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



                                                        S. Hrg. 107-395
 
                DEPARTMENT OF TRANSPORTATION AND RELAT- 
            ED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2002

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

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   on

                           H.R. 2299/S. 1178

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

                               __________

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

                               __________

         Printed for the use of the Committee on Appropriations


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


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                             WASHINGTON : 2002
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                    COMMITTEE ON APPROPRIATIONS \1\

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

          Subcommittee on Transportation and Related Agencies

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

                           Professional Staff

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

                         Administrative Support

                             Candice Rogers
                         Angela Lee (Minority)

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

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




                    COMMITTEE ON APPROPRIATIONS \2\

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

          Subcommittee on Transportation and Related Agencies

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

                           Professional Staff

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

                         Administrative Support

                               Angela Lee
                       Candice Rogers (Minority)

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

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












                            C O N T E N T S

                              ----------                              

                      Wednesday, February 14, 2001

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

                        Thursday, March 15, 2001

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

                        Thursday, April 26, 2001

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

                          Friday, June 1, 2001

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

                        Wednesday, June 13, 2001

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

                        Thursday, June 28, 2001

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

    Material Submitted by Agencies Not Appearing For Formal Hearings

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









 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              


                      WEDNESDAY, FEBRUARY 14, 2001

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

                      DEPARTMENT OF TRANSPORTATION

STATEMENT OF HON. KENNETH M. MEAD, INSPECTOR GENERAL

                       GENERAL ACCOUNTING OFFICE

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

Oversight Hearing on Department of Transportation Management Challenges


              opening statement of hon. richard c. shelby


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

            Prepared Statement of Senator Richard C. Shelby

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

            Prepared Statement of Senator Richard J. Durbin

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

                      statement of kenneth m. Mead

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


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

                         Transportation safety

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


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

                           Runway incursions

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

                           Operational errors

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



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

              Federal motor carrier safety administration

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

                               THREAD Act

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

                         Pipeline safety issues

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

                 stewardship of Transportation funding

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

               Full funding grant agreements for transit

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

                        immediate Budget issues

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

                      Aviation system performance

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


                                Bumping

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

                 Prepared Statement of Kenneth M. Mead

                      management oversight issues
    Mr. Chairman and Members of the Subcommittee: As we begin the 
fiscal year fiscal 2002 appropriations cycle, we appreciate the 
opportunity to appear today. As you know, each year we issue a report 
on the major management challenges facing the Department of 
Transportation (DOT). We have discussed our report with Secretary 
Mineta and are pleased to note that in his confirmation hearing, 
Secretary Mineta stated that he would be keeping a copy of the Top 10 
Management Challenges report on his desk and would be using it as a 
blueprint for addressing the management challenges facing DOT.
    For purposes of our statement, I would like to take this 
opportunity to highlight some of the most pressing issues facing 
Congress and DOT. These issues need to be dealt with to support safe 
and reliable transportation service, to prepare for necessary budget 
decisions related to DOT programs, and to ensure that Federal 
transportation infrastructure dollars are well spent. Attached to our 
testimony is a summary of our recommendations in each of the top 10 
management challenge areas.
                 summary of immediate issues facing dot
    The most important, immediate, core thematic issues confronting the 
new Administration and the new Congress, can be divided into four 
areas:
    Transportation Safety:
  --Reducing the record number of runway incursions (429 in the last 
        calendar year) and controller operational errors (1,154 in the 
        last fiscal year).
  --Staffing the oversight of Mexican truck safety.
  --Focusing the new Federal Motor Carrier Safety Administration 
        (FMCSA).
  --Implementing the TREAD Act to prevent future ``Firestones.''
  --Addressing longstanding pipeline safety issues.
    Stewardship of Transportation Funding:
  --Streamlining process requirements, while respecting environmental 
        protection laws.
  --Fighting fraud.
  --Implementing new infrastructure grant oversight requirements.
  --Monitoring contract expenditures.
    Immediate Budget Issues:
  --Controlling FAA's operating costs.
  --Implementing a cost accounting system at FAA.
  --Managing multi-billion dollar FAA systems acquisitions.
  --Justifying and reconciling Coast Guard capital investment 
        requirements.
  --Addressing Amtrak's financial viability.
    Aviation System Performance:
  --Making FAA accountable as a results-based organization.
  --Developing a multifaceted approach to addressing capacity 
        restraints.
  --Improving aviation customer service.
    Transportation Safety.--Safety is central to DOT's mission. Looking 
Department-wide, the most immediate safety issues are:
  --Reducing the Record Number of Runway Incursions (429 in the last 
        calendar year) and Controller Operational Errors (1,154 in the 
        last fiscal year).--To reverse the upward trend in runway 
        incursions, FAA must follow-through on its planned initiatives 
        at the national and local levels. FAA had three good plans to 
        reduce runway incursions since 1991, but they all lacked 
        follow-through. FAA must ensure that local action plans are 
        prepared to address airport-specific problems. Emerging 
        technologies to reduce runway incursions must be identified and 
        evaluated and advanced quickly to high-risk airports. Reducing 
        runway incursions demands strong and consistent leadership, 
        however, FAA has experienced significant turnover in the 
        management of its Runway Safety Program. With the anticipated 
        departure of the current program director this spring, this is 
        the fifth turnover in that position in the last 5 years. To 
        reduce operational errors, FAA must approach reducing 
        operational errors with a sense of urgency. Strong national 
        oversight is needed to ensure that efforts made to reduce 
        operational errors at facilities with high numbers of 
        operational errors are effective in correcting facility-
        specific problems.
  --Staffing the oversight of Mexican truck safety.--Strengthening U.S. 
        inspection capability at the southern border crossings can have 
        a real world impact. Recent increases in Federal border 
        inspectors correlated with a 4 percent reduction in Mexican 
        trucks that were placed out of service for significant safety 
        violations after inspections when entering the United States. 
        While it is encouraging that a total of 60 inspectors are 
        scheduled to be on board in 2001, in 1998 we estimated that 126 
        additional Federal inspectors were needed during port operating 
        hours. On February 7, 2001, Senator Ernest F. Hollings and 
        Congressman James L. Oberstar requested us to provide a status 
        report on existing conditions and the conditions necessary to 
        safely open the border to Mexican trucks. Specific areas to be 
        addressed are staffing and inspections facilities, out-of-
        service rates, verification of registration information, and 
        harmonization of safety regulations.
  --Focusing the New Federal Motor Carrier Safety Administration 
        (FMCSA).--DOT must fill key leadership positions in FMCSA and 
        issue statutorily directed rulemakings. FMCSA also needs to 
        take a multifaceted approach to enforcement such as issuing 
        shut down orders. While education/outreach efforts can be 
        effective with most carriers, strong enforcement is needed for 
        the minority of carriers that are egregious offenders.
      Similarly, FMSCA must employ a very firm hand with scams 
        involving fraudulent Commercial Driver Licenses (CDL), which 
        are occurring in an alarming number of States. For example, in 
        the states of Florida and Illinois, 35 individuals have been 
        found guilty of charges related to the issuance of fraudulent 
        CDLs. Since November 1999, investigations of fraudulent CDLs 
        have also resulted in multiple indictments in Georgia, Iowa, 
        Mississippi, New York, North Carolina, Pennsylvania and South 
        Carolina. Also, criminal investigations of fraudulent CDLs are 
        ongoing in four other states.
  --Implementing the TREAD Act to Prevent Future ``Firestones''.--The 
        TREAD Act requires NHTSA to conduct 10 rulemakings in the areas 
        of defect reporting by manufacturers, improving and updating 
        tire standards, and vehicle rollover testing and evaluation. 
        Six of the 10 rulemakings must be completed in 2001 or 2002. 
        For example, by June 2002, NHTSA is required to complete a 
        rulemaking establishing early warning reporting requirements 
        for motor vehicle and equipment manufacturers. This will be 
        important because it will include guidance for how and when 
        manufacturers report data to NHTSA in incidents involving 
        fatalities or serious injuries alleged or determined to be 
        caused by a possible defect. Since we found that it takes DOT, 
        on average, 3.8 years to complete a rule, significant 
        management effort will be required to issue these rules in the 
        time required by the Act.
      Also, NHTSA currently relies on consumer complaints to determine 
        whether potential defects warrant investigation and ultimately 
        a recall. These data are too narrowly focused and are not 
        comprehensive or reflective of the nature and extent of 
        potential safety defects. Other NHTSA databases, such as the 
        Fatality Analysis Reporting System (FARS) and the National 
        Automotive Sampling System (NASS), as well as other sources of 
        information, such as manufacturer warranty claims, and 
        insurance claims data should be routinely analyzed.
  --Addressing Longstanding Pipeline Safety Issues.--Recent tragic 
        pipeline incidents have emphasized the need for RSPA to develop 
        and implement a comprehensive, effective plan for pipeline 
        safety oversight. RSPA has been working on various facets of 
        pipeline safety, but needs to proceed expeditiously on several 
        fronts.
    --Originally due to Congress in the mid-1990s, RSPA issued two 
            Congressionally-mandated pipeline safety rulemakings in 
            December 2000. These two rulemakings are now being reviewed 
            by the Bush Administration. Currently, these rulemakings 
            are scheduled to become effective later this Spring (60 
            days from their original effective dates). These 
            rulemakings (1) define high-density population areas and 
            areas unusually sensitive to environmental damage, and (2) 
            specify how operators of large hazardous liquid pipelines 
            (large meaning 500 miles of pipeline or more) will report 
            to RSPA on their plans to assess and monitor the integrity 
            of their pipelines in these areas.
    --RSPA is currently working with the natural gas pipeline industry 
            to develop a rulemaking for integrity management plans for 
            natural gas pipeline operators to be issued later this 
            year.
    --Further, RSPA needs to ensure that all pipeline operators 
            continue to voluntarily submit pipeline location data to 
            the National Pipeline Mapping System.
    --RSPA should fund pipeline research and development to improve 
            internal inspection devices, called ``smart pigs,'' and 
            develop inspection technologies for pipelines that cannot 
            be pigged. RSPA must ensure its pipeline inspectors receive 
            training in new inspection technologies and up-to-date 
            information on the operators' integrity management plans.
    --Finally, RSPA utilization of state inspectors may ease the strain 
            on limited Federal inspection resources while increasing 
            state and community awareness of the benefits and dangers 
            that pipelines pose, thereby increasing the safety of the 
            pipelines, and the public.
    Stewardship of Transportation Funding.--Congress responded to the 
nation-wide problems of transportation congestion and capacity by 
passing TEA-21 and AIR-21, which provide an unprecedented infusion of 
funds for highway, transit, and airport infrastructure projects. To 
date, highway and transit funding have increased by over 40 percent and 
airport funds have increased 75 percent. TEA-21 provided $218 billion 
for highway and transit projects in fiscal years 1998 through 2003, 
while AIR-21 made $12.4 billion available for airport infrastructure 
projects from fiscal year 2000 through fiscal year 2003.
  --Streamlining Process Requirements, while Respecting Environmental 
        Protection Laws.--The Department also needs to address concerns 
        over process requirements and resulting project delays 
        associated with environmental (including noise) clearances. All 
        of the modes face this challenge. DOT has an opportunity here 
        to provide leadership on how to move major infrastructure 
        projects forward more expeditiously, while respecting the 
        letter and intent of environmental laws.
  --Fighting Fraud. The last comparable funding jump was during the 
        Eisenhower and Kennedy Administrations, when inadequate 
        protection and monitoring of funds used to build the interstate 
        highway system led to scandal and widespread fraud schemes 
        involving public corruption, bid rigging, and false claims. A 
        repeat must be avoided.
      The Office of Inspector General, with the support of American 
        Association of State Highway and Transportation Officials, the 
        Justice Department, and the Federal Bureau of Investigation, 
        has a major proactive fraud initiative. In fiscal year 2000 
        alone, our efforts in the area of contract and grant fraud led 
        to 54 indictments (a 54 percent increase over 1999), 36 
        convictions (a 24 percent increase over 1999), and over $10 
        million in fines, restitution and other monetary recoveries
      DOT needs to greatly improve its stewardship and oversight of 
        transportation funding across all the modes. In the last 2 
        years, several events served to reinforce the important lesson 
        that DOT agencies must take their financial oversight 
        responsibilities more seriously:
    --an alarming lapse in FHWA's oversight of the Central Artery 
            Project, despite our warnings, left FHWA unaware of 
            mounting cost overruns and allowed the Department to be 
            blindsided when the Project disclosed a $1.4 billion 
            increase;
    --a DOT OIG investigation that led to seven guilty pleas from 
            individuals charged with Federal racketeering and false 
            claims violations for their role in submitting inflated and 
            bogus claims on federally funded highway construction 
            projects in Illinois and $15 million in fines and 
            restitutions from the two companies involved;
    --an extensive investigation that resulted in five criminal 
            prosecutions and two steel product suppliers recently 
            agreeing to pay the United States and the State of 
            Louisiana a total of $30 million to settle allegations that 
            they supplied unapproved materials for federally funded 
            highway projects;
    --a 5 year prison term for a highway construction company owner who 
            defrauded the Disadvantaged Business Enterprise (DBE) 
            program on federally funded road projects in West Virginia;
    --a case involving two FHWA Program Managers who accepted over 
            $250,000 in bribes in exchange for awarding multi-million 
            dollar intelligent transportation system research 
            contracts: the Program Managers pled guilty, were ordered 
            to make restitution, and were sentenced to 27 and 36 
            months' incarceration, respectively, and five contractors 
            were prosecuted;
    --a 2 year prison term and nearly $1 million in fines and 
            restitution against a contractor for inflating the costs of 
            aerial photography and ground surveys on federally funded 
            highway construction projects in Virginia; and
    --plea agreements and fines totaling over $2 million for two 
            companies involved in a bid rigging and price fixing 
            scheme. As subcontractors, the companies provided specialty 
            construction in the areas of post tensioning, cable-stayed 
            bridges, and mechanically stabilized earth. The former head 
            of another company was also indicted. He fled the country 
            and remains a fugitive.
  --Implementing new infrastructure grant oversight requirements.--
        Improving financial oversight must begin with vigorous 
        implementation of new mega-project finance plan requirements, 
        as well as implementation of recent Task Force recommendations:
    --FHWA must enforce the new guidance on mega project finance plans 
            that it issued on May 23, 2000, perform independent 
            analyses of the data reported in mega project finance 
            plans, and perform ongoing oversight project management.
    --All DOT agencies overseeing large projects must implement the 
            recommendations of the Task Force on Oversight of Large 
            Transportation Infrastructure Projects, which was adopted 
            on December 29, 2000.
    --FTA faces a special challenge in maintaining oversight of large 
            infrastructure projects. At this time last year, FTA had 15 
            approved full funding grant agreements and 13 pending grant 
            agreements. As of January 19, 2001, FTA had 28 approved and 
            6 pending full funding grant agreements.
      --LBecause FTA's oversight is funded by a fixed percentage of New 
            Starts appropriations, doubling the number of projects had 
            the effect of decreasing the oversight on each individual 
            project.
      --Moreover, 9 of the 28 approved projects are not scheduled to 
            receive appropriations in fiscal year 2002, so FTA receives 
            no funding for overseeing those projects. Likewise, FTA 
            also receives no funding for oversight of pending or 
            proposed projects (absent appropriations). Nonetheless, 
            they may still have oversight requirements, for such things 
            as construction wind-up, finalizing outstanding claims, and 
            grant close out.
      --Finally, New Start transit projects require intensive oversight 
            because many grantees are new to major capital construction 
            projects for transit. This situation has resulted in 
            oversight being severely stretched to cover all the 
            approved, pending, and proposed grant agreements. 
            Meanwhile, TEA-21 authorization levels for transit new 
            starts have been exhausted and projects with full funding 
            grant agreements have, over the past 4 years, not received 
            the full funding they were supposed to receive under their 
            grant agreements. Although FTA has made significant 
            progress in project oversight in the last few years (so 
            much so that it has been removed from the GAO High Risk 
            List), to prevent slipping, back FTA must work with 
            Congress to address anticipated shortfalls in FTA project 
            oversight funds.
  --Monitoring Contract Expenditures.--During the 5 years ended April 
        2000, DOT (excluding FAA) closed 864 cost-reimbursable 
        contracts valued at $559 million. Since DOT internal agencies 
        took over responsibility for contract audits, independent 
        audits of DOT contracts by the Defense Contract Audit Agency 
        have dropped from 397 in 1996 to 68 in 1999, resulting in 
        minimal oversight over millions of dollars in contract costs. 
        Cost-reimbursable contracts are generally more risky for the 
        Government because contractors have little incentive to control 
        costs. We found that most contracts (1) were closed without 
        independent audits, (2) were not supported with annual 
        certified contractor incurred cost proposals, (3) were not 
        properly adjusted during contract performance for changes in 
        billing rates, and (4) were awarded without determining whether 
        the contractors' accounting systems were adequate to handle 
        cost-reimbursable contracts. In short, we saw little evidence 
        of review of the amounts billed by contractors. We also found 
        DOT had more than 400 cost-reimbursable contracts with 
        obligations of $232 million that were overdue for closure from 
        1 to 9 years.
      Our work on a diverse set of FAA acquisitions shows that FAA also 
        needs to strengthen contract oversight. In some cases, we found 
        that the contractor prepared Government cost estimates or 
        estimates were not prepared at all. FAA needs to make greater 
        use of earned value management techniques and cost controls 
        (cost ceilings). In addition, FAA needs to analyze variances 
        between agency and contractor cost estimates to ensure costs 
        are fair and reasonable. Greater use of the Defense Contract 
        Audit Agency for assessing costs is also needed to protect the 
        Governments interest. FAA needs to use the procurement and 
        personnel flexibility granted in 1996 to hold contractors and 
        FAA staff more accountable.
    Immediate Budget Issues.--There are several major budget issues 
that will have a profound impact on DOT's budget over the next decade.
  --Controlling FAA's Operating Costs.--In past testimonies we have 
        repeatedly cautioned that FAA's operations costs must be 
        contained. AIR-21 provides a powerful incentive for this 
        because the general framework calls for FAA's airport 
        improvement program (AIP) and facilities and equipment (F&E) 
        accounts to be funded at the authorized levels before 
        allocating any Trust Fund revenue to FAA's Operations account. 
        Barring a tax increase, Trust Fund receipts and interest will 
        clearly be inadequate to fund all of FAA's operations costs.
      As shown in the following chart, FAA's operations costs, which is 
        primarily salary driven, have risen by over $1.2 billion, or 25 
        percent, from fiscal year 1998 to fiscal year 2001, and are 
        expected to grow to about $7.4 billion by fiscal year 2003.
        
        
      New pay systems, developed as a result of FAA's personnel reform 
        efforts, have fueled much of the increase. For example, FAA 
        estimates the new pay system negotiated with the National Air 
        Traffic Controllers Association (NATCA) will require nearly $1 
        billion in additional funding over the 5-year life of the 
        agreement. Now, other FAA workforces want pay increases as well 
        and these must be negotiated under FAA's personnel reform 
        authority.
      To offset the additional costs of the NATCA agreement and 
        increase productivity, FAA and NATCA negotiated a series of 
        workplace changes. The bottom-line is that workplace 
        productivity changes are not yet in place system-wide--fiscal 
        year 2001 and 2002 will be watched closely to determine to what 
        extent they are implemented and quantified. Key elements 
        include:
    --increasing the use of controllers-in-charge and reducing the 
            number of first line supervisors while mitigating potential 
            safety implications;
    --evaluating the controller staffing ceilings established in the 
            collective bargaining agreement and addressing pressures 
            from various groups to hire additional controllers over and 
            beyond the cap; and
    --assessing the viability of closely related factors that bear on 
            system performance and controller productivity such as 
            facility consolidation, the future of FAA's successful 
            contract tower program, and delivery of Oceanic air control 
            services.
  --Implementing a Cost Accounting System.--Finally, to achieve 
        meaningful cost control and give Congress and FAA management 
        the information needed to make informed decisions on the FAA 
        operations budget, FAA must have a cost accounting system, 
        including a labor distribution component.
      FAA also needs a cost accounting system to know what it costs to 
        perform its various services and effectively manage its complex 
        organization. The FAA cost accounting system must measure the 
        overall costs of providing specific services, including 
        operations cost and the cost of labor. With good cost 
        accounting information, FAA could identify areas of low 
        productivity and high cost. Conversely, high productivity and 
        cost efficiency also would be highlighted.
      FAA originally planned to have its cost accounting system fully 
        operational by October 1, 1998. Now September 2002 is the 
        planned date. However, even if FAA meets the September 2002 
        date, it will still be 9 months from implementing its labor 
        distribution system, which if properly developed, will provide 
        the information necessary to properly allocate labor costs to 
        specific services. Labor accounts for more than half of FAA's 
        total costs, but it is the labor distribution system that part 
        FAA plans to develop last.
  --Managing Multi-Billion Dollar FAA Systems Acquisitions.--Within the 
        next 6 months, DOT will need to make ``go forward, slow down, 
        stop, or modify'' decisions on major air traffic control 
        systems acquisitions. The most important of these systems are:
    --WAAS--a $2.9 billion project in a watershed year. Over the years, 
            WAAS has proven more difficult to develop and field than 
            FAA anticipated. The key cost and schedule driver now 
            focuses on integrity-the ability of WAAS to alert pilots 
            when the signal should not be relied upon. Although an 
            independent review board has concluded that WAAS is 
            conceptually sound, a decision is needed in early 2001 on 
            how FAA will proceed with this program--but, still unknown 
            are how much WAAS will cost, how it will be certified as 
            safe, and when the satellite-based system will be 
            completed.
    --STARS--a $1.4 billion acquisition to replace controller displays 
            and software, which has experienced cost and schedule 
            difficulties. A major risk still remains to deploying all 
            STAR's systems at FAA's 171 terminal radar approach control 
            facilities with a combined installation of 119 Department 
            of Defense facilities. Early this year, FAA must develop a 
            realistic deployment schedule and identify additional funds 
            that will be needed for deployment.
    --Oceanic Air Traffic Control--Currently estimated at $279 million, 
            Oceanic services will have significant international 
            ramifications for one of the worlds fastest growing 
            aviation markets. FAA must avoid past problems with 
            modernizing Oceanic facilities. As we testified in February 
            2000, if Congress should choose to make any major changes 
            to FAA's structure or commercialize air traffic control 
            services, Oceanic services could provide a test for this 
            experience. Oceanic services also provide FAA a better 
            opportunity for the collection of user fees as Congress has 
            already approved the collection of over flight fees, and 
            other countries collect user fees for Oceanic services.
  --Justifying and Reconciling Coast Guard Capital Investments 
        Requirements.--Preliminary estimates indicate that capital 
        improvement funding of $15 billion or more will be needed over 
        the next 20 years to modernize assets that are critical to the 
        Coast Guard's Marine Safety, Search and Rescue, Law 
        Enforcement, and Marine Environmental Protection programs. To 
        meet the Coast Guard's stated requirements, its capital 
        acquisition budget will need to more than double from $400 
        million annually to at least $850 million annually on a 
        sustained basis. However, the Office of Management and Budget 
        (OMB) targets for the Coast Guard's acquisition budget range 
        from $520 million to $552 million annually for fiscal year 2002 
        through fiscal year 2005. Immediate issues that the Coast Guard 
        needs to address are:
    --Reconciling Capital Investment Priorities and Budget Targets.--
            Coast Guard's capital acquisition needs exceed OMB targets 
            by more than $300 million per year for the foreseeable 
            future. Coast Guard needs to establish capital investment 
            priorities and continue working with OMB to reconcile their 
            respective capital funding proposals and budget targets.
    --Justifying the Fiscal Year 2002 Budget Request for Deepwater.--
            The planning process for Deepwater has been endorsed and 
            praised by many organizations. However, the Coast Guard 
            wants to proceed with a budget request for this project 
            even though the planning process is not complete and it has 
            not selected an acquisition strategy. Given this, Coast 
            Guard should be prepared for questions on which Deepwater 
            assets need to be acquired or modernized, how this will be 
            done, what it will cost, and when funding will be needed.
    --Justifying the Fiscal Year 2002 Budget Request for the National 
            Distress and Response System Modernization Project.--Like 
            Deepwater, Coast Guard plans to proceed with a procurement 
            request for the Distress and Response System Project in 
            fiscal year 2002 before completing its separate planning 
            process. The major task for Coast Guard is to present a 
            specific system modernization plan for this important 
            search and rescue capability that details what assets need 
            to be acquired or modernized, how it will be done, what it 
            will cost, and when funding will be needed.
  --Addressing Amtrak's Financial Viability.--Amtrak's ability to 
        achieve operational self-sufficiency by 2003, as required by 
        law, depends substantially on closing a $737 million gap in 
        projected but undefined savings and revenue gains and fully 
        ramping up high-speed (Acela) rail service in the Northeast 
        Corridor. Beginning in 2001, Amtrak's cash losses must drop by 
        an average of nearly $100 million each year for Amtrak to reach 
        operating self-sufficiency by 2003.
        
        
      Amtrak initiated Acela Express revenue service on December 11, 
        2000. For the first 4 weeks of operations, Acela Express posted 
        an overall on-time performance of 94 percent. Amtrak plans to 
        phase in two additional Acela Express roundtrips in early March 
        and fully implement all 20 high-speed trainsets by September 
        2001.
      Even if Amtrak meets its operational self-sufficiency mandate, 
        its long-term viability will still depend on continued, 
        significant, funding for capital improvements, including 
        recapitalization of the Northeast Corridor, life-safety needs 
        in the tunnels approaching Penn Station, and development of new 
        high-speed corridors. Amtrak estimates the annual price-tag for 
        these investments to be about $1.5 billion, which it hopes to 
        secure through some combination of a high-speed rail bond bill 
        and annual appropriations from Congress.
    Aviation System Performance.--Aviation system performance has 
become a front burner issue. Last year was the worst on record, with 
FAA reporting a 90 percent increase in delays compared to 5 years ago. 
Cancellations grew at an even faster pace during this time period, 
increasing 104 percent. Over 1 of every 4 flights was delayed, 
cancelled, or diverted in 2000, affecting approximately 163 million 
passengers, with the average arrival delay exceeding 52 minutes. Much 
of the delay time is spent on the runway, with the number of flights 
experiencing taxi-out times of 1 hour or more increasing. Addressing 
the ability of the aviation system to effectively meet soaring consumer 
demand will require concerted efforts on the part of FAA and the 
airlines in several areas--transitioning FAA into a results-oriented 
organization, developing a multifaceted approach to addressing capacity 
constraints, and improving customer service.
  --Making FAA Accountable as a Results-Based Organization.--Proposals 
        for FAA to operate as a results-based organization are not new. 
        They go back to at least 1996 (when Congress exempted FAA from 
        Federal procurement and personnel rules and directed the agency 
        to implement a cost accounting system). In 1997, the National 
        Civil Aviation Review Commission also recommended that FAA 
        establish a cost accounting system to manage its resources in a 
        businesslike manner. These proposals were reinforced by AIR-21, 
        which significantly increased FAA's budget and directed various 
        ``structural'' reforms within the agency. There are several 
        preconditions that FAA must first address if the agency is to 
        make the transition into a results-based organization.
    --Implementing Requirements of AIR-21.--FAA is in the very early 
            stages of implementing the various reforms directed by AIR-
            21, including forming the Management Advisory Council, and 
            the Air Traffic Services Subcommittee (whose members were 
            just named); however, a Chief Operating Officer has not yet 
            been selected. While these measures have the potential to 
            assist FAA in transitioning into a more results-oriented 
            organization, it is much too early to tell if they will be 
            successful.
    --Developing a Cost Accounting System.--A credible cost accounting 
            system is a necessary precondition to develop needed 
            financial and cost data and thereby serve as the foundation 
            for any results-based organization, public or private. With 
            good cost accounting information, FAA could identify areas 
            of low productivity and high cost. Conversely, high 
            productivity and cost efficiency also would be highlighted. 
            In 1996, Congress directed FAA to develop a cost accounting 
            system, and FAA originally planned to have the system in 
            place by October 1998. FAA's cost accounting system is long 
            overdue.
  --Developing a Multifaceted Approach to Addressing Capacity 
        Constraints.--Effectively addressing constraints on capacity 
        will require a multifaceted approach. First, FAA and DOT must 
        establish and implement a uniform system for tracking delays, 
        cancellations, and their causes. In the final months of the 
        prior Administration, a Task Force made recommendations to 
        accomplish this. Those recommendations still need to be 
        implemented.
      Second, FAA must also develop capacity benchmarks for the 
        Nation's top 30 airports. This will provide a common framework 
        for understanding what maximum arrival and departure rate can 
        physically be accommodated by airport, by time of day under 
        optimum conditions. A set of capacity benchmarks is essential 
        in understanding the impact of air carrier scheduling practices 
        and what relief can realistically be provided by new 
        technology, revised air traffic control procedures, new 
        runways, and related airport infrastructure.
      Finally, FAA must develop a strategic plan for addressing 
        capacity shortfalls in the immediate, intermediate, and long 
        term. These three points in time are important because the new 
        runways or airports or air traffic control technology that may 
        be in place 2, 5, or 10 years from now holds promise for the 
        future, but offer limited or no bottom-line relief in the 
        immediate term. Actions that are necessary in the short term 
        may become unnecessary in the longer term with the addition of, 
        for example, new runways. An immediate issue is scheduling, at 
        peak travel times, flights beyond the established physical 
        capacity of the airport and air traffic control system under 
        optimum conditions. The dilemma an individual Airline faces is 
        if it takes action and reduces flights, would competitors then 
        fill those slots, resulting in no change in the overall flight 
        scheduling at the airport.
  --Improving Aviation Customer Service.--Airline customer service took 
        center stage in January 1999, when hundreds of passengers were 
        stuck in planes on snowbound Detroit runways for up to 8\1/2\ 
        hours. Following that incident, both the House and Senate 
        conducted hearings on the air carriers' treatment of air 
        travelers and considered whether to enact a ``passenger bill of 
        rights.'' Following hearings after the January 1999 incident, 
        Congress, DOT, and the Air Transport Association (ATA) agreed 
        that the air carriers should have an opportunity to improve 
        their customer service without legislation. To demonstrate the 
        Airlines' ongoing dedication to improving air travel, ATA and 
        its member Airlines executed the Airline Customer Service 
        Commitment on June 17, 1999. The Commitment covered 12 specific 
        areas, including: offering the lowest fare available; notifying 
        customers of known delays, cancellations, and diversions; and 
        being more responsive to customer complaints. Each airline 
        agreed to prepare a Customer Service Plan (Plan) implementing 
        the twelve provisions of the agreement.
      At the request of Senator John McCain, Chairman of the Senate 
        Committee on Commerce, Science, and Transportation, we reviewed 
        the Plans and evaluated the extent to which each Airline met 
        all provisions under its Plan. On June 27, 2000, we issued an 
        Interim Report on the 6-month progress of the Airlines in 
        implementing their Plans, and on Monday February 12, 2001, we 
        issued our final report on Airline Customer Service.
      Overall, we found the Airlines \1\ were making progress toward 
        meeting their Customer Service Commitment and that the 
        Commitment has been a plus for air travelers on a number of 
        important fronts. The voluntary Commitment to customer service 
        and the circumstances under which it was entered into are 
        noteworthy because, based on our observations, it prompted the 
        Airlines to take the matter of improving customer service more 
        seriously. Also, the Airlines generally were responsive to 
        suggestions made in our Interim Report. But, the Airlines, 
        airports, the FAA and, most important, the traveling public 
        know the aviation system is not working well--the road ahead is 
        long, and aggressive progress will be required by the Airlines, 
        airports, and FAA if consumer confidence is to be restored.
---------------------------------------------------------------------------
    \1\ ATA signed the Commitment on behalf of 14 ATA member Airlines 
(Alaska Airlines, Aloha Airlines, American Airlines, American Trans 
Air, American West Airlines, Continental Airlines, Delta Air Lines, 
Hawaiian Airlines, Midwest Express Airlines, Northwest Airlines, 
Southwest Airlines, Trans World Airlines, United Airlines, and US 
Airways).
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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\
---------------------------------------------------------------------------
    \2\ A regularly scheduled flight is a flight segment representing a 
city-pair (e.g., Chicago to Miami).
    \3\ Our intent is not to attribute the cause of the delays or 
cancellations associated with these flights to the Airlines, but to 
highlight the extent to which such flights are occurring.
---------------------------------------------------------------------------
    Using BTS data, we increased the amount of arrival delay to 30 
minutes or more and identified all scheduled flights that, when grouped 
by individual flight number, were delayed and/or canceled at least 40 
percent of the time during a single calendar month. Overall, for 
calendar year 2000, we identified over 240,000 regularly scheduled 
flights that met our criteria (representing over 10,300 individual 
flight numbers affecting approximately 25 million passengers). 
Currently, the Airlines are required to disclose on-time performance 
only upon request from the customer. Passengers should not have to ask 
when making a reservation if the flight is chronically delayed or 
canceled 40 percent of the time or more; the Airlines should notify the 
passenger of this information without being asked.
    Airline mitigation measures in the above areas will not solve the 
delay and cancellation problem since it is caused by multiple factors, 
some outside the airlines' control, but the airlines should be doing 
their part. For both the short and long term, the Airlines' Commitment 
to customer service must be combined with comprehensive action to 
increase system capacity to meet demand. FAA's efforts to modernize air 
traffic control through new technology, satellite navigation at 
airports, airspace redesign and, importantly, new runways will be 
central elements in any successful effort to add capacity and avoid 
gridlock.
    Provisions regarding fairness and consistency in ``bumping'' 
practices, and prompt refunds for tickets.--Regarding the provision for 
fairness and consistency in bumping practices on flights that are 
oversold, we found a need for improvement. Among other things, the 
rules about who gets bumped first varied among the Airlines, and the 
compensation limit for those who are involuntarily bumped is inadequate 
and has not been changed since 1978. In fact, we found that passengers 
who volunteer to be bumped stand a good chance of receiving greater 
compensation than passengers who are involuntarily bumped. As for the 
provision in the Commitment to provide prompt ticket refunds, which 
refers to Federal regulations in place for over 17 years, our tests at 
five Airlines showed excellent performance. However, four Airlines and 
two non-ATA airlines were clearly deficient in this area and need to 
improve their processing of ticket refunds.
    Contract of Carriage.--In our Interim Report, we noted that the 
Airlines' Commitment, while conveying promises of customer service, was 
not necessarily legally enforceable by consumers unless these 
protections were also incorporated into an Airline's contract of 
carriage, which is a binding and legally enforceable contract. In fact, 
one Airline explicitly said as much in its Plan. We recommended that 
the Airlines ensure that their contracts of carriage are changed to 
fully reflect the benefits afforded by their Plans and the Airlines' 
Commitment to customer service. Our review of the 14 Airlines' 
contracts of carriage showed that all of the Airlines responded to this 
recommendation to some degree. For example:
  --Eleven of the 14 Airlines incorporated the Commitment provision to 
        inform the customer of delays, cancellations, and diversions 
        into their contracts of carriage and eight of the Airlines 
        incorporated the Commitment provision to meet customers' 
        essential needs during extended on-aircraft delays.
  --Eleven of the 14 Airlines incorporated the Commitment provision for 
        quoting the lowest fare; and 12 Airlines incorporated the 
        provisions for holding a nonrefundable reservation for 24 hours 
        and for returning misrouted or delayed baggage within 24 hours.
  --There were differences among the Airlines in exactly what they 
        decided to incorporate, and we found instances where the 
        contract of carriage placed limits on what appeared to be a 
        more expansive provision in the Plan. For example, one Airline 
        limited the provision to quote the lowest fare to only domestic 
        travel whereas the others did not. Another Airline limited its 
        baggage return provision to passengers not traveling on a 
        reduced rate ticket. The Airlines also varied in what their 
        contracts of carriage said about accommodating ``essential'' 
        needs during ``extended'' on-aircraft delays, including the 
        definition of what constituted an ``extended'' delay.
    An area of particular concern is when an Airline will provide 
overnight accommodations occasioned by a delay or cancellation. Most of 
the Plans said generally that overnight accommodations would be 
provided if the passenger was required to stay overnight due to a delay 
or cancellation caused by the Airline's operations (as defined by the 
Airline). However, the contract of carriage for seven Airlines appeared 
to limit this to situations such as when a flight was diverted to an 
unscheduled destination or a flight delay exceeded 4 hours between the 
hours of 10:00 p.m.and 6:00 a.m. The circumstances in which overnight 
accommodations will be provided needs clarity so that passengers will 
know what to expect.
    Consumer Protection by the Department of Transportation.--Oversight 
and enforcement of consumer protection and unfair competition laws and 
regulations are the responsibility of the DOT. We found the resources 
available to the Department to carry out these responsibilities to the 
traveling public are seriously inadequate-so much so that they had 
declined at the very time consumer complaints quadrupled and increased 
to record levels-from roughly 6,000 in 1995 to over 23,000 in 2000. 
Nearly 20 staff are assigned these functions today, down from 40 in 
1985. The oversight and enforcement expectations for the Office of the 
Assistant General Counsel for Aviation Enforcement and Proceedings 
significantly exceed the Office's capacity to handle the workload in a 
responsive manner.
    Recommendations.--As directed by AIR-21, in our final report we 
made over 25 recommendations for improving accountability, enforcement, 
and the protection afforded commercial air passengers. A full list of 
these recommendations can be found in our report, Final Report on 
Airline Customer Service Commitment, OIG Report Number AV-2001-020, 
issued February 12, 2001. The report is available on our website: 
www.oig.dot.gov.
    Mr. Chairman, this concludes my statement. Thank you for inviting 
me to testify this morning. I would be happy to answer any questions 
the Subcommittee may have.
                  top 10 management challenges report
    This attachment summarizes the key recommendations in our ``Top 10 
Management Challenges Report, issued January 18, 2001. Taken as a 
whole, this year's DOT top management challenges list encompasses 
programs that require continual attention to ensure ever safer 
transportation, programs on which there are significant economy and 
efficiency concerns, and programs with questionable success in 
achieving results.
    The following table shows how we grouped the top management 
challenges in this year's DOT report, as compared to last year's 
report.


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

                     statement of john h. Anderson

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

                              Truck safety

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

                            Pipeline safety

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

                                 Amtrak

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

                          Aviation challenges

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

                     Coast guard deepwater project

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

              Prepared statement of John H. Anderson, Jr.

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


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


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

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

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

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

                              [In percent]

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

Source: FAA.

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


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

                   statement of senator patty Murray

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

               Prepared Statement of Senator Patty Murray

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

                            Pipeline safety

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

                          Pipeline inspections

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

                          Pipeline technology

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

                            Aging pipelines

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

                           Deepwater project

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

                         Deepwater contracting

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

                        Airline customer service

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

                    Flight delays and cancellations

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

                           trucks from Mexico

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

                            Transit projects

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

                                 Amtrak

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

                      Amtrak's northeast corridor

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

                        Amtrak's strategic plan

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

                           ATC modernization

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

                        Coast Guard procurement

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

                     Additional committee questions

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

         Questions Submitted to the Office of Inspector General

            Questions Submitted by Senator Richard C. Shelby

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

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

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

         Questions Submitted by Senator Ben Nighthorse Campbell

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

              Questions Submitted by Senator Patty Murray

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

            Questions Submitted by Senator Richard J. Durbin

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

          Questions Submitted to the General Accounting Office

            Questions Submitted by Senator Richard C. Shelby

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

              Questions Submitted by Senator Patty Murray

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

                          subcommittee recess

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









 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              


                        THURSDAY, MARCH 15, 2001

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

                              FREIGHT RAIL

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

             OPENING STATEMENT OF SENATOR RICHARD C. SHELBY

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

                   STATEMENT OF SENATOR PATTY MURRAY

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

                      STATEMENT OF PERRY L. DOZIER

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

                           PREPARED STATEMENT

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

                 Prepared Statement of Perry L. Dozier

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

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

                           PREPARED STATEMENT

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

                    Prepared Statement of Lamar Self

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

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

                           PREPARED STATEMENT

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

               Prepared Statement of Michael W. Snovitch

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

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

                           PREPARED STATEMENT

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

               Prepared Statement of Richard K. Davidson

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

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

                           PREPARED STATEMENT

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

              Prepared Statement of Dr. Robert E. Martinez

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

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

                           PREPARED STATEMENT

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

              Prepared Statement of Peter J. Rickershauser

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

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

                           PREPARED STATEMENT

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

                   Prepared Statement of Mic Dinsmore

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

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

                           PREPARED STATEMENT

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

                  Prepared Statement of Karen Schmidt

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

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

                          SUBCOMMITTEE RECESS

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








 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              


                        THURSDAY, APRIL 26, 2001

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

                      DEPARTMENT OF TRANSPORTATION

                        Office of the Secretary

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

             opening statement of senator richard c. Shelby

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

                   statement of senator patty Murray

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

                    Statement of senator ted Stevens

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

                 statement of senator barbara Mikulski

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

                statement of senator christopher s. Bond

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

                  statement of senator robert c. Byrd

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

                 statement of senator robert f. Bennett

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

                 statement of senator richard j. Durbin

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

                   statement of senator arlen Specter

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

                statement of secretary norman y. Mineta

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

                                 Safety

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

                                Mobility

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

                           Aviation capacity

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

                        management of Resources

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

                       mobility of all Americans

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

                           National security

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

                           prepared statement

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

                 Prepared Statement of Norman Y. Mineta

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

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

                            Pipeline safety

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

                       Aviation safety inspection

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

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

    Senator Bennett. Senator Byrd.

                      Environmental review process

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

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

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

                     design-build Highway projects

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

                             Highway safety

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

                        Patuxent River oil spill

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

                          Coast Guard funding

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

                                 Maglev

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

                      consolidation of OST offices

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

                          NHTSA administrator

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

                    Delta airlines at salt lake city

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

                         Central artery project

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

                           Project oversight

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

                 Puget sound light rail transit project

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

                                 Amtrak

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

                          High-speed rail act

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

                         Presidential nominees

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

                      FAA chief operating officer

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

                     Additional committee questions

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

            Questions Submitted by Senator Richard C. Shelby

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

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

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

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

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

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

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

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

FAD's Completed 1994 to 2000 with Projections to 2002

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

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

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

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

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

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

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

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

Fiscal year 2001 Hazardous Materials Program Funding by Operating 
Administration

                        [In millions of dollars]

                                                     Hazardous Materials
        Agency                                                    Budget

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

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

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

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

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

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

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

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

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

            dot's performance planning and budget structure
    Question. To what extent does your performance planning structure 
differ from the account and activity structure in your budget 
justification?
    Answer. The account and activity structure in the budget varies by 
operating administration, and it generally is not organized by 
strategic outcome but by grouping similar kinds of activities, or 
activities with a common funding mechanism. Given that multiple 
programs support single outcomes and single programs support multiple 
outcomes, perfect alignment is not possible.
    Question. Do you plan to propose any changes to your account 
structure for fiscal year 2002?
    Answer. No.
    Question. Will you propose any changes to the program activities 
described under that account structure?
    Answer. No.
                   dot performance measures and data
    Question. How were performance measures chosen?
    Answer. Performance measures were chosen to provide the information 
needed to determine if DOT programs are achieving the desired strategic 
outcome goals. The availability of relevant performance data was also a 
consideration. If acquiring the necessary data for a candidate 
performance measure appeared to require excessive cost and time, an 
alternative measure was selected.
    Question. What performance measures were changed from last year?
    Answer. The following discussion refers to goals and measures in 
the fiscal year 2002 DOT Performance Plan, which is based on the 
Department's fiscal year 2000 through fiscal year 2005 Strategic Plan.
    In DOT's Safety measures, we added fatality and injury rates for 
large trucks in addition to fatalities and injuries, and added a rate 
for runway incursions in addition to the number of such incursions. For 
air traffic operational errors, the denominator for the rate was 
changed to 1 million from 100,000 activities. This had no effect on the 
rate; it simply changed the performance number to a whole number from a 
fraction, which will simplify it.
    In Mobility, we changed the flight route flexibility goal to 
airport capacity and en route efficiency improvements, with associated 
measures for increased airport throughput during peak periods, and for 
greater routing efficiency for aircraft in flight. The Impediments to 
Port Commerce goal was discontinued, and in the Essential Air Service 
goal, one of the two measures was discontinued (2 round trips/day, 6 
days/week).
    In Economic Growth, one of the two measures in the Transportation 
and Education goal was discontinued (Garrett A. Morgan education 
outreach).
    In Human and Natural Environment, we reversed the arithmetic signs 
on Fisheries Protection targets; changed the Environmental Justice 
measure to a percentage rather than a number; and suspended the 
Greenhouse Gas Emissions goal. The model by which Aircraft Noise 
Exposure is calculated was changed to be more comprehensive.
    In National Security, the Coast Guard's military readiness 
reporting methodology gives greater weight to current readiness 
factors. The Sealift Capacity goal is discontinued after 2001, since 
the Administration proposes to transfer the Maritime Security Program 
and associated funding to DOD. We added new measures for Maritime 
Boundary Incursions and Regional Stability, and began calculating the 
Energy Efficiency measure using 1996 constant dollars rather than 1992 
constant dollars.
    Corporate Management strategies were converted to three outcome 
goals under the Organizational Excellence Strategy--Customer 
Satisfaction, Employee Satisfaction, and overall Organizational 
Performance and Productivity.
    Question. How did the agency balance the cost of data collection 
and verification with the need for reliable and valid performance data?
    Answer. Performance measurement is dependent on the availability of 
high quality data. All data are imperfect in some fashion. Pursuing 
``perfect'' data, however, may consume public resources without 
creating appreciable value. DOT's approach has been to select 
performance measures with current, validated data sources; while 
seeking to improve known problems in those data, and to cover current 
gaps in data coverage.
    Question. Does your plan include performance measures for which 
reliable data are not likely to be available in time for your 
performance report in March 2002?
    Answer. DOT's performance report/plan uses established data systems 
for most of its performance measures. Most of these systems can provide 
preliminary results that are both timely and sufficiently accurate for 
the performance report. The number of measures without timely data is 
minimal. In DOT's fiscal year 2000 Performance Report, five measures 
with no current data required that we project the Department's 
performance from past trends (Pipeline Failures, Highway Pavement 
Condition, Highway Congestion, Mobile Source Emissions, and Energy 
Efficiency). For the Impediments to Port Commerce goal, the measurement 
construct simply did not work, and one of the measures under 
Transportation and Education had insufficient data available for a 
projection of our performance. We expect to resolve the data issues by 
March 2002 for all but Mobile Source Emissions and Energy Efficiency. 
Data for these last two measures comes from the States and from the 
Environmental Protection Agency.
                       key dot performance goals
    Question. What are the key performance goals from your fiscal year 
2002 Annual Performance Plan that you recommend this subcommittee use 
to track program results?
    Answer. While all of the performance goals and measures in DOT's 
annual performance plan are important to track performance in each of 
the DOT operating administrations, the following subset of goals in the 
fiscal year 2002 Performance Plan are important in tracking overall 
progress toward DOT's five mission-oriented strategic goals:
    Safety.--Transportation-related fatalities (outcome); 
Transportation-related injuries (outcome); and Transportation Incidents 
(outcome).
    Mobility.--Highway Pavement Condition (outcome); Highway Congestion 
(outcome); Aviation Delay (outcome); Airport Capacity and En Route 
Efficiency Improvements (outcome); and Amtrak Ridership (outcome).
    Economic Growth.--International Air Service (outcome).
    Human and Natural Environment.--Transit Ridership (outcome); Mobile 
Source Emissions (outcome); Aircraft Noise Exposure (outcome); Maritime 
Oil Spills (outcome); and Pipeline Hazardous Material Spills (outcome).
    National Security.--Ready-Reserve Force Activation (outcome); Coast 
Guard Military Readiness (output); Drug Interdiction (outcome); and 
Critical Infrastructure Protection (output).
    Question. For each key annual goal, indicate whether you consider 
it to be an output measure (``how much'') or an outcome measure (``how 
well'').
    Answer. As explained in detail in each major subdivision of DOT's 
fiscal year 2000 Performance Report, the majority of DOT's performance 
goals are outcome-oriented. Furthermore, each performance goal, and 
related performance measure, is tied to the achievement of longer-term 
strategic goals or objectives. (The answer to the previous question 
indicates whether the key annual goals are outcomes or outputs).
    Question. State the long-term (fiscal year 2005 general goal and 
objective) from the agency Strategic Plan to which the annual goal is 
linked.
    Answer. The information is provided in the following table. 
    
    
    
    
    
    
    
    
             dot outcome measures and managing for results
    Question. In developing your Annual Performance Plan, what efforts 
did your agency undertake to ensure that the goals in the plan include 
a significant number of outcome measures?
    Answer. The agency made a decision at the beginning of the fiscal 
year 1999 performance planning process to use outcome measures wherever 
possible. Since then, output measures have been used only if a good 
outcome measure for a strategic outcome goal could not be identified.
    Question. Do you believe your program managers understand the 
difference between goals that measure workload (output) and goals that 
measure effectiveness (outcome)? Please provide examples of changes 
that have been made to shift programmatic priorities from output driven 
to outcome focused goals.
    Answer. Yes. The Department of Transportation has made great 
strides over the past several years in ensuring that program managers 
focus on outcomes. One salient example is the Coast Guard commercial 
vessel safety program's change in emphasis from compliance with 
technical regulations to stress human error as the prime causal factor 
in marine accidents. Programmatic standards changed from one of 
counting inspections to one of training, certification, and proper 
operational practices and risk management practices.
    Question. What are some examples of customer satisfaction measures 
that you intend to use? Please include examples of both internal and 
external customers.
    Answer. The Department has identified customer satisfaction as one 
of its three performance goals in support of the organizational 
excellence goal. The two measures that the Department will use to 
measure customer satisfaction are percent of customers satisfied with 
transportation system performance and percent of customers satisfied 
with the customer service provided by the Department. DOT is currently 
developing and employing survey instruments to collect data on customer 
satisfaction. When the survey instruments are fully implemented, they 
will measure customer satisfaction from a variety of groups, such as 
the traveling public, transportation workers, grant recipients, and DOT 
information users.
                       dot performance budgeting
    Question. How were the measurable goals of your fiscal year 2002 
Annual Performance Plan used to develop your fiscal year 2002 budget?
    Answer. Program performance was considered throughout the budget 
formulation process for the Department's fiscal year 2002 budget. For 
example, the Department requested $975 million--an 18 percent percent 
increase--for aviation safety programs, including initiatives designed 
to help achieve the Department's goal of reducing aviation fatalities 
by 80 percent by 2007. And the Administration's ambitious goals for 
drug interdiction, based on two years of record level seizures by the 
Coast Guard, were reflected in the increased funding requested for 
Coast Guard's operating expenses. These are programs with demonstrated 
successes, and specific expected levels of performance in fiscal year 
2002.
    Question. If a proposed budget number is changed, up or down, by 
this committee, will you be able to indicate to us the likely impact 
the change would have on the level of program performance and the 
achievement of various goals? Please provide examples.
    Answer. The change in expected performance will depend on the 
difference between the President's budget request and the Committee 
mark. In some cases, performance will also be affected by external 
factors. Therefore, cause and effect may not be clear, except where the 
Department directly provides services, such as air traffic control by 
the FAA, or search and rescue by the Coast Guard. For many goals, DOT 
does not provide direct services but rather tries to influence the 
actions of its partners and stakeholders.
                       dot performance management
    Question. Do you have the technological capability of measuring and 
reporting program performance throughout the year on a regular basis, 
so that the agency can be properly managed to achieve the desired 
results?
    Answer. In the instances where DOT relies on data reported by 
States, or local governments, or the private sector, it is more 
difficult and costly to receive performance data on a regular basis. 
Data derived from operations performed directly by DOT can be collected 
on a ongoing basis and used more readily to manage and control the 
effectiveness of DOT programs.
    Question. If so, who has access to the information--senior 
management only, or mid- and lower-level program managers too?
    Answer. To the extent that information and data are available, it 
is available to all levels of management.
    Question. Are you able to gain access easily to various 
performance-related data located throughout your various information 
systems?
    Answer. Appendix I of DOT's fiscal year 2000 Performance Report and 
fiscal year 2002 Performance Plan identifies the data systems used to 
obtain DOT performance data and the limitation of each system, 
including ready access.
                      dot budget account structure
    Question. The Government Performance and Results Act requires that 
your agency's Annual Performance Plan establish performance goals to 
define the level of performance to be achieved by each program activity 
set forth in your budget. Many agencies have indicated that their 
present budget account structure makes it difficult to link dollars to 
results in a clear and meaningful way. Have you faced such difficulty?
    Answer. The Department is assessing this issue. But there is not 
always a one-for-one correspondence between program activities and 
budget accounts. For instance, an investment in transportation 
infrastructure has impacts not only on mobility, but also in safety and 
economic growth. Another example is found in investments in capital 
equipment for the Coast Guard, where ships, aircraft, and command and 
control investments contribute to many different outcomes.
    Question. Would the linkages be clearer if your budget account 
structure were modified?
    Answer. The Department is assessing this issue. As the Department 
continues to evolve and refine overall long-term strategy and annual 
performance plans, it may become apparent that changing some aspect of 
the Department's budget account structure will allow better connection 
of resources to results.
    Question. If so, how would you propose to modify it and why do you 
believe such modification would be more useful both to your agency and 
to this committee than the present structure?
    Answer. The Department does not recommend making changes in the 
budget account structure this year.
    Question. How would such modification strengthen accountability for 
program performance in the use of budgeted dollars?
    Answer. The Department does not recommend making changes in the 
budget account structure this year.
      linking performance measurement systems to financial systems
    Question. Spending significant resources on performance measurement 
systems appears to be a wasteful exercise if this information is not 
linked to: (1) real data about what it costs to perform various 
government functions; and (2) how to allocate agency resources to 
perform these functions. Could you comment on your agency's cost 
accounting expertise and plans to link GPRA to the budget process?
    Answer. The majority of cost accounting expertise at DOT resides 
within the individual modal administrations. For example, FAA is in the 
process of developing a cost accounting system, which will be fully 
implemented by 2002. TASC and the Volpe Research Center operate on a 
fee-for-service basis, and have significant cost accounting expertise. 
The new Departmental financial accounting system will significantly 
enhance DOT's managerial cost accounting capability. In the fiscal year 
2002 Performance Plan, the Department has taken an additional step in 
attributing budgeted amounts for the entire array of program activities 
to specific performance goals listed in the Performance Plan. At 
present, this is an approximation, but as the Department continues to 
more closely connect budgets, costs, and performance, the Department's 
overall ability to link costs and performance will improve.
    Question. Under one of the new accounting standards recommended by 
the Federal Accounting Standards Advisory Board (FASAB) and issued by 
OMB, this year for the first time all federal agencies are required to 
have a system of Managerial Cost Accounting. The clearly preferred 
methodology for such a system, as stated in that standard, is the one 
known as ``Activity-Based Costing,'' whereby the full cost is 
calculated for each of the activities of an agency. What is the status 
of your agency's implementation of the Managerial Cost Accounting 
requirement, and are you using Activity-Based Costing?
    Answer. Implementing managerial cost accounting in the Department 
is a progressive process. Although the FASAB standard was originally 
scheduled to be implemented by fiscal year 1996, it was later deferred 
to allow agencies additional time to obtain the required resources. The 
Board recognized that reporting entities do not have to possess 
sophisticated cost accounting systems that are necessary to meet the 
standard's requirements. Federal agencies were allowed to take a 
gradual approach to the development of cost systems, if necessary, 
while developing basic cost information through other means in the 
short term.
    Departmental policy has been to encourage managerial cost 
accounting to be applied wherever there is a valid need for precise 
cost data, as in the calculation of fees and unit costs, for certain 
management decision making, and selectively for effective performance 
measurement. The costs of implementing and operating a cost accounting 
system to capture such data should not outweigh the benefits derived 
from having precise cost information. DOT operating administrations 
have been encouraged to identify their specific needs for cost data and 
to begin to plan for cost accounting, implementing policies and other 
capabilities to meet these needs.
    The Department is in the process of implementing a new commercial 
off-the-shelf (COTS) core accounting system. It is expected to be 
operational in all DOT entities within the next 18 to 24 months. This 
new core accounting system will provide a platform for DOT to gather 
and assemble the data required for managerial cost accounting. It will 
enable DOT to allocate costs through a variety of methods and over 
different time periods.
    Question. Will you be able in the future to show to this committee 
the full and accurate cost of each activity of each program, including 
in those calculations such items as administration, employee benefits, 
and depreciation? Please provide examples.
    Answer. Yes. In addition to the managerial cost accounting 
capabilities that will be available in DOT's core accounting system, 
the following are some examples of areas where DOT is successfully 
using cost accounting, including calculating such items as 
administration, employee benefits, and depreciation:
    The FAA has been directed to develop, and is in the process of 
implementing, a cost accounting system that adequately and accurately 
reflects investments, operating and overhead costs, revenues, and other 
financial measurement and reporting aspects of operations. The system 
will help track the cost of agency services, support the collection of 
user fees, and meet legislative mandates. The system is being 
implemented in a phased approach by line of business or staff office.
    TASC provides common administrative services to DOT's Office of the 
Secretary and operating administrations as well as other governmental 
entities. It is a business-like organization that recovers its costs of 
operations through customer user fees. Cost accounting in TASC helps 
management to determine which services can be provided by TASC in a 
cost-effective manner.
    The Volpe National Transportation Systems Center under RSPA 
provides transportation and logistics expertise in research, analysis, 
development and deployment of transportation technologies for clients 
within DOT and to other Federal agencies. The Volpe Center operates as 
a business-type entity that provides services and recovers its 
operational and overhead costs on a fee-for-service basis.
    Question. By doing so, would we then be able to see more precisely 
the relationship between the dollars spent on a program, the true costs 
of the activities conducted by the program, and the results of these 
activities?
    Answer. Yes. But it is also important to remember that DOT largely 
has outcome, not output, goals. Many variables may affect the 
achievement of these goals. DOT does not in all cases control all the 
variables that influence program outcomes and therefore does not always 
have complete control over the ultimate achievement of the department's 
strategic goals or objectives. While precise costing of program 
activities and the associated outputs may be possible in the future, 
tracing the activity costs all the way through to outcome results may 
be more elusive.
    Question. Will you be able to show us the per-unit cost of each 
activity and result?
    Answer. Costs must first be accumulated by program area prior to 
their allocation by output or unit. DOT's new COTS core accounting 
system, expected to be operational in all DOT entities within the next 
18 to 24 months, will provide a platform for DOT to gather and assemble 
the data required for managerial cost accounting. It will contain the 
structure needed for building cost accounting elements and the 
functionality to capture costs through a variety of methods at 
differing levels over multiple time periods. Since this system is quite 
new to DOT, many of its cost accounting capabilities have yet to be 
fully explored by program and financial managers. As stated in the 
answer to the previous question, tracing cost to results is more 
difficult to pin down, since many of DOT's partners and stakeholders 
have influence equal to or greater than the Department in achieving 
strategic goals or objectives.
    Question. To what extent do the dollars associated with any 
particular performance goal reflect the full cost of all associated 
activities performed in support of that goal? For example, are overhead 
costs fully allocated to goals?
    Answer. In most cases, program and modal overhead costs are 
reflected in the dollars associated with specific performance goals. 
For example, the program level for the Coast Guard's search and rescue 
program includes direct budget amounts from operating expenses; 
acquisition, construction and improvements; and research and 
development appropriation accounts, as well as an allocated portion of 
the Coast Guard's administrative expenses for staff functions such as 
procurement, personnel, legal, and executive leadership of the 
organization.
               performance planning and regulatory reform
    Question. Please identify any significant regulatory reform 
measures that have been put in place by your agency in conjunction with 
the development of the agency's performance plan.
    Answer. The Department is committed to improving the rulemaking 
process and to minimizing the regulatory burden on the transportation 
community. This commitment is documented in the Organizational 
Excellence section of the performance plan and report. In 1999, the 
Department implemented an electronic docket for rulemakings and met 
with industry and the general public to identify what could be done to 
improve the rulemaking process. These efforts will continue in fiscal 
year 2000 and 2001.
                 external influences on dot performance
    Question. Does your fiscal year 2002 performance plan--briefly or 
by reference to your strategic plan--identify any external factors that 
could influence goal achievement?
    Answer. Yes.
    Question. If so, what steps have you identified to prepare, 
anticipate and plan for such influences?
    Answer. Although DOT cannot control its entire operating 
environment, by clearly identifying the factors that need to be 
considered in developing and implementing programs, managers are better 
prepared to meet the challenges presented. For example, one external 
factor that is expected to have a significant influence on 
transportation is the growth of the elderly population. This is being 
considered by DOT management in the selection of initiatives that focus 
on ways to make travel for this group safer and easier, (e.g., easier 
to read signs and changes in passenger boarding and alighting time for 
aviation, rail and transit vehicles).
    Question. What impact might external factors have on your resource 
estimates?
    Answer. External factors can have a significant impact on resource 
estimates. For example, a major environmental catastrophe--such as a 
hurricane, earthquake or oil spill--could significantly impact resource 
requirements.
                  programmatic overlap or duplication
    Question. Through the development of the Performance Plan, has the 
agency identified overlapping functions or program duplication?
    Answer. No. DOT has identified areas where crosscutting programs in 
other agencies complement DOT program activities and jointly contribute 
to overall results. Conversely, DOT activities often complement other 
agencies' programs and contribute to results specified in their 
strategic and performance plans.
    Question. If so, does the Performance Plan identify the overlap or 
duplication?
    Answer. See previous question.
            management challenges and performance reporting
    Question. Should agencies address management challenges and 
potential duplication and overlapping functions in their GPRA plans, 
and if so, how?
    Answer. Yes. DOT has gone to great lengths to integrate the 
Department's and operating administrations' approach to addressing 
management issues in conjunction with achieving strategic objectives. 
In the few areas where results have not met expectations, the 
Department is undertaking reviews of performance strategies and will 
find better ways to achieve stated outcomes.
                         agency decisionmaking
    Question. To what extent has GPRA been used by agency leadership to 
guide decision-making? In your discussion, please provide specific 
examples.
    Answer. DOT has a history of using performance measurement in 
managing programs, particularly measures of the safety, condition, and 
performance of the transportation system. GPRA has expanded the use of 
performance measures and has led to two key advances: the integration 
of program performance measures into a single DOT performance plan, and 
a closer linkage of performance measures to the budget process. For 
example, NHTSA has tied individual program performance to intermediate 
outcomes (e.g., increasing seat belt use); and to overall outcomes 
(e.g., reducing fatalities and injuries). These ``top level'' outcomes 
are also integrated into the Department's Performance Plan. Budget 
justifications, in turn, use performance measures to justify the 
allocation of resources and the specific results that programs seek.
    Question. Will this use increase in the future and if so, in what 
ways?
    Answer. As DOT employees gain more experience in managing for 
results, and in linking resources to outcomes, the management processes 
underpinning the Results Act will become more a part of daily activity. 
As a result, overall DOT performance is expected to continuously 
improve.
           agency performance and the appropriations process
    Question. Future funding decisions will take into consideration 
actual performance compared to expected or target performance. Given 
that: to what extent are your performance measures sufficiently mature 
to allow for these kinds of uses?
    Answer. The Department has devised the best set of performance 
measures based on current knowledge of the causal relationships between 
departmental activities and outputs and the achievement of DOT's 
strategic goals or objectives. These measures can and will be improved 
upon in the ensuing years. DOT's performance data indicate to senior 
decision-makers what strategies are working well, and where the areas 
of improvement lie; where strategies need re-examination, or where 
different levels of resources need to be applied. Program evaluations 
are beginning to be utilized to demonstrate the linkage between DOT's 
activities and the achievement of organizational goals.
    Question. Are there any factors, such as inexperience in making 
estimates for certain activities or lack of data that might affect the 
accuracy of resource estimates?
    Answer. DOT exerts influence over highly complex human and 
technological systems, throughout many levels of government and with 
the private sector. Resource estimates and performance estimates will 
always be subject to some level of uncertainty. But, the Department 
expects that these uncertainties will be reduced over time as 
performance, budgeting, management, and financial systems become better 
integrated.
                        waivers of requirements
    Question. Are you requesting any waivers of non-statutory 
administrative requirements?
    Answer. No.
    Question. Specifically, are you requesting any relaxation of 
transfer or reprogramming controls in return for specific 
accountability commitments?
    Answer. No. We have no such plans at this time.
                      future performance reporting
    Question. Please provide for the record, the 1998, 1999, 2000, and 
2001 goals and actual results as well as the target for the current 
fiscal year and the prospective target for fiscal year 2002 in a table 
that simply lists the strategic goal, the individual (sub-goals) under 
that strategic goal (performance progress reports) and the requested 
information by year.
    Answer. The information is provided in the following table. Note 
that there were no specific GPRA goals in 1998. 




















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

              Questions Submitted by Senator Patty Murray

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

                Questions Submitted by Senator Herb Kohl

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

                          subcommittee recess

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








 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              


                          FRIDAY, JUNE 1, 2001

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

                      DEPARTMENT OF TRANSPORTATION

                              Coast Guard

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

      Overview of Coast Guard Activities in the Pacific Northwest

               opening statement of senator patty Murray

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

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

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

                 statement of rear admiral erroll Brown

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

                               Highlights

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

                          enthusiasm of People

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

                        Coast Guard performance

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

                   Recruiting, retention and training

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

                          Strategic alliances

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

                          Foreign flag vessels

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

                              Naval forces

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

                               Deepwater

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

                           prepared statement

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

            Prepared Statement of Rear Admiral Erroll Brown

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

                    statement of master chief Brown

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

                     diminishing pool of Experience

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

                            Retention issue

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

                     statement of captain Peterson

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

                              District 13

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

                      statement of captain Warner

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

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

           Spill prevention preparedness and response program

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

                         unified Command system

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

                North puget sound risk management panel

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

                              Port angeles

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

                              Rescue tugs

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

                   safety at Washington state ferries

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

                        Safety management system

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

                            Risk management

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

                           Emergency response

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

                    Port townsend to keystone route

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

                   Prepared Statement of Scott Davis

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

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

                          Districts 13 and 17

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

                                 Safety

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

                     Safety education and training

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

                           prepared statement

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

                  Prepared Statement of Leslie Hughes

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

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

                             Marine safety

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

                         State control program

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

                       support a National program

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

                           prepared statement

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

                Prepared Statement of Harry N. Hutchins

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

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

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

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

                         U.s. flag cruise ships

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

                            Marine pollution

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

                   tightening Cruise ship regulations

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

                           prepared statement

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

                    Prepared Statement of Randy Ray

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

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

                          subcommittee recess

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








 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              


                        WEDNESDAY, JUNE 13, 2001

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

                      DEPARTMENT OF TRANSPORTATION

                              Coast Guard

STATEMENT OF ADMIRAL JAMES M. LOY, COMMANDANT

                    Office of the Inspector General

STATEMENT OF HONORABLE KENNETH M. MEAD, INSPECTOR 
            GENERAL

               OPENING STATEMENT OF SENATOR PATTY MURRAY

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

                 STATEMENT OF SENATOR RICHARD C. SHELBY

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

            Prepared Statement of Senator Richard C. Shelby

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

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

                   STATEMENT OF ADMIRAL JAMES M. LOY

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

                             budget themes

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

                       RESTORE SERVICE READINESS

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

                            SHAPE THE FUTURE

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

                             TRANSFORMATION

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

                           prepared statement

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

               Prepared Statement of Admiral James M. Loy

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

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

                      STATEMENT OF KENNETH M. MEAD

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


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

                               DEEPWATER

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


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

      national distress and response system modernization project

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

                STATEMENT OF SENATOR BARBARA A. MIKULSKI

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

                    restoring the services readiness

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

                               deepwater

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

                 recruiting and retention of personnel

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

                   national defense authorization act

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

                               deepwater

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

      national distress and response system modernization project

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

                     STATEMENT OF SENATOR HERB KOHL

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

                        aquatic nuisance species

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

                                loran c

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

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

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

                       search and rescue program

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

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

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

                         retention of personnel

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

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

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

                            future force 21

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

                           incentive bonuses

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

      national distress and response system modernization project

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

                            caps in coverage

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

                         fisheries enforcement

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

                       decomissioning of cowslip

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

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

                        implementation of opa-90

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

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

                              seattle vts

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

                     ADDITIONAL COMMITTEE QUESTIONS

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

                 Questions Submitted to the Coast Guard

           Questions Submitted by Senator Barbara A. Mikulski

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

            Questions Submitted by Senator Richard C. Shelby

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

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


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


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


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


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

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

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

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

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

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

       Questions Submitted to the Office of the Inspector General

            Questions Submitted by Senator Richard C. Shelby

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

                          SUBCOMMITTEE RECESS

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








 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              


                        THURSDAY, JUNE 28, 2001

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

                      DEPARTMENT OF TRANSPORTATION

                    Federal Aviation Administration

STATEMENT OF JANE F. GARVEY, ADMINISTRATOR

        Status of Intercity Transportation: Airways and Railways

               OPENING STATEMENT OF SENATOR PATTY MURRAY

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

                   FINANCING AVIATION INFRASTRUCTURE

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

                            FINANCING AMTRAK

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

                 STATEMENT OF SENATOR RICHARD C. SHELBY

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

                       TERM OF FAA ADMINISTRATOR

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

                         AMTRAK OPERATING COSTS

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

                         RAIL PASSENGER SERVICE

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

                  STATEMENT OF SENATOR ROBERT BENNETT

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

               STATEMENT OF SENATOR KAY BAILEY HUTCHISON

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

                         PASSENGER TRAIN TRACKS

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

                Prepared Statement of Senator Herb Kohl

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

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

                            FINANCING AMTRAK

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

                         PENN STATION MORTGAGE

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

                            FINANCING AMTRAK

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

                POLITICAL PRESSURE OF AMTRAK OPERATIONS

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

                           SUPPORT FOR AMTRAK

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

                     BUILDING AMTRAK INFRASTRUCTURE

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

                      STATEMENT OF JANE F. GARVEY

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

              national airspace system ongoing initiatives

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

                        USE OF CANADIAN AIRSPACE

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

                        OPERATION EVOLUTION PLAN

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

                              SAFER SKIES

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

                        PARTNERSHIPS IN AVIATION

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

                           prepared statement

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

                  Prepared Statement of Jane F. Garvey

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

                  operation evolution plan initiatives

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

                           AIRSPACE REDESIGN

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

                               FAA REFORM

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

                            NATCA AGREEMENT

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

                         CONTRACT TOWER PROGRAM

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

                            ATC SUBCOMMITTEE

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

                             AIRLINE DELAYS

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

                       DELAYS AT ATLANTA AIRPORT

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

                            SALT LAKE RADAR

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

                        SALT LAKE OLYMPICS VISIT

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

                   REAGAN NATIONAL AIRPORT CONGESTION

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

           Prepared Statement of Senator Barbara A. Mikulski

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

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

                        SAFETY INSPECTOR HIRING

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

                        SAFETY PERFORMANCE GOALS

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

                 COST ACCOUNTING SYSTEM SCHEDULE DELAY

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

            NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK)

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

   Examples of Major Productivity Improvements from Labor Agreement 
                                Changes

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

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



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

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

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

  
  
  
  

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

                         CONCLUSION OF HEARINGS

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








 DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR 
                            FISCAL YEAR 2002

                              ----------                              

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

    MATERIAL SUBMITTED BY AGENCIES NOT APPEARING FOR FORMAL HEARINGS

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

                      DEPARTMENT OF TRANSPORTATION

       Questions Submitted to the Federal Transit Administration

            Questions Submitted by Senator Richard C. Shelby

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



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

Federal Transit Administration Vacancies

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                        [In thousands of dollars]

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

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

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

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

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

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

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

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

\1\ Actual.
\2\ Planned.


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

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

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

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

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

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

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

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

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

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

Section 5309 Capital Investment Bus Program

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Question. How will Sound Transit cover the increase in total 
project costs above the $500 million federal share?
    Answer. Sound Transit intends to cover the costs above Federal 
government's commitments of $500 M with the local sales tax and 
bonding.
    Question. How do these increases in MOS-1 costs affect Sound 
Transit's ability to finance, build and operate the second segment of 
the project (to Sea-Tac Airport)?
    Answer. Sound Transit developed an Updated 2001 Financial Plan, 
which was reviewed by the FTA's FMOC. The Plan proposes to fully 
finance all updated costs for MOS-1 and operation and maintenance costs 
through a combination of financing options. It also proposes to finance 
the Airport Link cost increases primarily through an assumed increase 
in Federal funding of $273 million (from $668 million to $941 million). 
FTA has made no commitments to any funds beyond those already committed 
to MOS-1.
    Question. In its April 4, 2001 interim report Seattle Central Link 
Light Rail project, the DOT Inspector General states that ``FTA did not 
perform satisfactory due diligence in the grant application review 
process'', that the agency had timely knowledge that the ``cost 
estimates contained in the grant agreement were materially 
understated'', and that ``consideration of the grant agreement should 
have been suspended or withdrawn.'' Do you concur with each of these 
findings?
    Answer. We do not agree with these particular findings, and are 
responding in detail to the Inspector General's report.
    Question. Was the Seattle project management oversight contractor, 
Gannett Fleming, Inc., made aware of the cost increases in the tunnel 
contract, third-party contracts, and real estate acquisitions as they 
were being negotiated in 2000?
    Answer. (a) Tunnel.--The cost proposals were submitted on July 28, 
2000. In August, the project management oversight contractor (PMOC) was 
informed that the initial tunnel contract proposal was higher than the 
Baseline Cost Estimate, but was not told by how much. Later in the 
month, the PMOC questioned the Link Project Director and the Chief 
Engineer about the unofficial information that the cost proposals were 
significantly higher. The Chief Engineer's response was that the cost 
proposal was higher but that cost was being negotiated down towards the 
Baseline Cost Estimate. In November, negotiations were suspended, and 
in December, after a number of requests, the PMOC was provided a copy 
of the most recent cost proposal prior to suspension.
    (b) Third Party Agreements.--The third party agreements increased 
only after the decision was made to revise the Full Funding Grant 
Agreement in December, 2000. The increase was based on the schedule 
extension approved by the Board in that month. The schedule extension 
opened up the executed agreements for re-negotiation.
    (c) Right-of-Way.--The real estate cost estimate was not updated 
until late November 2000. When the Sound Transit Board was informed in 
December, they authorized the hiring of an appraisal contractor in 
August/September time frame to provide a market review and 
``reappraisal'' for Link every six months.
    Question. The April 4 Inspector General interim report recommended 
that FTA and Sound Transit complete four tasks, and that, until those 
tasks were completed and certified by the FTA Acting Administrator, 
Sound Transit funds and funding decisions be held in abeyance. What 
funds have been affected by this proposed holding action?
    Answer. Of the unobligated fiscal year 2001 fund, $49.54 million 
are on hold. Additionally, FTA recommended no funds for The Seattle 
Link project in the fiscal year 2002 New Starts budget request to the 
Congress.
    Question. Does FTA concur in each of these four recommended tasks? 
What is the target date for completion of each of these actions? If you 
do not concur, please provide your rationale. Furthermore, what 
alternative course of action do you believe would resolve the issues 
presented in this report?
    Answer. FTA concurs with the four recommendations contained in the 
Interim Report. FTA has directed Sound Transit to develop a revised 
project plan that meets all of the requirements of the New Starts 
process. When completed, FTA will conduct a review of all aspects of 
the project, including a thorough review for reliability of costs and 
cost estimates, and any and all issues that could materially affect 
project scope, schedule, and cost. The review will also include a 
reassessment of Sound Transit's financial and technical capacity to 
carry out the project, and will be conducted with the assistance of our 
Project Management Oversight contractors and our Financial Management 
oversight contractors.
    Sound Transit has taken a number of actions already, including a 
six-month work plan, appointment of a Project Review Committee, and 
other controls to strengthen their internal cost control and oversight. 
Subsequent events suggest Sound Transit is now undertaking an even 
broader re-evaluation of light rail in Seattle, including a 
reconsideration of whether to proceed with the originally defined MOS-
1, which is the subject of the current FFGA. The local process that is 
now taking place is an important one and must ultimately result in a 
consensus on how to proceed with light rail in Seattle. We estimate 
that it will be at least six months before Sound Transit will be in a 
position to advance a revised proposal to the FTA. At such time as 
Sound Transit plans are firm enough for FTA review, we will begin an 
assessment. In the meantime, we will be monitoring their activities 
through our normal oversight processes.
    Question. Has a financial capacity stress test been performed on 
the New Jersey Hudson-Bergen light rail MOS-1 project? If so, what 
fiscal year 2002 appropriations levels were assumed in this test, and 
what were the results?
    Answer. The Hudson-Bergen light rail MOS-1 project was reviewed as 
part of the overall financial capacity assessment of New Jersey Transit 
Corporation. An agency wide stress test was conducted assuming a 50 
percent reduction in the scheduled New Starts annual allotment relating 
to the existing Full Funding Grant Agreement (FFGA) for MOS-1 and the 
proposed FFGA for the Hudson-Bergen light rail MOS-2 project. The FFGA 
for Hudson-Bergen light rail MOS-2 project was subsequently awarded. 
The stress test assumed $388.1 million in Federal capital funds for 
fiscal year 2002 using New Jersey Transit's agency wide cash flow 
summary for fiscal years 1999-2019. The results of the stress test 
showed that NJ Transit could use its reserve funds to satisfy its 
operating and capital requirements through 2012. In addition, NJ 
Transit has been proactive in taking steps to mitigate shortfalls in 
federal appropriations through its debt financing structure and 
insurance coverage in its capital program.
    Question. What is the current estimate of cost overruns on the San 
Juan, Puerto Rico Tren Urbano project above total project costs cited 
in the Full Funding Grant Agreement? How will these overruns be 
addressed?
    Answer. The current estimate of cost overruns above the total 
project cost cited in the Full Funding Grant Agreement is $113 million. 
The overruns will be covered by local funds.
    Question. What is the original and revised revenue operation date 
for Tren Urbano?
    Answer. The revenue operations date (ROD) per the FFGA is May 2002. 
The Puerto Rico Highway and Transportation Authority (PRHTA) has 
indicated that it will not meet that date. On May 16, 2001, FTA 
requested that PRHTA develop a recovery plan. The recovery plan will 
address the project budget, revised revenue operations date, financial 
plan, and safety and quality issues. A revised ROD will be determined 
following review of the recovery plan.
    Question. Please describe the current status of negotiations among 
the Metropolitan Council in Minneapolis, the Metropolitan Airport 
Commission, and Northwest Airlines regarding the use of airport 
revenues for the Hiawatha light rail tunnel and airport terminal rail 
stations on the airport property.
    Answer. Prior to the execution of FTA's Full Funding Grant 
Agreement with the Metropolitan Council (``Met Council'') on January 
17, 2001, the Met Council, Minnesota Department of Transportation 
(``MnDOT''), and Metropolitan Airports Commission (``MAC'') executed 
several contracts delineating their respective roles and 
responsibilities for construction, operation and maintenance, and 
financing of the one-mile light rail tunnel and two stations within 
Minneapolis-St. Paul International Airport (``MSP''). These agreements 
between Met Council, MnDOT, and MAC are still in effect. Northwest 
Airlines is not a party to any of these agreements. Major points:
    1. MAC will oversee construction of the tunnel civil works and 
light rail stations at MSP. MAC and MnDOT will coordinate their 
construction activities. Met Council will operate the Hiawatha light 
rail, including the portion of the alignment within MSP.
    2. The total estimated construction cost of the Hiawatha light rail 
within MSP is $142 million. MAC will contribute up to $84 million in 
airport revenue to pay a portion of the actual costs of construction of 
the tunnel civil work between the two light rail stations at MSP and 
the costs of those two stations; Met Council will contribute the 
remaining $58 million for design and construction of the tunnel and 
stations.
    3. By letter dated November 21, 2000, addressed to outside counsel 
for Northwest Airlines, the Federal Aviation Administration reiterated 
what it had informed the airline earlier: that consistent with FAA's 
policies on the use of airport revenue for airport ground-side access 
projects (64 Fed.Reg. 7696; February 16, 1999), it is permissible for 
MAC to contribute airport revenue towards the costs of the light rail 
tunnel and stations within MSP.
    Question. What is the status of the Chicago Transit Authority's 
proposed purchase of properties in the Sheffield Historic District on 
the Ravenswood Branch Brown Line? How will the State Historical 
Officer's decision impact the project's progress toward securing a Full 
Funding Grant Agreement?
    Answer. The Chicago Transit Authority (CTA) has not started to 
acquire any properties in the Sheffield Historic District on the 
Ravenswood Branch of the Brown Line. The current position of the 
Illinois State Historic Preservation Office (SHPO) is that CTA should 
not acquire or impact the sites of two specific buildings that 
potentially would be needed for expansion of the platform at the 
Fullerton Station, which is located within the Sheffield Historic 
District. The two buildings are the DePaul University women's gymnasium 
building and the privately-owned Dietzen building. The two buildings 
are contributing structures to the Sheffield Historic District, 
although they are not identified in the National Historic Register. CTA 
is having discussions with the SHPO to identify other possible station/
track configurations. The environmental work required under National 
Environmental Policy Act (NEPA) cannot be completed until the impasse 
with the SHPO is resolved. The project will not be eligible for a Full 
Funding Grant Agreement until the requirements under NEPA have been 
satisfied.
    Question. Please discuss the issue of operational line safety on 
the Portland Tri-Met light rail system. Are there lessons to be learned 
from these pedestrian fatalities and the changes in procedures that 
have been adopted in response?
    Answer. The Portland Tri-Met system experienced five pedestrian 
fatalities over an 18 month period following the opening of the new 
Westside light rail line. Three of these fatalities occurred on 
separate rights-of-way wherein persons were trespassing. The other two 
fatalities occurred at public access areas and were the result of the 
persons being struck after ignoring the warning of the approaching 
train.
    Trespassing on the right-of-way was initially treated with warnings 
to trespassers, but with the subsequent fatalities, Tri-Met has 
instituted arrest procedures for persons on the private right-of-way. 
Also, Tri-Met now recognizes that an intense public education and 
awareness program is necessary prior to the opening of new rail lines. 
Portland is undertaking an aggressive public education program with the 
September, 2001 opening of its light rail extension to the airport.
                           general provisions
    Question. Please describe the effect of the proposed section 326 
general provision, which authorizes the Secretary to use transit 
capital funds made available in this and subsequent acts for rail 
safety oversight activities. Does this establish a federal transit 
safety oversight role? Isn't this a state responsibility?
    Answer. With the initiation of the state safety oversight program 
enacted in TEA-21 (49 U.S.C. 5330), twenty-two state safety oversight 
agencies were created to oversee thirty-five rail fixed guideway 
systems not regulated by the Federal Railroad Administration. No 
Federal assistance was provided in the legislation to assist states in 
the continuing annual cost of this mandated oversight responsibility. 
FTA has determined that a state's development of a system safety 
program standard for a new start rail system is an eligible, one-time 
capital ``startup'' cost. However, the ongoing annual cost for safety 
oversight of each rail transit operation within a state is, on average, 
$250,000 for administrative and consultant costs. FTA is concerned 
that, in many cases, the state regards the process as an additional 
burden, and consequently does not assign safety specialists on a full 
time basis to the rail transit oversight function. This is particularly 
true in states experiencing their first ``new start'' light rail 
system.
    FTA does not believe that Federal assistance to the involved states 
creates a Federal role in the management and performance of the state's 
oversight responsibilities. Those responsibilities are defined in FTA's 
state safety regulations and audit process (49 CFR 659). This is 
similar to other agencies' efforts, such as the Federal Motor Carrier 
Safety Administration's Motor Carrier Safety Assistance Program.
    Question. Why is it appropriate to include the proposed section 328 
general provision, which states that, beginning in fiscal year 2004 and 
thereafter, the federal share for New Starts projects shall not exceed 
50 percent? Isn't this an issue that would more appropriately be 
addressed at the reauthorization of TEA-21?
    Answer. The change in the maximum Federal share of New Starts 
projects under Sec. 5309 will require a change in law, which can be 
accomplished through either the appropriation or authorization process. 
We are proposing that a change in the maximum Federal share be enacted 
as part of the appropriations process in fiscal year 2002, with an 
effective date of fiscal year 2004. This will give project sponsors 
sufficient time to adjust the financial plans for their proposed 
projects to reflect the new, lower maximum Federal share of New Starts 
funding.
    If, however, this provision were included as part of the new 
authorization, it would become effective at the start of the next 
authorization period at the earliest. In other words, it would become 
effective seven months after the New Starts project funding 
recommendations are released in the President's budget proposal to 
Congress (February 2003). Changing the maximum amount of funding 
available to New Starts projects after the release of the budget, but 
before the start of the fiscal year, may unnecessarily delay projects 
that are otherwise ready to proceed and would render the project 
ratings useless to Congress during the fiscal year 2004 appropriations 
process. By making the change for fiscal year 2004 effective now, 
project sponsors have ample opportunity to revise their financial plans 
and seek any additional local sources of funding that may be required.
    Question. Please describe the effect of section 321 of Public Law 
106-346 regarding funds made available for Alaska or Hawaii ferryboats.
    Answer. This provision allows Hawaii to use up to $3,000,000 of the 
funds made available under Section 5309(m)(2)(B) for demonstration or 
operating expenses rather than capital expenses. To date, no 
application for these funds has been made.
                                 ______
                                 
Questions Submitted to the Research and Special Programs Administration
            Questions Submitted by Senator Richard C. Shelby
                  office of hazardous materials safety
    Question. Please prepare a table indicating various measures of 
both the overall performance and the impacts of your program, showing 
statistical trends for each of the last 10 years. Please include data 
covering the last 10 years on the number of serious releases (or an 
equivalent measure), fatalities, injuries, costs, compliance measures, 
etc.
    Answer. The following table is provided:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Federal Aviation Administration Human-Centered Research Program

                              [In millions]

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

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

Federal Motor Carrier Safety Administration

                              [In millions]

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

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

Federal Railroad Administration

                              [In millions]

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

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

Federal Highway Administration

                              [In millions]

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

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

Coast Guard

                              [In millions]

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

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

Federal Transit Administration

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

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

Research and Special Programs Administration

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

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

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


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

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

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

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

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

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

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

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

Research & Development Funds

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

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

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

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

Fiscal Year 2002 President's Budget

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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








       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

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

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

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

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

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

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

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

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

Martinez, Rob, Vice President, Marketing Services and 
  International, Norfolk Southern Corporation....................   123
    Prepared statement...........................................   125
Mc Cain, Hon. John, U.S. Senator from Arizona....................   368
Mead, Hon. Kenneth M., Inspector General, Department of 
  Transportation 
  
 
 Opening statements
 
 1, 91, 157_____________________________________________________________
 
 Prepared statements
 
 3, 305_________________________________________________________________
 
 Questions submitted by
 
 54, 78 190, 345, 355, 405, 475_________________________________________
 
 Statements of
 
 305, 363_______________________________________________________________
 
 Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania Power and 
 Light
 
 102____________________________________________________________________
 
 Prepared statement
 
 104____________________________________________________________________
 
 Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement of
 
 170____________________________________________________________________
 
 Stevens, Hon. Ted, U.S. Senator from Alaska, statement of
 
 162____________________________________________________________________
 
 Venture, Captain John, Chief, Marine Safety Division, Coast Guard, 
 Department of Transportation
 
 251____________________________________________________________________
 
 Warner, Captain, statement of
 
 268____________________________________________________________________
 
 Warrington, George D., President and CEO, National Railroad Passenger 
 Corporation (Amtrak)
 
 387____________________________________________________________________
                                                        tatement100
 Shelby, Hon. Richard C., U.S. Senator from Alabama:
     Opening statements.......................................1, 91, 157
     Prepared statements..........................................3, 305
     Questions submitted by...............54, 78 190, 345, 355, 405, 475
     Statements of..............................................305, 363
 Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania 
   Power and Light................................................   102
     Prepared statement...........................................   104
 Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement 
   of.............................................................   170
 Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162
 
 Venture, Captain John, Chief, Marine Safety Division, Coast 
   Guard, Department of Transportation............................   251
 
 Warner, Captain, statement of....................................   268
 Warrington, George D., President and CEO, National Railroad 
   Passenger Corporation (Amtrak).................................   387
 Self, Lamar, Director, Distribution and Customer Service, 
   Mississippi Chemical Corporation...............................    99
     Prepared statement...........................................   100
 Shelby, Hon. Richard C., U.S. Senator from Alabama:
     Opening statements.......................................1, 91, 157
     Prepared statements..........................................3, 305
     Questions submitted by...............54, 78 190, 345, 355, 405, 475
     Statements of..............................................305, 363
 Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania 
   Power and Light................................................   102
     Prepared statement...........................................   104
 Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement 
   of.............................................................   170
 Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162
 
 Venture, Captain John, Chief, Marine Safety Division, Coast 
   Guard, Department of Transportation............................   251
 
 Warner, Captain, statement of....................................   268
 Warrington, George D., President and CEO, National Railroad 
   Passenger Corporation (Amtrak).................................   387
     Opening statements..................................1, 91, 157
     Prepared statements..........................................3, 305
     Questions submitted by...............54, 78 190, 345, 355, 405, 475
     Statements of..............................................305, 363
 Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania 
   Power and Light................................................   102
     Prepared statement...........................................   104
 Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement 
   of.............................................................   170
 Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162
 
 Venture, Captain John, Chief, Marine Safety Division, Coast 
   Guard, Department of Transportation............................   251
 
 Warner, Captain, statement of....................................   268
 Warrington, George D., President and CEO, National Railroad 
   Passenger Corporation (Amtrak).................................   387
      Hon. Richard C., U.S. Senator from Alabama:Opening 
       statements.............................................1, 91, 157
     Prepared statements..........................................3, 305
     Questions submitted by...............54, 78 190, 345, 355, 405, 475
     Statements of..............................................305, 363
 Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania 
   Power and Light................................................   102
     Prepared statement...........................................   104
 Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement 
   of.............................................................   170
 Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162
 
 Venture, Captain John, Chief, Marine Safety Division, Coast 
   Guard, Department of Transportation............................   251
 
 Warner, Captain, statement of....................................   268
 Warrington, George D., President and CEO, National Railroad 
   Passenger Corporation (Amtrak).................................   387
     Opening statements..................................1, 91, 157
     Prepared statements..........................................3, 305
     Questions submitted by...............54, 78 190, 345, 355, 405, 475
     Statements of..............................................305, 363
 Snovitch, Michael W., Manager, Fossil Fuel Supply, Pennsylvania 
   Power and Light................................................   102
     Prepared statement...........................................   104
 Specter, Hon., Arlen, U.S. Senator from Pennsylvania, statement 
   of.............................................................   170
 Stevens, Hon. Ted, U.S. Senator from Alaska, statement of........   162
 
 Venture, Captain John, Chief, Marine Safety Division, Coast 
   Guard, Department of Transportation............................   251
 
 Warner, Captain, statement of....................................   268
 Warrington, George D., President and CEO, National Railroad 
   Passenger Corporation (Amtrak).................................   387

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

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

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

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

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

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

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









                             SUBJECT INDEX

                              ----------                              

                      DEPARTMENT OF TRANSPORTATION

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

                              Coast Guard

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

                    Federal Aviation Administration

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

                     Federal Transit Administration

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

                    Office of the Inspector General

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

                        Office of the Secretary

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

              Research and Special Programs Administration

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

                       GENERAL ACCOUNTING OFFICE

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

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