our dialogue today,
    Senator.
        I have elected to give some of my time to Master Chief
    Brown. I appreciate you according me that. Master Chief Brown
    is my first selection when I became District Commander, and I
    consider my most important selection. Master Chief Brown
    represents a lot of what our service is all about.
        He represents three generations of Coast Guardsmen. His
    father was in the Coast Guard. He is in the Coast Guard, and
    his son will be in the Coast Guard. But within that context
    there are some significant things. Some of them you
    highlighted, and we'll talk about today.
        While we continue to have dedicated people, we are finding
    a drain on our experience. And that brings for us training
    burden, and as you said, it brings with it other difficulties.
    I would like for him to address some of those things within the
    context of his representing the enlisted force, as you said,
    who delivers the core of our services.

                              enthusiasm of People

        And with that, I would like to quickly go through my
    prepared statement. I have only been here a year, and what a
    great year it has been. We have people who constantly amaze me
    with their zeal, their creativity, and their dedication and,
    clearly, their unwaivering devotion to duty.
        And I'm talking about across all spectrums, our active
    duty, our reservists, also civilian and auxiliarists. It's not
    just the active duty. All of our members are just as zealous
    about their--about their work. They respond in terms of life
    saving.
        They facilitate the safe passage of passengers and cargo
    throughout our very complex maritime transportation system, and
    they've all--all stood ready to protect our maritime borders in
    our homeland. I have often said, and I think it's not an
    overstatement, that this region is probably the most important
    maritime gateway to our global economy, an incredibly complex
    maritime system.
        I don't need to tell you about it, you know better than I,
    which has an enormous contribution to the economic growth, not
    only locally, but the fact of that of our nation. It has a
    profound influence on the quality of life of our citizens, and
    also on our nation's security.
        And by all forecasts, all of our users, the commercial,
    fishermen, commuters, travelers, and recreational user are all
    going to continue to grow. And within this complex mosaic,
    safety is our number one issue. And as you highlight some of
    those challenges we have in assuring that we meet our
    performance goal.

                            Coast Guard performance

        And while we respond to those things, we will always have
    as our enduring goals maritime safety and the protection of
    natural resources, maritime mobility, national defense, and
    maritime security. And while I'm proud of all of our dedicated
    work, like you, I am concerned about our performance.
        The Commandant has laid out three priorities in his budget,
    restoring readiness, shaping the future of the Coast Guard, and
    transformation--transforming the Coast Guard into the Coast
    Guard of the 21st century. As District Commander, these are
    precisely the areas that I need dramatic improvements to be
    successful in carrying out my missions.

                       Recruiting, retention and training

        Now, local areas, in terms of restoring readiness, that
    comes--that comes down to recruiting, retention and training.
    Recruiting, retention and training. We are in our units at
    billeted strength, but what we have is a diminishing pool of
    experience, specifically in mid-level supervisors, first class,
    chief petty officers, and in our Marine Safety officers.
        And, mainly, this is from what we see as a float. And what
    we recognize as a result of this float is that it--it takes us
    time to bridge this--this experience gap, and as you indicated,
    it especially affects our motor lifeboat surfmen and our search
    and rescue stations.
        It takes 4 to 6 years to get them to the skill level to be
    proficient to handle those risky jobs, and that adds a burden
    to us in terms of qualified people. Though we have the numbers,
    we don't have enough qualified, so the burden is
    disproportionate and falls on the qualified ones. And it is
    exacerbated by the fact that we have a high turnover in our
    junior--junior enlisted.
        So, for us, the present budget addressed these recruiting
    and retention issues by providing a pay raise, improved health
    care for our retention, and other vital recruiting and
    retention issues. You talked about SAR. You are absolutely
    right, Senator, you hit the nail on the head.
        We have issues in terms of our watch standers that the
    budget will look to address because of already identified
    quality of life, and ability to effectively stand the watch
    because of the workloads on them. Also the equipment that we
    have is a bit dated, and in our budget we have funds for the
    National Distress and Response System Modernization Project
    that will go a long way in solving those problems.

                              Strategic alliances

        In addition to that, this year's budget continues to
    provide increased staff and to alleviate these identified
    shortages that you already addressed. As I said earlier, I
    think one of our keys to success is our strategic alliances. I
    arrived here and found myself in an area rich with people
    willing to work with us, and I think some of our success is our
    clearly predicated on our strategic partnerships, specifically
    in the area of passenger vessel safety.
        As you know, the independent Blue Ribbon Panel that
    completed its risk assessment in 1999 identified some areas for
    significant improvement. I think that we have been working very
    well with Washington State Ferries in implementing many of
    these panel recommendations. In the area of fishing vessel
    safety, as you identified, our dockside examinations, while
    they're voluntary, frankly have fallen far below the numbers
    that should be done to be effective for the fleet.
        But we are getting a lot of support from fishing
    associations and training organizations in reaching out to the
    fishing vessel industry. In terms of protection of our natural
    resources, we think that we have an exceptional partnership
    working with the Washington State Department of Ecology where
    jointly we co-chair the long-term risk management panel that
    just completed its work in July 2000 making recommendations
    about how to improve our marine transportation system.
        And we were working with them and the Harbor Safety
    Committee to implement many of those risk management panel
    recommendations. In terms of shaping the future, our
    perspective on trying to get that done is through risk analysis
    and through risk mitigation. Again, prevention and response.
        And while you accurately identify some of the challenges we
    have in terms of our risk analysis and our growing profile of
    work to be done, what we're finding is that where we have to
    have our resources is shifting, and that's what our analysis is
    telling us.

                              Foreign flag vessels

        In terms of risk mitigation, we think that our efforts in
    terms of working with the foreign flag vessels is critically
    important because to the extent we're successful with them, it
    is crucial to us here locally since 8 out of the 10 vessels
    that call on the ports here are foreign vessels.
        We, like you, are concerned about our contingency
    preparedness. Specifically in this area, we've taken some
    extraordinary efforts to work on our mass rescue operations
    with the ferry system, because we, too, are concerned about our
    ability to respond. We can't do it alone. We have to do with it
    with our partners, and we are moving in that direction.

                                  Naval forces

        In terms of the other competitors for our waters, this is
    the third largest concentration of naval forces, and we are
    working with them to coordinate our efforts to secure their
    assets; to ensure that they're safe in our new and changing
    environment. And while many may say that Deepwater is about our
    large cutters and those assets, and frankly none of them are
    under my control, there is a clear and distinct nexus between
    the success of our Deepwater program, and what we here in the
    District 13 will have to do.

                                   Deepwater

        We need these Deepwater assets to enforce an increasingly
    complex fisheries management plan to perform policing
    activities intelligence and maritime interception of suspect
    vessels. This clear nexus of these issues brings to us a clear
    sense that to the extent we fail to recapitalize and modernize
    these assets, that those responsibilities will increasingly
    fall on our overburdened, and ill-equipped coastal assets.
        Again, our fiscal year 2002 budget, the Deepwater project,
    has been addressed and is fully funded as requested.
    Transformation finally, for us, is about modernization. It's
    about preparing ourselves for a 21st century challenge with
    21st century capabilities. We have been in that business in the
    coastal area for well over 10 years.
        You have seen many of our new 47-footers. We have an 87-
    footer. Thank you very much for being a sponsor of a record
    setting seizure for our 87-foot Osprey. Adelie is on route to
    Port Angeles, expected to arrive in July. Henry Blake just
    arrived last year, and we will be replacing the Cowslip with
    the Mariposa, so we are deeply immersed in transformation.

                               prepared statement

        So, finally, I appreciate the opportunity to be here today
    before you. We appreciate your support and your leadership, and
    ask for your continuing support in our fiscal year 2002 budget
    which addresses the very issues that you asked us about. I
    would like to give Master Chief Brown one minute to talk about
    our people.
        [The statement follows:]

                Prepared Statement of Rear Admiral Erroll Brown

        Good morning Senator, I am Rear Admiral Erroll Brown, Commander of
    the Thirteenth Coast Guard District. On behalf of the Commandant,
    Admiral Jim Loy, thank you for the opportunity to appear before you
    today to proudly share our successes and the broad array of challenges
    we face here in the Thirteenth Coast Guard District.
        Although I have only been here a year, what a year it has been. I
    am continually amazed by the zeal, creativity, dedication and
    unwavering devotion to duty of all of our Coast Guard men and women--
    active duty, Reservists, civilian and Auxiliarists. Coast Guard men and
    women in the Thirteenth District responded to over 4,000 Search and
    Rescue cases in fiscal year 2000, saving 101 lives. Coast Guard
    personnel facilitated the safe passage of passengers and cargo
    throughout our marine transportation system, and protected the maritime
    borders of our homeland by interdicting drug smuggling vessels, such as
    the Canadian vessel WESTERN WIND carrying nearly 5,500 pounds of
    cocaine.
        In the Pacific Northwest we stand at one of the most important
    maritime gateways to the global economy. The Marine Transportation
    System (MTS) in this region makes enormous contributions to the
    economic growth of our nation, the quality of life of our citizens and
    our Nation's security. The combined ports of Seattle-Tacoma move over
    2.5 million containers per year, making this the 2nd largest container
    cargo complex in the United States. Over 360 million barrels of oil
    move through the Strait of Juan de Fuca every year. Over 50 million
    tons of cargo move on the Columbia River system, including important
    cargoes of grain and lumber products. Washington and Oregon rank in the
    top ten states in the nation in total fish landed. The Washington State
    Ferries transports over 25 million passengers on about 150,000 transits
    a year and is the largest ferry system in the U.S. Over 120,000
    passengers per year embark on cruise ships from the Port of Seattle.
    There are over 600,000 recreational boaters with 250,000 registered
    recreational boats in the State of Washington. The Puget Sound region
    is also home to the 3rd largest concentration of U.S. Naval forces. By
    all forecasts, the use of these waterways for commerce, fishermen,
    commuters, travelers, and recreation will continue to grow. The
    challenges of ensuring maritime safety will increase as the number,
    type, complexity and frequency of vessels and individuals using the
    waterways grow. Because of this array of activity in the MTS, safety
    remains our number one priority.
        In this environment, we must be ready to respond to the myriad
    challenges we face in carrying out our enduring strategic goals:
    Maritime Safety, Protection of Natural Resources, Maritime Mobility,
    National Defense and Maritime Security. While I'm extremely proud of
    our hard working people, I continue to be concerned about our ability
    to meet our performance goals. The Commandant has set as his top
    priorities (1) Restore Service Readiness, (2) Shape the Future of the
    Coast Guard and (3) facilitate the Transformation into the Coast Guard
    of the 21st Century. As a District Commander, these are precisely the
    areas where I need improvements to be successful in carrying out my
    responsibilities.
                               restore readiness
        Recruiting, Retention and Training.--Readiness in the Thirteenth
    District is multi-faceted, and its core is people and the assets they
    need to do the job. With budgetary support, the Commandant was able to
    keep his pledge to rebuild the Coast Guard workforce. At the end of
    fiscal 2000, our active duty enlisted workforce was at authorized
    strength for the first time since 1994. While our operational units in
    the Thirteenth District are at billeted strength, we are experiencing a
    diminishing pool of experienced mid-level personnel at the first class
    and chief petty officer levels and within the mid-level marine safety
    officers, primarily because the Coast Guard lost experienced personnel
    to the private sector economy. My senior enlisted advisor reports from
    his extensive unit visits that major issues such as housing, family
    health care, pay and compensation continue to dominate group and
    individual discussions. Additionally, competing interests such as other
    employment opportunities, child education and spousal employment make
    it difficult to convince even those who are not within the retirement
    eligibility window to remain in the Coast Guard. With the loss of each
    highly experienced individual, we face an experience gap that takes
    time to restore. In this district, it is affecting our motor lifeboat
    surfmen at our search and rescue stations. Shortages of qualified
    personnel increase workload and watchstanding requirements. So to
    restore readiness in the Thirteenth District, we need to continue to
    improve recruiting, retention and training.
        The President's budget will annualize the fiscal 2001 pay raise and
    mandatory military entitlements introduced with the National Defense
    Authorization Act of 2001, provide a fiscal year 2002 pay raise (4.6
    percent for military; 3.6 percent for civilians), improve health care,
    and continue vital recruitment and retention incentives. These
    incentives include increasing housing allowances for Coast Guard
    personnel and for unmarried junior enlisted members in particular, an
    increase in monthly allowance for meals, pay raises for mid-grade
    enlisted personnel, and career sea pay reform.
        SAR Response.--The President's budget addresses our readiness
    concerns at search and rescue (SAR) command centers and stations by
    increasing staffing to alleviate identified personnel fatigue and
    quality of life issues. Additionally, our search and rescue command
    centers require updated equipment with the ability to automatically
    record and play back distress calls, adjust the quality of the
    recording until a message can be clearly understood, and determine and
    preserve an electronic position indicator when a distress call is
    received. Our current coastal distress communications system cannot
    accomplish these tasks. The capability of our existing VHF-FM system,
    put in place in the early 1970's, has long since been surpassed by more
    effective and reliable communications systems which are critical to
    command and control functions both our own units and those we serve.
    The geography of our region further adds to the challenges of
    continuous, reliable communications. Our efforts to address these
    challenges have met with limited success. The President's fiscal year
    2002 budget recognizes the importance of this national safety issue and
    provides funding for the continuation of the National Distress and
    Response System Modernization Project--the ``nation's maritime 911
    system'', and a microwave modernization project for the Thirteenth
    District.
                                shape the future
        We are working with all our partners here in the Pacific Northwest
    to shape the future of the maritime environment through proactive risk
    analysis, risk mitigation, and contingency preparedness. In addition,
    the Thirteenth District is homeport to many Coast Guard Deepwater
    mission platforms. As such, the Thirteenth District will receive new
    assets from the Coast Guard's Integrated Deepwater Systems (IDS)
    Project.
        Risk Analysis.--The demand for our Search and Rescue (SAR) services
    remains nearly constant at about 4000 cases a year with several hundred
    lives saved and thousands of others assisted, and hundreds of millions
    of dollars worth of property saved or assisted. While the number of SAR
    cases has remained steady, the risk of incidence that require emergency
    response remains high due to the harsh weather, cold water survival
    times, and many treacherous breaking bar entrances that require both
    highly capable equipment and crews. While the overall number of cases
    remains fairly steady, the locations where those cases occur are
    changing.
        Risk Mitigation.--We must continue our port state enforcement
    efforts, working toward raising the standards of foreign flag vessels
    and preventing sub-standard foreign vessels from operating in U.S.
    waters. This effort effectively improves safety in our local waterways
    since approximately 8 out of 10 vessels calling in the U.S. are foreign
    flag vessels.
        In addition to our efforts as co-chair of the Long Term Risk
    Management Panel process for the Strait of Juan de Fuca and Puget
    Sound, we recently completed a broad, cooperative, international,
    interagency, tribal and industry Port Access Route Study. These two
    major efforts resulted in a series of recommendations to improve the
    Marine Transportation System and reduce risk.
        The Port Access Route Study, completed in November 2000,
    investigated existing vessel routing and traffic separation schemes in
    the Strait of Juan de Fuca and adjoining waterways to the north. This
    study was undertaken as follow-on to other studies, such as the Volpe
    Scoping Risk Assessment for the Puget Sound waters and a Waterways
    Analysis Management System review of the waterway. Both studies
    indicated that vessel routing improvements were possible to further
    reduce the risk of vessel collisions, powered groundings and drift
    groundings. A proposal to modify these routing and traffic separation
    schemes has been forwarded to the International Maritime Organization
    to begin consideration at the international level this summer.
        Contingency Preparedness.--We are constantly working to improve our
    readiness to respond to contingencies. We conduct regular training and
    exercises to ensure that we are able to execute coordinated interagency
    responses. Specifically, we have improved our capability to respond to
    Mass Rescue Operation risk by prototyping, testing and establishing the
    doctrine for deployable rafts. These flotation devices are designed for
    first responder delivery to large numbers of people in the water during
    a major SAR incident. We are currently testing and evaluating these
    buoyancy devices for deployment from helicopters and boats.
        The Pacific Northwest hosts a nuclear submarine homeport, two
    aircraft carrier homeports, a Naval Shipyard, a fuel depot, an
    ammunition depot and a Naval Air Station. With this large concentration
    of naval forces in Puget Sound, we are working closely with Navy Region
    Northwest to coordinate our efforts in providing Department of Defense
    asset security and safety.
        Passenger Vessel Safety.--An independent Blue Ribbon Panel
    completed a risk assessment on the ferry system in 1999, identifying a
    number of areas where significant safety improvements can be made
    regarding accident prevention and consequence mitigation. Washington
    State Ferries and the Coast Guard are working together to implement the
    Panel's recommendations. In our partnership with Washington State
    Ferries, we are addressing implementation of the new lifesaving
    regulations that involves a comprehensive reevaluation of the existing
    primary lifesaving equipment. We are also working together to evaluate
    and address crew endurance issues.
        Protection of Natural Resources.--The Pacific Northwest's marine
    environment includes the Olympic Coast Marine Sanctuary and some of the
    most valuable and productive natural resources on Earth. We work with
    our partners in other government agencies, the commercial maritime
    industry, and environmental organizations to prevent pollution and
    protect these valuable natural resources.
        We enjoy a very good working relationship with the Washington State
    Department of Ecology in oil spill prevention and response that dates
    back to the 1970s. We continue to nurture this relationship as we
    expand our collective efforts to prevent accidents and pollution in our
    marine environment. Just last week, I signed a new Memorandum of
    Agreement with Governor Locke regarding oil pollution prevention and
    response.
        The Coast Guard and the Washington State Department of Ecology
    (DOE) co-chaired the Long-term Oil Spill Risk Management Panel that
    completed its work in July 2000. This Panel, made up of local waterways
    stakeholders, made a number of recommendations for safety improvements
    to the Marine Transportation System to better protect the Puget Sound
    marine environment against accidents and oil spills. Working together
    with DOE and the Puget Sound Harbor Safety Committee, we continue our
    work to implement the recommendations of the Risk Management Panel. The
    Harbor Safety Committee will publish its first ever harbor safety plan
    for Puget Sound, much of it a compilation of standards of care
    recommended by the Risk Management Panel. We also have an emerging
    partnership with the State Department of Fish and Wildlife regarding
    ballast water initiatives to prevent the intrusion of non-indigenous
    species.
        Integrated Deepwater System.--Modernizing U.S. Coast Guard
    deepwater capability through an integrated system of surface, air,
    command and control, intelligence and logistics systems is critical to
    the shaping future of our law enforcement, pollution prevention, and
    off-shore search and rescue efforts here in the Pacific Northwest. The
    Integrated Deepwater System Project has a clear nexus to all of our
    maritime safety, protection of natural resources, maritime mobility,
    maritime security and national defense responsibilities here in the
    Thirteenth District. The President's fiscal year 2002 budget requests
    funds to address the need to recapitalize deepwater assets.
                                 transformation
        Modernization.--The December 1999 Report of the Interagency Task
    Force on U.S. Coast Guard Roles and Missions validated the roles and
    missions for the Coast Guard through the year 2020 and predicted that
    the need for all our missions will increase in the coming years. This
    is clearly the case for many missions here in the Pacific Northwest.
    Fortunately, the Coast Guard has already begun transforming itself to
    meet this growing demand for its services. We are in the midst of
    modernizing our fleet of coastal patrol boats, buoy tenders, and motor
    lifeboats. We are replacing our near shore assets with new 47 foot
    Motor Life Boats, 87 foot Patrol Boats like the cutter OSPREY which is
    already hard at work, and the cutter ADELIE that will arrive in Port
    Angeles in July of this year. For several years the Coast Guard has
    been engaged in a project to replace its seagoing buoy tender fleet,
    which consisted of 26 cutters with an average age of more than 50
    years. The Seagoing Buoy Tender Project replaces these older assets
    with 16 modern-equipped cutters. The President's budget proposes to
    acquire the last two seagoing buoy tenders in fiscal year 2002 to
    complete this replacement effort. The cutter FIR is one of those and is
    destined for Astoria to replace the cutter COWSLIP. Last year, the
    cutter HENRY BLAKE replaced the cutter MARIPOSA in Puget Sound.
                                   conclusion
        The President's fiscal year 2002 budget continues to build upon
    past efforts to restore service readiness and shape the Coast Guard's
    future. The budget focuses on restoring the readiness of Coast Guard
    personnel, as well as our core missions of maritime safety and SAR,
    while ensuring that all of our missions are performed at a level that
    can be sustained by our support infrastructure. By accelerating the
    retirement of some of our oldest and most maintenance intensive assets,
    this budget exercises good stewardship of the taxpayers' dollars. The
    fiscal year 2002 budget seeks to restore readiness through investments
    in recruiting, retention and training. Here in the Thirteenth District,
    we continue to work with our local, state, regional, and international
    partners to shape the maritime future of the Pacific Northwest through
    risk analysis, risk mitigation and contingency preparedness. The
    cumulative effect of the President's fiscal year 2002 budget will be a
    more efficient Coast Guard that is correctly positioned for
    transformation into the Coast Guard of the 21st century.
        In closing, I ask for your strong support for the necessary funding
    and equipment which the Coast Guard needs to continue making a
    difference all across America. The growth in demand for Coast Guard
    services in the Pacific Northwest is certain to continue. It is
    certainly clear to me that helping the entire Coast Guard deal with
    budgetary and resource issues is the best way to help us deal with our
    regional issues. Thank you again for the opportunity to discuss our
    issues in the context of the President's fiscal year 2002 budget
    request. I look forward to working with you to ensure that America's
    Coast Guard remains ``Semper Paratus.'' Again, thank you for your
    ongoing support. I will be happy to answer any questions you may have.

                        statement of master chief Brown

        Master Chief Brown. Morning, Senator Murray. I greatly
    appreciate the opportunity to meet and discuss with you the
    state of the Coast Guard's enlisted workforce here in the
    Pacific Northwest. My job as the 13th District Command Master
    Chief is to take the pulse of our enlisted force, understand
    how our work force is doing overall, and identify any issues
    and concerns they have.

                         diminishing pool of Experience

        Major issues such as housing, family health care,
    recruiting, retention, pay and compensation continue to
    dominate the open group and individual discussions I have with
    our military personnel. As you may be aware, we are facing a
    diminishing pool of experience as a result of the retirement of
    our personnel from the successful high enlistment era we
    experienced during 1980s.
        Just last year we experienced our first wave, of which 50
    percent of those eligible for retirement did, in fact, retire.
    Competing interests such as employment opportunities, child
    education, and spousal employment make it difficult to convince
    even those who are not within the retirement eligibility window
    to remain in the Coast Guard.
        The Coast Guard has always had ordinary people doing
    extraordinary things. I grew up in the Pacific Northwest
    following my father who served for over 20 years in the Coast
    Guard, eight units along the Washington and Oregon Coast. I
    have done the same for 20 years of my life.
        The only real core difference in today's Coast Guard is
    that our experience level has dropped. Our, ``Can do. We will
    not fail.'' attitude lives on though. But I am very concerned
    that we are accomplishing our missions on the backs of those
    few who are experienced and qualified.

                                Retention issue

        As they retire, retention becomes a very bigger issue. Our
    retention concerns not only affect our experience level, but
    also our work load, increasing our risk of unsustainable
    excellence. As we continue to address this issue Coast Guard
    wide, the best we can do is have our units focus on safety.
    Investing in our people's growth and continue cultivating that
    sustainable excellence.
        Many times we--many missions we do in the Coast Guard, we
    do them competently, expertly and safely every day. By focusing
    on safety, growth and excellence as our guiding principles, our
    men and women serving on our ships, aircraft, boarding teams,
    and pollution response teams will always accomplish their
    mission safely, and effectively.
        Our sustainable excellence will come from what I see as
    transformation of three ingredients. First, by continuing to
    recruit high quality candidates by offering incentives
    comparable to the other services. Second, by continuing to work
    to improve retention by focusing on the quality of life issues
    I briefly mentioned earlier.
        And finally, provide the growth and opportunity for every
    member to have the opportunity to contribute to their fullest
    ability to the missions of the Coast Guard. I believe we can do
    this best by implementing the future personnel proposals. In
    conclusion, I want you to know we are a highly capable work
    force that remains dedicated to fulfilling our missions.
        In speaking to the men and women patrolling our coast,
    protecting our resources, ready for the call, we thank you for
    supporting the passage of the National Defense Authorization
    Act 2001, which included a number of positive elements that
    improve the quality of life for our military families and
    personnel.
        Your continued support in improving our issues of the Tri-
    care Family Medical Programs, pay raises, basic allowance for
    housing are applauded by our military members. With your
    support, the world's best Coast Guard will be ready for today
    and tomorrow. Thank you.
        Senator Murray. Thank you very much. Thank you very much,
    Admiral Brown, Master Chief Brown, for your opening statements.
    And Master Chief Brown, let me thank you and all the personnel
    who serve us here in the Pacific Coast. All of us greatly
    appreciate the service of your men, women, and especially thank
    you for your opening statement, and, Admiral Brown, as well.
        We know you have been here for a year and have done a great
    job, and been great to work with, and I look forward to the
    responses to a number of questions that we have that are
    critical here. I do have a number of questions. We do have
    three panels, and we need to be concluded by 11:30, so if you
    can keep your responses concise, that would be helpful.
        Let me begin, Admiral, by asking you about your data that
    shows that only once during the last 5 years that you met your
    goal of saving at least 93 percent of mariners in imminent
    danger. Nationwide the Coast Guard did meet that goal, and can
    you explain the reasons behind the short falls in this critical
    mission.
        Admiral Brown. I believe what we can do is help you do the
    same thing we're basically doing is look at the data more
    closely and see what it tells us. As you indicated,
    servicewide, this is the lowest that we've had since 1993.
    While we've changed some of the methodology to help us better
    understand, the fact of the matter is that the numbers don't
    lie.
        And what they're telling us is that this is, again, a job
    that we can't do alone. And while it's a tragedy when there is
    any loss of life, we feel it is an even greater tragedy when
    the majority of the factors are those that are controllable by
    the people who put themselves in these situations.
        So what I would like to do is highlight on the macro level,
    those critical elements that are in the numbers, and then ask
    Captain Peterson to give you a more precise delineation of last
    year's data to help you understand where those problems are,
    and then I would like to come back and quickly say, ``And these
    are the areas within our control that we're making an effort to
    address.'' In terms of those external factors, we find that
    timely notification is critical. Where we find that people
    knowing where they are when they do call us helps us find them.
    Weather is another external factor.
        Senator Murray. Have these factors increased over the last
    5 years to bring these statistics down?
        Admiral Brown. This is conditional, and Captain Peterson
    will talk about this. Sometimes when we get a call, even we
    can't go, and that is one of those external factors, so the
    numbers may rise and fall. But for us here in the Pacific
    Northwest, I would say over time weather has been a constant
    factor.
        Weather doesn't cause us--our numbers to go up and down
    over time because we have constant seasons. Though we have
    dramatic weather, it is a constant factor for us, and may be a
    greater factor for us in some other areas. But it is an
    external factor when we look at it alone.
        Senator Murray. But the weather alone didn't increase the
    number of people----
        Admiral Brown. No.
        Senator Murray [continuing]. Who were killed or injured?
        Admiral Brown. We'll talk about the specific data, but in
    general across time, weather doesn't unless people have made--
    elected to go out and become casualties as a result of weather.
    Our data is not giving us a clear indication that the weather
    has changed the causal factors over time.
        And the last thing is the--the things that are really
    within our control or our readiness to go, our cycle time
    ability to get there, and our search planning to find them. Let
    me ask Captain Peterson to give you some specific numbers from
    last year, and I'll come back and say, ``Here is where we do
    have some ability to have some influence on these.''

                         statement of captain Peterson

        Captain  Peterson. Thank you, Admiral. Senator, last year
    in fiscal year 2000 District 13 responded to 4,283 SAR cases.
    We saved 101 lives and there were 20 deaths after Coast Guard
    notification that we accounted for which gives us a life save
    percentage of approximately 80 percent.

                                  District 13

        Now, that is--that is really within our norm if you run the
    statistics with respect to the last 5 year average for us for
    lives saved, and our percentages. As the Admiral stated, our
    conditions here are much more severe than other areas within
    the Coast Guard that brings the overall Coast Guard numbers.
        But what we have seen here is some exceptional growth in
    waterborne activities that are happening, increases on the rise
    in our work with the State Boating Law Administrators, and
    Boating Safety and Recreational Boating. The growth is
    happening. It's happening throughout, and this accounts for
    more people on the water, and more people that can and do get
    into trouble.
        And with those environmental conditions, as the Admiral
    stated, especially our water temperature which is very cold,
    and somebody who enters the waters of Puget Sound who is not
    protected in about 2 hours the life expectancy is there if they
    have no other protection, they will be incapacitated in that.
        So those are the major factors that we see with respect to
    this. We are responding. We have not had any difficulty there,
    except during major storms, and then we make our announcements
    as the Admiral stated.
        Senator Murray. Well, okay. What you are saying, then, is
    that we're seeing increased people on the water in increasingly
    risky times, but the Coast Guard hasn't reallocated personnel
    to the Pacific Northwest as a result of that, of these numbers
    that we're seeing; correct, Admiral?
        Admiral  Brown. Correct. That's correct.
        Senator Murray. Admiral, your Pacific area commander has
    identified an urgent need for an additional 250 billets to
    staff 10 search stations and four other rescue stations in the
    13th District. About 45 percent of certified surfmen billets
    are vacant. He maintains that the status quo is unsafe, and I
    would agree.
        Last year the committee fully funded an additional 57
    billets nationwide to staff search and rescue stations. This
    year, the Coast Guard is requesting an additional 194 billets
    for the entire country. With those additional billets in the
    budget, will we come even close to meeting the needs here in
    the 13th District?
        Admiral  Brown. With those--with the budget support that we
    got in the past, and with the current budget request, we will
    continue to improve our readiness here in the 13th District.
        We have been, and I'll ask Captain Peterson to give
    specific numbers, we have been a recipient of those billets for
    our--for those very SAR stations that you talk about,
    specifically the surf--surfmen training billets and the
    surfmen, who are the most important ones, and we will be the
    recipients of the billets for this year. I can ask Captain
    Peterson to give us the specific numbers.
        Captain  Peterson. Senator, this year for your surf
    stations we received 41 additional billets. Those are to
    provide for our safety back up boat, for the motor life boat,
    which previously hadn't been in our river bar tower watches.
    Those 41 billets have come to us. We also have six temporary
    training billets.
        These are chief surfmen to come to our units so we can
    capitalize on all of our surf training days that we were not
    able to capitalize on because we have a lack of surfmen.
    Currently we have 55 of 72 surfmen billets filled today, right
    now. We've qualified people, so that is 71 percent fit rate.
        We have 100 percent of the billets, but as the Admiral
    talked about the fit rate, there are only 71 percent of those
    are qualified, and that goes--at a station, that is about
    across the board how many people are qualified. And that
    becomes our issue with respect to watch standers as the Master
    Chief spoke of.
        Senator Murray. But the national goal is to reach--is to
    save at least 93 percent of those mariners who are in danger.
    Will this get us to that point here in the Pacific Northwest or
    not?
        Admiral  Brown. What this will to do will help the response
    side, the side of which we have control of, our--our readiness
    to answer the call. Again, I want to reiterate that those
    things will help improve our readiness and our response cycle
    time, and the qualification of the people who go do the job.
        On the survival side, the people's ability to notify us,
    and those kind of elements, continue to be out of our control,
    so we continue to need the education of the populus and those
    kind of cooperative efforts.
        Things like false alarms, hoaxes, things like that, cause
    us to scramble and to divert our resources and consume our
    assets, and, so, there is a dynamic between the controllable
    and the uncontrollable. We are making progress through our
    budget on these training issues that you have identified, on
    the staffing issues that you have identified, and on the--on
    the qualification issues that you have identified.
        Senator Murray. The Pacific Area Commander says that the
    search and rescue stations in the 13th District must maintain a
    minimum of two Bravo--zero ready-to-go boat crews at any time
    in order to accurately man the region's search and rescue
    needs. Do you agree with that, Admiral?
        Admiral  Brown. I agree with that, absolutely. It's a clear
    standard. It's a safe standard, and it's a necessary standard.
    We have surf stations which are different from SAR stations
    because of the environment in which they operate.
        We have a surf in excess of 8 feet as a definition, and we
    have it 9 months out of the year. And because of that, we have
    a two-boat safety standard, one boat to go, and a stand by boat
    ready to go, so that our people are safe, and the people they
    are going out to save are safe, and that is a standard I
    absolutely agree with.
        Senator Murray. Master Chief, do you agree with that?
        Master Chief Brown. Yes, I absolutely agree with that,
    having been Officer-in-Charge of two different life boat
    stations. Our crews feel much better knowing they have a boat
    to back them up, and even relieve them in the case if something
    should happen, and a stand-by boat is absolutely necessary in
    our coastal area.
        Senator Murray. According to the Pacific Area Commander,
    ``The current staffing concept that is used to allocate billets
    to search and rescues stations in the 13th District is
    flawed.'' Those are his words, not mine, ``flawed.'' Admiral,
    are you currently reviewing the staffing standards for the 13th
    District search and rescue stations, and are you planning to
    make any recommendations to that?
        Admiral  Brown. Senator, prior to my arrival here, the 13th
    District had been one of the leaders in identifying staffing
    level issues. I think the difference here is the difference
    between models being based upon SAR loads, and the requirement
    to have a readiness posture.
        And I agree with the concept of having a readiness posture
    which is predicated on the environmental conditions we talked
    about, the surf conditions here, so that drives ours to have a
    two boat at Bravo zero standard as opposed to normal SAR
    stations having one. Once you have two boats at Bravo zero,
    then that drives the manning to support them, and that's the
    frame work in one which one is built. And I agree with it,
    absolutely.
        Senator Murray. Master Chief, I understand that a
    persistent problem is that once boat crews are fully qualified
    to do their jobs, they're commonly transferred to another
    school or another unit. Do you have any recommendations for us
    on how we can best train certified and retain qualified surfmen
    in order to sustain surf station readiness?
        Master Chief Brown. Well, the Coast Guard is very good
    about helping itself from within. The 13th District started two
    different programs to address that problem. One is the seaman
    to surfman program, where a seaman comes in, he has dreamed to
    become a surfman and he remains there until he is a surfman.
        We also started another initiative where we do back to back
    surfman. If a person qualifies as a surfman, his next unit will
    be at another life boat station as a surfman. Then after that,
    it will be his choice working with the detailer if he wants to
    continue going on being a surfman, or move into another multi-
    mission with the Coast Guard that we have, which is fair.
        We don't want to lock them into one thing, but there is a
    balancing act there, and the 13th District, we're addressing
    that by doing those two initiatives.
        Senator Murray. Is it working?
        Master Chief Brown. I think it's too early to tell.
        Senator Murray. How long have you been doing that?
        Master Chief Brown. About 1 year, so it's still too early
    to tell. I do know, if you just look at it realistically, it
    gives stability to the unit. You have a member who is there,
    who gains respect, who is able to perform the mission, and
    people look up to.
        Senator Murray. Will that help address the experience issue
    you talked about in your opening statement of losing
    experience?
        Master Chief Brown. Well, you have got to remember in the
    1980s we opened up an additional training center, and we took
    in 10,000 people, and we have lost 50 percent of those. At 20
    years they retire, so you had a sudden loss of experience. It
    takes 4 to 6 years now to grow a surfman.
        And the new 47-footers are a beautiful boat, but they're
    harder to run than the old 44s that we built in the 60s. It's
    like an old Chevy, they're easy to work on. These new cars, you
    better take it to the garage. So surfman are harder to grow,
    and, so, in the growing process, we need to keep growing them
    and cultivating them as I said in my statement, that attainable
    excellence that we need in people.
        Senator Murray. Do you think there is a direct relationship
    between losing experienced Coast Guard people and our rising
    number of accidents or fatalities in this region?
        Master Chief Brown. No, I don't. Unfortunately a lot of
    people--tragedies occur before we were able to get on scene.
        Senator Murray. Master Chief, let me ask you one more
    question. You are a boatswain mates, and I understand that
    there is a growing shortage of boatswain mates, individuals
    with that rating that are essential to our boat stations doing
    their jobs effectively.
        Why do you think there is a growing shortage of boatswain
    mate, and what can you recommend to the Coast Guard to reverse
    that trend? You talked a little bit about it, but if you can
    talk a little more, I would appreciate it.
        Master Chief Brown. A boatswain mate who stays in as long
    as I have, and is dedicated to the job, has an indomitable
    spirit that comes within. Many of our younger people who come
    into the Coast Guard and worked the long hours, and have the
    stress that goes along with it, their multi-missions, whether
    it be law enforcement added on to just strictly running a boat,
    just find out that this is something they don't want to do for
    20 years.
        I think we are addressing it by a program of mentoring our
    people, having leadership in taking these young people and
    mentoring them, and if you do that and you gain their respect,
    a lot of these people will hang around. Another thing is we
    need to have a reenlistment bonuses and things like that as
    compared to the other DOD services that they have to, you know,
    hang that out, ``Hey, the 10-year mark, where you stick around
    if we give you 10 grand.''
        Senator Murray. There are no reenlistment bonuses?
        Master Chief Brown. Well, there is reenlistment bonuses,
    but they're not comparable to some of the other DOD services
    because of our budget, of course.
        Senator Murray. All right. Thank you very much. Admiral,
    let me turn back to you with a question in a different area.
    With the closure of the naval base Concord in San Francisco,
    your Puget Sound Marine Safety Offices had to oversee a greatly
    increased number of shipments of explosives by commercial
    vessels.
        Since they've received no additional resources, I've heard
    that they had to divert resources from inspections and
    hazardous materials containers. The Bush Administration budget
    for fiscal year 2002 proposes to eliminate 15 billets that
    monitor explosive loading, a time when explosive load
    monitoring workload is significantly increasing here in Puget
    Sound. What would the impact of losing those personnel
    resources be on us here?
        Admiral  Brown. Senator, your information is accurate. We
    are going through that experience right now. As you indicated,
    they did close Concord. We absorbed some of the work here in
    the MSO Puget Sound. I would like to turn the mike over to
    Captain Warner in a minute, but what I can tell you is that
    that was a very considered decision in terms of what would the
    impact be.
        As in terms of being a multi-mission service, we do things
    with our people in terms of multi-tasking. They have numerous
    responsibilities that they are charged with, and we give them
    the requisite training for that. ELS, Explosive Loading
    Supervisor, is a specialized training, and while they are being
    reduced, I think that more to the point that we have been able
    to absorb this work within our current structure because of
    redoing our business practices. The Navy changed its business
    practices, and I think we are on a part of the learning curve
    that is reducing that work load----
        Senator Murray. But you did get the responsibility from
    them on the overseeing of these explosives without any
    additional personnel; correct?
        Admiral  Brown. Yes. But I think that we're at the point
    now, based on our experience and our changing business
    practices, and the Navy's changing business practices, that
    that is an absorbable load. And I would like to ask Captain
    Warner address it more specifically.
        Senator Murray. Captain Warner.

                          statement of captain Warner

        Captain  Warner. Senator, there is an important distinction
    to make between explosive loading supervising, and container
    inspection of hazardous materials in which explosive materials
    are a subset. In Concord, the explosives used to be in what was
    called break bulk, not in containers.
        And we used to supervise the loading of every single hatch,
    and if you have seven hatches on a vessel, then you have to
    have seven full-time supervisors there, full time, servicing
    the load, and the cranes and so forth. Here, we don't do that.
    We do not do that. What we do is we're still doing our
    inspection program, and these explosives are now coming in
    containers, so by ex----
        Senator Murray. Are all explosives coming in containers
    now? There is no bulk loading?
        Captain  Warner. No, not all explosives, but the ones we're
    talking about that you just mentioned, the military ones, the
    last operation was a little over 1,000 containers, and the
    problems were involved in how they put the explosives in the
    containers which takes place somewhere else outside of Puget
    Sound.
        So, really, our container inspection program encompasses
    this explosive loading, and by example, just yesterday we did
    not permit underneath this program to ship 4.6 million pounds
    of what we call ammonium nitrate fuel mixture through the Port
    of Seattle as a result of our container inspection program, not
    our explosive loading program.
        We inspect containers, we look for hazardous materials, we
    saw that that was too large of a shipment coming through Puget
    Sound. It wasn't an explosive loading mission, it was a
    container inspection mission.
        Senator Murray. And you rejected that?
        Captain  Warner. We rejected it because the amount was too
    large. They are going to have to ship those out in smaller
    quantities through the various ports, or at various times
    through this port.
        Senator Murray. So in your opinion, Admiral, you are still
    able to conduct an adequate number of hazardous material
    container inspections, even though you had gotten this
    additional responsibility?
        Admiral  Brown. In my opinion, yes, ma'am.
        Senator Murray. Let me read you a statement, and tell me if
    it is true. ``Efforts to meet the explosive loading supervisory
    requirements have been detrimental to meeting C1BT output
    standards on HAZMAT container inspections.
        This is due in large part to the same personnel being
    required to handle both programs. With the quota of 728
    containers per billet totaling 2,912 containers, the unit was
    only able to complete 1,476 container inspections due to ELS
    requirements. Unless additional resources are provided, we will
    be unable to meet output standards on HAZMAT container
    inspections.'' Do you agree with that, or disagree with that?
        Admiral  Brown. In context, Senator, accurate statement. It
    has some time phase implications. As I indicated, our people
    are multi-tasked, multi-responsible, and as you indicated
    accurately, the people who absorb those responsibilities were
    our containers inspectors, and, so, they can't be two places at
    one time.
        They can't do two things at once. And as we began to absorb
    this work, that was initial decision of how to do it. The
    requirement was there, so we had to perform the functions. And
    in doing that, that was our experience. That was then. I'm----
        Senator Murray. This statement is only a month old.
        Admiral  Brown. I think it was a year or two ago.
        Captain  Warner. Senator, we turned in that statement when
    the load was first shipped to us, when we had three containers
    inspectors, and we had to get one of them additional training
    to deal with the shift up here.
        But as more and more of the DOD shipments were
    containerized, we realized that our existing container
    inspection qualifications were going to meet the challenge of
    the shift from Concord up here because the break bulk had gone
    to containers, and the containers are well within what we're
    training them to do.
        The statement we made, which is probably more like 9 months
    ago in that regard, was that we had a big increase. We had a
    big increase in activity at Indian Island, and we had to do
    shift. That was an initial hit that we took, and now because of
    the containerization, we have been able to shift that back east
    where they do the loading of those containers, and not
    necessarily in this port where we have to watch them load the
    containers.
        Admiral  Brown. Those are business practices, changes I
    talked about where we spiked, and I think in our current
    experiences, it's manageable.
        Senator Murray. So you can assure those of us who live here
    that hazardous material containers, and explosive materials are
    all being inspected adequately?
        Admiral  Brown. Senator, we are going to do our absolute
    best. We are going to be vigilant. We are going to assign our
    people on a priority basis to discharge those missions.
        Captain  Warner. If I can just add, our goal you say there
    are 728 times 3 billets gets you up to around 2,100. We've
    already inspected over 5,000 hazardous material containers this
    year.
        Senator Murray. This is your opportunity to tell me as
    ranking member, most likely Chairman of Transportation, whether
    you need additional dollars for these kinds of programs.
        Admiral  Brown. Appreciate your support and your
    leadership. We do have some challenges. I think we have been
    very forthcoming about identifying those challenges. This
    specific area you are talking about, while I would really
    frankly love to stick my hands out, I think if you gave me
    three billets, I wouldn't put them in ELS. Mike might not be
    happy about that. But I think in that regard----
        Senator Murray. What has a higher need that you would put
    them in?
        Admiral  Brown. Well, we talked about some of the things
    that are already being addressed. Our budget will give us more
    watch standers, in our communication centers--that is already
    coming. Those are the kinds of things we think are important.
        So those kinds of things that are being addressed in the
    budget are, as I said in my statement, are the kinds of
    priorities that we're after. Support that stabilizes our work
    force, so that we don't have the flow that the Master Chief
    talks about. Retention is important to us. So those are the
    kinds of things that are important.
        In this case, and it's not true in all cases, we are
    confident that the ELS issue, as long as the business practice
    continues the way it is now, is manageable. It was a spike, and
    we did have to address it, and at this point we believe it is
    manageable.
        Senator Murray. Thank you, Admiral. Let me turn to another
    question, then. The Bush Administration budget for fiscal year
    2002 in order to achieve budget savings is proposing to
    decommission earlier than scheduled the 180-foot seagoing buoy
    tender, Cowslip.
        This vessel services more than 200 buoys in the Pacific
    Northwest. Under the Administration's plan, the vessel will not
    be replaced in the region for 18 months. During that time other
    Coast Guard vessels would be required to handle the Cowslip's
    work load.
        Admiral, are you confident that if the Cowslip is
    decommissioned early as has been proposed by the Bush
    Administration, that there will not be any reductions or delays
    in the routine or emergency servicing of aid to navigation here
    in the 13th District?
        Admiral  Brown. Senator, your information is accurate. As
    currently planned the Cowslip, within the context of the
    Commandant's transformation of the Coast Guard to the 21st
    century, is part of that removing our older, more costly
    assets.
        There will, as you indicated, be a gap, as I indicated in
    my opening statement, before we get a new asset. What we have
    planned to do, and we're coordinating this with the other
    districts and the area commander is to have what we call heavy
    lift. There is some buoys that only that class vessel can do.
        We are going to share that responsibility with other
    districts. So we expect to have all of our buoys relieved in
    its normal cycle, and I can ask Captain Peterson to give you
    the specifics about that.
        Captain  Peterson. Senator, the Cowslip is responsible for
    approximately 161 aides. She services, on average, 115 of those
    aides a year. Of those aides, 29 are the larger class that
    nothing in this district will be able to handle. On average,
    she handles 15 of those larger buoys with discrepancies
    consistently over the year.
        We estimate that it's going to require the buoy tenders
    from California and Alaska to provide us approximately 1-month
    time period to be able to handle those aides with respect to
    that, and the rest of the aides would be picked up by the Henry
    Blake and our other Aton teams as well as the Bluebell and
    Bayberry.
        Senator Murray. So you do have a contingency plan for this
    proposed budget decrease?
        Admiral  Brown. Yes, we do, Senator.
        Senator Murray. And you feel confident that you will be
    able to maintain that?
        Admiral  Brown. Yes, we do.
        Senator Murray. Admiral, as you know within the Seattle
    area the Coast Guard currently lacks adequate pier space for
    all of its larger vessels. And the facilities at Pier 36 are
    quite old.
        There was also, I know, substantial earthquake damage to
    Pier 36, and the Port of Seattle has put forward a proposal for
    the Coast Guard to relocate its downtown facility to a newly
    built facility with more pier space at Pier 90 and 91. Can you
    update us regarding the status of the negotiations between the
    Coast Guard and Port of Seattle on this issue.
        Admiral  Brown. Yes, Senator. I had the privilege and honor
    to be with you as we both surveyed the earthquake damage. From
    our vista in the helicopter we didn't see some of the internal
    damage that occurred at Pier 36. It's about $3.5 million
    dollars worth of damage.
        I also had the honor and privilege of being with you after
    the Secretary of Transportation recognized the heroic work of
    the air traffic controllers by awarding them a medal of valor.
    That same afternoon, as you recall, we had a meeting on the
    Pier, where you expressed your concern about our efforts to
    work together to fight to try and find a solution.
        Based on that, we had a subsequent meeting where we had
    representatives from Coast Guard Headquarters and myself there
    to look more closely at these issues, and that the office--I
    think it's clear to say that we expect Seattle to remain a
    strategic address for the Coast Guard. We see it as a hub of
    our business, and it's a home to a lot of our people.
        The move for us, frankly, will be no change in our
    operational effectiveness. So, for us, it becomes other matters
    that we are negotiating with the Port. The subsequent meeting
    we had after your--at your request, I think it moved us in a
    direction where we are looking more closely at some viable
    alternatives.
        We have engineers who are meeting. There is a meeting
    scheduled, I think, the week of June 10 through the 12. We have
    exchanged engineer technical data. We have had data shared by
    outside contractor on value, so I think we are beginning to
    close that negotiation gap. And I think we are doing it in a
    very productive and effective manner.
        Senator Murray. Very good. I appreciate that very much,
    Admiral. That--I think what we will do then is close this
    panel, and Admiral Brown, if you want to stay at the table, I
    want to bring up Mr. Stan Norman, who is the acting Program
    Manager for the oil spill program for the Washington State
    Department of Ecology. And Mr. Scott Davis, Safety Systems
    Manager for Washington State Ferries.
        If you want to come forward, we will begin with your
    testimony. Mr. Norman, we will begin with your testimony, and I
    will tell you we have exactly a half hour for this panel for
    statements and questions. I would like you to keep your opening
    remarks to 5 minutes. We do have your written testimony, so if
    you can summarize that, that would be appreciated.
                           NONDEPARTMENTAL WITNESSES

    STATEMENT OF STAN NORMAN, ACTING PROGRAM MANAGER, OIL
                SPILL PROGRAM, WASHINGTON STATE DEPARTMENT
                OF ECOLOGY
        Mr. Norman. Thank you. Good morning. My name is Stan
    Norman. I'm the acting Program Manager for the Washington
    Department of Ecology Spills Program. I want to thank you,
    Senator Murray, for sponsoring this hearing. We appreciate your
    continued leadership on marine safety issues.
        My presentation today will address the role the Washington
    State Spills Program plays in enhancing our maritime safety,
    our recent efforts to expand our partnership with the Coast
    Guard, the current level of marine oil spill risk and
    perspective, and the status of funding for the Neah Bay rescue
    tug.
        And I would like to preface my remarks with the observation
    that the State of Washington and the Federal Government are
    jointly responsible for the safety and health of the waterfront
    here in Seattle, throughout Puget Sound, on Washington's coast,
    and in the Columbia River. Therefore, we must work together
    toward our common goals of spill prevention.

               Spill prevention preparedness and response program

        For more than a decade Washington has worked to develop a
    proven Spill Prevention Preparedness and Response Program. We
    have a 55-person program, including a team of highly
    experienced professional mariners focused on maritime safety.
    And we do provide spill response coverage 24 hours a day, 365
    days a year.
        We have a very active constituency, as you know, of local
    tribal governments, environmentalists and industries involved
    in decisions affecting them. As of last Friday, Admiral Brown
    and Governor Locke signed a revised memorandum of agreement
    between the State of Washington and the 13th Coast Guard
    District.
        This agreement will lead to greater Federal/State
    collaboration in preventing and responding to oil spills in
    Washington waters. We developed the agreement in part as a
    result of the U.S. Supreme Court Intertanko decision which,
    frankly, limits our ability to prevent oil spills.
        Governor Locke said, ``If the Coast Guard's regulations are
    the highest level of protection that will be allowed in our
    State, then we need to work together to make sure they are
    implemented and enforced to the greatest possible extent.'' The
    Coast Guard, as you said, is tasked with multiple missions of a
    national scope, which must be fulfilled under increasingly
    tight budget constraints.
        We feel the Coast Guard needs us, and we need them,
    certainly, to protect Puget Sound, our coast, and our Columbia
    River. Now that the agreement is signed, we're going to focus
    on developing a number of implementing protocols, cooperative
    vessel inspections, information sharing, and monitoring oil
    transfer operations.

                             unified Command system

        The partnership between the 13th District and Ecology
    officially began in 1988, and we developed and promoted a
    Unified Command System for jointly managing spill response and
    hazard material spills. This system, of course, is the national
    system now.

                    North puget sound risk management panel

        Thanks to the leadership of Admiral Brown and Captain
    Veentjer and Captain Moore, and Captain Spitzer here in the
    13th District. We've also taken advantage of other
    opportunities. The Admiral mentioned co-chairing the North
    Puget Sound Risk Management Panel together, and implementing an
    agreed protocol for dispatching the rescue tug.
        This cooperation is both beneficial and absolutely
    necessary. A review of some statistics regarding marine
    transportation and vessel casualties: 15 billion gallons of oil
    move through the waters of Washington State. About half of that
    was crude oil moved by the six refineries in the State.
        And about half of the remainder is in the form of vessel
    fuel and cargo passenger vessels. Last year over 11,000 vessels
    entered Washington waters. Approximately half of those were
    going to Canadian ports through Washington waters.
        According to a recent Coast Guard study that was part of
    the North Puget Sound process, the probability of a spill of
    over 10,000 gallons is approximately 1 every 5 years, and is
    increasing to 1 every 3\1/2\ years by 2020, based on traffic
    volumes. The consequences of oil spills are also increasing.
        The cost just to clean up an oil spill now is in the range
    of $1,000 per gallon. If you would please refer to the colored
    chart in your packet. The chart shows the locations since 1994
    where commercial vessels lost power, had steering failures, or
    experienced other accidents and spills.

                                  Port angeles

        While the light blue area east of Port Angeles has had the
    most vessel incidents and spills, there are a large number of
    measures in place in this region that provide a safety net if a
    vessel gets into trouble. However, the dark blue area west of
    Port Angeles is at particular risk, even if the incidents are
    less frequent.
        Vessels operating west of Port Angeles are transiting a
    waterway without a number of important spill prevention
    measures including no State pilots, no tug escorts for laden
    oil tankers. This area is also known for fog, storms, and heavy
    seas, extremely high natural resource values, including a
    national marine sanctuary, vital commercial, tribal and
    recreational fishing values, a long, long history of major
    spills, and relatively ineffective spill response capability.

                                  Rescue tugs

        We believe that the Neah Bay rescue tug provides important
    additional measure of safety if a vessel loses power, has a
    steering problem, or other casualty in this high risk area. The
    tug has demonstrated its cost effectiveness over the last 2\1/
    2\ year--two and a half winters.
        In other areas of the world benefit from dedicated rescue
    tugs including Alaska, Great Britain, Northern Europe, Japan,
    and South Africa. We are continuing to work with the State
    legislature and interested stake holders to find permanent
    government funding for a rescue tug that will protect the
    competitive position of the ports.
        This legislative session Governor Locke has requested $3
    million for the tug in his budget to support the tug over the
    next two winters. The Federal Government also has many trust
    responsibilities to protect in the area, and should provide
    some funding. These responsibilities are outlined in my
    accompanying handout.
        In summary, marine oil spills continue to place our
    environment and quality of life at risk. The State Department
    of Ecology has a strong and effective marine safety program,
    and is working hard to expand its partnership with the Coast
    Guard and others. As long as the Coast Guard and Ecology work
    together, we can continue to expand the economic benefits of
    the Pacific Rim trade while providing the level of natural
    resource protection demanded by the citizens of this State.
        The Department of Ecology strongly supports a well-funded
    Coast Guard. In closing, I ask for your continued support in
    improving maritime transportation safety. Specifically, Ecology
    would like your help in eliminating administrative hurdles to a
    strong Federal and State cooperative effort, with the ultimate
    goal of allowing for Federal delegation of certain activities.
        Help us identify permanent Federal funding, independent of
    the Coast Guard's operating budget to help support the Neah Bay
    rescue tug. Thank you for the opportunity.
        Senator Murray. Thank you, Mr. Norman. Mr. Davis.
    STATEMENT OF SCOTT DAVIS, SAFETY SYSTEMS MANAGER,
                WASHINGTON STATE FERRIES
        Mr. Davis. Good morning. I'm happy to be here to represent
    the largest ferry system in our Nation. Today, as we celebrate
    our 50th anniversary----
        Senator Murray. Happy anniversary.
        Mr. Davis [continuing]. And to share with you some of my
    excitement over the work being done at Washington State
    Ferries, both independently and in cooperation with the U.S.
    Coast Guard and the Department of Ecology to advance the cause
    of safety here in the Puget Sound.

                       safety at Washington state ferries

        When you move over 26 million people a year across a
    relatively large cold body of water, safety is an everyday
    occurrence for everyone at Washington State Ferries.
    Furthermore, when you operate a fleet of both high-capacity and
    high-speed passenger vessels, it is paramount that you do
    everything reasonably possible to reduce the likelihood of an
    incident, while still planning for a response should one occur,
    as the consequences are simply too high not to.
        This goal of providing for safety interventions along the
    full breadth of the error causal chain forms a basic tenant of
    safety at Washington State Ferries. In this era of limited
    resources, yet heightened expectations, Washington State
    Ferries' challenge is meeting operational demands, and a
    discerning customer base, while continuing to improve our
    overall safety posture.
        This can only be accomplished by leveraging available
    resources in order to both efficiently and effectively be
    stewards of the public's trust and limited funding. In the
    late--mid and late 1990s WSF embarked on a safety course
    specifically charted to lead to a destination where the
    organization's safety bar was markedly raised.

                            Safety management system

        In 1998, WSF implemented a safety management system for two
    vessels operating on the international route to Sydney, B.C.
    This system, although originally mandated by the International
    Safety Management Code, was embraced by WSF as a best business
    practice. In April of this year, I am happy to report that WSF
    rolled out Safety Management System fleetwide, including all
    terminal operations and Eagle Harbor Repair Facility.
        This new encompassing system was built on the original
    foundation laid on the international route and is helping us to
    ``Say what we do.'' and ``Do what we say.'' Also in 1998 and
    early 1999, WSF took a corporate-wide look at ferry passenger
    and crew safety. This was accomplished, in part, through the
    Risk Assessment developed by a Blue Ribbon Panel and published
    in July 1999.

                                Risk management

        This comprehensive assessment identified those areas of
    operation that were of highest relative risk and made a number
    of recommendations to address those risks. In turn, WSF using
    risk-based decision making to attack these areas of highest
    concern, using remedies that proved to be the most cost
    beneficial.
        This risk assessment also helped lay the foundation upon
    which WSF built its lifesaving and evacuation strategy to
    comply with the new Federal lifesaving standards. As part of
    this strategy, WSF has made organizational changes to better
    address safety concerns, has rewritten and is writing protocols
    to best safety--to reflect best safety practices, has embarked
    on an unprecedented purchase of lifesaving equipment, and
    perhaps most importantly is devoting a considerable amount of
    time, energy and money on the training of fleet personnel.
        Together these elements form a concerted effort to reduce
    the occurrence of human and organizational errors, seen as a
    common thread that runs throughout most accidents and may be
    WSF' greatest vulnerability as well. Possessing the largest
    consistent presence on the waters of Puget Sound, WSF' strategy
    for evacuation relies largely on its own assets.

                               Emergency response

        However, WSF clearly recognizes that it is part of the
    marine transportation system. For example, WSF has been
    directly involved with over 65 search and rescue cases on the
    waters of Puget Sound during the past 2 years. Accordingly, WSF
    clearly endorses the idea of a holistic approach to emergency
    response that has long been a hallmark of the U.S. Coast Guard.
        As part of the Subchapter W compliance strategy, WSF is in
    the process of going through a comprehensive review of the full
    sweep of its emergency response contingency plans. One element
    of this effort is the identification of potential available
    emergency response assets.
        WSF looks forward to continuing to participate in this
    approach as, together with the Coast Guard, we strive to
    enhance our already robust response network in order that the
    greater Puget Sound marine transportation system is second to
    none in this regard.

                        Port townsend to keystone route

        One example of where this effort described above are
    beginning to bear fruit is the progress made on the Port
    Townsend to Keystone route which was identified in the risk
    assessment as an area of high risk.
        I am happy to report that the two boats operating on this
    route today have sufficient lifesaving capacity on board to
    accommodate all passengers and crew. Assessing WSF' risks,
    implementing a Safety Management System, and enhancing the WSF'
    evacuation strategy have not, and will not be accomplished
    without a cost.
        The Washington State legislature should be applauded for
    having the vision to fund these critical safety enhancements.
    The benefits associated with funding prevention and response
    safety measures are often difficult to quantify. Indeed, the
    only way to measure the effectiveness is to forecast the
    potential costs avoided from a major marine catastrophe.
        This is difficult, if not impossible, to quantify with
    certainty. Suffice it to say, the implications would be
    staggering. Consequently, we believe, despite the difficulty in
    measuring the effectiveness, this preventative money is well
    spent now as an investment in the ferry system's long and safe
    future, and hopefully another 50 years of safe operation. Thank
    you.
        [The statement folows:]

                       Prepared Statement of Scott Davis

        On behalf of Washington State Ferries--good morning. My name is
    Scott Davis, and I am the safety systems manager and designated person
    for WSF. I am happy to be here to represent the largest ferry system in
    the nation, today as we celebrate WSF's 50th Birthday, and to share
    with you some of my excitement over the work being done at WSF, both
    independently and in cooperation with the U.S. Coast Guard and
    Department of Ecology, to advance the cause of safety in Puget Sound.
        When you move over 26 million people a year across a relatively
    large cold body of water, safety is an everyday occurrence for everyone
    at WSF. Furthermore, when you operate a fleet of both high-capacity and
    high-speed passenger vessels, it is paramount that you do everything
    reasonably possible to reduce the likelihood of an incident, while
    still planning for a response should one to occur, as the consequences
    are simply too high not to. This goal of providing for safety
    interventions along the full breadth of the error causal chain forms a
    basic tenant of safety at WSF. In this era of limited resources, yet
    heightened expectations, WSF's challenge is meeting operational
    demands, and a discerning customer base, while continuing to improve
    our overall safety posture. This can only be accomplished by leveraging
    available resources in order to be both efficient and effective
    stewards of the public's trust and limited funding.
        In the late 1990's WSF embarked on a safety course specifically
    charted to lead to a destination where the organization's safety bar
    was markedly raised. This course involved a detailed analysis of the
    organization itself, the procedures that it followed, the equipment it
    operated and the personnel training it conducted. At the core of this
    assessment was the genuine desire to put safety first and infuse that
    principle into the culture throughout the organization.
        In 1998, WSF implemented a safety management system for the two
    vessels operating on the international route to Sydney B.C. This
    system, although originally mandated by the International Safety
    Management Code, was embraced by WSF as a best business practice. In
    April of this year, WSF rolled out the Safety Management System
    fleetwide, including all terminal operations and the Eagle Harbor
    Repair Facility. This new encompassing system was built on the original
    foundation laid on the international route and is helping us to ``Say
    what we do'' and ``Do what we say.''
        Also in 1998 and early 1999 WSF took a corporate-wide look at ferry
    passenger and crew safety. This was accomplished, in part, through the
    WSF Risk Assessment developed by the Blue Ribbon Panel and published in
    July 1999. This comprehensive assessment identified those areas of
    operation that were of highest relative risk and made a number of
    recommendations to address those risks. In turn, WSF used risk-based
    decision making to attack those areas of highest concern, using
    remedies that proved to be the most cost beneficial. The risk
    assessment also helped lay the foundation upon which WSF built its
    lifesaving and evacuation strategy to comply with the new federal
    lifesaving rules for passenger vessels found in 46 CFR Subchapter W. As
    part of this strategy, WSF has made organizational changes to better
    address safety concerns, has rewritten and is writing protocols to
    reflect best safety practices, has embarked on an unprecedented
    purchase of lifesaving equipment, and perhaps most importantly is
    devoting a considerable amount of time, energy and money on the
    training of fleet personnel. Together these elements form a concerted
    effort to reduce the occurrence of human and organizational errors,
    seen as a common thread that runs throughout most accidents and may be
    WSF's greatest vulnerability as well.
        Possessing the largest consistent presence on the waters of Puget
    Sound, WSF's strategy for evacuation relies largely on its own assets.
    However, WSF clearly recognizes that it is part of the marine
    transportation system. For example, WSF has been directly involved with
    over 65 search and rescue cases on the waters of Puget Sound during the
    past 2 years. Accordingly, WSF endorses the idea of a holistic approach
    to emergency response that has long been a guiding hallmark of the U.S.
    Coast Guard. As part of the Subchapter W compliance strategy, WSF is in
    the process of going through a comprehensive review of the full suite
    of its emergency response contingency plans. One element of this effort
    is the identification of potentially available emergency response
    assets. WSF looks forward to continuing to participate in this approach
    as, together with the Coast Guard, we strive to enhance an already
    robust response network in order that the greater Puget Sound marine
    transportation system is second to none in this regard.
        One example of where the efforts described above are beginning to
    bear fruit is the progress made on the Port Townsend to Keystone route.
    This route was identified in the risk assessment as an area of
    relatively high risk, because of a lack of immediately available
    response resources. WSF has taken steps to address this concern over
    proximity to evacuation assets by adding marine evacuation slides and
    inflatable buoyant apparatus to the vessels operating on this route. I
    am happy to report that the two boats operating on this route today
    have sufficient lifesaving capacity onboard to accommodate all
    passengers and crew.
        Assessing WSF's risks, implementing a WSF safety management system,
    and enhancing the WSF evacuation strategy have not, and will not, be
    accomplished without a cost. The Washington State legislature should be
    applauded for having the vision to fund these critical safety
    enhancements. The benefits associated with funding prevention and
    response safety measures are often difficult to quantify. Indeed, the
    only way to measure the effectiveness is to forecast the potential
    costs avoided from a major marine catastrophe. This is difficult, if
    not impossible, to quantify with certainty. Suffice it to say, the
    implications would be staggering. Consequently, we believe, despite the
    difficulty in measuring effectiveness, this preventative money is well
    spent now as an investment in the ferry system's long and safe future.

        Senator Murray. Thank you very much, Mr. Norman, and Mr.
    Davis. Mr. Norman, before I ask questions, I just want to
    remark that in your opening comments you talked about Governor
    Gary Locke's budget, funds for the cost of the dedicated
    funded--dedicated tug at Neah Bay for the next 2 years.
        And as you point out, the dedicated tug has been proven to
    be an effective asset as well as the ITOS system that has been
    put in place. I understand that there is also a discussion
    going on right now in our legislature, right now, about
    establishing a fund to hire additional tugs at the discretion
    of the captain of the port.
        When the weather turns especially bad, and the risk for
    casualties is increased, and I just really want to urge
    everybody, all of the parties, to continue to work together to
    look at the merits of all of those approaches. Admiral, let me
    start with you. Following the Exxon Valdez spill over a decade
    ago now, the Coast Guard deploys pre-positioned oil spill
    response equipment at ports around the country, including here
    in this area.
        I understand that much of that oil spill recovery equipment
    that was deployed then is nearing the end of its surface life,
    and the Bush Administration fiscal year 2002 budget contains no
    requests for funds to replace any of that equipment. Can you
    tell us the condition of that equipment, and whether we have
    been able to maintain it for appropriate standards?
        Admiral Brown. I'll defer to Captain Moore, but before he
    speaks for our oil response equipment, there is the stuff that
    we are responsible for is also contractors, and I think we can
    speak to ours. I'm not in a position to speak to those that are
    that contracted.
        Captain Moore. I'll actually answer that, Senator. We have
    pre-positioned equipment here that is maintained under the
    National Strike Force. We have located a cache of it here in
    Puget Sound as well as down in Astoria. We also have prestaged
    crucial response equipment that is managed under the Marine
    Safety Offices.
        All of that equipment is in good shape. None of it is in
    need of replacement at this time. It's all well maintained and
    in exercise it has been used on occasion. The most important
    thing is that it will only last 10 years. These contractors
    have increased the amount of equipment that they have, and
    there is plenty of equipment in the Puget Sound.
        Senator Murray. So, in your opinion, if there was a major
    oil spill, that equipment is ready to go, it's safe, it's
    adequate, and it has been maintained?
        Captain Moore. Yes, it is.
        Senator Murray. Mr. Norman, can you comment for us on what
    the Washington State Pollutions Response capabilities are for--
    and how they interrelate with the Coast Guard.
        Mr. Norman. Our--we have a small pollution response group
    of about 21 people spread across four regions. On the west side
    of the State, the dividing line is basically Tacoma. They have
    been focused, because we haven't had, fortunately, many spills,
    they have been focusing more recently on cleaning up
    methamphetamine, illegal drug labs, which is a hazardous
    material. Because they respond----
        Senator Murray. On boats or shore?
        Mr. Norman. On shore so far, but we anticipate we'll start
    finding those on derelict vessels as well, which causes Captain
    Moore and I to have--to have some qualms, I guess you can say.
    It adds to the clean up, the difficulty. So we have been
    focused more on hazardous material spills. We don't bring a
    great deal of assets to the table.
        Senator Murray. This question is for both you, Admiral, and
    for you, Mr. Norman. Since enactment of the Oil Pollution Act,
    every vessel and facility is required to have a designated oil
    spill removal organization.
        I have heard that nationwide facility and vessel operators
    may be switching to cheaper, less capable oil spill remover
    contractors, and I understand that both the Coast Guard and the
    State of Washington has established standards for these
    contractors. Could you both comment on the availability and
    capabilities here in the 13th District, Admiral.
        Admiral Brown. As you mentioned, we do have standards, and
    as Captain Venture mentioned we also do exercises, and I would
    like to defer to Captain Moore for a more specific response.
        Captain Moore. Senator, there is two different classes of
    vessels. There are those that require a vessel response plan,
    primarily the tankers and tank barges, and the other vessels
    that require a different level of plan. Those that require a
    vessel response plan have to have a sufficient amount of
    equipment to meet the regulations.
        The way that most of them do that is they contract with Oil
    Spill Removal Organizations OSROs. In Puget Sound here, we have
    five main OSROs that are referred to in these vessel response
    plans. The majority of those plans refer to one or more of
    those OSROs. We work basically, essentially, the top five OSROs
    here all the time, both with respect to reviewing the vessel
    response plan, and an actual, in fact, oil clean up.
        Senator Murray. Mr. Norman?
        Mr. Norman. We have an unannounced drill program that helps
    us evaluate, and we work with the Coast Guard on drill programs
    that helps us evaluate the readiness of the contractors, both
    their equipment and their personnel.
        And as we do these drills, we're finding that the--I would
    say the biggest shortfalls, experienced spill personnel,
    because we have not had a big spill. I think spill management,
    in the event of a big spill, could be a problem for us.
        Senator Murray. Because we don't have personnel?
        Mr. Norman. Because we don't have the experienced
    personnel. They have gone to places where they have a lot of
    spills, basically. And as a result, our biggest concern is with
    the actual management of the spill by the responsible party.
    And the best way to get at that is more and more training, and
    we work with the Coast Guard on drills to assure that.
        Captain Moore. And, Senator, if I could just add to my
    point here. I think the answer to the question in terms of
    OSROs and less people in OSROs speaks to the beginning of that
    program where there was a shell game played where people
    referred to other contractors and subcontractors, and we
    weren't real sure that that equipment could be put in an
    effective and timely manner.
        What I meant to put the five--the main OSROs we work with
    here, we know their equipment, we know their personnel received
    every exercise and drill, and it's nice to have that
    consistency. It's also nice to have more than one, and, so, we
    see them all the time. Our focus now is more on the management
    of the spill, rather than their playing any kind of shell games
    with the equipment. We know where that is.
        Senator Murray. Very good. Well, it's actually a real
    concern of mine that we are at a point where we're seeing more
    oil spilled from facilities than from vessels, and the budget
    proposal the Administration is going to eliminate 17 facility
    inspectors whose job is to ensure that oil and cargo facilities
    are complying with the environmental laws.
        I know that part of that budget reduction is going to hit
    us here in the 13th District. Admiral, if you could tell me
    what--how you think the reduction of 17 facility inspectors
    will affect your ability to meet your performance goals.
        Admiral Brown. Yes, Senator, as you indicated that number
    is 17 Coast Guard-wide, and different regions have different
    facilities functioning and thus different impacts. In that
    regard, for us, it's not the largest contributor of problems in
    terms of oil spills, but let me ask Captain Moore to give more
    specifics about what we experienced here in the 13th District.
        Captain Moore. Senator, in Puget Sound less than 1 percent
    of our spills, last year we had 687 spills, only 500 of those
    were confirmed to be oil, and only 5 of those came from an
    inspected waterfront facility. Vessels at the facility,
    including barges and fishing vessels engaged in transfer
    operations, are another segment of spills, but not from the
    actual facility where it's piping, or its operation.
        And, so, in Puget Sound we don't have too many spills from
    facilities. I believe the statistics that might be relaying
    that are that non-vessels in the larger statistical national
    data base get referred to as facilities, that is, those that
    come from storm drains, those that are machines that are not
    otherwise attributed to a vessel.
        But for here in the Puget Sound, our specific data shows
    just 1 percent of the spills come from an inspected facility.
        Senator Murray. Well, would an elimination of 17 facility
    inspectors have an impact?
        Captain Moore. Us here? Well, that's 17 Coast Guard-wide.
    Here, out of all of our facilities we still focus on those that
    move the most oil, and those that have the dangerous cargo.
        And by extension, what we have found is that the container
    inspection program, our container inspectors have to go on the
    container yards. By virtue of being there, they can cover
    reviews of those containers facilities. Our facility inspectors
    are focusing on----
        Senator Murray. So, what, we have 17 people sitting around
    the country with nothing to do that this won't have an impact?
        Captain Moore. No, Senator. We're doing risk ranging so
    that--we have 56 oil facilities here. About 9 of those move the
    majority of the oil, so we focus on the top 9. A lot of those
    are mobile facilities.
        If we lose an inspector, we'll do less of the mobile
    facilities, or less frequency of the mobile facilities. We'll
    still make sure that the top 9, the ones that move the most
    oil, that--we'll make sure from risk ranging, that we'll be
    attending to those operations.
        Senator Murray. Mr. Norman, do you have any comments on how
    that will affect you?
        Mr. Norman. I'm not sure how it would impact the Coast
    Guard facility inspection. We also do pre-facility inspections
    and test every contingency plan and prevention. We have two
    prevention inspectors and I think eight contingency plan
    inspectors, one supplementary Coast Guard.
        In fact, we have a joint program for facilities that, as
    yet, they have not taken advantage of which increase the
    facilities inspections of itself with Coast Guard and State
    oversight that no facility has yet taken advantage of. We would
    like to see more of that as that would help absorb some of the
    impact.
        Captain Moore. One of the key elements, Senator, of the
    Memorandum of Agreement with the State is to leverage our
    resources and eliminate duplication, so as we work forward on
    that, the implementation of that MOA, we hope to identify those
    areas where we can allow the State to do certain things that we
    won't have to do then.
        Senator Murray. All right. Well, Mr. Davis, let me turn to
    you. You talked about 26 million people a year using our
    ferries here. That is a lot of folks moving. And we are seeing
    an increasing use of high-speed ferries as well, and clearly
    that it is contributing to a higher risk of casualties.
        There was recently a Blue Ribbon report on Washington State
    Ferry safety that made a number of recommendations to the Coast
    Guard and to Washington State to help us address these risks.
    Have the Coast Guard and Washington State Ferry System
    developed an exercise plan and procedures that are--that will
    help us with this increased risk factor?
        Mr. Davis. The simple answer is, yes, but I would like to
    expand on that a little. The Blue Ribbon Panel had 16
    recommendations, 15 of which were directly towards the Ferry
    System, one of which was directed towards the Coast Guard. All
    of those have, to varying degrees, been addressed. All them are
    not something that you say, ``We've done that.''
        They're all things that we're going to continue to improve
    on over time. So some of them have had a lot of progress made.
    Some of them have had a little progress made with more progress
    in the works.
        The implications of the recent life saving rules, the
    Subchapter W rules that have come out, have really solidified
    the already good working relationship with the Coast Guard to
    bring us together to say, ``How we are going to tackle this?
    How are we really going to deal with a scenario?'' We have got
    a drill coming up this fall in September-October. We are going
    to look at how are we going to do in those areas where they----
        Senator Murray. So you will actually be conducting drills
    along with the Coast Guard and making recommendations from
    there?
        Mr. Davis. That's correct. The whole idea of the exercise
    is to test those contingency plans that you put in place and
    see if you can actually do what you said you were going to do.
    Learn lessons from it, and refine. Make them better. That's the
    whole idea.
        Senator Murray. Admiral Brown, do you want to comment on
    that?
        Admiral Brown. I think he has done what I would do in terms
    of saying we made progress. We can't get any blocks and check
    them. I think we will continue to move in that direction.
        Senator Murray. Okay. Did you want to add anything else?
        Captain Moore. Just give a plug to Washington State Ferries
    for a second. They voluntarily put in place the safety
    management systems for the vessels that were not required to
    have them. And they are aggressively moving forward on training
    and increasing the competency of the crews.
        Those are two of the elements that we have been working on
    for a long time, and in their budget constraints and so forth,
    to be able to make that decision and stick with it is a great
    thing.
        Senator Murray. Okay. One final question, Admiral, before I
    let this panel go, for you. You have proposed closing your
    station at the Columbia River and moving the assets from that
    station to stations at Port Angeles, Port Townsend, and Grays
    Harbor.
        I understand that this proposal was not made for budgetary
    reasons, but because of your concerns about emergency response.
    Could you please walk us through the rationale for this
    proposed change.
        We are hearing a lot from folks, and I think they are very
    concerned, and if you can just acquaint us with some of the
    relative statistics that are moving you towards closing that
    station down, I would appreciate it.
        Admiral Brown. Senator, as you indicated this is not an
    easy decision for us. But it is, in fact, a threat-based
    decision. I mentioned in my opening comments that we see our
    demands shifting, and this is one of those clear cases where we
    think we have a good amount of credible documented data that
    indicates that we have rising threats within our areas of
    responsibilities that we should attend to.
        As you note, then, we've been in Station Q for over 80
    years, and your support was very evident by attending the
    tragic, but moving, memorial service. So it is not with a light
    heart we make such a hard decision, but it is, in fact, a
    threat-based one, and I would like to ask our planning
    officer----
        Senator Murray. So it is not a budgetary----
        Admiral Brown. No, it is not budgetary. It is a threat-
    based decision. I would like to ask the planning officer who
    has been working on this to quickly walk us through those
    specific details, if you don't mind. And I appreciate the
    support of your staff and our public meetings.
        Captain Broman. Senator, I am Captain Broman, and I have
    some charts that I would like to pass the charts up to you if
    you like. Basically, in terms of our response system along the
    north coast of the Olympic Peninsula, primarily from Port
    Angeles to Port Townsend, in that area over the last 3 years
    we're seeing about 89 cases a year on average. And that's----
        Senator Murray. 89 cases?
        Captain Broman. Eighty-nine search and rescue cases where
    the Coast Guard is called to respond. And that relates to an
    average Coast Guard station in Washington/Oregon that does
    about 160 a year, just in terms of a bench mark.
        So we're seeing about 89 cases in that area. We do not have
    any dedicated Coast Guard stations in either Port Angeles or
    Port Townsend that do search and rescue response on a 7 day a
    week, 24-hour a day basis.
        So, we see these growing number of cases. We're responding
    to them from the Air Station in Port Angeles using our sprint
    resources and helicopter, and we're saving lives, so we're not
    concerned about that. But you can't look at this number and
    look at what has happened in the Bellingham area over the last
    20 years, where we recently established and grew a station in
    the same type of growth pattern, and not begin to ask some
    questions about what should be done about that.
        So, as a baseline we have the number of cases, then we had
    the Blue Ribbon Panel which pointed out the lack of a dedicated
    search and rescue response in Port Townsend, so that is another
    factor. And then we look at the narcotic seizures that are
    occurring in the Puget Sound region, and we have to think about
    what is our law enforcement vulnerability in that same Port
    Angeles to Port Townsend corridor.
        So, those were the three main items that drove us to look
    at the increased risk. Then we started to do an examination
    about where resources might be under-utilized and we looked at
    Quillayute River. We identified about--an average case load of
    about 27 cases per year. So, again, when compared to the 13th
    District average station doing 160 cases, and about 90 cases
    occurring off the Port Angeles and Port Townsend with no
    station, and only 27 at Quillayute River----
        Senator Murray. Let me make sure I understand. There is no
    full-time station at Port Angeles or Port Townsend. Only one at
    Quillayute River; correct?
        Captain Broman. Yes, Senator, no full-time Coast Guard boat
    station. So, we saw the 27 cases at Quillayute River, and we
    said we better take a further look at that and see what this is
    telling us.
        At that point we ran a computer simulation model to just
    simulate if the station were closed or open, what would be the
    effect on lives saved. And that simulation came back, and the
    results of that analysis were that there was no difference or
    change in the number of lives saved with the station open or
    closed.
        So, at this point we went and made a proposal; we've had a
    series of public meetings; we have received some concerns from
    the public. We're trying to analyze that and understand exactly
    what is being said, and we need to make some further analysis
    and some further conversation with the public to make sure that
    we understand that their concerns are met with any solution we
    come up with. So, we're still in the data collection phase, but
    those are the relevant facts that have brought us to that
    point.
        Senator Murray. Okay. I really appreciate your walking us
    through this. Obviously safety is a concern. You outlined the
    statistics very well. The community in Forks is very, very,
    deeply concerned as you know about closing that station, and I
    would like to continue to work with you, and have conversations
    as we try and work through a difficult situation for that
    community.
        Captain Broman. Yes, Senator, we will work with them.
        Senator Murray. Thank you very much to this panel, and we
    will move to our final panel. If you will come up. Mr.--Ms.
    Leslie Hughes, who is the director of the North Pacific Fishing
    Vessel Owner's Association, Mr. Randy Ray, president of the
    U.S. Cruise Ship Association, and Mr. Harry Hutchins, the
    executive director of Puget Sound Steamship Operators
    Association.
        Again, I would remind you we only have a half hour for this
    panel. We have three panelists who have presentations. I'm
    going to keep you to 5 minutes on this because I do have some
    questions that are--that I would like to ask you. So, Ms.
    Hughes, if you can begin, and I will give you a 15-second
    warning when you are going to run out of time.
    STATEMENT OF LESLIE HUGHES, DIRECTOR, NORTH PACIFIC
                FISHING VESSEL OWNER'S ASSOCIATION
        Ms. Hughes. I'm going to pretty much follow my written
    comments, but I'll try to make them a bit briefer (sic). I want
    to thank you very much, Senator Murray, for your interest in
    safety in the Puget Sound area.

                              Districts 13 and 17

        And for our fleet, the commercial fishing fleet, we very
    much are involved with two districts of the Coast Guard; that
    being District 13 and 17 because the Washington-base fleet
    works predominantly in Alaskan waters. So, that said, a lot of
    my comments do refer to both districts, and in many ways I
    would also commend both those districts on how they do work
    together because they have shared fleets that are also--other
    than commercial fishing.
        I appreciate your opening comments and that you understand
    how the roles of industry and government need to work together
    if we're really going to be able to ensure a safer work
    environment as possible. I wanted to just provide a very brief
    profile of the commercial fishing industry that is based here
    in Washington.

                                     Safety

        Some of the issues that we face, and how we work with
    government to address many of those issues. I would also agree
    with what Scott Davis said that all of these are continuing
    efforts; that safety is not a destination. It's really what we
    refer to as a journey.
        The Washington State home based commercial fishing fleets
    number several thousand, and they harvest essentially all
    commercially important fish and shellfish resources,
    particularly in the Alaska and North Pacific region, and those
    include Pacific salmon, halibut, herring, King and Tanner crab,
    tuna, and the largest complex of pollock, cod, flounder, and
    groundfish in the world.
        These vessels range from small, 30-foot single operator
    vessels to vessels that are over 300 feet with crews of over
    120, and all classes in between. The Washington distant water
    operations account for between 80 and 85 percent of the catches
    off Alaska, and the Alaska area fisheries about 55 percent of
    the shellfish and fish harvest volumes in the United States.
        The total net value to this State from commercial fishing
    is 2--well, about 2 billion dollars a year annually. Providing
    competent safety training for those individuals that work on
    the vessels is critical for this industry to stay, keep or
    maintain its long-term health, and for people--for the people
    who work in these dangerous waters in the North Pacific, and
    who produce the seafood that we all enjoy.

                         Safety education and training

        Providing that training is what our organization does.
    We're a nonprofit organization. We're totally dedicated to
    safety education and training for commercial fishermen, and
    other mariners as well. As an industry sponsored effort, which
    is--what makes the program unique. There is nothing like it in
    the United States.
        It was developed by industry members, and then the Coast
    Guard joined forces with us in 1985 and it's remained the model
    safety training for commercial fishermen in the United States
    today. As you said, Senator Murray, in your opening remarks it
    cannot be disputed that the commercial fishing industry is
    inherently dangerous.
        In fact, it is very, very often referred to as the most
    dangerous occupation you could choose. Over the 17 years that I
    have worked with this industry and in this program, although
    we've seen many tragic losses, we have seen a phenomenal
    heightening of safety awareness and improved safety practices.
        I don't think there is anywhere in the country that has
    commercial fishermen as a whole, and I know its difficult to
    generalize, doing the kinds of training that we see here, the
    majority of which is voluntary. That is in excess of what is
    required of them. It's quite amazing what we have here. In
    addition to the voluntary efforts that I witnessed by our
    industry, the Coast Guard has established regulations----
        Senator Murray. Ms. Hughes, if you can wrap up. We do have
    your written testimony.
        Ms. Hughes. Okay. And those regulations have been
    effective. I think you need a combination of voluntary and
    regulatory guidelines. But the dockside exams, I just want to
    say here in this area is one of the instances where over the
    past 2 years have actually increased 38 percent, and that
    represents about 18 percent of our fleet which is roughly 2,200
    vessels.
        That is 10 percent higher than anywhere else in the
    country. So I think the partnership has had some effective
    results. The Coast Guard does a lot of outreach, they have
    trainers where they can teach people damage control, and they
    make those very accessible. And, naturally, the search and
    rescue efforts are critical to the fishing industry.
        We've worked on a lot of initiatives here in Puget Sound,
    but Harry Hutchins will describe those. We've joined forces
    with all the other maritime sectors on shared concerns. And to
    include, I would ask that you would consider the following
    three main requests that we have and that's----
        Senator Murray. Real quickly.
        Ms. Hughes. Provide support to the Coast Guard budget, full
    support so they can do the job that we all ask them to do. And
    we would ask that your influence increase, Senator Murray; that
    you will take a truly bipartisan approach to work on the issues
    with us.

                               prepared statement

        And that we work with industry and government as entities
    to find practical and realistic ways that we can accomplish
    things that are really meaningful, but within realistic
    budgets. Thank you.
        [The statement follows:]

                      Prepared Statement of Leslie Hughes

        Thank you for your interest in fishing vessel safety and the roles
    of industry and the U.S. Coast Guard to ensure as safe a work
    environment as possible. I appreciate the opportunity to speak before
    you regarding the efforts in the Pacific Northwest to further the goals
    of safety improvements. These comments will provide a profile of the
    North Pacific commercial fishing industry and the issues we face, as
    well as ways we have attempted to address those issues. We believe
    improvements are most effective when industry and government work
    together to enhance safety improvements.
      --Washington State home based commercial fishing fleets number
            several thousand harvesting essentially all commercially
            important fish and shellfish resources of the Alaska/North
            Pacific region, including all five species of Pacific salmon,
            halibut, herring, King crab, Tanner crab, Tuna and the largest
            complex of Pollock, cod, flounders and other groundfish in the
            world.
      --These vessels range from 30 foot catcher vessels with a single crew
            operator to 300 foot world-class catcher/processor ships with
            crews of over 120 people.
      --Washington's distant water operations account for 80 percent-85
            percent of catches off Alaska. Alaska-area fisheries, in turn,
            produce about 55 percent of the nation's marine fish and
            shellfish harvest volumes.
      --Total net benefits to the State of Washington from commercial
            fishing are in excess of $2.0 billion annually.
        Providing competent safety training to the thousands of people
    working in this industry is key to the long-term health of this fleet
    and the people who work the dangerous waters of the North Pacific to
    produce the seafood we enjoy.
        The North Pacific Fishing Vessel Owners' Association (NPFVOA)
    Vessel Safety Program is a non-profit organization totally dedicated to
    safety education and training for commercial fishermen and other
    mariners. The program is an industry-sponsored effort to save lives and
    property, and was developed in cooperation with the U.S. Coast Guard in
    1985. This program remains the model safety training program for
    commercial fishermen in the United States today.
        The NPFVOA Vessel Safety Program has a membership base of
    approximately 200 vessels and 150 support businesses and individuals,
    although anyone is welcome to participate in our programs and use our
    educational materials. Attendance in our courses has exceeded 22,000.
        It cannot be disputed that the nature of commercial fishing is
    inherently dangerous. Over the almost 17 years the NPFVOA Vessel Safety
    Program has existed, we have witnessed significant heightened safety
    awareness by those who have shaped and used our programs.
        In addition to the voluntary efforts initiated by the industry in
    the Pacific Northwest, the U.S. Coast Guard established regulations in
    1991, following the Fishing Vessel Safety Act of 1988. Those
    regulations have resulted in improved safety practices. Due to its
    diverse and dynamic nature, the industry is not easily regulated; a
    one-size-fits-all approach will never be effective for all fleets.
    Therefore, it is imperative that industry and government work together
    to ensure that risks are viewed from a regional perspective, and
    mitigation be directed where the need exists.
        Over the last several years casualty rates in Districts 13 and 17
    have declined dramatically. The tragic recent losses of the ARCTIC ROSE
    and the AMBER DAWN have been contrary to the trend we have been seeing.
    The industry in this region has very strong partnerships with the U.S.
    Coast Guard, and these have resulted in a number of improvements:
      --Dockside exams conducted by the U.S. Coast Guard over the past two
            years have increased by 38 percent, which represents
            approximately 18 percent of the present fleet (estimated at
            2,250 vessels). This figure is approximately 10 percent higher
            than anywhere else in the nation.
      --District 13 has improved enforcement of fishing vessel safety
            requirements, and when necessary have terminated voyages. We
            particularly support enforcement of the drill and safety
            orientation requirements (46 CFR, Part 28.265 and .270) in
            their dockside exams, as we believe they hold tremendous
            potential for improving the industry's safety record.
      --The Coast Guard provides educational outreach valued by the
            industry through training aids, such as their damage control
            trainers and stability models. They have been extremely
            accessible by regularly bringing them to our courses.
      --Stability checks aboard crab vessels in Alaska were conducted by
            the Coast Guard (Districts 13 and 17) the past two winters.
            These were highly valued by the industry.
      --Certainly, one of the Coast Guard's primary missions, Search and
            Rescue, is of extreme value to the fishing industry. In the
            winter of 1999, with Alaskan weather conditions described by
            some as ``biblical'', the Coast Guard conducted 330 SAR
            missions which resulted in 95 lives saved. For winter fishing
            seasons in Alaska, the Coast Guard routinely posts additional
            resources to assist in emergency situations.
        In addition to the oversight the U.S. Coast Guard provides to the
    fishing industry, either through regulations or educational outreach,
    the industry is actively supporting and furthering initiatives specific
    to the Puget Sound region. Several examples of these include:
      --Representation on the Puget Sound Marine Committee;
      --Support of the International Tug of Opportunity System (ITOS);
      --Participation on the North Puget Sound Oil Spill Risk Management
            Panel;
      --Support furthering of Harbor Safety Initiatives.
        To conclude, we ask you to consider the following:
      --Provide full support to the U.S. Coast Guard's budget so they can
            fulfill their important missions and do the job we and Congress
            ask them to do.
      --As you find yourself in a position of greater influence, that you
            will truly take a bipartisan approach to the needs you can
            address within your region and nationally.
      --You work with industry and government to find practical and
            realistic ways to make meaningful improvements to safety.

        Senator Murray. Thank you, Ms. Hughes. Mr. Hutchins?
    STATEMENT OF HARRY HUTCHINS, EXECUTIVE DIRECTOR, PUGET
                SOUND STEAMSHIP OPERATIONS ASSOCIATION
        Mr. Hutchins. Thank you, Senator, for the opportunity to
    work with you again. I know that we're running out of time, so
    that--I would like to get a couple high points in my
    presentation. With all due respect to the Coast Guard Search
    and Rescue Program, members of my association try very hard to
    avoid contact with that element of the Coast Guard, so most of
    the work is with the marine safety part of it, and that's what
    we're going to be talking about.

                                 Marine safety

        We work--pretty much following Secretary Slater's
    determination that we have an excellent marine safety system,
    in the catch phrase--in his determination was that, ``We can
    always look for more ways to improve.'' And that's what we've
    been doing. And I would like to reflect back a little bit on
    oil spill response.
        We're unique in the Nation, and I believe it was during
    your time in the legislature, Washington State passed a law
    that said, ``All ships, regardless of the type of the ship,
    over 300 gross tons has to have contingency plan in oil spill
    response capability.'' California has the same law. They've not
    been able to make it work nearly as well as we.
        And the Coast Guard and the Department of Ecology work
    closely together in the--doing quality control on that issue.
    Also, I would like to thank you for your early support of the
    International Tug of Opportunity System which is growing and
    spreading a safety net up and down the west coast and adopted
    in the other particular areas. One of the--a point of
    controversy we seem to come back to is rescue tugs.
        In 1994, the Emergency Towing System Task Force, which was
    set up, looked at three alternatives, they're listed--listed in
    my paper, but, today, all three of those alternatives are in
    place. Each one was intended to be a stand alone.

                             State control program

        We currently are doing all three of those. Specifically, I
    would like to highlight the Coast Guard for the State control
    program which does provide escort and special precautions for
    high-risk vessels, and as I mentioned, the International Tug of
    Opportunity System is being enhanced.
        We locally have formed a citizens advisory and action
    committee for the region, which brings together all State COLAs
    in the public and private sector. Early success in that regard
    was through the offices of the environmental representatives to
    that body which brought together the first people talking about
    controlling aquatic nuisance species importation through
    balance water.
        That lead to the State's balance water law which is the
    strongest in the Nation, and which, in fact, will provide a fix
    to the aquatic nuisance species problem posed by balance water
    and fish. For you, you will be seeing a re-authorization of the
    non-indigenous Species Act in the near future.

                           support a National program

        I encourage you to support a national program that is very
    strong, using Washington's as a model, so that we can have the
    same kind of protection in all of our port areas. We think that
    a Coast Guard that is well-funded, well-trained, and as
    ambitious and aggressive as ours is in pushing the safety
    envelope is very, very important, and I applaud your interest
    and ask for your support.
        Locally, and this is a point that you brought up earlier,
    locally we identified that the Coast Guard has the ability to
    fund a response once an incident occurs, but has no ability to
    provide funding in anticipation of an incident occurring.

                               prepared statement

        In that regard, the legislature is looking at funding the
    Coast Guard with monies so that if the weather deteriorates, or
    other circumstances occur, the Coast Guard can take action
    prior to an incident occurring when an incident occurs. Then
    the funding flips over to the Federal side, or to the affected
    vessel side. Again, thank you very much.
        [The statement follows:]

                    Prepared Statement of Harry N. Hutchins

        The Puget Sound Steamship Operators Association is a membership
    association comprised of commercial vessel owners, operators and agents
    whose vessels trade in the tidewater ports of Washington State.
        The association's mission is to promote the growth and development
    of marine commerce in Puget Sound and Grays Harbor ports through strong
    business leadership that influences state and national economics and
    politics.
        The PSSOA encourages sustained maritime trade in concert with the
    modern principles of environmental stewardship.
        The PSSOA will work to eliminate factors which unreasonably
    increase the cost and complexity of doing business in Washington State
    ports in order to provide a stable, reliable economic environment in
    which business can prosper.
        The PSSOA advocates education as a key strategy in carrying out its
    Mission.
        The PSSOA offers the following statement in support of oral
    testimony at the subject hearing:
        Following a number of extensive and intensive studies by the U.S.
    Coast Guard and the U.S. Department of Transportation's independent
    research facility, Secretary of Transportation Rodney Slater made and
    published the following determination in the Federal register of
    November 24, 1998:

        ``Based on the findings in the Volpe Center's report, I hereby
    determine that the many existing elements of the region's marine
    transportation system comprise a safe system. While there are always
    areas for improvement--and we should always be looking into means for
    improving safety--the Volpe report shows that the Puget Sound area has
    an excellent system now.''

        This determination correctly reflected on the high degree of safety
    practiced by vessels operating in the Puget Sound area, as well as the
    additional safeguards available locally but not in place in other parts
    of the nation. These safeguards included, at least
      --The Washington State Maritime Cooperative which provides oil spill
            contingency planning and response capability for commercial
            vessels operating in the area, particularly those which are not
            otherwise subject to the provisions of the federal Oil
            Pollution Act of 1990,
      --The U.S. Coast Guard and Canadian Coast Guard's Vessel Traffic
            System operating under the treaty agreement known as the CVTS
            agreement. This coordinated radar tracking and advisory system
            provides constant safety monitoring which is not available in
            most U.S. ports,
      --The voluntary agreement (Standard of Care) between the U.S. Coast
            Guard and the local industry to engage the services of a ship
            assist tug when proceeding to anchor in congested harbors, such
            as Port Angeles,
      --The ability for federal response managers to rapidly identify
            available tugboat response assets that could be employed in the
            event of a vessel emergency or loss of propulsion. This system
            is known as ``the International Tug of Opportunity System'', is
            a joint venture with the U.S. and Canadian Coast Guard and
            industry, and has been utilized with a great positive safety
            impact.
        The Secretary of Transportation correctly advised that the search
    for new means of enhancing safety should always be pursued. To this end
    the following has been adopted--
      --Expansion of the International Tug of Opportunity System has
            increased the number of response assets identified for the
            federal response managers. Installation of the system's
            electronics on ocean going cargo vessels assists in traffic
            control offshore as well as inshore. Adoption of this system by
            other areas along the West Coast will provide an industry
            funded and operated safety net for the entire coast,
      --Joint adoption by the U.S. Coast Guard and local industry of a
            Standard of Care for the maintenance and testing of the
            starting systems on a particular class of vessel has reduced
            propulsion losses to near zero,
      --Joint adoption by the U.S. Coast Guard and local industry of a
            Standard of Care for the actions to be taken by the U.S. Coast
            Guard and to be anticipated by a vessel operator in the event
            of a propulsion failure,
      --Joint adoption by the U.S. Coast Guard and local industry of a
            Standard of Care for the prohibition of vessel maintenance of a
            type that would adversely affect propulsion or control while
            the vessel is underway without the provision of a standby tug,
      --Continued aggressive application of the U.S. Coast Guard's Port
            State Control Program to identify and protect against
            substandard or dangerous vessels using the region's ports.
            Continued support for the U.S. Coast Guard's practice of
            requiring tug escort and/or prohibition of entry for the most
            risky vessels,
      --Operating under the auspices of the U.S. Coast Guard/Canadian Coast
            Guard CVTS agreement, the U.S. Coast Guard took the lead in
            streamlining the navigational channels serving each country.
            The changes engendered in this effort improved vessel
            navigational safety, organized the approaches to Puget Sound
            and provided extra protection to the Olympic Coast National
            Marine Sanctuary,
      --Institution of a citizen's safety advisory and action committee for
            the region. Known as the Puget Sound Harbor Safety Committee,
            this committee includes voting membership from all private
            sector maritime stakeholders (including environmental groups,
            tribes, and the public) and advisory positions for all public
            sector maritime stakeholders. The charter of this group is the
            constant evaluation of maritime operations in order to (in the
            Secretary's words) ``. . . always be looking into means for
            improving safety''. The U.S. Coast Guard Captain of the Port
            has taken a lead role in the development of a comprehensive
            ``Harbor Safety plan'' which will be published and implemented
            this summer,
      --The activity mentioned above is parallel to and complementary to
            the international safety provisions of the ``Shipboard
            Training, Crewing, and Watchstanding'' (STCW) requirements
            which addresses the elimination of ``human error'' instances
            aboard ships. Additional and complementary to STCW is the
            ``International Safety Management Code'' (ISM Code) which
            primarily addresses means for companies and shoreside
            management to eliminate particular actions or infrastructure
            that might contribute adversely to safe operations aboard
            vessels. Both of these error reducing programs are recorded in
            U.S. Coast Guard regulations and compliance is monitored by the
            local Captain of the Port.
        As reported by Environmental Research Consulting (ERC) in a recent
    international association's newsletter (BIMCO News), ``In the U.S. the
    reduction in tanker spills during the 1990s not only mirrored the world
    trend (dramatically downward), but was also more impressive. The strict
    port state control regime implemented by the U.S. Coast Guard and the
    fact that tanker owners must comply with a rigorous liability regime
    were undoubtedly important factors.''
        In August 1994, the Emergency Towing System Task Force published it
    Final Report. Page v of the Executive Summary reported. . . ``The need
    is for dedicated or improved capability to respond quickly to disabled
    vessels in the Strait and adjacent coast. The Task Force considered
    three possible solutions to meet this need:
      --Requiring tug escorts for high risk vessels to and from the
            entrance of the Strait;
      --Locating a dedicated standby tug at the entrance of the Strait;
      --Establishing an enhanced tugs of opportunity system combined with
            increased regulatory oversight on substandard vessels entering
            the Strait.
        Of these alternatives, the U.S. Coast Guard through its Port/State
    Control System requires tug escorts for high risk vessels to and from
    the entrance of the Strait, and exercises increased regulatory
    oversight on substandard vessels entering the Strait. The joint U.S./
    Canadian initiative for the International Tug of Opportunity System has
    significantly enhanced the use of tugs of opportunity and continues to
    enhance and enlarge the system.
        During meetings of the North Puget Sound Risk Management Panel (an
    attempt to develop a harbor safety plan), industry supported a proposal
    by the representative of the Washington Public Ports Association to
    fully support the U.S. Coast Guard's practice of requiring tug escorts
    for high risk vessels, and to enhance the International Tug of
    Opportunity System by ensuring, through tug charter, that an
    appropriate tug would be available in the Western Strait during
    conditions of increased hazard
        As a corollary to the U.S. Coast Guard's safety mission, that
    agency well understands and is sensitive to the operational needs of
    commercial cargo vessels. This sensitivity goes hand-in-hand with
    safety management and is especially valuable given the current
    improvements in cargo throughput at British Columbia ports and the
    recent move of the primary service of the ``Grand Alliance'' to British
    Columbia from Puget Sound ports.
        It is obvious that the promotion of marine safety is a high
    priority for the U.S. Coast Guard and the maritime industry in the
    Puget Sound region. Congress can participate in the U.S. Coast Guard's
    effective performance by ensuring that the service is provided adequate
    assets, appropriate training and full funding to perform the services
    required by Congress and is able to operate progressively beyond its
    Congressional mandate to ``. . . always be looking into means for
    improving safety''.
        In particular, Senator Murray, we ask that you consider the
    following:
      --Many thanks and much appreciation is due to you for early
            recognition of the safety value that can be derived from the
            rapid identification of response assets through the use of
            modern electronics. The ITOS program that you supported years
            ago has grown beyond the confines of Puget Sound and is
            providing an additional offshore safety net. Maritime industry
            in Alaska and the lower west coast states have recognized its
            intrinsic value and are planning to implement similar programs
            in their areas. Your continued support and endorsement will
            help in the proliferation of this equipment and enable us to
            derive the full safety value of this network.
      --We, locally, have identified a real gap in our safety system. This
            gap is made evident when considering that the U.S. Coast Guard
            Captain of the Port has access to funds to respond when an
            incident occurs, but does not have the ability to commit funds
            in anticipation of an incident. Recognizing this, we have
            supported an initiative in the legislature to provide funding
            to the Captain of the Port of Puget Sound that will enable
            accident preventive actions to be taken in anticipation of an
            actual incident occurring. This means that, for example, a
            tugboat could be chartered to standby in a given location when
            the Captain of the Port is concerned with deteriorating weather
            or some other potentially disturbing occurrence. This is an
            issue that, while initially identified here, poses a response
            problem nationwide.
      --With industry support, Washington has implemented a strong law
            which leads to the certainty of protecting our waters against
            Aquatic Nuisance Species which could threaten our sealife and
            which may be carried in ship's ballast water. We encourage you
            to vote to strengthen and reauthorize the Non Indigenous
            Species Act, to use Washington's law as a model, and to extend
            similar protections uniformly to all the nation's waters.
      --We ask that you stay involved and remain supportive of our efforts.
            The stakeholder partnership that has been forged here is strong
            and progressive and requires a strong and capable Coast Guard
            to continue to move ahead.
        I, and the members of the PSSOA, appreciate your interest and
    involvement and thank you for the opportunity to brief you on the real
    progress that has been made and the importance of the U.S. Coast Guard
    and its mission in protecting our environment and our commerce.

        Senator Murray. Thank you very much, Mr. Hutchins. Mr. Ray?
    STATEMENT OF RANDY RAY, PRESIDENT, U.S. CRUISE SHIP
                ASSOCIATION
        Mr. Ray. Thank you, Senator Murray. My name is Randy Ray,
    president of the U.S. Cruise Ship Association. We have five
    U.S. companies that are U.S. flag owned, have U.S. owned cruise
    ships. We cruise all parts of the planet, literally, from the
    Arctic to the Antarctic. Our primary market is the U.S. coastal
    and inland waters.
        Our American vessels are U.S. built, U.S. crewed, subject
    to U.S. State and State laws, and pay United States and State
    taxes. Normally when one visualizes a cruise ship, one thinks
    of a white vessel leaving Miami, or L.A. off to some tropical
    area. And I would be remiss if I also didn't now mention we
    will now visualize ships leaving Seattle.

                             U.s. flag cruise ships

        Those are not our ships. We are the small ships. We leave
    Portland, Oregon. We go to Hood River. We go to Umatilla.
    Pasco, Washington. We go to Lewiston, Idaho. We leave Boston
    and go to New Bedford. We sail the Mississippi, the Great
    Lakes, the Hudson, the Chesapeake, and Sacramento River. U.S.
    cruise ship members are cruising whole new areas of the U.S.
    and bringing economic revitalization and jobs to small towns in
    rural America.
        And we would like to thank Senator Murray for inviting us
    here because too often the U.S. flag cruise ships are
    overlooked by Federal and State governments and agencies. We
    have two issues to discuss, and we are not only looking at the
    13th District, but also the 17th District. First is marine
    pollution.

                                Marine pollution

        In 1999, Alaska raised questions about cruise ship
    pollution. United States and foreign flag cruise ships tested
    their discharge in 2000. The result was we all flunked. Big,
    small, United States and foreign, we all flunked. It was a wake
    up call as to a glitch in the system. The public and private
    sector had dropped the ball on marine pollution.
        We warned that the laws governing discharge and ship
    practices on cruise ships need be modernized. Last year Senator
    Murkowski amended Federal law to limit grey water and black
    water discharges in Alaska, but it only applies to Alaska. Now
    we have other States raising questions. Yesterday I spoke with
    Hawaii regulators, where they are forming a task force and plan
    to propose 2002 legislation for their State legislature.

                       tightening Cruise ship regulations

        Alaska has a special session that starts next week for
    further tightening of cruise ship regulations. While I do not
    represent foreign-owned lines, I will say that we and they are
    scrambling to restore confidence in the cruise ship industry.
        This will not happen overnight, but we are working quickly.
    I have an action request for Congress, and the U.S. Coast
    Guard. First, we need to rethink how marine sanitation devices
    are certified and tested in the real word, as well as look at
    the grey water standards.
        Second, the Federal Government needs to look at creating a
    Federal environmental permit for cruise ships in preempting
    States. Am I against States regulating themselves? The answer
    is: No. But what do we do when we are on the Columbia River,
    and sailing in both Oregon and Washington waters? Which permit
    do we have to go apply to?
        And, so, we have got a compliance--NPDES permits are based
    on stationary sources. We are mobile. Some of our ships go to
    18 to 20 States. What do we do? Do we have to have those many
    permits? We will be coming back to you, Senator Murray, as well
    as Congress to ask about that.
        The second issue we have is vessel safety. Two components
    for cruise ships: One is vessel safety and the other one is
    passenger safety, and our biggest lack of--thing that we need
    is communication. Puget Sound has extensive radar coverage, and
    high levels of radio coverage. Alaska we virtually have no
    radar. Columbia River has the same, no radar.
        Even parts of Puget Sound the resolution quality is an
    issue, and there is no radar south of Tacoma. In Alaska, radio
    is often questionable to nonexistent in some of the places we
    go. We had a grounding two summers ago where there was
    virtually no ability to communicate directly with the Coast
    Guard, as we had 75 people on a cruise ship that was starting
    to sink.
        We need new systems. Our request to Congress is to fund a
    new vessel tracking and communication system for the west
    coast. Radar is too expense. The system that we currently have
    in ITOS, which you helped start, is a technology of GPS
    transponders that tracks vessels as well as allows two-way
    communications between ship to shore. The Columbia and Puget
    Sound need a few more antennas.
        Alaska is more difficult. It's remote. It's extensive area,
    and it's a harsh climate, but British Columbia has the same
    system they use for the BC, Ministry of Forest. It can be done.
    Also, we may soon have personal transponders that we can put on
    people in kayaks or in hiking, and, so, we can use those to
    track as well.
        So the thing is if we can communicate with these vessels,
    we know where they are, would be great in terms of the
    environment as well as passenger safety. The dilemma is
    implementing for the west coast. The Federal regulatory system
    is too long a process if you try to go through an existing
    agency.
        If ITOS were to come through the same system, we don't
    believe it would be operating today. We would still be trying
    to hold hearings on what would be the best system. This is no
    one's fault, it's just how our system works. Currently the
    Washington legislature is looking at a pilot program for
    funding, adding additional transponders, and doing this as a
    joint venture with non-profit maritime groups.

                               prepared statement

        We would ask Congress to bring life to these dark areas and
    fund a GPS transponder system for the west coast via existing,
    non-profit maritime groups and working with the State for
    tracking vessels and opening communications. Thank you.
        [The statement follows:]

                        Prepared Statement of Randy Ray

        My name is Randy Ray and I am president of the United States Cruise
    Ship Association. The USCSA is comprised of 5 U.S. companies that own
    and operate U.S. flagged and U.S. owned cruise ships in all corners of
    the planet. But our primary market is the United States. Our U.S.
    vessels are small and operate in U.S. coastal and inland waters. The
    vast majority of our vessels are U.S. built, U.S. crewed, come under
    U.S. and state law, and pay U.S. and state taxes. While one may picture
    a large cruise vessel leaving Miami or Los Angeles for a tropical
    destination, that is not us. Our vessels will leave Portland, Oregon
    and go to Hood River, OR, Pasco, WA, and Lewiston, ID. We leave Boston
    and go to New Bedford and other New England towns. We sail the
    Mississippi, the Great Lakes, the Hudson, the Chesapeake, and the
    Sacramento River. When our vessels visit big ports there is little
    fanfare. When our vessels visit small town USA we have an extremely
    large economic impact on those towns and residents. We are growing in
    vessel numbers and capacity. The number of towns in the United States
    we are visiting is increasing. We are bringing cruising to whole new
    areas and communities of the United States. With it, we are bringing
    economic revitalization and jobs to small towns and rural America.
        We are different, but our issues are no different than those that
    impact large cruise vessels
        As U.S. flag and U.S. owned cruise ship operators, our operations
    often come under a closer scrutiny from the United States Coast Guard,
    than our foreign counterparts. When our ships are built, repaired, or
    crew licensed, we must meet U.S. standards dictated by U.S. law and
    enforced by the U.S. Coast Guard. As in any relationship, there are
    sometimes differences of opinion. But, as the President of the United
    States Cruise Ship Association, I would like to compliment the
    professionalism and the high standard of quality of the U.S. Coast
    Guard as an agency and as a team of highly trained people.
        We are fortunate to have them.
        But, as U.S. owned cruise companies, we often have had difficulty
    in being recognized by Federal and state governments. This has
    perplexed my membership.
        Let me give a short story as a transition into the issues.
        Last year in Alaska, local citizens, environmental groups, state
    legislators, and agencies questioned the whether or not cruise ships
    were polluting the environment. The result was the formation of the
    Alaska Cruise Ship Initiative. The original committee consisted of
    Alaska Dept. Of Environmental Conservation, the U.S. Coast Guard, EPA,
    and the Northwest Cruise Ship Association (representing foreign owned
    cruise lines). U.S. flagged cruise lines were not invited.
        We showed up anyway. We were told we were of no interest by the
    State and all Federal agencies. We insisted on participating. We were
    finally seated at the table. Unfortunately in too many forums lately,
    U.S. owned cruise companies have been ignored by State and Federal
    agencies, and in Congress.
        After the Alaskan Forum started, cruise companies were asked if
    cruise ships polluted the marine environment, some said they did not.
    The USCSA said we did not know. We said we had never done water quality
    testing on our discharges and promptly volunteered to do so. Other
    cruise lines volunteered later as well.
        As the testing proceeded, large foreign cruise ships were assisted
    in their testing by the U.S. Coast Guard. When we inquired for the same
    type of assistance for U.S. cruise ships, we were told we were not the
    subject of the inquiry and refused by the USCG. We proceeded on our
    own.
        The results were, as we discovered, all failed, often miserably.
    Almost every ship failed to meet standard water quality parameters,
    whether foreign or domestic, large or small. ALL cruise ship companies
    discovered, we have a long way to go to assure marine protection and
    reassure regulators and the public.
        And as a note, when the Alaska Legislation appeared this year
    creating regulation of the cruise industry, the definition of a cruise
    vessel is 50 passengers and above. As one USCG officer said to me last
    month in Juneau--we were smart to insist on involvement.
        Therefore, I would like to thank you, Senator Murray, for inviting
    us to speak. We believe as U.S. companies we deserve a seat a the
    table. We hope in the future other Congressional committees and Federal
    agencies will follow your example.
        I would like to quickly list two issues we hope the U.S. Congress
    would address.
                                marine pollution
        With the Alaska water quality testing, we had a wake up call as to
    a glitch in the system. The private sector and the public sector
    dropped the ball on vigilance and staying current. Technology,
    regulations, and oversight did not keep pace with a justifiable
    heightened concern over the marine environment.
        We flunked the public.
        We have now learned that laws governing discharges need to be
    modernized. Senator Murkowski last year amended Federal law to provide
    restrictions on blackwater and graywater discharges in Alaska. The
    amendment does not apply to other U.S. waters. Other States are now
    saying if the Federal government is not going to act, they will.
    Yesterday, I spoke with Hawai'i regulators who are forming a Cruise
    Ship Environmental Task Force to make a recommendation to the Hawai'i
    Legislature for 2002.
        While I do not represent any foreign owned lines, I do believe I
    can say for them and U.S. owned cruise operators, we all are scrambling
    to restore confidence in the cruise industry by the public and
    governmental regulators. This will not happen overnight. Ships will
    need to be retrofitted. This takes time and major investments.
        Some amazing new technology exists today for treating water
    discharges. Unfortunately for U.S. cruise lines, manufacturers have
    told us they have not designed these systems for our smaller cruise
    vessels. Therefore, U.S. cruise lines are in a box, the need to meet
    higher standards, but no new technology to do so. Even so, we are
    working hard using existing equipment to make it perform at its highest
    level.
        In Senator Murkowski's Legislation, cruise ships over 500
    passengers are prohibited from discharging while in port. The USCSA has
    learned existing MSDs work better if they are operated 24 hours a day.
    If they are shut down and restarted, one is almost guaranteed to
    violate the standard. While the Murkowski Legislation does not apply to
    our ships in Alaska, because of size. The AK Dpt. of Environmental
    Conservation attempted to use the same standard for all cruise ships.
    This would have driven the U.S. fleet out of Alaska. The Alaska
    Legislation is now being modified.
    Action requests
        First, the U.S. Coast Guard and Congress needs to rethink how
    Marine Sanitation Devices are certified and tested in the real world.
    Attention also needs to be paid to differing operational parameters for
    different size ships.
        Second, the Federal Government needs to look at creating a Federal
    environmental permit for cruise ships pre-empting the States.
        Are we against States acting to protect their local waters--NO.
    But, individual state permits does create a huge dilemma for vessels
    involved in interstate commerce. NPDES permits for regulating discharge
    are wondrous tools for preventing pollution. When created they were
    planned for stationary facilities. Now, states are looking at similar
    permits for cruise vessels. When a company has a vessel that visit 18
    states, that is a lot of permit application, filing, updating, and
    monitoring.
        What do we do on the Columbia River or the Mississippi? Two states
    may create contradictory laws. When one sails one can hit both states
    in the same half mile just by veering from one side to the other, what
    state is primary or is one in legal double jeopardy? This is not an
    issue in Alaska because of its location. But, this will face us in the
    lower 48.
        As we move into this needed regulatory area, we are going to be
    back to Congress asking for your help to bring sense to the schematic.
                                 vessel safety
        Two components exist for cruise ships: vessel safety and passenger
    safety. Both can be addressed with one component--communication.
        As we look at Puget Sound, one sees a body of water with extensive
    radar coverage, high levels of radio coverage. As we look at other
    areas in the Northwest, the same cannot be said. In Alaska, there is
    virtually no radar coverage of vessels. On the Columbia River, the
    story is the same--no radar. Even for parts of Puget Sound, resolution
    quality issues occur with the current radar.
        In certain areas of Alaska, radio coverage is highly questionable,
    if not non-existence. Two years ago, a USCSA member had a grounding in
    Alaska where passengers had to be evacuated. Radio communication was
    near impossible, because of the location. Luckily, no casualties
    occurred.
        With increased cruise vessel traffic, with increased passenger
    numbers, with more remote locations being accessed, new systems need to
    be implemented.
    Action request
        Congress needs to look at funding new vessel tracking and
    communication systems on the West Coast to protect the environment from
    vessel casualties and protect passengers.
        Radar as a technology is too expensive to put in such a vast area.
    The Maritime Industry in Washington has been implementing new
    technologies for protecting cargo vessels which can easily be
    transferred to these remote areas for a reasonable cost. These systems
    provide realtime tracking as well as two way communication.
        In Washington State, the system started as the International Tug of
    Opportunity System and is now attempting to evolve to include all
    piloted vessels. The technology uses a GPS transponder which provides
    an update every 5 minutes as to the vessel's location. The WA State
    Ferry System use this same technology for their ferries on a 30 second
    update. If a vessel has a computer on-board, the system can be used to
    send e-mail back and forth and track other vessel around corners radar
    cannot see. The primary signal relay is a line of sight antenna. As
    more vessels have the system antenna, they use each other as repeaters
    creating greater coverage.
        Certainly in remote regions of Alaska, placing enough antennas will
    not be easy. Keeping the antennas working in extreme climates is a
    problem too. Yet, the British Columbia Ministry of Forest utilizes the
    same technology to cover all of BC. This is doable for a reasonable
    cost.
        The savings will be great to the environment to be able to react
    quickly to a vessel in distress or a passenger in distress, if we can
    only know where the vessel is and be able to communicate. The
    technology is getting so good, we hope to soon have limited range
    transponders that can be put on life jackets or in coats to track
    kayakers and hikers.
        We come to a dilemma though in implementing such a system for the
    West Coast. If such a system is handled by a Federal agency, the
    bureaucratic regulatory process will mean a decade or more of process
    hearings, years of analysis, and finally a system delivered that will
    likely be obsolete by the time it is implemented. This is not the fault
    of Congress or any Federal agency. Unfortunately, this is how our
    process works today.
        ITOS is operational today because it did not go through such a
    process. A non-profit maritime group provided the funding and provides
    free feeds to the U.S. and Canadian Coast Guards. Now the system is
    trying to be expanded. The Maritime Industry has asked the WA
    Legislature to fund transponders and laptop computers for Washington
    State pilots boarding all cargo ships. If the Legislature provides the
    funding, the Maritime Industry will pay for the software, the
    additional computer hardware, staff the system, and provide the
    additional feed.
        I would ask Congress to consider investigating bringing light to
    the dark areas by funding a GPS transponder system for the West Coast
    via existing non-profit maritime groups for tracking vessels and
    opening communications.
        Thank you for your time.

        Senator Murray. Thank you very much, Mr. Ray. Admiral, let
    me begin by asking a question about the Arctic Rose. Commercial
    fishing continues to be the most dangerous occupation in this
    country, and the Pacific area has historically experienced the
    highest fishing casualties in the entire country.
        Recently we had a tragedy here with the Seattle based
    fishing vessel, Arctic Rose sank with the loss of 15 lives. It
    was the worst fishing accident in the last 50 years. Roughly 80
    commercial fishermen die every year. To combat this, there are
    only 21 dedicated commercial fishing vessel safety billets in
    the area, in the entire Pacific Area, to service roughly 30,000
    fishing vessels.
        Can you talk for a minute about whether you think the Coast
    Guard is capable of handling the large number of commercial
    fisheries that we have here.
        Admiral Brown. Senator, again, your numbers are accurate.
    It is a very significant challenge for us. Many of the
    panelists have spoken to some of the initiatives in terms of
    the preventative measures, in terms of inspections.
        We make an effort to enforce--our activities are focused on
    high-risk fisheries. I can tell you more specifically what we
    do here. We have Pulse Ops. We enforce in areas where we have
    derbies (sic) and things like that.
        I can ask Captain Moore to speak to our Puget Sound area.
    As some of the panelists mentioned, a lot of the fisheries who
    have--their ownership of the vessels docked here do, in fact,
    operate in Alaskan waters, which is a completely different
    environment. So we can only do the work on the dockside in
    terms of operations and other things, but let me ask Captain
    Moore to speak to right here in the Puget Sound.
        Senator Murray. Captain.
        Captain Moore. Senator, if I could refer to a couple of
    comments Leslie made. We had a 38 percent increase in the
    number of dockside examinations. However, I think if you look
    at that from a different perspective, only 18 percent--that
    only represents about 18 percent of the fleet.
        Senator Murray. So only 18 percent of our fleet, our
    commercial fishing fleet, has been--had any dockside
    inspections before they leave here?
        Captain Moore. Yes, Senator. Let's explore why for just a
    second. The access is the key. It's not that my three examiners
    can't do more examinations. It's drumming up the business from
    the current choir, if you will, those that want to do a
    dockside examination, want----
        Senator Murray. It's voluntary?
        Captain Moore. It's volunteer, drumming up business, and
    they have been very creative in working with Leslie and her
    folks about drumming up more business to get more people into
    the choir, if you will.
        And, so, for us right now, it is not a shortage of
    examiners. It is--we're spending a lot on outreach efforts to
    drum up more interest and business to go through education,
    training, and go through the voluntary dockside program.
        Senator Murray. How--should it be voluntary?
        Admiral Brown. As we've spoken to earlier, the panelists
    have indicated there are two sides to it. There is the
    prevention side and the inspections--those are the prevention
    side, and the response side.
        You mentioned some of the elements of the response, being
    able to communicate, being able to find, and those kinds of the
    issues. So your question is: Should it be mandatory? I think
    what Captain Moore is saying is--as well as be more effective,
    in doing our preventative side, we need to be able to get to
    those people to be able to help them. And whatever way that is
    best to facilitate them, that helps us accomplish our goal.
        Senator Murray. But I'm hearing you say that only 18
    percent of the commercial fishing vessels that leave here have
    been boarded for any kind of safety tests.
        Admiral Brown. Senator, that's our data.
        Captain Moore. Senator, there is one other explanation
    there. The fishing vessel dockside program, that's 18 percent
    of the fishing vessel dockside program, we also have at-sea
    boarding program where----
        Senator Murray. Is that voluntary?
        Captain Moore. No. Vessels stop fishing and making money
    and let us come aboard. It's not voluntary.
        Senator Murray. How many vessels do you inspect?
        Captain Moore. We have targeted--the Admiral talked about a
    targeted time period, and, so, in that particular case we
    boarded those that were just getting ready to get underway,
    either board them underway or just right before they left their
    docks. There were a couple hundred involved in that one
    targeted activity. So there is another percentage out there
    that get boarded at sea.
        Senator Murray. By any chance do you know if the Arctic
    Rose was inspected before it left?
        Admiral Brown. Yes, the Arctic Rose was inspected, Senator.
        Senator Murray. Did it get a decal?
        Admiral Brown. It had a decal, and in the 13th District we
    boarded 526 fishing vessels at sea.
        Senator Murray. 526. What percentage is that, do you know?
        Admiral Brown. 3,900 out of 3,900.
        Senator Murray. Ms. Hughes, how are we going to get more
    vessel inspections before they leave?
        Ms. Hughes. Well, one distinction that has to be made with
    these at-sea boardings is those are really what you referred to
    in your opening statement as fisheries and enforcement issues.
        And I am on the Coast Guard Advisory committee for fishing
    and vessel safety, and I have--I--in representation of my
    organization, we fully support greater enforcement of the
    safety drills and the kinds of things that will get these crews
    way more ready. And it's the same kind of thing that maritime
    sectors have talked about.
        As you do the drills, you find areas where you have a gap,
    or a deficiency. That's where you address it. So even though it
    might be reviewed in some ways as response mode, it's really a
    preventative mode because you are making sure you are prepared
    if something should go awry. The at-sea boardings in our view
    are really not the place to do the safety checks. It's better
    to do it before they leave the dock.
        Senator Murray. So how do we get more of those folks to----
        Ms. Hughes. Well, one of the other issues in the fishing
    industry that's found to be one of the most complex, diverse
    group you are going to be talking about today, because of it's
    diversity.
        The vessels that are under 200 gross tons, the smaller
    vessels, are really the ones that are going to be the most
    reluctant to do the dockside examination, and they are large in
    numbers. Your larger boats are the ones that are the bulk of
    your 18 percent participation.
        So, somehow the trick for the Coast Guard is to get the
    authority to have more regulation over the smaller vessels
    under 200 gross tons because the industry is highly regulated
    above 200 and 300 gross tons. A whole regime of regulations
    kick in there. Under 200, they're not licensed, and the Coast
    Guard lacks the authority to really reach them. And if you look
    at the casualty statistics, that is where you will see the
    bulk.
        Now, the Arctic Rose was an exception to that. We've not
    seen an accident like that--anything like that at all since the
    Aleutian Enterprise in the 90s. So, you know, that--that
    catcher vessel group has had a very good safety record; that is
    a tragic exception. So, normally when you see that, it's one of
    those.
        Senator Murray. Admiral, do you know what the focus of the
    investigation is going to be on the Arctic Rose?
        Admiral Brown. At this point the--they are still gathering
    data and information. The Coast Guard and NTSB have been
    conducting preliminary interviews and collecting evidence from
    all the parties that are known to have an association, or known
    to be associated with the Arctic Rose, either in business
    dealings, vessel owner, or the crew.
        It's currently a joint Coast Guard and NTSB Marine Board of
    Investigation which will conduct a formal hearing here in
    Seattle beginning 12 June. They'll attempt to determine the
    cause, and at this point it's too early for anyone to know what
    those causes are.
        But they will be looking at such things as the design,
    construction of the vessel, it's stability characteristics,
    perhaps the manner in which it was operated at the time, to the
    best of their knowledge, weather conditions, and any other
    historical data they may have, such as it's owners or
    operators, but at this point it's still an active--active
    investigation.
        Senator Murray. I appreciate that. And it's my
    understanding from talking to many fishermen over the years
    that fishing vessel are taking greater and greater risks
    because of the economic impact that they have and try to pay
    the bills and getting out there in dangerous waters.
        Will that be part of the investigation at all? Or do we
    need to look further at what kind of risks are fishing vessels
    are taking that they shouldn't be?
        Admiral Brown. I think the investigation is going to focus
    more directly on the direct causal events, whether it was
    stability, whether it was weather, whether it was operation. I
    think that there are other causal factors that put people in
    high risk situations.
        We are concerned about that, too. When we work with the
    FMCs, we try to not have events that cause people, under
    circumstances they normally wouldn't do it, whether it
    recreational or commercial because of economics. So we, too,
    have a position on things that create high risk endeavors.
        Senator Murray. Okay. Well, turning to a slightly related,
    but different topic, Admiral, last year the 13th District did
    not meet its goal of reducing the rate of passenger vessel
    casualties, even though that goal was met by the Pacific area
    as a whole.
        A couple weeks ago we had a Norwegian cruise line ship that
    returned to Seattle after a very jarring movement near the
    mouth of the Strait of Juan de Fuca that shattered glass and
    injured 15 passengers. That incident, and as well as the recent
    grounding of the ferry, State ferry, reminds us how important
    it is for passenger ships to operate safely in all of our
    waters.
        And, Mr. Ray, maybe I could ask you as a representative of
    the cruise lines what--what would be your comments on some of
    the major safety challenges facing the cruise ship industry?
        Mr. Ray. I do not represent the foreign lines--foreign-
    owned lines, so I will not speak on their part, but, again, one
    of the things that we need most of all is modernization of
    vessel tracking moving to a--more modern vessel tracking, as
    well as the--particularly in Alaska and other places where
    we've got GPS transponders active systems where we can use
    those for navigation, and also that the Coast Guard can use it
    as a way to watch over our shoulder.
        One of the problems we have in power runs and collisions is
    often you have somebody on the bridge not paying attention, and
    if you could have the ability for enhanced electronics for the
    Coast Guard to be watching over our shoulders.
        When we had a grounding of one of our ships two summers ago
    up in Alaska, it was a second mate who put the vessel up on a
    very well-charted rock. Perhaps if we have a little bit of
    extra--somebody watching over their shoulder from a shoreside
    station, we could have prevented that.
        That is--that incident was a small oil spill, thankfully,
    and there were no casualties. But we need to move the maritime
    industry electronically into the modern age.
        Senator Murray. Admiral, do you have any comments on that?
        Admiral Brown. In the--in view of time, let me just pass
    that question to Captain Moore to speak specifically about the
    Puget Sound area.
        Captain Moore. Senator, let me just go through this very
    quickly. Vessels are operating correctly, the competency of the
    crew is greater now than it has been in the past, the
    international standards have raised competency such as English
    speaking and navigation and so forth.
        In this particular case, it was their auto tracking system,
    very new system, on almost all the new vessels right now, that
    apparently malfunctioned. We don't know all the details right
    now, but certainly that is something that we would be looking
    at. As these systems get more and more sophisticated, and
    improving much of the navigation, we also need to take a look
    at their ability to malfunction and where they're being used.
        The other part of that was their readiness for sea. There
    are no international or Federal standards that indicate how one
    makes their vessels ready for sea, that is, what you tie down.
    So another element of this case is: What are those things on
    the cruise ship that were loose?
        I would make one other mention with respect to myself and
    the ongoing investigation. We have no indications that the
    vessel was anything other than in full operational condition.
    Likewise, about 3 weeks ago a small passenger vessel on the
    north end of Vancouver Island was fully operational and went
    aground as well.
        Senator Murray. Same place?
        Captain Moore. No. No, ma'am. I'm just explaining that in
    those cases you would look at crew competency, crew training,
    checks and balances, bridge team operations and that type of
    thing. The equipment itself, the vital equipment itself and the
    maintenance was coming up, and the training competency
    standards have come up across the board.
        But I think we make our biggest gains in the human element,
    in the human performance area.
        Admiral Brown. Senator, I hasten to add you have correctly
    identified some of the rising challenges that we face in this
    industry. We are working at the national level with all these
    very issues in terms of training and things we look for, and
    protocols. And our budget also provides some increase for us to
    address these very challenging issues.
        Senator Murray. Very good. Well, we are running out of
    time, but I did have one other important question that I just
    wanted to raise real quickly, Admiral, and that's that Coast
    Guard data shows that there are 88 gaps that exist in the
    communication coverage.
        I think Mr. Ray referred to that as well with the national
    distress system, including three areas around Port Angeles. The
    largest number of them obviously being up in Alaska, but those
    gaps mean that mayday calls from distressed mariners may not be
    heard, and I am very concerned about that, and the possibility
    that we are--have a big gap in terms of our radio contact. Is
    that a concern that the Coast Guard has?
        Admiral Brown. Yes, Senator, we share your concern, and our
    hope is that we continue to get your support in our ND&RSP,
    short for our National Distress and Response Systems Program,
    which will address those very gaps.

                              subcommittee recess

        Senator Murray. Very good. Well, I apologize, we have run
    out of time. I do want to thank all of the panel today,
    especially Admiral Brown here. You and your team have done an
    excellent job today, and I look forward to working with you on
    national level on addressing the very critical concerns that we
    have here in the Puget Sound region for the safety and well-
    being of both our people and our marine life, and the quality
    of life that we care about. So thank you very much for today.
    Hearing is recessed.
        [Whereupon, at 11:30 a.m., Friday, June 1, the subcommittee
    was recessed, to reconvene subject to the call of the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                            WEDNESDAY, JUNE 13, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 9:30 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Patty Murray presiding.
        Present: Senators Murray, Mikulski, Kohl, and Shelby.

                          DEPARTMENT OF TRANSPORTATION

                                  Coast Guard

    STATEMENT OF ADMIRAL JAMES M. LOY, COMMANDANT

                        Office of the Inspector General

    STATEMENT OF HONORABLE KENNETH M. MEAD, INSPECTOR
                GENERAL

                   OPENING STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. The subcommittee will come to order. This
    morning the subcommittee will hold a hearing on Coast Guard
    readiness. Our witnesses will be Kenneth Mead, the Department
    of Transportation Inspector General, and Admiral Jim Loy, the
    Coast Guard Commandant. Admiral Loy is beginning his fourth and
    final year as the Commandant of the Coast Guard and this is the
    first time in 3 years that he has appeared before this
    committee. So I want to give Admiral Loy a special warm welcome
    this morning.
        I also want to commend him for his excellent service to
    date and for the dedicated hard work of the thousands of
    officers and enlisted personnel that stand behind him.
        Two weeks ago the subcommittee held a hearing in Seattle,
    Washington, about the specific challenges facing the Coast
    Guard in the Pacific Northwest. I want to repeat something I
    said at that hearing. The Coast Guard is absolutely critical to
    the lives and the livelihood of the people of my State. We
    depend on the Coast Guard to perform its missions every day and
    to perform them flawlessly every time.
        Most Coast Guard units are called ``multi-mission'' units,
    because the Coast Guard does not have the kind of budget that
    allows ships, aircraft, and people to specialize in just one
    mission. The ship that is interdicting migrants today could be
    responding to an oil spill tomorrow.
        When you look at how the Coast Guard has allocated its
    aircraft and ships among missions over the last decade, it is
    clear that certain missions have moved in and out of favor.
    During periods of huge alien migrations from Cuba and Haiti,
    all available resources had to be brought to bear on that
    problem. After the Exxon Valdez disaster, the Coast Guard
    committed an increased number of hours to marine environmental
    protection.
        We can't always predict with certainty what missions the
    Coast Guard will be called upon to perform each year. But there
    is one mission that we all expect the Coast Guard to be able to
    perform consistently and excellently, and I am, of course,
    talking about search and rescue. Increasingly, however, the
    Coast Guard is not as prepared as it should be in handling this
    core mission. And the shortfall is especially bad in my part of
    the country. Nationally, the Coast Guard has a goal of saving
    93 percent of mariners in imminent danger. In the Pacific
    Northwest, however, the Coast Guard's success rate last year
    was only 80 percent. That is well below the 93 percent national
    goal. As Admiral Erroll Brown, the District Commander for the
    Pacific Northwest, stated at our hearing, ``the numbers don't
    lie.'' Why is the Coast Guard falling behind?
        Well, in the Pacific Northwest there are many challenges
    from heavy surf to harsh weather to cold water conditions. In
    addition, we've seen a dramatic increase in waterborne activity
    in the Pacific Northwest. But there has been no corresponding
    increase in Coast Guard assets.
        Vice Admiral Ray Ruitta, the Coast Guard's Commander for
    the entire Pacific area, wrote to me regarding this problem. He
    stated that a life is lost for certain predictable causes--some
    are in the Coast Guard's control and others are not.
        The factors he cited within the Coast Guard's control are:
    First, having a platform and crew which are both capable and
    available for response; and second, the amount of time between
    when the Coast Guard is notified of the emergency and when the
    Coast Guard arrives on the scene.
        In his testimony this morning, the Inspector General will
    be sharing with us some very disturbing facts that speak to
    both of these factors. He will point out that when it comes to
    having a fully trained crew with capable assets ready to
    respond, the Coast Guard has been experiencing a very dangerous
    drain in the experience level of its surfboat crews. Also, the
    conditions of those boats are not always what they should be.
    At our hearing in Seattle, we found that a high number of Coast
    Guard personnel at our search and rescue stations are not fully
    qualified for the billets to which they are assigned. In his
    own assessment of the needs in the 13th District, Admiral
    Ruitta said, and I quote, ``The status quo is unsafe and
    inequitable, reduces readiness and is not sustainable.'' Those
    are his words, not mine.
        On the issue of the time between when the Coast Guard is
    notified of an emergency and when they arrive on-scene, the IG
    has some disturbing testimony about the inadequacies of the
    Coast Guard's principal distress radio system. The current
    system has some gaping holes, and the bids to replace the aging
    system are coming in way over budget.
        Another area I want to discuss this morning is the Coast
    Guard's effort, or the lack of effort, in the areas of
    fisheries enforcement. The Department of Transportation did not
    meet its goal for fisheries enforcement last year, and that's
    not surprising. The number of cutter hours devoted to fisheries
    enforcement, including monitoring the boundary between United
    States and Russia waters, has been cut roughly by a third in
    the last 5 years. The number of aircraft hours devoted to this
    important mission has been cut in half over the same period.
    Over the last 5 years, the Coast Guard's efforts for other
    missions increased. This year, fishery enforcement efforts have
    been cut back even further due to perceived budget shortfalls.
    I look forward to supporting the Coast Guard's request for a
    supplemental this year so we can fix this immediate problem.
    But over the long term, this issue has less to do with money
    and more to do with the priorities articulated by the Coast
    Guard's senior managers.
        I look forward to pursuing these issues in some depth this
    morning. After opening statements, I will invite Admiral Loy to
    make a statement and then Mr. Mead. Thank you, all of you, for
    being here this morning. Senator Shelby.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. I'd ask that my entire written statement be
    made part of the record so we could get into testimony. Madam
    Chairman, I want to congratulate you on taking over the
    committee and I pledge to work with you and your staff.
        [The statement follows:]

                Prepared Statement of Senator Richard C. Shelby

        Thank you, Madame Chairwoman.
        Just last week, we received a supplemental request from the
    Administration that includes a request for some additional funding for
    the Coast Guard. The last two years, the Congress has provided
    substantial supplemental funds to the U.S. Coast Guard for operations
    and for capital acquisition.
        As I've said on earlier occasions, I'm increasingly concerned about
    this practice--it seems to me a dangerous game to get into the habit of
    always providing additional funds for operations through supplemental
    appropriations acts. This practice leads to expectations on the part of
    the Coast Guard that they will always get bailed out of funding
    shortfalls and provides a disincentive to manage operations and
    personnel to the annually appropriated funding level.
        In addition, it could actually encourage the Coast Guard to neglect
    those programs that provide the strongest case for supplemental
    funding. I'm committed to funding Coast Guard operations, but I'm
    increasingly troubled by how that funding is cobbled together during
    the course of the year. It is one thing to address an unanticipated
    funding shortfall, but the recent addiction to supplemental funding for
    routine operations is not good for the Coast Guard and does not
    encourage sound financial management.
        I also believe it is worthwhile to spend some time talking about
    the Coast Guard's procurement program--most notably the Integrated
    Deepwater procurement and the National Distress and Response System
    Modernization. Admiral Loy and Inspector General Mead--I hope we have
    time to have a candid discussion on where we are on these two programs
    and what steps we should take now to make sure that we give the men and
    women of the Coast Guard the tools they need to get the job done.
        At the same time, I am not willing to break new ground just for the
    sake of breaking new ground. I believe that the procurement practices
    at the Department of Transportation should minimize the risk to the
    taxpayer and provide a reasonable assurance that the procurement can be
    completed with a minimum of cost growth, delay, or pressure to trade
    away capability.
        Unfortunately, both the Integrated Deepwater Systems project and
    the National Distress and Response System Modernization fail all three
    of these tests. In fact, I don't believe that these procurements could
    have been designed to be more at odds with those three best business
    practices for procurement programs.
        If I were a cynic, I would look at the cost estimates for Deepwater
    and the increased cost estimates for the National Distress and Response
    System and think that someone is creating artificial deadlines and
    trying to get Congress to act precipitiously. Even the recently
    announced review of the Deepwater procurement by an outside consultant
    is advertised as not delaying the procurement. Given that this is a
    twenty-year procurement, I would think that we would take the extra
    time necessary to get it right and to minimize the risk to the taxpayer
    and the Coast Guard's and the Department's other priorities.
        Admiral, you won't be here to clean up when the bills come due on
    these procurements--so, I trust you will be patient with those of us
    who will.
        I also intend to ask you about your interim plans for the National
    Distress and Response System modernization. I'm afraid that people
    might think, in light of the campaign that's being made on behalf of
    the Deepwater procurement, that you have made a conscious choice that
    Deepwater is more important than modernizing what I call the ``911''
    system for recreational boaters, fishermen, and other people engaged in
    commercial marine activities. The deadline under the International
    Safety of Life at Sea has passed, but the Coast Guard won't be able to
    receive distress calls transmitted on digital select calling signals--
    the new international standard--anytime soon.
        Fully 65 percent of the Coast Guard's five year capital budget is
    devoted to the Deepwater procurement. Deepwater is almost 10 times as
    large as what's budgeted for the National Distress and Response System
    modernization, the next largest procurement. Clearly, these two
    procurements compete with each other for resources, and I'm concerned
    that the Coast Guard has so much of it's organizational ego tied up in
    the Deepwater procurement that we're setting ourselves up for a massive
    cost overrun or procurement mess.
        Too much of the Deepwater procurement strategy seems to be designed
    to just clear the next hurdle and push the consequences off until
    later. This reminds me of the Big Dig project in Boston. There, the
    strategy was to dig the hole in the ground and the Government would
    have no option but to finish the job. Here the mantra is: get the R-F-P
    out on the street, secure the $338 million appropriation and Congress
    will have to finish the job no matter the cost. I'm not convinced that
    we should necessarily go down that path.
        Now, in light of those reservations, I know some will question my
    commitment to modernizing the Coast Guard's capital plant. Let me
    repeat what I have said in the past three committee reports again for
    the record today: the Coast Guard needs to modernize or replace its
    aircraft, communications equipment, and especially its ships.
        In addition, the Coast Guard tells me that aren't as capable of
    executing ``systems integration'' as well as commercial contractors--
    and I have no reason to question that assessment. In fact, I believe we
    should explore expanding the role of a system integrator to make sure
    that all Coast Guard assets at a station or within a district are
    interoperable.
        I believe that we must modernize the National Distress and Response
    System, and that we can and should recapitalize the Coast Guard's
    capital plant. However, we should not panic and rush a procurement that
    is characterized as ``high risk'' by every procurement expert that
    looks at it.
        It almost seems as though the Coast Guard is holding it's breath
    waiting for some clock to run out on Congressional review and oversight
    of this procurement strategy. Folks, it's time to exhale and take a
    deep breath--we're going to be dealing with the recapitalization of the
    Coast Guard for a long time. The effort didn't start with the Deepwater
    concept, and it will continue long after all of us focus on other
    issues. This is a continual process, and I, for one, resent the Big Dig
    strategy that seems to be employed here.

        Senator Murray. Well, thank you very much, Senator Shelby.
    I look forward to working with you as well. Admiral Loy?

                       STATEMENT OF ADMIRAL JAMES M. LOY

        Admiral Loy. Good morning, Madam Chairman and, again,
    congratulations from our Chair as well. Madam Chairman and
    distinguished members of the committee, thank you for this
    opportunity to appear before you today to discuss the Coast
    Guard's 2002 budget request and its impact on the essential
    services that we provide to the American public on a daily
    basis, as you have pointed out in your opening statement, Madam
    Chairman.
        I continue to be inspired by the daily evidence of
    dedication and patriotism inherent to the Coast Guard people
    that you cited. These are men and women who continually
    demonstrate their commitment to saving lives and property at
    sea, to protecting our natural environment, to enforcing our
    laws, and to safeguarding the national security of our Nation.
        Maintaining their focus 24 hours of every day, frequently
    finding themselves in enormously high-pressure situations and
    often in very unforgiving environments, these Coast Guard
    sailors, airmen, marine safety professionals, and support
    personnel compiled an impressive lists of accomplishments over
    the past year. Coast Guard men and women responded with poise
    and skill when 34 crew members stranded aboard the foundering
    cruise ship SEA BREEZE, 250 miles offshore, called for help.
    Their helicopter was buffeted by 65-knot winds and the sinking
    ship was being pounded by 25-knot waves, yet all were returned
    to shore safely.
        Coast Guard personnel succeeded in preventing major
    ecological disasters in the wake of oil tanker groundings, not
    only off the Mississippi Delta and elsewhere in the United
    States, but even in the Galapagos Islands. They facilitated the
    safe passage of over 2 billion tons of freight, 3.3 billion
    barrels of oil, and 134 million passengers throughout our
    Marine Transportation System last year.
        As one of the Nation's five armed services, we deployed our
    Port Security Units to the Arabian Gulf in the aftermath of the
    U.S.S. COLE incident to design a prototype and then use it to
    provide force protection for U.S. Navy and Military Sealift
    Command ships. Coast Guard men and women protected the maritime
    borders of our homeland by preventing more than 4,000
    undocumented migrants from reaching our shores and by
    interdicting drug smuggling vessels, such as the FOREVER MY
    FRIEND, which was carrying nearly 20,000 pounds of cocaine
    destined for the streets and playgrounds of America.
        I have a great pride in what Coast Guard men and women have
    accomplished in this past year and, however, as I have said
    consistently now for 3 years, I continue to have grave concerns
    about our ability to maintain our performance now and into the
    coming decades. These concerns are based on a clear and
    accelerating erosion of readiness in both people and equipment,
    and I look forward to the discussions we'll have in that regard
    this morning.

                                 budget themes

        Despite dedicated and hard work that men and women of the
    Coast Guard perform day to day, we continue to be challenged
    and to maintain our performance level, aging assets, spare part
    shortfalls, deferred maintenance, and an inexperienced
    workforce are all issues that cause me concern, as well as you.
        Last fall the small boat lowering systems aft davit on the
    58-year-old Cutter STORIS broke into pieces and nine Coast
    Guard personnel were dumped into the freezing, rough waters of
    the Bering Sea. Fortunately, all were recovered. Many of them
    were incapacitated by the cold, unable to help themselves out
    of the water, and in imminent danger of succumbing to
    hypothermia. And as the STORIS was recovering its personnel,
    the fishing vessel they were about to board simply sailed away;
    it was illegally poaching in our waters. The STORIS incident
    provides a stark illustration of the harsh environments Coast
    Guard units operate in and of the need to maintain proper
    readiness if we are to accomplish our assigned work for America
    and to do that without undue risk to Coast Guard people.

                           RESTORE SERVICE READINESS

        Madam Chairman, the President's fiscal 2002 budget request
    focuses on three things for our service: restoring our
    readiness, shaping our future, and beginning the transformation
    to a Coast Guard of the 21st Century. We have made noteworthy
    progress toward the goal of restoring readiness. My number one
    pledge to this committee 2 years ago was to rebuild the Coast
    Guard workforce, and our exceptional recruiting efforts for
    officer and enlisted accessions are paying off. Last year I was
    able to announce that the reserve force was up to complement,
    and this year I am pleased to report that the active duty
    enlisted workforce is back to its authorized strength for the
    first time since 1994. We still have skill and seniority gaps,
    but the petty officer shortage has been cut in half. In
    addition, the civilian workforce is benefiting from its most
    successful year of recruiting ever.
        But the workforce is only one facet of readiness. To
    completely restore service readiness, we must continue our
    multi-year approach to ensure the Coast Guard operating and
    support units are properly staffed, trained, equipped, and
    maintained, again, as you suggested in your opening statement,
    Madam Chairman. The President's budget request helps makes
    progress along this path. It will provide for important
    personnel initiatives that will assist in recruiting and
    retaining the people that are important for our missions. It
    will annualize the fiscal year 2001 pay raise and mandatory
    military entitlements introduced with the National Defense
    Authorization Act of 2001. It will provide fiscal year 2002 pay
    raise at least as presented, 4.6 percent for the military and
    3.6 for civilians, and improve health care. Those are all good
    things.
        The President's budget provides much needed funding for
    aviation spare parts. It covers increasing fuel and energy
    costs and provides funding to operate new assets that we
    acquired last year. These assets include three new buoy
    tenders, 10 coastal patrol boats, and 20 motor lifeboats that
    were brought into the Coast Guard to replace antiquated coastal
    assets, progress along the path, Madam Chairman, you cited we
    needed to do.
        The President's budget also addresses our readiness
    concerns at search and rescue command centers and stations by
    increasing staffing to alleviate previously identified fatigue
    and quality of life issues. These last initiatives are part of
    our multi-year plan to restore the soundness of the SAR program
    you spoke about in your opening statement.

                                SHAPE THE FUTURE

        I believe the strongest statement in the President's
    request is that we step even more boldly into modernizing our
    service. I'm sure we'll discuss this thoroughly in the course
    of the hearing, so let me make just a few points here. First,
    the NDRSMP project will connect the coastal asset inventory
    into a safe, efficient, and effective force nationwide with no
    gaps in coverage. It deserves the attention of each of us that
    we move smartly and methodically to complete the prototypes, to
    execute the test and evaluation process, and to accelerate this
    installation.
        Second, the integrated Deepwater System is very simply the
    future of our service and its capability offshore. Aging
    infrastructure puts missions and Coast Guard people at risk. We
    have worked diligently for 3\1/2\ years to bring this Deepwater
    Project to this point. We have examined failed projects to see
    why they failed. We have examined successful projects to see
    why they succeeded. We have requested and received reviews and
    scrutiny from constructive critics, including GAO, the
    Department's IG, think tanks, acquisition reform experts in the
    Department of Defense and elsewhere, academia, OMB, and most
    recently a peer review panel of experts whose objective it was
    to scrub the RFP for this project to make sure it was right
    before it hit the street.
        Again, I look forward to a good discussion but the bottom
    line is this. Our offshore capability is waning and it is
    waning at an accelerated pace. That spells deteriorating
    service to the American public. That's not what they demand of
    our service. I need three key things from this Congress as
    requested by the President: $338 million; the ability to hold
    this project's timeline to award a contract in the second
    quarter of 2002; and support for the prime system integrator
    with whom I will enter into a public-private partnership to
    deliver the ships and planes we need to serve America offshore
    for the next 30 or 40 years.

                                 TRANSFORMATION

        Lastly, Madam Chairman, this budget offers the beginning of
    a transformation from the old to the new. The operating expense
    budget reflects a 6 percent increase from enacted 2001. I hope
    to show you in our discussion today that we need to break the
    downward spiral of spending ever increasing amounts of money on
    older assets. This budget acknowledges that temporary
    operational adjustments will likely be necessary. In order to
    pay mandatory bills, to bring on and use the new assets
    procured last year, and to live within the budgeted OE mark,
    old assets, too costly to sustain, are offered for
    decommissioning, and I'm ready to discuss that and the
    implications of that with you as well.
        Madam Chairman, fiscal year 2002 is an enormously important
    year for the Coast Guard. It is a pivotal opportunity to do two
    very significant things: First, we must obtain a sufficient
    level of operating expense funding to meet clearly recognized
    readiness requirements in the near term. The budget resolution
    and the Coast Guard authorization bill passed last week by the
    House recognizes these needs clearly. Second, we must commit to
    the recapitalization projects requested by the President.

                               prepared statement

        Madam Chairman, young Americans in Coast Guard uniforms are
    out there as we speak doing everything and more that's asked of
    them by their Congress and their President. Tropical Storm
    Allison passed through East Texas last week is just the latest
    example. These are amazing young people. They will always read
    their orders. They will always go out in the storm. And they
    will always excel for us. Our job, yours and mine, is to make
    certain that the heroism that they offer us is supported with
    the equipment and training necessary to bring them home safely.
        Thank you, Madam Chairman. I look forward to your
    questions.
        [The statement follows:]

                   Prepared Statement of Admiral James M. Loy

        Good morning, Madam Chairman and distinguished members of the
    Subcommittee. It is a pleasure to appear before you today to discuss
    the Coast Guard's fiscal year 2002 budget request and its impact on the
    essential services we provide the American public on a daily basis.
        I continue to be impressed by the dedication, patriotism, and sense
    of public service inherent within our Coast Guard men and women--active
    duty, Reservists, civilian and Auxiliarists. Men and women who
    continually demonstrate their commitment to saving lives and property
    at sea, protecting our natural environment and safeguarding the
    national security of this nation. Maintaining their focus around the
    clock, frequently in difficult situations under extreme pressure, Coast
    Guard sailors, airmen, marine safety, and support personnel have
    compiled an impressive list of accomplishments over the past year in
    support of our enduring strategic goals: Maritime Safety, Protection of
    Natural resources, Maritime Mobility, National Defense and Maritime
    Security. Coast Guard men and women responded with poise and vigor when
    34 crewmembers, stranded aboard the foundering cruise ship SEA BREEZE
    called for help. Their helicopter was buffeted by 65-knot winds and the
    sinking ship was pounded by 25 feet seas, yet all were returned to
    shore safely. Coast Guard personnel also succeeded in preventing major
    ecological disasters in the wake of oil tanker groundings off the
    Mississippi Delta and Galapagos Islands. They facilitated the safe
    passage of over 2 billion tons of freight, 3.3 billion barrels of oil
    and 134 million passengers throughout our marine transportation system.
    As one of the nation's five armed services, we deployed our Port
    Security Units to the Arabian Gulf in the aftermath of the USS COLE
    incident to provide force protection for U.S. Navy and Military Sealift
    Command ships. In addition to providing security abroad, Coast Guard
    men and women protected the maritime borders of our homeland by
    preventing more than 4,000 undocumented migrants from reaching our
    shores and interdicting drug smuggling vessels such as the FOREVER MY
    FRIEND, which was carrying nearly 20,000 pounds of cocaine destined for
    the streets and playgrounds of America. I have a tremendous sense of
    pride in what Coast Guard men and women have accomplished in this past
    year; however, that does not mean it is time to rest on our laurels. I
    continue to be concerned with our ability to maintain our performance
    now and throughout the coming decades.
                                 budget themes
        Despite the dedicated and hard work that the men and women of the
    Coast Guard perform day-to-day, we continue to be challenged to
    maintain our performance levels. Aging assets, spare parts shortfalls,
    and an inexperienced workforce are all issues that continue to cause me
    concern. Last fall, the small boat lowering system's aft davit on the
    58-year-old Cutter STORIS broke into pieces and nine Coast Guard
    personnel were dumped into the freezing, rough waters of the Bering
    Sea. Fortunately, all were recovered--many of them were incapacitated
    by the cold, unable to help themselves out of the water, and in
    imminent danger of succumbing to hypothermia. As the STORIS was
    recovering its personnel, the fishing vessel they were about to board
    got away; it was illegally poaching in our waters. The STORIS provides
    a stark illustration of the harsh environments Coast Guard units
    operate in and the need to maintain proper readiness.
        Mr. Chairman, the President's fiscal year 2002 budget focuses on
    three themes for the Coast Guard. Specifically, the President's budget
    will continue to: (1) Restore Service Readiness, (2) Shape the Future
    of the Coast Guard and (3) facilitate our Transformation into the Coast
    Guard of the 21st century.
                           restore service readiness
        We have made noteworthy progress toward the goal of restoring
    readiness. My number one pledge was to rebuild the Coast Guard
    workforce. A lot of people have worked very hard to make good on this
    pledge. Our exceptional recruiting efforts--and resources directed to
    underwrite those efforts--for officer and enlisted accessions are
    paying off. Last year I was able to announce that the Reserve force was
    up to complement. This year, I am pleased to report that the active
    duty enlisted work force is back to its authorized strength for the
    first time since 1994. We still have skill and seniority gaps, but the
    petty officer shortage has been cut in half. In addition, the civilian
    workforce is benefiting from its most successful year of recruiting
    ever.
        The workforce is just one facet of readiness. To completely restore
    service readiness, we must continue our multi-year, phased approach to
    ensure that Coast Guard operating and support units are properly
    staffed, trained, equipped and maintained. The President's budget
    request provides the necessary resources to continue to restore service
    readiness. It will provide for important personnel initiatives that
    will assist us in recruiting and retaining the people we need to
    conduct Coast Guard missions. The President's budget will annualize the
    fiscal year 2001 pay raise and mandatory military entitlements
    introduced with the National Defense Authorization Act of 2001, provide
    a fiscal year 2002 pay raise (4.6 percent for military; 3.6 percent for
    civilians), improve health care, and continue vital recruitment and
    retention incentives.
        In addition to maintaining a viable workforce, the President's
    budget addresses other aspects of readiness such as spare parts
    shortages, aging assets, staffing levels and the increasing cost of
    operations. The President's budget provides much needed funding for our
    spare parts and maintenance accounts. It covers increasing fuel and
    energy costs and provides funding to operate new assets that were
    acquired in fiscal year 2001. These assets include 3 buoy tenders, 10
    coastal patrol boats and 20 motor lifeboats that were brought into the
    Coast Guard to replace antiquated coastal assets. The President's
    budget also addresses our readiness concerns at search and rescue (SAR)
    command centers and stations by increasing staffing to alleviate
    previously identified personnel fatigue and quality-of-life issues. In
    addition, it provides enhanced training for the personnel who will be
    first-hand responders to SAR missions at sea.
        Full funding of the President's request is required to continue our
    multi-year efforts to restore Coast Guard readiness. We can only
    continue to meet our wide-ranging mission requirements by addressing
    the wear and tear on both our people and equipment.
                                shape the future
        An effective and timely recapitalization/modernization program is
    critical to our efforts to sustain the level of service the American
    public has come to expect of us and to be prepared to meet the maritime
    challenges of the 21st century. The President's fiscal year 2002 budget
    shapes the future of the Coast Guard by providing for the modernization
    of our assets, including sensors and communications equipment for our
    cutters, aircraft and command centers. I'd like to highlight three of
    these pivotal projects.
        To meet the challenges of today and tomorrow the Coast Guard must
    begin recapitalizing and modernizing its aging deepwater cutters,
    aircraft and command and control assets. This effort has been addressed
    in the President's fiscal year 2002 budget, which fully funds the
    Integrated Deepwater System Project (Deepwater). The December 1999
    Report of the Interagency Task Force on U.S. Coast Guard Roles and
    Missions determined that the recapitalization of the Coast Guard's
    deepwater capability is a near term national priority and that the
    Deepwater project is a sound approach. I have observed many
    acquisitions during my 40 years in the Coast Guard and I have the
    utmost confidence that we are proceeding along a sound path, which
    includes the use of a systems integrator to integrate our assets during
    the acquisition process. We continue to work closely with the Office of
    Management and Budget, Government Accounting Office and the Inspector
    General to ensure that the Coast Guard will have direct and positive
    control of each phase of the Deepwater acquisition, and that we will
    have the ability to easily insert new technology and exercise
    significant flexibility to work with subcontractors and suppliers to
    provide the most effective assets and systems. The Deepwater project
    has worked closely with three qualified industry teams for over 3
    years. The project capabilities are well developed and three mature
    functional designs have been prepared. We are ready to award a contract
    in fiscal year 2002.
        Critical to the safety of mariners at sea is the ability to
    automatically record and play back distress calls, adjust the quality
    of the recording until a message can be clearly understood, and
    determine and preserve an electronic fix when a distress call is
    received. Our current coastal distress communications system cannot
    accomplish these tasks. The existing VHF-FM system was put in place in
    the early 1970's and has long since been surpassed by more effective
    and reliable communications systems. The President's fiscal year 2002
    budget recognizes the importance of this national safety issue and
    provides full funding for the continuation of the National Distress and
    Response System Modernization Project--the ``nation's maritime 911
    system.''
        For several years the Coast Guard has been engaged in a project
    that replaces its seagoing buoy tender fleet, which consisted of 26
    cutters with an average age of more than 50 years. The Seagoing Buoy
    Tender Replacement Project has been aimed at replacing these older
    assets with 16 modern-equipped cutters. The President's budget proposes
    to acquire the last two seagoing buoy tenders in fiscal year 2002 to
    complete this replacement effort.
                                 transformation
        The Coast Guard is in the midst of a transformation period in order
    to meet the nation's dynamic needs in the 21st century. In recent
    years, we transformed many of our coastal zone assets by replacing them
    with new, modern technology such as motor lifeboats, stern loading buoy
    maintenance boats, coastal patrol boats and medium and long range buoy
    tenders. In fiscal year 2002, we will concentrate on the transformation
    of our aging offshore capability into the Integrated Deepwater System.
    We will work to break the downward spiral of spending ever-increasing
    amounts of money to maintain these older assets, always either entering
    or emerging from one round of short-term measures that solve one
    liquidity crunch but bear the seeds of the next one. As we continue
    through this transformation, temporary operational adjustments will be
    necessary. Although all of our assets are needed and contribute to
    achieving our national level performance goals, there are those that
    contribute less or are simply too costly to sustain. To help us
    determine which assets fit this category for transformation, I
    developed five guiding principles: (1) We must preserve SAR capability
    and safety functions, (2) We must only operate at a level that can be
    sustained by the current support infrastructure, (3) We must maximize
    and balance productivity, (4) We must continue to exercise good
    stewardship of the taxpayers' dollars, and (5) We must prepare for the
    Deepwater project. The fiscal year 2002 President's budget successfully
    applies these guiding principles and requests asset decommissionings
    and/or retirements that will help transform the Coast Guard from
    today's effective service into tomorrow's even more effective service.
    To this end, we have scheduled the decommissioning and/or retirement of
    assets including 3 cutters, 19 aircraft and 2 air facilities.
                                   conclusion
        The President's fiscal year 2002 budget continues to build upon
    past efforts to restore service readiness and shape the Coast Guard's
    future. The budget focuses on restoring the readiness of Coast Guard
    personnel, as well as our core missions of maritime safety and SAR,
    while ensuring that all of our missions are performed at a level that
    can be sustained by our support infrastructure. By accelerating the
    retirement of some of our oldest and most maintenance intensive assets,
    this budget exercises good stewardship of the taxpayers' dollars. The
    budget strives for efficient mission performance and optimum
    productivity. The budget demonstrates unwavering support for the
    Deepwater project by providing significant funding to continue this
    critical modernization project. The end result of the President's
    fiscal year 2002 budget will be a more efficient Coast Guard that is
    correctly positioned for transformation into the Coast Guard of the
    21st century.
        In closing, I ask for your strong support for the necessary funding
    and equipment the Coast Guard needs to continue making a difference all
    across America. I thank you and the other members of this distinguished
    subcommittee for the opportunity to discuss the President's fiscal year
    2002 budget request. I look forward to working with you over the course
    of the next several months to ensure that America's Coast Guard remains
    ``Semper Paratus.''

        Senator Murray. Thank you, Admiral Loy. Mr. Mead?

                          STATEMENT OF KENNETH M. MEAD

        Mr. Mead. Thank you, Madam Chair, Mr. Shelby. I would like
    to talk about three things: The Deepwater Capability
    Replacement Project, which is a replacement or modernization of
    all Coast Guard assets afloat and airborne that operate 50
    miles and beyond off our coast; second, the National Distress
    and Response System, which in effect is the 911 system for
    search and rescue along the coastline; and third, the Coast
    Guard Search and Rescue Program which is the backbone of the
    current system.
        The amount required for these three areas alone is very
    substantial. We've identified it as one of the top ten
    management challenges in the department. Unlike FAA's capital
    accounts and airport accounts, transit, and Federal highways,
    the bulk of the Coast Guard's funding comes from the general
    fund rather than a trust fund. Other transportation programs
    such as a substantial portion of FAA salaries for the
    controllers and others and AMTRAK are also seeking substantial
    budget increases and will be competing with Coast Guard for
    funding from the general fund.

        I would like to show you the delta between what the OMB
    targets are, which are represented by the bottom line, and the
    Coast Guard's capital planning requirements, which is
    represented by the top line. There is more than a $300 million
    delta there. The budget plus-up being sought by the Coast Guard
    is not just a 1-year phenomenon. It's probably more in the
    neighborhood of 10 to 15 years. Sustaining the Deepwater
    Project that Admiral Loy referred to and all the other
    initiatives is probably going to require an acquisition budget
    in the neighborhood of $1 billion annually for the foreseeable
    future. That's more than double what they get now.

                                   DEEPWATER

        The Coast Guard is rapidly approaching an important
    crossroads for this Deepwater Project. The planning process for
    Deepwater has been a sound one, in our judgment. It's been
    endorsed by many other organizations. The Coast Guard wants to
    proceed with the budget request for this project even though
    its planning process isn't complete, and they want to do that
    so they can get the money to kick it off next year. And that's
    just the way the Federal Government's budget cycle works. A key
    issue in our opinion is not whether the deepwater assets need
    to be replaced or modernized, because they do. The key issue is
    what it's going to cost, when the funding will be needed, and
    how the project will be executed.
        The project is unusual not just because of its size, but if
    all holds well as planned, it will concentrate the
    responsibility for project success with one prime contractor,
    who will be called the integrator, and various subcontractors
    will work with that integrator over a planned 15- or 20-year
    period. The sheer size of this project is stunning and the
    contractor will have extraordinary responsibility. We're
    talking about 209 aircraft, 92 vessels over that timeline.
        I ought to say that to the Coast Guard's credit they have
    been very responsive to input from us and our reviews and those
    of GAO and to those of OMB. And they are working hard, I think,
    to address the risks that are associated with this acquisition.
    I'd like to just highlight some of the risks that the Coast
    Guard is addressing. Factor one, establishing firm estimates of
    what this project will cost and the funding stream that's going
    to be needed. Funding availability is important for two
    reasons: It's not clear, one, how much of a downward swing from
    a $500 million projection that Deepwater could sustain in any
    given year and still remain viable. For example, the Coast
    Guard is saying it needs about $500 million on a sustained
    basis. What happens if that goes down to $300 million a year.
    Will the project still remain viable? Would it be at $400
    million? What if it gets an up-tick in a particular year?

        And second, given the priority being placed on Deepwater,
    the funding level needs to be settled because it could impact
    Coast Guard missions that are not part of Deepwater, in other
    words, those that are closer to shore like search and rescue,
    like the National Distress and Response System Modernization
    Project. Both of those latter two items have been in need of
    attention for some years.
        Factor two, reliance on a single contractor to manage and
    deliver assets critical to a variety of Coast Guard missions.
    This is the largest acquisition in the history of the Coast
    Guard and probably the Department of Transportation as well,
    and it involves all missions 50 miles offshore and beyond. How
    problems of contractor nonperformance are dealt with is going
    to be quite critical. That's why in the coming months we're
    going to closely scrutinize the so-called ``off-ramps'' that
    the Coast Guard is planning for in case something goes wrong.
        Factor three, we want to see how the Coast Guard will
    propose to maintain effective cost control given the fact that
    portions of the contract will be on a cost-reimbursable basis.
    I want to be very circumspect there because we've had lots of
    experience with the Federal Aviation on cost-plus contracts.

          national distress and response system modernization project

        Now in addition to Deepwater, the Coast Guard plans to
    proceed with another procurement called the National Distress
    and Response System Modernization Project. That project is long
    overdue as well. Its primary purpose is to coordinate certain
    search and rescue missions in response to mariner 911 calls,
    and it has been in the planning process since the late 1980s.
    The current system has serious shortcomings, because there are
    big gaps--if you could flip that chart.
        In other words, wherever there's a dot on that map it
    indicates an area where the 911 can't be heard by the Coast
    Guard or the location of the caller can't be identified. So as
    shown on this chart the gaps range in size from a small one of
    6 square nautical miles off the coast of Atlantic City, New
    Jersey, to over 1,600 square nautical miles south of Valdez,
    Alaska.
        There are also gaps off the coast of Washington State and
    even southeast of Mobile, Alabama. And off the coast of
    Washington State, northwest of Neah Bay, if I'm pronouncing
    that right, you see a red dot. That signifies that that gap is
    between 6 and 100 square nautical miles--the red dots on the
    map. In this particular case, the red dot means there are 64
    square nautical miles in that gap. The different colors
    indicate a gap of a different size. For example, the red ones
    indicate 6 to 100 square nautical miles. The green is 101 to
    400 square nautidal miles. The purple is 401 to 800 square
    nautical miles. And the yellow one is 800 or more square
    nautical miles. The example off of Senator Shelby's State is
    actually off the Florida panhandle, but that area is covered by
    a Coast Guard group from Mobile, Alabama. And that gap off the
    Florida panhandle is about ten percent larger than times the
    size of Washington, D.C.
        Now, the Coast Guard's current projections indicate the
    replacement system will cost between $240 million and $300
    million, and that's what they're budgeting for, both at OMB and
    the Coast Guard. And they are anticipating that it will be
    fully deployed by 2006, but the preliminary estimates that are
    coming from the contractors indicate, at least according to the
    contractors, they think it's going to be about $1 billion. And
    how both Deepwater and the National Distress System can proceed
    in tandem is a matter that's going to have to be addressed by
    the Congress, the Coast Guard, and OMB.
        Now the final area I'd like to speak to is search and
    rescue.
        Senator Murray. Mr. Mead?
        Mr. Mead. Yes.
        Senator Murray. I think what I'll do since we have a vote
    called and we have about 4 minutes left to get to the floor is
    to have you hold on your search and rescue and come back and
    we'll listen to that and then have questions, if you wouldn't
    mind.
        Mr. Mead. Fine.
        Senator Murray. So, Senator Shelby, if that's okay with you
    as well, we'll go vote and we'll return in about 20 minutes.
    The committee is in recess for 20 minutes.
        [There was a recess in the hearing for 7 minutes and the
    hearing continued outside of the presence of the court
    reporter.]

                    STATEMENT OF SENATOR BARBARA A. MIKULSKI

        Senator Mikulski [continuing]. And our priorities will be
    to work with you toward modernization. And though we're not in
    formal session--I think that's a little awkward. I don't know
    if I have the authority to do that--could you share with me for
    the record what you see as some of the main priorities, because
    I'm concerned about the shape of your fleet and then the need
    to recruit and retain the very fine Coast Guardsmen. And it's a
    new century and they have new opportunities and you have new
    challenges.

                        restoring the services readiness

        Admiral Loy. Thank you, Senator Mikulski. Absolutely, I am
    glad to do that. In my opening statement I cited a number of
    things that would go directly to the nature of your question.
    If I may, I'll just repeat those for you.
        First of all, restoring the readiness of our organization
    is an absolute principle for which I have spent the past 3
    years that I have had this job. I have been preaching from
    every available pulpit in town to bring a restoration of
    readiness issues to the forefront as something our service has
    to get about the business of doing.
        There is a people dimension to it as you just described. I
    was delighted to report to the committee that this year I can
    report that our enlisted and active duty workforce is now back
    at its authorized strength for the first time since 1994. Our
    reserve strength is up to its authorized strength, and we are
    having good success this year in terms of hiring into our
    civilian workforce.
        Our concern has continually been that, when you talk about
    demanding operational performance out of our organization, it
    has in the last several years come at the expense of a
    deteriorating, aging fleet that has put us in a position of
    basically watching this aging process demand that we steal from
    our maintenance accounts more and more dollars each and every
    day to keep that aging infrastructure capable of doing what the
    United States would have it do.
        There's an easy chart of reference to both cutters and
    aircraft which offers the conclusion that, despite pouring more
    money into this on an annual basis, we are still receiving less
    and less productivity out of that aging infrastructure, and
    that's, of course, what the Deepwater Project is all about.
        We have planned and studied for 3\1/2\ years to get us
    right on the cusp of the point of committing to this project
    and getting on with a significant restoration of that offshore
    capability that we need so desperately so as to meet the
    requirements that the American people, the Congress, and the
    Administration asks of us.

                                   deepwater

        Senator Mikulski. Well, just what would we buy? What would
    the taxpayers buy with this Deepwater, recognizing that an
    aging fleet costs more to maintain, and also a tremendous
    amount of your human resources are going into this.
        Admiral Loy. Oh, absolutely. Frankly, we hope that at the
    other end of the day, because of the commitment, we're probably
    somewhere close to about 70 percent of our operating expense
    dollars being associated with people one way or the other. So
    if we can find ways through the Deepwater Project to have ships
    at sea and planes in the air with a smaller human dimension to
    them, we will be incurring savings for the taxpayer year after
    year after year as those assets are used. So that human
    dimension is very real.
        I'm going to offer to the Chairman, Senator Mikulski, and
    obviously it will be to the committee as a whole, a proprietary
    brief that I can't discuss with the committee in public session
    on the Deepwater Project.
        Senator Mikulski. Well, fine.
        Admiral Loy. So as to the specifics of ships, planes, other
    kinds of assets that would be part of that project, I think
    it's enormously important for the committee to have a personal
    read on the three consortia proposals as we understand them
    today so that there is no ``pig in a poke'' kind of trust
    process necessary. You'll know exactly what the nature of the
    proprietary assets would be.

                     recruiting and retention of personnel

        Senator Mikulski. Well, I think that would be very good.
    And, of course, we look forward to participating in that
    conversation. I think it is appropriate that we do this in a
    different type of forum.
        I'm deeply concerned about personnel, and I'm concerned
    about it in all of our uniformed services, and the demands now
    of recruitment and retention. Again, with a workforce that
    doesn't always--in a generation that doesn't always see
    service. I mean, they see service as a weekend event rather
    than a lifetime commitment. Could you share with us how your
    recruitment and retention is going, or would you share with me
    so I can work with Senator Murray and Senator Shelby?
        Admiral Loy. Yes, ma'am. On the recruiting side we're doing
    just fine. I'm frankly very pleased with the programs, the
    incentives, the bonuses, the package that is currently in the
    President's request to deal with the recruiting side. I think
    it will sustain us through 2002 and on into the out years as we
    get into developing 2003, 2004 budget.
        I am very concerned about retention. All of the service
    chiefs, if you had the Army, Navy, Air Force and Marines
    counterparts, my colleagues, lined up here on one side or the
    other, they would offer the same observation, that they are as
    concerned about retention as I.
        And it is about the things you've described, Senator
    Mikulski. It's about an economy that offers them, especially if
    they are a specialist in certain areas, the incentive
    associated with doubling or tripling or quadrupling their
    salary simply by no longer staying in the service and going out
    and doing those same things for private corporations. That's an
    enormous attraction and one that we have to combat with a pride
    in work, with a quality--a focus that we take in terms of our
    leadership and management of our people, with designing a
    workplace that people like to participate in, and with the
    gratification that comes from the noble nature of the array of
    things that we do for the American people.
        And so we are working very hard on focusing our retention
    efforts such that literally every officer, every chief petty
    officer, every senior petty officer is part of the retention
    solution for the Coast Guard on into the future.
        Senator Mikulski. At what point in their careers do they
    tend to leave, like right after they've been petty officer or--
    --
        Admiral Loy. Well, there's an initial commitment?
        Senator Mikulski. I'm speaking both in--I'll use, and maybe
    it's inappropriate to the Coast Guard, but there's the enlisted
    corps and then there's the officer corps.
        Admiral Loy. Yes, ma'am. There is an initial obligated
    service for which someone signs up when they go either to boot
    camp or through one of our officer accession points. That
    becomes the first critical point, at the end of their obligated
    service from their first enlistment. For the enlisted corps, we
    have 2- and 3-year enlistments, but the standard one is four.
        So the vast majority of our folks will be signing up for 4
    years and at the end of that 4-year cycle we have to put a
    focused effort on convincing what we'd hope would be a 50 to 60
    percent of them to hang around and to re-enlist for the second
    term. Then they'll obligate themselves across time for lengths
    of time as they choose to and, of course, that all leads to a
    20-year retirement eligibility restored by the Congress, as you
    know, 1\1/2\ years ago.
        So the next critical point becomes retention beyond 20
    years, and we map out those challenges each year so as to hold
    on to the pyramidal structure, if you will, that represents
    both the enlisted and the officer workforce.
        Senator Mikulski. Well, I'm tremendously interested in
    this, and I know I certainly feel confident that Senator Murray
    feels the same way. I know Senator Shelby does, but I've talked
    more with Senator Murray about this because we're facing two
    types of capital crises, if you will: one, your
    infrastructure----
        Admiral Loy. And one in people.
        Senator Mikulski [continuing]. And one in people.
        Admiral Loy. Yes, ma'am.
        Senator Mikulski. And I think we have to address both. We
    could have the best ships and the smartest weapons, but if we
    don't have our personnel--so I know that your structure is
    identical to the Navy and I think, if we increased the pay for
    the Navy and the other uniformed services, will this affect the
    Coast Guard?
        Admiral Loy. They are tracked automatically.
        Senator Mikulski. So they are tracked automatically if we
    do the supplemental?
        Admiral Loy. That's correct.
        Senator Mikulski. Pardon me if I'm getting caught up. It's
    the first hearing in 3 years, so this is--I'm getting coached
    in fact and this is what hearings are all about.
        I would imagine, Admiral, that there are different
    incentives at different career points. In other words, an
    incentive for a 23-year-old to retain is different than the 33-
    year-old and the 43-year-old.
        Admiral Loy. Absolutely.
        Senator Mikulski. Am I correct?
        Admiral Loy. Absolutely. And we have to be savvy about that
    not only as it relates to those age differences, but the
    generational differences that they represent. What is
    attractive to the 40-year-old is different than the 30-year-old
    is different from the 20-year-old. I signed up for a 40-year
    career if I could get it. Now folks are interested in maybe 10
    4-year careers or 4 10-year careers.
        The variety of that in the Gen X, Gen Y kind of thing is a
    very important thing for us to understand. If we don't
    understand those things and look at dealing with retention
    programs that align themselves with the desires of the
    generation, we lose the ball and we lose the ballgame.
        Senator Mikulski. Well, we look forward to your
    recommendations exactly in that area so that we could have more
    conversation about it.
        Admiral Loy. Senator Mikulski, I'd offer one thought if I
    may.
        Senator Mikulski. Yes, please.

                       national defense authorization act

        Admiral Loy. The questions you asked or kibitzing with
    Peter about with respect to did our pay scale go up when the
    DOD, that happens automatically, but the point here that I
    think this committee needs to recognize is that it happens
    based on decisions taken in the SATS. And it's enormously
    important for this committee to stay aware of what's happening
    over with the DOD committees, because the parallels associated
    with that often come back to haunt us. That's exactly why we
    have been in this supplemental chase game for the last several
    years.
        For example, last year the sequence of events was the
    Transportation appropriation, which included our budget, a DOD
    appropriation, and then a DOD authorization bill. What was
    passed in the authorization bill had not been appropriated in
    our interests back at the original Transportation bill, so the
    exposure represented there is very real and we have to pull
    that into consideration.
        Senator Mikulski. Well, I think that's going to be a
    challenge also this year because of the way we see the
    sequencing in approps, is that Transportation will go before
    Defense. And as you know, this top-bottom review over at DOD is
    taking more time and turned out to be more time consuming and
    cumbersome than I think we anticipated. So I know both the
    authorizer and--and again, on a bipartisan basis, I know Warner
    and Levin and Inouye and Stevens are looking at this. And so we
    have to look at how we are going to sequence this.
        But I know that you don't like to come in in the
    supplemental either because it makes it sound like you're
    crying wolf and then you also can't plan. And then, also,
    people are planning their careers. They say, well, you might
    know it, you might not know, you know, et cetera. So I think we
    have our own interests and challenges.
        Well, I'm going to return to vote, but I think we see this
    as an ongoing conversation through this process. We are in
    transition, but, you know, it's very interesting when--I do
    think that there is strong bipartisan support for the Coast
    Guard, and I believe that members of Congress know who you are
    and what you do. I'd like to just see you get more coverage
    in--you know, they see you at those really very often
    melancholy rescues, but you do so much in the service to the
    Nation.
        Admiral Loy. Thank you.
        Senator Mikulski. So, again, I know you're semper paratus
    and you're always going to be prepared, and I think we need to
    do the same. What do you think? Well, I'm going to re-recess
    the committee and----
        Admiral Loy. Thank you very much for coming by, Senator
    Mikulski.
        Senator Mikulski. The committee stands in recess until
    Senator Murray returns. It's like a relay team today.

                                   deepwater

        Senator Shelby. Senator Murray, I think, will be here
    shortly. We've had two back-to-back votes. The Deepwater
    Project contracting that we've talked about, the procurement
    approach is unproven for a project of this magnitude. The most
    recent GAO report on the procurement expresses concern about
    the risks of the procurement and with the concept of a single
    systems integrator for the project. The report states, and I'll
    quote: ``The Deepwater acquisition strategy is unique and
    untried for a project of this magnitude and it carries many
    risks which would potentially cause significant schedule delays
    and cost increases.'' That's the GAO speaking.
        The report goes on to discuss the risks, but given the high
    degree of risk in this procurement approach, wouldn't it seem
    prudent to have a backup plan to recapitalize the Coast Guard's
    Deepwater assets, Admiral Loy? And if not, why not?
        Admiral Loy. I think we should always have a backup plan,
    Senator Shelby. My thoughts with respect to the GAO report go
    this way. We have worked hand in hand with a whole lot of
    constructive critics over the course of the last 3\1/2\ years
    as we have built the acquisition strategy that the President
    offers in his budget.
        First and foremost, I think we have to focus on the need.
    Is there a need to recapitalize the Coast Guard's deepwater
    capability--and I think we are all past that. Everyone I speak
    to, including Mr. Mead in his commentary this morning, offers
    that we're past the notion of whether or not this needs to be
    done. So it gets to a question of how, and that's where your
    question goes to it.
        Senator Shelby. Sure.
        Admiral Loy. I am fully convinced, sir, after deliberating
    this long and hard, not only with my staff but with all of
    these constructive critics that have helped us along the way,
    that the acquisition strategy that we have designed is sound.
    It is innovative. It is right out of the text that has been
    called for in Washington for years now with respect to
    acquisition reform. We have studied very carefully projects
    along the line of integrated effort before that have failed and
    have ascertained why and fixed those things in the approach
    that we're taking. We have looked carefully at those that have
    succeeded and have made sure those things are part of not only
    the acquisition strategy, but the report for the RFP that
    should go on the street this month.
        So I am personally convinced that for us to optimize the
    interoperability of our offshore capability down the road to
    serve this country for the next 30 or 40 years we should make
    the investment as has been offered by the President.
        Senator Shelby. Mr. Mead, what do you think a backup plan
    might look like if conceptualized it?
        Mr. Mead. Well, I think you have three basic options. I
    think the Coast Guard, before they get this underway, has to
    incorporate them. I mean, we're talking here about a 15-, 20-
    year undertaking with possibly one contractor.
        Senator Shelby. Is this the largest undertaking the Coast
    Guard has ever done?
        Mr. Mead. Yes. As a matter fact, it's the largest
    acquisition, single acquisition, that the Department of
    Transportation has undertaken.
        Senator Shelby. That doesn't mean it's not necessary----
        Admiral Loy. It is an important undertaking.
        Senator Shelby. Sure.
        Mr. Mead. And it is innovative. Just because something is
    innovative doesn't mean we shouldn't try it, but I think we do
    need a backup plan. And what you have is three basic options.
    One, if the prime contractor that is ultimately selected to
    drive the replacement and modernization of all the assets 50
    miles and out either doesn't perform or goes out of business,
    what happens? Well, one, the Coast Guard could replace that
    prime with another prime. Two, it could itself become the
    driver of the entire production. And the third possibility is
    to break the acquisition, this $10 to $15 billion acquisition,
    into smaller chunks----
        Senator Shelby. How would you do that?
        Mr. Mead. In a way which is more traditional. Well, I
    suppose once you decided--what was needed, contractors would be
    selected to build individual segments.
        Senator Shelby. Like a building block?
        Mr. Mead. It would be like a building block, yes. For
    example, you would take a particular class of cutters that they
    wanted to replace and you'd say, okay, we're picking a
    contractor that will do that and here's how much it's going to
    cost, which is the more traditional approach.
        Senator Shelby. The GAO also suggested that a panel of
    experts review the contracting strategy to better validate its
    efforts. In its report GAO says that ``peer review members
    expressed concerns that all contracting risks had not been
    fully addressed.'' In addition, I understand the OMB, the
    Department and the Coast Guard are currently undergoing with an
    outside acquisition consultant a 3-week review of the
    procurement strategy.
        Mr. Mead, with all of these reviews, shortcomings, and some
    of the other significant Coast Guard procurements and with some
    of the performance trends in the search and rescue area moving
    in the wrong direction, some people think, doesn't it argue for
    a reprioritization of some of the procurement by the budget
    folks?
        Mr. Mead. I don't think there is any question, Mr. Shelby,
    that the Coast Guard budget needs to be prioritized and there
    needs to be an agreement on the numbers. That chart down here--
    --
        Senator Shelby. Which one are you referring to, on the
    bottom?
        Mr. Mead. The bottom chart. That bottom chart--the purple
    line is what the Office of Management and Budget capital
    planning targets are for the Coast Guard. The red line is what
    the Coast Guard's capital planning budget requirements are.
    That includes all their capital requirements for--you know, not
    just this Deepwater Project, but also that 911 distress system.
    The difference is roughly $300 million, and if we're embarking
    on Deepwater, that's a 15-year undertaking. So as we get that
    underway, we better know how we're going to deal with all the
    other missions. We don't want the Deepwater Project--I'm sure
    the Coast Guard doesn't, either--to crowd out all these other
    missions, like search and rescue.
        But the Coast Guard is hoping for about $500 million a year
    for a long time for the Deepwater Project alone.
        Senator Shelby. What would they do to the other projects?
    That begs the question?
        Mr. Mead. At that level of funding, given what the purple
    line indicates, it would crowd out other important missions of
    the Coast Guard, such as search and rescue and the national
    distress system modernization project.
        Senator Shelby. Okay, what else would it crowd out?
        Mr. Mead. Well, it would crowd out what Senator Murray was
    mentioning, fisheries enforcement.
        Senator Shelby. That's very important.
        Mr. Mead. Environmental enforcement, drug interdiction.
        Senator Shelby. It would put pressure on every other
    mission of the Coast Guard, would it not?
        Mr. Mead. Unquestionably.
        Admiral Loy. Could I respond, if I may?
        Mr. Mead. Sure, Admiral Loy.
        Admiral Loy. The notion of out-year marks, of course, is
    always the magic thing for me to watch, at least, as they go by
    from year to year. If you asked OMB or ourselves in the year
    2000 what was to be our AC&I mark for fiscal year 2003, we
    would have told you somewhere around $350 to $370 million. If
    you asked them in 2001 what was the 2003 out-year mark, it
    would have grown to about $452 million. If you asked them in
    2001 about 2003--what I'm describing is a confluence of need
    and projection that is--not to discredit the chart that Ken is
    displaying here, because it's enormously important for us to
    recognize that a constant requirement for planning for
    approximately $500 million is exactly what we have been
    planning for 3\1/2\ years, with everybody's awareness along the
    way.
        Senator Shelby. You said awareness, their awareness, but
    were they going along? Was OMB buying into it? I know they were
    aware of what you were doing.
        Admiral Loy. OMB has over the course of the 3\1/2\ years
    been very much aware that we were using, with the three
    consortia that were put together, $500 million a year in the
    out-years after 2002 planning factor as the required dollars
    necessary to complete the contract through the course of the
    project. So you'll have to ask OMB of whether they were both
    aware and supportive or whatever. All I'm offering is that the
    confluence of need on the occasion of the year in question when
    I am submitting a budget with specific items in it, when the
    Administration is reviewing that, and when the Congress will
    deal with it in an appropriation mode, that is a year-by-year
    effort and will be through the course of the life of the
    contract.

          national distress and response system modernization project

        Now as it relates to crowding other projects away from
    attention, I would suggest, sir, that we have looked very, very
    carefully at our out-year marks, and I am quite confident--I'll
    talk a little bit if we have the opportunity, about this
    billion dollar estimate for the NDRSMP project, which is
    nowhere close to where it will go, and I'll offer you the
    reasoning process behind that. But we are quite confident that
    the out-year marks currently offered by OMB together with this
    confluence process that we have watched work every time, will
    yield the required support from the Administration on the
    project.
        Senator Shelby. Admiral Loy--I know my time is up, Madam
    Chairman--there's a lot of difference between being aware of
    something and being supportive of something, which you alluded
    to.
        Admiral Loy. I couldn't agree more, sir.
        Senator Shelby. Now this--have you in the last 20 years--I
    know you haven't been running the Coast Guard for 20 years, but
    have you had an appropriation of more than $1 billion like
    this?
        Admiral Loy. In AC&I?
        Senator Shelby. Yes.
        Admiral Loy. I doubt it, sir.
        Senator Shelby. Okay.
        Admiral Loy. I doubt it, sir.
        Senator Shelby. Thank you for your indulgence.
        Admiral Loy. But I would offer that in the 1960s and 1970s
    when we last modernized our deepwater capability, the AC&I
    numbers for those years, although they spiked all over the
    place, provided that current margin of about $800 million a
    year.
        Senator Shelby. Admiral, I want, just for the record, to
    say that we are aware of what you're trying to do, and a lot of
    people think you have a lot of merit in what you're trying to
    do. It's incumbent upon this committee, though, to fund all
    those things.
        Admiral Loy. Yes, sir, I understand that.
        Senator Shelby. And that's why I'm raising these questions.
    Thank you, Madam Chairman.
        Senator Murray. Thank you, Senator Shelby. Senator Kohl?

                         STATEMENT OF SENATOR HERB KOHL

        Senator Kohl. Thank you, Madam Chairman. Admiral Loy,
    aquatic nuisance species have plagued the Great Lakes,
    Chesapeake Bay, San Francisco Bay, Puget Sound and other areas
    of the United States for years. Scientists consider these
    species to be biological pollution. I know that in the Great
    Lakes the zebra mussel has been particularly destructive. Many
    of these organisms are brought into the United States
    unknowingly in ballast water of ships, as you know.
        Many States have grown frustrated with the Federal response
    to this problem. In my own State of Wisconsin a bill was
    introduced last week in our own legislature to regulate ships'
    ballast water. Other bills have been introduced in States like
    Maryland, Virginia, Minnesota, Illinois, New York, and
    Michigan. Bills have already been enacted in California and
    Washington State.
        So what is the Coast Guard doing to address this issue and
    how will the Nation's maritime industry be affected by several
    different States enacting their own different regulations of
    maritime commerce? Does the Coast Guard have any authority from
    Congress to do more, or is more legislation needed? And does
    the Coast Guard have the budgetary resources to adequately
    respond to this important issue?

                            aquatic nuisance species

        Admiral Loy. Senator Kohl, if I can offer the following
    thoughts. First of all, as you know, there is a voluntary set
    of standards in place at the moment for which I owe the
    Congress by January of 2002 a report on how well that's doing.
    Today I would offer to you that I only have probably somewhere
    between 18 and 20 percent participation by foreign flag vessels
    and others in terms of completely abiding by the voluntary
    standards that we are currently using. I have attempted to use
    every bully pulpit I can in terms of propeller club conventions
    and industry gatherings to point out to them that they are
    ``standing into danger'' as it relates to multiple States being
    very concerned with respect to ballast water exchange as a
    means to deal with ANS, the nonindigenous species. I am led to
    believe, sir, that today in San Francisco Bay there are perhaps
    upwards of 200 or 300 nonindigenous species that didn't used to
    be there 20, 25, or 30 years ago.
        Several States, as you point out very correctly, are taking
    unilateral action. We watched that unilateral action effort go
    by with respect to Washington State as it related to the oil
    spill implications and, of course, the INTERTANKO case that
    went all the way to the Supreme Court defining pre-emption
    issues very, very carefully for that particular issue.
        I have suggested to the industry that if we do not rise to
    the occasion, there will become mandatory protocols in the
    place of voluntary protocols and they may not like the
    challenges associated with that. I think at the moment we are
    working very hard to encourage other than ballast water
    exchange as a means of dealing with this issue. For example,
    are there thermal processes or are there chemical processes or
    are there other ways of dealing with the potential to bring
    these species into the country in ballast water, without
    forcing every ship to go through what can be in the wrong
    seaway an unsafe procedure at sea.
        But I owe you a report to the Congress, Senator Kohl, in
    January of 2002. I will certainly make that a constructive one,
    and at that point we will have to take stock as to whether more
    legislation is required.
        Senator Kohl. All right, as you know, it is, as I said in
    my statement and as I am sure you will agree, it is a serious
    problem and one that we have to come to some kind of a
    constructive resolution on, and I appreciate your interest.
        Admiral Loy. Yes, sir. I have raised this with Secretary
    General Bill O'Neil, who is the Secretary General of the
    International Maritime Organization. I suggested to him 2 years
    ago that I thought there were two issues that we absolutely had
    to get about. One was passenger vessel safety and one was
    ballast water exchange of nonindigenous species, and we are
    working through those issues in the international realm as
    well.
        Senator Kohl. Admiral Loy, Great Lakes shipping is
    important to the State of Wisconsin. Both industry and
    agriculture rely on the waterborne transportation for the
    supply of raw materials and the export of Wisconsin commodities
    to foreign markets. The ports of Milwaukee, Green Bay,
    Superior, and other ports rely upon the Coast Guard to maintain
    an efficient and safe maritime transportation system. During
    the past year there have been considerable problems on the St.
    Lawrence Seaway in Upstate New York with vessel pilotage. Ships
    have to pass through this territory to reach my State and other
    States.
        Unfortunately, due to these pilotage problems, I understand
    that many of these ships have been delayed. In fact, according
    to the St. Lawrence Seaway Development Corporation, there was a
    430 percent increase in ship delays in this area of upstate New
    York between 1999 and 2000. What is the Coast Guard doing to
    improve the efficiency of the pilotage system on the Great
    Lakes and specifically to address these problems in upstate New
    York?
        Admiral Loy. Yes, sir. There is a single region of the five
    in the Great Lakes--they are regionalized, if you will, with
    respect to the pilotage associated with each of the regions.
    Frankly, we have had only problems with the region that you've
    described, sir. At the beginning of this year when we were
    reopening the seaway to commerce after the ice season, we were
    very aggressive with respect to getting all of the pilots
    throughout the lakes as well as those in region one to deal
    constructively with labor regs associated with doing their jobs
    well and not becoming a problematic influence, if you will, on
    the flow of commerce on the lakes. I have not--we fixed that at
    the beginning of the season, Senator Kohl, and to my knowledge
    that protocol that we put in place is working well. I will be
    glad to check on that, sir, and get back to you if we continue
    to have any problems.

                                    loran c

        Senator Kohl. I do appreciate that. One last question to
    you, and to you, Mr. Mead. One of the existing navigation
    systems that fishermen, boaters, general aviation pilots, and
    others currently rely on is Loran C. A report about the
    benefits of Loran was recently released by the Department of
    Transportation, and it confirms that the user community
    overwhelmingly supports continuing Loran C. Last year this
    subcommittee provided $25 million to continue revitalization of
    this Loran system.
        The Coast Guard under its interagency agreement with the
    FAA received the majority of those resources to continue your
    work in modernizing the Loran C infrastructure. We understand
    the Coast Guard and FAA could put to good use a similar
    increment of resources, that is the $25 million, during fiscal
    year 2002, but the President's budget request includes only $13
    million. What projects could the Coast Guard undertake if you
    had something in the range of the $25 million and what projects
    will have to be deferred if you receive only the $13 million in
    the budget request?
        Admiral Loy. Ken, do you want to start?
        Mr. Mead. No, I have to get back to you for the record on
    that.
        [The information follows:]

        If something in the range of $25 million is received, Loran-C
    modernization efforts could be accelerated, by procuring and installing
    3 new solid state transmitters at Loran-C stations. Additionally, new
    signal generation and control equipment would be procured for
    installation with the new solid state transmitters. Finally, continued
    modifications of buildings at Loran stations to accommodate the new
    transmitters would occur.
        If $13 million was received, only 1 new solid state transmitter for
    1 Loran station could be procured, and installation of the transmitter
    may be deferred. Additionally, projects to evaluate where improvements
    can be made to Loran-C to determine if the technology can be used as a
    complement or backup to GPS for enroute through non-precision
    approaches in the National Airspace System, may not be completed by the
    end of 2001.

        Admiral Loy. I can just describe, sir, that, you know, as a
    backup system and as a primary system to those users, as you
    were describing them generally, this remains a very serious
    issue for Secretary Mineta to take to ground. So far, the
    challenges, as you've described, with a combined FAA-Coast
    Guard effort to make sure the Loran C stays alive and well, and
    it was literally, as you know, sir, at the very end of its
    potential useful service life.
        And so holding onto it until a final decision is made as to
    whether or not it will be the backup to DGPS in the future is
    really what we're doing over the course of these couple of
    years. And as you were describing these marginal adjustments to
    basically keep the system alive for as long as we will depend
    on it as either a primary or backup system is what we are doing
    with those dollars. So obviously the difference between $13 and
    $25 million is all about how much restoration work and how much
    finish work we will be able to do on towers and other physical
    facilities that will keep the system alive.
        Senator Kohl. Thank you, Gentleman, and, Madam Chairman, I
    thank you for your courtesy.
        Senator Murray. Thank you, Senator Kohl. Mr. Mead, we
    interrupted you before you were able to give your testimony on
    the search and rescue, and if you want to go through that
    briefly before answering questions about it, I would appreciate
    it.

                           search and rescue program

        Mr. Mead. You know, I had covered--I said I was going to
    cover 3 things, and I finished with the Deepwater and the
    National Distress System, which is the 911 system. And I was
    just about moving into the search and rescue as we broke for
    the vote.
        Search and rescue, what am I talking about here? Eighty-
    five percent of distress calls come in from three miles off the
    coast. So we are talking about coastal area search and rescue.
    We're not talking about 50 miles and out--right close to shore.
    It's about a $500 million program. And by its own admission,
    the readiness levels of the Coast Guard's, search and rescue
    stations have been deteriorating for some period of time.
    Despite that, their performance levels overall are quite high.
        Let me give you some vital statistics that give us concern.
    Ninety percent of the search and rescue stations are operated
    with a staffing level so low that the personnel are required to
    work over 80 hours a week. Mishaps involving Coast Guard small
    boats, these are the boats that perform rescues, increased
    about 200 percent over the past 2 years, from 40 mishaps to
    over 100. The Coast Guard attributes that to errors in
    judgment, navigation and errors--operational errors. Boat
    station coxswains, these are the boat drivers, and boat crews,
    they generally lack formal training. The Coast Guard doesn't
    have a school to send these folks through, so there's a lot of
    on-the-job training. At least 70 percent of the personnel
    arrive to these stations without prior experience or training.
        During 2000 a significant percentage of the search and
    rescue boats inspected, including their new ones, were found,
    ``not ready for sea,'' which was the classification the Coast
    Guard applied for them. Examples include the failure of
    watertight closures to seal, exhaust leaks, and loose or
    missing fittings. The failure of watertight closures to seal,
    which existed aboard 79 percent of the lifeboats inspected, is
    a significant problem because those boats are designed to roll
    over and self-right in heavy surf, and the proper operation of
    the watertight seal is obviously important if you're going to
    flip the boat over and not take on water. I just want to
    highlight this. It's not as costly as the Deepwater Program,
    but I think it's certainly right up there as the backbone of
    the Coast Guard's missions and what they are known for, and I
    think it's an area that deserves serious management attention.
        Senator Murray. Well, thank you very much, Mr. Mead. Let me
    start my questioning with you. Your report, which I saw,
    outlines a pretty grim snapshot of many of these issues that
    face the Coast Guard's search and rescue program. But your
    report also states that many of these problems have been well
    documented and have existed at surf stations for almost 20
    years. What has changed that causes you to now believe that
    these problems with search and rescue require immediate
    congressional and Coast Guard attention?
        Mr. Mead. I think a lot has to do with personnel and the
    numbers of personnel that are dedicated to this and the
    training of people. The Coast Guard in terms of replacing the
    equipment--they have a fairly significant number of new
    lifeboats that shouldn't have problems already. So I think some
    of the problems have to do with just keeping the ships, the
    boats, ready for sea. So I would point to training, personnel
    turnover, the loss of senior staff that can train the newer
    folks, and I think the reason for the high level of performance
    is, well, the Coast Guard's motto, semper paratus. I think
    these people are working very hard, and 80 hours a week is a
    lot.
        Senator Murray. Admiral, your Pacific Area Commander
    identified an urgent need for an additional 250 billets to
    staff 10 surf stations and four other rescue stations in the
    13th district. He maintains that the status quo is unsafe. Last
    year the committee fully funded an additional 67 billets
    nationwide to staff search and rescue stations. In this year's
    budget you are requesting an additional 194 billets for the
    entire Nation. If we fully fund your budget request this year,
    as we did last year, how many of the 250 billets that your
    Pacific Area Commander identified as necessary for the 13th
    district will actually be sent to the 13th district?
        Admiral Loy. Well, I think the number out of the 190 is
    probably 21, if I remember correctly, ma'am. I think it is nine
    associated with command centers, eight associated with
    stations, and four associated with 47-footers that will be
    coming into the district.
        Senator Murray. So about 29 of the 250?
        Admiral Loy. I think it's 21.
        Senator Murray. Twenty-one of the two hundred and fifty.
        Admiral Loy. Last year's focus, as you might recall, as you
    did say, was focused directly on surf stations, which, of
    course, are 13th District stations for the most part. Those 67
    military personnel went to small boat stations in the 13th
    District and to the Pacific Northwest.
        If I may, let me just add a thought here. First of all, we
    have--if there was a wake-up call associated with this
    depiction of 20 years worth of a problem, why all of a sudden
    is it a focus today? The wake-up call for us was probably the
    MORNING DEW case, which was in South Carolina a couple of years
    ago. In that particular tragedy four lives were lost, that
    frankly if in fact the National Distress and Response System
    modernization project functionality, as we understand it in the
    project, if that had been in place, I am reasonably confident
    in telling you that those four lives likely would not have been
    lost.
        If there was any need, and there was not, for a second
    wake-up call, whether it was the QUILLAYUTE crew or our own
    crew in Niagara just this past year, there is no need for an
    attention to be generated with respect to senior Coast Guard
    leadership and the instance of what I will call restoring the
    credibility, if you will, of our search and rescue program. We
    are in the midst of coming to closure with a very comprehensive
    review of the project, of the program overall.
        In the course of the last ten years or so, we have asked
    more and more and more of those existing crews at lifeboats
    stations, at district offices, at communication centers, and at
    rescue coordination centers around our service. Fifteen years
    ago 80 percent of their time was oriented towards search and
    rescue orientation. And I would offer that today in many of
    those very same rescue coordination centers they have as much
    of a challenge associated with the law enforcement activities
    that we have been asked to undertake for the Nation as the
    search and rescue responsibilities in the past.
        Senator Murray. So you are saying the law enforcement has
    increased and so has the search and rescue?
        Admiral Loy. Certainly the search and rescue challenge has
    grown with the congestion of our waterways and with the
    exploding recreational boating activity as part of the Nation's
    recreational interests, and I continue to see that happening in
    the future. Any line of challenge that you look like, as the
    interagency task force last year reflected, suggests that we
    will need more Coast Guard before we need less in these basic
    mission areas that have always been part of our makeup.
        I would guess, Madam Chairman, by the time we're done we're
    going to suggest back to the Congress in the 2003, 2004, and
    2005 budgets a need for somewhere, oh, I would guess between
    700 and 800 positions to restock the Coast Guard adequately.
        Senator Murray. Is that because people are retiring or
    because you need those additional people for your missions?
        Admiral Loy. For missions.
        Senator Murray. Okay, but I thought in your opening
    statement that you said that you had adequate personnel.
        Admiral Loy. In my opening statement I said the President's
    budget reflects progress along the path of what--if we got to
    where we are over the course of a decade or more, the notion of
    being able to fix it overnight is going to be less than
    attractive for budgeteers and for subcommittees as well. My
    thought is that we should compose a conscious--about a 5-year
    restoration period; 2001 and 2002 are steps along the way to
    that path. I would offer that 2003, 2004, and 2005, when we
    have concluded what we call Project Kimble, a solid review of
    all of our coastal requirements, those things will be reflected
    in the 2003 and 2004 requests.
        Senator Murray. Mr. Mead, go ahead.
        Mr. Mead. I would say that I think a point for your
    consideration, and the Coast Guard's as well, is that these
    people in this search and rescue workforce are so stretched,
    and I think that correlates with the condition of these boats
    and the training because the numbers of people are short. You
    don't have the time to train and you don't have the time to
    make these repairs. Some of these problems are not expensive
    problems to fix. Watertight seals are not expensive to fix.
    There's a reason that's not being done, and I don't think it's
    because people just don't want to do it.
        Admiral Loy. Well, I think you are absolutely right, Ken.
    First of all, the training issue is a very real one.
        Senator Murray. Right.
        Admiral Loy. In the budget this year we have requested the
    positions to re-establish, actually to back up--they actually
    re-established Boatswain's Mate A School so that the young
    people that are actually doing the driving of those vessels
    will have the formal training in a school setting necessary to
    restock those things service-wide.
        The notion of standardization teams to literally be a group
    of experts that goes around literally from station to station
    to station and checks the wherewithal of the station to get its
    job done is underway, and those standardization experiences go
    to some degree to Mr. Mead's comment about whether or not the
    vessels are at the 80 percent not ready for sea. What's also
    important to note is that by the time those inspectors leave,
    which could be a matter of days later, it's closer to 95
    percent of those vessels that are, in fact, ready for sea.
        So that the notion of an inspection team coming in to check
    on something and be a constructive help as opposed to a ``catch
    you doing something wrong'' mode is the manner in which we are
    attempting to deal with that, and I think we are making some
    very significant progress there.
        Senator Murray. Mr. Mead, you had mentioned in your
    testimony that people were working--I think you said 70 hours a
    week?
        Mr. Mead. Eighty hours a week.
        Senator Murray. Eighty hours a week. How many people would
    it take to add to make sure that people were working a 40-hour
    week again?
        Mr. Mead. It would be a significant number. Can I get back
    to you on the record for that?
        [The information follows:]

        We have not independently estimated the number of staff that would
    be needed to reduce the work-week for SAR personnel. Coast Guard
    studies have estimated that a significant staffing increase would be
    needed for stations to meet its 68-hour work-week standard. For
    example, under one set of assumptions that transfers some of the
    administrative and maintenance duties now performed by the stations to
    the groups, Coast Guard estimates a total of approximately 900
    additional personnel would be needed at SAR stations and groups.
    Assuming that SAR station mission, administration, and maintenance
    workload remains unchanged, Coast Guard estimates that more than 2,700
    additional station personnel would be needed to meet the 68 hour
    standard. The number of additional personnel needed to meet a 40-hour
    work week standard would be greater. I understand Commandant Loy is
    developing revised staffing numbers.

        Senator Murray. I would like to know, Admiral, from you,
    how long before we have that adequate personnel so we don't
    have people working long hours, which obviously----
        Mr. Mead. I want to make another point about the hours. You
    know, these inspections that I was referring to, let me give
    you the numbers. These are the conditions about the new boats.
    These are ones that have been in service for 0 to 4 years. Of
    those inspected in 2000, 90 percent were found not ready for
    sea. Now when the Coast Guard does these inspections, they give
    you plenty of notice. These are not like the police officer
    coming out and surprising you. And the fact that even with
    notice they are not able to have them in condition is
    suggestive to me that the staffing is a serious problem. But we
    will get back to you directly with a more precise calculation.
        Senator Murray. I appreciate that. Admiral, in our Seattle
    hearing, I heard that when it comes to experienced shortfall
    your search and rescue station, one bad thing leads to another.
    The workload, as bad as it is, is falling on a diminishing
    number of qualified people and that workload is causing those
    experienced individuals to transfer elsewhere within the Coast
    Guard, or retire, which, of course, makes the shortfall even
    worse. Have you taken any actions to reverse that trend?
        Admiral Loy. Yes, ma'am, we have, especially the surfmen
    qualified stations which are very important in your district.
    We have arranged a very liberal extension policy for certain
    qualified people that will hold the experience at the stations
    where we need it. We have arranged back-to-back tours for those
    who simply love the business of local search and rescue work
    and want to stay there for an additional 4 years beyond the
    original 4-year assignment. So the personnel administration
    procedures associated with extending qualified people at those
    lifeboat stations have been put into place.
        Senator Murray. Is that working?
        Admiral Loy. Yes, ma'am, it is working. We are finding a
    whole lot of those folks saying, absolutely, I would love to be
    able to extend for another year or to actually renew my tour of
    duty at Amqua River or Quillayute, or whatever.

                             retention of personnel

        Senator Murray. Do you have any statistics to show us how
    many people are re-upping comparatively to what we had?
        Admiral Loy. I'd have to get back to you on that. But we
    think there are good things in motion there that will help us
    in that regard. But let me also say that I have for the last
    several years been citing exactly the same kind of statistics
    that Ken is discussing with you this morning, and that is if
    you are talking about mishaps, if you are talking about those
    things occurring at air stations as well as at lifeboat
    stations, it is because the resonance of the organization has
    been sapped over the course of a decade's period of time.
        [The information follows:]

        The Coast Guard does not keep statistics on the number of service
    members that have opted to take advantage of recent policy changes
    allowing more liberal extensions of assignments. Although not
    quantifiable, the Coast Guard assignment officers responsible for small
    boat stations have seen an increase in requests for extensions and
    consecutive same-station assignments.

        Admiral Loy. As I indicated in my opening statement, we are
    the victims, if you will, to a degree of our own semper paratus
    mind set and not having announced early enough, a decade ago,
    that we simply could not take on more issues--take on more
    missions without the attendant resource inventory to do them
    correctly and to do them other than on the backs of our people,
    which is what an 80-hour work week represents.
        Senator Murray. Right.
        Admiral Loy. Now, the 80-hour work week has to be taken a
    little bit with a grain of salt, because in those 80 hours are
    sleep time, there is recreation time. They are not always out
    on a 47-footer bouncing around offshore. So the notion of being
    available to get in that boat when necessary when the 911 call
    comes is what adds up to the 80-hour week. And there is a
    preference associated with how sliding weekends offer the crew
    members better and more quality time with their families if
    they arrange their schedules in certain ways.
        So we need to be careful about the inference that an 80-
    hour week is twice what any other American is doing in a 40-
    hour work week. That's not quite the case, albeit I have been
    among those claiming that 80 hours is way too much. I think
    probably something closer to 60 is appropriate.
        Senator Murray. Mr. Mead, would you agree with that?
        Mr. Mead. Yes.
        Senator Murray. Admiral, you were once chief of Coast Guard
    personnel, and it seems to me that the personnel policies are
    helping get to where we are right now because, once junior
    enlisted people are fully trained at search and rescue
    stations, they are either sent away to school or transferred to
    a ship. Are the policies you just talked about reversing that
    trend or not?

                                future force 21

        Admiral Loy. Madam Chairman, to whatever degree the
    Integrated Deepwater Systems Project and NDRSMP on the
    equipment side are critical programs to remodernize the Coast
    Guard for the future on equipment, we have to do the same
    things with the policies by which we are dealing with our
    people. I have asked my Chief of Human Resources, Admiral Fred
    Ames, to design for me what we have termed Future Force 21.
    What are the workforce requirements that are going to be 5
    years, 10 years, 15 years from now, and to design the policy
    adjustments, and let's break some rice bowls if we have to to
    rebuild a military workforce or even to consider for stability
    reasons other than military ways of doing business at some of
    our traditional locations that have always been manned by
    military folks.
        If there is value, for example, in a civilian watch stander
    on a Coast Guard operation center, because they'll be there for
    not just a 2 or 3 or 4 year tour but for 10 years, or for a
    career, we should not ignore the possibility of looking at
    those things very carefully. I have asked him to be, I'll say,
    creative, innovative. But beyond that, I need new ideas in
    terms of how to best man the Coast Guard's workforce----
        Senator Murray. Is there a timeline for this report to come
    back?
        Admiral Loy. Yes, ma'am. I've asked him to--he's been
    working on it for 6 or 8 months at this point, and I have asked
    that it be a--that the mosaic for it, that the puzzle sort of
    be taking shape within a year.

                               incentive bonuses

        Senator Murray. Admiral, during that same hearing in
    Seattle I asked the Master Chief Petty Officer from the 13th
    District about these shortages, and he made the point that re-
    enlistment bonuses that are offered by the Coast Guard are not
    as generous as those that are offered by the services. Is that
    the case and has that, do you think, affected some of your
    retention problems?
        Admiral Loy. Absolutely, ma'am. I had a slide once that
    showed a very tall DOD sailor and a relatively short Coast
    Guard sailor, and the difference was, is our pay and
    compensation the same? Yes. Are our health benefits the same?
    Yes. Because the law requires for them to be the same.
        But when you talk about incentive bonuses in terms of
    specialties, when you talk about re-enlistment bonuses, when
    you talk about the dollars available that I have to incentivize
    my sailor to stay in the service, there is a significant height
    differential between those two respective sailors, and I think
    it is a bit of a travesty that there is any kind of a gap
    between the uniformed service personnel and any of the five
    services having a different set of educational opportunities, a
    different set of bonuses available to them to keep them in the
    force.
        Senator Murray. And that does have that impact on
    retention?
        Admiral Loy. Absolutely it does.
        Senator Murray. Mr. Mead, in Admiral Loy's testimony he
    States that we must continue our multi-year phased approach to
    ensure that the Coast Guard operating and support units are
    properly staffed, trained, equipped, and maintained. Do you
    believe that the solution to the search and rescue problems you
    identified would await a multi-year phased approach?
        Mr. Mead. No, I think we really need to get on, frankly,
    with the personnel to beef up and to train. I don't think we
    would need to require many years to establish a good solid
    training program, and I think we ought to get on with our
    National Distress System. I think that 2005 or 2006 date ought
    to be locked in concrete.
        Senator Murray. Admiral, if you could get additional budget
    resources above the budget request to address some of these
    critical search and rescue problems, where would you spend
    them?
        Admiral Loy. The question offers the opportunity to take
    note, for example, Madam Chairman, of the budget resolution and
    of the House authorization bill passed just last week, which
    suggested, among other things, that we be somewhere between
    $250 and $300 million above the President's request in OE.
        If those dollars were made available to me, there would be
    several priorities that I would think about. Number one would
    be to attempt to anticipate the exposure we have to whatever
    will be the National Defense Authorization Act 2002, so we
    don't find ourselves in this supplemental challenge this time
    next year. We estimate our exposure there, by the way, to be
    somewhere between $80 and $85 million.
        The second thing that I would deal with would be to restore
    the maintenance accounts from which we have borrowed, stolen
    monies to hold onto an operational tempo over the course of the
    last several years.
        The third thing I would do would be to gain a sense from
    the Congress as to whether or not what's offered in the
    President's budget in reality, which is a 15 or 20 percent
    shortfall in services being delivered to the American public
    and whether or not we should restore that capability.
        And then lastly I would be concerned about the specific
    items that could be ``bought back.'' In other words, those
    things that had been offered for decommissioning, several
    cutters, aircraft, air facilities, we should take stock as to
    whether or not those are potentially ``buy back'' items. And in
    the midst between restoring maintenance accounts and restoring
    operational capability, this issue that we are discussing would
    absolutely be part of that.

          national distress and response system modernization project

        Senator Murray. All right, well, let me turn to the
    National Distress System Modernization Project. Mr. Mead, you
    reported that the projected cost for the system has escalated
    greatly from the Coast Guard's initial estimate of roughly $300
    million to over $1 billion. You also stated that the National
    Distress System has deteriorated because the Coast Guard has
    delayed replacement to fund higher priorities. Why are the
    contractors' cost estimates so much higher than the Coast
    Guard's own estimates?
        Mr. Mead. Well, I think the Coast Guard estimate of $250 to
    $300 million assumed that a lot of the existing infrastructure
    could be used, and the contractors tend not to think that
    that's the case. Plus, the contractors projected covering
    almost all the gaps in the United States, and that probably
    makes a lot of sense. Also, the Coast Guard's figures on which
    they based the estimate were outdated at the time--by the time
    the contractors started doing their analysis.
        Senator Murray. So the original Coast Guard report would
    not replace all of them?
        Mr. Mead. No, the initial Coast Guard report, first of all,
    was based on cost information from some years ago and secondly,
    assumed that they could use a lot of the existing
    infrastructure in the United States and that the contractors
    could piggyback or build off of that. And I think the
    contractors have come back saying they are not that confident
    of that.
        Senator Murray. Admiral?
        Admiral Loy. Yes, ma'am. Where we are in the project, Madam
    Chairman, is this. The initial system designs and the initial
    life cycle costs, the first proposal back from the three
    contractors that are competing for this contract, the three
    companies that are competing for this contract, they were given
    essentially an unconstrained opportunity to come back and offer
    what it would take to do the job. And they have come back with
    the kind of numbers that Mr. Mead and you described with your
    question.
        The other thing they came back with, however, which is very
    critical here, is to point out to us very carefully where
    technical adjustments that can be made that can lower probably
    by half the estimates that they are offering. So if I was to
    give you an estimate as to what the right number would be for
    the NDRSMP project extended over time out to the 2006
    completion, it would probably be somewhere around $500 million.
    Now that's more than the $250 to $300 million that we estimated
    at the initial part of the project. There's no doubt about
    that. But it's not going to be anywhere close to those
    estimates that the contractors are coming back with.
        Why? Because we have to decide between the Congress and
    between my offerings to you as, at least, a place to start the
    nature of how many of those gaps ought to be closed. And to the
    degree we want 100 percent, which was the original precept,
    then that's when you're talking about $1 billion kind of a
    project.
        Senator Murray. When you come back to us with that, will
    you show us how that will impact public safety?
        Admiral Loy. Absolutely.
        Senator Murray. I mean, obviously, that their number over
    here and ours over here and somewhere between there it's going
    to impact public safety.
        Admiral Loy. Absolutely, ma'am. Unlike Deepwater, this is a
    scalable project. This is something that we can decide how much
    of the NDRSMP project is it that we need to deal with. It's
    principally focused on erecting towers to make sure that the
    microwave connectivity is adequate to----
        Senator Murray. And I assume that depends on geography?

                                caps in coverage

        Admiral Loy. That's all about geography, absolutely. And
    it's also all about do we need them on places where there is no
    recreational boating. You know, Ken's comment with respect to
    the only--you know, that the predominance of the SAR, which is
    absolutely right, is within 3 or 4 miles of the coast, do we
    need towers around the north coast of Alaska?
        Senator Murray. That map doesn't show you around the north
    coast of Alaska.
        Admiral Loy. And I would offer that there is absolutely no
    recreational boating or search and rescue requirement there
    and, therefore, that's an easy one. But all of the other gaps
    that Ken is properly citing, which has exactly been my
    testimony for the last 2 years by the way, that this gap issue
    is critical to----
        Senator Murray. There's a lot of commercial fishing around
    Alaska.
        Admiral Loy. Not up there.
        Senator Murray. Well, I'm looking at the south part where
    the dots are.
        Admiral Loy. Oh sure, absolutely. And as a matter of fact,
    we have worked hard already over the course of the last 10
    years to close gaps in the coverage in Alaska.
        Senator Murray. Well, as you probably know, we had the
    ARCTIC ROSE go down somewhere in Alaska and there was no
    distress signal. We don't know the final conclusion of that,
    but obviously it could have been some area that doesn't have
    any.
        Admiral Loy. Absolutely, absolutely.
        Mr. Mead. I just think sort of like--this is a personal
    experience. I was up in Northern Vermont and I had a cell
    phone, and I needed to get in touch with somebody in a hurry
    and was unable to. And I remember that experience as this was
    being related to me in these gaps.
        And I've read these NTSB reports, like the MORNING DEW
    incident, and it must be extremely frustrating and frightening
    to make a ``mayday'' distress call and not have anybody hear
    you within three or four miles off the coast of the United
    States.
        Admiral Loy. I think what's enormously important here,
    Madam Chairman, is that there is a menu of functionality that
    we want to introduce into the National Distress Response System
    for this system for the United States of America. It's about
    digital recording. It's about an enhanced playback capability,
    so that if there is a notion that we might have heard a call we
    can play it back, enhance it, and truly hear it at our
    respective op centers. It's about archiving those kinds of
    things so we have a documented record about it. It's about
    position localization, so that when we get a call in we not
    only know that we've got a call but that we know where that
    call came from.
        It's about OM unit tracking. I want to be able to know
    exactly where that small boat that left the Niagara station
    went so that I don't have to guess where to send the rescuers
    to go get those two young people that died. It's about GMDSS.
        So this menu of functionality is what the contract is all
    about. How we scale that is exactly what the dollar value of
    the project will become, and we are looking very carefully and
    scrubbing what the contractors have offered us. And I can
    almost guarantee you that we will not be dealing at a $1
    billion dollar level. We will be dealing at about $500 million.
        Senator Murray. Well, when will we know that? Admiral
    Riutta told me that he expects this to be completed by 2005. I
    assume we need to make those decisions fairly quickly and go
    forward.
        Admiral Loy. Yes, ma'am. We will know that within fiscal
    year 2002, when we can go ahead and let the contract. The deal
    with 2005 is--and I agree with Ken, the notion of can we get it
    accelerated, we have to design the system first. And I have
    looked very carefully. It's very hard for us to accelerate the
    design phase. But once we have a design, then all it takes is
    money to accelerate the installation wherever----
        Senator Murray. Well, I assume if you scale it back you're
    going to have to make some tough decisions and somebody's State
    is not going to be covered.
        Admiral Loy. We would make tough decisions along the way of
    what the threshold of coverage, an IOU, a good read on that, so
    as to help you make a good judgment in terms of funding the
    project, yes, ma'am.
        Mr. Mead. This is one reason why those numbers on Deepwater
    and NDRSMP need to have--we need to settle on them. Both of
    these things are marching at approximately the same point in
    time.
        Senator Murray. Right.
        Admiral Loy. Absolutely right.
        Senator Murray. Well, I want to hear as soon as we've got
    this, and I urge you to do it quickly. I think we need to get
    this going, make a decision, move towards it, so we know what
    numbers we need to have in the budget but also so that we can
    know what that number is going to be, whether it's towards the
    larger end or the shorter end. And I assume there will be some
    political decisions in that when we find out who gets covered
    and who doesn't.
        Admiral, in my opening statement, I addressed your agency's
    commitment of cutter and aircraft hours to fisheries
    enforcement. I talked about how that mission has been reduced
    significantly in the last 5 years. You have now ordered a
    further reduction in cutter hours, and we have been told that
    fisheries enforcement efforts will be 50 percent lower this
    quarter than they were at this time last year. These
    operational reductions include the cancellation of six
    fisheries patrols and the loss of 263 patrols days including
    two patrols in the Pacific Northwest.
        At what point does the Coast Guard have to admit that we
    are not really executing their mission with any degree of
    emphasis?
        Admiral Loy. Well, with any degree of emphasis, I guess
    the--I don't know how I can answer that question directly,
    ma'am. What I can tell you is that, in order for me to pay the
    bills mandated for me to pay, I have had to reach to places in
    our accounting structure, in our Coast Guard, that I had hoped
    I would never have to go to, and it includes reducing literally
    the operational tempo of the organization in order to pay those
    bills.
        I was, of course, provided a quarter-by-quarter definition
    of work out of the Office of Management and Budget this year.
    We have met each of those quarterly deadlines and challenges
    principally by robbing from Peter to pay Paul at the other end
    of the day.
        So my challenge is to present to the committee, to present
    to the Administration in turn, the implications of a funding
    level that we will receive. And in the President's budget this
    year, looking forward to 2002, we would have to reduce
    operating tempo by 15 to 20 percent across the board. The one
    thing that I have, of course, kept sacrosanct is SAR and
    safety, so we will not be reducing implications associated with
    SAR and safety.
        When you are exposed to fuel adjustments to the 40 or 50
    percent level, when you are exposed to unappropriated dollars
    that you have to pay in terms of National Defense Authorization
    Act requirements, the places you can go to are several-fold:
    bring less people into the organization so you don't have to
    pay them; rob your maintenance accounts and push the deferred
    maintenance bow wave even further down the future; and/or
    reduce the operating tempo of the organization so you do not
    burn the dollar value of the fuel.
        Senator Murray. Well, I understand the story for this year,
    but what about for the last 5 years?
        Admiral Loy. Well, 2000 was essentially the same as 2001 is
    becoming in terms of that requirement to wait and depend on a
    supplemental to ``bail us out'' based on what had not been
    appropriated----
        Senator Murray. Well, in terms of fisheries enforcement----

                             fisheries enforcement

        Admiral Loy. In terms of fisheries enforcement, 1999 should
    be our baseline year, because for all intents and purposes we
    were able to meet program hours of productivity out of the
    organization in fiscal year 1999. In fiscal year 2000, we were
    down slightly. In fiscal year 2001, we are now paying a penalty
    that hopefully will get re-established by a positive read on
    the supplemental request that the President has forwarded to
    the Congress. In 2002, it is as prescribed in the President's
    budget, which is what I'm trying to suggest, or trying to say,
    that if the OE level is as is prescribed and requested,
    inherent in that is a 15 or 20 percent reduction in offshore
    law enforcement capability.
        Senator Murray. Is that the President's budget request?
        Admiral Loy. Yes, ma'am.

                           decomissioning of cowslip

        Senator Murray. Let me turn to another area here. Admiral,
    your budget is proposing several operational changes in order
    to achieve budget savings totaling $108 million in fiscal year
    2002. One of these proposals is to decommission earlier than
    scheduled the 180-foot seagoing buoy tender COWSLIP which
    services more than 200 buoys in the Pacific Northwest. Under
    your plan the vessel will not be replaced in our region for 18
    months and during that time other Coast Guard vessels would be
    required to handle the COWSLIP's workload.
        Can you assure me that if the COWSLIP is decommissioned
    early as you proposed there will not be any reductions or
    delays in the routine or emergency servicing of aids to
    navigation in our 13th District?
        Admiral Loy. Yes, ma'am. I think I can assure you of that.
    The buoy tenders and Aids to Navigation (Aton) capability
    inherent in the district will be supplemented as necessary from
    both the 11th and the 17th in turn to deal with the major buoys
    that the COWSLIP normally would have had in their----
        Senator Murray. You'll take buoy tenders from the 11th and
    the 17th?
        Admiral Loy. We will stretch those for the 18-month period
    until the new buoy tender is commissioned and replaces the
    COWSLIP.
        Senator Murray. Will that give us delays or any problems
    with those having to travel so far?
        Admiral Loy. In terms of an emergency outage of a major
    aid, it will take a longer period of time for a tender to come
    up from California to deal with that outage. There's no doubt
    about that. Will the service be less than you're used to? I
    think unfortunately the only answer I can give you is yes.
        Senator Murray. Well, in the Pacific Northwest a great many
    aids to navigation are serviced by the BAYBERRY and the
    BLUEBELL, and both of those vessels are more than 46 years old.
    A review of the five-year capital investment plan that you
    submitted to the committee shows that you have no plans to
    replace either of those vessels.
        How much longer do you think we can extend the life of the
    BAYBERRY and the BLUEBELL?
        Admiral Loy. Madam Chairman, I'm not, as I sit here this
    morning, aware of the physical condition of those two
    platforms. I'd like to get back to you on that.
        Senator Murray. If you could, I would appreciate it.
        Admiral Loy. Yes, ma'am.
        [The information follows:]

        The cutter BLUEBELL, commissioned in 1945 and homeported in
    Portland, Oregon, is one of two 100-foot class Inland Buoy Tenders
    operated by the Coast Guard. Similarly, cutter BAYBERRY, commissioned
    in 1954 and homeported in Seattle, Washington, is one of three 65-foot
    class Inland Buoy Tenders currently in service. The Coast Guard
    conducted Ship Structure and Machinery Evaluation Boards (SSMEB's) in
    May 2001, and found each vessel to be in good material condition. Based
    on the SSMEB findings, the Coast Guard estimates that with some safety
    and environmental modifications such as upgrading fire & flooding
    detection systems, crew habitability, ventilation, and gray water
    handling systems, these cutters should be able to remain in service for
    another ten years. The Engineering Logistics Command (ELC) will convene
    a Service Life Evaluation Board (SLEB) prior to December 2001, to more
    thoroughly evaluate the supportability and expected service lives of
    these two cutters.

                            implementation of opa-90

        Senator Murray. Admiral, protecting our Nation's water from
    oil spills is supposed to be a top priority for your agency as
    well as everything else we've discussed this morning. However,
    this past December the U.S. Court of Appeals ruled that the
    U.S. Coast Guard is in blatant violation of the 1990 Oil
    Pollution Act for failing to require oil tankers to install
    devices to detect oil leaking from their cargo tanks.
        When Congress passed the Oil Pollution Act in August of
    1990, it gave the Coast Guard a clear mandate to complete this
    rule making within a year. How can we justify a 9-year delay in
    issuing this rule when the Congress gave your agency a very
    clear 1-year timeline?
        Admiral Loy. I don't have a good answer for you, Madam
    Chairman. I'd like to get that one back to you for the record.
    What I can point out is, what I think we should be able to say
    here without any reservation, is the enormous success OPA 90
    has actually been over the course of the ensuing decade. I
    mean, we have 70 percent less by volume oil spills on the water
    than we had 10 years ago, 50 percent fewer spills by number. So
    almost by any standard the Oil Pollution Act and the Coast
    Guard's execution of the regulatory--many, many regulatory
    challenges that were part of the has been an enormous success
    story. This particular rule making, ma'am, I will get back to
    you on.
        Senator Murray. If you could, and if there's any other rule
    making actions that were mandated that the Coast Guard hasn't
    yet completed, if you could let me know which ones as well.
        [The information follows:]

        Three other regulations from the oil pollution act of 1990 (OPA 90)
    are currently under development. They are: (1) Tank Vessel Response
    Plans for Hazardous Substances; (2) Facility Response Plans For
    Hazardous Substances; and (3) Reporting Marine Casualties that pose
    significant harm to the environment. The hazardous substances response
    plan rulemaking for vessels and facilities has been a complex project.
    The development has focused on resolving conflicts between existing
    federal regulations and ensuring complete stakeholder involvement. The
    Coast Guard published an Advanced Notice of Proposed Rulemaking (ANPRM)
    covering both vessels and facilities in May 1996, following extensive
    work with the Environmental Protection Agency to harmonize facility
    requirements. Since publishing the ANPRM, the Coast Guard has proceeded
    with two separate rulemakings, one for vessels and one for facilities.
    The Notice of Proposed Rulemaking (NPRM) for vessels was published in
    March 1999, and the NPRM for facilities was published in March 2000.
    Interim Rules (IR) for these rulemakings are under development, with
    the IR for vessels planned for publication in the Spring 2002, and the
    IR for facilities planned for Fall 2002. To maximize stakeholder
    involvement, the Coast Guard has worked with the Chemical
    Transportation Advisory Committee (CTAC), held four public meetings,
    and sponsored a two-day workshop. The reporting marine casualties
    rulemaking proposes that oil and hazardous material discharges of
    ``significant harm to the environment'' be added to the list of
    reportable marine casualties. An NPRM was published in November 2000. A
    Supplemental Notice of Proposed Rulemaking was published on July 12,
    2001.
        The Tank Level or Pressure Monitoring (TLPM) rulemaking project is
    one of more than 40 rulemakings and over 90 individual implementing
    actions required by the Oil Pollution Act of 1990 (OPA 90). Section
    4110(b) of OPA 90 mandating TLPM devices required the Coast Guard to
    set minimum standards and usage requirements for TLPM devices. These
    devices measure changes in cargo volume, thereby detecting possible oil
    leaks in the marine environment.
        The Coast Guard began its TLPM regulatory process in May of 1991 by
    issuing an Advanced Notice of Proposed Rulemaking (ANPRM) to solicit
    comments on what the minimum standards for leak detection devices
    should be and how such devices should be used (56 FR 21116).
        The Coast Guard also commissioned a study by the Volpe National
    Transportation Center regarding the technical feasibility and accuracy
    of devices then available. In February 1993, the Coast Guard announced
    to the public the availability of the study in a Notice of Availability
    (58 FR 7292). In November of 1994, the Coast Guard announced a Public
    Meeting to be held in December seeking additional comments with regard
    to the standards for and use of TLPM devices (59 FR 58810).
        To establish an effective and meaningful TLPM standard, the Coast
    Guard published a Notice of Proposed Rulemaking (NPRM) in August 1995
    which set a standard of a 0.5 percent change on the level of cargo, or
    a loss of 1,000 gallons (whichever was less). After receiving and
    reviewing several comments that questioned the availability of devices
    that would meet the proposed standard, the Coast Guard published a
    Temporary Rule establishing minimum detection standards for a TLPM
    device, but did not require installation (62 FR 14828). Even though no
    devices were currently available, the intent was to spur development of
    an effective device that would meet the standard. The rule was issued
    in 1997 as a Temporary Rule due to the fact that OPA 90 phase-out
    schedules suggested that after two years, it would not be economically
    beneficial to require the installation of such devices on tank vessels.
    Unfortunately, the temporary rule expired in April 1999 with no devices
    submitted for evaluation. Thus, the Temporary Rule ended in 1999,
    leaving neither a standard nor a usage requirement for TLPM devices in
    Coast Guard regulations.
        Currently, the Coast Guard is undertaking a rulemaking project that
    will establish a standard and usage requirements for TLPM devices on
    tank vessels. We plan to publish a Notice of Proposed Rulemaking during
    the fall of 2001. The need for TLPM regulations has greatly decreased
    because other OPA 90 mandated regulations have reduced the benefits of
    installing TLPM devices. Regulations such as the Operational Measures
    for Existing Tank Vessels Without Double-Hulls that require enhanced
    surveys, voyage planning and under-keel clearance requirements, have
    reduced the likelihood of a spill that would be detected by a TLPM
    device.

                                  seattle vts

        Senator Murray. One more question, Admiral. One of the
    Coast Guard's Vessel Traffic Systems is in the Port of Seattle.
    The VTS is critically important to the safe movements of ships
    throughout Puget Sound. The VTS will be that much more
    important as the number of cruise ships, high speed ferries and
    container ships increase. I am hearing reports that the Coast
    Guard does not currently have a sufficient number of trained
    radarmen to staff the Vessel Traffic Systems and the VTSs are
    short of watch standars.
        What can you tell me about the shortage of our radar watch
    standards?
        Admiral Loy. Radarmen as a rating, among the listed
    ratings, is one of those areas where retention has been a
    rather significant issue for us. So I am very concerned about
    that. There's a couple of answers to the question. One of those
    may very well be the potential civilianization of some of those
    positions, again, such that both stability and skill set is
    covered so to speak in the VTS watch standers without the
    requirement for replacements every 2, 3 or 4 years.
        The challenge there, of course, is that those positions
    represent the shore-side opportunities for those young Coast
    Guard sailors where otherwise their radarmen skill sets will be
    employed at sea. So we always have to deal with the sea/shore
    ratio and rotation concern when we are potentially thinking
    about civilianizing a position on the beach which offers
    radarmen and those specialists in our enlisted cadre that go
    and spend an awful lot of their time at sea. We need to provide
    them those opportunities on land to have a decent ratio. So I
    am concerned as to the retention issue especially as it relates
    to radarmen and several of our other enlisted ratings.
        Senator Murray. Is there anything in your budget initiative
    that directly speaks to this?
        Admiral Loy. I don't believe there is, ma'am.
        Senator Murray. Well, thank you to both of you and let me
    just say that I am a member of the Budget Committee and I know
    that both the House and Senate passed budget resolutions that
    promised increases in several areas, including the Coast Guard
    and education, but the fact is that the conference report on
    the budget resolution eliminated those increases and that is
    one of the reasons I voted against the final budget resolution.

                         ADDITIONAL COMMITTEE QUESTIONS

        I appreciate both of your testimony today. I look forward
    to getting your written testimony in response to the questions.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                     Questions Submitted to the Coast Guard

               Questions Submitted by Senator Barbara A. Mikulski

                   deepwater's impact on other ac&i projects
        Question. In his budget, the President recommends $659M million for
    Coast Guard acquisitions, construction, and improvements. Is this
    sufficient funding to support the Coast Guard's Deepwater Project as
    well as other capital improvement projects?
        Answer. The funding level in the President's budget is sufficient
    to fund the Integrated Deepwater System (IDS) project as well as other
    Coast Guard recapitalization requirements. For example, the National
    Distress and Response System Modernization Project, which will
    recapitalize the Nation's maritime 911 system, is fully funded in the
    President's fiscal year 2002 budget. Additionally, many
    recapitalization requirements that would historically be included with
    the Vessels, Aircraft and Other Equipment budget categories are within
    the IDS realm and will be funded within the future estimates for the
    Deepwater category.
                            deepwater: age of fleet
        Question. It is my understanding that the Coast Guard is currently
    operating an aging fleet of cutters and aircraft, which in some cases
    exceed 40 years of age or more. Can you discuss the benefits of the
    Coast Guard's Deepwater Project, particularly its role in addressing
    the Coast Guard's aging fleet of cutters and aircraft?
        Answer. The Deepwater Program is the Coast Guard's answer to
    pressing recapitalization needs. It will provide Coast Guard men and
    women with a state-of-the-market, integrated system of assets that will
    maximize operational effectiveness while minimizing total ownership
    costs.
        The Coast Guard's 93 cutters and 206 aircraft that operate more
    than 50 miles offshore, or in situations that require an extended on-
    scene presence, are aging and technologically obsolete. Most of these
    assets will reach the end of their service lives by 2008.
        The Coast Guard uses its deepwater ships and planes in search and
    rescue, drug interdiction, migrant interdiction, fisheries regulations
    enforcement, defense operations and other at-sea missions. As a result
    of their age, these platforms generate excessive operating and
    maintenance costs. They lack the essential capabilities of speed,
    sensors, and interoperability which limit their overall mission
    effectiveness and efficiency. The Coast Guard Deepwater Program will
    renovate, modernize, or replace those aging cutters and aircraft.
    Rather than replacing the assets on a one-for-one basis, the Deepwater
    Program follows a mission-based performance acquisitions approach that
    describes for industry the capabilities the service needs to perform
    its deepwater missions. Empowering industry to leverage new
    technologies to determine the most effective types and efficient mixes
    of assets will result in an integrated, cost effective, and efficient
    21st century Coast Guard.
        In response to the Phase 2 Request for Proposals (RFP), the three
    Phase 1 industry teams, led by Litton/Avondale/Boeing, Lockheed Martin,
    and Science Applications International Corporation, are eligible to
    submit proposals to build and/or provide their deepwater system
    concepts developed under Phase 1. To ensure no further erosion in
    operational effectiveness, their proposals will include specific
    implementation plans for transitioning from the current aging assets to
    the Integrated Deepwater System.
               deepwater: improvements in operational capability
        Question. How will the Deepwater Project improve your operational
    capability?
        Answer. The Coast Guard's current fleet of deepwater cutters and
    aircraft are aging and becoming technologically obsolete, with
    increasing maintenance costs and declining operational capability.
        Unlike the current assets that were procured on an individual
    basis, the Integrated Deepwater System (IDS) of replacement assets will
    be interoperable, employ state-of-the-market technology, and be
    specifically designed to provide the Coast Guard the capabilities
    needed to perform deepwater missions.
        The IDS program developed a performance specification for an
    integrated system of assets that must meet or exceed current Coast
    Guard operational capabilities. The focus on performance capabilities
    empowered the three competing industry teams to leverage innovative
    technologies and processes in designing systems that maximize
    operational capability effectiveness while minimizing total ownership
    costs.
               deepwater: benefits of system of systems approach
        Question. It is my understanding that the Deepwater Project is an
    Integrated System, rather than a traditional asset-for-asset
    replacement program. Can you discuss the benefits of the systems
    acquisition approach for the Deepwater Project?
        Answer. Given the multi-mission nature of the Coast Guard, our
    ships, aircraft and Command, Control, Communications, Computers,
    Intelligence, Surveillance, and Reconnaissance, (C4ISR) systems must
    work together to fully leverage our limited resources. Currently, our
    operational effectiveness is suboptimized due to the lack of
    interoperability between our assets. For example, our aircraft and
    cutters are often unable to establish secure communications during law
    enforcement operations. Not all of our helicopters can land on all of
    our ships. The lack of commonality between classes of ships and
    aircraft classes results in major logistical and supportability
    hurdles, as well as increased training requirements.
        With the Integrated Deepwater System (IDS), the Coast Guard will
    implement an innovative performance-based approach that asks industry
    to design, build, deliver, and maintain an integrated system of assets
    based on the fundamental capabilities needed to perform the entire
    portfolio of deepwater missions worldwide. This innovative approach
    gives the Coast Guard several compelling advantages:
      --By encompassing all of the Coast Guard's Deepwater assets, the
            Coast Guard and contractor will be able to determine the most
            effective types and efficient mix of assets to perform
            Deepwater missions.
      --The focus on performance capabilities allows industry to leverage
            innovative technologies and processes.
      --Acquiring an integrated system of assets builds in interoperability
            right from the start. Interoperability affords seamless
            coordinated performance of missions by multiple assets.
      --Acquiring a system of assets rather than each asset individually
            will allow the Coast Guard to leverage economies of scale and
            scope, as well as ensure systemic improvements in service
            effectiveness and efficiency.
        Another advantage of the IDS acquisition approach is its use of a
    Systems Integrator. The Systems Integrator will not only be responsible
    for ensuring the systems work together, but will do so in a way that
    maximizes operational effectiveness while minimizing total ownership
    costs. Using a Systems Integrator is the most effective way to execute
    a systems acquisition because:
      --The Systems Integrator shares risk and liability for systems
            interoperability.
      --Procurement lead time is reduced.
      --The Systems Integrator can enter into long-term partnering
            arrangements with suppliers and subcontractors (including
            entering into partnerships with members of opposing teams).
      --Cost/schedule/performance risk for subsystem procurement and
            introduction is reduced.
      --Asset sub-systems designed and developed by the Systems Integrator
            are more easily integrated into the system.
      --New technology is more easily inserted.
      --Organizational/staffing demands to manage contracting and
            integration issues are reduced.
            deepwater: approach based on operational considerations
        Question: Was this approach based on operational considerations?
        Answer. Yes, the Integrated Deepwater System (IDS) acquisition
    approach was based on operational considerations. Existing Coast Guard
    Deepwater assets were procured using a piecemeal approach. They lack
    the interoperability necessary to optimize operational effectiveness.
    The IDS acquisition approach was chosen to ensure that operational
    interoperability problems are avoided. The IDS will be procured as a
    system rather than as individual assets. Assets procured through the
    IDS program will have interoperability built in from the start, and
    will capitalize on the synergy created by the assets working together
    in planned interaction.
              deepwater: more effective than traditional approach
        Question. If so, in what ways will it make the Coast Guard more
    effective than a more traditional asset-for-asset replacement program?
        Answer. A traditional asset-for-asset replacement program assumes
    that the assets needed to perform Coast Guard missions in the past are
    the same ones that will be required in the future. This assumption may
    not be true. There have been rapid advances in technology that have the
    potential to significantly change the way the Coast Guard does
    business. Additionally, the lack of commonality between classes of
    ships and aircraft as they are purchased in an asset for asset manner
    creates major logistical and supportability hurdles and increases
    training requirements.
        With the exception of the National Security Cutter that is required
    to meet the Coast Guard's obligations under the National Fleet Policy,
    the Integrated Deepwater System (IDS) has no predetermined mix of
    assets or specific assets. Instead it provides performance
    specifications for the operational capabilities needed to perform the
    Coast Guard's 14 federally mandated missions. This allows industry to
    leverage innovative technologies and processes to determine the most
    effective types and efficient mix of assets in designing a state-of-
    the-market system that specifically meets the operational challenges
    facing today's Coast Guard.
        A second way that the IDS acquisition strategy will make the Coast
    Guard more effective than the traditional asset-for-asset replacement
    approach is that the assets are being acquired as an integrated system
    rather than on a piecemeal basis. This builds in interoperability and
    commonality right from the start, improving logistics support and
    affording seamless coordinated performance of missions by multiple
    assets that produces an overall force multiplier effect.
        Finally, reverting to a traditional one-for-one replacement of
    existing assets would actually cost the Coast Guard more than the IDS,
    but without the added and most desirable benefits of the systems
    approach. By acquiring a system of assets rather than each asset
    individually, we are able to leverage economies of scale and scope, as
    well as ensure systemic improvements in service effectiveness and
    efficiency. Additionally, during Phase 1 of the contract the industry
    teams worked to develop IDS implementation plans that maximized
    operational effectiveness while minimizing total ownership costs. In
    selecting the Phase 2 contractor, Total Ownership Cost is second only
    to Operational Effectiveness in the evaluation criteria. Because the
    winning industry team has designed and will manage their system to
    remain within Operating Expenses and Acquisition, Construction and
    Improvements targets, the IDS program will cost less than a
    traditional, platform-by-platform replacement strategy.
          operational impacts from fiscal year 2001 budget shortfalls
        Question. I am aware that the Coast Guard made some operational
    reductions this fiscal year because you had some unanticipated
    expenses: rising fuel costs, mandatory pay and other entitlements, and
    escalating health costs. Can you discuss how your operations have been
    affected by this current year's budget shortfalls?
        Answer. Yes. The Coast Guard experienced a $98 million shortfall
    within our fiscal year 2001 appropriation which was primarily caused by
    sharp increases in energy prices and changes made in the National
    Defense Authorization Act after the Coast Guard's appropriation was
    already signed. In order to fund our annual energy bills and satisfy
    personnel pay account needs, the Coast Guard was required to make
    budget adjustments that best balanced our mission performance, without
    exceeding the budgetary resources provided to the Coast Guard for
    fiscal year 2001. The Coast Guard adjusted operations levels as well as
    operational support and depot maintenance plans to ensure that the
    service remained within its appropriated funds and operated at a level
    that could be sustained by the support infrastructure. The Coast
    Guard's Search and Rescue mission and the safety of personnel were
    retained as the highest priorities. The majority of the impact of the
    reductions was felt in Law Enforcement missions such as Living Marine
    Resource enforcement, migrant interdiction operations, and drug
    interdiction operations.
            cost to restore fiscal year 2001 4th quarter operations
        Question. What do you need by the end of this fiscal year to get
    the Coast Guard back up to full operations offshore?
        Answer. The Coast Guard requires $98 million to restore operations
    in fiscal year 2001 to the level that the Coast Guard plans to operate
    at in fiscal year 2002 per the President's Budget, and pay mandatory
    personnel costs in fiscal year 2001.
                     asset reduction impacts on performance
        Question. It is my understanding that the fiscal year 2002 budget
    request for the Coast Guard will require the decommissioning of several
    offshore assets--both vessels and aircraft. Do you project a loss in
    capability as a result of these decommissionings and deactivations?
        Answer. Yes, reductions in the number of offshore assets will
    increase the Coast Guard's challenge to meet current performance
    targets as the Coast Guard continues its transformation process into an
    even more effective and efficient multi-mission, maritime military
    service. Cutter and aircraft reductions will result in the loss of
    approximately 33,000 resource hours. The assets selected for
    deactivations are among the oldest, most maintenance intensive, and
    costly assets contained within the Coast Guard inventory.
        In addition, the proposed 15 percent across-the-board reduction in
    the operation of remaining assets equates to an additional decrement of
    approximately 84,000 cutter and aircraft resource hours. Thus, the
    fiscal year 2002 President's budget for the Coast Guard will result in
    a total reduction of approximately 117,000 resource hours. This
    reduction in operational capability will have a temporary impact on
    performance results.
        These reductions have been made in preparation for the Integrated
    Deepwater System, which will replace all Coast Guard deepwater assets--
    both cutters and aircraft. Operational adjustments are being tailored
    to protect core search and rescue, training and safety missions.
                         $250 million budget resolution
        Question. I understand that the budget resolution identifies an
    additional $250 million for Coast Guard operating expenses in fiscal
    year 2002. Can you discuss how this additional funding would be
    allocated to help you perform your diverse missions and increase
    performance?
        Answer. If an additional $250 million were provided to the Coast
    Guard above the current President's budget, the Coast Guard would
    attempt to first cover any mandatory personnel costs not on budget.
    Second, the Coast Guard would seek to restore the operations reduction
    contained within the President's fiscal year 2002 budget and replenish
    its maintenance accounts to support operations. After finishing the
    first two priorities, the Coast Guard would seek to accelerate critical
    new starts (i.e. Search and Rescue Safety Enhancements) and cancel some
    of the proposed asset decommissionings and retirements contained in the
    fiscal year 2002 President's budget.
        By allocating additional funding in the above manner, the Coast
    Guard would avoid reduced operations, replenish depleting maintenance
    accounts improving the availability of assets to perform missions and
    invest in new starts that are force-multipliers.
                                     ______

                Questions Submitted by Senator Richard C. Shelby

                        cost range for deepwater project
        Question. I have heard estimates ranging from $9 billion to $15
    billion for the Deepwater project. Has the Coast Guard developed a
    detailed cost estimate for the Integrated Deepwater Systems
    procurement?
        Answer. The Coast Guard's current cost estimate ranges from $10-$12
    billion in fiscal year 1998 dollars for the Integrated Deepwater
    project. This estimate will be further refined in September 2001 when
    each of the 3 industry teams are required to submit a detailed cost
    estimate with their final design proposal as outlined in the Request
    For Proposals.
                             capital asset funding
        Question. How will the Coast Guard assure that adequate funding is
    available to meet high priority capital needs other than Deepwater,
    such as the modernization of the National Distress System?
        Answer. The Coast Guard is able to make room in its Acquisition,
    Construction, and Improvements (AC&I) budget to accommodate the
    Integrated Deepwater System (IDS) project without adversely impacting
    other Coast Guard recapitalization requirements. For example, the
    National Distress and Response System Modernization project, which will
    recapitalization the Nation's ``maritime 911 system'', is fully funded
    in the President' fiscal year 2002 budget. Additionally, many
    recapitalization requirements that would historically be included in
    the Vessels, Aircraft and Other Equipment budget categories are within
    the IDS realm and will be funded within the future estimates for the
    Deepwater category. Due to the dynamic Office of Management and Budget
    outyear targets, it has been noted in recent Five Year Capital
    Investment Plans that changes will be necessary based on IDS funding
    decisions. The Coast Guard IDS strategy and recapitalization
    requirements are flexible enough to respond to these changes.
                         deepwater acquisition strategy
        Question. As I understand it, the Coast Guard wants to proceed with
    a budget request for the Deepwater project even though the planning
    process is not yet complete and it has not selected an acquisition
    strategy. Is the Coast Guard prepared to justify which Deepwater assets
    need to be acquired or modernized, how this will be done, what it will
    cost, and when the funding will be needed?
        Answer. The Coast Guard is prepared to justify and support the
    Integrated Deepwater System (IDS) team solution it selects, the asset
    mix and schedule, and funding in proprietary briefings as they are
    requested. The Coast Guard also has completed the planning process and
    has selected an acquisition strategy. The Coast Guard has a vetted and
    validated Request for Proposal (RFP) through the Administration and an
    independent review acquisition strategy for recapitalization of the
    Deepwater assets. The RFP was released in June 2001. In Spring 2002,
    the Coast Guard will award the (IDS) acquisition contract to one of the
    three competing industry teams. To obtain essential contractual
    flexibility, the Coast Guard has structured the IDS acquisition
    contract as an indefinite delivery, indefinite quantity type contract.
    The Coast Guard will issue separate delivery orders under this contract
    to perform upgrades on existing legacy assets, and acquire new assets
    comprising the industry's proposed IDS. These clauses will enable the
    Coast Guard to acquire new technology that meets or exceeds performance
    (capability) levels.
                         deepwater: award term contract
        Question. The type of contract the Coast Guard plans to use on
    Deepwater (award term) is a relatively new contract approach. Your
    approach calls for a series of renewable 5-year contracts with one
    system integrator for the entire Deepwater system over 20-30 years.
    Theoretically, if the integrator is not performing well, you can choose
    not to renew the contract and seek another integrator. From a practical
    sense, how realistic is it to think that system integrator can be
    replaced without major disruption and high cost impacts on the program?
        Answer. Some disruption and cost impact would be unavoidable. These
    potential impacts however, would be mitigated by Coast Guard developed
    plans for effective management of overall program performance.
        If the Government has to decides not to continue with all or
    selected portions of the Integrated Deepwater System (IDS) contract,
    the Phase 2 Contractor will be required to conduct planning to allow
    for the smooth phase-out and transition of the IDS design, production,
    support and/or disposal responsibilities and activities. This plan is
    required to be submitted 120 days after contract award and then
    resubmitted annually. In conducting phase-out and transition planning,
    the Phase 2 contract will include a requirement for the Contractor to
    cooperate with the Government to establish the most effective method
    for contract phase-out and transition support to the Government and
    follow-on Contractor(s) (if applicable). The Phase 2 Contractor will be
    required to prepare a Contract Phase-Out and Transition Plan that
    documents the realistic and executable phase-out and transition
    methodology, consistent with the best Government and commercial
    business practices. The plan may be used to phase-out and transition
    the applicable information, tasks and services provided under the
    contract to the Government or a follow-on systems integrator with
    minimum disruption. At a minimum, this plan will address the following:
    (a) Phase-out and transition approach; (b) Transfer of
    responsibilities; (c) Schedule of activities that will ensure timely
    phase-out; (d) Points of contact that will be available to assist the
    Government during phase-out and transition; (e) Subcontractor and
    supplier identification and principal points of contact; (f)
    Description of how access to facilities can be obtained by the
    Government and follow-on Contractor(s) if necessary and; (g) Estimated
    cost associated with execution of the plan.
                 deepwater: system integrator contingency plan
        Question. In the event that the system integrator must be replaced,
    have you developed a contingency plan to facilitate an effective
    transition?
        Answer. Yes, in that situation, the Phase 2 Contractor will be
    required to conduct planning to allow for the smooth phase-out and
    transition of the Integrated Deepwater System (IDS) design, production,
    support and/or disposal responsibilities and activities. This plan is
    required to be submitted 120 days after contract award and then
    resubmitted annually. In conducting phase-out and transition planning,
    the Phase 2 contract will include a requirement for the Contractor to
    cooperate with the Government to establish the most effective method
    for contract phase-out and transition support to the Government and
    follow-on Contractor(s) (if applicable). The Phase 2 Contractor will be
    required to prepare a Contract Phase-Out and Transition Plan that
    documents the realistic and executable phase-out and transition
    methodology, consistent with the best Government and commercial
    business practices. The plan may be used to phase-out and transition
    the applicable information, tasks and services provided under the
    contract to the Government or a follow-on systems integrator with
    minimum, disruption. At a minimum this plan will address the following:
    (a) Phase-out and transition approach; (b) Transfer of
    responsibilities; (c) Schedule of activities that will ensure timely
    phase-out; (d) Points of contact that will be available to assist the
    Government during phase-out and transition; (e) Subcontractor and
    supplier identification and principal points of contact; (f)
    Description of how access to facilities can be obtained by the
    Government and follow-on Contractor(s) if necessary and; (g) Estimated
    cost associated with execution of the plan.
                       deepwater: date of contract award
        Question. When does the Coast Guard plan to award the Deepwater
    contract?
        Answer. The Coast Guard plans to award the Integrated Deepwater
    System contract to the winning industry team in the third quarter of
    fiscal year 2002.
                          deepwater: contract protest
        Question. Given the size and the complexity of the Deepwater
    procurement, isn't it realistic to expect that the contract award will
    be protested?
        Answer. The Coast Guard expects there may be protests filed by the
    non-selected parties after contract award and has taken every step to
    ensure that the selection decision will be fully defensible. The
    selection absolutely will be in line with the Request for Proposal's
    selection criteria and a fair and complete evaluation of the proposals
    received.
        The Coast Guard will provide complete debriefings for the
    unsuccessful offerors, providing all the information allowed by law.
    The Coast Guard also has an internal solicitation Ombudsman and an
    agency protest procedure in place, as alternatives to a more formal
    protest at the Government Accounting Office or in federal court. The
    Coast Guard will do everything it can to avoid protests and the need to
    protest, and provide information and alternatives to formal litigation.
                        deepwater: full contract funding
        Question. If the contract is not awarded until March or April 2002,
    does the Coast Guard still need the full amount of the request ($338
    million) for the Integrated Deepwater System in fiscal year 2002, or
    couldn't some of that money be applied to other pressing Coast Guard
    capital needs?
        Answer. The $338 Million funding for fiscal year 2002 encompasses
    both the costs of performance by the Phase 2 contractor ($300 million)
    and direct program management support ($38 million).
        Phase 2 Contract Costs.--The Request for Proposal (RFP) approved by
    OST and OMB and issued on June 29, 2001, provides the awardee a minimum
    of $300 million in orders during the base contract period. The Coast
    Guard must obligate the full amount of the minimum guarantee upon
    contract award. In accordance with Federal Acquisition Regulations, the
    Coast Guard must have available and obligate the full amount of the
    minimum guarantee upon contract award.
        Phase II Program Management Costs.--The $38 million provides the
    Coast Guard the resources necessary to ensure a successful proposal
    evaluation, prepare for post-award activities, and execute the first
    year of the largest, most complex contract in Coast Guard history. A
    reduction in the projected funding for program management would hinder
    the Coast Guard's ability to effectively manage this project and
    increase project risks.
                             deepwater scalability
        Question. Admiral Loy, you testified earlier that unlike the
    Integrated Deepwater System (IDS) project, the National Distress and
    Response Modernization project (NDRSMP) procurement is scalable. I was
    under the impression after reviewing several presentations given by the
    Coast Guard on the IDS program, that one of the advertised advantages
    of the Deepwater procurement is that it is scalable--especially in
    terms of the annual level of funding. What accounts for this change on
    the part of the Coast Guard on the scalability characteristics of the
    IDS program?
        Answer. The IDS acquisition will have the flexibility within its
    contract to accommodate some variation in annual funding.
        Each of the three industry teams are designing their proposed IDS
    on a ``Design to Annual Budget'' basis in which the winning contractor
    will have $300M the first year and $500M in follow-on years through
    system build-out (in fiscal year 1998 dollars). (Please note that these
    figures only include the annual budget for industry and do not include
    the additional funding required for the Coast Guard's IDS program
    management costs.)
        In developing their implementation plans, the industry teams are
    including the flexibility to accommodate fluctuations in the $500
    million outyear funding streams (in fiscal year 1998 dollars). If
    funding variances occur, the Coast Guard and the Systems Integrator
    (SI) will meet to discuss the implications of the variance. Based on
    the size of the variance, the Coast Guard will provide the SI with
    priorities. The SI will generate a set of alternatives and their
    respective impacts on the implementation plan, both near term and long
    term. Once an alternative has been determined, new cost and performance
    baselines and ceilings will be established. The current incentive plan
    will be reviewed and adjusted to accommodate the new cost and
    performance baselines. Finally, the contract will be modified to
    reflect decisions made.
        While the Coast Guard built flexibility into the contract, it is
    not unbounded or without cost. Each successive year of reduced funding
    produces a cumulative effect on fully implementing the integrated
    solution. It significantly increases both the time necessary to acquire
    the IDS and the cost of the fully implemented solution. Delays in the
    acquisition of new assets will also require that more of the remaining
    IDS funding be spent on repairing or updating the legacy assets to
    operate beyond their service lives. Consistent and/or substantial
    reductions from the notional funding stream could breach the original
    scope of the contract and the contract could cease to be in force.
    national distress and response monitoring system modernization project
                            (ndrsmp) cost estimates
        Question. My understanding is that three industry teams competing
    for the National Distress and Response System modernization procurement
    submitted cost estimates of as much as $1 billion. This is more than
    three times as much as the Coast Guard baseline estimate and twice as
    much as what has been budgeted in the 5-year capital budget plan. Why
    are the contractor cost estimates so much higher than the Coast Guard's
    own estimate?
        Answer. The National Distress and Response System Modernization
    Project (NDRSMP) acquisition project baseline of $240 Million to $300
    Million, approved on November 16, 1999, contained funding requirements
    based on a notional NDRSMP architecture similar to the existing
    National Distress System. In March 2001, each Phase I System Integrator
    Contractor (SIC) submitted their initial Life Cycle Cost Estimate
    (LCCE) and their Cost versus Performance Trade Off Analyses, addressing
    recommended cost and performance capability options in an integrated
    manner with the LCCEs. The SICs' LCCEs were based on their proposed
    NDRSMP architecture vice a conceptual architecture. The Coast Guard
    worked with its NDRSMP support contractors (Space and Naval Warfare
    Command--SPAWAR, San Diego; and Booze-Allen Hamilton) to analyze the
    LCCE and Cost versus Performance Trade Off Analyses deliverables and
    finalize several options that reduce costs with little performance
    loss. The revised AC&I project cost estimate is $475 Million to $580
    Million. Costs related to towers are the primary drivers for the LCCEs
    being larger than the Coast Guard cost baseline. These additional costs
    are based on system requirements that provide for the appropriate
    number of towers to ensure 20 nautical mile coverage in coastal areas
    in order to close coverage gaps.
    national distress and response monitoring system modernization project
                           (ndrsmp) scope evaluation
        Question. Is the Coast Guard planning any changes to the scope of
    the project that would have the effect of reducing cost and would any
    of these reductions in scope adversely impact public safety?
        Answer. The Coast Guard has finalized several performance
    capability options that reduce costs with minimal adverse impact on
    public safety or effect on the National Distress and Response System
    Modernization Project (NDRSMP) schedule.
        The revised operational requirements still include the following
    critical capabilities:
      --20 nautical mile communications coverage in coastal areas with a
            goal to close coverage gaps;
      --Digital Selective Calling (Channel 70);
      --Higher NDRS communications system availability and dependability;
      --Caller position location via Direction Finding;
      --Asset tracking;
      --Digital recorders with rapid recall and archiving capabilities;
      --Secure communications for sensitive but unclassified information;
      --Improved capability for voice and data communications; and
      --An integrated, scaleable system design.
    national distress and response monitoring system modernization project
                  (ndrsmp) interim system capability measures
        Question. At a subcommittee hearing held last year, I expressed my
    concern--as did several other members of the subcommittee--that the
    Coast Guard was taking too long to modernize the National Distress and
    Response System. This system is vital to the safety of the boating
    public. Admiral Card indicated that the Coast Guard was exploring ways
    to expedite the project. Nevertheless, from what I have learned about
    the contractor designs, I believe that the project will be more
    expensive and take longer to complete than the Coast Guard has planned.
    Are there any measures that could be taken, such as interim system
    capability, that would serve as a bridge to the modernized system if
    there are further delays in completing this project?
        Answer. At this time, there is minimal risk for the timeline of the
    National Distress and Response System Modernization Project (NDRSMP).
    In the interim, some critical capabilities have been addressed,
    including the installation of digital voice recorders and limited
    installations of direction finding equipment in high-risk areas for
    boating mishaps. Efforts to field a more advanced interim system could
    be detrimental to fielding the fully integrated, reliable
    communications system the Coast Guard seeks with NDRSMP. In their
    discussions with Coast Guard, the Department of Transportation
    Inspector General auditing NDRSMP suggested that it is neither
    technologically feasible nor cost effective to procure an interim
    system (or to piecemeal equipment and add it on to what is already in
    place) and achieve significant positive results. Once a Systems
    Integrator is selected, it may be possible to accelerate NDRSMP
    deployment if funding is available.
    national distress and response monitoring system modernization project
                              (ndrsmp) scalability
        Question. How is the NDRSMP procurement scalable?
        Answer. The National Distress and Response System Modernization
    project is scalable because of two primary reasons. First, commercial
    off-the-shelf and government off-the-shelf (COTS/GOTS) products are
    planned to be used to the maximum extent practicable. Second, the
    system will be procured in useable/modular segments.
               distress communications: notification and coverage
        Question. The other day I received a copy of the Inspector
    General's review of the Department's 2000 Performance Report and 2002
    Performance Plan. I was troubled by the finding that the percentage of
    mariners in imminent danger who were rescued is at the lowest level
    since 1993. The IG noted several factors which impact the Coast Guard's
    ability to rescue those in distress include ``untimely notification of
    the distress to Coast Guard, gaps in VHF-FM communications coverage,
    the inability of Coast Guard to pinpoint the location of distress
    calls, the proximity of small boat stations to the accident site, and
    severe on-scene weather and sea conditions.'' What steps is the Coast
    Guard taking to reverse this trend?
        Answer. As noted in the Department of Transportation Inspector
    General's report, a number of factors impact Coast Guard performance in
    this area. It is difficult to attribute year-to-year variations in the
    search and rescue performance to any particular factor. In fiscal year
    2000, such attribution is made more difficult by virtue of changes made
    to the measure itself (to include all mariners in distress, rather than
    only those mariners whose distress condition was reported to the Coast
    Guard), and due to improvements made to the collection of data upon
    which the performance measure is based.
        The Coast Guard has a number of initiatives aimed at improving its
    capability to respond to all mariners in distress. The fiscal year 2002
    budget submission includes:
        (1) The continuation of the National Distress and Response System
    Modernization Project, which will replace the Coast Guard's aging
    1970's-era technology.
        (2) The continuation of the Global Maritime Distress and Safety
    System project, which will bring the United States into compliance with
    international treaties to provide distress alerting and communications
    for maritime areas within our search and rescue regions of
    responsibility.
        (3) The continuation of the Search and Rescue Capabilities
    Enhancement Project, which will provide tools necessary for search and
    rescue planners to accurately plan searches and coordinate responses to
    mariners in distress. This project includes computer hardware,
    software, and Self Locating Datum Marker Buoys.
        (4) The Command Center Readiness and Infrastructure
    Recapitalization Project, which will improve command and control tools
    in our primary centers for coordinating operations for search and
    rescue and all other Coast Guard missions.
        (5) The Search and Rescue Systems Enhancement initiative, which
    will provide a needed specialty school to improve small boat handling
    and navigation skills and additional personnel to improve small boat
    station staffing.
                modernization of distress communications systems
        Question. Doesn't this trend support expediting modernization of
    Coast Guard's communications coverage and making sure that we are
    modernizing and improving our littoral water assets?
        Answer. Taken alone, the slight dip in the Coast Guard's fiscal
    year 2000 performance in rescuing mariners in imminent danger may not
    be a signal for any special concern. Some of the fatalities that
    significantly contributed to the failure to meet our performance goal
    were out of the Coast Guard's control. For example, several small
    aircraft crashes, deaths at hospital after a rescue was effected and
    deaths that occurred due to pre-existing medical conditions all
    impacted the performance goal.
        The multi-year trend showing no marked improvement in this
    performance measure does indicate a need for continued improvements in
    Coast Guard search and rescue capabilities.
        The Coast Guard is moving ahead as quickly as the procurement
    process will allow with the National Distress and Response System
    Modernization Project. The Department of Transportation Inspector
    General (DOTIG) auditing NDRSMP concluded that it is neither
    technologically feasible nor cost effective to procure an interim
    system or to piecemeal equipment and add it on to what is already in
    place, and achieve significant positive results. As interim measures,
    the high-risk areas have been outfitted with digital voice recorders
    and limited direction finding equipment.
        In addition, the Coast Guard's littoral water assets have been
    modernized in the recent past, including the acquisition of the 47-foot
    Motor Lifeboats and 87-foot Coastal Patrol Boats.
                     search and rescue assets and deepwater
        Question. I am concerned that the Coast Guard's preoccupation with
    Deepwater impedes the improvement of these other life saving measures.
    Isn't it true that the preponderance of assets that are used for search
    and rescue are not the assets that will be acquired in the Deepwater
    procurement?
        Answer. Search and Rescue is one of the Coast Guard's primary
    missions, and all Coast Guard boats, cutters and aircraft maintain the
    capability to respond to Search and Rescue (SAR) cases. Accordingly,
    all Integrated Deepwater System (IDS) assets will be employed in SAR
    missions as needed. In addition, the IDS includes all of the Coast
    Guard's aircraft, which perform SAR in the inland and coastal regions.
        The Coast Guard cutters being replaced by the IDS also provide SAR
    capability, including the ability to tow larger vessels, remain on
    scene longer (and in more severe weather conditions) than coastal based
    resources, and be stationed in high risk areas for rapid SAR response
    (e.g., during fishing seasons along the northeast and Alaskan coasts).
                     resource support for search and rescue
        Question. Although I have never been a fan of the breakdown in
    Operating Expenses by mission area, it is my understanding that funding
    allocated to search and rescue declined from 15.7 percent in fiscal
    year 1991 to 12.3 percent in fiscal year 2001. If search and rescue is
    such a high priority--and I would argue that it should be the highest--
    then why has the funding to support this activity been decreased?
        Answer. Search and Rescue (SAR) has been and will remain one of the
    Coast Guard's most important core program areas. Over the ten-year
    period cited, the Coast Guard has spent a smaller percentage of the
    overall budget on SAR, but has increased actual spending on SAR
    operations by almost $34 million (9.7 percent).
        The smaller percentage of the total operating budget spent on SAR
    is due to increased spending in other critical mission areas such as
    Enforcement of Laws and Treaties, Aids to Navigation (AtoN) and Marine
    Environmental Protection.
                       c-130j procurement status and cost
        Question. What is the status of the C-130J aircraft procurement and
    what are the C-130Js priced at in the Coast Guard's contract from the
    fiscal year 2000 supplemental appropriation?
        Answer. The Coast Guard executed a Military Inter-departmental
    Purchase Request (MIPR) with the USAF, for six baseline C-130J
    aircraft, on December 19, 2000. The USAF executed their new Five-Year
    Option Contract with Lockheed-Martin Aeronautics Corporation on
    December 22, 2000, and the Coast Guard aircraft were included in this
    order. The baseline aircraft are priced at $59.6 million each ($357.6
    million total).
        Baseline C-130J aircraft are scheduled for completion between March
    2002 and August 2003. These aircraft must be modified at additional
    cost with sensors, communications, computer and other systems necessary
    to make them suitable for Coast Guard maritime patrol and search and
    rescue missions.
       activities breakouts for hq/area/districts fiscal year 1997-2002
                                   breakouts
        Question. The Coast Guard has prepared headquarters and district
    breakouts for the past seven years for my staff which were transmitted
    on 6/12. Please submit those tables for the record but please modify
    them to include breakouts from the Atlantic Area and Pacific Area to
    delineate the 5th and 11th districts as opposed to the broader
    activities of those Areas. Further, please provide the increment
    breakouts for Operating and Maintenance expenses for Headquarters
    offices providing the detailed breakouts of those increments over the
    individual fiscal years
        Answer. The Following Charts are submitted for the record.

                                                               11TH DISTRICT FISCAL YEAR 1997-2002
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                Program project and activities category                 1997         1998         1999         2000         2001               2002
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Personnel Resources:
        Military pay & benefits (AFC-01)..........................  $83,617,594  $85,579,148  $90,443,325  $97,764,384  $97,981,335             $105,583,065
        Civilian pay & benefits (AFC-08)..........................    1,738,259    1,831,436    2,029,700    2,529,339    2,572,134                2,773,096
        Military Health Care (AFC-57).............................    8,801,849    9,468,039    9,857,263   10,134,987   11,722,932               14,251,410
        Perm. change of station (AFC-20)..........................    3,677,133    3,678,478    3,445,907    3,616,136    3,866,180                4,269,657
        Training & Education (AFC-30 & AFC-56)....................      285,901      313,473      327,627      523,174      523,174                  523,174
        Recruiting................................................  ...........  ...........  ...........  ...........  ...........  .......................
        FECA/UCX..................................................      542,976      381,469      358,641      393,829      146,073                  146,073
    Operating and Maintenance Expenses............................   15,059,178   16,512,561   17,449,211   17,718,971   20,746,821               20,445,993
    Depot Level Maintenance:
        Aeronautical Engineering (AFC-41).........................  ...........  ...........  ...........  ...........  ...........  .......................
        Telecommunications (AFC-42)...............................  ...........  ...........  ...........  ...........  ...........  .......................
        Civil Engineering (AFC-43)................................  ...........  ...........  ...........  ...........  ...........  .......................
        Naval Engineering (AFC-45)................................  ...........  ...........  ...........  ...........  ...........  .......................
                                                                   -----------------------------------------------------------------------------------------
          Total...................................................  113,722,890  117,764,604  123,911,674  132,680,820  137,558,649              147,992,468
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: These figures are estimates. 11th District no longer exists as a separate entity. In the 1997 realignment, it was combined with Maintenance and
      Logistics Command, Pacific and Pacific Area Command.

                                               PACIFIC COMMAND FISCAL YEAR 1997-2002--REVISED: LESS 11TH DISTRICT
    --------------------------------------------------------------------------------------------------------------------------------------------------------
            Program, Project and Activities Category               1997            1998            1999            2000            2001            2002
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Personal Resources:
        Military pay & benefits (AFC-01)....................    $115,743,927    $118,459,121    $125,192,141    $135,325,991    $135,626,296    $146,148,651
        Civilian pay & benefits (AFC-08)....................      21,675,031      22,836,880      25,309,113      31,539,313      32,072,940      34,578,815
        Military Health Care (AFC-57).......................      12,183,567      13,105,711      13,644,478      14,028,904      16,226,947      19,726,878
        Perm. change of station (AFC-20)....................       7,217,418       7,220,058       6,763,572       7,097,695       7,588,477       8,380,415
        Training & Education (AFC-30 & AFC-56)..............         395,745         433,912         453,503         724,180         724,180         724,180
        Recruiting..........................................  ..............  ..............  ..............  ..............  ..............  ..............
        FECA/UCX............................................       1,252,102         879,669         827,026         908,169         336,845         336,845
    Operating and Maintenance Expenses......................      93,649,507     100,846,631     103,070,623     108,697,308     109,674,179     108,083,007
    Depot Level Maintenance:
        Aeronautical Engineering (AFC-41)...................  ..............  ..............  ..............  ..............  ..............  ..............
        Telecommunications (AFC-42).........................       5,566,870       6,031,519       5,418,538       5,993,465       6,018,389       6,503,608
        Civil Engineering (AFC-43)..........................      37,198,570      39,932,619      33,885,473      40,223,223      40,409,019      41,776,237
        Naval Engineering (AFC-45)..........................      31,550,647      31,293,833      30,208,186      36,554,458      39,074,176      40,230,256
                                                             -----------------------------------------------------------------------------------------------
          Total.............................................     326,433,385     341,039,952     344,772,653     381,092,707     387,751,447     406,488,892
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                                               ATLANTIC COMMAND FISCAL YEAR 1997-2002--REVISED: LESS 5TH DISTRICT
    --------------------------------------------------------------------------------------------------------------------------------------------------------
        Program, Project and Activities
                   Category                        1997               1998               1999               2000               2001               2002
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Personnel Resources:
        Military pay & benefits (AFC-01)..       $245,858,153       $253,703,796       $264,896,644       $280,265,527       $280,887,470       $302,679,688
        Civilian pay & benefits (AFC-08)..         29,719,125         32,014,093         33,795,499         26,821,556         27,275,362         29,406,400
        Military Health Care (AFC-57).....         25,879,797         28,068,489         28,870,633         29,054,420         33,606,654         40,855,152
        Perm. change of station (AFC-20)..         13,435,462         13,551,379         12,541,799         12,882,203         13,772,964         15,210,320
        Training & Education (AFC-30 & AFC-           863,115            920,254            642,838          1,026,522          1,026,522          1,026,522
         56)..............................
        Recruiting........................  .................  .................  .................  .................  .................  .................
        FECA/UCX..........................          2,278,542          1,636,682          1,465,689          1,025,037            380,191            380,191
    Operating and Maintenance Expenses....        128,045,350        114,837,436        118,638,426        133,974,606        109,200,000        108,476,000
    Depot Level Maintenance:
        Aeronuatical Engineering (AFC-41).  .................  .................  .................  .................  .................  .................
        Telecommunications (AFC-42).......          8,222,899         13,120,463         10,492,245         11,020,424         11,066,250         11,958,443
        Civil Engineering (AFC-43)........         43,330,920         46,142,257         42,611,426         47,543,066         47,762,673         49,378,699
        Naval Engineering (AFC-45)........         54,936,906         52,856,772         52,735,554         50,525,503         54,008,253         55,606,185
          Total...........................        552,570,269        556,851,620        566,690,753        594,138,864        578,986,339        614,977,600
    --------------------------------------------------------------------------------------------------------------------------------------------------------

                                                               5TH DISTRICT FISCAL YEAR 1997-2002
    --------------------------------------------------------------------------------------------------------------------------------------------------------
        Program, Project and Activities
                   Category                        1997               1998               1999               2000               2001               2002
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Personnel Resources:
        Military pay & benefits (AFC-01)..       $104,932,488       $108,281,016       $113,058,134       $119,617,587       $119,883,033       $129,183,972
        Civilian pay & benefits (AFC-08)..            973,941          1,049,151          1,107,530            878,984            893,855            963,693
        Military Health Care (AFC-57).....         11,045,521         11,979,657         12,322,013         12,400,453         14,343,351         17,437,017
        Perm. change of station (AFC-20)..          4,808,402          4,849,887          4,488,570          4,610,397          4,929,190          5,443,604
        Training & Education (AFC-30 & AFC-           368,378            392,765            274,364            438,121            438,121            438,121
         56)..............................
        Recruiting........................  .................  .................  .................  .................  .................  .................
        FECA/UCX..........................            692,422            497,368            445,405            311,496            115,535            115,535
    Operating and Maintenance Expenses....         18,026,346         18,883,363         19,472,221         20,078,985         16,364,373         16,256,368
    Depot Level Maintenance:
        Aeronautical Engineering (AFC-41).  .................  .................  .................  .................  .................  .................
        Telecommunications (AFC-42).......  .................  .................  .................  .................  .................  .................
        Civil Engineering (AFC-43)........  .................  .................  .................  .................  .................  .................
        Naval Engineering (AFC-45)........  .................  .................  .................  .................  .................  .................
                                           -----------------------------------------------------------------------------------------------------------------
          Total...........................        140,847,499        145,933,208        151,168,237        158,336,023        156,967,459        169,838,310
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: These figures are estimates. 5th Districts no longer exists as a separate entity. In the 1997 realignment, it was combined with Maintenance and
      Logistics Command, Atlantic Area Command.

                                                                      HEADQUARTERS OFFICES FISCAL YEAR 1997-2002--ANNUAL INCREMENT
                                                                                          [Amounts in dollars]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 1999                      2000                      2001                       2002
       Program, Project and Activities Category        1997     1998 Increment      1998      Increment       1999      Increment       2000       Increment       2001      Increment       2002
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Personnel Resources:
        Military pay & benefits (AFC-01).........  139,155,604     (2,839,252)  136,316,352     976,378   137,292,730  16,367,625   153,660,355      340,991   154,001,346  11,947,955   165,949,301
        Civilian pay & benefits (AFC-08).........   44,940,650      3,700,057    48,640,707   2,218,914    50,859,621   4,177,165    55,036,786      931,191    55,967,977   4,372,806    60,340,784
        Military Health Care (AFC-57)............   14,647,954        433,390    15,081,343    (118,043)   14,963,300     966,281    15,929,581    2,495,840    18,425,421   3,974,113    22,399,534
        Perm. change of station (AFC-20).........    7,604,465       (323,240)    7,281,225    (780,962)    6,500,263     562,625     7,062,888      488,375     7,551,262     788,055     8,339,317
        Training & Education (AFC-30 & AFC-56)...   19,227,432      2,446,252    21,673,684   2,847,667    24,521,351   7,258,764    31,780,115   (3,952,560)   27,827,555   1,102,591    28,930,146
            AFC-30 portion.......................   19,227,432    (19,227,432)  ...........  ...........  ...........  ...........  ...........  ............  ...........  ...........  ...........
        Recruiting...............................  ...........  ..............  ...........  ...........  ...........  ...........  ...........  ............  ...........  ...........  ...........
        FECA/UCX.................................    3,445,564       (958,867)    2,486,697    (280,948)    2,205,749    (102,414)    2,103,335   (1,323,197)      780,138  ...........      780,138
    Operating and Maintenance Expenses...........   62,045,113     (4,184,421)   57,860,692   3,102,980    60,963,673  (1,146,893)   59,816,780   (1,566,405)   58,250,375   8,339,440    66,589,815
    Depot Level Maintenance:
        Aeronuatical Engineering (AFC-41)........   10,023,698     (9,067,439)      956,259    (675,687)      280,572     621,017       901,589       77,734       979,323    (181,517)      797,806
        Telecommunications (AFC-42)..............   10,285,598        172,783    10,458,381   4,055,197    14,513,578  (8,843,775)    5,669,803       23,577     5,693,380     459,016     6,152,396
        Civil Engineering (AFC-43)...............    1,177,983         43,707     1,221,690    (361,286)      860,404     (36,631)      823,773        3,805       827,578      28,001       855,579
        Naval Engineering (AFC-45)...............    1,834,095       (615,438)    1,218,657    (230,401)      988,256    (509,332)      478,924       33,012       511,936      15,147       527,083
                                                  --------------------------------------------------------------------------------------------------------------------------------------------------
          Total..................................  314,388,156    (11,192,468)  303,195,688  10,753,810   313,949,498  19,314,431   333,263,929   (2,447,637)  330,816,292  30,845,607   361,661,900
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

             fishing vessel safety activities in the north pacific
        Question. Please provide a breakout of fishing vessel safety
    activities in the North Pacific over the past seven fiscal years.
    Please explain the drop off in hours allocated to this mission in
    recent years.
        Answer. The backbone of Commercial Fishing Vessel Safety activities
    in the North Pacific (13th & 17th Coast Guard Districts) is the
    Voluntary Dockside Exam Program. Since this is a voluntary program, the
    number of exams the Coast Guard conducts is largely dependant on the
    willingness of vessel masters to allow us on board to conduct the
    exams. Over the past seven years, on average approximately 1,300 safety
    exams were conducted annually. Despite a slight decrease in 1997 and
    1998, in the year 2000, over 1,400 exams were performed, an 8 percent
    increase over the seven year average. Deviations and decreases in exam
    performance are largely customer driven. In addition, the Coast Guard
    has initiated a number of other activities to help fishermen operate in
    a safer manner and to curtail fishing vessel casualty rates. For
    example, we have provided free EPIRB tests, stability demonstrations,
    and instructions on damage control techniques. Additionally, industry
    outreach has been made through annual participation at trade shows such
    as FISH EXPO (Seattle), COMFISH (Kodiak), Crab festivals, State fairs,
    and partnerships with training organizations such as North Pacific
    Vessel Owner Association, Alaska Marine Safety Association, University
    of Oregon Sea Grant, Alaska Vocational Technical Education and various
    Fisherman's Wives Associations.
        The most notable of the recent activities in the 13th and 17th
    Coast Guard Districts have been steps to identify and target vessels in
    high-risk fisheries. The 13th Coast Guard District initiated Operation
    Safe Crab 2000, which focused on proper installation and carriage of
    required lifesaving equipment on Washington and Oregon vessels licensed
    for the Dungeness crab fishery. During a 10-day period, 266 vessels
    were boarded at the dock and over 153 serious deficiencies were
    corrected on the spot. The 17th Coast Guard District had a similar
    operation in 1999 where they partnered with Alaska Department Fish and
    Game to target safety concerns in the Bering Sea/Aleutian Island winter
    crab fishery. The efforts in Alaska focused on vessel stability to
    ensure that crab vessels did not overload their vessels, as well as
    checking for lifesaving equipment. In the last five years, 1,666
    vessels were examined in the Coast Guard's 13th District, and 5,103
    vessels were examined in the 17th District.
        The emphasis placed on the Commercial Fishing Vessel Safety program
    continues to be a high priority for the Coast Guard, especially in the
    Pacific Northwest. The number of qualified commercial fishing vessel
    safety examiners has been augmented by Coast Guard reserves and
    auxiliary members, which has increased the total number of qualified
    examiners from 96 in 1999 to 131 in 2000. Five new full time billets
    were established in the 13th and 17th Coast Guard Districts in fiscal
    year 2001, and an additional $160,000 was allocated to expand the
    reserve training and readiness in the Commercial Fishing Vessel Safety
    programs. The Coast Guard remains committed to making the fishing
    industry safer.
                 north pacific fisheries enforcement activities
        Question. Please provide a breakout of fishing enforcement
    activities in the North Pacific over the past seven fiscal years.
    Please explain the drop off in hours allocated to this mission in
    recent years.
        Answer. The following table depicts the number of resource hours
    Coast Guard cutters have devoted to domestic and foreign fisheries law
    enforcement in the North Pacific Ocean during fiscal years 1994-2000:

    ----------------------------------------------------------------------------------------------------------------
                       FISCAL YEAR                       1994     1995     1996     1997     1998     1999     2000
    ----------------------------------------------------------------------------------------------------------------
    Domestic.........................................   46,566   52,260   56,117   45,087   41,750   37,989   33,498
    Foreign..........................................    3,139    2,367    5,047    5,740    8,542    6,847    7,066
                                                      --------------------------------------------------------------
          Total......................................   49,705   54,627   61,164   50,827   50,292   44,836   40,564
    ----------------------------------------------------------------------------------------------------------------

        The following is a similar table reflecting the resource hours for
    Coast Guard aircraft:

    ----------------------------------------------------------------------------------------------------------------
                       FISCAL YEAR                       1994     1995     1996     1997     1998     1999     2000
    ----------------------------------------------------------------------------------------------------------------
    Domestic.........................................    8,730    9,072    8,722    7,570    6,364    5,953    4,654
    Foreign..........................................    1,238    1,717    1,531    1,800    1,655      612      379
                                                      --------------------------------------------------------------
          Total......................................    9,968   10,789   10,253    9,370    8,019    6,565    5,033
    ----------------------------------------------------------------------------------------------------------------

        The Pacific Area Commander must constantly deal with multiple
    threats and competing national and regional priorities when allocating
    scarce Coast Guard resources. As a result, resource hours dedicated to
    North Pacific fisheries have decreased in recent years.
        In fiscal year 2000, the Coast Guard reduced operations to align
    support capability with the level of operations and aim to correct
    problems indicated by reduced availability. This resulted in an
    approximate 10 percent reduction in total resource hours. In fiscal
    year 2001, the trend continued with projections at approximately 20
    percent less operating hours than fiscal year 1999.
        Redistribution of resource hours among law enforcement missions
    occurs to meet immediate threats in the Pacific theater of operations.
    These demands on limited resources include drug interdiction, migrant
    interdiction, and fisheries enforcement in the Pacific theater of
    operations. The flow of illegal drugs in the Eastern Pacific has
    dramatically increased, causing a shift in resources to interdiction
    operations.
        The combined operational reductions and shifting threats resulted
    in a decline in resource hours devoted to fisheries in the North
    Pacific Ocean.
                                     ______

           Questions Submitted to the Office of the Inspector General

                Questions Submitted by Senator Richard C. Shelby

                        coast guard's deepwater program
        Question. I have heard estimates ranging from $9 billion to $15
    billion for the Deepwater project. Has the Coast Guard developed a
    detailed cost estimate for the integrated Deepwater Systems
    procurement?
        Answer. The Coast Guard has not yet developed a detailed cost
    estimate based on the specific assets to be modernized or purchased. In
    our fiscal year 2000 report on the Deepwater planning process (MA-2000-
    0655), we recommended that the Coast Guard develop a strategy for
    justifying the fiscal year 2002 budget request. We suggested that one
    alternative would be to use available planning data from the three
    competing industry teams to develop a more current cost estimate for
    the Deepwater project. The Coast Guard briefed the Department, OMB, and
    congressional committees on the contents of the contractor's plans
    during the fiscal year 2002 budget process, but they have not provided
    a detailed cost estimate.
        The Coast Guard's detailed cost estimate is dependent on which
    contractor's proposal is selected. This is because the contractors'
    system design and implementation plans differ and the Coast Guard will
    not know specifically which Deepwater assets will be purchased or
    modernized, when these actions will occur, and what they will cost
    until a proposal is selected and negotiations are completed. The
    contractors' final proposals are scheduled to be submitted in September
    2001. The Coast Guard plans to select a contractor and negotiate the
    terms of a contract in March 2002.
        Question. The type of contract the Coast Guard plans on the
    Deepwater (award term) is a relatively new contract approach. Your
    approach calls for a series of renewable 5-year contracts with one
    system integrator for the entire Deepwater system over 20-30 years.
    Theoretically, if the integrator is not performing well, you can choose
    not to renew the contract and seek another integrator. From a practical
    sense, how realistic is it to think that system integrator can be
    replaced without major disruption and high cost impacts on the program?
        Answer. It is clear that changing integrators without delaying the
    schedule and increasing project costs would be difficult. The magnitude
    of the impact would be relative to when the change has to be made. If
    the change has to be made early in the first term, before asset designs
    are complete and production subcontracts are awarded, the impact would
    be less than if a change has to be made later. If Coast Guard makes
    changes to the system integrator after finalization of subcontracts,
    the process becomes more difficult. Subcontracts that do not address
    contingencies, such as a change in the system integrator, will most
    likely cause significant delays in the procurement process. The Coast
    Guard has recognized this possibility as a risk and is attempting to
    mitigate the risk by putting provisions in the proposed contract to
    help ensure a smooth transition to a new integrator if necessary.
        Question. In the event that the system integrator must be replaced,
    have you developed a contingency plan to facilitate an effective
    transition?
        Answer. The Coast Guard has not developed a specific contingency
    plan for replacing the system integrator. When developed, this
    contingency plan should, as a minimum, define the transition process,
    estimate the cost and schedule impact expected, and identify the key
    decision points for implementation.
        Question. When does the Coast Guard plan to award the Deepwater
    contract?
        Answer. The Coast Guard released the acquisition contract request
    for proposal (RFP) in June this year. Contractors will have 90 days to
    submit their final proposals. The Coast Guard will evaluate these
    proposals and plans to award the Deepwater acquisition contract in
    March 2002.
        Question. Given the size and the complexity of the Deepwater
    procurement, isn't it realistic to expect that the contract award will
    be protested?
        Answer. A protest is a possibility, but one the Coast Guard has
    taken steps to mitigate. Specifically, the Coast Guard has worked
    closely with the potential contractors in developing the final Request
    for Proposal (RFP). Additionally, the Coast Guard made changes to the
    RFP based on recommendations made by a panel of acquisition experts
    from industry and Government and by an independent consultant selected
    by the Department and OMB to review the Deepwater acquisition strategy.
        Question. If the contract is not awarded until March or April 2002,
    does the Coast Guard still need the full amount of the request ($338
    million) for Deepwater in fiscal year 2002, or couldn't some of that
    money be applied to other pressing Coast Guard capital needs?
        Answer. The Coast Guard advised the OIG that the $338 million
    requested for the Deepwater Project in the fiscal year 2002 capital
    budget represents the partial year funding that is needed. Contractors
    based the projected costs on funding parameters previously established
    by Coast Guard--specifically $300 million for the first year and $500
    million in the following years. However, Coast Guard will not negotiate
    final costs or identify the work to be performed for first term of the
    contract until after contract award scheduled for March 2002. At this
    time, Coast Guard will finalize the implementation schedule and proceed
    with the procurement contract at either the $300 million level or at
    the appropriated amount. Should Coast Guard experience delays with the
    award process because of unanticipated events, such as protests, it may
    not have the opportunity to obligate all of these funds within the
    allotted time frame.
        Question. Admiral Loy testified earlier that unlike the Deepwater
    project, the National Distress and Response Modernization procurement
    is scalable. I was under the impression after reviewing several
    presentations given by Coast Guard on the Deepwater replacement
    program, that one of the advertised advantages of the Deepwater
    procurement is that it is scalable--especially in terms of the annual
    level of funding. What accounts for this change on the part of the
    Coast Guard on the scalability characteristics of the Deepwater
    program?
        Answer. Based in part on the Coast Guard's perception of the
    adverse effect of reduced funding, scalable alternative procurement
    strategies have not been developed for the Deepwater program. The Coast
    Guard maintains that reducing the annual funding for the project would
    have serious consequences. In its risk management plan, the Coast Guard
    has assessed as ``catastrophic'' the impact the annual funding levels
    below the $500 million level would have on the project. For example,
    reduced funding levels would result in extending the project period to
    as much as 30 years. An extension would increase costs because
    production schedules would have to be modified, and overhead and
    integrator management fees would be absorbed for longer periods of
    time.
          national distress and response system modernization project
        Question. My understanding is that three industry teams competing
    for the National Distress System Modernization procurement submitted
    cost estimates as much as $1 billion. This is more than three times as
    much as Coast Guard baseline estimate and more than twice as much as
    what has been budgeted in the 5-year capital budget plan. Why are the
    contractor cost estimates so much higher than the Coast Guard's own
    estimate?
        Answer. The Coast Guard's baseline cost estimate was prepared
    several years ago when it began planning the project. The three
    competing contractors surveyed representative Coast Guard communication
    centers as part of the planning process and developed independent cost
    estimates for the replacement system. The primary reasons for the wide
    variance between the contractors and the Coast Guard's Project cost
    estimates are:
      --The Coast Guard did not have current cost data relating to the new
            technologies and capabilities it was requiring the contractors
            to include in the new system, such as direction finding,
            digital select calling, and boat tracking.
      --The contractors, after completing their survey of selected centers,
            estimated that significantly less of the existing system would
            be incorporated in the new system than the Coast Guard
            estimated in preparing its baseline cost estimate. In addition,
            the contractors have also estimated that far more new tower
            sites will be needed to meet the Coast Guard's specifications,
            and that the cost of new sites will be as much as 5 times
            greater than what the Coast Guard originally estimated.
          For example, Coast Guard estimated that 75 percent of the
            existing 300 antenna sites would be used by the new system,
            with new antenna sites costing $65,000 to $100,000 each.
            However, preliminary contractor projections indicate that
            several hundred more towers will be necessary to ensure
            communication coverage, with only about 50 percent of the
            existing towers usable in the new system. Moreover, the cost of
            new antenna sites may vary considerably based on geographic
            location, ranging from $65,000 to $500,000 per site-a material
            increase from the original estimate. Furthermore, costs may
            continue to escalate as contractors survey additional antenna
            sites prior to contract award in the forth quarter of fiscal
            year 2002. Even then, Coast Guard will not know the NDS
            Project's total cost until completion of all antenna site
            surveys by the winning contractor sometime during fiscal year
            2005 as currently planned.
        Question. Is the Coast Guard planning any changes to the project
    that would have the effect of reducing cost and would any of these
    reductions in scope adversely impact public safety?
        Answer. The Coast Guard Project Manager advised us that reductions
    in system capabilities are being considered to reduce the contractors'
    cost estimates. Since establishing new towers is a significant cost
    driver for the new system, Coast Guard intends to make cuts in the
    number of new towers it will construct. Cuts in the number of new
    towers would impact the Coast Guards ability to close coverage gaps and
    to deploy a fully functional direction finding system, which are both
    critical to the public's safety.
        Question. At a subcommittee hearing held last year, I expressed my
    concern--as did several other members of the subcommittee--that the
    Coast Guard was taking too long to modernize the National Distress and
    Response System. This system is vital to the safety of the boating
    public. Admiral Card indicated that the Coast Guard was exploring ways
    to expedite the project. Nevertheless, from what I have learned about
    the contractor designs, I believe that the project will be more
    expensive and take longer to complete than Coast Guard has planned. Are
    there any measures that could be taken, such as interim system
    capability, that would serve as a bridge to the modernization system if
    there are further delays in completing the project?
        Answer. The Coast Guard had implemented an interim improvement
    program after the ``Morning Dew'' boating accident. Described as a
    ``bandage'' approach, it did little to address critical coverage gaps
    and the National Transportation Safety Board concluded that the interim
    direction finding system was inadequate. Coast Guard does not plan to
    take any additional interim measures. Since the current system uses
    antiquated analog technology, Coast Guard cannot add basic capabilities
    without incurring significant costs. The basic system infrastructure
    needs to be replaced with current digital technology that will provide
    Coast Guard the flexibility to expand its capabilities as demanded by
    current and future missions.
        Question. How is the NDRSMP procurement scalable?
        Answer. Coast Guard can scale the project by purchasing less
    equipment and services, resulting in the system's deployment at fewer
    geographic locations, or deployment of less capabilities than
    originally planned.
        In March 2001, Coast Guard increased the NDRSMP's cost baseline
    from $300 million to $580 million--an amount that is almost one half of
    the $1 billion contractor's cost projections. In order to bring the
    contractors' cost estimates in line with the revised cost baseline
    Coast Guard directed the contractors to reduce the system capabilities.
    This will reduce the extent of communication coverage and direction
    finding capabilities the system will provide. As a result certain
    geographic areas will still contain gaps where Coast Guard cannot hear
    distressed calls or locate distressed boaters.
                    coast guard's search and rescue program
        Question. The other day I received a copy of the Inspector
    General's review of the Department's 2000 performance Report and 2002
    performance Plan. I was troubled by the finding that the percentage of
    mariners in imminent danger who are rescued is at the lowest level
    since 1993. The IG noted several factors which impact the Coast Guard's
    ability to rescue those in distress include ``untimely notification of
    the distress to the Coast Guard, gaps in VHF-FM communications
    coverage, the inability of Coast Guard to pinpoint the location of
    distress calls, the proximity of small boat stations to the accident
    site, and severe weather and sea conditions.'' What steps is the Coast
    Guard taking to reverse the trend?
        Answer. Recently, Coast Guard began addressing some of the
    staffing, training, and equipment problems that have been present in
    the search and rescue program since at least 1989. For example, during
    fiscal year 2001, Coast Guard increased staffing levels at selected
    stations, increased the budget supporting its 47-foot motor lifeboat
    fleet, and is in the process of expanding training opportunities for
    station boatswain's mates. While these are steps in the right
    direction, they only marginally address the serious problems impacting
    SAR Program readiness. Coast Guard needs to develop a strategic plan
    for improving SAR readiness.
        Question. Doesn't this trend support expediting modernization of
    Coast Guard's communications coverage and making sure we are
    modernizing and improving our littoral water assets?
        Answer. Timely completion of Coast Guard's National Distress and
    Response System Modernization Project is important to the Coast Guard
    SAR Program due to its planned ability to pinpoint the source and
    location distress calls. Determining the source and location of
    distress calls transmitted over the VHF-FM radio will require an
    extensive network of radio receivers mounted upon high towers capable
    of providing two or more line of bearing coverage over our lakes,
    rivers, bays, and sounds as well as along our coasts out to 20 nautical
    miles offshore. Having sufficient direction-finding coverage would
    improve the safety and efficiency of SAR missions by taking much of the
    ``search'' out of search and rescue, reduce SAR unit response times,
    and reduce the wear and tear on SAR station boats and boat crews.
        Question. I am concerned that the Coast Guard's preoccupation with
    Deepwater impedes the improvement of these other lifesaving measures.
    Isn't it true that the preponderance of assets that are used for search
    and rescue are not the assets that will be required in the Deepwater
    procurement?
        Answer. Yes. Of the 27,862 SAR sorties performed by Coast Guard
    cutters, aircraft, and small boats during fiscal year 1999, the last
    year detailed information is available, 76 percent (21,162 sorties)
    were performed by non-Deepwater procurement assets. These assets
    include shore-based rescue boats, buoy tenders, tugs, and other
    miscellaneous CG assets. Of the remaining 6,700 SAR sorties performed
    by Deepwater assets, 6,539 (97 percent) were performed by Coast Guard
    helicopters and less than 3 percent (161) were performed by high/medium
    endurance cutters.
        Question. The Inspector General's Office has been reviewing the
    staffing, training, readiness, funding, and management of the Coast
    Guard's search and rescue program at the direction of this committee.
    What observations can you make about the Coast Guard's Search and
    Rescue Program?
        Answer. The readiness of the Coast Guard's SAR Program continues to
    deteriorate. Since 1989, Coast Guard studies have identified serious
    staffing, training, and equipment problems at Small Boat Stations.
    Coast Guard has yet to implement many of the recommendations contained
    in the studies and reports. Our review is finding:
      --staff shortages require personnel at 90 percent of the SAR stations
            to work an average of 84 hours per week;
      --seventy percent of vacant positions at small boat stations are
            filled with Coast Guard boot camp graduates with little or no
            training in search and rescue techniques;
      --there is no formal training for boatswains mates, key SAR staff and
            the largest of the Coast Guard's enlisted job specialties;
      --eighty-four percent of the standard rescue boat fleet inspected by
            the Coast Guard in fiscal year 2000 were found to warrant a
            ``not ready for sea'' evaluation;
      --Coast Guard has not requested funding to extend the useful life or
            replace its 41-foot utility boat fleet, which is reaching the
            end of its service life; and
      --SAR stations operate 293 non-standard boats that are not subject to
            Coast Guard inspections.
        Coast Guard has agreed to implement our recommendation that they
    develop a strategic plan for correcting Search and Rescue program
    deficiencies.

                              SUBCOMMITTEE RECESS

        Senator Murray. This hearing is recesseded subject to the
    call of the Chair.
        [Whereupon, at 11:40 a.m., Wednesday, June 13, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                            THURSDAY, JUNE 28, 2001

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:37 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Patty Murray, (chairman)
    presiding.
        Present: Senators Murray, Mikulski, Durbin, Shelby,
    Bennett, Hutchison, and Stevens.

                          DEPARTMENT OF TRANSPORTATION

                        Federal Aviation Administration

    STATEMENT OF JANE F. GARVEY, ADMINISTRATOR

            Status of Intercity Transportation: Airways and Railways

                   OPENING STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. The subcommittee will come to order.
        Over the last two decades, our economy has grown
    dramatically. That growth has spurred an unprecedented rise in
    intercity transportation. Americans are traveling from city to
    city for business and pleasure at a growing rate, and we are
    feeling the impact on our highways, railways, and runways.
        This year the American people will log roughly 4.5 trillion
    miles across all transportation modes. That represents a 70-
    percent increase in the last 20 years. The demand has grown,
    but the infrastructure has not. Today it is painfully clear
    that we do not have the infrastructure to support this historic
    level of mobility.
        As a result, today we are experiencing a record number of
    flight delays. Highway congestion is also at its worst level
    ever. Amtrak's intercity passenger trains are also facing
    congestion problems as they vie for the same limited track
    space as commuter and freight trains.
        This infrastructure crunch is especially bad in the
    Northwest. Along the Tacoma-Seattle-Everett corridor, commuters
    face the second worst traffic in the Nation. Our one and only
    major airport, the Seattle-Tacoma International Airport is near
    or at the bottom of the list in on-time arrivals and
    departures. We have been trying to add an additional runway at
    Sea-Tac for 15 years.
        In the Northwest, our railways are congested. Despite
    strong partnerships from the State of Washington and our
    railroads, it has been difficult to make tracks throughout the
    Puget Sound corridor capable of handling high-speed rail.
        There are similar challenges throughout this country. I
    have called this hearing to address the challenges we all face
    in intercity transportation. As the new chairman of the
    Transportation Subcommittee, I feel like I have inherited some
    daunting challenges. Solving these challenges will take an
    extraordinary effort by both the Department of Transportation
    and this subcommittee.

                       FINANCING AVIATION INFRASTRUCTURE

        It will also require creative thinking on the part of all
    participants, as well as a significant financial investment.
    But I do want to stress that money is not the entire solution
    to these problems. Currently, the FAA benefits not only from a
    large trust fund but also from billions of dollars on annual
    general fund subsidies.
        Overall spending for the FAA has increased 50 percent over
    the last 7 years. During this time, the agency has enjoyed
    greater authority to reform its personnel and procurement
    systems than any other agency in the Federal Government.
        During the same period, however, wing lock on our runways
    has continued to worsen and procurement problems with the
    modernization of our air traffic control system have persisted.
    I know that I am joined by all members of this subcommittee in
    asking for recommendations to reverse this trend.
        So I am glad that we have with us this morning, Jane
    Garvey, our Federal Aviation Administration Administrator, to
    put forth some recommendations. Ms. Garvey is responsible for
    maintaining the safest air traffic control system in the world,
    and she is to be commended for her efforts at reinvigorating
    the agency in recent years.

                                FINANCING AMTRAK

        On our second panel, we will hear from George Warrington,
    the President of Amtrak. Amtrak does not derive funding from
    any trust fund. It has survived largely on general fund
    appropriations. In recent years that funding has declined
    continually, while appropriations for all of our other
    infrastructure investments have grown dramatically.
        Ever since the Amtrak Reform Act was signed into law in
    1997, Amtrak has been on a six-year mission to become self-
    sufficient of Federal operating subsidies. Self-sufficiency has
    become the mantra at Amtrak. The Reform Act required Amtrak to
    go from being the least subsidized national railroad in the
    world to the only such railroad that receives no Federal
    operating subsidies.
        Amtrak has made dramatic progress in improving revenues
    since the Reform Act was adopted. However, only a small portion
    of those increased revenues have been derived from its
    passenger train operations.
        Amtrak has been less successful at controlling its costs.
    But that should come as no surprise, given the massive physical
    facilities that Amtrak must maintain all over the country,
    especially along the Northeast corridor.
        The Department of Transportation Inspector General has
    recently reported on Amtrak's finances, and his conclusions
    should concern all of us. Amtrak has been required to take on
    greater and greater amounts of debt to stay on the path of
    self-sufficiency.
        Most recently, due to the continuing delays in launching
    Amtrak's new high-speed service in the Northeast corridor,
    Amtrak has had to borrow an additional $300 million just to
    cover its operating expenses for the current year. The pressure
    to become the world's only self-sufficient national railroad
    has put Mr. Warrington in the role of a magician. Every few
    months he pulls a new rabbit out of his hat just to keep Amtrak
    afloat. I am deeply concerned that in the near future, Mr.
    Warrington will go to his hat and find that he is out of
    rabbits.
        Increasingly, I am coming to the conclusion that Amtrak's
    drive to become self-sufficient is resembling some kind of
    fool's errand. At a time when the Nation's mayors and governors
    are asking for more and more intercity passenger rail service,
    we are allowing Amtrak to get deeper and deeper into debt while
    we invest more and more money into other modes of
    transportation.
        Unfortunately, given the structure of TEA21 and the
    allocation that this subcommittee has been granted for 2002,
    there is very little that this subcommittee can do to reverse
    this trend this year. But I hope and I expect that the
    administration and Congress will face these issues head on when
    we reauthorize Amtrak and hopefully pass the High Speed Rail
    Investment Act.
        So we have a lot of challenges ahead of us, and I am
    pleased that we have some knowledgeable witnesses with us this
    morning to share their perspectives with us. I am delighted to
    see Senator McCain. And after Senator Shelby's statement, we
    will turn to you for your comments.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you, Madam Chairman.
        Because of the limited time we have this morning, I will
    submit most of my FAA questions for the record. I do, however,
    have several questions and concerns on Amtrak's short- and
    long-term financial health and future status that I hope we
    will have time to get to this morning.

                           TERM OF FAA ADMINISTRATOR

        First, Madam Administrator, I want to commend you for
    staying on at the FAA through the change of administrations. I
    know that while the job certainly has its rewards, it certainly
    has its challenges, too. I look forward to working with you for
    the remainder of your first term as administrator, about 12
    months left I understand, and through the completion of your
    second 5-year sentence.
        Many places in government require substantial time in place
    by new leadership before real change can be implemented. You
    are at that point now, and I would hope that you would stay on
    to carry out some of your initiatives, including free flight,
    safe flight, and capacity benchmarks.
        But this morning, I want to focus primarily on Amtrak.

                             AMTRAK OPERATING COSTS

        I think that we have all heard the promises made each year
    that Amtrak is just about to turn the corner to become a self-
    sustaining operation. Let me quote from Mr. Warrington's
    testimony during the consideration of the fiscal year 2000
    bill. He stated, and I quote, ``I want to assure you that
    Amtrak is turning the corner to become a commercially oriented,
    customer-focused, and financially sound business enterprise.''
        A year later, Mr. Warrington testified, ``Today, I am happy
    to report that these positive trends are continuing, And I
    believe that our results, our commercial initiatives, our
    network growth, and our high-speed rail plans demonstrate
    clearly that our goal to not merely survive is more than a
    promise.''
        We have also heard the annual excuses that Amtrak
    management makes after it fails to improve its financial
    performance. I suspect that this morning we will hear why
    Amtrak is again in dire financial straits, and I am confident
    that it will be someone else's fault.
        I am also confident that Amtrak's testimony here this
    morning will not place the blame where it belongs and where it
    has belonged for the past 25 years. And that is that the
    business model does not make sense, and no amount of Federal
    money or inspired leadership can change that reality.
        In preparation for this hearing, I asked my staff to review
    a decade's worth of Amtrak testimony to the subcommittee. Over
    that time, every year, ridership is up, revenues are up, and
    opportunities abound.
        Yet the testimony never seems to mention the operating
    losses, which are growing faster than any other measure of the
    railroad. After all the investment, new business plans, new
    management, billions in operating and capital subsidies, Amtrak
    is in worse shape than ever.
        We are being told a story in Amtrak's testimony, and I do
    not think it is a good story. Madam Chairman, you do not invest
    in stories; you invest in income streams. Amtrak has plenty of
    stories. What they do not have is an income stream. I am
    informed that the cash loss in fiscal year 2000 was $561
    million. And I am informed that in fiscal year 2001 Amtrak is
    burning cash at a rate that will amount to a loss of $930
    million this year.
        Clearly, Amtrak is engaging in short-term borrowing to
    cover operational and debt service costs and Amtrak's cash
    shortfall is growing to unsustainable levels. In the past,
    Amtrak has postponed the inevitable by monetizing assets to
    meet the annual cash shortfall. The actions of the past month
    to monetize the ownership interest in Penn Station represents
    the last resort of Amtrak to squeeze cash out of its capital
    assets.
        Folks, I believe we are near the end of the line. Amtrak
    has no more assets to monetize. It has reached its credit
    limits. Federal subsidies cannot keep pace with operating
    losses. And Amtrak cannot constrain its operations to those
    routes with a potential to cover costs because of the political
    commitments made to garner congressional support.

                             RAIL PASSENGER SERVICE

        In short, nothing has changed over the past 30 years.
    Amtrak, I think, was a bad idea 30 years ago, and it is a bad
    idea today. In most parts of the country, Amtrak is not an
    alternative to air or automobile travel. The claim that
    passenger rail is a critical component in relieving intercity
    and intracity congestion, I believe, is ludicrous except for
    the Northeast corridor and perhaps in two or three other highly
    congested transportation corridors elsewhere in the country.
        Keep in mind that Amtrak carries roughly 21 million
    passengers a year. By comparison, the New York MTA carries over
    7 million passengers a day on its subways alone. Transit
    services, including commuter rail in highly congested urban
    areas, can help relieve congestion. But Amtrak services are
    irrelevant to the congestion faced by the majority of Americans
    on a daily basis and will remain irrelevant no matter what we
    do with Amtrak.
        Clearly, something has to be done to rationalize the
    business. Unfortunately, accepting the hard, cold business
    realities of Amtrak runs headlong into maintaining the
    political model that Amtrak has put forward. However, the
    comments that President Warrington made a couple of weeks ago
    at the National Press Club lead me to believe that even he,
    Amtrak's most vocal cheerleader, is coming around to accept the
    failures of the Amtrak business model.
        He said, ``You cannot meet a mandate to run a national
    network and operate in a true profitable commercial sense.''
    This is a far cry from the platitudes of his testimony over the
    past couple of years, but better late than never.
        For the fiscal year 2002, Amtrak is requesting $525 million
    and wants Congress to authorize the railroad to immediately use
    all these funds as opposed to using 40 percent in 2002 with a
    balance available for the 2003.
        My sense is that this is at best a short-term solution and
    that with this flexibility Amtrak will squeak through to the
    spring of 2002, when Amtrak again will be out of money. I am
    under no illusions that the votes exist in either the House or
    the Senate to eliminate Amtrak subsidies today. But as the hole
    that Amtrak has dug for the American taxpayer continues to
    grow, I think we will have to make choices. Those choices are
    not getting any easier or less expensive.
        Now is the time to change the way we view Amtrak and the
    role that passenger rail can and should play in this country.
    That does not mean that rail passenger service does not have a
    future in this country. I think it does in certain areas.
        What it does mean, though, is that the model for rail
    passenger service proposed by Amtrak is doomed to fail, as it
    has been over the tortured life of the corporation.
        The political model for Amtrak subsidies has been to
    promise a majority of the Members of Congress that they will
    get something for their States or districts, if they continue
    to support the bailout. But without a complementary change in
    the business model, we will never get out of the current
    dilemma of annually paying to keep Amtrak out of bankruptcy.
        For these reasons, I believe it is time for the
    administration, the Bush administration, to provide leadership
    to restructure the business and focus on supporting a rail
    passenger service model that makes sense for the long term. I
    hope the administration will step up to this challenge soon.
    The longer it takes for the administration to lead on this
    issue, the more it will cost and the more it is costing the
    American taxpayer.
        Thank you, Madam Chairman.
        Senator Murray. Thank you, Senator Shelby.
        For the information to the Senators on the committee, we
    have two panels this morning, one on FAA and one on Amtrak. We
    have been joined by two of our colleagues, who I believe want
    to make statements on the Amtrak issue.
        If either of the Senators who are here would like to make
    an opening statement beforehand, I will allow that before we
    move to our colleagues. But I warn all committee members that
    we need to be finished by noon today, so we are on a short time
    frame. So I would appreciate it if everybody would to be
    concise.
        Senator Bennett.

                      STATEMENT OF SENATOR ROBERT BENNETT

        Senator Bennett. Thank you, Madam Chairman. I shall be very
    concise.
        I support rail passenger service. I support Amtrak wholly
    and totally in the Northeast corridor. And I am willing to give
    up Amtrak service in Utah in a heartbeat in order to solve the
    economic problem that you face in Delaware, Pennsylvania, New
    York, and some other places where it makes good sense.
        Thank you.
        Senator Murray. Senator Hutchison.

                   STATEMENT OF SENATOR KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you, Madam Chairman.
        I would like to just speak briefly on both the aviation and
    the Amtrak issue. I appreciate very much Administrator Garvey's
    efforts in trying to come up with everything possible to
    increase the air capacity. But in fact, we must do several
    things to be helpful in this regard. And I have a bill,
    cosponsored by Senator McCain, as well as others, the Aviation
    Delay Prevention Act, which would have airlines to be able to
    talk about their schedules, reroute, reschedule in bad weather,
    without possible antitrust violations; and secondly, to add to
    the runways.
        We have airspace capacity problems, and we have ground
    capacity problems, and we need more runways. We need more
    facilities on the ground that would allow the planes that land
    to be able to get to a gate in an expedited manner. I have sat
    on the ground longer than I have been in the air going from
    Dallas to Washington and vice versa, and that is not
    acceptable.

                             PASSENGER TRAIN TRACKS

        That leads me into my position on Amtrak, which is very
    much for Amtrak, for our whole country. I do not think the
    taxpayers of America should subsidize just a Northeast
    corridor. I think the taxpayers of America have a legitimate
    interest in a national rail system for passengers.
        At a time when our airlines are not able to serve the major
    airports in our country, when our air is clogged, where our
    highways are clogged in many key areas of our country, I think
    rail is absolutely the third part of an intermodal system. It
    allows people who cannot drive to have that mobility, and I
    think it is a legitimate investment for our country.
        I think a national system would create more spurs from
    States coming in, and more and more States are doing that,
    which will add to the synergism. But we cannot starve Amtrak
    continually and expect it to perform. And that is what we have
    done for the last 25 years of Amtrak.
        We need to have a capital infusion that would give it a
    chance to really perform well. And in the end, you cannot have
    a real passenger rail system that depends on the goodwill of
    the freight-owned tracks. So in the long term, what we need is
    to be able to work with the freight railroads to have a track
    laid on the same right-of-way, because we could never afford to
    buy the right-of-way, but to have a parallel track so that the
    freight trains will not be delayed, and neither will Amtrak.
    That is the answer, and I hope that we are willing to make the
    investment, because I think it could add greatly to our air
    quality and the overall mobility that is important to our
    country.
        Thank you.
        Senator Murray. Thank you, Senator Hutchison.
        [Clerk Note.--Senator Kohl submitted a statement and asked
    that it be included in the record.]

                    Prepared Statement of Senator Herb Kohl

        Thank you Madam Chairwoman for holding this important hearing
    today. Transportation will be one of the most important issues that
    this nation faces in the coming years. Our highways, airways and
    railways are busier and busier, with congestion and delays becoming
    more common. This increase in traffic volume has led to a number of
    problems, besides the usual inconveniences. Pollution, rising gas
    prices, and, most importantly, increased risk of accidents are all
    byproducts of increased transportation usage.
        I believe this subcommittee stands in a unique position to offer
    the people of this nation a solution to many of these problems. Safety
    should be the top priority in any improvements to the transportation
    system, and I believe that by providing funding for a number of
    significant initiatives, we can cut down on traffic and congestion and
    greatly increase the safety of passengers. For example, I have
    consistently supported the Midwest Regional Rail Initiative which would
    bring high speed rail to the Wisconsin area. This transportation system
    is essential to state and local economic development, and offers a
    needed alternative to flying or driving. This is an important step in
    enhancing both the efficiency and safety of the transportation system.
        In addition to the need for a national high-speed rail network, we
    must work to modernize our aviation infrastructure. The number of
    Americans turning to air travel as their mode of transportation will
    reach 1 billion by 2010. That is an increase of more than 50 percent
    from today's level. One of the most challenging safety concerns that
    face the FAA with increased air travel is the potential for runway
    incursions. The Milwaukee Journal Sentinel recently reported on a FAA
    study that categorized runway incidents. It is disturbing to me that
    airports in Milwaukee, Green Bay and Appleton all ranked near the top
    in potential runway collisions. With air traffic increasing, I look
    forward to working with the FAA on ways to prevent incursions at the
    airports in Wisconsin and across the country.
        America has the safest transportation network in the world, and as
    the utilization of our system increases it is absolutely essential that
    we continue to work to modernize our infrastructure while endlessly
    ensuring the safety of its users.
        I look forward to working with this subcommittee and with both
    Administrator Garvey and Mr. Warrington in the future.

        Senator McCain, you were here first, so I will let you make
    your opening statement.
    STATEMENT OF SENATOR JOHN MC CAIN, U.S. SENATOR FROM
                ARIZONA
        Senator McCain. Thank you very much, Madam Chairman. I am
    keenly aware of your time constraints, so I will make my
    remarks very brief. And I applaud the remarks made by Senator
    Shelby and also those of Senator Bennett, because while many
    intercity passenger rail proponents, including many in this
    room, view me as the enemy, I am not.
        I fully recognize that in some places, such as the
    Northeast corridor and perhaps on the west coast, rail
    passenger service appears to be attracting passengers. I
    applaud the usage of rail passenger transportation. I use it
    myself whenever I can and view it as a valuable means of public
    transportation.

                                FINANCING AMTRAK

        But what we need, Madam Chairman, is an open and honest
    debate about the expenses, the costs of keeping Amtrak as a
    viable rail service, whether it should be a regional, which is
    my view, Northeast and west coast, does it make any sense in
    other parts of the country, particularly financially, and what
    we want to invest in order to keep it viable.
        What we have done since 1971 is every 2 or 3 years there
    has been the promise that they will be economically viable. And
    then, of course, the latest is by December 2002. We all
    unanimously passed the Amtrak Reform and Accountability Act of
    1997, which says that Amtrak will be financially independent by
    December 2002. We know that is not going to happen.
        And since 1971, we have invested $24 billion of the
    taxpayers' money in Amtrak. In Wisconsin, they have a line.
    $512 per passenger is their loss. Their own data, which I would
    like to submit for the record, averages $20.93 for every
    passenger it carries. Nearly 40 percent of its routes suffer
    losses of more than $50 a passenger, while nearly 25 percent of
    its routes suffer losses of more than $100 per passenger.
        What we need, Madame Chairman, is: What do we want? What
    are we willing to fund, and what is the Federal Government's
    role in it?
        In the European rail lines, many are subsidized. Fine. That
    is fine with me. That is a decision of the people that they
    make. But this continual flim-flamming of Congress about that
    they are on a ``glide path,'' as Senator Shelby mentioned--year
    after year after year they come forward and say, ``We are on
    the glide path to self-sufficiency. We are on the glide path.
    All we need is a little more.'' And now they are floating
    around--guess what?--$12 billion more.

                             PENN STATION MORTGAGE

        Madam Chairman, let me just mention one other aspect. This
    hearing is very timely. Amtrak executed an agreement to
    mortgage a portion of New York's Penn Station in order to
    secure a loan of $300 million. We were never informed. Congress
    was never informed. We were at the hearing last year, and the
    hearing that was scheduled. Everything was fine in Amtrak.
        I note that Mr. Warrington's testimony fails to mention a
    single word about the mortgage transaction or its financial
    situation. I would encourage the members to inquire about the
    specifics of the mortgage agreement. I am informed the
    transaction was out of desperation, because Amtrak would become
    insolvent within the next month without an immediate infusion
    of cash.
        One last comment about Penn Station Mortgage, which you may
    find of interest. When my office requested a copy of the
    transaction last week, Amtrak responded that it was a ``private
    matter.'' How can such a deal be private when, as I learned
    last week, it includes a provision which conveniently allows
    for the Federal Government--i.e., taxpayers--to repay that
    mortgage on Amtrak's behalf?
        I also understand the actual cost to repay the $300 million
    loan will be nearly $600 million over the 16-year life of the
    loan. How is that not the Congress's business, if the taxpayers
    are on the hook?

                                FINANCING AMTRAK

        And finally, Madam Chairman, I strongly recommend this
    committee hear from the Department of Transportation Inspector
    General and the General Accounting Office. Both of those
    individuals have raised serious factual concerns about the
    state of Amtrak. Just last week the Department of
    Transportation Inspector General released a report which raised
    serious concerns. He calls Amtrak's financial situation
    precarious.
        It stresses the urgency for Amtrak to curtail its expenses,
    the growth of which is attributed largely to the interest
    expense associated with the level of debt Amtrak has assumed in
    recent years.
        Madam Chairman, thank you for allowing me to testify. We
    need an open public debate about what the United States'
    responsibilities are to a rail passenger service in America and
    how we can best be fair to all Americans in the expenditure of
    their dollars. But for us to continue to backdoor billions of
    dollars to what is clearly a failed and failing enterprise, is
    doing a grave injustice to American taxpayers. I thank you for
    having this hearing. I look forward to working with you.
        Senator Murray. Thank you, Senator McCain.
        Senator Biden.
    STATEMENT OF SENATOR JOSEPH BIDEN, JR., U.S. SENATOR
                FROM DELAWARE
        Senator Biden. Thank you very much, Madam Chairman.
        My good friend from Arizona and I have had debates about
    Amtrak in the past. I was at a staff softball game when I heard
    he was coming to testify, and I wanted to be here to be with
    him.
        I have no prepared statement. Let me respond by--and I know
    your time is short. There is one thing we can all agree on
    here, and that is that Amtrak has financial troubles. I find it
    fascinating, though, that when we set up this corporation in
    1971, we did to this corporation what we have never done to any
    other corporation. We guaranteed their failure in terms of not
    being able to be self-sufficient.
        What we guaranteed was, for example, they take on the
    responsibility of the Railroad Retirement Act out of their
    capital, out of their capital--I mean, excuse me, out of their
    operating budget. They have no capital budget.

                    POLITICAL PRESSURE OF AMTRAK OPERATIONS

        I will not go through the whole history, but it comes down
    to this: We have come up, or I have, along with others and now
    led by Senator Hutchison of Texas, we have come up with a
    number of things that would have greatly alleviated Amtrak's
    problem and not cost the taxpayers much money. But it is
    amazing. The people who are most critical voted against every
    one of those things, every one of them. For example, my friend
    from Arizona and I have had, as I said, heated debates. I
    consider him one of my closest personal friends, but we have
    had heated debates.
        I came along and said, ``Look, here is what we do. We have
    a Highway Trust Fund. And there is this rural provision in the
    highway trust fund where you can go out and you can buy
    buses.'' I said, ``Why are you going to buy buses? Why do you
    not let the governor of Montana, for example, decide, if he
    wants to use that money instead of buying buses--because he was
    losing something like $60 million a year in skiing revenue, why
    do you not let him and the legislature take that money to buy
    buses and pay Amtrak to run a train on the track that exists?''
        You all said, ``Oh, no, we cannot do that. You can build a
    bicycle path. You can buy a bus. You can use it for--and you
    could probably use it for the handicapped and wheelchair
    access. But you cannot let Amtrak run.''
        I said, ``Well, we are not forcing anything on anybody.''
    So that is the Highway Trust Fund. Bless me, Father, for I have
    sinned. I thought about using any Highway Trust Fund money for
    Amtrak at the discretion of the Governor, local. They do not
    have to spend it. You all said ``no''. We had that half-cent
    tax we kicked in there on the deficit reduction package, said,
    ``Look, just give us that half cent.'' My friend from Alabama
    went nuts on that one, ``Oh, man, no. We wanted to send that
    back to the Treasury.'' And then we said, ``Okay. How about you
    give us just a little more flexibility and say to us that we do
    not have to operate all these railroads?'' ``No.''
        Here is what you said. Everybody says since 1971 it has not
    worked. Amtrak made a promise, and there is political pressure,
    and we are supposed to be out of the hole. Let me tell you how
    you made the promise. It went like this. I am sorry I do not
    know this gentle lady. They took a gun to her head and said,
    ``By the way, I have a deal for you. I will let you testify, if
    you promise me you can get it done in 12 seconds, or I am going
    to blow your brains out.''
        What is she going to say, ``I cannot get it done in''--she
    knows she cannot get it done in 12 seconds. But she is going to
    say, ``Yes, I promise you.'' She is going to do it in 12
    seconds.
        That is what you all did to Amtrak. That is what you all
    did to Amtrak. You continue to do it to Amtrak. You nickel and
    dime them. You beat the living devil out of them. And then what
    you say to them is a catch-22. It is a noble thing, you know. I
    mean, you all say, ``Look, it is unfair that Amtrak is put
    under this political pressure to have run a railroad in
    Wisconsin, loses $510 a passenger. And in Oregon it does
    this,'' and on and on. And you all say that. And it is true.
    But guess what? The way we set up the corporation, they cannot
    get enough votes to even get the Northeast corridor running,
    which makes money, unless everybody is in the deal.

                               SUPPORT FOR AMTRAK

        Now, look, I want to tell you something: As the guy who is
    viewed as the--I have a self-interest. I have made over 6,000
    round trips on Amtrak from Wilmington, Delaware, to Washington,
    D.C. I acknowledge it. And I would characterize it as evidence
    of a misspent adulthood. I acknowledge that.
        But having said that, I am all for it. If you guys want to
    break this thing up, fine. You break it up. You want to have an
    east coast corridor, a west coast corridor--I do not think that
    is the way to do it, but okay.
        Now, are we going to write something into the law here that
    guarantees me somehow I get the votes? What you are doing is
    you are mouse trapping me, Senator Shelby.
        Senator Shelby. No, no.
        Senator Biden Oh, yes, you are. You are saying, ``I want to
    help you out by--we will get that Northeast corridor going. And
    we are going to figure out how the heck you get 50 votes, 51
    votes.'' And I said, ``I cannot get 51 votes.''
        Why do we have some of those defense plants in Alabama,
    when they make the plane in California? To get your vote. That
    is why it is there. That is why we do this deal. Why do we,
    when we build one plane that we all love, why does it have
    components in 31 States?
        We all taught Amtrak a bad lesson. You say to this guy
    right here, you say, ``Okay. You mortgage the station.'' Shame
    on you. So, okay, what am I going to do? Shut the whole thing
    down?

                         BUILDING AMTRAK INFRASTRUCTURE

        I have a solution for you all. It is a real simple one.
    Senator Kay Bailey Hutchison and I have a little old thing. Let
    us have a bonding authority up to $12 billion. Let us have a
    capital budget. Let us have an operating budget. Let us run
    like any other business in the world.
        You want us to be a business? You want us to be self-
    sufficient? Let us do that. And if you all do not like this
    plan, then let me point out--and I will end with this: If you
    do not like the plan Amtrak has here, the plan is real simple.
    It is not unlike what we did in the interstate highway system.
        We did not go out and build a whole highway system all at
    once. I can go back and look, but everybody did not say, ``Hey,
    yes, man, let us do this all in one piece.'' But the promise
    was, ``Here is what we will do. We will take the corridors that
    will make sense, and we will build them a piece at a time. And
    we will extend them, and we will keep extending them.'' You do
    not want to extend them? Look folks, this is a little bait and
    switch here. You know what I mean? It is true, you can say,
    Amtrak was not setup right in the first place; two, they have
    had to promise that they would make themselves self-sufficient.
        I have made speeches constantly. It was a mistake for
    Amtrak to acknowledge what they were told would put them out of
    business. I think we should have called the bluff a couple of
    years ago and said, ``Okay, okay, put us out of business. We
    cannot be self-sufficient.''
        I would like to have self-sufficient airports. I would like
    to have that. What do you think about that? I would like to
    have self-sufficient highways, too. I would like to have no
    subsidies.
        I will end with saying, there is a need for this component.
    If you really mean it, when you say the east coast and the west
    coast--or I think there is a corridor that goes all the way
    across the Southeast into Texas, that makes eminent sense.
        But if you all really mean this, you really want to help,
    and you really say you understand our problems, then there are
    ways to do it. But the way to do it is not to vote against
    every single solitary thing that could move to alleviate some
    of the debt, some of the problem Amtrak has.
        Again, I apologize for the extemporaneous remarks. But as I
    said, I always like to be around when my friend John McCain is,
    when he talks about this subject. It warms my heart.
        But I appreciate the Chairwoman allowing me to do this. And
    I am sorry I trespassed on the time. I hope we can work
    together. I am willing to work. We know we do not have the
    answers. We know we have some problems, big problems, but we
    know we need this system. Anyway, thank you all for being so
    gracious, appreciate it.
        Senator Murray. Thank you very much, Senator Biden.
        Before we turn to Ms. Garvey, Senator Stevens, if you
    wanted to make an opening statement, I would be happy to
    accommodate you.
        Senator Stevens. I think you have had enough. Thank you
    very much.
        Senator Murray. You did not want to follow that?
        Thank you very much.

                          STATEMENT OF JANE F. GARVEY

        Ms. Garvey, please go ahead with your opening statement.
        Ms. Garvey. Thank you very much.
        Good morning, Madam Chair and Senator Shelby, members of
    the Subcommittee.

                  national airspace system ongoing initiatives

        First of all, I am very pleased to be here this morning to
    discuss the President's 2002 budget for the FAA. I would like
    to begin by thanking this Subcommittee, by thanking its
    members, for your continued and long-standing support of our
    requests in the past. We are very grateful for that support.
        In the interest of time, I would like to take just a few
    moments to highlight some of the ongoing initiatives that
    support a safe and efficient operation of the National Airspace
    System. We certainly know the issue of delays and capacities.
    Capacity is front and center for every member of Congress, and
    it is certainly front and center for a vast majority of
    Americans. We focused on that long and hard. We have developed
    some short-term initiatives, as well as some strategic
    initiatives to improve the overall efficiency of the system.
    With this year's spring-summer program, we have reached, I
    believe, an unprecedented level of collaboration between the
    airlines, the FAA, the pilots, the dispatchers, and the
    controllers in managing the system.
        From the command center in Herndon, conference calls are
    held every 2 hours, 24 hours a day, to jointly plan the day's
    activities, the day's actions. It is real-time decision making.
    It is real-time collaboration. I think it has made a
    difference.
        Last fall I mentioned to this subcommittee that we were
    focusing with the airlines on the most challenging area for us.
    And that is that airspace between Chicago, Boston, and
    Washington, D.C. We have identified 21 initiatives to relieve
    those choke points. I am pleased to say that as we are
    systematically implementing these initiatives. We are seeing
    measurable benefits that enhance efficiency. For example, our
    preliminary numbers for June, compared to last year at this
    time, show that delays are down 14 percent. Weather has
    cooperated, but I think the initiatives have made a difference
    as well.

                            USE OF CANADIAN AIRSPACE

        We have worked with NavCanada to use Canadian airspace
    along the crowded Eastern corridor. We are testing new routes
    to allow aircraft to fly at much lower altitudes. We have
    developed new sectors to create greater efficiencies. These are
    some of the tactical short-term initiatives that we have
    undertaken.

                            OPERATION EVOLUTION PLAN

        For the immediate and the long-term solutions, we have
    developed and recently announced an operation evolution plan.
    This represents industry and the FAA's commitment to meet our
    transportation needs over the next decades. Certainly the
    challenge, I think, both for us and for industry is to stay
    focused on that plan and to make sure that we turn our
    attention to implementation. We do know that while efficiency
    and capacity are critical, safety is paramount to us and to
    this Subcommittee. We have a commitment to reduce the fatal
    accident rate for the United States commercial air traffic by
    80 percent by 2007.

                                  SAFER SKIES

        With support from Congress, we have established, in
    partnership with the aviation community, Safer Skies, which is
    a focused safety agenda. The objective of Safer Skies is to
    determine the root cause, to develop interventions, and to
    track the progress and the success. Over the last 2 or 3 years,
    we have implemented significant actions to reduce commercial
    accidents in areas of control flight into terrain and
    uncontained engine failures. Now we are focusing on the
    approach and landing phases of flight.
        More importantly, air carriers are establishing flight
    operation quality assurance programs and aviation safety action
    programs to identify safety issues and trends so corrective
    actions can take place before an accident occurs.

                            PARTNERSHIPS IN AVIATION

        One last comment, Madam Chair, and that is that nothing we
    know is achievable without the cooperation from all parties. We
    have arguably the most complex, the safest, and the most
    efficient system in the world. But we know it is not achieved
    by the FAA alone. Its success is really based on the
    partnership that we have with airlines, with airports, with
    labor, and all members of the aviation community.
        Solving the problems of aviation today and meeting the
    challenges of the future requires the cooperation among all
    parties. Each one of the initiatives, each one of the actions
    that we have described in our longer statement and in this
    statement really depends on that premise. Congress, and
    especially this Subcommittee, has supported the FAA in its
    efforts to maintain safety and in its efforts to modernize
    airspace systems. I look forward to continuing that working
    relationship with you, Madam Chair, and with the other members
    of the Subcommittee. That concludes my testimony. I would be
    happy to answer any questions that you might have.

                               prepared statement

        Senator Murray. Thank you, Ms. Garvey, for your testimony.
        [The statement follows:]

                      Prepared Statement of Jane F. Garvey

        Chairwoman Murray, Senator Shelby, Members of the Subcommittee:
    Thank you for the opportunity to appear before you this morning to
    discuss Federal Aviation Administration (FAA) issues and our budget
    request for fiscal year 2002. The President's budget request makes a
    significant investment in our aviation infrastructure that will enable
    the FAA to continue its progress in meeting the demands of our air
    transportation system in the 21st century.
        The FAA is a 24 hour/7 days a week service delivery organization.
    The FAA controls approximately 200,000 takeoffs and landings per day
    and moves nearly 700 million commercial air travelers per year. Our
    customers depend on the safe and efficient operation of the National
    Airspace System (NAS). Maintaining this system in a safe and efficient
    manner, while providing for the anticipated growth in the use of NAS,
    is the FAA's top priority.
        I want to take a moment to discuss the FAA's role in operating and
    maintaining a safe and secure NAS. Every action we take is done with
    safety as our primary goal. Recent statistics show that the accident
    rate for commercial aircraft has been on a downward trend for the past
    two decades. Yet during this time period, passenger enplanements in the
    United States more than doubled and are expected to reach 1 billion by
    2010--an increase of 53 percent above today's level. We have the safest
    air travel system in the world, and are constantly working to improve
    it. Any action we take to address airline delays and capacity issues--
    and I cannot stress this enough--will always be done within our primary
    mission of increased safety and security for the traveling public.
        To meet these goals, the President's fiscal year 2002 budget
    provides operations and capital funding for the FAA consistent with the
    levels contained in the Aviation Investment and Reform Act for the 21st
    Century (AIR-21). Airport grants are funded at $3.3 billion; capital
    modernization programs are funded at $2.9 billion; and, FAA operations
    are funded at $6.9 billion. In total, this is $725 million, or six
    percent above fiscal year 2001.
        I want to thank you for the support that you and the members of
    this subcommittee have undertaken to fund the FAA's budget requests.
    With the funding provided in fiscal year 2001, the FAA is improving
    operational safety and efficiency throughout the entire commercial
    aviation system while making necessary capacity improvements in the
    NAS.
        Today I want to discuss the significant developments and
    accomplishments in fiscal year 2001 that will enable us to meet today's
    aviation growth and future demand. The FAA is committed to:
      --Maintaining a safe and efficient air transportation system;
      --Working with the aviation community to plan for aviation needs over
            the next decade and follow through on implementation;
      --Benchmarking airport capacity and streamlining environmental
            approval procedures;
      --Alleviating bottlenecks in the NAS; and
      --Modernizing the NAS.
    Safety is our paramount goal
        One of the most important FAA safety initiatives is our effort to
    reduce runway incursions. While runway incursions occur at a low
    frequency (five incursions for every one million operation in the NAS)
    the total number of incursions has increased over the past 5 years. The
    FAA is taking action to reverse this trend. Specifically, the FAA is
    working to enhance pilot and controller communication, identify and
    implement procedural changes at airports to reduce surface operational
    errors, and develop and promote runway safety training and education
    for airline, airport, and FAA personnel. In addition, the FAA has begun
    implementation of site-specific solutions at approximately ten airports
    that sustain the highest number of runway incursions.
        As I have already said, reducing the fatal accident rate for
    aviation is our primary goal at the FAA. We have embraced a goal of an
    80 percent reduction in the rate of fatal accidents in commercial
    aviation and a reduction in the number of general aviation fatal
    accidents to 350 or fewer over a 10-year period. To accomplish these
    goals, the FAA has joined in partnership with the aviation community to
    establish Safer Skies--a focused agenda to make the skies even safer.
        The objective of Safer Skies is to determine accident causes,
    develop interventions to address these issues, and track the progress
    and success of these interventions. We have implemented significant
    actions to reduce commercial accidents in two areas--controlled flight
    into terrain and uncontained engine failures. Now we are focusing on
    the approach and landing phases of flight. More importantly, air
    carriers are establishing Flight Operation Quality Assurance programs
    and Aviation Safety Action programs that identify safety issues and
    trends so that corrective actions take place before accidents occur.
    Agreement with airlines on national operations plan
        For intermediate and long-term solutions to our capacity and delay
    problems, we have developed an Operational Evolution Plan (OEP). The
    FAA achieved broad consensus with the aviation industry in the
    development of the OEP. This represents the industry's commitment to
    meet the air transportation needs of the United States over the next
    decade. The plan focuses on increasing capacity, managing delays, and
    maintaining the excellent safety record of the system.
        The OEP is a fundamental change in the way we do business. There
    are specific commitments and schedules on the part of the FAA and
    industry, particularly the airlines. The agency held numerous meetings
    with industry and received a significant number of comments that have
    been incorporated into the OEP. The plan lays out specific tasks to be
    accomplished in the near-term (2001 and 2002), mid-term (2002 to 2004)
    and long-term (2005 to 2010). The FAA and the industry consider the OEP
    to be an evolving document that will be modified, particularly to
    incorporate new technologies as they emerge.
        The OEP calls for expanding implementation of area navigation
    (RNAV) procedures; completing the Wide Area Augmentation System (WAAS)
    for satellite-based navigation; introducing datalink to reduce voice
    communications between pilots and controllers, and reducing vertical
    separation of aircraft at high altitudes from 2,000 feet to 1,000 feet.
    Benchmarking airport capacity and streamlining environmental approval
            procedures
        On April 25, we released our capacity benchmarks report. Simply
    stated, an airport's capacity benchmark represents the maximum number
    of flights it can routinely handle in an hour. Our analysis establishes
    capacity benchmarks for the top 30 major airports. The 31st airport in
    the report, Memphis, was included for its importance to the air cargo
    industry. These are being used to better understand the relationship
    between airline demand and airport runway capacity. This report
    provides valuable data to assist the FAA, airports, airlines, and other
    systems users in making informed decisions and investments that can
    ultimately help better manage the increasing demand for capacity, while
    at the same time minimizing unavoidable delays.
        The benchmark report indicates that we are faced with very
    challenging capacity issues at 8 of the 31 airports. We have developed
    plans to improve operational efficiency at the eight airports with the
    highest delay rates (Atlanta, Boston, Chicago O'Hare, Newark, New York
    Kennedy, New York LaGuardia, Philadelphia, and San Francisco). Each of
    the plans indicates the expected gains that can be anticipated from
    runway construction, and procedural, airspace, and technological
    improvements.
        The capacity benchmarks and action plans represent starting points
    for the aviation community to work together in solving the capacity
    problems at these specific airports. There has been some movement in
    this direction. We have an on-going effort at Newark meeting quarterly
    with Continental Airlines to take measured steps to alleviate
    congestion and delays. The City of Chicago and the FAA are co-
    sponsoring a Chicago Delay Task Force that will identify and analyze
    potential measures to relieve delays at O'Hare. In addition, recent
    actions by both American (at Chicago) and Delta (at Atlanta) to address
    their operations may prove to be helpful.
        On environmental streamlining, the FAA is aggressively moving major
    new runway projects through the environmental review pipeline. Our most
    critical airports are the large hub primary airports that combined
    enplane about 70 percent of U.S. air passengers. At these airports, 18
    new runways are currently proposed to come on line between now and
    2010. We have completed FAA's environmental review on 9 of these 18
    runways and are more than halfway through the environmental process on
    four more and are in an early environmental impact statement (EIS)
    stage on one more runway. That leaves 4 runways out of 18 that have not
    advanced sufficiently in local planning for the airport proprietors to
    submit them to FAA for environmental review.
        We have taken steps to expedite the FAA's part of this complex
    process. Our goal is to reduce unnecessary delays while maintaining the
    integrity of the environmental process and complying with all
    environmental protection requirements. To that end, we have taken the
    following steps: established an EIS team of experts for four current
    major EISs and will establish a team for each new EIS for a major
    runway project at a large hub primary airport; reallocate FAA staff
    resources to environmental reviews; and, begun the process of
    implementing reimbursable agreements for airports that have expressed
    interest in paying for additional FAA environmental staff resources for
    expedited EIS reviews.
    Complete chokepoint initiative and measure results
        We identified tactical measures to alleviate the chokepoints, or
    bottlenecks, in the NAS. These are all in the ``triangle'' between
    Chicago, Washington, D.C., and Boston. Our chokepoints initiative
    focuses on the creation of new procedures and changes to existing
    programs in order to gain greater efficiency from our current airspace.
        Twenty-one initiatives have been identified to make procedural
    changes to more efficiently use airspace. Thirteen are completed and
    are being measured and evaluated for effectiveness. Three are mid-term
    initiatives ranging with completion dates from this summer to December
    2001. The remaining five are longer-term actions requiring phased
    implementation or involve international agreements.
        By the end of the year, we will have established fifteen new
    sectors to ease congestion and speed traffic flows through the Great
    Lakes corridor (Chicago area air traffic) and into New York. In
    addition, we have: negotiated an agreement with NavCanada to route air
    traffic through Canadian airspace when US domestic routes are impacted
    by weather; conducted a test of radar automation interface between the
    Cleveland ARTCC and NavCanada's Toronto Center; and, developed advanced
    area navigation routes (RNAV) at the Chicago ARTCC and TRACON. These
    RNAV routes provide greater efficiency by separating aircraft routed to
    different destinations and give alternative flight plans for pilots
    around congestion and weather without the need for the controller to
    provide navigational guidance.
        As a result of our initiative so far, we have experienced 25
    percent fewer unplanned ground stops for flights going west out of the
    New York area. We have similarly reduced ground stops for flights
    flowing north out of the New York area by 37 percent.
    NAS Modernization
        In order to sustain our current systems and renew our aviation
    infrastructure, we are incorporating both major and minor changes to
    the air traffic control system. Our 21 enroute centers are
    significantly upgraded with new equipment--the Display System
    Replacement (DSR), the new Host computer, and air traffic control voice
    switching--which were on time and within budget. As a result of these
    upgrades, as well as upgrades systemwide, we have had a 50 percent
    reduction in delays in fiscal year 2000 due to FAA equipment failures.
        With the help of this subcommittee, we are now turning our
    attention to needed upgrades in the terminal environment. We are now
    beginning to deploy the Standard Terminal Automation Replacement System
    (STARS). When completed, the installation of STARS will replace the
    display screens and the computer automation systems for 173 TRACONS.
    Some of the equipment and software STARS will replace is more than 20
    years old, particularly at our 54 mid-to-high level demand TRACONS,
    which include Memphis, Bradley Windsor Locks, Philadelphia, and
    Orlando. Furthermore, STARS will also provide a platform for future
    enhancements to air traffic controllers in such areas as new free
    flight capabilities. We are working towards the full deployment of
    STARS by 2008.
        A critical element of NAS modernization is adding additional safety
    features--an effort that speaks directly to the FAA's primary mission
    of ensuring aviation safety. Additional safety features focus on the
    number one threat to safety--weather. Advanced weather information will
    provide us with more precise, more accurate, and timelier weather
    information. In our modernization blueprint, we have included many
    weather initiatives, such as the Integrated Terminal Weather System and
    the Weather and Radar Processor. These systems provide more
    comprehensive and up-to-date weather information in terminal and en
    route areas, as well as Terminal Doppler Weather Radar for major
    airports where windshear and microbursts are safety issues.
        I want to comment on one last important issue. As you know Madam
    Chairwoman, nothing is achievable without cooperation from all parties.
    We have arguably the most complex, safest, and most efficient air
    traffic control system in the world, but this is achieved not by the
    FAA alone. Its success is based on the partnership we have with
    airlines, airports, labor, and all members of the aviation community.
    From our daily--and hourly--efforts with the airlines to provide
    collaborative information on delays and capacity of the air traffic
    control system, to our union partnerships across the entire FAA, we
    cannot go it alone, nor do we intend to. Solving the problems of
    aviation today and the future requires cooperation among all parties.
    Each one of the actions and initiatives I have mentioned today depends
    on this premise.
        Congress, and especially this subcommittee, has supported the FAA
    in its efforts to maintain safety and modernize our air traffic control
    system, and I look forward to continuing that working relationship with
    you, Madam Chairwoman, and the members of the subcommittee. I would be
    pleased to answer any questions you may have.

                      operation evolution plan initiatives

        Senator Murray. FAA recently released its report to
    Congress on the environment review process that is required for
    airport improvement projects. We know that on the average, it
    takes 10 years to build a new runway. I have watched the
    prolonged environmental review process associated with a third
    runway at Sea-Tac Airport. And I am very interested in what
    steps the agency is taking to make sure that the environmental
    review process moves along. Your recent report outlined a
    number of measures that will expedite that process. How many of
    those measures has the FAA gotten off the ground? And how much
    time do you think you can realistically save?
        Ms. Garvey. We have really addressed all of the
    initiatives. We talked about dedicated teams for the most
    visible and the most important runway projects that really
    affect the system. We have those teams already in place for
    five of the major projects. We are prepared to put more teams
    in place as projects become reality. So that is underway.
        We have cooperative arrangements with San Francisco, for
    example, for them to pay for some of the additional staffing so
    that we will have the resources that we need. We are working
    with the Council for Environmental Quality (CEQ) and have
    identified more projects that can be included in what is called
    the categorical exemption. That is going to be concluded with
    CEQ this summer. They have been very cooperative, very,
    helpful. We have our regional teams out meeting with their
    counterparts in the other agencies to have much better
    collaboration and coordination with the other agencies. So I
    think that is good as well.
        Finally, the best practices, which we put up on the
    website, are going to be ready by July. So those are the
    initiatives that we have underway. The Secretary will be
    extraordinarily helpful in working with other Cabinet
    secretaries to deal with the coordination at the Federal level.
    We are looking forward to that work.
        How much time we can save is always difficult to answer. It
    depends on the project itself. Something like Houston we were
    able to do in a very short period of time, about 18 months. We
    used a team for that. But frankly, there were very few
    environmental problems.
        I have talked to Jean Marie Lindsey frequently about the
    Seattle project. I know she is down to some State issues. And
    to the extent that we can be helpful, we have offered to be
    helpful on that one as well.

                               AIRSPACE REDESIGN

        Senator Murray. I appreciate that very much. If it is
    possible to speed up the environmental review process for
    runway construction, do you think you could also speed up the
    environmental process on redesigning the airspace to reduce
    delays?
        Ms. Garvey. That is certainly a great challenge and
    something we absolutely are committed to. What we have tried to
    do with the airspace redesign is approach it in two ways. We
    are looking at, again, the tactical and the short-term changes
    that we can make to the airspace that may be less complicated
    environmentally, so that we can make those changes even before
    the complete redesign is actually completed. By the way, we
    have the controllers doing the redesign with us. They are
    really being extraordinarily cooperative and very creative as
    well.

                                   FAA REFORM

        Senator Murray. In 1995 Congress granted FAA authority to
    reform the way the agency handles its procurement and personnel
    systems. The procurement reforms have been successful in
    deploying some systems, such as the Host Computer Replacement
    and the Display System Replacement, on time and within budget.
    There have been other major projects, such as the Wide Area
    Augmentation System and the Standard Terminal Automation
    Replacement System that have experienced delays and significant
    cost overruns. Why has procurement reform worked in some cases
    and not in others?
        Ms. Garvey. You are right. Procurement reform has been very
    helpful to us. I think we have been able to cut the time to
    award a contract by about 50 percent. As you pointed out, host
    was up and running in about 18 months time, which is great.
        In the case of WAAS, the real challenges are around
    technology. We have been able to deal with the precision piece.
    The safety integrity has presented just some enormous
    challenges technologically for us. We brought in some very
    renowned independent thinkers on this, who understand WAAS very
    well. They tell us we are on the right track. We think our
    contractor, Raytheon, is well on the way to solving those
    technology problems associated with the safety integrity. But
    those have been enormously complex. We are the first place in
    the world, ever, to develop a system like WAAS. So we are
    really forging new ground. I think that has been the big issue,
    the technology pieces.

                                NATCA AGREEMENT

        Senator Murray. Personnel reform has provided the FAA with
    tremendous flexibility in how the agency hires and compensates
    their employees. At our aviation hearing last year, Inspector
    General, Ken Meade, stated the most visible result of personnel
    reform is the 5-year agreement you reached with the air traffic
    controllers in 1998. We recognize the awesome responsibility
    that we place in our Nation's air traffic controllers, as well
    as the men and women who keep the system running. The efforts
    of the controllers in my home city of Seattle during the
    Nisqually earthquake demonstrate how seriously they take their
    jobs.
        Clearly, we know that the 1998 agreement has vastly
    improved the relationship between the controllers and the FAA.
    But some have questioned, including our House colleagues,
    whether the agreement has resulted in any real productivity
    gain. Tell me why you think this agreement has worked.
        Ms. Garvey. It has worked on a couple of fronts. I think
    you started with the most significant, which is, it has really
    changed our relationship with the controllers. They are
    involved in about 65 technical projects we have. Every
    initiative that has been successful in the last 2 or 3 years,
    from Y2K to the Host Replacement to Free Flight Phase I, is a
    result of that kind of collaborative relationship. They are
    redesigning the airspace with us. We opened four new sectors
    last month. We did it without adding new staffing. We did it
    with the controllers. We did it because we are really committed
    to doing the modernization together. So I think it has
    fundamentally changed. The Inspector General and others have
    raised questions about the cost savings. Those are fair and
    honest questions.
        Senator Murray. Do you have any estimates of how much money
    you saved?
        Ms. Garvey. We did a study last year that identified about
    $400 million in offsets. We are updating that report this year.
    We have put in place an automation tracking system, which tells
    us where we are spending our time. That system is going to be a
    great help in identifying productivity gains. So we have more
    work to do in that area.
        Senator Murray. When will we see the report?
        Ms. Garvey. I hope by the end of the summer to have it
    completed. It was about a year ago that we finished the first
    cut. We have some outside expertise working with us and look
    forward to getting that report up to you and briefing you and
    your staff and the committee members, as well.
        Senator Murray. Thank you very much.
        Senator Shelby.
        Senator Shelby. Thank you.

                             CONTRACT TOWER PROGRAM

        What is the status of the plan that Congress requested over
    2 years ago on expanding the contract tower program?
        Ms. Garvey. Senator, I know that has been a source of great
    frustration, both to you and also to your staff. We certainly
    did not meet that deadline.
        Senator Shelby. Where are you on it?
        Ms. Garvey. I will tell you the administration, the new
    administration, when they came in OMB asked if they could take
    a look at it. They have given us what we think are some
    terrific productive comments. We have incorporated those. We
    would like to get it up to you in the next 2 or 3 days.
    Yesterday we thought it would be a good idea to run it one more
    time by the Secretary's Office. But very soon. I am sure the
    Secretary's Office will be supportive of the changes OMB has
    made.

                                ATC SUBCOMMITTEE

        Senator Shelby. Ms. Garvey, what is the status of the ATC
    subcommittee? When are you going to start getting them involved
    in the approval of budget submissions with bonus determinations
    and with approvals of acquisitions, such as Wide Area
    Augmentation System (WAAS) and En Route Automation
    Modernization (ERAM)?
        Ms. Garvey. As a matter of fact, they are meeting this
    morning.
        Senator Shelby. Okay.
        Ms. Garvey. I will be leaving here and joining them. We had
    our first discussion with them on some of the contracts, I am
    going to say, about a month ago.
        Senator Shelby. How did that go?
        Ms. Garvey. It went very well. They are great challengers.
    They have great expertise. I am very excited about the
    committee, not just with the contracts, but the level of
    expertise they are bringing around just even management issues.
    It is a great help, committee.

                                 AIRLINE DELAYS

        Senator Shelby. My last inquiry--I know we are compressed
    here--earlier this year you focused on capacity benchmarks----
        Ms. Garvey. Yes.
        Senator Shelby [continuing]. At individual airports in the
    country, which I thought was a very good idea----
        Ms. Garvey. Thank you.
        Senator Shelby [continuing]. And a good job. What are the
    next steps to apply that information to management delays?
        Ms. Garvey. That is a perfect question for us now, because
    we are very focused on the eight, what we call, capacity
    airports, the airports that are really causing delays in the
    system. Each one of those airports has an action plan. We took
    a first cut at an action plan. It is initiatives. It is a
    combination of procedure changes, technologies, operational
    changes. We have taken a first cut at it, but we are now
    sitting down with those individual airports and seeing that if
    these kinds of initiatives make sense, and if they want to add
    anything to it. Chicago, for example, recently instituted the
    delay task force, which really grew out of a recommendation,
    that was contained in the Operations Evolution Plan.

                           DELAYS AT ATLANTA AIRPORT

        Senator Shelby. What about Atlanta? What did they do?
        Ms. Garvey. They are terrific. They are doing a wonderful
    job, because they are well on their way with their runway
    project. They have built a wonderful coalition at the local
    level with the business community. So there is a great deal of
    support for it. And by the way, that runway will add capacity
    to Atlanta by about 40 percent. It is a real success story.
        Senator Shelby. What do we do for delays?
        Ms. Garvey. Atlanta will certainly help, because, as you
    have indicated, it is definitely one of the keys within the
    entire system. It is, very important.
        Senator Shelby. You know, in the South all of us have to go
    through Atlanta. And if we die, we still have to go through
    Atlanta, and we do not want to be delayed.
        Ms. Garvey. Well, we are working on that, Senator.
        Senator Shelby. Thank you. Madam Chairman, I have a number
    of questions that I would like to submit for the record. Thank
    you.

                                SALT LAKE RADAR

        Senator Murray. Senator Bennett.
        Senator Bennett. Thank you, Madam Chairman.
        Ms. Garvey, welcome.
        Ms. Garvey. Good morning. Thank you, Senator.
        Senator Bennett. It is always good to see you. It will come
    as no surprise that I am going to talk about the second radar
    in Salt Lake. We do this every year, and every year you say you
    will look into it. And after you look into it every year, the
    FAA says no. You have now agreed to put one in on a temporary
    basis for the Olympics. And I hope you forget to take it out
    when the Olympics are over.
        Ms. Garvey. The controllers tell me they are going to
    forget. So you have colleagues out there, partners.
        Senator Bennett. Yes. I am interested in Senator Murray's
    comment about redesigning the airspace. This would give you
    twice the airspace for the Salt Lake area. And the push for it,
    the reason it keeps coming back to you, because it keeps coming
    back to me, is not from the city fathers in Provo. It is the
    people in Salt Lake. They say, we lose airplanes that we
    normally could have in a holding pattern over Provo that at
    times of high congestion we absolutely have to have. And there
    is no radar down there, because the FAA people think of it as
    something for Provo, and Provo does not need it. And it is
    absolutely true, the Provo Airport is not a major international
    hub. As a matter of fact, you cannot land anything at the Provo
    Airport that has more than one engine. Now maybe that is not
    true. If there is anybody from Provo, I apologize, because
    their airport probably can handle two engines.
        But I have flown in and out of the Provo Airport. It is
    obviously a general aviation airport, and it does not justify
    the kind of radar that we are talking about here. But over and
    over and over again I hear from the people at Salt Lake that
    they are the ones who desperately need this. And yes, now there
    is a recognition that given the kind of traffic we expect
    during the Olympics, we are going to have it.
        And just one more time, when you put it in for the
    Olympics, just leave it there. Let the standard bureaucratic
    practice of never getting around to changing the direction once
    it is established run its course here, so that this will be
    there and be there forever. And then when you get around to
    redesigning airspace, you will say, gee, we are sure glad we
    left that there when we put it in for the Olympics in 2002
    because it has transformed airspace around the Salt Lake
    International Airport, which is an international airport. It is
    a major hub. It is going to get more major. And I have made my
    speech, and you hear this every year. But I will not cease
    giving it----
        Ms. Garvey. Thank you.

                            SALT LAKE OLYMPICS VISIT

        Senator Bennett [continuing]. Until we get this problem
    solved.
        The only other comment I would have to you, I have a
    letter, which I will hand to you here, signed by myself and
    Congressman Hanson and Senator Hatch. We would appreciate it if
    you--I know this is an imposition on your busy schedule, but
    the Olympics are important enough, we would appreciate it if
    you would visit Salt Lake and see the preparation that is going
    on for the Olympics.
        We have had most major Federal Administrators, the head of
    the Secret Service, FBI, all of those people, come to Salt Lake
    and physically look at what is going on in preparation for the
    Olympics. We think you would be well-served if you were to
    spend a few hours just familiarizing yourself. I remember
    talking to Senator Coverdell during the Atlanta Olympics. And
    he said, as Atlanta was getting some bad publicity, he called
    the Atlanta organizers and said, ``Is there anything I can
    do?'' And their response was ``Can you drive a bus?''
        Because transportation was the biggest problem with respect
    to the Atlanta Olympics. And transportation in and out of an
    alpine circumstance, which Utah becomes during the winter, from
    all over the world is going to have to be by air. It is not
    like the Summer Olympics where you can get on a bus in a
    distant city and drive in. And we would invite you to come look
    at what you have done. Frankly, the FAA has been terrific. I do
    not want to leave any impression that we are not more than
    grateful and more than satisfied with all that has been going
    on. But I think, given the pattern of other administrators of
    your stature that have been there to see what has been going on
    in their agencies, it would be a good thing for you to come.
        And while you are there, we would like to have you go down
    to St. George and take a look at that situation. Again, until
    you see it with your own eyes, you cannot really appreciate how
    essential that new regional airport is going to be. We are very
    grateful that we have the first commitment out of the FAA that
    there will be a regional airport there. It is a relatively
    short hop by air to go down and see that, see the problems we
    have with the current airport. And we think that would help you
    understand why we are going to press for that one as well.
        So come to Utah.
        Ms. Garvey. Thank you very much.
        Senator Bennett. I cannot guarantee you a ticket to the
    Olympics itself, but if you promise to keep the radar there, we
    can handle that, too. Thank you very much for all you do. We do
    appreciate it.
        Ms. Garvey. Thank you.

                       REAGAN NATIONAL AIRPORT CONGESTION

        Senator Murray. Thank you, Senator Bennett.
        Senator Mikulski. Thank you very much, Madam Chairman. I am
    just going to put a statement in the record and a few general
    comments. Ms. Garvey knows my long-standing concern about air
    traffic safety and also the fact that we in Maryland/Virginia
    face three airports that handle an enormous amount of the
    traffic.
        We have, of course, BWI in Maryland. But we also have to
    encompass in our thinking for the corridor Reagan National, as
    well as Dulles. And there is also another airport called
    Andrews, which is our military base, where the President's own
    Air Force One is. And every visiting dignitary comes through
    that airport. So we are in a pretty tight, congested corridor.
        I was very worried about the near miss at National the
    other day. And this is, again, not to finger point. But I think
    it really highlights the growing volume, the growing
    congestion, and the fact that our air traffic safety really
    needs a tremendous amount of upgrade. And I will be working
    with you to be able to do that. And not--well, you know we have
    had a lot of technological disasters, you know, where we have
    been through our modernization. But I know you have been giving
    these reports to Senator Murray and also to Senator Shelby,
    when he chaired it, a long-standing concern. So I just want to
    keep on working with you and----
        Ms. Garvey. Thank you very much.
        Senator Mikulski. Did you want to comment on that near
    miss?
        Ms. Garvey. Actually, it is still under investigation with
    the National Transportation Safety Board (NTSB). The report in
    the paper the other day was fairly accurate. We are still
    looking at it with the NTSB and will continue to do that. We
    will have some actions to be taken, but I would like to hold
    them until the NTSB report is finished.
        Senator Mikulski. Well, one of which will be, for future
    airport design, I think we really have to evaluate intersecting
    runways.
        Ms. Garvey. Absolutely, yes.
        Senator Mikulski. They might be okay for streets, but I am
    not so sure it is for runways.
        Ms. Garvey. Right. Good point.
        Senator Mikulski. Thank you.
        Senator Murray. Thank you, Senator Mikulski.
        [The statement follows:]

               Prepared Statement of Senator Barbara A. Mikulski

         senator mikulski fights for $955 million in funding for amtrak
        Washington, DC.--U.S. Senator Barbara A. Mikulski.--(D-MD) today
    urged the Transportation Appropriations Subcommittee to provide
    critical funding for Amtrak. The Senator voiced strong support for
    funding Amtrak at its full authorization of $955 million, so the
    passenger railway can upgrade its infrastructure and continue service
    without interruption.
        Senator Mikulski also highlighted the need for investment in high
    speed rail and her support for the High Speed Rail Investment Act (S.
    250). This legislation would authorize Amtrak and other rail services
    to sell $12 billion in high-speed rail bonds in partnership with states
    over 10 years. The funding could be used by Amtrak to upgrade existing
    routes to high-speed rail, construct new dedicated high-speed rail
    tracks, purchase high-speed rail equipment, and improve non-high-speed
    service.
        Senator Mikulski's statement follows:
        ``Welcome Administrator Garvey and Mr. Warrington. It's a pleasure
    to be here with you today to discuss the status of intercity passenger
    travel, both our airways and our railways. Ms. Garvey I would like to
    thank you for your testimony and for your continued leadership at the
    FAA. I look forward to working with you in the months ahead to ensure
    that our airways remain a safe and viable mode of transportation.
    However, today I would like to focus on Amtrak and the challenges that
    lie ahead for passenger rail service in this country.
        ``I believe we need to further diversify our nation's
    transportation system, and we can start by providing the critical
    funding needed to develop a stronger intercity passenger rail system--
    especially in key rail corridors around the country. Rail corridors
    will reduce traffic congestion, clear the way for economic growth,
    reduce sprawl, and improve air quality.
        ``Amtrak trains are essential to maintaining sanity on our nation's
    highways and biways. These trains help to reduce congestion on our
    roads. Rail travel is vital to maintaining a robust economy in our
    country. In my home state of Maryland, hundreds of thousands of
    commuters travel by rail every year to their jobs and back home to
    their families. Our railways help to reduce sprawl and encourage smart
    growth and provide an environmentally sound way to travel another train
    on the track can mean one less interstate back-up.
        ``That's why I support funding Amtrak at its full authorization of
    $955 million. I'm aware that the 100 percent scoring provision in the
    Administration's transportation budget request will provide Amtrak $521
    million up front so that their shops will continue to run and their
    infrastructure projects will move ahead without interruption.
        ``Investing in high-speed rail is also an important step in meeting
    the needs of our nation's transportation infrastructure. That's why I
    strongly support the High Speed Rail Investment Act (S. 250), sponsored
    by Senators Biden and Hutchison. The High Speed Rail Investment Act is
    a bipartisan proposal that provides the investment we need to sustain
    and improve railway infrastructure and to ensure that rail remains a
    safe and viable alternative for travel. Last year I rode Amtrak's new
    high speed train, the Acela Express, and it was fabulous. I believe
    this service can be a model for the other designated high speed rail
    corridors throughout the country.''

        Senator Murray. Ms. Garvey, I just have a couple more
    questions, and then we will move to our Amtrak panel, unless
    someone else has a question for you.
        Ms. Garvey. Sure.

                            SAFETY INSPECTOR HIRING

        Senator Murray. I wanted to ask you about your performance
    plan that sets important goals for improvement and the safety
    of airline operations. At the same time the FAA budget proposes
    a freeze on the number of FAA inspectors at 3,229, I am sure
    you remember the ValuJet crash and the task force that came out
    of that that concluded that FAA would require a minimum of
    3,300 inspectors to ensure safety. We have been on a path to
    get there. And I am curious why you have not asked for
    continued funds for additional inspectors.
        Ms. Garvey. First of all, thank you Congress and this
    Committee. Last year with the supplemental, we were able to add
    another 170 inspectors, and that is very good. By the end of
    this year, we will be 70 under the ValuJet number that you
    referred to. We have a request in for 2003 that would bring
    inspector staffing up to the ValuJet numbers. Frankly, it is a
    question of just trying to balance so many issues and so many
    priorities, the increased traffic and keeping the air traffic
    control numbers where they need to be, the technician numbers
    where they need to be and the environmental streamlining
    specialists where they need to be.

                            SAFETY PERFORMANCE GOALS

        Senator Murray. Are you fearful that it will undermine your
    safety performance goals?
        Ms. Garvey. We are working very hard to make sure we have
    the number of inspectors needed. You would always like more
    inspectors. I think we are certainly on the right track and
    grateful to the 170 number that we have been able to get with
    the supplemental last year.

                     COST ACCOUNTING SYSTEM SCHEDULE DELAY

        Senator Murray. In February the IG delivered his first
    assessment of FAA's cost accounting system that was required by
    AIR-21. His report acknowledged that developing an effective
    cost accounting system is a significant undertaking and that
    FAA has made progress in several areas. I am concerned that his
    report stated the FAA is 4 years behind schedule, and there are
    certain activities, like labor costs, that cannot be accounted
    for with any degree of accuracy and reliability under your
    current system. Can you tell this committee why you are 4 years
    behind schedule?
        Ms. Garvey. First of all, we underestimated the length of
    time it was going to take. When the FAA first took this on
    several years ago, it was perhaps overly ambitious in setting
    out the timetable. I spent probably the first month that I was
    on the job meeting with a number of Chief Executive Officers
    (CEOs). One of the first questions I asked each one of them was
    how long did it take you to put a cost accounting system in
    place? Most said it took about 5 years. I remember Bob Crandall
    saying to me, ``You have not budgeted enough time.'' So I think
    it is probably much more complex than we thought. We are going
    to make the 2002 timetable that we have set for ourselves. In
    fact, we moved the schedule up a little bit after the IG's
    report. They will be issuing another report this summer. We are
    working closely with them on our labor distribution system.
    That is really the critical piece for cost accounting. And I
    think we have a good system in place.
        I met with the IG staff yesterday, as a matter of fact, on
    that and heard very encouraging comments. This is a very
    ambitious undertaking, and particularly to meet the 2002
    timetable. In the air traffic organization we are currently
    collecting the costs for the en route centers, terminals, and
    for the flight service stations. We are on our way.
        Senator Murray. I appreciate that comment. And at some
    point, not today, but at some point, I would like to talk to
    you about air traffic control. I know Boeing has a proposal
    out.
        Ms. Garvey. I would enjoy that.
        Senator Murray. I would love to have a conversation with
    you about that and what the FAA's initial impressions are. But
    because we are on a short time frame and need to get to Amtrak,
    unless any other members have any other additional questions
    for Ms. Garvey? Seeing none, we will be happy to submit any
    questions that anybody has for the record. And thank you very
    much, Ms. Garvey.
        Ms. Garvey. Thank you very much.

                NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)

    STATEMENT OF GEORGE D. WARRINGTON, PRESIDENT AND CEO
        Senator Murray. Mr. Warrington, thank you for joining us
    today. Proceed with your statement.
        Mr. Warrington. Thank you, Madam Chairwoman, for the
    opportunity to appear before the committee. I want to use my
    very brief time here to cover three critical issues, all of
    which have been raised earlier.
        Number one, our progress toward operational self-
    sufficiency; number two, our capital funding request for 2002
    and beyond; and in many ways, frankly, most critically, the
    need for Amtrak's mission to be clearly defined so that
    passenger rail really can play a relevant role in helping to
    address what is a national transportation crisis.
        First concerning operational self-sufficiency, let me state
    that we are working very, very hard and remain entirely focused
    on our mandate to become operationally self-sufficient in
    accordance with the definition laid out to us by Congress.
    While the mandate is very challenging, and even many of our
    supporters of intercity rail service have their doubts about
    whether it can be met, we have in fact made progress.
        And I believe, that we will make that test in 2003. The
    real question, I think, is what the company looks like at that
    point in time and what it looks like beyond that.
        For the most recent 3 years, we reduced our Federal support
    for operations from $318 million in fiscal 1999 to $184 million
    last year and $59 million this year. It has been a challenge,
    particularly in light of delays in the delivery of Acela
    Express and the consequent $300 million cost to Amtrak over a
    full 2\1/2\-year period.
        And as I have said previously, frankly, the old Amtrak in
    the old days would have probably come back to Congress hat in
    hand and asked for a bailout to deal with that kind of
    uncontrollable adversity. And that is not my management style.
    That is not what we have been challenged with here to do, to
    come back to the Congress for bailouts.
        Instead, a year ago in our business plan we chose to solve
    that anticipated revenue loss during the limited life our
    business plan between now and 2003 as a private sector business
    would do, which is use our own assets and our resources to
    leverage a facility like Penn Station in New York to provide us
    with the opportunity to offset that loss and assure that we
    stay on that glide path, rather than come back to the United
    States Congress and once again be abused for asking for a
    bailout.
        But I will tell you that we have done much more to address
    the mandate for operating self-sufficiency within the company.
    First, we made significant service improvements to our guests.
    We are very proud of the Acela Express service that we are now
    running and equally proud of introducing the only customer
    service satisfaction guarantee offered by a national carrier on
    any mode across this Nation. As a result, we have had 4 years
    of ridership and revenue increases, and we will set a new
    record this year.
        On the expense side, and there has been much discussion
    about expenses, I will tell you we are fixated in this company,
    I am personally and the entire operation is fixated, on cutting
    costs and cutting costs responsibly. Our business plan right
    now calls for an average of $270 million of cost reductions
    over the next 4 years. They are real, they are tangible, and we
    are sharing them regularly with the Inspector General, who has
    been very carefully reviewing all of our business plan
    assumptions on the revenue and the expense side.
        Many of them are challenges. I understand that. But I will
    tell you that we are fixated on getting there and getting to
    the congressionally mandated definition of operating self-
    sufficiency in 2003.
        Senator Bennett. Could I just interrupt? You said $270
    million over the next 4 years. Your testimony says $270 million
    a year.
        Mr. Warrington. On average. On average.
        Senator Bennett. It is $270 million a year?
        Mr. Warrington. On average, yes, sir.
        Senator Bennett. So you are talking $1 billion over the
    next 4 years.
        Mr. Warrington. Yes. Correct.
        Senator Bennett. I wanted to be sure you----
        Mr. Warrington. That is correct. That is correct. And I
    will tell you, Senator, most of those actions are well underway
    and have been underway for the past 12 to 18 months.
        I will also at the same time tell you that cost increases
    in other areas were fully anticipated as well in our business
    plan, which reflect in large part the startup costs associated
    with initiation of our Acela Express service in the Northeast
    corridor, the ramp-up internally of our own mail and express
    business as a business line, which has expenses attached to it,
    and conscious investments that we made, I made, to
    significantly improve our service standards across this system
    to have an attractive product in the marketplace.
        These investments clearly will also bring improvements to
    the bottom line over the next number of years, and they have
    been factored into our multi-year business plan. This year, we
    will use $59 million of our $521 million Federal grant to
    support our national operation, $59 million in a $3 billion
    operation of Federal money, to support our day-to-day train
    operations.
        Our plan calls for that number next year to be $40 million
    and the following year, in accordance with the congressional
    definition of self-sufficiency, that number will be zero. At
    that point, we will have met that test. Our ability to maintain
    that test, I will tell you, does depend upon--and we have been
    very clear about this for years literally going back 20 or 30
    years--will require ongoing appropriations or funding of some
    sort with respect to capital.
        The railroad business in this country and in the western
    world is the most capital intensive business in the world in
    many respects. And you cannot do it successfully without
    capital investment in infrastructure, in technology, and in
    equipment. And you cannot generate that through the fare box.
    No one does it in the world. Nobody does.
        With respect to fiscal year 2002, Amtrak is authorized to
    receive $955 million and has officially requested that level of
    funding. However, we have also indicated that the President's
    budget of $521, if provided at 100 percent outlay rate, would
    meet our needs in fiscal 2002.
        While today's hearing is a forum to consider Amtrak's
    appropriation for 2002, I would also like to use this
    opportunity to raise, in many respects as you have raised,
    Senator Shelby, an important set of issues that the Congress
    really does need to address and I think that we have all
    fundamentally sidestepped for 30 years, which takes us beyond
    the short-term construct of operational self-sufficiency.
        Under the law that created us, we are to serve a national
    system. Yet in the absence of consensus about what that
    national system should be, we have, I have, maintained a very
    fragile network of long distance services by, in large measure,
    cross-subsidizing those services with other profitable train
    services or other commercial revenue streams. And all of this
    is in the context of insufficient capital investment in the
    most successful and most profitable services to make them more
    successful and more profitable.
        I have spoken recently about the mission conflict that
    Amtrak has faced for its 30-year history, being expected to
    perform like a business and at the same time serve community
    leads like a public service. Believe it or not, over the last
    couple of years with the self-sufficiency mandate clearly
    articulated in front of us, we have actually been managing to
    go in both directions at once or simultaneously.
        We have committed to achieving operational self-
    sufficiency, and that is my responsibility, while at the same
    time serving a national network. It has two very important
    consequences that I would really like to make very, very clear
    here this morning, because they are fundamental.
        One, it will always, always, leave Amtrak with losses in a
    classic commercial sense after accounting for its ample
    unfunded capital depreciation. Two, it requires internal cost
    subsidies from commercial revenues and profitable train
    services.
        What is really needed is public consensus around the shape
    of the national network, the extent to which that network does
    include unprofitable services that the government is either
    prepared to subsidize or the extent to which Amtrak should
    internally cross subsidize this service. And whatever that
    network is, the proper alignment of that network with a
    commitment of capital investment necessary not just to sustain
    it, but to grow it to be a very successful level of service
    that we can all, frankly, be proud of.
        I think that today within the context of a transportation
    congestion crisis, which, frankly, we are only seeing the tip
    of the iceberg today, I would encourage a frank discussion
    about the appropriate role for intercity rail service in the
    mix of solutions and the appropriate level of Federal funding
    to support it.
        Madam Chairwoman and members of the subcommittee, this is a
    national debate and national decision we should have as soon as
    possible, not only for the good of the country, but I think in
    many respects for our collective sanity. We already have taken
    an important step to begin this discussion.
        In consultation with the States, we have developed a 20-
    year capital year investment plan for intercity service, which
    would increase the safety and reliability of that network, and
    improve trip times with higher speed services.
        It can be accomplished by increasing the Federal capital
    investment in intercity rail from 1 percent to about 2.5
    percent of the annual Federal transportation budget or about
    $1.5 billion a year.
        In closing, we have worked very hard to meet the difficult
    and somewhat conflicting policy objectives Congress has given
    us, which, Mr. Shelby, actually has resulted in a business
    model which is very, very difficult to sustain given the
    constraints that we are all working within.
        I sincerely look forward to working with you and others to
    have an honest policy discussion about what services America
    wants from its passenger rail system and what it is prepared to
    pay for. Amtrak, as it has done with its 20-year capital plan,
    we can actively participate and help inform those decisions in
    a national policy discussion. What really is in the national
    interest? And what is America prepared to pay for?
        Thank you, Madam Chairwoman.
        Senator Murray. Thank you, Mr. Warrington.
        Senator Mikulski. Madam Chair, regrettably, I have a must-
    attend meeting at noon. I just would like to put my statement
    in the record so I can really work with you on the funding, the
    scoring. And also, I think we have to come to grips. Are they a
    public service and we treat them like a deregulated utility,
    hopefully with better results, or are they a business?
        And I think really in the next 18 months we are going to
    have to either--I think we are going to have some very critical
    decisions. But I look forward to working with you and also with
    you, Mr. Warrington. I think you are really trying your best,
    and I appreciate your public service.
        Mr. Warrington. Thank you, Ms. Mikulski.
        Senator Murray. Thank you, Senator Mikulski.
        Mr. Warrington, Amtrak recently completed a transaction
    that essentially mortgaged much of the Penn Station New York
    concourse. Your chief financial officer stated that the $300
    million loan was necessary due to the late delivery of the new
    Acela Express high-speed train sets. I understand that this
    funding was needed just to cover operating expenses through the
    end of the year. It was not used for capital investment.
        What are you going to do, if delivery of your Acela train
    sets is delayed any further?
        Mr. Warrington. That transaction, as I said in my
    testimony, I had two choices, we had two choices, about 12 or
    18 months ago. We could come back and say we are going to be
    off plan by about $300 million because of the delays in the
    delivery of the train sets or we use our assets to generate
    income, as a one-time transaction.
        I will tell you that we have now received 10 of the 20
    train sets. And the balance of the train sets--in fact, 18 of
    the train sets will be in our hands in September, early
    October, and the final two train sets clearly before the end of
    the year. So all of the train sets, as well as high horsepower
    locomotives that are necessary to run our full level of service
    we will have in hand and fully operational before the end of
    the year, and most of it in the fall.
        Senator Murray. You do not expect further delays?
        Mr. Warrington. No, I do not.
        Senator Murray. Are you looking at any other assets that
    you could collateralize if Acela is delayed any further?
        Mr. Warrington. No. We really do not have lots of other
    assets that we would or could collateralize. I mean, we have a
    handful of minor transactions relating to development projects
    that are in process, but they are relatively minor. No, the
    answer is no.
        Senator Murray. Mr. Warrington, your Penn Station
    transaction has raised a lot of concern on the part of many
    people regarding the financial health of your company. So I
    want to ask this question as directly as I can, and I would
    really like a very direct answer. If we fund the
    administration's request for $521 million for the coming year,
    as the House bill did, is Amtrak at any risk of going bankrupt
    at any time between now and the end of 2002?
        Mr. Warrington. No.
        Senator Murray. None.
        Mr. Warrington. No.
        Senator Murray. If you do end up in bankruptcy during this
    period, what will be the principal reason for your company
    going into bankruptcy?
        Mr. Warrington. As a practical matter, uncontrollable
    events that we cannot foresee today. But I have enough
    confidence in both our business plan, our revenue forecasts,
    and our expense management program that will enable us to get
    where we need to get to by the close of 2002. I am very
    confident about that.
        Senator Murray. I appreciate that response. One more
    question and then I will turn it over to Senator Shelby.
        In your past, Amtrak has been able to allocate a
    significant portion of its operating expenses to the capital
    program, including labor for employees working on capital
    projects. This year, however, Amtrak has severely reduced its
    capital program because of the funding constraints. To what
    extent will this reduced program translate into higher
    operating expenses in 2001 and 2002?
        Mr. Warrington. That is a good question. You know, one of
    the consequences of our capital program--well, let me back up
    for a second. You know, we received $2 billion through the
    Taxpayer Relief Act almost 4 years ago, and we have invested
    that capital wisely. It is in large measure why we have been
    able to reduce much of our cost and reduce the amount of
    Federal requirement for operations.
        One of the consequences of the TRA being entirely spent
    down at the end of this year is that we are out of capital
    completely, which is why the $521 million scored at 100 percent
    is so important. It is not about coverage of operations. It is
    about sustaining a capital investment program, number one.
        Number two, this year our capital program totals about $475
    million. Last year our capital program totaled about $870
    million. One of the consequences of a capital program this year
    that is one-half the size of last year's program is that much
    of our shop-related overheads--we have three significant
    maintenance shops, for example, in Wilmington, Delaware, Bear,
    Delaware, and Beach Grove, Indiana.
        Those shops undertake all capital-related equipment
    overhauls on a regular 4-year cycle. Some of it is required
    work; some of it is work that we choose to do ourselves.
        One of the consequences this year of a halving of our
    capital program, because we are running to the end of that TRA
    money, is that we have absorbed in this year's budget,
    operating budget, $40 million worth of previously capitalized
    overhead associated with continuing to run those shops.
        Senator Murray. Labor costs? Are you talking about labor
    costs?
        Mr. Warrington. No. It is principally overhead costs
    associated with the shop. Some of it is materials. Some of it
    is utilities. It is the general overhead structure associated
    with the running of those shops with one-half the capital
    program that we have today.
        Senator Murray. Some people are saying that the costs have
    been the result of agreements with labor. Has that been an
    issue?
        Mr. Warrington. I will tell you, I know there has been
    quite a bit of discussion about that. Let me just be frank
    about that. The last collective bargaining agreement that
    Amtrak entered into just preceded my coming to this position.
    And subsequent to that initial agreement, a number of other
    agreements were nailed down. That agreement called for wages
    that were about 90 percent of what the freight wages were, or
    10 percent less, and it called for 20-percent offsets through
    productivity savings.
        I will tell you that all of that plus on the productivity
    side has been secured. And the value is between $50 million and
    $60 million. I can share with you those details.
        [The information follows:]

       Examples of Major Productivity Improvements from Labor Agreement
                                    Changes

    BLE Crew Consist Improvement
        Increased threshold for 2nd passenger Engineer in locomotive from 4
    to 6 hours.
        Amtrak has eliminated 81 positions to date at annual savings of
    $6.9M/yr.
    UTU Crew Consist Improvement
        Provided for elimination of 2nd Assistant Conductor on Long Haul
    Trains (7 or more revenue cars, 1 or more of which is a sleeper).
        Projected elimination of 122 full time equivalent positions through
    attrition with guaranteed savings of about $6.1M through fiscal year
    2000.
        Out-year annual savings target of over $6.3M.
    TCU Rules Changes for RSOs
        Increase facility part time amount from 35 percent to 50 percent of
    the RSO work force, with an extra 100 agents at the Riverside facility
    (until the new Philadelphia facility was opened).
        Upgrade part time employees to full time status without full time
    benefits for up to 90 days a year.
        2 years at the 75 percent entry rate.
        Actions result in annualized savings at $1.3 M.
    TCU Commissary Closing
        Permitted transition of commissary operations to outside vendor--
    Dobbs.
        Estimated annual labor savings of $5-$7M.
    Special Shop Craft Agreements to Cover New Equipment/Technology (High
            Speed Rail and TALGO) and New Partnerships (Sound Transit)
        Team based work concept permitting more flexibility in assigning
    employees to a greater range of work.
        Employee lock-ins in recognition of training investment.
        Employee qualification maintenance. requirements/standards
    implemented
        For Sound Transit partners, greater use of part time coach
    cleaners, and commingled work force for Sound Transit and Amtrak
    Intercity train service.
        Based on initial vendor estimates for High Speed Rail, 10 percent
    fewer employees will be required.
    Other Rules to Improve Flexibility to Assign Employees to Work Needs
        BMWE--Rules permitting establishment of gangs to move between
    bridge projects without reposting positions to maintain gang
    cohesiveness and improve bridge rebuilding productivity. Savings of
    over $2M through fiscal year 2000.
        BRS--Starting Time Rule modifications to permit construction and
    signal test work to be performed at times to accommodate operational
    needs and at the straight time rate. Savings of over $1.7M through
    fiscal year 2000.
        AFRP--Civilianization of the radio desk. Savings of over $650,000
    through fiscal year 2000 and freeing up 13 fully commissioned police
    officers for patrol duty.
    Bottom Line
        With these and other work rule and wage changes, labor agreed to
    significant improvements valued at $52M through fiscal year 2000.
        Plus accepted a lower wage package at 90 percent of new wages
    applicable on freight railroads, which resulted in continued lower
    rates of pay compared to heavy rail commuter operations (table
    attached).

               LABOR RELATIONS ASSOCIATION OF PASSENGER RAILROADS--TOP WAGES FOR SELECTED CLASSIFICATIONS
                                                      [In dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                     Commuter Railroads
                                       -----------------------------------------------------------------------------
            Job Classification                                   METRO-
                                        AMTRAK \1\     LIRR      NORTH       PATH       NJT       SEPTA      METRA
    ----------------------------------------------------------------------------------------------------------------
    LOCOMOTIVE TECHNICIAN (electrical)       21.60        N/A        N/A      29.69      20.39      22.16      21.68
    ELECTRICIAN (equipment                   18.81      24.99      21.49      28.01      19.61      21.25      21.92
     maintenance).....................
    CARMAN (inspector)................       18.81      25.75      23.14      28.01      19.97      21.35      21.68
    LABORER/UTILITY WORKER (mechanical       15.75      19.47      18.51        N/A      16.91      19.25      18.17
     facility)........................
    TRACKMAN..........................       16.18      22.65      19.85      21.31      16.95      19.25      18.48
    TRACK EQUIP. OPERATOR (on-track,         17.60      25.42      21.45      26.47      19.27      20.32      20.86
     single function equip.)..........
    TRACK EQUIP. OPERATOR (on-track,         18.68      25.42      23.91      26.47      19.91      21.22      21.49
     more than two function equip.)...
    TRACK FOREMAN.....................       19.26      31.69      22.43      32.82      20.30      (\2\)      21.49
    B&B MECHANIC......................       17.87      24.99      23.53      25.43      19.26      21.22      20.04
    B&B FOREMAN.......................       19.94      31.69      24.77      32.82      21.00      (\2\)      21.49
    SIGNAL MAINTAINER.................       20.13      26.14      24.56      26.48      20.14      22.96      21.82
    DATA ENTRY CLERK..................       17.38      21.73      20.63      21.35      17.13      16.24      19.15
    SECRETARY.........................       17.87      23.22      21.09      (\2\)        N/A      (\2\)      17.20
    TRAIN DISPATCHER..................   \3\ 25.44      36.44      31.02      31.14      25.09      (\2\)      27.59
    TRACK SUPERVISOR..................       23.35      39.38      28.07      (\2\)      24.08        N/A      (\2\)
    MECHANICAL FOREMAN................       21.73      31.69      23.11      32.82      21.98      (\2\)      26.03
    SIGNAL SUPERVISOR.................       27.02        N/A      25.77      (\2\)      24.08        N/A      (\2\)
    CONDUCTOR.........................       22.71      29.05      28.02      25.01      21.86      20.03      22.03
    LOCOMOTIVE ENGINEER...............       27.03      29.05      30.96      27.74      24.86      21.85      22.92
    PATROLMAN.........................   \2\ 18.52    \5\ N/A    \5\ N/A      30.97      23.09      19.23      22.41
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes 0.38/hr COLA (July 1, 2001).
    \2\ EXEMPT positions.
    \3\ Hourly equivalent of monthly rate.
    \4\ Does not include 10 percent Hazardous Duty differential for work performed between 3PM and 7AM.
    \5\ Effective 1/1/98, LIRR Police consolidated with Metro-North Police to become the MTA Police. All rates are
      handled by MTA.
    Note.--Negotiations in various stages depending on craft and commuter property.

        And frankly, our wage rates are in many respects below
    market. You know, we have employees--I will give you one
    example in New York--dispatchers, who sit literally next to
    Long Island Railroad dispatchers. And our employees make $10 an
    hour less than Long Island Railroad dispatchers. While the
    difference is not that extreme among the other crafts, in most
    of the other crafts our actual wage rates are at or below what
    the market is for those crafts.
        Senator Murray. Thank you, Mr. Warrington.
        Senator Shelby.
        Senator Shelby. Mr. Warrington, as I understand it, an
    operating ratio is a numerical statement of the dollars spent
    by every dollar of revenue earned. In order for a business to
    at least break even, the operating ratio would need to be 1.0.
    In other words, it costs $1 to earn $1. In order for a business
    to earn a profit, the operating ratio must be less than 1.0.
        Based on revenue and expense figures reported in prior
    annual reports by Amtrak. My understanding is that Amtrak's
    basic operating ratios, excluding depreciation, over the past 3
    years are: in fiscal year 1998, Amtrak spent $1.03 for every $1
    in revenue it earned. In 1999, Amtrak spent $1.16 for every $1
    in revenue it earned. And in fiscal 2000 Amtrak spent $1.19 for
    every $1 in revenue it earned.
        Based on these operating ratios, it seems that Amtrak's so-
    called glide path is going in the opposite direction than we
    were hoping and have been led to believe. Can you reconcile
    these seemingly contradictory pictures of Amtrak's performance?
        Mr. Warrington. Yes. There are a couple of things going on
    there moving in different directions. Number one, as I said in
    my testimony, we did, during that period of about 18 to 24
    months, make conscious investments in----
        Senator Shelby. Capital?
        Mr. Warrington. No. I mean operating investments. We did
    make conscious operating investments in ramping up our mail and
    express business.
        Senator Shelby. Okay.
        Mr. Warrington. There was a significant ramp-up in our
    investments associated with the launch of the Acela high-speed
    service. So we did make conscious efforts to invest. And they
    all pay off over time, number one. At the same time, because of
    the losses associated with the late delivery of Acela, there is
    $300 million of value there that we are not able to reflect in
    those numbers.
        So, you know, if every piece of the plan had come together,
    those numbers would be clearly going in the other direction.
    But there are some uncontrollables that I could not get my arm
    around.
        Senator Shelby. Mr. Warrington, a lot of people, including
    yourself, spend a lot of time trying to convince us that Amtrak
    is underfunded by the Federal Government. By comparing Amtrak's
    annual subsidies to grants for highways--as Senator Biden did--
    and airports, both of which--I would note, are funded by user
    fees in the form of gas taxes.
        Prior testimony you have submitted to Congress states that
    combined highways and aviation have received nearly 70 times
    the amount provided to Amtrak. I am not arguing with that
    point.
        Well, the statistics I have seen indicate less than three-
    tenths of 1 percent of intercity travel across all modes is
    carried by Amtrak. If less than one percent of the traveling
    public utilizes Amtrak, why should Amtrak receive a
    proportionately greater share of Federal assistance? That is
    one of the arguments.
        Mr. Warrington. I understand. Let me try to answer that a
    couple ways. Okay? I will tell you that the lack of capital and
    the lack of real high-speed service in this country makes a
    stagnant market share sort of a self-fulfilling prophecy.
        Senator Shelby. It goes back to the basic architectural
    plan that we talked about earlier.
        Mr. Warrington. Part of it does. Part of it does. I think
    part of it does. But also, in places where we have high-speed
    service, reliable service very attractive service, we have
    extraordinary market share. I will give you an example.
        In the Northeast corridor or in the Cascades corridor in
    the Pacific Northwest, we have a 50-percent air-rail market
    share to end points. And we have a 70-percent air-rail market
    share to all points, including intermediate points. It is a
    reflection of the nature of the service that we are running.
        The other important thing to put that fact in the context
    of, Senator, I think, is that, you know, we often get stacked
    up against the aviation industry as an industry. Now there were
    900-plus million domestic trips on all carriers in America last
    year.
        When you stack Amtrak nationally up against the top 21 air
    carriers in this Nation that carried those 953 million, I
    think, trips, Amtrak actually rates as an individual carrier
    eighth or ninth with about a 4.6- to 5-percent share of all
    air-rail travel that goes on in this country. As a matter of
    fact, we stack up as an individual carrier right behind TWA and
    just ahead of America West.
        So when it is put in that context, we have a reasonable
    share of market. I think the challenge is, do we want to focus
    our capital in places that are going to enable us to really
    grow that market share and bump up against a carrier like
    Continental that is right ahead of TWA?
        Senator Shelby. What are the worst 20 performing routes?
    And if you do not know them offhand, would you provide it for
    the record? Just name a few.
        Mr. Warrington. Yes. We have a list of all of our routes
    with depreciation, without depreciation, all in, all out. We
    slice it lots of different ways. There are clearly a number of
    trains, primarily long-distance trains, that today do not make
    money. And by make money, I mean contribute to their out-of-
    pocket costs. Okay?
        There are a number of long-distance trains that fully cover
    their out-of-pocket costs but do not cover all of the overhead
    that will be allocated to them. I will provide you with that
    list. I will tell you generally we have been--and it has been
    slower than we like because of some uncontrollables.
        But generally, we have been reducing the losses on all of
    those trains. And it has been through a combination of cost
    reduction, as well as increasing revenues associated with
    segments of those trains, including through the mail and
    express business on the tail end of many of those trains.
        Senator Shelby. Would you furnish for the record what
    percentage of Amtrak routes lose more than $50 per passenger--
    --
        Mr. Warrington. Sure.
        Senator Shelby [continuing]. What percentage of Amtrak
    routes lose more than $100 per passenger, and graduate it on up
    to, I guess, the worst case scenario?
        Mr. Warrington. Yes.
        Senator Shelby. Would you do that?
        Mr. Warrington. Yes.
        Senator Shelby. And what is the range of subsidy per
    passenger by routes? Can you furnish that for the record?
        Mr. Warrington. I will do that. I will send that to you.
    And there is a very wide range.
        [The information follows:]

        At the June 28, 2001 Senate Transportation Appropriations
    Subcommittee Hearing, Senator Richard Shelby (R-AL) asked George
    Warrington for a list of Amtrak's 20 worst performing routes, the
    percentage of Amtrak routes that lose more than $50 per passenger, the
    percentage of Amtrak routes that lose more than $100 per passenger and
    the range of subsidy per passenger by routes. Attached is a chart of
    all of Amtrak's routes (including the 20 worst performing routes),
    which provides information addressing all of these questions.
        Amtrak, like every other transportation provider, operates services
    that are both profitable and unprofitable. In addition, Amtrak is more
    than simply a provider of intercity passenger rail service. As a
    company, we have several other profitable lines of business, which
    include commercial development, reimbursable work for other railroads,
    and contracts to operate commuter service around the nation. As a
    result, Amtrak generates over $2 billion worth of revenue each year,
    and these funds are used to cross-subsidize lesser performing trains.
    We do this because under our Congressional mandate we are required to
    operate a national system, and as such there will be both profitable
    and unprofitable services. This is a message that I have raised
    repeatedly in my testimony before Congress and in my May 24th speech to
    the National Press Club.
        Amtrak has a conflicted mission--on the one hand, we are required
    to operate a national system of intercity rail passenger services that
    includes a large number of unprofitable trains. As a result, we are
    criticized for the amount of money it costs to provide this service
    even though it is our mandate. As I have stated in my testimony, we can
    provide these services and can develop corridors that will help extend
    market reach, increase revenue, and perhaps lessen the impact on our
    bottom line of these poorer performing services. However, we should not
    be mandated to operate a national system and then be criticized when
    some of those services do not come close to profitability.
        Perhaps a better way of viewing the per-passenger loss on our
    services would be to determine that cost after subtracting the costs to
    cover mandatory railroad retirement as well as the amount of operating
    funds we use for our appropriations. In fiscal year 2001, we received
    $521 million of funding through the appropriations process, of which
    $243 million was used to cover these two costs ($184 million for
    railroad retirement and $59 million for operating funds). Next year, we
    only expect to use about $40 million of our appropriations to cover
    operating costs. When you isolate the per-passenger loss based solely
    on the operating support given to us by Congress, then the cost per
    rider is about $9.80 in fiscal year 2001 and $8.60 in fiscal year 2002.
    When you extract the amount of money we pay in operating costs to cover
    mandatory railroad retirement, then the number actually drops in fiscal
    year 2001 to $2.40 per passenger and in fiscal year 2002 to $1.50. This
    is a more realistic assessment of how much Congress actually
    appropriates for operating support, which goes to cover the loss on a
    per-passenger basis.

          FINANCIAL PERFORMANCE OF AMTRAK ROUTES, EXCLUDING DEPRECIATION--FISCAL YEAR 2000 VS FISCAL YEAR 1999
                                                      [In millions]
    ----------------------------------------------------------------------------------------------------------------
                                               Fiscal year 2000                        Fiscal year 1999
                                      ------------------------------------------------------------------------------
                                                               Profit/                           Profit/
               Description              Profit/                 (loss)    Profit/                 (loss)   Change in
                                         (loss)   Riders (in  per rider    (loss)   Riders (in  per rider   Profit/
                                          (in     thousands)     (in        (in     thousands)     (in       (Loss)
                                       millions)               dollars)  millions)               dollars)  per rider
    ----------------------------------------------------------------------------------------------------------------
    Amrak Intercity SBU:
        Route 29 Heartland Flyer.....       1.0        65.5      14.96        1.0        26.8      35.81     (20.85)
        Route 66 Carolinian..........       0.3       241.6       1.21       (1.2)      231.9      (5.12)      6.33
        Route 63 Auto Train..........      (3.4)      233.9     (14.65)      (2.1)      237.2      (8.92)     (5.73)
        Route 56 Kansas City-St.Louis      (1.2)      175.7      (6.94)      (1.6)      175.1      (9.34)      2.40
        Route 23 Illini..............      (1.1)      107.7     (10.13)      (1.8)      100.1     (17.84)      7.71
        Route 67 Piedmont............      (0.8)       55.0     (13.68)      (0.4)       53.3      (7.80)     (5.88)
        Route 24 Illinois Zephyr.....      (1.7)      103.0     (16.33)      (2.6)       94.2     (27.44)     11.11
        Route 19 Silver Meteor.......     (14.8)      254.9     (58.21)     (15.6)      249.4     (62.40)      4.19
        Route 28 Southwest Chief.....     (41.4)      268.3    (154.37)     (42.8)      285.5    (149.86)     (4.51)
        Route 25 Empire Builder......     (40.2)      433.4     (92.66)     (39.4)      434.9     (90.65)     (2.00)
        Route 21 Hiawathas...........      (9.2)      429.4     (21.53)      (9.4)      413.0     (22.68)      1.14
        Route 41 International.......      (3.8)      108.3     (34.67)      (4.0)      114.3     (34.79)       .12
        Route 16 Silver Star.........     (22.6)      270.4     (83.72)     (22.9)      259.0     (88.22)      4.50
        Route 48 Silver Palm.........     (20.6)      218.7     (94.41)     (19.3)      227.4     (85.00)     (9.41)
        Route 65 Pere Marquette......      (2.2)       64.8     (34.59)      (2.8)       69.9     (40.46)      5.86
        Route 27 California Zephyr...     (45.0)      382.9    (117.61)     (50.6)      407.6    (124.21)      6.60
        Route 17 Three Rivers........     (24.0)      135.0    (177.74)     (18.1)      127.6    (142.04)    (35.70)
        Route 52 Crescent............     (28.9)      267.9    (107.90)     (27.1)      264.1    (102.73)     (5.17)
        Route 45 Lake Shore Limited..     (31.8)      303.0    (104.97)     (25.1)      320.9     (78.18)    (26.79)
        Route 20 Chicago-St.Louis....     (11.9)      276.4     (43.06)     (12.5)      265.8     (47.13)      4.06
        Route 26 Capitol Limited.....     (20.8)      146.1    (142.45)     (18.2)      158.2    (114.87)    (27.58)
        Route 32 Texas Eagle.........     (30.4)      145.1    (209.29)     (28.8)      111.0    (259.45)     50.15
        Route 57 Pennsylvanian.......     (17.8)       93.3    (109.82)     (12.3)       95.8    (127.93)    (62.89)
        Route 22 Chicago-Pontiac.....     (17.2)      320.4     (53.53)     (18.5)      343.5     (53.78)       .25
        Route 33 Sunset Limited......     (34.1)      114.4    (297.98)     (31.6)      113.6    (278.28)    (19.70)
        Route 30 City of New Orleans.     (28.3)      200.8    (141.04)     (21.7)      192.5    (112.53)    (28.51)
        Route 18 Cardinal............     (12.5)       75.3    (165.65)     (10.2)       80.0    (127.40)    (38.25)
        Route 54 Kentucky Cardinal...      (4.7)       25.9    (180.09)       N/A         N/A        N/A        N/A
        Route 31 Lake Country Limited      (1.6)        2.9    (544.34)       N/A         N/A        N/A        N/A
        Intercity Special Trains.....       1.6        27.4      59.15        2.5        24.5     102.65     (43.50)
                                      ------------------------------------------------------------------------------
          Total Amtrak Intercity.....    (470.1)    5,547.6     (84.74)    (439.7)    5,489.5     (80.09)     (4.64)
                                      ==============================================================================
    NEC SBU:
        Route 01 Metroliner..........      75.8     2,408.2      31.46       62.8     2,240.6      28.04       3.42
        Route 04 Vermonter...........      (0.2)       79.5      (2.33)      (1.4)       80.0     (16.90)     14.57
        Route 05 Northeast Direct....     (66.3)    6,112.5     (10.85)     (73.3)    5,802.5     (12.64)      1.79
        Keystone & Clocker Service        (18.8)    2,768.7      (6.79)     (22.4)    2,671.2      (8.38)      1.59
         (Rts 13, 14, & 42...........
        Route 40 Adirondack..........      (2.8)      100.7     (27.69)      (4.3)       94.4     (45.02)     17.33
        Route 15 Empire Service......     (33.0)    1,320.5     (24.97)     (33.6)    1,263.3     (26.63)      1.67
        Route 03 Ethan Allen Express.      (2.3)       44.6     (52.26)      (3.1)       44.4     (68.99)     16.73
        NEC Special Trains...........        .0        68.8        .59         .1        50.9       1.43      (0.84
                                      ------------------------------------------------------------------------------
          Total Amtrak NEC SBU.......     (50.2)   12,903.5      (3.89)     (76.9)   12,247.3      (6.28)      2.39
                                      ==============================================================================
    Amtrak West SBU:
        Route 39 San Joaquins........      (0.6)      676.1      (0.85)      (5.0)      674.9      (7.48)      6.62
        Route 37 Capitols............      (2.9)      767.8      (3.76)      (2.2)      543.6      (4.13)       .37
        Route 36 Cascades............      (4.7)      507.7      (9.24)      (5.0)      450.2     (11.06)      1.81
        Route 35 Pacific Surfliner...     (20.5)    1,577.9     (12.98)     (19.5)    1,540.2     (12.68)     (0.30
        Route 34 Coast Starlight.....     (35.2)      502.1     (70.15)     (40.7)      505.0     (80.55)     10.40
        West Special Trains..........        .9        34.3      25.53         .6        38.6      16.76       8.77
                                      ------------------------------------------------------------------------------
          Total Amtrak West SBU......     (64.0)    4,065.9     (15.73)     (73.2)    3,752.5     (19.50)      3.77
                                      ==============================================================================
          Total Amtrak Business          (584.2)   22,516.9     (25.95)    (589.7)   21,489.3     (27.44)      1.50
           Activities................
    ----------------------------------------------------------------------------------------------------------------
    Note: Route-level data from Amtrak's Route Profitability System (RPS), adjusted to reflect allocation of
      contributions from non-route businesses Revenue excludes Federal and State capital payments and interest
      earned on Federal payments Excludes the gain on sale leasbacks. Fiscal year 2000 route data is not perfectly
      comparable to prior years due to improvements made to RPS during fiscal year 2000. Fiscal year 1999 and fiscal
      year 2002 Total Amtrak Business Activities data reflects post-audit adjustments as recorded in FIS. In March
      of 2001, Amtrak announced the Lake Country Limited would run 1 day per week for 180 days, and be discontinued
      on 9/22/01.

        Senator Shelby. Is the least subsidized route, in other
    words the most profitable, the East Coast route?
        Mr. Warrington. Our traditional Metroliner service and now
    our Acela Express service is a very profitable operation. In
    fact, not only does it cover all overheads, but it contributes
    to a large extent, from a cash point of view, to the support of
    the rest of the national system.
        Senator Shelby. Thank you.
        Madam Chair.
        Senator Murray. Senator Durbin?
        Senator Durbin. Thank you very much.
        Mr. Warrington, thanks for joining us. And I have given
    your staff a letter inviting you to come out to Illinois. I
    hope you can.
        Mr. Warrington. I would love to do it as soon as possible,
    Senator.
        Senator Durbin. We have 30 Amtrak communities. We have
    Mayor Tom Carper, the same name as our Senator from Delaware,
    who is the head of the mayor's council for Amtrak, and Jim
    Coston, of course, from Chicago who is a member of the Amtrak
    Reform Council. We would love to have you come there.
        Amtrak is very important to our State. And I am committed
    to it. And I believe you made an excellent point about the
    difference between operational subsidies and capital
    investment. I think we have to make this capital investment. I
    think we should. Those of us who deal with big city traffic
    congestion know there is just no way we can pave our way out of
    this mess. We have to come up with alternative transportation
    sources. And I would like to help you do that.
        I would like to ask you two very quick questions that are
    just out of my curiosity, because I am an Amtrak passenger. I
    am noting an awful lot of freight cars in the back end of
    Amtrak trains now, pulling through Springfield, Illinois, and
    into Chicago and heading down south to St. Louis. What is in
    those cars? And are you making money at it?
        Mr. Warrington. Yes. I wish we were hauling more of them.
    We have been working with the freight railroads that would
    enable us have some more capacity to hold more of that
    business. We made a conscious decision about 3 years ago, as
    one of the methods to improve the economics of our long-
    distance network, to get in the mail and express business.
        In fact, we have a separate business unit now devoted
    entirely to marketing and selling and hauling high-end, high-
    yield, time-sensitive products on the tail end of trains that
    have to leave on a regularly scheduled basis every day. This
    year it will end up being about a $140 million business with
    about a $35 million or $40 million net contribution. That will
    grow by 2003 to about a $60 million to $70 million net
    contribution.
        The bulk, or the lion's share, of products in those cars is
    mail. The U.S. Postal Service is our largest customer. There
    are a handful of other products that are very time sensitive
    that we are also marketing and selling as well. We are working
    hard to do that in partnership with the freight railroads. I
    have committed that I will not compete for products at all with
    the freight railroad industry.
        Senator Durbin. Have you ever taken the Amtrak train from
    Union Station to catch a plane at Baltimore?
        Mr. Warrington. Very often.
        Senator Durbin. Have you ever noticed a difference in rate
    structure between MARC and Amtrak?
        Mr. Warrington. Yes.
        Senator Durbin. Did you notice that it costs about three or
    four times as much to travel Amtrak on the same track as it
    does to ride on the MARC train?
        Mr. Warrington. Yes. Let me--if that is in the form of a
    question, let me try and anticipate----
        Senator Durbin. It is a question.
        Mr. Warrington [continuing]. And deal with it.
        Senator Durbin. Well, I will just tell you, my wife and I
    stood there and waited for the MARC train. And the Amtrak came
    by, nobody got on, got off, because it costs four times as much
    to take the same trip.
        Mr. Warrington. Well, if it was a Metroliner, it probably
    was four times as much. If it was an Acela regional or what we
    used to call Northeast Direct, I am sure it was not quite four
    times as much. But, you know, it is a reflection of the
    marketplace. We are challenged to behave commercially. We are
    challenged to meet an operating self-sufficiency deadline.
        And we have to charge what the market will bear. And there
    are as many folks who are concerned about our pricing on the
    Northeast corridor, there are just as many folks who believe
    that we should be pushing the envelope more on some of those
    Northeast corridor trains.
        It is a function of what the market will bear, Senator.
    And----
        Senator Durbin. Let me just ask you: If your only
    competitive market is charging one-fourth of what you charge,
    how can you be competitive?
        Mr. Warrington. Well, the competition--it depends upon the
    train and it depends upon the destination. But the competition
    is the automobile, and the competition on many of those trains
    between Washington and New York is the air shuttle.
        Senator Durbin. I am not making my point clear. You get off
    the airplane at Baltimore. You go take the bus to the train.
    You have two choices, the MARC train to Union Station, the
    Amtrak train to Union Station.
        Mr. Warrington. Right.
        Senator Durbin. The Amtrak train costs four times as much.
    Why? You are not being competitive. I waited for the MARC
    train, and so did everybody else on that platform. I watched
    the Amtrak train come and go, empty. Nobody got on, got off. I
    will not dwell on it.
        Mr. Warrington. Let me try to answer that. I understand
    your question now. Let me answer it very simply. MARC trains,
    which we happen to run on a contract basis with MARC, with the
    State of Maryland----
        Senator Durbin. That is interesting.
        Mr. Warrington. We are the operator of all of the MARC
    trains, and they pay us to run those trains. And the answer is
    that those trains are very heavily subsidized, and the fare
    structures are artificially held down as a matter of public
    policy and in the public interest, because it matters to the
    State of Maryland and Governor Glendening.
        Senator Durbin. So it is a favor to the Governor.
        Mr. Warrington. Yes.
        Senator Durbin. Okay. My wife made me ask that question.
        She likes Amtrak too, but she could not understand it
    either.
        So when I went to France earlier this year and rode on the
    TGV at 180 miles an hour up in the cab with the engineer and
    saw us whizzing past all of the traffic on the highways. They
    basically told us: No one in Europe would consider taking
    anything other than a train for a journey of less than 300
    miles. It just does not make any sense. And it does not.
        We are a long way from that point. But I think that that is
    something we have to start exploring. We have a continuing
    battle of downstate airports, regional airports and service to
    O'Hare, because we just do not have an alternative. There is
    just no other alternative.
        Do you support S. 250, the high-speed rail bill?
        Mr. Warrington. I support the high-speed rail bill like
    nothing else in the world.
        Senator Durbin. That is pretty clear.
        Mr. Warrington. And I want you to know that I and we deeply
    appreciate your support for that bill as well, Senator.
        Senator Durbin. Do you receive State subsidies from States
    other than Illinois?
        Mr. Warrington. Yes, we do. As a matter of fact, once
    again, in our drive to self-sufficiency, over the last 3 years
    we have increased the amount of State support cross this
    country for State supported trains from about $60 million a
    year to $120 million a year.
        Senator Durbin. Well, I hope that as we talk about high-
    speed rail, that it will not just be a northeastern idea. We
    tend to believe there are some great options in the Midwest
    involving St. Louis, Chicago, Detroit, Minneapolis, that we
    might put that together and try to get closer to this European
    model of giving people an alternative to regional air service.
        Mr. Warrington. Absolutely.
        Senator Durbin. I have some questions about your on-time
    performance and other things I will submit for the record.
        Thank you, Madam Chair.
        Senator Murray. Thank you, Senator Durbin.
        Senator Bennett.
        Senator Bennett. Thank you.
        Mr. Warrington, I am impressed with your testimony, and I
    appreciate your candor. And I agree most completely with your
    final point, which says that we need a full and open debate
    over what kind of a system we need. You may know this, but I
    have discovered there is no such thing as repetition in the
    United States Senate. Every statement is taken as if it is
    brand new.
        In a way, I am one of the creators of Amtrak. I was at the
    Nixon administration when the idea was hatched by Paul
    Cherrington. I was the head of congressional liaison that sold
    it to the Congress. I know exactly what Senator Biden is
    talking about. He is dead now, so I can say it. When the first
    Amtrak route structure was created, the board of directors that
    went over it said clearly, ``We cancel service through rural
    West Virginia.''
        The chairman of the House Commerce Committee was Harley
    Staggers, whose district was served by trains that went to a
    series of small colleges out in the rural area of West
    Virginia. Traditionally, college students and their parents
    went to school on those trains and because he was the chairman
    of the House Commerce Committee, we continued service to rural
    West Virginia when there was absolutely no justification for
    it. So what Senator Biden is talking about has a rich
    historical history.
        It is time to shed that historical--that is a redundancy, a
    rich historical background. It is time to shed that background,
    move away from that history, and look at the realities. And the
    realities are that in some areas of this country high-speed
    rail is absolutely essential to the economy. It is worth
    subsidizing from the Federal Government. In some areas of the
    country, frankly including mine, high-speed rail makes no sense
    whatsoever.
        We talk about mass transit. Senator Durbin talks about mass
    transit in Europe. The fundamental principle is that you have
    to have a mass that needs to be transited. The State of Utah
    has about 2 million people. That is less than live in Chicago
    by a far cry. The total usage of Amtrak in and out of Salt Lake
    City, which is the only stop, could be serviced by one airplane
    a day and it would have extra seats on it. It would have plenty
    of room.
        To maintain the kind of costs you have to maintain to
    provide service that no mass is using is ridiculous. So you
    have put your finger on exactly what we need to do. We have to
    have an intelligent debate. We would be crazy as a society to
    eliminate rail traffic in the areas where there is high
    population density. If our population density were as great as
    Europe, we would have it all over the United States. But we are
    not Europe.
        You see tourists that come to Utah from Europe, and they
    tell you we are not Europe. They look around and say, we are
    stunned, we had no conception of the size of this country.
    There is no place in Europe that approaches the wide open
    spaces of the American West.
        So we need the debate you have called for. Put me down as
    one who will strongly support appropriations for Amtrak for
    capital and even in some circumstances for operating expenses,
    but as one that wants you, as the competent manager you have
    indicated you are, you have demonstrated by your testimony here
    today, to come to us without the Harley Staggers mode and say,
    these are the routes which we would drop, if we were running an
    intelligent business and did not have to worry about the
    Congress. And I think you will be surprised that the Congress
    will support you.
        The only other comment that I would make, Madam Chairman,
    when I was at the Department of Transportation, I realized that
    in the United States 95 to 96 percent of intercity trips are by
    car. That is not true in Europe. I have tried renting a car in
    Europe and driving around, and I took it in early and got on
    the train, because the congestion is so enormous. There is
    absolutely nothing in Europe to compare with the wide open
    spaces in America.
        And let us not talk about the European model. Let us not
    talk about the Japanese model. I have ridden the bullet train
    in Japan, and it is wonderful. But once again, there is nothing
    in Japan to compare with the spaces around America. And a train
    that runs from Denver to Salt Lake City, and I have done that
    in the days when there was one, and I have hated it, makes
    absolutely no sense.
        So let us do what you are talking about. And put me down as
    one who will participate in it, and, when it is over and a
    rational system has been devised, one who will vote for the
    money to fund it, even if it means that there is no more
    service to Salt Lake City. Because in terms of the ridership,
    there is virtually no service to Salt Lake City now. Nobody
    takes it.
        With that, I realize we have a vote. So thank you very much
    for your testimony.
        Senator Murray. Thank you, Senator Bennett.
        We do have a vote on. We just have a couple minutes left. I
    have a few other questions that I will submit to you. I did
    want to talk to you about the Amtrak Cascades line that runs
    from Vancouver, B.C., to the Seattle-Portland, Oregon corridor.
    It is doing fairly well.
        I would love to have a chance to hear back from you on the
    ridership projections and what you see those as and whether or
    not you think the High-Speed Rail Investment Act is necessary
    to allow bonding to increase your capital budget.
        That project you have been working with Washington State
    and Oregon and British Columbia, I know they have been good
    partners for you. I would like an opportunity at some point
    here to talk with you about that project and how we can make
    sure that that continues successfully.
        I would also like to at some point talk to you about what
    is meant by operating self-sufficiency that we keep hearing
    around here and whether you think Congress has lived up to its
    side of the bargain and whether or not you think our definition
    is realistic and what our definition ought to be. I think that
    is going to be the debate over the next several months.
        So unfortunately, we have run out of time. There is a vote.
    But I will get back to you on that.

                             CONCLUSION OF HEARINGS

        And at this time, the subcommittee stands in recess until
    10 a.m. on Thursday, July 12, when we will convene to mark up
    the Transportation appropriations bill for fiscal year 2002.
        [Whereupon, at 12:20 p.m., Thursday, June 28, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2002

                                  ----------

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

        MATERIAL SUBMITTED BY AGENCIES NOT APPEARING FOR FORMAL HEARINGS

        [Clerk's note.--The following agencies of the Department of
    Transportation and independent related agencies did not appear
    before the subcommittee this year. Chairman Shelby requested
    these agencies submit testimony in support of their
    fiscal year 2002 budget request. Those statements and deg.
    answers to questions submitted by the chairman follow:]

                          DEPARTMENT OF TRANSPORTATION

           Questions Submitted to the Federal Transit Administration

                Questions Submitted by Senator Richard C. Shelby

                            administrative expenses
        Question. Please prepare an organizational chart for the Federal
    Transit Administration, showing the office structure and regional
    office locations, the number of FTEs currently assigned to each office
    and position titles for each of those FTEs, and the number of vacancies
    in each office and position titles for each of those vacancies.
        Answer. The following tables provide the current Federal Transit
    Administration organizational information requested:

                         FEDERAL TRANSIT ADMINISTRATION
                             [Authorized Positions]
    ------------------------------------------------------------------------
                                          No. FTE's
                                           assigned       Position title
    ------------------------------------------------------------------------
    Office of the Administrator........            5  ADMINISTRATOR
                                                      DEPUTY ADMINISTRATOR
                                                      STAFF ASSISTANT
                                                      EXECUTIVE ASSISTANT
                                                      ADMINISTRATIVE COORD
    Office of Administration...........           69  ASSOC ADM FOR ADMIN
                                                      ADMIN STAFF ASSISTAN
                                                      ADMIN SPEC
                                                      PROGRAM ANALYST
                                                      PROGRAM OFFICER
                                                      SENIOR STAFF ADVISOR
                                                      PROGRAM SUPPORT
                                                       ASSISTANT
                                                      SECRETARY (OA)
                                                      MANAGEMENT ANALYST
                                                      PERSONNEL ASSISTANT
                                                      ADMINISTRATIVE
                                                       ASSISTANT
                                                      COMPUTER ANALYST
                                                      LEAD SUP SERV SPEC
                                                      OFC SERVICES SPEC
                                                      MANAGEMENT ANALYST
                                                      SUPPORT SVC ASST (OA
                                                      MGMT ANALYSI OFFICER
                                                      SUPPORT SERVICES SPE
                                                      MANAGEMENT ANALYST
                                                      MANAGEMENT ASSISTANT
                                                      SENIOR MGMT ANALYST
                                                      MANAGEMENT ANALYST
                                                      SUPPORT SVC SPEC
                                                      SUPPORT SERVICE SPEC
                                                      SUPPORT SERV SPECIAL
                                                      COMP SYS ANA
                                                      ADMIN MGMT ASSISTANT
                                                      PROGRAM ANALYST
                                                      COMPUTER SYS ANALYST
                                                      COMPUTER SYS ANALYST
                                                      PROGRAM ANALYST
                                                      TELE NET SPEC
                                                      SUPV COMPUTER SPEC
                                                      COMPUTER SYS ANALYST
                                                      COMPUTER SYS ANALYST
                                                      COMP SPEC (WEB TECH)
                                                      ADMINIS SPECIALIST
                                                      TELECOMM. SPECIALIST
                                                      STAFF ADVISOR
                                                      PERSONNEL ASSISTANT
                                                      PERSONNEL ASSISTANT
                                                      SENIOR STAFF ADVISOR
                                                      STAFF ADVISOR
                                                      STAFF ADVISOR
                                                      STAFF ADVISOR
                                                      STAFF ADVISOR
                                                      STAFF ADVISOR
    Office of Administration...........               STAFF ADVISOR
                                                      PERSONNEL ASST
                                                      STAFF ADVISOR
                                                      SENIOR STAFF ADVISOR
                                                      INFORMATION MGMT SYS
                                                      SUPV HUMAN RES OFFIC
                                                      PROCUREMENT ANALYST
                                                      SECRETARY (OA)
                                                      ACQU SYS ANA
                                                      SEN CONTRACT SPEC
                                                      CONTRACT SPECIALIST
                                                      SUPV PROG ANALYST
                                                      SENIOR PROG ANAL T L
                                                      SECRETARY (OA)
                                                      PROGRAM ANALYST
                                                      PROGRAM ANALYST
                                                      CONTRACT SPECIALIST
                                                      CONTRACT SPECIALIST
                                                      CONTRACT SPECIALIST
                                                      CONTRACT SPECIALIST
                                                      CONTRACT SPECIALIST
                                                      COMPUTER SYSTEMS
                                                       ANALYST
    Offic of Chief Counsel.............           33  ATTORNEY ADVISOR
                                                      DEPUTY CHIEF COUNSEL
                                                      ADMIN COORDINATOR
                                                      ATTORNEY ADVISOR
                                                      ATTORNEY ADVISOR
                                                      CHIEF COUNSEL
                                                      ATTORNEY ADVISOR
                                                      SECRETARY (STENO)
                                                      SECRETARY (OA)
                                                      ATTORNEY-ADVISOR
                                                      ASST CHIEF COUNSEL
                                                      PARALEGAL SPECIALIST
                                                      ATTORNEY-ADVISOR
                                                      ATTORNEY ADV GENERAL
                                                      SUPV ATTORNEY ADV
                                                      ATTORNEY ADVISOR
                                                      ATTORNEY-ADV (GENERA
                                                      SENIOR ATTORN-ADVISO
                                                      ATT ADV (GEN)
                                                      PARALEGAL SPEC
                                                      ATTORNEY-ADVISOR
                                                      PARALEGAL SPEC
                                                      SUPV ATTORNEY ADVISO
                                                      ATTORNEY ADV (GEN)
                                                      ATTORNEY-ADVISOR
                                                      ATTORNEY-ADV (GEN)
                                                      ATTORNEY-ADV (GEN)
                                                      ATTORNEY ADV (GEN)
                                                      ATTORNEY-ADVISOR
                                                      ATTORNEY ADV (GEN)
                                                      ATTORNEY-ADVISOR
                                                      SECRETARY (TYPING)
                                                      ATTORNEY ADVISOR
    Office of Public Affairs...........           12  TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      SUPV PUB AFFAIRS SP
                                                      PUB AFFRS ASST (OA)
                                                      PUBLIC AFFAIRS SPEC
                                                      SECRETARY (OA)
                                                      FREEDOM OF INFO SPEC
                                                      PUBLIC AFFAIRS SPEC
                                                      PROGRAM ANALYST
                                                      PUBLIC AFFAIRS SPEC
                                                      SPEECH WRITER
    Office of Program Management.......           62  ADMIN STAFF ASST
                                                      ADMINISTRATI OFFICER
                                                      DEP A.A. FOR GRTS MGT
                                                      TRANS PROGRAM SPEC
                                                      AS ADM FOR PROG MGMT
                                                      GENERAL ENGINEER
                                                      SECRETARY
                                                      COMPETITIVE EDGE
                                                      SECRETARY (OA)
                                                      TRANS PROG SPEC
                                                      TRANSP PROG SPECIALI
                                                      TRANSP PROG SPECIALI
                                                      TRANS PROGRAM SPEC
                                                      TRANSP PROG SPECIALI
                                                      TRANSP PROG SPEC
                                                      TRANS/PROGM SPEC
                                                      TRANSP PROG SPECIALI
                                                      TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      FINANCIAL ANALYST
                                                      TRANS PROG SPEC
                                                      GENERAL ENGINEER
                                                      SUPV GENERAL ENGINEE
                                                      REAL ESTATE SPEC
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      SECRETARY (OA)
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      TRAN SAF & SEC SPEC
                                                      TRAS SAFTY & SEC SPE
                                                      TRANS PROG SPEC
                                                      TRANS SFTY & SEC SPE
                                                      TRANSIT SAFETY SPEC
                                                      SEN SFTY & SEC ENG
                                                      TRAN SAFE & SEC SPEC
                                                      TRANS/SAFE/SEC SPEC
                                                      DIR TRANS SAF & SEC
                                                      TRANS SAF & SEC SPEC
                                                      SECRETARY (TYPING)
                                                      SUPV TRANS PRGM SPEC
                                                      TRANSP PROG SPECIALI
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
                                                      TRANS PROGRAM SPEC
                                                      SUPV, TRNS PROG SPEC
                                                      TRANS PRGM SPEC
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROGRAM SPECIA
                                                      TRANSP PROG SPECIALI
                                                      INFORM SYSTEM SPEC
                                                      SUPV TRANSP PROG SPE
                                                      TRANS PROG SPEC
                                                      FINANCIAL ECONOMIST
                                                      TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
    Office of Budget and Policy........           55  ASSOC ADMINTRATOR
                                                      DEPUTY ASSOC
                                                       ADMINSITRATOR
                                                      ADMIN STAFF ASST
                                                      PROGRAM OFFICER
                                                      PROG ASST (OA)
                                                      LEGISLATIVE ANALYST
                                                      ACCOUNTING OFFICER
                                                      BUDGET ANALYST
                                                      ACCOUNTANT
                                                      SECRETARY (OA)
                                                      SECRETARY (OA)
                                                      ADMIN STAFF ASST
                                                      PROGRAM ANALYST
                                                      FINANCIAL ECONOMIST
                                                      PROG ANAL OFFICER
                                                      PROGRAM ANALYST
                                                      ECONOMIST
                                                      PROG ANALYSIS OFCR
                                                      ECONOMIST
                                                      PROG ANALYS OFFICER
                                                      SPECIAL ASSISTANT
                                                      PROG ANALYST
                                                      SECRETARY (OA)
                                                      BUDGET ANALYST
                                                      BUDGET ANALYST
                                                      SUPERVISORY BUD ANAL
                                                      BUDGET ANALYST
                                                      FINANCIAL SPECIALIST
                                                      PROGRAM ANALYST
                                                      BUDGET ANALYST
                                                      BUDGET ANALYST
                                                      SYSTEMS ACCOUNTANT
                                                      SECRETARY (OA)
                                                      SYSTEM ACCOUNTANT
                                                      SYSTEMS ACCOUNTANT
                                                      SUPV SYS ACCT
                                                      COMP SYS ANAL
                                                      FINANCIAL SPECIALIST
                                                      OPERATING ACCT
                                                      SUPV SYST ACCOUNTANT
                                                      FINANCIAL SPECIALIST
                                                      OPERATING ACCOUNTANT
                                                      OPERATING ACCOUNTANT
                                                      OPERATING ACCT
                                                      ACCOUNTING TECH
                                                      FINANCIAL SPECIALIST
                                                      ACCOUNTING TECH
                                                      OPERATING ACCOUNTANT
                                                      ACCOUNTING TECH
                                                      STAFF ACCOUNTANT
                                                      FINANCIAL SPECIALIST
                                                      OPERATING ACCOUNTANT
                                                      SUPV PROGRAM ANALYST
                                                      PROGRAM ANALYST
                                                      COMPETITIVE EDGE
    Office of Research Demonstratio and           45  INTL TRANS PRG MGR
     Renovation.
                                                      PROGRAM MGMT OFFICER
                                                      TRANSP SPECIALIST
                                                      TRANS MGMT SPEC
                                                      ASSOC ADM FOR RES, DE
                                                      SECRETARY (OA)
                                                      TRANS MGMT SPEC
                                                      TRANSP PROG MANAGER
                                                      ADMIN STAFF ASSISTAN
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      SECRETARY (OA)
                                                      PROG SPEC
                                                      DP ASSOC ADM FOR T A
                                                      ADMIN COORDINATOR
                                                      SUPV TRANS PROG MGR
                                                      TRANSP PROG SPEC
                                                      SUPV. TRNS PROG SPEC
                                                      TRANS PROG SPEC
                                                      GENERAL ENGINEER
                                                      TRANS MGMT SPEC
                                                      TRANS MGMT SPEC
                                                      TRANS MGNT SPEC
                                                      TRANS. MGMT. SPEC
                                                      TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      GENERAL ENGINEER
                                                      TRANS SYS MANAGER
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      TRANS MGMT SPEC
                                                      ADMIN COORDINATOR
                                                      GENERAL ENGINEER
                                                      TRANS MGMT OFFICER
                                                      GENERAL ENGINEER
                                                      SUPV GENERAL ENGINEE
                                                      GENERAL ENGINEER
                                                      PROGRAM ANAL OFFICER
                                                      SUPV TRANS MGMT SPEC
                                                      PROG MGMT SPEC
                                                      TRANSP MGMT SPEC
                                                      TRANS PROG MGR
                                                      TRANS MGMT SPEC
                                                      ADMIN COORDINATOR
                                                      TRANSP MGMT SPECIAL
    Office of Civil Rights.............           26  SUPV EEO SPEC
                                                      ADMIN OFFICER
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPECIALIST
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EQUAL OPPORTUNITY SP
                                                      EQU OPPTY ASST (OA)
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPECIALIST
                                                      EEO SPEC
                                                      EEO SPEC
                                                      EEO SPECIALIST
                                                      EEO SPECIALIST
    Office of Planning.................           35  ASSO ADM FOR PLANNIN
                                                      ADMINISTRATIVE OFFIC
                                                      ADMIN STAFF ASSISTAN
                                                      DEPUTY ASSOC
                                                       ADMINISTARTOR
                                                      SUPV CONNUN PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      ENVIRONMENTAL PRO SP
                                                      DIRECTOR HUMAN
                                                       NATIONAL ENVIR
                                                      FINANCIAL ANALYST
                                                      TRANS MGMT SPEC
                                                      COMMUNITY PLANNER
                                                      TRANS PROG SPEC
                                                      SUPV COMMUNITY PLAN
                                                      COMMUNITY PLANNER
                                                      SUPV COMMUNITY PLAN
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      SUPV COMMUNITY PLAN
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      SUPV COMMUN PLANNER
                                                      COMMUNITY PLANNER
                                                      FINANCIAL ANALIST
                                                      COMMUNITY PLANNER
                                                      FINANCIAL ANALYST
                                                      SUPV COMMUNITY PLAN
                                                      TRANS MGMT SPEC
                                                      ENVIRON PROTECT SPEC
                                                      ENVIRON PROTECT SPEC
                                                      ENVIRONMENTAL PRO SP
    Region 1--Cambridge, MA............           14  GRANTS CONTROL ASST
                                                      REGIONAL ADMINISTRAT
                                                      GENERAL ENGINEER
                                                      ADMIN OFFICER
                                                      DEPUTY REG ADMINIST
                                                      PROJECT MGMT SPEC
                                                      SUPV TRANSP SPECIALI
                                                      TRANS PROG SPEC
                                                      COMMUNITY PLANNER
                                                      TRANSP PROGRAM SPEC
                                                      TRANSP PROGRAM SPECI
                                                      COMMUNITY PLANNER
                                                      SUPV TRANS PROG SPEC
                                                      TRANS PROGRAM SPEC
    Region 2--New York, NY.............           20  ADMINISTRA OFFICER
                                                      ADMINISTRATIVE ASST
                                                      SUPV. SENIOR OPER MG
                                                      COMMUNITY PLANNER
                                                      TRANS PROG SPECIALIS
                                                      REGIONAL ADMIN
                                                      SUPV TRANS PROG SPEC
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      SUPV TRANSP SPECIALI
                                                      COMMUNITY PLANNER
                                                      GRANTS CONTROL ASST
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
                                                      TRANSP PROG SPECIALI
                                                      SUPV TRANS PROG SPEC
                                                      GENERAL ENGINEER
                                                      TRANS PROGRAM SPEC
                                                      ADMIN PROGRAM ASSIST
    Region 3--Philadelphia, PA.........           23  ADMIN ASSISTANT
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      REGIONAL ADMIN
                                                      DEPTY REG ADMIN
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
                                                      SUPV TRANS PROG SPEC
                                                      TRANS PROGRAM SPEC
                                                      SECRETARY (OA)
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROGRAM SPEC
                                                      TRANSP PROG SPEC
                                                      TRANSP PROG SPECIALI
                                                      TRANS PROGRAM SPEC
                                                      TRANSP PROG SPECIALI
                                                      PROJ MGMT ASST (OA)
                                                      SUPV TRANS PROG SPEC
                                                      TRANS PROGRAM SPEC
                                                      ADMIN PROG ASST (OA)
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      COMM PLANNER
    Region 4--Atlanta GA...............           22  PROGRAM ASSISTANT
                                                      REGIONAL ADMIN
                                                      SUPV TRANS PROG SPEC
                                                      TRANSP PROGRAM SPECI
                                                      ADMIN OFFICER
                                                      ADMIN STAFF ASSISTAN
                                                      GENERAL ENGINEER
                                                      SUPV SEN OPER MGR
                                                      COMMUNITY PLANNER
                                                      TRANS PROGRAM SPEC
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROGRAM SPEC
                                                      SUPV TRANS PROG SPEC
                                                      TRANS PROG SPEC
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      TRANSP PROG SPEC
                                                      COMMUNITY PLANNER
    Region 5--Chicago, IL..............           24  REGIONAL ADMINISTRAT
                                                      DEPUTY REG ADMIN
                                                      SECRETARY (OA)
                                                      GRANTS CONTROL ASSIS
                                                      TRANSP PROG SPECIALI
                                                      ADMIN ASSISTANT
                                                      PROJECT MGMT SPECIAL
                                                      ADMIN PROGRAM ASSIST
                                                      PROGRAM DEVELOP OFCR
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      TRANSPORTATION REP
                                                      SUPV TRANS PROG SPEC
                                                      TRANSP REPRESENTATIV
                                                      TRANS PROGRAM SPEC
                                                      TRANSPOR REPRESENTA
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      SUPV TRANS PROG SPEC
                                                      TRANSP PROG SPEC
                                                      GENERAL ENGINEER
                                                      GENERAL ENGINEER
                                                      TRANS PROGRAM SPEC
    Region 6--Fort Worth, TX...........           17  COMMUNITY PLANNER
                                                      ADMIN ASSISTANT
                                                      COMMUNITY PLANNER
                                                      SUPV TRANS PROG SPEC
                                                      SUPV TRANS PROG SPEC
                                                      REGIONAL ADMIN
                                                      COMMUNITY PLANNER
                                                      COMMUNITY PLANNER
                                                      DEPUTY REGIONAL ADM
                                                      SECRETARY (OA)
                                                      PROJECT MGMT SPEC
                                                      GENERAL ENGINEER
                                                      TRANS PROG SPECIALIS
                                                      TRANS PROG SPECIALIS
                                                      GENERAL ENGINEER
                                                      TRANSPOR PROGRAM SPE
                                                      PROJ MGMT SPEC
    Region 7--Kansas City, MO..........           12  REG. ADMINISTRATOR
                                                      GENERAL ENGINEER
                                                      TRANSP PROG SPECIALI
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
                                                      SUPV SENIOR OPER MGM
                                                      SECRETARY
                                                      COMMUNITY PLANNER
                                                      TRANS PROGRAM SPEC
                                                      ADMINIST PROG ASSIST
                                                      TRANSP PROG SPECIALI
                                                      TRANSP PROG SPECIALI
    Region 8--Denver, CO...............            9  COMMUNITY PLANNER
                                                      DEPUTY REG MANAGER
                                                      COMMUNITY PLANNER
                                                      ADMIN OFFICER
                                                      REG ADMINISTRATOR
                                                      TRANS PROGRAM SPEC
                                                      ADMIN ASSISTANT
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
    Region 9--San Francisco, CA........           23  SECRETARY (TYPING)
                                                      SUPV TRANS PROG SPEC
                                                      SUPV SENIOR OPER MGM
                                                      PROGRAM MGMT ASST
                                                      GENERAL ENGINEER
                                                      COMMUNITY PLANNER
                                                      REGIONAL ADMIN
                                                      TRANS/PROGM SPEC/
                                                      PROG MANAGEMENT SPEC
                                                      SECRETARY (TYPING)
                                                      COMMUNTY PLANNER
                                                      COMMUNITY PLANNER
                                                      SUPV TRANS PROG SPEC
                                                      SECRETARY (TYPING)
                                                      GRANTS CNTRL ASSIST
                                                      TRANS PROGRAM SPEC
                                                      GENERAL ENGINEER
                                                      TRANSP REPRESENTATIV
                                                      TRANSP REPRESENTATIV
                                                      TRANS PROGRAM SPEC
                                                      TRANS PROG SPEC
                                                      PROG MGMT SPEC
                                                      COMMUNITY PLANNER
    Region 10--Seattle, WA.............           10  COMMUNITY PLANNER
                                                      TRANSP PROGRAM SPEC
                                                      SUPV SENIOR OPER MGM
                                                      REGIONAL ADMINISTRAT
                                                      COMMUNITY PLANNER
                                                      GENERAL ENGINEER
                                                      COMMUNITY PLANNER
                                                      ADMIN OFFICER
                                                      TRANS PROG SPEC
                                                      TRANSP PROG SPECIALI
                                        -------------
          Total........................          516  ......................
    ------------------------------------------------------------------------

    Federal Transit Administration Vacancies

    TOA (Administrator, ES; Deputy Administrator, ES; Executive
        Assistant)....................................................     3
    TBP (Legislative Analyst; Accounting Officer; Budget Analyst;
        Clerk (OA); Dep. Associate Administrator, ES; Accountant:
        Associate Administrator, ES; Secretary).......................     7
    TCC (Attorney Advisor; Attorney Advisor: Chief Counsel, ES;
        Attorney Advisor).............................................     7
    TPA (Public Affairs Specialist; Speech Writer)....................     2
    TPL (Deputy AA for Planning; Supervisory Community Planner;
        Community Planner; Community Planner; Director Human & Natural
        Environment; Financial Analyst)...............................     6
    TPM (General Engineer; General Engineer; General Engineer;
        Secretary (OA))...............................................     4
    TRI (General Engineer; General Engineer)..........................     2
    TAD (Senior Staff Advisor; Computer Analyst; Program Support
        Assistant; Secretary; Personnel Assistant; Administrative
        Assistant; Computer Analyst; Management Analyst)..............     8
    T-2 (Supervisory Transportation Specialist).......................     2
    T-6 (Secretary)...................................................     1
    T-7 (Secretary)...................................................     1
    T-8 (Transportation Program Specialist; Administrative Asst (OA)).     2
                                                                      ______
          Total Vacancies.............................................    41

        Question. Please detail the Executive Schedule and Senior Executive
    Service positions at FTA headquarters that have not yet been filled and
    give a status update for each.
        Answer. The following chart shows the Executive Schedule and Senior
    Executive Service positions at FTA headquarters that have not yet been
    filled and their status.

    ----------------------------------------------------------------------------------------------------------------
                      POSITION                                                  STATUS
    ----------------------------------------------------------------------------------------------------------------
    Administrator (ES)..........................  The individual nominated is waiting for confirmation.
    Deputy Administrator (SES)..................  The position will not be encumbered until an Administrator is
                                                   confirmed.
    Chief Counsel (SES).........................  The position will not be encumbered until an Administrator is
                                                   confirmed.
    Associate Administrator for Budget and        The position will not be encumbered until an Administrator is
     Policy (SES).                                 confirmed.
    Deputy Associate Administrator for Budget     The position will not be encumbered until an Administrator is
     and Policy (SES).                             confirmed.
    ----------------------------------------------------------------------------------------------------------------

        Question. Please break out administrative expenses by activity and
    sub-activity. Prepare a table showing fiscal year 2000 funding for each
    activity, fiscal year 2001 funding estimated, and fiscal year 2002
    funding requested.
        Answer. The following table provides a break out of administrative
    expenses by activity and sub-activity. The table shows fiscal year 2000
    funding for each activity, fiscal year 2001 funding estimated, and
    fiscal year 2002 funding requested.

             FEDERAL TRANSIT ADMINISTRATION ADMINISTRATIVE EXPENSES
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                    Fiscal years--
                                         -----------------------------------
            Activity/Sub-activity            2000        2001        2002
                                            Actual     Estimate     Request
    ------------------------------------------------------------------------
    Salary & Benefits:
        Salary..........................      34,673      36,305      38,997
        Benefits........................       7,098       7,436       8,068
    Travel and Transportation...........       1,400       1,597       1,617
    Rent................................       3,946       4,216       4,361
    Communications......................       1,450       1,470       1,486
    Printing & Reproduction.............         318         345         351
    Contractual Services:
        Audit and Financial Reviews             1500  ..........  ..........
         Services.......................
        Building Management/Services....         710         706         668
        Contractor Support (Service,           1,700       1,724       1,739
         Help Desk, etc.)...............
        Accounting System (DELPHI)......         223         300         300
        Financial Systems (DAFIS).......         683         700         533
        Grant Systems/TEAM..............       2,450       2,600        2700
        National Transit Database.......  ..........       2,495       2,600
        PDD63...........................         300         550         550
        Executive Management System/Data  ..........         150         153
         Warehousing....................
        Electronic Commerce.............  ..........         150         150
        Training/Workforce Planning.....         427         903         905
        Other Contractual Services......         607         674         577
    Supplies & Materials................         243         235         239
    Equipment & Furniture...............       1,845       1,303       1,006
                                         -----------------------------------
          Total.........................      59,573      63,859      67,000
    ------------------------------------------------------------------------

                                    staffing
        Question. The FTA has proposed increasing the FTE level from 495 to
    505 in fiscal year 2002. Please break out these staffing increases by
    title, grade, and projected starting dates, including where each
    position will be located.
        Answer. The following chart provides a break out of the proposed
    FTE funding increase:

                                              FISCAL YEAR 2001 HIRING PLAN
    ----------------------------------------------------------------------------------------------------------------
                   TITLE                          GRADE            PROJECTED START DATE            LOCATION
    ----------------------------------------------------------------------------------------------------------------
    Community Planner..................  GS-9/11/12.............  7 Oct 01..............  Washington, DC
    General Engineer...................  GS-11/12/13............  9 Sep 01..............  Cambridge, MA
    Community Planner..................  GS-9/11/12.............  7 Oct 01..............  Philadelphia, PA
    General Engineer...................  GS-11/12/13............  9 Sep 01..............  Atlanta, GA
    Community Planner..................  GS-11/12...............  7 Oct 01..............  Chicago, IL
    Financial Analyst..................  GS-11/12...............  12 Aug 01.............  Seattle, WA
    General Engineer...................  GS-11/12/13............  9 Sep 01..............  San Francisco
    General Engineer...................  GS-11/12/13............  4 Nov 01..............  Washington, DC
    General Engineer...................  GS-11/12/13............  4 Nov 01..............  Washington, DC
    Computer Systems Analyst...........  GS-11/12/13............  12 Aug 01.............  Washington, DC
    ----------------------------------------------------------------------------------------------------------------

        Question. How much of the proposed salaries and benefits increase
    from fiscal year 2001 enacted to fiscal year 2002 requested is
    associated with the 10 new FTEs in the budget request? Over how many
    months in fiscal year 2002 does this portion of the increase cover?
        Answer. An increase of $866,000 in salaries and benefits is
    associated with the 10 new FTEs. This portion of the increase covers 12
    months in fiscal year 2002.
        Question. Please break out the remainder of the proposed salaries
    and benefits increase.
        Answer. Of the total proposed salaries and benefits increase of
    $3,324,000, $866,000 is associated with the 10 new FTEs. The remainder
    of the proposed increase is broken out as follows:

    Fiscal year 2001 and fiscal year 2002 pay raise...............$1,722,000
    Other (health benefits, transit benefits, relocation costs,
        thrift savings plan, retirement contributions)............   736,000

        Question. Please provide a table similar to the one found on pages
    1122-1123 of Senate hearing 106-921, detailing FTA's FTEs for fiscal
    years 1999, 2000, 2001 estimated end-of-year, and proposed for fiscal
    year 2002.
        Answer. The following table provides detail of FTA's FTE through
    fiscal year 2002:

                           FULL-TIME EQUIVALENT (FTE)
    ------------------------------------------------------------------------
                                                   Fiscal year--
                                     ---------------------------------------
              Organization              1999     2000      2001       2002
                                       Actual   Actual  Estimated  Estimated
                                        FTE      FTE       FTE        FTE
    ------------------------------------------------------------------------
    Headquarters Offices:
        Administrator...............        5        4         4          5
        Public Affairs..............       12       11        12         12
        Chief Counsel...............       29       29        31         32
        Budget and Policy...........       49       51        52         52
        Civil Rights................       26       24        26         26
        Administration..............       74       76        68         67
        Res. Demonstration and             41       43        44         45
         Innovation.................
        Program Management..........       55       56        60         60
        Planning....................       29       32        27         30
                                     ---------------------------------------
          Subtotal Headquarters.....      320      326       324        329
                                     =======================================
    Regional Offices:
        Region 1, Cambridge, MA.....       13       13        14         15
        Region 2, New York, NY......       18       20        19         19
        Region 3, Philadelphia, PA..       20       21        21         22
        Region 4, Atlanta GA........       21       21        22         23
        Region 5, Chicago, IL.......       23       24        24         25
        Region 6, Fort Worth, TX....       17       16        17         17
        Region 7, Kansas City, MO...       11       12        12         12
        Region 8, Denver, CO........        8        6         9          8
        Region 9, San Francisco, CA.       21       22        23         24
        Region 10, Seattle, WA......        9        9        10         11
                                     ---------------------------------------
          Subtotal Regions..........      161      164       171        176
                                     ---------------------------------------
          Total FTA.................      481      490       495        505
    ------------------------------------------------------------------------

        Question. Page 34 of the detailed budget justification states that
    reimbursable funding from OST, FAA, STB, and BTS will support 13 FTE
    and associated administrative costs. Please elaborate on this
    statement. What is the purpose and associated cost for each of these
    proposed reimbursable positions? What is the transit nexus that
    justifies using funds from each of these agencies? Is there an
    interagency agreement in place to provide this reimbursable funding? If
    so, please provide a copy for the record.
        Answer. FTA proposes to continue to provide the full range of
    accounting services to the Department of Transportation's Office of the
    Secretary (OST), Surface Transportation Board (STB), and Bureau of
    Transportation Statistics (BTS). FTA does this based on a negotiated
    reimbursable agreement with each agency or the Office of the Secretary
    on a yearly basis. FTA provides the service by funding 13 reimbursable
    positions (These positions are not included in FTA's on-board count.)
    to do the work. This arrangement has shown to be more economical for
    these smaller agencies than to keep individual accounting staff in-
    house. FTA also provides electronic processing and payment services to
    the Federal Aviation Administration's Airport Improvement grant
    programs on a reimbursable basis.
                             information technology
        Question. The fiscal year 2002 budget request reduces Information
    Technology costs -$728,000 below the base. What was the fiscal year
    2001 level for this activity? Have the needed information technology
    improvements requested and funded in fiscal years 1999, 2000 and 2001
    been completed? What ongoing work is required in this area?
        Answer. The fiscal year 2001 level for Information Technology was
    $11,520,000. FTA's information technology improvements requested and
    funded in fiscal years 1999, 2000 and 2001 are being completed. In the
    fiscal year 2002 budget request FTA, reduced funding by $728,000 for
    projects that were non-recurring, or would no longer be funded in
    fiscal year 2002, such as IT equipment (-$300,000), DAFIS Operations
    (-$100,000), HRIS (-$103,000), TCC services (-$100,000) accreditation
    (-$75,000). These activities were fully funded as of fiscal year 2001.
    IT funding of $11,191,000 in the fiscal year 2002 budget reflects
    increased contract services and continues work on major IT systems such
    as the National Transit Database (NTD), TEAM, Security systems
    (required by PDD-63), and Executive Management System (Data
    Warehousing), telecommunications costs and equipment purchases. In
    addition, FTA requests $150,000 to continue to enhance the TEAM 2
    system.
        One of FTA's major emphasis's includes, funding to counteract the
    increase in attacks on Federal information technology (IT) resources,
    which is climbing at an alarming rate. In fiscal year 2002, these funds
    provide for investments in hardware, software and labor resources to
    protect the Agency's IT systems and networks. These include dedicated
    contract resources for monitoring and administering the Agency's
    Security Plan, antivirus software, intrusion detection and incident
    reporting, biometric authentication, disaster recovery, Public Key
    Infrastructure (PKI), change management, system accreditation for
    general support systems, and security awareness training for general
    users and network administrators.
        In addition, the Executive Management System (EMS) project will be
    segmented into three maintainable phases. Each phase includes the
    provision of technical and general knowledge training, along with
    maintenance for all warehouse information extraction, transaction, and
    loading endeavors.
        TEAM, FTA's vital grants management system, is scheduled to be web-
    based in fiscal year 2002. Additional alterations to TEAM's core
    business processes will require security re-certifications during
    fiscal year 2002. Ongoing work in this area requires hardware,
    licenses, telecommunications upgrades and travel expenses to provide
    regional TEAM training to FTA employees, new users, and grant
    recipients--many which are in remote locations.
        Also, the National Transit Database makes available essential
    statutorily required information that provides key factors for
    apportioning over $4.7 billion in funding for transit formula grants.
                          project management oversight
        Question. Please detail the authorized takedown levels (percentage
    and dollar amounts) for both formula and capital investment grants for
    fiscal years 2000, 2001, 2002, and 2003, and the amounts requested
    under the proposed takedown change in the budget proposal for fiscal
    years 2002 and 2003. Please also include the amount requested for PMO
    for each year and the actual obligations, including carryover.
        Answer.

                                                                 FEDERAL TRANSIT ADMINISTRATION--FISCAL YEAR 2000-2003 OVERSIGHT BUDGET
                                                                                         [Dollars in thousands]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Fiscal year            Fiscal year            Fiscal year            Fiscal year            Fiscal year            Fiscal year
                                                                2000      Percent      2001      Percent      2002      Percent      2002      Percent      2003      Percent      2003      Percent
                        Section/program                       Oversight   of app.    Oversight   of app.    Oversight   of app.    Oversight   of app.    Oversight    of law    Oversight   of app.
                                                               actual                set-aside             current law             proposed              current law             proposed
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    FORMULA PROGRAMS:
        Alaska Railroad (Sec. 5307).......................       $24,250   \1/2\        $24,196   \1/2\        $24,250   \1/2\        $24,250   \1/2\        $24,250   \1/2\        $24,250   \1/2\
        Urbanized Area Formula (Sec. 5307)................    13,864,451   \1/2\     13,682,722   \1/2\     16,103,008   \1/2\     16,103,008   \1/2\     17,229,698   \1/2\     17,229,698   \1/2\
        Nonurbanized Area Formula (Sec. 5311).............       968,065   \1/2\      1,025,046   \1/2\      1,124,369   \1/2\      1,124,369   \1/2\      1,203,038   \1/2\      1,203,038   \1/2\
    CAPITAL INVESTMENT GRANTS:
        Bus and Bus Facilities (Sec. 5309)................     4,096,500   \3/4\      4,334,443   \3/4\      3,886,500   \3/4\      5,182,000       1      4,179,000   \3/4\      5,572,000       1
        Fixed Guideway Modernization (Sec. 5309)..........     7,353,000   \3/4\      7,920,536   \3/4\      8,523,000   \3/4\     11,364,000       1      9,108,000   \3/4\     12,144,000       1
        New Starts (Sec. 5309)............................     7,353,000   \3/4\      7,942,987   \3/4\      8,523,000   \3/4\     11,364,000       1      9,108,000   \3/4\     12,144,000       1
                                                           -----------------------------------------------------------------------------------------------------------------------------------------
          Total...........................................    33,659,266  .......  \1\ 34,929,9  .......    38,184,127  .......    45,161,627  .......    40,851,986  .......    48,316,986  .......
                                                                                             30
                                                           =========================================================================================================================================
    PMO Actual Obligations/Requested......................    26,614,784  .......    23,847,585  .......    21,900,000  .......    28,564,000  .......    28,858,421  .......    28,858,421  .......
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Oversight set-aside amounts reflect adjustments pursuant to the Fiscal Year 2001 Omnibus Consolidated Appropriations Act (Public Law 106-554)

        Question. The September 2000 GAO report entitled ``Mass Transit
    Project Management Oversight Benefits and Future Funding Requirements''
    states that, under the current TEA-21 PMO takedown, FTA anticipates a
    funding shortfall of about $5 million in fiscal year 2002 for project
    management oversight. FTA was directed in the fiscal year 2001
    appropriations bill to identify options to cover the projected
    shortfall and submit this plan with the 2002 budget. FTA's budget
    proposes to increase the set-aside for section 5309 capital investment
    grants from \3/4\ of one percent to a full one percent, an increase of
    $7 million. This appears to more than make up the identified shortfall.
    What other options were considered? Please outline the effects on the
    PMO program if the proposed change to the capital grants takedown is
    not adopted.
        Answer. Another option considered was to increase the set-aside for
    section 5307 and 5311 grants from \1/2\ of one percent to \3/4\ of one
    percent to make the take-down consistent among all programs. The option
    to increase the set-aside on Section 5309 was forwarded because project
    management oversight is required primarily on New Starts and Rail
    Modernization projects. Therefore, funding should be derived from these
    programs.
        If the proposed change to the capital grants takedown is not
    adopted, a shortfall will occur. FTA's recourse will be either: (1) to
    limit the number of projects to which oversight contractors are
    assigned, or (2) to scale back the level of oversight currently being
    provided by doing a risk-based ranking of projects. Either of these
    options may expose FTA and the Federal government to criticism if one
    of the projects not fully monitored develops serious problems. Note
    that FTA, in addition to project management oversight, proposed to also
    use the additional funds generated by the increase in the percentage of
    section 5309 capital investment grants set-aside for financial
    management oversight.
        Question. Please provide the names of contractors, their geographic
    location, annual and total costs of contracts, and a short description
    of each contract, for each PMO contract let in fiscal year 2001 and
    thus far in 2002.
        Answer. FTA has no Project Management Oversight Contracts let in
    fiscal year 2000 or that will be let in fiscal 2001. The fifteen
    Project Management Oversight Program Contracts let in fiscal years 1998
    and 1999 were for a five-year period of performance. The total and
    annual cost of each contract is provided in the chart below. This list
    does not include non-PMO activities such as Financial Management
    Oversight and Procurement Review.

                                  FEDERAL TRANSIT ADMINISTRATION OVERSIGHT DEMOGRAPHICS
    ----------------------------------------------------------------------------------------------------------------
                                                                  Contract         Annual
                Contractor                     Location            Amount        Expenditure     Brief Description
    ----------------------------------------------------------------------------------------------------------------
    Gannett Fleming, Inc..............  Camp Hill, PA........     $12,183,951        $963,820  PMO
    Fluor Daniel, Inc.................  Irvine, CA...........      10,391,273       2,600,000  PMO
    Hill International, Inc...........  Newport Beach, CA....      11,533,331       3,284,345  PMO
    Sverdrup Civil, Inc...............  Maryland Heights, MO.      11,576,298       2,093,278  PMO
    Delon Hampton and Associates, Chtd  Washington, D.C......      12,507,225       3,000,000  PMO
    STV, Inc..........................  Philadelphia, PA.....      13,850,585       5,130,554  PMO
    Daniel, Mann, Johnson & Mendenhall  Baltimore, MD........       9,474,885       2,751,890  PMO
    Parsons Brinckerhoff Construction   Herndon, VA..........      13,065,484         385,000  PMO
     Servi-  ces.
    Carter and Burgess................  Fort Worth, TX.......      13,005,826       1,700,000  PMO
    Frederick R. Harris...............  Philadelphia, PA.....      12,394,675         450,000  PMO
    MK Centennial Engineers, Inc......  Arvada, CO...........      10,585,422         328,885  PMO
    Parsons Transportation Group, Inc.  Washington, D.C......      11,836,275           1,568  PMO
    Stone & Webster Engineers, Inc....  Boston, MA...........       9,843,869         900,000  PMO
    Transportation Construction         Philadelphia, PA.....      10,810,846       2,000,000  PMO
     Services.
    Urban Engineers, Inc..............  Philadelphia, PA.....      11,353,154         480,993  PMO
                                                              --------------------------------
          Total.......................  .....................     174,413,099      26,070,333  .....................
    ----------------------------------------------------------------------------------------------------------------

        Question. Please update the table found on page 1127 of Senate
    hearing record 109-221, indicating oversight obligations by activity
    broken out for fiscal years 1999, 2000, 2001 estimate and 2002 planned.
        Answer.

                            FEDERAL TRANSIT ADMINISTRATION--OVERSIGHT OBLIGATIONS BY ACTIVITY
                                                [In thousands of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                      Fiscal years--
                                                                     -----------------------------------------------
                                                                         1999        2000        2001        2002
                                                                        Actual      Actual     Estimate     Planned
    ----------------------------------------------------------------------------------------------------------------
    Project Management Oversight....................................      23,502      26,615      23,847      28,564
    Financial Management Oversight..................................       3,530       5,122       4,494       4,600
    Safety and Security Oversight...................................       2,827       3,300       3,284       3,000
        Drug & Alcohol Compliance...................................       1,410       2,200       1,474       1,500
        State Rail Safety Oversight.................................         693         900         800         800
        Security Audits.............................................         724         200       1,010         700
    Procurement Oversight...........................................       1,320       1,073       1,767       1,195
    Management Oversight............................................       5,576       8,337       6,081       5,803
        Civil Rights Reviews, DBE, EEO..............................         709         818         220         200
        ADA Civil Rights Reviews....................................         951         934         680         800
        Triennial and State Management Reviews......................       3,726       3,401       3,389       3,400
        Electronic Grant Making.....................................  ..........  ..........  ..........  ..........
        Planning Compliance.........................................         190       1,552       1,200         953
        Rail Control Technology.....................................  ..........         216         361         100
        Bus Technology..............................................  ..........         300         100          50
        ITS National Architecture...................................  ..........       1,116         131         300
    Transfer to Inspector General...................................  ..........  ..........  ..........       2,000
                                                                     ===============================================
          Total Oversight...........................................      36,755      44,447      39,473      45,162
    ----------------------------------------------------------------------------------------------------------------

        Question. You have requested a $2,000,000 reimbursement to the DOT
    Inspector General from the PMO takedown for costs associated with
    audits and investigations of transit-related issues. Since there is a
    projected shortfall in PMO funds, shouldn't this reimbursement be taken
    from FTA administrative expenses? If not, why not?
        Answer. Activities associated with the audits and reviews by the
    Office of Inspector General is more appropriately funded from Oversight
    resources. One of the OIG's functions is to oversee the new fixed
    guideway projects. The General Accounting Office September 2000 report
    recognized that a shortfall in the neighborhood of $5 million would
    exist and required FTA to develop options to address this shortfall.
    The increase in funding for the Project Management Oversight was needed
    regardless of the amount reimbursed to the OIG. To deal with the
    shortfall FTA proposes to increase the set-aside from the Capital
    Investment Grants from 0.75 percent to 1.0 percent.
        The amount for the OIG should not be funded from FTA's
    Administrative Expenses account. In fiscal year 2002 the funding in the
    Administrative Expenses account increases $3 million from the available
    fiscal year 2001 resources. This does not even cover the $3.3 million
    needed to fund the annualized pay increase and associated benefits of
    FTA's current FTE, and the cost of 10 FTE which are new positions aimed
    at bolstering FTA's oversight of New Starts projects as they proceed
    through the planning process, receive New Starts funding and complete
    construction.
                           national transit database
        Question. In fiscal year 2001, a total of $4 million was provided
    for the National Transit Database ($2.5 million from administrative
    expenses for the continued operation of the present system and $1.5
    million from the transit cooperative research program for the new data
    base that was Congressionally directed in fiscal year 2000). Please
    summarize the progress to date on developing this new data base model,
    and confirm whether the new, revised NTD will be operational on report
    year 2001 data. Will FTA's work on the new NTD continue to be funded
    through the transit cooperative research program? If so, how much of
    the $8.25 million TCRP program is for NTD? Is a continued level of $2.5
    million from administrative expenses assumed for continued operation of
    the present system? When does FTA plan to switch to the new NTD?
        Answer. Last year, FTA reported to Congress that completion of the
    redesign of the revised National Transit Database (NTD) would likely
    involve most of calendar 2001. We also reported that FTA planned to
    launch and pilot test the new, revised NTD system in fiscal year 2002,
    using report year 2001 data. FTA is still on target with this schedule;
    that is, implementation of the revised system will go online for report
    year 2002 data.
        The revised NTD requires a new systems design, which will also
    entail loading data into a new relational database. These tasks are
    well underway. The revised NTD will also incorporate new Internet
    software for our 600 reporters to use to report their data to FTA. FTA
    believes sufficient funding is on hand for the programming effort. FTA
    has not asked for additional funds for fiscal year 2002. Therefore,
    none of the $8.25 million TCRP program request is for the NTD.
        Dissemination of additional NTD data on the Internet, preparing for
    transit operator data input via the Internet, and general inflationary
    pressures on the information technology field have impacted the base
    operating costs of the NTD program. Consequently, FTA has requested
    $2.6 million in administrative funds to operate the revised NTD in
    fiscal year 2002. In addition, new reporting and processing
    requirements for a new safety module, a new capital asset module and a
    new rural module could add to the NTD's base annual costs in future
    years.
                     job access and reverse commute grants
        Question. Please provide a funding history table for the Job Access
    and Reverse Commute grant program, showing the guaranteed firewall
    TEA21 funding level for each fiscal year in the authorization, the
    administration's funding request, and the enacted funding level for the
    program.
        Answer. The following table provides a funding history table for
    the Job Access and Reverse Commute grant program:

              JOB ACCESS AND REVERSE COMMUTE GRANTS FUNDING HISTORY
                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                          Guaranteed    Budget      Enacted
                 Fiscal Year                Funding     Request      Level
    ------------------------------------------------------------------------
    1999................................      50,000  \1\ 100,00  \2\ 75,000
                                                               0
    2000................................      75,000  \3\ 150,00      75,000
                                                               0
    2001................................     100,000  \3\ 150,00  \4\ 99,780
                                                               0
    ------------------------------------------------------------------------
    \1\ Prior to TEA-21 Reauthorization.
    \2\ Includes $25 million appropriated general funds.
    \3\ RABA funds requested as source of additional funds.
    \4\ Reduction from $100 million initial program level pursuant to
      Section 1403, Public Law 106-554.

        Question. What is the length of availability of federal funds made
    available as grant awards under the Job Access and Reverse Commute
    program?
        Answer. While there is no statutory limit on when Job Access and
    Reverse Commute funds must be obligated, FTA administratively has
    adopted a funding availability policy for its formula allocated
    programs. Funding is available in the year of the appropriation plus
    two years. As authorized in TEA-21, Job Access and Reverse Commute
    funds, once obligated, are available until expended. FTA has urged that
    projects be submitted that can be quickly implemented. In the fiscal
    year 2001 announcement of competitive awards made on January 25, 2001,
    FTA requested that all final applications be submitted by April 1,
    2001.
        Question. Have all the fiscal year 1999 and 2000 Access to Jobs
    funds been obligated? If not, why not?
        Answer. As of May 15, 2001, FTA had obligated $68.05 million or
    90.7 percent of the $75 million in fiscal year 1999 budget authority
    and $39.7 million or 53 percent of the $75 million available in fiscal
    year 2000 budget authority.
        Grants have been awarded obligating all funds allocated in the
    fiscal year 1999 competition except for two projects in Chicago and one
    in Dallas-Fort Worth. The delays in finalizing these applications
    include meeting FTA standard grant requirements, the final securement
    of matching funds and project scope adjustments. In Chicago, the
    Regional Transit Authority (RTA) plans on submitting its final
    application by June 2001. RTA will be applying on behalf of itself,
    DuPage County and the Chicago Housing Authority, each of which was
    selected for Job Access funding in fiscal year 1999. PACE, the Chicago
    area suburban public bus operator, has received a grant of $150,000,
    but plans on submitting an application for an additional amount of
    almost $1 million. Transit providers in Dallas-Fort Worth are working
    to resolve labor protection issues before submitting their application.
        In fiscal year 2000, the competitive grants were announced on
    October 19, 2000 and grant applications are being processed. Because
    projects from urbanized areas with populations between 50,000 and
    200,000 selected for fiscal year 1999 and fiscal year 2000 funding did
    not use all available funding in that category, the remaining fiscal
    year 2000 funds were allocated to projects selected for funding in
    fiscal year 2001.
        Question. Please update the Committee on the Department's time
    frames for evaluating and awarding grants for the fiscal year 2001
    projects.
        Answer. The Department decided not to conduct a separate
    competition for fiscal year 2001 funds. Instead, available Job Access
    and Reverse Commute funds were allocated to proposals that were
    submitted in the fiscal year 2000 competition and evaluated as
    meritorious, but either under-funded or not funded in fiscal year 2000.
    Project demand in the fiscal year 2000 competition, in both the major
    urban and rural areas, far exceeded the Job Access and Reverse Commute
    funding that was available after Congressional earmarking.
        FTA announced project selections on January 25, 2001 in the amount
    of $23,721,455, as listed in the following table. All selected
    applicants were instructed to submit final applications to FTA by April
    1, 2001. Grant awards are expected as soon as all requirements are met.

                JOB ACCESS AND REVERSE COMMUTE PROGRAM--FISCAL YEAR 2001 COMPETITIVELY SELECTED PROJECTS
    ----------------------------------------------------------------------------------------------------------------
                State/Locality                              Applicant (Sub-applicant)                    FTA Funds
    ----------------------------------------------------------------------------------------------------------------
    Alabama: Montgomery...................  City of Montgomery......................................        $250,000
    California: Oakland...................  AC Transit..............................................         130,108
    California: Napa......................  Napa County Transportation Planning Agency..............          62,500
    California: Sacramento................  CALTRANS................................................         500,000
    California: Sacramento................  Sacramento County Public Works Agency...................          96,395
    California: San Diego.................  San Diego Association of Governments....................         800,000
    California: San Francisco Metro Area..  Metropolitan Transportation Commission..................         316,500
    California: Ukiah.....................  Mendocino Transit Authority.............................          79,368
    California: Woodland..................  YOLOBUS.................................................         137,440
    Colorado: Breckenridge................  Summit County (Summit Stage)............................          75,000
    Colorado: Denver......................  Regional Transportation District........................         100,000
    Connecticut: New Britain, Bristol,      Connecticut Department of Transportation (North Central          857,786
     Plainville.                             Region).
    Connecticut: Bridgeport...............  Connecticut Department of Transportation (Southwest              309,623
                                             Region).
    Connecticut: Bridgeport, New Haven....  Connecticut Department of Transportation (South Central          473,000
                                             Region).
    Connecticut: Groton, Mystic,            Connecticut Department of Transportation (Eastern                127,714
     Montville, New London, Norwich,         Region).
     Pawcatuck, Foxwoods.
    Delaware: Sussex County...............  Delaware Department of Transportation...................          95,000
    Delaware: Wilmington Metro Area.......  Delaware Department of Transportation...................         432,500
    Florida: Clearwater-Tampa Metro Area..  Pinellas County MPO (Pinellas Suncoast Transit                 2,400,000
                                             Authority, Pasco County,).
    Florida: Jacksonville.................  Jacksonville Transportation Authority...................         930,000
    Georgia: Atlanta......................  Georgia Department of Transportation (Hall County:               150,000
                                             rural).
    Illinois: Chester.....................  Interagency Transportation Consortium...................          93,868
    Illinois: Chicago.....................  Chicago Area Transportation Study (Chicago Transit               136,314
                                             Authority).
    Illinois: Chicago.....................  Chicago Area Transportation Study (Metra)...............          92,934
    Illinois: Chicago.....................  Metro Area Chicago Area Transportation Study  (PACE)....         362,445
    Illinois: Karnak......................  Massac County (Shawnee Development Council).............          53,600
    Illinois: Rock Island.................  Rock Island County Metropolitan Mass Transit............         316,368
    Indiana: South Bend...................  South Bend Public Transportation Group..................         245,919
    Kentucky: Louisville..................  Transit Authority of River City.........................       1,097,400
    Massachusetts: Boston.................  Massachusetts Bay Transportation Authority..............         601,900
    Massachusetts: Haverhill..............  Merrimack Valley Regional Transit Authority.............         500,000
    Michigan: Barry.......................  Michigan Department of Transportation (Barry  County)...          44,000
    Michigan: Benzie County--Leelanau.....  Michigan Department of Transportation (Benzie County--            45,000
                                             Leelanau).
    Michigan: Berrien, Cass, Van Buren....  Michigan Department of Transportation (Berrien-Cass-Van          150,000
                                             Buren).
    Michigan: Charlevoix, Emmet...........  Michigan Department of Transportation (Charlevoix-Emmet)          17,500
    Michigan: Detroit.....................  Southeastern Michigan Council of Governments (City of            200,000
                                             Detroit Department of Transportation).
    Michigan: Eaton.......................  Michigan Department of Transportation (Eaton  County)...          58,939
    Michigan: Ionia County................  Michigan Department of Transportation (Ionia  County)...          81,570
    Michigan: Lake-Mason-Oceana Counties..  Michigan Department of Transportation (Lake-Mason-Oceana         150,000
                                             Counties).
    Michigan: Lansing.....................  Capital Area Transportation Authority...................          26,000
    Michigan: Midland.....................  Michigan Department of Transportation (Midland County)..          71,281
    Nebraska: Buffalo County..............  Nebraska Department of Roads (Buffalo County Community).         131,925
    New York: New York City...............  MTA/Human Resource Administration.......................         477,568
    New York: New York City...............  Non-Profit Assistance Corp..............................         929,040
    New York New: York City...............  Phipps Community Development Corp.......................         760,284
    New York: New York City...............  Project Renewal.........................................         400,577
    New York: New York City Metro--         Westchester County......................................          55,000
     Westchester.
    New York: New York City Metro--         Westchester County Department of Transportation                  175,320
     Westchester.                            (Westchester Community Opportunity Program).
    North Dakota: Fort Yates..............  Sitting Bull College....................................          79,208
    Ohio: Akron...........................  Metro Regional Transit Authority........................          33,378
    Ohio: Lorain..........................  Lorain County Transit...................................         300,000
    Ohio: Muskingum.......................  Ohio Department of Transportation (Muskingum Transit             142,582
                                             Authority).
    Ohio: Pike County.....................  Ohio Department of Transportation (Pike County Community          36,921
                                             Action Committee).
    Ohio: Youngstown......................  Western Reserve Transit Authority.......................          50,000
    Oregon: Baker City....................  Oregon Department of Transportation (Community                    28,600
                                             Connection of Baker County).
    Oregon: LaGrande......................  Oregon Department of Transportation (Community                    16,500
                                             Connection of Union County).
    Oregon: Redmond.......................  Oregon Department of Transportation (Central Oregon              110,000
                                             Intergovernmental Council).
    Pennsylvania: Indiana.................  Indiana County Transit Authority........................          51,580
    Tennessee: Knoxville..................  Knoxville-Knox County Community Action Committee........         200,000
    Tennessee: Memphis....................  Memphis Area Transit Authority..........................         275,000
    Texas: Austin/Colorado Counties.......  Texas Department of Transportation (Colorado Valley)....         150,000
    Texas: Dallas-Fort Worth..............  North Central Texas Council of Governments..............       1,500,000
    Texas: El Paso........................  City of El Paso.........................................         720,000
    Texas: Fort Worth.....................  Fort Worth Transit......................................         240,000
    Texas: Guadalupe/Comal Counties.......  Texas Department of Transportation (Alamo Area Council           150,000
                                             of Governments).
    Texas: Hunt/Rockwell/Dallas Counties..  Texas Department of Transportation (The Connection).....         200,000
    Texas: Robstown/Petronila/Banquete/     Texas Department of Transportation (Institute for Urban           60,000
     Driscoll.                               Development).
    Virginia: Richmond....................  Greater Richmond Transit Company........................       1,000,000
    Washington: Seattle...................  Puget Sound Regional Council............................       2,780,000
                                                                                                     ---------------
          Total...........................  ........................................................      23,721,455
    ----------------------------------------------------------------------------------------------------------------

        FTA also made an additional commitment of $1,865,296 on March 28,
    2001. The projects funded are as follows:

    ----------------------------------------------------------------------------------------------------------------
                State/Locality                              Applicant (Sub-applicant)                    FTA Funds
    ----------------------------------------------------------------------------------------------------------------
    Arizona: Phoenix......................  Maricopa County Human Services Department...............        $498,789
    California: San Jose..................  Project Outreach........................................          50,982
    California: Santa Rosa................  City of Santa Rosa......................................         250,000
    Florida: Tampa........................  Hillsborough Area Regional Transit Authority............         212,320
    Michigan: Flint.......................  Flint Mass Transit Authority............................         500,000
    Minnesota: Park Rapids................  Minnesota Department of Transportation..................          62,500
    New York: Albany......................  Capital District Transit Authority......................         248,050
    New York: Rochester...................  Rochester-Genessee Regional Transit Authority...........          42,537
    ----------------------------------------------------------------------------------------------------------------

        Question. Please provide a state apportionment table for fiscal
    year 2002 of job access and reverse commute grants funding if the
    proposed formula allocation of JARC funds were approved. Please
    describe the formula, and explain the rationale for how it was written.
        Answer. The following table lists state apportionments for fiscal
    year 2002 of Job Access and Reverse Commute grants funding if the
    proposed formula allocation of JARC funds were approved.

    Job Access and Reverse Commute Program: Formula Apportionment of 2002
    Funds

            STATE                                              APPORTIONMENT
    ALABAMA.................................................      $2,529,385
    ALASKA..................................................         188,505
    AMERICAN SAMOA..........................................          50,000
    ARIZONA.................................................       2,125,649
    ARKANSAS................................................       1,529,089
    CALIFORNIA..............................................      15,000,893
    COLORADO................................................       1,467,850
    CONNECTICUT.............................................         797,702
    DELAWARE................................................         195,798
    DISTRICT OF COLUMBIA \1\................................         176,757
    FLORIDA.................................................       6,496,462
    GEORGIA.................................................       3,276,282
    GUAM....................................................          50,000
    HAWAII..................................................         366,795
    IDAHO...................................................         499,975
    ILLINOIS................................................       4,915,726
    INDIANA.................................................       2,248,890
    IOWA....................................................       1,159,636
    KANSAS..................................................       1,053,000
    KENTUCKY................................................       2,309,903
    LOUISIANA...............................................       3,181,003
    MAINE...................................................         477,345
    MARYLAND................................................       1,512,979
    MASSACHUSETTS...........................................       2,037,223
    MICHIGAN................................................       4,275,735
    MINNESOTA...............................................       1,651,555
    MISSISSIPPI.............................................       1,988,890
    MISSOURI................................................       2,526,532
    MONTANA.................................................         429,477
    NEBRASKA................................................         687,430
    NEVADA..................................................         515,493
    NEW HAMPSHIRE...........................................         259,223
    NEW JERSEY..............................................       4,873,246
    NEW MEXICO..............................................       1,031,277
    NEW YORK................................................       8,325,977
    NORTH CAROLINA..........................................       3,086,851
    NORTH DAKOTA............................................         315,180
    N. MARIANAS.............................................          50,000
    OHIO....................................................       5,004,160
    OKLAHOMA................................................       1,894,526
    OREGON..................................................       1,310,772
    PENNSYLVANIA............................................       5,038,353
    PUERTO RICO.............................................       2,995,994
    RHODE ISLAND............................................         384,765
    S. CAROLINA.............................................       1,914,447
    S. DAKOTA...............................................         377,187
    TENNESSEE...............................................       2,795,586
    TEXAS...................................................      10,855,492
    UTAH....................................................         856,741
    VERMONT.................................................         198,342
    VIRGIN ISLANDS..........................................          82,258
    VIRGINIA................................................       2,374,037
    WASHINGTON..............................................       1,998,201
    W. VIRGINIA.............................................       1,117,738
    WISCONSIN...............................................       1,944,234
    WYOMING.................................................         193,459
                        --------------------------------------------------------
                        ____________________________________________________
          TOTAL.............................................     125,000,000

    \1\ Funds for Washington DC are included in MD's ($412,436) and VA's
    ($392,795) apportionments, for a total of $981,988.
    Note: American Samoa, Guam, and the Northern Marianas were allocated at
    a base level of $50,000, as census data on low-income residents (which
    FTA would use for JARC allocations) are not collected in these
    territories.

        The JARC formula program would allocate funds annually as follows:
        At the National level: 60 percent of funds would be available for
    areas over 200,000 population; 40 percent of funds would be available
    for areas under 200,000 population.
        At the State level: Funds would be allocated based on the
    proportion of low-income (up to 150 percent of poverty level)
    population in areas over 200,000 population and areas under 200,000
    population Since poverty and welfare dependence are highly correlated
    and the poor are the most vulnerable to job loss and return to welfare
    dependency, this formula will allocate funding based on need.
        Additionally, formula allocation of JARC funds will allow states
    and localities a greater level of predictability and stability. Not
    knowing how much funding they will receive and when they will receive
    it, makes if very difficult for states and localities to plan and
    implement their JARC projects. Matching funds, especially those from
    other Federal sources, will be easier to secure if there is a degree of
    certainty about the level and timing of FTA funds. Predictability of
    funding is not assured when funds are earmarked.
        Multi-year funding of JARC projects has been a major issue under
    the program, as applicants contend that the partnerships that emerge in
    a community from the extensive collaborative planning efforts need time
    to mature. New and expanded services need a reasonable start-up period
    to prove their value to a community, and a steady and predictable level
    of funding is needed to assure ongoing service. Formula funding will
    make it possible to assure continuity of funding for projects.
        The statutory integrity of the program will be preserved through a
    formula program. According to TEA-21 statute, funds are to be awarded
    on a competitive basis. A formula program would allow the states to
    solicit for applications for grants and select grantees on a
    competitive basis. Earmarking of funds does not allow for projects to
    emerge from a competitive process. Another provision under the statute
    calls for funds to be allocated according to community size, and such
    allocation of funds may not be considered when funds are earmarked.
                                 formula grants
        Question. Please provide a table displaying the state-by-state
    distribution of the formula program funds within each of the program
    categories for fiscal year 2002 (as shown on pages 1133-1134 of Senate
    hearing 106-921). Please add a column to the far right of the table
    that expresses each state's share of the formula grants program as a
    percentage of the total program.
        Answer. The table is provided below.

    FEDERAL TRANSIT ADMINISTRATION, FISCAL YEAR 2002 GUARANTEED LEVEL--APPORTIONMENT FOR FORMULA PROGRAMS (BY STATE)
    ----------------------------------------------------------------------------------------------------------------
                                                                            Section 5310                      State
                                            Section 5307    Section 5311     elderly and     Total formula   percent
                    State                  urbanized area   nonurbanized    persons with       programs         of
                                                                area        disabilities                      total
    ----------------------------------------------------------------------------------------------------------------
    Alabama..............................     $14,040,178      $5,344,661      $1,465,034       $20,849,873      .59
    Alaska...............................   \1\ 7,619,647         797,004         203,762         8,620,413      .25
    American Samoa.......................  ..............         113,598          53,101           166,699  .......
    Arizona..............................      36,086,127       2,339,752       1,287,919        39,713,798     1.13
    Arkansas.............................       5,520,952       4,272,834       1,014,025        10,807,811      .31
    California...........................     518,704,526      10,428,595       8,077,729       537,210,850    15.27
    Colorado.............................      40,928,704       2,226,089         991,811        44,146,604     1.25
    Connecticut..........................      55,160,193       2,019,272       1,141,158        58,320,623     1.66
    Delaware.............................       7,329,543         503,760         323,821         8,157,124      .23
    District of Columbia.................      29,256,884  ..............         321,183        29,578,067      .84
    Florida..............................     156,776,788       6,703,961       5,440,466       168,921,215     4.80
    Georgia..............................      55,198,599       7,814,463       1,909,167        64,922,229     1.85
    Guam.................................  ..............         323,387         135,314           458,701      .01
    Hawaii...............................      25,789,482         877,054         420,603        27,087,139      .77
    Idaho................................       3,300,878       1,769,431         431,176         5,501,485      .16
    Illinois.............................     217,131,921       7,169,333       3,505,594       227,806,848     6.48
    Indiana..............................      34,806,454       6,925,413       1,824,126        43,555,993     1.24
    Iowa.................................       9,303,320       4,454,494       1,092,507        14,850,321      .42
    Kansas...............................       8,541,490       3,543,409         910,746        12,995,645      .37
    Kentucky.............................      18,577,689       5,849,395       1,402,706        25,829,790      .73
    Louisiana............................      29,765,457       4,837,873       1,407,347        36,010,677     1.02
    Maine................................       2,367,920       2,334,462         547,089         5,249,471      .15
    Maryland.............................      80,384,314       2,914,464       1,414,153        84,712,931     2.41
    Massachusetts........................     124,736,660       3,123,420       2,050,913       129,910,993     3.69
    Michigan.............................      66,414,415       8,458,755       2,994,685        77,867,855     2.21
    Minnesota............................      38,624,294       4,867,525       1,434,541        44,926,360     1.28
    Mississippi..........................       4,932,006       4,750,072         984,235        10,666,313      .30
    Missouri.............................      35,603,515       5,669,413       1,850,314        43,123,242     1.23
    Montana..............................       2,497,778       1,433,378         392,963         4,324,119      .12
    Nebraska.............................       8,447,964       2,162,787         632,725        11,243,476      .32
    Nevada...............................      21,339,036         706,117         462,562        22,507,715      .64
    New Hampshire........................       3,499,595       1,869,613         435,225         5,804,433      .17
    New Jersey...........................     189,133,645       2,673,150       2,468,641       194,275,436     5.52
    New Mexico...........................       7,078,357       2,101,501         552,626         9,732,484      .28
    New York.............................     546,166,788       9,409,809       5,762,287       561,338,884    15.96
    North Carolina.......................      29,462,044       9,995,997       2,175,630        41,633,671     1.18
    North Dakota.........................       2,434,856       1,060,047         329,769         3,824,672      .11
    Northern Marianas....................  ..............         105,272          52,833           158,105  .......
    Ohio.................................      92,258,624      10,176,620       3,659,887       106,095,131     3.02
    Oklahoma.............................      11,565,275       4,350,400       1,206,115        17,121,790      .49
    Oregon...............................      29,577,270       3,454,256       1,119,077        34,150,603      .97
    Pennsylvania.........................     148,792,087      11,352,125       4,394,371       164,538,583     4.68
    Puerto Rico..........................      52,797,914       3,392,373       1,059,960        57,250,247     1.63
    Rhode Island.........................      10,331,636         434,568         483,450        11,249,654      .32
    South Carolina.......................      11,616,676       5,003,046       1,164,780        17,784,502      .51
    South Dakota.........................       1,756,431       1,292,115         358,657         3,407,203      .10
    Tennessee............................      23,225,955       6,458,361       1,735,610        31,419,926      .89
    Texas................................     170,177,230      13,635,398       4,539,494       188,352,122     5.35
    Utah.................................      20,796,268         979,495         512,817        22,288,580      .63
    Vermont..............................         882,731       1,155,262         290,967         2,328,960      .07
    Virgin Islands.......................  ..............         247,264         138,096           385,360      .01
    Virginia.............................      66,268,007       5,725,963       1,806,838        73,800,808     2.10
    Washington...........................      88,572,612       4,012,110       1,617,182        94,201,904     2.68
    West Virginia........................       4,255,733       3,411,450         842,548         8,509,731      .24
    Wisconsin............................      38,268,062       5,894,585       1,651,726        45,814,373     1.30
    Wyoming..............................       1,219,667         824,424         242,740         2,286,831      .07
                                          --------------------------------------------------------------------------
          Subtotal.......................   3,209,324,197     223,749,375      84,724,801     3,517,798,373    100.0
                                          ==========================================================================
    Oversight............................      16,127,259       1,124,368  ..............        17,251,627  .......
                                          --------------------------------------------------------------------------
          Total..........................   3,225,451,456     224,873,743      84,724,801     3,535,050,000  .......
                                          ==========================================================================
    Clean Fuels..........................  ..............  ..............  ..............        50,000,000  .......
    Over-the-Road Bus Accessibility......  ..............  ..............  ..............         6,950,000  .......
                                          --------------------------------------------------------------------------
          Grand Total....................  ..............  ..............  ..............     3,592,000,000  .......
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes $4,825,700 for the Alaska Railroad improvements to passenger operations.

        Question. Please provide a table displaying the state-by-state
    distribution of the formula grants program funds within each of the
    program categories for fiscal year 2001, comparing the total authorized
    program with the enacted program which included a directed set-aside of
    $60 million for the 2002 Winter Olympics.
        Answer. The table is provided below.

                                          COMPARISION OF FISCAL YEAR 2001 ENACTED APPORTIONMENTS AND ESTIMATED FY 2001 APPORTIONMENTS WITHOUT OLYMPIC SET-ASIDE
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Fiscal year 2001 enacted apportionments                         Fiscal year 2001 apportionments without olympic
                                               --------------------------------------------------                                       set-aside
                                                                                                                   --------------------------------------------------
                       State                        Sec 5307         Sec 5310      Sec 5311 non-    Total formula      Sec 5307        Sec 5310       Sec 5311 non-        Total        Difference
                                                 urbanized area      elderly/     urbanized area                    urbanized area     elderly/      urbanized area
                                                     formula         disabled         formula                           formula        disabled          formula
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Alabama...................................       $12,824,139      $1,341,753      $4,908,405       $19,074,297     $13,062,244      $1,366,477        $4,999,044     $19,427,765        $353,468
    Alaska....................................         2,552,406         196,516         731,949         3,480,871       2,599,788         197,969           745,465       3,543,222          62,351
    American Samoa............................  ................          52,816         104,325           157,141  ..............          52,873           106,252         159,125           1,984
    Arizona...................................        32,964,484       1,180,931       2,148,770        36,294,185      33,576,462       1,202,388         2,188,450      36,967,300         673,115
    Arkansas..................................         5,042,769         932,236       3,924,065         9,899,070       5,136,398         948,639         3,996,528      10,081,565         182,495
    California................................       473,783,741       7,346,082       9,577,365       490,707,188     482,580,357       7,492,814         9,754,221     499,827,392       9,120,204
    Colorado..................................        37,386,123         912,066       2,044,385        40,342,574      38,080,225         928,059         2,082,137      41,090,421         747,847
    Connecticut...............................        50,377,247       1,047,673       1,854,450        53,279,370      51,312,696       1,066,422         1,888,694      54,267,812         988,442
    Delaware..................................         6,695,745         305,530         462,640         7,463,915       6,820,044         309,198           471,184       7,600,426         136,511
    District of Columbia......................        26,720,935         303,134  ..............        27,024,069      27,217,097         306,754  ................      27,523,851         499,782
    Florida...................................       143,206,699       4,951,449       6,156,753       154,314,901     145,865,447       5,049,522         6,270,444     157,185,413       2,870,512
    Georgia...................................        50,415,913       1,745,026       7,176,610        59,337,549      51,352,019       1,777,945         7,309,134      60,439,098       1,101,549
    Guam......................................  ................         134,366         296,991           431,357  ..............         134,556           302,475         437,031           5,674
    Hawaii....................................        22,802,749         393,408         805,465        24,001,622      23,240,108         398,862           820,339      24,459,309         457,687
    Idaho.....................................         3,014,169         403,008       1,625,002         5,042,179       3,070,147         408,657         1,655,009       5,133,813          91,634
    Illinois..................................       198,313,457       3,194,583       6,584,138       208,092,178     201,995,757       3,256,957         6,705,722     211,958,436       3,866,258
    Indiana...................................        31,791,136       1,667,808       6,360,128        39,819,072      32,381,412       1,699,158         6,477,575      40,558,145         739,073
    Iowa......................................         8,497,060       1,003,498       4,090,897        13,591,455       8,654,834       1,021,349         4,166,440      13,842,623         251,168
    Kansas....................................         7,802,189         838,458       3,254,179        11,894,826       7,947,042         852,956         3,314,271      12,114,269         219,443
    Kentucky..................................        16,970,857       1,285,158       5,371,940        23,627,955      17,285,911       1,308,733         5,471,138      24,065,782         437,827
    Louisiana.................................        27,188,765       1,289,372       4,442,983        32,921,120      27,693,551       1,313,032         4,525,027      33,531,610         610,490
    Maine.....................................         2,162,245         508,257       2,143,913         4,814,415       2,202,403         516,045         2,183,502       4,901,950          87,535
    Maryland..................................        73,419,025       1,295,552       2,676,572        77,391,149      74,782,247       1,319,338         2,725,998      78,827,583       1,436,434
    Massachusetts.............................       113,921,306       1,873,732       2,868,472       118,663,510     116,036,693       1,909,266         2,921,441     120,867,400       2,203,890
    Michigan..................................        60,669,321       2,730,678       7,768,311        71,168,310      61,795,634       2,783,625         7,911,762      72,491,021       1,322,711
    Minnesota.................................        35,280,777       1,314,065       4,470,214        41,065,056      35,935,798       1,338,227         4,552,762      41,826,787         761,731
    Mississippi...............................         4,504,563         905,187       4,362,349         9,772,099       4,588,205         921,040         4,442,905       9,952,150         180,051
    Missouri..................................        32,522,564       1,691,587       5,206,649        39,420,800      33,126,359       1,723,420         5,302,795      40,152,574         731,774
    Montana...................................         2,280,824         368,311       1,316,379         3,965,514       2,323,183         373,255         1,340,688       4,037,126          71,612
    Nebraska..................................         7,716,556         586,015       1,986,250        10,288,821       7,859,824         595,383         2,022,928      10,478,135         189,314
    Nevada....................................        19,493,518         431,507         648,480        20,573,505      19,855,403         437,735           660,455      20,953,593         380,088
    New Hampshire.............................         3,195,678         406,684       1,717,006         5,319,368       3,255,027         412,408         1,748,713       5,416,148          96,780
    New Jersey................................       172,746,185       2,253,028       2,454,955       177,454,168     175,953,657       2,296,270         2,500,289     180,750,216       3,296,048
    New Mexico................................         6,465,925         513,285       1,929,966         8,909,176       6,585,967         521,175         1,965,605       9,072,747         163,571
    New York..................................       498,811,960       5,243,663       8,641,736       512,697,359     508,074,294       5,347,674         8,801,316     522,223,284       9,525,925
    North Carolina............................        26,909,601       1,986,974       9,180,077        38,076,652      27,409,243       2,024,809         9,349,597      38,783,649         706,997
    North Dakota..............................         2,223,367         310,931         973,521         3,507,819       2,264,660         314,709           991,499       3,570,868          63,049
    Northern Marianas.........................  ................          52,572          96,679           149,251  ..............          52,624            98,465         151,089           1,838
    Ohio......................................        84,276,055       3,334,681       9,345,956        96,956,692      85,840,652       3,399,901         9,518,540      98,759,093       1,802,401
    Oklahoma..................................        10,565,123       1,106,654       3,995,300        15,667,077      10,761,257       1,126,601         4,069,077      15,956,935         289,858
    Oregon....................................        27,015,598       1,027,623       3,172,303        31,215,524      27,517,193       1,045,965         3,230,883      31,794,041         578,517
    Pennsylvania..............................       135,900,688       4,001,593      10,425,512       150,327,793     138,424,027       4,080,366        10,618,030     153,122,423       2,794,630
    Puerto Rico...............................        48,225,340         973,945       3,115,471        52,314,756      49,120,731         991,195         3,173,002      53,284,928         970,172
    Rhode Island..............................         9,438,118         450,473         399,097        10,287,688       9,613,330         457,086           406,467      10,476,883         189,195
    South Carolina............................        10,611,045       1,069,122       4,594,674        16,274,841      10,808,049       1,088,306         4,679,520      16,575,875         301,034
    South Dakota..............................         1,603,871         337,161       1,186,647         3,127,679       1,633,657         341,472         1,208,559       3,183,688          56,009
    Tennessee.................................        21,216,715       1,587,436       5,931,199        28,735,350      21,610,601       1,617,152         6,040,725      29,268,478         533,128
    Texas.....................................       155,446,145       4,133,366      12,522,412       172,101,923     158,332,148       4,214,815        12,753,649     175,300,612       3,198,689
    Utah......................................        18,998,246         477,138         899,544        20,374,928      19,350,926         484,294           916,155      20,751,375         376,447
    Vermont...................................           806,059         275,698       1,060,965         2,142,722         821,029         278,760         1,080,556       2,180,345          37,623
    Virgin Islands............................  ................         136,892         227,081           363,973  ..............         137,133           231,275         368,408           4,435
    Virginia..................................        60,526,339       1,652,110       5,258,583        67,437,032      61,650,165       1,683,141         5,355,688      68,688,994       1,251,962
    Washington................................        80,902,237       1,479,903       3,684,623        86,066,763      82,404,326       1,507,435         3,752,664      87,664,425       1,597,662
    West Virginia.............................         3,886,087         776,535       3,132,991         7,795,613       3,958,260         789,774         3,190,846       7,938,880         143,267
    Wisconsin.................................        34,954,300       1,511,269       5,413,442        41,879,011      35,603,281       1,539,438         5,513,407      42,656,126         777,115
    Wyoming...................................         1,113,728         231,908         757,131         2,102,767       1,134,412         234,081           771,112       2,139,605          36,838
                                               =====================================================================================================================================================
          Total...............................     2,926,159,692      77,560,406     205,485,900     3,209,205,998   2,980,504,180      78,997,238       209,280,424   3,268,781,842      59,575,844
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                    over-the-road bus accessibility program
        Question. Beginning in October, 2000, Class I over-the-road bus
    companies are required by the Americans with Disabilities Act (ADA) to
    purchase lift-equipped buses, or to install a wheelchair lift in any
    new buses which they purchase. The entire fleet of buses owned by these
    companies must be accessible by 2012. What is the TEA21 guaranteed
    funding level for the over-the-road bus accessibility program for each
    year of the authorization? Are there any other federal funding programs
    under which these privately-owned companies could apply for assistance
    in meeting this mandate?
        Answer. The total guaranteed level of funding under TEA-21 for the
    over-the-road bus accessibility program is $24.3 million: $17.5 million
    is available for intercity fixed-route providers and $6.8 million is
    available for other providers, such as local fixed-route, commuter,
    charter and tour operators, as follows:
        Fiscal year 1999.--$2 million for intercity fixed-route providers.
        Fiscal year 2000.--$2 million for intercity fixed-route providers;
    $1.7 million for other providers.
        Fiscal year 2001.--$3 million for intercity fixed-route providers;
    $1.7 million for other providers.
        Fiscal year 2002.--$5.25 million for intercity fixed-route
    providers; $1.7 million for other providers.
        Fiscal year 2003.--$5.25 million for intercity fixed-route
    providers; $1.7 million for other providers.
        The only other federal funding program under which some privately-
    owned companies might apply for funds for lift-equipped vehicles is the
    Section 5311 nonurbanized area formula program. A provision under
    paragraph 5311(f) requires each state to spend fifteen percent of its
    annual Section 5311 apportionment ``to carry out a program to develop
    and support intercity bus transportation'' unless the Governor
    certifies that ``the intercity bus service needs of the state are being
    met adequately.'' Capital costs such as vehicles and vehicle-related
    equipment, including wheelchair lifts, are among eligible expenses
    under this program. Although assistance under Section 5311(f) must
    support intercity bus service in rural and small urban areas, the
    states have the discretion to determine how the funds will be used for
    that purpose.
                      metropolitan and statewide planning
        Question. Please provide a table displaying the formula
    apportionments to States and MPOs of the fiscal year 2001 and fiscal
    year 2002 Metropolitan and State Planning Funds.
        Answer. All FTA Planning funds are apportioned to the States;
    apportionments of Planning funds to MPOs within the States are done by
    each State according to a State formula. The fiscal year 2001
    apportionments to the States, as published in the Federal Register, are
    listed in the table below:

    ------------------------------------------------------------------------
                                                     Fiscal year 2001
                                             -------------------------------
                      State                    Metropolitan   State planning
                                                 planning      and research
                                               apportionment   apportionment
    ------------------------------------------------------------------------
    Alabama.................................        $457,908        $119,765
    Alaska..................................         209,116          54,694
    Arizona.................................         832,799         172,881
    Arkansas................................         209,116          54,694
    California..............................       8,913,015       1,657,612
    Colorado................................         680,203         154,775
    Connecticut.............................         611,144         159,844
    Delaware................................         209,116          54,694
    District of Columbia....................         281,927          54,694
    Florida.................................       2,850,720         662,471
    Georgia.................................       1,009,163         212,240
    Hawaii..................................         209,116          54,694
    Idaho...................................         209,116          54,694
    Illinois................................       3,054,794         551,886
    Indiana.................................         741,608         175,269
    Iowa....................................         234,596          61,358
    Kansas..................................         271,200          66,302
    Kentucky................................         324,845          83,112
    Louisiana...............................         561,350         145,024
    Maine...................................         209,116          54,694
    Maryland................................       1,213,729         233,121
    Massachusetts...........................       1,480,370         307,905
    Michigan................................       1,907,119         378,339
    Minnesota...............................         774,395         154,326
    Mississippi.............................         209,116          54,694
    Missouri................................         856,194         181,131
    Montana.................................         209,116          54,694
    Nebraska................................         209,116          54,694
    Nevada..................................         226,742          59,304
    New Hampshire...........................         209,116          54,694
    New Jersey..............................       2,591,730         431,523
    New Mexico..............................         209,116          54,694
    New York................................       5,262,941         918,827
    North Carolina..........................         625,372         163,565
    North Dakota............................         209,116          54,694
    Ohio....................................       1,801,618         433,309
    Oklahoma................................         337,052          88,155
    Oregon..................................         378,602          92,433
    Pennsylvania............................       2,336,651         469,143
    Puerto Rico.............................         566,656         138,335
    Rhode Island............................         209,116          54,694
    South Carolina..........................         355,069         $92,868
    South Dakota............................         209,116          54,694
    Tennessee...............................         551,991         144,372
    Texas...................................       3,552,299         740,230
    Utah....................................         328,394          85,891
    Vermont.................................         209,116          54,694
    Virginia................................       1,168,443         249,281
    Washington..............................         931,292         209,250
    West Virginia...........................         209,116          54,694
    Wisconsin...............................         652,027         160,431
    Wyoming.................................         209,116          54,694
                                             -------------------------------
          TOTAL.............................      52,278,930      10,938,770
    ------------------------------------------------------------------------

        For fiscal year 2002, the apportionment to the states based on the
    guaranteed level of funding for the two FTA Planning programs would be
    as follows:

    ------------------------------------------------------------------------
                                                     Fiscal year 2002
                                             -------------------------------
                      State                    Metropolitan   State planning
                                                 planning      and research
                                               apportionment   apportionment
    ------------------------------------------------------------------------
    Alabama.................................         485,442         126,759
    Alaska..................................         221,690          57,888
    Arizona.................................         882,875         182,978
    Arkansas................................         221,690          57,888
    California..............................       9,448,942       1,754,420
    Colorado................................         721,103         163,813
    Connecticut.............................         647,891         169,179
    Delaware................................         221,690          57,888
    District of Columbia....................         298,878          57,888
    Florida.................................       3,022,130         701,160
    Georgia.................................       1,069,843         224,635
    Hawaii..................................         221,690          57,888
    Idaho...................................         221,690          57,888
    Illinois................................       3,238,475         584,116
    Indiana.................................         786,200         185,505
    Iowa....................................         248,702          64,942
    Kansas..................................         287,507          70,174
    Kentucky................................         344,378          87,965
    Louisiana...............................         595,104         153,493
    Maine...................................         221,690          57,888
    Maryland................................       1,286,709         246,735
    Massachusetts...........................       1,569,383         325,887
    Michigan................................       2,021,792         400,435
    Minnesota...............................         820,959         163,339
    Mississippi.............................         221,690          57,888
    Missouri................................         907,676         191,709
    Montana.................................         221,690          57,888
    Nebraska................................         221,690          57,888
    Nevada..................................         240,376          62,767
    New Hampshire...........................         221,690          57,888
    New Jersey..............................       2,747,568         456,724
    New Mexico..............................         221,690          57,888
    New York................................       5,579,395         972,487
    North Carolina..........................         662,974         173,117
    North Dakota............................         221,690          57,888
    Ohio....................................       1,909,947         458,614
    Oklahoma................................         357,319          93,304
    Oregon..................................         401,366          97,831
    Pennsylvania............................       2,477,151         496,541
    Puerto Rico.............................         600,729         146,414
    Rhode Island............................         221,690          57,888
    South Carolina..........................         376,419          98,291
    South Dakota............................         221,690          57,888
    Tennessee...............................         585,181         152,804
    Texas...................................       3,765,894         783,460
    Utah....................................         348,140          90,907
    Vermont.................................         221,690          57,888
    Virginia................................       1,238,700         263,840
    Washington..............................         987,289         221,471
    West Virginia...........................         221,690          57,888
    Wisconsin...............................         691,233         169,800
    Wyoming.................................         221,690          57,888
                                             -------------------------------
          TOTAL.............................      55,422,400      11,577,600
    ------------------------------------------------------------------------

        Question. Please explain the transfer of approximately $54 million
    in FHWA metropolitan planning funds to FTA in fiscal year 2000. What is
    the reason for this transfer, and what is the statutory authority? Does
    FTA administer all the funds? Will a similar transfer take place in
    fiscal years 2001 and 2002?
        Answer. Approximately $54 million in FHWA metropolitan planning
    funds were transferred last fiscal year to FTA so that the states could
    manage their planning funds as a single grant. This consolidation of
    planning funds was done as a pilot in response to requests from a
    number of states. FTA and FHWA developed this pilot, called
    Consolidated Planning Grant (CPG), to streamline the grant process,
    reduce paperwork for the States, and support a State's focus on system
    rather than mode-specific planning.
        The fiscal year 2000 FHWA funds were transferred to FTA for the CPG
    pilot under the provisions of section 104 (k) of Title 23, U.S.C.,
    ``Transfer of Highway and Transit Funds.'' Transferring FHWA funds to
    FTA gives States electronic access to both FTA and FHWA planning funds
    thereby giving States the ability to monitor and manage their planning
    balances through a single program. Transferring funds also provides
    States with a simplified fund drawdown process ensuring that the States
    will not have their planning funds lapse.
        When the Consolidated Planning Grant pilot was developed, FTA and
    FHWA decided that the funds should be processed through FTA's Windows-
    based electronic [fund] award and management system. This system, which
    will soon be available to the States through the Internet, allows the
    States to apply for and manage planning funds electronically. Based on
    an earlier customer survey of the participating States' satisfaction
    with the CPG pilot, we expect current participants to continue with the
    pilot and anticipate that additional States will become participants.
        It is not known whether transfers in FHWA metropolitan planning
    funds to FTA similar to the level in fiscal year 2000 will take place
    in fiscal year 2001 and fiscal year 2002.
                    national research and technology program
        Question. Please provide a list by activity and amount of the
    earmarks contained in TEA-21 that must be administered under the FTA's
    transit planning and research account in fiscal year 2002. Are there
    any TEA-21 project earmarks under the national research and technology
    program for fiscal year 2002?
        Answer.

                            [In thousands of dollars]

                                                            Fiscal year 2002
            Activity                                                  Amount
    Metropolitan Planning.........................................   55,422
    Statewide Planning and Research...............................   11,578
    Transit Cooperative Research Program..........................    8,250
    National Transit Institute....................................    4,000
    Rural Transit Assistance Program..............................    5,250
    National Research and Technology:.............................   31,500
        Project ACTION...........................................\1\ [3,000]

    \1\ This project is earmarked in TEA-21.

        Question. If FTA had a constrained budget for the national research
    and technology program, how would the agency allocate non-TEA21
    mandated programs with a discretionary allowance of $12,000,000?
        Answer. FTA has requested $28,500,000 for non-TEA21 mandated
    programs in fiscal year 2002. If only $12,000,000 were made available
    for use at FTA's discretion, we would allocate it to the following non-
    TEA21 programs, with reductions as indicated .

                            [In thousands of dollars]
    ------------------------------------------------------------------------
                                                                    Under
                        Program                     Fiscal year  $12,000,000
                                                        2002      constraint
    ------------------------------------------------------------------------
    1.5.1. Safety & Security Training (includes           1,400        1,400
     Transportation Safety Institute).............
    1.1. Railroad Grade Crossing Safety...........          750          750
    1.5.5.2. Safety Management Information System           400          400
     (SAMIS)......................................
    1.5.5.3. Drug and Alcohol Testing Information         1,100        1,100
     System (DAMIS)...............................
    1.5.13. Transit Accident Causal Factors.......          300          300
    1.3. Crime Prevention.........................          650          650
    1.5.7. Transit Bus Safety.....................          500          500
    1.5.14. System Safety Guidance Program........          300          300
    1.5.3. Drug and Alcohol Testing: Updated                250          250
     guidelines and newsletters...................
    1.4.2 Shared Track............................          750          750
    1.5.2. Safety & Security Training Course                300          300
     Development..................................
    1.5.11. Safety Awareness Outreach.............          400          400
    1.5.15. Fatigue Programs......................          300          300
    1.5.12. Safety and Security Preparedness                200          200
     Planning and Drills..........................
    1.5.6. Safety and Security Clearinghouse/Web-           300          300
     site.........................................
    1.5.9. Fire Materials Testing.................          100          100
    4.4. National Rural Transportation Assistance           750          750
     Program......................................
    7.2. Major Investment Planning and Project              550          550
     Development..................................
    6.1. Transit Conditions, Performance and Needs          500          500
    2.3. Civil Engineering Deployment:                       80           80
     Construction Roundtables.....................
    3.1. Bus Rapid Transit (BRT) Initiative.......        1,000        1,000
    7.1. Transportation Planning and Programming..        1,100        1,100
    6.3. Innovative Financing.....................          200           20
                                                   -------------------------
          Subtotal................................       12,180       12,000
    4.1. Joblinks Demonstration and Technical             1,000  ...........
     Assistance Program...........................
    7.3. Land Use and Environmental Planning......          200  ...........
    9.3. Program Evaluation and Strategic Planning          200  ...........
     (GPRA).......................................
    8.1. Support for Title VI/DBE.................          450  ...........
    2.1.3. BRT Technology Evaluation..............        2,000  ...........
    7.4. Planning Methods.........................          500  ...........
    6.5. Nationwide Personal Transportation Survey          400  ...........
    8.2. Garrett A. Morgan Trans. Tech. Program...          200  ...........
    2.2.1. Rail Control Systems Deployment and            1,500  ...........
     Standards Development........................
    5.1. Technology Sharing: Internet FTA Website.          100  ...........
    2.1.1. Hybrid-Electric Propulsion Development.        2,000  ...........
    2.1.2. Clean Fuels and Electric Drive Bus             1,000  ...........
     Deployment...................................
    6.2. Benefits of Transit......................          400  ...........
    5.1. Technology Sharing and Documentation of            700  ...........
     Research.....................................
    9.1. National Transit GIS.....................          200  ...........
    4.2. Federal Coordinating Council Support.....          150  ...........
    3.2. Mixed Rail Operations....................        2,000  ...........
    10.1. International Mass Transportation                 500  ...........
     Program: Technical Assistance and Training...
    2.1.4. Federal Lands Transit Technology               1,200  ...........
     Transfer.....................................
    2.3. Civil Engineering Research and Deployment        1,420  ...........
    7.5. Predicted vs. Actual Outcomes of New               200  ...........
     Starts Projects..............................
                                                   -------------------------
          Total...................................       28,500       12,000
    ------------------------------------------------------------------------

        Question. For each of the congressionally designated programs and
    projects in the fiscal year 2000 and 2001 appropriations bills under
    ``Transit Planning and Research'', please note when the grant,
    contract, or cooperative agreement was released and note who the
    official grantee agency or entity is in each case. (Designate which
    year the funds were appropriated.)
        Answer.

    ----------------------------------------------------------------------------------------------------------------
      Congressionally designated programs
                 and projects                 Amount        Release date                Official recipient
    ----------------------------------------------------------------------------------------------------------------
    Fiscal Year 2000 Appropriation:
        Transit Cooperative Research        $7,150,000  9/29/00............  National Academy of Sciences
         Program.
        Design a new transit database with     395,000  2/9/00.............  KPMG Peat Markwick
         National Academy of Sciences.
        Transit Cooperative Research           695,000  9/1/00.............  KPMG Peat Markwick
         Program.
        National Transit Institute........   4,000,000  9/29/00............  Rutgers University
    National Research and Technology:
        Zinc-air battery bus technology        937,758  ( \1\ )............  Electric Fuel Corporation
         demonstration.
        Washoe County, Nevada transit        1,235,616  11/29/00...........  Regional Transportation Commission of
         technology.                                                          Washoe County
        Massachusetts Bay Transportation     1,482,739  12/15/00...........  Massachusetts Bay Transportation
         Authority advanced electric                                          Authority
         transit buses and related
         infrastructure.
        Palm Springs, California fuel cell     988,492  4/5/00.............  SunLine Transit
         buses.
        Gloucester, Massachusetts            1,482,739  1/31/00............  Massachusetts Bay Transportation
         intermodal technology center.                                        Authority
        Southeastern Pennsylvania            2,965,477  5/23/00............  Southeastern Pennsylvania
         Transportation Authority advanced                                    Transportation Authority
         propulsion control system.
        Project ACTION....................   2,965,477  4/10/2000..........  Easter Seals Project Action
        Advanced transportation and          3,212,600  4/6/2000...........  Westart-CALSTART, Inc
         alternative fuel technology
         consortium (CALSTART).
        Hennepin County community              988,492  11/29/00...........  Hennepin County Regional Railroad
         transportation, Minnesota.                                           Authority
        Electric vehicle information           741,369  11/29/00...........  Electronic Vehicle Association of the
         sharing and technology transfer                                      Americas
         program.
        Portland, Maine independent            494,246  2/29/00............  Independent Transportation Network
         transportation network.
        Wheeling, WV mobility study,......     247,124  ( \1\ )............  Ohio Valley Regional Transportation
                                                                              Authority
        International program.............     988,492  1/16/01............  Department of State USAID
        Transit Safety and Security          1,200,000  3/13/00............  Transportation Safety Institute
         Training.
        Safety and security programs......   4,250,000  ...................  Various recipients
        Santa Barbara Electric Transit         494,246  9/25/00............  Santa Barbara Electric Transit
         Institute.                                                           Institute
        Pittsfield economic development      1,334,465  7/6/00.............  Pioneer Valley Transit Authority
         authority electric bus program.
        Citizens for modern transit,           296,548  ( \1\ )............  East-West Gateway Coordinating Council
         Missouri.
    Fiscal Year 2001 Appropriation:
        Transit Cooperative Research         6,735,150  ( \1\ )............  National Academy of Sciences/TRB
         Program.
        National Transit Database Phase 2    1,496,700  To be selected.....
         Redesign Activities.
        National Transit Institute........   3,991,200  ( \1\ )............  Rutgers University
        Rural Transit Assistance Program..   5,238,450  ( \1\ )............  American Public Works Association
    National Research and Technology:
        Safety and Security activities....   6,086,580  ( \2\ )............  Various recipients
        West Virginia University Fuel Cell     971,857  ( \1\ )............  West Virginia University
         Technology Institute Propulsion
         and ITS Testing.
        State of Vermont Electric Vehicle      498,900  ( \1\ )............  E Vermont
         Transit Demonstration.
        Center for Composites                  923,264  3/19/01............  Southern Research Institute
         Manufacturing.
        Fairbanks Extreme Temperature          777,486  ( \1\ )............  To be determined
         Clean Fuels Research.
        WestStart-CALSTART................   2,977,280  1/23/01............  WestStart-CALSTART, Inc
        Electric Vehicle Institute,            498,900  2/20/01............  Electric Transit Vehicle Institute
         Tennessee.
        Southestern Pennsylvania             2,993,400  4/12/01............  Southeastern Pennsylvania
         Transportation Authority Advanced                                    Transportation Authority
         Propulsion Control System (TEA-
         21).
        Project ACTION (TEA-21)...........   2,993,400  1/23/01............  Easter Seals Project Action
        National Rural Transit Assistance      748,350  ( \1\ )............  To be determined
         Program.
        Hennepin County Community              997,800  ( \1\ )............  Hennepin County Regional Railroad
         Transportation, Minnesota.                                           Authority
        Great Cities Universities            1,995,600  ( \1\ )............  University of Alabama Birmingham on
         Consortium.                                                          behalf of Great Cities Universities
                                                                              Consortium
        Joblinks..........................   1,047,690  ( \1\ )............  Community Transportation Association of
                                                                              America
        Acadia Island, Maine, Island           149,670  ( \1\ )............  Maine Department of Transportation
         Explorer Transit System
         Experimental Pilot Program.
        Mid-America Regional Council           748,350  ( \1\ )............  Mid-America Regional Council
         Coordinated Transit Planning,
         Kansas City Metro Area.
        Sacramento Area Council of             249,450  ( \1\ )............  Sacramento Area Council of Governments
         Governments Regional Air Quality
         Planning and Coordination Study.
        University of Rhode Island,            149,670  ( \1\ )............  Rhode Island Public Transit Authority
         Kingston Traffic Congestion Study
         Component.
        Trans-Lake Washington Land Use         449,010  ( \1\ )............  Washington Department of Transportation
         Effectiveness and Enhancement
         Review.
        Southern Nevada Air Quality Study.     777,486  ( \1\ )............  Desert Research Institute
        Mississippi State University Bus        99,780  ( \1\ )............  Mississippi Department of
         Service Expansion Plan.                                              Transportation
        South Amboy, New Jersey Transit        199,560  ( \1\ )............  To be determined
         Study.
        Long Island, New York                  249,450  ( \1\ )............  To be determined
         Transportation Land Use Projects.
    ----------------------------------------------------------------------------------------------------------------
    \1\ Not yet released.
    \2\ Varies.

        Question. Why is FTA requesting $750,000 from the national research
    and technology program for the Rural Transportation Assistance Program,
    which already has a guaranteed funding level of $5,250,000?
        Answer. The $750,000 requested is to support the national component
    of the Rural Transportation Assistance Program (RTAP). RTAP activities
    at the national level include the National Transit Resource Center,
    operated by the Community Transportation Association of America,
    production and dissemination of training modules, information and
    technical assistance briefs, research, and coordination of and support
    for state RTAP activities. The $5,250,000 guaranteed funding would be
    entirely allocated to the states to support their state RTAP
    activities.
        Since RTAP began in 1987, FTA has administered the program with
    both a state and national component. From 1987 to 1992, the
    approximately $5 million appropriated annually was split with 85
    percent allocated to the states and 15 percent reserved for national
    activities. Starting in 1993 Congress appropriated only the amount
    traditionally allocated to the states, and FTA funded the national RTAP
    separately at a reduced level. In fiscal year 1998 and 1999 Congress
    earmarked $750,000 for the national RTAP in addition to $5.25 million
    for RTAP, which FTA allocated entirely to the states. In fiscal year
    2000, however, when Congress appropriated only the $5.25 million
    guaranteed level, FTA allocated only $4.7 million to the states and
    reserved $525 thousand for the national RTAP. In response to a strong
    adverse reaction from the states, FTA promised to seek full funding for
    both components of RTAP. The fiscal year 2001 Appropriations Act
    restored full funding to the states and supported the highly valued
    national activities at the $750,000 level.
        Question. Of the activities requested within the safety and
    security area, which are directly supported by or in response to NTSB
    recommendations?
        Answer. FTA has initiated the following actions in response to NTSB
    recommendations:
        1. As a result of NTSB recommendations following their March 1998
    transit bus safety hearings, the FTA is reviewing a number of means to
    encourage uniformity of oversight by states over local transit bus
    operations. FTA is considering the development of technical assistance
    to the states to assist them with the adoption of uniform safety
    regulations and oversight.
        2. Following NTSB's recommendations concerning fatigue related
    accidents, the FTA sponsored a fatigue symposium. A second symposium
    was recommended to be conducted in two years. FTA is requesting funding
    for that purpose.
        Also in response to issues identified by the NTSB, the
    Transportation Safety Institute has undertaken a series of courses for
    transit industry personnel relating to fitness-for-duty programs and
    training which address fatigue issues. FTA will continue funding of
    that program with fiscal year 2000 funding.
        Question. The Committee is aware of FTA's and FRA's joint work on
    developing agency policy on shared use of the general railway system by
    conventional railroads and transit systems. Please outline the status
    of this policy's development, summarize the principal issues and
    questions. How will the requested $750,000 for ``shared track
    technology'' and the $2 million for ``mixed rail operations'' be spent?
        Answer. Both the FTA and FRA entered into an agreement in October
    1998 to coordinate their safety programs with respect to rail. In May
    1999, both agencies proposed a policy concerning track shared by both
    railroad and transit. After considering 50 written comments from the
    public, on July 10, 2000, both agencies issued a joint final statement
    of policy in 65 FR 42526. This policy identifies safety issues
    emanating from shared track, such as, potential for collision and
    infrastructure (e.g., train control).
        On May 11, 2001, FTA issued guidance to its Regional Administrators
    on coordination with the FRA about waivers for light rail transit
    vehicles operating on general railroad systems. FTA currently has a
    liaison that participates on the FRA Railroad Safety Board which
    reviews shared track waiver requests. Based on recent, first-hand
    observation of successful shared track experience in Europe (e.g.,
    Karlsruhe, Germany), FTA has developed a strategy to address safety
    issues over shared track. The strategy consists of taking a pro-active
    approach that focuses on vehicles, information/communications, and
    employee safety. Funding for only the first two areas have been
    requested since employee safety is presently funded as part of safety
    training initiative.
        FTA proposes to spend $750,000 on research and development to
    assess the crashworthiness of light rail vehicles used on track shared
    with the general railroads. A survey of the state-of-the-art technology
    addressing vehicle body and materials will be performed, and a study
    will be conducted to optimize a design for light rail vehicles capable
    of absorbing energy from a collision with freight cars.
        FTA proposes to spend $2 million on research, development, and
    demonstration of information/communications technologies, such as
    intelligent transportation systems, in order to maximize safety as well
    as capacity on shared track. Intelligent transportation systems
    include: (1) combining automatic vehicle location using high-precision,
    differential global position system technology with, (2) positive train
    control (i.e., radio-based train control systems) to separate trains,
    and (3) deploying common communications systems that are compatible
    between light rail transit vehicles and freight trains.
        Question. What is the current status and cost to complete the
    Georgetown University fuel cell bus program? Is FTA requesting any
    transit research funds to support this effort in fiscal year 2002?
        Answer. In 1997, the Federal Transit Administration (FTA) program
    was structured to develop two fuel cell buses, one with a phosphoric
    acid fuel cell (PAFC) and one with a proton exchange membrane fuel cell
    (PEMFC). At that time it was not clear which technology might better
    meet the demands of the transit bus market.
        The PAFC bus development is complete. The fuel cell power plant was
    fabricated and tested by International Fuel Cells, and integrated into
    a 40-foot NovaBus platform. BAE Systems (formally Lockheed Martin
    Control Systems) provided the power and propulsion system (the same
    design that is being used on the hybrid-electric buses in New York
    City). Emission testing of this vehicle has been completed and shows
    the vehicle to have emissions well below any projected clean air
    standards. Currently, discussions with the Washington Metropolitan Area
    Transit Authority are directed toward operational testing and
    demonstration of this vehicle on a route in the Washington metropolitan
    area.
        The PEMFC bus fabrication is nearing completion at the XCELLSiS
    facility in Poway, CA. The power plant combines two 50kw fuel cell
    engines manufactured by XCELLSiS (a joint venture between
    DaimlerChrysler, Ford, and Ballard) for their NECAR-3 automobile into a
    single 100 kw bus power plant. The engine has been integrated into a
    40-foot NovaBus platform with a BAE Systems power and propulsion
    system. Plans currently call for this vehicle to be operationally
    tested and demonstrated by multiple transit agencies in California.
        The FTA, in 1999, structured a Memorandum of Agreement (MOA) with
    Georgetown University (GU) to define the total program, schedule, end
    products and funding requirements for the Fuel Cell Transit Bus
    Program. The MOA includes the Fuel Cell Transit Bus Maintenance
    Facility so that the total Fuel Cell Transit Bus Program activities are
    defined in a single document. The MOA envisioned a total of eight fuel
    cell transit buses (including the two above) with a total cost of $71.8
    million, of which $51 million has been provided to date. This plan has
    now been revised to reflect the following developments:
        (1) The major thrust for fuel cell powered automobiles in Europe
    and the United States now uses PEMFC technology with liquid methanol as
    fuel. The power plants for fuel cell buses will scale the automotive
    fuel cells to transit bus requirements by coupling several smaller
    units for increased power. Incorporation of automotive technology
    should greatly reduce the cost of bus fuel cells since production
    levels will be driven by demand for automobiles.
        (2) A key lesson learned from the program to date is that combining
    fuel cell and battery technology into a hybrid configuration (as in the
    first two buses) cannot meet the commercial goals established for this
    program. Such buses are too heavy and complex to satisfy the market
    demand. Larger fuel cell power plants are necessary. Automotive power
    plants are now sized at 60 kW; a non-hybrid 40-foot transit bus
    requires approximately 200 kW of power. The GU program has been
    restructured to meet this requirement. To reduce first-time engineering
    costs, an existing 30-foot fuel cell bus will be upgraded, using
    multiple automotive fuel cell power plants and ultra-capacitors to meet
    transit bus power requirements. This approach should allow transit bus
    power plants to be built with production hardware incorporating
    automotive economies of scale.
        (3) There is interest within the Department of Defense to
    investigate the use of fuel cells for Army land vehicle applications.
    The Tank Automotive Command's National Automotive Center (NAC) funded a
    concept study on the applicability of PEMFC power plants for various
    types of Army trucks. The power levels of these vehicles are close to
    the fuel cell power plants (200 kW) being developed for the next PEMFC
    buses. The ability to operate on liquid fuel is paramount for military
    applications although eventually a logistic military fuel (diesel or
    JP-8) would have to be used. The NAC has provided some funding ($3.0
    million to date with an additional $2.0 million previously appropriated
    to be made available) for the next fuel cell bus development in order
    to gain familiarity with the control schemes and operation of this
    class of vehicle.
        It is vital to develop and integrate this concept of a non-hybrid
    fuel cell power plant into a transit bus (1) to address scale-up and
    control issues, and (2) to demonstrate resulting performance to the
    transit community. GU has identified an additional funding requirement
    of $4.5 million over the additional NAC funding to complete that
    activity and still continue the testing and demonstrations for the
    existing buses. Once this bus demonstrates operational performance, the
    FTA can define a responsive follow-on program to ensure proper
    commercialization of the technology.
        FTA is not requesting funding for this effort in fiscal year 2002.
        Question. What is the total amount allocated to bus rapid transit
    activities in fiscal years 1999, 2000, 2001, and planned for fiscal
    year 2002? Please list the BRT consortium member agencies, and provide
    a brief description of each BRT project and its associated schedule and
    budget. What federal funding options are available to these projects?
    If the projects have received discretionary federal funding in the past
    three years, please note the amount of funding, when it was
    appropriated, and the type of funding.
        Answer.

    1998....................................................    \1\ $160,000
    1999....................................................   \1\ 1,720,000
    2000....................................................     \1\ 200,000
    2001....................................................     \1\ 998,980
    2002....................................................   \2\ 1,000,000

    \1\ Actual.
    \2\ Planned.

                                                                                  BUS RAPID TRANSIT CONSORTIUM PROJECTS
                                                                                          [Million of dollars]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                    City                                  Sponsor                                           Description                                    Schedule                   Budget
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Boston, MA.........................  Massachusetts Bay Transportation          The Silver Line project consists of locally funded exclusive  Phase 1: 2003; Phase 2:      Phase 1: $601; Phase
                                          Authority (MBTA).                         lanes on Washington Street (Phase 1, Section B) (under        2003.                        2: $364
                                                                                    construction and opening in 2003) connected to two tunnel
                                                                                    sections: 1. South Boston Piers to Logan Airport (Phase 1,
                                                                                    Section A)(in FFGA)(under construction and opening in
                                                                                    2003), and 2. Downtown Boston (Phase 2) (in Preliminary
                                                                                    Engineering) (2008). The Silver Line will have direct
                                                                                    transfers to MBTA's Red, Orange and Green lines and permit
                                                                                    much faster service to Logan Airport.
    Charlotte, NC......................  City of Charlotte.......................  Independence Corridor. This project includes an exclusive     Phase 2: 2004; Phase 3:      13
                                                                                    busway in the median of Independence Boulevard.               2006.
                                                                                    Approximately 2.6 miles of the busway already exists. Phase
                                                                                    2 will add one additional mile in 2004 and Phase 3 will
                                                                                    potentially have a total of 13.5 miles after 2006. A
                                                                                    corridor study is underway.
    Cleveland, OH......................  Greater Cleveland Regional Transit        GCRTA proposes to rebuild a five-mile section of Euclid       2003.......................  220
                                          Authority.                                Avenue by 2003 to provide for exclusive transit lanes,
                                                                                    landscaping, transit shelters, street furniture, etc. The
                                                                                    exclusive lanes will carry a fleet of new low-floor
                                                                                    articulated dual mode buses. This project is now in final
                                                                                    design.
    Dulles Corridor, VA................  Virginia Department of Rail & Public      This project, in preliminary engineering, is part of a multi- 2003.......................  280
                                          Transportation.                           year, multi-phase effort to bring Metrorail to the
                                                                                    corridor. The Bus Rapid Transit project phase (2003) would
                                                                                    be an intermediate phase to the ultimate Metrorail phase
                                                                                    (2010). Bus Rapid Transit would operate on the congestion-
                                                                                    free Dulles Airport Access Road and use median stations
                                                                                    built for the Metrorail extension.
    Eugene-Springfield, OR.............  Lane Transit District...................  A 10-mile East-West pilot corridor from east Springfield to   Phase 1: 2002; Phase 2:      15
                                                                                    west Eugene. LTD proposes to use exclusive lanes in a         2004.
                                                                                    variety of configurations, limited stops, proof-of-payment
                                                                                    fare collection, low-floor guided buses, feeder services,
                                                                                    park and ride, and ITS technologies. Phase 1, downtown
                                                                                    Eugene to downtown Springfield is scheduled for 2002 and
                                                                                    funded through the Bus Capital Program and has been
                                                                                    approved for implementation. Phaes 2 is scheduled in 2004.
                                                                                    LTD is expected to pursue New Starts funding for Phase 2
                                                                                    and subsequent phases.
    Hartford, CT.......................  Connecticut Department of Transportation  A nine-mile, 12-station, two-lane exclusive busway is to be   2003.......................  80
                                                                                    built on active and inactive rail rights-of-way and open in
                                                                                    2003. There will be five intermediate points of access.
                                                                                    Project is in preliminary engineering.
    Honolulu, HI.......................  City and County of Honolulu.............  CityExpress!, Phase 1 of Honolulu's BRT project, which        Phase 1: 1999; Phase 2:      Phase 1: 4; Phase 2:
                                                                                    started in March 1999. is a limited stop service overlayed    2004; Phase 3: 2008.         264; Phase 3: 239
                                                                                    on current local service routes running in whole or in part
                                                                                    along the same alignment, with additional transit priority
                                                                                    measures and improved express service stations to be added
                                                                                    in subsequent phases. Travel times on a 12.6 mile route
                                                                                    were cut from one hour and twenty minutes to 45 minutes.
                                                                                    Average weekday ridership has quadrupled from 2500 to
                                                                                    10,000. Phase 2 (In-Town BRT) and Phase 3 (Regional BRT) of
                                                                                    Honolulu project are under consideration by FTA to initiate
                                                                                    New Starts preliminary engineering.
    Los Angeles, CA....................  Los Angeles County Metropolitan           Rapid Bus, Los Angeles' initial phase BRT project was         Phase I Rapid Bus: 2000....  15
                                          Transportation Authority (LACMTA) & Los   implemented in June 2000 on two corridors: Ventura and
                                          Angeles City Department of                Wilshire/Whittier Boulevards. The Rapid Bus services
                                          Transportation.                           operate on regular mixed traffic lanes but includes traffic
                                                                                    signal preference within the City of Los Angeles, limited
                                                                                    stops, and low floors for fast boarding. Travel time has
                                                                                    been cut by 25 percent and patronage has increased by 25
                                                                                    percent to 40 percent. Los Angeles is also seeking FTA New
                                                                                    Starts funding for a Wilshire Boulevard BRT project with
                                                                                    exclusive lanes and is following FTA's New Starts process
                                                                                    for a BRT project with exclusive lanes in the San Fernando
                                                                                    Valley corridor.
    Miami, FL..........................  Miami-Dade Transit Agency...............  MDTA proposes to extend their existing 8.5 mile South Miami-  2003.......................  88
                                                                                    Dade Busway another 11.5 miles to Florida City by 2003. The
                                                                                    additional section would have 22 new stations. The project
                                                                                    is in preliminary engineering.
    San Juan, PR.......................  Puerto Rico Highway and Transportation    2002........................................................  2..........................
                                          Authority Fast shuttle bus service
                                          operating over HOV lanes on the new 2.5-
                                          mile Rio Hondo Connector linking the
                                          Bayamon Tren Urbano Station and the Rio
                                          Hondo Tren Urbano Plaza. The project
                                          will also include seamless fare
                                          collection with Tren Urbano, traffic
                                          signal preference, and other ITS
                                          technologies. This FFGA project is
                                          under construction and is expected to
                                          be operational in 2002.
    Santa Clara, CA....................  Santa Clara Valley Transportation         The line 22 corridor is approximately 27 miles long and       2002.......................  33
                                          Authority (SCVTA).                        serves six Silicon Valley cities. Line 22 has a running
                                                                                    time of over two hours. SCVTA plans to reduce travel times
                                                                                    by 25 percent by route modifications, infrastructure,
                                                                                    traffic signal preference, queue jump lanes, fare
                                                                                    prepayment, low-floor-articulated buses, and ITS
                                                                                    technologies. The project is expected to be operational in
                                                                                    2002.
    Pittsburgh, PA.....................  Port Authority of Allegheny County......  The five-mile West or Airport Busway opened to service in     2000.......................  322
                                                                                    September 2000. Bus travel times have been cut from 52
                                                                                    minutes to 26 minutes. Weekday ridership has doubled from
                                                                                    3,500 to 7,000.
    Albany, NY.........................  Capital District Transportation           The ``Best Bus'' will operate on five miles of New York       2002.......................  5
                                          Authority.                                Route 5 between the downtowns of Albany and Schenectady.
                                                                                    Project features traffic signal preference, infrastructure,
                                                                                    and queue jump lanes will save ten minutes.
    Chicago, IL........................  Chicago Transit Authority...............  The X49 Western Avenue Express began operation in December    1998.......................  1
                                                                                    1998. The X49 uses limited stops to cut travel time by 25
                                                                                    percent. Ridership has increased by 17 percent.
    Montgomery County, MD..............  Montgomery County, MD...................  The six mile Viers Mill Road priority project will include    2002.......................  6
                                                                                    route modifications, queue jump lanes, shoulder operations
                                                                                    and ITS technologies.
    Oakland, CA........................  Alameda-Contra Costa Transit Dis-  trict  The 16 mile San Pablo corridor runs through six East Bay      2002.......................  28
                                                                                    cities and includes a variety of bus priority improvements
                                                                                    and vehicle and station design improvements to cut running
                                                                                    and dwell time.
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

        The following Federal funding options are available:
        FTA Section 5307--Formula Grant Program; FTA Section 5309--New
    Starts Program; FTA Section 5309--Bus Capital Discretionary Program;
    FTA Section 5314--Research and Technology Program; FHWA ITS Systems
    Integration Program; FHWA Flexible funding including: Surface
    Transportation Program, and Congestion Management and Air Quality
    (CMAQ).
        The following BRT Demonstration cities each received $50,000 in
    Section 5314 (Research and Technology Program) funds appropriated in
    fiscal year 1999: Boston, Charlotte, Cleveland, Dulles Corridor,
    Eugene, Hartford, Honolulu, Miami, San Juan, and Santa Clara.
        The following table shows this and other BRT funding:

                                                             BUS RAPID TRANSIT: FEDERAL DISCRETIONARY FUNDS BY FISCAL YEAR OF APPROPRIATION
                                                                                         [In million of dollars]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   FTA section 5309 bus    FTA section 5309 new     FTA section 5314             CMAQ                   FHWA
                                                                                         capital                  starts        --------------------------------------------------------------------
                      Location                               Project            ------------------------------------------------
                                                                                   1999    2000    2001     1999    2000   2001   1999   2000    2001     1999    2000   2001    1999    2000   2001
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Boston.....................................  Silver Line...................  .......  .....  .......  .......  .....  .....    .05  .....  .......  .......  .....  .....  .......  .....  .....
    Charlotte..................................  Independence..................  .......  .....  .......  .......  .....  .....    .05  .....  .......  .......  .....  .....  .......  .....  .....
    Cleveland..................................  Euclid........................  .......  .....     10.0  .......  .....   27.0    .05  .....  .......  .......  .....  .....  .......  .....  .....
    Dulles.....................................  Dulles........................  .......  .....  .......  .......  .....  .....    .05  .....  .......  .......  .....  .....  .......  .....  .....
    Eugene.....................................  Pilot Corridor................      4.4    4.3  .......  .......  .....  .....    .05  .....      .05  .......  .....  .....  .......  .....  .....
    Hartford...................................  Hartford-New Britain Busway...  .......  .....      2.2  .......  .....   17.1    .05  .....  .......  .......    3.1  .....  .......  .....    0.9
    Honolulu...................................  CityExpress!..................  .......  .....  .......  .......  .....  .....    .05  .....      .05  .......  .....  .....  .......    0.2  .....
    Miami......................................  South Dade Busway.............  .......  .....  .......  .......  .....    7.4    .05  .....  .......  .......  .....  .....  .......   18.4    9.0
    San Juan...................................  Rio Hondo.....................  .......  .....  .......  .......  .....  .....    .05  .....  .......  .......  .....  .....  .......  .....  .....
    Santa Clara................................  Line 22 Corridor..............      4.2  .....      4.2  .......  .....  .....    .05  .....  .......  .......  .....  .....  .......    4.2    4.2
    Los Angeles................................  Rapid Bus.....................  .......  .....  .......  .......  .....  .....  .....  .....      .10  .......  .....  .....  .......  .....  .....
    Oakland....................................  San Pablo.....................     11.0  .....     11.3  .......  .....  .....  .....  .....  .......  .......  .....  .....  .......    3.0    2.0
    Pittsburgh.................................  West Busway...................     18.9  .....  .......  \1\ 130  .....  .....  .....  .....      .05  \1\ 76.  .....  .....  \1\ 25.  .....  .....
                                                                                                               .9                                             5                      4
                                                                                --------------------------------------------------------------------------------------------------------------------
          Totals...............................  ..............................  \1\ 38.    4.3     27.7  \1\130.  .....   51.5     .5  .....      .25  \1\ 76.    3.1  .....  \1\ 25.   25.8   16.1
                                                                                       5                        9                                             5                      4
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Includes fiscal year 1999 and prior year funds.

            fta's urban maglev and advanced technology pilot program
        Question. Please delineate the total combined TEA-21 section 1218
    and section 3015(c) funds for the urban maglev and advanced technology
    pilot programs that are administered by FTA. How have these funds been
    administered, and which projects were directed by Congress? What is the
    fiscal year 2002 funding level outlined in TEA-21 for these programs?
        Answer. Section 1218(i) of TEA-21, as amended by the TEA-21
    Restoration Act, authorized $5,000,000 in grants for the research and
    development of low-speed superconductivity magnetic levitation
    technology for public transportation purposes in urban areas to
    demonstrate energy efficiency, congestion mitigation, and safety
    benefits. Section 1218 created subsection 322(i) of Title 23 U.S.C.
    (Highways) to establish the Low Speed Project. So far, available
    funding has been limited to approximately $2,619,000 by the obligation
    limitations in Section 1102(e) of TEA-21.
        Section 3015(c) of TEA-21, Advanced Technology Pilot Project,
    authorized $5,000,000 per fiscal year for six fiscal years (from fiscal
    year 1998 through fiscal year 2003), for a total of $30,000,000, for
    grants for the development of low speed magnetic levitation technology
    for public transportation purposes in urban areas to demonstrate energy
    efficiency, congestion mitigation, and safety benefits. So far,
    available funding has been limited to approximately $17,031,000.
        FTA has combined these two statutory provisions into a
    comprehensive Urban Maglev Program that includes research, development
    and assessment of both superconducting and other technologies.
        FTA solicited Urban Maglev Program proposals through a Federal
    Register Notice on January 29, 1999. Eight proposals were received and
    evaluated.
        The Pittsburgh Airborne Shuttle System (PASS) project, also called
    the General Atomics Project, was awarded approximately $8,000,000 at 80
    percent federal share; the General Atomics team is providing
    approximately $2,000,000. Congressman Bud Shuster--former chairman of
    the House Transportation and Infrastructure Committee--informed the FTA
    that two years allocation of Section 3015(c) of TEA-21, Advanced
    Technology Pilot Project funds were meant for the PASS project. An
    additional $2,000,000 has been earmarked in fiscal year 2001 for the
    General Atomics project and is pending award.
        An award of $1,000,000 was made through the Department of Energy to
    Sandia National Laboratories for the development of Segmented Rail
    Phased Induction Motor (SERAPHIM), as a result of a Congressional
    earmark of the same amount in the fiscal year 2000 appropriation.
        In fiscal year 2001, Sandia National Laboratories received another
    earmark of $2,000,000 for further development of the SERAPHIM motor,
    and Colorado Intermountain Fixed Guideway Authority (CIFGA) received an
    earmark of $2,000,000 for their airport link project. These two
    organizations are partnering with Maglev Technology Group, LLC (whose
    proposal under the FTA competition was rated high), and the Colorado
    Department of Transportation, which is providing a 20 percent cost
    share.
        FTA is actively working on awards to several other proposals that
    were ranked high in the FTA open competition. Fiscal year 2002 and
    fiscal year 2003 funding will be utilized to support promising
    technologies that may result from the various maglev projects funded by
    FTA.
        Magnetic levitation is an advanced, complex technology. FTA
    requires technical support to assist in analyzing complex technical
    information regarding the system design concepts being developed under
    the Phase I program. Therefore a technical support contractor and the
    Volpe National Transportation Systems Center have been retained by FTA
    to assist in technical aspects of the Urban Maglev program at a cost of
    $665,000. FTA will use fiscal year 2002 funds to procure additional
    technical support, if required.
        Section 3015(c) of TEA-21, Advanced Technology Pilot Project,
    provides $5,000,000 in fiscal year 2002.
                               unobligated funds
        Question. Transit New Starts and bus and bus facilities funds are
    subject to the ``three-year rule'', wherein earmarked appropriated
    funds not obligated after three fiscal years are available to be
    reprogrammed. Please provide two tables--a New Starts table, and a bus
    table--showing the updated obligation status of all projects whose
    funding have expired or will expire at the end of fiscal year 2001.
    Please note whether applications are in, what issues remained to be
    resolved, and the agency's opinion on whether the project funds will be
    obligated before the end of fiscal year 2001.
        Answer. The table below details the requested information for all
    New Starts and bus and bus related projects whose funding has expired
    or will expire at the end of fiscal year 2001.

                                   STATUS OF FISCAL YEAR 1999-2001 NEW STARTS EARMARKS
                                                 [As of April 30, 2001]
    ----------------------------------------------------------------------------------------------------------------
                State/Earmark       Amount of     Amount                         Amount
     Year        description         earmark     obligated   Obligation date  unobligated            Status
    ----------------------------------------------------------------------------------------------------------------
     1999 AK: Alaska (or         $10,322,550  ..........  ................  $10,322,550  AK DOT will purchase a
           Hawaii) Ferry                                                                  ferry vessel; Estimated
           Projects                                                                       Obligation Date July
                                                                                          2001
     1999 AL: Birmingham--           992,550  ..........  ................      992,550  AA work scope finalized,
           Alternatives                                                                   RFQ/RFP issued;
           Analysis &                                                                     application submitted;
           Preliminary                                                                    funds may lapse
           Engineering
     1999 CA: Orange County--      2,481,380  ..........  ................    2,481,380  Application Not Yet
           Transitway Project                                                             Filed; funds may lapse
     1999 CA: Riverside County--     496,280  ..........  ................      496,280  Application not yet
           San Jacinto Branch                                                             filed; Estimated
           Line Project                                                                   Obligation Date Sept.
                                                                                          2001; funds may lapse
     1999 CA: San Diego--Mid-      1,985,100  ..........  ................    1,985,100  Application Not Yet
           Coast Corridor                                                                 Filed; Estimated
           Project                                                                        Obligation Date Sept.
                                                                                          2001
     1998 CO: Roaring Fork           793,530  ..........  ................      793,530  Extended in fiscal year
           Valley Project                                                                 2001 Appropriations
                                                                                          Bill; Estimated
                                                                                          Obligation Date Sept.
                                                                                          2001
     1999 CO: North Front Range      496,280  ..........  ................      496,280  Fiscal year 2001
           Corridor Feasibility                                                           appropriations bill re-
           Study                                                                          programmed this earmark
                                                                                          for the Colorado Eagle
                                                                                          Airport to Avon LRT;
                                                                                          State not interested in
                                                                                          applying for funds;
                                                                                          funds may lapse
     1999 CT: Bus Circulator       1,488,830    $600,000  2/29/00.........     $888,830  Application expected in
           (Hartford Light                                                                3rd or 4th Qtr of fiscal
           Rail)                                                                          year 2001. Funds may
                                                                                          lapse
     1999 CT: Hartford--Old          496,280  ..........  ................      496,280  Awaiting project
           Saybrook Project                                                               description/definition.
                                                                                          Funds may lapse
     1999 CT: New London--           496,280  ..........  ................      496,280  Application under review
           Waterfront Access                                                              for alternatives
           Project                                                                        analysis. Obligation
                                                                                          anticipated July 2001
     1999 FL: Miami Metro Dade--   2,977,660  ..........  ................    2,977,660  Fiscal year 2001
           North 27th Avenue                                                              appropriations bill re-
           Corridor Project                                                               programmed this earmark
                                                                                          for the South Miami Dade
                                                                                          Busway project;
                                                                                          Estimated Obligation
                                                                                          Date Sept. 2001
     1999 FL: Miami Metro-Dade     2,977,660  ..........  ................    2,977,660  Received congressional
           Transit East-West                                                              approval to reprogram
           Corridor Project                                                               busway project. New
                                                                                          grant fiscal year 2001;
                                                                                          Estimated Obligation
                                                                                          Date Sept. 2001
     1999 GA: Savannah--Water        496,280  ..........  ................      496,280  Study Complete.
           Taxi                                                                           Obligation anticipated
                                                                                          3rd Qtr. of 2001; funds
                                                                                          may lapse
     1999 KS: Kansas City Area--     992,550     981,079  1/14/00.........       11,471  Estimated Obligation Date
           Johnson County, KS,                                                            June 2001
           I-35 Commuter Rail
           Project
     1999 LA: New Orleans--        1,985,100   1,485,100  9/29/00.........      500,000  Application to be
           Desire Streetcar                                                               submitted in 3rd Qtr.
           Project                                                                        Obligation anticipated
                                                                                          Sept. 2001
     1999 MD: Baltimore--            496,280  ..........  ................      496,280  Application in
           Central Downtown                                                               development; initial
           Transit Alternatives                                                           review underway.
           MIS                                                                            Obligation anticipated
                                                                                          Sept. 2001
     1998 MS: Intermodal           2,990,300  ..........  ................    2,990,300  Extended in Fiscal Year
           Corridor                                                                       2001 Appropriations
                                                                                          Bill; Estimated
                                                                                          Obligation Date Aug.
                                                                                          2001
     1999 NC: Charlotte--North-    2,977,660   2,004,400  8/3/00..........      973,260  Application under final
           South Corridor                                                                 review. Anticipated
           Transitway Project                                                             obligation date May 2001
     1999 NC: Raleigh-Durham-      9,925,525  ..........  ................    9,925,525  Application under final
           Chapel Hill--                                                                  review. Anticipated
           Triangle Transit                                                               obligation date May 2001
           Project
     1999 NE: Omaha--Trolley         992,550  ..........  ................      992,550  Grantee is developing New
           System                                                                         Starts criteria and
                                                                                          plans to apply for funds
                                                                                          July 1, 2001; Estimated
                                                                                          Obligation Date Sept.
                                                                                          2001
     1999 NM: Albuquerque Light    4,962,765   2,008,000  8/30/00.........    2,954,765  In alternatives analysis.
           Rail Project                                                                   Funds may lapse,
                                                                                          however, grantee may
                                                                                          request extension of
                                                                                          funds
     1999 OH: Cleveland--Berea       992,550  ..........  ................      992,550  No application submitted.
           Red Line Extension                                                             MIS underway. Early in
           to Hopkins                                                                     project development
           International                                                                  stage; funds may lapse
           Airport
     1999 PA: Harrisburg--           992,550  ..........  ................      992,550  Once approved, all NS
           Capitol Area Transit/                                                          earmarks outstanding to
           Corridor One Project                                                           be included in revised
                                                                                          application. PE entry
                                                                                          info expected within 30
                                                                                          days. Obligation
                                                                                          anticipated Sept. 2001
     1999 PA: Philadelphia--         992,550     640,000  7/19/1999.......      352,550  Obligation anticipated
           SEPTA Cross County                             & 12/22/00......                Sept. 2001
           Metro Project
     1999 PA: Philadelphia-        2,977,660  ..........  ................    2,977,660  Obligation anticipated
           Reading--SEPTA                                                                 Sept. 2001
           Schuylkill Valley
           Metro Project
     1999 SC: Charleston--         2,183,615  ..........  ................    2,183,615  Obligation anticipated
           Monobeam Rail                                                                  Sept. 2001
           Project
     1999 TN: Knoxville--          1,488,830     680,000  3/10/99.........      808,830  Will be obligated into TN-
           Electric Transit                                                               03-0049-01; Estimated
           Project                                                                        Obligation Date Sept.
                                                                                          2001
     1999 TN: Nashville--            992,550     312,000  8/29/00.........      680,550  Will be obligated into TN-
           Regional Commuter                                                              03-0057-00; RTA has to
           Rail Project                                                                   address final design
                                                                                          issures before grant can
                                                                                          be approved; Estimated
                                                                                          Obligation Date Sept.
                                                                                          2001
     1998 TX: Galveston--Rail      1,993,530     532,800  9/27/00.........    1,460,730  Extended in Fiscal Year
           Trolley Extension                                                              2001 Appropriations
           Project                                                                        Bill; Funds may lapse
     1998 VT: Burlington-Essex--   4,843,828   1,960,000  7/12/00.........    2,883,828  Extended in Fiscal Year
           Commuter Rail                                                                  2001 Appropriations
           Project                                                                        Bill; Application
                                                                                          expected in 2nd Qtr. of
                                                                                          fiscal year 2002 for
                                                                                          design and construction.
                                                                                          Funds may need to be
                                                                                          extended again;
                                                                                          Alternative analysis to
                                                                                          be completed by July
                                                                                          2001
     1999 VT: Burlington-Essex--   1,985,100   1,960,000  7/12/00.........       25,100  Grantee is expected to
           Commuter Rail                                                                  request an extension
           Project
     1999 WA: King County--          248,140  ..........  ................      248,140  Project also funded with
           Elliot Bay Water                                                               FHWA funds; Estimated
           Taxi                                                                           Obligation Date Sept.
                                                                                          2001
     1999 WA: Spokane--South         992,550  ..........  ................      992,550  Combining fund FY99,00 &
           Valley Corridor                                                                01; Estimated Obligation
           Light Rail Project                                                             Date July 2001
     1999 WV: Morgantown--Fixed    3,970,210  ..........  ................    3,970,210  No application.
           Guideway                                                                       Obligation anticipated
           Modernization                                                                  Sept. 2001
           Project
    ----------------------------------------------------------------------------------------------------------------

                state by state breakout of federal transit funds
        Question. For fiscal year 2001 enacted, please prepare a table that
    includes all firewall formula program funds, New Starts funds as
    earmarked in the fiscal year 2001 Transportation Appropriations bill
    (before project management oversight is subtracted), and all earmarked
    bus funds (before project management oversight is subtracted), breaking
    out the funding distribution by state and category. Show a total at the
    bottom, and note what percentage of that total is represented by each
    state's subtotal.
        Answer. The table is provided below.

                                                            FISCAL YEAR 2001 APPORTIONMENTS AND ALLOCATIONS FOR SELECTED PROGRAMS (BY STATE)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Section 5310                                                                                 State
                                                           Section 5307       Section 5311       elderly and      Section 5309 new     Section 5309     Section 5309 bus     State total     percent
                           State                          urbanized area   nonurbanized area     parsons with          starts         fixed guideway       allocation        selected FTA       of
                                                                                                 disabilities                         modernization                            programs       total
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Alabama...........................................        $12,888,460         $4,932,890         $1,341,753         $4,989,675  .................        $36,872,180        $61,024,958      1.0
    Alaska............................................      \1\ 7,404,486            735,600            196,516         20,158,286  .................         21,502,414         49,997,302       .8
    American Samoa....................................  .................            104,846             52,816  .................  .................  .................            157,662  .......
    Arizona...........................................         33,129,802          2,159,489          1,180,931          9,979,349         $1,462,646         12,472,398         60,384,615      1.0
    Arkansas..........................................          5,068,060          3,943,640            932,236          2,993,805  .................          6,021,674         18,959,415      0.3
    California........................................        476,160,047          9,625,140          7,346,082        233,466,882        115,678,823         42,984,870        885,261,844     14.9
    Colorado..........................................         37,573,624          2,054,583            912,066         24,150,028          1,517,326          9,977,918         76,185,545      1.3
    Connecticut.......................................         50,629,947          1,863,700          1,047,673          7,983,479         37,821,013         10,726,263        110,072,075      1.8
    Delaware..........................................          6,729,323            464,948            305,530          4,989,675            814,514          3,492,271         16,796,261      0.3
    District of Columbia..............................         26,854,967  .................            303,134  .................         49,417,879          4,839,290         81,415,270      1.4
    Florida...........................................        143,924,927          6,187,465          4,951,449         17,962,829         15,230,913         15,465,741        203,723,324      3.4
    Georgia...........................................         50,668,794          7,212,409          1,745,026         24,948,375         21,531,113          8,231,784        114,337,501      1.9
    Guam..............................................  .................            298,472            134,366  .................  .................  .................            432,838  .......
    Hawaii............................................         22,920,896            809,483            393,408          7,684,099            947,056          5,986,751         38,741,693      0.7
    Idaho.............................................          3,029,290          1,633,108            403,008  .................          3,492,271          8,557,677                0.1
    Illinois..........................................        199,308,189          6,616,983          3,194,583         49,896,747        119,540,740          6,236,199        384,793,441      6.5
    Indiana...........................................         31,950,594          6,391,855          1,667,808          4,989,675          8,641,856         11,374,827         65,016,615      1.1
    Iowa..............................................          8,539,683          4,111,304          1,003,498  .................  .................         11,975,499         25,629,984      0.4
    Kansas............................................          7,841,318          3,270,412            838,458            997,936  .................          9,828,251         22,776,375      0.4
    Kentucky..........................................         17,055,965          5,398,737          1,285,158  .................  .................         15,361,007         39,100,867      0.7
    Louisiana.........................................         27,325,127          4,465,146          1,289,372  .................          2,833,737          5,986,752         41,900,134      0.7
    Maine.............................................          2,173,093          2,154,607            508,257          2,993,805  .................          5,487,854         13,317,616      0.2
    Maryland..........................................         73,787,284          2,689,924          1,295,552         20,457,667         25,159,164          7,982,334        131,371,925      2.2
    Massachusetts.....................................        114,492,756          2,882,781          1,873,732         28,940,116         66,621,764          8,705,735        223,516,884      3.8
    Michigan..........................................         60,973,583          7,807,063          2,730,678            498,967            343,206         19,631,554         91,985,051      1.5
    Minnesota.........................................         35,457,723          4,492,514          1,314,065         54,886,422          3,752,492         16,837,737        116,740,953      2.0
    Mississippi.......................................          4,527,158          4,384,110            905,187  .................  .................         10,127,588         19,944,043      0.3
    Missouri..........................................         32,685,673          5,232,622          1,691,587         64,366,805          3,517,920         13,719,640        121,214,247      2.0
    Montana...........................................          2,292,267          1,322,946            368,311  .................  .................          6,236,198         10,219,722      0.2
    Nebraska..........................................          7,755,259          1,996,158            586,015  .................  .................          3,991,167         14,328,599      0.2
    Nevada............................................         19,591,277            651,715            431,507          1,496,903  .................         11,474,607         33,646,009      0.6
    New Hampshire.....................................          3,211,712          1,725,571            406,684  .................  .................  .................          5,343,967      0.1
    New Jersey........................................        173,612,642          2,467,201          2,253,028        133,722,294         89,707,633         13,470,188        415,232,986      7.0
    New Mexico........................................          6,498,353          1,939,594            513,285          1,995,870  .................         14,971,867         25,918,969      0.4
    New York..........................................        501,314,059          8,684,845          5,243,663         10,478,317        336,168,709         26,052,345        887,941,938     14.9
    North Carolina....................................         27,044,573          9,225,871          1,986,974         14,969,024  .................          8,481,229         61,707,671      1.0
    North Dakota......................................          2,234,522            978,378            310,931  .................  .................          2,494,479          6,018,310      0.1
    Northern Marianas.................................  .................             97,162             52,572  .................  .................  .................            149,734  .......
    Ohio..............................................         84,698,716          9,392,578          3,334,681          5,987,609         16,869,014         19,581,657        139,864,255      2.4
    Oklahoma..........................................         10,618,107          4,015,230          1,106,654  .................  .................          8,980,126         24,720,117      0.4
    Oregon............................................         27,151,098          3,188,128          1,027,623          8,482,448          3,554,516          7,533,331         50,937,144      0.9
    Pennsylvania......................................        136,582,339         10,477,518          4,001,593         29,439,080        100,643,383         24,670,405        305,814,318      5.1
    Puerto Rico.......................................         48,467,210          3,131,012            973,945         74,845,122          2,083,205  .................        129,500,494      2.2
    Rhode Island......................................          9,485,450            401,088            450,473            498,967          1,618,865          3,991,167         16,446,010      0.3
    South Carolina....................................         10,664,263          4,617,594          1,069,122  .................  .................          6,660,260         23,011,239      0.4
    South Dakota......................................          1,611,917          1,192,566            337,161  .................  .................  .................          3,141,644      0.1
    Tennessee.........................................         21,323,122          5,960,786          1,587,436         11,975,219            256,851          5,986,751         47,090,165      0.8
    Texas.............................................        156,225,765         12,584,880          4,133,366         86,079,100          7,102,564         21,352,745        287,478,420      4.8
    Utah..............................................         19,093,520            904,031            477,138          1,995,870  .................          9,977,918         32,448,477      0.5
    Vermont...........................................            810,103          1,066,257            275,698          1,995,870  .................          9,479,021         13,626,949      0.2
    Virgin Islands....................................  .................            228,214            136,892  .................  .................  .................            365,106  .......
    Virginia..........................................         60,829,926          5,284,815          1,652,110         52,890,553          5,346,281         15,429,853        141,433,538      2.4
    Washington........................................         81,308,009          3,703,003          1,479,903         58,878,161         17,472,786         15,405,907        178,247,769      3.0
    West Virginia.....................................          3,905,584          3,148,620            776,535  .................  .................          1,995,584          9,826,323      0.2
    Wisconsin.........................................         35,129,616          5,440,446          1,511,269          3,991,739            705,309         13,969,085         60,747,464      1.0
    Wyoming...........................................          1,119,316            760,908            231,908  .................  .................            917,968          3,030,100      0.1
                                                       ---------------------------------------------------------------------------------------------------------------------------------------------
          Total.......................................  \2\ 2,945,679,494  \3\ \7\ 206,510,9  \4\ \7\ 77,560,40  \5\ \7\ 1,087,056  \6\ 1,056,361,278        578,424,660      5,951,593,552    100.0
                                                                                          46                  6               ,768
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Includes $4,839,280 in funds appropriated for the Alaska Railroad improvements to passenger operations.
    \2\ Includes $4,735,805 in reapportioned recoveries.
    \3\ Includes $1,501,792 in reapportioned recoveries.
    \4\ Includes $319,909 in reapportioned recoveries.
    \5\ Includes $26,994,048 in reallocated funds from unobligated balances of other New Starts projects.
    \6\ Includes $289,758 in recoveries.
    \7\ Totals for sections 5307, 5311, and 5310 do not include distribution of $59,868,000 set-aside for the 2002 Winter Olympics.

                           project description issues
        Question. Please provide a list of any of the fiscal year 2001 bus
    and bus facilities or New Starts grantees who have encountered problems
    with having grants released because the project name listed in the
    appropriations legislation does not precisely match the description of
    the project forwarded by the grantee in their application. Please also
    inform the Committee of any instances where a project was funded under
    two different project names in the fiscal year 2001 bus earmarks.
        Answer. Grantees have indicated problems with the following fiscal
    year 2001 earmarks because the project listed in the appropriations
    legislation does not precisely match the description:
      --MA Lowell Transit Hub--$1,237,894. Grantee would like to expand
            scope to include Hale Street Bus operations/maintenance
            facility.
      --VT Burlington Multi-modal Transportation Center $1,485,472. Grantee
            wants to include other transit improvements such as park and
            ride and intercity bus facility.
      --PA Bradford County Buses and Bus Facilities $1,237,894. Grantee
            (Endless Mountains Transit Authority) wants to purchase a
            facility in Tioga County rather than Bradford County.
      --OR Rogue Valley buses--$950,702. Grantee wants to use the earmark
            for facility improvements.
        We have not identified any earmarks in fiscal year 2001 which are
    duplicative.
                         bus and bus-related facilities
        Question. Are there any fiscal year 2002 bus and bus facilities
    earmarks in TEA-21? If so, please list the projects and locations, and
    the amount which is designated in TEA-21.
        Answer. There are no fiscal year 2002 bus and bus facilities
    earmarks in TEA-21.
        Question. What states have traditionally submitted a consolidated
    statewide bus and bus facilities grant request to FTA?
        Answer. The following is a list of the states that have
    traditionally submitted a consolidated statewide bus and bus facilities
    grant request:

    Alabama
    Arkansas
    Illinois
    Iowa
    Kentucky
    Louisiana
    Maryland
    Michigan
    Missouri
    New Hampshire
    New Mexico
    North Carolina
    Ohio
    Oklahoma
    Tennessee
    Texas
    Virginia
    Washington
    West Virginia
    Wisconsin

        Question. Please provide a state apportionment table for fiscal
    year 2002 of bus and bus-related facilities funding if the proposed
    formula allocation of bus funds were approved. Please describe the
    formula, and explain the rationale for how it was written.
        Answer. The requested table is provided below. Under the FTA
    proposed formula-based bus program, funds would be apportioned to
    urbanized and rural areas. Of the amount available for apportionment,
    40 percent would be allocated to urbanized areas having populations 1
    million or greater, 30 percent to urbanized areas with populations
    200,000 to 999,999, and 30 percent to states for areas with populations
    less than 200,000 (including small urbanized and rural areas).
    Population and related population density data as shown by the latest
    Government census would be used.
        For urbanized areas, one-half of an area's allocation would be
    based on a ratio/percentage equal to the population of the area divided
    by the total population of all eligible areas. The other half would be
    allocated based on a ratio/percentage for the area based on its
    population weighted by population density. Funds allocated for rural
    areas would be made to the state (as would funds allocated to urbanized
    areas between 50,000 and 199,999 populations). The rural allocation
    would be based on the ratio of a state's rural population divided by
    the total rural population in the United States.
        The formula would use only two factors to apportion available
    funds: (1) population, and (2) population multiplied by population
    density. Under this approach, providing for transit needs will be based
    on the potential for transit growth--as measured by changes in
    population and population density. This is in contrast to the formula
    used for the Urbanized Area Formula Program (section 5307), which uses
    existing service levels (vehicle revenue miles, route miles, passenger
    miles, and operating cost) as primary factors in the apportionment of
    funds, in addition to population and density.
        The allocation of funds under the proposed formula closely reflects
    the actual distribution of section 5309 bus earmarks, by area size-
    population, over the last 6 years. For example, the rural areas have
    historically received about 15 percent of section 5309 bus funds, even
    though the statutory requirement for allocation of bus funds to rural
    areas is 5.5 percent.
        The proposed bus formula will not disturb the current structure of
    the Capital Investment Program. It will maintain a separate bus capital
    program, which will counterbalance allocations made to large areas
    (those 1 million and over in population) via the Fixed Guideway
    Modernization and New Starts Programs.

    Section 5309 Capital Investment Bus Program

                                                            Fiscal Year 2002
            State                                              Apportionment
    Alabama.................................................      $7,072,972
    Alaska..................................................         976,536
    American Samoa..........................................          38,477
    Arizona.................................................       7,121,413
    Arkansas................................................       3,164,400
    California..............................................      70,780,202
    Colorado................................................       6,627,618
    Connecticut.............................................       9,479,448
    Delaware................................................       1,951,774
    District of Columbia....................................       6,033,401
    Florida.................................................      30,819,920
    Georgia.................................................       9,145,790
    Guam....................................................         109,536
    Hawaii..................................................       4,494,748
    Idaho...................................................       1,436,031
    Illinois................................................      23,069,823
    Indiana.................................................      11,296,560
    Iowa....................................................       4,508,825
    Kansas..................................................       3,884,970
    Kentucky................................................       6,547,951
    Louisiana...............................................       7,468,834
    Maine...................................................       1,391,310
    Maryland................................................       8,243,321
    Massachusetts...........................................      11,514,517
    Michigan................................................      19,145,018
    Minnesota...............................................       5,885,169
    Mississippi.............................................       3,209,900
    Missouri................................................       6,972,338
    Montana.................................................       1,118,632
    Nebraska................................................       3,589,953
    Nevada..................................................       4,312,109
    New Hampshire...........................................       1,585,559
    New Jersey..............................................      17,861,191
    New Mexico..............................................       3,041,451
    New York................................................      44,113,830
    North Carolina..........................................      10,895,085
    North Dakota............................................         982,347
    Northern Marianas.......................................          35,657
    Ohio....................................................      23,422,407
    Oklahoma................................................       5,712,153
    Oregon..................................................       4,439,364
    Pennsylvania............................................      24,345,986
    Puerto Rico.............................................       7,822,691
    Rhode Island............................................       3,714,497
    South Carolina..........................................       6,123,267
    South Dakota............................................         883,077
    Tennessee...............................................       9,457,865
    Texas...................................................      29,804,065
    Utah....................................................       5,929,485
    Vermont.................................................         615,093
    Virgin Islands..........................................          83,752
    Virginia................................................      10,429,800
    Washington..............................................       9,402,651
    West Virginia...........................................       2,241,062
    Wisconsin...............................................       8,075,734
    Wyoming.................................................         588,436
                        --------------------------------------------------------
                        ____________________________________________________
          Total.............................................     513,018,000
                                   new starts
        Question. How much contract authority will remain available through
    the remainder of the current authorization if all existing, pending,
    and recommended Full Funding Grant Agreements are executed? How much of
    this remaining contract authority is associated with the contingent
    authority created by section 380 of Public Law 106-346? Is this
    additional contract authority only available for the Chicago Metra,
    Chicago Transit Authority, Minneapolis, and Dulles Corridor projects
    that were described in section 380?
        Answer. Under TEA-21, 80 percent of FTA funds are trust funds or
    contract authority and 20 percent are general funds. FTA does not make
    a distinction between trust funded and general funded programs in
    presentation of budget authority. The remaining budget authority in
    TEA-21 consists of amounts available fiscal year 2002 and 2003. The
    guarantee level for fiscal year 2002 is $1,138.41 billion and for
    fiscal year 2003 is $1,214.40 billion. If all existing pending, and
    recommended FFGAs were executed as described in their attachment 6,
    there would be no remaining budget authority in fiscal year 2002 and
    there would be $36.61 million remaining in fiscal year 2003. Under TEA-
    21, the commitment authority equals $9.9 billion. This includes the
    guaranteed level for fiscal years 1998-2003 ($6.1 billion) plus
    contingent commitment authority equal to the guaranteed levels for
    fiscal year 2001, fiscal year 2002 and 2003 ($3.4 billion); and the
    additional $453.6 million in commitment authority for the BART Airport
    project that had its own special commitment authority under ISTEA and
    the unappropriated amount of that commitment carried over into TEA-21.
    The remaining budget authority for fiscal year 2002 and fiscal year
    2003 is not directly associated with contingent commitment. The
    additional contingent commitment authority provided in Public Law 106-
    346 is available for projects in addition to Chicago Metra ($269.1m),
    Chicago Transit Authority ($565.6m), Minneapolis ($60m), and Dulles
    Corridor projects ($217.8m). There is $462.1 million contingent
    commitment authority remaining after all pending, and recommend Full
    Funding Grant Agreements are executed.
        Question. Please provide a table detailing by existing Full Funding
    Grant Agreement the amount of the FFGA, the actual amounts received
    through fiscal year 2001, the schedule 6 amounts through fiscal year
    2001, any shortfalls or overages to date, the fiscal year 2001 enacted
    level, the fiscal year 2002 schedule 6 amount, the amount of shortfall
    included in the fiscal year 2002 budget, and total fiscal year 2002
    budget request.
        Answer. The following table indicates for existing Full Funding
    Grant Agreements the amount of the FFGA, the actual amounts received
    through fiscal year 2001, the schedule 6 amounts through fiscal year
    2001, any shortfalls or overages to date, the fiscal year 2001 enacted
    level, the fiscal year 2002 schedule 6 amount, the amount of shortfall
    included in the fiscal year 2002 budget, and the total fiscal year 2002
    budget request.

                                                                                 EXISTING FFGAS--SECTION 5309 NEW STARTS
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year 2001 and prior                                                 Shortfall included
                                                     Section 5309 FFGA ----------------------------------------------------------   Fiscal year     Fiscal year     in fiscal year      Fiscal year
                  Geographic location                      amount             Total         Total attachment      Cumulative       2001 enacted        2002           2002 budget      2002 proposed
                                                                           appropriated            6               shortfall           level       Attachment 6         request           budget
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Existing FFGAs:
        CA: Los Angeles--MOS-3 (North Holly-  wood)       $681,037,000       $631,351,627       $671,747,443       ($40,395,816)     $49,532,158      $9,289,557       ($40,396,912)     $49,686,469
        CA: Sacramento--LRT Extension..............        111,200,000        110,871,190        111,200,000           (328,810)      34,870,640  ..............           (328,810)         328,810
        CA: San Diego--Mission Valley East LRT.....        329,358,000         53,312,430         87,107,170        (33,794,740)      31,205,260      65,000,000  ..................      65,000,000
        CA: BART Extension to the SFO Airport......        750,000,000        296,450,154        378,317,849        (81,867,695)      79,251,454      80,000,000             (4,669)      80,610,000
        CA: San Jose Tasman West LRT Project.......        182,750,000        182,636,664        182,750,000           (113,336)      12,135,379  ..............           (113,336)         113,336
        CO: Denver SE Corridor LRT.................        525,000,000          6,411,446         23,439,516        (17,028,070)       2,971,930      60,000,000        (11,800,000)      71,800,000
        CO: Denver SW Corridor LRT.................        120,000,000        119,807,508        120,000,000           (192,492)      20,010,000  ..............           (192,492)         192,492
        FL: Fort Lauderdale-Tri Rail Commuter Rail         110,500,000     \1\ 28,640,644         40,810,787        (15,140,353)      14,859,647      30,000,000        (54,829,566)      84,829,566
         Upgrade...................................
        GA: Atlanta-North Springs..................        370,543,200    \2\ 329,586,576        329,820,496           (233,920)      24,766,080      25,000,000            (72,274)      25,072,274
        IL: Chicago--Douglas Branch Reconstruc-            320,100,000         19,779,647         19,779,647  ..................      14,859,647      35,000,000  ..................      35,000,000
         tion......................................
        MA: Boston--S. Boston Piers Trainsitway....        330,726,320        319,523,151        330,726,320        (11,203,169)      24,766,080  ..............        (11,203,169)      11,203,169
        MD: Largo Extension........................        260,300,000         12,089,953         14,660,129         (2,570,176)       7,429,824      60,000,000  ..................      60,000,000
        MN: Minneapolis--Hiawatha Corridor LRT.....        334,300,000        118,856,915        118,856,915  ..................      49,532,158      50,000,000  ..................      50,000,000
        MO: St. Louis--MetroLink St. Clair Exten-          243,930,961        212,842,539        219,707,693         (6,865,154)      59,438,590      24,223,268         (6,865,154)      31,088,422
         sion......................................
        NJ: Hudson--Bergen (MOS-1).................        604,088,750        445,298,227        453,018,980         (7,720,753)     119,867,821     151,069,771           (257,884)     151,327,655
        NJ: Hudson--Bergen (MOS-2).................        500,000,000  .................  .................  ..................  ..............  ..............  ..................  ..............
        NJ: Newark Rail Link (MOS-1)...............        141,950,000         39,583,790         39,678,339            (94,549)       9,905,451      20,000,000  ..................      20,000,000
        OR: Portland--Interstate MAX LRT Exten-            257,500,000          7,429,824         40,000,000        (32,570,176)       7,429,824      70,000,000        (10,085,904)      80,085,904
         sion......................................
        PA: Pittsburgh--Stage II LRT Reconstruc-           100,200,000         23,706,558         23,706,558  ..................      11,887,718      20,000,000  ..................      20,000,000
         tion......................................
        PR: San Juan--Tren Urbano..................        307,409,845        153,963,518        307,409,854       (153,446,336)      74,298,238  ..............        (50,159,703)      50,159,703
        TN: Memphis--Medical Center Extension......         59,670,000         10,580,171         24,885,848        (14,305,677)       5,943,859      19,170,000           (830,000       20,000,000
        TX: Dallas--North Central LRT Extension....        333,000,000        161,612,674        162,838,717         (1,226,043)      69,345,021      70,000,000         (1,200,000)      71,200,000
        TX: Houston--Regional Bus Plan.............        500,000,000        499,904,542        500,000,000            (95,458)      10,649,414  ..............            (95,459)          95,459
        UT: CBD to University LRT..................         84,600,000          1,981,286          2,000,000            (18,714)       1,981,286      15,000,000  ..................      15,000,000
        UT: Salt Lake City--South LRT..............        237,393,530        236,675,524        237,393,530           (718,006)  ..............  ..............           (718,006)         718,006
        WA: Seattle--Central Link LRT--MOS-1.......        500,000,000         90,971,851         90,971,851  ..................      49,532,158      49,532,158  ..................  ..............
           TOTAL--EXISTING FFGAs....................      8,295,557,606      3,482,516,782      3,282,455,180       (419,929,443)     786,469,637     879,357,927       (189,153,338)     993,511,265
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ Non-FFGA portion of project @$2,970,210.
    \2\ Includes $10,663,845 in deobligated funds.

        Question. Please prepare a table that provides by project the
    capital cost, federal share (dollars and percentage), and local share
    (dollars and percentage) for each FFGA, those projects proposed for
    FFGAs in the budget request, and the fifty remaining projects that are
    furthest along in the planning and preliminary engineering process. Use
    estimates where necessary.
        Answer. The following table indicates by project the capital cost,
    federal share (dollars and percentage), and local share (dollars and
    percentage) for each FFGA, those projects proposed for FFGAs in budget
    request, and the remaining projects that are furthest along in the
    planning and preliminary engineering process. Estimates were used where
    necessary.

                                                                           FFGA STATUS
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              New Starts                  Federal                    Non-
                                                                                Section 5309  Percentage      Other        Funds     Non-Federal    Federal
                                            Fiscal Year 2002    Total Project    New Starts    Share of      Federal    Percentage    Share of    Percentage
                City/Project                Overall Project          Cost        Requested       Total        Funds      of Total       Total      of Total
                                                 Rating                            Share        Project     Proposed      Project   Project Cost    Project
                                                                                                 Cost                      Cost                      Cost
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    EXISTING FULL FUNDING GRANT
     AGREEMENTS:
        Atlanta--North Springs.........  FFGA.................        $463.18        $370.54         80   ............         80         $92.64         20
        Boston--South Boston Piers       FFGA.................         601.00         330.73         55        $150.07         80         120.20         20
         Transitway Phase 1.
        Chicago--Douglas Branch          FFGA.................         482.60         320.10         66          63.60         80          98.90         20
         Reconstruction.
        Dallas--North Central LRT        FFGA.................         517.20         333.00         64   ............         64         184.20         36
         Extension.
        Denver--Southeast Corridor LRT.  FFGA.................         879.30         525.00         60   ............         60         354.30         40
        Denver--Southwest Corridor LRT.  FFGA.................         176.32         120.00         68          18.88         79          37.44         21
        Fort Lauderdale--Tri-Rail        FFGA.................         327.00         110.50         34          91.41         62         125.09         38
         Commuter Rail Upgrade.
        Houston--Regional Bus Plan.....  FFGA.................         625.00         500.00         80   ............         80         125.00         20
        Los Angeles--North Hollywood...  FFGA.................       1,310.82         681.04         52         245.60         71         384.18         29
        Memphis--Medical Center          FFGA.................          74.58          59.67         80   ............         80          14.91         20
         Extension.
        Minneapolis-St. Paul--Hiawatha   FFGA.................         675.40         334.20         49          49.50         57         291.30         43
         Corridor LRT.
        Newark Rail Link (MOS-1).......  FFGA.................         207.70         142.00         68          25.30         81          40.50         19
        Northern New Jersey--Hudson-     FFGA.................         992.14         604.09         61         281.65         89         106.40         11
         Bergen LRT MOS-1.
        Northern New Jersey--Hudson-     FFGA.................       1,215.40         500.00         41         153.70         54         561.70         46
         Bergen LRT MOS-2.
        Pittsburgh--Stage II LRT         FFGA.................         386.40         100.20         26         133.60         61         152.30         39
         Reconstruction.
        Portland--Interstate MAX LRT     FFGA.................         350.00         257.50         74          24.00         80          68.50         20
         Extension.
        Sacramento--South LRT Extension  FFGA.................         222.00         111.20         50   ............         50         110.80         50
        Salt Lake City--CBD to           FFGA.................         118.50          84.60         71          11.90         81          22.00         19
         University LRT.
        Salt Lake City--North-South LRT  FFGA.................         312.49         237.39         76           4.00         77          71.10         23
        San Diego--Mission Valley East   FFGA.................         431.00         330.00         77          13.70         80          87.30         20
         LRT Extension.
        San Francisco--BART Extension    FFGA.................       1,510.20         750.00         50   ............         50         760.20         50
         to SFO Airport.
        San Jose--Tasman West LRT......  FFGA.................         325.00         182.75         56          61.96         75          80.29         25
        San Juan--Tren Urbano..........  FFGA.................       1,653.60         307.40         19         400.90         43         945.30         57
        Seattle--Central Link LRT (MOS-  FFGA.................       2,603.00         500.00         19   ............         19       2,103.00         81
         1).
        St. Louis--Metrolink St. Clair   FFGA.................         339.20         243.93         72   ............         72          95.27         28
         Extension.
        Washington DC/MD--Largo          FFGA.................         433.90         260.30         60   ............         60         173.60         40
         Extension.
                                                               ---------------------------------------------------------------------------------------------
          Sub-total....................  .....................      17,232.93       8,296.14         48       1,729.77         58       7,206.42         42
                                                               =============================================================================================
    PENDING FULL FUNDING GRANT
     AGREEMENTS:
        Baltimore--Central LRT Double-   Recommended..........         153.70         120.00         78           3.00         80          30.70         20
         Tracking.
        Chicago--Metra--S.W. Corridor    Highly Recommended...         218.70          37.00         17          91.10         59          90.70         41
         Commuter Rail.
                                                               ---------------------------------------------------------------------------------------------
          Sub-total....................  .....................         372.40         157.00         42          94.10         67         121.40         33
                                                               =============================================================================================
    PROPOSED FULL FUNDING GRANT
     AGREEMENTS:
        Chicago--Metra--North Central    Recommended..........         236.4          144.7          61           8.20         65          83.60         35
         Corridor.
        Chicago--Metra--Union-Pacific    Recommended..........         142.1           87.4          62   ............         62          54.64         38
         West Line Extension.
        Miami (South Busway Extension--  Exempt...............          88.8           23.4          26          41.30         73          22.80         26
         Phase 2) \1\.
        New Orleans (Canal Streetcar     Recommended..........         156.6          125.3          80   ............         80          31.40         20
         Line).
        San Diego (Oceanside-Escondido   Highly Recommended...         332.3          152.1          46   ............         46         180.20         54
         Rail Corridor).
                                                               ---------------------------------------------------------------------------------------------
          Sub-total....................  .....................         956.18         532.94         56          49.50         61         372.64         39
                                                               =============================================================================================
    Final Design:
        Dallas-Ft. Worth (Trinity        Not Rated............         184.1           46.4          25          64.80         60          72.00         39
         Railway Express--Phase II) \1\.
        Little Rock (River Rail          Exempt...............          13.2            8.6          65           2.00         80           2.60         20
         Project) \1\.
        Los Angeles-San Diego (LOSSAN    Exempt...............          35.7           24.1          68   ............         68          11.57         32
         Rail Corridor Improv.) \1\.
        San Francisco (3rd Street Light  Recommended..........         530.8   .............  ..........         51.11         10         479.69         90
         Rail--Phase 1).
        Seattle--Central Link LRT (MOS-  Recommended..........       1,562.4          931.4          60          59.40         63         571.60         37
         2 & MOS-3).
                                                               ---------------------------------------------------------------------------------------------
          Sub-total....................  .....................       2,326.2        1,010.5          43         177.3          51       1,137.5          49
                                                               =============================================================================================
    Preliminary Engineering:
        Austin (Austin Area LRT System)  Recommended..........         739.0          369.5          50   ............         50         369.50         50
        Charlotte (South Corridor LRT).  Recommended..........         331.1          166.8          50   ............         50         164.30         50
        Chicago--CTA--Ravenswood Line    Recommended..........         327.1          245.5          75          13.20         79          68.20         21
         Expansion.
        Cincinnati (I-71 Corridor LRT).  Not Recommended......         874.7          431.2          49   ............         49         443.50         51
        Cleveland (Euclid Corridor       Recommended..........         228.6          135.0          59          50.00         81          43.60         19
         Transportation Project).
        Girdwood, AK (Alaska Railroad    Exempt...............          69.6           14.9          21   ............         21   ............         79
         Commuter Rail).
        Hartford (New Britain-Hartford   Recommended..........          82.0           51.6          63          14.00         80          16.40         20
         Busway).
        Houston (Downtown-Astrodome      Recommended..........         300.0   .............  ..........  ............  ..........        300.00        100
         Corridor Light Rail).
        Kansas City/Johnson County (I-   Exempt...............          30.9           24.8          80   ............         80           6.20         20
         35 Commuter Rail).
        Las Vegas (Resort Corridor       Recommended..........         597.0          210.0          35         105.00         53         275.00         46
         Fixed Guideway MOS).
        Los Angeles (East Side Corridor  Recommended..........         759.5          402.3          53         116.00         68         241.80         32
         LRT).
        Los Angeles (San Fernando        Recommended..........         300.3   .............  ..........  ............  ..........        300.30        100
         Valley Corridor).
        Lowell, MA-Nashua, NH--Commuter  Exempt...............          41.0           18.00         44          14.50         79           8.20         20
         Rail Extension.
        Maryland (MARC Commuter Rail     Exempt...............          85.1           40.9          48          13.50         64          30.70         36
         Improvements).
        Miami (North 27th Avenue         Not Recommended......          87.9           61.5          70   ............         70          26.40         30
         Corridor).
        Minneapolis (Northstar Corridor  Recommended..........         223.0          112.0          50   ............         50         111.00         50
         Commuter Rail).
        Nashville (East Commuter Rail    Exempt...............          33.2           22.9          69           3.70         80           6.60         20
         Project).
        New Orleans (Desire Corridor     Recommended..........          93.5           65.5          70   ............         70          28.00         30
         Streetcar).
        New York (Long Island Rail Road  Recommended..........       4,344.0        2,172.0          50   ............         50       2,172.00         50
         East Side Access).
        Orange County, CA (Centerline    Recommended..........       3,741.2        1,870.6          50         638.60         67       1,232.00         33
         Rail Corridor).
        Phoenix (East Valley Corridor    Not Rated............       1,075.9          533.4          50           7.60         50         534.70         50
         LRT).
        Pittsburgh (North Shore          Recommended..........         389.9          195.0          50   ............         50         194.95         50
         Connector LRT).
        Raleigh-Durham (Regional Rail)-- Recommended..........         754.7          377.3          50          14.00         52         363.20         48
         Phase I.
        San Diego (Mid Coast Corridor).  Highly Recommended...         116.7           42.2          36           0.50         37          73.90         63
        San Juan (Tren Urbano)--         Recommended..........         477.5          382.6          80   ............         80          94.90         20
         Minillas Extension.
        Seattle (Everett-to-Seattle      Exempt...............         104.0           24.9          24   ............         24          79.10         76
         Commuter Rail).
        Seattle (Lakewood-to-Tacoma-     Exempt...............          86.0           24.9          29   ............         29          61.10         71
         Commuter Rail).
        Stamford, CT (Urban Transitway/  Recommended..........          24.0            9.9          41           8.20         75           5.80         24
         Intermodal Center).
        Washington DC (Dulles Corridor   Recommended..........         287.3          217.8          76           1.00         76          62.00         22
         Rapid Transit).
        Wilsonville-Beaverton, OR        Exempt...............          82.8           24.9          30   ............         30          57.80         70
         (Commuter Rail).
                                                               ---------------------------------------------------------------------------------------------
          Sub-total....................  .....................      16,687.5        8,247.9          49         999.8          55       7,425.85         44
                                                               ---------------------------------------------------------------------------------------------
          Total New Starts Pipeline....  .....................      37,575.19      18,244.46         49       3,050.48         57      16,280.25         43
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ However, sponsors of the Miami (S. Busway Extension--Phase 2) project are not seeking an FFGA since the project is exempt and requesting a New
      Starts share that is less than $25 million.
    \2\ Several projects that are [technically] still in preliminary engineering were not rated and reported in the Fiscal Year 2002 New Starts Report due
      to a change in scope, alignment, etc. These projects include: S. Boston Piers Transitway--Phase II; Kansas City (Southtown Corridor); Norfolk-Virginia
      Beach Corridor; and Tampa Bay (Regional Rail). However, a brief description/status of each can be found in the TEA-21 Appendix of the Fiscal Year 2002
      New Starts Report.

        Question. Please detail by fiscal year and project how the FTA
    plans to allocate or has allocated the $10,400,000 provided annually
    under TEA-21 for Alaska or Hawaii projects. Include in your answer the
    total cost and the local/federal share of each project (dollar and
    percentage).
        Answer. TEA-21 provides for $10.4 million per year (1999-2003) for
    Alaska/Hawaii ferry projects. Over the five-year period, $52 million
    will be available. After the PMO takedown, $30,828,458 is currently
    available.
        Absent direction from Congress, FTA has administratively determined
    that the funds should be divided equally between the two states over
    the life of TEA-21 unless one state indicates that it does not plan to
    use all of its share of the funds.
        There have been no grants obligated to date using these funds.
    There is currently an application pending from the state of Alaska in
    the amount of $24.9 million towards the purchase of a ferryboat. A
    second application will be submitted for $0.9 million for dock
    improvements. After both submissions, Alaska will have applied for its
    half of the total funds available.
        The two Alaska applications are at an 80 percent federal, 20
    percent local match ratio. The ferryboat application is for $24.9
    million in federal funds for a ferryboat. The total grant project cost
    is $31.13 million; the local match is $6.23 million. The cost of the
    ferryboat could be higher depending on the upon bid price. The dock
    improvements application is for $900,000. The total project cost is
    $1,125,000; the local share is $225,000. If Hawaii does not use all of
    the remaining funds, Alaska proposes to apply for additional funds,
    ranging from between $3.9 million to $15.1 million, depending upon the
    actual costs of bids received on the ferryboat.
        Question. What New Starts projects, if any, does FTA anticipate
    will be requesting an amended Full Funding Grant Agreement during the
    balance of this calendar year?
        Answer. The New Starts projects that FTA anticipates will request
    an amended full funding agreement for the balance of the calendar year
    are:
      --South Boston Piers Transitway--Phase I, Massachusetts Bay
            Transportation Authority
      --Regional Bus Plan, Houston Metro
        Question. Please list those current FFGA projects, which have
    undergone significant change in scope or cost increases beyond and
    above the original project scope and baseline cost estimate. Please
    provide a brief summary of the project's description, current status,
    reason for cost increases or scope changes, and pending issues.
        Answer. Current FFGA projects that have undergone change in scope
    or cost increase beyond and above the original project scope and
    baseline cost estimate are:
    Bay Area Rapid Transit (BART), San Francisco Airport Extension Project,
            San Francisco, CA
        Project Description.--BART is constructing an 8.2 mile, 4 station,
    extension of the BART rapid transit system to serve San Francisco
    International Airport. The project consists of a 7.4-mile mainline
    extension from the existing BART station at Colma, through Colma, south
    San Francisco, and San Bruno, terminating at the Millbrae Avenue BART/
    CalTrain Station. An additional 0.8-mile spur from the main line north
    of Millbrae will take BART trains directly into the airport, to a
    station adjoining the new International Terminal.

    ------------------------------------------------------------------------
                                                         Baseline schedule
                                      Baseline cost     (revenue operation
                                                               date)
    ------------------------------------------------------------------------
    Original......................    $1,054,000,000  August 31, 2001
    Amended.......................     1,483,200,000  July 1, 2002
    ------------------------------------------------------------------------

        Current Status.--The San Francisco International Airport project is
    in the final design and construction stage. The project is
    approximately 68 percent complete based on March 2001 payment
    expenditures.
        Reason for change in scope, budget, and schedule.--Due to various
    contract design changes, differing site conditions encountered during
    construction and contract claims, BART's SFO Extension project has
    experienced cost overruns and project delays. The revision in the
    Revenue Operation Date (ROD) to July 1, 2002, was made to recognize
    BART's inability to meet the originally planned date of September 30,
    2001. The amendment substituted a $70 million shop and yard improvement
    program in place of the originally planned acquisition of 28 vehicles
    budgeted $100 million.
        Pending Issues.--Due to unsettled contract changes and contract
    claims additional delay is expected. The Project Management Oversight
    (PMO) Contractor's April 2001 monthly report projected a Revenue
    Operations Date of November 2002.
    Houston Metro, Houston, TX, Houston Regional Bus Plan (RBP) Project
        Project Description.--The Regional Bus Plan (RBP) is a region wide
    mobility strategy for the entire Houston area. Through the use of
    barrier-separated high occupancy vehicle lanes, buses operate to move
    people quickly and efficiently to and between the city's primary
    activity centers. The RBP includes services expansions in most of the
    region, new and extended High-Occupancy Vehicle facilities and ramps,
    new buses, several transit centers and park-and-ride lots, and
    supporting facilities.

    ------------------------------------------------------------------------
                                                         Baseline schedule
                                      Baseline coat            (ROD)
    ------------------------------------------------------------------------
    Original......................    $1,000,000,000  December 31, 2002
    Proposed......................     1,000,000,000  December 31, 2005
    ------------------------------------------------------------------------

        Current Status.--Project is in various stages of preliminary/final
    design and construction.
        Reason for Cost Increase or Scope Changes.--Not long after the
    execution of the FFGA, the Houston Contractors Association brought suit
    against Houston Metro in the U.S. District Court in Houston to contest
    the constitutionality of Houston Metro's program for disadvantaged
    business enterprise (DBE) participation in the RBP. When the district
    court invalidated Houston Metro's DBE program, and denied the federal
    government's motion to intervene in the suit, USDOT and FTA terminated
    FTA's Section 5309 New Starts funding for the RBP, due to Houston
    Metro's inability to comply with the DBE regulation. On June 28, 1999,
    the U.S. Court of Appeals for the Fifth Circuit ultimately vacated and
    remanded the district court's judgment that permanently enjoined
    Houston Metro from carrying out its DBE program. In addition the U.S.
    Court vacated the District Court ruling that the Federal government
    would not be permitted to intervene. As a result of the U.S. Court's
    decision, FTA resumed the Section 5309 funding for the RBP. By this
    time, Houston Metro had suffered significant slippage in its baseline
    schedule under the FFGA.
        In carrying out the RBP, Houston Metro has identified a number of
    changes that will enhance the effectiveness of projects in the
    federally funded scope of work, and certain projects it wishes to add
    and/or delete to the RBP. The changes to the projects under the
    December 1994 FFGA, the addition of certain projects to the RBP, and
    the delays in Federal funding attributable to the Houston Contractors
    litigation all led to a request by Houston Metro to defer the final
    completion date under the FFGA from December 31, 2002 to December 31,
    2005. FTA agrees that this is a reasonable and appropriate request.
        Pending Issues.--FTA has not executed the amendment. FTA will
    inform the Congressional Committees of its intention to amend FFGA
    before the amendment is executed.
    Chicago Transit Authority, Douglas Branch Reconstruction Project
        Project Description.--The Douglas Branch Reconstruction Project
    (Douglas Branch) is part of CTA's Blue Line rapid rail service. The
    proposed improvements planned for the Douglas Branch will bring this
    project to a state of renewed condition so that it will subsequently
    require only routine maintenance. Following reconstruction, maintenance
    costs will be reduced and slow zones along the route will be
    eliminated, thereby avoiding the alternative of abandoning the line.
    The Douglas Branch consists of 5.1 miles of open deck elevated steel
    structure and 1.5 miles of at-grade ballast track. The branch connects
    to the Congress Branch of the Blue Line at Loomis Junction and runs for
    about 6.6 miles to 54th Street Cermak Terminal. A portion of the line
    at Loomis Junction is at-grade track. The line is elevated from its
    connection with the Congress branch to Keeler Avenue. The remaining
    portion of the line to the 54th Street Cermak Terminal is at-grade
    track. The branch has eight elevated stations and three at-grade
    stations. The eleven stations provide for 27,000 passengers on an
    average weekday.

    ------------------------------------------------------------------------
                                                         Baseline schedule
                                      Baseline coat            (ROD)
    ------------------------------------------------------------------------
    Original......................      $482,679,160  January 31, 2005
    Proposed......................       482,679,160  August 31, 2005
    ------------------------------------------------------------------------

        Current Status.--The project is behind schedule and is currently in
    the bidding stage. The contract plans and specifications are complete.
    The contract was advertised for bids on March 26, 2001. The bids are
    due in late May 2001. The submittal of these addenda packages may
    extend the bid opening date by 30 to 60 days.
        Reason for Cost Increase or Scope Changes.--The Full Funding Grant
    Agreement (FFGA) for this project was executed on January 17, 2001.
    Delays in final engineering estimates preparation and the repackaging
    of the construction documents into one final construction document have
    caused the construction starting date to slip. The CTA notified the FTA
    that the project would extend eight months beyond the planned
    completion date as shown in the FFGA. FTA has requested CTA to provide
    a recovery plan to bring the project schedule back to the FFGA
    schedule.
        Pending Issues.--FTA has not approved the extension and has
    requested from CTA a recovery plan.
    Tren Urbano Project, Puerto Rico Highway and Transportation Authority
        Project Description.--Tren Urbano is a heavy rail project
    consisting of 17 kilometers (10 miles) of guideway, which is either
    elevated, at grade, within retained cut, or in a 2 kilometer (1.2
    miles) tunnel connecting 16 stations starting from the westerly
    municipality of Bayamon to the central business district of Hato Rey.
    Seven alignment section contracts (ASC) were awarded to build the
    guideway; one of these includes the systems, vehicles, test track
    (STTT) and operations and maintenance for 5 years.

    ------------------------------------------------------------------------
                                                         Baseline schedule
                                      Baseline coat            (ROD)
    ------------------------------------------------------------------------
    Original......................    $1,250,300,000  July 1, 2001
    Amended.......................     1,653,600,000  May 31, 2002
    ------------------------------------------------------------------------

        Current Status.--The project is in the final design and
    construction phase and is approximately 75 percent complete.
        Reason for change in scope, budget, and schedule.--In July 1999,
    Tren Urbano increased the project cost from the baseline of $1.250B to
    $1.653B to cover the cost of accommodating two additional stations,
    realigning two segments, an increase in vehicles, increased systems
    costs, increased inspection services, a new management contract and an
    extended schedule.
        Pending Issues.--The Project Management Oversight (PMO) Contractor
    report of January 2001 projected a Revenue Operations Date of September
    2003 and a final cost of $1.766 Billion. FTA has requested that Tren
    Urbano provide a recovery plan to address the project schedule delay,
    cost increase, construction quality and project management. The fiscal
    year 2000 earmark of $31.4 million, the fiscal year 2001 funds in the
    amount of $74.3 million as well as the fiscal year 2001 Urban Formula
    and flexible funds are on hold pending the receipt and acceptance of
    the Recovery Plan.
    South Boston Piers Transitway Project, MBTA, Boston, MA
        Project Description.--The South Boston Piers/Fort Point Channel
    Full Build Transitway Project, consist of a 1.5-mile underground
    transit tunnel from Boylston Station to the World Trade Center.
    Combined with surface bus operations, the Transitway will link the
    South Boston area with regional mass transit services in downtown
    Boston. Five underground Transitway stations and numerous surface bus
    stations will provide connections to the Red, Orange and Green Lines,
    commuter and intercity rail and bus services, as well as provide bus
    service to Logan International Airport.
        Current Status.--The Transitway project has a Full Funding Grant
    Agreement (FFGA) that was approved in November 1994. An amendment has
    been requested to address the project cost increase and slippage in the
    revenue operation date.

    ------------------------------------------------------------------------
                                                         Baseline schedule
                                      Baseline coat            (ROD)
    ------------------------------------------------------------------------
    Original......................      $413,407,000  December 31, 2000
    Proposed......................       600,915,000  December 31, 2003
    ------------------------------------------------------------------------

        Reason for change in scope, budget, and schedule.--The project cost
    has increased approximately $188 million as a result of differing site
    conditions with work associated with the Central Artery Tunnel (CA/T)
    project, complex design for relocation of existing utilities, and
    additional engineering to address environmental mitigation measures for
    a downtown project. Also, real estate costs have escalated due to the
    current market conditions being enjoyed in the region.
        Pending Issues.--The revenue operation date in the FFGA is December
    31, 2000. The MBTA's current schedule forecasts a revenue operation
    date of December 31, 2003. The three year schedule slippage is a result
    of differing site conditions encountered on the joint CA/T construction
    contracts, sophisticated design interface of existing utility
    relocations in the downtown area and the delayed award of the last
    major tunnel construction contract. A recovery plan has been approved.
    The submission of an amended FFGA is on hold pending a MBTA final
    contract award on the System Wide Installation Contract.
        Question. Please prepare a table indicating the projects that are
    likely to be ready for FFGAs in the near term (fiscal years 2001
    through 2003). Include current stage of project development, project
    description, estimated record of decision date, and estimated federal
    share.
        Answer. The table below includes the requested information, based
    on the most recent available data. The attached table lists those
    projects that are anticipated to enter final design by the end of
    fiscal year 2003. To be eligible for New Starts funding, proposed
    projects must complete the appropriate steps in the planning and
    project development process and receive a rating of ``recommended'' or
    higher in the most recent FTA evaluation. To ensure that those projects
    that are recommended for a Full Funding Grant Agreement are fully
    developed, FTA takes additional steps to assure that no outstanding
    project scope or cost issues remain (e.g., right-of-way acquisition)
    and that there are no local financial commitment issues that are
    outstanding that could be detrimental to the project and consequently
    jeopardize the Federal financial commitment.

                      NEW START PROJECTS ESTIMATED TO BE READY FOR FFGAs IN FISCAL YEARS 2001-2003
    ----------------------------------------------------------------------------------------------------------------
                                                                                         Grantee
                                                                                        estimated      (Estimated)/
       State/Geographic location                   Project description                section 5309    actual record
                                                                                       new starts      of decision
                                                                                          share            date
    ----------------------------------------------------------------------------------------------------------------
    IN FINAL DESIGN [7]:
        AR: Little Rock............  River Rail Streetcar..........................            $8.6  Sep 1999
        CA: Los Angeles-San Diego..  Los Angeles-San Diego (LOSSAN)................            24.1  N/A
        CA: North San Diego County.  Oceanside-Escondido Rail Corridor.............           152.1  Feb 2000
        CA: San Francisco..........  Third Street Light Rail--Phase 1..............  ..............  Apr 2000
        FL: Miami..................  South Busway Extension--Phase 2...............            23.4  Jan 1998
        LA: New Orleans............  Canal Streetcar Line..........................           125.3  Aug 1997
        WA: Seattle................  Central Link LRT (MOS-2 & MOS-3)..............           931.4  July 2000
                                                                                    ----------------
          Total--In Final Design...                                                         1,264.9
                                                                                    ================
    IN PRELIMINARY ENGINEERING [PE]
     [32]:
        AK: Girdwood \1\...........  Girdwood Commuter Rail........................             5.0  July 2000
        AZ: Phoenix................  Central Phoenix/East Valley [MOS-1]...........           533.4  (2002)
        CA: Los Angeles............  Eastside Corridor LRT.........................           402.3  (Oct 2001)
        CA: Los Angeles............  San Fernando Valley Corridor..................  ..............  (Oct 2001)
        CA: Orange County..........  Centerline Rail Corridor......................         1,870.6  (2002)
        CA: San Diego \1\..........  Mid-Coast Corridor............................            42.2  (Oct 2001)
        CO: Denver.................  West Corridor.................................           366.0  (2003)
        CT: Bridgeport.............  Intermodal Transportation Center..............            24.0  (Nov 2001)
        CT: Hartford...............  Hartford-New Britain Busway...................            51.6  (June 2001)
        CT: Stamford \1\...........  Urban Transitway..............................            18.0  (Aug 2001)
        DC: Washington, DC/VA......  Dulles--Bus Rapid Transit.....................           217.8  (2002)
        FL: Miami..................  North 27th Avenue.............................            61.5  (2001)
        IL: Chicago................  CTA--Ravenswood Line Expansion................           245.5  (2001)
        KS/MO: Johnson County, KS..  Interstate 35 Commuter Rail...................            24.8  (Dec 2001)
        LA: New Orleans............  Desire Corridor Streetcar.....................            65.5  (2002)
        MA: Lowell, MA-Nashua, NH..  Commuter Rail Extension.......................            18.0  (Apr 2002)
        MD: Maryland...............  MARC--Commuter Rail Improvements..............            40.9  N/A
        MN: Minneapolis-Rice \1\...  Northstar Corridor Commuter Rail..............           112.0  (July 2001)
        NC: Charlotte..............  South Corridor LRT............................           166.8  (Aug 2002)
        NC: Raleigh-Durham \1\.....  Regional Commuter Rail--Phase I...............           377.3  (2001)
        NV: Las Vegas..............  Resort Corridor Fixed Guideway [MOS-1]........           210.0  (2001)
        NY: New York City \1\......  Long Island Rail Road East Side Access........        2,172.00  (June 2001)
        OH: Cincinnati.............  Interstate 71 Corridor LRT [MOS-1]............           431.2  (July 2002)
        OH: Cleveland \1\..........  Euclid Corridor Transportation Project........           135.0  (June 2001)
        OR: Washington County \1\..  Wilsonville-Beaverton Commuter Rail...........            24.9  (May 2001)
        PA: Pittsburgh.............  North Shore Connector LRT.....................           194.9  (2002)
        PR: San Juan \1\...........  Tren Urbano--Minillas Extension...............           382.6  Sep 2000
        TN: Nashville \1\..........  East Corridor Commuter Rail...................            22.9  Apr 2000
        TX: Austin.................  Light Rail Corridors..........................           369.5  (2002)
        TX: Houston................  Downtown-Astrodome LRT........................  ..............  N/A
        WA: Seattle................  SOUND MOVE: Commuter Rail (Everett]...........  ..............  Feb 2000
        WA: Seattle................  SOUND MOVE: Commuter Rail (Tacoma]............            24.9  June 2000
                                                                                    ----------------
            Total--In Preliminary    ..............................................         8,611.1  ...............
           Engineering.
                                                                                    ================
          Total--FEDERAL DEMAND....  ..............................................         9,876.0  ...............
    ----------------------------------------------------------------------------------------------------------------
    \1\ Anticipated Final Design request in next six months.

        Question. Please list, by state, all new start projects currently
    in the preliminary engineering stage. Please provide a very brief
    status summary of each project, including such information as: whether
    or not these projects will seek federal funding, whether they will
    require a Full Funding Grant Agreement, what local benchmarks must
    occur before local share funding is secure, what type of project has
    been locally selected, etc.
        Answer. The table below includes the requested information, based
    on the most recent available data. The fiscal year 2002 New Starts
    Report, to be released in the near future, will contain detailed
    information on all projects currently in preliminary engineering,
    including a discussion of any outstanding project-specific local
    funding issues.

                                                                                  NEW STARTS IN PRELIMINARY ENGINEERING
                                                                                          [Millions of dollars]
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                           Status of PE/NEPA
                                                                                           Grantee                                                         ()=Estimated date
                                                            Total capital    Reporting    estimated                                                  ----------------------------- Outstanding local
              City/project              Mode/technology     cost of fixed     year for     section   Percent   Seeking an FFGA?     FFGA required?                    Record of      funding share
                                                              guideway     total capital   5309 new                                                    Date of PE  decision (ROD)        issues
                                                           alternative(s)    cost date      starts                                                      approval      or FONSI
                                                                                            share                                                                    completion
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    AK: Girdwood Commuter Rail.....  Commuter Rail.......            7     2001.........          5     71    No................  No................  Jun-00.....  Jul-00........  None; Local
                                                                                                                                                                                    funding secured
    AZ: Central Phoenix/East Valley  Light Rail..........        1,076     Escalated....        533     50    Yes...............  Yes...............  Sep-98.....  (2002)........  None; Local
     Corridor (MOS).                                                                                                                                                                funding secured
    CA: Los Angeles (East Side       Light Rail..........          759     Escalated....        402     53    Yes...............  Yes...............  Sep-00.....  (Oct 2001)....  State legislative
     Corridor).                                                                                                                                                                     action needed to
                                                                                                                                                                                    secure funds
    CA: Los Angeles (San Fernando    Bus Rapid Transit...          300     Escalated....  .........  .......  No................  No................  Dec-00.....  (Oct 2001)....  None; Local
     Valley Corridor).                                                                                                                                                              funding secured
    CA: Orange County (Centerline    Light Rail..........        3,741     Escalated....      1,870     50    Yes...............  Yes...............  Feb-98.....  (2002)........  State/local
     Rail Corridor).                                                                                                                                                                legislative
                                                                                                                                                                                    action needed
    CA: San Diego (Mid Coast         Light Rail..........          116     Escalated....         42     36    Yes...............  Yes...............  Sep-96.....  (Oct 2001)....  State/local
     Corridor).                                                                                                                                                                     legislative
                                                                                                                                                                                    action needed
    CO: Denver--West Corridor......  Light Rail..........          624     Escalated....        366     59    Yes...............  Yes...............  Mar-01.....  (2003)........  Local/private
                                                                                                                                                                                    sector action
                                                                                                                                                                                    needed to secure
                                                                                                                                                                                    funds
    CT: Bridgeport--Intermodal       Intermodal Center...           62     2001.........         24     39    No................  No................  Apr-01.....  (Nov 2001)....  Local action
     Transportation Center.                                                                                                                                                         needed to secure
                                                                                                                                                                                    funds
    CT: Hartford-New Britain Busway  Bus Rapid Transit...           82     Escalated....         51     62    Yes...............  Yes...............  Jan-00.....  (June 2001)...  State legislative
                                                                                                                                                                                    action needed
    CT: Stamford--Urban Transitway.  Busway..............           24     2000.........         18     75    No................  No................  Feb-00.....  (Aug 2001)....  Local action
                                                                                                                                                                                    needed to secure
                                                                                                                                                                                    funds
    DC: Wash., D.C.--No. Virginia    Bus Rapid Transit...          287     Escalated....        217     76    Yes...............  Yes...............  Mar-00.....  (2002)........  State/local
     (Dulles--Bus Rapid Transit).                                                                                                                                                   legislative
                                                                                                                                                                                    action needed
    FL: Miami--North 27th Avenue...  Busway..............           88     Escalated....         61     69    No................  No................  Aug-96.....  (2001)........  State/local
                                                                                                                                                                                    legislative
                                                                                                                                                                                    action needed
    IL: Chicago--CTA--Ravenswood     Heavy Rail..........          327     Escalated....        245     75    Yes...............  Yes...............  ( \1\ )....  (2001)........  None; Local
     Line Expansion.                                                                                                                                                                funding secured
    KS: Johnson County (Interstate   Commuter Rail.......           31     1997.........         24     77    No................  No................  Jul-99.....  (Dec 2001)....  Local action
     35 Corridor).                                                                                                                                                                  needed to secure
                                                                                                                                                                                    funds
    LA: New Orleans (Desire          Electric Trolley....           93     Escalated....         65     70    Yes...............  Yes...............  Aug-00.....  (2002)........  Local action
     Corridor Streetcar).                                                                                                                                                           needed to secure
                                                                                                                                                                                    funds
    MA: Lowell, MA-Nashua, NH--      Commuter Rail.......           41     Escalated....         18     44    No................  No................  May-00.....  (Apr 2002)....  State legislative
     Commuter Rail Exten-  sion.                                                                                                                                                    action needed to
                                                                                                                                                                                    secure funds
    MD: MARC--Commuter Rail          Commuter Rail.......           85     Escalated....         41     48    No................  No................  N/A........  N/A...........  State legislative
     Improvements.                                                                                                                                                                  action needed to
                                                                                                                                                                                    secure funds
    MN: Minneapolis-Rice (Northstar  Commuter Rail.......          223     Escalated....        112     50    Yes...............  Yes...............  Jun-00.....  (July 2002)...  State/local
     Corridor Commuter Rail).                                                                                                                                                       legislative
                                                                                                                                                                                    action needed to
                                                                                                                                                                                    secure funds
    NC: Charlotte (South Corridor).  Light Rail..........          331     Escalated....        166     50    Yes...............  Yes...............  Aug-00.....  (Aug 2002)....  None; Local
                                                                                                                                                                                    funding secured
    NC: Raleigh-Durham (Regional     Diesel Multiple               754     Escalated....        377     50    Yes...............  Yes...............  Oct-97.....  (2001)........  State/local
     Rail)--Phase 1.                  Unit.                                                                                                                                         legislative
                                                                                                                                                                                    action needed to
                                                                                                                                                                                    secure funds
    NV: Las Vegas--Resort Corridor   Fixed Guideway......          597     Escalated....        210     35    Yes...............  Yes...............  Jul-98.....  (2001)........  State/local/
     Fixed Guideway  (MOS).                                                                                                                                                         private sector
                                                                                                                                                                                    action needed to
                                                                                                                                                                                    secure funds
    NY: Long Island Rail Road East   Commuter Rail.......        4,344     Escalated....      2,172     50    Yes...............  Yes...............  Sep-98.....  (June 2001)...  State action
     Side Access.                                                                                                                                                                   needed to secure
                                                                                                                                                                                    funds
    OH: Cincinnati--Interstate 71    Light Rail..........          875     Escalated....        431     49    Yes...............  Yes...............  Dec-98.....  (July 2002)...  State/local
     Light Rail.                                                                                                                                                                    legislative
                                                                                                                                                                                    action needed to
                                                                                                                                                                                    secure funds
    OH: Cleveland--Euclid Corridor   Bus Rapid Transit...          228     Escalated....        135     59    Yes...............  Yes...............  Sep-96.....  (June 2001)...  None; Local
     Transportation Proj-  ect.                                                                                                                                                     funding secured
    OR: Wilsonville-Beaverton--      Commuter Rail.......           83     Escalated....         25     30    No................  No................  Jul-00.....  (May 2001)....  State/local
     Commuter Rail.                                                                                                                                                                 legislative
                                                                                                                                                                                    action needed to
                                                                                                                                                                                    secure funds
    PA: Pittsburgh--North Shore      Light Rail..........          390     Escalated....        195     50    Yes...............  Yes...............  Jan-01.....  (2002)........  State legislative
     Connector Light Rail.                                                                                                                                                          action needed
    PR: San Juan--Tren Urbano        Heavy Rail..........          477     Escalated....        382     80    Yes...............  Yes...............  Jun-98.....  Sep-00........  State action
     (Minillas Extension).                                                                                                                                                          needed to secure
                                                                                                                                                                                    funds
    TN: Nashville (East Corridor     Commuter Rail.......           33     Escalated....         23     70    No................  No................  Nov-99.....  Apr-00........  Local action
     Commuter Rail).                                                                                                                                                                needed to secure
                                                                                                                                                                                    funds
    TX: Austin (Light Rail           Light Rail..........          739     Escalated....        369     50    Yes...............  Yes...............  Apr-00.....  (2002)........  Local action
     Corridors).                                                                                                                                                                    needed to secure
                                                                                                                                                                                    funds
    TX: Houston (Downtown-Astrodome  Light Rail..........          300     Escalated....  .........  .......  N/A...............  N/A...............  Oct-99.....  N/A...........  None; Local
     Corridor).                                                                                                                                                                     funding secured
    WA: Everett-Seattle--Commuter    Commuter Rail.......          104     Escalated....  .........  .......  No................  No................  Jul-97.....  Feb-00........  None; Local
     Rail.                                                                                                                                                                          funding secured
    WA: Tacoma-Lakewood Commuter     Commuter Rail.......           86     Escalated....         24     28    No................  No................  Jul-97.....  Jun-00........  None; Local
     Rail.                                                                                                                                                                          funding secured
                                                          ----------------               --------------------
          Total 32.................                             17,307                        8,603     50
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ FTA grandfathered the Chicago Transit Authority's Ravenswood Line Expansion project into preliminary engineering given that the agency had substantially completed PE-level activities prior
      to entering the New Starts project development process.

        Question. Which projects currently in preliminary engineering are
    most likely to enter the final design stage before the end of fiscal
    year 2001?
        Answer. The table below includes the requested information.

                                      NEW STARTS PROJECTS MOST LIKELY TO ENTER FINAL DESIGN BY THE END OF FISCAL YEAR 2001
                                                                      [Millions of dollars]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Total                              Sec. 5309
             City/project/(# of projects)                   Mode/technology           capital      Year of estimated     new starts  (Estimated)/actual ROD/
                                                                                       cost           capital cost          share           FONSI date
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Anticipated May 31, 2001-September 30, 2001     ..............................      $6,274  .......................      $3,309  .......................
     (11).
        Alaska Railroad (Girdwood Commuter Rail)..  Commuter Rail.................           7  .......................           5  Jul-00
        Cleveland (Euclid Corridor Transportation   Electric Bus..................         228  Escalated..............         135  (June 2001)
         Project).
        Hartford-New Britain, CT (Busway).........  Bus Rapid Transit.............          82  Escalated..............          51  (June 2001)
        Minneapolis-Rice, MN (Northstar Corridor    Commuter Rail.................         223  Escalated..............         112  (July 2001)
         Commuter Rail).
        Nashville (East Corridor Commuter Rail)...  Commuter Rail.................          33  Escalated..............          23  Apr-00
        New York MTA (LIRR East Side Access)......  Commuter Rail.................       4,344  Escalated..............       2,172  (June 2001)
        Pawtucket, RI (Layover Facility)..........  Maint. Facility...............          18  Escalated..............          10  Dec-99
        Raleigh-Durham (Regional Rail)--Phase I...  DMU...........................         754  Escalated..............         377  (2001)
        San Juan (Tren Urbano)--Minillas Extension  Heavy Rail....................         478  Escalated..............         382  Sep-00
        Stamford, CT (Urban Transitway)...........  Busway........................          24  .......................          18  (August 2001)
        Wilsonville-Beaverton, OR Commuter Rail...  Commuter Rail.................          83  Escalated..............          24  (May 2001)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    DMU--Diesel Multiple Unit; FONSI--Finding of No Significant Impact; MTA--Metropolitan Transportation Authority; and ROD Record of Decision.

        Question. The fiscal year 2002 budget proposal funds only those
    projects that currently have a Full Funding Grant Agreement or that
    have reached the final design stage, despite the statutory set-aside of
    8 percent for projects that have not yet reached final design. What is
    the justification for this allocation of funds? What potential effect
    does this have on projects in earlier stages of development?
        Answer. TEA-21 indicates that ``not more than 8 percent'' shall be
    made available . . ''. FTA does not view this language as a set-aside
    but a limit on how much can be used for planning and preliminary
    engineering. In preparing the fiscal year 2002 budget, our review of
    existing and proposed FFGA's indicated a high level of demand for
    construction funds. It is FTA's opinion that providing funds for
    construction is a higher priority than providing funds for preliminary
    engineering and design. It has been the policy of FTA to strongly
    encourage grantees to use Urban Formula funds, including flexible
    funds, for early planning work, saving New Starts funds for actual
    project construction. It is FTA's opinion that this proposal will
    create no adverse impacts on projects in earlier stages of development.
    Rather it should encourage those projects to look for other formula
    funds or flexible funds and conserve New Starts funds for construction.
        Question. Please list any New Starts projects or other transit
    grantees that received TIFIA loans in fiscal years 1999, 2000, and
    2001, and the amount of each loan. What are the terms of these loans?
    What transit projects currently have pending applications for the next
    round of TIFIA loans?
        Answer. In fiscal year 1999 two transit projects were approved for
    TIFIA credit assistance. The Washington Metropolitan Area Transit
    Authority (WMATA) Capital Improvement Program was approved for a
    maximum $600 million loan guarantee. The purpose of the guarantee was
    to provide WMATA with obligation authority to advance its program. The
    loan itself came from Lehman Brothers, and has not been drawn against.
        The Puerto Rico Highway and Transportation Authority (PRHTA)
    borrowed $300 million from TIFIA for the New Starts project ``Tren
    Urbano.'' The loan agreement was signed on August 4, 2000 and the total
    amount of the loan was drawn on August 7, 2000. The loan is to be
    repaid by 2035, at 5.74 percent annual interest rate. PRHTA pays
    interest only during the first seven years, then principal and interest
    during the balance of the loan, and is current on its payments.
    However, we anticipate that PRHTA will repay the loan in full in 2007.
        In fiscal year 2000, TSASC, Inc., a special purpose New York
    entity, was approved for a TIFIA loan for the Staten Island Ferries and
    Terminals project in New York City. The St. George and Whitehall Ferry
    terminals are not New Starts projects, but they have received some
    limited formula and discretionary funds. One of the project's ferry
    boats has received some FHWA funding. FTA and the TIFIA Joint Program
    Office are currently in negotiation to complete the loan agreement,
    expecting to close on the loan in July 2001.
        The Notice of Funds Availability for the next cycle of TIFIA
    applicants has not yet been published, so there are no other pending
    transit TIFIA applications.
        Question. What is FTA's official position on the remaining federal
    contingent commitment authority for Los Angeles Metro? What is the
    amount of contract authority associated with Los Angeles Metro MOS-3,
    excluding those funds associated with the North Hollywood FFGA?
        Answer. FTA is holding commitment authority for Los Angeles MOS-3
    in the amount of $696.80 million. This includes the $49.69 million
    included in the fiscal year 2002 Budget. The amount of commitment
    authority that FTA is holding for Los Angeles MOS-3, excluding the
    North Hollywood FFGA, is $647.11 million. At this point in time there
    is no contract authority (i.e., budget authority) associated with Los
    Angeles MOS-3, excluding the North Hollywood FFGA.
        Question. There was a very large increase in projected total
    project costs for the Seattle Sound Transit light rail between February
    2000, when MOS-1 or the ``University Link'' entered final design, and
    January 2001, when the Full Funding Grant Agreement was executed by the
    Federal Transit Administration. Please provide a comparison of original
    and revised cost estimates for the project, breaking out the project by
    cost elements (design and construction, vehicles, signals and
    communications, maintenance equipment and facility, right of way,
    financing costs, etc.).
        Answer.

                               MOS-1 COST INCREASE
                              [Dollars in millions]
    ------------------------------------------------------------------------
                                             First      Second
                 Description               Baseline    Baseline   Percentage
                                           Cost \1\     Cost\2\
    ------------------------------------------------------------------------
    PE/EIS..............................       $32.4       $42.0         +30
    Design Build Tunnel.................       557.5       886.6         +59
    Station Finishes in DB Tunnel.......        90.2       148.9         +61
    Bus Tunnel (DSTT)...................        24.9        22.8         -61
    Royal Brougham to Airport Way.......        48.8        52.6          +8
    Vehicles & Assoc Systems............       209.3       223.4          +7
    Power System & Assoc................        31.1        41.0         +32
    O&M Facility & Assoc................        66.7        81.1         +22
    Project Start-up....................        10.1        15.7         +55
    Right of Way........................       107.8       187.3         +74
    CM..................................        43.6        80.0         +83
    Other Contracted Services...........        65.0        94.5         +45
    Intergovernment Agreements (Third           20.0        84.4        +322
     Party).............................
    Project Management..................        36.8        50.4         +37
    Other Miscellaneous Costs \3\.......        76.1       239.7        +215
    Financing Costs.....................        99.0       195.0         +97
                                         -----------------------------------
          Subtotal......................       1,519      2445.3         +61
                                         ===================================
    Project Reserve.....................       155.0       157.3          +1
                                         -----------------------------------
          Total.........................     1,674.3     2,602.6        +55
    ------------------------------------------------------------------------
    \1\ Estimate July 2000 in $M with Allocated Contingency; Mid-Point
      Construction.
    \2\ Estimate December, 2000 in $M with Allocated Contingency; Year 0
      Expenditure.
    \3\ Miscellaneous Cost include agencies salaries and overhead for the
      duration of project.

        Question. How will Sound Transit cover the increase in total
    project costs above the $500 million federal share?
        Answer. Sound Transit intends to cover the costs above Federal
    government's commitments of $500 M with the local sales tax and
    bonding.
        Question. How do these increases in MOS-1 costs affect Sound
    Transit's ability to finance, build and operate the second segment of
    the project (to Sea-Tac Airport)?
        Answer. Sound Transit developed an Updated 2001 Financial Plan,
    which was reviewed by the FTA's FMOC. The Plan proposes to fully
    finance all updated costs for MOS-1 and operation and maintenance costs
    through a combination of financing options. It also proposes to finance
    the Airport Link cost increases primarily through an assumed increase
    in Federal funding of $273 million (from $668 million to $941 million).
    FTA has made no commitments to any funds beyond those already committed
    to MOS-1.
        Question. In its April 4, 2001 interim report Seattle Central Link
    Light Rail project, the DOT Inspector General states that ``FTA did not
    perform satisfactory due diligence in the grant application review
    process'', that the agency had timely knowledge that the ``cost
    estimates contained in the grant agreement were materially
    understated'', and that ``consideration of the grant agreement should
    have been suspended or withdrawn.'' Do you concur with each of these
    findings?
        Answer. We do not agree with these particular findings, and are
    responding in detail to the Inspector General's report.
        Question. Was the Seattle project management oversight contractor,
    Gannett Fleming, Inc., made aware of the cost increases in the tunnel
    contract, third-party contracts, and real estate acquisitions as they
    were being negotiated in 2000?
        Answer. (a) Tunnel.--The cost proposals were submitted on July 28,
    2000. In August, the project management oversight contractor (PMOC) was
    informed that the initial tunnel contract proposal was higher than the
    Baseline Cost Estimate, but was not told by how much. Later in the
    month, the PMOC questioned the Link Project Director and the Chief
    Engineer about the unofficial information that the cost proposals were
    significantly higher. The Chief Engineer's response was that the cost
    proposal was higher but that cost was being negotiated down towards the
    Baseline Cost Estimate. In November, negotiations were suspended, and
    in December, after a number of requests, the PMOC was provided a copy
    of the most recent cost proposal prior to suspension.
        (b) Third Party Agreements.--The third party agreements increased
    only after the decision was made to revise the Full Funding Grant
    Agreement in December, 2000. The increase was based on the schedule
    extension approved by the Board in that month. The schedule extension
    opened up the executed agreements for re-negotiation.
        (c) Right-of-Way.--The real estate cost estimate was not updated
    until late November 2000. When the Sound Transit Board was informed in
    December, they authorized the hiring of an appraisal contractor in
    August/September time frame to provide a market review and
    ``reappraisal'' for Link every six months.
        Question. The April 4 Inspector General interim report recommended
    that FTA and Sound Transit complete four tasks, and that, until those
    tasks were completed and certified by the FTA Acting Administrator,
    Sound Transit funds and funding decisions be held in abeyance. What
    funds have been affected by this proposed holding action?
        Answer. Of the unobligated fiscal year 2001 fund, $49.54 million
    are on hold. Additionally, FTA recommended no funds for The Seattle
    Link project in the fiscal year 2002 New Starts budget request to the
    Congress.
        Question. Does FTA concur in each of these four recommended tasks?
    What is the target date for completion of each of these actions? If you
    do not concur, please provide your rationale. Furthermore, what
    alternative course of action do you believe would resolve the issues
    presented in this report?
        Answer. FTA concurs with the four recommendations contained in the
    Interim Report. FTA has directed Sound Transit to develop a revised
    project plan that meets all of the requirements of the New Starts
    process. When completed, FTA will conduct a review of all aspects of
    the project, including a thorough review for reliability of costs and
    cost estimates, and any and all issues that could materially affect
    project scope, schedule, and cost. The review will also include a
    reassessment of Sound Transit's financial and technical capacity to
    carry out the project, and will be conducted with the assistance of our
    Project Management Oversight contractors and our Financial Management
    oversight contractors.
        Sound Transit has taken a number of actions already, including a
    six-month work plan, appointment of a Project Review Committee, and
    other controls to strengthen their internal cost control and oversight.
    Subsequent events suggest Sound Transit is now undertaking an even
    broader re-evaluation of light rail in Seattle, including a
    reconsideration of whether to proceed with the originally defined MOS-
    1, which is the subject of the current FFGA. The local process that is
    now taking place is an important one and must ultimately result in a
    consensus on how to proceed with light rail in Seattle. We estimate
    that it will be at least six months before Sound Transit will be in a
    position to advance a revised proposal to the FTA. At such time as
    Sound Transit plans are firm enough for FTA review, we will begin an
    assessment. In the meantime, we will be monitoring their activities
    through our normal oversight processes.
        Question. Has a financial capacity stress test been performed on
    the New Jersey Hudson-Bergen light rail MOS-1 project? If so, what
    fiscal year 2002 appropriations levels were assumed in this test, and
    what were the results?
        Answer. The Hudson-Bergen light rail MOS-1 project was reviewed as
    part of the overall financial capacity assessment of New Jersey Transit
    Corporation. An agency wide stress test was conducted assuming a 50
    percent reduction in the scheduled New Starts annual allotment relating
    to the existing Full Funding Grant Agreement (FFGA) for MOS-1 and the
    proposed FFGA for the Hudson-Bergen light rail MOS-2 project. The FFGA
    for Hudson-Bergen light rail MOS-2 project was subsequently awarded.
    The stress test assumed $388.1 million in Federal capital funds for
    fiscal year 2002 using New Jersey Transit's agency wide cash flow
    summary for fiscal years 1999-2019. The results of the stress test
    showed that NJ Transit could use its reserve funds to satisfy its
    operating and capital requirements through 2012. In addition, NJ
    Transit has been proactive in taking steps to mitigate shortfalls in
    federal appropriations through its debt financing structure and
    insurance coverage in its capital program.
        Question. What is the current estimate of cost overruns on the San
    Juan, Puerto Rico Tren Urbano project above total project costs cited
    in the Full Funding Grant Agreement? How will these overruns be
    addressed?
        Answer. The current estimate of cost overruns above the total
    project cost cited in the Full Funding Grant Agreement is $113 million.
    The overruns will be covered by local funds.
        Question. What is the original and revised revenue operation date
    for Tren Urbano?
        Answer. The revenue operations date (ROD) per the FFGA is May 2002.
    The Puerto Rico Highway and Transportation Authority (PRHTA) has
    indicated that it will not meet that date. On May 16, 2001, FTA
    requested that PRHTA develop a recovery plan. The recovery plan will
    address the project budget, revised revenue operations date, financial
    plan, and safety and quality issues. A revised ROD will be determined
    following review of the recovery plan.
        Question. Please describe the current status of negotiations among
    the Metropolitan Council in Minneapolis, the Metropolitan Airport
    Commission, and Northwest Airlines regarding the use of airport
    revenues for the Hiawatha light rail tunnel and airport terminal rail
    stations on the airport property.
        Answer. Prior to the execution of FTA's Full Funding Grant
    Agreement with the Metropolitan Council (``Met Council'') on January
    17, 2001, the Met Council, Minnesota Department of Transportation
    (``MnDOT''), and Metropolitan Airports Commission (``MAC'') executed
    several contracts delineating their respective roles and
    responsibilities for construction, operation and maintenance, and
    financing of the one-mile light rail tunnel and two stations within
    Minneapolis-St. Paul International Airport (``MSP''). These agreements
    between Met Council, MnDOT, and MAC are still in effect. Northwest
    Airlines is not a party to any of these agreements. Major points:
        1. MAC will oversee construction of the tunnel civil works and
    light rail stations at MSP. MAC and MnDOT will coordinate their
    construction activities. Met Council will operate the Hiawatha light
    rail, including the portion of the alignment within MSP.
        2. The total estimated construction cost of the Hiawatha light rail
    within MSP is $142 million. MAC will contribute up to $84 million in
    airport revenue to pay a portion of the actual costs of construction of
    the tunnel civil work between the two light rail stations at MSP and
    the costs of those two stations; Met Council will contribute the
    remaining $58 million for design and construction of the tunnel and
    stations.
        3. By letter dated November 21, 2000, addressed to outside counsel
    for Northwest Airlines, the Federal Aviation Administration reiterated
    what it had informed the airline earlier: that consistent with FAA's
    policies on the use of airport revenue for airport ground-side access
    projects (64 Fed.Reg. 7696; February 16, 1999), it is permissible for
    MAC to contribute airport revenue towards the costs of the light rail
    tunnel and stations within MSP.
        Question. What is the status of the Chicago Transit Authority's
    proposed purchase of properties in the Sheffield Historic District on
    the Ravenswood Branch Brown Line? How will the State Historical
    Officer's decision impact the project's progress toward securing a Full
    Funding Grant Agreement?
        Answer. The Chicago Transit Authority (CTA) has not started to
    acquire any properties in the Sheffield Historic District on the
    Ravenswood Branch of the Brown Line. The current position of the
    Illinois State Historic Preservation Office (SHPO) is that CTA should
    not acquire or impact the sites of two specific buildings that
    potentially would be needed for expansion of the platform at the
    Fullerton Station, which is located within the Sheffield Historic
    District. The two buildings are the DePaul University women's gymnasium
    building and the privately-owned Dietzen building. The two buildings
    are contributing structures to the Sheffield Historic District,
    although they are not identified in the National Historic Register. CTA
    is having discussions with the SHPO to identify other possible station/
    track configurations. The environmental work required under National
    Environmental Policy Act (NEPA) cannot be completed until the impasse
    with the SHPO is resolved. The project will not be eligible for a Full
    Funding Grant Agreement until the requirements under NEPA have been
    satisfied.
        Question. Please discuss the issue of operational line safety on
    the Portland Tri-Met light rail system. Are there lessons to be learned
    from these pedestrian fatalities and the changes in procedures that
    have been adopted in response?
        Answer. The Portland Tri-Met system experienced five pedestrian
    fatalities over an 18 month period following the opening of the new
    Westside light rail line. Three of these fatalities occurred on
    separate rights-of-way wherein persons were trespassing. The other two
    fatalities occurred at public access areas and were the result of the
    persons being struck after ignoring the warning of the approaching
    train.
        Trespassing on the right-of-way was initially treated with warnings
    to trespassers, but with the subsequent fatalities, Tri-Met has
    instituted arrest procedures for persons on the private right-of-way.
    Also, Tri-Met now recognizes that an intense public education and
    awareness program is necessary prior to the opening of new rail lines.
    Portland is undertaking an aggressive public education program with the
    September, 2001 opening of its light rail extension to the airport.
                               general provisions
        Question. Please describe the effect of the proposed section 326
    general provision, which authorizes the Secretary to use transit
    capital funds made available in this and subsequent acts for rail
    safety oversight activities. Does this establish a federal transit
    safety oversight role? Isn't this a state responsibility?
        Answer. With the initiation of the state safety oversight program
    enacted in TEA-21 (49 U.S.C. 5330), twenty-two state safety oversight
    agencies were created to oversee thirty-five rail fixed guideway
    systems not regulated by the Federal Railroad Administration. No
    Federal assistance was provided in the legislation to assist states in
    the continuing annual cost of this mandated oversight responsibility.
    FTA has determined that a state's development of a system safety
    program standard for a new start rail system is an eligible, one-time
    capital ``startup'' cost. However, the ongoing annual cost for safety
    oversight of each rail transit operation within a state is, on average,
    $250,000 for administrative and consultant costs. FTA is concerned
    that, in many cases, the state regards the process as an additional
    burden, and consequently does not assign safety specialists on a full
    time basis to the rail transit oversight function. This is particularly
    true in states experiencing their first ``new start'' light rail
    system.
        FTA does not believe that Federal assistance to the involved states
    creates a Federal role in the management and performance of the state's
    oversight responsibilities. Those responsibilities are defined in FTA's
    state safety regulations and audit process (49 CFR 659). This is
    similar to other agencies' efforts, such as the Federal Motor Carrier
    Safety Administration's Motor Carrier Safety Assistance Program.
        Question. Why is it appropriate to include the proposed section 328
    general provision, which states that, beginning in fiscal year 2004 and
    thereafter, the federal share for New Starts projects shall not exceed
    50 percent? Isn't this an issue that would more appropriately be
    addressed at the reauthorization of TEA-21?
        Answer. The change in the maximum Federal share of New Starts
    projects under Sec. 5309 will require a change in law, which can be
    accomplished through either the appropriation or authorization process.
    We are proposing that a change in the maximum Federal share be enacted
    as part of the appropriations process in fiscal year 2002, with an
    effective date of fiscal year 2004. This will give project sponsors
    sufficient time to adjust the financial plans for their proposed
    projects to reflect the new, lower maximum Federal share of New Starts
    funding.
        If, however, this provision were included as part of the new
    authorization, it would become effective at the start of the next
    authorization period at the earliest. In other words, it would become
    effective seven months after the New Starts project funding
    recommendations are released in the President's budget proposal to
    Congress (February 2003). Changing the maximum amount of funding
    available to New Starts projects after the release of the budget, but
    before the start of the fiscal year, may unnecessarily delay projects
    that are otherwise ready to proceed and would render the project
    ratings useless to Congress during the fiscal year 2004 appropriations
    process. By making the change for fiscal year 2004 effective now,
    project sponsors have ample opportunity to revise their financial plans
    and seek any additional local sources of funding that may be required.
        Question. Please describe the effect of section 321 of Public Law
    106-346 regarding funds made available for Alaska or Hawaii ferryboats.
        Answer. This provision allows Hawaii to use up to $3,000,000 of the
    funds made available under Section 5309(m)(2)(B) for demonstration or
    operating expenses rather than capital expenses. To date, no
    application for these funds has been made.
                                     ______

    Questions Submitted to the Research and Special Programs Administration
                Questions Submitted by Senator Richard C. Shelby
                      office of hazardous materials safety
        Question. Please prepare a table indicating various measures of
    both the overall performance and the impacts of your program, showing
    statistical trends for each of the last 10 years. Please include data
    covering the last 10 years on the number of serious releases (or an
    equivalent measure), fatalities, injuries, costs, compliance measures,
    etc.
        Answer. The following table is provided:

    ----------------------------------------------------------------------------------------------------------------
                                                      Total        Serious
                         Year                       Incidents   Incidents \1\   Fatalities    Injuries     Damages
    ----------------------------------------------------------------------------------------------------------------
    1991.........................................        9,110           405            10          439  $38,350,611
    1992.........................................        9,311           376            16          604   35,164,057
    1993.........................................       12,830           358            15          627   22,801,551
    1994.........................................       16,087           427            11          577   44,185,413
    1995.........................................       14,743           408             7          400   30,903,281
    1996.........................................       13,950           466           120        1,175   46,849,243
    1997.........................................       13,999           423            12          225   33,449,784
    1998.........................................       15,350           430            13          197   46,170,284
    1999.........................................       17,085           380             7          252   33,856,229
    2000.........................................       17,224           401            12          240   57,530,562
    ----------------------------------------------------------------------------------------------------------------
    \1\ RSPA defines a serious hazardous materials incident as one that involves a fatality or major injury due to a
      hazardous material, closure of a major transportation artery or facility or evacuation of six or more persons
      due to the presence of a hazardous material, or a vehicle accident or derailment resulting in the release of a
      hazardous material.

        Question. What is the current regulatory backlog at the OHMS?
    Please include pending rulemakings, petitions for preemption and
    exemptions.
        Answer. OHMS does not have a regulatory backlog. OHMS is pursuing a
    number of regulatory activities using procedures mandated by law and
    OMB guidelines.
        Question. Why do you propose new positions to address less obvious
    causes of hazardous materials incidents when the OHMS already has a
    long list of pending and unfinished regulatory initiatives? Wouldn't
    any new positions be better employed in the standards or exemption and
    approval offices, where regulatory work is done, in order to address
    this backlog?
        Answer. OHMS does not have a regulatory backlog. OHMS is pursuing a
    number of regulatory activities using procedures mandated by law and
    OMB guidelines. The new positions will directly support all aspects of
    the safety program, including rulemaking and exemptions. RSPA supports
    a large number of initiatives internally, all at different levels of
    closure. While we dedicate substantial resources to developing rules
    and processing exemption and approval applications, we must remain
    vigilant to any threats to public safety resulting from the ever-
    changing hazardous materials marketplace. We intend to use the new
    resources to discover potential vulnerabilities before they actually
    cause serious hazardous materials incidents. An example would be
    discovering flaws in the design of a packaging newly-introduced to the
    marketplace. A DOT-wide Hazardous Materials Program Evaluation,
    completed in March, 2000, identified the need for better use of quality
    data to support all aspects of the program, including regulation
    development, training, outreach, enforcement and emergency response.
    Similarly, technical staff support all aspects of the program,
    particularly rulemaking and exceptions.
        Question. Please describe the current scope and list the number of
    regulatory initiatives that OHMS is already considering. How will the
    fiscal year 2002 budget request promote the issuance of cost-effective
    regulations?
        Answer. For fiscal year 2002, RSPA is planning a comprehensive,
    multi-disciplinary risk reduction campaign using enhanced statistics
    and new engineering capabilities to target major causes of hazardous
    materials incidents. The new resources requested for fiscal year 2002
    will improve the quality and utilization of hazardous materials data
    and technical analysis to support all aspects of the hazardous
    materials program. This will enable us to more accurately assess the
    costs, benefits, and other impacts associated with regulatory proposals
    and develop non-regulatory approaches to safety problems, such as
    targeted outreach and training programs, if appropriate.
        A listing of pending rulemaking actions follows:

    ----------------------------------------------------------------------------------------------------------------
            RULEMAKING PROJECT                         SUMMARY                             CURRENT STATUS
    ----------------------------------------------------------------------------------------------------------------
    Hazardous Materials Regulations:   Corrects inconsistencies in             Final rule anticipated: 7/01
     Miscellaneous Corrections (HM-     terminology and makes minor editorial
     189R).                             corrections to improve the clarity of
                                        the Hazardous Materials Regulations
                                        (HMR).
    Hazardous Materials Regulations:   Annual update to correct minor          Final rule anticipated: 9/01
     Miscellaneous Corrections (HM-     editorial errors and to enhance
     189S).                             clarity of certain provisions of the
                                        HMR.
    Hazardous Materials Communication  Revises hazard communication            Interim final rule anticipated: 8/01
     Requirements (HM-206B).            requirements for consistency with
                                        international standards.
    Air Carrier Emergency Telephone    Responds to an NTSB recommendation      ANPRM published: 8/15/00 NPRM
     Number Requirement (HM-206C)       that air carriers maintain a 24 hour    anticipated: 8/01
                                        telephone number that is able to
                                        provide information on the specific
                                        hazardous materials and their
                                        location aboard an aircraft.
    Limited Extension of Requirements  A limited exception from PIH labeling   Interim Final Rule issued: 9/16/99
     for Labeling Certain Shipments     requirements, provided in 1999 to       Interim Final rule anticipated: 8/01
     of PIH Materials (HM-206D).        facilitate international shipment of
                                        PIH materials, expires October 1,
                                        2001. We plan to publish a second
                                        interim final rule to address
                                        continued problems resulting from
                                        differences in international and
                                        domestic PIH labeling and placarding
                                        requirements.
    Revision of Requirements for       RSPA is proposing changes to            Anticipated: 7/01
     Uniform Hazardous Waste Manifest   requirements for preparation of
     (HM-206E).                         shipping papers for hazardous wastes
                                        consistent with revisions being
                                        proposed by EPA regarding the waste
                                        manifest.
    Shipping Records Retention  (HM-   Implements self-executing requirement   NPRM anticipated: 8/01
     207B).                             of Federal hazardous materials
                                        transportation law to require
                                        shippers and carriers to retain
                                        shipping papers for 1 year.
    Temporary Reduction in Hazardous   Proposed temporary changes in the       NPRM published: 12/7/00. Notice
     Materials Registration and Fee     registration and fee assessment         published to announce deferral of
     Assessment (HM-208D)               requirements to eliminate a surplus     final rule pending review in light
                                        of funds in the hazardous materials     of fiscal year 2002 budget request:
                                        emergency preparedness grants account.  5/2/01
    Requirements for Cargo Tanks (HM-  Revises and updates requirements for    NPRM anticipated: 8/01
     213).                              the manufacture, maintenance, and use
                                        of specification cargo tanks.
    Cargo Tank Rollover Requirements   In response to two NTSB                 ANPRM published: 11/16/99. Further
     (HM-213A).                         recommendations, we are studying        action undetermined pending outcome
                                        cargo tank rollover accidents to        of studies.
                                        evaluate the adequacy of current
                                        regulatory requirements.
    Safety requirements for Retention  This action will evaluate the means     NPRM anticipated: 7/01
     of Hazardous Materials in          available to eliminate risks
     External Product Piping (Wet       associated with the retention of
     Lines) on Cargo Tank Motor         hazardous materials in product piping
     Vehicles. (HM-213B).               on cargo tank motor vehicles and
                                        responds to an NTSB recommendation.
    Harmonization with U.N.            Revises the HMR by incorporating        NPRM published: 10/23/00. Final rule
     Recommendations, ICAO Technical    changes based on the most recent        (partial) published: 2/01/01. Final
     Instructions, and IMO Code (HM-    changes to the U.N. Recommendations,    rule (remaining issues) anticipated:
     215D).                             ICAO, and IMO requirements.             06/01
    Frangible Discs on Tank Cars (HM-  Propose to clarify requirements in the  NPRM anticipated: 11/01
     216A).                             HMR related to inspection of
                                        frangible discs on tank cars.
    Alternate Standards for the        Responds to a petition for rulemaking   NPRM anticipated: 8/01
     Loading/Unloading of IM Portable   and a denial of a petition for
     Tanks on Motor Vehicles (HM-       reconsideration under HM-166Y,
     218A)                              concerning the loading and unloading
                                        of IM portable tanks while attached
                                        to a motor vehicle.
    Consolidation of Specifications    Revises the requirements for            NPRM published: 10/30/98. Comment
     for High-Pressure Cylinders (HM-   reinspection, retesting, and            period closed: 5/28/98. Final rule
     220).                              repairing cylinders and consolidate     (partial; see HM-220D) anticipated:
                                        seamless cylinder specifications.       mid 2001
    Filling of Propane Cylinders  (HM- Responds to petitions for rulemaking    ANPRM published: 8/23/96. Termination
     220C).                             to allow propane cylinders to be        of rulemaking action anticipated:
                                        filled by volume rather than by         mid 2001.
                                        weight.
    Requirements for Maintenance,      Proposes to establish revised           Spin-off of non-controversial issues
     Requalification, and Repair of     requalification standards for           originally proposed in HM-220. Final
     DOT Specification Cylinders (HM-   cylinders and to respond to petitions   rule anticipated: mid 2001.
     220D).                             for rulemaking.
    Applicability of the HMR to        Resolves regulatory jurisdictional      Supplemental ANPRM published: 4/27/
     Loading, Unloading and Storage     issues regarding applicability of the   99. Comment period closed: 8/25/99.
     (HM-223).                          HMR.                                    NPRM anticipated: mid 2001
    Transportation of Oxygen           Will propose to authorize the           NPRM anticipated: mid 2001
     Cylinders on Aircraft (HM-224B)    transportation of oxygen cylinders on
                                        aircraft provided they are in an
                                        outer packaging that meets prescribed
                                        thermal and heat resistant
                                        requirements.
    Transportation of Lithium          Evaluation of hazards associated with   Advisory notice published: 09/07/00.
     Batteries (HM-224C).               transportation of lithium batteries     NPRM anticipated: late 2001
                                        aboard aircraft.
    Infectious Substances:             Proposes to revise the requirements     NPRM published: 01/22/01. Comment
     International Harmonization and    for infectious substances to            period closes: 04/23/01. Final rule
     Bulk Packaging (HM-226).           harmonize the requirements with         anticipated: late 2001
                                        international standards and propose
                                        bulk packaging requirements.
    Revision and Consolidation of      Joint petition by ATA and AAR to        Petition received: 1/98. NPRM
     Requirements for Carriage by       consolidate 49 CFR Parts 174 and 177.   anticipated: Undetermined, pending
     Railcar and Motor Vehicle (HM-                                             current Sec.  610 review under Small
     227).                                                                      Business Regulatory Enforcement
                                                                                Fairness Act of 1996.
    Revision of Requirements for       Addresses issues related to             ANPRM anticipated: late 2001
     Carriage by Aircraft (HM-228).     transportation of hazardous materials
                                        by air, including quantity limits,
                                        exceptions, and signage.
    Hazardous Materials Incident       Revises current hazardous materials     ANPRM published: 3/23/99. Comment
     Reporting Requirements,            incident reporting system and form to   period closed: 6/21/99. NPRM
     including the HMR Form 5800.1      simplify, update, and overhaul          anticipated: 8/01
     (HM-229).                          requirements.
    Adoption of the Latest IAEA and    Proposes to harmonize the requirements  ANPRM published: 12/28/99. Comment
     other Miscellaneous Revisions      for the transportation of Class 7       period closed: 6/29/2000. NPRM
     and Clarifications (HM-230)        (radioactive) materials with those      anticipated: late 2001
                                        issued by the IAEA.
    ----------------------------------------------------------------------------------------------------------------

        Question. Other than the fact that you are responding to the
    Departmental report on hazmat safety, what evidence can you provide of
    the need for the additional funds requested. What is new and different
    from the inspections, analyses, and regulatory efforts that OHMS is now
    conducting?
        Answer. The funds requested in the fiscal year 2002 budget address
    three needs critical to the success of the hazardous materials safety
    program.
        RSPA is in the midst of replacing its minicomputer-based
    information system that is operating with 20-year-old software no
    longer supported by the manufacturer, with a more robust, state-of-the-
    art database management system. The result will be more efficient,
    timely, accessible information to support office programs and to
    provide information to the regulated community and the public.
        New funding is also dedicated to shoring up HMS' administrative
    infrastructure. The HMS administrative expenses budget has remained
    essentially constant since 1997. Since that time, our mandate has grown
    dramatically in conjunction with both international and domestic trade
    growth. Since 1997, HMS established a fifth Regional office in Atlanta,
    and five additional outreach staff have been assigned to the Regions,
    with the resultant increased demand on funds for travel, office space,
    telecommunications, and other support. These additional requirements
    are in addition to the expected inflationary increases in such items as
    rents and administrative support contract costs, which have not been
    addressed in past budget submissions.
        Additional resources will be used to identify vulnerabilities in
    the hazardous materials transportation system before they result in
    incidents. We are planning a comprehensive, strategic, multi-
    disciplinary risk reduction campaign, using enhanced statistics and new
    engineering capabilities to target less obvious yet major causes of
    hazardous materials incidents with more extensive compliance
    initiatives. The new resources will support critical coordinated
    information, research, analysis, regulation, training, and enforcement
    activities.
        Question. RSPA is seeking suggestions from industry and the public
    to be considered as part of your hazmat reauthorization proposal. What
    concerns, if any, were expressed by industry regarding the existing
    OHMS program and how might your fiscal year 2002 budget address these?
        Answer. In our hazardous materials reathorization legislative
    docket, we received 25 comments from 23 parties, several of which
    represented many businesses or organizations. The overall thrust of the
    industry comments was: support clarified and stronger DOT enforcement
    authority; support stronger Federal preemption (with one exception);
    support elimination of DOT/OSHA regulatory overlap except for training;
    support prompt issuance of DOT (FMCSA) regulations on uniform forms and
    procedures for State registration and permitting of hazardous materials
    shippers and carriers; and support application of hazardous materials
    regulations to the United States Postal Service.
        We are reviewing all of these issues as we draft an Administration
    hazardous materials reuathorization proposal.
          hazardous materials personnel issues and operating expenses
        Question. What steps have been taken to comply with the staffing
    level that was approved by the conferees in fiscal year 2001? What is
    your current FTE strength?
        Answer. The Office of Hazardous Materials Safety (OHMS) and the
    Research and Special Programs Administration's (RSPA) personnel office
    work closely together to recruit suitable candidates for all current
    and anticipated vacancies. OHMS has a full-time permanent and full-time
    equivalent of 129 positions. We currently have 123\1/2\ FTE on board
    due to recent staff turnover and are actively recruiting to fill the
    remaining positions.
        Question. What are the precise titles, job descriptions, GS
    ratings, and office assignments for each of the proposed 6 new staff
    members (3 FTE) in fiscal year 2000 for the OHMS?
        Answer. Two positions will be data analysts, two will be engineers
    specializing in risk management, and 2 will be engineers who conduct
    incident investigations. The new staff members will be assigned to
    offices within OHMS in a way that maximizes their participation in the
    effort to prevent hazmat incidents. At least two positions will be
    assigned to the Office of Planning and Analysis and at least two
    positions will be assigned to the Office of Technology to support all
    elements of the hazardous materials program. The positions will likely
    be at the GS-12 level.
        Question. Please explain how each one of the new positions
    requested will address the recommendations presented in the
    Departmental review of its hazmat program. Please prioritize these six
    positions in order of importance, and justify the reasons for this
    order.
        Answer. The Departmental review concluded that DOT was hampered by
    a lack of accurate and complete information to support decision-making.
    RSPA's two additional data analysts will apply sophisticated data
    analysis tools to the current HMIS data as well as data from other
    sources to identify new threats. Two new engineering staff will conduct
    detailed analyses of the threats uncovered in the data analyses. The
    Departmental review also recommended we gain a better understanding of
    undeclared shipments and to review the adequacy of Performance Oriented
    Packaging Standards. Two of the engineering positions will conduct
    engineering-based investigations of specific incidents, to identify
    potential vulnerabilities that we have not been able to identify using
    current resources. Examples would be the discovery of an unusually high
    failure rate for newly-introduced containers, or a high incident rate
    for a particular shipper shipping a small number of highly volatile
    materials. All 6 positions are equally important.
        Question. Please describe the ``newly-revealed'' problems mentioned
    in support of the two new engineering positions.
        Answer. The comprehensive Strategic Hazardous Materials Incident
    Reduction Initiative will utilize sophisticated data analysis tools and
    engineering-based investigations of specific incidents, to identify
    potential vulnerabilities that we have not been able to identify using
    current resources. Examples would be the discovery of an unusually high
    failure rate for newly-introduced containers, or a high incident rate
    for a particular shipper shipping a small number of highly volatile
    materials. These resources will also be used to develop regulations,
    training, and other programmatic responses to these issues.
        Question. Please provide a table showing the authorized number of
    inspectors for each of the last three fiscal years, and the actual
    number of inspectors on-board during those periods.
        Answer. The following table shows the authorized number of
    inspectors and the actual number of inspectors on-board for the last
    three years.

    ------------------------------------------------------------------------
                      FISCAL YEAR                    AUTHORIZED    ON-BOARD
    ------------------------------------------------------------------------
    1998..........................................           37           34
    1999..........................................           37           37
    2000..........................................           37           37
    ------------------------------------------------------------------------

        OHMS has not been authorized any new inspector positions during
    that last three fiscal years.
        Question. Please present historical data since fiscal year 1995
    showing staffing levels of the OHMS.
        Answer.

    ------------------------------------------------------------------------
                                                    Positions        FTE
                     Fiscal Year                    Authorized   Authorized
    ------------------------------------------------------------------------
    1995.........................................          113         113
    1996.........................................          129     \1\ 122
    1997.........................................          129         122
    1998.........................................          129         122
    1999.........................................          129         122
    2000.........................................          129         125.5
    2001.........................................          129     \1\ 129
    ------------------------------------------------------------------------
    \1\ NOTE: The 129 FTE level was not fully-funded until fiscal year 2001.

                       inspection and enforcement program
        Question. Does the current incident database support your
    enforcement program at the present time? If so, to what effect and
    extent?
        Answer. Yes. The Office of Hazardous Materials Enforcement (OHME)
    utilizes the incident data base through computer programs to extract
    information on shippers of hazardous materials. The programs used by
    OHME are designed to key on companies identified as the shipper on 20
    or more incident reports during a five-year period. These incidents are
    also broken down by packing group, since the packing group system
    assigns relative risk to each material based on the packing group to
    which it is assigned. The reports provided through this program are
    used to conduct shipper inspections.
        Question. What has RSPA done, in conjunction with the Federal Motor
    Carrier Safety Administration, to develop an electronic intrastate
    database to determine the effectiveness and impacts of HM-200? What is
    RSPA's technical and financial involvement? What is the status of that
    project? Are funds requested for that activity in fiscal year 2002? How
    has the expansion of the database to include intrastate data affected
    your program's ability to influence safety?
        Answer. We have worked with FMCSA as it develops an intrastate
    database intended to support an enforcement strategy and to determine
    the effectiveness of HM-200 in contributing to a reduction in highway-
    related incidents involving the intrastate transportation of hazardous
    materials. RSPA staff have participated in planning the new database to
    ensure cross-compatibility with other hazardous materials data sources.
    RSPA has not provided funds for this effort and is not requesting
    funding for the project in fiscal year 2002.
        Question. Please calculate the average settlement percentage
    [amount of civil penalties collected for valid claims divided by the
    amount of civil penalties originally assessed for valid claims] for
    hazmat cases concluded during the last three fiscal years.
        Answer.

    ------------------------------------------------------------------------
                                         1998 \1\     1999 \1\     2000 \1\
    ------------------------------------------------------------------------
    Penalties Proposed...............   $2,053,196   $2,155,634   $2,247,892
    Penalties Collected..............   $1,412,593   $1,518,432   $1,532,749
    Percentage Collected (percent)...           69           70           68
    Ticket Proposed Penalties........     $301,343     $346,524     $375,313
    Ticket Collected Penalties.......     $300,602     $345,217     $375,165
    Penalties Percentage Collected...         99.8         99.6         99.9
    ------------------------------------------------------------------------
    \1\ Does not include tickets.

        Question. Please discuss improvements in your training and outreach
    program since last year.
        Answer. RSPA has an active publication and training materials
    development program. Publications and training materials are developed
    based on needs and risk assessments. Over 50 percent of the new
    materials being developed are being targeted at areas of noncompliance,
    high risk, and new regulatory requirements. Due to the HMSAT activities
    and expansion of targeted training and outreach, the quantity of
    materials printed and distributed has nearly doubled since fiscal year
    2000. In addition, RSPA is currently developing a new training module
    on hazardous materials transportation on vessels for its CD-ROM
    training program. The new module will complete the basic modal
    additions to the Modular training program and is scheduled for
    completion in early 2002.
        In fiscal year 2001, RSPA increased the number of Multimodal
    Training Seminars from four to five per year. It is anticipated that
    1,500 participants will attend this year's seminars. This represents an
    increase of 25 percent over fiscal year 2000 attendance.
        In fiscal year 2000 RSPA established a Hazardous Materials Safety
    Assistance Team (HMSAT) to make industry and the public aware of the
    Hazardous Materials Regulations (HMR), to help businesses find the
    resources needed to comply with the regulations, and to provide
    technical assistance to the emergency response and planning community.
    This team has been fully staffed since January 2001 and is dedicated to
    training and technical assistance.
        With this team, RSPA is undertaking high visibility activities
    aimed toward high-risk small businesses that ship hazmat infrequently
    and intrastate shippers and carriers that are subject to the HMR. RSPA
    is also specifically targeting hazmat operations through national and
    local industry and labor associations. Our broad-based approach will
    assure the widest possible dissemination of this critical information.
        RSPA continues to sponsor the Cooperative Hazardous Materials
    Education (COHMED) program. COHMED is a partnership effort that works
    to foster coordination, cooperation, and communication among Federal,
    State and local government agencies and tribal nations having
    regulatory and enforcement responsibility for the safe transportation
    of hazardous materials, as well as hazardous materials shippers and
    carriers. RSPA's efforts to expand industry participation in COHMED
    programs have resulted in nearly a 25 percent increase in private
    sector attendance over the past year.
        Question. Please present data on the number of times that each of
    your inspectors working in the regional offices conducted joint
    inspections or provided training for state officials.
        Answer. In 2000, RSPA hazardous materials inspectors conducted 20
    inspections of companies along with inspectors from the following
    states: Alabama, Arkansas, California, Colorado, Florida, Georgia,
    Iowa, New Jersey, New York, and North Carolina. RSPA inspectors also
    worked with state inspectors from California, Georgia, Louisiana,
    Minnesota, and Virginia, during six week-long joint inspection
    operations.
        In February 2000, a RSPA inspector provided cylinder retester
    training to the New York State Fire Marshall's office, as well as to
    local fire marshalls. In March 2000, a RSPA inspector met with and
    provided outreach to the Texas State Fire Marshall's Office. In March
    and April 2000, a RSPA inspector assisted the Suffolk County, New York,
    District Attorney's Office in conducting a criminal investigation of a
    cylinder retester.
        In 2000, RSPA hazardous materials inspectors conducted outreach/
    training presentations to personnel of the following agencies:
    Connecticut State Fire Marshall's Office (cylinder retesting); South
    Carolina State Health Department (regulated medical waste); Texas
    Natural Resource Conservation Commission (regulated medical waste);
    Arizona Department of Transportation (general information); North
    Carolina Department of Environment and Natural Resources (packaging for
    hazardous wastes); Tennessee Occupational Safety and Health Agency
    (regulated medical wastes); Alabama Department of Environmental
    Management (regulated medical waste); New Jersey State Police Arson/
    Bomb Unit (general information); New Jersey State Police (explosives
    approval process and transportation of explosives); Seattle Fire
    Department (transportation of propane from Port of Seattle); Florida
    State Department of Health (regulated medical waste); and New York
    State Hazardous Materials Bureau (RSPA hazardous materials enforcement
    program).
                        shipper and carrier registration
        Question. The collection of hazardous materials registration fees
    was widened last year to include all small businesses ($300), and the
    fees that larger businesses pay were raised from $300 to $2,000. How
    much was collected in the 2000-2001 registration cycle under this new
    use fee schedule? How much is this in excess of the emergency
    preparedness grants user fee schedule? How much is this in excess of
    the emergency preparedness grants obligation limitation for fiscal year
    2001? Is this the first time since the registration program was
    authorized that there has been an excess balance in fees collected
    above the national program level?
        Answer. In fiscal year 2000, $24.8 million was collected in
    registration fees for the 2001-2002 registration year. This is
    approximately $7 million above the fiscal year 2001 obligation
    limitation of $14.3 million. Fiscal year 2000 was the first fiscal year
    in which funds collected exceeded the obligation limitation.
        Question. Does the 1990 Hazardous Materials Transportation Act
    require the Department of Transportation to adjust the amount of fees
    being collected to reflect any unexpended balance in the emergency
    preparedness grants program?
        Answer. Section 5108(g)(2)(B) of the 1994 Hazardous Materials
    Transportation Act does require the Department of Transportation to
    adjust the amount of fees being collected to reflect any unexpended
    balance in the emergency preparedness grants program. If collections
    during fiscal year 2001-2002 are similar to those of the previous year,
    and the President's fiscal year 2002 budget request to fund a portion
    of RSPA's hazardous materials program budget from user fees is enacted,
    all funds, including carryover from the previous year, will have been
    expended.
        Question. In December 2000, RSPA published a Notice of Proposed
    Rulemaking in the Federal Register to lower the registration fees in
    response to this excess balance. However, on May 2, 2001, RSPA reversed
    its position, and announces the fees would remain the same as last
    year, which will create another excess balance in the emergency
    preparedness grants program for fiscal year 2002. Why did the
    Department decide to reverse its position and withdraw the rulemaking
    that would have adjusted the fees to the level set in the
    appropriations law?
        Answer. On April 9, 2001 the President submitted his fiscal year
    2002 budget request to Congress. In that budget request, the President
    proposes to fund a portion of RSPA's hazardous materials safety program
    budget from fees collected through the Hazardous Materials Registration
    program. Consistent with the President's budget request to Congress,
    RSPA withdrew all proposals contained in this rulemaking pending
    enactment of the fiscal year 2002 Department of Transportation
    appropriations.
        Question. Is there current statutory authority for the Department
    to divert any of the emergency preparedness grants program (EPGP) funds
    for activities of the Office of Hazardous Materials Safety?
        Answer. No. There is no such authority.
        Question. Would you agree that the Department is violating current
    law by refusing to adjust the unexpended balance in the EPGP?
        Answer. No. The Department has no authority to directly adjust the
    unexpended balance itself and is not required to refund any fees.
        Question. Does RSPA plan to plan to propose another rulemaking to
    increase the fees further, so that by fiscal year 2003 there will be
    funds in the EPGP account to fully fund both the Office of Hazardous
    Materials Safety and the EPGP?
        Answer. If Congress approves our proposal to fund part of RSPA's
    fiscal year 2002 Office of Hazardous Materials Safety (OHMS) activities
    with registration fees, then, to fully fund both OHMS activities and
    the Emergency Preparedness Grants Program in fiscal year 2003, which is
    assumed in the out-year projections in the President's fiscal year 2002
    Budget, we would have to increase registration fees starting with the
    May 2002 billing cycle.
        Question. Section 347 of Public Law 106-346, the Fiscal Year 2001
    Transportation Appropriations Act, states that budget officers at the
    Department shall not be paid their salaries from the funds made
    available by that Act if a budget proposal is submitted which assumes
    revenues due to user fee proposals that have not enacted into law prior
    to the submission of the budget, unless the budget proposal identifies
    spending reductions to offset those user fee proposals. Does the
    budget's proposal Section 323 which authorizes the Secretary of
    Transportation to increase hazardous materials registration fees
    violate this provision in the fiscal year 2001 appropriations law? Are
    RSPA budget officers still being paid their salaries? From what funds?
        Answer. This issue was addressed by former OMB Director Jacob Lew
    in his letter of September 11, 2000, to the conferees on DOT's Fiscal
    Year 2001 Appropriations Act. Director Lew stated that this particular
    provision ``would effectively require the President to submit a budget
    proposal to the Congress that identifies prospective spending cuts in
    the event Congress does not enact a portion of the President's overall
    budget proposal. Such a requirement that the President spell out for
    Congress his fallback position in the budget negotiation process
    conflicts with the Constitution's separation of executive and
    legislative powers, and, specifically, with the President's
    constitutional authority to `recommend' to Congress `such Measures as
    he shall judge necessary and expedient' (U.S. Constitution, Article II,
    Section three). The Department of Justice has advised that, if enacted,
    the President will interpret this provision as precatory.''
        Question. Please display the total registration fees collected for
    each of the last five fiscal years by the shipper and carrier
    registration program, broken out by emergency response activities and
    administrative costs. How much do you expect to collect during fiscal
    year 2001 and during fiscal year 2002?
        Answer.

                                          EMERGENCY PREPAREDNESS FUNDS RECEIPTS
                                               (Dollars shown in millions)
    ----------------------------------------------------------------------------------------------------------------
                                                                      Administrative
                                                                         Costs to        Funds for
                               Fiscal Year                             Treasury for      emergency    Total Receipts
                                                                        processing       response
                                                                         receipts       activities
    ----------------------------------------------------------------------------------------------------------------
    1995............................................................          $1.429          $6.843          $8.272
    1996............................................................           1.420           6.729           8.149
    1997............................................................           1.526           7.147           8.673
    1998............................................................           1.649           7.750           9.399
    1999............................................................           1.583           7.373           8.956
    2000............................................................           1.326      \1\ 24.866          26.192
    2001 (est.).....................................................           1.250          23.300          24.550
    2002 (est.).....................................................           1.250          23.300          24.550
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes $3.568 million paid in advance for registration years 2001-2002 and 2002-2003.
     NOTE: (Estimates for 2001 and 2002 assume that no one will pay in advance).

                    research and technology strategic goals
        Question. What has RSPA done since last year to implement the
    provision of TEA-21 that requires strategic planning to design a
    national surface transportation research and technology agenda?
        Answer. In May 1999, the Secretary and the President's Science
    Advisor jointly announced the Department's first Transportation
    Research and Development (R&D) Plan. This document was developed in
    part to respond to a requirement in Section 5108 of TEA-21. It was
    developed through an interagency R&D strategic planning process,
    focused through the Department's Research and Technology Coordinating
    Council.
        This process has been used to generate two updated versions of the
    DOT Transportation R&D Plan; the Third Edition is now undergoing final
    DOT reviews. The Second Edition of the R&D Plan, completed in May 2000,
    includes a formal agenda of 23 research and technology areas that
    support achievement of each of the Strategic Goals set forth for the
    Department in the DOT Strategic Plan, 1997-2000.
        The updated DOT Strategic Plan 2000-2005, issued in July 2000,
    underlines the role of R&D in meeting the Department's Strategic Goals.
    It includes a specific R&D strategy section in the discussions of each
    of its six Strategic Goals, highlighting specific technologies and
    research areas that are particularly supportive of that goal.
        The Third Edition of the DOT Transportation R&D Plan integrates the
    strategy material from the new Strategic Plan into an updated national
    research and technology agenda. Based on user reactions to the Second
    Edition, the Third Edition also integrates materials from other
    interagency planning exercises in the document. It contains new
    appendices detailing 14 mature technologies that are, or could be, the
    focus of implementation partnerships, and 7 enabling technology areas
    that could be the basis for future transportation advances.
        The DOT R&D strategic planning process continues to define the
    national R&T agenda, serving the needs of the various DOT and other
    agency participants.
        Question. What impacts have recent federal and DOT strategic
    planning efforts for transportation research and technology had on
    decisions about cross-cutting and modal research projects and how they
    are performed?
        Answer. The R&D strategic planning process has demonstrated the
    potential of collaboratively-defined efforts to address common
    problems. A variety of multimodally applicable research activities--
    both initiated within DOT and originated by the Congress--are now
    underway that involve several administrations and that address areas
    highlighted in previous research and technology planning efforts. These
    include: (1) a coordinated Departmental program of human factors
    research, with core funding of $300,000 provided to RSPA in fiscal year
    2001; (2) a multimodal Departmental program of research on
    transportation infrastructure assurance, with core funding of $1
    million provided to RSPA in fiscal year 2001; (3) the ongoing
    interagency initiative for maritime applications of fuel cells, with
    RSPA funding two Small Business Innovation Research (SBIR) projects
    supporting the effort; (4) the Commercial Remote Sensing Program, with
    $4 million core funding in fiscal year 2001; and (5) The Advanced
    Vehicle Technologies Program, which is active based on prior year
    funding. Additional enabling research activities to examine advances in
    nanotechnology or the rise of ``smart technologies'' are under
    discussion among the DOT administrations.
        In terms of the modal programs, the variety of research planning
    materials that have been developed under this activity have already had
    the following effects:
      --Promoted collaborative research (e.g., aviation R&D, fuel cells)
      --Promoted consideration of longer-term research (e.g.,
            nanotechnology)
      --Raised the consciousness of senior DOT leadership of R&D as a tool
            to achieve Departmental goals and solve transportation problems
            (e.g., R&T strategies are now included for each major goal in
            DOT's Strategic Plan, highlighting specific modal R&T programs)
      --Linked research more explicitly to accomplishing Departmental goals
            (e.g., 2002 Performance Plan/2000 Performance Report)
      --Created a better-focused agenda of research activities and
            priorities (e.g., DOT Transportation R&D Plan [Second and Third
            Editions])
      --Identified new opportunities for cooperative implementation (e.g.,
            Transportation Infrastructure Assurance R&D, Human-Centered
            Systems, Advanced Vehicle Technologies Program)
      --More effectively involved non-Federal participants (industry,
            State/local government, academia) in support and conduct of
            research (e.g., Intelligent Vehicle Initiative, ITS Deployment,
            National Highway R&T Partnership Initiative, National R&D Plan
            on Aviation Safety, Security, Efficiency and Environmental
            Compatibility).
        Question. Please list by contract and amount how comparable funds
    provided in fiscal year 2000 and fiscal year 2001 under the activity
    R&D Planning and Management were used or will be used. Please address
    how the Department's third edition of its Transportation R&D Plan had
    an impact on R&D planning, budgets, and program implementation.
        Answer. RSPA obligated or plans to obligate funds for activities
    under R&D Planning and Management as follows:

    ------------------------------------------------------------------------
                                                          FISCAL YEAR--
                       ACTIVITY                    -------------------------
                                                        2000         2001
    ------------------------------------------------------------------------
    Strategic Planning:
        Volpe Center 30th Anniversary Symposia....           $0     $150,000
        NRC/TRB Peer/Merit Review.................      200,000      150,000
        R&D Planning:
            DOT R&D Plan..........................      250,000      100,000
            Mature Technologies Deployment........      100,000      100,000
            Enabling Research.....................      100,000      110,000
        Private-public Partnership Outreach.......      175,000      450,000
        Enabling Research Outreach................      125,000       80,000
        International R&T Coordination............       50,000      100,000
        Long-Term Decisions.......................            0      100,000
        Sustainability............................      100,000            0
                                                   -------------------------
          Subtotal................................    1,100,000    1,340,000
                                                   =========================
    Research and Technology Coordination and
     Facilitation:
        Performance Measurement...................      100,000       85,000
        Innovation Partnerships...................      150,000            0
        National Research Council (GUIRR).........      125,000      135,000
        TRB Annual Fee............................       60,000       60,000
        International S&T (e.g., NAFTA,US-EU).....      150,000       50,000
        DOT R&D Tracking System...................      200,000      200,000
        DOT Technology Sharing/Transfer...........      115,000      115,000
        Homepages.................................      210,000      150,000
                                                   -------------------------
          Subtotal................................    1,110,000      795,000
                                                   =========================
    Intermodal and Multimodal Research and
     Education:
        Research and Education Planning...........  ...........      100,000
        Small Business Innovative Research........       25,000            0
                                                   -------------------------
          Subtotal................................       25,000      100,000
                                                   =========================
          TOTAL...................................    2,235,000    2,235,000
    ------------------------------------------------------------------------

        The third Edition of the Department's R&D Plan, as one of the
    latest products in the ongoing DOT research planning process, has had
    the following effects:
      --Promoted collaborative research among the DOT operating
            administrations
      --Promoted consideration of longer-term research
      --Raised the consciousness of senior leadership throughout DOT of R&D
            as a tool to achieve Departmental goals and solve
            transportation problems
      --Linked research more explicitly to accomplishing Departmental and
            operating administration goals
      --Created a better-focused agenda of research activities and
            priorities Department-wide
      --Identified new opportunities for cooperative implementation
      --More effectively involved non-Federal participants in support and
            conduct of research.
        Question. Please break out separately funding for any conferences,
    meetings, outreach activities, international scanning activities or
    panel discussions sponsored by RSPA using funds appropriated under the
    research and technology sub-account for fiscal years 2000 and 2001.
        Answer. RSPA obligated or plans to obligate funds to support
    conferences, meetings, outreach, international scanning activities, and
    panel discussions as follows:

    ------------------------------------------------------------------------
                                                            Fiscal year--
                                                       ---------------------
                                                           2000       2001
    ------------------------------------------------------------------------
    Volpe Center 30th Anniversary Symposia............         $0   $150,000
    National Research Council/Transportation Research     200,000    150,000
     Board Workshops..................................
    Public-private Partnerships/Enabling Research         300,000  .........
     Outreach.........................................
        Outreach Facilitation.........................  .........    100,000
        Partnership Development.......................  .........    200,000
            Infrastructure Renewal & Assurance........  .........  .........
            Transportation Weather Service............  .........  .........
        Partnership Plans/Reports.....................  .........    150,000
    Enabling Research.................................  .........     80,000
    International R&D Assessment & Coordination.......     50,000    100,000
                                                       ---------------------
          TOTAL.......................................    550,000    930,000
    ------------------------------------------------------------------------

        Question. Please give specific examples of key needs in cross-
    cutting or intermodal research that were funded in fiscal year 2001.
    What is planned for fiscal year 2002 in this area?
        Answer. At least five cross-cutting or multimodal activities are
    ongoing with RSPA involvement. These include: (1) a coordinated
    Departmental program of human factors research, with core funding of
    $300,000 provided to RSPA in fiscal year 2001; (2) a multimodal
    Departmental program of research on transportation infrastructure
    assurance, with core funding of $1 million provided to RSPA in fiscal
    year 2001; (3) the ongoing interagency initiative for maritime
    applications of fuel cells, with RSPA funding two Small Business
    Innovation Research (SBIR) projects supporting the effort; (4) the
    Commercial Remote Sensing Program, with $4 million core funding in
    fiscal year 2001; and (5) the Advanced Vehicle Technologies Program,
    which is active based on prior year funding. Activities on all these
    research topics will continue into fiscal year 2002, although several
    will be continuing based on prior year funding provided.
        Question. Did RSPA or OST obtain any funding in either fiscal year
    2000 or 2001 from FHWA's surface transportation research and
    development account for any purpose? If so, please specify the use and
    amount of any funding received.
        Answer. The FHWA provided $250,000 to RSPA in fiscal year 2000 to
    support the implementation of Section 5108 of the Transportation Equity
    Act for the 21st Century. The funds were provided to help accomplish
    the following: (1) Develop the updated versions of the DOT R&D Plan
    ($100,000 fiscal year 2000); (2) Conduct a National Research Council
    review of the DOT R&D Plan and transportation R&D strategic planning
    process ($100,000 fiscal year 2000); and (3) Support the development of
    Performance Plans and Performance Reports ($50,000 fiscal year 2000).
        Question. Please list each of the recommendations of and response
    to the TRB Committee regarding DOT's R&T strategic efforts.
        Answer. The NRC Committee met most recently on September 20, 2000
    to review DOT's strategic planning process. The committee evaluation
    focused specifically on the process of developing and implementing
    partnerships. The Committee reviewed National Science and Technology
    Council (NSTC) and U.S. Department of Transportation strategic planning
    documents. DOT managers and program managers from other federal agency
    partnership programs briefed the Committee on the progress of the
    following three partnership programs: (1) Next Generation
    Transportation Vehicles; (2) Intelligent Vehicle Initiative (IVI); and
    (3) Aviation Safety Research Alliance. Based on the strategic planning
    documents and presentations at the meeting, the NRC committee made the
    following recommendations in January 2001. DOT/RSPA responses to these
    recommendations are as follows:
        1. Committee Recommendation.--The strategy, and even more so its
    accompanying documents, should be clearer and more specific about
    participants, levels of effort, activities and accomplishments.
        DOT Response.--The recommendation will be addressed in the changes
    currently contemplated for the NSTC and DOT strategic planning process.
    The changes will include redefining priority partnerships and preparing
    a roadmap on each selected partnership.
        2. Committee Recommendation.--The strategy should take a more
    systematic and intermodal approach.
        DOT Response.--DOT, where feasible, is initiating a systems
    approach for partnerships. For example, DOT/RSPA has proposed research
    on alternate fuel infrastructure as part of the advanced vehicles
    partnership.
        3. Committee Recommendation.--The role of enabling research should
    be strengthened and more clearly defined. Enabling research and
    education should be integrated more fully into the partnerships.
        DOT Response.--DOT is exploring vertical integration of enabling
    research and education and training, specifically in areas of new or
    breakthrough technologies such as the application of remote sensing
    technologies to transportation. DOT has requested that NRC conduct a
    proactive evaluation of education and training and professional
    workforce development for 21st Century transportation needs.
        4. Committee Recommendation.--A process of establishing and
    sunsetting partnerships should be developed.
        DOT Response:.--As part of contemplated changes in the strategic
    planning process, DOT will recommend development and implementation of
    a process for sunsetting partnerships when the useful and productive
    life of a partnership is exhausted.
        5. Committee Recommendation.--Periodic program level assessments,
    including non-federal evaluators should be conducted. Feedback from
    these assessments should be used to increase understanding of and
    learning from successful practices.
        DOT Response.--DOT conducts ongoing programmatic assessments of all
    R&T programs. While it is feasible for DOT to establish national
    committees that include federal and non-federal experts for each
    partnership, it is intended to limit such reviews to a few high
    priority partnerships, to most efficiently gather best practices.
        Question. What was done with the funds provided last year regarding
    fatigue research?
        Answer. All of fiscal year 2001 funds ($300,000) appropriated to
    RSPA for fatigue management are being utilized in initiating
    partnership research projects on multimodal fatigue management. We also
    expect about another $500,000 of reimbursable funding from modal
    administrations within DOT.
        RSPA released a Broad Agency Announcement (BAA) in October 2000 for
    partnership projects in fatigue management. Four projects were selected
    from about 25 proposals received in response to the BAA. The proposals
    were reviewed by a DOT fatigue management team. Negotiations have been
    completed and awards are in process to begin three projects.
      --Development and implementation of a work schedule representation
            and analysis package to help identify and apply critical
            characteristics of work schedules by various transportation
            modes for managing fatigue.
      --Development of an evaluation framework for multi-modal operator
            fatigue management systems to improve operational understanding
            of fatigue and its impact on all transportation modes.
      --Development of a Fatigue Management reference handbook that will
            provide guidelines to manage operator fatigue in all commercial
            transportation modes.
        RSPA manages the multimodal fatigue management program in
    coordination with a DOT expert team on fatigue management established
    as part of the DOT Human Factors Coordination Committee.
        Question. Please describe in detail the amount and purposes of
    funds spent on international science and technology assessment
    activities during fiscal year 2000 and fiscal year 2001. How much is
    requested for those activities in fiscal year 2002? Who has received
    those funds and what was done with the results of this investment?
        Answer. In the past, the Department has had limited data on the
    system-wide performance of the Nation's transportation system (e.g.,
    safety, security, and efficiency) and the impact transportation R&D has
    had on that system. Further, the Department has had limited data on
    other nations' Research and Development (R&D) and its potential
    application to United States transportation needs.
        RSPA's mission to provide leadership and coordination of
    transportation R&D is helping provide tools important for solving
    transportation challenges. In fiscal year 1998-1999, RSPA conducted an
    assessment of international R&D needs, trends, capabilities, and
    opportunities. The resulting September 1999 assessment report,
    Comparison of International Transportation R&D Expenditures and
    Priorities, includes an overview of international R&D, research needed
    to maintain the competitiveness of U.S. transportation industries as
    well as opportunities for international cooperation and technology
    exchange. The data from the assessment continues to be used extensively
    in strategy development and in Departmental planning, program and
    budget development.
        This assessment was performed by the Volpe National Transportation
    Systems Center with the participation of all appropriate Federal
    agencies and DOT operating administrations. The effort, funded in
    fiscal year 1998-1999 at $100,000, supported the work of two Volpe
    Center employees. Information for the report was derived from a variety
    of sources. Information was solicited from transportation, research and
    academic institutions of the ``group of seven'' countries.
        Because technical knowledge is doubling every 2-5 years, RSPA in
    fiscal year 2002 will use about $100,000 of its request to support the
    acquisition of data on current and future international transportation
    R&D needs, trends, capabilities and opportunities for international
    cooperation and technology exchange with nations beyond the ``group of
    seven.'' These activities will be performed in the context of the
    overall series of technology assessments RSPA uses to support research
    planning and program development in the Department.
                  transportation infrastructure assurance r&d
        Question. Please identify all ongoing research, activities, and
    associated funding amounts for both fiscal year 2001 and fiscal year
    2002 in all DOT modes that identifies and/or addresses transportation
    infrastructure and security vulnerabilities.
        Answer. The following is a list of research in all DOT operating
    administrations that address transportation infrastructure and security
    vulnerabilities and the corresponding levels of funding.

                             [Dollars in thousands]
    ------------------------------------------------------------------------
                                                              Funding--
                                                       ---------------------
                Administration and Activity              Enacted   Requested
                                                          fiscal     fiscal
                                                        year 2001  year 2002
    ------------------------------------------------------------------------
    FTA Safety and Security Technology (Portions).....          0         50
    FAA Systems Development/Information Security......          0      2,581
    FAA System Security Technology:
        Explosives and Weapons Detection..............     42,512     38,438
        Airport Security Technology Integration.......      2,457      2,084
        Airport Security Human Factors................      5,134      5,163
        Aircraft Hardening............................      4,298      4,640
    RSPA Transportation Infrastructure Assurance......      1,000      1,000
    ------------------------------------------------------------------------

        Question. Please list by contract and amount how funds appropriated
    for Transportation Infrastructure Assurance are being or will be used.
    What do you expect to accomplish with the associated projects? How will
    you measure performance?
        Answer. RSPA's initial activities regarding Transportation
    Infrastructure Assurance (TIA) have been defined in conjunction with
    the Office of Intelligence and Security (S-60), and focus in three
    areas.
        Critical Transportation Interdependencies ($300,000)--This activity
    is assessing the interdependencies of critical elements supporting the
    operation of the transportation system (including electric power and
    telecommunications), and determining the short- and long-term impact on
    people and on transportation systems of loss of or damage to these
    infrastructures.
        Electronic Commerce In Transportation ($500,000).--This activity is
    establishing the dependencies of the world's existing and future
    transportation systems on information and communication systems
    associated with business-to-business dealings and E-commerce,
    highlighting the vulnerabilities associated with existing and emerging
    processes, and making this information available to transportation
    system operators.
        Weapons of Mass Destruction (WMD) Response Team Requirements
    ($200,000).--This activity will: (1) define WMD emergency response team
    transportation requirements for a variety of WMD incident types, and
    (2) after assessing current transportation plans, recommend
    coordination steps and strategies for civilian and military
    transportation providers which will better match WMD response
    transportation needs with resources. Performance will be measured using
    the threat information time metric set forth for Critical
    Transportation Infrastructure Protection in the Department's fiscal
    year 2002 Performance Plan.
                    human-centered systems research program
        Question. Please identify all human centered systems research that
    is ongoing at the Department of Transportation, within each modal
    administration and interagency programs. What amount of funding was
    appropriated for these programs in fiscal year 2000 and 2001 and what
    amount is requested in fiscal year 2002? What are the specific
    accomplishments resulting from this activity?
        Answer. The following is a summary of human-centered research
    currently carried out by the various DOT administrations:

    Federal Aviation Administration Human-Centered Research Program

                                  [In millions]

    Fiscal year:
        2000.......................................................... $21.9
        2001..........................................................  24.0
        2002 (requested)..............................................  25.9

        The FAA human factors program focuses on the following research
    areas:
        Human-Centered Automation.--Research on the role of the operator
    and the cognitive and behavioral effects of using automation to assist
    him/her in accomplishing tasks. Initiatives focus on the implications
    of computer-based technology in the design, evaluation, and
    certification of controls, displays, and advanced systems. Specific
    examples include: developing a certification job aid for flight deck
    displays, design of Airway Facility alerting systems, designing air
    traffic controller decision-support automation tools, and design of
    enhanced vision systems in the tower.
        Selection and Training.--Research to understand the relationship
    between human abilities and task performance. Initiatives focus on:
    enhancing methods for predicting job performance; establishing a
    scientific basis for the design of training programs; defining criteria
    for assessing future training requirements; and identifying new ways to
    select aviation system personnel. Specific examples include: a
    proficiency-based Model Advanced Qualification Program for pilot
    training; reconfigurable flight scenarios for simulator training;
    realistic radio communication and motion requirements in simulator
    training; general aviation CD-ROM training programs for personal
    performance; error avoidance strategies in aviation maintenance; and
    enhanced tools to screen applicants for Airway Facilities positions.
        Human Performance Assessment.--Research to identify cognitive and
    decision-making factors for individuals and teams, which determine how
    well they are able to perform aviation tasks. Initiatives characterize
    the impact of environmental and individual factors on human performance
    while improving and standardizing methods for measuring human
    performance. Specific examples include: job task analysis for aviation
    maintenance technicians; the Automated Performance Measurement System
    data collection and analysis tool; a Congressionally-mandated study of
    ATC shift work and fatigue; and human factors booklets for controllers
    to enhance job performance and help prevent runway incursions.
        Information Management and Display.--Research addresses
    presentation and transfer of information among components in the
    National Airspace System. Initiatives focus on: identifying the most
    efficient and reliable ways to display and exchange information;
    determining how to best display and transfer information to system
    components; designing a system to reduce the frequency of information
    transfer errors and misinterpretations; and minimizing the impact when
    such errors do occur. Specific examples include: human factors design
    for Electronic Flight Bags, assessment of head-up displays, guidelines
    on the use of color in ATC displays, and visual symbology design
    guidance.
        Bioaeronautics.--Research involves the bioengineering, biomedicine,
    and biochemistry associated with performance and safety with a focus on
    crew and passenger protection, health, and physiological performance.
    Initiatives include: human protection and survival, medical and
    toxicological factors in accident/incident investigation, and support
    for aeromedical certification and in-flight aeromedical services.
    Specific examples include: child passenger restraints, crew protective
    breathing equipment, and wide-body exit evaluation; the
    Congressionally-mandated FAA/National Institute for Occupational Safety
    and Health study of cabin air quality and flight attendant reproduction
    issues; and evaluating use of external defibrillators.

    Federal Motor Carrier Safety Administration

                                  [In millions]

    Fiscal year:
        2000..........................................................  $4.0
        2001..........................................................   6.0
        2002 (requested)..............................................   7.0

        The FMCSA human factors program performs on the following research
    areas:
        Driver Safety Performance.--The objective is to reduce Commercial
    Vehicle Driver (CMV) error. The research include CMV driver training
    and licensing standards, and industry practices, modifying the behavior
    of non-CMV drivers and other road users in the vicinity of CMVs. FMCSA
    seeks to improve CMV driver compliance with physical qualification
    standards, update these standards, and improve driver health and
    wellness in general. Current projects are refining medical standards
    (e.g., on vision and diabetes) to make them more valid and performance-
    based; and disseminating a ``Getting in Gear'' driver wellness program.
        Carrier Compliance and Safety.--The objective is to identify ``best
    practices'' that improve carrier compliance reviews and develop tools
    to expedite safety audit data collection. Using crash data, a CMV
    industry operational and crash risk profile for various industry
    segments will be developed. The R&T research also supports efforts to
    apply principles of safety management science from other industries,
    such as lessons learned from systems and behavioral safety, and to
    document and disseminate best management practices from the CMV and
    other industries. An important R&T initiative is benchmarking safety-
    effective carrier management practices in support of the ``Safety is
    Good Business'' outreach program, which is targeting small carriers and
    new entrants.
        Cross-Cutting Safety Initiatives.--Many FMCSA R&T activities are
    crosscutting in that they support the overall program; either its
    knowledge base or the tools available to enhance its effectiveness.
    Most notably, problem assessment research supplements agency crash
    investigation and analysis. In the largest study, FMCSA will quantify,
    through a major case control crash risk study, the role of multiple
    driver and situational characteristics in crash risk to compliment the
    findings of the FMCSA/NHTSA Truck Crash Causation Study. Studies will
    be conducted and analyses performed, using instrumented vehicles
    currently under development to enable ``instant replays'' of driver
    errors and their precursors.

    Federal Railroad Administration

                                  [In millions]

    Fiscal year:
        2000..........................................................  $3.8
        2001..........................................................   4.1
        2002 (requested)..............................................   4.3

        The Train Operations Program addresses human factors issues of
    fatigue, organizational behavior, culture, and new technology in the
    operation of conventional and high-speed trains. Fatigue research
    efforts will continue to identify, evaluate and validate current and
    potential vigilance monitoring technologies for real time alertness
    monitoring and feedback in the railroad industry; research using
    applied behavior analysis methods will continue to identify unsafe
    work-related behaviors and work-related practices, and then systems
    will be developed to improve the safety culture by positively
    reinforcing safe behaviors in the work environment. Amtrak's high-speed
    simulator will be used to study human factor issues in high-speed rail
    operations, including studies of Positive Train Control systems to
    evaluate the design of PTC systems to accommodate both the physical and
    cognitive limitations of the human-machine system.
        The Yard & Terminal Program addresses the human factor issues of
    job characteristics and ergonomics that contribute to accidents and
    injuries in railroad yards and terminals. A study of maintenance-of-way
    job characteristics will continue to determine the relative role of
    work schedules and other practices in accidents and injuries. Research
    will also continue to examine ergonomic design of yard and terminals to
    reduce the frequency of these costly injuries.
        The Human Factors Grade Crossing Program addresses issues for both
    conventional and high-speed grade crossing projects dealing with
    accident statistics and driver behavior. Funding supports research into
    accident causation analysis. The driver behavior project will continue
    to address a variety of issues concerning the behavior of motorists at
    grade crossings (e.g., driving around gates, directly in front of
    trains). Commuter crossing safety will focus on driver's decision
    making at crossings during peak commuting hours.

    Federal Highway Administration

                                  [In millions]

    Fiscal year:
        2000..........................................................  $2.8
        2001..........................................................   2.8
        2002..........................................................   2.6

        Improving Highway and Roadway Safety for all Users.--The research
    addresses issues such as: Designing Safer Intersections and
    Roundabouts; Reducing Driver Tendency to Select Unsafe Speeds;
    Integrating the Driver, Pedestrian and Bicyclist into a Safe Roadway
    Environment; Reducing Run-Off-Road Crashes on Curved Roadways;
    Improving Roadway and Roadside Visibility for the Driver. To reduce
    driver errors, highway design and operational practices must be
    consistent with the perceptions, capabilities, and responses of the
    entire driving population, including younger and older drivers, as well
    as other roadway users, including pedestrians and bicyclists.
        Intelligent Transportation Systems Research Program.--Research
    supports human factor studies for In-Vehicle Information Systems
    (IVISs) and Traffic Management Centers (TMCs). The IVIS related
    products are intended to guide system designers in developing in-
    vehicle devices that do not distract the driver from the primary
    driving task cited as the cause of a significant portion of crashes.
    Specific examples include human factors design guidelines for advanced
    in-vehicle information systems in private, commercial and police
    vehicles. TMC work under this program provides human centered design
    guidance for TMC designers that maximizes operational efficiency and
    minimizes operator errors. Specific examples include guidelines for the
    development and design of TMCs.
        Improving Highway Travel for an Aging Population.--The program was
    developed to review highway design standards and accommodate the needs
    and capabilities of older drivers. The program focused on developing a
    clear understanding of older driver needs and capabilities, analyzing
    current highway design standards, and identifying and implementing
    practical solutions through development of revised guidelines and
    standards for traffic control devices, geometric design, and traffic
    operations. The research program has been completed and the first
    edition of the Older Driver Handbook was printed in 1998. A revision to
    this document is due to be published in the near future. To continue
    the process started by the 1989 research program, older driver issues
    are considered as part of all human centered research conducted by
    FHWA.

    Coast Guard

                                  [In millions]

    Fiscal year:
        2000..........................................................  $0.6
        2001..........................................................  1.05
        2002 (requested)..............................................  1.05

        Human Factors in Casualty Investigations.--The goal is to improve
    the ability of the Investigating Officer (IO) to identify and report
    human-related causes of accidents. Procedures have been developed and
    tested for the investigation of three types of human errors which
    contribute to marine casualties: fatigue, communications errors, and
    inadequate skills and knowledge.
        Shipboard Fatigue Countermeasures Analysis.--The goal is to provide
    guidelines and strategies for commercial maritime vessels to promote
    vessel safety. To do this, a cooperative research and development plan
    has been implemented with the assistance of tanker, towing, and ferry
    industry partners, labor partners, and others.
        Human Performance and Safety for CG Operations.--The goal is to
    evaluate the effects of crew endurance, performance, and safety aboard
    USCG cutters and produce USCG Crew Endurance Plans to mitigate the
    impact of watch schedules, duty cycles, and possible future crew
    reductions on workload and safety. The program has produced results for
    reducing risks associated with CG nighttime and high tempo operations.

    Federal Transit Administration

    Fiscal year:                  [In millions]
        2000......................................................  $150,000
        2001......................................................         0
        2002 (requested)..........................................   300,000

        FTA Fatigue Program.--In fiscal year 2000 the FTA conducted a
    symposium on fatigue management, and sponsored the development of a
    ``Transit Fatigue Management Tool Box.'' The goal was to heighten
    awareness of fatigue as a contributory factor in transit accidents and
    incidents and to provide a forum for exchange of ideas on development
    of fatigue management programs.
        In fiscal year 2002 FTA plans to continue its Fatigue Program. This
    program will address all factors associated with fatigue and fitness-
    for-duty, including prescription and non-prescription medications. The
    program will provide technical assistance through a series of regional
    seminars, guidance publications and advisory notices.

    Research and Special Programs Administration

    Fiscal year:                  [In millions]
        2000......................................................        $0
        2001......................................................   300,000
        2002 (requested)..........................................   300,000

        The Research and Special Programs Administration serves as point of
    coordination for the U.S. DOT's Human Centered Activities and supports
    the DOT Human Factors Coordinating Committee (HFCC), initiates and
    manages integration of human factors in multimodal and intermodal
    settings. The HFCC was established by DOT in 1993 to foster research
    that addresses problems broader than the domain of individual modes,
    facilitate synergy across modes. The Committee representation includes
    USCG, FRA, OST, MARAD, NHTSA, FAA, FHWA, FMCSA, FTA, and RSPA.
        In fiscal year 2000, RSPA in coordination with HFCC developed a
    partnership program plan for operator error and safety performance
    focusing on multimodal operator fatigue management (OFM) and advanced
    instructional technology. The goal of the OFM program is to reduce, by
    one-third, within 20 years fatigue-related transportation injuries,
    fatalities. This goal is to be achieved by developing innovative
    fatigue management systems, promote OFM, research and applications
    across transportation modes, forging strong DOT/industry partnerships,
    and demonstrating OFM and other outreach activities to the public and
    industry. The plan was approved by DOT for implementation.
    Contributions from modal administrations was collected to jump start
    the program initiative in fiscal year 2000 while waiting for fiscal
    year 2001 appropriations. Based on the plan document, RSPA developed
    and released a Broad Agency Announcement.
        Interagency Programs.--Other federal agencies including DOD, NASA
    and NSF have research on research serving their program mission. The
    DOT experts keep in touch with the development in interagency human
    factors research. There are no formal cost shared or joint programs
    between DOT and other federal agencies on human factors research at the
    present time.
                university transportation centers grants program
        Question. Specify what you have done since last year to improve the
    effectiveness of the University Transportation Centers program. Please
    summarize the accomplishments or outputs from this program during each
    of the last three years.
        Answer. The following activities have been accomplished since last
    year to improve program effectiveness:
      --in accordance with a UTC-grant requirement imposed in 1998,
            identified appropriate DOT representatives to participate in
            each UTC's research selection process to promote the
            accomplishment of DOT goals and objectives, as well as to
            facilitate information exchange;
      --began development of an Internet-based search capability that will
            allow the public to search all UTCs' web sites for completed
            and ongoing research;
      --conducted site visits at eighteen of the UTCs in order to evaluate
            each center's work, plan future activities, enforce compliance
            with grant requirements, and ensure that proper financial and
            property-management procedures are in place; and
      --conducted two meetings with the UTC Directors to discuss common
            problems, consider possible cooperative ventures, and share
            best practices.
        Summary of outputs and accomplishments during the last three years:
    multi-year strategic plans have been developed by each of the 33 UTCs
    and approved by DOT; four new transportation-related PhD programs have
    been established at UTCs; five new transportation-related Masters
    programs have been established at UTCs; more than 1,800 students have
    graduated from UTCs with transportation-related degrees at the MA and
    PhD levels; and outreach activities have reached approximately 21,300
    transportation professionals and 11,200 pre-college students.
        Question. Please display the UTC budget for fiscal year 2000, 2001,
    and 2002. Include funding sources, amounts released in grants (by TEA-
    21 institution grouping), and administrative and evaluation costs.
        Answer.

    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal Year     Fiscal Year     Fiscal Year
                             Funding Sources                               2000         2001 (est.)     2002 (est.)
    ----------------------------------------------------------------------------------------------------------------
    FTA R&D Appropriations..........................................      $1,200,000  \1\ $1,200,000  \1\ $1,200,000
    Transit Acct. of the Hwy. Trust Fund............................       4,800,000   \1\ 4,800,000   \1\ 4,800,000
    Highway Trust Fund..............................................      23,734,750      23,900,054  \1\ 23,240,500
                                                                     -----------------------------------------------
          Total Program Funding.....................................      29,734,750  \1\ 29,900,054  \1\ 29,240,500
    ----------------------------------------------------------------------------------------------------------------
    \1\ Reimbursable Agreements for fiscal year 2001 have not yet been executed with FTA and FHWA. FTA figures are
      based on information provided by FTA staff; FHWA figures apply the same percentage reduction from authorized
      amounts as occurred in fiscal year 2001.

    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal Year     Fiscal Year     Fiscal Year
                                Costs \1\                                  2000         2001 (est.)     2002 (est.)
    ----------------------------------------------------------------------------------------------------------------
    Group A Grants..................................................      $8,623,000      $8,702,000  \2\ $8,850,000
    Group B Grants..................................................       3,449,600       3,480,800  ..............
    Group C Grants..................................................       6,568,900   \2\ 6,548,900   \2\ 9,070,000
    Group D Grants..................................................      10,898,400  \2\ 10,961,600  \2\ 11,080,000
    RSPA Admin. and Evaluation......................................         194,850         127,004     \2\ 162,399
    Funding Withheld by FTA.........................................               0      \2\ 20,000      \2\ 20,000
    Funding Withheld by FHWA........................................               0          59,750      \2\ 58,101
                                                                     -----------------------------------------------
          TOTAL.....................................................      29,734,750      29,900,054  \2\ 29,240,500
    ----------------------------------------------------------------------------------------------------------------
    \1\ This table indicates the fiscal year of the funding awarded and not the year in which the grants were made.
    \2\ Reimbursable Agreements have not yet been executed with FTA and FHWA. FTA figures are based on information
      provided by FTA staff; FHWA figures are estimated using the same percentages that applied in fiscal year 2001.

        Question. Please list all of the universities now receiving funds
    authorized in TEA-21 and the amounts provided to each university in
    fiscal year 2000, 2001, and anticipated for fiscal year 2002.
        Answer.

    ----------------------------------------------------------------------------------------------------------------
                                                                                 Awarded
                                                                   Authorized  Fiscal Year   Authorized   Est. Award
                          Name of Recipient                       Fiscal Year     2000 &    Fiscal Year  Fiscal Year
                                                                    2000-01    Fiscal Year    2002 \1\     2002 \1\
                                                                  (each year)      2001
    ----------------------------------------------------------------------------------------------------------------
    Alabama, U. of..............................................     $750,000     $646,800  ...........  ...........
                                                                                  $652,700
    Arkansas, U. of.............................................     $750,000      646,800  ...........  ...........
                                                                                   652,700
    Assumption College..........................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    California, U. of...........................................    1,000,000      862,300   $1,000,000     $885,000
                                                                                   870,200
    Central Florida, U. of......................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    City U. of NY...............................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Denver, U. of/Mississippi State U...........................      500,000      431,200  ...........  ...........
                                                                                   435,100
    George Mason U..............................................    2,000,000    1,724,600    2,000,000    1,770,000
                                                                                 1,740,400
    Idaho, U. of................................................      750,000      646,800  ...........  ...........
                                                                                   652,700
    Iowa State U................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Marshall U..................................................    2,000,000    1,724,600    2,000,000    1,770,000
                                                                                 1,740,400
    MIT.........................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Minnesota, U. of............................................    2,000,000    2,000,000    2,000,000    2,000,000
                                                                                 2,000,000
    Missouri-Rolla, U. of.......................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    Montana State U.............................................    2,000,000    1,724,600    2,000,000    1,770,000
                                                                                 1,740,400
    Morgan State U..............................................    1,000,000    1,000,000  ...........  ...........
                                                                                   980,000
    NC State U..................................................    1,000,000    1,000,000  ...........  ...........
                                                                                   980,000
    NCA&T State U...............................................      750,000      646,800  ...........  ...........
                                                                                   652,700
    NJIT........................................................      750,000      646,800  ...........  ...........
                                                                                   652,700
    ND State U..................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Northwestern U..............................................    2,000,000    2,000,000    2,000,000    2,000,000
                                                                                 2,000,000
    Penn. State U...............................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Purdue U....................................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    Rhode Island, U. of.........................................    2,000,000    1,724,600    2,000,000    1,770,000
                                                                                 1,740,400
    Rutgers U...................................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    San Jose State U............................................      750,000      646,800  ...........  ...........
                                                                                   652,700
    So. Carolina State U........................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    South Florida, U. of........................................      750,000      646,800  ...........  ...........
                                                                                   652,700
    Southern Calif., U. of......................................      500,000      431,200  ...........  ...........
                                                                                   435,100
    Tenn., U. of................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Texas A&M U.................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Wash., U. of................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    Wisc., U. of................................................    1,000,000      862,300    1,000,000      885,000
                                                                                   870,200
    ----------------------------------------------------------------------------------------------------------------
    \1\ TEA-21 requires that the Group B and C grantees compete for the fiscal year 2002 and 2003 funding. Only 10
      of the 17 may receive grants in those years, and each would receive an estimated $908,000.

        Question. For each university which has received grants from the
    UTC program in fiscal year 2000 or 2001, please specify what research
    programs are supported, and describe what the Department is doing to
    integrate the research activities conducted by each center or
    university with the Department's own research.
        Answer. To date, UTC grants awarded under TEA-21 have used funding
    from fiscal years 1998, 1999, and 2000. Because UTC grants have
    historically been awarded at the end of the fiscal year, no fiscal year
    2001 funding has yet been awarded. The 10 UTCs in Group A, the so-
    called Regional UTCs, were selected by competition in 1999, and thus
    the two new UTCs that entered the program at that time have received
    only two years of funding.
        All UTCs are empowered to select their research projects, but they
    are required to do so through a process that includes peers and other
    experts in the field, including at least one individual from the U.S.
    Department of Transportation (DOT). In addition to considering each
    proposal's technical completeness and feasibility, a UTC's selection
    process must include multiple additional rating factors, not least of
    which is the project's relevance to the UTC's chosen theme and to the
    Department of Transportation's strategic goals. Participation by DOT
    staff ensures a two-way conduit for information about on-going research
    between DOT and the university.
        All UTCs are now required to post on their web sites a brief
    project description for each of their research projects. These are all
    to be provided in searchable format and are to use standard TRB
    keywords. All final reports of research conducted with UTC funding,
    after undergoing required peer review, must be published on the UTC's
    web site in the same manner. This innovation in the program greatly
    facilitates access by DOT researchers and planners to new and ongoing
    research. The Internet makes possible direct interaction between
    academic researchers and outside experts.
        All of the 33 UTCs have completed the strategic plan that was
    required as their first activity under the grant. In that plan, the UTC
    proposed and DOT approved a theme for its center that helps to focus
    its research program. The 33 UTCs have the following themes:

    ----------------------------------------------------------------------------------------------------------------
                UTC Location                                             Center Theme
    ----------------------------------------------------------------------------------------------------------------
    Assumption College..................  Transportation and Environmental Education for the Twenty-First Century
    City College of New York............  Planning and Management of Regional Transportation Systems
    George Mason University.............  Deployment of Intelligent Transportation Systems
    Iowa State University...............  Sustainable Transportation Asset Management
    Marshall University.................  Transportation and Economic Development in Mountain Regions
    Massachusetts Institute of            Strategic Management of Transportation Systems
     Technology.
    Montana State University............  Rural Travel & Transportation
    Morgan State University.............  Transportation: A Key to Human and Economic Development
    New Jersey Institute of Technology..  Productivity Increases through Transportation Improvements
    North Carolina A&T State University.  Urban Transit Performance in Small and Rural Areas
    North Carolina State University.....  Transportation and the Environment
    North Dakota State University.......  Rural and Intermodal Transportation
    Northwestern University.............  Infrastructure Technology
    Pennsylvania State University.......  Advanced Technologies in Transportation Operations and Management
    Purdue University...................  Safe, Quiet and Durable Highways
    Rutgers University..................  Advanced Transportation Infrastructure of High Volume Systems
    San Jose State University...........  Policy Guidance of Transportation Management Systems
    South Carolina State University.....  Professional Capacity Building in Transportation
    Texas A&M University................  Transportation Solutions to Enhance Prosperity and the Quality of Life
    University of Alabama...............  Management and Safety of Transportation Systems
    University of Arkansas..............  Improving the Quality of Rural Life through Transportation
    University of California............  Transportation Systems Analysis and Policy
    University of Central Florida.......  Advanced Transportation Systems Simulation
    University of Denver                  Intermodal Transportation: Assessment, Planning, and Design
    University of Idaho.................  Advanced Transportation Technology
    University of Minnesota.............  Human-Centered Transportation Technology
    University of Missouri-Rolla........  Advanced Materials & Non-destructive Testing Technologies
    University of Rhode Island..........  Intermodal Transportation and Advanced Transportation Infrastructure
    University of South Florida.........  Transit and Alternative Forms of Urban Transportation
    University of Southern California...  Metropolitan Transportation
    University of Tennessee.............  Transportation Safety
    University of Washington............  Transportation Operations and Planning
    University of Wisconsin.............  Optimization of Transportation Investment and Operations
    ----------------------------------------------------------------------------------------------------------------

        Question. How are the funds for this program allocated? What amount
    of funds are used by RSPA? For what purposes?
        Answer. TEA-21 specifies authorized amounts for each UTC grant. It
    also provides that not more than 1 percent of amounts made available
    for the UTC Program may be used for program coordination. UTC funding
    has been reduced each year so far under TEA-21 by the Highway Trust
    Fund Obligation Ceiling, so grantees affected by that reduction (29 of
    the 33 UTCs) have not received the full TEA-21 authorized amounts.
    Additionally, in fiscal year 2001, the Government-Wide Rescission of
    Discretionary Budget Authority further reduced funding for all UTCs.
        RSPA set aside $194,850, or 0.66 percent of amounts made available,
    in fiscal year 2000 for program coordination and $127,004, or 0.42
    percent, in fiscal year 2001. RSPA proposes to set aside $162,399, or
    0.56 percent, in fiscal year 2002. RSPA uses these funds for the
    purposes that are stated in TEA-21: coordinating UTCs' activities,
    disseminating UTC research results, operating a clearinghouse, and
    conducting annual review and evaluation of the UTCs.
        For administrative purposes, the Federal Transit Administration
    withheld $20,000 in UTC funds in fiscal year 2001 and is expected to
    withhold the same amount in fiscal year 2002. The Federal Highway
    Administration withheld $59,750 in UTC funding in fiscal year 2001 and
    is expected to withhold $58,100 in fiscal year 2002.
                            emergency transportation
        Question. How did you use the new positions last year?
        Answer. Of the two new positions for the fiscal year 2001 budget,
    the Operations Chief position, which is extremely important to the
    success of our mission has just been filled. The Ops Chief is
    responsible for the operation and maintenance of the Secretary's Crisis
    Management Center as well as the newly established alternate facility.
    In addition, the position will be responsible for ensuring the
    preparation and dissemination of the daily situation report to the
    Office of the Secretary and operational connectivity with other State
    and Federal operations centers. We expect to fill the second position
    by the end of June 2001. This individual will be responsible for
    national security programs such as continuity of operations plans and
    procedures, enduring government (continuity of government and
    consequence management aspects of critical infrastructure protection),
    weapons of mass destruction (WMD) and national security special events.
    The Office has been given additional responsibilities in dealing with
    the consequences of WMD as a result of a new Presidential Executive
    Order dealing with national security preparedness. In addition, a new
    terrorism annex to the Federal Response Plan directs the Department,
    through the Office of Emergency Transportation, to manage the rapid
    transportation of Federal resources to and from local jurisdictions
    following a chemical, biological or radiological event. The national
    security position will lead the development and implementation of
    Department-wide planning and preparedness in these important areas.
        Question. How many times in fiscal year 2000 was the Center
    activated and for which reasons? How many times thus far in fiscal year
    2001 has the center been activated and for which reasons?
        Answer. Since January 2000, the Center has been operational during
    extended daytime hours and producing daily information bulletins,
    advisories and situation reports. In fiscal year 2000, there were 45
    such ``major'' declarations. In fiscal year 2000, the Center was also
    activated for the World Trade Demonstrations, NATO 50th Anniversary,
    four national security exercises, Y2K and subsequent related actions.
    As of May 2001 there had been 17 such declarations in fiscal year 2001.
    In fiscal year 2001 the Center was activated for the Presidential
    Inauguration, Seattle earthquake, national security exercise Positive
    Force, and twice to train new personnel from the Operating
    Administrations. In fiscal year 2001, the Center continues to operate
    on an extended-day basis to produce daily reports to the Office of the
    Secretary. The Office of Emergency Transportation was designated to
    serve as the Departmental clearinghouse for critical information flow
    to the Office of the Secretary and FEMA during the Y2K Rollover. The
    Center is activated to support a variety of tasks under the Federal
    Response Plan whenever there is a ``major'' Presidential Emergency
    Declaration for natural disasters, such as floods, severe storms,
    wildfires, and hurricanes. The number of Operating Administrations
    mobilized depends on the nature of the disaster and the nature of the
    impact on the transportation infrastructure. Thus, for example, if the
    disaster affects primarily highways, FHWA emergency coordinators will
    be activated.
        Question. For the Crisis Response Management program, please
    provide a breakdown of how the fiscal year 2000 and fiscal year 2001
    funds were or will be used.
        Answer.

                                OPERATIONAL FUNDS
    ------------------------------------------------------------------------
                                                    FISCAL YEAR  FISCAL YEAR
              CRISIS RESPONSE MANAGEMENT                2000         2001
                                                      (Actual)    (Estimate)
    ------------------------------------------------------------------------
    Response Team Training........................      $68,061     $115,464
    RETCO Support.................................       63,000      180,000
    Transportation Policy Documentation...........       16,939       36,939
    Crisis Management Center Support..............       37,875       60,817
    COOP Planning and Training....................       93,203       79,181
    NATO Training.................................            0       37,400
    Emergency Planning Outreach Program...........            0       65,637
                                                   -------------------------
          Total...................................      279,078      575,438
    ------------------------------------------------------------------------

        Response Team Training.--Response Team Training applies to
    maintaining the readiness of Headquarters' and regional response teams.
    In particular, funding is provided for training on the Department's
    Activation Information System (AIM) and for headquarters and regional
    exercises on potential disaster specific events.
        Regional Emergency Transportation Coordination (RETCO) Support.--
    RETCO funds are designated in direct support of the DOT Regional
    Emergency Transportation Coordinator Program. Funding is used toward
    regional response training exercises, travel for participation in
    interagency planning and training, responding to local regional
    emergencies, publication of regional emergency preparedness plans,
    computer support, and routine administrative costs associated with
    Regional Assistance Committee (RAC) activities in concert with FEMA. A
    new DOT RETCO Order is also being revised to reflect the current status
    of the RETCO program.
        Transportation Policy Documentation.--The Office of Emergency
    Transportation is responsible for documentation of North Atlantic
    Treaty Organization (NATO) transportation policies, and classified and
    unclassified reports. The Office Director serves as the U.S.
    representative to NATO. Funding is used for the operation and
    enhancement of a document tracking and reporting system which allows us
    to be compatible with NATO documents and provides a basis for use
    during the annual NATO classified document inspection.
        Crisis Management Center Maintenance Support.--Funding is utilized
    for part-time contractor support for computer and audio visual
    equipment service to ensure the operational status of the Crisis
    Management Center and maintain connectivity with other Federal
    agencies, and the FAA and USCG Operations Centers.
        Continuity of Operations (COOP) Planning.--Provides funding for
    Continuity of Operations (COOP) planning, the classified Continuity of
    Government (COG) program, and for operational costs setting up the DOT
    Relocation (Alternate) Facility.
        NATO Training Conference.--OET is conducting, for departmental and
    NATO personnel, training on civil transportation support for NATO's
    Civil Emergency Planning Directorate Civil Aviation Planning Committee
    (CAPC). Training will be conducted on NATO's Article V defense
    operations and non-article V civil emergency planning and Partnership
    for Peace countries. This training will help the NATO ensure effective
    use of civil transportation assets in response to a NATO operation.
        Emergency Planning Outreach Program.--OET maintains relationships
    with critical Federal agencies, non-governmental organizations,
    industry stakeholders, and supported departmental initiatives regarding
    such things as Western Hemisphere Transportation Ministers, U.S./Canada
    Consultative Group, and Central America/Mexico.

    Research & Development Funds

    Fiscal year 2000 (actual).....................................  $144,135
    Fiscal year 2001 (estimate)...................................   179,211

        R&D funds are used for Response Team Training, Continuity of
    Operations (COOP) support, outreach efforts, Central United States
    Earthquake Consortium (CUSEC) research, technology transfer of
    applicable ITS advances and Response Team training for DOT's RETCOs,
    RETREPs, Emergency Planning Officers and Emergency Coordinators. Due to
    a temporary reduction in staffing, we have not been able to initiate
    planned national security related work efforts at this time.
                                program support
        Question. Department-wide, how much money was allocated for the
    Garrett A. Morgan Technology and Transportation Futures Program during
    fiscal year 2000 and how much will be allocated during fiscal year
    2001? Please specify the exact source of those funds. How were these
    funds used? How much is planned for fiscal year 2002?
        Answer. During fiscal year 2000, $202,000 was obligated for Garrett
    Morgan activities, all of which had the goal of reaching students who
    might be interested in careers in transportation. $152,000 from Coast
    Guard and $50,000 from the FAA was obligated as follows: $111,000 for
    contract work to respond to callers' questions about the program,
    prepare information and pamphlets for persons interested in the
    program, produce and distribute Garrett Morgan newsletters, keep count
    of the number of students reached, coordinating or partnering with
    agencies and holding annual DOT-wide events, such as America Goes Back
    to School Day (September), Groundhog Job Shadowing Day (February),
    National Transportation Week (May), and the Wright Brothers Celebration
    (December). $52,000 for Volpe to produce and maintain an internet
    website as a resource for students, teachers and other external
    partners () and maintaining an intranet
    website as a resource for the DOT modal personnel (). $33,000 for printing of brochures and pamphlets;
    and $6,000 for miscellaneous expenses.
        In fiscal year 2001, there is no funding for Garrett Morgan.
    However, Coast Guard has dedicated a career full-time employee for the
    management of the Morgan Program's Prince George's County, Maryland
    Initiative through the end of September 2001. The Bureau of
    Transportation Statistics is maintaining the Garrett Morgan Program
    databases. The Federal Transit Administration and the Maritime
    Administration provide two headquarters employees to chair an
    intermodal group and lead as webmasters in developing content for the
    internet and the intranet sites as collateral work. The FMCSA and SLSDC
    provide two senior executives to co-chair the meetings of the
    intermodal education task force and provide departmental leadership to
    the activities and projects under the umbrella of Garrett Morgan
    Program during this transitional period.
        For fiscal year 2002, no funds have been requested.
        Question. Please specify what employee development activities have
    been accomplished in fiscal year 2000 and thus far in fiscal year 2001.
    How much has RSPA paid for these activities? What planned activities
    would be undertaken under the fiscal year 2002 employment development
    program?
        Answer. The first area of emphasis is enhancing the management
    skills of RSPA's senior managers.
        The second major area is employee development in technological
    skills related to programs that RSPA's employees oversee in hazardous
    materials transportation, pipeline safety, advanced technology
    research, and national mobility/security. In fiscal year 2000, RSPA
    invested $19,290 in technical areas such as organic and physical
    chemistry, blasting and explosives, welding inspection for pipelines
    and pipeline inspections using smart pigs.
        End-user computer skills training is another significant area of
    employee development funded in fiscal year 2000 at a cost of $9,599.
    The remainder of individual training was administrative (i.e.,
    acquisition, budget, accounting, human resources, diversity, etc.) and
    in basic education (i.e., English and grammar, time management, project
    management, communications skills, etc.). Tuition for this training in
    fiscal year 2000 was $30,830. This training included mandatory course
    work required by the Clinger-Cohen Act for procurement professionals.
        In fiscal year 2001, RSPA invested $26,000 to pilot the
    Transportation Virtual University's e-learning program in order to make
    greater use of distance learning technology, as directed by Executive
    Order 13111 ``Using Learning Technology to Improve Training
    Opportunities for Federal Employees.'' Through this pilot, we are
    providing high quality, flexible, and cost efficient training to
    employees on topics that fill individual needs and at times that fits
    their schedules.
        RSPA also provided plain language training for its employees at a
    cost of $5,500 in order to improve service delivery to its customers.
        In fiscal year 2001, RSPA also will provide supervisory/managerial
    training on two tracks. Track I, to be offered both in mid July and
    early September, will focus on Handling Discipline and Performance
    Problems and Employee Counseling. Track II, to be offered both in late
    fall and early winter will focus on human resources management
    including classification and position management, employee development,
    merit staffing and promotion, and employee-management relations. These
    tracks will be mandatory for all RSPA supervisors and form the
    foundation for supervisory certification requirements.
        In fiscal year 2000, RSPA invested $15,983 for five managers to
    attend OPM's Federal Executive Institute (FEI) and Management
    Development Centers and other management training. In fiscal year 2001
    thus far, we have identified 8 employees who will attend the FEI and
    other executive and management training, which involves an investment
    of $45,140.
        The fiscal year 2002 funding will provide for ongoing continuous
    learning in critical technological fields such as hazardous materials
    transportation, pipeline safety, advanced technology research and
    national mobility/security. RSPA's technical workforce needs frequent
    re-training in industrial processes and techniques to keep pace with
    technological changes in the industries that it regulates.
        Present-day standard office technology, procedures and practices
    require up-to-date training. We plan to train existing employees in
    21st century business processes and innovations to increase their
    productivity and customer service skills. Based upon the success of the
    TVU e-learning program pilot, we anticipate investing $55,000 to fully
    implement internet-based training for all RSPA employees in fiscal year
    2002.
        The Administration's Workforce Planning and Organizational
    Restructuring Initiative directs us to analyze and identify our
    workforce skills requirements through fiscal year 2002, and to develop
    a strategy to maximize the extent to which critical skills needs can be
    filled internally. The employee development program funding will enable
    RSPA to retrain employees to transition to fill skill gaps to reflect
    the reality of the organization's future skill needs.
        Executive and management training, new skills requirements, greater
    use of distance learning technology, workforce and succession planning
    strategies, and identified gaps in traditional skills all underscore
    the need within RSPA for increased learning and development funding.
                         emergency preparedness grants
        Question. Please prepare a table showing the amount allocated to
    each of the states for each of the last three years and display the
    increase that would be provided if the full request was allowed.
        Answer. The following table is provided. Fiscal year 2000 was the
    first fiscal year that receipts were sufficient to fund the grants
    program at the $14.3 obligation limit level. Thus, the amounts awarded
    in fiscal year 2000 reflect full-funding of grants to each state at the
    requested level.

    ----------------------------------------------------------------------------------------------------------------
                                                                                     FISCAL YEAR--
                               STATES                            ---------------------------------------------------
                                                                      1997         1998         1999         2000
    ----------------------------------------------------------------------------------------------------------------
    ALABAMA.....................................................     $117,942     $117,942     $158,656     $234,957
    ALASKA......................................................       41,180       41,180       55,396       81,870
    ARIZONA.....................................................       81,763       81,763      109,987      163,390
    ARKANSAS....................................................       72,907       72,907       98,074      145,952
    CALIFORNIA..................................................      485,207      485,207      652,701      968,081
    COLORADO....................................................       83,356       83,356      112,131      166,906
    CONN........................................................       75,144       75,144      101,084      150,041
    DELAWARE....................................................       44,913       44,913       60,418       89,190
    DC..........................................................       37,448       37,448       50,374       74,421
    FLORIDA.....................................................      216,353      216,353      291,039      432,317
    GEORGIA.....................................................      142,701      142,701      191,961      285,628
    HAWAII......................................................       44,789       44,789       60,250       89,045
    IDAHO.......................................................       58,847       58,847       79,161      117,496
    ILLINOIS....................................................      316,505      316,505      425,763      627,683
    INDIANA.....................................................      152,033      152,033      204,516      302,308
    IOWA........................................................      104,755      104,755      140,917      208,943
    KANSAS......................................................      117,072      117,072      157,486      233,105
    KENTUCKY....................................................       90,198       90,198      121,334      180,362
    LOUISIANA...................................................      103,884      103,884      139,745      207,412
    MAINE.......................................................       53,871       53,871       72,468      107,180
    MARYLAND....................................................       94,179       94,179      126,690      187,905
    MASS........................................................      108,362      108,362      145,769      216,762
    MICHIGAN....................................................      169,076      169,076      227,442      338,439
    MINNESOTA...................................................      129,639      129,639      174,391      258,659
    MISSISSIPPI.................................................       88,831       88,831      119,496      176,963
    MISSOURI....................................................      134,987      134,987      181,584      269,925
    MONTANA.....................................................       58,847       58,847       79,161      117,561
    NEBRASKA....................................................       92,313       92,313      124,179      183,468
    NEVADA......................................................       58,723       58,723       78,995      117,030
    NH..........................................................       52,252       52,252       70,290      103,807
    NEW JERSEY..................................................      155,142      155,142      208,697      311,035
    NEW MEXICO..................................................       73,776       73,776       99,244      146,658
    NEW YORK....................................................      252,183      252,183      339,237      505,572
    N. CAROLINA.................................................      151,533      151,533      203,843      302,243
    N. DAKOTA...................................................       77,385       77,385      104,099      153,727
    OHIO........................................................      264,376      264,376      355,639      525,378
    OKLAHOMA....................................................       94,553       94,553      127,193      189,247
    OREGON......................................................       91,941       91,941      123,679      183,750
    PENN........................................................      210,132      210,132      282,670      420,164
    RI..........................................................       46,281       62,257       92,064  ...........
    SC..........................................................       91,692       91,692      123,344      183,137
    S. DAKOTA...................................................       61,708       61,708       83,010      123,089
    TENNESSEE...................................................      123,044      123,044      165,519      245,487
    TEXAS.......................................................      321,605      321,605      432,624      644,428
    UTAH........................................................       70,169       94,392      139,661  ...........
    VERMONT.....................................................       41,927       41,927       56,401       83,387
    VIRGINIA....................................................      121,177      121,177      163,008      241,893
    WASHINGTON..................................................       99,033       99,033      133,219      198,471
    W/VIRGINIA..................................................       71,786       71,786       96,567      142,641
    WISCONSIN...................................................      129,761      129,761      174,554      259,057
    WYOMING.....................................................       49,890       49,890       67,112       99,313
                                                                 ---------------------------------------------------
          TOTAL.................................................    5,980,890    6,027,171    8,107,766   12,027,208
    ----------------------------------------------------------------------------------------------------------------

        Question. How will the final regulation on registration fees
    influence fee collection for the next two years? How does this
    rulemaking influence the amount of appropriated funds needed to
    implement this grant program?
        Answer. RSPA expects that, under the revised registration
    regulations which were published on February 14, 2000, approximately
    45,000 companies will be required to register in fiscal year 2001. The
    monies collected will be sufficient to fund the grant program at the
    $14.3 million level in fiscal year 2002, as authorized by Congress,
    without the use of appropriated funds. In addition, added to the
    previous year's carryover, the fees would provide $12 million to
    partially fund the hazardous materials safety program. The increased
    amounts collected in the following year will be used to fund the
    training and planning grants as well as the hazardous materials safety
    program.
        Question. Please discuss the pros and cons of allowing states the
    flexibility of deciding how to allocate their grant funds among
    eligible training and planning activities. Does existing law still
    govern the distribution of funds in fiscal year 2002?
        Answer. Existing law remains in place and mandates that RSPA
    allocate no more than $5 million funds to states for planning and no
    more that $7.8 million for training. Grants program staff applies this
    apportionment to each grantee. To-date, RSPA has not received any
    requests to re-allocate funds between planning and training. However,
    if any State did reallocate funds, they would have to be offset by a
    reallocation of other States' funds for RSPA to stay within the limits
    mandated by Congress.
                           office of pipeline safety
        Question. What activities can be funded with the monies that are
    available for three years?
        Answer. Our fiscal year 2002 request for 3-year funding
    availability follows. We have indicated the funding sources and note
    that an activity may be funded by more than one source (e.g., State
    Pipeline Safety Grants).

    Fiscal Year 2002 President's Budget

            Program Activity                                          Amount
    Funding Source: Trust Fund Share of Pipeline Safety...........$7,472,000
    Activity:
        Personnel Compensation & Benefits.........................   900,000
        Administrative Expenses...................................   531,000
    Contract Programs:
        Information & Analysis....................................   400,000
        Risk Assessment & Technical Studies.......................   400,000
        Integrity Management......................................   798,000
        Compliance................................................   100,000
        Training & Information Dissemination......................   300,000
        Damage Prevention/Public Education Campaign...............   200,000
    OPA: Implementing the Oil Pollution Act....................... 2,443,000
    Grants--State Pipeline Safety Grants.......................... 1,400,000
    Funding Source: Pipeline Safety Fund..........................20,707,000
    Activity:
        Research and Development.................................. 2,744,000
            Information Systems...................................   400,000
            Risk Assessment.......................................   300,000
            Mapping...............................................   800,000
            Outside Force Damage..................................   644,000
            Leak Detection........................................   600,000
    Grants........................................................18,050,000
        State Pipeline Safety Grants..............................14,913,000
        Risk Grants...............................................    50,000
        One-Call Grants........................................... 1,000,000
        Interstate Oversight (Damage Prevention Grants)........... 2,000,000

        Question. How will the current and planned pipeline integrity
    regulations affect the OPS workload? How will this new regulatory
    requirement impact the workload of the OPS over the longer term?
        Answer. The series of integrity regulations covering hazardous
    liquid and natural gas transmission pipelines constitute the single
    largest modification to our pipeline regulatory and oversight programs
    in over a decade. We have begun planning to implement this series of
    rules using existing resources, but it is in fiscal year 2002 that the
    first significant impacts will occur.
        The President's fiscal year 2002 budget request will provide us
    with personnel and contract funds needed to implement the hazardous
    liquid integrity management program rules that become effective
    beginning on January 1, 2002. We designed our approach to absorb the
    surge of operators' program validation activity using contractual
    support, and to build our personnel to levels commensurate only with
    continued program oversight. Over the longer term, OPS will be
    retooling its oversight program and personnel to accommodate both the
    requirements we have promulgated for hazardous liquid pipelines and
    also the, as yet unspecified, requirements of the natural gas integrity
    management rules. In addition to inspectors, OPS will need additional
    regulatory, legal, contractual, and administrative support in the field
    and headquarters to maximize the effectiveness of our oversight. Our
    initial oversight will include review of each pipeline operator's
    identification and scheduling for integrity testing of pipeline
    segments in high consequence areas. This will quickly be followed by
    more detailed reviews of the availability and quality of prior testing
    results, integration of these results with that from other risk
    identification activities, their risk analyses for these segments,
    repair criteria, risk control actions (e.g., number and location of
    values), and other elements of their integrity management program
    framework and plan.
        Question. Please discuss the mix of contract funds and FTE's needed
    to properly manage and implement the integrity management program.
        Answer. Our fiscal year 2002 budget requests $3.6 million for
    integrity management program expert assistance for integrity validation
    efforts, training, and field support. An additional $1 million is
    requested to help OPS improve oversight of new construction and to
    obtain expert assistance during accident investigations. These funds
    and activities will be used both for review of operators' Integrity
    Management Plans and to address broader integrity concerns in new
    construction and post-accident investigation monitoring. Twenty FTE's
    are needed to ensure oversight of the integrity management program. We
    are requesting fiscal year 2002 funds for only 10 FTE recognizing that
    it will take up to 6 months to fill them. These additional positions
    will cover a range of functions including compliance and compliance
    support, regulatory development and interpretation, legal and data
    analyses, and data geographic information system support.
        Question. Please provide a breakout of the current staffing levels
    in OPS headquarters and the five regional offices. Are all the funded
    positions currently filled? If not, please list the vacancies.
        Answer.

                    OFFICE OF PIPELINE SAFETY STAFFING LEVELS
    ------------------------------------------------------------------------
                    Office                  Authorized   Onboard     Vacant
    ------------------------------------------------------------------------
    Headquarters..........................          38         36          2
    Eastern...............................          10         10  .........
    Southern..............................          11         10          1
    Central...............................          15         13          2
    Southwest.............................          14         12          2
    Western...............................          17         16          1
    TSI...................................           4          4  .........
                                           ---------------------------------
          Total...........................         109        101          8
    ------------------------------------------------------------------------

        Question. Please discuss the Department's views on the budgetary
    implications of the Senate-passed version of the pipeline safety bill,
    being certain to include a discussion of Oil Pollution Act activities,
    research and development funding needs, and damage prevention issues.
        Answer. The fiscal year 2002 budget request generally supports the
    key provisions of the Senate-passed version of the pipeline safety
    bill, except for increasing R&D activities as the Senate Bill would do.
    This request increases that portion of the OPS budget drawn from the
    Oil Pollution Act Trust Fund. It maintains support at current levels
    for key research and development projects of the OPS consistent with
    Congressional action. OPS has already begun coordinating national
    pipeline research activities through collaborative, interagency work
    and expects to host a symposium this summer to help prioritize and plan
    future activities within the United States and elsewhere. We are
    requesting significant support for damage prevention activities through
    creation of our Community Technical Assistance Program. This program
    will help build support at the local level for damage prevention
    activities consistent within the programs of the Common Ground
    Alliance--the nonprofit organization RSPA helped create, and to
    reinforce work done at a State level that aligns with efforts
    associated with the One-Call grant and Damage Prevention grant
    programs.
                              pipeline safety fund
        Question. Please prepare a comparative historical table displaying
    the per mile user fee assessed to gas transmission and liquid pipeline
    operators, and the total collected in user fees from each industry in
    fiscal year 1998 through fiscal year 2001 and anticipated for fiscal
    year 2002. How do you ensure that this is an equitable assessment of
    fees?
        Answer. Below is a table which shows the per mile rate and the
    total collections for fiscal years 1998 through 2000. We are collecting
    fees for fiscal year 2001 now, so the amount shown is what we assessed
    gas transmission and hazardous liquid operators. We estimated the
    fiscal year 2001 figures based on the amount of $30,612,888.65, which
    includes the President's enacted appropriation for the Pipeline Safety
    Program of $47,044,000, less funds derived from the Oil Spill Liability
    Trust Fund $7,488,000 and $3 million derived from existing user fees,
    plus an offset to the Research and Special Programs Appropriation for
    labor costs to support the Pipeline Safety Program. Other variables,
    including the offset from previous year collections, the allowance by
    law to collect 105 percent of the appropriation, and pipeline mileage,
    are subject to change prior to the fiscal year 2002 assessment. Program
    activities would be allocated at 55 percent gas and 45 percent
    hazardous liquid. The State Grants in Aid will be allocated at 88
    percent gas and 12 percent hazardous liquid, Interstate Oversite Grants
    will be allocated at 40 percent gas and 60 percent hazardous liquid.

    ----------------------------------------------------------------------------------------------------------------
                                                             Gas Transmission                     Liquid
                                                     ---------------------------------------------------------------
                                                                           Total                           Total
                                                       Per Mile Rate     Collected     Per Mile Rate     Collected
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year:
        1998........................................          $67.98     $26,889,824          $59.59      $7,472,139
        1999........................................           70.47      20,725,337           57.88       9,102,548
        2000........................................           68.23      20,458,589           63.11       9,761,799
        2001........................................           97.54  \1\ 25,473,717           98.17  \1\ 11,279,950
        2002........................................           103.0  \2\ 31,029,912          102.87  \2\ 15,716,519
    ----------------------------------------------------------------------------------------------------------------
    \1\ Fiscal year 2001 based on assessment.
    \2\ Fiscal year 2002 anticipated assessment.

        Question. How did you allocate the user fee between gas
    transmission lines and product lines for each of the last two fiscal
    years. How does this accurately reflect the true allocation of your
    program efforts?
        Answer. In fiscal years 2000 and 2001, RSPA charged gas operators
    55 percent of program costs and 87 percent of grant costs. We charged
    liquid operators 45 percent of program costs and 13 percent of grant
    costs. We split Damage Prevention Grants 50/50 between gas and liquid
    operators. These percentages closely reflect the allocation of our
    efforts and resources, as shown in the table that follows:

                             PROGRAM COST ALLOCATION
    ------------------------------------------------------------------------
                                                    Fiscal Year  Fiscal Year
                   Program Activity                  2000 Gas/    2001 Gas/
                                                       Liquid       Liquid
    ------------------------------------------------------------------------
    Personnel Compensation and Benefits...........        60/40        60/40
    Administration................................        50/50        50/50
    Information and Analysis......................        50/50        50/50
    Risk Assessment & Technical Studies...........        50/50        50/50
    Compliance....................................        50/50        50/50
    Training & Information Dissemination..........        75/25        60/40
    Emergency Response (NRC)......................        50/50        50/50
    Public Education Campaign (One-call)..........        50/50        50/50
    Research & Development........................        50/50        50/50
        Average Apportionment.....................        54/47        52/48
        Actual Apportionment......................        55/45        55/45
    State Grants..................................        87/13        87/13
    ------------------------------------------------------------------------

        Question. Please estimate how much OPS maintains it needs to have
    as a reserve in the trust fund? Please specify in detail the
    assumptions made and the methodology used to determine the amount
    needed.
        Answer. In light of the GAO report of April 2001, we are currently
    reviewing the methodology we used to determine the amount of funds that
    are needed to be maintained in the Pipeline Safety Fund (PSF) and will
    provide the Committee with our findings.
        Question. An April 30, 2001 GAO report entitled, ``Pipeline Safety
    Fund Minimum Balance was Not Reasonably Estimated'' found significant
    flaws in RSPA's financial analysis in determining the estimated minimum
    balance for the pipeline safety fund. The GAO report recommended 5
    actions to improve the user fee billing process and calculation of the
    minimum pipeline safety fund balance. Please outline these 5
    recommendations and RSPA's response to each. What specific changes will
    OPS make in response to GAO?
        Answer. RSPA is currently reviewing the recommendations from the
    GAO report, and is in the process of re-evaluating our analysis.
        Question. What is your in-house capability to manage the inflow of
    funds, billing, and financial management of the Pipeline Safety Fund?
    Do you use outside expertise or consultants to assist in these
    activities? If not, would this be worthwhile in view of the
    recommendations of the GAO report on this subject?
        Answer. OPS uses an in-house staffer to issue the user fee bills;
    however, there is an intra-agency agreement between RSPA and FAA in
    Oklahoma City, Oklahoma, to monitor the inflow of funds and to perform
    financial management for all RSPA activities, including the Pipeline
    Safety Fund. We have brought in expert assistance to help examine the
    GAO recommendations and our own methodology.
        Question. What is the current balance in the pipeline safety
    reserve fund? Please provide an historical table displaying the annual
    unappropriated balance in the fund from the end of fiscal year 1999
    through fiscal year 2001.
        Answer. The balance in the Pipeline Safety fund as of May 5, 2001,
    is approximately $11,914,946.00.

                                                                  Amount \1\
    Fiscal Year:
        1999................................................     $17,000,235
        2000................................................      16,758,035

    \1\ Unappropriated Balance at the End of Fiscal Year.

        Question. Please describe how much of the unobligated balance could
    safely be drawn down during fiscal year 2002, taking into account
    replenishment of the fund through the collection of new fees.
        Answer. In light of the GAO report of April 2001, we are currently
    reviewing the methodology used to determine the amount of funds we need
    to maintain in the Pipeline Safety Fund to preclude becoming anti-
    deficient.
        Question. What has been the lowest balance that has been in the
    trust fund for each of the last 20 months? What was the amount
    withdrawn from the trust fund during each of the last 20 months?
        Answer. In fiscal year 1999, the lowest balance in the Pipeline
    Safety Fund (PSF) occurred in May in the amount of $16,094,998.73. In
    fiscal year 2000, the lowest balance occurred in January
    ($16,198,004.21). To date the lowest balance during fiscal year 2001
    was in April in the amount of $11,525,253.58. RSPA does not monitor the
    Oil Spill Liability Trust Fund, which is administered by the Coast
    Guard. However, we do track the balance in the PSF.
        Question. How could the FAA improve its processing of data
    regarding warrants, expenses, obligations, reserves, or other financial
    data in the Pipeline Safety Fund that would help OPS?
        Answer. The FAA Accounting Office could do several things to
    improve its processing of OPS financial data. Specifically:
      --FAA could process a single warrant in October for the balance in
            the Pipeline Safety Fund as of 9/30, and process additional
            warrants based on the collection activity during the year,
            rather than withholding issuance until the balance reached a
            particular amount.
      --FAA could input collections into the system daily, instead of
            weekly or monthly.
      --FAA could maintain a single database that provides accurate
            tracking of receivables and collections, which would obviate
            the need for our reconciliation of two conflicting databases.
      --FAA could enhance the payment process generally with the new
            document imaging process that is being implemented in
            connection with Delphi. With imaging, the invoice could be
            forwarded to RSPA headquarters immediately upon being scanned
            into the system and RSPA could electronically forward an
            approval to accounts payable, rather than waiting for receipt
            of hard copies.
      --Absent changes like these, OPS and RSPA would expect to continue
            experiencing problems with inadequate and inaccurate financial
            data and reporting.
                  oil pollution act expenses and oil pipelines
        Question. Please specify and describe all OPS expenses that legally
    could be associated with the Oil Pollution Act (OPA) in fiscal year
    2002. What types of personnel related costs can be associated with
    OSLTF funds, and what is the maximum level of personnel costs under the
    current budget request that could be funded in this manner.
        Answer. We estimate that the total amount that could legally be
    associated with Oil Pollution Act program requirements is $14,797,000.
    This amount, described as follows, would include all costs that
    directly relate to preventing and mitigating the effects of oil spills
    into water and environmentally sensitive areas are funded by the
    appropriate source (OSLTF).
    PC&B and Administrative ($1,056,000)
        OPS HQ and Region staff and administrative costs to address
    environmental policy, regulatory development, spill response plan
    review and exercise, pipeline inspection and spill response technical
    monitoring; special task force/studies of oil pipeline company risk
    management programs.
      --Over 360 hazardous liquid inspections, includes accident
            investigations and pipeline construction.
      --Area exercises and 20 table top drills.
    Information and Analysis ($700,000)
        Over half the incident reporting, data collection, analysis and
    trending labor.
        Identifying accident cause and consequence, evaluating and acting
    on environmental impacts, particularly related to protecting drinking
    water sources.
    Risk Assessment and Technical Studies ($650,000)
        Systematically identify hazardous liquid risks, and compare
    relative likelihood and consequences of an adverse events.
        Monitor, report, and expand the Risk Demonstration and System
    Integrity Inspection Pilot programs.
        Increase public awareness about potential risks from liquid
    pipelines.
    Integrity Management Program ($3,954,000)
        Review 66 large liquid operators' integrity management plans.
        Review the adequacy of the liquid operators' plans for the
    identification of High Consequence Areas (HCA), operator time lines for
    mandatory testing, operators' selections of appropriate test methods,
    risk factors considered, processes for integrating information, test
    results, and adequacy of leak detection systems, valve placement, and
    other prevention and mitigation measures.
    Compliance ($150,000)
        Technical field engineering support for monitoring major spills and
    remediation.
        Dedicated personnel for integrating public and private sector
    incident coordination and decision support for protective actions.
    Training & Information Dissemination ($400,000)
        Computer-based training (CBT) to update safety evaluations of
    hazardous liquid pipeline systems.
        Classes and seminars specifically given to address hazardous liquid
    risk and system integrity concerns.
    Emergency Notification ($50,000)
        The National Response Center (NRC) provides immediate notification
    of hazardous liquid pipeline spills.
    Damage Prevention Community Assistance ($1,707,000)
        Investigate, encourage, and inform communities on damage prevention
    efforts on hazardous liquid pipelines.
    Implementation of the Oil Pollution Act ($2,443,000)
        Review and approve pipeline operator spill response plans.
        Contract support for 3 area exercises and 20 table top drills.
        Obtain data on environmental sensitive area, includes drinking
    water and other ecological resource areas.
    National Pipeline Mapping System ($400,000)
        Collecting and digitizing more accurate liquid pipeline location
    information as it becomes available. To be used in conjunction with
    data on population, drinking water intakes, terrain. Needed to set
    priorities for prevention and response actions.
    Outside Force Damage ($400,000)
        Research to detect encroachment on pipeline right-of-way or
    mechanical damage to reduce accidents from third-party damage to
    hazardous liquid pipelines.
    Pipeline Safety Grants ($2,087,000)
        State program which provides oversight of intrastate hazardous
    pipelines operations and maintenance, construction, repairs.
        50 percent of one-call grants to States for programs to increase
    training, education and compliance activities.
        50 percent of damage prevention grants to reduce impacts on the
    environment from disruptions caused by excavation activities around
    railroads, sewage lines, electric, telecommunications, hazardous liquid
    pipelines.
    Interstate Oversight Grants ($800,000)
        State activities to promote the best practices on interstate
    hazardous liquid pipelines.
        Question. Please describe progress made in the environmental
    indexing effort. What was accomplished with funding provided in fiscal
    year 2000? How much is being spent in fiscal year 2001 for this
    activity, and for which purposes? What new initiatives will be
    conducted during fiscal year 2002 and how much will that cost?
        Answer. Using fiscal year 2000 funding, RSPA completed a pilot test
    of the proposed unusually sensitive area (USA) definition using a
    computer model created from the proposed definition, conducted a
    technical review of the pilot results using drinking water and
    ecological experts, and pilot tested the technical reviewers'
    recommended changes to the proposed USA definition and USA computer
    model. RSPA used the results of the technical review and pilot tests to
    complete the USA definition which was published in December 2000. RSPA
    also used fiscal year 2000 funds to: contract with The Nature
    Conservancy and the Association for Biodiversity Information to obtain
    data on threatened and endangered, critically imperiled, and imperiled
    species; collect drinking water and other ecological data needed to
    identify and map USA's; and identify, locate, and map drinking water
    and ecological USA's in the top 10 hazardous liquid pipeline States.
    These 10 States contain about 70 percent of the hazardous liquid
    pipelines in the United States. The USA maps have been placed in our
    national pipeline mapping system to allow operators, other government
    agencies, and the public to view the USA locations in relation to
    pipelines. In addition, RSPA has incorporated contact information into
    the USA maps. The contact information includes the name of the agency
    that supplied the drinking water or ecological data and the agency's
    web site or other contact information. This allows individuals who need
    more information on a specific drinking water or ecological resource to
    contact the appropriate agency.
        In fiscal year 2001, RSPA expects to spend $947,000 on this
    initiative. The money will be used to collect additional drinking water
    and ecological data and to identify, locate, and map USA's in an
    additional 30 States.
        In fiscal year 2002, RSPA expects to need an additional $720,000 to
    gather data and map USA's in the remaining 10 States; contract with the
    Pennsylvania Natural Diversity Inventory agency to obtain data on
    threatened and endangered, critically imperiled, and imperiled species;
    research and analyze new or revised drinking water and ecological
    programs and databases that may be used to revise the USA maps and to
    update our Drinking Water Data Catalog and create an Ecological Data
    Catalog. The Data Catalogs will provide, by state, the agencies that
    supplied the data, a description of the data, and noted problems with
    the data.
        Question. Please summarize the results of last year's review of
    pipeline operators' emergency response plans. Include the number of
    plans reviewed, the number accepted, and the number of plans which
    required corrective measures.
        Answer. In fiscal year 2000, OPS has reviewed 84 plans and approved
    16 of them. The remaining 68 plans required corrective measures.
                     risk assessment and technical studies
        Question. Who are the current participants in pipeline risk
    management demonstration projects? What progress has been made in each
    of those projects? What challenges have been identified with the
    implementation of this program? Have any adverse safety or
    environmental impacts surfaced with any of the projects? What is your
    initial assessment of the benefits and costs of these demonstration
    projects? Will these be continued?
        Answer. OPS has successfully concluded the consultation and review
    process with seven companies. Six of these have been formally approved
    in the Demonstration Program: Chevron Pipe Line, Exxon Mobil, Natural
    Gas Pipeline Company of America, Northwest Pipeline, Phillips Pipe
    Line, and Equilon. OPS will soon request public comment on approval of
    the Duke Energy project, the seventh project.
        Each of the approved companies has demonstrated progress towards
    achieving the program objectives. Notable examples (one from each
    company) include:
      --Chevron's demonstration of a very systematic, scenario-based
            approach to risk assessment that has improved OPS'
            understanding of how a quantitative, scenario-based risk
            assessment process can be utilized effectively to identify and
            address pipeline risks;
      --Exxon Mobil's allowing OPS to witness internal company sessions at
            which the company tapped technical and managerial expertise to
            construct its risk-based decision model, improving
            communication and information flow between the operator and the
            regulator;
      --Natural Gas Pipeline of America's establishment of an enhanced
            damage prevention program comprised of a number of activities
            that exceed regulatory requirements;
      --Northwest's expansion and acceleration of its in-line inspection
            program, using resources that would have otherwise gone to pipe
            replacement in low-risk locations;
      --Phillips's establishment of an excavation risk assessment process
            that has resulted in outside parties rerouting or altering
            proposed projects to reduce the likelihood of hitting
            Phillips's pipelines during excavation activities; and
      --Equilon's improved emergency response capability and enhanced
            public and emergency personnel protection and awareness
            activities at the demonstration site.
        More information on the progress of each demonstration project is
    included in the Appendices A and B of OPS' recently released Report to
    Congress entitled ``Beyond Compliance: Creating a Responsible
    Regulatory Environment that Promotes Excellence, Innovation, and
    Efficiency,'' accessible via the OPS website at http://ops.dot.gov/
    ReportToCongress042501.htm.
        The report also discusses several challenges with the Program
    implementation: the time required by companies to make the required
    fundamental improvements in management and technical processes; the
    time needed for OPS to understand how risk management can be
    responsibly used in the regulatory process; the continuing evolution of
    risk models and companies' experience applying them; the difficulty of
    developing quantitative performance measures that can reliably indicate
    the impact of activities on safety performance; and the difficulty of
    establishing a practical and efficient validation process.
        Safety and environmental impacts with all of the projects were
    positive.
        OPS believes the Demonstration Program has provided an experience
    we needed for the integrity management initiatives now underway, and is
    therefore of immeasurable benefit. OPS has not performed quantitative
    assessments of the cost/benefits of the individual projects.
        OPS will continue the Demonstration Program as long as it continues
    to yield lessons pertinent to the integrity management initiatives. At
    present, OPS is using the program to test protocols for reviewing
    company processes and to explore alternative approaches to achieving
    superior safety.
        Question. Please elaborate on the specific contracts and their
    associated funding amounts that have been or will be let to ensure
    continued monitoring and progress in the risk management demonstration
    projects. Will funding needs diminish?
        Answer. OPS has contracted with Cycla Corporation for technical
    support of the Demonstration Program since the program began in 1996.
    Between 1996 and 2000, contract support costs totaled approximately
    $4.7 million before the contract expired. In March 2001, OPS awarded
    Cycla a new 3-year contract with a funding celing of $9.5 million for
    support of OPS' integrity management, communication, and damage
    prevention initiatives. All monitoring of the demonstration projects
    will be done in the context of moving these companies and the pipeline
    industry toward the integrity management approach, which incorporates
    the positive and practical aspects of risk assessment and management we
    learned during the Demonstration Program and summarized in a recent
    Report to Congress, Beyond Compliance: Creating a Responsible
    Regulatory Environment that Promotes Excellence, Innovation, and
    Efficiency,'' accessible via the OPS website at http://ops.dot.gov/
    ReportToCongress042501.htm.
        We estimate that about $200,000 of the $1.25 million requested for
    Risk Assessment and Technical Studies in fiscal year 2002 budget will
    be required to support activities involving the demonstration projects.
    This represents a decrease in funding for risk management from previous
    levels.
        Question. How much funding was or is associated with the various
    demonstration projects in fiscal year 2000 and fiscal year 2001, and
    how much is requested for these projects in the fiscal year 2002?
        Answer. In fiscal year 2000, OPS obligated $628,000 for direct
    contractor support of the demonstration projects. In fiscal year 2001,
    OPS obligated $54,000 to support its oversight of the demonstration
    projects, and $50,000 to support a study of risk model experience
    intended to improve OPS and industry understanding of how risk models
    can be applied to improve safety. In fiscal year 2001, OPS began
    orienting its Demonstration Program activities to support development
    and implementation of the integrity management initiatives. We estimate
    that about $200,000 of the $1.25 million requested for Risk Assessment
    and Technical Studies in fiscal year 2002 budget will support
    activities involving the demonstration projects.
                              compliance programs
        Question. For each of the last three fiscal years, please provide
    data on all enforcement actions taken by OPS, including the number of
    enforcement cases opened, closed, and the amount of civil penalty
    assessments collected. What is the pending backlog of enforcement
    penalties? Please compare these data with the number of reportable
    events, number of deaths and injuries, and any other measures of
    pipeline safety for both hazardous liquids and gases.
        Answer. The requested information is available only by calendar
    year (CY), as follows:

    ------------------------------------------------------------------------
                 Measures                CY 1998      CY 1999      CY 2000
    ------------------------------------------------------------------------
    Enforcement:
        Cases Opened.................          218           91          129
        Cases Closed.................          273           97           73
        Amount of Civil Penalties          $93,500     $110,000   $4,379,000
         Proposed....................
        Amount of Assessed Civil          $350,196       $49,50      $62,000
         Penalties...................
        Amount of Collected Civil         $316,846     $120,000     $143,707
         Penalties...................
    Reportable events:
        Incidents Reported...........          379          344          380
        Deaths.......................           19           21           38
        Injuries.....................           74          108           81
        Property Damage (in millions)          104           97          152
    ------------------------------------------------------------------------

        The amount of civil penalties proposed is the amount sought when
    then operator is first notified of the allegations of noncompliance.
    The proposed amount of a civil penalty may be reduced if the agency
    decides after hearing the operator did not violate the regulations or
    that mitigation of the amount in accordance with the statutory
    assessment criteria is appropriate. The agency experience with
    collections has been good so that collections approximate assessments
    in the long run. However, because enforcement case processing may not
    be completed within the same year, comparison between the amounts
    proposed and amounts collected within the same year are not valid.
        Question. How have you improved your enforcement and compliance
    program since last year? How many of those companies provided with
    technical education were reinspected? Did you find those companies
    still out of compliance? If so, how many enforcement actions were taken
    against those companies?
        Answer. Maximum penalties are sought for any violation that may be
    a factor in a fatality, serious injury, or significant harm to the
    environment. RSPA is making full use of all enforcement tools including
    corrective action orders, civil penalties and compliance orders. RSPA
    is also conducting a formal assessment of the effectiveness of various
    pipeline enforcement tools (civil penalties, agreements, etc.) to
    determine whether they result in comparative compliance and safety
        In 2000, RSPA proposed over $4.3 million in civil penalties and in
    January through March of 2001, proposed over $640,000 in civil
    penalties. Some enforcement cases involve substantially larger claims
    against companies, including a case initiated in 2000 which proposed a
    $3.05 million civil penalty. In comparison, between 1995 and 1999, RSPA
    annually proposed an average of $460,000 in civil penalties.
        These changes reflect new policies set in place after several
    recent pipeline tragedies and respond to the concerns of the American
    people who want a strong and effective pipeline program. The Inspector
    General and General Accounting Office conducted audits of RSPA pipeline
    enforcement policies in 1999 and recommended RSPA assess the
    effectiveness of the then current policy. In 1995, RSPA reported to
    Congress it was exploring non-regulatory approaches to improve pipeline
    integrity and giving operators options to correct problems that would
    achieve the best long term safety results. This enforcement policy, in
    effect between 1995 and 2000, resulted in a significant drop in civil
    penalty assessments for violations.
        RSPA agrees with the GAO audit recommendation that a formal
    assessment is needed to determine which policy provides an equal,
    greater, or lesser level of compliance with the regulations. An
    assessment was initiated in the fall of 2000 with expected completion
    by the end of 2001. RSPA has contracted with General Physics to review
    the assessment methodology and independently evaluate the RSPA study
    findings.
        Additional improvements to the RSPA compliance program include
    training for Federal and State inspectors. The training subjects
    include internal inspection technologies, integrity management audit
    methods, and operator qualification issues. Recent rulemakings have
    highlighted the need for inspectors to understand basic concepts of the
    complex technologies pipeline companies use to assess the integrity of
    their pipelines.
        Twenty-five of the companies that were inspected and received
    enforcement actions in fiscal year 1999 were inspected at different
    locations in their system during fiscal year 2000. Enforcement action
    was initiated on eight of these companies in fiscal year 2000. However,
    it should be noted that the concerns found in fiscal year 1999 were not
    necessarily the same items found in fiscal year 2000.
        Question. Please prepare an updated table indicating the number of
    pipeline safety inspectors on board and the number of pipeline safety
    inspector positions authorized for each of the last three fiscal years.
    Please show how the additional staff requested for fiscal year 2002
    would be deployed.
        Answer. RSPA will use the additional staff to help evaluate
    compliance with recently issued and forthcoming rules which will
    require operators to perform testing and more comprehensive evaluation
    of the integrity of pipeline systems. This will ultimately help prevent
    pipeline accidents, enable early detection of pipeline damage and
    assure prompt and effective mitigation of the accidents we cannot
    prevent. Additional staff will be generally distributed equally
    throughout the regions.

                                              NUMBER OF INSPECTORS ONBOARD
    ----------------------------------------------------------------------------------------------------------------
                                                                       1999 onboard/   2000 onboard/   2001 onboard/
                                  Region                              authorized \1\  authorized \1\  authorized \1\
    ----------------------------------------------------------------------------------------------------------------
    Eastern.........................................................          36,379          36,745          37,110
    Southern........................................................          36,379          36,745         \2\ 8/9
    Central.........................................................          36,474          37,236       \2\ 11/13
    Southwest.......................................................          36,505          36,840       \2\ 10/12
    Western.........................................................          36,505          36,903       \2\ 13/14
                                                                     -----------------------------------------------
          Total.....................................................           51/51           52/52           50/56
    ----------------------------------------------------------------------------------------------------------------
    \1\ These numbers do not include the five Region Directors or headquarter inspector positions that supply
      technical support to all five regions. Some of the authorized inspector positions have been moved between
      regions and the headquarters technical support to meet risk-based needs.
    \2\ We are currently in the process of hiring six additional regional inspectors, Southern, Central, Southwest,
      and Western Regions.

        Question. How many accident investigations were conducted during
    each of the last three fiscal years? Please include information on
    follow-up accident investigations and the results.
        Answer.

                           OPS ACCIDENT INVESTIGATIONS
    ------------------------------------------------------------------------
                                                1998       1999       2000
    ------------------------------------------------------------------------
    Number of Onsite Investigations........         48         46         43
    Follow-up Investigations...............         43         40         45
    Accident Reports Generated.............          4         19         13
    ------------------------------------------------------------------------

        RSPA reviews each pipeline accident to assess factors contributing
    to the failure and performs onsite investigation of those with national
    safety implications, public interest, fatalities, numerous injuries,
    significant property damage or environmental impact. The distinction
    between the accident investigation and the follow-on inspections is
    difficult to make. An investigation may involve multiple follow-up
    inspections, which may require months to complete. An example is the
    continuing investigation into the Olympic pipeline failure in
    Bellingham, Washington. Almost two years after the pipeline failed,
    RSPA inspectors and technical staff continue to closely monitor
    Olympic's corrective actions.
        We perform follow-on investigations for many of the onsite accident
    investigations and incorporate lessons learned into our inspection
    processes and regulatory initiatives. Recent accidents have highlighted
    the need for RSPA to conduct system-wide inspections and ensure
    pipeline companies are integrating data about their pipelines in order
    to make good preventative maintenance decisions.
                       damage prevention/public campaign
        Question. Please describe improvements in outreach programs since
    last year.
        Answer. In November 2000, RSPA organized a communications team in
    conjunction with its Integrity Management Program to identify
    information needed by the public and local officials and effective
    mechanisms for distributing this information. RSPA held a public
    meeting in February 2001 to afford the public an opportunity to present
    its views. RSPA is working with representatives of the public, state
    and local government, and industry to develop prototype information for
    local officials and emergency responders and to identify several
    communities which on a pilot basis could evaluate these efforts and
    make recommendations for improvements. This project anticipates a two-
    way communications system between communities, OPS, States, and
    industry. OPS is preparing an advisory which will explain to operators
    the types of information which OPS believes that they should begin
    planning to provide to local officials and emergency responders.
        Since last year, the Dig Safely Team translated the Dig Safely
    Implementation Manual and the Dig Safely brochure into Spanish for use
    by construction and public works employees. A new Dig Safely training
    video was produced last fall and is being distributed nationwide to all
    States through the National Association of Regulatory Utility
    Commissioners and the National Association of Pipeline Safety
    Representatives. Major trade associations representing all sectors
    involved in underground damage prevention are distributing it to their
    members. The video is also being dubbed in Spanish. The Dig Safely
    program continues to be promoted nationwide and the campaign continues
    to receive endorsements from major trade associations and corporations.
        A Public Education Presentation and a Public Education PDF file
    containing recommendations developed by the One Call Systems Study
    (Common Ground) Public Education and Awareness Team have been posted to
    the OPS web site. Presentations developed by the other eight task teams
    are also available on that site. The site also contains videos and
    brochures on Damage Prevention Initiatives and the Common Ground Study.
    Since last year, the Dig Safely Team added representatives of the
    insurance, railroad and locating industries to the team.
        Question. What has the Damage Prevention Quality Action Team
    accomplished during the last year? What are the anticipated activities
    of this team during the next year.
        Answer. Since last year, DAMQAT, now known as the Dig Safely Team,
    commissioned production of a new safety video. We have begun
    duplication and distribution of the video to States, contractors, and
    other groups. We have begun to translate additional materials into
    Spanish for distribution to the significant numbers of Spanish speaking
    workers involved in the construction trades. The video will also be
    dubbed in Spanish.
        The Team is also planning another national survey to evaluate the
    impact of the Dig Safely campaign which was launched nationally in
    1999. At the start of 2001, the Dig Safely Team was placed under the
    Educational Programs Committee of the Common Ground Alliance. The
    Common Ground Alliance will provide direction on program evaluation.
        Question. What are your plans for increasing the quality and
    quantity of assistance to state and local officials in the areas of
    damage prevention with particular reference to land use planning, zone,
    set backs and other public participation concerns?
        Answer. RSPA proposed to realign base funds for damage prevention
    programs and shift $3,000,000 from the Damage Prevention Grants Program
    to a Damage Prevention Community Assistance Program. This new program
    would help localities ensure safety by providing information on
    pipeline locations, how to avoid damaging lines, and how to recognize
    and report emergencies. In fiscal year 2002, OPS will provide
    communities with information needed to: encourage plat designation of
    existing underground facility easements; gather information prior to
    construction to avoid impact to underground facilities; encourage
    communication among all underground facility owners on current and
    future projects from pre-bid through construction phases; gather
    information on current land use practices and zoning ordinances to
    determine how best to prevent hazards on pipeline right-of-ways; and
    raise awareness of the risks of development on pipeline right-of-ways
    and effective methods of smart growth adjacent to pipeline right-of-
    ways. OPS will also develop a community right-to-know program which may
    include community outreach in damage prevention and spill response
    techniques, and development of databases to support citizen education.
        Our proposed budget includes a request for six additional
    personnel, five of which would be assigned at the regional level, to
    work on public education and community right-to-know issues, and to
    promote adoption of best practices. Their responsibilities would
    include assisting in formation of regional or State level groups, based
    on the Common Ground Alliance model, with representatives of
    underground facility operators, States, industry and others involved in
    damage prevention such as one-call centers, contractors and locators.
    One such group has already been formed in the State of Missouri.
        As part of its efforts to improve communications between OPS and
    State and local officials, OPS convened a communications team with
    representatives of State and Federal agencies, public interest groups,
    and industry. OPS worked with these groups to help them establish
    guidelines for setbacks and land use planning in the vicinity of
    existing pipelines. While OPS does not have jurisdiction over siting of
    interstate pipelines, it can make recommendations and provide technical
    assistance so that public officials can make informed decisions about
    land use planning and setbacks such as construction of public
    facilities in areas close to pipeline right-of-way. Communities often
    experience significant pressure from developers to issue construction
    permits closer to existing pipelines than may be prudent since
    construction related activities are the single greatest cause of
    pipeline failure.
        Question. Please break out how the $3,413,000 for Damage Prevention
    Community Assistance will be used.
        Answer. Approximately $500,000 will be used to continue the
    important damage prevention work being done by the Common Ground
    Alliance (CGA), our Dig Safely public education campaign. $2.913
    million will be used in support of the Damage Prevention Community
    Assistance initiative to organize and deliver technical assistance to
    communities and to replicate the CGA model at the local level. This
    includes preparation, design, production and distribution of materials
    to communities to help them identify the location of pipelines in their
    areas through use of the OPS National Pipeline Mapping System (NPMS),
    to train them in damage prevention practices, to identify the types of
    information which local officials and emergency responders need from
    OPS and pipeline operators with respect to pipeline operations and
    pipeline safety issues, and to develop databases that would allow us to
    inform communities about pipeline operators performance, as well as
    developing guidance on land use and pipeline setbacks. Funds will be
    used to incorporate into the NPMS important information on public
    facilities such as hospitals, parks, schools and other public
    facilities designated by communities, in addition to Unusually
    Sensitive Areas, and their location vis a vis pipelines, and hazardous
    liquid gathering lines (not currently regulated) in a format that can
    be used by both OPS and the public. These funds will be used to take
    important lessons learned from the Common Ground Study directly to
    States and communities in the form of damage prevention technical
    assistance. This initiative will promote the message that damage
    prevention is a shared responsibility; identify the most effective
    methods for communicating this message to local governments; and
    develop a system whereby enables communities can convey their questions
    and concerns about pipeline operations and damage prevention issues to
    OPS and to individual pipeline operators. The new CGA, established with
    support from OPS, is taking the first steps to consolidate damage
    prevention efforts at the national level. Additional efforts are needed
    to reduce construction related damage at the State and local level.
    Lastly, we plan to provide additional support to the CGA.
        Question. What role will OPS play in the Common Ground Alliance?
    When will direct financial support end? How much will be provided in
    fiscal year 2002? How much has been provided thus far?
        Answer. OPS is supporting start up and initial operation of the
    Common Ground Alliance (CGA) through loan of an executive and providing
    technical and logistical support. Our support of the CGA also includes
    participation on several committees; administrative support to the CGA
    Board of Directors and working committees; developing, maintaining, and
    administering the CGA Information System on the Web; facilitating all
    meetings of the CGA Board and committees; and facilitating
    communications among the various CGA components and the public. OPS has
    also assigned an executive to the CGA for a period of about 18 months
    to assist in forming and initially operating the organization. This
    budget requests funding for that executive through March 2002. By then,
    a permanent Executive Director will have been hired and on board for at
    least six months.
        OPS believes that the Federal Government should continue to provide
    support for this important damage prevention effort. A direct grant of
    $500,000 will provide the support needed in fiscal year 2002 to develop
    the organization as a permanent entity to advocate protection of all
    buried utilities, identify new best practices and research needs and
    evaluate effectiveness of its programs and activities. This
    organization is separately raising private sector funds.
        Question. Since last year, what have you done to motivate States to
    improve their one-call notification systems and excavation damage
    prevention activities? How much is planned for that activity in fiscal
    year 2001?
        Answer. OPS has an ongoing program for One-Call Grants. In fiscal
    year 2001, OPS distributed $1 million to be used by States to improve
    their one-call notification systems by strengthening State one-call
    legislation, increasing enforcement activities, and continuing public
    education. OPS will also distribute up to $4.5 million (and carry over
    a small unobligated balance) in Damage Prevention Grants to State
    agencies in fiscal year 2001 to assist them in the implementation of
    best practices identified in the Common Ground Study. OPS also
    motivates States to improve their one-call notification systems and
    excavation damage prevention activities by underwriting the
    participation of representatives from the National Association of
    Pipeline Safety Representatives and the National Association of
    Regulatory Utility Commissioners in the Common Ground Alliance and on
    the Dig Safely Team. Lastly, we have added progress in damage
    prevention as an element of our annual performance review of State
    pipeline programs.
        Question. How much is planned for that activity in fiscal year
    2002? Please describe the scope and nature of that activity.
        Answer. In fiscal year 2002, OPS will maintain One-Call Grants at
    the current level of $1 million, and will continue to distribute
    remaining funds for approved damage prevention grants. In fiscal year
    2002, OPS proposes to use $2.9 million, previously allocated for Damage
    Prevention Grants, for a more centralized public education program. The
    Damage Prevention Community Assistance program objectives are to
    provide communities with information they need to encourage plat
    designation of existing underground facility easements; gather
    information prior to construction to avoid impact to underground
    facilities; encourage communication among all underground facility
    owners on current and future projects from pre-bid through construction
    phases; gather information on current land use practices and zoning
    ordinances to determine how best to prevent hazards on pipeline right-
    of-ways; and raise awareness of the risks of development on pipeline
    right-of-ways and effective methods of smart growth adjacent to
    pipeline right-of-ways.
        OPS will also develop a community right-to-know program which may
    include community outreach in damage prevention and spill response
    techniques, and development of databases to support citizen education.
    Our proposed budget includes a request for six additional personnel,
    five of which would be assigned at the regional level, to work on
    public education and community right-to-know issues, and to promote
    adoption of best practices. Their responsibilities would include
    assisting in formation of regional or State level groups, based on the
    Common Ground Alliance model, with representatives of underground
    facility operators, States, industry, and others involved in damage
    prevention such as one-call centers, contractors, and locators.
        Question. How are you working with NTSB to advance damage
    prevention strategies?
        Answer. Damage prevention is the top safety priority of both OPS
    and NTSB. We are working together with NTSB staff to reduce damage to
    pipeline systems from third-party damage. OPS has responded to the 12
    NTSB pipeline safety recommendations that relate to damage prevention.
    OPS is currently completing an update report to NTSB on our responses
    to these recommendations. OPS staffers meet regularly with NTSB
    pipeline specialists to discuss damage prevention and other issues.
    NTSB staff is kept fully informed on OPS damage prevention activities
    and contributes to our proactive measures.
        In response to advice from NTSB, OPS has issued a number of
    Advisory Bulletins on damage prevention to the pipeline industry. The
    most recent was on May 21, 2001, when we issued a bulletin advising
    pipeline operators to review their emergency plans and procedures to
    determine whether the procedures prompt the appropriate actions for gas
    leaks caused by excavation damage near buildings, and whether the
    procedures adequately address the possibility of multiple leaks and the
    underground migration of gas into nearby buildings. Late last year we
    issued an Advisory Bulletin on damage prevention during directional
    drilling operations.
        OPS and NTSB are working together through industry standards
    committees, such as the Gas Piping Technology Committee, to provide the
    pipeline industry with guidance on damage prevention in gas pipelines.
    NTSB and OPS support research to prevent third-party damage and to
    improve state one-call systems. RSPA continues to work to enhance
    damage prevention efforts on several fronts including:
      --Providing each State with a copy of RSPA's innovative study,
            ``Common Ground: Study of Damage Prevention Best Practices,''
            which includes more than 150 best practices;
      --Expanding our evaluation of State program damage prevention and
            one-call systems;
      --Assisting development of and supporting the newly established
            Common Ground Alliance;
      --Encouraging States to participate in the OPS damage prevention
            grant program; and
      --Promoting our national ``Dig Safely'' damage prevention education
            campaign establishing a new damage prevention and technical
            assistance program.
        At the suggestion of NTSB, RSPA, and American Public Works
    Association (APWA) have worked together to strengthen damage prevention
    laws, promote and develop education initiatives, and improve data
    collection. Both organizations testified at State legislative hearings
    to effect improvements in state damage prevention laws. APWA worked
    with RSPA on the Common Ground study and in the development of the Dig
    Safely Campaign.
                      research and development and mapping
        Question. What is the current status of your pipeline safety R&D
    program? Please break out on a contract by contract basis how the
    fiscal year 2000 and fiscal year 2001 funds were used. How can you
    assure the Committee that your R&D program will lead to advances to
    meet your futures challenges?
        Answer. RSPA is in the initial stages of preparing to conduct a
    research planning conference. We believe such a conference is needed to
    bring the pipeline safety research needs into clearer focus, to
    establish a consensus on the adequacy of current research programs
    conducted by the government and industry, to ease concerns expressed by
    Congress and the public concerning the adequacy and reliability of
    existing technologies, and to establish a realistic research agenda for
    OPS and the industry. Federal and State agencies, pipeline operators,
    trade associations, research organizations, and public interest groups
    will be invited to the conference. The goals of the conference will be
    to: (1) set the stage for a concerted and credible strategic approach
    to pipeline research planning; (2) provide a forum for broad-based
    input to planning including input from regulators and the public; and
    (3) to develop strategies for leveraging scarce existing funds by
    joining federal and industry monies.
        We presently have agreements to conduct collaborative research in
    three areas. The first area is advancing magnetic flux leakage
    technology used on in line inspection (ILI) tools or ``smart pigs'' to
    identify and characterize mechanical damage on pipelines. We awarded a
    2-year, $2 million cooperative agreement with the Gas Technology
    Institute (GTI) in April 2000 to conduct research with the magnetic
    flux oriented in the circumferential direction around the pipe. This
    smart pig research is funded 50 percent by RSPA and 50 percent by GTI.
    The research will provide for better identification and
    characterization of mechanical damage oriented in the pipe's
    longitudinal axis. Mechanical damage from excavators is the leading
    cause of major pipeline accidents. Funding for this project was
    $500,000 in fiscal year 2000. We expect to fund the additional
    $500,000, to complete our 50 percent of the funding, later in fiscal
    year 2001.
        The second area is advancing acoustic technology for real time
    monitoring for pipeline right-of-way encroachment and outside force
    damage. We awarded a 1-year, $364,000 cooperative agreement with the
    Gas Technology Institute (GTI) in April 2001 to conduct this research.
    This real time monitoring research is funded 50 percent by RSPA and 50
    percent by GTI. The results from this research have the potential to
    significantly reduce pipeline mechanical damage caused by excavators.
    The goal is to provide early warning to operators of the presence of
    excavation equipment on the pipeline right-of-way so that the operators
    can take corrective action before significant damage is done to the
    pipeline. RSPA funding for this project was $0 in fiscal year 2000 and
    $181,842 in fiscal year 2001, for our 50 percent of the total funding.
        The third area is an offshore research project to investigate the
    validity of data on wall thinning gathered by IDI tools. We are
    hydrostatically testing to failure a number of abandoned pipelines and
    comparing the failure data with the IDI inspection data. We, along with
    industry and other government partners, are participating in this
    research sponsored by the Minerals Management Service, Department of
    the Interior. Funding for this project was $50,000 in fiscal year 2000
    and $50,000 in fiscal year 2001.
        In addition, a reimbursable agreement between RSPA and Wright-
    Patterson Air Force Base, Ohio, was executed in April 2001 for the Air
    Force Base to manage a one-year research and development project to
    demonstrate infrared lidar mapping for use as an airborne leak
    detection system for gas and hazardous liquid pipelines. The technology
    development has been under contract with the Air Force for sometime. A
    more efficient use of funding is realized for the Air Force to continue
    the development of the technology with RSPA oversight. The kick-off of
    the research is scheduled for June 13, 2001, with a meeting in
    Washington, DC. Funding for this project was $0 in fiscal year 2000 and
    $600,000 in fiscal year 2001.
        We also have funded development of utility location technologies
    which can be mounted on excavation equipment to warn machine operators
    of existing underground facilities before damage occurs. The developed
    prototype system, known as Buried Utility Detection System (BUDS), is
    capable of locating metallic pipes underground, according to feedback
    from users. Our funded research developed and tested a ``stop-light''
    feature added to BUDS. Outside force damage is the leading cause of
    pipeline failures. Funding for this project was $10,000 in fiscal year
    2000 and $0 in fiscal year 2001.
        Question. Please describe the progress made in your mapping
    initiative since last year. When will the project be completed? How
    much was appropriated and spent on this effort in fiscal years 1998,
    1999, and 2000 and how much is planned for fiscal years 2001 and 2002?
    What are the remaining challenges? Will there be a need for funding
    over the long-term?
        Answer. OPS has been working over the past year to increase the
    percentage of operators submitting pipeline data to the National
    Pipeline Mapping System (NPMS). Outreach has included working directly
    with pipeline trade associations, state partners, and individual
    companies to encourage pipeline operator participation in the NPMS. OPS
    has been promoting the NPMS at pipeline operator professional
    conferences and has conducted an educational workshop in Washington,
    DC, targeted at smaller intrastate natural gas transmission operators.
    OPS has added additional NPMS State repositories to assist in reaching
    smaller intrastate pipeline operators. The data received by the NPMS to
    date has been made available to communities across our Nation through
    an Internet mapping service run by OPS. Through this service,
    communities and individuals can get information on the pipelines and
    pipeline operators that traverse and service their locations. This
    service is accessible through the following link: http://
    www.npms.rspa.dot.gov.
        The results have been a significant increase in the number of
    pipeline operators submitting pipeline data over the past year,
    especially among hazardous liquid operators. As of April 25, 2001, the
    NPMS has received approximately 82 percent of the hazardous liquid and
    40 percent of the natural gas transmission pipeline data. Combined, the
    pipeline data submitted represents 54 percent of all OPS jurisdictional
    pipelines.
        Because of ongoing and increasing construction of new pipelines as
    well as frequent changes in ownership of existing pipelines,
    maintaining the accuracy of the NPMS will remain significant challenges
    and will require continuing efforts. OPS is requesting submissions from
    pipeline operators who have never submitted to the NPMS as well as
    requesting update submissions from pipeline operators who have
    previously submitted data. The key to a successful program is to
    develop a complete data set while also maintaining the timeliness of
    the data.
        Over the past three years, $2 million has been appropriated, and
    about $2.2 million has been spent. It is important to note that this
    initiative is funded with multi-year funding and some of the amounts
    spent each year include funds carried over from prior years. We expect
    that the $800,000 appropriated for fiscal year 2001 and the $800,000
    requested for fiscal year 2002 will be spent.
        Question. Has a contract been awarded for the $600,000 earmark in
    the fiscal year 2001 appropriations act for airborne mapping research,
    technology, and engineering in support of improving pipeline leak
    detections, analysis and response? What is the status of this program,
    and who will administer it? What follow-up costs are anticipated by the
    program administrator?
        Answer. A contract has been awarded. RSPA extended a reimbursable
    agreement between RSPA and Wright-Patterson Air Force Base, Ohio, in
    April 2001 for the Air Force Base to manage a one-year research and
    development project to demonstrate infrared lidar mapping for use as an
    airborne leak detection system for gas and hazardous liquid pipelines.
    The technology development has been underway with the Air Force for
    sometime. The kick-off of the research is scheduled for June 13, 2001,
    with a meeting in Washington, DC.
                                     grants
        Question. For fiscal year 2000 and 2001, please list the states
    that participated in your hazardous liquids and natural gas state grant
    programs. For each participating state, display the amount requested by
    state, the amount of federal grant funds received, and the percentage
    of federal contribution to total costs represented by that grant. What
    efforts were taken to increase participation in the grant program?
        Answer. Attached are the allocations for fiscal year 2000. Because
    the allocations are made at the end of the fiscal year following State
    program evaluation, the data for fiscal year 2001 is not yet available.
    RSPA has encouraged additional States to assume intrastate jurisdiction
    and improvements to State one-call damage prevention programs.

                2000 NATURAL GAS PIPELINE SAFETY GRANT ALLOCATION
    ------------------------------------------------------------------------
                                                                     PERCENT
                STATE               REQUEST     STATE    ALLOCATION     OF
                                                POINTS               FUNDING
    ------------------------------------------------------------------------
    ALABAMA.....................     $419,223      100     $338,151       40
    ARIZONA.....................      466,440      100      376,237       40
    ARKANSAS....................      201,298      100      162,370       40
    CALIFORNIA..................    1,469,249      100    1,185,119       40
    COLORADO....................      210,784      100      170,022       40
    CONNECTICUT.................      332,500       95      254,790       38
    DELAWARE....................       21,731       95       16,652       38
    FLORIDA.....................       49,100      100       39,605       40
    GEORGIA.....................      302,039      100      243,629       40
    ILLINOIS....................      287,093      100      231,573       40
    INDIANA.....................      175,600      100      141,642       40
    IOWA........................      209,500      100      168,986       40
    KANSAS......................      340,210      100      274,418       40
    KENTUCKY....................      251,380      100      202,767       40
    LOUISIANA...................      371,331      100      299,521       40
    MAINE.......................       67,597       90       49,072       36
    MARYLAND....................      160,986      100      129,854       40
    MASSACHUSETTS...............      332,265       95      254,609       38
    MICHIGAN....................      296,130      100      238,863       40
    MINNESOTA...................      741,278      100      597,927       40
    MISSISSIPPI.................      136,500      100      110,103       40
    MISSOURI....................      358,623       95      274,807       38
    MONTANA.....................       22,043      100       17,780       40
    NEBRASKA....................       96,758      100       78,046       40
    NEVADA......................      173,808      100      140,196       40
    NEW HAMPSHIRE...............      115,798      100       93,404       40
    NEW JERSEY..................      339,267      100      273,658       40
    NEW MEXICO..................      170,835       95      130,908       38
    NEW YORK....................    1,365,500      100    1,101,434       40
    NORTH CAROLINA..............      169,000      100      136,318       40
    NORTH DAKOTA................       39,099      100       31,538       40
    OHIO........................      520,133      100      419,547       40
    OKLAHOMA....................      348,710      100      281,275       40
    OREGON......................      178,983      100      144,371       40
    PENNSYLVANIA................      399,822       95      306,377       38
    PUERTO RICO.................       52,500      100       42,347       40
    RHODE ISLAND................       47,572       85       32,616       34
    SOUTH DAKOTA................       29,723       90       21,577       36
    TENNESSEE...................      293,489      100      236,732       40
    TEXAS.......................    1,297,116      100    1,046,274       40
    UTAH........................      209,550      100      169,026       40
    VERMONT.....................       50,629      100       40,838       40
    VIRGINIA....................      248,369       95      190,321       38
    WASHINGTON, DC..............      117,128      100       94,477       40
    WASHINGTON..................      393,006      100      317,004       40
    WEST VIRGINIA...............      304,200      100      245,373       40
    WISCONSIN...................      179,300      100      144,626       40
    WYOMING.....................       87,500       95       67,050       38
                                 -------------------------------------------
          TOTALS................   14,450,685  .......   11,563,834       40
    ------------------------------------------------------------------------
    Note: The ``Request'' represents 50 percent of the States estimated
      budget. The ``Percent of Fund'' is the percentage of the budget
      represented by the allocation.

             2000 HAZARDOUS LIQUID PIPELINE SAFETY GRANT ALLOCATION
    ------------------------------------------------------------------------
                                                                     PERCENT
                STATE               REQUEST     STATE    ALLOCATION     OF
                                                POINTS               FUNDING
    ------------------------------------------------------------------------
    ALABAMA.....................      $25,341      100      $20,440       40
    ARIZONA.....................       51,321      100       41,396       40
    CALIFORNIA..................      946,960      100      763,833       40
    KENTUCKY....................        5,160       95        3,954       38
    LOUISIANA...................       67,334      100       54,312       40
    MINNESOTA...................      172,599      100      139,221       40
    MISSISSIPPI.................        7,363      100        5,939       40
    NEW MEXICO..................       18,750       90       13,612       36
    NEW YORK....................       53,300      100       42,993       40
    OKLAHOMA....................       80,690      100       65,086       40
    TEXAS.......................      228,903      100      184,636       40
    VIRGINIA....................       17,239      100       13,905       40
    WASHINGTON..................       60,860      100       49,091       40
    WEST VIRGINIA...............       46,800      100       37,750       40
                                 -------------------------------------------
          TOTALS................    1,782,617  .......    1,436,166       40
    ------------------------------------------------------------------------
    Note: The ``Request'' represents 50 percent of the States estimated
      budget. The ``Percent of Fund'' is the percentage of the budget
      represented by the allocation.

        Question. RSPA and the states have agreed to attempt to provide 50
    percent of the states' pipeline safety program funding from the federal
    government. As an aggregate, what percent of the states' pipeline
    safety program funds were appropriated through the OPS state grant
    program in fiscal years 1999, 2000, and 2001?
        Answer. The funding levels for fiscal years 1999 and 2000 were 44
    percent and 40 percent. The funding level for fiscal year 2001 is
    expected to be 47 percent.
        Question. Part of the original justification for the increase in
    the pipeline grant program was that with increased funds the states
    would be encouraged to expand their enforcement responsibilities.
    Please provide quantitative data on a state by state basis indicating
    whether that has happened.
        Answer. Over the past several years, States have steadily been
    increasing the number of operators they oversee, the number of
    inspection units the inspect, the total number of person days spent on
    inspections, and--particularly for gas pipelines--the number of
    enforcement actions initiated under the State pipeline grant program.
    Overall State responsibility has grown in the past few years with
    limited additions of new intrastate gas and liquid pipelines. Moreover,
    States have assumed greater responsibility over Municipal, LPG, or
    master meter operator, as well as enhanced one-call compliance.
        Question. What has been accomplished with the funds provided for
    the TEA-21 damage prevention grant program? Why is it taking so long
    for these funds to be allocated? Please list the amount and nature of
    awards to date under this program.
        Answer. RSPA announced the availability of grants to States in this
    program in August 2000. The application period closed on March 23,
    2001. We received 25 applications, which are being administratively
    reviewed. RSPA has had to work with each applicant to complete holes in
    their application package. When this review process is complete, the
    proposals will be technically scored, prioritized and grants will be
    competitively awarded. RSPA expects that this round of grants will be
    awarded in this fiscal year. Should any money remain after funding
    eligible applications, RSPA will announce another opportunity for
    States to submit applications.
        When Congress appropriated the additional $5 million in the fiscal
    year 2001 budget, RSPA decided to consolidate it with the available
    fiscal year 2002 funds, increase the per-project funding target to
    $300,000, and extend the closing date for applications until December
    2000. Several States sought consultation with RSPA regarding
    alternatives to the program's cost-sharing requirements (20 percent
    State share/80 percent Federal share) and the reimbursement procedures.
    RSPA actively sought to find ways, within existing authority, to give
    States the maximum flexibility and opportunity to participate in this
    program. As a result, RSPA provided guidance that showed how a State
    could incorporate third-party participation in the project to satisfy
    their cost share. RSPA also exercised its authority to allow a portion
    of the Federal share to be advanced to the State at award time. RSPA
    extended the application period to March 23, 2001, to allow States to
    make the necessary adjustments in their applications.
        Question. Please update past data provided on the status of state
    and regional one-call systems, their completeness of coverage,
    effectiveness, legislative status, and enforcement capabilities. How
    many, and which, states have utilized one-call grant funds to establish
    one-call programs?
        Answer. Within the past 4 years, 17 States have passed or improved
    one-call legislation: Alaska, Arizona, Louisiana, Montana, New Mexico,
    New York, North Dakota, Pennsylvania, Puerto Rico, South Dakota,
    Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin and
    Wyoming. Since the incident in San Juan, Puerto Rico, in 1996, we have
    been working closely with Puerto Rico for legislation to create a one-
    call center. This legislation was passed in September 1998. We also
    supported Texas in the passage of its first one-call legislation in
    1997.
        There is also a growing number of States with a strong one-call
    enforcement mechanism (Arizona, Connecticut, Massachusetts, Minnesota,
    New Hampshire, New Jersey, Tennessee, and Virginia) that include: A
    specific agency with jurisdiction over excavators and facility
    operators; authority to issue immediate citations and the power to
    collect penalties; and administrative encouragement and staff assigned
    to enforce the law.
        Nine States and Puerto Rico do not require all underground facility
    operators to belong to one-call organizations. We expect several state
    legislatures to enact or modify one-call legislation for this purpose.
        More than 30 States have emergency service available on a 24-hour
    basis. In States without 24-hour emergency service, excavators have to
    notify operators of impending excavation after business hours.
        OPS also utilizes one-call grant funds to support States to
    establish one-call programs. This year, 29 States have requested one-
    call grants to further one-call activities. Many of these States also
    requested damage prevention grant funds, previously known as TEA-21, to
    expand their damage prevention efforts by implementing Best Practices
    within their States.
        Question. The conferees provided $800,000 matching funds to the
    State of Washington's supplemental appropriation for pipeline safety
    activities. Please provide information on the specific activities that
    have been identified by the State to enhance pipeline safety. What
    amounts of the total funding is or will be applied to each of these
    specific projects? What are the estimated completion dates for each?
        Answer. This appropriation has not yet been granted to the State of
    Washington, however, we fully expect to make this grant during fiscal
    year 2001. We have requested that the State of Washington specify the
    purpose and amounts of funding that will be applied.
                      volpe national transportation center
        Question. What percent of your personnel costs are for contract
    administration, technical program direction, and in-house research?
        Answer. Five percent of personnel costs are for contract
    administration. Sixty-nine percent is tied to specific project work,
    including technical direction. No funding or staff was devoted to in-
    house research (i.e., independent research and development not tied to
    a client project) in fiscal year 2000 and none is planned for fiscal
    year 2001. The remaining twenty-six percent of personnel costs cover
    facility operations, business services, staff development, supervision,
    process improvements, stakeholder reporting, and outreach.
        Question. Please discuss the current staffing situation at Volpe in
    relationship to current and anticipated workload.
        Answer. The Volpe Center has been able to meet overall staffing
    requirements with considerable effort. We have experienced delays in
    filling positions due to the competitive market for technical skills,
    especially in the fields of information systems security, software
    development, information technology, and middle and entry-level
    engineers in all disciplines. Like other Federal agencies, we foresee
    the need to give continued attention to recruitment and retention of
    talented staff in order to replace the substantial portion of our
    Federal workforce who will retire over the next five to ten years.
        Question. Please break out, in tabular form, obligations by each of
    the DOT modal administrations to the Volpe Center for each of the last
    three fiscal years. What is the significance of these funding trends?
        Answer. The following table shows Volpe Center obligations for
    projects with the following DOT Operating Administrations in millions
    of dollars.

    ------------------------------------------------------------------------
                                          Actual       Actual
                                       Fiscal Year  Fiscal Year  Est. Fiscal
                                           1999         2000      Year 2001
    ------------------------------------------------------------------------
    FAA..............................         70.7         62.1         73.1
    FHWA.............................          4.0         15.6         16.0
    USCG.............................          5.7          5.3          6.8
    FRA..............................         11.4         11.6         13.9
    FTA..............................          8.5          4.6          8.6
    NHTSA............................          7.3          8.8         10.6
    RSPA.............................          4.7          6.0          5.7
    OTHER DOT........................          1.8          1.0          3.6
    OST..............................           .7          1.1          1.0
                                      --------------------------------------
          TOTAL......................        124.8        116.1        139.3
    ------------------------------------------------------------------------
    Note: Each amount includes the customers' participation in DOT's Small
      Business Innovative Research (SBIR) program, which the Volpe Center
      manages.

        The trends reflect changes in our customers' program emphasis as
    well as changes to DOT's appropriations.
        Question. What are the Volpe overhead charges and how have you
    tried to reduce these charges? Please provide a detailed explanation
    and dollar figures of all overhead costs for each of the last three
    fiscal years.
        Answer. Overhead charges represent Volpe indirect costs incurred in
    support of it's direct projects.
        Following is the distribution of the Center's indirect expenses (in
    millions of dollars obligated):

    ------------------------------------------------------------------------
                                          Actual       Actual
            Indirect Activity          fiscal year  fiscal year  Est. fiscal
                                           1999         2000      year 2001
    ------------------------------------------------------------------------
    Facility Operations..............          3.4          3.3          4.3
    Business Services................          8.8         10.3         10.3
    Line Management..................          2.7          3.0          3.1
    Center-wide Services.............          1.5          2.3          2.4
    Computer & LAN Services..........          3.4          4.6          4.6
    Industry Outreach................          0.3          0.2          0.3
    Capability Development...........          0.3          0.6          0.5
    Plans & Pgm Development..........          1.6          1.7          1.8
    Chief Counsel....................          0.3          0.3          0.4
    Executive Management.............          1.1          0.8          0.8
                                      ======================================
    Indirect Obligations.............        $23.4        $27.1        $28.5
    Total Obligations................       $174.0       $199.0       $205.0
    Indirect to Total (percent)......         13.4         13.6         14.0
    ------------------------------------------------------------------------

        The estimated fiscal year 2001 indirect obligations reflect
    increases in facility operations resulting from significantly higher
    energy costs, as well as increases for salaries, benefits, negotiated
    contract price adjustments and other normal costs, including an amount
    for depreciation of prior year capital investments. We are trying to
    reduce Business Services expenses through increased use of performance-
    based contracts and e-commerce in all our procurement solicitations.
        Question. Please provide a detailed listing of all fiscal year 2000
    and fiscal year 2001 reimbursable agreements that the Volpe Center has
    with other Federal agencies. Include all costs that are paid out to
    contractors hired by the Volpe Center.
        Answer. Following is a list of all the fiscal year 2000 and fiscal
    year 2001 new start reimbursable agreements.
    Fiscal year 2000
        PROJECT: Vendor ITV Repair Parts Prototype
        SPONSOR: Defense Logistics Agency
        FUNDING: $170,000
        CONTRACT PERCENT: 7 percent
        The DLA and the US Transcom engaged the Center to expand in transit
    visibility (ITV) concepts to include systems repair parts. Working with
    the Logistics Management Institute, the Volpe Center selected a repair
    parts vendor, evaluated electronic commerce alternative to achieve the
    ITV objectives, and participated in prototype development and testing.

        PROJECT: Technical and R&D Support for Combating Terrorism
        SPONSOR: DOD's Combating Terrorism Technology Support Office
        FUNDING: $100,000CONTRACT PERCENT: 16 percent
        The Volpe Center supported the customer's research and development
    program for combating terrorism against U.S. interests worldwide.

        PROJECT: Aviation Safety Program Risk Management
        SPONSOR: NASA Langley Research Center
        FUNDING: $245,500
        CONTRACT PERCENT: 5 percent
        The Volpe Center supported NASA's Aviation Safety Program (AvSP) by
    working in collaboration with the NASA Safety and Mission Assurance
    personnel at Langley Research Center, Ames Research Center, Dryden
    Flight Research Center, and Glenn Research Center to identify, track
    and mitigate risks to assure success of the AvSP.

        PROJECT: Environmental, Transportation, and Info. Systems Technical
    and Consultant Services
        SPONSOR: U.S. Postal Service, New York Metro Area (NYMA)
        FUNDING: $320,000
        CONTRACT PERCENT: 86 percent
        The USPS NYMA implemented a comprehensive Environmental Compliance
    Review (ECR) program to periodically review USPS facilities for
    conformance with relevant laws and regulations, track regulatory
    deficiencies, monitor program towards environmental goals and
    objectives, et. al. Volpe provided technical, engineering, and
    managerial expertise to help the New York Metro Area with the ECR and
    state and federal regulatory requirements.

        PROJECT: Improving NTSD's Operations, Customer Support and
    Strategic Planning
        SPONSOR: U.S. Environmental Protection Agency
        FUNDING: $160,000
        CONTRACT PERCENT: 2 percent
        Volpe supported EPA's Office of Environmental Information in its
    effort to align its organization with its parent organization's
    strategic goals of consistent operations, stellar customer service and
    effective planning.

        PROJECT: USPS Pacific Area
        SPONSOR: USPS Pacific Area
        FUNDING: $27,000
        CONTRACT PERCENT: 26 percent
        Volpe provided comprehensive technical and consultation services to
    the sponsor in the areas of environmental and energy technical support
    services, including remediation, abatement, and construction
    management, information systems management, and transportation studies.

        PROJECT: Dynamic Traffic Assignment Support
        SPONSOR: U.S. Department of Energy, Oak Ridge Operations
        FUNDING: $78,600
        CONTRACT PERCENT: 0 percent
        Volpe provided technical support for a study being undertaken for
    the sponsor by the Massachusetts Institute of Technology Intelligent
    Transportation Systems Program.

        PROJECT: EPA, Region I--Brownfields Program
        SPONSOR: U.S. Environmental Protection Agency
        FUNDING: $150,000
        CONTRACT PERCENT: 57 percent
        The Volpe Center performed site assessment and related activities
    at designated brownfield sites. The EPA's brownfield initiative is an
    innovative program that defines brownfields as abandoned, idled, or
    under-used industrial and commercial facilities where expansion or
    redevelopment is complicated by real or perceived environmental
    contamination.
    Fiscal year 2001
        PROJECT: Crash Test Dummy Evaluation Study
        SPONSOR: Naval Air Warfare Center Aircraft Division
        FUNDING: $244,800
        CONTRACT PERCENT: 0 percent
        Volpe will evaluate existing finite element models of crash test
    dummies to study the effectiveness of protective countermeasures in
    reducing serious injuries and fatalities under severe impact
    conditions.

        PROJECT: High Frequency E.M. Scattering
        SPONSOR: U.S. Office of Naval Research
        FUNDING: $80,000
        CONTRACT PERCENT: 69 percent
        Volpe will conduct research to develop fast 3-D electromagnetic
    scattering models in the high-frequency regime to calculate wave
    scattering by ship and sea surface

        PROJECT: Transportation Portals Study
        SPONSOR: U.S. Transportation Command
        FUNDING: $72,000
        CONTRACT PERCENT: 2 percent
        The U.S. Transportation Command has requested that the Volpe Center
    undertake an objective survey of transportation and other commercial
    firms who provide user information about shipment status and location,
    reservations for transportation assets, and automated means of
    producing documents and labels required to move freight in the United
    States and overseas.

        PROJECT: Support U.S. Air Force Electronic Systems Center Airborne
    Warning and Control System (AWACS) Mode 5 Study
        SPONSOR: U.S. Air Force
        FUNDING: $35,000
        CONTRACT PERCENT: 0 percent
        The Volpe Center will provide engineering support to develop new
    Mode 5 and Mode S secondary surveillance radar capabilities for the
    worldwide fleet of AWACS.

        PROJECT: Performance Measures for DON CIO
        SPONSOR: Secretary of the Navy
        FUNDING: $8,000
        CONTRACT PERCENT: 0 percent
        The Volpe Center in collaboration with the Department of the Navy
    Chief Information Officer will develop performance measures, frameworks
    for performance measures, and guidelines for performance measures
    related to the activities of the DON CIO.

        PROJECT: Vision for the Transportation System After Next
        SPONSOR: NASA Headquarters
        FUNDING: $175,000
        CONTRACT PERCENT: 0 percent
        The Volpe Center will provide NASA with technical expertise and
    team leadership for the Vision for the Transportation System After Next
    project, to establish a vision and stretch performance goals for
    transportation 25 to 50 years into the future.

        PROJECT: U.S. EPA, Region 9--Superfund Removal Program Support
        SPONSOR: U.S. EPA
        FUNDING: $420,000
        CONTRACT PERCENT: 74 percent
        Volpe will provide the U.S. EPA with environmental support services
    in the assessment, design, remediation, restoration and oversight of
    contaminated sites in Region 9.

        PROJECT: Organizational Development for EPA/Office of Water
        SPONSOR: U.S. EPA
        FUNDING: $40,000
        CONTRACT PERCENT: 32 percent
        Volpe will assist the Office of Water's staff and line offices in
    becoming high performing teams that are fully capable of providing
    support and advice to EPA's leadership.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Anderson, John H., Managing Director, Physical Infrastructure,
      General Accounting Office......................................     1
        Prepared statement...........................................    32
        Statement of.................................................    29

    Bennett, Hon. Robert F., U.S. Senator from Utah, statements of.168, 366
    Biden, Hon. Joseph Jr., U.S. Senator from Delaware...............   369
    Bond, Hon. Christopher S., U.S. Senator from Missouri, statement
      of.............................................................   164
    Brown, Erroll, Rear Admiral, 13th Coast Guard District...........   251
        Prepared statement...........................................   257
        Statement of.................................................   254
    Brown, Ken, Master Chief Petty Officer, Command Master Chief,
      13th District, Coast Guard, Department of Transportation.......   251
        Statement of.................................................   261
    Byrd, Hon., Robert C., U.S. Senator from West Virginia, statement
      of.............................................................   165

    Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
      questions submitted by.........................................    67

    Davidson, Richard K., Chairman, CEO, and President, Union Pacific
      Railroad.......................................................   111
        Prepared statement...........................................   119
    Davis, Scott, Safety Systems Manager, Washington State Ferries...   275
        Prepared statement...........................................   277
    Dinsmore, Mic, Executive Director, Port of Seattle...............   133
        Prepared statement...........................................   136
    Dozier, Hon. Perry, State President, Washington Association of
      Wheat Growers..................................................    91
        Prepared statement...........................................    98
        Statement of.................................................    96
    Durbin, Hon. Richard J., U.S. Senator from Illinois:
        Prepared statement...........................................     4
        Questions submitted by.......................................    76
        Statement of.................................................   168

    Garvey, Jane F., Administrator, Federal Aviation Administration,
      Department of Transportation...................................   361
        Prepared statement...........................................   374
        Statement of.................................................   372

    Hughes, Leslie, Director, North Pacific Fishing Vessel Owner's
      Association....................................................   285
        Prepared statement...........................................   287
    Hutchins, Harry, Executive Director, Puget Sound Steamship
      Operators Association..........................................   288
        Prepared statement...........................................   289
    Hutchison, Hon. Kay Bailey, U.S. Senator from Texas, statement of   366

    Kohl, Hon. Herb, U.S. Senator from Wisconsin:
        Prepared statement...........................................   367
        Questions submitted by.......................................   247
        Statement of.................................................   324

    Loy, Admiral James M., Commandant, Coast Guard, Department of
      Transportation.................................................   303
        Prepared statement...........................................   310
        Statement of.................................................   306

    Martinez, Rob, Vice President, Marketing Services and
      International, Norfolk Southern Corporation....................   123
        Prepared statement...........................................   125
    Mc Cain, Hon. John, U.S. Senator from Arizona....................   368
    Mead, Hon. Kenneth M., Inspector General, Department of
      Transportation

     Opening statements

     1, 91, 157_____________________________________________________________

     Prepared statements

     3, 305_________________________________________________________________

     Questions submitted by

     54, 78 190, 345, 355, 405, 475_________________________________________

     Statements of

     305, 363_______________________________________________________________

     Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania Power and
     Light

     102____________________________________________________________________

     Prepared statement

     104____________________________________________________________________

     Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement of

     170____________________________________________________________________

     Stevens, Hon. Ted, U.S. Senator from Alaska, statement of

     162____________________________________________________________________

     Venture, Captain John, Chief, Marine Safety Division, Coast Guard,
     Department of Transportation

     251____________________________________________________________________

     Warner, Captain, statement of

     268____________________________________________________________________

     Warrington, George D., President and CEO, National Railroad Passenger
     Corporation (Amtrak)

     387____________________________________________________________________
                                                            tatement100
     Shelby, Hon. Richard C., U.S. Senator from Alabama:
         Opening statements.......................................1, 91, 157
         Prepared statements..........................................3, 305
         Questions submitted by...............54, 78 190, 345, 355, 405, 475
         Statements of..............................................305, 363
     Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania
       Power and Light................................................   102
         Prepared statement...........................................   104
     Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement
       of.............................................................   170
     Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162

     Venture, Captain John, Chief, Marine Safety Division, Coast
       Guard, Department of Transportation............................   251

     Warner, Captain, statement of....................................   268
     Warrington, George D., President and CEO, National Railroad
       Passenger Corporation (Amtrak).................................   387
     Self, Lamar, Director, Distribution and Customer Service,
       Mississippi Chemical Corporation...............................    99
         Prepared statement...........................................   100
     Shelby, Hon. Richard C., U.S. Senator from Alabama:
         Opening statements.......................................1, 91, 157
         Prepared statements..........................................3, 305
         Questions submitted by...............54, 78 190, 345, 355, 405, 475
         Statements of..............................................305, 363
     Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania
       Power and Light................................................   102
         Prepared statement...........................................   104
     Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement
       of.............................................................   170
     Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162

     Venture, Captain John, Chief, Marine Safety Division, Coast
       Guard, Department of Transportation............................   251

     Warner, Captain, statement of....................................   268
     Warrington, George D., President and CEO, National Railroad
       Passenger Corporation (Amtrak).................................   387
         Opening statements..................................1, 91, 157
         Prepared statements..........................................3, 305
         Questions submitted by...............54, 78 190, 345, 355, 405, 475
         Statements of..............................................305, 363
     Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania
       Power and Light................................................   102
         Prepared statement...........................................   104
     Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement
       of.............................................................   170
     Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162

     Venture, Captain John, Chief, Marine Safety Division, Coast
       Guard, Department of Transportation............................   251

     Warner, Captain, statement of....................................   268
     Warrington, George D., President and CEO, National Railroad
       Passenger Corporation (Amtrak).................................   387
          Hon. Richard C., U.S. Senator from Alabama:Opening
           statements.............................................1, 91, 157
         Prepared statements..........................................3, 305
         Questions submitted by...............54, 78 190, 345, 355, 405, 475
         Statements of..............................................305, 363
     Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania
       Power and Light................................................   102
         Prepared statement...........................................   104
     Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement
       of.............................................................   170
     Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162

     Venture, Captain John, Chief, Marine Safety Division, Coast
       Guard, Department of Transportation............................   251

     Warner, Captain, statement of....................................   268
     Warrington, George D., President and CEO, National Railroad
       Passenger Corporation (Amtrak).................................   387
         Opening statements..................................1, 91, 157
         Prepared statements..........................................3, 305
         Questions submitted by...............54, 78 190, 345, 355, 405, 475
         Statements of..............................................305, 363
     Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania
       Power and Light................................................   102
         Prepared statement...........................................   104
     Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement
       of.............................................................   170
     Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162

     Venture, Captain John, Chief, Marine Safety Division, Coast
       Guard, Department of Transportation............................   251

     Warner, Captain, statement of....................................   268
     Warrington, George D., President and CEO, National Railroad
       Passenger Corporation (Amtrak).................................   387

        Prepared statement...........................................    11
        Statements of................................................5, 313
    Mikulski, Hon. Barbara A., U.S. Senator from Maryland:
        Prepared statement...........................................   384
        Questions submitted by.......................................   341
        Statements of..............................................163, 316
    Mineta, Hon. Norman Y., Secretary of Transportation, Office of
      the Secretary, Department of Transportation....................   157
        Prepared statement...........................................   172
        Statement of.................................................   170
    Moore, Captain Mike, Commanding Officer, Marine Safety Office,
      Puget Sound, Coast Guard, Department of Transportation.........   251
    Murray, Hon. Patty, U.S. Senator from Washington:
        Opening statements....................................251, 303, 361
        Prepared statement...........................................    39
        Questions submitted by..................................69, 84, 238
        Statements of...........................................38, 93, 160

    Norman, Stan, Acting Program Manager, Oil Spill Program,
      Washington State Department of Ecology.........................   273

    Peterson, Captain Bill, Group Commander, Port Angeles, U.S. Coast
      Guard, Department of Transportation............................   251
        Statement of.................................................   263

    Ray, Randy, President, U.S. Cruise Ship Association..............   292
        Prepared statement...........................................   294
    Rickershauser, Peter, Vice President, Network Development,
      Burlington Northern Santa Fe...................................   126
        Prepared statement...........................................   128

    Schmidt, Karen, Executive Director, Freight Mobility Investment
      Board, State of Washington.....................................   138
        Prepared statement...........................................   140
    Self, Lamar, Director, Distribution and Customer Service,
      Mississippi Chemical Corporation...............................    99
        Prepared statement...........................................   100
    Shelby, Hon. Richard C., U.S. Senator from Alabama:
        Opening statements.......................................1, 91, 157
        Prepared statements..........................................3, 305
        Questions submitted by...............54, 78 190, 345, 355, 405, 475
        Statements of..............................................305, 363
    Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania
      Power and Light................................................   102
        Prepared statement...........................................   104
    Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement
      of.............................................................   170
    Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162

    Venture, Captain John, Chief, Marine Safety Division, Coast
      Guard, Department of Transportation............................   251

    Warner, Captain, statement of....................................   268
    Warrington, George D., President and CEO, National Railroad
      Passenger Corporation (Amtrak).................................   387

                                 SUBJECT INDEX

                                  ----------

                          DEPARTMENT OF TRANSPORTATION

                                                                       Page
    Additional committee questions...................................    54
    Airline:
        And rail industries, increasing competition in the...........    79
        Are the airlines lying less..................................    71
        Customer service.....................................45, 61, 67, 81
    Airport security, vulnerabilities in.............................    88
    Amtrak...........................................................50, 81
        Financial viability and modernization........................    59
        Northeast corridor...........................................    51
        Strategic plan...............................................    52
    ATC:
        Modernization................................................    52
        Operational errors...........................................62, 82
    Audit of sound transit...........................................    71
    Aviation.........................................................    76
        Safety.......................................................    84
        System performance...........................................    10
    Bumping..........................................................    11
    Can Amtrak survive with the current levels of investment.........    86
    Can we speed up runway construction while preserving the
      environment....................................................    69
    Classification of spills.........................................73, 84
    Coast Guard:
        Growing cost of..............................................74, 85
        Procurement..................................................    53
    Congressional mandates, implementation of........................74, 84
    Declining rail competition.......................................    89
    Deepwater contracting............................................    44
    Delays in certifying new Boeing products.........................75, 87
    FAA:
        Air traffic controllers costs................................    62
        Contract tower program.......................................    60
        Reorganization...............................................    82
        Security issues..............................................    83
    Federal Motor Carrier Safety Administration...................... 9, 63
    Flight delays and cancellations..................................    46
    Full funding grant agreements for transit........................    10
    Hazardous materials evaluation...................................    60
    Highway and pipeline safety challenges...........................    33
    Immediate budget issues..........................................    10
    Infrastructure investment........................................55, 80
    Management:
        Challenges...................................................     4
        Oversight issues.............................................    11
    Mexican trucks...................................................62, 68
    Most pressing challenges at DOT..................................54, 78
    Motor:
        Carriers.....................................................    67
        Vehicle......................................................    77
    National Highway Traffic Safety Administration...................    66
    NTSB financial accountability....................................    66
    Operational errors...............................................     8
    Pennsylvania station.............................................    59
    Pipeline:
        Inspections..................................................    40
        Safety.......................................................56, 78
            Issues...................................................     9
        Technology...................................................    42
    Rail safety......................................................    60
    Rail/transit.....................................................    77
    Runway incursions.............................................7, 61, 81
    Seat belt usage..................................................    65
    Summary of immediate issues facing DOT...........................    12
    Thread Act.......................................................     9
    Top 10 Management Challenges Report..............................    22
    Transit projects.................................................    49
    Transportation:
        Funding, stewardship of......................................     9
        Safety.......................................................     7
    Trucks from Mexico...............................................    47

                                  Coast Guard

    Aquatic nuisance species.........................................   325
    Budget themes..................................................307, 310
    Caps in coverage.................................................   335
    Coast Guard:
        Overview of activities in the Pacific Northwest..............   303
        Performance..................................................   255
    Decomissioning of COWSLIP........................................   338
    Deepwater.................................................257, 317, 321
    Diminishing pool of experience...................................   261
    District 13......................................................   263
        And 17.......................................................   285
    Emergency response...............................................   277
    Fisheries enforcement............................................   338
    Foreign flag vessels.............................................   256
    Future force 21..................................................   332
    Highlights.......................................................   254
    Incentive bonuses................................................   333
    Loran C..........................................................   326
    Marine:
        Pollution..................................................292, 295
        Safety.......................................................   288
    National:
        Defense Authorization Act....................................   320
        Distress and response system modernization project.........323, 334
    Naval forces.....................................................   257
    North Puget Sound risk management panel..........................   274
    OPA-90, implementation of........................................   339
    People, enthusiasm of............................................   254
    Port:
        Angeles......................................................   274
        Townsend to Keystone route...................................   277
    Questions submitted to...........................................   341
    Recruiting, retention and training...............................   255
    Recruiting and retention of personnel............................   318
    Rescue tugs......................................................   274
    Restore:
        Readiness....................................................   258
        Service readiness.....................................308, 311, 317
    Retention:
        Issue........................................................   261
        Of personnel.................................................   331
    Risk management..................................................   276
    Safety...........................................................   285
        At Washington State ferries..................................   275
        Education and training.......................................   286
        Management system............................................   276
    Search and rescue program........................................   327
    Seattle VTS......................................................   340
    Shape the future..........................................259, 309, 311
    Spill prevention preparedness and response program...............   273
    State control program............................................   289
    Strategic alliances..............................................   256
    Support a national program.......................................   289
    Tightening cruise ship regulations...............................   293
    Transformation............................................260, 309, 312
    U.S. flag cruise ships...........................................   292
    Unified command system...........................................   274
    Vessel safety....................................................   296

                        Federal Aviation Administration

    Airline delays...................................................   380
    Airspace redesign................................................   378
    Amtrak:
        Building infrastructure......................................   371
        Operating costs..............................................   364
        Political pressure of operations.............................   370
        Support for..................................................   371
    ATC subcommittee.................................................   380
    Atlanta Airport, delays at.......................................   381
    Canadian airspace, use of........................................   373
    Contract tower program...........................................   380
    Cost accounting system schedule delay............................   385
    Examples of major productivity improvements from labor agreement
      changes........................................................   392
    FAA reform.......................................................   378
    Financing:
        Amtrak................................................362, 368, 369
        Aviation infrastructure......................................   362
    NATCA agreement..................................................   379
    National airspace system ongoing initiatives.....................   372
    Operation evolution plan.........................................   373
        Initiatives..................................................   377
    Partnerships in aviation.........................................   374
    Passenger train tracks...........................................   366
    Penn Station mortgage............................................   368
    Rail passenger service...........................................   365
    Reagan National Airport congestion...............................   383
    Safer skies......................................................   373
    Safety:
        Inspector hiring.............................................   384
        Performance goals............................................   385
    Salt Lake:
        Olympics visit...............................................   382
        Radar........................................................   381
    Status of intercity transportation: Airways and railways.........   361
    Term of FAA Administrator........................................   363

                         Federal Transit Administration

    Administrative expenses..........................................   405
    Bus and bus-related facilities...................................   453
    Formula grants...................................................   426
    FTA's urban maglev and advanced technology pilot program.........   446
    General provisions...............................................   475
    Information technology...........................................   417
    Job access and reverse commute grants............................   422
    Metropolitan and statewide planning..............................   431
    National:
        Research and technology program..............................   434
        Transit database.............................................   421
    New starts.......................................................   455
    Over-the-road bus accessibility program..........................   431
    Project:
        Description issues...........................................   453
        Management oversight.........................................   418
    Questions submitted to...........................................   405
    Staffing.........................................................   416
    State by State breakout of Federal transit funds.................   450
    Unobligated funds................................................   446

                        Office of the Inspector General

    Activities breakouts for hq/area/districts fiscal year 1997-2002
      breakouts......................................................   350
    Additional committee questions...................................   341
    Asset reduction impacts on performance...........................   344
    C-130J procurement status and cost...............................   350
    Capital asset funding............................................   345
    Caps in coverage.................................................   335
    Coast Guard's:
        Deepwater program............................................   355
        Search and rescue program....................................   357
    Cost:
        Range for deepwater project..................................   345
        To restore fiscal year 2001 4th quarter operations...........   344
    Deepwater.................................................313, 317, 321
        Acquisition strategy.........................................   345
        Age of fleet.................................................   341
        Approach based on operational considerations.................   343
        Award term contract..........................................   345
        Benefits of system of systems approach.......................   342
        Contract protest.............................................   346
        Date of contract award.......................................   346
        Full contract funding........................................   347
        Impact on other AC&I projects................................   341
        Improvements in operational capability.......................   342
        More effective than traditional approach.....................   343
        Scalability..................................................   347
        System integrator contingency plan...........................   346
    Distress communications: notification and coverage...............   349
    Fishing vessel safety activities in the North Pacific............   354
    Incentive bonuses................................................   333
    Loran C..........................................................   326
    Modernization of distress communications systems.................   349
    National distress and response monitoring system modernization
      project (NDRSMP)........................................315, 334, 356
        Cost estimates...............................................   347
        Interim system capability measures...........................   348
        Scalability..................................................   349
        Scope evaluation.............................................   348
    North Pacific fisheries enforcement activities...................   354
    Operational impacts from fiscal year 2001 budget shortfalls......   344
    Questions submitted to...........................................   355
    Personnel:
        Recruiting and retention of..................................   318
        Retension of.................................................   331
    Restoring the services readiness.................................   317
    Search and rescue:
        Assets and deepwater.........................................   350
        Program......................................................   327
        Resource support for.........................................   350
    $250 million budget resolution...................................   344

                            Office of the Secretary

    Access to aviation for smaller communities.......................   244
    Accessibility and passenger rights...............................   194
    Additional committee questions...................................   190
    Advisory committee travel........................................   206
    Agency:
        Decisionmaking...............................................   225
        Performance and the appropriations process...................   225
    Airline competition..............................................   247
    Amtrak...........................................................   188
    Automated staffing system........................................   196
    Aviation:
        Capacity.....................................................   171
        International affairs and policy.............................   196
        Safety inspection............................................   178
    Central:
        Artery project...............................................   187
        Artery/tunnel project........................................   236
    Civil right complaints...........................................   204
    Coast Guard funding..............................................   183
    Commuter rule impact on EAS service..............................   211
    Corporate average fuel economy (CAFE)............................   238
        For light trucks and SUVs....................................   239
    Deepwater........................................................   237
    Delta Airlines at Salt Lake City.................................   186
    Design-build highway projects....................................   182
    DHL license......................................................   235
    DOT:
        Budget account structure.....................................   222
        Outcome measures and managing for results....................   221
        Performance:
            Budgeting................................................   221
            Budget linkage...........................................   212
            External influences on...................................   224
            Management...............................................   222
            Measures and budget linkage..............................   214
            Measures and data........................................   216
            Planning and budget structure............................   216
    EAS program, administrative costs for............................   211
    Employee development.............................................   204
    Environment......................................................   176
        Review process...............................................   180
    FAA:
        Challenges...................................................   237
        Chief Operating Officer......................................   189
        Overflight user fees.........................................   211
    Future performance reporting.....................................   225
    General counsel:
        Consulting services..........................................   191
        Environmental coordination...................................   194
        New initiatives..............................................   191
    GSA rent costs...................................................   205
    Hazardous materials transportation resources.....................   208
    Hazmat:
        Outreach efforts.............................................   208
        Strategic goals and performance measures.....................   210
    High speed rail..................................................   248
    High-speed Rail Act..............................................   189
    Highway safety...................................................   183
    Hoan Bridge......................................................   249
    Increasing seat belt use.........................................   240
    Inspector general recommendations................................   246
    Key DOT performance goals........................................   217
    Linking performance measurement systems to financial systems.....   222
    Loran C..........................................................   248
    Maglev...........................................................   185
    Management:
        Challenges and performance reporting.........................   225
        Resources....................................................   172
    Minority business outreach.......................................   206
    Mobility.......................................................171, 174
        Of all Americans.............................................   172
    National:
        Energy policy................................................   238
            And congestion relief....................................   243
        Security.....................................................   172
    National Highway Traffic Safety Administration...................   234
    New freedom initiative...........................................   243
        Administrator................................................   186
    Office of:
        Civil Rights.................................................   205
        Civil Rights travel..........................................   206
        Intelligence and Security....................................   199
        Intermodalism................................................   199
        The Chief Information Officer................................   201
        The Secretary travel costs...................................   197
    Opening the border to Mexican trucks.............................   245
    OST:
        Consolidated travel..........................................   205
        Consolidation of offices.....................................   185
        Reorganization...............................................   235
    Passenger rail station at Mitchell Airport.......................   249
    Patuxent River oil spill.........................................   183
    Performance planning and regulatory reform.......................   224
    Pipeline safety..................................................   177
        Inspector training & mapping.................................   241
        New inspection rules.........................................   241
    Presidential nominees............................................   189
    Principal advisor on hazmat issues...............................   210
    Programmatic overlap or duplication..............................   224
    Project oversight................................................   187
    Puget Sound light rail transit project...........................   187
    Radionavigation and GPS, funding for.............................   207
    Reductions in:
        Fisheries enforcement efforts................................   239
        Marine safety activities.....................................   239
    Safety.........................................................171, 173
    Securing information technology..................................   190
    State seat belt laws.............................................   241
    TEA-21 funding for the States....................................   242
    Technical assistance and information initiative..................   195
    Telecommuting..................................................196, 204
    Transit new starts pipeline......................................   236
    Transportation planning, research, and development...............   207
    User fees........................................................   235
    Waivers of requirements..........................................   225
    Withholding slot exemptions......................................   236
    Workforce improvement initiatives................................   197

                  Research and Special Programs Administration

    Compliance programs..............................................   507
    Damage prevention/public campaign................................   509
    Emergency:
        Preparedness grants..........................................   499
        Transportation...............................................   495
    Grants...........................................................   514
    Hazardous materials personnel issues and operating expenses......   479
    Human-centered systems research program..........................   488
    Inspection and enforcement program...............................   480
    Office of:
        Hazardous Materials Safety...................................   475
        Pipeline Safety..............................................   500
    Oil Pollution Act expenses and oil pipelines.....................   504
    Pipeline safety fund.............................................   502
    Program support..................................................   498
    Questions submitted to...........................................   475
    Research and:
        Development and mapping......................................   512
        Technology strategic goals...................................   483
    Risk assessment and technical studies............................   506
    Shipper and carrier registration.................................   482
    Transportation infrastructure assurance R&D......................   488
    University transportation centers grants program.................   493
    Volpe National Transportation Center.............................   517

                           GENERAL ACCOUNTING OFFICE

    Aging pipelines..................................................    43
    Amtrak...........................................................30, 50
        Northeast corridor...........................................    51
        Strategic plan...............................................    52
    ATC modernization................................................    52
    Aviation challenges..............................................30, 35
    Challenges facing surface transportation projects and passenger
      and freight rail...............................................    34
    Coast Guard:
        Challenges...................................................    38
        Deepwater project............................................    31
        Procurement..................................................    53
    Deepwater:
        Contracting..................................................    44
        Project......................................................    43
    Departmentwide human capital challenges..........................    38
    Pipeline:
        Inspections..................................................    40
        Safety.......................................................30, 40
        Technology...................................................    42
    Questions submitted to...........................................    78
    Transit projects.................................................    49
    Truck safety.....................................................    29
    Trucks from Mexico...............................................    47

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