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

[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

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
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

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.

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.
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\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).
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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\
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\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.
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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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