    [Senate Hearing 107-826]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 107-826

                    DEPARTMENT OF TRANSPORTATION AND RELAT-
                ED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2003
    =======================================================================

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       on

                               H.R. 5559/S. 2808

     AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF TRANSPORTATION AND
    RELATED AGENCIES FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2003, AND FOR
                                 OTHER PURPOSES

                                   __________

                          Department of Transportation
                           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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                          COMMITTEE ON APPROPRIATIONS

                    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
    TIM JOHNSON, South Dakota            LARRY CRAIG, Idaho
    MARY L. LANDRIEU, Louisiana          KAY BAILEY HUTCHISON, Texas
    JACK REED, Rhode Island              MIKE DeWINE, Ohio
                      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        ARLEN SPECTER, Pennsylvania
    HARRY REID, Nevada                   CHRISTOPHER S. BOND, Missouri
    HERB KOHL, Wisconsin                 ROBERT F. BENNETT, Utah
    RICHARD J. DURBIN, Illinois          BEN NIGHTHORSE CAMPBELL, Colorado
    PATRICK J. LEAHY, Vermont            KAY BAILEY HUTCHISON, Texas
                                         TED STEVENS, Alaska (ex officio)

                               Professional Staff

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

                             Administrative Support

                                   Angela Lee

                                C O N T E N T S

                                  ----------

                           Thursday, February 7, 2002

                                                                       Page
    Department of Transportation.....................................     1

                          Wednesday, February 14, 2002

    Department of Transportation: U.S. Coast Guard...................    45

                            Thursday, March 21, 2002

    Department of Transportation: Security Challenges for
      Transportation of Cargo........................................    93

                            Tuesday, April 16, 2002

    Department of Transportation: Federal Aviation Administration....   133
    Nondepartmental witnesses........................................   183

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2003

                                  ----------

                           THURSDAY, FEBRUARY 7, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:02 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Patty Murray (chairman) presiding.
        Present: Senators Murray, Byrd, Kohl, Shelby, Specter,
    Bond, and Bennett.

                          DEPARTMENT OF TRANSPORTATION

    STATEMENT OF HON. MICHAEL JACKSON, DEPUTY SECRETARY,
                DEPARTMENT OF TRANSPORTATION
    ACCOMPANIED BY HON. JOHN MAGAW, UNDER SECRETARY OF TRANSPORTATION FOR
                SECURITY

                   opening statement of senator patty murray

        Senator Murray. The subcommittee will come to order. This
    will be the first of several subcommittee hearings on the
    Transportation budget for fiscal year 2003. As I review this
    budget, it is clear to me that our subcommittee will face
    extraordinary challenges this coming year, challenges that may
    make the Mexican truck issue seem easy by comparison.
        In his State of the Union message, President Bush said his
    economic security plan can be summed up in one word, jobs, but
    his Transportation budget proposals have cut billions of
    dollars in infrastructure spending. This is the single largest
    proposed cut across the entire Government, and it threatens to
    eliminate over 350,000 jobs across the country.
        During a hearing with OMB Director Mitch Daniels, held 2
    days ago, I questioned the wisdom of this proposal. Director
    Daniels was quick to point out that in making this request, the
    Administration was only following the requirements of the TEA-
    21 law. What Mr. Daniels failed to say is that throughout his
    budget proposal, there are hundreds of examples where the
    Administration is asking us to ignore existing law, or to
    change the law.
        Just within the Transportation budget, we are asked to
    ignore current law and to adopt measures to throw several
    communities out of the Essential Air Service Program. We are
    asked to ignore the TEA-21 law and transfer formula funds to
    the President's New Freedom Initiative. We are asked to ignore
    current law and impose new user fees on railroads, shipping
    companies, and transporters of hazardous materials. So I expect
    that one of the issues we will pursue this morning is why the
    Administration supports current law when it requires billion-
    dollar cuts in infrastructure investment, but ignores current
    law in so many other places.
        The proposed slashing of highway spending is just one
    challenge we are going to face. The Department of
    Transportation is currently establishing a brand-new agency,
    the Transportation Security Administration, known as TSA. It is
    clear from September 11 that we need to improve security in all
    of our transportation modes. I support the new Under Secretary
    in his major task of securing our various modes of
    transportation against threats of attack.
        To date, the TSA has been funded largely through user fees,
    but for fiscal year 2003 the Administration is requesting that
    direct appropriations for this agency grow from less than $95
    million to $2.2 billion. Dramatic increases are also requested
    for the Coast Guard's efforts in the area of homeland defense,
    and as I said earlier, the President's budget also recommends
    several controversial transportation user fees to partially
    offset the cost of a portion of these increases.
        Finally, the President's budget proposes to freeze
    subsidies for Amtrak. At the same time, we are told that
    Amtrak's president will testify that unless Amtrak gets a 130-
    percent increase in funding this year, the majority of States
    across the Nation will lose passenger rail service.
        So this is a challenging year. I would just ask my
    colleagues to keep these challenges in mind as we work on
    developing a budget for the coming year. If this subcommittee
    wants to fully fund the request for security while avoiding
    deep cuts in highway infrastructure, the elimination of
    passenger rail service, and the imposition of new user fees,
    then a budget that holds us to the President's requested level
    will not do the job.
        In order to better acquaint us with the President's
    proposal, we are joined this morning by Deputy Secretary
    Michael Jackson. As many of you know, Secretary Mineta is
    recuperating from hip replacement surgery, and I know I speak
    on behalf of the entire subcommittee in wishing the Secretary a
    speedy recovery. Given the central role of transportation
    security in this budget request, I have also invited the new
    Under Secretary of Transportation for Security, John Magaw, to
    appear with Mr. Jackson.
        We will also hold a hearing on cargo security with the
    Administrators from the Federal Railroad Administration,
    Federal Motor Carrier Safety Administration, Federal Highway
    Administration, Maritime Administration, and the Coast Guard.
        This is the third hearing that Mr. Magaw will participate
    in just this week. Mr. Magaw, we do appreciate your stamina. I
    understand that almost all of the discussion during the two
    previous hearings focused on the huge challenge you face in the
    area of aviation security. In just 11 days the TSA is expected
    to take over the entire screening function at our Nation's
    airports, and in just 10 months the TSA is expected to
    implement a system to screen all checked baggage for
    explosives.
        I do not underestimate those critical challenges one bit,
    but I do represent a State with one of the largest seaports in
    the United States, where every day tons of cargo travels by
    rail and by truck. I want to remind my colleagues that the new
    Transportation Security Administration is responsible for
    security in all of our transportation modes, and I think it is
    not too soon to ask what progress is being made in those areas.
    I appreciate that the TSA must focus on its near-term deadlines
    in aviation, but if the new agency is not yet focusing on port
    or rail or highway security, then we have to ask what is being
    done in other parts of DOT.
        To date, we have received no details on the TSA's budget
    request for $4.8 billion for next year. Instead, we have
    received only a seven-page narrative with no funding figures
    for any individual security activity. As such, I think we will
    need to spend some time this morning pursuing precisely what
    Mr. Magaw believes he can and cannot achieve at that funding
    level.
        While we have many challenges ahead of us, this is
    important work. Transportation is a key part of our economy.
    Our transportation infrastructure affects our productivity and
    our quality of life, and when we make investments in our
    critical infrastructure, we are laying the foundation for our
    future economic growth.
        We welcome the challenges we face, and I look forward to
    working with my colleagues to meet those challenges for the
    benefit of the American people. With that, I recognize Senator
    Bond for an opening statement.

                    statement of senator christopher s. bond

        Senator Bond. Thank you very much, Madam Chair, and
    welcome, Michael Jackson, John Magaw. We are delighted to have
    you here, and given what the chair has outlined as the
    tremendous responsibilities in your area, gentlemen, I wonder
    how you can spend the time up here testifying on the Hill.
    Perhaps we ought to get you to phone in your answers and let
    you go back to work, because this is a huge, very important
    challenge, and as the chair mentioned, it is not just airline
    security.
        Those of us who fly all the time experience airline
    security efforts but the security of our ports, our rails, our
    trucks--and I took Amtrak to New York and back on Monday, and
    knowing what happened in the Baltimore Tunnel, we have an idea
    of what can happen if a terrorist were to strike a rail asset,
    so you have many challenges, and I will be interested to see
    how you deal with all those challenges and hope that you have
    the time to do them.
        Senator Murray has outlined the major concerns that I think
    all of us have about the adequacy of transportation funding. I
    have great concerns about the shortfalls in highway dollars. I
    was coauthor of the Highway Trust Fund, the realigned budget
    authority provision in TEA-21. We wanted to make sure that
    Highway Trust Fund dollars were spent only for Highway Trust
    Fund purposes, and under the budget proposal, the sum
    apparently has been reduced by $8.6 billion.
        That comes to almost $159 million for Missouri. That costs
    us directly about 6,600 jobs at a time when we cannot afford
    the job loss, particularly when it is important in economic
    security. As I have said in this Committee and elsewhere many
    times, adequate funding for highways is not just a matter of
    convenience or economic viability, it is a question of life and
    death for people who are driving in Missouri on highways that
    are not adequate for the traffic that they hold, so we are
    going to be very interested in your proposals. I know there are
    some legislative proposals. Another committee on which I serve
    will be working on those, and we would welcome your comments on
    those.
        Two particular questions, Michael. I have had many
    conversations with you about trying to find a fair resolution
    for the disputes between the employees and the unions of the
    former TWA and the American Airlines on how to integrate their
    seniority lists to determine who may be furloughed, as
    furloughs continue, unfortunately, because of a decline in
    traffic.
        The Secretary and you and I have had countless discussions.
    My preference would be to solve this by mediation so all
    parties would agree, but as a fallback, my still strong belief
    is that the dispute, if it cannot be mediated, ought to be
    submitted for binding arbitration under the Mohawk-Allegheny
    decision. Indeed, the mechanics of the two lines are currently
    in binding arbitration over this issue, and the reason we
    continue to talk about it, it could be severely disruptive to
    the overall passenger air transportation system and for the
    wonderful, fine American Airlines. If the employees and the
    pilots are in dispute, that is not going to help the provision
    of service to all of us and is not in the interests of air
    transportation.
        Finally, the topic of Vanguard Airlines has been something
    that Secretary Mineta, you and I have talked about a long time.
    Vanguard has on two separate occasions applied for assistance
    from the Federal loan program, and the ATSB has recently denied
    approval of the application, citing Vanguard's inability to
    repay the loan as the reason. It was my understanding when we
    took part in the creation of this that the purpose of that fund
    was to assist airlines that were profitable and were on a
    profit mode prior to September 11, but otherwise could not
    survive after September 11 without the assistance.
        Now, Vanguard is very important to the Kansas area. It
    provides critical value, with revenues, jobs, and service, and
    we have heard people saying we need to keep these otherwise
    viable airlines in operation, so I am going to be asking, since
    apparently, as far as I know, America West is the only other
    airline that has received assistance, with that fund, a large
    fund meant to keep airlines in business, how come Vanguard is
    not able to get that assistance.
        So Madam Chair, I thank you for your indulgence, and look
    forward to the question session.
        Senator Murray. Thank you. Senator Bennett.
        Senator Bennett. I have no opening statement, other than to
    welcome our witnesses here. Thank you.
        Senator Murray. Thank you very much. We have a vote called,
    but I think I will go ahead with your opening statements, and
    we will start with Mr. Jackson.

                statement of deputy secretary michael p. jackson

        Mr. Jackson. Thank you, Madam Chairman. We, too, understand
    that there are many difficult issues to work through in the
    transportation world this year, and we welcome this opportunity
    to have this discussion today and, as we go through the year,
    to work closely with you as we work through these important
    issues.
        On behalf of Secretary Mineta, I am pleased, to discuss our
    2003 budget, and specifically to focus a little bit on the
    Transportation Security Administration. I am pleased to be
    joined today by John Magaw, but I am even more pleased to be
    joined by him every morning as we work through the issues that
    he is working on.

                                    overview

        President Bush is requesting $59 billion for the Department
    of Transportation, which is an 8 percent increase over the 2002
    budget, if the TEA-21 formula adjustments for highway were not
    included. But they are included, and these required adjustments
    mean that we have to tighten our belt and be very careful as we
    work through the challenges that we have on the transportation
    funding. Most DOT programs will, nonetheless, see an increase
    in 2003.
        In his State of the Union address last week, President Bush
    said that his budget will support three preeminent goals for
    America: winning the war both at home and abroad, protecting
    our homeland, and reviving the economy. The DOT budget focuses
    on delivering performance against these three objectives, and
    it recognizes that we have these three preeminent challenges
    this year to deal with and is committed to meeting them.

                     transportation security administration

        The events of September 11 underscore the importance of
    transportation, as you have said, Senator Murray, on homeland
    security in particular, and our budget requests $8.8 billion
    for homeland security.
        The President's budget requests $4.8 billion for the
    Transportation Security Administration. Honestly, we will have
    to come back in the next few months and help unpack the details
    of that budget. I will be happy to talk through how we see it
    and how we arrived at this number, but we recognize that there
    are several key decisions that will play out over the next
    couple of months and drive the 2003 budget as we stand up the
    Transportation Security Administration.
        The $4.8 billion will be funded by a combination of direct
    appropriations, with offsetting collections estimated in the
    proposed budget at $2.2 billion.
        TSA has been given an unprecedented task in standing up a
    full Federal takeover of the airport security responsibility,
    including all passenger baggage screening functions. By the
    middle of this month, aviation security will become a direct
    responsibility of the Federal Government, rather than the
    airline industry. TSA has much to do, but we are prepared to
    meet the task and to make it happen. Again, I would be happy,
    along with Under Secretary Magaw to talk about the details of
    how we plan to move forward with the TSA.

                                  coast guard

        The President's budget includes the largest increase in our
    Nation's history for the Coast Guard. It provides $7.1 billion
    in search and rescue enhancements and increased port security.
    The President has proposed $500 million to fund the Coast
    Guard's Deepwater project, which will replace our aging fleet
    of boats, planes, helicopters, and cutters, with state-of-the-
    art equipment. This committee has supported this procurement,
    which will take place over several decades, and we start in
    earnest with the work this year.
        Our budget proposal also includes $90 million to improve
    maritime safety. This initiative will modernize the maritime
    ``911'' system and eliminate existing radio coverage gaps along
    our coast to enhance the Coast Guard's ability to conduct
    search and rescue missions.

                                highway funding

        The Department's mission is, of course, much more focused
    on other priorities beyond the homeland security priorities
    that are so pressing in this year. First is an issue on the
    minds of many of us and one that the committee has raised this
    morning--the required adjustment to Highway Trust Fund spending
    in 2003. The reason for this, obviously, is embedded in the
    Transportation Equity Act for the 21st Century (TEA-21). TEA-21
    guaranteed that highway funding would be tied to Highway Trust
    Fund tax receipts. It accomplishes this through a series of
    annual adjustment mechanisms, as this committee knows.
        As a result of our strong economy over the last 3 years, we
    have enjoyed record funding for surface transportation, well
    above the baseline forecasts in the initial authorization bill.
    But because of the economy's slowdown in 2001, there was a drop
    in tax receipts flowing into the Highway Trust Fund requiring a
    downward adjustment.
        The President's budget fully funds the guaranteed funding
    level set in TEA-21. As we make plans to reauthorize TEA-21 in
    2003, we will work with Congress to evaluate any type of
    legislative mechanisms that could help to decrease the funding
    volatility that we are seeing in this program. We want to
    engage the Congress in a discussion of the volatility that we
    have seen and the mechanisms that might diminish that
    volatility.

                                 safety funding

        The Department's 2003 budget also offers several other
    initiatives to support the country's air, land, and sea
    transportation system. Safety remains the priority of DOT.
    Nearly $8 billion of the President's request is dedicated to
    improving transportation safety for all Americans. Aviation has
    certainly been a major focus of that investment in safety. The
    2003 budget for the Federal Aviation Administration (FAA)
    reflects the Administration's strong commitment in funding
    safety efforts.
        Recovering from the events of September 11, air traffic is
    now beginning to grow again. We see that the capacity problems
    we were worried about last spring and summer have not
    disappeared. They will recur, and we must be prepared to
    contend with them. The total FAA program budget request of $14
    billion is 1.7 percent higher than 2002, when adjusted for
    changes that migrate various parts of the FAA into the new
    Transportation Security Administration. We are requesting $3.4
    billion in our FAA 2003 budget for our airport improvement
    activities.
        The President's 2003 budget also requests $371 million for
    activities of the Federal Motor Carrier Safety Administration,
    up 8 percent over 2002. I want to again thank this Committee
    for helping us work through the NAFTA trucking issues. The
    President is requesting $116 million for the Federal Motor
    Carrier Safety Administration to improve our southern border
    safety enforcement and continue the deployment along the border
    that we launched with this committee's strong work.

                         public and rail transportation

        For 2003, the President is proposing a record $7.1 billion
    for public transportation. The budget request includes funding
    29 new starts, projects that will carry over 190 million riders
    and save over 61 million hours in travel time.

                         federal transit administration

        Within the 2003 Federal Transit Administration proposal,
    $145 million is dedicated to the President's New Freedom
    Initiative. This program will make transportation more
    accessible for persons with disabilities. A competitive grants
    program will make $100 million available for alternative
    transportation services, and the remaining $45 million will go
    to pilot projects that promote innovative approaches to
    overcoming transportation barriers for persons with
    disabilities.
        The 2003 budget also includes a placeholder request for
    Amtrak of $521 million, and we recognize it is as such.
    Understanding Amtrak's precarious financial circumstances, we
    must decide precisely what type of inter-city rail network we
    need, what we can afford, and how we can sustain it over time.
    The Administration is prepared and eager to engage with the
    Congress in a discussion on this issue. Last summer, Secretary
    Mineta called for an early reauthorization of Amtrak and inter-
    city passenger rail issues, and we expect that this issue will
    be a focus of subsequent and more detailed conversations with
    the committee.
        This is a strong 2003 budget supporting the President's
    goals for air, land, and sea transportation. My prepared
    remarks focus only on a few highlights, and the rest of the
    Department obviously contributes to the core goals of the
    Department.
        To conclude, Secretary Mineta and I believe that the 2003
    budget for DOT will clearly enhance homeland security, but also
    manage to sustain the goals that are core to DOT's mission. We
    know that it is a tough year financially, but we believe the
    budget will help us do the job. We look forward to working with
    the subcommittee and all members of the Senate as it considers
    the President's 2003 budget. I will be happy to answer any
    questions that you might have. We have a prepared text for
    submission to the record with your permission.
        [The statement follows:]

                    Prepared Statement of Michael P. Jackson

        Mr. Chairman and members of the Subcommittee: On behalf of
    Secretary Mineta, I am pleased to appear before you today to discuss
    the Department's budget request for fiscal year 2003 and, more
    specifically, the budget for the Transportation Security
    Administration--TSA. Joining me today is Mr. John Magaw, our Under
    Secretary of Transportation for Security.
                                    overview
        President Bush is requesting $59 billion for the Department of
    Transportation (DOT). This is an 8 percent increase over the 2002
    budget, if TEA-21 formula adjustments for highways are excluded. With
    those required adjustments, however, we are tightening our belts,
    particularly on highway spending. Most DOT programs will nonetheless
    see an increase in 2003.
        In his State of the Union address last week, President Bush said
    that his budget will support three preeminent goals for America:
    winning the war--at home and abroad; protecting our homeland; and
    reviving the economy.
        Secretary Mineta testified before Congress last month about lessons
    of September 11, about how our transportation system is critical to the
    security of every American--and to the Nation's economy. DOT plays an
    important role in meeting all three of the President's goals, and our
    budget reflects that fact.
        In 2003, we will continue our efforts of 2002 by focusing the
    Department's resources in a significant way to meet President Bush's
    three-part commitment. The Secretary and his entire team stand ready to
    work with President Bush, Congress and the American people. We will
    meet the President's goals.
                   homeland security--tsa and the coast guard
        The events of September 11, 2001, underscore the importance of
    transportation security as part of America's homeland security.
    Protecting airports, seaports, bridges, highways, pipelines, passenger
    and freight rails, and mass transit against the threat of terrorism is
    imperative. In 2003, added emphasis on this mission will be reflected
    in resources for personnel, technology and equipment to meet
    transportation security challenges. This is most clearly evident in the
    budgets of two DOT agencies: the Transportation Security Administration
    and the Coast Guard. In total, DOT's 2003 budget requests $8.8 billion
    for homeland security.
        In November, President Bush signed the Aviation and Transportation
    Security Act, establishing the TSA. While the initial focus of the TSA
    will be in the area of aviation where deadlines are specified in law,
    TSA will ultimately work to enhance security in all modes of
    transportation.
        The President's budget requests $4.8 billion in funding for the TSA
    in 2003, an increase of $3.6 billion above the level of funds provided
    directly to TSA in 2002 and $2.5 billion above the security-related
    amounts appropriated to both TSA and the Federal Aviation
    Administration (FAA) for TSA related activities. The $4.8 billion would
    be funded through a combination of direct appropriations, offsetting
    collections in the form of the passenger security fee of $2.50 and a
    fee to be paid by airlines. The total for the offsetting collections is
    estimated to be about $2.2 billion. Resource information for the
    Federal Air Marshal program can be provided in a classified document or
    briefing.
        John Magaw--former Director of both the Secret Service and the
    Bureau of Alcohol, Tobacco and Firearms--joined the DOT team to lead
    the new TSA as Under Secretary of Transportation for Security. With
    John, Secretary Mineta's team is working closely with the Office of
    Homeland Security and with multiple Federal, State, local and private
    partners in this vital work.
        TSA's budget is presented in a service-oriented manner, rather than
    being broken down based on types of costs, such as operating expenses,
    capital costs, and research. These broad service areas are security
    operations, law enforcement, intelligence, and security regulation
    enforcement, and include headquarters and field resources with
    administrative, support and management personnel.
        For the first time, beginning on February 18, aviation security
    will become a direct responsibility of the Federal Government rather
    than the airline industry. There is much to do to make this transition,
    and TSA is on track to make it happen.
        TSA has been given an unprecedented task in standing up a full-
    Federal takeover of much of airport security, including all passenger
    and baggage screening functions. Our budget proposal includes funding
    for security screeners, law enforcement officers, screening management
    and Federal supervisors, as well as for baggage screening technology to
    ensure that the Congress's mandate that all bags are screened is met.
    We will also fund the development and acquisition of new security
    technologies that will better enable us to perform the important
    aviation security functions.
        In addition to TSA, virtually every other part of the Department is
    working to improve homeland security. The Coast Guard, the Maritime
    Administration, and the maritime industry are working together to
    enhance our maritime and port security efforts. This work is critical,
    as 95 percent of America's overseas commerce travels through our
    Nation's seaports.
        Recently, President Bush spoke in Maine about the importance of the
    Coast Guard in protecting homeland security--and he praised the
    magnificent work of its men and women. The President's budget includes
    the largest increase in spending for the Coast Guard in our Nation's
    history. It provides $7.1 billion in search and rescue enhancements and
    increased port security. Also included is a commercial navigation user
    fee, to help pay for increased port security needs.
        The President has proposed $500 million to fund the Coast Guard's
    ``Deepwater'' project. Deepwater will replace our aging fleet of boats,
    planes, helicopters, and cutters with state-of-the-art equipment--
    delivered over more than two decades.
        Deepwater will rely upon a new performance-based approach to the
    acquisition of major assets. This investment will increase the Coast
    Guard's effectiveness in saving lives and assuring homeland security.
    It will equip the Coast Guard to protect the environment and enforce
    immigration, drug, and fishery laws at sea.
        The Department's mission is, of course, focused on many other
    important priorities.
                                    highways
        First is an issue that is on the minds of many of us--the required
    adjustment to Highway Trust Fund spending in 2003. The reason for the
    adjustment can be found in the law that sets highway funding--the
    Transportation Equity Act for the 21st Century (TEA-21).
        TEA-21 guaranteed that highway funding would be tied to Highway
    Trust Fund tax receipts. It accomplishes this through a series of
    annual adjustment mechanisms. As a result of a strong economy, for the
    past three years TEA-21 has provided record-level funding for surface
    transportation--well above baseline levels forecast in the 1998
    authorization.
        Because of the economy's slowdown in 2001, there was a drop in tax
    receipts flowing into the Highway Trust Fund. In 2003, highway
    obligations will therefore be 29 percent below the 2002 level. Actual
    spending, which typically lags obligations on these multi-year highway
    projects, will fall nationally in 2003 by roughly 3 percent.
        In a nutshell, spending for highways will be lower in 2003 based on
    a formula set in law that adjusts spending to Trust Fund receipts. The
    President's budget fully funds the guaranteed funding level set in TEA-
    21. As we make plans to reauthorize TEA-21 in 2003, we will work with
    Congress to evaluate legislative mechanisms that could decrease funding
    volatility.
        The Department's 2003 budget also offers several other initiatives
    to support the country's air, land and sea transportation systems.
                   aviation and surface transportation safety
        Safety remains a cornerstone priority at the DOT. Nearly $8 billion
    of the President's request is dedicated to improving transportation
    safety for all Americans.
        In addition to homeland security and safety, improving mobility
    while protecting the environment remains a focus of so much of our work
    at DOT. In recent years, the United States has invested billions of
    dollars in transportation in order to accomplish these multiple goals.
        Aviation has certainly been a major focus for that investment. The
    2003 budget request for the FAA reflects the Administration's strong
    commitment to making air travel safer and more efficient.
        Recovering from the events of September 11, air traffic is now
    beginning to grow again. The FAA must continue its efforts to provide
    for increased efficiency and capacity within our Nation's airspace.
        The total FAA program budget request of $14 billion is 1.7 percent
    higher than in 2002, when adjusted for changes in mission related to
    the TSA. We are requesting $6 billion for operating and maintaining the
    air traffic control system, $700 million for FAA's air traffic control
    system modernization, and $290 million for safety related technologies
    and systems to prevent runway incursions and other accidents.
        We are requesting $3.4 billion in our FAA 2003 budget for airport
    improvement activities.
        Turning from aviation to surface transportation, here too the focus
    on safety is at the heart of our work at DOT. Sadly, traffic crashes
    claimed over 40,000 lives annually, accounting for over 90 percent of
    transportation-related deaths. The Department's goal is to reduce
    highway deaths through education, research and new technologies--and
    rigorous enforcement of our traffic and safety laws.
        To achieve our highway safety goals, the budget calls for $200
    million for the National Highway Traffic Safety Administration's safety
    research and information programs. It provides for $225 million in
    grants to states for their highway safety programs.
        The Federal Motor Carrier Safety Administration (FMCSA) has been
    working to achieve the goal of reducing truck-related fatalities from
    more than 5,000 in the year 2000 to less than 2,700 by the year 2010.
        The President's 2003 budget requests $371 million for motor carrier
    safety activities, 8 percent more than 2002. The budget provides $190
    million to support continued research and enforcement of FMCSA's
    interstate commercial carrier regulations. It includes $165 million for
    Motor Carrier Safety Assistance Program State grants.
        I again want to thank you for supporting our commitment under the
    North American Free Trade Agreement in DOT's 2002 Appropriations Act.
    The President is requesting $116 million for FMCSA to improve our
    southern border safety enforcement program. This will support the
    comprehensive Federal and State safety enforcement presence at the
    U.S./Mexico border that is being deployed this year.
                         public transportation and rail
        Public transportation--transit, commuter rail and buses in urban,
    suburban and rural areas of the country--reduces traffic congestion and
    enhances mobility. For 2003, the President is proposing a record $7.2
    billion for public transportation. The budget request includes funding
    for 29 new starts--projects that will carry over 190 million riders and
    save over 61 million hours in travel time.
        Within the 2003 proposal for the Federal Transit Administration,
    $145 million is dedicated to the President's New Freedom Initiative.
    This program will make transportation more accessible for persons with
    disabilities. A competitive grants program will make $100 million
    available for alternative transportation services and the remaining $45
    million will go toward pilot projects that promote innovative
    approaches to overcoming transportation barriers for passengers with
    disabilities.
        The 2003 Budget also includes a placeholder request of $521 million
    for Amtrak. Understanding Amtrak's precarious financial circumstances,
    last summer Secretary Mineta called for passenger rail reauthorization
    in 2002, in advance of the expiration of Amtrak's current
    authorization. We must decide precisely what type of intercity rail
    network we need, what we can afford, and how to sustain it over time.
        On other rail matters, the President's budget supports beefing up
    the safety program at the Federal Railroad Administration, recommending
    $195 million for safety initiatives and rail research efforts.
                                 other programs
        The Research and Special Programs Administration (RSPA) oversees
    the transportation of hazardous materials, including America's 2.1
    million miles of gas and oil pipelines. The President's Budget includes
    $64.5 million to hire new pipeline inspectors and to initiate a
    research and development program for the safety of our energy
    infrastructure.
        RSPA's budget also includes $2.1 million for the Office of
    Emergency Transportation's Crisis Management Center, which demonstrated
    its critical importance to the Nation on September 11 as the
    Department's intermodal communication center.
        In addition to the previously mentioned Coast Guard budget, our
    budget proposal includes a $90 million initiative to improve maritime
    safety. This initiative will modernize the maritime ``911'' system and
    eliminate existing radio coverage gaps along our coast and enhance the
    Coast Guard's ability to find those in distress.
                                   conclusion
        All up, this is a strong fiscal year 2003 budget supporting the
    President's goals for air, land and sea transportation. My prepared
    remarks focus on only a part of the whole picture. Yet each
    organization within DOT contributes indispensably to accomplishing the
    DOT goals I have outlined.
        To conclude, Secretary Mineta and I--along with his DOT leadership
    team--believe that the President's 2003 budget for DOT will clearly
    enhance homeland security--significantly. But more, it will improve
    transportation safety, maintain America's critical transportation
    infrastructure, increase transportation capacity, protect the
    environment, and improve mobility. In short, it will do the job.
        We look forward to working with this Subcommittee and all members
    of the Senate as it considers President Bush's 2003 budget request.

                               AVIATION INCIDENT

        Senator Murray. Thank you very much, Mr. Jackson.
        Mr. Magaw, I understand you do not have an opening
    statement but will be available for questions.
        Mr. Magaw. That is right. I will be available for
    questions, but I also believe my responsibility is to report an
    incident to you this morning that you may not have heard of
    yet, and I do not want to leave this hearing without telling
    you about that incident. However, I can only give you partial
    information because that is all I have right now. United 855,
    en route Buenos Aires from Miami, had an incident occur early
    this morning. The cockpit door was kicked by a passenger. The
    panel, or the bottom portion of it, was damaged, but the door
    held. The crew and others assaulted and injured the person. The
    flight landed in Buenos Aires. They did not divert and go to a
    different location.
        The person, as I understand it, is now in custody but is
    injured, maybe seriously injured, and is being treated. The
    information about what was used to injure the individual varies
    in four or five things, so I do not want to state what that is.
    Actually, one of the things that they used to injure the
    individual was a fire extinguisher, and that is about what I
    have right now.
        I did get the call a few minutes after the air traffic
    control towers were notified. I got the call around 4:40 this
    morning, and the plane did land safely around 8:00 a.m., in
    Buenos Aires.
        Senator Murray. Thank you, Mr. Magaw, and I am sure we will
    have questions about that. I have a number of questions as well
    about the budget. There is a vote in progress. Senator Shelby
    has already voted, so I am going to let him make his opening
    statement and do questions, and then I will be back in a
    minute.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you. Thank you very much. I am going
    to welcome you--you have been welcomed by the chairman, but
    welcome you to the hearing. I look forward to our discussions
    this morning on the Department of Transportation's 2003 budget
    request. Hopefully we will have an opportunity to look under
    the hood of the budget request and to better frame what this
    request means for the Department's multifaceted agenda.
        While the Transportation budget request is fairly
    straightforward, it does rely in a small part on some of the
    same tried and rejected budget gimmicks such as new user fee
    taxes. Although the Transportation budget request avoided the
    wholesale reliance on new user fees taxes that characterized
    the last Administration's submissions, somewhere the budget
    gnomes just could not let go completely.
        The request continues the proposal for $65 million in new
    user fee taxes for rail safety inspection and a hazardous
    materials safety program even though these proposals have been
    submitted to Congress and dismissed for the past 5 or 6 years,
    and the request resurrects a Coast Guard navigation fee for
    $165 million that has also been rejected previously by the
    Congress. I would be surprised if they fare any better this
    year.
        Although the hole in the budget created by the user fee
    requests is smaller than in years past, even a small hole will
    have to be made up somewhere. Because of the funding
    distortions caused by special budgetary treatment for other
    capital accounts, closing this gap will likely come at the
    expense of those accounts that have the greatest difficulty
    absorbing the shortfall, but the difficulties presented by the
    user fee taxes budget gimmick pale in comparison to the $8\1/2\
    billion cut in highways.
        In the years past, I have contended that the special
    budgetary treatment of the highway, transit, and aviation
    capital accounts put pressure on FAA operations, Coast Guard
    operations, and Amtrak subsidies. This year, the special
    budgetary treatment for highways puts pressure on itself as
    well as those other accounts. Clearly, restoring some level of
    reason to the highway account will be the biggest issue that
    the transportation budget will face in 2003.
        I understand that the budget request complies strictly with
    the law as articulated in TEA-21, but I had actually hoped for
    a little more leadership on infrastructure investment than a
    blind devotion to a flawed highway authorization act. I believe
    that, because of the mechanically derived highway numbers, this
    budget presents an enormous challenge for this Subcommittee;
    namely, how to find the resources for a more responsible level
    of highway infrastructure investment. That is by no means the
    only challenge in this request, but it is undoubtedly the most
    daunting from a budgetary resource perspective.
        What the $8\1/2\ billion cut to the highway program
    demonstrates to me is the folly of trying to set infrastructure
    investment on automatic pilot and how flawed the TEA-21
    legislation was in trying to match annual gas tax receipts to
    the annual highway infrastructure appropriation. If the goal of
    TEA-21 was to set the highway program on autopilot, then the
    RABA adjustment this year caused what aviators refer to as
    controlled flight into terrain.
        Secretary Jackson, as you begin to formulate
    reauthorization proposals for highways and transit, I hope and
    trust that you will avoid mechanical approaches to establishing
    highway obligation limitation levels. One, if the primary
    argument for linking highway gas tax receipts to highway
    spending levels was the need to provide State Departments of
    Transportation with a stable and certain level of highway
    investment, then this budget request shows how badly TEA-21
    failed.
        This request represents the largest swing in the highway
    program in history. Such a swing would not have been possible
    without the fact of accountability that comes from the TEA-21
    autopilot. To illustrate just how counterproductive this
    approach is, consider what drives the amount of receipts into
    the Highway Trust Fund, which are derived from gas and excise
    taxes. The economy drives the receipts. When the economy
    stumbles, receipts into the Highway Trust Fund decrease.
        Under the approach required by TEA-21 black box fuzzy
    logic, investment in highways and the immediate job creation
    that highway spending supports contracts as the economy slows.
    Just at the time we should be increasing highway spending for
    short- and long-term economic stimulus, the TEA-21 autopilot
    would have us cut highway spending. This is misguided,
    shortsighted, and an abrogation of our prerogatives as elected
    officials.
        I believe this committee should not, and I believe it will
    not, be bound by funding levels derived in an artificially
    constrained process void of the public policy and economic
    concerns that must influence decisions regarding responsible
    investment in highway infrastructure.
        Now, moving to other good news in the budget, I note that
    the Administration provided $521 million of additional subsidy
    for Amtrak in fiscal year 2003. Once again, I wish the
    Administration had provided some greater leadership in this
    continuing crisis. Simply requesting the same level
    appropriation as was requested for last year does little to
    extricate the country from this failed experiment in passenger
    rail service.
        I note that Chairman Murray anticipates an Amtrak hearing
    in the near future, and I will save my detailed comments and
    observations for that hearing. In short, I think it is time to
    stop ignoring reality with Amtrak and just start doing
    something that makes sense. The Administration, I believe, must
    lead on the issue of Amtrak, because, unfortunately, a majority
    of the Congress has demonstrated its inability to effectively
    address the chronic Amtrak problem for more than 20 years.
        Last year at our budget hearing, Secretary Mineta indicated
    that he anticipated spending 70 percent of his time on aviation
    matters. I suspect that his estimate turned out to be about
    right, although at the time I do not think he was referring to
    aviation security matters. The budget requests $4.8 billion for
    the Transportation Security Administration. I look forward to
    greater detail about how that money, and the $1.25 billion
    appropriated for 2002, will be used to enhance the security of
    our transportation systems.
        As critically important as the security and national
    defense issues are, I would urge you to make time for the
    Department's other four missions and programs. In particular,
    the Coast Guard's Deepwater and National Distress and Response
    System Modernization projects are two of the most expensive and
    the most challenging procurements that the Coast Guard, if not
    the Department, have ever undertaken.
        Like Deepwater, the National Distress and Response System
    Modernization project is slipping, and deserves greater
    attention from OST and OMB than it has received. I was recently
    informed that the Coast Guard will postpone the awarding of the
    Deepwater contract. This does not bode well for a procurement
    that has been considered as having a high risk schedule and
    acquisition strategy.
        We will have a hearing next week on Coast Guard programs,
    and I will go into more depth on those procurements and other
    issues at that time. I wanted to bring them to your attention
    to encourage you, Under Secretary Magaw, to look into the
    Deepwater procurement during this most recent delay, and try to
    make some sense of it from a homeland security and
    transportation security standpoint.
        I am always concerned when a program that is advertised as
    the perfect solution to one set of missions for the Coast Guard
    emerges with no modification as a new and improved perfect
    solution to a dramatically different set of missions. There is
    some soap being sold here, and it carries a $10 billion price
    tag.
        In turn, the NHTSA effort to comply with the TREAD Act
    faces some substantial challenges as it had difficulty in
    meeting the statutory deadlines. I urge you to provide the
    management oversight to get that effort on track. Every year,
    more than 40,000 Americans lose their lives on our highways,
    while less than 3,000 die in the rest of the system.
    Accordingly, whatever improvements we can make in highway
    fatality rates pay significant dividends in terms of lives
    saved.
        The Federal Government is committing more resources than
    ever to improve highway safety, and I am not convinced we are
    doing as well as we should. ``Click It or Ticket'' or similar
    seat belt mobilization campaigns, if applied on a national
    basis, should have immediate and lasting safety benefits.
        Fiscal year 2003 is an important one for reauthorization
    proposals for highways, transit, and aviation. I encourage you
    to review the things that have worked and those that have not
    before you formulate the Administration's reauthorization
    procedures. Clearly, in the aftermath of 9/11, and with the
    draconian cuts to the highway program necessitated by TEA-21,
    there is a need to substantially reassess the appropriateness
    of the lack of flexibility in our infrastructure investment
    programs.
        What I am trying to say is that you have a lot of
    challenges facing you at the Department, and you must
    constantly resist only reacting to the crisis of the moment. It
    is imperative that you keep a long-term view of all the
    missions of the Department, as well as manage the immediate
    challenges.
        I look forward to this continuing hearing, and to the other
    people's statements.
        Senator Byrd.

                      STATEMENT OF SENATOR ROBERT C. BYRD

        Senator Byrd. Chairman Shelby, thank you. Thank you for
    your service to the Nation. Thank you for your service to your
    State. Thank you for your service to the Senate, as the former
    Chairman, and now as Ranking Member. You are a valuable asset
    to the Nation. I did not get to hear all of your statement, but
    I will have an opportunity to concentrate on it later. At the
    moment, I have a statement of my own, and then I must go to the
    budget hearing which is in progress at this moment, before
    which Secretary of the Treasury, Mr. O'Neill, is appearing.
        So I, too, want to wish Secretary Mineta a speedy recovery,
    and I hope you will pass along, Mr. Jackson, to him our warm
    wishes.
        Mr. Jackson. Yes, sir, I will.
        Senator Byrd. The events of September 11 focused the minds
    of the American people on our national transportation system in
    important new ways. Our entire national aviation system was
    brought to a halt. People needed urgently to find alternative
    ways to travel. Citizens reflected on the security of our
    transportation system in ways that they had never done before.
    They reflected not only on the safety of the aviation system,
    but on other modes of travel as well.
        Our transportation network of roads, runways, and railways
    has always been central to the health of our national economy.
    Roads, runways, railways. Nothing about September 11 changed
    that. Yet as I review the President's budget request for the
    Department of Transportation for fiscal year 2003, I am greatly
    disappointed by its lack of balance.
        Hugely increased sums are requested for transportation
    security. I do not doubt that these increased sums are needed,
    and I support them, but these increases for security are more
    than offset by a dramatic $9 billion cut to our investment in
    our Nation's highway infrastructure. As such, even with all of
    the increased funds requested for transportation security, the
    overall budget for the Department of Transportation drops by
    $1.7 billion, or almost 3 percent. While our investment in
    highway construction has risen in recent years, the fact is
    that we have not yet begun to reverse the trends of
    accelerating road deterioration and worsening congestion.
        I believe that many of my colleagues in the Senate will
    agree that we should be looking at ways to move our investment
    in highways forward, not backward. Our economy is in recession.
    If there ever is an appropriate time to consider putting
    thousands of people out of work, now is not the time.
        During the Senate's consideration of the TEA-21 highway
    bill, I, along with Senator Gramm of Texas, championed an
    amendment that sought to ensure that our investment in highways
    would fully recognize the receipts coming into the highway
    account of the Highway Trust Fund. Up until that point, there
    was no recognition in either the budget, or the appropriations
    processes, of the billions of dollars that the public was
    paying into the Trust Fund, billions that were staying in the
    Trust Fund unspent, while our road conditions worsened.
        While we were successful in TEA-21 in ensuring that
    spending would keep pace with revenues, not much was said at
    the time about the fact that the highway account of the Trust
    Fund already had an unspent balance of $14.7 billion. Page 744
    of President Bush's budget now shows that the unspent balance
    has grown to $18.1 billion.
        While a portion of this balance must be reserved to pay for
    obligations already incurred, the fact is that the majority of
    this balance represents tax dollars that were paid at the gas
    pump but are not being utilized for highway construction or
    renovation. If there ever is a time to consider tapping a
    portion of this balance to keep our highway construction
    enterprise moving forward, now is the time.
        Whether we will be able to achieve that goal will depend on
    the larger budget debate that will commence shortly in the
    Budget Committee. Chairman Murray is a member of that
    committee, as am I. I hope to work with her and with other
    Members to see to it that we do not put hundreds of thousands
    of jobs at risk while our economy is attempting to pull itself
    out of recession.

                              PREPARED STATEMENTS

        Thank you, Madam Chairman, and thank you, Ranking Member
    Shelby, and thank you to the members of the subcommittee on
    both sides.
        That completes my statement.
        [The statements follow:]

                  Prepared Statement of Senator Robert C. Byrd

        Thank you Madam Chairman.
        I commend you and your ranking member, Senator Shelby, for moving
    out rapidly and initiating hearings on the Administration's budget
    request for the Department of Transportation. I, too, want to wish
    Secretary Mineta a speedy recovery and I ask you, Mr. Jackson, to
    please pass along our warm wishes to the Secretary.
        The events of September 11 focused the minds of the American people
    on our national transportation system in important new ways. Our entire
    national aviation system was brought to a halt. People needed to
    urgently find alternative ways to travel. Citizens reflected on the
    security of our transportation system in ways that they never have
    before. They reflected not only on the security of our aviation system
    but on all the other modes of travel as well.
        Our transportation network of roads, runways and railways has
    always been central to the health of our national economy. Nothing
    about September 11 changed that. Yet, as I review the President's
    budget request for the Department of Transportation for fiscal year
    2003, I am greatly disappointed by its lack of balance.
        Hugely increased sums are requested for transportation security and
    I don't doubt that these increased sums are needed. However, these
    increases for security are more than offset by a dramatic $9 billion
    cut to our investment in our nation's highway infrastructure. As such,
    even with all the increased funds requested for transportation
    security, the overall budget for the Department of Transportation drops
    by $1.7 billion or almost 3 percent.
        While our investment in highway construction has risen in recent
    years, the fact is that we have not yet begun to reverse the trends of
    accelerating road deterioration and worsening congestion.
        I believe that many of my colleagues in the Senate will agree that
    we should be looking for ways to move our investment in highways
    forward, not backward. Our economy is in recession. If there ever is an
    appropriate time to consider putting hundreds of thousands of people
    out of work, now is not the time.
        During Senate consideration of the TEA-21 Highway Bill, I, along
    with Senator Gramm of Texas, championed an amendment that sought to
    ensure that our investment in highways would fully recognize the
    receipts coming in the highway account of the Highway Trust Fund. Up
    until that point, there was not recognition in either the Budget or
    Appropriations processes of the billions of dollars that the public was
    paying in the Trust Fund--billions that were staying in the Trust Fund
    unspent while our road conditions worsened.
        While we were successful in TEA-21 in ensuring that spending would
    keep pace with revenues, not much was said at the time about the fact
    the highway account of the Trust Fund already had an unspent balance of
    $14.784 billion.
        Page 744 of President Bush's budget now shows that the unspent
    balance has grown to $18.126 billion. While a portion of this balance
    must be reserved to pay for obligations already incurred, the fact is,
    the majority of this balance represents tax dollars that were paid at
    the gas pump but are not being utilized for highway construction or
    renovation. If there ever is a time to consider tapping a portion of
    this balance to keep our highway construction enterprise moving
    forward, now is the time.
        Whether we will be able to achieve that goal will depend on the
    larger budget debate that will commence shortly in the Budget
    Committee. Chairman Murray is a member of that Committee as am I. I
    hope to work with her and other members to see to it that we do not put
    hundreds of thousands of jobs at risk while our economy is attempting
    to pull itself out of recession.
        Thank you Madam Chairman.
                                     ______

                    Prepared Statement of Senator Herb Kohl

        Good morning and thank you for holding this important hearing
    today. I believe that the work of this Subcommittee is essential as we
    continue to secure our transportation system post September 11. Welcome
    Under Secretary Jackson and Under Secretary Magaw. I look forward to
    your comments this morning.
        The Senate has been debating a stimulus bill to help jump start our
    economy. Many of my colleagues disagree on the best way to do this in
    the short run. But one thing is certain, long term sustained economic
    growth requires a modern transportation network that allows for people,
    goods and services to move about freely and safely.
        That is why I am disappointed that the President's budget request
    includes a 29 percent cut in much needed funding for highway
    construction. During these uncertain economic times, we cannot afford
    such a drastic cut in funding for projects that will help create jobs
    and help move people and goods safely and efficiently.
        I would like to commend you and the Department of Transportation on
    your work as it relates to the many provisions included in the Aviation
    and Transportation Security Act. I am encouraged to see that the
    President's Budget request includes $4.8 billion in total funding for
    the new Transportation Security Administration. However, I am
    frustrated by the lack of attention the department seems to be giving
    to the security of chartered aircraft and general aviation. I will
    reserve further comments on this issue until the questioning period,
    but I want to put our witnesses on notice that this is a priority for
    me.
        There can be no need more urgent than the safety of the American
    flying public. And the simple fact is that, if air travel is not safe
    and passengers do not fly, the entire airline industry is imperiled. We
    must ensure that we have sufficient resources to bring aviation
    security to an acceptable level, whether that means buying the
    necessary numbers of explosive detection machines to screen checked
    luggage, paying for the hiring and training of additional airport
    personnel to screen checked baggage, or investing in high tech security
    devices to identify suspected terrorists.
        Last Fall, when we passed the Aviation and Transportation and
    Security Act, Congress acted to fix a gaping hole in the entire
    aviation security system. While enormous efforts were being made to
    check carry-on bags after September 11, until the changes mandated by
    this legislation, almost all checked bags were still being loaded onto
    our passenger airplanes with no screening. This failure to check bags
    was creating an unacceptable security risk for thousands of passengers
    everyday and leaving our air transportation system vulnerable to
    terrorists.
        But now, as a result of this recently passed legislation, all
    checked bags must either be screened for explosives or subject to bag
    matching so that we know the person who checked the bag actually
    boarded the airplane. Most important of all is the requirement that, by
    the end of this year, all bags must be screened by explosive detection
    machines.
        But this legislation will be worthless unless we provide adequate
    funding to purchase and install the explosive detection machines. I
    will therefore expect our witnesses today to tell us how the
    Congressional mandate to install these machines and screen all checked
    baggage will be fulfilled by the end of this year.
        Thank you Madam Chairman and I look forward to a productive
    hearing.
                                     ______

                Prepared Statement of Senator Richard J. Durbin

        Chairman Murray, thank you for holding this important hearing on
    the U.S. Department of Transportation's fiscal year 2003 (fiscal year
    2003) budget. I look forward to working with you and our Subcommittee
    colleagues this year to address a number of critical transportation
    issues.
        I also want to say a word of welcome to Deputy Secretary Michael
    Jackson and new Under Secretary of Transportation for Security John
    Magaw. This Congress and this Administration are facing an
    unprecedented challenge on aviation and transportation security. We
    will be pressed to find adequate resources to help state and local
    governments deal with transportation security and fund critical
    infrastructure projects.
        I want to touch on a few issues this morning.
                                     amtrak
        On February 1, Amtrak President George Warrington asked Congress to
    provide $1.2 billion in fiscal year 2003 to ensure the continued
    nationwide operation of Amtrak. Without this influx of federal funds,
    Amtrak officials will be forced to immediately cut jobs and may have to
    eliminate long distance train service as soon as October.
        As you know, the President included $521 million for Amtrak in his
    fiscal year 2003 budget. This is the same level of funding as last year
    and represents less than half of Amtrak's request. While I believe this
    funding level is inadequate and short-sighted, it is my hope that
    Congress, and this subcommittee in particular, will take the necessary
    steps to fund fully Amtrak and preserve our only national passenger
    rail system.
        I've also been working with the Senate Commerce Committee and have
    cosponsored legislation that would reauthorize Amtrak, provide
    emergency funds for security and life safety, and further develop high-
    speed passenger rail service in corridors throughout the country.
        But while we wait for action in other committees, we need to go the
    extra mile to ensure that intercity passenger rail service is preserved
    and that no jobs are lost in this critical transportation sector. We
    need this Administration as a partner in this important endeavor.
    Yesterday, I met with Federal Railroad Administrator Allan Rutter and
    expressed my opinion that unless this Administration steps forward and
    gives us a positive signal about Amtrak, then national passenger rail,
    as we know it, will come to an abrupt and premature end later this
    year.
        My home state of Illinois benefits greatly, both directly and
    indirectly, from Amtrak jobs and service. An average of 48 Amtrak
    trains run each day from 30 Illinois communities on more than 1,000
    miles of track. Ridership in the state exceeded 2.9 million during
    2000. In 1999, Amtrak employed more than 2,000 Illinois residents and
    spent $45.6 million for goods and services in the state.
                               aviation security
        I commend the Department and the new Transportation Security
    Administration (TSA) for moving quickly to organize and implement the
    aviation security legislation Congress passed last fall. However, as
    Inspector General Ken Mead points out, many of the major challenges lie
    ahead. For example, deploying and installing explosive detection
    systems (EDS) and hiring as many as 40,000 employees for screening and
    other aspects of airport and aircraft security.
        I understand the current requirements that 100 percent of checked
    baggage must been screened by EDS or an alternative method such as
    positive passenger match. That's a major improvement from the 10
    percent figure we were quoted last fall. However, EDS machines still
    play too small of a role in screening checked baggage. The
    manufacturing and deployment backlog are primarily to blame. However,
    the Inspector General has found these EDS machines to be underutilized.
        Inspector General Mead suggested that using the currently deployed
    EDS equipment to its fullest potential more than 200 bags per machine
    per hour would more than quadruple the overall percentage of EDS
    screened checked luggage. He has also recommended that current EDS
    staffing levels must be significantly increased to efficiently screen
    checked luggage. These actions would bring an added security dimension
    to commercial aviation. And I hope the new TSA takes these
    recommendations seriously.
        I also want to inquire about how TSA is working with smaller
    airports around the country. I understand that the Department has
    dispatched teams to evaluate airports and their security operations. I
    hope that the Department will work cooperatively with airport operators
    to help solve many of the security challenges that we'll face in the
    coming months and will expeditiously process their information and
    requests, such as bomb-blast analyses.
                                 highway funds
        I was alarmed by the Administration's almost $9 billion cut to the
    federal highway program. According to the Illinois Department of
    Transportation, this could mean a $225-$250 million reduction for the
    State of Illinois a quarter of the State's federal highway funds. And
    as many as 10,000 Illinois jobs could be affected (American Road and
    Transportation Builders Association). As we try to alleviate traffic
    congestion, improve the environment, stimulate the economy, and provide
    increased highway access, I find it remarkable that the Department
    would slash highway funding to the states. I will stand with my
    colleagues on both the authorization and Appropriations Committees to
    correct this serious mistake.
                      chicago aviation capacity expansion
        Finally, I'd like to put a plug in for legislation that I
    introduced in the Senate, S. 1786. It would codify an historic aviation
    agreement between Illinois Governor Ryan and Chicago Mayor Daley.
        This agreement and this legislation are rapidly gaining broad-based
    support. To date, there are 18 Senate cosponsors and nearly 90 House
    cosponsors. Groups ranging from business to labor to general aviation
    to airlines to small/community airports across the Midwest support this
    historic agreement and my legislation.
        Chicago O'Hare International Airport was the world's busiest last
    year. It is also one of the country's most congested and chronically
    delayed airports. For all practical purposes, the O'Hare airfield
    hasn't been materially improved since 1971 and continues to use an
    antiquated runway layout plan. By simply reconfiguring the airport
    layout, many weather-related delays could be avoided. By replacing old
    runways with safer configurations, delays and cancellations would be
    greatly reduced, eliminating delays that often ripple through the
    entire nation.
        This agreement also moves ahead with a south suburban airport near
    Peotone. Common sense dictates that we'll need the capacity in the
    future. But just like expanding O'Hare doesn't eliminate the need for a
    third airport, building Peotone won't replace O'Hare modernization.
    Both are needed to address serious aviation capacity problems in the
    region.
        Meigs Field on Chicago's Lake Michigan shoreline would also be
    preserved under this State-City aviation agreement.
        Governor Ryan and Mayor Daley deserve great credit for ending more
    than two decades of inaction on airport modernize and expansion. But,
    in order for this agreement to become reality and for it to have long-
    term benefits, it must be codified. Thus, passing S. 1786 must be a
    high priority.
        I would welcome the Department's support.
        Chairman Murray, again thank you for the opportunity to talk about
    these issues and the fiscal year 2003 Budget.
                                     ______

                 Prepared Statement of Senator Patrick J. Leahy

        Madam Chairwoman, thank you for calling this hearing today. I would
    like to thank our witnesses, Deputy Secretary Jackson and Under
    Secretary Magaw, for coming before the subcommittee to discuss the
    President's transportation budget request for 2003.
        I share the President's concerns about funding necessary rail,
    port, and air security programs. But the budget blueprint he has put
    forward is really the tale of two budgets. The President has properly
    emphasized the budget to combat terrorism, but his domestic budget is
    riddled with many opportunistic cuts, motivated by ideology and special
    interests, that would hurt America's multi-faceted transportation
    system.
        For instance, the President calls for the break-up of Amtrak
    without offering a comprehensive alternative national rail
    transportation plan. He also does not restore funding to the Federal
    Highway Trust Fund, which is $8.6 billion short; a deficit that will
    leave Vermont highway projects $32.2 million in the hole next year. And
    his budget cuts direct funding for the Essential Air Service program
    that brings air service to small communities, like Rutland, Vermont.
    Without this program, air passenger service to dozens of small
    communities across the country may end.
        I look forward to reviewing the testimony from today's hearing to
    see the direction the Administration plans to take in the coming year.
    Thank you.
                                     ______

             Prepared Statement of Senator Ben Nighthorse Campbell

        Thank you Madam Chairwoman.
        I would first like to thank the Chairwoman, this Committee, and the
    Department of Transportation for providing leadership and essential
    transportation funding over the years. My state of Colorado is growing
    by leaps and bounds. The funding that has been provided by this
    Committee has made a profound impact on the development of the
    transportation infrastructure that is of utmost importance in
    sustaining a favorable economic climate and a high quality of life in
    Colorado as it continues to grow.
        I would like to point out a couple of projects that have had
    particular impact on my state. The funding for the Titan Road/State
    Highway 85 intersection greatly improved the safety in a community that
    has experienced terrible accidents and deaths at this crossing,
    including the deaths of six teenagers in 1995. Additional projects have
    enhanced the economic vitality and provide increased mobility such as
    the multi-modal T-REX project in metro Denver, which I expect will be a
    model project for the rest of the nation. This Committee has also
    provided much needed funding to begin repairs on the Broadway Bridge in
    Denver, which was constructed in the 1950's and is in such a state of
    disrepair that it has become a safety hazard for our thousands of daily
    commuters.
        With the Homeland Defense build-up in our country, we are facing a
    major fiscal challenge as we look at the priorities for fiscal year
    2003 and beyond. My constituents and the entire nation are looking to
    this Committee to provide the necessary funds to protect those who
    travel our country's skies, seas, rails, and roads. I look forward to
    working with all of you to meet this challenge and to ensure our
    nation's priorities are balanced.
        I would like to thank our distinguished guests for coming up here
    today to speak with us and I look forward to hearing their statements.
    I'm sorry that my good friend Secretary Mineta was not able to join us
    and I'm sure we all wish him a healthy and speedy recovery. I don't
    want to take up anymore of the Committee's time as I have a number of
    questions I'd like to ask at the appropriate time.

                                HIGHWAY FUNDING

        Senator Murray. Thank you very much. We will go ahead and
    move forward on questioning. Mr. Jackson, as I mentioned in my
    opening statement, OMB Director Daniels maintains that the law
    requires that DOT request cuts of more than $8\1/2\ billion in
    highway investments in 2003. As I said, if those cuts get
    enacted it will result in a loss of over 350,000 jobs.
        Your budget asks us to ignore law, and to actually change
    current law, in several areas. You ask us to ignore existing
    law and enact changes so you can eliminate communities from the
    Essential Air Service program. You ask us to ignore existing
    law and impose new, unauthorized user fees. You ask us to
    ignore existing law and divert Transit Formula Funds for the
    President's New Freedom Initiative.
        If the President is concerned about jobs, and he is willing
    to ignore existing law in all of these other areas, why is he
    requesting infrastructure investment cuts of more than $8\1/2\
    billion?
        Mr. Jackson. Senator, the President's budget is $4.4
    billion below the TEA-21 estimated guaranteed obligation
    limitation, and that is a significant movement obviously. We
    believe, with Senator Shelby, that reauthorization of TEA-21
    should look at mechanisms to make sure that we do not have
    spikes of this magnitude in the funding for this crucial
    program. We also understand that if you look at the historical
    payout, the 2003 spending will be roughly a 3-percent cut.
    About 27 percent of the amounts in 2003 will be outlayed in
    2003, so the full effect of the reduction in the highway budget
    would not be felt in 2003.
        We believe that the discussion on reauthorization should
    address the question whether to allow DOT to smooth highway
    funding, even in a year like 2003 when the RABA adjustment
    would be negative but the cumulative RABA adjustment is
    positive. There is this significant change in the level of
    highway funding, but in order to be able to meet the
    President's core focus on homeland security and the work that
    has to be done at the Department in standing up the new
    Transportation Security Administration, we believe overall that
    the mechanism, while difficult in this year, is a defensible
    approach to take as we start into this conversation.
        Senator Murray. I would not disagree that reauthorization
    is important, but it is not going to help us in time to help
    350,000 jobs, and it is a 10-percent cut in 2004, correct?
        Mr. Jackson. Yes, ma'am.
        Senator Murray. Well, I hope we get your help, and the
    President's help in working with us as Chairman Byrd alluded
    to, to make up the shortfall. We have contracts out there, we
    have jobs, we have a lot of projects that are going to be
    really hurt if we do take this hit in this budget, so I hope we
    get the President's willingness to work with us.

                                 AMTRAK FUNDING

        Let me ask you another question regarding Amtrak. In your
    budget, you requested that Amtrak funding be frozen at $521
    million, and your budget states that Amtrak is in need of
    legislative reforms. Amtrak maintains that at that level of
    funding they will go bankrupt. This is not news to you, I know.
    You sit on the Amtrak board, as Secretary Mineta does. Is the
    Administration planning to submit a bill to us to show us
    precisely what reforms you would propose that would enable
    Amtrak to continue operating at the subsidy level of $521
    million that you request?
        Mr. Jackson. Senator, Secretary Mineta believes, and I
    share this belief with great conviction, that inter-city
    passenger rail is an absolutely indispensable portion of our
    transportation network. We must have a viable inter-city rail
    system. We also understand that the system that we have is
    severely broken. There is a nuance in the President's budget,
    and I do not want us to miss it, so I will emphasize it. The
    $521 million--billion request--million dollar, excuse me. I
    really fixed the problem there, didn't I.
        Senator Murray. Thank you.
        Mr. Jackson. The $521 million request is a placeholder so
    that we can allow conversation about early reauthorization to
    take place. We anticipate engaging with the Congress in what
    has been a 30-year, thorny, difficult problem to figure out how
    to manage this issue.
        I, along with some of my colleagues from the White House
    and the Department, met with the Amtrak Reform Council this
    morning as they prepare today to release their final
    recommendations. We have met to review their thoughts on how to
    address the issues, so we know that there will be an ongoing
    dialogue.
        Senator Murray. What do you mean by a placeholder? Are you
    going to come back and ask for more?
        Mr. Jackson. We are open to the opportunity of revisiting
    the Amtrak budget mark, in light of how the reauthorization
    debate takes place.
        Senator Murray. You are going to come back before the
    subcommittee in March. At that time will you be able to
    identify precisely what costs you think can be eliminated from
    Amtrak, the cost structure, so that they can stay solvent at
    the $521 million?
        Mr. Jackson. I do not believe that $521 million is more
    than a relatively short-term funding level. That is what we
    have requested this year. Amtrak's president has stated that at
    this funding level they could not continue to operate the
    railroad with its current network, so I think our policy
    challenge is to figure out what we need, how much we can afford
    to pay, and how we are going to pay for it. We are currently
    looking at these issues in light of the financial information
    that Amtrak has made available to the public, and we have done
    an internal study at DOT of Amtrak financing.
        The Amtrak board has retained an outside consulting firm to
    help them understand the cost drivers of Amtrak's system. They
    have offered to share some of that work with the Administration
    in our efforts to try to find a longer term fix to the Amtrak
    issue. We will be working this very aggressively. I am
    personally going to spend time on this, and the Secretary is,
    too.
        Senator Murray. I look forward to our March discussion.
    Amtrak has said that they need $1.2 billion. You are saying
    they need $521 million. I think it is incumbent on the
    Administration to show us how they can remain solvent with $521
    million if they want to stay alive.

                          AIRPORT PASSENGER SCREENING

        Let me ask you one question, Mr. Magaw, before my time is
    up. On February 18, you are going to assume the existing
    private sector contracts to do this screening at our airports.
    There have been some articles in the paper and stronger rumors
    on the street that some of these companies are seeking to take
    the taxpayers to the cleaners on their way out the door. Is the
    cost of these contracts going to greatly exceed the $700
    million estimate that you provided at the end of last year?
        Mr. Magaw. We do not believe that they will exceed that
    amount at this point. We are trying to continue to negotiate
    with the contractors so that we are ready to take the current
    screening contracts over on the 17th. We want to keep it fairly
    competitive, with as many contractors as we can. We do not
    anticipate us going over that amount.
        Senator Murray. Do you have any leverage when you are
    negotiating these contracts?
        Mr. Magaw. As long as there is competition, we have some
    leverage. We are trying to take over some of the contracts as
    they exist, if we can.
        The problem with that is since most of those contracts were
    negotiated, there has been a lot of security added since 9/11.
    We are trying to do the very best job we can of being
    reasonable in terms of the expenditure.
        Senator Murray. I understand that you are not going to
    assume the contract of Argenbright. Is that related to the
    price that they were charging?
        Mr. Magaw. They have a continuing contract with the
    airline, so we are going to reimburse the airline, not
    negotiate another contract. For a short period of time in all
    of these issues, until we start getting our Federal force
    online, we are going to put a Federal person from TSA at each
    one of those airports the day before, or 2 days before, to
    watch very carefully how this takes place.
        If there are any groups not doing their job, we are going
    to replace them. We are also starting to hire the new Federal
    security directors for the airports, so while that is taking
    place and the new screeners are being trained, the contracts
    will be monitored very closely.
        Senator Murray. I know Argenbright has 40 percent of the
    security services at the Nation's airports. If you are not
    assuming their contract, are we going to have enough Federal
    employees by 18 February to fill those positions?
        Mr. Magaw. The employees within the company that are doing
    the screening are not where the problem lies. The problem lies
    mainly with the companies, in terms of being able to contract
    with them. We are going to move in and watch the people and the
    groups that are actually doing the screening. The patch on
    their shoulder is irrelevant to us, because what we are looking
    for is quality work until we get the Federal screeners trained.
    We will not have any trained Federal screeners to put in there
    on February 17.
        But we are going to have close oversight and we will be
    monitoring it. We do have a backup plan if there is a company
    that turns and walks, or a company that pulls their people out.
        Senator Murray. Do you do not expect major disruptions on
    18 February?
        Mr. Magaw. In any of our conversations, negotiations,
    whether it has been with the Deputy Secretary or myself, or the
    lawyers who are working on the contracts, those who have had
    information and worked with the airport managers are making the
    commitment, along with the airlines, to make this work during
    this changeover period, and we believe that to be the fact.
        Senator Murray. Thank you. Senator Shelby.

                            COAST GUARD CAPITAL PLAN

        Senator Shelby. Mr. Magaw, I know you have been busy on
    other things, for good reason. My concern is that the Coast
    Guard's capital program has not been reviewed or restructured
    to reflect the emerging port and water security requirements
    identified in the past 4 months. In light of the contention
    that roughly 25 percent of the Coast Guard's operations will be
    on homeland security activities, have you at this point
    reviewed the Deepwater program, or have you been briefed on the
    Coast Guard's capital plan as it relates to homeland security,
    and if not, will you?
        Mr. Magaw. I will get a more in-depth briefing. The
    Secretary knows the in-depth answer to that question.
        Mr. Jackson. Senator, I think it is obvious that the Under
    Secretary must be involved in the Coast Guard's capital plan.
        Senator Shelby. I know he has been busy as heck.
        Mr. Jackson. He has, but we will give him something else to
    do, too. I have had several recent briefings on the Coast
    Guard's progress, and I am tracking that very closely. You have
    it nailed exactly right. About 1 percent of Coast Guard's
    mission focused on homeland security prior to the 11th, and
    then we surged to about 58 percent. We are now proposing a new
    normalcy level at about 22 to 25 percent of the budget.
        We believe, and the Commandant has done an evaluation of
    this, that the fundamental platform modernization that we are
    doing will serve that new normalcy mission well, and that
    Deepwater is an essential component of making us able to meet
    the needs. There are other port security and improvement issues
    that we will take up with the Congress' help. We have $93
    million to do some port security work this year, and we are
    moving out aggressively to use that money wisely to strengthen
    work there, too.

                               AVIATION SECURITY

        Senator Shelby. Mr. Magaw, the Aviation and Transportation
    Security Act envisions the development of a data base to
    identify individuals who are suspected terrorists, and
    procedures to turn them over to law enforcement officials. I
    have read press accounts that the Department has prototype
    systems under development. I believe myself that information
    technology can be a very useful law enforcement tool to prevent
    terrorists and other criminals from ever boarding the aircraft.
    To be effective, it will be necessary to collect personal
    property information that we envision.
        Mr. Magaw, do you agree, though, that the personal
    information collected for official Government use--in other
    words, to protect the public--by Government contractors should
    not be allowed to be used for commercial purposes unless the
    individual grants his or her consent?
        Mr. Magaw. I do, sir. That is right. This has to be very
    well protected.
        Senator Shelby. Most Americans that I have talked to
    understand the need for security. We give up some things for
    security only, but not for commercial use.
        Mr. Magaw. That is right.
        Senator Shelby. And that has to be a strong proviso there.
        Mr. Magaw. That is right, yes, sir.
        Senator Shelby. Mr. Magaw, airport security--I am not
    picking on you. I do not want to upset Secretary Jackson.
        Mr. Jackson. I will get mine, I am certain, yes, sir.
        Senator Shelby. Mr. Magaw, you have indicated, I believe,
    in previous congressional testimony that it is your intention
    to have a training facility at each airport to facilitate the
    training of Transportation Security Administration personnel.
    Have you held any discussions with airport operators on the
    lease or rental agreements necessary to accommodate the TSA's
    use of space for training, screening, and other purposes at
    airport facilities?
        Mr. Magaw. We have had discussions about screening space
    and those kinds of things. As far as being able to tell them
    what kind of space we are going to need for training and our
    Airport Security Director, those needs are starting to be
    evident to us in terms of size and how much space.
        Senator Shelby. You will rent that space, will you not?
        Mr. Magaw. Absolutely.

                        REVENUE ALIGNED BUDGET AUTHORITY

        Senator Shelby. Secretary Jackson, I know you have been
    smothered by the Aviation Security Stabilization Act, but I
    would like to ask you to indulge me just a little on the
    practical and political impact of RABA--how do you say it?
        Mr. Jackson. RABA, yes, sir.
        Senator Shelby. RABA has been in the budget request since
    fiscal year 2000. First, compared to the authorized and
    guaranteed level of highway spending included in TEA-21 for the
    fiscal year 2002, the actual appropriations for highways was
    $4.6 billion higher than the authorized level, what could be
    called a $4.6 stimulus investment in highways. Unfortunately,
    neither Congress nor the Administration received the credit for
    that exceptional additional increase in highway spending.
        The corollary to the fiscal year 2002 experience is what
    your budget request for 2003 portends. Just at the time when
    everyone is trying to reassure the American public and industry
    that the economy is getting better, the budget request proposes
    an $8\1/2\ billion cut, a 26-percent decrease in overall
    highway program amount. It is hard to say anything nice about
    that request. I cannot imagine that it is a request that you
    are over enthusiastic about defending. Can you tell us why that
    is the responsible, desirable level of highway investment
    consistent with a budget theme of economic security?
        Mr. Jackson. Senator, the President's budget tries to
    balance a number of very difficult budget priorities this year.
    We have made very significant investments that reflect the
    challenges that face us in a post-9/11 environment. This was
    one of the toughest decisions that we had to accommodate in
    this budget. That is a fact. But we know that over the first 5
    years of the TEA-21 authorization period we have enjoyed quite
    a substantial addition above the guaranteed funding levels that
    were in the Act, and that the States have rightfully put this
    to good use in our highway system.
        For 2003, highway funding would be $4.4 billion below the
    intended mark. As I said, we are very much committed to working
    with the Congress during reauthorization of TEA-21 to try to
    smooth out authorized highway funding levels so that such
    swings do not occur, or that we minimize the effects of such
    swings. I think that we have a chance to look at the way
    highway funds are currently obligated and outlayed in the
    reauthorization debate, and we still have an opportunity to
    address the issue of the $4.4 billion as it is outlayed over
    multiple years.
        About 27 percent of highway funds are spent in the first
    year, around 41 percent in the next year, and then sending
    trails off over multiple years thereafter. So I think there is
    a window to take up the question, if the Congress is willing to
    work with us, on how we level out these issues. But for this
    year there are some very tough choices that had to be made in
    our budget. The Secretary and I fully support the President's
    desire to address the core objectives that he laid out in the
    State of the Union, and that our budget reflects.

                              FAA CAPITAL PROGRAM

        Senator Shelby. Senator Byrd has gone now. I wish he were
    still here, because he would be really involved with all of us
    on this issue.
        One last question. I will be careful and quick. FAA capital
    program. We all understand the need there. Would you commit
    again, Mr. Secretary, that you will have some of your able
    staff to do a ``soup-to-nuts'' review of the FAA's capital
    program?
        Mr. Jackson. I will be happy to look through all of the
    capital program expenditures and make sure we answer any
    questions you may have about them.
        Senator Murray. Senator Bond.

                    UNOBLIGATED HIGHWAY TRUST FUND BALANCES

        Senator Bond. Thank you, Madam Chair, and following up on
    the questions that everybody else is talking about, yesterday
    my office was in contact with the Federal Highway
    Administration attempting to learn the actual amount of the
    unobligated funds in the Highway Trust Fund. As we look at not
    only the appropriations process but the pending legislation, it
    would be extremely helpful for us to have a ballpark figure of
    what the unobligated funds might be so we know what we are
    dealing with, with the caveat that all the figures are not
    final. Is there any figure you can give us now, or could you
    give us in a short time?
        Mr. Jackson. Senator, I will pledge to get you the best
    figures we have just as quickly as we can, and we will work
    with your office to make sure we quickly deliver good data to
    you and you get everything you need to be able to take on this
    question.
        [The information follows:]

        At the end of fiscal year 2001, the Highway Account of the Highway
    Trust Fund had unpaid obligations in excess of its cash balance. The
    cash balance in the Highway Account was $20.372 billion. Outstanding
    obligations subject to payment from the Highway Account were $39.77
    billion. In addition, there were $27.299 billion in unobligated
    authorizations that would eventually be obligated and require payments
    from the Highway Account.
        The comparable figures for the Mass Transit Account are: cash
    balance of $7.369 billion; unpaid obligations of $1.306 billion; and
    unobligated authorizations of $29 million.

        Senator Bond. Having worked on that before, we are very
    much interested in seeing if we cannot come to a good
    resolution with you and the members of this Committee and the
    EPW Committee on just how we can take care of this shortfall.

                INTEGRATION OF AMERICAN AIRLINES/TWA WORK FORCE

        I mentioned to you earlier our frequent conversations about
    the union security issues and the integration of the American
    Airlines employees and TWA employees in American Airlines.
    Given the potential disruption to the airline system, the fact
    that other unions are already using binding arbitration, and
    the fact we clearly need some kind of equitable solution to get
    beyond these contentious labor disputes, and I have laid out
    all my concerns in the past, what can the Department of
    Transportation do to help take care of these issues in a way
    that will avoid disruption and assure that all of us who fly
    the new American Airlines have the same good service we had in
    the past?
        Mr. Jackson. Senator, as you know from our conversations
    and from your conversations with Secretary Mineta we very much
    admire and respect the role that you are taking with your
    constituents at TWA in trying to find an equitable solution to
    the integration with their new colleagues from American
    Airlines.
        The disputes in the aviation industry between labor and
    management have been many and protracted, and it takes too long
    to resolve issues of equity between the parties. Our system
    does not, in my personal view, well support quick resolution of
    these crucial issues, so I believe that we would be quite
    willing to have conversations with industry, labor, and
    Congress about what could be done to help find an equitable and
    fair resolution of these types of disputes.
        They are not something over which that we have inherent
    statutory responsibility at DOT, that is the ability to go in
    and resolve the labor problems. The merger case between TWA and
    American, as you know, sir, from your work in this area, was
    approved by the Department of Justice, and we did not have a
    chance to impose conditions on the approval. So I am happy to
    continue to look at this issue with you. It is a very important
    issue.
        Senator Bond. Well, we appreciate your looking at it. We
    have many discussions, and I know, number one, it is not an
    easy issue. You may not have any explicit statutory authority.
    We have asked the National Aviation Board to look at it, and I
    appreciate your continuing to look at it, but as you continue
    to look at it, more and more employees with many years of
    seniority are being furloughed as airline traffic continues to
    be slow in rebounding, and I would hope that there may be some
    at last voluntary efforts to begin the process to encourage
    mediation essentially between the two employee groups.
        I am sure--the company itself I know wanted to see this
    solved. They have a limited role in this, according to them,
    and if you can provide some assistance and urge some amicable
    settlement, because they are all going to have to be working in
    the same airplanes and serving the airline public, I think it
    would be extremely helpful, so we will continue to work with
    you and hope that we find some way to get everybody in the same
    planes agreeing on how they should be there.

                            AVIATION LOAN GUARANTEES

        But I also asked you about Vanguard, and as I told the
    chair as we were walking along, I said, there is the cynical
    view of banks that a banker is one who lends you an umbrella
    and takes it back when it rains. Well, after September 11, we
    saw that rain was falling on airlines, and as far as I can
    tell, the ATSB has decided to give an umbrella to America West,
    but I do not know of any others, and Vanguard obviously,
    without a Federal loan guarantee, is going to be yet another
    casualty of the attacks on September 11.
        Can you help us understand the issues at hand? We
    understood that one of the problems was that they really needed
    the loan, and that kind of fits the definition of why we set up
    the loan program. Maybe you can help us determine what needs to
    be done and what conditions you feel are appropriate before
    awarding such a loan.
        Mr. Jackson. Yes, Senator. I want to say at the start that
    the issue involves the evaluation of sensitive financial
    information that has been submitted.
        Senator Bond. And I agree you cannot get into that. We are
    not going to substitute our judgment for your judgment. We just
    want your attention on it.
        Mr. Jackson. Yes, sir. Well, I can tell you, this one
    certainly has Norm Mineta's attention. It has Michael Jackson's
    attention as well. We have had a series of conversations about
    this. Vanguard has submitted two applications, and so far we
    have not found a formula that meets both our requirements and
    Vanguard's requirements under the program. But I will
    characterize for you what Senator Mineta's counsel is about
    this program.
        It is our job to try to find out how to make this program
    work. We are not sitting in a chair just waiting for people to
    throw things over the transom and say, ``Here is our
    application,'' and we say ``Yes'' or ``No.'' That is absolutely
    not our approach to this issue. We had multiple rounds with
    America West before we approved that one.
        Senator Bond. Yes. They told me it was harrowing.
        Mr. Jackson. Yes, sir, for all parties, I suspect.
        Senator Bond. Yes.
        Mr. Jackson. But I think we came out with a very fair and
    good resolution of that one. We have told this particular
    applicant that we are willing to sit down and work through what
    is acceptable and how to structure something that is consistent
    with the program requirements, and then it will be Vanguard's
    choice as to whether or not they can meet or wish to accept
    those conditions. Our obligation is to work proactively and
    aggressively. We met with them at our office at DOT to help
    them understand how to approach this issue, and we will keep
    our door open and we remain eager to work with them.
        Senator Bond. Mr. Secretary, it looks like we are going to
    have lots of phone time together here in the weeks and months
    ahead, and I appreciate your efforts. Thank you.
        Mr. Jackson. Thank you, sir.

                             HIGHWAY SAFETY PROGRAM

        Senator Murray. Thank you. Mr. Secretary, there were over
    40,000 deaths on our Nation's highways last year--that is, by
    the way, more than one World Trade Center incident per month--
    and yet your budget for the National Highway Traffic Safety
    Administration has increased only four one-hundreths of a
    percent, and while you have requested this minuscule increase
    for the entire agency, your detailed budget reveals that you
    want to cut funding for impaired driving prevention by 22
    percent, cut funding for occupant protection by 14 percent, and
    cut funding for safety standards by 20 percent. How do you
    justify these reductions when automotive accidents account for
    more than 90 percent of all transportation fatalities?
        Mr. Jackson. Senator, we agree that the automotive fatality
    issue is the number one safety issue at the Department's
    National Highway Traffic Safety Administration (NHTSA), and
    Administrator Runge is working very aggressively to use our
    funds in an effective fashion. The ``Click It or Ticket''
    program which you mentioned earlier is a good example. We
    believe that we have some significant funds to promote this
    type of highway safety work, and that we have an adequate pool
    of money to move very aggressively here.
        Senator Murray. Have you asked to continue that in 2003?
        Mr. Jackson. I am sorry, I do not know the answer to that
    line item. I will have to check on that and respond to you.
        [The information follows:]

        The President's Fiscal Year 2003 budget for NHTSA does not propose
    any funding specifically for the ``Click It or Ticket'' initiative.
    However, NHTSA is planning to amend its regulations to allow the use of
    Section 157 innovative seat belt project allocations for advertising
    campaigns such as ``Click It or Ticket,'' which was so highly
    successful in region IV during May of 2001.

        Mr. Jackson. It is something that we are pushing this year
    with the States and are very much supportive of.
        Senator Murray. Do you want the States to fund it?
        Mr. Jackson. No. The States are natural and indispensable
    partners in the effort, and we are working very closely to
    leverage that type of partnership with State and Federal
    participation.

                              HIGHWAY SAFETY GOALS

        Senator Murray. You did not send up a fiscal year 2003
    performance plan with the budget, as you have been doing for
    the last couple of years. Can you guarantee us that the
    Department is not planning to abandon or weaken any of the
    safety goals that were included in last year's performance
    plan?
        Mr. Jackson. We are undertaking a detailed look at all of
    our goals. We certainly do not intend to weaken our commitment.
    We intend to look at each one of them and to be able to report
    back to you what we plan to do, what we can do. We are going to
    set the bar high and try to resolve all those important safety
    goals.
        Senator Murray. You are really short of your goal of 86
    percent of all drivers wearing seat belts this year, and I know
    you did not request it, but the Committee last year did set
    aside $10 million for targeted efforts to boost seat belt use
    in the 2002 Appropriations Bill. Your budget terminates that
    initiative, and then cuts NHTSA's other efforts on occupant
    protection by more than 14 percent. Why should we believe that
    you take these performance goals seriously when you present
    budget proposals like this one for highway safety?
        Mr. Jackson. I assure you that we will work with you on the
    budget proposal for this year to make certain that it is being
    directed to programs that will effectively meet these
    challenges.

                          EXPLOSIVE DETECTION SYSTEMS

        Senator Murray. Mr. Magaw, the next major deadline for the
    Transportation Security Administration after you assume all of
    the screening functions on February 18, is to screen all
    baggage for explosives by the end of this year. That is going
    to be a huge undertaking that is going to require installation
    of over 2,000 explosive detection machines at the Nation's
    airports. If you are not able to meet that deadline, what will
    the reason be?
        Mr. Magaw. There are four or five barriers that we are
    making sure we overcome. It is almost like a hurdle race. If
    you knock one over, then it is going to affect the others, and
    so right now we are concentrating on the manufacturers. There
    are two certified manufacturers and a third is close to being
    certified.
        But under their normal production today, they can only
    produce about 300 machines, maybe less than that.
        Senator Murray. In what time frame?
        Mr. Magaw. In the time frame we are talking about.
        Senator Murray. By the end of this year?
        Mr. Magaw. Yes, ma'am.
        Senator Murray. 300, and the need is 2,000?
        Mr. Magaw. The need is near 2,000.
        What the Deputy Secretary and I have been doing, but the
    Deputy Secretary has worked mostly on this, is talking to the
    three companies trying to get the rights to their equipment and
    their production so that we can bring in some larger companies
    to look at the production part of it. If we can get larger
    companies to come in, and we are conferring with them now, to
    take over this production, that number can be reached. That is
    one hurdle. So we are still optimistic that that number can be
    reached.
        One of my concerns, and also the Deputy's and the
    Secretary's, is that we have got to make sure that if we did
    reach this goal with the machines we have now, is there another
    generation hanging right back there that we need to consider as
    we are moving along?
        The other hurdle is working with the airports, which we are
    doing now. How many do we believe they need, and how many do
    they believe they need? Some airports are going to need 60 or
    65 additional machines. Many of them do not have the space for
    more machines, so it is going to take some reconstruction to do
    that.
        Senator Murray. By the end of this year?
        Mr. Magaw. By the end of this year. The supporting of the
    floor also needs to be improved, because they are very heavy
    machines.
        Then the installation cost is fairly expensive, so we have
    to put a package together at each airport. That is why we are
    dedicating a temporary Federal security person for each airport
    within the next week, to start coordinating contracts, union
    negotiations, and those kinds of things.
        We believe we can still meet those requirements. The reason
    we cannot give you the bottom line figures on the TSA budget in
    either 2002 or 2003 is that we have to get through that process
    so that we know basically what each airport is going to cost
    us.
        Senator Murray. Do you think we have a reasonable chance of
    meeting that goal?
        Mr. Magaw. I think we have a reasonable chance of meeting
    that goal. As soon as we realize, and as soon as my judgment or
    the Secretary's or the Deputy's changes in any way, we will
    make sure that you are advised immediately.

                                 EDS CONTRACTS

        Mr. Jackson. Senator, I would be very happy to unpack this
    very crucial question a little bit more if you want, on the
    contracting side. As John has said, we have done some work, and
    I can summarize that approach.
        We have issued a letter contract to the two firms that are
    currently certified to provide EDS machines this week. We had
    sent it to them. We had negotiations with them. Each had some
    deficiencies that they had to address prior to being able to
    get a contract with us, and we have a plan. We have retained
    MacKenzie, who has completed an evaluation of the tools that we
    can use--EDS machines, trace detection and others in
    combination with each other--to do this effectively. We are
    using a demonstration at Salt Lake City right now of trace
    detection equipment to do some explosive detection screening.
        So we have looked at the technological tools that are
    available, we have worked with the firms to give them better
    sourcing data and production data about how to manufacture more
    reliably, and we are now going to look at the second stage
    procurement in which we go out and find another firm to build
    some portion of the whole that is needed, using intellectual
    property which the firms have volunteered to provide to us.
        In addition, there is a third firm, Perk and Elmer, that is
    very close to finishing its certification cycle, and we are
    hopeful that they will successfully complete that. We have
    ``baked them into the mix'' as well. We are negotiating an
    intellectual property license from each manufacturer that would
    allow us to complete the manufacture of the remaining number of
    machines that we need. We have a plan to work through an
    engineering firm that is going to be retained Nation-wide to
    help us assess installation problems, and we are looking for a
    contract to deliver, install, train, and maintain that whole
    equipment set. It is a very complex web of procurement issues,
    but we think we are proceeding systematically.
        Senator Murray. I think it is important that you keep this
    Committee informed as you move through the contract process.
        Mr. Jackson. This is absolutely vital, and we are happy to
    meet with you on a very routine basis to keep you up to speed
    on this, and it is very important.
        Senator Murray. Thank you, I look forward to your briefings
    to keep us regularly informed----
        Mr. Jackson. Great. We would be grateful to have your
    counsel and to keep you in close contact on this.
        Senator Murray. Senator Shelby.

                             COST OF EDS EQUIPMENT

        Senator Shelby. I just want to comment. In this area, you
    are talking about a lot of money.
        Mr. Jackson. Yes, sir.
        Senator Shelby. A lot of money is going to be spent, and we
    want it spent wisely, on the right thing, and as Mr. Magaw said
    earlier, competition is the best thing we have going for us in
    trying to protect the taxpayers and get the best product.
        Mr. Jackson. Yes, sir.
        Senator Shelby. I hope you will keep that in mind in this
    area, because once you get through this license process, that
    could open up more competition.
        Mr. Jackson. Yes, sir. It is frustrating to the firms that
    manufacture EDS equipment, to the executives who run the
    airport authorities, and to me, that we have not dropped on the
    table the definitive solution. Because the sums are so large,
    and the importance to the economy is so real, we are taking the
    time to make coherent decisions that will get good value from
    taxpayers' money, and we will look at the principle of
    maintaining competition as a constant source of inspiration on
    this issue.
        Senator Shelby. Mr. Magaw, the explosive detection subject.
    I note the transfer of $124 million from the FAA to TSA for
    procurement of explosive detection systems.
        Is this the total amount of EDS procurement money, or if
    not, can you tell me what the total funding for explosive
    detection systems is in this budget?
        Mr. Jackson. Senator, slightly under $300 million has been
    specifically set aside through a multiplicity of mechanisms.
    There is some money in the FAA budget and there was some
    emergency supplemental money. When you aggregate it, it comes
    to slightly under $300 million. I believe the number is $293.5
    million, and that money is allowing us to launch this initial
    phase of EDS procurement, which is producing a ramp in the
    production capabilities of the certified firms so that we can
    complete the rest of the deliverables.
        Senator Shelby. Thank you.
        Senator Murray. Senator Kohl, then Senator Specter.

                           GENERAL AVIATION SECURITY

        Senator Kohl. Thank you, Madam Chairman.
        Mr. Magaw, as part of the Aviation and Transportation
    Security Act, an amendment was incorporated into the bill at
    section 132. This section required the FAA to author a report
    to Congress on measures to improve general aviation security.
    The report concludes that it is important to develop security
    measures for general aviation that can be deployed singly or in
    appropriate combination in response to varying threat levels.
        What level of threat exists today and, based on that, in
    your opinion, what steps need to be taken to provide an
    adequate level of security for general aviation?
        Mr. Magaw. General aviation stations throughout the country
    vary quite a bit in their security efforts. TSA needs to
    develop a checklist of things that will help general aviation
    personnel tighten their security, not only of their
    installation, but also the security of their aircraft and all
    of the other things. It is one of the many things that clearly
    we need to address.
        The youngster who, regretfully, hit the building in Tampa
    should not have had access to that aircraft. We need to examine
    what kind of things we can build in that are not costly, that
    will not allow somebody other than the intended person to start
    an aircraft. Right now, at some general services locations, you
    have total freedom to walk through, and if they are busy, you
    can walk right out on the ramp, as well you know. So we intend
    to address that issue in depth, and in a few months I should
    have more specific answers for you.
        I am in the process now of hiring the highest level of
    personnel for TSA, and I want to bring somebody on board that
    has the expertise and background to help us understand the
    general aviation culture at the same time we are trying to
    apply the security.

                     AIRPORT PASSENGER SCREENING CONTRACTS

        Senator Kohl. In addition to authoring the report, section
    132 required the FAA to develop and implement a security plan
    for larger classes of chartered aircraft defined as an aircraft
    upwards of 12,500 pounds, or having about 12 seats or more.
    What can you tell us today about the development of this plan,
    and will you be ready for its implementation, which I believe
    is scheduled within 2 weeks?
        Mr. Magaw. I have not addressed that particular plan. I
    know the problem, but I have not addressed the topic, and there
    is something we are going to be doing in 2 weeks that I am not
    aware of.
        Mr. Jackson. I think the Senator may be talking about the
    2-week implementation of our takeover of the security screening
    contracts.
        Mr. Magaw. At the airports, oh. I misunderstood. I am
    sorry, sir.
        Yes, on the 17th we are prepared to take over the screening
    contracts. They will not be Federal personnel at that point,
    other than a person that we are sending to each airport to
    oversee the screening process, work with the airlines, and work
    with the contractors.
        At the same time, we are starting to hire the Federal
    security screeners to take their place, and we will be
    monitoring every location in the country very closely. As
    quickly as we can recruit and train nearly 28,000 to 30,000
    screeners, we will do so.

                           GENERAL AVIATION SECURITY

        Senator Kohl. I appreciate that. I was referring to general
    aviation, that we needed a plan for the larger general aviation
    aircraft, those with 12 seats or more.
        Mr. Jackson. We have submitted a 60-day plan that outlines
    the basic approach to general aviation. In addition, FAA has
    imposed some security directives that tighten up the security
    measures that have to be in place specifically, as you
    addressed, Senator, for aircraft 12,500 pounds or more.
        For example, aircraft operating out of a commercial airport
    have to meet the same safety rules that are in place for
    commercial flights. For those departures, we require an
    approved security director to review the security plan for
    larger aircraft. There is an inspection protocol, a manifest
    listing, and a series of FAA security directives, some of which
    are public and some of which are confidential and conveyed to
    airport security and airline operators.
        So we have done something there. I think what you are
    hearing from the Under Secretary is that all of us believe this
    is an area that we do not yet have as good an approach as we
    want to have. It is a very large system, 19,000 plus airports
    around the country, and we know that this needs more work. John
    is committed to bringing in a team of people to look at this in
    more detail.
        FAA currently has folks working on this issue. I have been
    involved with the Homeland Security Council on efforts to try
    to tighten up general aviation security. After the incident in
    Florida that the Under Secretary mentioned, we sent out a
    security directive and security notice to general aviation
    airports talking about the particular set of problems that we
    had found in that incident, and offering some counsel about how
    to strengthen security.
        So it is not an area where I would say that we feel
    comfortable that we have done everything that needs to be done.
    It is an important area that we will continue to work on and
    look at. The industry has helped us try to understand
    approaches that might be successful, and we are going to
    continue to engage on this one.
        Senator Kohl. Okay, and I thank you. I know how much stress
    you are under and how much work you have to do, so I am not
    suggesting you are not working 24 hours a day, 7 days a week on
    your problem.
        I would just comment with respect to the general aviation
    airports, I fly in and out of them occasionally, and it is
    apparent to me, as it is to you, that the level of security is
    pretty low, in some cases fairly nonexistent. The aircraft in
    those airports are as able to do mayhem as many of the aircraft
    that are in our larger airports around the country which are
    under your control, and it seems to me until you get a handle
    on that problem, it is hard to assert to the American public
    that in fact we are dealing with the problems of airplanes.
        The airplanes flying out of small airports, general
    aviation kinds of activity, are as dangerous as any other
    airplane, and I am very fearful that something terrible will
    happen and we will all be caught unawares again, and we will be
    embarrassed, humiliated, as well as terribly disappointed with
    what happens, and I think to some extent you are sitting on a
    ticking time bomb.
        Mr. Magaw. We will address that issue in depth, Senator.
        Senator Kohl. Thank you. Thank you, Madam Chairman.
        Senator Murray. Senator Specter.
        Senator Specter. Thank you, Madam Chairman.

                          EXPLOSIVE DETECTION SYSTEMS

        The budget for the Department of Transportation has always
    been important, but as we look to next year, it is even more
    important than ever. I think it ranks right up there with
    Defense, and Health, Human Services, and Education, and it is
    going to be a tough job finding enough dollars to go around for
    all of the needs which are presented here.
        Mr. Magaw, I visited the Philadelphia International Airport
    this past Monday, and there is an urgent need for these new
    explosive detection machines. I am told that the international
    airport will require 14 machines at a cost of $42 million, and
    they need to move them now, because they are having a new
    terminal that costs about $475 million, so they will not have
    to retrofit. As I hear the testimony today, about $300 million
    is available Nation-wide. How will we meet the mandate for
    these explosive detection machines to be in place by the end of
    the year, considering the tremendous need and the limitation of
    funds?
        Mr. Magaw. The funds that you see both in 2002 and 2003
    clearly are not going to cover the costs. The President has
    said that once we get the requirements analyzed and know what
    the cost is, then he is going to support this effort. I take
    that in good faith and move forward. The Philadelphia Airport,
    as well as the other airports, is very important, and we will
    have a person in there next week to start dealing with the
    airport manager and all those who know what the problems are to
    develop a plan to get that airport the machines and
    construction it needs.
        Senator Specter. Well, I am pleased to hear that, and there
    is enormous concern over airport security, and I am glad to see
    the President's commitment and your commitment to get that
    done.

                           MAGLEV AND HIGH-SPEED RAIL

        MAGLEV, I think, is going to be the wave of the future,
    something that I have been working on now in my 22nd year,
    since I got here. I thought that was really the kind of
    visionary item which we really had to have. Flying from
    Pittsburgh to Philadelphia with regularity, it is an enormous
    difficulty with the waits on the tarmac and the weather, et
    cetera. With MAGLEV, we will be able to go from Philadelphia to
    Pittsburgh in 2 hours and 7 minutes, with intermediate stops in
    Lancaster, Harrisburg, Altoona, Johnstown, and Greeensburg, and
    I am looking forward to the day when we have a MAGLEV system
    which runs from Boston to Richmond, and perhaps to Miami, and
    New York to Chicago.
        It is my hope that we will develop a real national
    constituency for MAGLEV, and there is concern from the
    westerners that the competition between Western Pennsylvania
    and Baltimore to DC has an eastern tilt, and I think they do
    have a point, but what we have to do is get the national
    constituency. There can be a line from Orange County,
    California to Las Vegas.
        We are prepared for the competition. Baltimore to
    Washington is a line I know very well. I am there all the time
    en route to and from Philadelphia. You have Metroliner and you
    have ACELA, and you have the parkways, where if you contrast
    getting from Greensburg, Pennsylvania, to the Pittsburgh
    International Airport, all you have is bottlenecks. You do not
    have any way to go.
        Governor Ridge, Senator Santorum and I convened a meeting
    in Pittsburgh, and Governor Schweiker has taken over with real
    community spirit, and a very hardworking consortium of
    steelworkers and U.S. Steel and other companies to put that
    together. It would be my hope that we could structure thinking
    about some of that on the Environment and Public Works
    Committee, where we may be able to tap into TEA-21 and figure
    out some way to get additional funding.
        I would be interested in your views, Secretary Jackson, as
    to your vision for MAGLEV, and how important do you think it is
    in looking to really increase transportation and economic
    development into the 21st Century.
        Mr. Jackson. Senator, I believe that high-speed rail and
    MAGLEV are very important things to evaluate as we think about
    the future of inter-city passenger rail. Moving along at 40
    miles an hour does not get the job done in terms of meeting the
    transportation needs of this country for the future. We are
    going to have to take up the Amtrak reauthorization, high-speed
    rail, and MAGLEV issues in concert with each other to try to
    sort out these priorities and to figure out what we need, how
    we can afford to pay for it, and what to do. So I look forward
    to working with you on those issues.
        Senator Specter. Well, I am glad to hear you mention
    Amtrak. I recall one of the first meetings I attended in
    Senator Baker's office in 1981. David Stockman, Director of
    OMB, had zeroed out Amtrak, and it is just indispensable.
        I said we would have a clog of the Baltimore Tunnel, and
    National Airport would be overrun if we did not have the line
    running from New York to Washington, and David Stockman said,
    ``Well, that is a prosperous line.'' The trustee in bankruptcy
    would sell that off in no time, and I said, ``All of the
    locomotives would be rusted shut by the time the trustee in
    bankruptcy got around to it,'' but we have maintained that
    battle, and I think we are surviving, but we have to keep it
    going.

                                HIGHWAY FUNDING

        I am very much concerned about the reduction in the Federal
    Highway Administration, some $9.2 billion, because of a decline
    in the fuel tax and other trust fund receipts. Here again, we
    are looking in the Environment and Public Works Committee,
    where I also serve, at a mechanism which might be able to
    utilize the Highway Trust Fund to make up some of that
    shortfall. Do you think that is realistic, Secretary Jackson?
        Mr. Jackson. We welcome the opportunity to listen and talk
    with you as you look at these mechanisms. What I said to
    Senator Shelby earlier was that the variability in highway
    funding under the existing TEA-21 program creates a
    vulnerability for highway infrastructure. So we look forward,
    particularly in the reauthorization discussion, to developing a
    means level out these spikes in the funding.

                   TRANSPORTATION PRIORITIES IN PENNSYLVANIA

        Senator Specter. In the limited time I have, I cannot go
    through all the priorities my State has, but we lean very, very
    heavily--we get support from Chairman Murray and Chairman
    Shelby, when he had been the Chairman, but as I look over the
    list here, we have a project called the SEPTA Schuykill Valley
    Metro, which ties into the Job Access and Reverse Commute
    program, which is in at $1.9 billion. It will take people from
    Center City Philadelphia, where there are no jobs, out along
    the industrial corridor as far as Reading through Montgomery
    County, and that is an enormously important program.
        Now, the Administration has put in a request for $26.3
    million for the Pittsburgh Stage II light rail, and we are
    looking at the Pittsburgh North Shore Connector, where we need
    to move people from center city Pittsburgh to the two new
    stadiums which have been constructed in Pittsburgh.
        Every time you turn around, there is an indispensable
    ingredient that comes out of the Department of Transportation
    budget, to be able to keep up with employment needs or economic
    development needs, so we have the Harrisburg Corridor One
    Project, which is a very important 30-mile regional light rail
    system to take the pressure off the highways, and there is
    enormous interest in a Scranton to New York City rail service,
    where we have gotten starter money of $1 million, and $200,000
    to see if Wilkes-Barre can connect to it, so I mention those
    items because it underscores the importance as to your
    Department and how we are going to handle the funding.

                     AIRPORT PASSENGER SCREENING CONTRACTS

        I am glad to see, Secretary Magaw, that Argenbright is not
    going to be security-company-contracted-with, as I understand
    it. Is that so?
        Mr. Magaw. You cannot answer that yes or no. Let me
    explain. We are reimbursing the airlines any security costs in
    the initial days. Argenbright will keep the contract they have
    with the airlines for the temporary future, and we will
    reimburse the airlines. We will contract with them. We are
    going to move that company out as quick as we can in terms of
    moving our Federal force in.
        Senator Specter. Well, I am glad to hear that you are
    moving them out. They were under criminal prosecution,
    probation, have violated probation out of the Philadelphia
    Federal court, so that I am glad to hear you will keep a sharp
    eye, because that is very, very important.
        Mr. Jackson. We would expect those contracts to be
    concluded in a matter of weeks after the switch-over date.
        Senator Specter. Well, give Secretary Mineta our best
    wishes for recovery, and Mr. Magaw, are you enjoying your job?
        Mr. Magaw. Very busy, and enjoying it. I am challenged by
    it, and I am delighted--most Americans after 9/11 want to
    serve, and that is the way I feel.
        Senator Specter. Well, I am glad to see you in it. I
    expected you to be confirmed on December 20. They had that
    hurry-up hearing in the Commerce Committee, and we had a little
    discussion, you and I, and I thought you were going to be
    included in wrap-up that night, so I am glad the President made
    an interim appointment. That is one interim appointment that
    has not caused any controversy. It is nice to have you.
        Mr. Magaw. And I appreciate the Senate voting on it quickly
    after you came back.
        Senator Specter. Well, we are glad to see you on that job.
    You have got a big, big job to do, and we are going to support
    you.
        Mr. Magaw. Thank you.
        Senator Specter. Thank you, Mr. Jackson and Mr. Magaw.
    Thank you, Madam Chairman.
        Senator Murray. Thank you.
        Mr. Magaw, I am confused by your answer to Senator Specter
    on the federalization of our security force. If we are just
    simply paying the airlines who are continuing those contracts,
    how does that satisfy the requirement that we are federalizing
    the security screeners?
        Mr. Magaw. Well, the contract is being reimbursed to the
    airlines, but we are having people on the scene right there,
    taking over supervision of the screening function.
        Senator Murray. So it is not federalizing the workers, it
    is just having somebody on-site overseeing.
        Mr. Magaw. Well, that is why I wanted to explain what was
    happening so there was no----
        Mr. Jackson. We are federalizing all the workers. It is a
    phased-in implementation, so Argenbright will be out of this
    process quickly. All of the third-party contractors will, by
    the 1-year statutory deadline, be gone from the system, and
    everybody will be a Federal employee.
        In fact, we intend to phase this in at a cluster of
    airports, and then at roughly 25 per week. Thereafter, we will
    have a full Federal team in place, and as John said, starting
    immediately we will have a supervisory team at each airport. At
    a larger airport they will be larger in number; in a small
    airport it could be just one.
        Senator Murray. I am confused because what you are telling
    me is you will have Federal supervisors in place, but you are
    still going to be paying the airlines, therefore the airlines
    are going to be responsible.
        Mr. Jackson. I am sorry, John. I will address the
    contracting issue.
        Here is how we are handling the switchover in the middle of
    this month. We have negotiated and are completing this week,
    so-called IDIQ--indefinite delivery, indefinite quantity, I
    think. I am acronym-limited here, but it is basically a bulk
    purchasing contract with those firms who provide security-
    screening at existing locations around the country.
        In the case of Argenbright, we have decided not to sign a
    bulk purchasing contract with that firm, and we have in place a
    temporary transitional tool to allow us to be able to put
    third-party screeners in place at each of the airports that
    Argenbright currently, serves. They have about 35 airports that
    they serve, and then we will switch that over to a full Federal
    force as part of the normal implementation.
        Senator Murray. Who is paying the screeners? Is it the
    airlines, or is it the Federal Government?
        Mr. Jackson. The Federal Government pays the bulk contracts
    with everyone in the transition. They will work for us; they
    will meet new contract requirements; they will have to have our
    new screening training requirements in place; and they will
    meet the technical, educational and all other requirements of
    the statute. So we own the job.
        Senator Murray. Is that the case for Argenbright, too?
        Mr. Jackson. No, it is not, because we do not intend to
    employ Argenbright.
        Senator Murray. So in the case of Argenbright's contracts
    that you are not going to assume, will you be paying the
    airlines, and the airlines will be responsible.
        Mr. Jackson. The airlines will continue for a few weeks
    after, in some cases but not in all cases, to operate with
    Argenbright under their existing contract. So after the 17th,
    for the couple of weeks necessary, in some instances, to make a
    transition to a different firm, the airlines' existing contract
    with Argenbright will remain in place and we will supervise the
    airline. They will work for us. We will manage the contract
    through the airlines for a short period of a few weeks.
        Senator Murray. Thank you. Let me go to another rule that
    is causing a lot of distress.
        Mr. Jackson. Senator, I might just say, we are barred from
    doing business with them, and that is a decision that we agree
    with. This contracting mechanism honors the Federal debarment
    rules.
        Senator Murray. I just wanted to make sure we all
    understand what is happening.
        Mr. Jackson. Exactly.

                          AIRPORT PARKING RESTRICTIONS

        Senator Murray. Let me ask you another question that is
    causing a lot of distress at a lot of our smaller airports, and
    that is the 300-foot rule. I think you heard about this at the
    Senate Commerce Committee yesterday and said you were going to
    inject some common sense.
        The act provided that some of these airports could gain
    relief from your rule after they put forward some measures to
    you, and a number of airports have done that and have been
    denied respite. We have small airports who have no parking
    whatsoever any more because of the 300-foot rule simply
    eliminating all of their parking. We have many airports, small
    airports who have no handicap parking, and the airports in my
    State just do not see why they are burdened with this
    requirement when, you know, a suicide bomber can drive right up
    to the terminal if they want to. They just cannot park there.
        What do you mean by common sense, and how soon are our
    small airports going to see this?
        Mr. Jackson. This is an issue that has been difficult to
    grapple with, and I want to try to give you some numbers to put
    it into context.
        First of all, the smallest category of airport, category 4,
    was exempted at the outset from this rule, so we are talking
    about category X, 1, 2, and 3. Of those airports, we have
    allowed for a voluntary application for relief from the rule
    and amendments to the rule, and for tailoring the rule to each
    particular airport. Of the 168 that have been submitted, 157
    have been approved for amendments and changes to the 300-foot
    rule. We have 10 that have not been approved. We are still open
    to those 10.
        I know of one that a Member of Congress called me about
    this week. We are going back to work with the airport director
    and figure out how to put together appropriate blast zone
    protection that is meaningful for that airport.
        Here is the punch line, Senator. If one of them has a
    problem, we want to help them fix it. This is not intended to
    be an arbitrary, capricious, or unreasonable requirement. It is
    meant to protect life from people who park a bomb, walk away
    from their car, and cause a large loss of life. We have to be
    reasonable. It does not make any sense to have people parking
    in a cow pasture and walking to the airport, so we are very
    willing and eager to work with airports to try to do this in a
    reasonable fashion.
        Senator Murray. I understand it has been difficult to
    implement.
        Mr. Jackson. It is a thorny issue, and we will keep
    whacking at it.
        Senator Murray. I appreciate that.

                              NAVIGATION USER FEE

        In my region of the country, the ports are one of the
    biggest suppliers of well-paying jobs. Your budget is asking us
    to impose a new user navigation fee to be paid by ships that
    are transiting U.S. waters. With that fee, you are expecting to
    collect $165 million next year and over $300 million in 2004.
    Mr. Jackson, won't that fee only increase the likelihood that
    ships are going to call on ports in Canada and Mexico instead
    of U.S. ports?
        Mr. Jackson. We hope not and we think not, and we will come
    back to you with a precise legislative recommendation from the
    Administration so that we can give meat on the bones of this
    proposal.
        We recognize that there have been proposals submitted in
    the past for user fees to help offset various transportation
    needs that have not been accepted by the Congress and not been
    adopted. We also recognize that, following the events of 9/11,
    that the Congress very much proactively reached to include some
    very significant user fees in the aviation world. We hope that
    to meet some of the enormous costs of providing for homeland
    security in other modes, the Congress would be willing to
    engage in a dialogue with us as to whether user fees are
    appropriate. We recognize that we have to meet the needs of
    commerce and promote the efficient flow of freight and
    passengers through the country, so we will submit a proposal
    for you.
        Senator Murray. You need to know that it is highly
    competitive on the West Coast market. Any increased costs for
    ships coming into our ports will simply mean that they will
    divert to Canada and Mexico, so we have to be very careful when
    it comes to these kinds of user fees in that competitive of a
    market.

                                 CARGO SECURITY

        Mr. Magaw, I think it is important when you impose a new
    security cargo regime, that you guarantee that the cargo that
    crosses the U.S. or Mexican border will be subject to the exact
    same procedures as cargo entering through the U.S. ports as
    well, otherwise we are going to deal them another competitive
    blow.

                               PIPELINE SECURITY

        On the area of pipeline security, the National Security
    Council has identified our Nation's 2.1 million miles of
    pipeline as potential targets for terrorism. An attack on
    pipelines that carry natural gas, or petroleum, or hazardous
    materials could result in a standstill at our Nation's ports
    and highways, not to mention, of course, a significant cost to
    life. Can you tell me what, if anything, RSPA has proposed in
    the budget to ensure the safety of our Nation's pipelines, and
    hazardous materials?
        Mr. Jackson. Senator, I am going to have to look at the
    budget detail on the RSPA pipeline safety, and I would be happy
    to get back to you.
        Senator Murray. Can tell me if any of the $4.8 billion in
    the TSA goes for that as well, I would appreciate that.
        Mr. Jackson. Yes, ma'am.
        [The information follows:]

        The President's Fiscal Year 2003 budget for RSPA does not propose
    any funding specifically for pipeline security. However, RSPA is using
    resources made available for pipeline safety to ensure the security of
    pipelines to the maximum extent possible. For example, RSPA is working
    with the Department of Energy and the Federal Bureau of Investigation
    to distribute security information and threat warnings to pipeline
    operators; securing critical infrastructure mapping information through
    a password protection system; working with the pipeline industry to
    assess vulnerabilities; developing and implementing protection measures
    for pipeline facilities; implementing a coordinated set of protocols
    that would be used during inspections to confirm the adequacy of
    operators' security practices at critical facilities; and, developing
    plans to improve response and recovery preparedness.
        None of the funds proposed in the fiscal year 2003 budget for the
    Transportation Security Administration would be used for pipeline
    security.

                              MOTOR CARRIER SAFETY

        Senator Murray. Mexican trucks, I know your favorite issue,
    Mr. Jackson. The Inspector General is close to completing his
    review of the implementation of your plans for opening the
    border to Mexican trucks, and we are going to hold a hearing
    with the IG and Secretary Mineta. Up to this point, can you
    tell us quickly how adequately the Federal Motor Carrier Safety
    Administration is implementing the safety requirements that we
    included in the Appropriations Bill last year?
        Mr. Jackson. Yes, ma'am. We are on track to honor and meet
    all of the requirements of the statute, and this includes the
    regulatory work which we owe the Congress and the public on
    this matter, and a plan for hiring and well-training the
    individuals who are necessary to do this inspection work. The
    week before last, the Federal Motor Carrier Safety
    Administrator, Joe Clapp, traveled to Mexico City and had an
    extensive meeting with his Mexican counterparts to review
    detailed plans. The Secretary has also reviewed a detailed
    chart of tasks and deliverables that would meet the
    requirements.
        We are not going to open the U.S.-Mexico border to provide
    operating authority to any carrier until we have done the job.
    We think we are on track to do that by early summer. I am
    actually traveling with Administrator Clapp tonight to Atlanta
    to meet with my counterparts from the Mexican Government, from
    two departments, to review the issues and to make certain that
    both Governments are working cooperatively and effectively in
    this area.
        Senator Murray. It is, my understanding that one of the
    challenges you face is adequate space at the border so that
    unsafe trucks can be put out of service. Is that the biggest
    challenge, or are there others?
        Mr. Jackson. No, I think that we have that one under
    control. We approached the GSA Administrator and asked him to
    devote some resources to help us identify some excess Federal
    space that we could surface, and they have been very helpful.
    Over the long haul it would be desirable for us to have more
    complete and permanent facilities to accomplish this mission,
    but we will, in future budgets, come back to talk to you about
    some of the more comprehensive build-out needs. To do the job
    that we have been given, we will have to have space available
    to park them. If necessary, we will have them towed back across
    the border until they get them properly fixed, and able to
    travel on our roads.
        Senator Murray. It is one of the requirements we put in the
    bill, and I want to stay in close touch with you as we work
    through this. We are going to have a hearing on it, but if you
    could let us know what you are seeing----
        Mr. Jackson. I would be happy, at whatever time is
    convenient, to make sure that you get detailed briefings on the
    implementation plan for this. I know that Administrator Clapp
    would be delighted to work with you and your staff on that one.
        Senator Murray. Very good.

                         PROPOSED BORDER CONTROL AGENCY

        Mr. Jackson, let me ask you about one of the proposals that
    we are hearing out of the Office of Homeland Security to merge
    all the Coast Guard into a new border control agency. Is that
    officially dead within the Administration, or is that still an
    active proposal?
        Mr. Jackson. It would be premature for me to speculate
    about work that is ongoing in the Administration prior to the
    President making any decision on this. I will say that it has
    been a hallmark of his instructions to all of the Departments
    and agencies, from the beginning of the post September 11
    period, to look at how we can make the border operate more
    effectively for our passengers and freight, for security and
    efficiency. It has been an ongoing topic.
        Senator Murray. Do you think it is wise to sever the Coast
    Guard from the Department of Transportation?
        Mr. Jackson. I would not speculate on those policy issues
    for you here, and I would defer to my President to allow his
    Cabinet to continue that discussion. When he makes any decision
    in that arena I would be delighted to come back and talk to you
    about it.
        Senator Murray. I will not pin you down on that.
        Mr. Jackson. Thank you. I appreciate it.

                 TRANSPORTATION SECURITY ADMINISTRATION BUDGET

        Senator Murray. Mr. Magaw, when you were in my office, I
    asked whether the Transportation Security Administration would
    be providing a fully justified budget request to the Committee.
    Your Deputy, Mr. McHale, said that you would, so I was a little
    surprised to see you submit only a seven-page document to
    defend a request of $4.8 billion. When do you expect to have a
    fully justified budget submitted to this Committee?
        Mr. Magaw. I believe that we can do it, Madam Chairman, in
    60 to 90 days. The surveys at each airport are going to take
    some time, and until we get some reasonable numbers from the
    airports, we are only going to be----
        Senator Murray. 60 to 90 days is going to be hitting us
    right when we are marking up. We are going to need some time to
    review your request. I really urge you to get that to us
    quickly. I know it is a big task, but we are going to be
    marking up probably in the middle of May, and we will need some
    time to go through your request, so I urge you to get it to us
    as quickly as you can.
        Mr. Magaw. All right.
        Senator Murray. I understand you are going to need a
    supplemental appropriation?
        Mr. Magaw. We are going to need money from somewhere, and
    the President has said that the Administration will support
    this program. But I am not at liberty to talk about a
    supplemental or anything like that.
        Senator Murray. Are you asking everybody to put their
    wallets out there?
        Mr. Magaw. I know.
        Senator Murray. We only have a few places we can look.
        Mr. Magaw. I know. That is why it is so important, as you
    say, that we get some accurate figures, or reasonably accurate
    figures to you for construction costs, for installation
    charges, for the cost of machines, and for transporting them
    there.
        Senator Murray. I know the deadlines are approaching fast.
    I know we need to get out an Appropriations Bill. If there is
    going to be a Supplemental, we need to know what that is, what
    the costs are, and again, I know you are working under intense
    deadlines, but if we are going to have the funds for TSA,
    looking at the other challenges we have, we have got to get a
    handle on this quickly.
        Mr. Jackson. Senator, I can comment. We have two challenges
    as you have just identified. We have a 2002 challenge and a
    2003 challenge. On the 2003 challenge, as we flesh out the
    approach that we would take to filling in the $4.8 billion, we
    would be happy to give you an interim report so that we do not
    wait until the last minute and drop something on you. I would
    welcome the chance, as we go along.
        This is something that is unprecedented for us and for you,
    I recognize, and we do not want to create more difficulty for
    the Committee than need be in this case. So as we work our way
    through this, we want to just stay in close contact with you.
    We will tell you what we know and what we do not know, and when
    we get to a problem we do not know how to solve, we will tell
    you that, too. We will figure it out and keep in close touch.
        Senator Murray. I appreciate that.

                        TSA ASSOCIATE UNDER SECRETARIES

        Mr. Magaw, in recent briefing documents you provided to
    this Committee it was not clear whether you expected to have
    separate Associate Under Secretaries for Maritime Security,
    Rail Security, and Motor Carrier Security. Have you made a
    decision on that yet?
        Mr. Magaw. I have made an initial decision that our first
    high-ranking person will be maritime and land. I am now trying
    to recruit an outstanding individual from the trucking industry
    who will be able to come in and pay full attention to that
    industry. The same thing with the railroads. So the highest-
    ranking position in the box that you have seen on the chart
    basically says maritime and land security.
        We are recruiting and looking at a couple of Coast Guard
    admirals to oversee maritime security. At the same time, we
    want to have people within that box who are from the other
    modes. It is my judgment that the box is going to split fairly
    quickly, because there is going to be a quick need for the
    other areas to be addressed in more detail. That is my
    intention, and I know that--the Deputy and I have talked about
    it--it has not been approved, but my intention is to split the
    box. Do you have this copy?
        Senator Murray. Our staff has it.
        Mr. Magaw. Okay. And so while all of maritime and land
    appears to be in one box right now, and it is, we are going to
    have representatives from every mode in that office who will
    pay attention to their specific area of expertise. They will
    not only keep the Committee advised, but also give full
    attention on their particular mode. As the aviation and other
    deadlines are moving by, we are not sitting idle in general
    aviation, and we are not sitting idle in railroad or any of the
    other modes.
        Senator Murray. We will be interested in working with you
    to do that. I am curious as to how they are going to interface
    together and who is going to be really in charge of security in
    each of the modes, and how maritime is going to work with Coast
    Guard, so we will have more conversations on these issues.

                     NATIONAL DISTRESS AND RESPONSE SYSTEM

        Let me ask you a question about the Coast Guard, Mr.
    Jackson. The IG issued a report on the Coast Guard's distress
    awareness system a week ago. Your Department has now placed
    this project on a high-risk watch list. Due to extraordinary
    cost overruns, the Coast Guard has now eliminated the
    requirement that the system be capable of pinpointing the exact
    location of distress calls. Even at the lower cost, the Coast
    Guard's projected capital needs still exceed OMB's funding
    targets by more than $300 million annually. Do you think that
    the Coast Guard has dumbed down the system's capabilities to
    the point that mariners in distress will be at risk?
        Mr. Jackson. No, I do not think that we have dumbed it
    down, nor will we. I do believe this is an important priority
    that we have not yet got our arms around in terms of the
    program being fully implemented and moving forward. It is an
    important commitment, and it is one that we will have some
    ongoing oversight conversations with you about in this area.
        Senator Murray. Of course, you know it is a high priority
    for me, so I want to make sure----
        Mr. Jackson. Good. It is a high priority for the Secretary
    as well.
        Senator Murray. The 2002 Appropriations Act does not allow
    the Deepwater procurement to go forward unless DOT and OMB
    certify in writing that adequate funding will be requested for
    the new distress system of the Deepwater program and essential
    search and rescue procurements. Is that the reason why we have
    not received the certification, due to the uncertain costs?

                              SUBCOMMITTEE RECESS

        Senator Murray. I have no further questions. This
    subcommittee stands in recess until Thursday, February 14, when
    we will take testimony on the U.S. Coast Guard.
        [Whereupon, at 12:05 p.m., Thursday, February 7, the
    subcommittee was recessed, to reconvene at 10 a.m., Thursday,
    February 14.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2003

                                  ----------

                          THURSDAY, FEBRUARY 14, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:05 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Patty Murray (chairman) presiding.
        Present: Senators Murray, Mikulski, Shelby, and Stevens.

                          DEPARTMENT OF TRANSPORTATION

                                U.S. Coast Guard

    STATEMENT OF ADMIRAL JAMES M. LOY, COMMANDANT
    ACCOMPANIED BY HON. KENNETH M. MEAD, INSPECTOR GENERAL

                   OPENING STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. The subcommittee will come to order. Today
    the subcommittee will hear testimony on the Coast Guard's
    budget request for fiscal year 2003. We are pleased today to be
    joined by the Department of Transportation Inspector General
    Kenneth Mead, and we also want to welcome our Coast Guard
    Commandant, Admiral James Loy.
        Today is likely to be Admiral Loy's last appearance before
    this committee, as his 4-year term comes to a close this May,
    so Admiral, on behalf of all of us on this subcommittee I want
    to thank you for your over 40 years of excellent service to
    this country.

                      FISCAL YEAR 2003 FUNDING CHALLENGES

        During our hearing with Deputy Secretary Jackson last week,
    I pointed out that the subcommittee will face extraordinary
    challenges in financing a balanced Transportation bill this
    year. The President has proposed a $9 billion cut in highway
    spending. Amtrak is near bankruptcy, and the funding
    requirements of the new Transportation Security Administration
    are expected to grow by more than 250 percent to $4.8 billion.

                              COAST GUARD FUNDING

        With this backdrop, the administration has also requested
    an increase in the Coast Guard budget of almost 20 percent.
    There is no question that the Coast Guard is in a period of
    rapid change, coming on the heels of our national tragedy. In
    some ways this period is similar to the aftermath of the EXXON-
    VALDEZ tragedy in 1989. As we attempt to respond to the tragedy
    of September 11, it is clear that we must do more to protect
    our country from terrorist attacks. This is especially true
    when you reflect on how vulnerable our port communities are to
    further attack.
        At the same time, we must not allow the events of September
    11 to divert the Coast Guard away from their other core
    responsibilities that loomed so large on September 10. The
    administration has requested the largest increase in Coast
    Guard spending in history, but I think it is important for us
    to ask what we are getting if we are successful in fully
    funding the administration's request, if we are successful in
    providing this historic funding increase, the Coast Guard's
    level of increase at fisheries enforcement will barely increase
    at all over this year's level. In fact, their level of effort
    will still be well below their level of effort from 3 years
    ago. This comes at the same time when the Coast Guard has again
    failed to meet its performance goal for keeping illegal foreign
    fishing vessels out of U.S. waters.
        If we are successful in providing this historic funding
    increase, the amount of cutter hours, aircraft hours, and boat
    hours devoted to marine environmental protection will actually
    go down from the level expected for the current year. If we are
    successful in providing this historic funding increase, we will
    not see any substantial increase in the Coast Guard's level of
    effort at drug interdiction. In fact, their level of effort
    will still be 25 percent below where it was 3 years ago, and
    here again this plan is presented to us at the same time that
    the Coast Guard has failed to meet its performance goal for
    seizing illegal drugs.
        As much as I want the Coast Guard to respond fully to all
    of our homeland security needs, the fact is, massive amounts of
    funding are also being provided for this function to the
    Department of Defense, to the intelligence agencies, and to the
    Transportation Security Administration, the DOT agency that is
    supposed to be responsible for security in all transportation
    modes. We are even told the Department of Defense will soon be
    appointing its own Commander in Chief, or CINC, for Homeland
    Defense.

                        COAST GUARD TRADITIONAL MISSIONS

        One thing I do know is, we cannot depend upon the
    Department of Defense or Transportation Security Administration
    to conduct fisheries patrols. We cannot depend upon them to
    inspect oil tankers or respond to an oil spill. The Navy's
    level of effort in maritime drug interdiction is driven largely
    by whether they have ships available. And even when they do
    conduct drug patrols, they generally require Coast Guard law
    enforcement detachments on board to actually inspect and
    prosecute suspect vessels.
        The tension between Homeland Security and the Coast Guard's
    traditional missions is perhaps starkest in my area of the
    country. Puget Sound has many critical Department of Defense
    installations, and we are proud of all of them. Immediately
    after September 11, Coast Guard vessels traditionally used for
    search and rescue were diverted to establish a 24-hour security
    zone around those facilities and to escort Navy ships.
        In my home State of Washington, this shift came at a time
    of unprecedented marine casualties, where 17 recreational
    boaters were killed in boating accidents during the months of
    August and September alone. While I do not know if any of these
    deaths were linked to the reprogram of Coast Guard small boats,
    I do know that search and rescue must remain a primary and
    focused mission of the Coast Guard. It took months for those
    search and rescue boats to return to their normal stations.
    Only after I petitioned the Commander in Chief for the Pacific
    Fleet, Admiral Fargo, did the Navy expend its own efforts to
    guard its own assets.

                      COAST GUARD'S HOMELAND SECURITY ROLE

        When the President submitted his supplemental request for
    the Coast Guard, I doubled the amount of funding requested for
    Marine Safety and Security Teams so that the Puget Sound could
    have its own Coast Guard unit to prosecute this mission without
    diverting other Coast Guard units from their traditional
    missions.
        No one wants to see the needs of the Coast Guard fully met
    more than I do. When I think of the needs of the Coast Guard, I
    do not think of Washington, D.C., I think of the seamen and
    petty officers in Washington State. They deserve the best
    equipment and best training that we can give them. They also
    deserve a humane work week so they can conduct all their
    missions with excellence, not exhaustion, and so as we once
    again expend the Coast Guard's efforts in a critically
    important mission, I intend to make sure that it is not done
    entirely on the backs of the hard-working Coast Guard members
    in the field, and I also intend to make sure that the expansion
    of this mission is in balance with the continuing needs of all
    other missions, and that all the appropriate Federal agencies
    pay their fair share of the cost.
        I will turn to Senator Shelby for his opening statement.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you, Madam Chairman, and again,
    welcome, Inspector General Mead and Admiral Loy, and Admiral
    Loy for what may be, as the Chairwoman said, your final
    appearance before this subcommittee. Admiral Loy, I do not want
    to miss this opportunity to acknowledge your contributions to
    and your stewardship of the Coast Guard. You are to be
    commended for your service to the Coast Guard, Admiral, and to
    this Nation.
        While we have not always agreed on tactics, priorities, or
    the best way to accomplish the mission, we have always agreed,
    sir, on the way to accomplish, always agreed on the need to
    support the various missions of the Coast Guard, the need to
    recapitalize the Coast Guard's asset base, and to make the
    Coast Guard a meaningful and attractive career choice for young
    Americans.

                            NATIONAL DISTRESS SYSTEM

        While we have agreed on many, if not most issues facing the
    Coast Guard, we do have healthy differences on how to address
    some of those challenges. I would like to spend just a few
    minutes on some of those differences. I am concerned that the
    Coast Guard is trading away capability and coverage in the
    national distress system modernization program in order to trim
    costs after receiving contractor estimates that were three
    times Coast Guard projections.
        The promise of this modernization was the capability to
    precisely locate a boater in distress. Unfortunately, the Coast
    Guard seems willing to trade that capability away and settle
    for just knowing in what direction the distressed mariner is
    in. On top of that, the Coast Guard's own capital budget does
    not appear to fully fund even this less capable system. My
    staff tells me that this procurement appears to be underfunded
    by at least $110 million.
        If we are going to do this modernization, and I believe we
    must, Admiral, why would we buy a system that has coverage gaps
    and dumbs down capabilities? Why would we want to give up on
    that critical 911 life-saving feature when time is of the
    essence in an emergency situation? Local police and fire
    officials have had that capability since the seventies. Time
    has long passed for the Coast Guard to have this capability as
    well.
        The Inspector General's recent report on National Distress
    System modernization concludes that we should develop a firm
    plan before contract award. This is good advice, and the Coast
    Guard should not delay in developing that plan. Unfortunately,
    the National Distress System modernization system problems are
    a piece of cake compared to the Integrated Deepwater System
    procurement.

                        INTEGRATED DEEPWATER PROCUREMENT

        For 4 years this subcommittee has expressed concern about
    the risk inherent in the Coast Guard's big bang procurement
    strategy for Deepwater. We have questioned the affordability,
    the procurement risk, the lack of exit strategies, the Coast
    Guard's blind eye to changing circumstances, and the impact
    that Deepwater's funding has on other capital investments the
    Coast Guard must make to maintain its capital plan, and we are
    at this critical point just at the time when the administration
    is saying we have to do more for Homeland Security, when the
    Congress is saying we cannot neglect other missions, including
    Search and Rescue and Fisheries Enforcement, and when the
    Inspector General is saying that the National Distress System
    modernization is in danger of being underfunded.
        Madam Chairman, the Coast Guard's capital numbers do not
    add up, and it appears the Department is not reviewing and
    restructuring the capital budget to accommodate the other
    internal challenges within the AC&I budget line and the
    changing circumstances since the attacks of September 11. To
    illustrate the changing nature of the operational mission
    requirements facing the Coast Guard, I would draw your
    attention to the two charts that I have here.
        Admiral, these charts should look familiar. They came from
    a Coast Guard presentation about the nature of the threat and
    the New Normalcy. The first chart depicts the position of Coast
    Guard assets on 10 September. That pre-terrorist attack
    deployment can be characterized as being in the transitional
    zone between brown and blue water.
        The second chart depicts the redeployment of those assets a
    week later to better meet the emerging threat. That chart shows
    Coast Guard assets hugging America's coastline, deployed almost
    exclusively in the littoral zone, in brown water.
        Many of you will recall the press pictures of Coast Guard
    cutters, I believe it was a 378-foot cutter on-station on New
    York Harbor, and more recently the substantial Coast Guard
    presence in New Orleans for the Super Bowl. Both of these
    deployments were appropriate and necessary in light of the
    threat. The events of September 11, as graphically illustrated
    on the charts, dramatically changed the Coast Guard's mission
    profile. The capital budget request, as represented by
    Deepwater, does not reflect the change.
        Madam Chairman, that is not the only problem with
    Deepwater. Forget for a moment the disconnect between the
    mission profile and the budget request. From my experience on
    this subcommittee, the Department has struggled with large and
    complicated procurements. Inspector General Mead could go on
    for hours about the Boston Central Artery, the advanced
    automation system, WAS, and plenty of other procurements.
        My experience on other subcommittees leads me to believe
    that this problem is not unique to the Department of
    Transportation. The one conclusion we can draw is that the
    larger and the more complicated the procurement, the more
    certain the overruns and schedule slippages. Deepwater is
    already slipping, even though it has not delivered anything but
    studies and internal machinations, yet for the 4 year in a row
    we are being asked to appropriate a blank check, this year for
    $500 million, and being asked to trust an untried, unproven,
    and risky strategy.
        In some situations, complexity and size are unavoidable,
    but not here. Deepwater is basically four categories of
    procurements; ships, aircraft, sensors, and communications
    systems. It is almost as though someone sat around and asked
    what the most difficult and risky way to capitalize the Coast
    Guard's long-range assets would be. Here it is.
        But Madam Chairman, the problems do not end there. If you
    combine funding projections for Deepwater and the National
    Distress System modernization, they consume 80 percent of the
    capital appropriations for the next 5 years. If history is any
    guide, these programs will consume an even greater portion of
    the capital budget in the future, as their cost escalates.

                                  CAPITAL PLAN

        Deepwater is already squeezing out other capital projects.
    If you take a look at the Coast Guard's 5-year capital plan,
    you see that the number of projects shrinks by more than 6
    percent this year alone. That includes the Coast Guard's family
    housing appropriation, which is not programmed for any funding
    in fiscal years 2004 and 2005. I know that that will come as a
    surprise to Secretary Mineta and to the Coast Guard enlisted
    personnel.
        The Coast Guard Magazine regularly highlights how important
    improving Coast Guard housing is for retention and quality of
    life, but this budget tells me that those issues get sacrificed
    at the altar of Deepwater.
        Now, it is hard to envision cost escalations in Deepwater
    even before a contract award, but that is what the budget
    presents. After multiple briefings characterizing Deepwater as
    a 20-year, $500-million-per-year procurement, the capital plan
    now inflates future funding.
        To my knowledge, there is no other procurement line in the
    transportation budget that gets COLA. This inflation adjustment
    effectively robs all the other capital projects of an
    additional $292 million over the next 4 years. Why, then, is
    the Coast Guard unnecessarily bundling these other four
    procurement categories and ignoring changing circumstances, the
    warning signals and the crowding out occurring in the AC&I
    budget? I wish I knew.

                                   DEEPWATER

        Simply put, the procurement strategy makes little sense and
    is a black hole in the Coast Guard's capital budget. There are
    many reasons to be concerned about the Deepwater program. This
    procurement was justified by a study. The law certifies that
    the Deepwater and the National Distress System modernization
    are fully funded within the capital plan. There is a tab for
    that certification in the budget justification but no
    certification. The budget outyears have been inflated, yet we
    still do not know what we are buying. The law requires details
    on assets to be procured, but the budget justification is
    nonresponsive.
        Last year, this was a 20-year procurement. Now the Coast
    Guard says it could last as long as 30 years, yet we are being
    asked to appropriate another blank check, bringing the total to
    $890 million. The responsible thing for Congress to do is to
    withhold further funding for this program until it has been
    restructured to meet the change in mission profile,
    restructured to meet other necessary capital investment, and
    restructured to minimize the procurement risk.
        Now, in light of these complaints I know some will question
    my commitment to modernizing the Coast Guard's capital plant.
    Let me repeat what I have said for the past 4 years as chairman
    and now Ranking Member of this subcommittee: the Coast Guard
    needs to modernize or replace its aircraft, communications
    equipment, and especially its ships.
        Our goal with these procurements and the rest of the Coast
    Guard's capital budget must be to optimize the mix of tools in
    the hands of men and women of the Coast Guard. I would think
    that we would take the extra time to get it right and to
    minimize the risk to the taxpayer and the Coast Guard and the
    Department's other priorities. I stand ready to work with you,
    Madam Chairman, and with you, Admiral Loy, to that end.
        Thank you.

                        ADDITIONAL SUBMITTED STATEMENTS

        Senator Murray. The following statements were received from
    Senators Mikulski, Kohl and Durbin which will be inserted in
    the record at this point.
        [The statements follow:]

               Prepared Statement of Senator Barbara A. Mikulski

        I would like to take this opportunity to welcome Admiral Loy and
    Mr. Mead. It's a pleasure to be here with you today to discuss the
    Coast Guard's fiscal year 2003 budget request. You perform a wide array
    of missions that support our national security. I want to make sure you
    have what you need and to thank you for all that you do every day. I
    would like to offer a special thanks to Admiral Loy for his almost 40
    years of dedicated service to this country and his unfailing leadership
    of the Coast Guard since 1998.
        Our U.S. Coast Guard is one of the most efficient and effective of
    all Federal agencies, performing essential missions that address
    national safety and homeland security. The men and women of the Coast
    Guard put their lives on the line everyday to save those who suffer
    calamities at sea, to apprehend drug and contraband smugglers, to
    protect our fisheries and other marine resources, and to safeguard our
    environment from oil spills and other hazards.
        Each day the Coast Guard conducts 109 Search and Rescue missions.
    They also seize over 169 pounds of marijuana and 306 pounds of cocaine,
    while responding to 20 oil or hazardous chemical spills, in their
    normal course of action.
        And then came September 11. What happened that day was not simply
    an attack against America, it was a crime against democracy, decency
    and humanity. Immediately following the terrorists attacks, the U.S.
    Coast Guard responded quickly to the Nations's homeland security needs.
    They reprogrammed a significant number of their assets to provide port
    security. The Coast Guard's port security mission has expanded since 9/
    11 from 1-2 percent of daily operations to around 50-60 percent today.
        Maritime industries contribute $742 billion annually to our
    economy. This is essential because 95 percent of America's trade moves
    over water and we would be crippled if there was an attack on our
    maritime commerce. Maritime borders of the United States include 95,000
    miles of open shoreline and 361 ports, including my home state's Port
    of Baltimore.
        The Coast Guard was there when we called, and we need to ensure
    that they have the assets to meet these new challenges. I want to
    ensure that the world's best Coast Guard is the world's best equipped
    Coast Guard. And yet, we ask them to operate a fleet of ships and
    aircraft that is one of the oldest in the world. Some of their ships
    date back to WWII and many are quickly approaching the end of their
    useful service lives. The Coast Guard's fleet is technologically
    outdated, personnel intensive, and increasingly expensive to operate
    and maintain. The Deepwater project would replace these antiquated
    systems high and medium endurance cutters and aircraft and the
    associated sensor and communications systems.
        I am absolutely committed to the U.S. Coast Guard and to Maryland's
    own Coast Guard Yard at Curtis Bay, which serves as a core logistics
    facility that helps ensure fleet readiness.
        Admiral Loy, I look forward to working with you to address the
    Coast Guard's current and future readiness needs.
                                     ______

                    Prepared Statement of Senator Herb Kohl

        Thank you very much, Madam Chairwoman. Congratulations on becoming
    our new Chair of the Subcommittee. I would like to thank Admiral Loy
    and Mr. Mead for taking the time this morning to share their thoughts
    on the fiscal year 2002 Coast Guard budget request. The issues we are
    here to discuss are very important to myself and the people of
    Wisconsin. The Coast Guard plays an essential role in both safety and
    commerce, and I would like to take this opportunity to applaud the work
    they have done in Wisconsin.
        We all know that increased maritime commerce along with increased
    hostile threats to our coastline will continue to pose serious demands
    on your ability to provide the service we as Americans are all proud
    of. We all also know that it is impossible to meet those threats and
    demands of the future with a Coast Guard fleet from the past. The wear
    and tear on your personnel and equipment have accelerated, resulting in
    increased risks by having tired people operating obsolete equipment. We
    as members of this Subcommittee will work with you to make sure that
    the Coast Guard is positioned and equipped to effectively achieve your
    mission of protecting the public, the environment, and U.S. economic
    interests in our waterways and ports for the many years to come.
        I look forward to hearing from you on how the fiscal year 2002
    Budget request for the Coast Guard takes us in the direction of
    modernization and increased readiness. The Deepwater Project is an
    important component of that effort and I am interested to hear your
    comments on how you believe this project adds to your overall
    modernizing strategy.
        Again, thank you for your testimony this morning and I look forward
    to working with this Subcommittee, and with the Coast Guard to continue
    our successes of the past and prepare for future challenges both in
    Wisconsin and the rest of the country.
                                     ______

                Prepared Statement of Senator Richard J. Durbin

        Chairman Murray, thank you for holding this important hearing on
    the fiscal year 2003 U.S. Coast Guard budget. I would like to join you
    in welcoming Admiral James M. Loy, Commandant of the Coast Guard, and
    Transportation Inspector General Ken Mead.
        I would like to take just a moment to thank Admiral Loy for his
    outstanding service to our country and for his fine leadership of the
    U.S. Coast Guard. While we'll miss his presence and leadership in
    Washington, we wish him the best of luck in retirement.
        My opening statement is brief. I simply want to say thank you to
    the U.S. Coast Guard. The Coast Guard has done excellent work under
    less-than-ideal circumstances. They rushed to protect our ports and
    other critical infrastructure in the wake of September 11. And they
    have maintained their vigilance and dedication through the highest
    state of alert since World War II.
        Twice since September 11--in October and January--I have visited
    the men and women of the Coast Guard in Chicago to thank them for their
    service and to hear about the challenges they continue to face every
    day. In fact, the last time we got together it was Super Bowl Sunday,
    with a foot of snow on the ground, and chilling temperatures. But, as
    usual, the Coast Guard was doing its job and not complaining about the
    cold weather or the increases in its duties. They are true
    professionals.
        I believe the Great Lakes and the Chicago Lake Michigan shoreline
    are in good hands. I'd like to publicly acknowledge Admiral James Hull
    and the leadership of the Chicago MSO. I look forward to my continued
    work with them.
        Chairman Murray, thanks to this Subcommittee and the fiscal year
    2002 conference report, Chicago will soon see a rebuilt U.S. Coast
    Guard marine safety and research station near Navy Pier. This project
    has the potential to significantly improve public safety and law
    enforcement by rebuilding an old, unused station and by facilitating
    cooperation among local, State, and Federal marine safety authorities.
    I look forward to officially opening the station in the near future.
        Of course, one of the regional challenges remains attracting a
    full-time USCG helicopter search and rescue team in the Chicagoland
    area. There's a long history here. Up to this point, a solution has
    eluded us. But, together with the Coast Guard, City of Chicago, State
    of Illinois, and the Illinois Congressional Delegation, I'm confident
    we can come to an agreement that will improve safety and help give
    boaters and other users of southwestern Lake Michigan peace of mind.
        I would also like to put in a plug for the EJ&E railroad bridge
    near Morris, Illinois. This bridge is one of the most frequently hit in
    the country and has been identified as needing major alteration. This
    Subcommittee has provided nearly $7 million over the last 3 fiscal
    years toward the EJ&E railroad bridge's reconstruction and included
    some very specific instructions to the Coast Guard. I hope the Coast
    Guard will proceed with this important alteration project to ensure the
    Illinois River remains safe and navigable.
        I look forward to working with the U.S. Coast Guard on homeland
    security, these Illinois projects, and the Integrated Deep Water System
    program in fiscal year 2003 and beyond.
        Thank you, Chairman Murray, for scheduling today's hearing.

        Senator Murray. Thank you very much, Senator Shelby. We
    will now turn to Admiral Loy for his opening statement.

                       STATEMENT OF ADMIRAL JAMES M. LOY

        Admiral Loy. Thank you very much, Madam Chairman. Good
    morning to the distinguished members of the subcommittee. It is
    a pleasure to appear before you today to discuss the Coast
    Guard's fiscal year 2003 budget request and its effect on the
    essential daily services we provide the American public and, I
    might say, across the full range of the mission profile that
    both you and Mr. Shelby have mentioned already this morning,
    but I think my first responsibility today is to thank you,
    Madam Chairman, for your personal effort and for that of the
    committee membership and staff during the post 9/11 period when
    the Transportation Appropriation for 2002 and the fall
    supplemental was being negotiated.

                              SUPPLEMENTAL FUNDING

        I am especially pleased with the structure of the $209-
    million supplemental as it reflected not only the immediate
    maritime security requirements, including paying reservists
    called to duty, but also the 1\1/2\ years of the fiscal year
    2002 National Defense Authorization Act exposure. That effort
    has enabled us to put the full capability of the Coast Guard
    into the war on terrorism. You were there when we needed you,
    and I am very grateful for that.
        Working with Secretary Mineta and the Department of
    Transportation, the Coast Guard's fiscal 2003 budget first and
    foremost represents significant increases to address our
    Homeland Security responsibilities. We are in a resource crisis
    to stand up the permanent capability to deal with our maritime
    security challenges, and this budget addresses it strongly, as
    you have suggested in your opening statement, and when the
    President said the budget being sent to the Congress has the
    largest increase in spending for Coast Guard in our Nation's
    history, our ports, waterways, and coastal security are the
    focus of that increase.
        Last year, I talked about the Coast Guard's multiyear plan
    to transform our organization by restoring our readiness and
    shaping our future to enable the Coast Guard as a
    multimissioned maritime military organization to adapt to the
    need of our Nation. We should be applauding the accomplishments
    of this organization on the occasion of 9/11. Those charts that
    Senator Shelby reflected represented the very key aspect of
    what we do best for America. We shift gears when necessary to
    go to the Nation's primary need, and we adjust accordingly in
    the aftermath of that shift that the Nation requires.
        This budget also methodically continues that strategic
    effort and also concentrates on our efforts to rebuild our
    Search and Rescue program, a clear administration and
    congressional priority and, I might add, one of my own. All
    these intentions were shocked by the future that arrived
    unannounced on September 11 of last year. The transformation
    that we had designed occurred sooner, faster, and with greater
    force than we might have anticipated, but it did not alter our
    fundamental vision, and we must continue that transformation.
    As we bolster the foundation of our service, we will
    simultaneously enhance our increased maritime homeland security
    capabilities.

                               MARITIME SECURITY

        Madam Chairman, I will make just brief comments about four
    items that I believe frame this budget. First, maritime
    security. The Coast Guard, with strong support from Secretary
    Mineta, from Governor Ridge and from the President, has
    developed five key goals which, when met, will radically
    improve the security of our Nation's ports and waterways. This
    fiscal 2003 budget will make significant strides towards those
    five goals, and they are simply to build Maritime Domain
    Awareness in our ports and waterways and the approaches to this
    Nation, to control the movement of high-interest vessels, to
    enhance our presence on our waterways, to protect critical
    infrastructure, and especially with respect to Coast Guard
    force protection, and to use outreach both at home and abroad
    to create an all-hands evolution, because it is there and only
    there that we will actually realize the greater security
    profile we need. Much of this budget focuses on accomplishing
    those goals.

                           SEARCH AND RESCUE PROGRAM

        Secondly, our search and rescue program. This committee
    focused on our SAR program last year, and I want to report back
    that I was listening very carefully. The enacted 2002 budget
    and the supplemental in the 2003 request are systematic steps
    in the 5-year plan that we have developed and that we have
    spoken with you about. We just recently offered a very
    significant review of that plan to the Inspector General's
    staff, and my feedback from Mr. Mead is that they were very
    pleased with that report.
        More importantly, clear capability improvements,
    significant head count additions, solid training investments,
    and very real equipment and technology improvements have been
    made and will continue to be made in the 2003 budget and the
    following years thereafter.

                        NATIONAL DISTRESS MODERNIZATION

        Third, the National Distress Response System Modernization
    Project. This project will modernize the capital infrastructure
    that enables effective safety and security response capability.
    Many call it our maritime 911 system, and it is that and more.
    This budget seeks $90 million to accelerate the project. As
    this committee requested, there seems to be three areas of
    concern here: (1) did we eliminate some kind of important
    capabilities in the phase 2 request for proposal which went on
    the street, (2) will there still be coverage gaps associated
    with our new system, and 3, is our adjusted standard for system
    restoration from a 6 to 24-hour standard a reasonable one in
    the wake of what might be a hurricane that goes by and topples
    towers?
        Well, we have spent an awful lot of time on these three and
    many other questions as the requirements were being modified,
    and the real RFP for phase 2 was issued just last week. I
    believe we made very solid, cost-effective decisions on each
    one of those questions. The new system is enormously important
    not only for search and rescue, but as the command and control
    system for all of our missions, including maritime security. We
    are on track to complete the system by the fourth quarter of
    2006, as directed by the Congress, and I welcome your questions
    with regard to any of those three issues.

                              INTEGRATED DEEPWATER

        Fourth and last, the Integrated Deepwater System. On his
    recent trip to Portland, Maine, President Bush said, we must
    make sure our Coast Guard has a modern fleet of vessels, and
    the Congress has helped us move in that direction. It has been
    a long and, yes, tortuous path to make sure we are doing this
    the right way. We have reached out time and time again to get
    advice and counsel from experts. We are now only a few months
    away from an award. We are on track with forward-thinking, and
    strongly applaud that acquisition strategy.
        Last year, Senator Shelby cautioned us to be meticulous, to
    be methodical, and not to rush to a decision, and we have done
    that and more. At the request of the Office of Management and
    Budget, the Acquisitions Solutions Incorporated Company
    conducted a full, independent review of the Integrated
    Deepwater System phase 2 RFP. It did delay our time line, but I
    believe it was time well-spent, because we got the 15th or 20th
    or however many times you want to count it affirmation that the
    acquisition strategy was, in fact, right on target, exactly
    what this project deserved, with the attention being spent to
    it being right on track.
        The review concluded that the project was well-conceived,
    well-developed, and well-managed. They strongly supported the
    acquisition strategy and said they felt the Integrated
    Deepwater System would become a model of performance-based
    success for others in Government to emulate in the future.
        As we speak, our team is reviewing the three proposals
    offered to the RFP. We remain ready to award in the third
    quarter of fiscal 2002. This budget supports the next step. IDS
    will provide capability across all mission areas, including
    maritime security. It is the right project whose time has come,
    and we should move forward on it aggressively immediately.
        Madam Chairman, my written statement closes with a quote
    from the President. He said, quote, I saw how the Coast Guard
    has responded after 9/11, and I know how important the Coast
    Guard is for the safety and security and the well-being of our
    American citizens, close quote. I am enormously proud of what
    every member of my service has been doing before and after 9/
    11, and our great strength is our multimission capability and
    the inherent adaptability to shift focus to the Nation's
    immediate maritime needs. That is what we did on 9/11. This
    budget will underpin this capability in fiscal year 2003.

                               PREPARED STATEMENT

        Madam Chairman, I have provided to the staff a small folder
    of the copies of the slides that were provided and, if there is
    any value to them through the course of the hearing, I offer
    you those to note along the way, as we discuss these issues.
        Thank you, Madam Chairman, and I look forward to your
    questions.
        [The statement follows:]

                   Prepared Statement of Admiral James M. Loy

                                  introduction
        Good morning, Mr. Chairman and distinguished members of the
    Subcommittee. It is a pleasure to appear before you today to discuss
    the Coast Guard's fiscal year 2003 budget request and its impact on the
    essential daily services we provide the American public.
        Working with Secretary Mineta and the Department of Transportation,
    the Coast Guard's fiscal year 2003 budget first and foremost represents
    significant increases to address our Homeland Security
    responsibilities. When the President said, ``the budget [being sent] to
    the United States Congress [has] the largest increase in spending for
    the Coast Guard in our Nation's history'' our ports, waterways, and
    coastal security are the focus.
        Last year I talked about the Coast Guard's multi-year plan to
    transform our organization by Restoring Our Readiness and Shaping Our
    Future to enable the Coast Guard, as a multi-missioned, maritime,
    military organization, to adapt to the needs of our Nation. This budget
    also methodically continues that strategic effort and also concentrates
    on our efforts to rebuild our Search and Rescue program, a clear
    Administration and Congressional priority. All these intentions were
    changed on September 11 of last year. The transformation that we had
    designed occurred sooner, faster, and with greater force than we might
    have anticipated but it did not alter our fundamental vision--we must
    continue that transformation. As we bolster the foundation of our
    service, we'll simultaneously enhance our increased Maritime Homeland
    Security capabilities.
                         transforming our organization
        The Coast Guard achieves its flexibility and strength through its
    military discipline, multi-mission character, and civil law enforcement
    authority. This unique authority and flexibility in operations allows
    our organization to shift our resources rapidly from one priority to
    another, often in a matter of minutes.
        Our mission profile is different than planned a year ago. At that
    time, Marine Safety was allocated 14 percent of our mission portfolio
    including the Coast Guard's traditional Port Safety and Security
    efforts. In the days and weeks following the terrorist attacks, we
    dedicated over half of all Coast Guard resources to Maritime Homeland
    Security-or as we now refer to it-Ports, Waterway, and Coastal
    Security. In fiscal year 2003, our traditional Marine Safety activities
    coupled with the resources dedicated to Ports, Waterways & Coastal
    Security represent a very significant 27 percent of our Coast Guard
    resources.
        Our Maritime Transportation System (MTS) is both valuable and
    vulnerable. The MTS includes waterways, ports, intermodal connections,
    vessels and vehicles. The Maritime Transportation System moves 95
    percent of the Nation's overseas trade accounting for nearly $1
    trillion in GDP. Protecting America from terrorist threats requires
    constant vigilance across every mode of transportation: air, land and
    sea. The agencies within the Department of Transportation, including
    the U.S. Coast Guard, the Maritime Administration (MARAD), and the
    Transportation Security Administration touch all three modes of
    transportation and are cooperatively linked. The vast majority of the
    cargo handled by this system is immediately loaded onto or has just
    been unloaded from railcars and truckbeds, making the borders of the
    U.S. seaport network especially vulnerable. The Coast Guard, with
    strong support of Secretary Mineta, has developed five key goals, which
    when met will protect and ensure the safety of our Nation's waterways
    and ports, as well as maintain and increase public confidence in the
    Maritime Transportation System. In fiscal year 2003 the Coast Guard
    will make great strides in addressing these five goals:
        Build maritime domain awareness.--The United States must have an
    awareness of all vessels--with their cargo and crew along with
    associated risk profiles- that operate to and from our ports, or
    transit our coastal waters. We will complete Port Vulnerability
    Assessments for the Nation's 50 most critical ports. There are also
    approximately 300 personnel and $88 million requested to establish
    intelligence fusion centers for the collection, analysis, and sharing
    of intelligence information. The initiatives in this component of our
    have the potential to significantly reduce security risks while
    allowing better decision making and allocation of security resources.
        Ensure controlled movement of high interest vessels.--High interest
    vessels include any vessel that could be used as a weapon of mass
    destruction and vessels carrying a large number of passengers (i.e.
    Liquefied Natural Gas carriers, chemical tankers and cruise ships).
    These vessels must be identified, and possibly boarded and inspected by
    Coast Guard personnel well offshore before a possible threat could
    cause harm to our Nation's ports or people. This budget supports 160
    Sea Marshals for armed escort of High Interest Vessels and provides the
    resources to increase on-the-water patrols for all 49 Captains of the
    Port zones.
        Enhance presence and response capabilities.--Increased presence has
    great value as a deterrent and if a potential threat has been
    identified, the Coast Guard needs the capability to detect, intercept
    and interdict it, preferably on the high seas, using a layered defense
    of major cutters, patrol boats, and maritime patrol aircraft. Such
    action will effectively disrupt a terrorist's planned chain of events
    and prevent a possible catastrophic terrorist attack well before it
    threatens our shores. This budget completes building a total of 6
    Maritime Safety & Security Teams with nearly 500 active duty personnel.
    It will also add 26 more Port Security Response Boats and staffing for
    small boat stations.
        Protect critical infrastructure and enhance Coast Guard force
    protection.--The Coast Guard must take measures to ensure protection of
    our personnel, physical plant, and, consistent with the
    Administration's Critical Infrastructure Protection Program,
    information technology capabilities. The threats posed are wide and
    varied, and require considerable actions to safeguard the Coast Guard's
    people and resources. $51 million is requested for Anti-Terrorism/Force
    Protection--with specific enhancements to physical infrastructure,
    cyber-security, personal protective equipment, and firearms and
    ammunition.
        Increase domestic and international outreach.--Addressing security
    risks in the maritime environment is an ``all-hands'' affair. It will
    require partnerships and strategic relationships at home and abroad. To
    help build this security network, the Coast Guard will require robust
    security plans, including plans for commercial vessels, offshore
    structures, and waterfront facilities. These plans will address access
    control, credentialing of waterfront employees, and physical and other
    security issues. Coast Guard Captains of the Port, in concert with all
    other port stakeholders, will prepare anti-terrorism contingency plans.
    All of these plans will be exercised periodically. The Coast Guard will
    continue to work with the International Maritime Organization to align
    international activities and improve security. The budget proposes 111
    contingency response planners for worldwide seaport infrastructure
    security.
                            restoring our readiness
        We must also continue our multi-year, phased efforts to restore
    readiness as we strive to establish equilibrium to sustain our ``new
    normalcy.'' We must attend to traditional operations and perform
    appropriate training, maintenance and administrative work, while
    maintaining surge' capacity for emergency operations. We must ensure
    adequate levels of training, maintenance, and other support resources
    are in place to achieve the full measure of output from our ships,
    aircraft, and shore facilities.
        Search and Rescue (SAR).--The Coast Guard remains the sole
    government agency that has the expertise, assets, and around the clock,
    on-call readiness to conduct Search and Rescue operations in all areas
    of the maritime environment. Through education, regulation, and
    enforcement efforts, as well as SAR operations, the Coast Guard strives
    to reduce fatalities, injuries and property loss at sea. Annually, the
    Coast Guard responds to approximately 40,000 calls for assistance. In
    fiscal year 2001, the Coast Guard saved over 84 percent of all mariners
    in distress; over 4,100 lives.
        The Coast Guard has undertaken a multi-year effort to improve our
    readiness at our small boat stations where many of the search and
    rescue cases take place. We added 67 personnel for back-up safety boat
    crews and tower watches at our surf rescue stations in fiscal year
    2001. This year the Coast Guard is adding nearly 200 personnel to small
    boat stations and command centers. Additionally, we are opening a
    formal school for training Boatswain's Mates and establishing traveling
    small boat training teams, ensuring that our personnel have critical
    skills required to successfully carry out search and rescue missions.
    Personal protective clothing inventories have been enhanced to protect
    our crews from the harsh environment. This effort continues in fiscal
    year 2003 by adding another 174 personnel to our small boat stations to
    reduce the work hour requirements and enhance the retention of our
    front line personnel.
        The National Distress & Response System Modernization Project
    (NDRSMP).--In addition to adding personnel to our emergency response
    system, we are making major commitments to the capital infrastructure
    that enables effective safety and security response capability. The
    Coast Guard is underway with a major re-capitalization of the Nation's
    ``Maritime 911 System.''
        The National Distress & Response System Modernization Project will
    update our 1970's technology to an integrated communications network
    that will greatly increase detection and localization of distress
    signals, eliminate known radio coverage gaps, and enhance Coast Guard
    command and control capabilities across all mission areas, including
    homeland security, on the Nation's inland and coastal waterways. This
    budget will fund the initial installation of NDRS equipment and
    networking at six of the Coast Guard's Group regions along the
    Atlantic, Gulf, and Pacific Coasts.
        Human Capital.--Our personnel remain our organization's most
    valuable resource. It is their hard work and dedication that have
    enabled the Coast Guard to adapt to evolving missions and changing
    operational environments. The Coast Guard's motto of Semper Paratus--
    always ready--is more a statement of our people's mindset than of the
    capabilities of our physical assets.
        At his State of the Union address, President Bush emphasized the
    commitment of men and women in uniform to provide for our Nation's
    security and safety. He said, ``Our men and women in uniform deserve
    the best weapons, the best equipment, the best training--and they also
    deserve another pay raise.'' This budget reflects the President's
    desires.
                               shaping our future
        We must also plan the U.S. Coast Guard's future now. The ability to
    anticipate and respond to new threats, risks, demands and opportunities
    is critical to our success.
        The Integrated Deepwater System.--Of the 39 Navies throughout the
    world, the U.S. Coast Guard has one of the oldest. With great support
    from the Department of Transportation and the Administration, we're
    ready to move forward with our plans to recapitalize and upgrade our
    deepwater assets. During his recent trip to Portland, Maine, President
    Bush said we ``. . . must make sure our Coast Guard has a modern fleet
    of vessels.'' Providing capability across all mission areas, our
    Deepwater assets are vital to the layered defense and response for
    Maritime Homeland Security. Deepwater is key to ensuring the Coast
    Guard can continue to fulfill all our missions and essential in
    providing a high level of ``maritime domain awareness.'' This budget
    fully funds the first full year of $500 million for this critical
    program.
                                   conclusion
        The President's fiscal year 2003 budget provides immediate
    capability for our Homeland Security responsibilities and continues to
    build upon past efforts to restore service readiness and shape the
    Coast Guard's future. The budget also demonstrates unwavering support
    for both the Deepwater project and National Distress and Response
    System Modernization Project (NDRSMP). The end result of the
    President's fiscal year 2003 budget will be a more capable Coast Guard
    that is correctly positioned for transformation into the Coast Guard of
    the 21st century.
        I close with a quote from our Commander in Chief as he reflected on
    the Coast Guard's efforts as of late. ``I saw how the Coast Guard has
    responded after 9/11 and I know how important the Coast Guard is for
    the safety and security and the well-being of our American citizens.
        This is a fine group of people, who don't get nearly as much
    appreciation from the American people as they should. And I'm here
    today [Jan 25, 2002] to say thanks, on behalf of all the citizens who
    appreciate the long hours you put in, the daring rescues you accomplish
    and the fine service you provide to our country. Oh, yes, we're on
    guard in America.''
        Protecting our ports, waterways, and coastal regions, saving
    mariners in distress, interdicting illegal migrant and seizing drugs,
    or protecting our fisheries--With this budget the Coast Guard will be
    there to answer the call. . .
        Semper Paratus

                       STATEMENT OF HON. KENNETH M. MEAD

        Senator Murray. Mr. Mead.
        Mr. Mead. Thank you, Madam Chair, Senator Mikulski, Senator
    Stevens. I want to start by saying that we have delivered to
    the Majority and Minority our report of yesterday to the
    Appropriations Committees and the Department's overall budget,
    and so you have that for the record.
        I also want to start out by saying that this is probably
    the last hearing that I will be joining jointly with the
    Commandant here, and I wanted to say on a personal note that I
    have learned a lot from Admiral Loy. The country has a lot to
    thank him for, and his leadership, and just speaking as the
    Inspector General, it is always important in our relationships
    with the agency heads that they be respectful of the
    independence of the Inspector General, be solicitous of the
    Inspector General's views, and responsive to the
    recommendations, and I feel on every one of those counts that
    Admiral Loy and the Coast Guard under his leadership should get
    five stars, and I hope he goes on to serve the country in some
    other capacity.
        Now, to the testimony. As you recall, last year at this
    time the big budget drivers were Deepwater, the Search and
    Rescue Program, and the Distress System, and to maintain the
    Coast Guard's core missions. We were not talking about beefing
    up the security mission, and so this year you have the security
    mission overlaying the Coast Guard's budget, and what I would
    like to talk about today is the Coast Guard's overall budget
    request, the Coast Guard's response to our search and rescue
    report, which outlined deficiencies, the Deepwater capability,
    the Deepwater capability replacement project.

                            NATIONAL DISTRESS SYSTEM

        That is all the Coast Guard's assets that operate 50 miles
    and out afloat and airborne, and as well as the overhaul of the
    National Distress System. That is rather like a 911 system
    where mariners in distress can call the Coast Guard and, of
    course, it is inextricably intertwined with the search and
    rescue program, so I think this is a real critical year for the
    Coast Guard. It has got to take actions to adjust its missions
    in the wake of 9/11, and it simultaneously has to serve all its
    other missions, and simultaneously embark on what is the
    largest and most expensive acquisition in its history.
        At the same time it is doing this, it has to resolve
    serious weaknesses in its Search and Rescue Program and begin
    overhauling that National Distress System. We feel that the
    Coast Guard is facing a number of big uncertainties about its
    mission requirements, how it is going to execute major
    acquisition projects, and control costs. We think the Coast
    Guard is probably at a point where they ought to invest in a
    cost accounting system, because you have a pretty big budget
    plus-up, a lot of big endeavors moving out at the same time,
    and you are going to want to know how much money is going to
    each and what we are getting for it.
        The Coast Guard's budget seeks an increase of $1.6 billion.
    That will move the budget from $5.7 billion to $7.3 billion. I
    think it is important to note, though, that really about three-
    quarters of that budget increase is for retirement, pay
    entitlements such as cost of living increases, and things of
    that nature, and so you are really left with about a $500 or
    $600 million actual increase.
        The Coast Guard is striving to balance its missions for
    fiscal 2003, and it plans to dedicate between 25 and 28 percent
    of its resources to security and port safety. That is roughly
    twice what the Coast Guard was applying to those areas last
    year--that is, before 9/11--and it views the 2003 budget
    request as the initial phase of a 3-year plan to enhance its
    homeland security missions. What is not clear to us is if the
    Coast Guard intends to request additional increases in 2004 and
    2005 to support that plan.

                               SEARCH AND RESCUE

        A second point concerns the Search and Rescue Program.
    Admiral Loy is right, they have pulled together a plan that I
    think is fairly robust. My staff was very impressed with it,
    and we reported, of course, last year that the search and
    rescue program was really in need of repair. It was declining
    because it did not have enough qualified people. It did not
    have a formal training program for its staff, and the equipment
    was in a state of disrepair, so the Coast Guard has developed
    this plan.
        You provided a $14.5 billion plus-up, the budget request
    another plus-up, and I think, as you all know, the Inspector
    General has been directed to make a certification that that
    money has been used to supplement, not supplant the baseline
    expenditures that were being made in 2001 for search and
    rescue.
        You should know that the small boat stations, which are the
    folks that do the search and rescue, are also doing port
    security, and we have not been out on the audit trail since 9/
    11 long enough to be able to quantify the extent to which they
    are trying to mix those missions, but we do know that the
    search and rescue people are operating--their operating tempo
    for port security has gone way up, and if you will recall the
    numbers I gave you last year on what they were performing just
    for search and rescue, you wondered how they could fit any more
    hours in the day.

                  NATIONAL DISTRESS AND RESPONSE MODERNIZATION

        I would like to cover major acquisition projects. The Coast
    Guard is approaching an important crossroads in the National
    Distress and Response System Modernization and the Deepwater
    capability projects. Both projects involve multiyear contracts.
    They both have long-term funding requirements. The Coast Guard
    expects to award contracts for both projects later this year.
    The budget seeks about $590 million for those projects
    combined.
        There are some significant uncertainties in these projects
    that I think you will have resolved, or you should expect to
    have resolved later this year. For Deepwater, this is the
    second year the Congress has been asked to appropriate money
    for it without a detailed cost and schedule estimate, and that
    is attributable to the procurement strategy they are following,
    so that right now I cannot tell you exactly what assets will be
    modernized or replaced and when, and at what cost. We should be
    able to tell you that later this year, after the contractor is
    selected, which I think is in the third quarter.
        Also, last year at this time we thought that the time line
    for the Deepwater acquisition would be 15 or 20 years. Now, we
    are not sure that 15 or 20 years is solid, and it may go to 30
    years, so we would like to know more about the time line for
    that acquisition.
        In the National Distress Response System, which I said is a
    911 system for mariners in distress, I would like to use a
    chart. Actually, this is the same chart I used last year. You
    remember the little dots. The different colors on the dots just
    indicate they are intended to signify the amount of nautical
    miles that are areas off the coastline where people can call
    911 for the Coast Guard and they will not get an answer.
        I call them dead phones, or gaps, and the different colors
    indicate, as I said, in different nautical miles--for example,
    the red is 6,100 square nautical miles of gap. Where you have
    the yellow up there in Alaska you have 800 or more square
    nautical miles with lack of coverage, and the specifications
    that the Coast Guard is now seeking for the National Distress
    System will get rid of 90 percent of those dots. The problem is
    that until they select a contractor, I cannot tell you which
    dots are going to disappear.
        Also, we are concerned about the repair time. Initially,
    the specification was for a 6-hour repair time, and now the
    specification seems to have crept up to 24 hours, which seems
    like a long time to be in distress if you have to place a 911
    call, but I do want to make clear to the committee that the
    replacement of the National Distress System that the Coast
    Guard is proposing is a vast improvement over what we have now,
    but I would like to see all of those gaps or dead zones closed.

                               PREPARED STATEMENT

        And I would like to see the repair time reduced very
    substantially, and I understand if you have a hurricane you are
    probably going to need 24 hours or more to replace those
    antennas, but there are other reasons a system goes down, and I
    think for the range of reasons that a system may go down, that
    we really ought to reduce the time required to make repairs.
        I think I will just proceed to Q and A's, if that is okay.
        [The statement follows:]

                     Prepared Statement of Kenneth M. Mead

        Madam Chairwoman and Members of the Subcommittee: We appreciate the
    opportunity to discuss Coast Guard's budget and management issues. We
    have identified balancing Coast Guard's missions and budget needs in
    light of post September 11 priorities as 1 of the top 10 management
    challenges in the Department of Transportation.
        The Coast Guard is seeking a significant increase in its budget to
    be able to deal with an expanded security mission, perform its other
    major missions, and proceed with an extraordinary set of important
    major acquisitions. The budget will increase from $5.7 billion in
    fiscal year 2002 to $7.3 billion in fiscal year 2003. There are
    currently a number of uncertainties about Coast Guard mission
    requirements, how it will execute major acquisition projects, and
    control costs. Coast Guard needs an effective cost accounting system
    that meets Federal accounting standards to provide a basis for
    accurately measuring the costs of specific activities and making
    decisions about where to apply resources.
        My testimony today will address three areas.
        First, the Budget Request for 2003.--Coast Guard is seeking an
    increase of $1.6 billion for fiscal year 2003. The largest portion of
    the increase is $736 million for a required payment to Coast Guard's
    military retirement fund. Two other categories, operating expenses (up
    by $733 million) and acquisitions (up by $92 million), account for most
    of the remaining increase. The increase in Coast Guard's operating
    capacity is not as large as the increase in operating expenses makes it
    appear. About half of the operating expenses increase will pay for
    entitlements and other inflationary adjustments and not add to
    operating capacity. The other half of the increase will fund the
    operation of new assets, such as seagoing buoy tenders and coastal
    patrol boats, continue increased security operations begun after
    September 11, and fund new security operations.
        Immediately after September 11, Coast Guard devoted 58 percent of
    its resources to port safety and security, while deployment to other
    core missions fell. For fiscal year 2003, Coast Guard plans to dedicate
    27 percent of its resources to port safety and security programs. This
    is roughly twice the amount that Coast Guard planned to dedicate to
    these missions for fiscal year 2002 prior to September 11. The relative
    amount of resources Coast Guard plans to devote to drug interdiction
    and fisheries enforcement in fiscal year 2003 is expected to decrease
    from planed fiscal year 2002 levels. Coast Guard views its fiscal year
    2003 budget request as the initial phase of a 3-year plan to enhance
    its homeland security missions while still conducting other diverse
    missions that remain national priorities. It is not clear to us if
    Coast Guard intends to request additional increases in fiscal years
    2004 and 2005 to support this plan.
        Second, the Search and Rescue program.--Last year we reported that
    the readiness of the Coast Guard's small boat station search and rescue
    program was declining because it did not have sufficient numbers of
    qualified personnel, a formal training program for key staff, and
    equipment that was up to standards. Coast Guard developed a strategic
    plan to improve readiness and the Congress provided $14.5 million for
    fiscal year 2002 for added search and rescue program personnel and
    equipment. We have been directed to audit Coast Guard's use of these
    added funds and certify that the $14.5 million supplements and does not
    supplant Coast Guard's level of effort in this area in fiscal year
    2001. The fiscal year 2003 budget proposal seeks $22 million to follow
    through on Search and Rescue program enhancements such as adding crew
    members to the 47-foot motor life boats and procuring small search and
    rescue boats.
        Small boat stations are also playing a key role in port security
    activities since September 11. More than half of all station hours are
    devoted to port security, and operating tempo has increased
    significantly. Given the emphasis on security missions, it is unclear
    whether Coast Guard has implemented its plan to address the Search and
    Rescue program deficiencies we identified. As part of our audit to
    certify the use of fiscal year 2002 funds, we will determine the status
    of Coast Guard actions to address the deficiencies identified in our
    prior audit report.
        Third, Major Acquisition Projects.--The fiscal year 2003 budget
    seeks $590 million for Coast Guard's two largest acquisition projects,
    the Deepwater Capability Replacement and the National Distress and
    Response System Modernization. Both projects are critical to improving
    Coast Guard's operations, but both also have significant uncertainties
    that the Subcommittee should expect to see resolved this fiscal year.
      --Deepwater.--This is the second year that the Congress is being
            asked to appropriate procurement funding for the Deepwater
            project without a detailed cost and schedule estimate. If the
            Congress appropriates the $500 million Coast Guard is seeking
            for 2003, it will have $790 million available for the
            procurement phase of the project. Given the acquisition
            approach that Coast Guard is using, reliable estimates that
            describe what assets will be modernized or replaced, at what
            cost, when that will occur, and when funding will be required,
            will not be available until after a contractor is selected. The
            selection is currently scheduled for the third quarter of
            fiscal year 2002.
          Another area of uncertainty is how long the project will take to
            complete. Although Coast Guard originally stated this would be
            a 20-year project, the request for proposals states that the
            performance period for the contract could be up to 30 years. It
            is not clear to us whether this means that (1) previously
            planned annual funding levels will remain the same and result
            in increased cost, or (2) the planned annual funding levels
            will be spread out and reduce the level of funding required
            each year.
      --National Distress and Response System (NDS).--Coast Guard has
            increased its estimate for the NDS project--the 911 system for
            mariners in distress--from $300 million to $580 million and it
            is seeking $90 million in the fiscal year 2003 budget to begin
            procurement. If the Congress appropriates the $90 million Coast
            Guard is seeking for fiscal year 2003, it will have $125
            million available for the procurement phase of the project.
          The current system has many deficiencies including more than 88
            communication coverage gaps, totaling 21,490 square nautical
            miles along the U.S. coastline where Coast Guard cannot hear
            mariners. The revised system will provide a significant
            improvement over the existing system.
          However, we are concerned that Coast Guard reduced or eliminated
            capabilities in the revised system that it initially considered
            essential. This occurred because Coast Guard reduced
            performance specifications after contractors estimated that a
            system meeting Coast Guard requirements would cost more than $1
            billion. As a result of the reduced performance specifications,
            the revised system will still contain gaps in communication
            coverage. Because the acquisition strategy being used on NDS is
            following the same approach as that used on Deepwater, the
            number, size, and location of the gaps will not be known until
            a contractor's system is selected. Also, the time allowed to
            restore critical functions, if the system becomes unavailable,
            has been increased from 6 to 24 hours. However, at some time in
            the future, Coast Guard may have to upgrade the system to
            provide some or all of the capabilities that were to be
            provided by the $1 billion system. We have recommended that
            Coast Guard develop an acquisition plan that includes cost and
            schedule estimates for upgrading the system to provide these
            capabilities.
        coast guard's budget request represents a 27.6 percent increase
        Coast Guard's fiscal year 2003 budget request seeks an increase of
    $1.6 billion or 27.6 percent over the fiscal year 2002 budget. As shown
    in the following table, most of the increase is in three categories:
    operating expenses; acquisition, construction, and improvements; and
    military retirement fund payment.

              COMPARISON OF COAST GUARD'S FISCAL YEAR 2002 BUDGET WITH ITS FISCAL YEAR 2003 BUDGET PROPOSAL
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year
                                                        Fiscal year        2003
                                                       2002 enacted     President's       Change      Percent change
                                                                          budget
    ----------------------------------------------------------------------------------------------------------------
    Operating Expenses..............................      $3,902,679      $4,635,268        $732,589            18.8
    Acquisition, Construction and Improvements               643,900         735,846          91,946            14.3
     (AC&I).........................................
    Environmental Compliance and Restoration........          17,181          17,286             105             0.6
    Alteration of Bridges...........................          15,466               0         -15,466          -100.0
    Retired Pay.....................................         876,346  ..............  ..............  ..............
    Coast Guard Military Retirement Fund............  ..............         889,000          12,654             1.4
    Reserve Training................................         100,251         112,825          12,574            12.5
    Research, Development, Test and Evaluation......          21,077          23,106           2,029             9.6
    Oil Spill Recovery..............................          61,200          61,200               0             0.0
    Boating Safety..................................          64,000          64,000               0             0.0
    Gift Fund.......................................              80              80               0             0.0
                                                     ---------------------------------------------------------------
          Sub Total.................................       5,702,180       6,538,611         836,431            14.7
                                                     ===============================================================
    Payment to Coast Guard Military Retirement Fund.  ..............         736,000         736,000             N/A
                                                     ---------------------------------------------------------------
          Total.....................................       5,702,180       7,274,611       1,572,431            27.6
    ----------------------------------------------------------------------------------------------------------------

        The increase includes approximately $736 million for payment to
    Coast Guard's military retirement fund consistent with legislation
    proposed in October 2001 by the Administration. The $736 million will
    fund the future retirement benefits of current Coast Guard uniformed
    personnel. The $889 million funding item in the above table for the
    Coast Guard Military Retirement Fund finances payments to existing
    retirees.
        Acquisition funding would increase by $92 million (14 percent) to
    $736 million. This includes $500 million for the Deepwater project, and
    $90 million for the NDS project.
        The fiscal year 2003 budget request seeks $4.6 billion for Coast
    Guard operations, a $733 million (19 percent) increase over fiscal year
    2002. About half of the increase will fund entitlements such as pay
    raises, increased health care costs, and other inflationary
    adjustments. The other half of the increase will fund the operation of
    new assets (such as seagoing buoy tenders and coastal patrol boats),
    continue increased security operations begun after September 11, and
    fund new and enhanced operations including port security. Funding for
    new security initiatives includes $48 million for marine safety and
    security team; $19 million for maritime escorts and safety patrols; $60
    million for enhanced communications, information, and investigations;
    and $37 million for force protection.
     the fiscal year 2003 budget seeks to balance current priorities with
                        coast guard's multiple missions
        In response to the September 11 attacks, Coast Guard deployed 58
    percent of its resources to port safety and security missions. These
    resources included its fleet of rescue boats at small boat stations
    around the country. The redeployment, however, came at the expense of
    other important core missions. For example, resources deployed to drug
    interdiction fell from approximately 18 percent to 7 percent. Other
    missions such as fisheries enforcement, recreational boating safety,
    aids to navigation, and migrant interdiction were also hard hit.
        For fiscal year 2003, Coast Guard plans to use 27 percent of its
    operating expense budget for port safety and security programs. This is
    roughly twice the amount that Coast Guard planned to dedicate to these
    missions for fiscal year 2002 prior to September 11. To help fund the
    increased port safety and security program, Coast Guard will continue
    reduced levels of activity in other missions such as drug interdiction
    and fisheries enforcement. The following chart shows the resources
    projected to be used for major missions during fiscal year 2003
    compared to fiscal year 2002. Because the amount of operating funding
    is different in each year, the change reflects the difference in the
    relative amount of resources projected by mission.

            U.S. COAST GUARD MISSION PROFILE--PERCENT OF PLANNED OPERATING EXPENSES BUDGET BY MAJOR PROGRAMS
                                                      [In percent]
    ----------------------------------------------------------------------------------------------------------------
                                                                                Fiscal year
                                 Program                             --------------------------------     Change
                                                                           2002            2003
    ----------------------------------------------------------------------------------------------------------------
    Programs Increased in fiscal year 2003:
        Marine Safety...............................................         ( \1\ )               5         ( \2\ )
        Ports, Waterways, and Coastal Security......................         ( \1\ )              22         ( \2\ )
        Aids to Navigation..........................................              15              17              +2
        Defense Readiness...........................................               2               3              +1
    Programs Unchanged in fiscal year 2003: Search and Rescue.......              12              12               0
    Programs Decreased in fiscal year 2003:
        Ice Operations..............................................               4               3              -1
        Other Law Enforcement.......................................               3               2              -1
        Migrant Interdiction........................................               5               4              -1
        Marine Environmental Protection.............................              11               8              -3
        Living Marine Resources.....................................              16              11              -5
        Drug Interdiction...........................................              18              13             -5
    ----------------------------------------------------------------------------------------------------------------
    \1\ 14 percent combined in fiscal year 2002.
    \2\ Plus 13 percent.

        The Coast Guard is in the process of balancing its enhanced port
    safety and security mission requirements with its other missions.
    According to Coast Guard, the fiscal year 2003 budget request
    represents the initial phase of a 3-year plan to address its needs. The
    Coast Guard's goal is to enhance all of its homeland security missions
    while still conducting other diverse missions that remain national
    priorities. It is not clear to us if Coast Guard intends to request
    additional increases in fiscal years 2004 and 2005 to support this
    plan.
     fiscal year 2003 budget continues efforts to address deficiencies in
                the small boat station search and rescue program
        Coast Guard's small boat station Search and Rescue program provides
    the first line of response for mariners in distress. During fiscal year
    2000, the 188 small boat stations responded to approximately 40,000
    calls for help and saved over 3,300 lives.
        As we reported to you last year, the small boat station Search and
    Rescue (SAR) program was suffering from serious staffing, training, and
    equipment problems that go back more than 20 years. Our findings were:
      --staff shortages required personnel at 90 percent of the SAR
            stations to work an average of 84 hours per week;
      --high attrition rates among enlisted personnel were impacting
            experience levels at small boat stations;
      --70 percent of vacant positions at small boat stations were filled
            with Coast Guard boot camp graduates with little or no training
            in seamanship, piloting and navigation, small boat handling,
            water survival, or search and rescue techniques;
      --there was no formal training for boatswain's mates, who are key SAR
            staff and one of the largest of the Coast Guard's enlisted job
            specialties;
      --84 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; and
      --Coast Guard had not requested funding to replace or extend the
            useful life of its 41-foot utility boat fleet, which is
            reaching the end of its service life.
        In response to our recommendations, Coast Guard initiated a multi-
    year strategy to improve readiness at small boat stations. For example,
    during fiscal year 2002, Coast Guard added 199 billets to support
    station operations and is in the process of expanding training
    opportunities for station boatswain's mates. In its fiscal year 2002
    supplemental funding request, Coast Guard received an additional 54
    billets and funding to purchase 18 port security boats to augment
    station port security operations.
        In DOT's fiscal year 2002 Appropriations Act, Congress directed
    Coast Guard to use $14.5 million to add personnel, purchase personnel
    protection equipment, and begin the process of replacing its aging 41-
    foot utility boat fleet. We have been directed to audit and certify
    that the $14.5 million supplements and does not supplant Coast Guard's
    level of effort in this area in fiscal year 2001. The fiscal year 2003
    budget proposal seeks $22 million to follow through on SAR program
    enhancements, such as adding crew members to the 47-foot motor life
    boats and procuring small search and rescue boats.
        In December 2001, the Coast Guard briefed us on its strategic plan
    for the small boat station SAR program. The plan identified actions to
    address the deficiencies found during our audit by, for example, adding
    personnel at stations to reduce the hours crew members are on duty and
    to provide administrative support to station management, freeing up
    management to train and certify crew members. Coast Guard also planned
    to increase the number of coxswains receiving advanced training,
    purchase personnel protection equipment for boat crews, and begin the
    process of designing and procuring a replacement for the 41-foot
    utility boat.
        Since September 11, the operating tempo at small boat stations more
    than doubled as they responded to support port safety and security
    efforts while maintaining a successful search and rescue capability.
    More than half of all station hours are now devoted to the port
    security mission. In addition, Coast Guard called up reservists and
    enlisted the Coast Guard auxiliary to support the port security
    mission. This mission includes: enforcing security/safety zones around
    high-risk vessels, oil/gas/chemical terminals, and power plants;
    conducting harbor patrols; providing round-the-clock force protection
    around U.S. Navy and Coast Guard vessels and facilities; escorting
    high-risk vessels in and out of ports, and transporting sea marshals
    and boarding teams to and from vessels. Given the emphasis on security,
    it is unclear whether Coast Guard has implemented its plan to address
    the SAR program deficiencies we identified. As part of our audit to
    certify the use of fiscal year 2002 funds, we will determine the status
    of Coast Guard actions to address the deficiencies identified in our
    prior audit report.
         acquisition, construction, and improvements budget provides a
               significant funding increase for nds and deepwater
        The fiscal year 2003 budget request seeks an acquisition funding
    increase of $92 million (14 percent) to $736 million. The funding
    request includes $90 million and $500 million for the NDS and Deepwater
    projects, respectively. As proposed, the NDS and Deepwater projects
    account for 80 percent of Coast Guard's capital budget for fiscal year
    2003.
              the nds project is likely to experience cost growth
        The 30-year old National Distress System no longer supports Coast
    Guard's short-range communication needs. System deficiencies, such as
    communication coverage gaps and limited direction finding capabilities,
    complicate Coast Guard's ability to effectively and efficiently perform
    search and rescue missions. For example, at least 88 major
    communication coverage gaps exist where Coast Guard cannot hear calls
    from mariners in distress. Totaling about 21,500 square nautical miles,
    the communication coverage gaps represent 14 percent of the total NDS
    coverage area and range in size from 6 to more than 1,600 square
    nautical miles.
        Over the last 6 years, Congress appropriated $56 million for
    planning the NDS project. In the planning phase, Coast Guard and its
    technical support agent performed a significant amount of technical and
    market research and worked directly with three contractors to design a
    system that would meet Coast Guard's needs. During March 2001, each of
    the contractors submitted a cost proposal that individually exceeded $1
    billion--nearly three and a half times Coast Guard's $300 million
    estimate.
        When the contractors' cost estimates came in higher than expected,
    Coast Guard revised the system's performance specifications to lower
    the costs to an estimated $580 million. The proposed system will
    provide significant improvement over the existing system. However,
    Coast Guard eliminated or reduced capabilities in the $1 billion system
    that Coast Guard originally considered essential to address
    deficiencies in the existing system and to improve the SAR program
    efficiencies. As currently designed the proposed system:
        Contains communication coverage gaps, meaning Coast Guard will not
    be able to hear and locate all mariners in distress even when they are
    within the system's planned range of 20 nautical miles of shore. While
    it is anticipated that the gaps will not be as large or as numerous as
    the 88 gaps in the existing system, the exact size and location will
    not be known until a contractor is selected later this year.
        Cannot pinpoint the location of distressed mariners. The proposed
    system will provide only the general direction of the distress call.
    Compared to the $1 billion system, the revision has negatively impacted
    Coast Guard's original project goal to take the ``search'' out of
    search and rescue. Consequently, Coast Guard may have to perform other
    investigative procedures and conduct wide-area searches to locate
    distressed mariners.
        Restoring system outages will take longer. In the proposed system,
    the specified time allowed to restore critical system functions if they
    become unavailable has been extended from 6 hours to 24 hours and full
    system functions from 12 hours to 7 days. Coast Guard has no set
    parameters for restoring critical functions if the existing system
    becomes unavailable.
        Reduced the capability to support an increased level of operations
    during a national emergency or a natural disaster. Capabilities that
    were eliminated, such as the ability to send classified information and
    to talk with other agencies such as the Department of Defense, may be
    necessary to support some Coast Guard homeland security activities.
        While it is notable that Coast Guard has taken aggressive action to
    reduce cost estimates for NDS, Coast Guard may have to restore
    capabilities that were reduced or eliminated as the system is deployed
    to meet operational requirements. This will not only increase the cost
    of the NDS project, but will further compound Coast Guard's capital
    acquisition challenge.
        We have recommended that Coast Guard develop an acquisition plan
    for approval of the Department prior to obligating any funds
    appropriated for the procurement contract, which is anticipated to be
    awarded in the fourth quarter of fiscal year 2002. Coast Guard fully
    concurred with our recommendation. However, given our concern over the
    reduction in capabilities, we have since recommended that Coast Guard
    ensure the acquisition plan also contains cost estimates and milestones
    for adding the capabilities that were reduced or eliminated. In
    addition, we recommended that the plan should identify how Coast Guard
    intends to meet its short-range communication needs in response to its
    increased homeland security mission.
     uncertainties with the deepwater project should be resolved this year
        The Deepwater project proposes to replace or modernize 209
    aircraft, 92 vessels, and associated sensor, communications, and
    navigation systems that are approaching the end of their useful life.
    This project involves replacing or modernizing all of the Coast Guard
    assets that are critical to missions that occur 50 miles or more
    offshore, including drug interdiction, search and rescue, and migrant
    interdiction.
        This project is unusual not only because of its size, but also
    because, if all goes as planned, it concentrates the responsibility for
    project success with one contractor (called the Integrator) and
    subcontractors extending over a planned period of at least 20 years.
    Given this, the Coast Guard should expect a high level of scrutiny by
    the Department and the Congress regarding this project.
        The Congress supported the planning phase of the project by
    appropriating about $117 million. The Coast Guard plans to replace its
    Deepwater capability as an integrated system rather than a series of
    distinct procurements. For example, instead of specifying that it wants
    a medium endurance cutter or a long-range helicopter, Coast Guard
    tasked three industry teams to propose vessels and aircraft that can
    work together to meet mission needs more effectively. The planning
    process has been comprehensive and provides Coast Guard a good basis
    for identifying its needs and developing an acquisition strategy.
        The Coast Guard is rapidly approaching an important crossroads with
    respect to the Deepwater project. Although it previously planned to
    award the Integrator contract in the second quarter of fiscal year
    2002, Coast Guard has appropriately delayed the award to provide
    additional time to further analyze industry proposals. The award is
    currently scheduled for the end of the third quarter of fiscal year
    2002. The award of the integrator contract will start the Coast Guard
    moving forward on a course that is likely to be difficult and
    potentially expensive to alter once funding has been committed and
    contracts have been executed.
        Coast Guard has not yet provided a reliable cost estimate for the
    Deepwater project, but that should be resolved once the Integrator is
    selected. The selection of the contractor will mark the beginning of
    discussions and negotiations between the Coast Guard and the winning
    contractor to devise the exact system the contractor will provide. It
    is likely the final system will not be exactly what the contractor
    proposed but will combine certain aspects from all three contractors'
    proposals. Once the final system design and configuration is
    determined, Coast Guard will be able to establish a cost estimate and
    deliverable schedule.
        Coast Guard received $290 million for the Deepwater procurement in
    fiscal year 2002. If it receives the $500 million requested in fiscal
    year 2003, Coast Guard will have $790 million available for the
    procurement phase of the project. Although Coast Guard originally
    thought this would be a 20-year project, the request for proposal
    states that the performance period for the contract could be up to 30
    years. It is not clear to us whether this means that (1) previously
    planned annual funding levels will remain the same and result in
    increased cost, or (2) the planned annual funding levels will be spread
    out and reduce the level of funding required each year.
        Madam Chairman, this concludes my statement. I would be happy to
    answer any questions the Subcommittee may have.

        Senator Murray. Thank you, Admiral Loy and Mr. Mead. Before
    we begin the question period, I will allow any of our committee
    members to make opening statements. Senator Stevens.

                        STATEMENT OF SENATOR TED STEVENS

        Senator Stevens. Thank you very much. I join the Inspector
    General in congratulating Admiral Loy for his period of time as
    Commandant. I understand the time is coming close, unless he is
    drafted to stay. I do not know if the President might do that,
    but we have enjoyed working with you, Admiral, and Mr. Mead's
    comments are well-taken as far as I am concerned.
        My opening statement really is about homeland security,
    homeland defense. We have rumors up our way of substantial
    reductions in Coast Guard activities off Alaska because of the
    demands of the contiguous 48 States and the increased demands
    in terms of port security. I hope that that is not the case. We
    still have half the coastline in the United States, and if you
    look at the assets you have for half the coastline of the
    United States, they are about one-twentieth of the rest of the
    operation, even less than that.
        But my real questions, when we get to questions, will be
    about those reductions and about the role of the Coast Guard in
    this new command we are hearing about, the Northern Command,
    and whether or not you will be part of that, if you have been
    consulted. I will save those questions for the question period,
    Madam chairman, but I do think that those of us who are from
    coastal States that have such heavy reliance on the Coast
    Guard, of course we welcome the increased role of the Coast
    Guard nationally and internationally, but I would not like to
    see us be left behind in areas where the reliance on the Coast
    Guard is so heavy, particularly in terms of safety and the
    operation of vessels in the North Pacific, probably the worst
    area of operation that you have as far as I am concerned.
        But I do not know whether I can stay through the whole
    period to ask some of those questions. If I do not, I would
    like to be able to submit some questions to you to get on the
    record what we might have to review as this budget moves
    forward. I entirely support, as I said, the increased
    modernization of the Coast Guard nationally, and hope that that
    will trickle down to the area of law enforcement in the fishing
    industry as well as assisting in the protection of the
    extremely long coastline that we have as far as the difficulty
    of maintaining tight control over our border.
        You are going to have an enormous role, really, as this
    future unfolds, and I am sure that this committee is going to
    be deeply involved in it, but we would hope that we can get the
    information from you that we need to make certain that we cover
    all of your needs in these appropriations this year and
    succeeding years. I think Mr. Mead's comments about future
    years is extremely important. You do not build ships in 1 year.
    We have to have some substantial commitments here if we are
    going to proceed with allocations for an initial period of
    construction and modernization and replacement of your vessels.
        Thank you.
        Senator Murray. Thank you. Senator Mikulski.

                    STATEMENT OF SENATOR BARBARA A. MIKULSKI

        Senator Mikulski. Thank you very much, Madam Chairman. I
    appreciate this courtesy. I have to leave around 11:00 for
    another hearing.
        First, Mr. Mead, I want to thank you very much for the
    excellent testimony and the background material. I think one,
    we love our Inspector Generals because they really do give us
    guidance on how to improve management, and I think the issues
    you raise in Deepwater are excellent issues, and we hope that
    the Coast Guard will address them for the committee, so we know
    we need Deepwater. We know we need the kind of accountability
    timetables and outcomes that I think you are pressing for, so
    thank you very much.
        Admiral Loy, I wanted to come here today, also, not only to
    talk about the Coast Guard's appropriation, but to talk about
    the Coast Guard and talk about you. First of all, I really want
    to thank you for just being you. You have provided leadership,
    you have provided vision, and you have provided advocacy for
    the Coast Guard while they out there doing a tremendous job,
    and the Coast Guard motto, Semper Paratus, always prepared, you
    have really been an advocate to see that they are.
        I just want to thank you for your leadership, and I know
    the men and women of the Coast Guard just will fall on a
    propeller for you, so I just want to thank you, and also for
    the Coast Guard. We in Maryland, of course, are forever
    grateful to our Coast Guard, and what they do in search and
    rescue, port security, even before September 11, and our
    environmental protection.
        Since September 11 we have watched this operations tempo
    really increase in the bay and at the port, and we know you
    cannot do this with three people and two Zodiacs, and just the
    stress on personnel and the stress on the vessels that we have
    I think shows that the funding for the Coast Guard is, indeed,
    spartan, and I use only the bay because we appreciate the 24-7
    that the Coast Guard always does even before September 11, so
    it is not like they got a new job. Their intensity of their job
    increased.
        I note that your appropriations of 7.3 includes a $700
    million request for pensions. That is great, because we need to
    be able to have good pay, good health care, and good pensions
    to be able to recruit and retain people, but Madam Chairwoman,
    I am really concerned about the Coast Guard. I mean, if they
    get close to $1 billion, but only $500 million is really for
    what they need in terms of the Coast Guard mission, and $700
    million is into a pension, I think that is really not what the
    Coast Guard needs.
        I just bring to the chairperson's attention this is roughly
    the same money we spent on EPA. EPA is worth every nickel of
    what we spend, and I know some might raise some flashing yellow
    lights about EPA, but I think the Coast Guard in my mind is a
    $10 billion operation. I do not know where we are going to get
    the money, but the Coast Guard is the vital link in homeland
    security. You are, along with INS, the protector of our
    borders.
        The INS is to protect and make sure bad people do not come
    into our country, but you have got to make sure not only bad
    people and bad things do not come into our country, and that
    bad things do not happen to our country. I do not see--no
    matter how diligent, no matter how duty-driven, no matter how
    resourceful and creative the Coast Guard is, they cannot really
    do this, and I would hope that we could in our talks with
    Governor Ridge and the President, I know we have got this for
    this year, and we have to make the best of what we can, but I
    would hope that within the next 3 years, that we really press
    the President to really give us the robust funding because of
    the competing needs of this committee.
        So you might be underfunded, but you are not undervalued,
    and I just want to be able to say that, and I am going to do
    everything I can to help the committee keep the President's
    budget and see if we cannot find ways to add to it. Knowing the
    great stresses that are in your committee and, I must say, in
    mine--mine is pretty flat-funded--do you think we could get
    some money out of Defense?
        Particularly for some of the homeland security issues. But
    thank you, and again, many, many thanks, and Godspeed, Admiral
    Loy.
        Admiral Loy. Thank you, Senator Mikulski, for your support.
        Senator Murray. Thank you, Senator.

                 OPERATING TEMPO OF SEARCH AND RESCUE STATIONS

        Admiral Loy, I am going to start with you. In the
    Transportation bill for 2002 this subcommittee more than
    doubled the Coast Guard funding request to improve training and
    staffing at your overtaxed small boat stations. We were, in
    fact, responding in part to Mr. Mead's observation that
    personnel at these stations were overworked, averaging 84-hour
    work weeks.
        Mr. Mead's testimony today indicates that the operating
    tempo at these small boat stations has increased by 200 percent
    since September 11, and the added stress may undermine our
    efforts to improve training and work hours of these Coast Guard
    units. How are these units handling this 200 percent increase
    in workload?
        Admiral Loy. I would have to look at the numbers to find
    out what Ken means by the 200 percent, but let me be very clear
    that post 9/11 the port security obligations that have come
    upon the organization have added to the workload, there is
    simply no doubt about it.
        I would like to have the characterization of those stations
    be multimission Coast Guard stations, not SAR stations. It is
    not like those stations on 10 September and before were
    exclusively doing search and rescue and nothing else, so the
    multimission character of all of our stations is real, and that
    is probably worth getting on the table so that we do not go
    from zero to 100 percent kind of shifting.

                                 RESERVE RECALL

        First and foremost, the reserve call-up opportunity was
    absolutely mandatory for us. The first call I had on 11
    September was to Secretary Mineta, who was already in the
    basement of the White House with the Vice President sorting out
    how they were going to get airplanes out of the air, and he
    gave me verbally over the phone the authority to call up our
    reserves and, as you know, Secretary Mineta has domestic call-
    up authority, does not have to wait for the presidential call-
    up associated with the mobilization, and so instantly we were
    able to get a full third of the selected reserve of the Coast
    Guard on active duty and augmenting the stations to help them
    with that OPTEMPO issue.
        The second thing is, we just shifted gears, Madam Chairman,
    in terms of what our people woke up to, a normal profile, if
    you will, on a traditional mission allocation process on 10
    September. I was able to call the Area Commanders and they in
    turn called their down-the-chain District Commanders and
    Station Commanding Officers and said, ``take a left and go to
    port security.''
        Now, we always have search and rescue as an interrupt
    demand mission that, in the event something occurs in a search
    and rescue environment, we always go there, but the first order
    of business then was to shift gears and deal with port
    security.
        Senator Murray. When Mr. Mead gave his testimony, he said
    he has not had enough people out to check and audit some of the
    conditions of the small boat stations. When he does, do you
    think he will see any improvement in training or experience or
    workload?
        Admiral Loy. Yes, ma'am. We have developed a 5-year game
    plan in which 2003 will be the 3 year to stand up these
    adjusted challenges that you offered us last year, and others
    as well; through Mr. Mead's audit. We have invested in
    staffing, we have invested in standing up training courses, we
    have invested in simple command center staffing and station
    staffing, about 200 bodies, if you will, in the 2002 budget,
    about another 200 bodies in the 2003 budget, and systematically
    we will gain that level of adequate OPTEMPO standard that we
    talked so much about last year, so he will find committed to
    the active force a combination of reservist and auxiliarist who
    unbelievably have volunteered thousands and thousands of hours
    to help those young people on active duty do what they needed
    to do across this period.

                           SMALL BOAT STATION AUDITS

        Senator Murray. Mr. Mead, what do you expect to see when
    you go out to do those audits?
        Mr. Mead. I hope to see real, substantial improvement, and
    you know, when we did our last audit we developed a lot of
    baseline data on operating hours that were devoted to search
    and rescue, and we will be able to use that baseline data to
    compare what is going on now, so what we will do and what we
    will report back to you, you have asked us to certify the extra
    money that the Congress gave the Coast Guard for this function
    was not being used to supplant, but in addition, because of the
    points that Admiral Loy raised, that there is some certain
    flexibility of the missions.
        We are going to go out and see exactly, substantively what
    is different. Has there really been core improvement in the
    hours these people are spending? Are they really getting
    trained, and are the boats they use, is the percentage of boats
    that were judged not ready--which was a substantial
    percentage--decreased?
        I think we will have--we will not have to wait till the end
    of the fiscal year to get that information to you.
        Senator Murray. I look forward to hearing from you as you
    gather that information.

                  STATUS OF COAST GUARD'S TRADITIONAL MISSIONS

        Admiral Loy, I am really disturbed by the fact that even
    with this historic funding increase that has been proposed for
    the Coast Guard for next year your level of effort in the area
    of marine safety, fisheries enforcement and drug interdiction
    are expected either to stay the same or diminish even further,
    and this comes at a time when you are not achieving your
    performance goals for interdicting drugs or keeping illegal
    fishing vessels out of U.S. waters. Has the amount of
    assistance you got from the Department of Defense to conduct
    maritime drug interdiction been reduced as a result of the war
    in Afghanistan and other operations?
        Admiral Loy. To answer your last question first, Madam
    Chairman, there has been a relatively consistent contribution
    from the afloat community in the Navy with respect to on-scene
    ship days, and less so in the maritime patrol aircraft, which
    have, in fact been, if you will, almost recalled, if not State-
    side for the things they are doing here, to their deployments
    overseas.
        My concern is that the changes, the things that brought DOD
    into the drug game in 1989 with the DOD authorization act, the
    requirement to fuse intelligence, the requirement to do
    detection and monitoring, to be the lead agency for detection
    and monitoring, those things have not changed appreciably in
    the 10 years that have gone by, so any kind of a loss of those
    assets in that mission will be a detraction from our ability to
    get the job done collectively.
        I also wear the hat, as you know, as the Interdiction
    Coordinator for the country, for Mr. Walters, who just sat down
    in his chair, and I must reflect concern as to the impressions
    that I have seen, little red flags, if you will, going up that
    suggest perhaps walking away from the drug mission is part of
    the game plan in the Department of Defense.
        We will watch that very carefully, and we will aggressively
    challenge the continuation of the assets we need in that field.

                           COAST GUARD'S NEW NORMALCY

        Senator Murray. Very good. Is this committee just going to
    have to accept the notion that New Normalcy for the Coast Guard
    means that we have a diminished effort in its core missions for
    marine safety and fisheries enforcement and drug interdiction?
        Admiral Loy. I think there is an opportunity, Madam
    Chairman, if I may answer a couple of questions, including
    those from Senator Stevens here, 2003 will be the first of a 3-
    year game plan that will allow the Coast Guard to grow to
    provide its contribution to the New Normalcy you just
    described, and the New Normalcy is this.
        On 10 September we were spending maybe 2 percent of our
    budgeting capability on port security, focused activity. By 15
    or 18 or 19, the chart that Senator Shelby showed, we had
    committed probably 50 percent or more of our budgeted
    capability directly to port security, because we did exactly
    what his chart showed. We brought things from doing other
    mission areas.
        Now, first of all, as I said earlier, I think that should
    be seen as an enormous strength this organization brings to the
    country. When a crisis is here, we go there. We have SAR
    instincts as an organization. We surge to that 50 percent
    level, and ever since we have been backing off to find out what
    the New Normalcy is in the immediate area of port security so
    as to be quite clear as to what the degradation might be in the
    other missions of the organization.
        These pie charts, Madam Chairman, show the large orange
    section in the sort of southwest quadrant, if you will, all the
    way to the right is the devotion we feel now appropriate to
    ports, waterways, and coastal security for the 2003 budget. And
    if you go around the circle you will see, with the exception of
    constant program strength missions like search and rescue and
    aids to navigation.
        Senator Murray. I have to admit, it is a little hard to
    read from right here.
        Admiral Loy. There is a copy in your folder. You will see
    small percentage drops in counterdrug effort, in fisheries
    enforcement effort in alien migration effort, and in the other
    wedges of our mission profile, to allow us to concentrate on
    this new priority 1, if you will, for the Nation.
        Over the course of that 3-year build, we will rebuild the
    organization's strength, head count capability to not only do
    the new maritime security challenge, but to return in full
    scope to the other missions that you were referring to.
        Senator Murray. Can you explain to me why, in the first
    year of the 3-year game plan, you talked about the level of
    effort in these core missions going down?
        Admiral Loy. Because we are literally having to borrow some
    energy, if you will, from them in order to do year 1 of the New
    Normalcy, which is an almost 20 percent increase in that ports,
    waterways, and coastal security mission.

                           17TH COAST GUARD DISTRICT

        Senator Murray. Senator Stevens.
        Senator Stevens. Thank you very much. Admiral, let me first
    go to the 17th District. With the increase you are getting
    overall, is the effort in the 17th District going to be
    reduced?
        Admiral Loy. The standards that we are challenged with in
    the 17th, Senator Stevens, are pretty constant, because it is a
    search and rescue requirement as well as a fisheries
    enforcement requirement that is met by those cutters off-shore
    in the Gulf of Alaska and the Bering Sea, so pretty much for
    the Pacific Northwest I will say from Northern California to
    the north our asset deployment profile will be essentially the
    same.
        Senator Stevens. While they are going up everywhere else,
    right?
        Admiral Loy. We are able to borrow, if you will, fisheries
    enforcement capability--no, sir, they are not going up
    everywhere else, if you mean fisheries enforcement and
    counterdrug activity. The only thing that is going up, quote-
    unquote, is our attention to port security as the Nation's
    number 1 responsibility.
        Senator Stevens. The 17th District is really flat, and your
    overall budget is going up 200 plus million. Will any of that
    modernization money seep into this district?
        Admiral Loy. Sir, the modernization money will seep into
    all corners of the Nation, including Alaska, of course. When
    Deepwater water comes of age, the cutters that go to Alaskan
    waters will be new, modern cutters. When the aircraft come of
    age out of Deepwater they will go not only to Alaska, but
    everywhere else in terms of increased capability around the
    Nation.
        Unless I am misunderstanding your question, sir, our
    investment in those projects, NDRSMP and Deepwater, is constant
    across the board.
        Senator Stevens. I am really talking about the operational
    level and the enforcement level and the basic level in the
    North Pacific, and what is going to happen to it. There is a
    great feeling out there, and I am hearing it from lots of
    sources, that the level of operations, the tempo of operations
    in the North Pacific is going down, and yet the effort, the
    fishing effort there is not going down.
        As a matter of fact, because of the marvelous management of
    that resource, the harvesting continues to go up every year. A
    substantial portion of our seafood is coming from the North
    Pacific now, and I do not see any reflection of that in terms
    of operations of the Coast Guard, where our operation level is
    going down.
        Admiral Loy. In the immediate wake of 9/11, as we surged
    away from those enormously important missions to meet the new
    number 1 priority of port security, clearly all around the
    Nation we borrowed cutter days and aircraft hours in order to
    make sure we were going to get the port security thing right.
        We have since--a month or two went by after 9/11--been
    gradually restoring the capability of the organization to do
    fisheries enforcement, but in the fiscal year 2003, given the
    President's request, our concentration on port security will
    require, at least, a level of effort adjustment from our other
    significant mission areas in order to concentrate on the first
    year of a building process to gather the Coast Guard's
    wherewithal to do port security at its new higher level, as
    well as return fully to the 100 percent levels of our other
    mission areas.
        The supplemental, for example, restored a budget line item
    that said, reduce the operational capability of the
    organization by 15 percent. Among other things, the
    supplemental has enabled us to go back to a 100 percent
    capability of the organization and use it around the country,
    and that has all been annualized in the President's request for
    2003.
        Senator Stevens. As I said, I do not know of an officer I
    have more confidence in than you, Admiral, but when I look at
    this budget, headquarters office is going up from $234 million
    to $371 million, headquarters managed units going up from $62
    million to $102 million. The basic functions of the system, if
    you look down each one of the districts, has an increase,
    fairly substantial increase, except for the 17th. It is flat.
    It is flat right across the board.
        Admiral Loy. Let me look at that, Senator Stevens. I owe
    you a good answer, and I do not have it with me this morning. I
    will get back to you.

                                 C-130 AIRCRAFT

        Senator Stevens. We put money in for the C-130's, and
    really I think it was the 2000 supplemental. What has happened
    to that money? I noticed--is there an error in your layout that
    that is not--I am told that that 5-year capital plan does not
    show the $30.5 million that was in the capital plan for last
    year.
        Admiral Loy. Sir, with respect to the J models that were
    funded in the fiscal 2001 Military Construction bill, as I
    recall, Senator Stevens, this is where we are with that
    project. $468 million was appropriated for six of those assets.
    First and foremost, we had a contract with the Air Force in
    December of 2000 that enabled us to procure the six airframes
    that were part of that buy.
        There is about $110 million, as I recall, left from that
    Military Construction bill. We are using that to develop the
    notions associated with workforce front end analysis, Coast
    Guard requirements to the aircraft in terms of modifying it,
    interim maintenance, et cetera. We probably are short about a
    $200 million AC&I requirement in order to finish off the
    procurement of those particular airframes.
        I think as a matter of fact I and Mr. Jackson, the Deputy
    Secretary, have been trying to arrange an opportunity to sit
    down with you and Congressman Young to sort out precisely what
    we should be doing with the J contract as it relates to the
    immediate future, so we owe you a good conversation, Senator
    Stevens. We will be trying to arrange that.
        Senator Stevens. I would like to pursue that. That is
    really related to the drug enforcement effort, it sort of seems
    to me by the pie chart, sort of being softened a little bit,
    and out of necessity, I take it.
        Admiral Loy. Yes, sir. We have been trying to get back to
    chat with you and Mr. Young about it, who has sent us a piece
    of correspondence on the same issues, sir.

                    COAST GUARD RECRUITING AND REINLISTMENT

        Senator Stevens. If I could ask one last question, Madam
    Chairman, what about recruitment? How is your recruitment? How
    does this compare now to last year at this time, and has it
    been impacted at all by the attacks on our Nation?
        Admiral Loy. We have been watching for a bump, sir, and we
    actually went back and did some exploration about the same kind
    of a period before and after crises that the Nation has faced
    in the past. We have not seen a patriotic bump in recruiting,
    nor have the other four services, to my knowledge, and I have
    asked my personnel human resources guy to be touching bases
    with the other services, but recruitment in general, sir, we
    are doing okay.
        I think it is the nature of the other kinds of things that
    the Coast Guard does, in addition to national security
    requirement kind of business, that attracts an awful lot of
    very terrific young Americans, so we are doing fine with
    recruitment. We are not seeing any kind of a bump.
        Senator Stevens. The flip side of that coin is
    reenlistment. How is that? Is it up or down?
        Admiral Loy. We are about even at the moment, and we are
    expecting, as a result of what this Congress and the past
    several have concentrated on in terms of pay raises and health
    care adjustments and retention--I am sorry, retirement
    adjustments, we are expecting probably about a 5 percent
    positive tick up as it relates to our retention in fiscal 2002,
    and we are watching that very carefully, Senator Stevens,
    because all of this recruiting and retention issue, I have
    always been infinitely more concerned about retention than I
    have about recruiting, and the experience drain that the last 5
    years or so of the nineties represented to all of the services
    was very, very real, but it looks like we are going to have a
    small come-back in 2002, sir.
        Senator Stevens. Would you permit me just one last
    question?
        Senator Murray. Absolutely.
        Senator Stevens. Are we allocating enough money in the
    Coast Guard for recruiting and retention, Mr. Mead?
        Mr. Mead. I think you could always argue for a little bit
    more for that, frankly. I think there are some major unsettled
    areas in the Coast Guard's budget, and that is one of them, and
    I am most concerned, though, not with the recruitment and
    retention element. I am most concerned with these two large
    acquisitions and how much they are going to end up costing, and
    what they will actually be for, what their time line is going
    to be, and what the implications of that will be on other
    missions and other activities such as in the 17th District.
        Senator Stevens. It is not just the Coast Guard. They think
    we have been pushing money at modernization and acquisition
    and, as Congress does it, I do not think we have looked down
    the line at the requirement of people to man increased number
    of vessels, planes, et cetera.
        I do not think we have really been fair with you in terms
    of anticipating the needs of the expanded Coast Guard or Air
    Force, whatever. I am worried about our reenlistment rates,
    particularly in the area of pilots, and I am worried about the
    training rates in terms of people for these new activities,
    particularly in the area of port security. We cannot continue
    to borrow. When you borrow from an area like ours, you have to
    pay it back. We need replacements in the system to do that.
        Admiral Loy. Yes, sir. Your comments are right on target.
    There are probably three specialty areas that we have been
    watching with some concerned, fixed wing pilots, naval
    engineers, and anybody with an IT kind of a background,
    especially, as I said, in the last 5 or 6 years.
        The notion that the grass was always greener in the strong
    economy of the late nineties was driving a lot of people to
    make those kinds of judgments, but I think even--you never want
    to look for a silver lining in a dark cloud, but if there is
    one with respect to with a softening of the economy, a lot of
    people are making those judgments a lot more methodically today
    and staying in the service as opposed to leaving, and we are
    going to look for that, and I think we are going to get about a
    5 percent positive tick in 2002 in our retention, sir.
        Senator Stevens. I would like to tie some of the
    educational aid money to some service and uniform as we expand
    that. We have got to look somehow at giving a little better
    push to people to sign up.
        Admiral Loy. Yes, sir. The other thing with respect to the
    Deepwater project, we have had, looking over the shoulder of
    the project designers from the very beginning, the workforce
    implications of the project, so as it relates to competencies
    and skill sets and all of that, we are very attentive to what
    we will need in the future workforce in the Coast Guard 20
    years from now, 15 years from now, 10 years from now, as we
    watch our Deepwater assets come online.
        Senator Stevens. Thank you very much. Thank you, Madam
    Chairman.

                         DEEPWATER PROCUREMENT STRATEGY

        Senator Murray. Mr. Mead, you alluded a moment ago to the
    Deepwater program, and you have done a major assessment of
    that. Prior to September 11 this program was considered to be a
    priority initiative to replace the Coast Guard's aging assets
    that operate in the deep water environment. Since September 11,
    the Deepwater program has suddenly been transformed into a
    priority for port security and homeland defense in the coastal
    environment. Do you think the Coast Guard should revisit its
    Deepwater procurement strategy in the wake of September 11?
        Mr. Mead. No, I would not revisit the strategy. They have
    been on this strategy for several years now, and what you
    really need--I think that bottom line on this is, you need to
    know how much the Deepwater project is going to cost, what it
    is going to buy and when, and how long of a time line it is
    going to operate on.
        I think the acquisition strategy of trying to get three big
    contractors to give a proposal for the contract was sound, and
    a lot of people have thought, including us, that that was
    fairly innovative. The down side is that, unlike a traditional
    acquisition, you do not know how much exactly it is going to
    cost, or what it is going to buy, until they select a
    contractor. I am really--I am nervous about the time line here,
    and when I look at the Coast Guard's capital plan and the time
    line for Deepwater, the floor on it is about $10 billion. Is
    that $10 billion going to be spread out over 15 years, 20
    years, 30 years, or is the project actually going to cost
    substantially more than that?
        If you look at the 5-year capital plan, in the years 2004
    and 2005, the capital plan allocates zero to shore facilities,
    and I expect the Coast Guard is going to probably need more
    than zero for their shore facilities during those years. Aids
    to Navigation is another, and homeland security, I do not think
    all of the cards are in on how much the Coast Guard is going to
    have to apply to that area.
        I mean, there has really been not that many months since 9/
    11, and 9/11 was in many ways a case of first impression for
    the Coast Guard. The same comments apply to the National
    Distress System project, although to a lesser degree. Frankly,
    I think on some of the issues we mentioned, I think the Coast
    Guard should reflect on whether that 10 percent coverage gap
    ought to somehow be covered, and if the repair time ought to be
    decreased, that will cost money.
        Now, do we do that, do we plan for that now, or do we wait
    3 or 4 years and say, well, now we want to fix it?
        Senator Murray. Well, Admiral Loy, last year the head of
    the Deepwater program, Rear Admiral Stillman, committed to us
    that by the time we marked up the appropriations bill this year
    he would be able to tell us precisely what we would be funding,
    and his words were, line by line and dime by dime.
        It appears that you have slipped your Deepwater contract
    until the third quarter now, and as a result you are asking us
    to appropriate $500 million into a black hole, the precise
    problem that Rear Admiral Stillman said would not happen again.
    What has led to this delay in your awarding of the Deepwater
    procurement contract?
        Admiral Loy. Thank you, Madam Chairman, for asking that
    question. A number of things here. First of all, we can give
    you three versions of line by line and dime for dime today. It
    would have to be a proprietary brief so as to allow the
    competitiveness of the procurement to continue along that line,
    and so we can offer--and I think we have already spent a little
    bit of time with Mr. Rogoff--a proprietary brief that offers
    very, very good insight as to the specific assets that would be
    part of each of the proposals that are currently being scrubbed
    by our team, and then when we award the contract we will be
    able to do, line for line and dime for dime, the winner as it
    proceeds out over time.
        So the point, and I am sure what Rear Admiral Stillman
    meant to say, is that--and he is absolutely right on target--if
    the timing of the hearing season would have been attendant to
    the expectant April award that we had on schedule as he
    testified last year, or as he spoke with you last year, we
    would have been doing exactly what he explained.
        Our notion at the moment is that several things crept into
    that calendar. The first was the insistence by OMB that yet
    another independent review be undertaken, which was, in fact,
    accomplished by ASI. Secondly, I personally said I want at
    least 30 more days in the source selection scrubbing process,
    because we are facing a 20-year effort here, a multibillion
    effort for our organization, and whatever the little delay up
    front a month is, is worth it to make absolutely certain that
    we cross all the T's and dot all the I's and get it right.
        So I think there is a very easy and solid explanation for
    the delay as it relates to a post 9/11 implication. Deepwater
    is infinitely more important to us on 9/12 than it was on 9/10,
    because what it will bring to the table with respect to its
    focus on C4ISR is interoperability, is capability, is
    modernized assets now rather than later, that will, in fact,
    have everything to do with adequate maritime security and the
    return to the mission areas that both you and Senator Stevens
    and others have discussed.
        IDS was developed, interestingly enough, anticipating
    asymmetric threats. It is all about the simple mission task
    sequence we do for everything else. We surveil, detect,
    classify, identify, and prosecute. We do that in search and
    rescue, we do that in counterdrug, we do it in fish, we do that
    in maritime security, so the soundness of the strategy that was
    used to develop IDS is absolutely right on target for the post
    9/11 environment, Madam Chairman. It only strengthens the
    requirement that this program is absolutely needed now, and
    must go forward, as Senator Stevens inferred.
        Senator Murray. I am looking forward to seeing your dime-
    by-dime report.
        Admiral Loy. We can arrange a proprietary brief now, ma'am,
    or if you prefer to wait until the contract is awarded.
        Senator Murray. You already have $300 million. You are
    asking for $500 million more and the mission has changed, and
    we just want to make sure we know what the money is going for.
        Admiral Loy. Absolutely.

                         NATIONAL DISTRESS SYSTEM AUDIT

        Senator Murray. Mr. Mead, you just completed an audit on
    the Coast Guard's plan to modernize the National Distress and
    Response System. You talked a little bit about that. You said
    that the Coast Guard has eliminated important, critically
    important capabilities from their proposed new system in order
    to bring the cost of the system under control.
        Admiral Loy, how do you respond to Mr. Mead's observation
    that you have dumbed-down the system and eliminated the
    capability to pinpoint the location of distressed boaters?
        Admiral Loy. I think the notion here is this. In phase 1 of
    the contract, of the project, I am sorry, it was enormously
    important for us to get the full spectrum of what 100 percent
    would cost us, and what would the capability get that we paid
    for, and at lesser levels. When last year we were testifying,
    Mr. Mead was discussing the billion-dollar-plus proposals that
    were coming back from the three contractors involved with the
    NDRSMP contract.
        We looked for and challenged each of them to show us where
    the step functions were that would offer us considerable
    savings for either less capability, what might be less
    reliability, what might be less recovery time to downed tower,
    or what might be even less coverage. We looked at those very,
    very carefully, and selected those.
        In terms of the hard specs that went out with the RFP just
    last week, that would make good cost-effective benefit-to-cost
    decisions in favor of the project. For example, with respect to
    reliability, if we pushed a .9995 insistence on reliability, as
    opposed to .995--three 9's and a 5, instead of two 9's and a
    5--we could spend an extra $100 million for the program. I did
    not think that was a smart thing to do, in a benefit-to-cost
    analytical read, and so we chose to adjust that specification
    in the RFP to not spend that $100 million.
        The same thing has to do with system restoration, the
    notion to be able to restore it in 6 hours as opposed to 24
    hours. We saved about $100 million in that, we guess, or we
    think, by shifting to the 24-hour standard. The 6 would require
    us to literally have aircraft available on alert to carry
    people to those sites to restore the towers.
        Senator Murray. Will this pose risks to mariners that are
    out there?
        Admiral Loy. I think the risk to the mariner is
    infinitesimally small compared to the value we get out of the
    system. We are now asking for--the 24-hour system, first of
    all, affords us the chance to simply have the contractor
    construct portable towers and be able to get those portable
    towers to the replacement towers in a 24-hour window.
        Senator Murray. I think it was Mr. Mead who said in his
    testimony in a hurricane it is one thing, but during other
    circumstances, can't it be done in 6 hours?
        Admiral Loy. It will be done in between 6 and 24 hours.
    This 24 hours will be the standard we insist it be done within,
    but my notion is that to adjust the taxpayer's price tag for
    this system and to eliminate as many dots as we possibly can
    off of Ken's chart, we are serving the taxpayer well by
    accepting a business standard, if you will, with respect to the
    6 and 24 issue, and the same thing then goes to the coverage
    gaps, Madam Chairman.
        We could build 300 more towers and cost another, between
    $200 and $300 million to the program, and eliminate all of the
    dots on Ken's chart. My notion again is, we should be
    selective, and we always will have the opportunity in the wake
    of the project as it comes online to test it, see exactly what
    it is and tweak it for what it is worth.
        What we should be concentrating on is the great positive
    that is going to accrue from this project, and I have a simple
    chart----
        Senator Murray. Admiral, I would agree with you, but the
    last mile is always the most expensive, and when you do not
    eliminate all the dots, I sometimes worry the most remote areas
    where distress can be the most acute will be the ones we do not
    reach.
        Admiral Loy. And we will have to make those marginal
    judgments, Madam Chairman, I could not agree with you more, but
    to build a $1 billion-plus system where you can gain
    reliability coverage and the other dimensions we sought that I
    think are perfectly adequate to the challenge, we should be as
    cost-conscious as well as performance-conscious as we are going
    to be in this project.
        Senator Murray. According to the IG audit that I saw, you
    eliminated the capability to transfer classified information as
    a part of the system.
        Admiral Loy. Absolutely not. We have the ability to
    transfer classified information, the capabilities in the system
    with respect to direction-finding multichannel communications
    capabilities. I would be happy to offer, Madam Chairman, a
    briefing for you.
        Senator Murray. The IG audit said that is true, and they
    also said you reduced your ability to talk to other fellow
    State agencies, including the DOD.
        Admiral Loy. The communications capabilities and the
    requirements in the RFP that went on the street last week
    remain intact, Madam Chairman.
        Senator Murray. Mr. Mead.
        Mr. Mead. We will stand by what we said in our report, and
    we will get together with Admiral Loy to reconcile what the
    differences are.
        Senator Murray. I look forward to hearing from both of you
    after that.
        Mr. Mead. I think we all know that if, after this system is
    up, if a mariner in distress is caught up in one of these dead
    zones, guaranteed, we will come back and say, why didn't we
    close that.
        Senator Murray. I cannot agree more, and invariably it will
    be somebody on this committee who will be representing that.
        Admiral Loy. But that will cost us another $500 million,
    and we just need to understand that.
        Senator Murray. I thought that was the central purpose of
    the replacement to make sure we covered those gaps. You know,
    we have a system out there right now. What we have is gaps. I
    thought we were eliminating the gaps.
        Admiral Loy. We are trying very hard to eliminate as many
    of the gaps as possible, yes, ma'am.
        Senator Murray. That is the committee's concern.
        Admiral Loy. To go on, I think our challenges are going to
    be less about money, Madam Chairman, and more about things like
    property acquisition in terms of where we want to put a tower.
    If we need a tower in the Everglades, if we do need a tower in
    places--one of the Congressmen from Massachusetts has reflected
    on Mr. Mead's report and wondered about property in Chatham.
    Well, if we need property in Chatham with respect to a tower,
    that will be more a hurdle for us to get over, I am convinced
    that the dollars that the Congress and the administration are
    willing to spend on this project. That is going to be, I
    think----
        Senator Murray. The problem, is that when we are asked for
    and appropriate the numbers for the NDRSMP we were told that it
    would eliminate the gaps. That is the expectation.
        Admiral Loy. Yes, ma'am, and I owe you a very, very good
    read, am I able to do that at the 100 percent level, or am I
    able to do that at the 99 percent level, and where would the
    resultant 1 percent be.
        Senator Murray. We need to know where that 1 percent would
    be. If it is on a mountain in the middle of the country, I am
    not worried.

                           CAPITAL BUDGET CONSTRAINTS

        Let me move on. Mr. Mead, in your audit, you discussed how
    the combination of the Deepwater program and the National
    Distress and Response Program runs the risk of crowding out
    other critical Coast Guard procurements, including procurements
    necessary for Search and Rescue.
        In the 2002 Appropriations Act, we prohibited the Coast
    Guard from going forward with the Deepwater Integration
    contract until the Director of OMB and the Secretary of
    Transportation certified to us in writing that Coast Guard's
    capital investment plan and OMB's budget targets fully
    incorporates the needs of the Deepwater program, the National
    Distress and Response System, and other essential Search and
    Rescue procurements. Based upon your audit, do you believe that
    the OMB Director and the Transportation Secretary can
    legitimately certify to us that they have budgeted adequate
    funding to finance all of these needs?
        Mr. Mead. Well, I am glad--it is not my responsibility, of
    course, to make that certification. That is the Coast Guard and
    the Secretary and the Director of OMB, but before I would put
    my name on the dotted line in order to certify to you that
    everything is fully funded, I would want to know how much it is
    going to cost, and what I was going to get for it, and I
    personally would have to wait until I understood which
    contractor was going to go into it, and what that contractor's
    line-by-line was, for which ship, when, and I also would want
    to know, as Admiral Loy puts it, when Deepwater will come of
    age, and the implications that is going to have for the funding
    stream.
        There are two elements of this certification, Senator, and
    one element is that the Coast Guard have in its capital plan
    funding within the OMB targets. I could say right now, yes,
    they have done that. It is within the OMB targets. It has been
    submitted with the budget of the Department.
        The other element of this is that it is fully funded, and
    that implies that I know exactly what I am going to buy and
    what I need, and I do not know that yet.
        Senator Murray. Admiral Loy, when are we going to see the
    certification occur? Will it be before we know who has the
    contract?
        Admiral Loy. Yes, ma'am. The certification, as I understand
    it, has already cleared both OMB and the Department.
        Senator Murray. So we have the certification, but as Mr.
    Mead points out, we do not know who the contractor is yet, so
    the cost could change.
        Admiral Loy. The cost parameters of the RFP on the street
    remain affixed, Madam Chairman, and it is all associated with
    the 1998 baseline, $500 million a year over the course of
    approximately 20 years.
        Now, we fully expect--and this notion of will it be 20 or
    30, that is all about, across that 20 years there is very
    likely to be variations as the Congress considers the annual
    request that is forthcoming from the administration each year,
    so if, in fact, for example, there would be a couple or $400
    million with the 1998 baseline, $400 million a year, would that
    mean that the project was a 22-year project instead of a 20-
    year project? You see what I mean.
        Those variations are certainly possible as the Congress
    exercises its authority each year and as the administration
    makes its request each year, but the certification is already
    cleared, and I was actually hoping I would be able to bring it
    to you this morning, but the Director has not yet signed it
    over at OMB.
        Senator Murray. How much is assumed to be budgeted for
    other critical Search and Rescue procurements under that
    certification?
        Admiral Loy. Across multiple years? I will get you those
    numbers, Madam Chairman. I do not have the 2004 or 2005 numbers
    in my head in terms of the rest of the improvement for the SAR
    program that is the game plan for SAR. That Mr. Mead's staff
    was just briefed on the other day and found to be very
    satisfactory, but I can get you those numbers.
        Senator Murray. Well, I think what concerns me is, we are
    certifying it before we know how much it is going to cost, what
    we are going to get, and what other critical missions--not
    missions, but housing facilities, shore facilities are going to
    be crowded out as a result of that.
        Admiral Loy. Yes, ma'am, and of course CIP, as we all know,
    within the restraints associated within the mechanics of
    producing it each year, are keyed to projections and keyed to
    projections limited by, I think it is a 2.0, or 2.2 percent
    associated rise inside the OMB projections, so if you look
    backwards each and every year when our real needs had been
    adequately expressed to the Director, the request for our AC&I
    levels on those attendant years have been attendant to the
    needs of the organization, so it is not that I ignore the
    notion of what the CIP is all about, but we have to, I think,
    take it with the notion of understanding the mechanics required
    to produce it.

                         SEARCH AND RESCUE ENHANCEMENTS

        Senator Murray. Let me change topics entirely, Admiral, and
    ask you about a report the Coast Guard issued about the March
    2001 tragedy in which two Coast Guardsmen lost their lives at
    station Niagara, in the Great Lakes. That report reiterates
    many of the findings of the IG regarding the lack of adequate
    training for boat crews, and the lack of adequate equipment.
        One of the recommendations of that report is for all Coast
    Guard Search and Rescue personnel to be issued their own
    antiexposure suits. Is that recommendation fully funded in your
    fiscal year 2003 budget?
        Admiral Loy. Yes, ma'am.
        Senator Murray. It is?
        Admiral Loy. Yes, ma'am.
        Senator Murray. Another recommendation from that report is
    that the Coast Guard should rapidly pursue the National
    Distress Response System authorization project, particularly
    the asset tracking components. Has your newly configured
    National Distress Response Modernization project eliminated any
    aspect of your ability to track the whereabouts of Coast Guard
    Search and Rescue assets?
        Admiral Loy. No ma'am. Asset tracking remains a critical
    feature of the new system, and absolutely an imperative in the
    RFP. Beyond that, just because in the wake of Morning Dew
    several years ago and, of course, Niagara and any other kind of
    an incident like that, we try not to wait, if we can, so a
    couple of the features associated with the lessons that we
    learned from those experiences are already in place.
        For example, the direction finding capability, the digital
    voice recorders, I just was down, for example, at our station
    on Lake Pontchartrain in New Orleans at the beginning of the
    week, and went directly to their command and control center to
    see precisely whether or not that capability was there, and in
    fact was delighted that it was.
        So as part of the staffing increases that you have
    directed, that is a net gain for us in terms of command
    supervision and capability staffing, obviously with respect to
    boat crews and boats themselves, but the specific answer to
    your question, asset tracking, absolutely part of the
    requirements on the street.
        Senator Murray. One of the findings of the investigation
    was that, the chain of command failed to have a common
    understanding of the level of risk, or of various Search and
    Rescue missions. Do you think that is a common problem?
        Admiral Loy. We have watched that very carefully, and this
    was about several things, Madam Chairman. It was about, for
    example, should we have a national standard with respect to
    communications checks from deployed assets--in other words,
    should they check in every hour, should they check in every 15
    minutes?--and we believe there is a requirement for a national
    standard to then be--to be delegated to the local commander, or
    something higher than the national standard in areas like that.
        So we are looking with respect to check-in times, with the
    adequacy of the size of boat crews, all those things are being
    very much reviewed in the wake of not only Morning Dew but the
    Niagara as well, and I think we have a handle on the national
    standard issue.
        We then want to be able to make sure that if the Officer-
    in-Charge of a station in the middle of a storm, as opposed to
    a bright, sunny day, or night as opposed to day, wants to
    challenge and raise the standards of performance for his boat
    crew and for the supervision and oversight, he has the ability
    to do that.
        Senator Murray. When we think of the need to improve Search
    and Rescue, we commonly think of permanent individual stations,
    but the finding of that investigation said Group Buffalo lacked
    an awareness of ongoing Search and Rescue Station operations.
    That is a pretty disturbing finding. How is it that your Group
    Commanders did not have an appreciation of the ongoing
    operations of their Search and Rescue Stations?
        Admiral Loy. Well, I am concerned about that as well, and
    the administrative investigation for the Niagara incident is
    just about finished. It actually parallels and tracks pretty
    closely with the mishap analysis, which is what was published
    at the end of last week.
        If the investigation reveals either on the specific case
    that this Group and its doctrine was not overseeing adequately
    the Station's performance as the stations are distributed
    around the group, we will deal with that. I think the doctrine
    that I have reviewed in our Search and Rescue Manual is sound
    with respect to the oversight responsibilities of the Group
    Commander to the stations that they actually have in their
    group.
        Senator Murray. Is this a problem that is Coast Guard-wide,
    and if so----
        Admiral Loy. Yes, ma'am. That is the issue I was concerned
    about.
        Senator Murray. Were there any initiatives in your budget
    request that will help us address that?
        Admiral Loy. The issues in the budget request that would
    help us address that would be about Group and Command Center
    staffing adequacy, again which was part of Ken's audit over the
    course of the last year, and we are inserting, if you will,
    into the Group Offices, the Command Center staffing, greater
    numbers so that we are not dealing with fatigue factors, for
    example, or we are not keeping somebody up 24 hours, when in
    fact he should be getting a good, solid night's rest.
        Mr. Mead. Madam Chair, I would just like to reiterate, we
    do think the Coast Guard has a good plan that is responsive,
    and obviously nobody counted on 9/11 coming along, and the
    clear test, of course, is going to be in its execution, but the
    plan that we were briefed on was substantive, it was solid,
    there was not a lot of puff, and I think if they go forward
    with dispatch and execute it, that you will be quite pleased.

                           NAVY SECURITY INITIATIVES

        Senator Murray. Let me ask you about your Navy support,
    Admiral. Immediately after September 11, you began discussions
    with the Navy to substantially improve the capability and
    interoperability of Coast Guard cutters for homeland defense
    that included improved weapons, communications systems centers,
    and protective equipment items that the Navy had purchased for
    the Coast Guard in the past.
        At one point I know you were hopeful of receiving $240
    million, but in the end they provided you with only $2 million.
    What does that tell you about their level of support?
        Admiral Loy. I think we have to take the bigger picture
    first, Madam Chairman. I mentioned earlier the first phone call
    I had on 9/11 was about Secretary Mineta and standing up the
    reserve arm. The second phone call I got was from Admiral
    Clark, Admiral Vern Clark, the Chief of Naval Operations, a
    very strong phone call offering to me the full support of the
    Navy as necessary.
        We have had a number of very solid meetings, and the work-
    up that we are currently engaged in with respect to the
    anticipated spring supplemental has a very strong Coast Guard
    set of requirements being reflected in the Navy's request that
    will go forward.
        Senator Murray. Will that be in the Navy's request?
        Admiral Loy. Yes, ma'am. I cannot tell you what happened
    outside of the Navy and the rest of the efforts in DOD, but you
    need to be aware that at the Navy level, the Navy-Coast Guard
    level understands the thing you just mentioned about the kinds
    of things that have been funded in the past, and they take
    their responsibilities very seriously.
        Senator Murray. Some of the equipment enhancements, it
    appears to me, that are in your budget request are the same
    systems you hope the Navy would do for you 4 months ago. Are we
    going to see those requests from the Navy?
        Admiral Loy. We deconflicted, if you will, that set, that
    list.
        Senator Murray. That must be a military term.
        Admiral Loy. They are not overlapping. We do not have
    things on both lists, and so the kinds of things that we would
    be seeking from the Navy have to do with sensoring and
    interoperability, and weapons and ammunition.
        Senator Murray. So we are not going to see duplicative
    requests?
        Admiral Loy. Exactly. That is what we are guaranteeing as
    we build the spring supplemental.
        Senator Murray. Let me just make sure, did everything come
    off the Navy's list and come through your request to us, or did
    they take any of it?
        Admiral Loy. They took a good bit, yes, ma'am, in terms of
    what it is that they are going to seek on our behalf in the
    spring build.
        Senator Murray. I will be looking forward to seeing that.
        Admiral Loy. I will keep you posted precisely on the things
    on the list.
        The other thing I was going to add, Madam Chairman, is,
    Admiral Clark also made some very significant decisions that
    have been enormously helpful. For example, they were about to
    decommission the Cyclone class patrol craft. Currently, those
    13 assets are available, 13-170 foot patrol craft with full
    Navy crews are being employed by Coast Guard Commanders at
    various ports around the country, including Puget Sound, so
    that was probably a $65-million decision he made, just because
    he knew it was the right thing to do, and his personal, and
    Secretary England's personal attention to understanding how the
    Navy can supplement, complement, and help the Coast Guard in
    its responsibilities for the maritime security piece have been
    admirable.

                            PORT SECURITY CHALLENGES

        Senator Murray. Let me switch topics again, Admiral.
    Seattle and Takoma are two of the largest container ports in
    the country. They are also cities with particularly bad heroin
    problems. Some people have speculated that those two facts are
    related, that the amount of container traffic from Asia passing
    through our ports and Vancouver contribute to the drug abuse
    problems, and when we think about the need to improve port
    security, containers pose a very difficult challenge, I think
    we can all agree.
        Right now, Coast Guard and Customs are only able to
    inspect, as I understand, about 2 percent of the containers
    that are in the U.S. How is that percentage going to change as
    a result of the fiscal year 2003 budget?
        Admiral Loy. Madam Chairman, I think the whole notion of
    Maritime Domain Awareness, you might recall the five points I
    mentioned in terms of the challenge that we all have looking
    forward to a maritime security plan for the Nation. I believe
    information is the key to our insight to doing a better job
    with respect to doing a better job with container security in
    this Nation.
        As we speak, I have a delegation over in London working
    with the International Maritime Organization to take on the
    challenge of grappling with this container security issue at
    the international level. More importantly, in the United
    States, Secretary Mineta has asked MARAD and Coast Guard and
    the other interested elements--because it is a transportation
    dilemma. 6 million of these things come into our seaports, 17
    million of them come into our country, the other 11 coming
    across the Canadian border or the Mexican border on trucks or
    trains or whatever.
        So this issue I believe is, from the maritime security
    perspective, the number 1 challenge for our Nation to get our
    arms around. Whether it is in Puget Sound and a connection to
    counternarcotics, or whether it is anywhere else across the
    linear borders with Canada and Mexico, or the ports and
    waterways of our country, container security has to be dealt
    with.
        Senator Murray. How long is it going to take the IMO to
    come back with recommendations?
        Admiral Loy. I have accused them of being glacial in their
    pace of activity often, but I have a dedicated Secretary-
    General's promise that we will gather from this year, by
    December of this year some constructive efforts not only with
    respect to container, but credentialing of international
    seamen.
        200,000 sailors come to the United States on commercial
    ships on an annual basis. We need security plans for vessels
    and passenger terminals and off-shore structures. There is a
    half-dozen or more very right things for us to be grappling at
    the international level to raise the standards in the classic
    notion that a rising tide will raise all boats.
        Senator Murray. Do you really think we can depend on
    nations that originate these shipments to give us the kind of
    security we want here?
        Admiral Loy. Certainly not exclusively, absolutely not. In
    fact, many of the nations of the world, as we all know, will
    find it enormously difficult to have the assets necessary,
    financial or otherwise, to make the commitments we are asking
    for.
        But the marketplace is the United States, and if, in fact,
    they choose to continue, whether it is shipowners, or
    charterers, or insurers, or anyone else, if they choose to
    continue to do business in the United States, akin to what you
    suggested earlier, ma'am, where what happened in the aftermath
    of the EXXON VALDEZ, and a decade's worth of experience of
    watching the United States set standards to which the rest of
    the world then rallied to, my guess is we will be doing the
    same thing with respect to maritime security.
        Senator Murray. If we cannot keep heroin out of containers,
    it is hard to believe we could keep other lethal products out.
        Admiral Loy. Yes, ma'am, it is a nightmare scenario that I
    wake up with every night.
        Mr. Mead. We are auditing container security this year. It
    is very interesting, one component of the audit we want to
    include is the trends in containers coming to this country,
    what the trend line looks like, so you can see what type, the
    magnitude of the problem, and also this is a big cross-modal
    issue, because it used to be that a container you put on a ship
    you could not put on a truck. You had to take stuff out and put
    it in another container. Now, you can lift it and go, and you
    can put them on trains, you can put them on trucks, and it is
    truly a cross-modal issue.
        Senator Murray. It is a huge economic impact, and so I will
    be looking forward to that.
        Admiral Loy. That is the challenge, ma'am, absolutely. we
    all understand that the economic, or our prosperity is built on
    our economic foundation, and at the same time we are trying to
    identify the small percentage of the bad guys--I do not know
    what that number is, 2 percent, 5 percent--we want to be
    identifying the good guys and actually facilitate their
    commerce through our system.
        But Hart-Rudman, the study that Senator Hart and Senator
    Rudman did, that was precisely the dichotomy, the economic, the
    balance between facilitating commerce on one hand and being
    concerned about security on the other.
        Senator Murray. It is a challenge.
        Admiral Loy. Yes, ma'am.

                        COAST GUARD'S NEW SECURITY TEAMS

        Senator Murray. Admiral, as you know, the Committee doubled
    the number of Marine Safety and Security Teams you requested in
    the 2002 supplemental. One of those teams is going to be
    located in Puget Sound, so the Coast Guard does not have to
    continue to divert its Search and Rescue assets in order to
    provide force protection for the Navy. When do you anticipate
    commissioning that new unit?
        Admiral Loy. I do not have a date for you, ma'am, but it is
    very quick. The four from the supplemental will be augmented by
    two more in the 2003 request to an initial inventory of six.
    The four sites, Puget Sound, Norfolk, LA/LB, and Houston-
    Galveston, are set for the four that came from the
    supplemental. I will get you a date, and frankly, I would be
    delighted if perhaps we could gather at that date and cut a
    ribbon.
        Senator Murray. Do you anticipate sooner rather than later?
        Admiral Loy. Absolutely, yes, ma'am.
        Senator Murray. Any hint at what sooner rather than later
    means?

                   COMBINING COAST GUARD WITH OTHER AGENCIES

        Admiral Loy. I will call you this afternoon, if I may.
        Senator Murray. Admiral, we read with interest about the
    debate within the Administration over whether the Coast Guard
    should be combined with the Customs Service and the INS into a
    new megaborder security agency.
        Now, I recognize this could be a difficult issue for you to
    talk about, but since this is your last hearing I wanted to
    give you an opportunity to give us your personal view on that
    question, recognizing that the Administration has not yet
    reached a position on this. What are your personal thoughts
    about the merits of combining the Coast Guard with all of those
    other agencies?
        Admiral Loy. It is a very complex question, and it is
    attendant with all kinds of porcelain that people do not like
    to see broken pieces of in terms of turf, whether it is
    Committee structures on the Hill, or organizational structures
    in the Administration.
        My thoughts at the strategic level are these. We chose to
    reorganize the Department of Defense in 1947, not 1944 or 1945.
    I think that is instructive. We waited for the crisis, World
    War II to be over, and then we reorganized the Department of
    Defense. I think good old management 101 suggests do not
    reorganize in the middle of a crisis, and do not leap to a
    notion that moving boxes around on an organizational chart is
    necessarily going to improve whatever it is you are trying to
    improve.
        A second notion, also sort of management 101, I guess, is
    that form should follow function, and that suggests to me that
    the much more important discussions to be having right now are
    the functionality discussions. If we can find areas, whether it
    is port of entry inspection services, whether it is between
    ports of entry, whether it is inclusive of the exclusive
    economic zone and the territorial sea, whether we can do--we
    have a criteria set. Can we be more efficient, can we be more
    effective, can we serve customers better, and can we enhance
    security?
        If any of those four, or some combination of those four
    criteria would be served well after a solid functionality
    review----
        Senator Murray. So are you suggesting that maybe part of
    the agency, part of some function can be----
        Admiral Loy. No, ma'am. I am looking at the service
    provided. For example, at a port of entry, if we see someone
    carrying their customs declaration form, whether it is an
    airport, or whether it is a linear border port of entry, go and
    have to show it to this person with this uniform on, or that
    person with that uniform on, and this person with this uniform
    on, if there is an efficiency process that we can gauge there,
    we should take a very strong look at doing that more
    efficiently, that function more efficiently than in the past.
        From the Coast Guard's perspective, because of the lessons
    we learned for the millionth time on 9/11, we should not be in
    the business of slicing and dicing mission areas of our
    organization. What the American taxpayer gets best from the
    Coast Guard is for a single overhead, all of those missions
    accomplished. That should be sacrosanct, as should our military
    nature, because of the discipline that it brings to what we do
    for America.
        But the other important thing to take stock of at the
    moment, Madam Chairman, is that TSA represents an enormous
    undertaking for the Secretary of Transportation. The Congress
    has seen, with the Administration, in its wisdom to provide
    that challenge to Secretary Mineta. TSA eventually will be
    about more than aviation. It will be about the maritime sector,
    it will be about the others as well. Wherever the synergies
    associated with what is trying to happen in our transportation
    security system is being served, we do not want to trade
    synergies here.
        I think at the moment that for the foreseeable future we
    belong still in transportation because of this transportation
    security issue, which is multimodal in nature, and the maritime
    piece. Secretary Mineta needs to have that well-served for him
    in the Department.
        Senator Murray. To that point, the new TSA, as you said, is
    responsible for all modes of transportation, and we are told
    that Secretary McGaw intends to appoint an Associate Under
    Secretary for Maritime Security, and we are told that DOD may
    also be appointing a new Commander in Chief for the Security of
    North America. How does that chain of command work in the Coast
    Guard function under either of those two new structures?
        Admiral Loy. With respect to TSA, I believe that because
    they already have in the Coast Guard an organization that does
    all of the line work out in the field, there will be more of a
    liaison relationship with TSA and an oversight relationship of
    Under Secretary McGaw, and serving Secretary Mineta in that
    regard. They are not having--for example, they are having to
    stand up a 40,000 person organization, or whatever the number
    is at the moment, but most of those people will be focused on
    aviation security and the wherewithal to do what we need to do
    there.
        Senator Murray. My basic question is, who is going to
    determine the posture of the Coast Guard's maritime security
    efforts? Will it be the Commandant, will it be the
    Transportation Security Administration, will it be the new CINC
    who will be making those decisions?
        Admiral Loy. I will be developing the plans and seeking
    Secretary Mineta's and the President's blessing on the maritime
    security plan.
        Senator Murray. You would be determining what those plans
    are?
        Admiral Loy. Yes, ma'am. With respect to the new CINC, it
    is important for the Committee to know that literally from day
    one, if you will, on 9/11, we have been immersed in the work
    going on at Joint Forces Command down in Norfolk and with NORAD
    in Colorado. Those two are the elements that will be the core
    around which NORTHCOM--if that is, in fact, what occurs and the
    President agrees, NORTHCOM will have the homeland security
    responsibilities that DOD will bring to the table.
        It has already been--the designwork already has the Coast
    Guard as the lead agency for the maritime sector, as supported
    by a host of others in terms of what would be brought to the
    table for that new CINC, the homeland security chief in DOD, so
    in both cases we are already integrated as the maritime sector
    lever, if you will, in terms of getting the job done.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Murray. Admiral, again, as we end this hearing, let
    me just thank you for your tremendous service to this Nation,
    and I wish you the best in your future service, wherever that
    may be. I am sorry this is going to be your last opportunity.
        Mr. Mead, obviously, fortunately for us, unfortunately for
    you, you will be back again, but we appreciate your service as
    well.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                  Questions Submitted to Admiral James M. Loy

               Questions Submitted by Senator Barbara A. Mikulski

                             vessel tracking system
        Question. What progress have you made in working with the ports to
    identify and implement some sort of vessel-tracking system?
        Answer. The Coast Guard worked directly with the port industry in
    conducting Port and Waterway Safety Assessments in 30 ports to
    determine if a Vessel Traffic Service was needed to ensure a safe and
    orderly flow of marine traffic. Although these assessments had a safety
    focus, the information gathered in this process has been applied to
    determine if some sort of vessel tracking system was needed to enhance
    port security.
        The Automatic Identification System (AIS) will be the cornerstone
    sensor for vessel tracking in ports, port approaches, offshore areas
    and inland waterways. The Coast Guard has been working with ports and
    port users to test and develop AIS before its eventual phased-in
    deployment beginning in July of 2002. The Coast Guard is also working
    with the International Maritime Organization to accelerate the
    implementation date of AIS. The accelerated implementation schedule, if
    adopted, will require foreign commercial vessels arriving in the U.S.
    to have AIS by July 2004. A plan for establishing the AIS shore side
    infrastructure is being developed. This plan will deploy AIS receiving
    stations in strategic sites to monitor commercial traffic.
        The Coast Guard's National Vessel Movement Center is an
    administrative form of vessel tracking system utilizing a system of
    pre-arrival reporting. The Coast Guard worked closely with the marine
    industry in implementing this 96-hour advance notice of arrival system
    and continues to work with vessel operators and agents in operating the
    system.
        The Coast Guard is also working with our counterparts in the
    Department of Defense and local response organizations to determine
    where vessel tracking and monitoring systems are needed to protect
    critical assets and infrastructure.
        The Coast Guard's budget request reflects our highest priority
    needs with respect to Vessel Traffic Service and Automatic
    Identification System installations.
              benefits of the integrated deepwater system project
        Question. Can you discuss the benefits of the Coast Guard's
    Deepwater Project, particularly it's role in addressing the Coast
    Guard's aging fleet of cutters and aircraft?
        Answer. The Coast Guard's current fleet of deepwater ships and
    aircraft are aging and technologically obsolete. As a result, they lack
    fundamental capabilities and technologies necessary for efficient and
    effective mission performance. These capabilities include sufficient
    cutter speed, proper sensors and night operations capability on cutters
    and aircraft, interoperability between cutters and aircraft, adequate
    communications, and access to mission critical information. The lack of
    commonality between classes of ships and aircraft classes has also
    created major logistical and supportability hurdles and increased
    training requirements.
        The Integrated Deepwater System (IDS) will reverse the erosion of
    the operational effectiveness currently being experienced due to
    obsolescence and aging of Coast Guard cutters, planes, sensors and
    communications systems. Without the IDS, replacements would not be
    available in time to prevent a dramatic drop in operational
    effectiveness.
        The Coast Guard Integrated Deepwater System Program will renovate,
    modernize or replace aging cutters and aircraft that are approaching
    their end-of service life. Rather than replace the deepwater assets on
    a one-for-one basis as done in the past utilizing the traditional
    Federal acquisition paradigm, the Integrated Deepwater System Program
    is implementing an innovative Mission-Based Performance Acquisition
    approach that describes the capabilities needed to perform Coast Guard
    missions in the deepwater environment. The assets procured through the
    Integrated Deepwater System Program will be interoperable, employ
    state-of-the market technology, and be specifically designed to provide
    the Coast Guard the capabilities needed to perform current deepwater
    missions as well as future missions.
                 deepwater operational capability improvements
        Question. How will the Deepwater Project improve your operational
    capability?
        Answer. The Integrated Deepwater System Program will improve the
    Coast Guard's operational capability. The overarching goal of the
    Deepwater Program is to maximize operational effectiveness while
    minimizing total ownership costs.
        Existing legacy cutters, aircraft and C4ISR lack capabilities and
    technologies necessary for efficient and effective mission performance.
    These capabilities include sufficient cutter speed, proper sensors and
    night operations capability on cutters and aircraft, interoperability
    between cutters and aircraft, adequate communications, and access to
    mission critical information. The lack of commonality between classes
    of ships and aircraft classes results in major logistical and
    supportability hurdles, as well as increased training requirements.
    Legacy (current) ships and aircraft are aging and are technologically
    obsolete.
        As outdated technology ultimately increases operating and
    maintenance costs, it also places greater demands on the Coast Guard's
    infrastructure. System and component manufacturers cancel production
    and support for old equipment and parts, while labor costs increase.
    Cutter and aircraft operational availability decreases thus limiting
    their effectiveness.
        Interoperability is built in from the beginning by considering and
    designing deepwater assets as components of an overall Integrated
    Deepwater System. There will be improved data link capability on major
    cutters and data link capability between smaller cutters and aircraft
    Deepwater assets will be able to implement a modern network-centric
    concept of operations. Just as with Navy task forces, Deepwater assets
    will be connected via data links and will automatically be able to
    share tactical information in real time. Coast Guard Deepwater assets
    will be able to implement the Navy/Coast Guard National Fleet Policy by
    providing more capable assets for joint operations.
               benefits of deepwater system acquisition approach
        Question. Can you discuss the benefits of the systems acquisition
    approach for the Deepwater Project? Was this approach based on
    operational considerations? If so, in what ways will it make the Coast
    Guard more effective than a more traditional asset-for-asset
    replacement program?
        Answer. The ``systems of systems'' acquisition approach for the
    Deepwater Program was based on operational considerations. The Coast
    Guard's current fleet of deepwater ships, aircraft, logistics support
    systems, and C4ISR are aging and technologically obsolete.
        Rather than replace the deepwater assets on a one-for-one basis
    utilizing the traditional Federal acquisition process, the Deepwater
    Program is a performance-based acquisition to replace current
    capabilities. This performance-based acquisition differs from the
    traditional type because the Coast Guard focuses on performance
    specifications for an integrated system of assets based on operational
    capabilities needed to perform the Coast Guard's seven federally
    mandated missions. The assets procured and the upgrades to existing CG
    equipment will operate with each other, with other agencies, employ
    state-of-the market technology, and be specifically designed to provide
    the Coast Guard the capabilities needed to perform current deepwater
    missions as well as future missions.
        This type of innovation and integration would be much more
    cumbersome if attempted as separate, distinct acquisitions.
                                     ______

                 Question Submitted by Senator Patrick J. Leahy

                         burlington, vermont breakwater
        Question. Last year's Transportation Appropriations Bill included
    language that was part of the Senate-passed version of the bill
    securing funds for a waterways aids to navigation project in
    Burlington, VT. The language reads: ``Within the funds provided, the
    Committee directs $250,000 to be available only for the construction
    and installation of two aids to navigation on the Burlington, Vermont
    Breakwater to replace the existing dated equipment.'' ADM Loy, after
    passage of the bill I wrote to you on January 7, 2002, seeking to work
    with you on completing this project. A copy of that letter is attached.
    Since I have yet to receive a response from you, I will take this
    opportunity to seek clarification:
        What is the status of these aids to navigation along the Burlington
    Waterfront? And what is the Coast Guard doing to follow-up on the
    Congressional directive for this project?
        Answer. The aids to navigation currently in place are appropriate
    to our navigation system and serve mariners' interests properly. The
    funds identified in the appropriations bill are adequate to replace the
    current structures with a more contemporary design however.
        In May 2002, the Coast Guard's regional office engaged the City of
    Burlington and the Maritime Heritage Museum to discuss various options
    for replacing the present structures using funds identified in the
    appropriations bill.
        Officials from the City and Museum indicated their intent was to
    receive the funding appropriated for this project as a grant, which is
    not consistent with the current appropriations language. The Coast
    Guard will do everything possible, in accordance with appropriations
    law, to meet the desires of the local constituents. The local officials
    have indicated they desire grant funding and will approach their
    legislators for appropriations language consistent with their
    objectives.
        Attached please find a copy of Admiral Collins' March 22, 2002
    letter response to you.

                     U.S. Department of Transportation,
                                              U.S. Coast Guard,
                                        Washington, DC, March 22, 2002.
    Hon. Patrick Leahy,
    United States Senate,
    Washington, DC.
        Dear Senator Leahy: This is in response to your inquiry of January
    7, 2002, on behalf of the City of Burlington, Vermont, and the Lake
    Champlain Maritime Museum, regarding replacing breakwater lights with
    historically consistent structures.
        The Senate Mark report identified $250,000 for the Burlington
    project ``to replace existing dated equipment.'' While the current
    structures have many years of service life remaining, given your
    interest and the multi-million dollar rehabilitation of the breakwater,
    we will work with the interested parties to identify possible
    replacement structures. Replacing the present structures with
    historical wooden replicas may be problematic and dependent on the
    scope of the breakwater's rehabilitation. A substantially larger
    financial base will be required to support a historical structure.
    Since replacing the present structures with wooden replicas is beyond
    our normal scope of business due to the susceptibility of ice damage
    and the costs associated with follow-on maintenance efforts, it might
    be in everyone's best interest to investigate the usage of private aid-
    to-navigation procedures to meet the community's aesthetic interests.
        Congress is actively moving the Coast Guard away from a role in
    historical structures through legislation such as the National Historic
    Lighthouse Preservation Act of 2000. Our purpose remains to help the
    maritime community manage transit risks associated with collisions and
    groundings by providing the right short-range aids-to-navigation
    signals with an economical life cycle cost to taxpayers. I am confident
    that my district officials can continue the positive discussions with
    your local constituents and develop an appropriate plan that meets
    everyone's desires and can be accomplished within the prescribed
    funding constraints.
        I hope this information assists you in responding to your
    constituent. If you have any further questions, please have your staff
    contact the Senate Liaison Office at (202) 224 2913.
                Sincerely,
                                                  T.H. Collins,
                      Vice Admiral, U.S. Coast Guard Acting Commandant.

                              SUBCOMMITTEE RECESS

        Senator Murray. The subcommittee stands recessed until the
    week of February 25, when we will take testimony on highway
    safety issues.
        [Whereupon, at 12 noon, Thursday, 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 2003

                                  ----------

                            THURSDAY, MARCH 21, 2002

                                           U.S. Senate,
                Subcommittee of the Committee on Appropriations
                                                        Washington, DC.
        The subcommittee met at 9:35 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Patty Murray (chairman) presiding.
        Present: Senators Murray and Shelby.

                          DEPARTMENT OF TRANSPORTATION

                Security Challenges for Transportation of Cargo

    STATEMENT OF JOHN MAGAW, ADMINISTRATOR, TRANSPORTATION
                SECURITY ADMINISTRATION
    ACCOMPANIED BY:
            REAR ADMIRAL PAUL PLUTA, ASSISTANT COMMANDANT FOR MARINE SAFETY
                AND ENVIRONMENTAL PROTECTION, U.S. STATES COAST GUARD
            JOSEPH CLAPP, ADMINISTRATOR, FEDERAL MOTOR CARRIER SAFETY
                ADMINISTRATION
            ALLAN RUTTER, ADMINISTRATOR, FEDERAL RAILROAD ADMINISTRATION
            ELLEN ENGLEMAN, ADMINISTRATOR, RESEARCH AND SPECIAL PROGRAMS
                ADMINISTRATION
            CAPTAIN CHRISTOPHER McMAHON, MARITIME ADMINISTRATION

                   OPENING STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. The subcommittee will come to order.
        More than 6 months have passed since the tragic events of
    September 11. And since then we have been working to protect
    our country from future terrorist attacks. Just weeks after
    September 11, Congress responded by appropriating billions of
    dollars to shore up our aviation industry and to improve
    security across our aviation system.
        We passed the Aviation and Transportation Security Act, but
    it is important to remember that the act covered more than just
    aviation. It gave the new Transportation Security
    Administration responsibility for ensuring security in all
    modes of transportation. Our security system is only as strong
    as its weakest link. As we work to make aviation more secure, I
    want to make sure we are not leaving other vulnerabilities open
    to those who would threaten us.
        So today we are going to explore the state of security in
    the transportation of cargo, including hazardous materials. It
    is estimated that roughly one-third of the terrorist attacks
    that occur around the world are targeted on some aspect of
    transportation. Every day there are more than 800,000 shipments
    of hazardous material within the United States, mostly over our
    railways and highways.
        Millions of dollars worth of goods enter our seaports each
    day from thousands of destinations and rapidly find their way
    onto those highways and railways. Much of that freight is
    identified only as ``freight of all kinds.'' We know very
    little about the true identity of the shipper and we know even
    less about the true nature of the cargo. As I have looked at
    this, I have found major gaps in funding and regulations. We
    have a system that is designed to prevent accidents, but not
    designed to prevent deliberate attacks.
        This morning's subcommittee hearing will focus on the
    vulnerabilities that surround the transportation of cargo,
    especially hazardous cargo, and what is and is not being done
    to better ensure security across our entire transportation
    system. As we look at this issue, I want to point out four
    challenges we will need to consider: the economic importance of
    moving goods quickly, how our major cities and ports are
    closely connected, the role of hazardous materials, and the
    inconsistent regulations and funding across all modes of
    transportation.
        First, our cargo transportation system was designed with
    speed in mind. Many American industries have become more
    efficient and productive than their foreign counterparts by
    exploiting the benefits of just-in-time delivery. This has been
    an economic success story that no one wants to undermine.
        A second challenge is our transportation infrastructure
    itself. Historically, our largest cities have developed around
    our major rivers and rail systems. Our interstate highway
    systems were designed to connect those cities. As a result,
    hazardous cargo moves through one population center or another
    every hour of every day. Similarly, most of our major ports are
    found at the waterside of our largest cities, be it in Seattle-
    Tacoma, Los Angeles-Long Beach, Newark-New York area, or
    Houston.
        Across the Nation, waterside shipping terminals sit next to
    residential communities and busy commercial districts. Keeping
    people and cargo separated is for the most part unattainable.
        A third challenge concerns hazardous materials like
    chlorine, which is used to purify drinking water. Transporting
    chlorine poses a security challenge, but we must remember that
    the American public relies on these and other hazardous
    materials in our everyday lives. We need to make sure that they
    can be transported safely.
        A fourth challenge is the Federal regulatory and
    enforcement regimes that currently govern the transportation of
    hazardous cargos. Our government policies and regulations have
    largely been designed to prevent an accidental release of
    hazardous materials. They have not been designed to protect
    against a deliberate release. Many of the agencies within the
    Department of Transportation that are now charged with
    launching new security regulations are already behind in
    publishing regulations to maintain transportation safety. We
    need to make sure that they can meet the existing safety
    challenges and the new security challenges effectively.
        Taken together, all of these challenges will require strong
    and informed leadership. Frankly I am concerned about the
    leadership we have seen so far. Many in the transportation
    industry have told me the efforts to date have been
    characterized by a lack of direction, a lack of urgency, and a
    general confusion over who is in charge.
        Our new Under Secretary of Transportation for Security,
    John Magaw, is responsible for security in all modes of
    transportation safety. However, the extraordinary challenges
    presented by the Aviation and Transportation Security Act have
    required us to focus almost entirely on aviation. As such, when
    it comes to trucking, railroads, pipelines, and our ports, the
    new security requirements have been left largely to the Federal
    Motor Carrier Safety Administration, the Federal Railroad
    Administration, the Maritime Administration, the Coast Guard,
    and the Research and Special Programs Administration. Somewhere
    in the middle of all of this the Secretary's office and the new
    Office of Homeland Security weigh in from time to time. While I
    am not an advocate of one size fits all solutions to the
    security problem, it is hard not to notice some of the glaring
    differences in the way different transportation industries are
    being handled by different parts of DOT.
        In some industries, individual companies are being asked to
    develop their own security plans and submit them for approval
    by the Federal agency. In other instances, the agencies
    themselves are developing the security plans for industry. And
    in yet another, the companies are just being asked to have a
    plan in place with no agency review. We even find
    inconsistencies in what is and is not considered classified
    information. While the number of new Federal air marshals
    sought in the President's budget is classified, the number of
    new Coast Guard sea marshals is printed for all to see in the
    Coast Guard's annual budget.
        There are even more significant inconsistencies in the
    funding levels requested in the President's budget. For
    aviation security, the President requested several billion
    dollars. For Coast Guard, the President requested historic
    funding increases. But for the Federal Railroad Administration,
    the Federal Motor Carrier Safety Administration, and the
    Research and Special Programs Administration, there are no
    major funding initiatives to deal with security in these
    transportation modes.
        For port security, Congress funded almost a hundred million
    dollars in direct grants for security improvements at our ports
    in 2002. The President, however, in his budget request, has
    requested zero dollars, zero, for port security grants.
        In the absence of clear leadership by the Administration,
    individual transportation industries have sought to stand up to
    the challenge. The major class-one freight railroads have
    sought to implement their own new security regime. So have some
    of the larger and more organized sectors of the trucking and
    chemical industries. But even they are working somewhat in the
    dark. No sooner did the railroad industry set up a new security
    regime pegged to four different security alert levels than
    Governor Ridge announced his new national system with five
    different security alert levels. Clearly, we need to improve
    our communication, so that we are all working together as
    effectively as possible. And I believe we have got to focus on
    the weakest links in the system.
        All of our efforts on transportation security will be no
    better than the effort of the least paid security guard manning
    the perimeter fence of a rail yard or a pipeline pump station.
    We have known for years about vulnerabilities in how States
    distribute commercial drivers' licenses. It should not have
    come as a surprise when it was discovered some months ago that
    known terrorists were obtaining commercial drivers' licenses
    with special endorsements to carry hazardous materials. It is
    precisely because terrorists go after the weakest link that we
    must not depend solely on voluntary measures by industry.
        I commend the industries that have stepped up to the plate
    to do the right thing, but we must remember that hazardous
    materials are carried by more than just class-one railroads and
    major trucking firms. There are over 38,000 individual trucking
    firms, many that consist of only one truck, that are authorized
    to carry hazardous materials. Those truckers do not have the
    time, the money, or the desire to review the Federal Register
    to learn what new voluntary measures are being recommended by
    DOT. That is why we need comprehensible and enforceable
    policies that will govern the behavior of each and every one of
    them. We need more than just voluntary recommendations and
    agency advisories to take greater care.
        My goal for the hearing this morning is to get answers as
    to who is in charge of these security functions. If the answer
    to that question is that no one is in charge, then I want to
    know who is going to take charge. How is our Federal Government
    going to attack the weakest links in our security system? And
    when precisely are we going to see real policies put in place
    to eliminate the vulnerability?
        I am very pleased that so many distinguished members of the
    Administration have joined us today. Our Under Secretary of
    Transportation for Security, John Magaw, was required to
    reschedule events in Europe so that he could be with us today,
    and I appreciate that. And I appreciate his flexibility and
    attention to this very important issue.
        We are also joined by administrators of the Federal
    Railroad Administration, the Federal Motor Carrier Safety
    Administration, and the Research and Special Programs
    Administration. We are also joined by the appropriate
    representatives from the Coast Guard and the Maritime
    Administration. And I thank all of you for being here for the
    hearing this morning.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you. Thank you, Madam Chairman.
        After the attack on the World Trade Center and the
    Pentagon, most of the focus in countering the threat by
    international terrorists has been on improving the security of
    our aviation system. That focus is appropriate and must
    continue. We should not, however, lose sight of the need to
    improve security in other modes of transportation. We must
    identify all of our vulnerabilities and then develop more
    practicable countermeasures to prevent an attack. Until we
    understand the full spectrum of potential threats to each mode
    of transportation, we run the risk of addressing relatively
    minor, self-contained problems with great vigor, while leaving
    potentially catastrophic threats exposed.
        While assessing the vulnerabilities at our Nation's ports
    and pipelines, highways and railways, we should remember that
    the terrorist is capable of adapting his behavior and tactics
    to circumvent heightened security measures. The department must
    be just as nimble, or terrorists will have changed their
    behavior before the department has ever changed its assumptions
    about their behavior.
        On the other hand, by adopting countermeasures to the
    greatest potential dangers and constantly reevaluating those
    procedures, we will not only be better prepared to meet the
    terrorist threat, but will also deter other criminal activity
    and reap other ancillary benefits, such as improved compliance
    with safety regulations.
        I believe that a national transportation risk assessment is
    absolutely necessary. I also believe that we must conduct
    ongoing reassessments, considering the constantly evolving
    threat. I am keenly interested in Under Secretary Magaw's
    thoughts about the need for such a comprehensive evaluation and
    any progress the Transportation Security Administration has
    made along those lines.
        Perhaps the greatest threat to the country comes from the
    use of conventional explosives in the short term and the use of
    weapons of mass destruction in the future. The fact that it is
    possible to either conceal a bomb in other goods or to use the
    material itself, such as hazardous material, as a weapon of
    mass destruction is what makes cargo an attractive target to
    those who intend to inflict maximum harm.
        During the hearing this morning, it is my hope that the
    witnesses will address several concerns I have regarding the
    security of cargo in the transportation system. Specifically,
    we must establish an inspection system that stops cargo hiding
    a bomb or weapon of mass destruction from entering the United
    States. As long as we are able to check only a fraction of
    cargo entering the United States, Federal inspection agencies
    must screen all suspicious cargo and overlay a system of random
    searches, a big challenge.
        Second, we must be mindful of the intermodal nature of
    cargo, whether shipped in containers or on pallets, and must
    use security issues from a cross-modal perspective. The
    department must adopt a comprehensive system that assures both
    the integrity of the cargo and the operators responsible for
    transporting that cargo.
        Third, we must establish, I believe, clear lines of
    responsibility. A tug of war between the modal administrations
    blurs the authority and leaves no one in charge.
        We also must balance important safety requirements with a
    new necessity to keep this dangerous cargo secure from attack.
    Madam Chairman, the enemy we face is determined to attack
    innocent Americans on our soil. They issue no demands, nor do
    they plot their escape. They simply try to inflect maximum harm
    by targeting us where we are vulnerable and by using our
    strengths against us.
        I believe the President and the Congress agree on the need
    to provide the necessary resources to secure our Nation from
    the threat of terrorism. As long as we maintain an open society
    that permits the free movement of people and cargo, however, we
    will be vulnerable to a certain extent.
        I believe we will have to accept some level of risk,
    because we should not and will not live in bunkers. But it is
    our responsibility to reduce the risk to the physical
    infrastructure to all modes of transportation. I look forward
    to hearing the witnesses.
        Senator Murray. Thank you, Senator Shelby.
        We will now hear from the Honorable John Magaw, who is
    Administrator of the Transportation Security Administration.
        Mr. Magaw. Good morning and thank you, Madam Chairman and
    Senator Shelby. I am privileged to be joined this morning by my
    counterparts from the Department of Transportation:
    Administrator Joseph Clapp of the Federal Motor Carrier Safety
    Administration; Administrator Ellen Engleman from the Research
    and Special Programs Administration; Administrator Allan Rutter
    from the Federal Railroad Administration; Captain Chris
    McMahon, representing the Maritime Administration; and Rear
    Admiral Paul Pluta, from the United States Coast Guard. Also
    present here this morning, as is a practice of ours, the senior
    members of our staff from all of the modes are here, because we
    think it is important that not only do they hear your message
    first hand, but they understand it. It helps all of us to be
    more focused, but at the same time flexible, as we address all
    modes of transportation.
        We appear before this subcommittee today to discuss the
    issue of cargo security. My oral statement this morning, Madam
    Chairman, is a short one. I ask that the full statement be
    entered into the record.
        Senator Murray. Without objection.
        Mr. Magaw. Our Nation has entered a new era of security
    awareness. Nowhere is that felt more strongly than in the field
    of transportation, and both of you have referred to that many
    times in your opening statements. Secretary Mineta and the
    people of the Department of Transportation are working
    aggressively to expand and strengthen our country's security
    across all modes of transportation, be it aviation, rail,
    surface, maritime, pipeline, and transit.
        As Senator Shelby mentioned, risk assessments are very
    important, because then it gives you the direction on which you
    can address these many, many issues and allows you to
    prioritize them as you move forward. We are working with our
    partners in State and local law enforcement, other Federal
    agencies, industry, labor, members of Congress, and the
    important staffs that they employ, as the Transportation
    Security Administration is being built, organized, and moves
    forward to address these critical transportation issues.
        With the congressionally-mandated deadlines prescribed in
    the Aviation Transportation and Security Act of 2001, you are
    very accurate to say that Transportation Security
    Administration has devoted a great deal of its time to
    aviation-related security issues. However, in the past days and
    in the months ahead, our new organization will devote
    substantial attention to an intermodal approach, including
    maritime and surface transportation-related security issues.
        I am pleased to announce that Rear Admiral Richard Bennis,
    U.S. Coast Guard, retired, will start next week as the TSA
    Associate Under Secretary for Maritime and Land Security.
    Admiral Bennis brings a wealth of security knowledge and
    experience to this job, not only from maritime security, but
    from all modes of transportation, and including cargo.
        We also have the support and the expertise of other
    operating administrators as they sit here with me today. It is
    clear in our minds that TSA has the responsibility for all the
    security that you discussed. We are working collaboratively and
    consulting with each other, and we will talk more in detail
    about that later.
        The Department of Defense Appropriations Act of Fiscal Year
    2002 appropriated $93.3 million to TSA for competitive grants,
    to enhance the facility and operational security at critical
    seaports. The broad agency announcement for a port security
    grant program has already been issued. We expect to complete
    the process and initial awards should commence in June. We are
    moving expeditiously to put this money to the best use.
        In addition, we are making great strides in addressing one
    of our most critical transportation security challenges, and
    that is cargo container security. The most pressing security
    challenges have been addressed with the existing authorities.
    Now we must design and incorporate a network of protections
    that transforms a rapid response into a sustained effort that
    permanently integrates heightened security into all operations.
        A week following the September 11 attacks, Secretary Mineta
    established the National Infrastructure Security Committee
    (NISC) to address security concerns in the surface modal
    transportation system. Since that time, the NISC has evaluated
    transportation infrastructure vulnerabilities and security
    protocols and processes.
        Six million marine containers in our Nation's ports, along
    with 11 million truck and rail containers, cross the Mexican
    and Canadian borders into America each year. In December 2001,
    the National Infrastructure Security Committee established the
    Container Working Group to recommend improvements in the secure
    movement of these containers.
        Cargo containers arriving at U.S. seaports today can be
    virtually anywhere in the heartland of America tomorrow by way
    of truck, rail, and air. Accordingly, any security measures
    must be fully integrated throughout all modes of
    transportation, as both of your statements so ably addressed.
        All of us at the Department of Transportation are looking
    forward to working with this committee and other members of the
    Senate and the House in successfully reaching and maintaining
    the new standard of transportation security that the Nation not
    only needs but deserves. We will settle for nothing less, Madam
    Chairman. And that concludes my statement.
        [The statement follows:]

                        Prepared Statement of John MaGaw

        The Department of Transportation appreciates the opportunity to
    appear before the Subcommittee on Transportation Appropriations to
    discuss the issue of cargo security. Our Nation has entered a new era
    of security awareness since September 11 and nowhere is that felt more
    strongly than in the field of transportation. Secretary Mineta is
    working aggressively to build the security foundation the country needs
    in this new era, from aviation to railways, highways, pipelines and
    waterways. The Department is working with its partners in state and
    local law enforcement, other government agencies, industry and labor
    and with the leadership and Members of the Congress.
        Thanks to your help, we are making great strides in addressing one
    of our most critical transportation security challenges, cargo
    security, but we need to do more. While the most pressing security
    challenges have been met with existing authorities, we now must work to
    build a new network of protections, one that transforms what has been a
    rapid response into a sustained effort that recognizes heightened
    security as a part of normal operations. In addition, cargo security
    depends on the users of the system, shippers and operators, and affects
    the trade corridors they use.
        The new threats and opportunities of the 21st century demand a new
    approach to border management. The United States has a 7,500-mile land
    and air border shared with Canada and Mexico and an exclusive economic
    zone encompassing 3.4 million square miles. Each year, 11.2 million
    trucks and 2.2 million rail cars cross into the United States, while
    7,500 foreign-flag ships make 51,000 calls in U.S. ports. The massive
    flow of people and goods across our borders helps drive our economy,
    but can also serve as a conduit for terrorists, weapons of mass
    destruction, illegal migrants, contraband, and other unlawful
    commodities.
        President Bush envisions a border that is grounded on two key
    principles: First, America's air, land, and sea borders must provide a
    strong defense for the American people against all external threats,
    most importantly international terrorists but also drugs, foreign
    disease, and other dangerous items.
        Second, America's border must be highly efficient, posing little or
    no obstacle to legitimate trade and travel.
        America requires a cargo management system that keeps pace with
    expanding trade while protecting the United States and its territories
    from the threats of terrorist attack, illegal immigration, illegal
    drugs, and other contraband. The border of the future must integrate
    actions abroad to screen goods and people prior to their arrival in
    sovereign U.S. territory, and inspections at the border and measures
    within the United States to ensure compliance with entry and import
    permits. Federal border control agencies must have seamless
    information-sharing systems that allow for coordinated communication
    among themselves and also the broader law enforcement and intelligence
    gathering communities. This integrated system would provide timely
    enforcement of laws and regulations. The use of advanced technology to
    track the movement of cargo and the entry and exit of individuals is
    essential to the task of managing the movement of hundreds of millions
    of individuals, conveyances, and vehicles.
        Agreements with our neighbors, major trading partners, and private
    industry will allow extensive pre-screening of low-risk traffic,
    thereby allowing limited assets to focus attention on high-risk
    traffic. Some of this work has already begun with Canada, our largest
    trading partner. On December 12, 2001, Governor Tom Ridge, Director of
    the Office of Homeland Security, and John Manley, then Canada's
    Minister of Foreign Affairs, signed the ``Smart Border Declaration''
    with a 30-point action plan that will help speed and secure the flow of
    people and goods between the United States and Canada. The Smart Border
    Declaration recognizes that ``our current and future prosperity and
    security depend on a border that operates efficiently and effectively
    under all circumstances.'' A similar effort is currently underway with
    Mexico.
        The struggle against terrorism is a truly national struggle.
    Federal, State, and local government agencies, as well as the private
    sector must work seamlessly together. Having the right system of
    communication--content, process, and infrastructure--is critical to
    bridging the existing gaps between the Federal, State, and local
    governments, as well as the private sector. These new systems will
    greatly assist our officials at all levels to protect and defend
    against future terrorist attacks, and to effectively manage incidents
    whenever they should occur.
        To help meet these needs, the Administration has established a
    uniform national threat advisory system, announced last week by the
    Office of Homeland Security, to inform Federal agencies, State and
    local officials, as well as the private sector, of terrorist threats
    and appropriate protective actions. The President's Budget for fiscal
    year 2003 supports this effort by funding the development and
    implementation of secure information systems to streamline the
    dissemination of critical homeland security information.
        Likewise, the Department of Transportation, through the new
    Transportation Security Administration (TSA), will be making every
    effort to ensure the security of cargo, including containerized cargo,
    as it moves throughout America's intermodal transportation system. With
    its Congressionally mandated deadlines, TSA has been focusing primarily
    on aviation-related security issues. However, in the months ahead, the
    new organization will be devoting substantial attention to maritime and
    surface transportation-related security.
        Although much attention was rightfully focused on aviation
    following the September 11 attacks, the Department of Transportation
    took decisive steps to address the issue of security in all the surface
    modes of transportation as well. In addition to the U.S. Coast Guard's
    quick response to guard the security of American ports and waterways,
    Secretary Mineta established the National Infrastructure Security
    Committee (NISC). Through several direct action groups, the NISC was
    tasked with evaluating transportation infrastructure vulnerabilities,
    security protocols and processes and recommending changes to improve
    security. As part of the President's USA Freedom Corps, the Department
    is working with the Department of Justice on a ten-city pilot test of
    the Terrorist Information and Prevention System (TIPS) that will use
    transportation workers, letter carriers and others as part of a system
    for reporting suspicious terrorist activity. If the pilot tests are
    successful, the program will be expanded nationwide.
        From the direct action group process, other groups have been formed
    to tackle very specific security issues. Among these is the Container
    Working Group--established through the NISC in December. The Container
    Working group is co-chaired with the U.S. Customs Service and includes
    representatives from the Departments of Defense, Energy, Commerce,
    Justice, Agriculture, Health and Human Services (FDA) and others. The
    group has oversight from the Office of Homeland Security.
        The Container Working Group is tasked with providing
    recommendations to improve the secure movement of the six million
    marine containers that enter our nation's ports and the eleven million
    truck and rail containers that cross the Mexican and Canadian borders
    into America each year in a way that is safe and efficient. In order to
    address individual aspects of container security, four subgroups of the
    Container Working Group are studying information systems, security
    technologies, business practices, and international affairs. On the
    front lines of container security is the U.S. Customs Service, as well
    as other federal agencies. The Container Working Group is studying
    technologies and business practices that will enable Customs and others
    to prevent high-risk containers from entering the United States or to
    ensure that they are properly inspected before they pose a threat to
    the United States. Although the Customs Service utilizes a thoughtful
    risk-based selection method, preventing a container from being used as
    a weapon requires a more complex strategy, enhancing the non-intrusive
    inspection technology and information used for selection. The new
    Customs Container Security Initiative builds upon previous work with
    our international trading partners to improve container security
    throughout the world's global supply chain.
        This work is of critical importance, especially in the maritime
    arena. Approximately 95 percent of our Nation's non-NAFTA international
    trade moves by water. During a major military deployment, 90 percent of
    our military materials move through our nation's seaports. Preserving
    those assets and protecting the safety of the men and women who use
    them and the communities near them has been, and continues to be, one
    of the Administration's top priorities. To accomplish this priority, a
    new partnership must be formed. A partnership between the commercial
    maritime industry and government must take advantage of existing
    commercial security systems, information systems and technological
    innovations.
        Even with our best efforts, our current transportation system is
    groaning under capacity constraints and congestion in many ports is
    increasing. To further complicate matters, container traffic, even with
    the current economic slowdown, is predicted to double in the next
    twenty years. Improving efficiency is one of the key ways to help solve
    these capacity and congestion problems. Yet efficiency improvements
    must now be looked at through a security lens. Our transportation
    system will need to operate both efficiently and securely. These twin
    goals of efficiency and security need to be addressed simultaneously.
        In summary, the vast volume of trade and traffic through our
    nation's ports and across its borders has put immense pressure on our
    ability to enforce the nation's laws while facilitating international
    trade, even before September 11. After September 11, our challenge has
    risen to a new level. Notably cargo trade, which is critical to this
    country's economic strength, continues to move through ports with
    minimal interruption. It is no surprise that sustaining mobility will
    come at a higher cost to all of us as we harden our borders. The
    reality is that we are an open society and we cherish our freedoms.
    Ultimately, it is incumbent upon our government and our transportation
    industry partners to find the balance between appropriate security
    measures and the unimpeded movement of cargo.
                     cargo security in the maritime sector
        An analysis of our transportation system in the aftermath of the
    events of September 11, 2001 clearly laid bare the susceptibility of
    container shipments as a delivery system for an enemy's weapons. Prior
    to September 11, DOT's primary concern was the efficient movement of
    these containers through the transportation system. The advent of just-
    in-time business processes and the use of the transportation system as
    a rolling inventory tied the transportation system even more integrally
    into the economic vitality of this country.
        The Department was well equipped with existing statutory authority
    to develop the immediate maritime security response our Nation has
    required. These steps have formed the core of our near-term response to
    the new maritime and port security environment, and have been based on
    current authority and existing resources.
        A number of critical steps have been taken since September 11:
        The Coast Guard has refocused resources to protect high consequence
    targets in the marine environment, including critical bridges, port
    facilities and other infrastructure.
        The Coast Guard has issued emergency regulations requiring 96-hour
    advance notices of arrival for ships arriving in U.S. ports, and we
    expect to make that regulation permanent by the summer of 2002.
        The Coast Guard Intelligence Coordination Center, working with the
    Office of Naval Intelligence, has been tracking inbound high-interest
    vessels and providing intelligence on the people, cargoes and vessels
    to operational commanders and interested agencies.
        The Coast Guard has deployed personnel as Sea Marshals and small
    boat escorts to ensure positive control of vessels containing critical
    cargoes and in sensitive areas.
        The Maritime Administration has been meeting with members of the
    maritime industry to examine and address security issues and make
    recommendations regarding legislation and policy changes.
        The Maritime Administration has heightened security at its Ready
    Reserve Force fleet sites and outport locations as well as activated
    one ship to assist in Operation Enduring Freedom.
        The Maritime Administration, Credential Direct Action Group and the
    Transportation Security Administration GO Teams are working to examine
    ways that advanced technologies, including smart card, biometrics and
    public key infrastructure can be used throughout the maritime and
    related industries in order to accurately identify employees working in
    security-sensitive areas.
        The St. Lawrence Seaway Development Corporation has been working
    closely with its Canadian counterpart and the Coast Guard to heighten
    security on the St. Lawrence River and ensure the protection of ocean
    access to our Great Lakes ports.
        In order to address the security issues surrounding the movement of
    marine cargo containers through the international, intermodal
    transportation system, the interagency Container Working Group has been
    examining ways of improving the coordination of government and business
    efforts as they relate to container security; enhancing data
    collection; improving the physical security of containers; initiating
    activities on the international front; and considering all possible
    uses of advanced technologies to improve the profiling of containers
    and to increase the physical security of containers.
        Working with other port entities, the Coast Guard is developing
    tracking mechanisms for all vessels operating in the maritime domain:
    within or transiting to U.S. ports and transiting our coastal waters.
    The heart of this maritime domain awareness program is accurate
    information, intelligence, surveillance, and reconnaissance of all
    vessels, cargo, and people extending well beyond our traditional
    maritime boundaries. Coast Guard forces will provide enhanced defenses
    for critical high-risk vessels and coastal facilities, marine and
    otherwise (e.g. nuclear power plants, oil refineries). Close
    coordination through Harbor Safety Committees, which help bring
    together the many local, State, and Federal agencies that maintain and
    protect the harbor, will ensure a well-balanced protective envelope is
    sustained at different threat levels.
        The Coast Guard has also reorganized its security programs, which
    were dispersed throughout the Office of Marine Safety, Security and
    Environmental Protection, and consolidated them under a new port
    security directorate. This includes the movement of the container
    inspection program, which was focused on the structural integrity of
    containers and the proper shipment of hazardous materials, to add a
    security element to its safety inspections. The Container Inspection
    Training Assistance Team (CITAT) was deployed to New York City
    following the attacks and assisted in inspecting numerous containers
    following the ``just in time'' training they received from the U.S.
    Army.
        The President's 2003 Budget increases funding for the Coast Guard's
    homeland security-related missions (protecting ports and coastal areas,
    as well as interdiction activities) by $282 million, to an overall
    level of $2.9 billion. After September 11, the Coast Guard's port
    security mission grew from approximately 1-2 percent of daily
    operations to between 50-60 percent during the heightened threat
    periods. Today the port security mission is about 15 percent. In
    addition, the Coast Guard has important national security missions such
    as illegal immigration and drug interdiction and port security.
        Equally important in improving port security has been the
    Department's partnering efforts with the international community. At a
    recent International Maritime Organization Assembly and intersessional
    working group meetings, the Coast Guard, as the lead agency for the
    U.S. delegation, introduced numerous security measures for
    consideration including vessel, facility and offshore platform security
    plans, early implementation of automatic identification system
    transponders for certain ships on international voyages and designation
    of and training for ship, company and facility security officers. The
    U.S. Government also introduced some preliminary container security
    measures for consideration with the promise to provide more detailed
    papers for the Maritime Safety Committee meeting in May 2002 based upon
    the recommendations of the interagency container working group and
    Customs' Container Initiative.
        Grant Program for Improvement of Port Infrastructure: The
    Department of Defense Appropriations Act for fiscal year 2002
    appropriated $93.3 million to the Transportation Security
    Administration to award competitive grants to critical national
    seaports to finance the cost of enhancing facility and operational
    security. Such grants are to be awarded based on the need for security
    assessments and enhancements as determined by the Under Secretary of
    Transportation for Security, the Administrator of the Maritime
    Administration, and the Commandant of the Coast Guard. The final grant
    approval body will be a board consisting of the Under Secretary of
    Transportation for Security, the Administrator of the Maritime
    Administration, and the Commandant of the Coast Guard, or their
    representatives. Determination of grant awards will be based on
    consideration of the most urgent needs from a homeland security
    perspective. It is anticipated that initial awards will commence in
    June 2002. Port authorities will be able to submit grant applications
    electronically through a Departmental website. A small amount of this
    money will fund ``proof of concept projects,'' focusing on critical
    seaports. Preference will also be given to ports that have already
    begun port security enhancement through some demonstrated action. We
    are moving very quickly to put this money to work.
                   cargo security in the motor carrier sector
        In response to terrorist threats to the transportation system, the
    Federal Motor Carrier Safety Administration (FMCSA) initiated a program
    of onsite visits to hazardous materials carriers and businesses to
    increase their awareness of terrorist threats, to identify potential
    weaknesses in carrier security programs, and to report potentially
    serious security issues to the appropriate authorities. Since September
    26, FMCSA's credentialed field staff have completed almost 41,000
    Security Sensitivity Visits (SSVs) throughout the country, focusing on
    companies transporting hazardous materials in types and quantities that
    terrorists could use as a weapon, truck driver training schools, truck
    rental and leasing firms, chemical and petroleum facilities, hazardous
    materials shippers, and other operations that could be at risk.
        In SSVs, FMCSA personnel meet directly with top company officials
    to review security measures and identify areas for tightening
    procedures. The SSV also includes a records review to identify any
    suspicious activities by carrier employees that could affect security.
    To date, 128 referrals of suspicious activities have been forwarded to
    the FBI for follow-up. False names or false personnel information,
    suspicious inquiries or inappropriate comments, unexplained absences,
    and citizenship irregularities are among the activities that provide a
    basis for referral. Company officials are being urged to conduct
    thorough interviews when hiring new drivers and to verify U.S.
    citizenship or appropriate immigration status. In reviewing their
    security procedures, management is asked to consider who might have
    access to their facilities and storage areas and the adequacy of
    protection. Carriers are urged to know their business partners,
    vendors, service providers, and their shippers.
        FMCSA urges carriers to avoid transporting particularly hazardous
    materials near high population centers whenever possible and reinforces
    the need to strictly adhere to en route security procedures. Companies
    are informed about technical advances that can improve security and
    communication, such as satellite tracking, surveillance systems, and
    cell phones, as well as state-of-the-art locks and seals, alarms, and
    engine controls.
        In the future, FMCSA hopes to conduct operational tests of
    technologies that could enhance the security of hazardous materials
    transportation to demonstrate the potential effectiveness of these
    systems. Technologies which could be tested include systems for
    preventing unauthorized drivers from operating a vehicle, systems for
    detecting a vehicle that is off-route, systems to remotely shut-off the
    vehicle engine, and systems that allow law enforcement, shippers, and
    consignees to make positive identification of the proper truck driver.
        Enhanced communications systems provide another opportunity for
    improving security. A good communications system can help detect
    patterns of activities that when taken alone may not seem significant
    but when taken as a whole may cause concern. Security reminders and
    training should be regularly and widely provided to employees and
    should be comprehensive, covering overall company security, specific
    procedures, and the employee's personal role in security.
        The SSV Program is only one component of the agency's program to
    promote the secure transportation of hazardous materials. In the
    future, compliance reviews of hazardous materials carriers will be
    expanded to include a security component. FMCSA is also developing a
    program for periodic visits to carriers transporting certain types of
    explosives, radioactive materials, and highly toxic substances. These
    visits will be more in-depth and include an on-site inspection of
    facilities and a written report with security recommendations.
        The law enforcement community is an important partner in FMCSA's
    effort to enhance cargo security. FMCSA has developed outreach material
    and a training course to raise the awareness of law enforcement
    officers to the potential threat that commercial vehicles can pose if
    they are used as a weapon. With the Commercial Vehicle Safety Alliance
    (CVSA), the International Association of Chiefs of Police (IACP), the
    Maryland State Police, and the Virginia State Police, FMCSA developed a
    Security Awareness for Enforcement Checklist. The IACP is distributing
    500,000 of these checklists to law enforcement officers across the
    country. FMCSA also is offering a free 8-hour training course, ``Trucks
    & Terrorism,'' to law enforcement agencies.
        In another outreach effort, the Teamsters, CVSA, IACP, and the
    Maryland State Police are working with FMCSA to inform truck drivers
    about measures they can take to protect themselves from potential
    terrorist hijackers.
        Many states have either experienced instances of fraudulent
    activity within their Commercial Driver's License (CDL) programs or
    have testing and licensing practices that make them susceptible to
    fraud. Fraudulent licensing schemes come in many forms; language
    interpreters, State employees, and third party testers have all been
    involved. FMCSA is providing funding to States to reduce
    vulnerabilities in their CDL programs and is working closely with
    States and American Association of Motor Vehicle Administrators (AAMVA)
    on a special task force on identification security. We are committed to
    eliminating fraud in the CDL program and are examining the specific
    actions and resources that will be needed to accomplish this.
        FMCSA is developing new regulations to implement background checks
    for hazardous materials drivers as specified in the USA PATRIOT
    legislation. FMCSA is also considering whether additional hazardous
    materials rulemakings would enhance the security of the motor carrier
    industry.
        In addition to security in freight transportation, FMCSA is
    concerned about the vulnerability of the commercial passenger carrier
    industry to acts of violence. Today, except when crossing the border,
    passengers travel without requirements for identification, and baggage
    is not routinely screened. Yet motorcoaches travel in close proximity
    to some of the Nation's most visible and populated sites, such as
    sporting events and tourist attractions. FMCSA is working with charter
    and scheduled motorcoach operators to identify additional measures such
    as training, enhanced communications, passenger identification
    procedures, and security equipment and technologies to reduce the
    vulnerability of this vital transportation industry, which carries the
    highest volume of passengers of any mode.
        While FMCSA has placed a special emphasis on increased security
    programs, critical safety enforcement activities have continued,
    including issuance of out-of-service orders, conducting compliance
    reviews, and complaint investigation. Enforcement targeted at carriers
    exhibiting poor safety performance will continue to be a major focus
    for FMCSA.
                       cargo security in the rail sector
        The Federal Railroad Administration's (FRA) broad safety authority
    and expertise in railroad safety and operational issues give it a
    significant role to play in helping to analyze and address security
    threats as they relate to rail transportation, including intermodal
    transportation. FRA, engaged with other modes in DOT, is investigating
    the availability and applicability of technological devices for rail
    cars and intermodal vehicles that can track the car, detect attempts to
    intrude into the cargo space, and provide remotely controlled locks for
    cargo doors (for packaged freight) and valves and hoppers (for bulk
    freight). Remote locks can enhance security by remaining closed until
    released by a radio signal from a secure location. Satellite
    positioning devices could further enhance security by verifying that
    the vehicle is at its proper destination before the locks are released.
        Since September 11, FRA has been coordinating with freight,
    intercity passenger, and commuter railroads, railroad industry groups,
    railroad labor unions, and shippers of hazardous materials by railroad
    to review current security programs.
        The freight railroad industry has established task forces to study
    security threats to their physical assets, to train operations, to
    information technology systems, to high-value and dangerous cargoes,
    and to national security shipments. A classified study in draft form is
    now under review and future actions by FRA and the industry will use
    these critical action team analyses to plan enhancements to the
    increased security already in place. Similar studies are underway
    within the short-line and regional railroads and by the commuter rail
    carriers.
        Working with FRA, individual railroads have already increased
    inspections and surveillance at sensitive locations such as bridges and
    terminals.
        In the coming months, FRA will study the findings in the
    vulnerability assessments already underway. The rail transportation of
    chemicals for American and foreign industries is vital to the global
    economy and, thus, to the larger security of the United States. While
    it is impossible to eliminate the risk of terrorist attack on our
    railroad transportation infrastructure, FRA is committed to using its
    assets as efficiently as possible to improve the already superb record
    of rail transportation safety. FRA has begun the steps to establish an
    on-going dialogue with America's chemical shippers to coordinate rail
    security efforts among shippers and carriers. Finally, FRA will examine
    the progress that can be made on three fronts: First, by enhancing the
    ability of rail carriers and the Federal government to track known
    risks such as shipments of highly volatile or poisonous hazardous
    materials. Second, by improving the ability of the railroads and of law
    enforcement to detect undeclared dangerous cargoes. Third, by working
    with the safety and security community to reinforce the training given
    to Federal safety and enforcement personnel so that they can detect
    suspicious parameters and more easily identify a security threat.
        Working with the Research and Special Programs Administration, the
    Department has prepared legislation (introduced as S. 1669) that
    includes such security enhancements as allowing Federal inspectors to
    remove a shipment of dangerous goods from transportation if an imminent
    safety hazard exists.
           hazardous materials in transportation and pipeline systems
        A number of actions to ensure the security of hazardous materials
    in transportation and pipeline systems have been undertaken by the
    Research and Special Programs Administration (RSPA) and plans for
    longer-term actions to enhance both hazardous materials transportation
    security, as well as pipeline security, are underway.
        Steps Taken to Ensure Hazardous Materials Transportation Safety:
    RSPA issued emergency exemptions to New York City, Arlington County,
    and the States of New York and Virginia. The exemptions provided relief
    from requirements of the Hazardous Materials Regulations (HMR) to
    facilitate clean up and disposal of hazardous materials, including
    hazardous waste, at the World Trade Center and Pentagon sites.
        In addition, RSPA issued an emergency exemption to the Federal
    Emergency Management Agency (FEMA). The FEMA exemption provided relief
    from the requirements of the HMR to allow the transportation of various
    types of hazardous materials to support recovery and relief efforts to,
    from, and within the disaster areas of New York City and Virginia.
        RSPA worked closely with the Federal, State, and local authorities,
    including the Centers for Disease Control and Prevention (CDC), the
    U.S. Postal Service (USPS), and the Environmental Protection Agency, to
    respond to the anthrax emergencies in Florida, New York, New Jersey,
    and Washington, DC. With CDC, RSPA provided advice and assistance to
    USPS on appropriate procedures for transporting anthrax-contaminated
    mail and developed written guidance on how to transport anthrax-
    contaminated material for decontamination and disposal. In addition,
    RSPA issued several emergency exemptions to facilitate clean up and
    disposal of anthrax-contaminated material at sites in Florida, New
    York, New Jersey, and Washington, D.C. These exemptions required
    development of a new packaging protocol for shipment of anthrax-
    contaminated objects such as mail, office equipment, carpeting, and
    furniture.
        Since September 11, three security advisories have been issued
    warning that transportation security can no longer be treated as a
    secondary or tertiary issue and asking shippers and transporters to
    review and strengthen security measures, particularly for high-hazard
    materials. The most recent security advisory, issued on January 18,
    2002, asked the hazardous materials transportation community to be
    especially vigilant during the Super Bowl in New Orleans and the
    Olympics in Salt Lake City. The advisory suggested that shippers and
    transporters implement heightened security measures and considers
    altering routes to avoid populated areas where practicable.
        RSPA is developing a security template for the Risk Management
    Self-Evaluation Framework (RMSEF). RMSEF is a tool to assist
    regulators, shippers, carriers, and emergency response personnel for
    examining their operations, and considering how they assess and manage
    risk. The security template illustrates how risk management methodology
    can be used to identify points in the transportation process where
    security procedures should be enhanced within the context of an overall
    risk management strategy.
        RSPA is also developing a Hazardous Materials Transportation
    Security Awareness Training Module directed at law enforcement,
    industry, and the hazmat community. The training module will be web-
    based, posted on the HMS website, and presented at multimodal seminars,
    and outreach efforts will be stepped up at the local level.
        RSPA created a Hazardous Materials Direct Action Group (Hazmat DAG)
    that met with representatives of the hazardous materials industry,
    emergency response community, and State governments to discuss
    transportation security issues in the wake of the September 11 attacks
    and continuing terrorist threats. Participants addressed recently
    implemented security measures; identified gaps in current security
    arrangements; discussed specific areas of concern and worst-case
    scenarios; recommended government actions to augment industry security
    programs; and suggested policy, legislative, and regulatory changes
    that could enhance the overall security of hazardous materials during
    transportation.
        RSPA also created an internal DOT Intermodal Hazardous Materials
    Transportation Security Task Force, which assessed attack or sabotage
    vulnerabilities, evaluated existing security measures, and identified
    potential ways to reduce vulnerabilities. The reports of the Hazmat DAG
    and the Intermodal Task Force provide a sound basis for moving forward
    to enhance hazardous materials transportation security.
        On February 14, RSPA published a notice in the Federal Register
    advising hazardous materials shippers and carriers of voluntary
    measures to enhance the security of hazardous materials shipments
    during transportation. The notice is based largely on what we learned
    through the Hazmat DAG and the Security Task Force and addresses
    personnel, facility, and en route security issues, and includes contact
    points for obtaining additional, more detailed information.
        The hazardous materials industry already has voluntarily adopted a
    number of measures to enhance the security of hazardous materials
    shipments and is committed to do whatever it takes to assure that
    hazardous materials can continue to be transported safely and securely.
    Shippers and carriers have implemented a wide spectrum of actions to
    enhance security awareness and improve security for both fixed
    facilities and in-transit shipments. Individual companies and industry
    associations are conducting threat assessments, identifying targets of
    opportunity and areas of vulnerability, and taking concrete actions to
    reduce threat possibilities and increase security. Many are working
    closely with Federal, State, and local law enforcement and security
    personnel, including the U.S. Coast Guard, the FBI, the DOT Office of
    Security and Intelligence, and the U.S. Customs Service. Certain
    shippers and carriers are upgrading security in and around plant sites,
    conducting more stringent background checks on plant employees and
    motor carrier drivers, and adjusting routes to avoid populated areas
    where feasible. Increasingly, some carriers will only handle hazardous
    materials shipments from approved shippers. Many are improving the ways
    they identify and track hazardous materials shipments.
        Steps Taken to Ensure Pipeline Security: In addition to work on
    hazardous materials transportation, RSPA is addressing security issues
    for pipelines through its Office of Pipeline Safety. The security of
    the pipeline system is of strategic importance due to the large volumes
    of materials transported by pipeline and their critical importance to
    the National economy as well as defense. The events of September 11
    provided us a unique understanding of the state of security
    preparedness within the pipeline industry--and RSPA discovered there is
    work to be done. To ensure that pipelines are secure to the maximum
    extent possible, RSPA is now taking a number of measures. Additionally,
    within the pipeline safety program, RSPA is cooperating with the new
    Transportation Security Administration, to ensure RSPA provides a
    unified approach to meeting transportation security challenges.
        On September 11, RSPA responded immediately to security concerns
    for the Nation's pipeline systems by making over 1,000 telephone calls
    jointly with its State partners to pipeline operators, to assess the
    security at pipeline facilities and to monitor events. In recent
    months, RSPA streamlined this communication process, in coordination
    with the Department of Energy (DOE) and the Federal Bureau of
    Investigation, and incorporated it into its daily operations for
    distribution of security information and threat warnings.
        RSPA is securing its own information systems. One action on
    securing information concerns the National Pipeline Mapping System,
    accessed by a website. To reduce the opportunity for misuse, RSPA
    limited accessibility to the website by installing a password
    protection system. RSPA is also processing security clearances for key
    federal, state and industry security personnel, and conducting
    conference calls every two to three weeks with all the pipeline safety
    agencies to review recent developments, toward the goal of providing a
    seamless Federal and State oversight program of pipeline security.
        Reauthorization: However, all of RSPA's efforts on security for
    both hazardous materials transportation and pipelines may be undermined
    if these two programs are not reauthorized. Toward this goal, the
    Administration submitted a proposal for reauthorization of the
    Hazardous Materials Transportation Safety program, which was introduced
    by Senator Hollings and Senator McCain on November 8, 2001. The
    proposal includes a number of provisions to clarify and strengthen
    RSPA's authority to address hazardous materials security issues.
        Although current law does not preclude the Department from
    preventing intentional misuse or release of hazardous materials in
    transportation, RSPA's program is primarily focused on preventing
    unintentional releases. Therefore RSPA is seeking clarification and
    strengthening of the Department's authority to address hazardous
    materials transportation security and supports Congressional efforts in
    this area. The result will be a comprehensive hazardous materials
    safety program that addresses a broad spectrum of possible threats to
    public safety.
                                   conclusion
        The Department of Transportation is glad to have had the
    opportunity today to discuss the steps we are taking as we build a new
    operational baseline for cargo security in America. Like any network,
    the cargo transportation system is in a constant state of growth and
    change. The system we create must therefore be one that is capable of
    evolving over time, and where the expectation of that evolution is
    clearly established. Finally, the system must fully recognize the
    intermodal nature of transportation. Cargo that is unloaded from a ship
    today in a seaport will move quickly to other modes of transportation.
    There is no better example than the cargo container--a phenomenon that
    has been successful precisely because it is fundamentally intermodal--a
    cargo container arriving at a U.S. seaport today can be virtually
    anywhere in the heartland of America via truck and/or rail tomorrow.
    Accordingly, security measures must be fully integrated throughout all
    of the modes of transportation.
        I know that the witnesses will be able to expand on our efforts and
    that all of us at DOT are looking forward to working with the
    leadership and members of the House and the Senate in successfully
    building the new standard the nation requires.

                    HAZARDOUS MATERIALS DIRECT ACTION GROUP

        Senator Murray. Thank you very much, Mr. Magaw.
        Mr. Magaw, your testimony states that Ms. Engleman's
    agency, the Research and Special Programs Administration,
    created a hazardous material direct action group. According to
    the testimony you gave us, that group identified gaps in
    current security arrangements, discussed specific areas of
    concern and worst case scenarios, recommended government
    actions to augment industry security programs, and suggested
    policy, legislative, and regulatory changes. I understand these
    recommendations include some very far reaching actions. Ms.
    Engleman, maybe you could tell us precisely when you submitted
    those recommendations to the Secretary's office.
        Ms. Engleman. Thank you, Madam Chairman. This intermodal
    working group is a very active group. We set it up within about
    10 days or less following the September 11 event. We gave them
    a stringent 30-day requirement to come back with a set of
    recommendations. The recommendations did indeed address all the
    areas that you said. The group consisted of a total DOT team.
    We had Coast Guard, we had highways, we had motor carriers, we
    had rail, we had ourselves, and then we also reached out
    internally to general counsel and other areas within the
    Department of Transportation. We submitted that to the National
    Infrastructure Security Committee and added that, in addition
    to the other 10 or 15 direct action groups that were working at
    that very time. We are implementing many of those
    recommendations. We are still working on that entire set of
    goals.
        Senator Murray. When did you actually send the
    recommendations to the Secretary's office?
        Ms. Engleman. I do not have the specific date, ma'am. I
    believe it--I know it was in November, but I don't have the
    specific day that we submitted it to the Secretary.
        Senator Murray. Well, Mr. Magaw, when can we actually
    expect these recommendations to be acted on?
        Mr. Magaw. Well, I will today make an inquiry with the
    Secretary's office to see what the status of those are and will
    get back to you with that answer.
        [The information follows:]

        Two notices were published in the Federal Register in response to
    recommendations from the Hazardous Materials Direct Action Group. On
    February 14, 2002, the Research and Special Programs released
    ``Advisory Notice: Enhancing the Security of Hazardous Materials in
    Transportation'' and on May 2, 2002, released ``Hazardous Materials:
    Security Requirements for Offerors and Transporters of Hazardous
    Materials'' for comment. The Department will continue to act on
    recommendations from these reports through additional regulatory
    actions and non-regulatory actions such as initiating hazardous
    materials security focused outreach and training.

                         HAZARDOUS MATERIALS RULEMAKING

        Senator Murray. We have not seen any regulations at this
    point.
        Ms. Engleman. Madam Chairman, we have a rulemaking on one
    of those significant regulations, that is working to
    continually review and consolidate these issues. We also have
    had a variety of other actions that we've done on security
    alerts, inspection teams, working with industry, and a variety
    of direct action groups, as previously mentioned. We also have
    issued announcements. We do have what we call a risk management
    self-evaluation framework which is up and on the Web. But I'd
    like to share with you that that is not a mere guideline. This
    document is pretty comprehensive. I would submit that it is not
    just an evaluation tool, but actually a consulting tool.
        Senator Murray. It is my understanding that everything so
    far has been voluntary or advisory. There have been no
    regulations issued at this point.
        Ms. Engleman. That's correct, ma'am. As you know, we have
    to go through the administrative rulemaking procedures. That
    does take time. After you go through the notice of proposed
    rulemaking, there's at least a 60-day period, and then
    obviously rulemaking can take up to a year. However, we don't
    want to wait for the administrative bureaucracy to delay
    action, and so we've gone to industry, the actual people
    involved, to help them to start the process now. And we also
    have our own actions to work with.
        Senator Murray. What is your target date for when we are
    going to see regulations?
        Ms. Engleman. Ma'am, it's not a single target date. This is
    literally a daily activity, a weekly activity. We don't have an
    end goal as in ``we will finish everything within x days,''
    because this will never stop. This will be an ongoing activity
    to continually review, continually update, continually
    outreach, continually train, and continually attempt to secure
    the needs of the Nation.

                     TRANSPORTATION OF HAZARDOUS MATERIALS

        Senator Murray. We know that every day there are over
    800,000 shipments of hazardous materials. And we all know what
    the tragic consequences would be if a tank car carrying one of
    these lethal, hazardous materials were to spill or explode in a
    densely populated area. Mr. Clapp, Mr. Rutter, if you could
    tell us how realistic it is to think we could actually reroute
    some of these dangerous hazardous materials so as to avoid
    major metropolitan areas. Mr. Clapp.
        Mr. Clapp. Thank you, Madam Chairperson. We of course have
    existing routing regulations in place that, as you point out in
    your statement, were designed with safety in mind, as opposed
    to security. However, for this particular issue I think the two
    go hand in hand. You would want to route hazmat by the safest
    route, whether it's a security issue or an accidental release
    that we're dealing with.
        We know that there has been a considerable increase in
    activity by State and local jurisdictions with respect to
    establishing hazardous materials routing. Those are done
    according to existing Federal standards that are a part of our
    regulations.
        Senator Murray. Are you considering mandating the most
    hazardous materials be rerouted to avoid densely populated
    areas?
        Mr. Clapp. We already have regulations in place which
    govern the choice of routes for hazard material shipments.
    First of all, there is a general regulation which applies to
    the carriers' selection of routes, because some routes, of
    course, are not designated as such. State and local government
    and Indian tribes have the right to establish routes in their
    areas of jurisdiction according to these standards.
        Senator Murray. So basically you are relying on the local
    rules and regulations and are not looking at anything from the
    Federal level?
        Mr. Clapp. No. We already have regulations in the Federal
    Register that require the driver to select a route which is
    most appropriate from the standpoint of safety for the
    hazardous materials transportation that he is performing at
    that time. The routing requirements reflect the consequences of
    an accidental release.
        Senator Murray. Do you think the current security threats
    that we now have should make us think about having some more
    restrictions or stronger restrictions at this time than what we
    currently have?
        Mr. Clapp. The answer is yes. We are developing a
    rulemaking with respect to certain particular types of
    hazardous materials such as explosives. It frankly comes out of
    the task force that Administrator Engleman was discussing. With
    respect to the extension of additional security regulations
    that include routing for certain high-consequence hazardous
    commodities. We are in the process of developing an Advance
    Notice of Proposed Rulemaking to go out on that now.
        Senator Murray. Mr. Rutter, for your agency?
        Mr. Rutter. Part of how we're approaching how to deal with
    the transportation of those hazardous materials depends on two
    issues. One is, in considering the possibilities of routing
    around metropolitan areas, that we have to be concerned about
    the infrastructure in place. Many times major class one routes
    between cities that are maintained to the highest standards are
    those that are the most heavily trafficked and by their nature
    go to and through major cities. If we were to take actions to
    require those goods to move around those cities, we may be
    using rail lines that are maintained to a lower level of
    capacity or safety.
        The other thing to consider is that routing decisions in
    many cases are dependent on who's generating the chemicals and
    who's using the chemicals. In many cases, those generators and
    users are located in metropolitan areas.
        One of the things that you had mentioned in your statement
    having to do with the use and manufacture of chlorine, for
    instance, is a matter of making sure that the people who use
    those chemicals can have access to it. Most water treatment
    facilities are in major metropolitan areas. And if we take
    actions to restrict the movement of those chemicals, we may
    endanger the intended uses of them, such as for water treatment
    facilities. So we're trying to balance the needs of those who
    need to use those chemicals and to make sure that the
    transportation of them is as safe as possible.

                         HAZARDOUS MATERIALS SHIPMENTS

        Senator Murray. Let me ask one more question. Then I am
    going to run and vote and come right back.
        There has been a lot of speculation as to whether some of
    the more deadly hazardous materials could be transported in a
    form that is either less concentrated or perhaps less lethal.
    Ms. Engleman, let me ask you. Have you explored this idea with
    the chemical and hazmat industries to see if there is a way to
    transport some of these shipments in a less deadly form?
        Ms. Engleman. Yes, ma'am. We're looking at all aspects of
    the shipment: container designs, container equipment, the
    actual product itself. All of this is on the table to discuss.
        Senator Murray. Have you made any formal recommendations to
    the Secretary in terms of this?
        Ms. Engleman. Not to my knowledge, ma'am.
        Senator Murray. There have been no recommendations
    submitted on hazardous material, any recommendations
    whatsoever? I mean, we are 6 months, 7 months away from
    September 11, and we have not had any recommendations to the
    Secretary on any of this?
        Ms. Engleman. No, ma'am. Perhaps I misunderstood your
    question. I thought you were relating directly to specifics as
    far as individual products.
        Senator Murray. We should be looking at some ways to have
    safer transport of some of these hazardous chemicals. I know
    you have been looking at some things. But you have not made any
    recommendations specifically, even though we are 7 months after
    September 11?
        Ms. Engleman. Ma'am, we've made a variety of
    recommendations covering the entire gamut of hazmat material,
    everything from the actual product to its containment, shipping
    process, delivery, labeling, and packaging, the entire product.
    So when you ask about the recommendations, yes, ma'am, we've
    put together an entire package, including regulation review,
    interagency support and organization, and coordination. Please
    note, much of what we do to provide safe shipment of hazardous
    materials, and have done fairly successfully, also addresses
    many of the security concerns. That which is safe often is
    secure.
        So sometimes we don't have to have a security overlay, if
    you will, to still ensure the safe shipment. We can address it
    through our safety regulations, which are already in place.
    This is part of our review to determine if we needed to add
    additional security overlay, because as you correctly stated in
    your opening comments, prior to 9/11, we focused on safety and
    the accident versus security and the incident. So we have gone
    very precisely through to determine if any additional work
    needs to be done to provide security that would make a
    difference. In the majority of much of what we do, though,
    safety is enough. If they are safe, they are secure.
        Senator Murray. I have a number of additional questions in
    this area. Senator Shelby is going to be back in just a minute.
    As soon as he gets back, he will start his questioning, but I
    am going to recess for just a few minutes while we go and vote.

                        IDENTIFYING HAZARDOUS MATERIALS

        Senator Murray. The hearing is back in order.
        Let me just say while I am directing these questions to
    individuals, I want to emphasize that other witnesses really
    should chime in when appropriate. All these issues have impacts
    in all the modes that we have represented here this morning. I
    really do want you to feel free to comment and add comments as
    you feel are necessary.
        I will continue with questions until Senator Shelby gets
    back and then allow him to move forward.

                          BALANCE SAFETY AND SECURITY

        Ms. Engleman, let me go back to you again. Every day there
    are 800,000 shipments of hazardous materials moving on our
    highways, on our railways, and our seaways, all of which are
    required to be marked with placards to identify the type of
    hazard that is inherent in the cargo, such as poisonous gas or
    an explosive. In addition to the placards, some of the most
    dangerous shipments require additional markings. For example,
    highway shipments of chlorine require that tank trucks are
    marked in white four-inch block letters, the word ``chlorine''
    on the side of the truck. The fact of these markings are to
    warn people to stay away and to allow emergency response
    personnel to properly respond to spills and leaks. The problem
    here lies in the fact that at the same time we are achieving
    our safety goals, we are also drawing potentially unwelcome
    attention to shipments that could potentially be used as a
    weapon of mass destruction.
        Ms. Engleman, what are you doing to balance the safety and
    security issues that seem to be at odds here?
        Ms. Engleman. Thank you, Madam Chairman. You are absolutely
    correct that it is a balance of issues that we're trying to
    address. We're very sensitive to the concerns that placards may
    indeed help identify hazmat material shipments as a target, if
    you will, of opportunity for terrorists or criminals. But we
    have to weigh the additional security risk against the
    demonstrated safety benefits of placarding, for the emergency
    responders, for anyone on the accident site, for anyone who
    would be involved in trying to support recovery efforts. And so
    to protect firefighters, policemen, emergency personnel, rapid
    identification of the hazmat material is absolutely critical.
        We also believe that a sophisticated terrorist will not
    rely on our placarding system to identify the vehicles or the
    container or the shipment, in order to do harm, if you will,
    with the product. So, as such, removing the placards and
    removing hazardous communication markings could truly place our
    firefighters and policemen, ambulance technicians, and other
    emergency responders at risk and increase their vulnerability
    at an accident site.
        Senator Murray. Is there any technology available to switch
    to a more nondescript method of identifying hazardous cargos
    that also meets the needs of the emergency response community?
        Ms. Engleman. We are reviewing a variety of possible
    technologies that could assist us in this, everything from
    advanced sensor reading or tracking devices, and we are
    reviewing the possibility of utilizing this to support our
    efforts. So this is something that's on the table. But the main
    consideration that we have right now is if there is an
    accident, because we hope sincerely that accidents will remain
    our concern, rather than incidents.
        The majority of the time that we will need to be on site
    will be a safety issue, an accident, and we don't want to deter
    from the ability of first responders to be on site or to cost
    them time.

                             PAYING FOR TECHNOLOGY

        Senator Murray. Who should pay for that new technology?
    Should it be us, the Government, or the industry?
        Ms. Engleman. Usually, when you invest in technology--I
    actually come from an R&D background--I think that it's
    something that you have to consider the cost versus the
    economic benefit to the industry. We need to look at what's
    going to be the best way to achieve that through a cost/benefit
    analysis.
        Senator Murray. Beyond that, though, is this something we
    should be thinking about in terms of our budgeting? Should the
    Government be responsible for paying that, or are we going to
    require industry to do it?
        Ms. Engleman. I can't answer definitively at this time.
    However, if you look at past practices on these issues, no
    matter where they are, whether they're safety, security, or
    other issues, we have a whole breadth of responses. Sometimes
    the Government pays 100 percent; sometimes it's industry;
    sometimes it's a 50-50 split. It's based on the cost/benefit
    and what's the best way to achieve the goal and not be onerous
    to either party.
        Senator Murray. Mr. Clapp or Mr. Rutter, do either one of
    you want to respond to this issue? Mr. Clapp.
        Mr. Clapp. We have discussed this internally, and I believe
    Administrator Engleman's views are entirely consistent with our
    own.
        Mr. Magaw. Madam Chairman, can I just make a comment here?
        Senator Murray. Yes.

                         DRIVER AWARENESS AND SECURITY

        Mr. Magaw. You know, the other thing that we want to
    address very quickly also is the driver of these vehicles.
        Training them in terms of what to look for, most of the
    time. When you will use something like this to do harm, you
    will case it. You will find out where they are parking it. You
    will find out when they are leaving terminals, and when they
    are coming back to terminals. Drivers who are on the highway
    can look for things that a tailing vehicle or an observation
    vehicle would give away, that there is some kind of planning
    going on or in fact an act about to occur.
        So more driver awareness, more driver security is needed.
    How secure are we in terms of that particular driver? Could a
    sleeper cell or a terrorist group come on board and actually be
    drivers of these vehicles? So we are going to look at that area
    very closely also.
        Senator Murray. Will we be seeing some recommendations on
    this?
        Mr. Magaw. Well, it is one of the items that we have
    identified and we are going to look at. I can't imagine that we
    wouldn't have some very good suggestions coming out of this.
        Senator Murray. Mr. Rutter, do you want to comment?
        Mr. Rutter. Well, Senator, one of the, I guess, ongoing
    success stories that had of predated 9/11 was the efforts of
    both kinds of modes of transportation, in the industry itself,
    working with local emergency planning committees and with first
    responders. One of the programs that is in use now is called,
    ``Operation Respond'' and provides those with the need to
    know--the first responders information about the consist--down
    to ``This is what that car is,'' ``This is what it's
    carrying,'' ``Here's how it's manufactured,'' ``Here's the
    chemical information about that commodity.''
        There are in existence some technological approaches that
    provide first responders some of that information. But the key
    is how do you help those first responders visibly know what's
    on those trains--what's on a train or what's in a truck? And so
    the technology has to be based on the ability of a first
    responder to gain information about that particular shipment.
        There may be possibilities of doing away with the placard,
    but, you know, who wants to go marching up to the car to wave
    some sort of AEI indicator? We're trying to find ways of
    building on what's already in place, that relationship between
    the shippers, the carriers, and the first responders, to find
    additional ways of enhancing the capabilities of those systems.

                    EXEMPTION OF CERTAIN HAZARDOUS MATERIALS

        Senator Murray. Ms. Engleman, let me go back to you. I
    understand that there are regulations that have been in place
    since 1990 that exempt smaller quantities of certain hazardous
    materials from having to be registered or placarded. In
    addition, I am told your agency exempts the intrastate transfer
    of ammonium nitrate in quantities far larger than Timothy
    McVeigh used to blow up the Murrah Building in Oklahoma City.
    Given the new level of concern regarding terrorist attacks,
    should your agency not review whether these hazardous materials
    should be exempted from your regulations or whether the
    threshold should be lowered even further?
        Ms. Engleman. Senator, part of the challenge, of course,
    will be record keeping for any type of registration and
    tracking of such. We don't want to impose any severe burdens
    especially on small businesses. As you are aware, there are
    over 40,000 small businesses that act as our shippers, if not
    more.
        Senator Murray. So we have not moved because we are worried
    about regulating industry?
        Ms. Engleman. We should always be concerned about over-
    regulating industry, ma'am, to ensure that we have economic
    prosperity balanced with----
        Senator Murray. Should the concern be regulation or should
    the concern be security, in light of what we now know about
    terrorist activity?
        Ms. Engleman. I believe we have to balance both regulatory
    and security concerns.
        Senator Murray. Which way do you tip?
        Ms. Engleman. I believe we have to balance both regulation
    and security concerns and the need for economic prosperity.
        Senator Murray. Mr. Magaw, do you want to comment?
        Mr. Magaw. Well, I think that we have to be careful of the
    bottom line of the business person in this country. I would
    lean towards the security side, but would ask also that
    Congress help fund that side.
        Senator Murray. Mr. Clapp or Ms. Engleman, shouldn't we be
    concerned about the fact that your agency exempts potential
    explosives such as ammonium nitrate from many regulations? Mr.
    Clapp.
        Mr. Clapp. Well, we do not exempt potential explosives. I
    think your statement was to the effect that some States permit
    the intrastate transportation of ammonium nitrate----
        Senator Murray. Intra, right.
        Mr. Clapp [continuing]. In larger quantities than they are
    allowed under the Federal regulations. Prior to October 11,
    1998 we did not have preemption authority over intrastate
    regulations, although our grant program, in fact, specifically
    requires the States' regulations to be in concert with our own.
        I think it is definitely worthy of consideration. If there
    are instances where some States do permit larger quantities of
    ammonium nitrate to be shipped intrastate than are permitted
    under Federal regulation, then yes, we should look at that.

                         HAZARD MATERIALS ACTION GROUP

        Senator Murray. Ms. Engleman, how did your hazmat direct
    action group address the issues in your recommendations to the
    Secretary?
        Ms. Engleman. First of all, we put together an intermodal
    hazmat group, which was the 30-day group which I mentioned
    earlier. That consisted of all modes within the Department of
    Transportation, as well as legal staff. We provided the formal
    documentation, which I do need to clarify, and state that we
    are implementing many of these.
        I don't want to mislead you, to say that we're waiting just
    for regulations. Much of what we're doing was internal
    coordination, communication, and security advisories. We
    actually have put out a product every month since the event,
    whether they be specific security notices, advisories, or
    interviews, or working with the major associations, as well as
    individual companies, and other agencies. We provided the
    formal notebook and plan to the National Infrastructure
    Security Committee, which the Department established under
    Secretary Mineta's leadership. We additionally added what we
    call the direct action groups.
        The direct action groups broke down all the major issues
    into topic area, as well as specific issues. Each of those
    direct action groups also added to our body of knowledge. We
    provided all of these information materials and recommendations
    to the modes and to the Secretary; interdepartmentally we are
    implementing much of what we had discussed, because much of
    that we can do without requiring regulations.
        Senator Murray. Senator Shelby.

                            NATIONAL RISK ASSESSMENT

        Senator Shelby. Thank you, Madam Chairman.
        In my opening statement, I stated my belief that it is
    essential for the Department to develop a national risk
    assessment of the entire transportation system. This would form
    the basis of a plan to make the system more secure and should
    provide a method to address the greatest risks immediately.
        Mr. Magaw, has TSA begun this process? Also I would be
    interested in hearing how this effort is coordinated with the
    Office of the Secretary and various modal administrations, if
    you care to comment.
        Mr. Magaw. The Office of Homeland Security, which we have
    interfaced very closely with and will continue, is doing
    assessments right now. What we want to do is fit into it as
    part of the national plan. We believe that you have to have a
    risk assessment. It has to be a national risk assessment in
    order to coordinate all the kind of things that you are
    concerned about.
        What we are doing now is--at TSA--is we are hiring
    personnel. I have told the administrators, ``We need to hire
    personnel who have law enforcement background, but people who
    also have trucking background or railroad background.'' So I am
    working with them to hire the proper staff, after which then we
    can move forward and coordinate and work with other entities to
    make sure that we have a national plan and that we develop our
    priorities and our budgets and our strategic plan based on
    that.

                            TRANSPORTATION SECURITY

        Senator Shelby. Mr. Magaw. And I'll direct this question to
    all of you on the panel. Aside from aviation, what do you
    perceive to be the most immediate and serious transportation
    security issue? And what immediate actions or steps are you
    pursuing or should the Department be pursuing to mitigate the
    risk while a more comprehensive risk assessment is being
    undertaken by the TSA? You have immediate problems; you have
    got long range problems. Mr. Magaw, you want to lead that off?
        Mr. Magaw. Yes, sir. When any terrorist group plans to
    attack, it is an area that is or an area that will make the
    most impact--and we could see that clearly on September 11. My
    concern is that as we are paying more attention to aviation.
    Funds are being appropriated for security surveys and
    protections. The issue that you are sitting here about this
    morning, cargo and transportation of goods, is my immediate
    concern--in terms of where loopholes might be. The cargo area
    and the baggage area are places that they would try to find
    weaknesses. In fact, we find that there are elements of the
    terrorist groups that are canvassing airports and
    transportation systems.
        The other area that concerns me is rail. If you look at
    Union Station here in D.C., without me being overly specific
    about it, you will be able to see why my concern is here also.
        Senator Shelby. What about the other panelists? Do you have
    any other comments on it, Mr. Rutter?
        Mr. Rutter. Well, within a week after September 11, the
    most immediate concern I had was making sure that we did
    conduct that kind of risk assessment. Unlike other modes, the
    railroad infrastructure is privately owned instead of publicly
    funded. They were in a position to know more about their
    systems. They had the ability to apply some very significant
    resources toward doing that level of assessment. And we
    directed them and have been cooperating with them as they have
    done that. That product at the industry level has been
    completed as of December, and the FRA has engaged a consultant
    to test the results of that vulnerability assessment and
    mitigation measures that are necessary, to make sure that not
    only the carriers' economic interests are being balanced, but
    that the public interest is being protected.
        As we do that, we're also conducting outreach to shippers,
    chemical manufacturers, and labor, at the same time.
        Immediate steps we also took before we waited for those
    projects to begin are--I guess I'd point out two. The carriers
    themselves have ratcheted back on the transparency of
    information about their operations. As those of you who are
    familiar with STB efforts on shipper concerns, one of the
    things shippers have been asking for is, ``Where's my stuff? I
    want to be able to know where my goods are.'' And so railroads
    have, over the past couple of years, done very well at creating
    Web-based information systems on, ``Here's where your stuff is
    exactly. It's in this town right here.''
        The problem was, up until September 11, those were fairly
    open to just about anybody. And what the carriers have done,
    working with those shippers, is to put on more control of who
    has access to that kind of information. And it's not as widely
    distributed as it was.
        The other thing that's been done is to take advantage of
    the employees that are out there on the railroad system itself.
    Generally over 200,000 people are in a position to see what's
    happening, and to know who's supposed to be on their properties
    and who's not. And the carriers working with those labor groups
    have done a very good job of helping to train those employees
    to know what to look for, know who to report that to, and to be
    able to pass that information to railroad police forces, who
    are given interstate law enforcement capabilities. They are
    licensed and commissioned officers and have the ability to so
    something with that information. So we've controlled the amount
    of transparency to those who would use that information against
    us. And we've taken advantage of leveraging the abilities and
    the capabilities of the employees out there to keep their eyes
    and ears open.

                         TRANSPORTATION VULNERABILITIES

        Mr. McMahon. Mr. Senator, as the Under Secretary indicated
    and some of the administrators mentioned, a week following the
    September attacks Secretary Mineta established the National
    Infrastructure Security Committee to deal specifically with the
    security issues in the surface transportation field.
    Administrator Engleman and others have mentioned that. And that
    included maritime, hazmat, pipelines, surface transportation,
    which is highway and motor carriers, rail, and transit. And
    that included people from industry, hundreds of people, over
    hundreds of hours of meetings throughout the fall, and many
    recommendations. But from that, one of the clear problems or
    challenges was containers--sea containers, trucks, and rail
    containers coming across borders.
        So in December, the Department established an Interagency
    Container Working Group, which is co-chaired and includes
    participants from industry and from other Federal agencies,
    including not only Transportation and Treasury, but Defense,
    Agriculture, Justice, Commerce, Health and Human Services and
    again, many people from the private sector.
        The four subgroups in our container working group have
    included information technology, security technologies,
    business practices, and international affairs. And we submitted
    an initial report to the Office of Homeland Security on
    February 1. So the Department is taking the issue of container
    security, which we hear quite a bit about in the press,
    extremely seriously.
        Senator Shelby. Mr. Clapp, do you have any comments on
    this?
        Mr. Clapp. Yes, Senator. Your question had to do with
    vulnerabilities.
        Senator Shelby. That is right.
        Mr. Clapp. And it seems to me that----
        Senator Shelby. What are you doing immediately and then
    long term?
        Mr. Clapp. Well, unlike my friend Allan at the railroads,
    we have somewhat the opposite circumstance----
        Senator Shelby. You do.
        Mr. Clapp [continuing]. In motor carriers. We have hundreds
    of thousands of motor carriers in this country. We are a free
    and open society and an entrepreneurial-based society. As both
    of you recognized in your statements, the efficiency, speed,
    and reliability of transportation have been uppermost in our
    minds and indeed in our performance of our transportation
    systems. So one has to regard that as a vulnerability.
        The way we have tried to approach that in my particular
    agency is to go out and have face-to-face meetings with over
    40,000 carriers of hazardous materials that we would identify
    as being of relatively high consequence. And we have sat down
    with the officials of those carriers. We have reviewed their
    security programs, or the lack thereof, within their programs.
    We have reviewed a series of recommendations suited to their
    particular kind of circumstance, for a security planning,
    implementation, training and vigilance. We have also reviewed
    the driver rosters of those carriers.
        We are just about concluded with the first round. As of
    March 31, we have about 400 or so to go and we have made 128
    referrals to the FBI of potentially suspicious people,
    activities, applicants or other things of that nature. We have
    already seen the benefit of having done these visits, in that
    we have seen evidence of where the carriers have acted upon
    this information. They have reported when they saw suspicious
    activities, as Mr. Magaw referred to earlier. If somebody seems
    to be following the truck or is taking an unusual interest in
    it; it seems to us that was the most rational approach to this
    very open system that we have. We have to help the carriers
    adjust to the new normalcy; things will never be like they
    were, and vigilance is the price of freedom.
        Senator Shelby. Admiral.

                             MARITIME VULNERABILITY

        Admiral Pluta. Thank you, Senator Shelby, Madam Chairman.
    As you know, we consider the maritime mode of transportation
    very valuable to our country, as over 90 percent of the imports
    and exports into our country come through the maritime mode.
    It's also most vulnerable.
        As we went through the Seaport Security Study that was
    conducted several years back, in addition to our response and
    our prevention activities that we undertook in the Coast Guard
    after 9/11, we set aside five basic goals for maritime
    security. In a very methodical way, and with a lot of outreach
    and consultation, we figured that the best investment would be
    made in awareness. And so Maritime Domain Awareness is very
    important to us, knowing what's coming our way, not only cargo,
    but people, ships, and also the ports from which they came.
        Our second goal was to control and pay attention to the
    movement of high interest vessels, which gets into hazardous
    material, cruise ships, and other environments; they could be
    used as weapons or as targets.
        Our third goal is increasing Coast Guard presence, both as
    a deterrent to somebody who wants to do something untoward and
    also to provide better response, as in our new Maritime Safety
    and Security Teams that will be coming out this summer.
        Our fourth goal is critical infrastructure protection of
    our country. There are thousands of pieces of critical
    infrastructure that we need to protect that are either at the
    water's edge or on the water. And finally domestic and
    international outreach, because the solution to a U.S. attack
    has to be a global solution, not just a domestic solution.
        Since 9/11, we undertook a very rapid rulemaking to require
    a 96-hour advance notice of arrival if someone is sending a
    ship to our country. Formerly, it was limited to some ships and
    was a 24-hour advance notice of arrival. We moved that out to
    give us more time to process the ships, the names of the crew
    members, the names of the passengers, and the cargo and such.
    We also established an 800 number at our National Response
    Center for people to call in suspicious acts and that's been
    used quite frequently by people who see things that don't look
    right on the waterways of our country and in our ports.
        We also have been working with a commercial carrier to
    develop a means of ship alerting, a silent alarm similar to
    what aircraft pilots might have to squawk a code if they're
    being hijacked. We have a device that one of the companies
    worked with us on to send a silent alarm on a ship back to our
    national response center to alert them that something is
    happening on board.
        In addition, our captains of the ports have broad statutory
    authorities and responsibilities and, not waiting for
    regulations, have used the vehicles of the captain of the port
    orders, security zones, and safety zones, to implement
    additional security requirements, and have established port
    security committees in the ports of our country so that all the
    stakeholders could get together and figure out how to improve
    security without being told what to do.
        At the same time, we're using a vehicle that we have,
    called a navigation and vessel inspection circular, to go out
    with interim guidelines on things such as port facility
    security, vessel security, and such, so that everybody who is
    desperately in need of an answer to ``what do I do?'' will have
    some guidance from us on what to do on a temporary basis. We'll
    follow that up with a notice of proposed rulemaking later this
    year, which would go to final rule with the timing of the
    Administrative Procedures Act in--next year in 2003.
        On the international front, because this won't just take a
    domestic solution, Admiral Loy and I went to IMO and made a
    strong presentation to get their attention focused on maritime
    security last November at the assembly meeting, and we got
    overwhelming support in an assembly resolution to accelerate
    IMO's activities. I headed the U.S. delegation to the very well
    attended inter-sessional work group on maritime security, in
    February, where we started the process of coming up with
    international standards for vessel security plans, facilities
    security plans, port vulnerability assessments and all the 14
    different maritime security concepts that we imbedded in our
    U.S. paper.
        We'll follow up with a meeting in May at the Maritime
    Security Council of IMO to conclude our work of the Maritime
    Security Work Group, and a diplomatic conference is set for
    December to put those requirements into effect on an
    international basis, all of which, in my opinion, compared to
    other IMO work I've done, is light speed time for IMO. They've
    been very responsive, and the countries have been very
    responsive to our needs.
        So that's, in effect, in a nutshell, Senator, what we've
    done. And I don't care to go any further unless you care to
    pursue any of those.
        Senator Shelby. Ms. Engleman, do you have any comments?
        Ms. Engleman. Yes. I'll try to keep mine brief, sir.
        Senator Shelby. Okay.

                             PIPELINE VULNERABILITY

        Ms. Engleman. In addition to all the internal work that we
    did, I would be remiss if I did not additionally share with
    you, that we've gone through worst case scenarios, best case
    scenarios, and vulnerability assessments for both hazardous
    material as well as our pipelines. I know Senator Murray is
    specifically interested in that.
        On the day of the event, we made over 1,000 individual
    calls to pipeline owner/operators, personal calls, to ensure
    that they understood the security necessities that we had to
    immediately address. For pipelines, we have done vulnerability
    assessments, working closely with industry on a one-on-one
    basis literally with the individual operator, not just with the
    associations or the like. We have biweekly telephone
    conversations, meetings coordinating security needs and
    addressing them. Each of the major owner/operators have put
    together individual security plans and have brought them to our
    attention. We are reviewing them and working with them to
    improve them.
        On the hazardous materials side, we've had workshops
    identifying best practices. We've printed brochures, produced
    videos, and put out CDs. We've had over half a dozen multimodal
    seminars throughout the Nation, with over 300 shippers in
    attendance at each. We will continue to have this outreach.
        In January, we put together a whole plan of action. And
    yes, it is voluntary. But if you look at the details of the
    security plans that we have put together, we have provided how-
    to books, if you will, that are either low cost or free--
    they're on our Web site--to all hazardous materials shippers.
    That was in January. In February, in the Federal Register,
    again we have specifically put in a security plan, personnel
    security, facilities security, and en-route security.
        If you look at the very specific items, you will see that
    we are addressing security in a total fashion.
        So in addition to the advisories, and addition to the
    internal review, we are putting a product into the system at
    the one-on-one level, to ensure that people know how to do what
    they need to do to add security to their already in-place
    safety practices.
        Senator Shelby. Thank you.

                              SHIPPER INFORMATION

        Mr. Magaw. There has been a lot of concern also, Senator,
    that only 2 to 4 percent of the containers are checked at
    ports. To try to check a much larger number than that would
    require a huge in number of people. What everyone here, both
    nationally and internationally, has been working on is to try
    to have better quality information about the shipper. If you
    have better quality information about the shipper and the
    contents that are being shipped, some of the things apply that
    each of them have mentioned. Then your 2 to 4 percent really is
    not a bad figure, because you would only be examining those
    which caused you to have suspicion, based on the information
    that, for instance, Admiral Pluta gave. They will know very
    quickly about that international cargo by the various means
    that they have, very high quality information. Therefore,
    Customs probably only has to look at a very small percentage,
    those that will jump out to them as being risky.

                      300-FOOT PERIMETER RULE AT AIRPORTS

        Senator Shelby. The 300-foot perimeter rule--the airport
    security bill provided for a process whereby airports could
    gain relief from rules prohibiting parking within 300 feet of
    airport terminals after consulting with local law enforcement
    and after adequate safeguards had been put in place. This issue
    was raised in an earlier hearing, and Secretary Jackson's
    response would lead us to believe that the Department had a
    fairly standard process for reviewing airport applications for
    relief.
        It has been brought to our attention since then that
    airports across the country are still waiting for the TSA to
    comprehensively review this issue and consider individual
    applications for relief.
        Mr. Magaw, is Transportation Security Administration still
    working on a case-by-case basis with airports that have been
    denied relief to this point? And can you give us some sense of
    when you will have developed an economically viable 300-foot
    rule approach for the Nation's airports?
        Mr. Magaw. What we are doing is looking at each airport,
    because each of them are different, Senator. We have most of
    those resolved now. I think there are only five or six----
        Senator Shelby. Okay.
        Mr. Magaw [continuing]. Out there that haven't been
    relieved because 300 feet for some of them is in somebody
    else's yard or a field. So that is important to us, and we are
    addressing it, sir.

                       EXPLOSIVES TRACE DETECTION SYSTEM

        Senator Shelby. Trace detection equipment is very
    important, is it not? I note that one airport is using trace
    detection equipment as their primary explosive detection
    regime. Should we interpret this to mean that the Department is
    open to an explosive detection system regime that does not rely
    exclusively or even primarily on certified EDS equipment?
    Should we interpret this to mean that explosive detection and
    baggage security should be a multilayered and varied system? In
    other words, how do we read this?
        Mr. Magaw. Yes, it should be multilayered. My concern is
    that 10 months from now we will reach the goal that the law has
    asked us to reach, and lo and behold, we will have technology
    that is going out of existence or that there is some better
    technology on the market. So we are looking at everything.
        Right now there is no one item, no one technology that
    covers all of our concerns and the concerns that you have. So
    we are trying to figure out what two technologies together or
    three technologies together would meet the needs for the kind
    of risks that that particular airport has and also what the
    airport is able to put in.
        For instance, Dulles Airport. To put the proper number of
    Explosive Detective Systems (EDS) machines in there to screen
    all the bags would totally fill their lobby. So what is a
    practical way of doing this? We're trying to do the best job we
    can at that.
        Each one of the technologies has a deficiency. There hasn't
    been a lot of money in the past years put into research in this
    area.
        I believe that with the entrepreneurs out there, and more
    money going into research, that 2 or 3 years from now we will
    have a much different technology in terms of size and in terms
    of error free than we have now. So we are trying to watch all
    of those as we move forward and mix and match them as best we
    can.
        For instance, EDS takes much less personnel than does the
    trace detection. Each one of them has their deficiencies, and
    we would be happy to talk to you in private about them.

                          EXPLOSIVES DETECTION SYSTEMS

        Senator Shelby. Speaking of EDS, the Department of
    Transportation Inspector General Ken Mead has indicated that
    the airport site preparation cost required for installation of
    EDS machines may be almost as costly as the machines
    themselves. How does TSA propose to handle the construction
    cost at airports associated with installation of EDS machines?
    Of course, we have got a December 31 date.
        Mr. Magaw. Right now the general plan, Senator, is to
    install a machine in the lobby we will go up to $175,000, which
    is more than what is needed to install it. If, let us say, we
    are putting three machines into an airport and two of them cost
    $125,000 each, we will provide the other $50,000 if the airport
    wants to and it looks feasible, to put an in-line system behind
    the counter or something like that, which costs a little more.
    But we are going to try to stay at the $175,000 for each
    machine, whether that involves moving walls or whatever it
    might involve. So that is where we are working right now.
        Senator Shelby. Thank you, Madam Chairman.

                               THREAT CONDITIONS

        Senator Murray. Thank you, Senator Shelby.
        A few weeks ago, Governor Ridge announced the establishment
    of a Homeland Security Advisory System, setting up five threat
    conditions. Each condition sets in motion protective measures
    designed to reduce the vulnerability to security threats and
    increase the response capability. Prior to Governor Ridge's
    announcement, the railroad industry set up its own four-tier
    alert plan.
        Mr. Magaw and Mr. Rutter, how does the railroad industry's
    plan fit or not fit with the threat plan designed by Homeland
    Security?
        Mr. Magaw. The Homeland Security program, as it was put
    together, involved virtually all of the Federal agencies. It
    was reached through a lot of discussion, primarily with the
    intelligence units, because intelligence is where we hope to be
    able to offset some of the weaknesses that we feel we have in
    some of our transportation modes. I believe the Homeland
    Security one will work very, very well as a national one across
    the country. But maybe Administrator Rutter could comment on
    the railroad one.
        Mr. Rutter. One of the things, certainly, that we're
    expecting to get out of our own internal third-party assessment
    of the railroad risk analysis and vulnerability assessment is a
    judgment on how we can take what has been identified as a plan
    for the railroads to do, and mesh it with what Homeland
    Security has pointed out.
        It's my impression, although we'll certainly wait for that
    product to be prepared, that our approach on rail security ties
    into what Homeland Security has provided, because those varying
    levels on the one hand depend on response, but the main thing
    that it gives us is: how do we get the intelligence information
    in the first place?
        So we'll be looking to adjust those plans to take into
    consideration what Homeland Security has already provided.

                        COMMUNICATIONS BETWEEN AGENCIES

        Senator Murray. I understand the decision to move from one
    threat level to another is currently being communicated to the
    various transportation industries through the Secretary's
    Office of Intelligence and Security. And I have heard
    complaints that the Office of Intelligence and Security is not
    getting sufficient input from the FBI to determine whether the
    heightened security levels are necessary. Is that true?
        Mr. Magaw. Madam Chairman, that is not true. Our
    intelligence unit not only interfaces very closely with the
    FBI, but we have personnel there and they may from time to time
    have personnel in our shops. What we want to do is to make sure
    that in our structure we have an Associate Under Secretary
    position for intelligence. It is one position below my
    position. That is how important we believe it is.
        We are searching now for a person who has international
    intelligence experience that will be recognized as equal and
    capable of being involved at every level, whether it be at the
    White House, in Condoleezza Rice's intelligence part or whether
    it is at the CIA or the FBI. Right now Transportation Security
    Administration intelligence is involved in all of those
    committees.
        Senator Murray. Will TSA be taking this over at some point?
        Mr. Magaw. TSA already has it. That was part of the
    changeover from FAA, the intelligence part of it. It is now
    mingled very closely with all the other intelligence units. So
    our Associate Under Secretary for Intelligence and Security is
    going to have intelligence for all of Transportation and will
    be very closely intermingled with Homeland Defense, CIA, NSA,
    FBI. So you will not find cracks there.
        Senator Murray. Mr. Clapp, how you intend to make this
    alert plan relevant and applicable to the independent owner-
    operators with hazmat endorsements?
        Mr. Clapp. Well, we look a whole lot more like the general
    population. I don't have a direct line to every owner-operator,
    but we do have existing lines of communication with the
    industry, both at the State level and at the Federal level and
    with all kinds of organizations that represent drivers, as well
    as where drivers congregate in their companies.
        Senator Murray. Yes, Captain.

              TRANSPORTATION INFORMATION OPERATIONS CENTER (TIOC)

        Mr. McMahon. Madam Chairman, I wanted to mention that one
    of the efforts at the Department is to set up what will be
    called a Transportation Information Operations Center, or TIOC.
    And the purpose of the TIOC is to be able to deal with not only
    security information, but other relevant information, to push
    it out from the Department to the industry and from the
    industry back to the Department and then to share information
    with Federal agencies.
        So in the case of motor carriers, through their
    associations and perhaps even through the Teamsters Union or
    something like that, our TIOC is envisioned to have the ability
    to communicate a security alert, to an association, to some
    group that can then disseminate it further. So we are working
    on ways to effectively do that. And our interim TIOC will be on
    line 24/7 April 1. And we're in the process of constructing a
    full center which should be completed by the end of the summer.

                                  SMART BORDER

        Senator Murray. Mr. Magaw, in your formal opening
    statement, you discussed the Administration's new Smart Border
    declaration. That is an initiative designed to expedite the
    travel of cargo across the United States-Canadian border. I am
    concerned about cargo that is destined to the United States,
    that will be sent to Canadian ports instead of United States
    ports, because the security requirements will be more lax. Can
    you assure this subcommittee that containers coming into the
    United States via Canada and containers entering U.S. ports
    will be subject to the exact same security requirements?
        Mr. Magaw. I will just comment and then have Admiral Pluta
    talk about it for a moment. Clearly any program that TSA puts
    together will be put together with fairness to all. I
    understand the importance of the Mexican border and the
    Canadian border and the countries we deal with. But if the
    admiral would discuss it.
        Admiral Pluta. Yes, sir, I'd be happy to. Madam Chairman.
        Senator Murray. Admiral.
        Admiral Pluta. We have for a long time been collaborating
    with Canada. And during last May's visit to the IMO, I signed a
    MOU with both Canada and Mexico on port security. In
    preparation for our IMO meeting, we had a video teleconference
    with the Canadian delegation as well, to make sure that we were
    in sync, so that we wouldn't have the disparity of having
    people compete on the basis of security. And this is exactly
    why we're going to IMO, to have an international standard so
    that everybody has the same basic level of security in the
    maritime mode, so that mode of international transportation
    won't be something upon which somebody can compare security. It
    will all be the same. That's the approach that we're talking,
    Madam Chairman.
        Senator Murray. Will containers entering U.S. ports be more
    likely to be inspected by the Customs Service or Coast Guard
    than containers coming through Canada, entering through Canada?
        Admiral Pluta. I'm sorry. I didn't catch your question,
    Madam Chairman.

                              CONTAINER INSPECTION

        Senator Murray. Will containers that are coming into U.S.
    ports be more likely to be inspected than containers coming
    across the Canadian border?
        Admiral Pluta. In the scenario that we're trying to work
    with Canada, we would both subject containers to the same level
    of inspection. In fact, Madam Chairman, there was a DOT
    delegation that Admiral Loy was a member of that set up a 20-
    point program of cooperation with interborder type issues,
    security issues, with Canada. And I think the objective of this
    program is to avoid exactly what you're talking about, Madam
    Chairman.
        Senator Murray. Will the ratio of U.S. Customs officers to
    containers be the same for U.S. ports and Canadian ports?
        Admiral Pluta. I can't answer that question, Madam
    Chairman, for Customs. Maybe Mr. Magaw could help me out here.
        Mr. Magaw. No. I think we'd have to ask Customs that
    question.
        [The information follows:]

        The U.S. Customs Service anticipates that the ratio of inspectors
    to containers in Canadian ports will be higher than the ratio of
    inspectors to containers in U.S. Ports. In Canada, Canada Customs and
    U.S. Customs rely upon a manual review of paper manifests. This is the
    result of several factors including the fact that the percentage of
    carriers that transmit manifests electronically is lower in Canada than
    in the U.S. Since the U.S. system is highly automated, U.S. Customs
    expects that fewer inspectors will be needed in U.S. ports.
        The number of inspectors conducting targeting operations in the
    U.S. and Canada currently differs. At this point, there is one Canadian
    Customs inspector located in Tacoma/Seattle, Washington and one in
    Newark, New Jersey. U.S. Customs has staffed both Montreal and
    Vancouver with three inspectors, while Halifax is staffed with two
    inspectors. These staffing levels may change as the program evolves.

                               CONTAINER SECURITY

        Senator Murray. Captain.
        Mr. McMahon. Madam Chairman, just one point on that, and I
    think it was brought up earlier as far as container security.
    The best way we can ensure container security, whether a
    container is coming from Canada, Mexico, or through our ocean
    ports, is information and to know what, in fact, is in that
    container and who shipped it. And that knowledge, that feeling
    of security, is not contingent on whether it's coming into a
    U.S. port or a Canadian port. We're just as interested in
    transhipped containers coming through Canada, and perhaps in
    some cases more so, for these same reasons.
        So that's one of the efforts of our container working
    group, working with Customs and other agencies, to ensure that
    information is as accurate as possible.
        Senator Murray. Admiral.
        Admiral Pluta. Madam Chairman, I was just informed that
    Canadians and the U.S. Customs Service have an exchange
    program. We have just exchanged three customs officers from the
    United States to work in Canada as well as those coming over
    here in an exchange program, to try to sort out those things
    and make sure that we're dealing with the cargo issues in the
    same manner.
        Senator Murray. Very good.
        Admiral Pluta. Thank you, Madam Chairman.

                    ADVANCED NOTICE OF ARRIVAL REQUIREMENTS

        Senator Murray. Admiral Pluta, the Coast Guard recently
    changed the advance notice of arrival requirements from a 24-
    hour advance notice of arrival to a 96-hour time period. At the
    same time, you are requiring ships to send a list of all their
    crew members so they can be checked against national security
    screening lists. That requires the screening of over 9,000
    names a day.
        Earlier this week it was reported that the screening
    process is so cumbersome that oftentimes the ships have come
    and gone before the screening confirmations have gotten back to
    the Coast Guard. It was also reported that there is very little
    the Coast Guard can do when they are given fictitious names of
    crew members.
        Admiral, why does it take so long for the Coast Guard to
    screen these names?
        Admiral Pluta. Madam Chairman, first please let me say that
    we do look at the crew members and we focus on high interest
    vessels first and other vessels later. The reason that it's
    taking so long is because we don't have that information
    submitted to us electronically. In order for us to get this
    rulemaking on the street expeditiously, we were limited by
    procedure to not making radical changes. And making a change
    from a paper submission to an electronic submission was more
    than we were permitted to do. So we're including that
    electronic submission in our final rule, and we're working with
    the U.S. Customs Service and their APIS System, the Automatic
    Personnel Identification System, to use their system to
    electronically vet people.
        Senator Murray. When can we expect that to happen?
        Admiral Pluta. In June the regulation can become final, and
    I can't answer beyond that, Madam Chairman.
        Senator Murray. Okay.
        Admiral Pluta. But we are working with the industry. In
    fact, we already have a working agreement with the
    International Council of Cruise Lines, who voluntarily use the
    APIS System for the most part to get people to submit
    electronically. And there seems to be a very warm reception to
    that whole idea. I think we're going to get voluntary
    compliance before the Administrative Procedures Act.
        Senator Murray. What do you plan to do about fictitious
    names?
        Admiral Pluta. The Credentialing Direct Action Group and
    the IMO initiative to get background checks for seafarers and
    identification for seafarers is going to resolve this problem
    hopefully over time. We can't deal with fictitious information
    right now. We have to accept it at face value. But the
    initiative that we went forward with at the IMO was to
    establish a central identification database for all mariners
    from all countries.
        The issue of background checks for mariners is very
    contentious at the IMO. But we are working between the IMO and
    the International Labor Organization to get a standard for all
    seafarers to be identifiable before they come into our country.
    And we are working with INS, who is also a member of our
    delegation, to make sure that that identification would be
    equivalent to a passport kind of identification level, so that
    we would be more conscious of everybody who is coming our way,
    Madam Chairman.

               RISK OF FOREIGN VESSELS ENTERING THE UNITED STATES

        Senator Murray. Admiral, with the vast majority of vessels
    entering the United States being foreign flagged and operated
    by foreign crews, it is only natural that you have looked for
    international support to ensure that these vessels do not
    present an unusual risk to our national security. One goal you
    announced in this area is to accelerate the requirement for
    every ship to have an automated information system or a
    transponder by 2004. Without those transponders, as the case is
    today, we effectively do not know what ships are in our waters.
    How likely is it that you will achieve unanimous consensus for
    this requirement at the International Maritime Organization
    meeting in December of this year?
        Admiral Pluta. Madam Chairman, I'll be better able to
    answer that question in May, but I feel very optimistic about
    that. We suggested to the IMO that it accelerate this
    requirement. It's an existing requirement that had a
    preexisting time frame that ran through 2008. And we suggested
    that they accelerate it through 2004. After a lot of
    discussion, the language that came out of the inter-sessional
    work group was that this equipment would be installed at the
    first special survey after the first of July of 2004, but no
    later than December 31, 2004. And that seemed to be the
    consensus opinion, although there were several countries that
    offered other alternatives that would string it out for some
    classes of vessels a little bit further.
        Senator Murray. You are hoping to get International
    Support. But if you do not get international support to
    accelerate this at your next meeting, do you think it is time
    we put in place a requirement as a port state and mandate that
    any ship that enters our water has a transponder, so we at
    least know what ships are operating in our waters?
        Admiral Pluta. Madam Chairman, I think if we don't succeed
    at the IMO in getting that time frame, then that's our only
    alternative.

                  PORT OF ORIGIN CONTAINER EXAMINATION PROGRAM

        Senator Murray. Admiral, a second goal of your
    international outreach included seeking support for a port of
    origin container examination program, where containers would be
    inspected at their point of origin, so that when they finally
    arrive here in the United States we will have some level of
    comfort that the contents of the container are as they were
    advertised on their cargo manifest. In reality, how smart do
    you really think it would be for us to rely on security
    screening procedures that are put in place by countries like
    Malaysia or Indonesia or the Philippines?
        Admiral Pluta. Madam Chairman, if we establish an
    international standard, and if we have an auditing system of
    trusted agents that can be vetted to vet the cargo themselves,
    if we have a good working relationship between the IMO, the
    World Customs Organization, our own Customs Service and our
    larger bilateral partners, you have to trust to a degree, but
    you have to check as well. And I think that has to be part of
    it. But we're building those blocks at the IMO from the ground
    up. Establish what is the minimum standard, first, and then we
    can hold people to it through port state control provisions and
    check with either the Customs Service or other overseas trusted
    agents. In that case, I would be willing to trust what's coming
    in our direction, Madam Chairman.
        Senator Murray. In a lot of the Asian ports there are
    independent barge operators that transfer as few as four
    containers at a time. How do we ensure the security of
    operations with facilities like that?
        Admiral Pluta. Madam Chairman, we have to apply the same
    standard regardless of the volume. I think it's up to the
    Administration in the case of Singapore, China, or Hong Kong to
    make sure that the same standard is applied to all operators.
    And that would be a condition of a container being permitted to
    be loaded on a ship bound for the United States, Madam
    Chairman.

                             NATURAL GAS PIPELINES

        Senator Murray. Thank you very much.
        Ms. Engleman, let me go back to you. Earlier this year your
    agency put out a proposed rule which would prevent natural gas
    pipelines from being installed near hospitals, schools, daycare
    facilities, and other facilities having persons who are
    disabled. The natural gas industry has been lobbying against
    that proposed rule. And given the security threat proposed by
    natural gas pipelines, do you think it is responsible for the
    gas industry to try and weaken that proposal?
        Ms. Engleman. I believe that we have to look at all aspects
    of security, as well as safety, when we look at the natural gas
    rule. As you are aware, that is step one of our integrity
    management program for gas. We will soon follow the notice of
    proposed rulemaking with the actual program. And that program
    will incorporate the elements of locations. It will go beyond
    just population and concerns for the high----
        Senator Murray. Will RSPA weaken its proposal in that area?
        Ms. Engleman. We're in the rulemaking process now, ma'am.
    We're looking at all aspects of the comments that are coming
    back from industry. That's part of the general procedure.
    However, we do continue to have a focus on safety and security
    as our primary decision maker.

                         ADMINISTRATIVE PROCEDURES ACT

        Senator Murray. Mr. Magaw, the issue of the Administrative
    Procedures Act has come up several times this morning. Do you
    believe that we should waive the Administrative Procedures Act
    in the case of transportation security regulations?
        Mr. Magaw. Well, certainly if we have particular
    circumstances, events, or discoveries as we move forward that
    need immediate action, I would think that we ought to have that
    authority, but we ought to make sure that we use it very
    cautiously.
        Senator Murray. Okay.
        Mr. Magaw. Some of those authorities are in the new
    Aviation Transportation Securities Act. I don't intend to use
    them unless I have to use them, but the ones that are there,
    allow me to make airline industry regulations, but it has to be
    very carefully monitored by Congress so that it is not misused.
    I guarantee we will not misuse it.
        Senator Murray. What about for other modes?
        Mr. Magaw. I would think it would be valuable for other
    modes with close observation of Congress.

                               AVIATION SECURITY

        Senator Murray. Let me move on. Mr. Magaw, while this
    hearing really is about cargo security, I did want to take a
    minute to ask you a couple of questions about aviation
    security. We are told that we may be receiving the
    Administration's supplemental funding request for the current
    year perhaps even today. Do you expect that the amount of
    funding requested for your agency in the supplemental will be
    sufficient to enable you to fully meet your deadlines for
    federalizing the screening functions and testing all checked
    bags for explosives by the end of this year?
        Mr. Magaw. The figure that we are working with now, which
    we would hope the President will authorize, would allow us to
    do what you just said, meet the requirements of the baggage and
    the screening and the training and the hiring of the screeners.
        Senator Murray. You are hoping?
        Mr. Magaw. No. I believe that the amount that's in there
    now is $4.3 billion. If that comes forward to you at $4.3
    billion, we will be able to meet the requirements with that.
        Senator Murray. Without causing undue delay for passengers?
        Mr. Magaw. Without causing undue delay for passengers. It
    will not allow us to do some of the perimeter airport security
    that we had planned. It will not allow us to do as much in
    cargo as we planned. But it will allow us to get started in the
    cargo area. It will allow us to continue moving forward in
    2003.
        Senator Murray. So I can assume that it will not have
    enough to cover a lot of the issues that we have discussed this
    morning?
        Mr. Magaw. No. It will have money in there for most of
    those issues. In fact, it has money in there for 200 personnel
    to hire as cargo inspectors and cargo supervisors. So it will
    get us started in that area.

                          EXPLOSIVE DETECTION SYSTEMS

        Senator Murray. By the end of this year you are required to
    have new explosive detection systems installed in every airport
    across the country for the purpose of screening all of our
    checked baggage. This is a huge undertaking that is going to
    take a lot of cooperation between your agency and all the
    airports. I have had a number of airports talking to me in the
    last few weeks, who really feel that they are being kept in the
    dark by the agency and want to know what is going to happen to
    their facilities within the next few months. Do you think your
    staff at the TSA knows how and where best to install explosives
    systems, more than the airports?
        Mr. Magaw. Oh, absolutely not. I can understand, Madam
    Chairman, their concern. Two months ago, this organization was
    a white piece of paper and me. We now have Federal personnel in
    each of the airports, but they are not the new Federal security
    directors. I can understand that the managers of airports, the
    operators of airports, and the airlines themselves, are
    concerned. The message that we want to send is that every
    airport is different. You are the masters of your airport. We
    are going to come in there and coordinate with you. The only
    thing that they would have problems with us is if they want to
    build let us say, lanes to bring groups through that are more
    than what they would need for that airport.
        We have a pilot program right now at Baltimore-Washington
    International. Those lines went from an hour and a half to 18
    minutes. The other day they were 12 minutes. Now that was by
    building one more lane, but putting all the kinds of practices
    in place that we could figure out with the people at the
    airport. It was all done with the leadership at the airport.
        For instance, simple things like instead of taking all of
    your things out of your pocket and putting it in the plastic
    container as you stand there at the x-ray machines at the same
    time you are trying to put your carry-on baggage through, it is
    done back in the line. So when you walk up there, there is no
    dropping of things. You already had a chance to check, so that
    there are less delays because you put more in that box as you
    come up through there, because you think about it. Therefore
    you don't trip the machine as often. There is not that dropping
    and picking up and mad scramble.
        The other thing is in terms of wanding. If you trip the
    machine, you step off to the side where you are wanded, and
    able to watch your own valuables, so that there are not
    complaints of missing it. The wanding, then, takes place as the
    machine is still functioning, bringing passengers through.
        So that blueprint, although it can't fit exactly in every
    airport, the lessons learned there will fit. We are going to
    give those lessons learned to the airports. But the airport
    people are sitting there, knowing all this is coming, and
    asking ``how does it affect me?'' What I am trying to do is
    talk to each one of them. We have a conference call every two
    weeks to talk about their particular concerns. They have places
    to call each day to try to work their concerns out. But once we
    get those Federal security directors at each airport, those
    concerns will go away.

                      HIRING OF FEDERAL SECURITY MANAGERS

        Senator Murray. You have only hired a handful of these
    Federal security managers. When do you expect to have those in
    place?
        Mr. Magaw. The eight that we already have hired are
    developing the plans and being trained right now. There is
    another group of ten that the Secretary has approved. There is
    another group of 15 or 20 that the Secretary will approve in
    the next few days. After that, we are going to be rolling them
    out at about 25 to 30 a week. And so it will take us through
    the summer.
        Senator Murray. It will take us through the summer?
        Mr. Magaw. I believe before they are at all the airports.
    Now at the 81 airports, they will probably be there within the
    next 6 weeks. But in terms of all 429, it will take us probably
    through the summer. There is Federal presence on board now. The
    interim Federal security director is at every airport.
        The problem they have is that they were pulled from their
    assignments and put out there. We are trying to make sure we
    give them directions as we go along, so that they will be
    working with the airport people, taking their ideas, putting
    the plans together as they see it. The airports really have to
    make the plan. All we are going to do is just say, ``yes, it
    makes sense,'' and ``let's do it.''
        Senator Murray. I know you are a proud veteran of the
    Secret Service, and I have a lot of respect for the work of the
    Secret Service, but I wonder why so many of your new appointees
    at TSA come from the Secret Service. How many of your new
    senior managers are veterans of the Secret Service?
        Mr. Magaw. Of the eight airport directors that were just
    selected, four of them have a Secret Service background. One
    has ATF background also. On my staff--this is going to be an
    estimate, because I can't run all of them through my head right
    now--we have about 35 that we have hired at headquarters.
    Probably 8 or 10 of those have a Secret Service background.
        Senator Murray. Are you making a sufficient effort to bring
    in transportation specialists at the staff?
        Mr. Magaw. Yes, we are. We want to have a balance between
    those who have law enforcement background and those who have
    industry background. So as we have been talking with the modal
    administrators, and as we are talking to the Secretary in
    developing our staff, we want to make sure that in the land
    travel area, we have people from the trucking industry. In
    fact, there's a woman here today that has 40 years' experience
    in airline experience, from running----
        Senator Murray. Do you have anybody who is a security
    director for a transportation company on staff?
        Mr. Magaw. Yes. He's coming on board, in fact, next week.
    He also has a law enforcement background, but he has been in
    the trucking business 4 years now. As Mr. Clapp and I were
    talking during the break, we need to find somebody who has a
    history in liquid transportation. So we are balancing it. While
    I want to make sure that we are looking at security issues, I
    want to make sure that we have a balance, both in the airports
    and in the headquarters staff.

                          EXPLOSIVES DETECTION SYSTEMS

        Senator Murray. I want to ask you about the procurement of
    explosives detection systems. I know Senator Shelby asked you a
    bit too, but I am getting pretty worried. We have 9 months and
    9 days left to install a sufficient number of explosive
    detection systems around the country to meet the deadline of
    screening all checked baggage. As I understand it, you have
    only contracted for a few hundred new explosive systems. I am
    told there will be several thousand that will be needed. Do you
    still think it is possible to meet this deadline?
        Mr. Magaw. Not only possible, but I feel more comfortable
    about it than I did, 3 or 4 weeks ago. Let me tell you why.
        The problem is not putting the machine together, because it
    is basically bending steel. The problem is making sure that you
    get all the components, everything from the CAT scan to those
    kinds of things. Over 300 of those orders have gone out.
        There are other manufacturers stepping up now that are
    saying, ``We can produce some of those parts that make it.''
        There also are a number of companies stepping up, saying,
    ``If we have the components, we can turn these machines out.''
        The problem we wanted to make sure that we dealt fairly
    with was with the companies that are already in the market and
    certified, that their rights were not violated. They have
    signed agreements that allow us now to have a major company set
    up an entire warehouse to just run these machines very quickly
    through as the component parts come in. So two companies that
    are certified are going to be making the maximum number that
    they can make. They are both gearing up to make more than what
    they thought they could. The shortfall will come from the big
    manufacturing unit. I am convinced we will reach that goal.
        Senator Murray. Do you believe will we have those machines
    installed at all the airports by the end of the year, or are we
    going to be looking at alternative means to do this?
        Mr. Magaw. If you have an airport that can only handle so
    many of the EDS machines and there is no way to reconstruct
    that in time to put all EDS machines in there, then the
    alternative means that we would be looking at is the ETD
    machine; that is the swipe type machine. Much smaller, but it
    takes more people to do it.
        So what we are trying to do is look at each airport, what
    is feasible at each airport, and then what plan do we go about
    it. But by the deadline, we will be examining baggage through
    one of those two technical systems, or both of them in tandem.

                                CUSTOMER SERVICE

        Senator Murray. Mr. Magaw, you have spoken in the past
    regarding the importance of good customer service when it comes
    to the way the TSA treats air passengers. Secretary Mineta has
    publicly called for a wait time of no more than 10 minutes for
    passengers to get through the screening process. Has the TSA
    taken Secretary Mineta's 10-minute standard as a hard and fast
    customer service standard for the future?
        Mr. Magaw. We have taken that as a goal. We are working for
    that at every airport. Some of those airports, in order to do
    that, will take some restructuring of exit and entry lanes. So
    it may take us a while to get there. But that is our goal. In
    fact, our vision statement, our mission statement, and our
    values list all the kind of things that you are talking about
    in terms of not only top-flight security, but quality customer
    service. That is in our training of our new first screeners
    being trained this week and next. The first group is coming
    through. And that's an essential part of the training. First
    class security, but also first class customer courtesy and
    respect and service.

                              SUBCOMMITTEE RECESS

        Senator Murray. Well, thank you very much to all of our
    witnesses today for taking time on this important hearing. This
    subcommittee will now stand recessed until Thursday, April 4,
    when the subcommittee will take testimony on port security in
    Washington State.
        [Whereupon, at 11:37 a.m., Thursday, March 21, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

     DEPARTMENT OF TRANSPORTATION AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2003

                                  ----------

                            TUESDAY, APRIL 16, 2002

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:35 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Patty Murray (chairman) presiding.
        Present: Senators Murray, Kohl, Durbin, Shelby, Bennett,
    Campbell, and Stevens.

                          DEPARTMENT OF TRANSPORTATION

                        Federal Aviation Administration

    STATEMENT OF HON. JANE F. GARVEY, ADMINISTRATOR

                   OPENING STATEMENT OF SENATOR PATTY MURRAY

        Senator Murray. The subcommittee will come to order.
        Already this year, this subcommittee has had three hearings
    on the topic of transportation and security. It was my hope
    that our hearing today could focus solely on the issues of
    aviation safety and capacity. Those were the two critical
    aviation issues this subcommittee was most focused on prior to
    September 11. And now, even with all the concerns we face in
    the area of aviation security, I still believe that we must pay
    more attention to them.
        Before September 11, air traffic was growing at a rapid
    rate, as was our economy. We were celebrating an historically
    long period without a major domestic airline disaster, even
    while air traffic was reaching historic highs. The events of
    September 11 did much to depress air traffic, and then on
    November 12, American Airlines flight 587 plunged into Rockaway
    Beach, Queens, the result of a clear safety failure.
        Today, we are starting to see air traffic return in some
    markets to pre-September 11 levels. Our aviation industry and
    our national commercial aviation enterprise is trying to get
    back to normal, even as we all worry that the next terrorist
    attack may be right around the corner.
        We are beginning to see the fruits of certain FAA
    investments to improve the efficiency of our aviation system.
    We have finally begun installing ground proximity radars to
    prevent runway incursions, and I was pleased to host our
    witness, Administrator Garvey, in Seattle 2 weeks ago for such
    an event.
        We have installed new technologies in some of our busiest
    control towers to keep airplanes moving during the summer storm
    season. At the same time, we continue to see either performance
    or cost problems with some of the most important FAA
    procurements on the horizon: performance problems with the new
    ASR-11 radars, which are expected to replace the aging analog
    radars at airports; cost overruns associated with the STARS
    program, which will provide new, desperately needed displays
    and computer equipment for air traffic controllers; and
    diminishing expectations of what the WAAS program can provide,
    a program designed to move the aviation industry into the era
    of satellite navigation.
        While it would be valuable and instructive to focus on just
    these issues alone, I am finding that, as I wade into the
    details of the Administration's aviation budget, it is
    impossible to ignore the issues surrounding the financing of
    aviation security. Notwithstanding the fact that this
    subcommittee fully funded the FAA's Operations budget request
    last year and granted several hundred million dollars more for
    emerging security needs, the FAA is currently contemplating a
    number of austerity measures for the current year due to the
    lack of available funds. These austerity measures include a
    hiring freeze on all air traffic employees that are not air
    traffic controllers or maintenance technicians, delaying the
    hiring of new air traffic controllers, reducing the maintenance
    on redundant safety systems, and reducing training for air
    traffic controllers.
        On top of those challenges, the FAA has had to urgently
    invest $100 million in order to better protect its own air
    traffic control facilities against a potential terrorist
    threat. At least in this case, the Administration has asked us
    to provide the FAA with an extra $100 million, but it has done
    so in a most misguided manner. Rather than ask for an emergency
    appropriation similar to the $4.4 billion in additional funding
    that has been requested for the Transportation Security
    Administration, the Administration is asking that this $100
    million be diverted from funds already appropriated for capital
    investments in the FAA's Facilities and Equipment program, and
    the Airport Improvement Program. This proposal comes at a time
    when the FAA is already required to divert funds away from its
    capital needs.
        In order to continue the operations of the Essential Air
    Service (AES) Program, Administrator Garvey must divert $50
    million from existing capital programs. There is also roughly
    $25 million that needs to be rescinded as a result of
    Congressional action. And finally, there is an additional $38
    million that must be found to keep the STARS program on
    schedule, because of cost overruns that have burdened that
    program.
        So, I do not see the wisdom in cutting capital investments
    further to pay for the protection of FAA facilities. We should
    appropriate these emergency security funds in the same way that
    we fund the urgent needs of the Transportation Security
    Administration.
        As I review the Administration's plans to implement the
    Transportation Security Act, it is clear that there will be a
    continuing tension between the needs for safety and the need
    for security. The Transportation Security Act allows funds
    appropriated to the Airport Improvement Program (AIP), our
    priority grant program for airport safety and capacity
    enhancements, to be used for security-related expenditures for
    2002 only.
        The hope, at the time the Security Act was written, was to
    help the airports cover a portion of their costs associated
    with hiring additional law enforcement personnel and other
    security expenditures. I am now concerned by indications that
    the Administration is looking to use the entire AIP program,
    all $3.3 billion, as a funding source for the installation of
    new explosive detection systems. While I support the investment
    in security, I do not think it is wise to suspend an entire
    year of Federal investment in projects designed to help our
    industry grow and ensure the safety of the flying public.
        While the Administration's supplemental budget request for
    an additional $4.4 billion for the TSA was submitted to the
    Congress almost a month ago, they still have been unwilling to
    brief this subcommittee on the details of their plans to
    purchase and install explosive detection machines. Those
    machines will be needed to comply with the requirement to
    screen all checked bags by the end of this year.
        But the Nation's airports, like this subcommittee, cannot
    get any straight answers out of the Administration as to how
    this requirement is going to be met. Clearly, the
    Administration is struggling internally to determine how or
    whether it will implement the letter of the Security Act, the
    spirit of the Security Act, or its own unique interpretation of
    the Security Act.
        I, for one, do not believe that we can afford to take a
    full year hiatus from investing in critical safety and capacity
    projects at our Nation's airports. We should not divert every
    dollar of airport grant funding for security expenditures. If
    we allow this to happen, we will once again find ourselves
    struggling to handle a growing number of delays and congestion
    at our Nation's airports. Those security expenditures need to
    be paid for and should not be done at the cost of safety and
    capacity projects. With that, I recognize the subcommittee's
    ranking member, Senator Shelby.

                     STATEMENT OF SENATOR RICHARD C. SHELBY

        Senator Shelby. Thank you, Madam Chairman.
        Now that responsibility for the security of the aviation
    system has shifted to the Transportation Security
    Administration, the FAA must focus on being prepared for the
    return in demand for air travel.
        The current decline in air traffic presents the FAA with an
    opportunity, I believe, to get ahead of future demand by
    developing a strategic plan for addressing capacity constraints
    and modifying the modernization effort to accelerate
    development of the acquisition programs with the greatest
    potential.
        At the same time, we must remain ever mindful of the need
    to constrain operational costs and enhance the efficiency of
    air traffic services delivery. Ultimately, our efficiency in
    modernizing the National Airspace System, and providing air
    traffic control services, translates into making air travel
    more affordable for all Americans and making our economy that
    much more competitive. Clearly, if the FAA continues along its
    present, inefficient course, when the traffic returns, so will
    the delays.
        But, Madam Chairman, it is difficult and unwise to discuss
    aviation safety or capacity issues without addressing aviation
    security. While I appreciate the difficulty of creating and
    staffing a new agency from scratch, there is no excuse for
    making decisions from behind a closed door or for perceiving
    that the formulation and disposition of security-related
    matters are exempt from accountability.
        Time and time again, information from TSA has not been
    forthcoming and affected stakeholders have not had
    opportunities to present their cases before decisions are made.
        One of the most immediate issues involves the funding
    source to pay for the implementation of new security
    requirements, including in particular the installation of the
    explosive detection systems. I have been told that until this
    and other security-related costs can be determined, the FAA
    will not issue any AIP grants and is holding the funds in
    abeyance. That is like saying that we are not going to pay for
    cholesterol-reducing drugs because we are saving all of our
    money for open-heart surgery.
        I believe that the Department must pursue the critical
    security improvements and requirements, while keeping important
    capacity and safety projects on track. The construction season
    in some States will begin soon, and unless the funding
    suspension is lifted, several multi-year projects will be in
    jeopardy.
        The FAA's acquisition programs, on the other hand, seem to
    be continuing virtually unaffected by the terrorist attacks of
    September 11. This is short-sighted, I believe. Instead of
    ignoring changing circumstances, even those brought about by
    tragedy, the FAA must, I believe, revalidate the need for
    various acquisition programs within the context of new security
    procedures and security requirements.
        This is a call to look at programs like WAAS to confirm
    that the programmatic solutions the FAA is pursuing are still
    the right solutions. We really, really should be constantly
    revalidating our modernization program and asking the FAA and
    industry if there are better, safer, and more efficient ways of
    meeting our modernization and security goals.
        I also continue to be concerned, Madam Chairman, that cost
    increases, schedule delays, and reduced capabilities are the
    norm with FAA's acquisition programs, not the exception.
    Furthermore, I am concerned that the FAA is abusing its
    procurement flexibility.
        At my request, the Inspector General conducted a rigorous
    analysis of competition in air traffic control contracts, and
    determined that the FAA awarded six of nine large contracts,
    valued at more than $1.25 billion, on a non-competitive basis.
    The intent of procurement flexibility was to overcome the
    barriers that can delay an acquisition program from benefitting
    the flying public and save taxpayer money along the way.
    Instead, it appears that the flexibility is being used for
    convenience of program managers. Madam Chairman, procurement
    flexibility was granted in order to accelerate modernization,
    not to trample on the legitimate expectations of fairness
    engendered by competition. When the FAA does just that, and
    then does not realize any efficiency in program delivery or
    cost savings, we are getting the worst of all worlds.
        Madam Chairman, fiscal year 2003 will be, in many ways, a
    pivotal year for the FAA. The AIR-21 authorization act expires,
    as does the labor agreement with the air traffic controllers
    union. In anticipation of the reauthorization process, it is my
    hope that the supporters of fire walls, whether in the Congress
    or from groups that claim to benefit by them, will make an
    honest determination of their value and understand their
    limitations.
        As I have stated before, special budgetary protection
    effectively establishes a funding ceiling, not just a funding
    floor, and minimizes our ability to make adjustments due to
    changing circumstances, such as new security requirements.
    Furthermore, programs with special budgetary protection become
    a source for funding noncapital priorities, and that is why the
    funding for the Essential Air Service Program is being
    requested in AIP, which is one of the so-called protected
    accounts.
        Finally, I want to join you, Madam Chairman, in commending
    FAA Administrator Jane Garvey for her dedication and her
    leadership over the past 5 years. While the job certainly has
    its rewards, it certainly has its challenges, and perhaps more
    challenges than rewards.
        As this may be your last appearance as FAA Administrator
    before this subcommittee, Madam Administrator, I would like to
    get your candid advice for your successor, a sense of what you
    think you did right, a sense of what things you might have done
    differently. Perhaps you could make some comments along those
    lines in your opening remarks.
        Madam Administrator, I believe your sense of service was
    evident by your decision to continue in your position at the
    FAA through the end of the term, despite the change of
    administrations.
        I believe it was just as important that you remained in
    your position to provide stability to an organization that was
    rocked by the terrorist attacks of September 11. The FAA is one
    of those places in government where leadership at the top,
    sustained over a period of time, is necessary before real
    change can be implemented.
        You have provided that leadership and we are seeing some
    progress now because of some of your initiatives, including
    Free Flight, Safe Flight, and capacity benchmarks. I commend
    you for that. Thank you.
        [The statement follows:]

                Prepared Statement of Senator Richard C. Shelby

        U.S. Senator Richard C. Shelby (R-AL), Ranking Member of the Senate
    Transportation Appropriations Subcommittee, today commented on aviation
    safety and capacity issues:
        Now that responsibility for the security of the aviation system has
    shifted to the Transportation Security Administration, the FAA must
    focus on being prepared for the return in demand for air travel.
        The current decline in air traffic presents the FAA with an
    opportunity to get ahead of future demand by developing a strategic
    plan for addressing capacity constraints and modifying the
    modernization effort to accelerate development of the acquisition
    programs with the greatest potential.
        At the same time, we must remain ever mindful of the need to
    constrain operational costs and enhance the efficiency of air traffic
    services delivery. Ultimately, our efficiency in modernizing the
    National Airspace System and providing air traffic control services
    translates into making air travel more affordable for all Americans and
    making our economy that much more competitive.
        Clearly, if the FAA continues along its present, inefficient
    course, when the traffic returns, so will delays.
        But, it is difficult and unwise to discuss aviation safety or
    capacity issues without addressing aviation security. While I
    appreciate the difficulty of creating and staffing a new agency from
    scratch, that is no excuse for making decisions from behind a closed
    door or for perceiving that the formulation and disposition of
    security-related matters are exempt from accountability.
        Time and time again, information from TSA has not been forthcoming
    and affected stakeholders have not had opportunities to present their
    cases before decisions are made.
        One of the most immediate issues involves the funding source to pay
    for the implementation of new security requirements, including in
    particular the installation of the explosive detection systems. I have
    been told that until this and other security-related costs can be
    determined, the FAA will not issue any AIP grants and is holding the
    funds in abeyance. That's like saying we're not going to pay for
    cholesterol reducing drugs because we're saving all our money for open-
    heart surgery.
        I believe that the Department must pursue the critical security
    improvements and requirements while keeping important capacity and
    safety projects on track. The construction season in some states will
    begin soon and unless the funding suspension is lifted, several multi-
    year projects will be in jeopardy.
        The FAA's acquisition programs, on the other hand, seem to be
    continuing virtually unaffected by the terrorist attacks of September
    11. This is short-sighted. Instead of ignoring changing circumstances,
    even those brought about by tragedy, the FAA must revalidate the need
    for various acquisition programs within the context of new security
    procedures and security requirements.
        This is a call to look at programs like WAAS to confirm that the
    programmatic solutions the FAA is pursuing are still the right
    solutions. We really should be constantly revalidating our
    modernization program and asking the FAA and industry if there are
    better, safer, and more cost efficient ways of meeting our
    modernization and security goals.
        I also continue to be concerned that cost increases, schedule
    delays, and reduced capabilities are the norm with FAA's acquisition
    programs, not the exception. Furthermore, I am concerned that the FAA
    is abusing its procurement flexibility.
        At my request, the Inspector General conducted a rigorous analysis
    of competition in air traffic control contracts, and determined that
    the FAA awarded six of nine large contracts, valued at more than $1.25
    billion, on a non-competitive basis.
        The intent of procurement flexibility was to overcome the barriers
    that can delay an acquisition program from benefitting the flying
    public and save taxpayer money along the way; instead, it appears that
    the flexibility is being used for the convenience of program managers.
    Procurement flexibility was granted in order to accelerate
    modernization, not to trample on the legitimate expectations of
    fairness engendered by competition. When the FAA does just that and
    then doesn't realize any efficiency in program delivery or cost
    savings, we are getting the worst of all worlds.
        Fiscal year 2003 will be in many ways a pivotal year for the FAA.
    The AIR-21 authorization act expires, as does the labor agreement with
    the air traffic controllers union. In anticipation of the
    reauthorization process, it is my hope that the supporters of
    firewalls--whether in the Congress or from groups that claim to benefit
    by them--will make an honest determination of their value and
    understand their limitations.
        As I have stated before, special budgetary protection effectively
    establishes a funding ceiling, not just a funding floor, and minimizes
    our ability to make adjustments due to changing circumstances, such as
    new security requirements.
        Furthermore, programs with special budgetary protection become a
    source for funding non-capital priorities, and that is why the funding
    for the Essential Air Service program is being requested in AIP, which
    is one of the so called protected accounts.
        Finally, I want to join Chairman Murray in commending FAA
    Administrator Jane Garvey for her dedication and leadership over the
    past five years. While the job certainly has its rewards, it certainly
    has its challenges--and perhaps more challenges than rewards.
        As this may be your last appearance as FAA Administrator before
    this subcommittee, Madam Administrator, I would like to get your candid
    advice for your successor, a sense of what you think you did right, and
    a sense of what things you might have done differently. Perhaps you
    could make some comments along those lines during your opening remarks.
    I believe your sense of service was evident by your decision to
    continue in your position at the FAA through the end of the term,
    despite the change of administrations.
        I believe it was just as important that you remained in your
    position to provide stability to an organization that was rocked by the
    terrorist attacks of September 11. The FAA is one of those places in
    government where leadership at the top sustained over a period of time
    is necessary before real change can be implemented.
        You have provided that leadership and we are seeing some progress
    now because of some of your initiatives, including Free Flight, Safe
    Flight, and capacity benchmarks.

        Senator Murray. Senator Campbell.

                  STATEMENT OF SENATOR BEN NIGHTHORSE CAMPBELL

        Senator Campbell. Thank you, Madam Chairman.
        I would like to join my colleagues, Jane, in congratulating
    you on 5 years at the head of the FAA. Who could have ever
    anticipated the tragedy that we all faced after 9/11?
        I believe all three of us came on this committee about the
    same time in the last few years. Mostly what this committee did
    was listen to passenger complaints, on flight delays,
    cancellations, things of that nature, and the lack of available
    information pertaining to those problems.
        Certainly, that has all changed. And while those problems
    may continue, our focus certainly has switched to security
    procedures. And the tragic events of 9/11 were, in my view,
    were terrible and it forced us to put some things in place that
    I am not sure that we have yet found the balance between common
    sense and necessity to protect the public.
        Before 9/11, 4-inch knives were allowed on planes and
    security screening was pretty lax, untrained personnel,
    sometimes people could not speak English, security features on
    the planes were weak. The cockpit doors, for example, were
    easily breached. And I realize that many steps have been taken
    to correct that, because I fly home every weekend, as Senator
    Murray does too.
        Our country's economy is dependent on travel and the
    mobility of commerce. Additionally, the people of the United
    States deserve to move about in a safe manner. So sky marshals,
    improvement in selection and training of airport employees, and
    improvement in security procedures, all of those things, I
    think, are a terrific step.
        I guess my big problem is that there is such inconsistency
    out there still at the airports. Some airports I go through,
    they make me take my shoes off; others, they do not. It seems
    to me they ought to have some kind of a mechanism so that if I
    wear Western boots and if there is something in there that
    rings, they ought to all know it, not just some of them. But I
    think the last couple of weeks has really brought into focus
    some of the inconsistencies.
        This little thing here, you know, you have seen it. It is a
    fingernail clipper. I had two of them in my pocket when I came
    through Dulles on the way to Denver last week; two of these
    little things. And they made me take them out, everything metal
    you take out. I took them out. And this person that was doing
    the inspecting looked at this and he said, ``Open that up.''
    And so I did. And you can see, it is a little file, about an
    inch long. There very common. You can buy them in any
    drugstore.
        And this man said, ``You cannot get on there with that.''
    And I said, ``Well, break it off.'' And he said, ``Well, I
    cannot do that. You will have to break it off yourself.'' I
    said, ``Okay.'' So I broke the thing off.
        And he said, ``Okay. That is fine. Now, you can take it on
    there.'' He did not say a thing about the other one. So I got
    on with one with a broken little file, and one without a broken
    little file. When I came back from Colorado this way this year,
    I forgot the one with the broken file, and I just happened to
    have the one in my pocket with the file, and nobody said
    anything.
        While I was on the plane, Madam Chairman, I was doing some
    writing of notes, and I dropped my pen, this pen. And while I
    was fumbling around, I could not see where it fell under the
    seat, and I was groping for the thing. I stuck it in my hand,
    which leads to another interesting question. I mean, holy
    smoke, could that be a weapon if somebody was inclined to?
    Maybe it could.
        But I guess I bring these simple little case studies to
    your attention, because there does not seem to be consistency
    yet about what we can take on, what we cannot, and if it is
    going to be the same in all airports. And you might try to
    address that.
        I have a couple of questions I would like to ask the
    Administrator as we get along.
        Thank you.
        Senator Murray. Senator Reid has submitted a statement and
    asked that it be printed in the record.
        [The statement follows:]
                    Prepared Statement of Senator Harry Reid
        Madam Chairman, let me begin by saying how pleased and honored I am
    to serve on this prestigious committee entrusted with appropriations to
    meet the nation's transportation needs.
        Madam Chairman, it may be prudent to request the DOTIG to return to
    the Subcommittee and update his latest findings on STARS. Given his
    concerns about the risk in the schedule and costs requires we obtain
    more information before committing scarce 2003 funding to continue what
    appears to be a terribly troubled program. Now is the time to address
    these issues before our Air Traffic Control system becomes completely
    outdated and unsafe.
        Mrs. Garvey, the STARS program is critical to the FAA's ongoing
    efforts to modernize the air traffic control system. Yet as I
    understand it, STARS is now $700 million over budget, 4 years behind
    schedule and no full STARS workstations are yet deployed. We've been
    hearing for years from the FAA that STARS has ``turned the corner''.
    Unfortunately, this doesn't seem to be the case. The DOT IG has warned
    Congress on several recent occasions about STARS' schedule and costs
    risks. The IG also noted that the FAA has not been able to produce a
    deployment schedule and cost estimate for the 99 sites to be installed
    after 2004. And the number of ``critical'' trouble reports arising from
    the STARS software testing has increased over the last 6 months. All
    this is occurring at a time when the war on terrorism and increased
    homeland security funding is constraining FAA's funding.
        In closing, I want to pledge my support to Federal Aviation
    Administrator Garvey. Finding the right balance between present needs
    and future musts for our nation's Air Traffic Control system is indeed
    a challenging task. As a senior member of this subcommittee, I'm
    committed to providing the necessary support and funding for the
    aviation transportation infrastructure of this great nation.

                          INTRODUCTION OF JANE GARVEY

        Senator Murray. Thank you very much.
        With that, we will turn it over to the Honorable Jane
    Garvey, Administrator of the Federal Aviation Administration.

                              FAA OPENING REMARKS

        Ms. Garvey. Well, thank you very much, and good morning. I
    very much appreciate Chairman Murray, Senator Shelby, and
    Senator Campbell being here this morning, and the opportunity
    to present the FAA's budget request for 2003.
        And I very much appreciate the kind words that all of you
    have expressed to me this morning. But even more importantly, I
    do appreciate and recognize that any success we have had in the
    last 5 years has really been due to the leadership that has
    been provided by this committee. Certainly, the smooth
    transition to Y2K, modernizing the air traffic control system,
    the improvements in safety, are due in large part to the
    support that we have received from your leadership and from
    this committee, and I am very much appreciative of that.
        I would like to briefly, if I could, address four issues.
    And Senator Shelby, I think it ties in to some of the comments
    you made about what are the issues that are important, what
    will the new Administrator need to focus on, as well. These are
    areas that I believe are reflected in the President's budget,
    but there are certainly issues that I will remain focused on
    between now and August.

                               TRANSITION TO TSA

        Since the events of September 11, our focus, and I think
    rightly so, has been to restore the security of the national
    air transportation system. I have certainly been working very
    closely with Secretary Mineta, with Deputy Secretary Jackson,
    and Under Secretary John Magaw to ensure a smooth transition to
    the new Transportation Security Administration (TSA). That will
    remain a high priority for us.
        While most of these issues are now with Transportation
    Security; and while Transportation Security is focused on many
    modes of transportation, we will work very closely with the
    Administration to ensure a smooth transition.
        But I also am very mindful of the comments that you all
    have made, which is that while we must view everything through
    the prism of September 11, we really cannot and should not lose
    sight of some very important aviation initiatives. And that is
    critical and important as well.

                           OPERATIONAL EVOLUTION PLAN

        And, again, I think if you look at the President's budget,
    it does reflect a strong commitment to the safety and
    efficiency programs within the FAA. It calls for a continuation
    of the Operational Evolution Plan; that is critical for us.
        You may remember that about a year ago, we were in this
    room discussing the Operational Evolution Plan, and it really
    represents a 10-year commitment, not just from the FAA, but
    from the airports and airlines as well, to increase capacity by
    about 30 percent.
        Again, with enormous support from this committee, we have
    begun to see some very strong benefits from that. You remember
    last year, we talked about seven choke point areas and the
    efforts we were going to take, the 21 initiatives. Those
    initiatives will all be finished by June. We have opened new
    sectors. We have put technology in place. All of that has
    resulted in a reduction in delays by about 20 percent. We saw
    those numbers before September 11 last summer, and we are still
    seeing those numbers as we move forward.
        Last December, we opened a new runway in Detroit. That is
    included in the Operational Evolution Plan. We promised this
    committee we would do that; we did. It increased capacity at
    that airport by about 20 percent. As you have noted, we have
    met every milestone and every deadline with Free Flight/Phase
    One. I think that program is a success for us. So, certainly
    staying the course on the Operational Evolution Plan,
    recognizing that demand will come back, we know the numbers are
    down now, but clearly within the next 12 to 24 months, we will
    see demand back in full force.

                                     SAFETY

        I expect we will see some hub areas this summer where we
    definitely will see some increase in travel, and we may even
    see some of the delays that we want to avoid. With respect to
    safety, the President's budget reflects a strong commitment to
    the safety programs. Again with the help of this committee, we
    are making progress in our runway safety program. The annual
    rate of runway incursions declined overall in 2001. What is
    even more significant is the reduction in the most severe
    runway incursions, the ones that present the greatest risk.
        Certainly, we are not declaring success in this area. We
    know we have more to do, but we think the trend is heading in
    the right direction. Our Air Transportation Oversight System,
    ATOS, is, in our view, another very significant safety program.
        The Inspector General took a snapshot in time a year ago on
    this program and made some recommendations. They are very
    consistent with the recommendations that we ourselves have
    developed in cooperation with our own inspectors. They focused
    on two principal areas. The first area was really to
    incorporate and integrate our data. We have done that. The data
    was fully integrated in January of this past year. The second
    was to restructure the training programs for the inspectors. We
    have done that and about 92 percent of the inspectors have been
    retrained. All of them will be retrained before the end of the
    year.
        I think if you asked the Inspector General, if you talk
    with Nick Sabatini, they will say ``This is the right approach,
    and it affords the opportunity to re-target our resources where
    we see the greatest problem.'' So I think that is a program
    that needs to stay on target and to stay very focused.

                                 FAA MANAGEMENT

        Finally, Senator Murray, you and members of this committee
    have consistently expressed interest in the management of the
    FAA. Through your leadership, I think this committee has
    challenged us to use more corporate tools to better manage our
    own resources.
        And I am very proud to say that the FAA received an
    unqualified clean audit on our financial statements for 2001.
    That was a phone call I enjoyed receiving from the Inspector
    General.
        We are continuing our initiatives to fully implement our
    cost and performance accounting measures. We have a cost
    accounting system that is in place for the entire air traffic
    organization that represents 70 percent of the agency. Cost
    accounting will be fully in place by the end of this year, but
    we are already using it as a management tool to control our
    costs and to understand our costs much better. It is a very
    effective tool we believe in doing just as you have suggested,
    which is controlling the operational costs that we have for the
    agency.
        So, four areas of focus for me between now and August, and
    I think probably for the next Administrator as well, and that
    is transition to the TSA, the Operational Evolution Plan, the
    safety program, and the management improvements. And in each
    one of those areas, I think we have made significant progress
    over the last 5 years. I think there is still a great deal that
    can be done, but I am very proud of the progress that we have
    made to date.

                                   FINANCING

        Finally, I would like to take just a moment to comment on
    this, on the FAA's 2002 budget. The agency, as you have
    suggested, Madam Chairman, is facing a shortfall of about $200
    million in its air traffic operating budget. That is due, as
    you have suggested, to higher security costs of almost $90
    million at our manned facilities, and to other unbudgeted costs
    we are facing.
        Although we were able to offset some of the shortfalls with
    cuts in existing programs, we were not able to offset the full
    amount. Therefore, the President's supplemental request
    includes a provision that will allow the FAA to transfer $100
    million, as you have said, from our capital accounts to cover
    these unexpected security costs. We certainly would ask, once
    again, for the committee's consideration of this request as you
    debate the supplemental budget; and we certainly appreciate
    that consideration.
        And finally as I mentioned, this will probably be my last,
    in fact, this will be my last appearance before this committee,
    before the Appropriations Committee. And just a personal note,
    it has been an extraordinary 5 years. I will say, once again,
    that I probably cannot adequately express the tremendous
    appreciation I feel to this committee, the sense of gratitude
    that I have for both for the personal support and the support
    that you have given to the agency; and also my deep admiration
    for the men and women of the FAA, the inspectors, the
    controllers, and the support staff, who make hundreds of
    decisions on a daily basis that really affect the air traffic
    system of this country and I think make it the greatest in the
    world. It has been an honor to serve and really a pleasure to
    be here this morning before you. Thank you.
        [The statement follows:]

                   Prepared Statement of Hon. Jane F. Garvey

        Chairman Murray, Senator Shelby, Members of the Subcommittee: Thank
    you for the opportunity to appear before you this morning to discuss
    the Federal Aviation Administration (FAA) and our budget request for
    fiscal year 2003.
        Last year, I spoke with you about our sense of urgency about
    expanding the capacity of our nation's aviation system. At that time,
    we faced a crisis of congestion, delays, and too many aircraft for too
    few runways. Americans were frustrated with airline travel.
        This year, those concerns pale in comparison with the challenges
    our nation now faces. Our current crisis is far graver--its impact on
    aviation far more acute.
        This morning I want to discuss the significant developments and
    challenges that are before the FAA. We are working to ensure a
    successful transition of security operations and research to the
    Transportation Security Administration (TSA). We are continuing our
    efforts to provide a safe and efficient National Airspace System (NAS),
    and we must address the unfinished business from last year regarding
    capacity. While air traffic is still below the levels seen before
    September 11, we are beginning to see growth return to pre-September 11
    levels. We must use this time to make needed investments in
    infrastructure.
        To meet these critical objectives, the President's proposed fiscal
    year 2003 budget provides 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 $3.4 billion;
    capital modernization programs are funded at $3.0 billion; and, FAA
    operations are funded at $7.5 billion.
        I appreciate the efforts that you and the members of this
    subcommittee have undertaken to fund the FAA's budget requests. Fully
    enacting the President's budget request will permit the FAA to respond
    and recover from the events of September 11, make necessary
    improvements in the NAS and at the FAA, and improve operational safety
    and efficiency throughout the entire commercial aviation system.
        With the horrors of the September 11 attacks not far behind us, we
    must draw from the same courage that Americans have demonstrated during
    the last few months to proceed in this new era of aviation security,
    led by TSA.
        At the outset, I would like to commend Congress for their
    bipartisan efforts that created the Aviation and Transportation
    Security Act (ATSA). ATSA authorizes TSA to perform security screening
    responsibilities that once belonged to air carriers and security
    oversight functions that until recently were performed by the FAA. TSA
    took over the screening of passengers and property and oversight
    responsibilities on February 17, 2002. We at the FAA are committed to
    maintain the highest level of dedication to aviation security through
    the transition of these functions to the TSA.
                         maintaining our safety record
        The United States has a remarkable safety record. We know that as
    strong as our safety record is, we can make it better. We also know
    that with the growing demand we must make it better. That is exactly
    what we are doing. I want to take a moment to discuss three important
    safety initiatives we currently have underway: our Safer Skies
    initiative, the Air Transportation Oversight System (ATOS), and our
    runway safety program.
        Reducing the fatal accident rate for aviation is our primary goal
    at the FAA. To accomplish this goal, the FAA has joined in partnership
    with the aviation community to establish Safer Skies--a focused agenda
    to make the skies even safer.
        What we do in aviation is ``risk management.'' Risk must be
    identified, analyzed, evaluated, and controlled. It must be reduced
    with a disciplined and targeted approach. I am pleased to report to the
    subcommittee we are making clear progress.
        Safer Skies consists of three teams with similar goals to improve
    aviation safety. The Commercial Aviation Safety Team (CAST), the
    General Aviation Joint Steering Committee (JSC), and the Partners in
    Cabin Safety (PICS).
      --CAST is well on its way toward implementing safety interventions
            for commercial accidents. CAST has been implementing strategies
            to address Flight Into Terrain, Approach and Landing, and
            Uncontained Engine Failures. Government and industry CAST
            participants continue to develop intervention strategies for
            runway incursions, loss of control, and turbulence. Weather
            will be the next area for analysis.
      --As part of Safer Skies, the General Aviation JSC aims to eliminate
            the equivalent of an entire year's worth of accidents by 2007.
            This committee is focusing on the two leading causes of general
            aviation accidents: Controlled Flight into Terrain and Weather.
            Intervention strategies differ from those being implemented for
            commercial aviation due to the unique general aviation
            operating environment. Other areas still to analyze include
            Loss of Control and Survivability.
      --PICS was chartered to bring the passenger into the cabin safety
            equation by providing information to the public regarding cabin
            safety issues in the following areas: Passenger Seat Belt
            Discipline, Carry-on Baggage, and Passenger Interference with
            Crew Members. FAA has developed a Cabin Safety web site to
            provide guidance and educational material to the airlines and
            general public.
        Another risk management tool used by the FAA is the way in which we
    inspect the nation's airlines. It is designed to identify safety trends
    in order to spot and correct problems at their root cause before an
    accident occurs.
        The program, called the Air Transportation Oversight System (ATOS),
    is now in place for the nation's 10 largest airlines--which handle 95
    percent of U.S. passengers--and will ultimately include all U.S.
    airlines.
        FAA inspectors look at an airline as a whole, to see how the many
    elements of its operations--from aircraft to pilots to maintenance
    facilities to flight dispatch--interact to meet Federal standards. By
    collecting and analyzing data on the many airline systems, FAA
    inspectors are better able to target areas for improvement. Congress,
    the General Accounting Office, the National Transportation Safety
    Board, and the airlines agree with our approach.
        ATOS already has yielded benefits: It has enabled us to create a
    targeted, more effective surveillance plan. ATOS is a significant shift
    in the way we oversee airlines and in the way our inspectors operate.
    Our goals are to assure that safety standards are met and to get ahead
    of issues that could potentially lead to the next accident.
        One of the most important FAA safety initiatives is our effort to
    reduce runway incursions. I am pleased to inform the subcommittee that
    both the actual number and the rate of runway incursions declined in
    2001 from their 2000 level. While this is a positive step, much remains
    to be done to continue this trend.
        The President's budget provides an increase of $5 million to
    strengthen our runway safety program. These funds will be primarily
    used to implement site-specific solutions at airports that sustain the
    highest number of runway incursions.
        Technological solutions are continuing to be implemented through
    the Airport Movement Area Safety System (AMASS) and the Airport Surface
    Detection Equipment (ASDE-X). The President's fiscal year 2003 budget
    request provides $21.7 million for AMASS and $87.8 million for ASDE-X.
    Twenty-seven of the 34 AMASS sites are scheduled for commissioning by
    September 30. Factory Acceptance Testing for ASDE-X is scheduled to be
    completed by August. We will continue to evaluate and assess low-cost
    technologies for potential deployment to non-ASDE and ASDE-X airports.
        In addition, the FAA is continuing to work to enhance pilot and
    controller communication, provide additional training and education
    opportunities for pilots and airport vehicle operators, and improve
    operational procedures at our most congested airports.
                              preparing for growth
        Even with the events of September 11, we must plan for aviation
    growth.
        Some priorities shifted after September 11, which caused the FAA to
    update the Operational Evolution Plan (OEP). Even with recent events,
    the OEP is fundamentally the same--a near 30 percent increase in
    capacity by 2010. The OEP is our plan to ensure that Government is
    doing everything that it can do; while at the same time have a
    comprehensive plan that lays out realistic expectations. These
    expectations are based on who has the ability to do what and when.
        Let me highlight our progress on near-term OEP initiatives. These
    initiatives are the heart of the FAA's ability to manage the NAS and
    provide for future growth.
      --Tactical, real-time approach to managing delays and demand around
            weather and other issues is now a year-round approach. It is
            standard operating procedure and how we do business. We are
            using this collaborative, tactical approach every day of the
            year. We are developing new tools and capabilities that better
            define airspace constraints and support corrective actions.
      --Reduced separation (RNAV) ``Area Navigation'' routes in the Gulf of
            Mexico were successfully implemented last year, allowing for a
            greater flow of aircraft in this area. They have been a large
            success with estimated annual savings to operators of about $22
            million dollars. We are implementing RNAV routes around the
            nation and are on schedule to meet OEP milestones.
      --We have made major progress on chokepoints. Ten new sectors opened
            last year. One sector opened this year at the Cleveland Center.
            Four radar positions opened at the Philadelphia and New York
            TRACONS in late December. We will finish the chokepoints
            initiative this June with four more enroute sectors in the
            Cleveland and New York Centers.
      --We opened a new 10,000-foot runway at Detroit Metro on December 11.
            We have runways planned for completion in calendar year (CY)
            2003 in Denver, Miami, Orlando and Houston. Minneapolis is
            under construction and scheduled for completion in CY 2004.
      --We are accelerating the User Request Evaluation Tool (URET). This
            Free Flight Phase I tool allows for more direct routes,
            increased arrival capacities, and a more predictable flight
            experience for the passenger.
        I am pleased to report that Kansas City, Cleveland, Memphis,
    Indianapolis, and Chicago Centers are now operational with URET.
    Atlanta and Washington Centers will rapidly follow in the URET
    schedule.
        I visited the Kansas City and Cleveland Centers in late February.
    Controllers at both sites are pleased about this tool for its increased
    productivity, ability to allow time for controllers to focus on
    important tasks, as well as the conflict probe ability.
        URET at Atlanta and Washington Centers will mark a very important
    milestone for us. Achieving operational capabilities at both Centers
    will complete the commitment the FAA made with and to the aviation
    community 4 years ago to deliver on Free Flight Phase I. We did what we
    said we were going to do and when we promised. What was critical and
    essential to the success of Free Flight Phase I was holding the
    consensus, following the plan, communicating with the community, and
    the commitment by all to get this done.
                         a more business-like approach
        I also want to take this opportunity to update the subcommittee on
    our management efforts and reforms.
        First, I want to inform the subcommittee that the FAA received an
    unqualified, or ``clean,'' audit opinion on its fiscal year 2001
    Consolidated Financial Statements, which shows how the agency is
    spending its funds. Improvements we have made in the property
    accounting system were the major step in achieving the improved rating.
    By receiving an unqualified opinion, Congress can be assured that the
    FAA's resources are appropriately accounted for and our financial
    condition is being accurately reported.
        Second, the FAA is moving toward the creation of an Air Traffic
    Organization (ATO) and the hiring of a Chief Operating Officer (COO).
        The ATO will be a performance based air traffic services
    organization. It will commit to clear objectives, specific measurable
    goals, customer service standards, and targets for improved
    performance. It is designed to make certain that our air traffic
    services, from acquisition to delivery to operation, are highly
    responsive to user needs and more accountable for performance. A Chief
    Operating Officer will lead the ATO.
        In addition, the FAA is fully committed to finishing our cost and
    performance initiatives, which include cost accounting and labor
    distribution reporting (LDR). Our cost accounting system is well
    underway, currently tracking over 70 percent of our cost on a monthly
    basis. All FAA lines of business will have cost accounting in place by
    November of this year to coincide with the implementation of the FAA's
    new accounting system, DELPHI.
        Our LDR initiative will improve the cost information provided to
    the cost accounting system and FAA managers to better understand our
    largest cost element--our labor. We are currently collecting labor data
    from six FAA organizations, and this activity will be implemented
    across the FAA by the end of this fiscal year.
        In conclusion, I want to take a moment to once again thank
    Congress, and especially this subcommittee, for its support of the FAA.
    The President's fiscal year 2003 budget is the last budget that I
    present to this subcommittee as my 5-year term will end this coming
    August. I have enjoyed the working relationship that I have with you,
    Senator Murray, and the members of the subcommittee.
        I would be pleased to answer any questions you may have.

        Senator Murray. Thank you very much, Ms. Garvey.
        We have been joined by Senator Stevens. Would you like to
    give an opening statement before we do our questions?

                        STATEMENT OF SENATOR TED STEVENS

        Senator Stevens. No. I just, Madam Chairman, dropped by
    because I know what Ms. Garvey just said is the case, and this
    is probably her last appearance, and I wanted to stop by and
    thank her for her consideration of so many issues that affect
    my State and aviation in general. You have done a wonderful job
    and really can take with you a legacy of not only understanding
    the system, but cooperating with Congress and with everyone
    concerned to improve our air traffic system and improve its
    safety. I think I just join all concerned, I think, in thanking
    you for so much that you have done, and particularly for your
    personal visits to Alaska. We will welcome you back without
    regard to where you are working, Jane.
        Ms. Garvey. Thank you very much.
        Senator Stevens. Thank you very much.
        Ms. Garvey. Thank you, Senator.
        Senator Murray. Senator Kohl, would you like to make an
    opening statement before we turn to questions?
        Senator Kohl. No. I do not have any questions.
        Senator Murray. Very good.

                   SECURITY OF AIR TRAFFIC CONTROL FACILITIES

        Ms. Garvey, as I mentioned in my opening statement
    following September 11, you were required to rapidly spend $100
    million to better secure your air traffic control facilities
    against terrorist attacks. And I understand that, separate from
    that $100 million expense, you were required to absorb another
    $100 million in unanticipated costs.
        Do you have any continuing concerns regarding the adequacy
    of security around your air traffic control facilities?
        Ms. Garvey. Senator, I think that is an issue you always
    have to keep focused on. We are certainly working very closely
    with our air traffic controllers. We have done threat
    assessments. We are in close communication, obviously, with
    intelligence; with the FBI, in particular. So, it is something
    we are constantly looking at.
        I think we have taken all the right steps, but I think as
    we move forward and we learn more, we will have to continue to
    look at that. I think in some cases, some of the steps we took
    immediately after September 11, we have been able to step back
    from, again working with the controllers. In some cases the
    armed guards are being replaced by fences. Those are the kinds
    of steps and those are the kinds of issues we continue to look
    at.

                         UNANTICIPATED OPERATIONS COSTS

        Senator Murray. What other unanticipated expenditures have
    you experienced this year that resulted in that $200 million
    shortfall?
        Ms. Garvey. Well, there are certainly issues around
    communication and some additional program issues that we had
    not anticipated. I continue to work and as the Deputy does, as
    well, with our Chief Information Officer (CIO), to continue to
    look at even some of the protection of the air traffic
    infrastructure; not just the facilities themselves, but also
    the air traffic control system itself. So, again, we have
    budgeted that. We found ways to cover it, but it will continue
    to be a concern as we move forward.
        Senator Murray. What will be the impact of your plans to
    slow the hiring of new air traffic controllers and reduce the
    training expenditures for air traffic controller?
        Ms. Garvey. I think those are two areas that I am
    particularly disappointed in. Those are steps that you do not
    like to take. When we have the work that I talked about, choke
    points for example, just to give one illustration, we have
    opened a number of new sectors. That has meant some additional
    responsibilities for controllers. And they have taken that on
    and they have really done it very, very well; but clearly, it
    is an additional workload, in some cases. Wanting to make sure
    that we could provide the kind of staffing that we have wanted
    to, we have made a commitment to that. It is difficult to have
    to hold back for a while on that. That is not something you
    like to do as prepare for the future.
        Certainly, training is another area that I have concerns
    about. We have got a lot of work going on to reduce and
    operational errors, and we are beginning to see a decrease in
    errors of about 4 percent. We are taking some right steps, but
    a cornerstone of that is additional training for the
    controllers, and I am particularly concerned that some of that
    training may have to be held back as we meet that shortfall.
        Senator Murray. Will those slowdowns still be necessary if
    we provide the $100 million supplemental that the
    Administration requested?
        Ms. Garvey. We will be able to reinstate all of those, or
    if not all, nearly all of those training programs and, again
    begin to hire. I think the key is, of course, when a
    supplemental is passed within the fiscal year.

                      IMPACT OF SHORTFALL ON SAFETY ISSUES

        Senator Murray. Do you have any safety concerns, regarding
    your initiatives, to reduce the contract maintenance of air
    traffic control systems and service redundance systems?
        Ms. Garvey. Madam Chairman, we have been very, very careful
    as we look at these issues that we are not affecting critical
    safety issues, and so clearly if we would not take those steps.
    One of the hallmarks of the American aviation system is the
    redundancies that we are able to build in.
        So, while I think we can live without some of the
    redundancies, you certainly do not want to remove too many, nor
    do you want to see that in a longstanding way. So we have been
    very careful to protect the most critical ones. I think, again,
    that is the kind of issue we have to constantly evaluate and
    guard against.

                    FUNDING SOURCE FOR SUPPLEMENTAL REQUEST

        Senator Murray. The Administration's budget request for the
    2002 supplemental seeks language allowing you to divert funds
    from your investments in air traffic control systems in the
    Facilities and Equipment account, and the AIP account, to cover
    part of your operations shortfall. Why was it determined that
    FAA must eat its security expenditures out of its own hide,
    when the Administration is simultaneously requesting $4.4
    billion for new security requirements through the TSA?
        Ms. Garvey. Those are always difficult decisions. I think
    from the FAA's perspective, we put forward a request for $100
    million. We are certainly pleased that the Secretary's office,
    OMB, and the Administration supports and recognizes the needs
    we have. I know that the Secretary's office struggled and tried
    very hard to certainly stay within the spending line. And this
    really was the determination. But clearly the fact is the $100
    million is a recognized need. We are pleased with that.
        Senator Murray. Is it fair to assume that that budget
    proposal did not originate in the FAA?
        Ms. Garvey. We put forward the request for $100 million.
    That is, we did do that.

                       SUMMER TRAFFIC AND OVERTIME COSTS

        Senator Murray. Summer is going to be upon us very soon;
    actually today out here. But hopefully, hopefully the traffic
    spike that always accompanies the summer travel season will be,
    as well. Do you currently have enough money in your operations
    budget to cover the customary amount of overtime that you
    generally use during the summer travel season?
        Ms. Garvey. I think without the supplemental, that will be
    a concern as we move forward. We are going to have to watch
    that very carefully. I think you are absolutely right. We are
    starting to see that travel come back. We expect that this
    summer some of our busy hubs will once again be very busy, so
    it does put an additional strain on the Ops budget.
        Certainly with the supplemental, we will work very hard
    with you all to make sure that that money is there, and the
    resources are there.

                         USE OF AIP FOR SECURITY COSTS

        Senator Murray. The Transportation Security Act allows
    airports to use AIP funds for security-related expenditures for
    2002 only. Funding for this program, which totals $3.3 billion
    in 2002, is primarily intended for investments, of course, in
    airport capacity and safety improvements. Can you shed any
    light on how much of the $3.3 billion appropriated for 2002 is
    likely to be used for the cost of installing explosive
    detection systems?
        Ms. Garvey. Madam Chairman, as you indicated in your
    comments, some of this is still being discussed within the
    Administration. And let me answer it, if I could, in two ways.
        One is, if you look historically at how much out of AIP
    went towards security, it was generally about 2 to 3 percent,
    if you look at the historical commitment. It was essentially
    for things like fences or access cards and so forth, very much
    within the guidelines. With Congress's help this year, much
    more flexibility was given to the airports, which I think they
    are very grateful for. The $175 million that Congress
    appropriated, again, was a very big help.
        We are right now, at the Secretary's request, pulling
    together all of the costs that have been incurred by the
    airports. We should be getting that this week. The very early
    estimates I saw was that it might be about 12 percent of the
    $3.3 billion, but again we need to get a much clearer sense of
    that.
        We are just getting those numbers. When we get that in,
    which, again, will be this week, we will be sitting down with
    TSA to really take a look at both the concerns that they have
    from a security point of view, and certainly working with the
    Secretary and the Deputy Secretary to make the policy
    determination.
        Senator Murray. Will the airports be required, by the FAA
    or by TSA, to use a portion of their AIP entitlement funds to
    cover the cost of installing explosive detection systems?
        Ms. Garvey. At this point, that policy call has not yet
    been made. I think the first step was really to understand what
    the costs would be, to really understand the magnitude of the
    problem. I expect that determination will be made fairly
    quickly. I am hearing, and I am sure you are as well, from
    airports that are concerned, as you indicated, with
    construction seasons and so forth; so I think there certainly
    is an urgency to this issue.
        Senator Murray. What factors will determine how much of the
    AIP program will be diverted for the installation of these, and
    can you tell us when the Administration is making the decision?
        Ms. Garvey. I am sure that the Secretary will want to make
    this decision or come to grips with this very quickly. Our
    responsibility in the short term is to get these numbers to
    them. We said we would get it to them by the end of this week,
    and we will certainly do that.
        I think one of the factors, certainly, will be
    understanding the magnitude of the problem: Are we really
    talking about something that is enormous in scope? Are we
    talking about something that if we take part of it from AIP, we
    could still make it work?
        I think part of our responsibility will be to also present
    to both the Secretary and TSA an understanding of just what the
    capacity needs are out there. We have got a very good handle on
    that.

                      USE OF AIP FOR SECURITY EXPENDITURES

        Senator Murray. Well, let me just ask you for your personal
    opinion on whether you think it would be wise for Congress,
    with the competing requirements between safety and security,
    whether we should change the law again and allow the AIP funds
    to be used for security expenditures instead of safety and
    capacity projects?
        Ms. Garvey. For the challenges that we are facing, and
    again I have not seen the final numbers, but I think for the
    challenges we are facing, more flexibility is probably
    something that I would certainly want to see considered. I
    would like to see that considered for a bit more time as we
    move forward. But, again, having said that the capacity issues
    are still very real as well. It is going to be a very tough
    balance, but this is an extraordinary time, and I think we are
    going to have to face some very, very tough issues.
        Senator Murray. Thank you. Senator Shelby.

                         USE OF AIP FOR SECURITY COSTS

        Senator Shelby. Thank you. Ms. Garvey, I am concerned that
    TSA is not budgeting the cost of installing EDS machines at our
    airports and is reviewing the AIP solely as a funding source to
    implement security-related requirements, which according to the
    I.G. could exceed $2 billion. Other estimates even run higher.
    Do you have any comments on that?
        Ms. Garvey. Senator, I think the points that you all made
    in your opening comments are exactly ones certainly that I
    share and I believe the Secretary does as well.
        The capacity issues are very real; and while we do have
    certainly some very real issues around security, and looking
    for a little more flexibility may be appropriate for the next
    year or so, we still cannot lose sight of the capacity issues.
    Somehow finding a balance, it may be a little bit more on
    security than we have ever had before, is going to be very
    important.

                   EN ROUTE AUTOMATION MODERNIZATION PROGRAM

        Senator Shelby. The FAA's en route automation modernization
    program, what do you call it? ERAM? It is critical to keeping
    the national air space system operating and meeting the
    anticipated demand for air travel. This acquisition program, as
    you well know, is in the early stages, but already there is
    concern that this software-intensive effort has the potential
    for significant cost growth and schedule delay. It is a high-
    risk program, and costs could easily reach $1.5 billion, we
    have been told.
        What is your strategy for moving forward and ensuring
    competition here? And what will be the criteria for selecting
    the prime contractor?
        Ms. Garvey. Well, as you may remember, Senator, we did at
    one point move forward on a sole source, but it was challenged
    and we are in a competitive process right now.
        Senator Shelby. Real competition is good, if it is real
    competition.
        Ms. Garvey. Yes. Yes. I agree with you, Senator. There has
    been a protest that was filed. However, the two firms that are
    involved are engaged in mediation, and those talks are
    literally underway now. Some were held last week, additional
    talks, I believe, are being held this week. So I am hopeful
    that the mediation process will result in something that allows
    us to move ahead so that competition is protected but still we
    are able to move ahead. I think that is critical and important.

                           ENVIRONMENTAL STREAMLINING

        Senator Shelby. Has the FAA basically slipped environmental
    streamlining to the back burner?
        Ms. Garvey. Actually, the answer to that is no. Although I
    will tell you that I probably personally have not focused on it
    as much as I did last year, I am delighted to say that we have
    got a pretty dedicated staff that----
        Senator Shelby. I think you have focused on security in the
    last few months, which is great.
        Ms. Garvey. That is right. That is right. Thank you. But
    the airports office, Lynn Pickard, who actually works on this
    very carefully and has worked long and hard on it, had to
    continue discussions with the President's Council on
    Environmental Quality (CEQ) and came up with a whole series of
    categorical exemptions that could be included. And CEQ has been
    very helpful. We have a lot of work underway there, work with
    CEQ. And I think that has been helpful. The dedicated teams
    that we have had in place for particular airports have
    continued with their work; and, again, it is not shortchanging
    the environment, but actually streamlining it to some degree.
    Finally, we have asked for some additional lawyers in our
    budget for next year, who will help us with the environmental
    work.
        Senator Shelby. To move the process.
        Ms. Garvey. To move the process. The legal issues,
    sometimes, are the most troublesome as you move forward.

                           TIME TO CONSTRUCT RUNWAYS

        Senator Shelby. Does it have to take approximately 12 years
    to build runways, something like that?
        Ms. Garvey. In some cases----
        Senator Shelby. The total process.
        Ms. Garvey. In some cases, that is correct. And certainly
    if you begin from the very early stage of when the local
    decisions are debated through, even before it gets to the
    Federal level, that is absolutely true.
        I think the area where we still need to work, and one area
    that I suggest for another administrator, is coordination at
    the Federal level among all the Federal agencies. In some
    cases, I think we could probably do more work in that area.
        Senator Shelby. But if you are going to increase capacity
    and it takes 12 years, you are going to have further delays
    here and there; are you not?
        Ms. Garvey. That is exactly why the dedicated teams, those
    teams that we put in place, particularly for some of those
    runways where it affects the system, where there is a rippling
    effect.

                                  COST CONTROL

        Senator Shelby. What steps has the FAA taken under your
    leadership to ensure that current costs and schedule parameters
    will be maintained? We are all interested in costs. You know,
    this is an appropriations committee.
        Ms. Garvey. Absolutely, Senator. As you should be. And I
    certainly understand that.
        First of all, I think the cost accounting really has been
    and will continue to be a terrific tool for the FAA. Having a
    cost accounting system in place where you can really drill down
    and understand what your costs are and you can compare why is
    it more expensive, for example, for communication lines to be
    running in Chicago than it is in Atlanta, so that you can
    really drill it down facility by facility and being able to
    look at your costs. That is one way we can really control
    costs.
        If you look at some contracts that we have put in place, we
    have included a fixed cost. Sometimes that works, sometimes it
    does not. But in the cases where it does work, I think it has
    the potential to save some money. We have included in some
    cases some incentives for contractors to finish earlier, which
    in the long run saves us money.
        Senator Shelby. It works, does it not?
        Ms. Garvey. It does work, absolutely. There are a number of
    steps we have put in place, both internally and with our own
    contractors. Again, more needs to be done, but we have made
    some enormous progress in that area.

                   TECHNOLOGY FOR OCEANIC AIR TRAFFIC CONTROL

        Senator Shelby. The Inspector General recently weighed in
    on the FAA's latest effort, that is advanced technologies in
    oceanic procedures, expressing a concern that the software
    development continues to be a major risk.
        What are you doing in that area to maintain the costs?
        Ms. Garvey. Senator, the Inspector General talked about the
    FAA taking a very close look and monitoring that very
    carefully. We are doing that. We have a very aggressive and a
    very good program manager in that particular program who is
    doing exactly that. That contract has a fixed cost associated
    with it, so there is a real incentive for the contractor to
    stay within certain parameters. We are very much on top of that
    particular contract.

                WIDE AREA AUGMENTATION SYSTEM (WAAS) AND ASR-11

        Senator Shelby. A couple of other things as I sum up here.
    What about the WAAS signal? Where are we there, and where are
    we going, you know? I have expressed my reservations about the
    cost growth here, and the reduced capability of the program.
        The second thing I would like for you to touch on is the
    Air Force has certified the ASR-11 radar. The FAA is still
    testing it. I have been told that the FAA will make a decision
    to certify the radar on or about the 1st of May, which is a
    couple of weeks away. Can you give us any sense of how these
    tests are going?
        Ms. Garvey. Let me start with the ASR-11, and then I will
    go to WAAS. There have been some concerns raised about how well
    the ASR-11 will perform in an operational setting.
        Senator Shelby. Yes.
        Ms. Garvey. We did some developmental work and testing in
    the last couple of months, and I have not seen the final
    results. It was actually finished, I believe, at the beginning
    of April. My understanding is the results were pretty positive,
    that they were overall good. We now move into more of an
    operational testing with the controllers. I do not want to
    prejudge that, but it sounds like this is heading in the right
    direction. We have to look at that analysis more carefully, but
    at least the reports that I have gotten have been promising.
        On WAAS, we have made some terrific progress in the last 6
    months. About a month ago, we had a pretty significant
    breakthrough that was reported, I believe, at least in The
    Washington Post. It may have been reported more widely than
    that. In some of the developmental work that we were doing, we
    had a breakthrough that was going to allow us to use the
    precision approaches in about 5,000 small and mid-sized
    airports. That was very, very good news.
        Some of the concerns that we had a year ago and that the
    contractor had as well have been surmounted. We believe this
    breakthrough of about a month ago, will save about 2 years of
    developmental work. And that will, in turn, of course, save
    some money. We are still focused on the integrity, the safety
    integrity piece, but the progress is moving in that area. I see
    no difficulty in meeting that commissioning date of December,
    2003.
        Senator Shelby. Thank you, Madam Chairman.
        Senator Murray. Thank you, Senator Shelby. We will go back
    and forth, from side to side, so I will turn to Senator Kohl
    next after him.
        Senator Kohl. Thank you, Madam Chairman. And, Administrator
    Garvey, welcome.
        Ms. Garvey. Thank you, Senator.

                        SECURITY FOR CHARTERED AIRCRAFT

        Senator Kohl. The Transportation Security Act includes a
    provision to strengthen security requirements for chartered
    aircraft. The new security program for chartered aircraft
    larger than 18 seats is being developed at the Transportation
    Security Administration. However, major gaps in the security
    system still exist. It is a fact that today, even with all of
    the progress we have made when it comes to security for
    commercial airline travel, an individual can still charter a
    747 and bring his friends on board without any screening of
    those individuals or their luggage. They could just walk on the
    plane and use it as a weapon similar to what occurred on
    September 11.
        What assurances can you give us that another terrorist
    attack will not come from a charter jet? If passengers and
    their luggage for these charter jets are not prescreened, as
    they are not, then how can we be assured that another large jet
    will not be hijacked and used as a weapon?
        Ms. Garvey. Senator, and I know this has been a real issue,
    both for you, and I would say, several members of Congress have
    raised this as an issue as well. And I know it is one that TSA
    is very, very focused on. I know in speaking with Under
    Secretary Magaw, they are focused on so many issues within the
    legislation of trying to meet the deadlines and so forth, but
    this issue of chartered aircraft is one that I know they are
    very focused on. And I will certainly bring that message to him
    of your concern around this issue.
        Senator Kohl. Well, let me----
        Ms. Garvey. But these will have to be worked through with
    the Under Secretary.
        Senator Kohl. And I appreciate that, I know how much how
    much you are genuinely concerned, but passing it on to TSA and
    suggesting that they are working on it, and they will come up
    with something as soon as possible is, somehow, something I
    would like to hope that we could get beyond here today.
        I mean, I asked just a simple question. And until they come
    up with a better procedure, why should we not have a system
    instituted immediately that would at least require that
    passengers getting on chartered aircraft are wanded down?
        Ms. Garvey. Yes.
        Senator Kohl. You know, with the thing that they do when
    you go to an airport? Sometimes they just have these hand-held
    devices that they wand people, and at least hand-check their
    baggage. I mean, I do not understand the bureaucracy that is
    involved; that could be done today. And I would like to hope or
    suggest to you that you have a conversation with Mr. Magaw, who
    I know and is a very fine person, and at least respond to that
    request that we are making. Because it is now, you know, 6
    months or 7 months since September 11.
        Ms. Garvey. Yes.
        Senator Kohl. And really, chartered aircraft have no more
    security, large chartered aircraft have no more security today
    than they had before September 11, which was and is none. Is
    that a reasonable request?
        Ms. Garvey. Oh, absolutely, Senator. And I will do that.
        Senator Kohl. Could I hope that within the next day or two,
    you and I could have a telephone conversation and----
        Ms. Garvey. Absolutely, yes, Senator.
        Senator Kohl. I think that would be great.
        Ms. Garvey. Thank you.

                              FLIGHT 587 ACCIDENT

        Senator Kohl. I think that would be very significant.
        One other comment I would like to make to you. On November
    of 2001, New York City, still reeling from the September 11
    attacks, as you know, suffered another blow with the crash of
    Flight 587. And while the investigation results are not yet
    conclusive, many people believe that this tragedy may have been
    prevented with technology that exists today and continues to be
    developed. Under FAA regulations, aircraft inspections are
    often spaced, as you know, too infrequently. And they allow
    airlines to design for cost savings, oftentimes over safety.
        In addition to insufficient procedures for the inspection
    of composite components within aircraft, it is quite possible
    that the people who died on Flight 587 died as the result of
    failure of the aircraft's composite tail fins. It is my
    understanding that current technologies are being developed
    that could have very possibly prevented such a failure, as well
    as several other close calls that we have had.
        One such technology is the idea of a Structural Health
    Monitoring system called SHM. SHM systems would be implemented
    in an aircraft to continuously monitor the critical structural
    components using surface penetrating methods. This would enable
    the operator to discover damage that could potentially lead to
    failure, damage that may have been overlooked between scheduled
    intervals.
        Is the FAA doing anything, or what is the FAA doing to
    encourage research in this area to prevent similar failures in
    the future?
        Ms. Garvey. Senator, I can certainly tell you that we are
    doing a great deal of research on both composites and a whole
    host of issues, again, with a lot of help from this Committee,
    from wiring to flammable materials, et cetera. So, if you get
    an opportunity to ever visit the Technical Center in Atlantic
    City, it is really quite extraordinary. I think it is about the
    best in the world, with the technologies that are being
    explored.
        I am not particularly familiar with this technology that
    you have mentioned, but I certainly will find out about it, and
    will be able to talk with you about it when we talk over the
    next couple of days. I will certainly find out about it.
        Just one note, though, about that particular accident.

                      NATIONAL TRANSPORTATION SAFETY BOARD

        We are working hand-in-glove with the National
    Transportation Safety Board (NTSB). I have talked with the
    chairwoman several times. We have done some additional
    inspections of the tail to make sure that we are not seeing
    difficulties in other aircraft as well. So, there is a
    tremendous amount of discussion and work going on at the
    technical level, all the way up the line between the NTSB and
    the FAA, and we are very focused on it together. While we do
    not know yet what the cause is, I think people are working very
    hard and taking all the appropriate steps. But I will find out
    about this technology in particular, and it may be that some
    folks at the Tech Center are already working on it. I will find
    out about it.
        Senator Kohl. All right. Thank you very much. I thank you,
    Madam Chairman.
        Senator Murray. Thank you, Senator Kohl. Thank you, Senator
    Campbell, for your patience. You have been here since the
    beginning of the hearing. I appreciate it.

                         FIXED BASED OPERATIONS (FBOS)

        Senator Campbell. Thank you, Madam Chairman. I have about a
    half dozen questions. Unfortunately, I have got a 11:30
    conflict, so I would like to submit those in writing, if I
    could, and just make a couple of comments before I have to run.
    One was related to what Senator Kohl was mentioning about
    private aircraft. In my other life, I am an instrument-rated
    pilot, and I used to fly a lot. And I can tell you that the
    biggest weakness in our whole safety link is in the Fixed Based
    Operations (FBOs). Not that there is anything wrong with the
    Fixed Based Operations (FBOs), but literally anybody can go out
    on a flight line to get on a private plane.
        And some of them have huge lifting capabilities, as you
    might guess. There are some pretty big private aircraft out
    there, with almost no consideration of security at all, that I
    can see, in a lot of the smaller communities.
        In addition to that, most of those private planes, some big
    ones, they buy their fuel from the FBOs. And the trucks are
    parked right there. They fill them and they park them right
    beside the hangars where they are fueling, sometimes with
    thousands of gallons on board and on those trucks too, which
    seemed to me that is another really weak place, too.
        And I do not know what the FAA is doing about it, but I
    know I just live a few miles from one where I used to fly out a
    lot. And it just seems to me there is a real need there in
    dealing with private aircraft, too.

                            CERTIFICATION OF ASR-11

        A second point: Senator Shelby mentioned the ASR-11. I know
    that Senator Stevens and Senator Murray both have some airports
    that we are waiting for that ASR-11, as I did in Eagle County.
    Colorado has been waiting a number of years for an upgraded
    instrument landing system. And it was mentioned that that ASR-
    11 has been certified by the Air Force, but not by the FAA. As
    I understood you to say it, it is kind of on the way. You are,
    it is pretty close now; is that correct?
        Ms. Garvey. We are working on that, and I need to double-
    check on the Air Force.
        Senator Campbell. All right.
        Ms. Garvey. I am not sure that they have actually; I think
    we are doing it together.
        [The information follows:]

        The Air Force is currently in the testing phase and expects to
    certify the ASR-11 in the August-September 2002 time frame.

        Senator Campbell. Well, I just mention that, because Eagle
    County is used by the Air Force regularly. They have a
    helicopter training unit there, and they use it as one of the
    flight training places in their system, too. It seems to me if
    it is good enough for the Air Force, it ought to be good enough
    for civilian traffic, too.

               SCHEDULED PASSENGER SERVICE AT CENTENNIAL AIRPORT

        And lastly, Madam Chairman, in 1996, Congress amended the
    national aviation statutes to improve local control over
    community airfields. That mandate means that small aircraft and
    small airports, such as Centennial which is south of Denver,
    could not be forced to handle airline service of 30 or more
    passenger seats. That was 1996, before you even took your
    present position. But it is my understanding after 6 years, the
    FAA still has not written the rules to implement the law. So
    Centennial Airport, and I imagine a lot of other ones like it,
    has lost more than $7 million in Federal funding since 1998
    alone for not complying with these now outdated rules that call
    for an accepted schedule passenger service.
        I mentioned this to you before we had our meeting and
    Administrator Garvey has agreed to come to Colorado to meet
    with officials of Centennial Airport about this particular
    question; but I did want to also put that on the record that it
    is a big concern to us in Colorado. And I apologize for having
    to run, and I will submit my questions in writing. Thank you.
        Ms. Garvey. We will just have to do that before August,
    Senator.
        Senator Campbell. How about next week? We will. We will do
    it before August.
        Ms. Garvey. Thank you.
        Senator Campbell. Thank you. Thank you, Madam Chairman.
        Senator Murray. Thank you, Senator Campbell.

                        VIOLATION OF RESTRICTED AIRSPACE

        On April 1st, a Frontier Airlines aircraft violated
    restricted air space by flying over the White House, the
    Washington Monument, and the National Observatory. And earlier
    in the day, that same crew was diverted to Dulles after failing
    to produce the password necessary to land at Reagan National
    Airport. Given all the restrictions that are in place around
    the air space around Washington, how is it possible that this
    crew could so blatantly violate them?
        Ms. Garvey. Senator, I could not agree more, that just
    should not have happened. And as you may know, Madam Chairman,
    the crew was grounded and retrained. We have had extensive
    discussions with Frontier about some additional training, so I
    do not expect that will happen again. We have taken the steps
    necessary, and quite frankly, I do not think it should have
    happened even the first time.
        Senator Murray. What can you tell us about the frequency of
    these kinds of violations?
        Ms. Garvey. I would like to get more accurate numbers for
    the record. I think we have certainly had some incidents,
    though I do not want to suggest that it is widespread. Every
    time we do have an incident, there is either retraining or an
    appropriate action taken. Sometimes it is a very minor matter
    of moving into the restricted areas, and other times it is
    something that we believe is more serious, more blatant.
        Senator Murray. Do you think it is common, a common problem
    for crews not to know these rules?
        Ms. Garvey. I would not say it is a common problem, but I
    would like to get you, if I could for the record, a more exact
    number.
        [The information follows:]

        The number of airspace violations concerning Prohibited Area 56 (P-
    56) is not a common occurrence. Below is the total number of operations
    at Reagan National Airport (DCA) and the number of airspace violations
    for P56 from 1998 to present:

    ------------------------------------------------------------------------
                                                 Number of       Number of
                      Year                      operations      violations
    ------------------------------------------------------------------------
    1998....................................         313,938              24
    1999....................................         334,768              20
    2000....................................         342,790              17
    2001....................................         270,145              14
    2002 \1\................................          47,602               4
    ------------------------------------------------------------------------
    \1\ Current data as of May 10, 2002.

                   AIR TRANSPORTATION OVERSIGHT SYSTEM (ATOS)

        Senator Murray. Last week, the Inspector General released
    his report on the Air Transportation Oversight System, ATOS.
    The report applauded the goals of ATOS, which is to identify
    systemic safety risks in air carrier operations, utilizing data
    that is collected by your inspector work force.
        However, the report points out a number of areas where ATOS
    has fallen woefully short. For example, the I.G.'s report
    stated that your inspectors are not adequately trained, your
    data analysis is lacking, and you need to do a better job of
    following up when deficiencies are identified.
        How difficult has it been to get inspectors to shift from
    the traditional methods of inspections to using ATOS?
        Ms. Garvey. Madam Chairman, I do not think it is ever easy
    when you are talking about really a cultural shift in an
    agency, and you are changing from one system that people have
    grown up with professionally to another. It is always a
    challenging observation, but I would make two comments.
        One is that the recommendations that the I.G. came out with
    were exactly what our own inspectors told us, as well. So there
    is no argument with the recommendations that were made. And, in
    fact, even in the midst of the I.G. report, which was about a
    year and a half ago, we had begun to implement those
    recommendations. The data is now integrated. We have the
    analysts on board to do it. We are in the process of retraining
    our inspectors under a program that the inspectors designed
    with us.
        That will be completed by the end of this year, but I think
    that is going to be a constant issue for us, because it really
    is changing the way we are doing business. But what I am
    encouraged by, the comments from the inspectors and from the
    I.G. are consistent, and from our own managers, in saying this
    is the approach we should be taking, this is the direction we
    should be going. That part is the most encouraging.
        Senator Murray. ATOS currently only covers 10 air carriers.
    When do you expect the rest to be covered?
        Ms. Garvey. We are in transition right now. We are
    beginning to work with the other carriers. I had a long
    conversation with the Inspector General about this last week,
    on the one hand, you want to push ahead and on the other you
    want to make sure that you have got the program solidly
    grounded. So we are moving ahead to the other airlines, but
    also being mindful of the fact that we still have some work to
    do even with the fundamental program that we have. We are in a
    transition to the new program with the other carriers, that is,
    beginning to discuss with them both what the safety systems
    need to look like, what kind of training they need to begin
    preparing for. So we have begun those conversations already. I
    would like to get back to you with a time line on that.
        Senator Murray. All right.
        Ms. Garvey. I want to factor in some of the Inspector
    General's comments as well.
        [The information follows:]

        It is important to note that currently the non-ATOS air carriers
    are in a transition program called the Surveillance and Evaluation
    Program that introduces system safety and ATOS tools in a phased-in,
    systematic, modular process. Flight Standards plans to have all of the
    remaining 14 CFR 121 air carriers (approximately 140 air carriers)
    phased-in under the ATOS system by September 30, 2004.

                           HIRING OF SAFETY STAFFING

        Senator Murray. Very good. Ms. Garvey, this subcommittee
    provided a total of $15.8 million over and above your requests
    last year to increase the number of safety inspectors and
    aircraft certification personnel. Specifically, the purpose of
    these funds was to get the inspector work force up to the level
    that was identified as necessary in the 90-day review study
    that followed the Valu-Jet crash. What progress has been made
    in getting these new inspectors on board and how many of them
    have you brought on board to date?
        Ms. Garvey. The progress to date, is slower than I would
    have liked. September 11, really has thrown a number of issues
    off. But in fact, talking with our AVR staff yesterday, the
    numbers will be on board by the end of the year. So we will
    meet that commitment. We are grateful for that support. We
    recognize the necessity of having those inspectors in place, so
    we will have it completed by the end of the year, but it is a
    little slower than I would like.
        Senator Murray. Can you assure us that these positions will
    not be delayed as a result of the shortfall in your operations
    budget?
        Ms. Garvey. We are committed to getting those done,
    absolutely, because of the safety implications.
        Senator Murray. Given the training deficiencies that the
    I.G. identified, can you assure us that these new inspectors
    will be fully trained for their responsibilities?
        Ms. Garvey. Madam Chairman, they will be fully trained; and
    again, the program that we have restructured with the help of
    our inspectors will be the basis of that training.
        Senator Murray. Does your fiscal year 2003 budget continue
    the funding for these new positions?
        Ms. Garvey. I would have to go back and look at that.
        Yes, it does. I am sorry.
        Senator Murray. Can you give me a schedule for filling
    those?
        Ms. Garvey. Yes, we will.
        [The information follows:]

        The funding added by Congress was to restore staffing levels in
    Regulation and Certification to the fiscal year 1998 levels. In order
    to reach the fiscal year 2002 staffing level of 3,327, the monthly
    hiring schedule, which covers new positions and backfilling for
    attrition, is:

    April.............................................................    +3
    May...............................................................   +18
    June..............................................................   +31
    July..............................................................   +36
    August............................................................   +32
    September.........................................................   +13
                                                                      ______
        Total.........................................................   133

              FAA ASSISTANCE TO AIRLINES WITH FINANCIAL DIFFICULTY

        Senator Murray. The experience of Eastern Airlines taught
    us that airlines in financial difficulty are sometimes tempted
    to cut corners when it comes to necessary maintenance and
    complying with safety regulations. Given the fact that we have
    a great many airlines in financial difficulty, many more than
    we had a year ago, should your inspection systems be better
    targeted on the carriers that are struggling?
        Ms. Garvey. Absolutely, that is an issue that we do
    inherently focus on. In other words, if an airline is in
    trouble, either financially or is having union difficulties,
    our inspectors will spend a little bit more time with those
    particular carriers. And that is certainly the case; that is
    the case now.
        I also think that some of the voluntary disclosure
    programs, both the Aviation Safety Action Plan (ASAP) and the
    Flight Operations Quality Assurance (FOQA) program, which again
    we got a lot of support from Congress on, is also helpful,
    because we often hear from some of the people within those
    airlines when they think there are difficulties or areas that
    we need to focus on. So, we are paying particular attention to
    that, but you are absolutely right. Focusing and encouraging
    our inspectors to spend more time with carriers that may be
    experiencing some difficulty is important.
        Senator Murray. Okay. Have you seen any evidence that there
    are any air carriers that are cutting corners right now?
        Ms. Garvey. I have not, Madam Chairman. I have not seen any
    evidence of that. And I will ask again when I get back today.
    But I have not seen any evidence. It is clearly an issue that
    our inspectors are aware of and are focused on.
        [The information follows:]

        The FAA has established procedures to work with air carriers
    experiencing problems. During these conditions, the FAA may initiate
    additional surveillance to ensure that the carrier is continuing to
    operate safely. The Certificate Holding District Offices (CHDO's), in
    coordination with their regional offices, develop and execute
    surveillance plans to provide additional oversight of key air carrier
    functions. Such plans could provide for increasing the number and type
    of inspections performed on the air carrier's training and maintenance
    programs, increasing the number on en route inspections performed by
    inspectors and increasing surveillance by geographic inspectors. As
    surveillance and inspections are conducted weekly reporting is analyzed
    in order to retarget inspections as appropriate. Specific guidance for
    these processes is provided in inspector handbooks (FAA Order 8400.10--
    Operations: FAA Order 8300.10--Airworthiness).

            STANDARD TERMINAL AUTOMATION REPLACEMENT SYSTEM (STARS)

        Senator Murray. Okay. Ever since the multi-billion dollar
    debacle known as the AAS program was terminated, your air
    traffic control facilities have been waiting for long overdue
    technology upgrades. One of those upgrades, the STARS system,
    is finally nearing the stage of being deployed in air traffic
    control towers around the country several years later than
    originally anticipated. But despite assurance of improved cost
    controls from some of your managers, you are now proposing to
    reprogram almost $38 million from other FAA procurements in
    order to keep your installation schedule for this year. Given
    the program's history so far, why should we be confident that
    the program will continue to stay on schedule?
        Ms. Garvey. Madam Chairman, we have not missed a deadline
    on STARS in the last year and a half. And I think that the
    difficulties that we experienced in the early days are behind
    us.
        The date that we are all very focused on is November, which
    is Philadelphia. We are going to make that. In fact, I intend
    to come back for that. I have told the Inspector General that I
    will come back to that ribbon-cutting with him, as well.
        Senator Murray. Why do we have a $38 million cost overrun?
        Ms. Garvey. The $38 million, which is the reprogramming
    that we have discussed a little bit with the staff is due to a
    couple of factors. One is there was more site preparation with
    some of the sites. There were more site difficulties. We also
    accelerated Philadelphia, which was not our intent when we
    first put the program together, but because of compelling
    issues, we have accelerated Philadelphia, so there is money
    associated with that, as well. Those are the really two
    principal reasons for the cost increases. November is it. We
    went to early display configuration earlier than expected in
    both Memphis and in Bradley; much earlier, 6 weeks earlier in
    one case. So I expect we will meet that date of November.
        Senator Murray. Well, I appreciate the optimism. But since
    STARS is dependent on the ASR-11 digital radar, which has its
    own technical problems, do you have any contingency plans in
    case we have any further delays?
        Ms. Garvey. Right. We do, Madam Chairman. First of all, I
    am encouraged by the testing that was done in March that really
    indicates it looks pretty good. There may be, and again, I do
    not want to be overly optimistic on the ASR-11. But in any
    case, ASR-11 becomes an issue, in about 2005 in terms of the
    STARS waterfall. There are contingency plans that are being
    developed if the ASR-11 proves not to work out. But we do have
    contingency plans that are in place. And, again, that would
    impact the waterfall towards the end, not in the beginning.
        Senator Murray. Thank you very much.
        Senator Durbin.

                         BALANCING SAFETY AND SECURITY

        Senator Durbin. Thanks, Madam Chairman. Administrator
    Garvey, thank you for being here today and thank you for your
    service.
        Ms. Garvey. Thank you, Senator.
        Senator Durbin. You have faced extraordinary challenges,
    not to mention September 11 and all of the other things
    attendant to it, and you have met each of those challenges so
    well. I really am glad to count you as a friend.
        Ms. Garvey. Thank you.
        Senator Durbin. And I am happy to have worked with you over
    the 5 years that you served as Administrator under two
    different presidents.
        I would like to ask you, before I go into a specific
    question which you can probably anticipate, I would like to ask
    you if you would reflect on a couple of things for this
    Committee and those who are following this hearing. I would
    like to divide it into safety and security. Safety being the
    ordinary operations of our aircraft across America, Security
    addressing the issues that have been raised since September 11.
        As you are about to move on and reflect on what you have
    learned and try to look ahead, what would you say to us in
    Congress? What are the things that we should be mindful of when
    it comes to challenges to maintain and improve the safety of
    our air service? If there are one or two things that you think
    we might overlook, and we should not?
        Ms. Garvey. To some degree, I think some of the discussion
    a little bit earlier points to one of the challenges: how can
    we provide for the greatest levels of security without
    sacrificing and without losing sight of some of the very
    critical safety programs? So I think, for Congress and for the
    Administration, the enormous challenge of providing the right
    kind of balance, which means being strategic and tactical to
    some degree in resource dedication.
        It will mean for TSA and for Congress and for the
    Administration choosing the right technologies. You cannot do
    all the technologies, but what are the right technologies that
    will give us the kind of seamless system that we need. So, I
    think finding that right balance between some of the security
    priorities as well as some of the very, very critical safety
    priorities.

                            DECISIONS ON TECHNOLOGY

        Senator Durbin. But you think it comes down to technology.
    That really is most important?
        Ms. Garvey. I think that is going to be certainly a key for
    TSA. And is it bio-metrics, is it EDS machines, is it, you
    know, better access for employees, access codes and so forth? I
    think that is really where the challenge is going to be. What
    are the right strategic and tactical decisions around
    technology? Because you simply cannot do it all, and how do you
    sort through that?
        Senator Durbin. There is so much linkage here. I just left
    a hearing that I chaired upstairs on the integrity of drivers'
    licenses and State I.D. cards, which is a State issue. We have
    some legislation we are considering, which would try to
    establish some national standards, but issued by States.
        That is the key to entry into airports, into our economy,
    and there is such linkage. If that is not done well, if
    identification is falsified at the start, then all of the other
    precautions that follow are meaningless.
        So, there is such linkage there. And I think that would
    apply, certainly, to the security side of it.

                PENDING LEGISLATION ON CHICAGO'S O'HARE AIRPORT

        About 5 or 6 years ago, someone from the FAA anonymously,
    in a Newsweek article, said that the greatest single thing that
    could be done to improve aviation across America is to do
    something about O'Hare.
        That was said anonymously. And it might have been before
    you came on board, but we are trying to focus on that now. I
    thank you and the FAA for at least working with us every step
    of the way to review what we have been doing, a historic
    agreement between our Governor and the Mayor of the City of
    Chicago, trying to finally take 40-year old runways and make
    them more modern and safer.
        I do not know if you have personally seen it, but your
    staff has been reviewing the legislation. I want to ask you to
    comment on specifics. Let me ask this question: Have you seen
    anything in the proposals that have been brought to the FAA,
    which suggests that there would be any circumventing of the
    authority of the FAA to make the final decisions on safety and
    the environment and all of your other responsibilities under
    law?
        Ms. Garvey. Senator, I have not seen the final language
    yet, but I understand our staffs are working very closely, and
    they have not brought anything to my attention that would give
    me that kind of concern. I know there were issues in the
    beginning, but I think we worked very well together. I continue
    to think of what you all in Chicago and Illinois were able to
    accomplish as a model for all of us, because it was
    extraordinarily difficult and with very strong feelings on both
    sides, but with a lot of help from Members of Congress, the
    issue was finally brokered. And that was very important. I am
    going to be talking in one of my favorite States later this
    week, and it is certainly a good model.
        Senator Durbin. Well, thank you. And I might add that we
    were happy to receive, just a day or so ago, the Airline Pilots
    Association endorsement of this legislation, as well.
        Ms. Garvey. Great.
        Senator Durbin. Administrator Garvey, thank you for your
    service to our country and to the FAA, and wish you the very
    best and hope we can work together in the future.
        Ms. Garvey. Thank you. Thank you very much, Senator.
        Senator Durbin. Thank you, Madam Chair.
        Senator Murray. Thank you, Senator Durbin.
        Senator Bennett.

                           REMARKS BY SENATOR BENNETT

        Senator Bennett. Thank you very much. Administrator Garvey,
    I join with my colleagues in thanking you for your service. You
    are getting close to the end of your 5-year appointment and, as
    you know, I have some personal experience with FAA
    administrators, having served in the Department and it is not
    the easiest assignment in the Department.
        As a matter of fact, it has become the graveyard of a
    number of careers. And the fact that you have handled yourself
    with such competence and such aplomb through this 5-year period
    that you have served two presidents of two different parties
    with equal diligence, you deserve our congratulations and our
    thanks and our best wishes for whatever it is you decide to do.
        Ms. Garvey. Thank you, Senator.
        Senator Bennett. I think rather than being the graveyard of
    a career, I am hoping this will be a launching pad for you for
    wherever you go on to.
        Ms. Garvey. Thank you very much.

                       FAA'S PERFORMANCE AT THE OLYMPICS

        Senator Bennett. I also want to thank you for the FAA's
    superb performance during the Olympics. The Olympics, it is
    hard for us to remember now, but a time of some concern prior,
    where after September 11 there were some serious voices raised
    that they should be cancelled, that we would not be able to
    keep them safe. If we did keep them safe, we could not keep
    them accessible. If we cracked down on security, nobody would
    come. Everybody would be afraid, so on. And the challenges of
    getting hundreds of thousands of people in and out of Salt Lake
    City on a continual churning basis with the appropriate
    concerns for security were enormous. And the FAA rose to those
    challenges and handled them extremely well. And we are very
    grateful to you for that.

                          ST. GEORGE REGIONAL AIRPORT

        While I am expressing gratitude, I want to thank you also
    for your efforts and concerns with the development of a new
    regional airport in St. George. St. George, Utah, is one of the
    fastest growing parts of the State. Its growth is hampered only
    by the fact that its airport cannot handle jets above a certain
    size. And you cannot extend the runway, because it is on the
    edge of a cliff. And you are going to have to put a whole new
    airport down in the valley, where you have got enough space for
    a modern runway.
        And we are grateful to the FAA for working with us on that,
    which leads me to my suggestion. I understand Senator Campbell
    has asked you to come to Colorado, and while you are there, if
    you could slip down to St. George and take a look at that, we
    would welcome you there and appreciate whatever attention you
    could give to that.
        Ms. Garvey. It sounds like a wonderful trip.
        Senator Bennett. Well, I will warn you that you better do
    it sooner rather than later, because St. George gets to 110/115
    degrees in the summertime. Its growth is significantly larger
    in the wintertime. Somebody refers to St. George as Utah's Palm
    Springs.
        Ms. Garvey. Yes.

                            RADAR FOR SALT LAKE CITY

        Senator Bennett. And the population grows by tens of
    thousands every winter.
        Let us go back to the Olympics just very briefly and a
    subject that we have discussed before. That is radar coverage
    for the Salt Lake Airport, particularly with airplanes coming
    from the south. During the Olympics, there was a temporary
    radar system installed, and we continue to be anxious to see to
    it that becomes somehow, because the growth in the area is only
    going to continue. It is a major hub for Delta Airlines. And
    with the growth along the Wasatch front, the population of Utah
    will double within the next 30 to 40 years.
        We understand that ASR-9 radar units are no longer
    available and that ASR-11s continue to be hampered by
    technology problems, so we have been approached by the
    manufacturer of what he hopes will be an ASR-12 and wonder if
    we can get in conversations with you and finally get this
    somewhat difficult problem resolved. As I say, it worked very
    well in the Olympics to have that additional radar down there.
        Ms. Garvey. Yes.
        Senator Bennett. It was installed as temporary. I told them
    to pour as much concrete as they possibly could around it, so
    that it could never get taken away, but that is maybe not good
    public policy.
        I simply raise it with you in the hope that we can have
    continuing conversations with your agency about getting that
    problem under some control.
        Ms. Garvey. We certainly will, Senator. And we will follow
    up at the staff level to make sure we continue those
    discussions.
        Senator Bennett. Thank you again.
        Ms. Garvey. Thank you. Thank you very much for your kind
    comments.
        Senator Bennett. My congratulations are very sincere and
    heartfelt, because of my own experience with how difficult a
    challenge you really had in these last 5 years.
        Ms. Garvey. Thank you. Thanks, Senator.
        Senator Murray. Thank you, Senator Bennett.

                   COMMERCIAL AIRPLANE CERTIFICATION PROCESS

        Last month, the FAA released the results of a study that
    focused on the commercial airplane certification process. One
    of the major findings of this study is that the FAA airlines
    and aircraft manufacturers have not adequately communicated
    important safety information within and among their
    organizations.
        What are you doing both in the short term and the long term
    to correct that situation?
        Ms. Garvey. Senator, that was, I thought, a very good
    report, and good steps, both from the FAA and the
    manufacturers, to really sit down and say, ``Look, what can we
    do better in this particular area?''
        Quite honestly, we saw some difficulties within our own
    shop. We did not feel our own Certification side of the house
    was speaking as much to the Flight Standard, sharing
    information in a timely way. So we started there. That is
    really our first emphasis.
        Nick Sabatini, as the Associate Administrator for
    Regulation and Certification (AVR), has done an extraordinary
    job. He comes out of Flight Standards. He is very, very close
    to John Hickey, who is the head of the Certification shop. They
    have worked very well together.
        Jim Ballough, the new head of Flight Standards, is working
    very closely with John Hickey. Some of those issues that we
    have had internally in the past have been dealt with very well.
        There are a whole series of recommendations; and currently
    both John Hickey and others within the AVR organization are
    laying out action plans with the industry to implement the
    recommendations. We have had an opportunity to brief the NTSB
    and got a pretty positive response.
        We will have an action plan that we would like to share
    with you in very short order, but the immediate issue was to
    deal with our own internal communication.
        Senator Murray. That is----
        Ms. Garvey. We have made some good, you know, good progress
    there.
        [The information follows:]

        A plan to address the findings and recommendations for improving
    communications is being drafted. The plan is in final coordination with
    the Government/Industry Oversight Board. We do not have an estimated
    date when the Board coordination will be completed. The plan, when
    completed, will be provided to the Committee.

        Senator Murray. Yes; that has been done.

                            COMPETITIVE PROCUREMENT

        Following up on an issue that was raised by Senator Shelby,
    last year, your agency was severely chastised by the court for
    trying to sole source the new En Route Automation Modernization
    or ERAM program to Lockheed-Martin.
        The Raytheon Company succeeded in requiring that the
    program be competed. Now, that you have published your
    specifications for the competition, Raytheon is taking you to
    court, alleging that the specifications are deliberately
    drafted so that Lockheed wins the competition.
        Are you confident of your ability to award an ERAM contract
    this year?
        Ms. Garvey. I am confident, Madam Chairman. And
    particularly because the two companies are in mediation right
    now, as I mentioned. While I do not know the details of them, I
    understand that they were very productive discussions last
    week. We clearly do not agree with the protest that was filed;
    but in any case, if you can resolve the issues through
    mediation, you are always better off from any kind of
    protracted court dilemma. Those discussions that took place
    last week are continuing this week, and I am still very hopeful
    that that will result in something that may even move up what
    we thought was going to be an award by the summer. There may
    even be a way to move that up sooner. So, we are interested in
    following the mediation process very carefully.
        Senator Murray. Could that lawsuit actually extend the
    program out another year?
        Ms. Garvey. I think there is always the potential for that.
    I am not expecting that, and, again, I think we are on pretty
    solid ground. But my first preference would be to see mediation
    succeed.
        Senator Murray. In the emergency supplemental chapter in
    last year's Defense Appropriations Bill, I included $50 million
    that you did not request for proof of concept demonstrations on
    new aviation security technologies.
        Within that amount, not less than $25 million must be for a
    demonstration project that incorporates a global satellite-
    based communications system and other technologies that are
    described in the conference report. I was really disappointed
    to learn that none of these funds for this initiative have been
    obligated to date.
        Can you update me on the status of that initiative?
        Ms. Garvey. I can, Senator. We are going to competitive
    bidding on this, in part because some other companies have
    raised some issues about it. We think we can go to put out a
    Request for Proposal (RFP) next month, in early May, and we
    have to allow a certain amount of time for people to get the
    proposals back. But we would like to be able to make a decision
    before I leave in August. And again, I will revisit the time
    line today with our folks and make sure that we are all
    comfortable that we are moving it as quickly as we possibly
    can.
        Senator Murray. The conference report that accompanied that
    appropriation mandated that these demonstrations leverage
    significant industry cost-sharing efforts. It is my
    understanding that Boeing is prepared to put up a significant
    amount of matching funds for this initiative. Do you know of
    any other vendor that is prepared to put up hard cash to match
    the $25 million initiative?
        Ms. Garvey. I do know that Boeing, as you have indicated,
    has suggested a pretty significant amount.
        The other proposal that was put forward, I am not sure what
    the amount is, but that certainly will be a factor and a part
    of the criteria as we move forward.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Murray. Well, Administrator Garvey, you have sat
    through another long hearing this morning. It is likely the
    last hearing that you will be before this committee. Let me
    just, again, thank you for your tremendous service to this
    country. You are the longest-serving Administrator in the
    agency's history. And I would not want to end this hearing
    without thanking you for the tremendous job you have done in
    very, very trying circumstances. You have been accessible. Your
    integrity is unmatched and your commitment to public service,
    really, is admirable. So let me end this hearing by, again,
    thanking you for the tremendous job you have done, and to wish
    you the very best in your future.
        [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 Robert C. Byrd

                      senate directive on personnel reform
        Question. In the Manager's Report for 2002 Transportation
    Appropriations, language was included expressing the Committee's
    concern over your agency's failure to implement a labor agreement with
    AFSCME. Chairman Murray stated that she expected your agency to
    implement the agreement immediately since it was affecting productivity
    and morale. Despite the Committee directive, you did not implement the
    agreement. Then the conferees on the Transportation Appropriations
    Conference Report directed you to report to both the House and Senate
    by January 15, 2002 on how you had implemented that agreement or your
    plans to implement our earlier directive.
        Your response was received by January 15, but was not responsive to
    the conferees clear language. Instead of reporting on how you had
    implemented the agreement or your plans to implement the agreement you
    reported on the status of negotiations. It is my understanding that
    since your chief negotiator had signed off on the agreement that
    negotiations were over. The only thing left to do is to implement the
    agreement. I ask that a copy of your January 15 response be included in
    the record.
        Answer.
        [The letter follows:]
                          Department of Transportation,
                               Federal Aviation Administration,
                                      Washington, DC, January 18, 2002.
    Hon. Patty Murray,
    Chairwoman, Subcommittee on Transportation, Committee on
            Appropriations,
    U.S. Senate, Washington, DC.
        Dear Madam Chair: This letter is in response to language contained
    in the Conference Report (House Report 107-308) accompanying the final
    version of H.R. 2299, the Department of Transportation Fiscal Year 2002
    Appropriations Act. The Federal Aviation Administration (FAA) was
    requested to submit to the Appropriations Committees by January 15,
    2002, a report on how the agency plans to implement committee report
    language contained in Senate Report 107-38 regarding personnel reform.
        The Senate report stated the following:

        Personnel Reform.--In April 1996, at the request of the Department
    of Transportation and the Federal Aviation Administration, Congress
    directed the FAA to develop its own personnel and compensation systems
    to give the agency more flexibility in hiring, training, compensating
    and retaining a highly technical and experienced work force. Under
    congressional mandate and in consultation with experts in personnel
    management, FAA commenced negotiating with its employees. Four employee
    groups have completed negotiations with FAA thus far. Three of these
    negotiated agreements, two with the National Air Traffic Controllers
    Association and one with the Professional Airways Systems Specialists,
    were implemented immediately upon ratification by the employees. The
    fourth agreement, between the American Federation of State, County, and
    Municipal Employees and the FAA, covering employees in FAA's
    headquarters, was ratified in late February 2001 but has not been
    implemented by the agency. The Committee is concerned that the failure
    to implement this contract has resulted in lost opportunities to obtain
    important productivity gains and a deterioration in the relationship
    between the agency and its employees. The Committee expects the agency
    to implement the ratified agreement immediately so that improved
    productivity can be achieved and employee morale can be improved.

        I would like to take this opportunity to report to the Committees
    the status of negotiations between the American Federation of State,
    County and Municipal Employees, Council 26 (AFSCME) and the FAA on the
    parties' first labor agreement covering four bargaining units in FAA
    headquarters.
        Negotiations between AFSCME and the FAA began in July of 2000. The
    work rules (non-pay issues) were completed rapidly and the parties
    began addressing pay issues in September 2000. From the opening session
    through the conclusion of discussions with AFSCME, the FAA made clear
    that a final agreement would be conditioned on the Office of Management
    and Budget (OMB) concurrence. OMB declined to concur with the tentative
    agreement that was reached in early February of 2001.
        Because the condition of OMB concurrence was not met, the FAA's
    position is that a final agreement was not reached and that the parties
    must return to the bargaining table. AFSCME rejected the FAA's initial
    offer to return to the bargaining table. AFSCME's position is that FAA
    must execute the tentative agreement.
        In March 2001, AFSCME filed an unfair labor practice (ULP) charge
    against the FAA with the Federal Labor Relations Authority (FLRA), and
    the matter is currently in litigation. Before the hearing on the ULP
    commenced, the FAA met with AFSCME representatives and offered to
    resolve the dispute based on earlier agreements with other unions. The
    parties were ultimately unable to reach a resolution and the parties
    participated in an FLRA hearing on the ULP complaint earlier last
    month. We remain ready to resume negotiations with assistance from the
    Federal Mediation and Conciliation Service, if necessary.
        The FAA has made efforts to settle this dispute. The FAA has
    offered, on several occasions, to return to the bargaining table and
    resume negotiations. AFSCME has rejected a resumption of negotiations.
        I will continue to keep the Committees informed as events warrant.
        Identical letters have been sent to Chairwoman Murray, Senator
    Shelby, and Chairman Rogers.
                Sincerely,
                                                Jane F. Garvey,
                                                         Administrator.

        Question. I have spoken with AFSCME's leaders and they testified
    under oath in an Unfair Labor Practice trial, that they did not
    acquiesce or agree to allow OMB to have power over the agreement. I
    request that a document from that trial in which OMB clearly states
    that FAA had the final authority to implement the agreement, be
    included in the record.
        Answer. At this time, OMB produced a number of documents relating
    to the negotiations. Several of these documents were staff drafts of
    correspondence. It is not clear from your request whether these are the
    documents to which you are referring, but we have provided them for
    your review.
        [The draft follows:]
                                    [draft]
    Hon. Peter T. King,
    U.S. House of Representatives,
    Washington, D.C. 20015-3203.
        Dear Representative King: Thank you for your letter of June 6,
    2001, concerning the Federal Aviation Administration (FAA) and its
    consultations with the Office of Management and Budget (OMB) regarding
    a proposed collective bargaining agreement between the FAA and its
    employees.
        We appreciate your interest in the matter of the proposed
    collective bargaining agreement. As you may be aware, this matter is
    presently in litigation before the Federal Labor Relations Authority,
    in a case brought against the FAA by the union representing its
    employees. In the Matter of: Department of Transportation, Federal
    Aviation Administration (Respondent) and American Federation of State,
    County & Municipal Employees, Council 26 (Charting Party/Union), Case
    WA-CA-01-0386. Due to this pending litigation, and at the
    Transportation Department's request, I have forwarded your letter to
    Secretary of Transportation Mineta, so that the Department can respond
    to you directly about the proposed collective bargaining agreement.
        Thank you again for your letter.
                Sincerely,

        Question. I also request that a letter to Secretary Mineta from
    Senator Stevens and myself on this subject be included in the record.
        Answer.
        [The letter follows:]
                                           U.S. Senate,
                                   Committee on Appropriations,
                                    Washington, D.C., October 10, 2001.
    Hon. Norman Y. Mineta,
    Secretary of Transportation, Department of Transportation,
    Washington, DC 20503.
        Dear Mr. Secretary: We are writing to express our concern over the
    status of the collective bargaining agreement reached between the
    American Federation of State, County and Municipal Employees (AFSCME)
    and the Federal Aviation Administration (FAA). It is our understanding
    that this contract has yet to be implemented.
        In 1995, Congress mandated in the fiscal year 1996 Department of
    Transportation Appropriations (Public Law 104-50) that FAA develop a
    new personnel system in ``consultation'' with its employees. The FAA
    wanted an agency and workforce that was better able to meet the demands
    of the 21st Century. The FAA requested total flexibility in personnel
    reform so that they could be competitive with private sector
    organizations and corporations in compensation and hiring.
        Subsequently, Congress directed the FAA to ``bargain'' with the
    exclusive bargaining representative of the employees certified under
    section 7111 of Title 5, United States Code in the development of the
    new personnel system.
        It is our understanding that AFSCME and the FAA initiated
    bargaining in June of 2000 over the new personnel system pursuant to
    the congressional mandates cited above. AFSCME and the FAA came to
    agreement in January 2001.
        After negotiations were successfully completed, the FAA informed
    AFSCME that the Office of Management and Budget recommended that it not
    implement the agreement. To date, the FAA negotiated four contracts as
    a result of the congressionally mandated personnel reform and the FAA
    has implemented three of these contracts. It appears unreasonable to
    single-out this one last contract that is neither more nor less
    generous than the other contracts. The FAA negotiated and agreed to the
    terms of the contract, and the FAA has the independent legal authority
    to implement this contract. But, to date, this contract remains
    unimplemented and dedicated employees affected by this delay are
    understandably demoralized.
        Following the catastrophic events on September 11, the Headquarters
    employees represented by AFSCME performed with extraordinary
    professionalism, dedication and competency during the attacks on our
    Nation. In fact, they still staff the Emergency Response Command
    Centers set up to respond to the emergency and are continuing to work
    on new safety and security measures as well as developing a ``new'' air
    traffic control system.
        We are seriously concerned about the morale of the employees caught
    in this standoff, and we would like to see this matter resolved
    expeditiously. We ask for your assistance in bringing closure to this
    matter.
                Sincerely yours,
                                                Robert C. Byrd,
                                 Chairman, Committee on Appropriations.
                                                   Ted Stevens,
                           Ranking Member, Committee on Appropriations.

        Question. In light of the above information, I would like to have
    your comments concerning your agency's continuing failure to implement
    this binding labor agreement.
        Answer. From the opening session through the conclusion of
    discussions with AFSCME, the FAA made clear that a final agreement
    would be conditioned on the Office of Management and Budget (OMB)
    concurrence. OMB declined to concur with the tentative agreement that
    was reached in early February 2001. Because the condition of OMB
    concurrence was not met, the FAA's position is that a final agreement
    was not reached and that the parties must return to the bargaining
    table. The issue of whether a final agreement was reached is the issue
    now before the Administrative Law Judge.
                                     ______

               Questions Submitted by Senator Barbara A. Mikulski

                 airport approaches over montgomery county, md
        Question. After September 11, the FAA changed the landing
    procedures for planes landing from the north at Ronald Reagan
    Washington National Airport (DCA). It is my understanding that all
    aircraft approaching the airport from this route are forced to travel
    at low altitudes over densely populated areas of Montgomery County. Has
    the FAA examined the safety risks associated with this flight path?
        Answer. Revised procedures to address security concerns were
    implemented in response to the tragic events of September 11, 2001. In
    addition, published instrument approach procedures were used on a
    regular basis to ensure aircraft maintained a straight and steady
    course to the airport. Between March 23, 2002 and April 27, 2002 the
    Federal Aviation Administration, working with the Department of
    Defense, the Office of Homeland Security, and the United States Secret
    Service, continued its efforts to return operations at DCA to the
    previously established noise abatement procedures. On April 27, 2002,
    after an agreement was reached among all parties, aircraft arrivals and
    departures at DCA began operating again under the long-standing noise
    abatement procedures that were in effect prior to September 11. These
    procedures are for visual flight rules and provide for the aircraft to
    fly over either the Potomac or Anacostia Rivers.
        The noise abatement procedures for aircraft flying to DCA from the
    north are provided when the cloud ceiling is 3,500 feet above ground
    level or greater, and the visibility is 3 statute miles or greater.
    Otherwise, the aircrafts fly the instrument approach procedures that
    were in effect prior to September 11. These procedures provide required
    minimum altitudes, below which the airplanes are not to fly, in order
    to safely fly to the airport during inclement weather.
                    noise abatement in montgomery county, md
        Question. What is the FAA doing to address noise abatement issues
    in Montgomery County?
        Answer. In order to address noise abatement issues in Montgomery
    County, the FAA on April 27, 2002, re-instituted the long-standing
    noise abatement procedures that were in effect for arrivals to and
    departures from Ronald Reagan Washington National Airport (DCA) that
    were in effect prior to September, 11, 2001.
        These noise abatement procedures can only be used during good
    weather conditions because the pilot must be able to see the ground in
    order to stay over the rivers. During inclement weather conditions all
    aircraft must follow the instrument approach or departure procedures
    that were in place prior to September 11, 2001. The procedures we are
    using today are exactly the same as the procedures we followed prior to
    September 11, 2001.
                           primary long-range radars
        Question. I understand that the FAA has a mix of more than 100
    aging primary long-range radars, utilizing technology that dates back
    to the 1950's. Given the FAA's November 2001 decision to retain these
    primary long-range radars, what actions have you taken to ensure their
    sustainment?
        Answer. The FAA is currently performing upgrades to the
    infrastructure at long-range radar facilities that will ensure the
    continued operation of these facilities. The agency has also initiated,
    jointly with the Department of Defense, studies to examine the
    operability, reliability, and maintainability of the existing inventory
    of long-range, primary radars in the en route environment. These
    studies will reveal the nature and extent of any modifications that may
    be required.
        Question. The FAA maintains more than 125 primary long-range radars
    for safe air traffic control and provides the DOD with data from these
    radars for Homeland Defense purposes. It's my understanding that while
    these radars provide excellent coverage around the perimeter of the
    United States, there may be coverage gaps in the interior of the
    country.
        How does the FAA plan to support the DOD's Homeland Defense
    surveillance requirements for non-cooperative aircraft?
        Answer. The FAA will continue to provide surveillance information
    to the Department of Defense and U.S. Customs Service from existing
    assets, as well as establish additional data connections as requested,
    in order to support these agencies' need to identify and track non-
    cooperative aircraft.
        In addition, FAA is participating in the Airspace Management and
    Protection Work Group established by the Office of Homeland Security.
    This multi-agency workgroup that is currently developing a national
    surveillance plan that provides a common airspace picture and enables
    the exchange of surveillance data among air surveillance stakeholders.
        Question. Does the FAA plan include the deployment of additional
    FAA primary long-range radars?
        Answer. No. However, the agency is working collaboratively with the
    Department of Defense, U.S. Customs Service, and other users to
    identify their surveillance needs and assess the viability of
    fulfilling their needs with existing FAA assets.
            standard terminal automation replacement system (stars)
        Question. It has been brought to my attention that the STARS
    program has suffered serious setbacks resulting in substantial cost
    overruns and delays. Please describe the oversight you are applying to
    the current STARS testing.
        Answer. The program has met all major milestones since the 1999
    restructuring, including the start of operations at our key sites of El
    Paso, Texas, and Syracuse, New York, with both our Early Display
    Configuration and the initial version of Full STARS. The program is
    also on track for the start of operations with the national baseline
    version of Full STARS in Philadelphia in November 2002.
        There is a significant amount of oversight in place today. The
    STARS team provides senior FAA leadership with biweekly updates on all
    aspects of the STARS program, including ongoing testing. Since 1999,
    the STARS team also briefs the aviation authorization subcommittees in
    the House and Senate on a regular basis. Additionally, the Department
    of Transportation Inspector General continuously provides oversight and
    explaining concerns to the FAA, Congress, and the media.
        Question. Have you made any changes to the STARS software delivery
    schedule? Please describe these schedule changes.
        Answer. No significant changes were made to the schedule since the
    STARS program was restructured in 1999, and since the addition of a
    modified software version for Philadelphia in 2000.
        All software delivery milestones were met and the system is on
    track to begin nationwide deployment when we commence operations at
    Philadelphia in November 2002.
        Question. Have you encountered any testing problems which may
    result in future scheduling delays?
        Answer. No. Testing of the national software baseline is on track
    and going as planned. We don't expect any delays.
        In the normal testing process, the team identifies ``program
    trouble reports'' (PTRs) which they fix. We are now in the second of
    three phases of operational testing of the national software baseline.
    The number of PTRs will go up as testing progresses, and will then go
    down between each phase as the critical ones are fixed.
        Question. Please quantify the cost-overruns associated with the
    STARS program as reported by the DOT-IG.
        Answer. STARS has a past history of escalating costs, due largely
    to human factor changes made in the late 1990s. The original STARS
    contract was awarded to Raytheon in 1996 with an estimated cost of
    $940.2 million. In 1999, FAA and Raytheon restructured the contract to
    deploy STARS in various phases and to address human factor issues. This
    increased the cost estimate to $1.4 billion ($273 million for human
    factor changes).
        The present cost baseline for STARS is $1.33 billion. This takes
    the program completely through the development phase and through
    replacement of the most ``critical risk-to-service'' facilities.
    Although a cost estimate of $1.69 billion exists for the full
    production phase (verses the $1.4 billion baseline of 1999), the agency
    has not sought approval of that estimate, as it is exploring various
    means to reduce out-year costs.
        The cost estimate ($1.69 billion) that the DOT-IG used for the
    STARS program projects an increase of roughly $285 million. Most of
    that amount, $220 million, would be due to increased production and
    deployment costs.
        The other $65 million is due to increased development costs. The
    increase in development costs was primarily due to the creation of an
    additional software baseline for national deployment. That baseline
    required us to procure additional hardware, contract for additional
    work from our prime contractor, and conduct additional development and
    testing, while maintaining the approved schedule.
        The estimate for the increase in production costs is primarily due
    to increased adaptation activities, establishment of deployment teams,
    an increase in spares requirements, product warranties, unbudgeted
    prime contractor support after initial operations, unbudgeted Early
    Display Capability (EDC) to Full Service (FS), and unbudgeted
    replacement for Sony display tubes.
                                     ______

                   Questions Submitted by Senator Harry Reid

      standard terminal automation replacement system (stars) deployment
                                    schedule
        Question. Please provide a detailed deployment schedule and cost
    estimate for the installation of the entire system, not just through
    2004.
        Answer. The present cost baseline for STARS is $1.33 billion. This
    takes the program completely through the development phase and through
    replacement of the most ``critical risk-to-service'' facilities.
    Although a cost estimate of $1.69 billion exists for the full
    production phase, the agency has not sought approval of that estimate,
    as it is exploring various means to reduce out-year costs.
        STARS will go operational in the following cities in:
        Fiscal year 2003.--Philadelphia, PA; Portland, OR; Miami, FL;
    Milwaukee, WI; San Antonio, TX; Raleigh, NC.
        Fiscal year 2004.--Tucson, AZ; Kansas City, MO; Nashville, TN;
    Roswell, NM; Port Columbus, OH; Moses Lake, WA; Boston, MA; Charlotte,
    NC; Rochester, NY; Oklahoma City, OK; Tulsa, OK; Seattle/Tacoma, WA;
    Santa Barbara, CA; Dayton, OH; Salt Lake City, UT; Cincinnati, OH;
    Buffalo, NY; Indianapolis, IN; Daytona Beach, FL.
        Fiscal year 2005.--Little Rock, AK; Norfolk, VA; Pittsburgh, PA;
    New Orleans, LA; Orlando, FL; Shreveport, LA; Cedar Rapids, IA;
    Pensacola, FL; Houston, TX; Atlantic City, NJ; Grand Rapids, MI;
    Portland, ME; Toledo, OH; Pasco, WA; Madison, WI; Jacksonville, FL;
    Akron, OH; Wichita, KS; Phoenix, AZ.
        Fiscal year 2006.--Lubbock, TX; Harrisburg, PA; Bangor, ME; Austin,
    TX; Fort Wayne, IN; Eugene, OR; Lansing, MI; Tampa, FL; Lafayette, LA;
    Boise, ID; Savannah, GA; Erie, PA; Lincoln, NE; Burlington, VT; West
    Palm Beach, FL; Rome, GA; Flint, MI; Greensboro, NC; Springfield, MO;
    Palm Springs, CA; Waco, TX; Rochester, MN; Charleston, SC; Roanoke, VA;
    Aspen, CO; Reno, NV; Huntsville, AL; Rockford, IL; Montgomery, AL;
    Muskegon, MI; Knoxville, TN; Peoria, IL.
        Fiscal year 2007.--Springfield, IL; Baton Rouge, LA; Fayetteville,
    NC; Fort Smith, AR; Fort Myers, FL; Colorado Springs, CO; Gulfport, MS;
    Billings, MT; Green Bay, WI; Kingsport, TN; Fresno, CA; Columbia, SC;
    Greer, SC; Fargo, ND; Abilene, TX; Lexington, KY; Allentown Bethlehem/
    Easton, PA; Sioux City, IA; Youngstown, OH; Cape Cod, MA; Charleston,
    WV; Augusta, GA; Corpus Christi, TX; Kalamazoo, MI; Elmira, NY;
    Saginaw, MI; Great Falls, MT; Mobile, AL; Champaign, IL; Wilkes-Barre,
    PA; Spokane, WA; Midland, TX; Wilmington, NC; Hilo, HI; Duluth, MN.
        Fiscal year 2008.--Asheville, NC; Casper, WY; Myrtle Beach, SC;
    Evansville, IN; Monroe, LA; Florence, SC; Amarillo, TX; Bakersfield,
    CA; South Bend, IN; Waterloo, IA; Reading, PA; Jackson, MS; Sioux
    Falls, SD; Lake Charles, LA; Huntington, WV; Terre Haute, IN;
    Tallahassee, FL; Chattanooga, TN; Louisville, KY; Mansfield, OH;
    Binghampton, NY; Moline, IL; Longview, TX; Bismark, ND; Clarksburg, WV;
    Meridian, MO.
        Fiscal year 2009.--Pueblo Memorial, CO.
        Question. Please describe your contingency plan if STARS cannot be
    deployed according to the current schedule. What are the costs involved
    and what would it take to trigger the plan?
        Answer. If STARS were not deployed according to schedule, the
    contingency would be to continue operations with the existing
    automation system until STARS is deployed to that site. The added cost
    to the agency would be an increase in the maintenance costs of the
    existing system. Not all of the sites have the same existing system,
    however. Some sites have an ``ARTS IIIA'' system, some have an ``ARTS
    IIE'' system and some have an ``ARTS IIIE'' system.
        The ARTS IIIA sites are the first to be replaced. The last IIIA
    site is Tampa, which is scheduled to be replaced in the middle of 2005.
    Should the STARS deployment schedule slip prior to Tampa, ARTS IIIA
    maintenance would be required for a longer duration than was otherwise
    planned. The cost would be directly related to the number of sites
    slipped as well as the length of time slipped. Maintaining all of the
    ARTS IIIA sites currently costs approximately $5 million a year. This
    cost begins to go down in fiscal year 2004, and eventually phases out
    as STARS replaces the ARTS IIIA's.
        After the ARTS IIIA's are replaced by STARS, the ARTS IIE and ARTS
    IIIE sites will be replaced thru 2008 (although a few IIE and IIIE
    sites are planned for replacement prior to 2005). If there was a delay
    in STARS deployment at this point, additional ARTS IIE and ARTS IIIE
    maintenance dollars would be needed. The ARTS IIIE's cost approximately
    $5 million a year to maintain. The ARTS IIE's cost approximately $2
    million a year to maintain. Again, the total amount needed would be
    directly related to the number of sites delayed as well as the length
    of time.
        In addition to maintenance costs, there would also be the cost to
    refurbish old equipment to meet operational needs if STARS is delayed.
    The average cost to refurbish old equipment per year is $972,840 for
    ARTS IIIA's, $585,420 for ARTS IIE's, and $392,150 for ARTS IIIE's.
        Question. According to the IG's office, the FAA never justified its
    rejection of Common ARTS as a substitute for STARS, particularly since
    it is operational at 140 FAA sites, including six of the busiest
    terminal facilities. The IG points out that Common ARTS already
    provides the functionality that STARS proposes to provide when it is
    deployed. Would you support an independent evaluation of Common ARTS'
    and STARS' functionality, cost, and schedule risk?
        Answer. The FAA has done several analyses of alternatives to meet
    automation requirements, starting with the competition in 1996 when
    Raytheon was awarded the STARS contract over the other bidders,
    including Lockheed Martin.
        Starting in October of 1999, and more recently in March of 2002,
    the team conducted economic analyses of the STARS program before senior
    FAA management and received approval to continue moving forward with
    the program.
        Results consistently indicate the economic feasibility of
    continuing the STARS program versus pursuing an alternative. There are
    also intangible benefits to STARS that are not readily quantifiable,
    including higher levels of information security and more data for
    controllers (such as latitude and longitude readouts, minimum
    separation indicators and additional data block fields).
        Common ARTS and STARS are very comparable in terms of what they
    provide in the near-term. STARS has features that ARTS does not have,
    and vice-versa. However, many of the computer-human interfaces that
    were added to STARS in 1999 are not available in Common ARTS,
    particularly in their color displays. Additionally, STARS has the
    capability to support a more complex national airspace system and to
    expand with future growth in traffic.
        Despite all of the steps that have been taken, the FAA would
    support any additional independent evaluation of this matter.
                                     ______

                    Question Submitted by Senator Herb Kohl

    standard terminal automation replacement system (stars) at philadelphia
                                    airport
        Question. I am pleased to learn that Philadelphia Airport will
    begin operation of the STARS radar system in November 2002. I also
    appreciate your efforts to address the radar problems experienced by
    Philadelphia in March 2000 and your willingness to work with my office
    and the air traffic controllers in Philadelphia to expedite the
    installation of the new STARS system. Some concerns have been brought
    to my attention that software testing for the new system has
    experienced problems and may result in installation delays. I would
    appreciate your providing me with an update on the testing currently
    underway and whether we can still expect the system to be operational
    this November.
        Answer. Testing of the national software baseline is on track and
    going as planned. We don't expect any delays.
        The STARS software for Philadelphia (the national baseline) is
    currently in the second of three phases of operational testing at the
    FAA Technical Center in New Jersey. After these phases are complete,
    on-site testing will begin at El Paso in August and at Philadelphia in
    September.
        As part of the normal testing process, the team identifies
    ``program trouble reports'' (PTRs), which they fix. The number of PTRs
    will go up as testing progresses, and will then go down in between each
    phase as they fix the critical ones.
        Philadelphia's success in November depends on the integration of
    several factors, including new ASR-11 digital radars, STARS, and the
    construction of a new room for controllers. The FAA has been holding
    bi-weekly meetings at Philadelphia with all the stakeholders to
    integrate these factors, and all are on track for operations to begin
    in November 2002.
                                     ______

             Question Submitted by Senator Ben Nighthorse Campbell

                      emergency information dissemination
        Question. In the hours following the attacks on the Pentagon and
    the World Trade Center, it was clear that the lines of communication
    between everyone involved in air travel--the FAA, Federal authorities,
    airlines, and customers--was severely deficient, if not to say
    completely inadequate. What steps have been taken to improve this so
    that information moves quickly and accurately from the air traffic
    controllers to the airlines to the passengers, and most importantly, to
    the appropriate agencies in the event of another emergency?
        Answer. The Federal Aviation Administration (FAA) has initiated and
    implemented many actions over the last year to improve the lines of
    communications for the users of the National Airspace System regarding
    airport and flight status information. Many steps have been taken to
    provide timely and accurate information to passengers through the
    Internet, a CNN Airport Network ticker, CNN Airport Network public
    service announcements, and through meetings with airlines and airport
    officials. For example, the FAA established a real-time wireless
    notification system targeted for travelers on the go. Users can
    subscribe to receive delay notification to wireless devices such as
    cell phones, Palm Pilot type devices, and pagers at no cost to the
    traveling consumer. Additionally, the FAA redesigned the
    www.fly.faa.gov website to be more user friendly and, in an effort to
    share information with outside organizations, the website has a section
    which allows external organizations to automatically retrieve the data.
    Some organizations currently using the information include CNN and USA
    Today.
        The FAA, in concert with the Department of Defense (DOD), NORAD,
    and other Federal agencies has in place policies, procedures, and
    communications infrastructure to monitor aircraft for suspicious
    activity and deviation from authorized flight. Awareness, refinement,
    and training on these policies and procedures, since September 11,
    2001, are ongoing. A system is in place for interagency, DOD, and law
    enforcement information sharing to facilitate each organization's
    requirements. Additionally, the FAA is currently working with the
    Office of Homeland Security and other agencies to meet interagency
    requirements for enhanced ground/ground communications and surveillance
    availability. Certain current and planned technologies are considered
    Security Sensitive Information (SSI) and are prohibited from
    dissemination.
        Additionally, the Office of Homeland Security has developed the
    Homeland Security Advisory System (HSAS) to improve coordination and
    communication among all levels of government and the American public.
    The processes and information technology systems to communicate Threat
    Conditions and threat information to Federal, State, and local
    governments, and the private sector are an integral part of the HSAS.

                             CONCLUSION OF HEARINGS

        Ms. Garvey. Thank you very much, Madam Chairman. Thank you.
        Senator Murray. This hearing is recessed.
        [Whereupon, at 12:04 p.m., Tuesday, April 16, 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 2003

                                  ----------

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

        [Clerk's note.--The following testimonies were received by
    the Subcommittee on Transportation and Related Agencies for
    inclusion in the record. The submitted materials relate to the
    fiscal year 2003 budget request.
        The subcommittee requested that public witnesses provide
    written testimony because, given the Senate schedule and the
    number of subcommittee hearings with Department witnesses,
    there was not enough time to schedule hearings for
    nondepartmental witnesses.]

          Prepared Statement of the American Passenger Rail Coalition

        Chairman Murray and Members of the Subcommittee on Transportation
    Appropriations, thank you for the opportunity to provide testimony on
    fiscal year 2003 appropriations for the national Amtrak system and to
    advance development of high-speed rail in designated corridors around
    the country. My name is Harriet Parcells and I am the Executive
    Director of the American Passenger Rail Coalition, an association of
    the nation's railroad equipment suppliers and rail businesses.
        This is a critical time for the Federal Government to provide
    strong support for the nation's intercity passenger rail system,
    Amtrak. The American Passenger Rail Coalition (APRC) urges Congress to
    fully fund Amtrak's budget request to Congress of $1.2 billion in
    fiscal year 2003. This is the level of funding that Amtrak needs to
    ensure the railroad has sufficient funds to continue operating the
    current national passenger system over the next fiscal year. APRC also
    asks Congress to continue strong funding in fiscal year 2003 of the
    Federal Railroad Administration's high-speed rail R&D programs and
    funding to advance development of designated high-speed rail corridors.
        The national Amtrak system serves over 500 cities and rural
    communities. The rail system provides clean, safe, affordable and
    energy-efficient mobility for millions of Americans each year. In
    metropolitan corridors, rail offers an efficient, cost-effective
    alternative to congested highways and airways. For small cities and
    communities, rail is an essential link to other regions of the country
    and supports economic development. As we saw in the days and weeks
    following the terrorist attacks of September 11, our national intercity
    passenger rail system enhances national security. In the days following
    the attacks, when service was shut down nationwide, Amtrak trains
    continued to roll carrying thousands of individuals and families safely
    to their destinations. The trains kept the country mobile and
    productive. The attacks highlighted the vulnerability of the U.S.
    transportation system's overdependence on a single mode of transport
    and the value of providing citizens with mobility choices, including
    the choice of intercity passenger trains.
    Rail Ridership Remains Strong
        Despite a weakened economy and decreased travel and tourism over
    the past six months, Amtrak ridership in the first half of the fiscal
    year (October 2001-March 2002) rose 1.3 percent over the prior year.
    The gains in rail ridership come on top of 5 years of steady rail
    ridership and revenue growth. Amtrak ridership rose 19 percent from
    1996-2001 and revenues rose 40 percent. The continued upward trend in
    rail ridership contrasts with a 17 percent decline in domestic airline
    travel from October 2001-February 2002, according to the Air Transport
    Association.
        Ridership on the high-speed Acela Express and Metroliner services
    in the Northeast Corridor between Washington D.C., New York City and
    Boston experienced particularly strong growth, up 32 percent in the
    October 2001-March 2002 period compared to 1 year ago. Customer demand
    for sleeping cars on Amtrak's long distance trains is also strong--
    ridership is up 7 percent, ticket revenues up 19 percent in March 2002
    vs. March 2001. Ridership on the Cascades service in the Pacific
    Northwest rose 5 percent in the first half of the fiscal year compared
    to the same period a year ago, continuing a strong trend in ridership
    growth since 1993 on this rail corridor. Ridership on the Pacific
    Surfliner rose 7 percent and ridership on the Cardinal service through
    West Virginia jumped 28 percent.
          years of federal underinvestment shortchange passenger rail
        Years of Federal Government underinvestment in intercity passenger
    rail have shortchanged the nation's intercity passenger rail system.
    For decades, the government invested, and continues to invest, billions
    of dollars to build and improve highway and airport infrastructure and
    technology, but neglected and undercapitalized its intercity passenger
    rail system, Amtrak. In fiscal year 2001, Federal funding for highways
    was on the order of $33 billion, for aviation, about $13 billion and
    for Amtrak, only $521 million (an additional $105 million was provided
    separately for life safety improvements in the New York City tunnels
    and for security enhancements on the national system). Amtrak is
    expected to be operationally self-sufficient, yet competing modes are
    not. The Federal Government established trust funds for highways and
    aviation to provide a secure stream of funding to meet their capital
    and operational needs. Yet, no dedicated funding has been established
    for intercity passenger rail despite the compelling logic for doing so.
        The U.S. government invests less than 1 percent of transportation
    spending each year in intercity passenger rail. Other industrialized
    nations have a much more balanced approach to transportation investment
    and dedicate significant percentages of their transportation budgets to
    improve passenger rail service. Germany and France invest over 20
    percent of total transportation capital funding in rail; Great Britain,
    17.6 percent.
      states are looking for a strong federal partner in rail investments
        States are making substantial investments to improve intercity
    passenger rail service to assure future economic productivity and
    mobility for their regions and their citizens. As with other modes of
    transport, however, the States need a Federal partner to share the
    investment costs. Since 1993, the States of Washington and Oregon,
    along with Amtrak, Burlington Northern and other partners, have
    invested nearly $500 million in improvements to the Pacific Northwest
    Corridor. The return on the investment has been dramatic: rail
    ridership has increased over 300 percent since 1993 and the improved
    passenger rail service has diverted over 6.5 million miles of traffic
    from regional highways and prevented more than 151 tons of pollutants,
    according to Washington State DOT.
        Gridlocked freeways throughout the State of California, along with
    concerns about the environment and quality of life, have brought a
    large commitment by the State to improve intercity passenger rail
    service. Since 1990, California has invested $1.6 billion in rail
    capital improvements to upgrade track, buy new passenger rail equipment
    and for other capital needs. Last year, California spent $63 million to
    operate 50 State-supported passenger trains in regions throughout the
    State--the San Joaquin Valley, Sacramento, the San Francisco Bay Area
    and Southern California. Rail ridership has responded, growing steadily
    with the improvements and increased frequencies.
            benefits of passenger rail service to rural communities
        The need for intercity passenger rail service in congested
    metropolitan corridors is clear to most policymakers. What appears to
    be less appreciated is the value intercity passenger rail service
    provides to small cities and communities across the country. Yet,
    intercity passenger rail service is vital to the economic health of
    hundreds of America's rural communities and the mobility of their
    citizens. Citizens of rural communities like Rugby and Devil's Lake,
    North Dakota and Wolf Point, East Glacier and Whitefish, Montana depend
    on Amtrak's Empire Builder train as a safe, essential means of
    intercity travel, especially in winter when highway travel can be
    precarious or impossible. For residents of these and other rural
    communities, air travel is neither a convenient nor affordable travel
    option. The long-distance trains are important to the economic health
    of rural communities. The trains bring tourists to the region, who come
    to fish, hike, ski and enjoy the region in other ways. Their spending
    on food, hotels and recreation is essential to the economies of the
    States and communities.
                    rail contributes to other national goals
        Travel by trains is energy-efficient, consuming 38 percent less
    energy (btu) per passenger mile than travel by commercial airlines.
    Transportation is the only sector of the U.S. economy that consumes
    much more oil today than it did 20 years ago. U.S. dependence on
    imported oil has been rising and since 1997, exceeds 50 percent of our
    daily domestic oil consumption. Two-thirds of the petroleum is used in
    transportation, mostly to fuel a growing fleet of cars and trucks.
    Investments in energy-efficient passenger trains are a sensible way to
    help reduce the vulnerability created by the country's growing and
    costly reliance on imported oil. Lower energy consumption translates
    into benefits to air quality. Investments in intercity passenger rail
    help reduce harmful air pollutants and contribute to State and
    community efforts to achieve healthy air quality.
        At a time when the national security and economic benefits of the
    nation's intercity passenger rail system are clear, when States are
    appealing to the Federal Government to partner with them on investments
    to improve rail service and when rail ridership is rising, it is
    senseless that Amtrak is being forced to consider eliminating service
    on the majority of its passenger rail network. Yet, the nation's
    passenger rail system has reached this critical juncture.
        APRC urges Congress to appropriate $1.2 billion for Amtrak in
    fiscal year 2003 to ensure that Amtrak is able to continue to operate
    the current national system and to appropriate funding for FRA's high-
    speed rail R&D program and to advance development of designated high-
    speed rail corridors. Investments to improve intercity passenger rail
    service and develop high-speed rail in key corridors are wise
    investments that yield substantial returns for the nation, States and
    communities.
        Thank you Chairman Murray and Members of the Subcommittee for the
    opportunity to provide this testimony on our nation's intercity
    passenger rail system and for the strong support this Subcommittee has
    demonstrated for intercity passenger rail over the years.
                                     ______

      Prepared Statement of the American Public Transportation Association

                                  introduction
        The American Public Transportation Association (APTA) appreciates
    the opportunity to submit testimony on the fiscal year 2003 Department
    of Transportation and Related Agencies Appropriations bill.
        APTA's 1,400 public and private member organizations serve the
    public by providing safe, efficient, and economical public
    transportation service, and by working to ensure that those services
    and products support national energy, environmental, community, and
    economic goals. APTA member organizations include transit systems and
    commuter railroads; design, construction, and finance firms; product
    and service providers; academic institutions; and state associations
    and departments of transportation. More than ninety percent of the
    people who use public transportation in the U.S. and Canada are served
    by APTA member systems.
    Public Transportation and TEA 21
        During the past five years, increased appropriations for the
    federal transit program, authorized under the Transportation Equity Act
    for the 21st Century (TEA 21), have been critical in assisting the
    public transportation industry address mobility issues around the
    country. We appreciate what the legislation, and its annual funding
    through the appropriations process, has meant for our industry. Public
    transportation ridership is growing, the demand for new transit
    projects and extensions continues, and Americans are including public
    transportation as an option in planning their daily activities. Freedom
    of mobility is critical to the spirit of America, and public
    transportation is an important component of that mobility. Therefore,
    APTA urges the Subcommittee in its fiscal year 2003 Transportation
    Appropriations bill to fund the federal transit program at the full
    $8.2 billion level authorized in TEA 21.
                public transportation ridership at record levels
        More and more people are choosing public transportation every day,
    and the numbers speak for themselves. Thanks in part to Congress'
    investment in the federal transit program, public transportation is
    experiencing a renaissance. Americans used public transportation a
    record 9.5 billion times in 2001, and transit ridership has grown 23
    percent since 1995, according to preliminary ridership figures. This
    represents the highest level in more than 40 years. Over the last six
    years, transit use has grown faster than the population (4.5 percent),
    highway use (11.8 percent), and domestic air travel (12 percent). In
    2000, ridership was up in all modes and in all parts of the country. In
    the light rail category, Denver (41 percent), San Jose (34 percent),
    and New Jersey Transit (38 percent) experienced tremendous ridership
    success. New light rail service in Salt Lake City is exceeding
    estimates and was a big success during the recent Olympic Games. The
    commuter rail operations in Dallas (39 percent) and in Northern
    Virginia (20 percent) have had continued success. Heavy rail ridership
    increased by more than 7 percent in New York City, Washington, D.C.,
    and Philadelphia, and it rose by nearly 4 percent in Chicago and by
    almost 13 percent in San Francisco. Bus ridership was up in large
    cities like Washington, D.C. (8.4 percent) and New York City (6.7
    percent), as well as in cities across the country like Lexington, KY
    (5.7 percent) and Birmingham, AL (5.7 percent). Although the 2001
    transit ridership numbers will not be finalized until later in April,
    preliminary indications are that, despite the economic downturn,
    transit ridership continued its upward climb with 2 percent growth over
    2000 levels.
    Demand Soaring in all Modes and in all Communities
        The consistent, annual ridership growth in public transportation
    sends the message loud and clear: people are leaving their cars at home
    and using transit to meet their mobility needs. As new systems open
    doors and existing systems expand their service, demand is exceeding
    the speed at which new service can be funded and implemented. Now more
    than ever, growing congestion is causing people to seek alternative
    forms of transportation to commute to work, complete errands, make
    health care visits, and to get to and from sports and entertainment
    events. Therefore, it is of the utmost importance that we sustain the
    national commitment to an integrated transportation system by
    adequately investing in transit.
               investment in public transportation shows results
        Recent transit ridership increases are a direct result of the
    increased annual investment in the federal transit program. TEA 21
    authorized $41 billion for public transportation, and guaranteed $36
    billion, a significant increase over previous funding levels. This
    funding increase benefited transit systems in both urban and rural
    areas. In 2002, the rural program is funded at $223.4 million, a 95
    percent increase over the 1997 funding of $115 million. This compares
    with a 65 percent increase in the overall growth of the federal transit
    program over the same period. One of the keys to this growth has been
    the transit funding guarantee provision, which has been instrumental in
    insuring that transit funding has increased on a consistent, annual
    timetable.
        The increased transit and highway investments under TEA 21 have
    been put to work wisely and expeditiously on an array of transportation
    projects and improvements. Nearly 200 new or expanded rail or bus or
    rapid transit projects were authorized for 88 areas in more than 40
    states. TEA 21 investments have enriched the lives of Americans by
    giving them mobility and the freedom to do what they want and need to
    do, and created real success stories. To capture some of these success
    stories, APTA and the American Association of State Highway and
    Transportation Officials jointly published a report on TEA 21, ``Money
    at Work.'' We would be pleased to make copies available for the
    Subcommittee.
    Transit Plays Key Role in National Emergencies
        Perhaps one of the best illustrations of the benefits of the
    investment in the transit program was the role that transit played
    during the September 11, 2001, terrorist attacks. On September 11,
    citizens in New York and Washington relied on public transportation to
    evacuate from the urban core. In New York, hundreds of thousands of
    citizens were evacuated quickly and without injury. Here in Washington,
    the Washington Metropolitan Area Transit Authority proved its value in
    running the equivalent of two rush hours back-to-back and moving
    thousands of citizens out of harms way. This same story was true all
    across the country as transit systems helped evacuate citizens from
    shut down airports and center cities. We have published a report in
    this regard, ``America Under Threat: Transit Responds to Terrorism,''
    that we would be pleased to share with the Subcommittee.
          increased public transit infrastructure investment is needed
        As noted, Madam Chairman, public transportation delivers
    significant benefits and transit ridership is up. Even though highway
    and transit investment has increased, transportation experts agree that
    our annual capital investments still fail to keep pace with the
    increasing needs for public transportation. Transit industry needs,
    from all sources, for capital, planning, and research will average $42
    billion per year, between fiscal year 2004 through fiscal year 2009,
    according to a recent APTA Transit Needs Synthesis Report. The report
    summarizes existing needs estimates from APTA, the Federal Transit
    Administration, and the Community Transportation Association of
    America. While the $42 billion estimate reflects potential investments
    in an unconstrained environment, it identifies the demand for new rail
    starts, buses and related facilities, rail modernization, core capacity
    improvements, preventive maintenance, paratransit, and other needs.
        Additional reports addressing transit needs are expected in the
    next several months, including the Department of Transportation (DOT)
    Conditions and Performance Report, which will detail the investments
    needed for maintenance and improvement of the nation's highways and
    transit systems. The American Association of State Highway and
    Transportation Officials' (AASHTO) ``Bottom Line'' Report will also
    assess both highway and transit needs. APTA has been working with the
    Transit Cooperative Research Program (TCRP) to support the efforts of
    both DOT and AASHTO.
        If current trends continue, over the next 15 years alone, highway
    travel is expected to increase by 40 percent and transit use by 60
    percent. In order to accommodate such growth, it is critical to
    maximize the federal investment in all forms of surface transportation,
    including public transportation.
    Infrastructure in Critical Need of Repair
        Overworked bus and rail fleets paired with rapidly increasing
    ridership have taken their toll over the years, and recent assessments
    of the nation's infrastructure are disconcerting. The American Society
    of Civil Engineers (ASCE) released its 2001 Report Card for America's
    Infrastructure last March, and the news for transit was not good in
    terms of the state of the transit infrastructure. The report card gave
    transit a ``C-'' in 2001, down from its ``C'' in the prior report card
    in 1998. The ASCE cited the DOT 1999 Status of the Nation's Highways,
    Bridges, and Transit report, in which DOT recommends an annual
    investment of $17 billion in order to improve both conditions and
    performance of transit. Most importantly, the ASCE urges the full
    funding of TEA 21 at its authorized level, $8.2 billion for fiscal year
    2003.
        In addition, the National League of Cities report entitled ``Six
    Critical Threats to Our Cities: Keys to Unlocking America's Future''
    lists the areas most in need of attention in order to reinforce
    America's prosperity. Among the hazards is the nation's aging
    infrastructure, and the NLC calls for the modernization of the
    transportation infrastructure in order to build the quality of life
    that families and businesses want and expect.
    Voters Demanding More Transit
        It's no wonder that so many American cities have recently voted to
    start or expand light rail, commuter rail, or bus service in their
    communities. Just recently, on March 5, in a California statewide
    election, voters overwhelmingly approved Proposition 42, requiring that
    all state gasoline tax revenue be devoted to transportation beginning
    in 2008. Under the provision, 20 percent of the gas sales tax funds
    will be used for public transportation. Voters have supported recent
    transit initiatives in Pierce County, Washington; Salt Lake City, Utah;
    Seattle, Washington; Toledo, Ohio; Providence, Rhode Island; King
    County, Washington, Houston, Texas, Glendale, Arizona, and in Portage
    County, Ohio, among others.
        The nation's mayors also recognize the growing demand for public
    transit. In February, at a meeting of more than 300 mayors from across
    the country, a survey was released that showed that 80 percent of
    respondents agreed that the idea of investment in light rail can reduce
    congestion by presenting a viable alternative to driving.
                        administration's budget proposal
        Madam Chairman, while we are pleased that the Administration's
    fiscal year 2003 Budget proposes to honor the TEA 21 funding guarantees
    for public transportation, needs studies indicate a clear and growing
    need for investment in transit infrastructure. Thus, we urge you to
    fund the fiscal year 2003 program at the highest possible level.
    New Freedoms Initiative
        The Administration's fiscal year 2003 budget request includes a New
    Freedoms Initiative, designed to help Americans with disabilities by
    increasing access to employment and daily community life. The program
    would include $100 million for grants for alternative methods to
    promote access to transportation, and $45 million for a pilot program
    to promote innovative transportation solutions for people with
    disabilities. While APTA supports the Administration's New Freedoms
    Initiative, it recommends that it be financed with TEA 21 fiscal year
    2003 funds authorized to be appropriated over the guaranteed amounts.
    Federal Match for New Starts
        The Bush Administration budget also proposes that, starting in
    2004, the federal match under the new fixed guideway and extensions
    program be reduced from its current 80 percent to 50 percent. While we
    recognize the significant and growing demand for New Start funding and
    the interest in allocating it carefully, we are concerned about the
    larger transportation policy issue of a level playing field for all
    federal surface transportation funds. If highway funds continue to be
    available at an 80 percent federal match, and new start transit funds
    are available at 50 percent, it would seem that federal policy contains
    a built in bias discouraging local decision makers from making
    independent transportation decisions strictly on the basis of local
    needs, criteria, and the best solution to local transportation
    problems. Rather than revising federal shares in an attempt to spread
    the resource, we urge Congress to grow the program to accommodate the
    clear demand for federal investments in our nation's surface
    transportation infrastructure.
    Increased Funds are Required to Maintain ADA Compliance Standards
        Since the enactment of the Americans with Disabilities Act in 1990,
    transit agencies have made significant progress in the effort to ensure
    that all forms of public transportation are accessible to people with
    disabilities. According to an APTA survey of 300 transit agencies,
    there were approximately 25,000 U.S. transit buses in 1993 that were
    not wheelchair accessible. In 2000, that number was less than 11,000.
    Similarly, commuter rail operators reduced the number of non-accessible
    rail cars by more than half over the same time period. However, as the
    population ages, the need for demand response and paratransit service
    will continue to rise. Public investment for these services and further
    on-vehicle lift, ramp, and station improvements must keep pace for
    transit to meet mobility demands. In fact, the demand for paratransit
    services in particular is growing and the resulting costs are rising
    significantly.
        As ridership across the nation's small and large communities
    continues to flourish, transit agencies struggle financially to meet
    the demand for additional service for disabled and elderly passengers.
    Such services are already frequently operating at capacity. We applaud
    the Administration's recognition--as demonstrated in its New Freedoms
    Initiative--that people with disabilities are well served by expanded
    mobility.
    Job Access and Reverse Commute Program
        In addition, APTA reaffirms the Federal Transit Administration's
    (FTA) assessment that the Job Access and Reverse Commute Program should
    be funded at the fully authorized level of $150 million as provided in
    TEA 21. These programs not only get people to jobs otherwise
    unavailable to them, but they provide America's employers with access
    to the services of thousands of new employees. We commend FTA on its
    outreach efforts to date, and urge it to continue efforts to streamline
    the program administratively and focus on increased program
    coordination at the federal, state, and local levels.
    Transit Security & Fiscal Year 2002 Supplemental Request
        Madam Chairman, as we conclude our views on the fiscal year 2003
    Transportation Appropriations bill, we also want to take this
    opportunity to comment on the recent submission by the Administration
    of its Emergency fiscal year 2002 Supplemental Appropriations Request.
    We mention in our testimony that transit played an important role
    during the terrorist attacks in New York and Washington last year. We
    should also note that transit agencies across the nation have made
    significant investments in security-related capital in recent months.
    As the Subcommittee develops a fiscal year 2002 Supplemental
    Appropriations bill, we urge you to consider the investments in
    security enhancements made by public transportation systems around the
    country.
                                   conclusion
        Madam Chairman, public transportation ridership is at its highest
    point in decades, and transit systems in our largest cities and small
    communities are doing their best to keep up with growing demand. We are
    pleased with the sharp increases in ridership, but it is taking its
    toll, and funds are needed to maintain and upgrade existing systems. We
    urge Congress to help lead the ongoing renaissance of public
    transportation and to support its many benefits, in communities of all
    sizes. Help us get the job done! Public transportation delivers an
    enormous return on the federal investment--it can provide freedom of
    mobility and a transportation choice for all Americans. We urge the
    Subcommittee to fund the fiscal year 2003 federal transit program at
    the $8.2 billion authorized level.
        APTA appreciates the opportunity to submit testimony on the
    development of the fiscal year 2003 Transportation Appropriations Act.
    We would be pleased to provide additional information to assist you in
    your deliberations.
                                     ______

                   Prepared Statement of Chatham Area Transit

        Mr. Chairman, thank you for this opportunity to submit a statement
    for the Outside Witness Hearing Record. This statement presents
    critical needs of CAT for fiscal year 2003. I would like to thank
    Senators Max Cleland and Zell Miller for their support of this
    statement and CAT's needs for fiscal year 2003.
        The request includes $8,000,000 for Bus and Bus Facilities and
    Equipment and $1,000,000 for Job Access and Reverse Commute purposes.
        The Chatham Area Transit (CAT) request is $8,000,000, comprised of
    four components: (1) The purchase of 36 replacement buses, all of which
    have between 600,000 and 900,000 miles, far above their designed
    service life of 500,000 miles, (2) Operations facility renovations, (3)
    Design costs for bus passenger facilities needed in the east and south
    sides of Savannah, and (4) Purchase of equipment to support ferry and
    trolley operations.
    Bus Replacement
        The bus replacement component will involve new vehicles that will
    be ADA compliant. The vehicles that currently need replacement are not
    ADA compliant.
        CAT's annual increase in ridership exceeds the national average for
    transit ridership growth. CAT is serving a growing community that is
    increasingly reliant on public transit for its transportation needs.
    The growth in tourists using CAT has also placed new demands on the
    system's aging resources.
    Facility Renovation
        The current facility needs a new roof and replacement concrete pads
    in the parking areas. The constant bus traffic and their associated
    weight have caused severe damage to the CAT maintenance and
    administrative facility.
    Ferry and Trolley Operations
        CAT has assumed responsibility for trolley and ferry operations in
    the CAT service area. Equipment for these two operations will be needed
    to serve CAT's ridership and services.
        CAT also requests $1 million within the Job Access/Reverse Commute
    category. Continuation of this important program will permit CAT to
    meet current transit route schedules and transit needs.
        Thank you for this opportunity to present CAT's needs for fiscal
    year 2003.
                                     ______

              Prepared Statement of the City of Newark, New Jersey

        The City of Newark respectfully submits the following for your
    consideration:
      --The Newark Penn Station Platform Extension and Inter-modal Access
            Enhancement Project, for which the City requests 4 million from
            the Bus and Bus Facilities program; and
      --the Newark-Elizabeth Rail Link, a $60 million request, included in
            the Administration's Budget, as a New Starts Rail initiative.
        Chairman Murray and members of the Subcommittee, on behalf of the
    City of Newark, thank you for giving me the opportunity to present
    testimony to you on behalf of projects under your jurisdiction which
    are very important to the people of Newark, New Jersey and the
    surrounding region. The support of this Committee has been critical in
    the past, and we wholeheartedly thank you for your aid to projects that
    have truly impacted on the people of Newark and our economy. Newark's
    transportation infrastructure needs are vital to enabling us to
    maintain our position as a regional center for commerce, government and
    entertainment.
                           newark-elizabeth rail link
        Newark is a City with vast potential, and there is a renewed
    vitality and sense of optimism in Newark. As the physical crossroads of
    the Northeast Corridor, the future economic viability of Newark is
    inextricably dependent upon the continued modernization and expansion
    of our intermodal transportation system. Improvements to our roadway
    network, our rail system, and our port and airport facilities directly
    translate into jobs and economic prosperity for our City, State and
    Region.
        The construction of major new facilities, including the 4 year old
    New Jersey Performing Arts Center, our 2 year old minor league baseball
    stadium, and the Joseph G. Minish Passaic Riverfront Park and Historic
    Area--on which the Army Corps of Engineers is ready to begin its second
    phase of construction--are all related to the proximity and
    effectiveness of our transportation network. The renovation and
    repopulation of older office buildings, and construction of new ones,
    is occurring in large part due to the ease of access for commuters.
    Your help on transportation funding has improved access to not only the
    downtown business, arts and entertainment district, but also the
    rapidly growing Newark Airport/Port Newark complex. The success of
    University Heights, where four institutions of higher learning provide
    educational opportunities to over 50,000 commuter students per day, is
    also directly related to the ease of access to the highway system.
        We are working to further capitalize on the existing transportation
    infrastructure by connecting current and proposed facilities with the
    Newark Elizabeth Rail Link. The first segment of the Newark Elizabeth
    Rail Link (NERL) is now under construction, thanks to your previous
    support. The first operable segment of the NERL will provide the
    missing link between downtown Newark's two train and bus transportation
    nodes. It will be a 0.94 mile connection between the Broad Street
    Station, where trains from the western suburbs enter the City, and
    Newark Penn Station, on the Northeast corridor line and the central hub
    for New Jersey Transit trains and buses. There will be three new
    stations on this segment--Broad Street Station, Washington Park/
    Riverfront Stadium, and N.J. Performing Arts Center/Center Street--
    which connect sites mentioned above, as well as our renowned Newark
    Museum and Newark Public Library, that are crucial to Newark's economic
    and cultural growth. The line then will enter a portal where it will
    connect with the existing City Subway tunnel to access Penn Station,
    which I will discuss further in a moment. At full build-out, the NERL
    is planned to be an 8.8 mile, fifteen station light rail transit line
    linking downtown Newark with Newark International Airport and the City
    of Elizabeth.
        The NERL is an important and central component of our overall
    transportation plan. We are proud that a full funding agreement for
    this first operable segment of the Newark Elizabeth Rail Link was
    signed last summer, and the Administration has included funding for it
    in its budget. I respectfully ask this Committee to add its support for
    the $60 Million budget request for this vital connection.
         newark penn station platform extension and inter-modal access
                              enhancement project
        A central feature of the downtown/riverfront area is the presence
    of AMTRAK facilities at Newark Penn Station. This station is the last
    northbound stop on the Northeast Corridor before New York City, and
    provides rail and bus linkages to the rest of New Jersey, and the
    region beyond. New Jersey Transit is doing an admirable job of
    renovating and modernizing the facility to accommodate increases in
    demand at the station, but the portion of the overall rail
    infrastructure that is owned and operated by AMTRAK is in great need of
    attention. The renovation and upgrading of AMTRAK property to better
    serve the City of Newark, its residents and visitors is a key factor in
    the City's economic development and transportation initiatives.
        Newark Sports and Entertainment and the City of Newark are
    enthusiastic about continuing the effective federal partnership they
    have developed in support of the platform extension project at Penn
    Station. These platform extensions will enable passengers to exit the
    rail facility without having to navigate through passageways to exit
    through the station itself. This improvement will enable the connection
    of a pedestrian walkway to a planned economic development project, the
    new downtown sports and entertainment complex. With this extension, an
    old abandoned railroad bridge will be transformed into a productive
    pedestrian corridor, linking passengers to a recently planned inter-
    modal transportation facility that will be housed adjacent to the new
    sports facility. The project will help to revitalize the southern
    portion of Broad Street--which is Newark's main commercial corridor--
    just as other transportation projects have facilitated the renaissance
    of the upper Broad Street area. The entire cost of the platform
    extension at Penn Station is $35 million, and the amount requested for
    this appropriation totals $4 million. This project meets all of the
    requirements for the Transportation Appropriations bill, and will serve
    as a model for other cities in desperate need of urban revitalization.
        The assistance of this committee in funding these projects is
    vital. The Newark Elizabeth Rail Link and the Penn Station improvements
    are critical links in Newark's transportation network, and your support
    for them is crucial to our continued economic development. Your
    attention and consideration of the needs of Newark, New Jersey are
    deeply appreciated, and I thank you in advance for any assistance your
    subcommittee may provide.
                                     ______

     Prepared Statement of the Coalition of Northeastern Governors (CONEG)

        As the Subcommittee begins the fiscal year 2003 transportation
    appropriations process, the Coalition of Northeastern Governors (CONEG)
    is pleased to share with the Subcommittee testimony for the record on
    the fiscal year 2003 U.S. Department of Transportation appropriations.
    The CONEG Governors commend the Subcommittee for its past support of
    funding for the Nation's highway, transit and rail systems. We also
    urge the subcommittee to continue the important Federal partnership
    role in strengthening the Nation's passenger and freight rail systems
    through continued investment in rail safety and capital investment in
    intercity passenger rail and other critical projects. Continued Federal
    investment in transportation research and development is also an
    essential element of public and private efforts to enhance the safety
    and capacity of the Nation's transportation system.
        An integrated, safe and fully funded national surface
    transportation system is a critical underpinning to the productivity of
    our economy, the well being of our communities, and the quality of life
    of our people. Within this system, the Northeast has unique
    transportation needs and challenges. For example, it is the most
    densely populated area in the Nation and has the Nation's oldest
    transportation infrastructure. In addition, the region's transportation
    infrastructure is among the most heavily used, and is exposed to the
    largest variation in seasonal changes in the country.
        First, the Governors urge the Subcommittee to fund the highway and
    transit programs at least at the levels authorized in the
    Transportation Equity Act for the 21st Century (TEA-21) and, ideally,
    to fund the highway program at the fiscal year 2002 funding level. This
    level of funding is critical for the Federal-State partnership to
    achieve improved conditions, performance and safety of the region's and
    the Nation's highways and bridges.
        Second, the Governors strongly urge the subcommittee to provide a
    level of funding for intercity passenger rail which ensures that safe,
    reliable service is provided across the Nation without interruption as
    the Congress and Administration address the future of intercity
    passenger rail. The need for substantial Federal investment in
    intercity passenger rail is independent of the outcome of the current
    policy debate on the shape and future of Amtrak. The USDOT Inspector
    General has noted that over $1 billion in capital funds is needed
    annually just to sustain the current intercity passenger rail system,
    regardless of who operates that system. The States are already major
    investors in the current intercity passenger rail system, with the
    Northeast and Mid-Atlantic States already investing approximately $2.5
    billion in intercity passenger rail infrastructure since 1991.
        Intercity passenger rail is an indispensable part of our Nation's
    transportation system, particularly in the Northeast and Mid-Atlantic
    region. This has become more clear since the events of September 11
    when rail provided a much needed redundancy to the Nation's
    transportation system. A degradation or sudden disruption in safe,
    reliable intercity service, whether through reduction in essential
    maintenance, devastating service cuts, or bankruptcy by Amtrak, would
    jeopardize the future opportunity of passenger rail service across the
    Nation. In the Northeast, it would add enormous pressures on the
    region's already over-burdened highway and airport capacity. The
    Federal Government must continue to be a strong consistent funding
    partner of intercity passenger rail, just as it has for the other modes
    of transportation that promote the efficient movement of people and
    goods.
        Third, the Governors support efforts to improve the security of our
    Nation's transportation infrastructure, including fully funding the
    President's request for the newly created Transportation Security
    Agency to provide security for the Nation's transportation
    infrastructure, particularly the Nation's airports.
        Fourth, the Governors urge the Subcommittee to continue funding for
    investments in Intelligent Transportation Systems (ITS). The densely
    populated Atlantic Coast region relies heavily on ITS to improve
    operations every day on both highways and transit. However, in the wake
    of September 11, the region's ITS systems, including those provided by
    TRANSCOM and the I-95 Corridor Coalition, played a critical role in
    both the emergency management and recovery phases of the operation.
    These organizations, funded through the Federal ITS program, supported
    and helped coordinate the movement of convoys of military personnel and
    emergency service agencies in the hours immediately following the
    event. They also helped support the recovery effort as the
    transportation system was systematically brought back on line.
        Fifth, safety on the Nation's highways, transit and rail systems
    remains a priority of the Governors. We are specifically concerned
    about the safety of the aging rail tunnels along the Northeast
    Corridor, and urge the Subcommittee to fund life safety improvements
    for the Baltimore and New York tunnels. In addition, the Governors
    support full funding for the Railway-Highway Crossing Hazard
    Elimination Program. As part of the Federal-State partnership to
    correct hazardous conditions on the Nation's highways, investments in
    highway-rail crossings can reduce injuries and death from accidents
    even as they allow higher train speeds and increased reliability.
        Sixth, the Governors support the President's funding request of $20
    million for the Surface Transportation Board, and urge the Subcommittee
    to fund the Federal Railroad Administration at current levels.
        Seventh, the Governors support continued Federal investment in
    transportation research and development programs, particularly the
    Federal Railroad's Next Generation High Speed Rail program. This
    program enhances safety and helps stimulate the development of new
    technologies which will benefit improved intercity rail service across
    the Nation.
        The Governors also support funding to ensure that the U.S. Coast
    Guard can maintain the readiness of its fleet to carry out ice-breaking
    and related maritime safety responsibilities, in addition to its law-
    enforcement operations. The Northeast is highly dependent on waterborne
    shipments of distillate to meet winter heating oil, diesel fuel, and
    other petroleum product needs. Therefore, the Coast Guard's ice-
    breaking operations are a critical link when severe winter weather
    threatens a complex and fragile delivery system. Without additional
    resources, an aging fleet of icebreakers and deferred maintenance place
    additional stress on this essential logistics system.
        The CONEG Governors thank Chairman Rogers, Ranking Member Sabo and
    the entire Subcommittee for the opportunity to present this testimony,
    and appreciate your consideration of these requests.
                                     ______

        Prepared Statement of the Illinois Department of Transportation

        Madam Chairwoman and Members of the Subcommittee, we appreciate the
    opportunity to submit testimony concerning fiscal year 2003 U.S.
    Department of Transportation (U.S. DOT) appropriations on behalf of the
    Illinois Department of Transportation (IDOT) to the Senate
    Appropriations Subcommittee on Transportation and Related Agencies. We
    thank Subcommittee Chairwoman Murray and the members of the
    Subcommittee for their past support for a strong Federal transportation
    program and for taking into consideration Illinois' unique needs. Our
    recommendations for overall funding priorities and our requests for
    transportation funding for projects of special interest to Illinois are
    described below.
                                highway funding
        Illinois has an extensive highway system to serve the diverse needs
    for passenger and freight travel within and through the State. There
    are over 288,000 lane miles of public highway that carries over 102
    million vehicle miles of travel annually. IDOT urges the Subcommittee
    to set the fiscal year 2003 obligation limitation for highway and
    highway safety programs at the fiscal year 2002 level of $31.8 billion.
    Unless action is taken, the fiscal year 2003 $4.4 billion reduction in
    Revenue Aligned Budget Authority (RABA) will lead to an obligation
    level of $23.2 billion. This would result in a reduction of $8.6
    billion in national funding to States for fiscal year 2003 from the
    fiscal year 2002 enacted level, a 27 percent drop. Given that the
    country is in the midst of an economic recession, it would be
    counterproductive to drastically cut highway funding that produces
    valuable jobs. We estimate that the drop in Federal highway funding
    would result in an employment loss of more than 5,660 direct
    construction-related jobs in Illinois. Therefore, Congress needs to
    fully restore the $8.6 billion Federal highway funding cut. We believe
    this can be accomplished by using a portion of the current balance in
    the Highway Account of the Highway Trust Fund. We also urge that the
    restored funds be distributed to the States in the same way highway
    funds are currently allocated. We appreciate the support of the
    Subcommittee and the full Appropriations Committee for the provision
    adopted in the House Budget Resolution to at least offset the fiscal
    year 2003 RABA reduction.
        IDOT Requests the Following Earmarks For Highway Construction
    Projects:
      --Stevenson Expressway reconstruction in Chicago.--IDOT requests an
            earmark of $30 million to assist in financing the final stage
            of the $567 million Stevenson Expressway reconstruction
            project. IDOT believes that this earmark is warranted because
            of the extraordinary cost of this project and because the
            Stevenson Expressway is of national and international
            importance in the movement of people and freight. A special
            earmark of $30 million from the Discretionary Interstate
            Maintenance program or from another discretionary highway
            funding category will aid in finishing this costly project.
      --Wacker Drive reconstruction in Chicago.--IDOT and the city of
            Chicago jointly request an earmark of $39 million to assist in
            financing the estimated $210 million cost to reconstruct Wacker
            Drive from Michigan Avenue to Randolph Street, located in
            downtown Chicago. IDOT and the city believe that this earmark
            is warranted because of the extraordinary cost of the project
            and because Wacker Drive is critically important to the city's
            transportation system. A special earmark of $39 million from
            the Discretionary Bridge program or from another discretionary
            highway funding category will aid in financing this costly
            project.
      --Intelligent Transportation Systems (ITS) projects.--IDOT requests
            an fiscal year 2003 earmark of $10 million in ITS Deployment
            funds for key projects in the Chicago and other metropolitan
            areas in Illinois to enhance system operations and for various
            locations around the State for security, commercial vehicle
            operations, work zone safety and weather/roadway condition
            information. The list of projects is shown in Attachment 1.
            IDOT believes that this earmark is warranted because it will
            aid in implementing vitally needed projects that enhance the
            effectiveness and efficiency of the transportation system and
            improve mobility, safety and security for all highway users.
        If the Subcommittee again earmarks funds from the National Corridor
    Planning and Development (NCPD) and Transportation and Community and
    System Preservation programs in fiscal year 2003, IDOT requests funding
    for the projects listed below. We suggest that these projects be funded
    from the NCPD program but defer to the Subcommittee's judgement:
      --US 30 in Will County (Williams Street to Illinois 43).--IDOT
            requests an earmark of $2.7 million for engineering and land
            acquisition on US 30 from Williams Street in New Lenox to
            Illinois 43 (Harlem Avenue). US 30 in this section of central
            Will County carries large amounts of traffic and is designated
            as a Strategic Regional Arterial. The segment connects the city
            of Joliet on the west and existing four-lane pavement on the
            east. The US 30 corridor is quickly developing, and the roadway
            needs to be expanded. Initial engineering for design and
            environmental assessment is currently under way with completion
            anticipated in fall 2002.
      --US 45 in Lake County (Illinois 137 to Washington Street).--IDOT
            requests an earmark of $13.9 million to add lanes on US 45 from
            Illinois 137 (Buckley Road) to Washington Street in Grayslake.
            US 45 is a major north-south arterial route in central Lake
            County that carries large amounts of traffic. The first $6
            million of the requested funding would be used for additional
            lanes for 1.7 miles to extend four lanes northward from IL 137
            to IL 120 (Belvidere Road). The remaining $7.9 million of the
            requested funding would be used for additional lanes for 1.5
            miles to extend four lanes northward from IL 120 to Washington
            Street.
      --Fox River Bridge Crossing in Kane County.--IDOT requests an earmark
            of $2.5 million for land acquisition for the Stearns Road Fox
            River bridge crossing in South Elgin, Kane County. Federal
            funding is requested for land acquisition for a proposed Fox
            River Bridge Crossing within the Chicago Central and Pacific/
            Stearns Road Corridor in South Elgin. Phase I engineering for
            design, location and environmental studies is under way for the
            project, with completion estimated next fall. The
            Transportation Equity Act for the 21st Century (TEA-21)
            provided $9.6 million in High Priority Project funding for the
            proposed Fox River bridge crossings; however, the minimum cost
            for any of the proposed bridges, including required roadway
            work, is at least $60 million.
      --Illinois 5 in Rock Island.--IDOT requests an earmark of $5 million
            for improvements to Illinois 5 in Rock Island. The requested
            Federal funding for improvements on IL 5 from 24th Street to
            38th Street in Rock Island will complete the four-laning
            improvement on IL 5 through Rock Island and Moline and will
            complement the new West Rock River Bridge project.
      --Illinois 6 Extension to Chillicothe.--IDOT requests an earmark of
            $1.2 million to expand the Illinois 29 corridor study north of
            Peoria. Illinois is about to undertake preliminary engineering
            on a long-term project to expand IL 29 to four lanes from north
            of Chillicothe to I-180. The requested Federal funds will
            expand the limits of the corridor study to also include the
            extension of IL 6 to connect to the proposed four-lane IL 29
            north of Chillicothe.
      --Allen Road in Peoria.--IDOT requests an earmark of $2 million to
            widen Allen Road in Peoria. Federal funding for this project
            will widen Allen Road (old IL 174) to five lanes for one-half
            mile from Pioneer Parkway to Townline Road in Peoria. This
            widened segment will connect to five-lane roadway both north
            and south of the segment.
      --US 67 in Schuyler County.--IDOT requests an earmark of $2.5 million
            for Phase II Engineering for US 67. The requested Federal
            earmark will fund Phase II engineering (preparation of contract
            plans) for the improvement of US 67 from north of Rushville to
            north of Illinois 101 in Schuyler County. Construction for this
            segment of US 67 is estimated at $56 million.
      --Illinois 29 from Berry to Edinburg.--IDOT requests an earmark of
            $1.2 million for Preliminary Engineering for IL 29 between
            Berry and Edinburg, Illinois. Illinois intends to construct a
            four-lane highway for 19 miles on Illinois 29 between Rochester
            and Taylorville. A new four-lane highway will better handle
            traffic and improve safety. The State has committed $40 million
            for engineering and construction of 12 miles of the new
            highway. The $1.2 million earmark would fund Phase II
            engineering to prepare contract plans for the remaining 7-mile
            segment.
        There will likely be other project earmarks that are requested by
    Illinois local governments and IDOT will support them as well.
                        transit major capital investment
    Bus and Bus Facilities
        IDOT, the Illinois Public Transportation Association and the
    Regional Transportation Authority (RTA) (which oversees the planning
    and financing of transit in the six-county northeastern Illinois area)
    jointly request an earmark of $28 million in fiscal year 2003 Section
    5309 bus capital funds for Illinois. This joint request is a
    demonstration of our mutual interest in securing funding for essential
    bus capital needs throughout the State. A project list supporting this
    statewide request is shown in Attachment 2.
        The request will provide $8.2 million for downstate Illinois
    transit systems for the purchase of 72 buses and paratransit vehicles
    to replace overage vehicles and to comply with Federal mandates under
    the Americans with Disabilities Act. All of the vehicles scheduled for
    replacement are at or well beyond their design life. The request will
    also provide $12.2 million to undertake engineering, land acquisition
    or construction for nine support facilities that will enhance efficient
    operation of transit services.
        In northeastern Illinois, $7.6 million will be used to purchase 64
    heavy-duty buses and paratransit vehicles for Pace, RTA's suburban bus
    operator.
        Illinois transit systems need discretionary bus capital funds since
    regular formula funding is inadequate to meet all bus capital needs.
    IDOT believes that Illinois' needs justify a much larger amount of
    funds than the State has received in recent years. Illinois receives 7
    percent of the needs-based urbanized area formula funds but has
    received less than 2 percent of bus capital funds over the last several
    years. RTA ranks third in the nation in bus passenger trips, yet
    Illinois' share of bus capital has been far below shares received by
    other States with much less bus transit use.
    New Systems and Extensions--Metra Commuter Rail
        IDOT supports Metra's (the commuter rail operating agency serving
    the six-county northeastern Illinois region) request for an earmark of
    $59.7 million in New Starts funding for continued work on three
    projects: the North Central Service, the Union Pacific West Line and
    the SouthWest Service. These improvements are in areas where
    significant population and development increases have already happened
    and are projected to continue well into the 21st Century. The projects
    will improve and extend commuter rail service which will in turn reduce
    highway congestion and contribute to attaining clean air objectives.
    Metra received $54.4 million in fiscal year 2002 for the three
    projects, and U.S. DOT executed Full Funding Grant Agreements (FFGA) in
    November 2001 totaling $319 million in New Starts funds.
    New Systems and Extensions--Chicago Transit Authority (CTA)
        IDOT supports the CTA's request for an earmark totaling $90.4
    million in New Starts funding--$57.6 million to assist in
    rehabilitating the Douglas Branch of the Blue Line and $32.8 million to
    assist in upgrading the Brown Line. In fiscal year 2002, CTA received
    $32.4 million in Federal funds for construction of the Blue Line and $3
    million to continue engineering for the Brown Line.
        The funding requested for rehabilitating the Douglas Branch of the
    Blue Line would continue construction to completely rehabilitate or
    replace track, structure and ancillary systems to restore this 6-mile
    branch of the Blue Line to an acceptable level of service and to ensure
    its viability for the next 30 to 40 years. The CTA is seeking at least
    $57.6 million in New Starts funds for fiscal year 2003. A FFGA for $320
    million in Federal funds was executed in January 2001 for the project.
        The funding requested for upgrading the Brown Line would begin
    construction to extend station platforms to handle longer trains that
    are needed to serve the increasing demand along this line. Lengthening
    all platforms to handle longer, 8-car trains; straightening tight S-
    curves that slow operations and selected yard improvements will
    increase capacity by 25 to 30 percent. The CTA is seeking at least
    $32.8 million in New Starts funds for fiscal year 2003. TEA-21
    authorized final design and construction of the Brown Line (Ravenswood)
    project, and the fiscal year 2001 U.S. DOT Appropriations bill made
    available $565.6 million for FFGAs for this and the Blue Line project
    described above. A FFGA for the Brown Line is expected by Summer 2002.
    New Systems and Extensions--MetroLink
        IDOT supports the Bi-State Development Agency's (the bus and light
    rail service operating agency for the St. Louis region) request for an
    earmark of $60.45 million in fiscal year 2003 New Starts funding for
    extending the MetroLink light rail system in St. Clair County,
    Illinois. This funding would extend the line from Southwestern Illinois
    College to Scott Air Force Base (as contemplated in the existing FFGA).
    This amount includes funds ($450,000) required by the Federal Transit
    Administration for Project Management Oversight. The Bi-State
    Development Agency expects to execute a $60 million amendment to the
    existing FFGA for additional funding for the St. Clair County
    extension. The MetroLink system serves the St. Louis region in both
    Illinois and Missouri. MetroLink service has been a tremendous success
    and ridership has far exceeded projections.
                             transit formula grants
        IDOT urges the Subcommittee to set appropriations for formula
    grants programs at the guaranteed levels set in TEA-21. IDOT also
    supports using general funds to fund transit programs beyond the TEA-21
    guaranteed levels.
    Section 5307 Urbanized Area Funds
        The Section 5307 formula grants program for urbanized areas
    provides vital capital and operating assistance for public
    transportation. In Illinois, these formula funds are distributed to 18
    urbanized areas which provide approximately 600 million passenger trips
    a year. Strong Federal funding support for transit service in urbanized
    areas is necessary to enable transit to continue the vital role it
    plays in providing urban transportation service.
    Section 5311 Rural and Small Urban Formula Funds
        The Section 5311 program plays a vital role in meeting mobility
    needs in Illinois' small cities and rural areas. Adequate Federal
    funding assistance for this program is very important to transit
    systems in Illinois. The needs in these areas are growing, yet their
    local revenue sources continue to be very limited. In Illinois, such
    systems operate in 50 counties and 6 small cities, carrying
    approximately 2.75 million passengers annually.
                        next generation high-speed rail
        IDOT urges the Subcommittee to earmark at least $8 million of the
    Next Generation High-Speed Rail appropriation for Federal Railroad
    Administration (FRA) funding to expand a positive train control (PTC)
    system in Illinois. The North American Joint Positive Train Control
    Project currently under way in Illinois is intended to demonstrate a
    PTC system and develop rail industry standards for such control that
    could be used by all railroads. It is jointly sponsored and financed by
    the American Association of Railroads, FRA and IDOT. The PTC system
    installation from Springfield to Dwight, Illinois is nearly complete,
    and testing is scheduled for summer 2002 with a goal of FRA approval by
    the end of 2002. After completing testing, IDOT intends to extend PTC
    from Springfield southward to St. Louis. Illinois is in the process of
    utilizing $70 million of State funds for development of high-speed rail
    in the Chicago-St. Louis corridor.
        IDOT urges an appropriation of $15 million for the Railway-Highway
    Crossing Hazard Elimination in High-Speed Rail Corridors program
    authorized in TEA-21 and an earmark of $6 million for a rail-highway
    grade separation in the Chicago-St. Louis high-speed rail corridor at
    Pontoon Road in Granite City. Section 1103(c) of TEA-21 authorized $15
    million per year in general funds for this program. The Chicago-St.
    Louis corridor is one of the designated corridors under this program,
    and the State is working to minimize railway-highway crossing conflicts
    as part of efforts to implement high-speed rail service.
        IDOT urges the Subcommittee to earmark $2.5 million for upgrading
    at-grade warning systems from dual gates to quad gates on public
    crossings and to dual gates on private crossings in the Chicago-St.
    Louis high-speed rail corridor. Section 1103(c) of TEA-21 sets aside
    $5.25 million of Surface Transportation Program funds each year for the
    Railway-Highway Crossing Hazard Elimination in High-Speed Rail
    Corridors program. The Chicago-St. Louis high-speed rail corridor is
    one of the designated corridors. The $2.5 million would cover 50
    percent of the department's share of upgrading 54 public at-grade
    crossings in the Springfield-St. Louis segment from dual gates, or in
    some cases only crossbucks, to quad gates. The funding would also
    assist in providing dual gates for 20 private at-grade crossings where
    there is no active warning system and would assist in closing crossings
    where possible.
                              amtrak appropriation
        IDOT supports Amtrak's request for $1.2 billion in general funds,
    the amount that Amtrak estimates will be needed to maintain existing
    nationwide operations. IDOT urges Congress to provide funds to continue
    current service until it develops a new national rail passenger policy
    and a clear plan for any changes to existing services as part of the
    congressional reauthorization of Amtrak. Chicago is a hub for Amtrak
    intercity service, and Amtrak operates 50 trains throughout Illinois as
    part of the nation's passenger rail system, serving approximately 3
    million passengers annually. Of the total, Illinois subsidizes 18
    State-sponsored trains which provide service in four corridors from
    Chicago to Milwaukee, Quincy, St. Louis and Carbondale. Amtrak service
    in key travel corridors is an important component of Illinois'
    multimodal transportation network and continued Federal capital and
    operating support is needed. As noted above, Illinois is in the process
    of utilizing $70 million of State funds for development of high-speed
    rail in the Chicago-St. Louis Corridor and is looking to use those
    funds to leverage Federal and private funds. The North American Joint
    Positive Train Control project is under way in the corridor, and
    Illinois intends to implement high-speed rail service over a portion of
    the corridor in the near future. Illinois also has an additional $20
    million for improving passenger service throughout the State through
    track and station improvements.
               airport improvement program obligation limitation
        IDOT supports a fiscal year 2003 Airport Improvement Program (AIP)
    obligation limitation at the $3.4 billion authorization level set in
    Aviation Investment and Reform Act for the 21st Century. The AIP
    program provides Federal funding support for airport preservation and
    improvements needed at general aviation and commercial airports. A
    total of 704 million passengers were enplaned at U.S. airports in 2000.
    While the events of September 11, 2001 sent shock waves throughout the
    aviation industry, passenger enplanements are expected to continue
    growing and reach one billion annually within the next decade. U.S. DOT
    Inspector General Kenneth Mead recently noted that passenger
    enplanements are expected to return to the pre-September 11 levels
    within 18 to 24 months. Airports must continue to make improvements to
    safely and efficiently serve existing traffic and this rapidly growing
    demand. Airports also have to make modifications to terminal areas for
    security purposes.
        Adequate AIP funding is especially important for general aviation,
    reliever, commercial service and small primary airports. While most
    primary airports have been able to raise substantial amounts of funding
    with Passenger Facility Charges, smaller airports are very dependent on
    the Federal AIP program.
        This concludes my testimony. I understand the difficulty you face
    trying to provide needed increases in transportation funding. However,
    an adequate and well-maintained transportation system is critical to
    the nation's economic prosperity and future growth. Your ongoing
    recognition of that and your support for the nation's transportation
    needs are much appreciated. Again, thank you for the opportunity to
    discuss Illinois' Federal transportation funding concerns.
      Attachment 1.--Illinois Fiscal Year 2003 Intelligent Transportation
                       Systems Deployment Earmark Request
        Illinois requests an earmark of $10 million in fiscal year 2003
    Intelligent Transportation Systems (ITS) Deployment funds to assist in
    funding priority projects listed below. These projects make use of
    Intelligent Transportation Systems to enhance the operations,
    performance, safety, and security of travel on the Illinois highway
    system.
    Gateway System Safety and Security Integration--($1.6 million Federal)
        Add interface with Public Safety Access Points (PSAPs, the 911 call
    processing and emergency services dispatch centers) to create an
    integrated transportation and emergency services ``infostructure'' in
    Cook, DuPage, Kane, Lake, McHenry and Will counties in northeastern
    Illinois. The Illinois Gateway Hub of the Gary-Chicago-Milwaukee (GCM)
    ITS Priority Corridor Gateway Traveler Information System is
    operational as the collection and distribution hub for the sharing of
    real-time video, traffic, congestion, incident, construction and system
    condition data. Integration with the 911 centers will significantly
    link transportation operators and emergency service agencies to enhance
    security. This project also supports completion of the GCM Corridor
    fiber optic communications backbone linking critical facilities in
    northeastern Illinois and linking the Central Gateway, Illinois
    Gateway, Indiana Gateway and Wisconsin Gateway hubs to coordinate
    operations and emergency response plans in the major metropolitan
    centers of the three-State corridor.
    Surveillance Systems at Illinois Major River Crossings--($2.0 million
            Federal)
        Develop and deploy monitoring, detection, communications and
    information systems at critical infrastructure crossings on the
    Mississippi, Illinois and other rivers in Illinois. Priority river
    crossings serving Interstate highway routes have been identified in
    East Saint Louis, Rock Island/Moline, Rockford and other areas.
    Surveillance and communication technologies including video and
    detection would be deployed as appropriate based on an assessment of
    the threat and the security priority of the bridge. The project would
    include real-time communications links to Illinois Department of
    Transportation (IDOT) District and Central Office facilities and the
    GCM Corridor facility. Bridge security systems data would also be
    linked to traveler information systems including on-route Variable
    Message Signs and other media.
    Traffic Management and Control Centers--($2.4 million Federal)
        Enhance the operation of traffic management and software systems in
    St. Louis Metro East and Peoria, Illinois. Traffic Operations Centers
    including surveillance, detection, control and traveler information
    systems have been or are being deployed in both metropolitan areas to
    improve traffic flow, incident management, emergency response and
    system security. These systems will be designed with capability for
    statewide integration with the IDOT Operations Center at IDOT
    headquarters in Springfield through the Gateway System or similar
    software licensed to the department. Additional deployments are
    targeted in metropolitan areas where regional and project architectures
    are being developed, including Rockford and Quad Cities.
    Illinois Commercial Vehicle Information Systems and Networks--($280,000
            Federal)
        Deploy key components of the Commercial Vehicle Information Systems
    and Networks (CVISN) Level 1 system in Illinois. This deployment would
    support the new Commercial Vehicle Operations Electronic One-Stop
    Shopping Business Plan coordinated by the Illinois Commerce Commission
    and the statewide deployment of PrePass electronic screening and Weigh-
    in-Motion systems at all weigh and inspection stations on Interstate
    highways in Illinois recently completed by IDOT. This project includes
    development and deployment of Commercial Vehicle Information Exchange
    Window, International Fuel Tax Agreement, International Registration
    Plan and electronic screening PrePass Clearinghouse Data Exchange
    functionality, and development and deployment of electronic screening
    on-line access. These capabilities will enhance documentation,
    monitoring and enforcement of commercial vehicle regulations to support
    increased safety and security of heavy truck shipments to, from and
    through Illinois.
    Chicago-Kennedy Expressway Closed Circuit TeleVision System--($570,000
            Federal)
        Deploy a high resolution Closed Circuit TeleVision (CCTV)
    surveillance system along the Kennedy Expressway between the Chicago
    Loop and O'Hare International Airport to expand the existing limited
    system. Includes expansion of the existing communications
    infrastructure to control the Pan-Tilt-Zoom video cameras and to share
    video with operating and emergency service agencies for enhanced
    security and incident response capabilities along this vital
    transportation corridor.
    Statewide Weather/Roadway Condition Reporting System--($500,000
            Federal)
        Deploy the FORETELL/CARS weather and construction information
    system statewide. FORETELL/CARS would be integrated through IDOT's
    Central Office Bureau of Operations and includes advanced weather
    reporting, highway condition and incident reporting systems. FORETELL/
    CARS provides an operational highway management and traveler
    information system to serve rural and small to mid-sized urbanized
    areas throughout Illinois. The project would install video surveillance
    cameras at up to six Roadway Weather Information System stations
    throughout Illinois. Existing communications would be used to permit
    monitoring of the cameras at the IDOT Operations Center in Springfield.
    Bridge Control Automation System--Joliet, Illinois--($750,000 Federal)
        Automate and consolidate the six localized, motorized bridge
    controls in Joliet. Automation provides coordinated bridge operations.
    This project includes control modernization, expanded video
    surveillance of the bridges, wireless communications for control data
    and alarms, remote reporting and traveler information systems for
    improved security of these critical links.
    Virtual Weigh Station for Commercial Vehicle Enforcement/Security--
            ($150,000 Federal)
        Deploy one virtual weigh station or over-weight vehicle enforcement
    commercial vehicle/heavy truck security screening. One high-priority
    location would be selected for prototype deployment. Virtual weigh
    stations use weigh-in-motion sensors, Automated Vehicle Location,
    Computer Aided Dispatch and communications technology to complement
    permanent weigh stations on Interstate highways to more effectively
    enforce weight restrictions and/or hazardous material regulations by
    screening passing vehicles with minimum disruption.
    Expand/Upgrade IDOT District 1 Variable Message Signs--($750,000
            Federal)
        Deploy new and replacement Variable Message Signs (VMS) in Cook,
    DuPage, Kane, Lake, McHenry and Will counties in northeastern Illinois.
    The VMS would use current, standards-compliant sign and control
    technologies to take advantage of the capabilities of the upgraded
    Traffic Systems Center (TSC) traffic management system software. VMS
    provide for direct center-to-motorist communications for real-time, en-
    route management of expressway operations and enhanced security
    response including traffic routing information.
    Work Zone Management System--($150,000 Federal)
        Acquire portable work zone traffic management systems to include
    skid platform(s), tower(s), closed circuit video cameras, portable
    Variable Message Sign(s), non-intrusive detector(s), solar power,
    communications, data processing and control systems for deployment to
    enhance work zone safety at construction projects around Illinois. Use
    of the equipment would be scheduled according to planned construction
    and would be available for emergency/security deployment as needed.
    I-55/Lake Springfield Fixed Anti-Icing System--($850,000 Federal)
        Deploy a Fixed Anti-Icing System (FAIS) on the 700-foot long bridge
    carrying Interstate 55 over Lake Springfield in Springfield, Illinois.
    This project reduces the risk and increases safety associated with the
    high volume of trucks carrying hazardous material and the frequent
    icing conditions experienced on the bridge. This in turn would reduce
    the likelihood of a hazardous material spill into Lake Springfield, the
    water supply for nearly 150,000 people in the Springfield area. This
    project would provide real-time response to icing conditions through
    the use of advanced detector, anti-icing and control technologies.
        Attachment 2.--Fiscal Year 2003 Illinois Bus and Bus Facilities
                         (Section 5309) Earmark Request
        Illinois requests an earmark of $28 million in fiscal year 2003
    Section 5309 funds for the projects listed below. The Federal funds
    would be matched with State or local funds.
    Northeastern Illinois Bus Request
        Six four heavy-duty transit and paratransit buses for Pace (the
    Regional Transportation Authority's operator of bus service in the
    Chicago, Illinois suburban region). This request is for $7.6 million in
    Federal funds to replace 20 heavy-duty buses and 44 paratransit buses
    that have reached or are beyond their useful life. These buses are in
    addition to those programmed for replacement with available Federal,
    State and local funds.
    Downstate Illinois Bus Request
        Forty heavy-duty transit and paratransit buses for Bloomington,
    Peoria, Madison County, River Valley (Kankakee), Rockford, Rock Island
    and Springfield, Illinois. This request is for $6.3 million in Federal
    funds to replace 20 heavy-duty transit buses and 20 paratransit buses
    that have reached or are beyond their useful life. These buses are in
    addition to those programmed for replacement with available Federal,
    State and local funds.
        Thirty two paratransit buses for nonurban areas. This represents
    the combined paratransit vehicle replacement request of the State's 30
    nonurban (Section 5311) general public transportation providers. The
    request is $1.9 million in Federal funds to replace 32 paratransit
    vehicles. Since most of the Federal Section 5311 funds go to operating
    assistance, the major source of funding for vehicle purchases is the
    discretionary bus capital program.
    Downstate Illinois Facility Requests
        Bi-State Development Agency, Illinois--Illinois Bus Facility.--This
    request is for $3.9 million in Federal funds to begin constructing a
    new bus maintenance and storage facility on the same site as Bi-State's
    new light-rail maintenance facility in St. Clair County. Bi-State is in
    the process of completing the facility design and the estimated cost is
    $22 million. The State and local agencies have already committed $4
    million for design. Additional discretionary bus capital funds will be
    requested in fiscal year 2004 to help fund construction.
        Bloomington, Illinois--New Garage.--This request is for $3.6
    million in Federal funds for land acquisition, design and construction
    of a new administrative/maintenance facility. The Bloomington-Normal
    Public Transit System's current facility is in need of replacement.
    Previous renovations were done over 12 years ago and in addition, the
    transit system has expanded and needs more work space.
        Champaign, Illinois--Park and Ride Day Care Center.--This request
    is for $1.2 million in Federal funds for design and construction of a
    day care center at a Park and Ride location. The Champaign-Urbana Mass
    Transit District, in cooperation with the University of Illinois, has
    developed a plan to locate a day care center adjacent to the
    University's South Research Park. The center would help the University
    meet day care needs for employees who park and use public transit to
    the central campus. There is no parking available during the day at the
    central campus for these employees.
        Galesburg, Illinois--New Garage (Phase I).--This request is for
    $192,000 in Federal funds for Phase I (design and land acquisition) for
    a new administrative/maintenance facility. The city of Galesburg's
    public transit system needs a new facility. The city is currently
    renting a facility that is very old and too small.
        Madison County, Illinois--Facility Renovation.--This request is for
    $1.2 million in Federal funds to renovate the Madison County Transit
    District's administrative/maintenance facility (Building 1). The
    facility was built in 1987 and the interior of the building needs to be
    renovated to meet current operating and administrative needs. The
    parking lot needs improvement as well.
        RIDES, Illinois--Albion Facility.--This request is for $480,000 in
    Federal funds to construct a new administrative/maintenance facility in
    Albion, IL. The RIDES Mass Transit District (based in Rosiclare, IL)
    received fiscal year 2001 discretionary bus capital funding for Phase I
    (land acquisition and design) for this project and construction funding
    is needed.
        River Valley (Kankakee), Illinois--Transfer Center.--This request
    is for $560,000 in Federal funds to construct a bus transfer facility
    in downtown Kankakee. The River Valley Metro Mass Transit District
    received fiscal year 2002 discretionary bus capital funding for Phase I
    (design and land acquisition) for this project.
        Rock Island, Illinois--Facility Renovation (Phase I).--This request
    is for $600,000 in Federal funds for initial renovation of the Rock
    Island County Metro Mass Transit District's administrative/maintenance
    facility. The facility was built in 1983 and is in poor condition. The
    deficiencies were documented in a study undertaken by the district one
    year ago.
        Springfield, Illinois--Transfer Center Engineering.--This request
    is for $480,000 in Federal funds to undertake Phase I (design and land
    acquisition) for an intermodal transfer center to serve the Springfield
    Mass Transit District. The center would have space for transit buses,
    intercity buses and would house the Amtrak station. The current
    transfer location is on-street and creates a safety problem for
    passengers crossing the street to transfer buses.
                                     ______

           Prepared Statement of the Los Angeles County Metropolitan
                         Transportation Authority (MTA)

        Chairman Murray and members of the Subcommittee, on behalf of the
    Los Angeles County Metropolitan Transportation Authority (MTA), I
    appreciate the opportunity to submit testimony in support of Los
    Angeles County's surface transportation programs, projects and
    services. The MTA's fiscal year 2003 Appropriations funding request is
    designed to stimulate the economic growth of Los Angeles County and
    address the mobility needs of over nine million people.
        The MTA's transportation partnership with the Federal Government
    has helped to strengthen this area's economy and move its people and
    visitors to work and recreation venues throughout Southern California.
    The successes experienced by MTA in recent years stem from a resolute
    Board of Directors, the leadership of former CEO Julian Burke and the
    productive partnership this agency has enjoyed with the Federal
    Government. This shared vision to improve the delivery of
    transportation projects and services has served to make Los Angeles
    County a clear example of how Federal funding can work. There is a firm
    foundation of fiscal responsibility and a dedication to serving the
    public that will help to build an even better system for the future.
        Another area of focus on this year is establishing greater
    cooperation with the municipal operators, including the further
    development of a common transit pass. This pass is an interim step to
    the implementation of the Universal Fare Card. Additionally, we hope to
    secure funding from whatever sources possible for security efforts at
    our transportation facilities in Los Angeles County. It should be noted
    that we have also identified the need for $24 million in security
    funding and enhancements for the MTA and the municipal operators. We
    hope to have access to any Federal funding for transit security measure
    which may become available either through Transportation Appropriations
    or other congressional efforts.
                 mta's fiscal year 2003 appropriations request
        Specifically, the MTA's fiscal year 2003 Appropriations request is
    as follows:
        $40.5 million in Section 5309 New Starts Funding.--To complete the
    Federal Government's funding commitment to the Metro Rail North
    Hollywood Extension. Under the North Hollywood Full Funding Grant
    Agreement this is the last Federal installment of Federal funds for the
    project. This project opened in June 2000 on budget and ahead of
    schedule, and has exceeded its ridership projections with 147,775
    weekday boardings on this line, the project is a true success story
    that demonstrates the strong working relationship between the MTA and
    the Federal Government.
        $35 million in Section 5309 New Starts Funding.--For use on the
    Eastside light rail transit project. This project, which replaces the
    subway project originally planned under the MOS-3 FFGA, will bring long
    awaited transit improvements to the East Los Angeles communities. This
    funding will be used for the final design of the tunnel for the
    project, land acquisition, and to enter into a design and construction
    contract for the project.
        $4.5 million in Section 5309 New Starts Funding.--For preliminary
    engineering on the Exposition Boulevard light rail transit project from
    downtown Los Angeles to the Mid-city area and eventually onto the city
    of Santa Monica. MTA has approved moving this project into preliminary
    engineering. The Mid-City/Exposition LRT Project is a passenger rail
    project running 6 miles with 10 stations from Downtown Los Angeles
    through Culver City and the City of Los Angeles.
        $11.5 million for MTA and $15 million for the Los Angeles Municipal
    Transportation Operators Coalition in Section 5309 Bus and Bus-Related
    Discretionary Funding.--To assist the MTA in expanding its Metro Rapid
    Bus Program into communities throughout Los Angeles County and help the
    Municipal Operators in Los Angeles County expand and enhance their
    services. The MTA's Metro Rapid Bus Program, which carries 48,415
    people per weekday, utilizes advanced technology to provide more
    efficient bus services, including limited stops, electronic message
    signs at stops and street signalization. This program is popular with
    transit riders and serves as an example for transit properties around
    the Nation. The MTA is requesting that $5 million be appropriated for
    Metro Rapid Buses and $6.5 million be appropriated for Metro Bus
    divisions, facility improvements to support the service sector efforts
    and to enhance the Bus Signal Priority system. The Municipal Operators
    set a figure of $15 million for capital bus needs this year. The MTA
    supports that request.
        $5 million in Intelligent Transportation Systems (ITS) Funding.--
    For the further development of the ``smart card'' fare system in Los
    Angeles County. This universal fare system will be used to create
    ``seamless'' transit services throughout the Southern California
    Region.
        $2 million in Reverse Commute/Jobs Access Program Funding.--As a
    member of the Los Angeles County's Transportation and Human Services
    Executive Council, the MTA funding request will help implement a
    focused ridesharing matching program for employed Welfare-to-Work
    participants.
                          progress through partnership
        In the last few years the MTA has refined its mission through a
    series of important Board decisions. These decisions have resulted in
    the selection of cost-effective and publicly supported projects in
    corridors previously slated for expensive heavy rail projects. The
    Board has also placed as high priorities the procurement of new, clean
    fuel buses and the development of greater efficiency in bus service.
    This past summer the Board adopted a long-range transportation plan to
    address the current and future growth in the region. We believe the
    MTA's progress has been significant, and reflects the agency's ongoing
    efforts with the Federal Government and other funding partners to
    provide safe and efficient transportation services to Los Angeles
    County residents. The MTA and its transportation partners in Los
    Angeles County have 1.7 million boardings a day. That is equivalent or
    greater than the population of most cities in the United States. We
    have come a long way in meeting the needs of this region, but we also
    have a great deal more to do.
    Metro Rail
        Most noteworthy during the last two years is the completion of the
    North Hollywood segment of the Metro Rail Red Line. It is my
    understanding that many in the country, and perhaps in the Federal
    Government, were unsure of the efficacy of this project. This segment
    of the rail system, however, was completed six months ahead of schedule
    and on budget. The opening of that portion of the Red Line resulted in
    a doubling of the ridership on the subway line of the rail system,
    which now has an estimated 147,775 weekday boardings. Federal funding
    has also played a part in advancing the next critical element of the
    MTA's rail system--the Eastside light rail transit project.
    Bus Fleet
        It is my understanding that four years ago MTA had one of the
    oldest fleets in the nation. Many of the MTA vehicles were far past the
    average bus retirement age of 12 years. Today I can share that the
    average age of the MTA fleet is under 8 years and nearly half of the
    fleet, over 1,000 buses, are CNG clean fuel vehicles. The accelerated
    procurement plan implemented by the agency three years ago resulted in
    safer, cleaner buses, increased on time pull outs, fewer breakdowns,
    and staying on schedule to our waiting passengers. This workhorse of
    our transit system carries over 1.2 million boardings a day.
    Metro Rapid Bus Service
        Another achievement during the last few years was the successful
    demonstration of the Metro Rapid Bus in two corridors in the County. It
    is one of my priorities to expand this successful service as quickly as
    possible throughout the County. This program, which incorporates
    elements such as fewer stops (similar to a light rail line), signal
    synchronization and signal pre-emption, low floor vehicles for faster
    boarding, frequent buses and information technology at bus stops, is
    incredibly popular in Los Angeles. The two corridors of the program
    have seen a 25-28 percent increase in transit usage, with one-third of
    those boardings coming from new bus riders. The MTA Board has voted to
    expand the program to 21 new corridors throughout the county. This bus
    rapid transit network, coupled with the current bus and rail system,
    will greatly enhance access to and acceptance of transit services for
    Los Angeles residents.
                                   conclusion
        The MTA appreciates the consistent support of the Subcommittee on
    Transportation for projects and services in Los Angeles County. The MTA
    respectfully submits this fiscal year 2003 Appropriations request as a
    means to help this agency continue to improve mobility and air quality,
    and encourage job development and economic growth in the one of the
    most densely populated and congested regions in the United States.
        As the MTA continues to make significant and sustainable
    improvements to its delivery of transportation services, projects and
    programs, we look forward to continuing our funding partnership with
    the Federal Government. This partnership assists our efforts to provide
    for the safe and efficient movement of goods and people in the Los
    Angeles basin. We believe that funding for Los Angeles County
    transportation is a sound investment for Los Angeles, California and
    the Nation.
        Thank you for this opportunity to share our successes and fiscal
    year 2003 transportation funding requests with the Subcommittee.
                                     ______

    Prepared Statement of the Metropolitan Atlanta Rapid Transit Authority
                                    (MARTA)

                       introduction and executive summary
        Atlanta is the one of the fastest growing metropolitan areas in the
    nation, and has played a key role in the economic vitality of the
    Southeast. Metro Atlanta, however, is now confronted by serious traffic
    congestion and air pollution problems, which threaten both the quality
    of life and economic health of the region. In order to provide improved
    transit service to this expanding region, the Metropolitan Atlanta
    Rapid Transit Authority (MARTA) is requesting Federal appropriations
    for three major capital projects in fiscal year 2003. These projects
    consist of the North Line heavy rail extension to North Springs,
    including the purchase of additional rail cars; the acquisition of
    clean fuel buses; and the Hamilton Clean Fuels Bus Facility.
        MARTA respectfully requests the United States Senate Committee on
    Appropriations to designate $16,363,780 in fiscal year 2003 FTA Section
    5309 New Starts funds for the North Line Extension Project, including
    the purchase of associated rail cars. This project was authorized in
    TEA-21 and is the subject of a Full Funding Grant Agreement between the
    Federal Transit Administration (FTA) and MARTA. The requested funds
    will be utilized to partially fund the acquisition of new rail cars
    needed to serve this extension.
        Additionally, MARTA has significant capital funding needs in
    support of our Bus and Bus Facilities program. As part of an effort to
    improve air quality in the Atlanta non-attainment area, MARTA is
    committed to the use of clean-fuel vehicles. To further this
    commitment, we respectfully request the Committee on Appropriations to
    allocate $17,600,000 in fiscal year 2003 FTA Section 5309 Bus and Bus
    Facilities funds for the purchase of 41 clean-fuel buses and the
    development of the Hamilton Clean Fuels Bus Operations & Maintenance
    Facility.
        The background, rationale and justification supporting these
    requests are set forth in the following pages.
                   new starts and extensions project request
        The North Line Extension Project consists of the development of a
    two-mile, two-station extension of the MARTA heavy rail system to North
    Springs and the acquisition of 56 new rail cars. This project is
    authorized in Section 3030 (a)(3) of the Transportation Equity Act for
    the 21st Century, and has been implemented pursuant to a Full Funding
    Grant Agreement with FTA.
        The North Line Extension--including the new Sandy Springs and North
    Springs stations--opened for revenue service as scheduled on December
    16, 2000. The construction phase of this project is complete. The major
    remaining component of the project is the production, delivery, testing
    and acceptance of the new rail cars.
        The original scope of the project included the purchase of 28 rapid
    rail cars. In late 1996, MARTA's reevaluation of expanded customer
    service demands and estimated patronage growth in this rapidly
    developing area resulted in a decision to increase the number of rail
    cars to be acquired to support this extension. Due to the projected
    increase in ridership and service requirements following the opening of
    the North Line Extension, the planned rail car requirement was
    increased from 28 to 56 passenger vehicles, a net increase of 28 cars.
    This project scope change was authorized in Section 3030 (d)(2) of TEA-
    21. FTA has approved the MARTA Rail Fleet Management Plan, which
    provides a detailed justification for these 28 additional vehicles. The
    new rail cars will allow MARTA to run longer trains to accommodate the
    additional passenger loads.
        The 56 passenger vehicles that are associated with the North Line
    Extension are being acquired under a major contract that will procure a
    total of 100 rail cars. MARTA awarded this contract (CQ 312) to Breda
    Costruzioni Ferroviarie (``Breda''), a major Italian rail car
    manufacturer, in February 1998. The final assembly and testing of these
    new cars is taking place in Tucker, Georgia at an existing 120,000
    square foot light industrial facility that has been leased and modified
    by Breda.
        These new stainless-steel rail cars include a number of features to
    enhance customer convenience and safety, including ADA-compliant
    between car barriers, digital scrolling interior signs, a sporty new
    blue interior, with a more comfortable configuration for both seated
    passengers as well as standees. These state-of-the art rail vehicles
    also employ an alternating current (AC) propulsion system that will
    provide greater reliability and be easier to maintain.
        As of March 15, 2002, MARTA has accepted delivery of 36 of the new
    rail cars, which have been placed into revenue service and well
    received by our passengers. The status of the remaining 20 federally
    funded rail cars is as follows: Six of the 20 cars are in pre-revenue
    testing, with the remaining 14 cars undergoing final production at the
    Tucker facility. The current schedule calls for the 56th rail vehicle
    to be delivered and accepted for revenue service in August 2002.
        Appropriations requested for fiscal year 2003 in the amount of
    $16.4 million will be utilized to reimburse MARTA for the cost incurred
    to purchase the ten remaining rail cars included in the scope of this
    project.
    Financial Status
        The Full Funding Grant Agreement reflects a total (multi-year)
    Federal contribution of $370,543,000 for the North Line Extension
    project. This funding level represents 80 percent of the total project
    cost of $463,179,000. Of the total proposed Federal share, $354,343,058
    has been secured to date either through previous Congressional
    appropriations or FTA reobligations to the Project. This leaves a
    remaining Federal share of $16,200,142 needed to complete this project.
    In anticipation of the one percent FTA deduction for Project Management
    Oversight (PMO), MARTA is requesting the slightly higher amount of
    $16,363,780.
                 marta bus and bus facilities project requests
        The Committee is respectfully requested to appropriate $17.6
    million in fiscal year 2003 funds, including $10 million for the
    purchase of 41 clean fuel buses and $7.6 million for the Hamilton Clean
    Fuels Bus Facility. These projects are described in greater detail
    below.
    Acquisition of Clean Fuel Buses
        Due to the serious air quality problems in the Atlanta region,
    MARTA has embarked upon a program to convert our bus fleet to clean
    fuel operation by fiscal year 2007. Through the combined assistance of
    the Congress, the FTA and the State of Georgia, MARTA acquired 118
    compressed natural gas (CNG) fueled buses in 1996. Recently, MARTA
    received delivery of our second order of CNG buses, consisting of 206
    low floor models manufactured by New Flyer Industries. Our clean fuel
    CNG bus fleet now includes a total of 324 vehicles, the 2nd largest CNG
    fleet in the nation.
        For fiscal year 2003, MARTA is requesting a federal share of
    $10,000,000 for the purchase of 41 clean fuel buses to replace aging
    non-clean fuel buses that will have exceeded their recommended useful
    life.
        In 2001, MARTA placed an order for 140 clean fuel buses--including
    130 fueled with CNG--with Orion Bus Industries. The first set of 70
    buses under this order are due for delivery in late Spring 2002, with
    the second group of 70 buses targeted for revenue service by February
    2003. To date, federal funding has been secured for 119 of the Orion
    buses on order, leaving a balance of 21 buses targeted for funding
    through fiscal year 2003 appropriations. This summer, MARTA plans on
    awarding our next procurement contract that would call for the delivery
    of 65 clean fuel buses in 2004, to replace buses that were acquired in
    1991/92. Our fiscal year 2003 appropriations request includes funding
    for 20 of these buses.
        The buses to be acquired will be a mix of 35-ft. and 40-ft. low-
    floor models designed to meet specific local service, community and
    operational requirements. Low-floor buses are wheelchair accessible,
    allow for easy and convenient boarding by all passengers, and are
    economical to operate.
        All buses being replaced will exceed the minimum FTA replacement
    criteria of 12 years or 500,000 miles of accumulated service. The new
    buses will fully meet or exceed the requirements of the Americans with
    Disabilities Act (ADA), as well as, the Clean Air Act Amendments
    (CAAA). Currently, 46 percent of the 703 buses in the fleet operate on
    clean fuels, and there is an obvious need to convert the remaining 379
    buses to clean-engine, low emission operation as soon as feasible.
        MARTA is committed to provide bus service that is fully accessible
    to persons with disabilities. With the final acceptance of the buses in
    the recent New Flyer order, the Authority's fixed route bus fleet is
    now 100 percent ADA accessible.
        MARTA is also acquiring low emission clean diesel buses in order to
    provide emergency-response capability, in the event needed, to respond
    to natural disasters throughout the State of Georgia. Because CNG re-
    fueling capability is limited in other parts of our state, a complement
    of clean diesel buses will enable MARTA to respond to such emergency
    public transportation needs, as needed, in a timely and effective
    manner. The clean diesel buses will incorporate the latest low emission
    technology, and will meet or exceed EPA emissions requirements.
        MARTA is also engaged in a strong partnership with the State of
    Georgia in terms of receiving matching funds to support our bus
    replacement program. Over the past two years, the Georgia Legislature,
    with the support of the Governor and the Georgia Department of
    Transportation, has allocated over $4 million in State general funds to
    be applied to the non-federal matching share for the purchase of MARTA
    clean fuel buses.
    Bus Facilities Program
        MARTA is investing in the capital infrastructure necessary to
    support clean fuel bus operations. In 1996, a CNG Bus Maintenance and
    Fueling facility was constructed at Perry Boulevard with local MARTA
    funds prior to the Olympic Games. The major conversion of our Laredo
    bus operating and maintenance facility serving DeKalb County to support
    CNG operation was completed in March 2001. At present, two of our three
    bus operating facilities are able to support CNG operations. There
    remains, however, a critical need to provide clean fuel bus
    infrastructure in the southern portion of the MARTA service area.
        The need to provide clean fuel bus capacity on Atlanta's southside
    has resulted in plans for the retrofit and expansion of MARTA's
    Hamilton Bus Operating & Maintenance Facility in southeast Atlanta. Due
    to the unique characteristics of CNG, various capital improvements must
    first be made to enable the safe operation and maintenance of CNG buses
    at the Hamilton site. These planned improvements include the
    construction of a CNG compressor station and refueling/service
    facility, the renovation or construction of the bus wash facility, new
    ventilation and heating systems in the maintenance bay areas, a CNG gas
    detection system, and partial modifications to the ceiling lights and
    electric conduit.
        The currently estimated cost for this Phase, including design and
    project management costs, is approximately $19 million, based on our
    experience with the recent Laredo Garage conversion project. It is
    likely that this estimate will undergo refinement as design progresses
    on this project. MARTA is requesting the Senate Committee on
    Appropriations to allocate $7,600,000 in fiscal year 2003 Federal
    Transit Section 5309 funds to assist in financing these CNG-related
    capital improvements.
        The capacity of the existing Hamilton facility is now limited to
    approximately 200 buses. Should additional funding be identified, there
    are conceptual plans to increase the capacity of the facility to
    accommodate up to 250 buses, as well as to improve the flow of buses
    into and out of this facility. There is also the potential for shared
    use of this facility, once it is modernized and expanded, for broader
    regional transit purposes and by other CNG vehicle operators.
                                     ______

     Prepared Statement of the National Association of Railroad Passengers

        Thank you for the opportunity to submit this statement. We support
    the Amtrak request for $1.2 billion. We also support efforts to make
    the Federal Government a true funding partner with states to permit
    development of high speed rail corridors, for which many states already
    have well-advanced plans. Attached is a copy of my letter to Federal
    Railroad Administrator Allan Rutter, commenting on his written
    statement to the House appropriations subcommittee, which was virtually
    identical to his statement to you. I ask that this letter also be
    included as a part of the record.
        We believe that the nation's existing intercity passenger rail
    network is ``skeletal,'' that it should be preserved and improved in
    its entirety, and expanded when possible. The message from the
    traveling public supports this view.
    Current Ridership
        February was the sixth straight month in which the percentage
    change in travel from a year ago was sharply stronger on Amtrak than on
    the airlines. In spite of rising fares on Amtrak and heavy airline
    discounting, passenger-miles rose 8.6 percent at Amtrak but fell 10.3
    percent for domestic airline service. (A passenger-mile is one
    passenger traveling one mile.) Amtrak ticket revenues rose 17.0
    percent.
        Amtrak's strong performance was not confined to the Northeast
    Corridor. For example, sleeping cars nationwide outperformed the
    overall system: passenger-miles up 13.5 percent; ticket revenues up
    18.0 percent. Overall, 10 of Amtrak's 19 long-distance trains posted
    double-digit ticket revenue gains, and the single train which posted a
    decline is on a passenger-unfriendly schedule which will be
    significantly improved in the April 29 timetable.
        As the attached graph indicates, for six straight months--September
    through February--Amtrak has significantly outpaced domestic air travel
    in terms of percentage change from one year ago. Many of the smaller
    communities served by Amtrak's long-distance trains have born the brunt
    of airline service reductions.
        Obviously, air travel remains vastly greater in absolute volume.
    However, the general public--and many elected officials--increasingly
    realizes that our transportation system and our economy would be far
    less vulnerable if our passenger rail network was more completely
    developed.
    Ridership History
        Amtrak's historical ridership data understate the growth of true
    intercity ridership, particularly when 1979 is used as the base year.
    That year is misleading as a baseline because that was when the
    gasoline availability crisis artificially and dramatically increased
    Amtrak travel. Passenger-miles rose 22 percent to a level not achieved
    again until 1986. Ridership rose 13 percent to a level not achieved
    again until 1988. Also, since Amtrak's early years a number of daily
    commuters in the Northeast have been deliberately diverted from Amtrak
    trains to regional commuter trains, and a Chicago-Indiana commuter
    train Amtrak inherited from Penn Central was discontinued. The Amtrak
    Reform Council has used 1979 as a base year without explaining any of
    the above caveats.
    Subsidies and Costs
        Amtrak's $1.1 billion operating loss in fiscal year 2001 includes
    depreciation on right-of-way property mostly, but not entirely, in the
    Northeast Corridor. In Fiscal 2001, this rose by $54.9 million (or 28
    percent)--from $196 million in fiscal year 2000 to $251 million and now
    represents about 23 percent of the entire operating loss. The increase
    in right-of-way depreciation in fiscal year 2001 equals 43 percent of
    the total $129 million increase in the operating loss. No airline or
    bus company carries equivalent right-of-way costs on its books. This
    may or may not argue for someone other than Amtrak owning the Northeast
    Corridor, but anyone analyzing Amtrak's finances needs to be aware of
    this.
        The claim is frequently made that other modes pay for themselves
    through trust funds. We believe the biggest ``subsidy'' in
    transportation is the mode-specific Federal approach to trust funds. By
    recognizing all air ticket taxes, and most gasoline taxes, as ``votes''
    for more investment in aviation and highways, respectively, and by
    providing generous Federal matches for air and road projects and none
    for intercity passenger rail projects, the Federal Government insures a
    strong state investment bias against passenger rail. The fact that some
    states--including yours--have made significant investments absent
    meaningful Federal matches is testimony to the popularity of rail, and
    the broad realization even before September 11 that the rail choice is
    important to travelers today and will be even more important in the
    future. That future importance will become more obvious with continuing
    growth in both the cost of--and logistical obstacles to--building new
    highways and airports.
    Economic Performance
        The oft-quoted measure, ``subsidy per passenger,'' does not measure
    economic efficiency on an intercity network in which different
    passengers make trips of widely differing lengths. The better measure
    would be operating ratio (i.e., costs divided by revenues) or perhaps
    subsidy per passenger-MILE. CHECK AMTRAK IG'S REPORT.
        For example, the Southwest Chief, which links Chicago and Los
    Angeles via Kansas City, Albuquerque and Flagstaff, is the fastest
    Chicago-West Coast train. According to the table at page 96 of the ARC
    report, this train in fiscal year 2001 had the fourth best operating
    ratio among long-distance trains (behind Auto Train, Silver Meteor, and
    Empire Builder) but one of the highest subsidies per passenger, because
    it has a relatively small number of passengers traveling very long
    distances. (One quarter of the Chief's ticket is generated by just two
    city-pairs: Chicago-Los Angeles and Chicago-Fullerton.) Indeed, at
    Amtrak, subsidy per passenger corresponds more with average trip length
    than with economic performance.
        The Association stands ready to do our best to provide any further
    information the committee may need.
        Thank you for considering our views.

                   National Association of Railroad Passengers,
                                        Washington, DC, March 13, 2002.
    The Honorable Allan Rutter,
    Federal Railroad Administrator.
        Dear Allan: An impressive amount of work went into your written
    statement for House Appropriations, but in a number of ways--by errors
    of omission and commission--the statement seemed to undermine the case
    for a national passenger rail network, or even any Federal funding for
    intercity passenger rail. I wanted you to be aware of how this came
    across to me and probably other rail passenger supporters who read your
    statement.
        You acknowledge that ``as demonstrated in the aftermath of
    September 11th, a strong argument can be made for flexibility and
    redundancy in this Nation's passenger transportation system that could
    be provided by intercity passenger rail'' (page 2). But, except for a
    backhanded reference on page 13, the statement is silent on the message
    the traveling public has been sending ever since about the desire for
    more rail travel--Amtrak's September-January travel percentage changes
    far stronger than the airlines', with January Amtrak travel up 5
    percent (sleeping cars up 10 percent) and the airlines' down 13
    percent. The table below understates the shift: the airline decline is
    in spite of massive fare discounting and Amtrak's growth is in spite of
    aggressive fare policies.

                      YEAR-TO-YEAR CHANGE IN PASSENGER-MILES HANDLED--AMTRAK AND DOMESTIC AVIATION
    ----------------------------------------------------------------------------------------------------------------
                                         September        October        November        December         January
                                         (percent)       (percent)       (percent)       (percent)       (percent)
    ----------------------------------------------------------------------------------------------------------------
    Amtrak..........................            +0.2            -2.2            +0.9            +3.8            +5.0
    Domestic Aviation...............           -32.5           -21.1           -17.7           -13.2           -12.8
    ----------------------------------------------------------------------------------------------------------------

        ``Together these actions will reduce the quality of Amtrak service
    in 2002 and succeeding years. Amtrak's management is to be commended
    for taking these steps on its own to conserve its cash resources,
    rather than asking for supplemental funding from Congress'' (page 2).
    That is an interesting, and sad, sequence--praising Amtrak for reducing
    its service quality in the face of public demand for more and better
    rail service. The public increasingly has trouble reconciling the quick
    $5 billion aid package for the airlines while Amtrak is left to ``twist
    in the wind.''
        [The only reason NARP did not urge Amtrak to seek and Congress to
    approve a supplemental is our belief that--in large part because of the
    Administration's position--this effort would not succeed. Had Amtrak
    delayed ``these steps'' only to learn later that no supplemental would
    be forthcoming, the task of making it through the year likely would
    have changed from difficult to impossible.]
        ``. . . Some important metropolitan areas (i.e. . . Phoenix. . .)
    lack Amtrak service entirely'' (page 3). Amtrak recently began service
    to Maricopa (near Phoenix) and ridership has grown quickly.
        ``. . . Only 25 to 30 of Amtrak's stations would be regarded as
    realistic transfer points between intersecting routes, while 136
    airports are classified as hubs and Greyhound claims 150 major
    terminals. . . If a prospective traveler can't get there from here' by
    a particular mode, that mode simply can't compete for his or her
    business'' (page 4). These comments, and the absence of any mention of
    Amtrak's Thruway bus connections, seem odd coming from a Department
    which in many other contexts vigorously promotes ``intermodality.''
    Your subliminal message seems to be, ``Amtrak is too small, so let's
    make it even smaller.''
        Thruway's very important role in California, Florida and elsewhere
    deserves recognition. Longview, Texas, is a major Amtrak stop partly
    because Thruway connections there make possible trips like Chicago-
    Houston and Chicago-Shreveport. In addition, there are the growing
    number of intermodal terminals where passengers make their own non-
    through-ticketed transfers between Amtrak and other forms of public
    transport (intercity and local bus and rail).
        A few observations about on-time performance:
      --A 30-minute tolerance on a long-distance trip implies many late
            trains where passenger dissatisfaction is minimal; someone
            traveling from California to Chicago likely will not be
            bothered by 40 minutes of lateness (or even longer, if the
            staff treats them well and they don't misconnect).
      --Passenger (and freight) service, at least in early fiscal year
            2001, was still recovering from the debacle that immediately
            followed the NS/CSX splitup of Conrail.
      --Ex-Southern Pacific lines (used by Sunset Limited, Coast Starlight,
            California Zephyr) deteriorated in years before the Union
            Pacific acquisition. Since then, an above-normal amount of
            track work has been necessary. This creates severe problems on
            heavily-used, single-track lines, but not on a permanent basis.
            There is concern, however, at the huge number of slow orders
            now in place on Union Pacific--covering 8 percent of the Los
            Angeles-Portland route.
        Comparisons of Amtrak running times with those of the mid-1950s--a
    favorite device Joseph Vranich uses to trash Amtrak--miss the point.
    Today's travelers don't care about 1950s schedules. In any event your
    15\1/2\-hour New York-Chicago running time was for the all-Pullman
    Broadway Limited that used a shorter route and skipped most of the
    intermediate stops Amtrak's trains serve.
        ``Amtrak's average fares were approaching 50 percent higher than
    those of air.'' There should be a caveat on statements like this.
    Amtrak's average fares include sleeping car passengers, Auto Train
    travelers--some in sleeping-cars but all transporting automobiles, and
    business travel in the NEC where arguably Amtrak should be charging
    ``what the market will bear.'' We certainly agree that coach travel
    should be affordable in the NEC) but that implies a need for larger
    operating grants, which we support but which do not seem widely popular
    at the White House. We also think there is a huge, untapped market for
    economical sleeper rooms, equivalent to the old slumbercoaches Amtrak
    inherited and ultimately discontinued.
        The reference to ``significant market shares'' (page 7, first full
    paragraph) implies that routes without ``significant market shares''
    are not of value. Long-distance routes (perhaps excepting New York-
    Florida) will never have ``significant market shares'' but we think
    they are nonetheless justified if well used. There are issues of
    medical inability to fly, fear of flying, desire for the rail travel
    choice, service to smaller communities with limited or no public
    alternatives, and maintaining the foundation needed for economical
    future development of commuter rail and corridor services.
        ``The Corporation today generates about 800 million fewer
    passenger-miles than it did at its 1991 peak and this decline occurred
    during a significant expansion in total passenger mobility in the
    U.S.''
        It would be more correct to say ``in fiscal year 2001 generated''
    rather than ``today generates,'' and then to note the post-9/11 trends
    This would have been a logical place to report the post-9/11 trends
    reflected in my first item and the table. As you know, one major reason
    Amtrak travel volume is not greater is the big fare increases imposed
    in 1995-96 in an apparently successful attempt to fill a budget hole.
        ``Average trip lengths have decreased from 288 miles in 1991 to 235
    miles in 2001--a drop of one-fifth. This means that fixed per-trip
    costs, like reservations and ticketing, are spread over fewer miles.''
    This is a stretch. It ignores that much of the growth has come in the
    Capitol and Pacific Surfliner Corridors where trains are unreserved
    (except in Surfliner business class) and res/ticketing costs are low
    because most trips are simple. Fiscal year 2002 may see an increase in
    average trip length.
        ``In the referenced chart, `revenues' are total core revenues less
    State subsidies and other governmental payments'' (footnote, page 11).
    That fact really belongs in the heading to the table. The decision not
    to credit Amtrak with state payments is significant (and questionable--
    much better to show both farebox and state payments as in your page 18
    table), and many readers will have seen similar information displayed
    with state payments.
        ``Train-miles have risen more than twice as fast as passenger-
    miles. . . Amtrak's average trainload of passengers has declined''
    (page 12). So what? As you note, the growth of short-distance trains is
    a major reason. They are shorter trains. (Another reason is the
    Pennsylvanian, a passenger-unfriendly schedule introduced to
    accommodate express, which Amtrak--however belatedly--is planning
    shortly to change to a more passenger-friendly schedule.)
        The page 12 discussion of load factor should include any data
    available from fiscal year 2002, since this probably will show a
    reversal of the trend. Load factor, of course, is less significant on
    trains than on planes and buses because capacity adjustments produce
    fewer cost changes on trains (in contrast with doubling the cost every
    time a plane or bus schedule adds a second section). Rail transit
    typically has relatively low load factors because of lots of empty
    seats are standard even in the peak hour (outlying portions of a run
    and reverse-peak directional service) but this does mean the service is
    inefficient. Load factor also is referenced at the top of page 18 but,
    interestingly, is not shown in the table at the bottom. Segmented by
    business unit, I believe Intercity--dominated by the long-distance
    trains--consistently has the highest load factor.
        In discussing overnight services, you state: ``Their primary market
    is evidently for personal travel; the size of any potential business
    market is unknown because of Amtrak's chronic on-time performance
    difficulties and schedules that have deteriorated, in many cases
    markedly, since the mid-1950s'' (page 15). Here we go ago with the
    1950s comparison. We know that plenty of business travel still existed
    in the 1960s, and it is quite likely that at least the New York-Florida
    run and probably other runs have business travel today. If Amtrak has
    done no surveys recently on this, they should.
        ``Only in terms of annual passenger-trips do the corridors assume a
    preponderant role; because of repetitive travel over shorter distances,
    this statistic does not indicate the number of individuals making use
    off the various Amtrak services yearly'' (page 17). I can recall no
    analysis of airline, auto or intercity bus travel which references
    ``repetitive travel'' this way, yet airlines and Greyhound have
    repetitive riders. The phrase seems to imply that, well, the Amtrak
    number really isn't that significant because it reflects some people
    traveling repetitively.
        ``The long-distance trains average only one round-trip daily,
    speeds well below 55 miles per hour. . . '' (page 17). Only a closely-
    reading lawyer would assume that ``well below 55'' refers to average
    speed. Top speeds of 79 and 90 mph mean that on many given segments
    trip times are impressive.
        ``The leading causes of Amtrak's weakened financial condition are
    crosscutting cost drivers--those costs that impact every train on every
    route'' (page 19). Readers will be eager to hear the definition and
    discussion of ``crosscutting cost drivers.''
        I look forward to continuing the discussion about insuring the
    future of our national passenger rail network.
                Sincerely,
                                                 Ross B. Capon,
                                                    Executive Director.
                                     ______

        Prepared Statement of the National Congress of American Indians

        The more than 200 member tribal nations of the National Congress of
    American Indians urges the Subcommittee on Transportation
    Appropriations to reject any and all cuts to the Indian Reservation
    Roads (IRR) program.
        Tribal governments rely on IRR funding to supply the dollars needed
    to construct and maintain the public roads that provide access to and
    on Indian reservations, Indian trust lands, restricted Indian lands,
    and Alaska Native villages. Unfortunately, this funding is woefully
    inadequate.
        IRR comprise up 2.63 percent of all existing roads in the Federal-
    aid highway system, but historically they have received less than one
    percent of all Federal highway dollars. On average, only $500 per
    mile--and in some cases, as little as $80 per mile--is available for
    maintenance. In comparison, an average of $2,200 per mile is spent
    maintaining other Federal roads, and an average of $2,500 to $4,000 per
    mile is spent by States.
        The fact that fully 66 percent of the roads serving Native American
    communities are not even paved has a direct impact on basic services to
    tribal members. These roads are primarily dirt and clay, ungraded, and
    deeply rutted. During spring and fall rains, they turn to mud or wash
    out, forcing people to walk for miles to get to their homes. Even more
    troubling are these seasonal disruptions to emergency health care and
    law enforcement services and to the availability of heating fuel,
    water, and food delivery.
        We all know that the efficient and safe movement of goods and
    services is a basic building block of a viable economic structure. It
    goes without saying that having the type of unreliable transportation
    infrastructure that is the norm in American Indian and Alaska Native
    communities has a direct negative impact on the ability of tribal
    governments to attract economic development.
        During the TEA-21 debate, NCAI and tribal governments fought hard
    to convince Congress to increase funding for Indian roads and bridges.
    In the end, tribes received an increase from approximately $191 million
    a year to $275 million, which is still far less than what is needed to
    address the deplorable road conditions in Indian Country.
        Unfortunately, this increase was in large part offset by a new cut
    imposed on IRR funding. TEA-21 for the first time extended the
    ``obligation limitation'' to the Indian roads allocation. Under the
    obligation limitation, the Federal Highway Administration (FHWA) is
    required to withhold a certain percentage of the total IRR obligation
    authority at the beginning of each fiscal year, so that it can be
    redistributed at the end of the fiscal year. When the obligation
    limitation was expanded to the IRR program in TEA-21, Congress failed
    to authorize IRR to participate in this end-of-the-year redistribution.
    As a result, funding that was expressly authorized for tribes is now
    being diverted to States for their transportation projects. Obviously,
    our member tribes consider this to be grossly unfair.
        In recognition of this untenable situation, last year Congress
    approved and the President signed a fiscal year 2002 Transportation
    Appropriations Act that provided funds to offset the obligation
    limitation on the IRR and thus resulted in a final funding level of
    approximately $275 million, the full authorization level.
        We are extremely concerned that the budget request for the
    Transportation Department of eliminates the additional IRR funding
    contained in the fiscal year 2002 appropriation, which means that we
    would see a funding level of approximately $240 million.
        Based on recent information provided by the Bureau of Indian
    Affairs, the estimate of need based on a grossly out of date IRR
    inventory is over $11 billion, not including the cost of project
    engineering (planning, survey, design, environmental, archaeological,
    and perfection of rights-of-ways) or the cost of constructing new or
    existing bridges or other eligible transportation facilities allowed by
    the BIA, such as construction of non-BIA jurisdictional routes, transit
    facilities, enhancements, and matching to State and local projects.
        Today, Indian Reservation Roads are among the worst maintained in
    the United States. Our unreliable transportation infrastructure hurts
    our ability to attract businesses, provide emergency services, and bus
    our children safely to school. The IRR program needs an increase, not a
    decrease, and we urge you to support an appropriation to offset any
    negative effect of the obligation limitation on its authorized level of
    $275 million.
        On behalf of NCAI, the oldest, largest, and most representative
    tribal organization in the United States, thank you for your past
    support of the IRR program and for your consideration of our views.
                                     ______

                Prepared Statement of the New York State Police

        Good morning Senator Murray. I am James W. McMahon, Superintendent
    of the New York State Police. I would like to thank you and the entire
    Subcommittee on Transportation for the opportunity to discuss with you
    a topic which I consider of the utmost importance in my capacity as
    both the Superintendent of the New York State Police, and as General
    Chair of the State and Provincial Division of the International
    Association of Chiefs of Police. Issues of highway safety have profound
    impacts on communities in New York State and across this country. Our
    roads tie those communities together, move our commerce and thereby
    unite us. Unfortunately, our roads and highways also kill more than
    40,000 mothers, fathers and children each year, and the majority of
    those deaths are needless and preventable.
        Highway safety was one of the founding missions of the New York
    State Police in 1917, and the importance of that mission has never been
    greater. The New York State Police is not a highway patrol, as such. It
    is a full service police agency, providing general enforcement and
    police services to all of New York's rural communities, as well as
    support services to the State's urban police forces, including a
    criminal detective force of 980 members. But there is no mission more
    important, even today, than the safety of our roads and highways,
    because there is no issue which impacts the lives of the average
    citizen more often and more dramatically.
        We are proud of our highway safety record in New York State. The
    year 2000 (the last year for which complete statistics are available)
    was our safest in history, dating back to the early 1920s. Our highway
    fatality rate of 1.15 deaths per 100 million vehicle miles of travel,
    was among the lowest nationally, and the percentage of those deaths
    which were alcohol related was second lowest in the nation. Having said
    that up front, I can attest to you that those life-saving records could
    not have been achieved without strict and targeted enforcement, which
    was enhanced by federal funding to the States through the National
    Highway Traffic Safety Administration (NHTSA). The same is true of
    other States with low fatality rates.
        New York's highway safety enforcement strategy is data driven and
    results oriented. We apply significant resources to target three main
    areas: excessive speed, impaired driving and failure to wear safety
    restraints. As I'm sure is the case in other States, these persistent
    threats are responsible for the majority of highway tragedies. The
    first two, alcohol or drug impairment and speeding, are causative
    factors. The third, the use of safety restraints, is the number one
    factor in preventing deaths or serious injuries, regardless of
    causation.
        Let me begin by talking about the last factor first, because it is
    the easiest way to improve safety, and it affects the human outcome in
    all crashes. To do so, I will provide some history and detail of our
    successful Buckle Up New York Campaign, and the impact this program has
    had on the safety of all New Yorkers.
        New York State was the first State in the nation to enact a
    mandatory safety belt law in 1984. The law became effective January 1,
    1985. It was a primary law from the start, enabling police to stop
    violators solely for not wearing a safety belt. Prior to the law taking
    effect, only 12 percent of motorists wore seat belts, and in 1984,
    1,012 unrestrained occupants were killed on New York's highways. The
    year the mandatory seat belt law took effect, seat belt use jumped to
    50 percent and the number unrestrained deaths dropped to 644. New
    York's mandatory seat belt law saved 368 lives that year alone.
        Over the next 5 years, compliance with the new law rose steadily to
    about 70 percent. As with the rest of the nation, these increases in
    seat belt use were largely the result of programs at the federal and
    State levels, which placed their main emphasis on education and
    awareness. But these campaigns reached a level of diminishing returns
    in New York State by the mid-1990s, and the steady increases in belt
    use stagnated at 70-75 percent between 1994-1998. At the same time, we
    in the State Police began to notice a recurrence of crashes where lives
    were needlessly lost because the occupants were unrestrained, and we
    began discussions about how to increase the use of safety restraints.
        Shortly thereafter, I had discussions with NHTSA administrators and
    Mr. Chuck Hurley and Ms. Janet Dewey of the National Safety Council's
    Air Bag and Seat Belt Safety Campaign, about developing a strategy to
    get the remaining 25 percent of New York motorists buckled up. We
    studied strategies employed elsewhere in this country and abroad, and
    determined that the only strategies which were effective anywhere in
    the world, were those which employed a zero-tolerance enforcement
    approach. We researched the New York State crash data by location, age
    and gender to learn about specific target groups. Lastly, we researched
    the field of occupant safety regarding these target groups, including a
    landmark literature review by the Meharry Medical College, which
    identified a significantly at-risk population of young African-American
    males. Subsequently, we established a goal of 85 percent safety belt
    use by the end of the year 2000, and developed a strategy of highly
    visible zero-tolerance enforcement. We presented the plan to NHTSA and
    asked their experts to estimate the safety impacts of increasing belt
    use from 74 percent to 85 percent in 18 months. NHTSA estimated that if
    successful, 148 lives and $400 million in insurance and medical costs
    could be saved. With this objective in mind, the Buckle Up New York
    Campaign was instituted in May 1999.
        We in the State Police knew from the start that we could not
    achieve this objective alone. As is similar in other States, New York
    State Troopers accounted for 47 percent of all occupant restraint
    enforcement, 55 percent of all speed enforcement, 23 percent of all
    impaired driving enforcement and 41 percent of total traffic
    enforcement in the State, yet comprise just 5.9 percent of police
    manpower. Despite this enforcement presence, an even more extensive law
    enforcement commitment would be necessary to change public behavior.
    The participation and cooperation of local and county law enforcement
    would be critical.
        In some cases, local law enforcement agencies did not, consider
    traffic enforcement a primary mission. In order to involve them, we
    needed a complete package. We had an attainable goal. We developed a
    workable strategy, which involved 3 annual enforcement waves, which
    supplement year-round enforcement efforts. These waves would be 10 days
    long and preceded by 10 days of heightened media. But we knew the local
    agencies would not, and in most cases, could not participate without
    additional funding for the additional enforcement. For this we needed
    the assistance of NHTSA, through the offices of our Governor's Traffic
    Safety Committee.
        When Governor George E. Pataki, nominated me as Superintendent of
    State Police, he provided me a mandate to continue to improve the
    safety of New York's highways and communities by working in cooperation
    with local authorities. That is a mandate I take very seriously. But
    while the governor had made great investments in improving the
    capability of the New York State Police to safeguard the highways,
    including 100 additional troopers, new electronic breath test
    instruments and state-of-the-art speed enforcement instruments, I knew
    that in this case fulfillment of that mandate meant improving the
    capability of other agencies. Only by ensuring funding for the county
    and local agencies, could we improve the safety of our roads and
    highways statewide.
        NHTSA and the Governor's Traffic Safety Committee responded in
    dramatic fashion, providing funding to any agency willing to join the
    enforcement effort. A streamlined funding application procedure was
    implemented through a State Police law enforcement liaison assigned for
    this purpose. Letters were sent to each police chief and sheriff, and
    each was visited personally to enlist his or her support. In addition,
    an extensive child passenger safety program was implemented in
    partnership with other State agencies, local law enforcement and other
    safety practitioners, to improve the safety of our smallest and most
    vulnerable vehicle occupants. With the support of available federal
    funding, a comprehensive Buckle Up New York Campaign began to take
    shape.
        In order to build greater support in minority communities, we
    partnered with NHTSA to host a diversity forum at the New York State
    Police Academy. In attendance were representatives from the NAACP,
    ACLU, Local Urban Leagues, educators, and leaders of faith-based
    communities, some of whom could not have attended without the financial
    assistance provided by NHTSA. Attendees were informed of the findings
    of our research and asked to be part of the solution. The result was
    great community support for our enforcement efforts and relationships
    which continue to this day.
        The second phase of this outreach involved improving the capability
    of the economically disadvantaged to safeguard their children. While I
    consider failure to protect child passengers gross neglect and strict
    enforcement child seat laws is warranted, it is also necessary to
    ensure that those without the financial means to protect their
    children, are provided with the means to do so. Once again, we turned
    to our partners at the Governor's Traffic Safety Committee and NHTSA
    for federal funding, and today a statewide mechanism is in place to
    ensure that no care-giver will be denied access to child restraints due
    to their economic status. This has significantly improved our
    relationships in minority communities.
        Since may 1999, seven Buckle up New York enforcement waves have
    been conducted, resulting in the issuance of more than 300,000 tickets
    for failure to wear restraints. More than 9,600 of those tickets were
    for child restraint violations. The statewide average safety restraint
    use rate has been measured as high as 88.3 percent, a significant
    increase from the 74 percent recorded prior to the first wave. Most
    importantly, 141 lives were saved between 1999 and 2000, nearly
    reaching NHTSAs estimate of 148.
        Throughout the campaign, the involvement of local and county level
    enforcement grew, which contributed significantly to the outcome.
    During the first wave, local and county enforcement accounted for about
    a third of the enforcement effort, but by the end of the seventh wave,
    accounted for 42 percent. More than any other component, this
    involvement was critical to the successful and life-saving outcome of
    the program, and could this not have occurred without significant
    federal funding.
        Please allow me to summarize the main points of our recent
    experience in increasing safety restraint use in New York State,
    because I believe the effective strategies used in the Buckle Up New
    York Campaign, with the support of critical and targeted funding
    provided by NHTSA, can be replicated in States nationwide.
        First, proper use of seat belts and child restraints is the most
    effective way to prevent needless deaths and debilitating injuries,
    regardless of the actual cause of any motor vehicle crash. These
    tragedies exact a great cost and result in widespread suffering in
    American society, and buckling up is the easiest means of prevention.
        Second, enforcement works. When applied across the board by State,
    county and local agencies, the potential of receiving a ticket for not
    wearing a seatbelt is the impetus required to achieve rates of seat
    belt use in excess of 80 percent.
        And third, the additional enforcement required to significantly
    raise seat belt use and thereby save lives and prevent injuries, cannot
    be accomplished without federal funding. This is especially true in
    light of recent demands for enhanced security efforts, and their fiscal
    implications on State and local budgets. Without the federal
    assistance, lives will continue to be needlessly lost on our highways.
        While we have not yet solved the problem of unrestrained occupants
    in New York State, I believe we have found the formula to address it.
    We witnessed nearly a 10 percent reduction in fatalities in New York
    State since implementing Buckle Up New York. It is a model which we
    adopted from others, and it can work elsewhere in America as well.
        In the time remaining, let me turn to the other two highway safety
    concerns, impaired driving and excessive speed.
        There has been great progress made in reducing the incidence of
    impaired driving in the U.S. in recent years, but I fear that apathy is
    setting in, and today we are at risk of relinquishing some of the gains
    made. In highway safety, apathy equals lives lost. The downward trend
    in impaired driving deaths has leveled off, and more attention and
    innovation may be necessary to prevent greater loss of life.
        Impaired driving is a continual concern in New York State,
    particularly where our youngest drivers are concerned. Drivers under
    age 21 make up just 5 percent of the licensed drivers, but are involved
    in 14 percent of fatal crashes in New York. Compounding the problems,
    recent census data indicate that the number of licensed drivers under
    age 21 in New York State will grow by 25 percent in the next decade.
    Therefore, if nothing is done, more young lives will be lost.
        We are attempting to apply the strategies employed in the Buckle Up
    New York Campaign to impaired driving and underage drinking. We are
    developing joint enforcement operations with county and local
    enforcement agencies and the State Liquor Authority to improve
    enforcement of underage consumption and sale of alcoholic beverages. In
    addition, we have the benefit of a State mechanism to fund local
    impaired driving countermeasures. A State law titled Special Traffic
    Options Program for Driving While Intoxicated (Stop-DWI), returns fines
    imposed on impaired driving violators to county level administrators to
    fund additional enforcement efforts. This law, enacted in 1982, is one
    of the main factors contributing to New York's success in combating
    impaired driving. As in the effort to improve safety restraint use,
    coordinated statewide efforts offer the greatest promise to preventing
    impaired driving, and continued funding will be necessary to support
    those efforts.
        In the last area, speed enforcement, I dare to say that law
    enforcement is currently losing the battle. Non-compliance with speed
    limits is widespread in New York State and nationwide. Like no other
    law, many behave as though it is their inalienable right to speed, and
    unfortunately for too many, the results are tragic. In New York State,
    24 percent of fatalities in 2000 were attributable to excessive speed.
    Addressing the issue will take a large scale programming and additional
    resources to provide new technologies and the staffing necessary to
    implement them.
        In closing, I would like to say what I have said to many recruit
    troopers at the State Police Academy. It is hard to prevent a murder
    which occurs behind closed doors, but it is relatively easy to prevent
    a murder on the highway by stopping a drunk or speeding driver. So too,
    it is relatively easy to prevent the needless death of an occupant who
    does not buckle up or of a child who's safety is unconscionably
    neglected by being left unrestrained. And although we may not remember
    the faces of the people we save, we certainly do remember the faces of
    those we fail to save. Both are equally real, and it is incumbent upon
    us to prevent the latter.
        Senator Murray, that concludes my testimony. Again, I want to thank
    you and the entire committee for this great opportunity to express my
    views on highway safety. I would be happy to answer any questions you
    or the subcommittee may have.

                                     ______

                  Prepared Statement of the Rail Travel Center

                                    summary
        We support Amtrak's request for $1.2 Billion in capital and
    operating funds for fiscal year 2003, but
        We urge that the fiscal year 2003 equipment repair program be
    immediately implemented in fiscal year 2002.
        We support the experimental franchising of a selected Amtrak route
    and/or service.
        We do not support the separation of the Northeast Corridor (NEC)
    from the control of Amtrak.
        We oppose exclusive State funding of regional services.
        We absolutely believe the Federal Government must continue to
    provide meaningful capital and operating grants if any rail system is
    to survive, even the regional corridor services.
        Rail Travel Center has operated tours by train worldwide since
    1982. We have consistently marketed Amtrak travel as a part of that
    program and therefore have an experienced perspective on the current
    Amtrak situation. Too often, discussions of Amtrak are conducted
    without input from those who actually sell and use train travel. This
    situation becomes even more urgent in light of Amtrak's February 1,
    2002 press release, which suggests the carrier might end its national
    network by dropping all long-distance trains as early as October 1,
    2002.
        We believe Amtrak must receive the $200 million it has requested to
    preserve its connected national network, and that now also is the time
    to initiate measures ensuring passenger train services continue to
    operate in the long-term. Therefore, we support bringing the equipment
    repair portion of Amtrak's $820 million fiscal year 2003 capital
    request forward into fiscal year 2002. At present, the company
    gradually is losing its operating fleet due to the effects of deferred
    maintenance, ironically just as demand is trending dramatically upward.
    In the longer term, we support an experimental program of franchising
    selected Amtrak routes and services to bring about better marketing,
    operations and cost-recovery.
        As we note below, the problem with Amtrak is not a lack of
    potential business. Rather, Amtrak's troubles derive in large measure
    from a lack of equipment to meet the demand already on offer. Worse,
    Amtrak's management too often has compounded the equipment shortfall by
    refusing to use assets it already possesses. We will outline our
    concerns with these practices below, in a section we characterize as
    ``Institutionalized Pessimism''.
        We also want to reassert our deep respect for Amtrak, which has
    been a good business partner to Rail Travel Center. We know for the
    last thirty years its managers have been forced to grapple with
    virtually no meaningful capital investment outside the Northeast
    Corridor (and on a very few regional lines). This has fostered a
    corporate culture of endless cost cutting combined with a tight focus
    on the needs of the NEC, where Amtrak saw its most likely source for
    immediate funding. That attention has come at the expense of the
    national system. We appreciate our many long-term relationships with
    fine Amtrak employees, but we also recognize that Amtrak, as an
    institution, has flaws which must be addressed.
        Rail Travel Center is concerned about the harmful potential in a
    universal implementation of the recommendations of the Amtrak Reform
    Council (ARC). Although we set forth our chief differences in some
    detail below, we do not oppose all ARC recommendations. In particular,
    we believe the ARC is correct in urging at least some franchising
    (partial privatization) of Amtrak services. If done correctly, this
    could reverse the past Amtrak inclination to avoid opportunity and
    risk, lead to a dramatic increase in passenger train ridership (a trend
    already underway), and ultimately reduce the need for government
    support. Our analysis of these views follows.
     discussion of the arc report, amtrak marketing difficulties, and the
                  arc suggestion for amtrak route franchising
        The worldwide experience with passenger train franchising is mixed
    but far more positive than some recent media coverage of the failure of
    the British Railtrack Company would suggest. Not all the 26 British
    rail franchise operators have failed to turn a profit, improve service,
    or reduce government support. At least ten are operating profitably,
    and more will be when track repairs are completed. The Great
    Northeastern Railway, Scot Rail and First Great Western offer
    outstanding service. Throughout the United Kingdom the frequency of
    trains has increased, and entire fleets of new equipment are in service
    or on order. Clearly, far too many franchises were issued (which should
    be avoided here), but the near meltdown of British operations in the
    last year reflected the mismanagement of the Railtrack infrastructure
    company, not the train operators. We need to learn from the errors of
    the British; but it is false to consider British franchising an overall
    failure.
        An even more relevant example of the successful franchising of
    long-haul services can be found in Australia. The operation of the
    transcontinental INDIAN PACIFIC, GHAN and OVERLAND trains was assumed
    by a private operator (Great Southern Railway) which retained an
    assured level of government support but only could make a profit by
    increasing its business. This is precisely what has happened. More
    frequent trains with more cars are operating. Fares were raised to the
    maximum economic level, especially for First Class travel, yet
    patronage soared with the adoption of the philosophy that ``the more
    passengers we carry, the more money we make''.
        We want to see the Amtrak Reauthorization and the ARC Review
    processes succeed in preserving a truly national U.S. rail passenger
    system. Their actions can facilitate either a creative redesign of
    American rail travel or lead to a virtually useless system of isolated
    corridors best described as ``Balkan Track''. This disconnected system
    would almost certainly disappear, as it would lack both broad-based
    Congressional support and any connectivity, thus becoming woefully
    under-used. As the airlines' ``hub and spoke'' systems have proven,
    easy connections between the maximum number of destinations are
    essential to efficiency, patronage and profitability.
    Areas of Concern With the ARC Report.
        Neither Amtrak nor any successor can succeed without adequate
    capital and a multi-year guarantee of operational support.--This need
    must be satisfied for any operator to succeed. No real planning can
    occur if an operator must annually beg for funding. The United States
    must commit to a rationally capitalized and funded rail network, or
    failure is certain. If this can be done, subsidies will gradually
    decline and patronage will increase.
        The semantics used in U.S. transportation policy must change.--Why
    is it said we ``invest'' in highways and air service while
    ``subsidizing'' rail? It should be clearly understood by everyone that
    all of these funds accomplish the same thing: government funding
    assistance for the transportation needs of Americans in all parts of
    our country.
        ARC's suggestion that regional services be funded only by State or
    regional agencies is flawed and will insure such trains die.--The
    partial Federal financial support of State-initiated trains (as is
    presently done) is a good approach which has produced outstanding
    routes such as the CASCADES in the Pacific Northwest and the new
    DOWNEASTER between Boston and Portland, Maine. It is unlikely the
    multi-state compacts needed under the ARC recommendations would be
    adequately funded at the State level. If, for example, three States
    were responsible for a route (a good example is trains between Chicago
    and Detroit), all operations could end due to a fiscal crisis in a
    single State. This is precisely what happened in 1971/72 when Amtrak's
    original Buffalo-Chicago train was dropped because the five States
    along the route failed to come to an agreement over how to divide the
    costs.
        ARC's recommendation to strip Amtrak of the ownership of the
    Northeast Corridor would degrade service.--Any experienced railroader
    will attest to the need to control train dispatching. Amtrak's
    difficulty in raising speeds between New York and New Haven eloquently
    speaks to the problem of divided track ownership. This critical portion
    of the NEC is owned and dispatched by the Metro North Commuter
    Railroad, a joint agency of the New York and Connecticut Departments of
    Transportation. Metro North has priorities not necessarily including
    high-speed access for Amtrak. Every other part of the NEC also hosts
    commuter trains, but elsewhere Amtrak controls dispatching and can
    assure access for its trains.
        Most importantly, there is no likelihood a separate agency for the
    NEC would be more successful in garnering Federal funds than Amtrak has
    been. A more likely outcome is that such an agency would try to collect
    ever-increasing track access fees from Amtrak and the various State
    commuter authorities. Since these agencies' resources already are
    severely stressed, the likely outcome would be a further drop in
    services.
        Land-cruise trains are not the answer in providing a national
    system.--Tour trains are essential to the business plan of Rail Travel
    Center, but we clearly understand that they are not the ``real
    transportation'' required of a national rail system. Of necessity,
    these trains serve only end-points, run very infrequently, and are
    extremely expensive. Moreover, they could not provide regular
    transportation even if they wanted to, since their operators could not
    afford to give up their limited capacity to local customers, space that
    might be sold for the full journey. Their schedules also could not
    tolerate frequent stops to accommodate shorter-distance passengers and
    still arrive at sightseeing destinations at appropriate hours.
        The land-cruise trains presently operating nationally do so in
    large measure because they are able to charter engines and train crews
    from Amtrak. Most importantly, they use Amtrak's track-access rights to
    run on the freight railroads. Without a national Amtrak system, these
    trains would disappear because their costs would be impossible and they
    would be unable to reach most scenic areas.
        Amtrak's long-haul trains serve far more passenger than up-scale
    tourists. Only long-haul trains serve such large cities as Denver, Salt
    Lake, Memphis, New Orleans, Dallas and Minneapolis. They feed countless
    connecting passengers into Amtrak's regional and corridor trains,
    virtually none of whom who would ride those services without the long-
    haul trains. These trains often are sold-out months in advance,
    particularly in the summer and at holidays. The sleeping car services
    are very heavily used. Even before September 11, First Class space
    frequently was unavailable. Since then, sleeper demand has grown 15-18
    percent, yet (as we will note below) Amtrak's fleet of serviceable cars
    is declining just as demand grows.
        Long-distance trains provide the only public transportation for
    many points and the only reliable winter service over large parts of
    entire routes, such as Chicago to Seattle. They are very well used. For
    example, the often-belittled EMPIRE BUILDER carried 398,000 passengers
    on the Chicago-Seattle (Portland) route in fiscal year 2001. This is an
    average of 1094 passengers per day, or 547 on each train (allowing for
    the fact that the train runs daily in each direction). Yet the EMPIRE
    BUILDER serves such tiny (but rail dependent) towns as Wolf Point,
    Montana and Williston, North Dakota. Many departures are sold out
    months in advance, a fact that often has eluded Amtrak's critics.
        System-wide, these ``little used'' trains actually carried 5.88
    million passengers in fiscal year 2001, over 16,110 riders per day.
    Typically, a third of the passengers on the national services connected
    to other Amtrak routes, frequently including the very corridor trains
    which are so often claimed to be Amtrak's only viable operations.
    Amtrak's own Market-Based Network Analysis (MBNA) in 1999-2000 made the
    clear point that elimination of Amtrak's national network would
    dramatically increase losses on all remaining routes. Not only would
    connecting revenues be lost, but other costs such as depreciation,
    reservations and terminal expenses would fall on a far smaller number
    of routes. This impact could convert a marginally profitable operation
    like the NEC to a money-loser.
        If the tragic events of September 11-15, 2001 proved nothing else
    about our rail transportation policy, they demonstrated the absolute
    necessity of maintaining a real, interconnected, national rail system
    in the United States.
        Having expressed areas of concern about the ARC Report, we turn to
    a discussion of points in the Report we think have real merit.
    Prefacing that analysis, it is necessary to indicate what we observe to
    be Amtrak's marketing problems and how they warrant at least the
    partial implementation of several ARC recommendations.
    Amtrak Marketing Problems
        Amtrak tends toward a corporate culture of institutionalized
    pessimism, which too often causes it to miss business opportunities.--
    Under unremitting pressure to cut losses, Amtrak managers have focused
    for over three decades on cutting costs; but this concentration has had
    unfortunate consequences. Too often Amtrak has avoided expense by
    avoiding opportunity, acting as if it fears ``the more people we carry,
    the more money we'll lose''. Rail Travel Center's experience in its 20
    years of selling Amtrak have shown us Amtrak's long-haul trains are
    frequently sold-out, yet for a variety of reasons Amtrak rarely
    responds to its lack of space by adding capacity.
        This flies in the face of a fundamental business truth. If a
    merchant has something to sell and it quickly sells out, two lessons
    are properly learned: Get additional inventory now and raise prices
    until sales stop! Amtrak has experimented with market-driven pricing
    but rarely has acted on the need for more capacity. The long-haul
    system has been fundamentally compromised by the failure to meet market
    demand. These trains do not lack for riders; rather they lack capacity
    and frequency.
        Amtrak cripples itself further by not keeping proper records on
    potential business that is lost.--Amtrak refuses to take waitlists for
    sold-out trains because accepting waitlists would require staffing its
    reservations bureaus with extra workers to call passengers as space
    cleared. Amtrak managers always have preferred cost-containment through
    reduced staffing as opposed to having the opportunity to board more
    passengers. The result has been to deny Amtrak information it needs to
    properly estimate unmet demand. Amtrak often has used the excuse of a
    lack of cars to justify its reluctance to take waitlists; and indeed,
    the company clearly needs much more equipment. But if Amtrak managers
    really knew how much business they were losing, they could better
    justify capital expenditures for new equipment and to repair existing
    cars.
        Even in the west, where extra cars should be available given the
    size of the Superliner fleet, extra cars rarely are added. Indeed, in
    the last few years Amtrak has cut the capacity of most western trains,
    even in the face of frequently sold-out consists at peak seasons.
    Ideally a car would be added whenever advanced ticket sales reached the
    capacity of a train. The process of making that decision would be
    further enhanced if proper waitlists were kept. Even if cars never had
    to be added, waitlists would insure programmed capacity rarely ran
    empty by refilling space after cancellations.
        All other transportation carriers . . . rail, sea and air . . .
    keep such waitlists. In 20 years at Rail Travel Center, we never failed
    to get a client onto the frequently sold-out VIA Rail Canada
    transcontinental service who was willing to be waitlisted. VIA
    therefore never lost that revenue.
        Amtrak intentionally has reduced the capacity of many long-distance
    trains by failing to repair wreck-damaged equipment and by deferring
    essential overhauls.--This saved money at the expense of undermining
    patronage on trains which were turning away customers. The result is
    reflected in reduced capacity and declining patronage even on trains
    that often are sold-out long before departure.
        A good example is the vital CALIFORNIA ZEPHYR, which traditionally
    carries three sleeping cars in the summer season over the entire route
    from Chicago to San Francisco. Last summer the third car ran only
    between Chicago and Denver on most dates. The supremely scenic portion
    of the route through the Rocky Mountains and the High Sierras was left
    without adequate sleeper capacity. Lack of cars was blamed. In order to
    obtain the added Chicago to Denver sleeper, Amtrak stripped its
    Chicago-Louisville train of any sleeping car space at all for the
    entire summer. Yet at that very time, Amtrak had many Superliner cars
    in storage awaiting either deferred overhauls or wreck repairs.
    Obviously, Amtrak managers favored short-term cost savings over meeting
    passenger demand. This behavior makes a well-used service like the
    CALIFORNIA ZEPHYR appear to suffer from declining patronage, when in
    fact passengers are being turned away.
        The February 1, 2002 Amtrak Press Release announcing draconian
    maintenance cuts for fiscal year 2002 will compound the problem. If
    cars are not routinely overhauled, the stored fleet inevitably will
    grow. Every 180 days, all Amtrak equipment must receive major
    maintenance or be parked until that work is done. Even if essential
    repairs are performed, business will be lost if trains depart with cars
    that have torn upholstery, malfunctioning air conditioning, or improper
    cleaning.
        In mid-January 2002, 32 of Amtrak's double-decker Superliner
    sleeping cars were out of service for maintenance and/or repair work.
    This represents 26.9 percent of the fleet. Some of these cars have been
    stored for months. Already Amtrak has trouble finding the cars to
    respond to both emergencies and opportunities.
        The Congress could be very helpful by targeting a portion of its
    annual Amtrak appropriation for equipment maintenance and repair and
    insisting those funds not be diverted to any other purpose. In the
    short-term, an emergency appropriation is needed in fiscal year 2002 to
    repair stored cars for service before the summer season begins. Without
    capacity, Amtrak cannot possibly meet any performance goals.
        The VIA Rail Canada system provides dramatic evidence of the
    success of running as many cars as demand requires. For years, VIA
    capped its trans-continental CANADIAN at 9 cars in the off-season and
    17 in summer. VIA also feared ``the more people we carry, the more
    money we'll lose''. But faced with a permanently capped level of
    government support, VIA raised fares as high as the market would bear
    and added cars until demand was filled. Now the CANADIAN often carries
    26 cars, but the train covers its costs in the high season and has
    dramatically improved its finances year-round. No VIA trains have been
    cut since 1994, despite no increase in operating subsidies throughout
    the 1990s.
        Amtrak consistently under-estimates the likely patronage of new
    services.--Such remarkable success stories as the CAPITALS in
    California, the CASCADES in the Northwest, and the DOWNEASTER in Maine
    were grudgingly supported in their early stages by an Amtrak management
    that too often accepted the assumption few passengers would travel even
    on a well-run service.
        The company's 1999-2000 Market Based Network Analysis (MBNA) might
    have offered a way out. Unfortunately, most new routes proposed in the
    first MBNA report were express and mail driven, and few of those
    actually were implemented. Amtrak appears to have completely abandoned
    the promised second round of MBNA recommendations, which was expected
    to include new passenger-oriented lines. The first MBNA was totally
    silent on the most obvious examples of unserved markets. For example,
    no trains were projected to serve Chicago to Florida (one of the
    busiest of all travel routes) or Denver to Dallas.
        Starting new trains requires major Federal and State capital
    investment and some additional operating support. Amtrak would request
    this funding in its annual budget if starting new routes was really an
    Amtrak priority. Congressional and State support follows the perception
    that something might actually happen. Consider the resurgent interest
    in trains in Oklahoma once the Oklahoma City to Fort Worth HEARTLAND
    FLYER began operating.
        Amtrak rarely does effective Route-Specific Marketing.--Although
    Amtrak spends millions annually on advertising, virtually all of its
    media placements for the national network are vague ``image''
    advertising. Amtrak tells users that ``Trains are Fun'', ``All Aboard
    Amtrak'', or ``Tracks are Back'', but it rarely runs an ad targeting
    the potential users of an individual train. After 30 years of Amtrak
    operation, most people know that Amtrak exists. What they do not know
    is where it goes, what they could see on a trip, and how much it might
    cost to travel.
        Rarely are we told ``The Ten Best Reasons to Take the SOUTHWEST
    CHIEF''. Route-specific promotions work; and when Amtrak has tried this
    approach they often have been very successful, most recently in adding
    patronage to the threatened TEXAS EAGLE. But individual route ads do
    not appeal to national advertising agencies that want to place generic
    ads they perceive meet all needs.
        Even when route-specific marketing has been pursued, Amtrak
    sometimes gets it wrong. The most recent example is the naming of all
    NEC trains ``ACELA''. In the public mind, the term ``ACELA'' denotes
    the 150 mph American super trains; yet passengers board typical NEC
    services run with 25 year-old Amfleet cars and are deeply unhappy to
    find they are not on a true ``ACELA''. Calling an all-stops New York to
    Philadelphia local an ACELA COMMUTER is simply confusing to the public,
    especially when a true ACELA EXPRESS bullet train may leave 5 minutes
    later.
        This brings us to the areas where we feel the ARC report has merit.
    However, a basic principal must preface any discussion of possible
    franchise options.
        The present Amtrak network is far too skeletal, not too large.
        We support experimental and limited franchising of selected Amtrak
    routes or service functions. This should produce operators who will
    aggressively market. We have no illusions that all government support
    can be eliminated, but it very likely can be gradually reduced as
    patronage grows with dedicated marketing. Each franchise award would
    come with an assured level of government support. As noted above,
    Amtrak has historically focused its efforts on the NEC and a few other
    regional corridors (largely to exclusion of the long-haul network)
    because it correctly perceived the money was in those routes. If real
    dollars were applied to the support of the long-haul system, its
    operation should attract both Amtrak and other potential vendors.
    Actions to be Taken Before any Franchising Begins
        A special program needs to be funded to restore all stored Amtrak
    equipment to operating condition.--No operator can succeed without
    adequate equipment, nor could any meaningful new routes be started or
    capacity added to existing trains without more cars than presently are
    serviceable. Amtrak must not sell any more of its stored equipment.
    Many fine cars in long-term storage should be renovated for operation.
    For example, an entire fleet of former Santa Fe RR ``High Level'' chair
    cars is stored, offering the potential for hundreds of seats per day if
    returned to service. There is absolutely no lack of demand for any of
    Amtrak's stored assets.
        Tax incentives and grants should be made available for purchase of
    additional passenger cars.--This is the essential capital commitment
    that the government must make to allow any rail program to succeed. New
    cars already are desperately needed, especially on eastern long-haul
    routes where Amtrak uses almost every car it owns every day and
    literally has no reserve fleet. If franchising succeeds, more cars will
    quickly be needed. We must spend money now to make future money. To
    minimize the amount in direct grants, the tax code should be reviewed
    for ways to encourage private sector initiatives; for example, using
    tax credits and accelerated depreciation. In addition, the fuel tax
    collected on the railroads should be diverted to railway capital needs.
        The High Speed Rail Investment Act (HSRIA) should be passed to
    assure regional route development.--We are absolutely in support of the
    incremental upgrade strategy essential to the HSRIA process. A network
    of higher-speed corridors should hugely reduce Amtrak's expenses and
    increase its ridership throughout the system.
        A Federal Passenger Rail Franchise Oversight Agency (FOA) should be
    created to analyze which services might be franchised.--Not all routes
    may offer the prospect of real cost reductions. To assure a reasonable
    chance of success, the train services offered in a franchise award
    package must be sufficient in number to allow for adequate synergies of
    scale. It is very unlikely any individual train alone can be
    franchised. This agency should include representatives of the operating
    railroads, organized labor, the Department of Transportation, Amtrak,
    the States currently supporting Amtrak trains, and the travel industry.
    An independent arbitrator, in cooperation with the FOA, should make the
    actual ultimate award of franchises.
        Amtrak should be retained, and encouraged to bid to operate any
    services included in any franchise award(s).--The objective of any
    franchising should be to encourage an expanded rail passenger system
    with better economics through improved route-specific marketing,
    equipment utilization, and a more pro-active management culture.
        It should be understood that no franchise awards would be likely
    for 2 years.
                                  conclusions
    Steps to Implement an Experimental Franchise Process
        We should franchise at least one group of Amtrak routes. The
    franchise should contain enough trains to give the operator a
    reasonable synergy of scale. For example, all long-haul trains running
    west from Chicago might be a franchise grouping. Another could be all
    trains run with Superliner equipment, or all long-haul trains to
    Florida, the Carolinas and New Orleans. Amtrak and other potential
    operators (including the freight railroads) should be encouraged to bid
    for the franchise to serve any route. Until the success of the initial
    franchise can be properly evaluated, all other services should remain
    under Amtrak's direct control.
        There must be a Federal guarantee of a fixed level of financial
    support. This guarantee must be for a multi-year period equal to the
    duration of the franchise award, be contractually assured, and not
    subject to the annual appropriations process. For regional trains,
    partial State support also could be a part of the package. An
    expectation of the franchise award would be that an operator seek to
    gradually reduce the government's support; but it would be clearly
    understood the operator would not be expected to cover all fully-
    allocated costs.
        The franchise holder would be required to operate the service for
    the full period of the award but could adjust service levels based on
    market demand as long as year-round service was provided. The Amtrak
    right of track access must be transferred to any franchise holder; but
    freight railroads should be encouraged to enter into the process, if
    possible by actually bidding for appropriate franchises. To encourage
    participation by the freight railroads, substantial tax incentives
    should be offered. This will help assure track access and good
    dispatching, even if the freight carrier is not the ultimate franchise
    operator.
        There must be on-going review of the performance (both financial
    and operational), of each franchise. Poorly-run franchises could be
    cancelled or offered to other operators.
        Amtrak's equipment should be allocated on a competitive basis.--If
    equipment needs are recognized on a route-by-route basis, mistakes
    (such as Amtrak's failure to order a single passenger car for its long-
    haul national system with the more than two billion dollars in capital
    provided in the recent Roth capital appropriation) can be avoided. From
    that appropriation, only express and mail equipment was purchased for
    routes outside the NEC and California.
        We should experiment with privatizing on-board services including
    dining cars and sleepers.--For years Amtrak has had the authority to
    privatize its food services. This should be done now. Amtrak did
    contract-out the commissary function for its diners but not the actual
    operation on board the trains. This is where the greatest savings can
    be found. While it is unlikely a concessionaire would want to handle a
    single train, the entire long-haul system and/or a route grouping (such
    as all regional services out of Chicago) might look financially
    rewarding to a private operator.
        While it is a clich of rail operations that dining cars cannot be
    operated profitably, this is not always true. For many years the Alaska
    RR has used a contractor for its diners. Amtrak itself has two trains
    with private food operations: the North Carolina PIEDMONT and the
    Boston-Portland DOWNEASTER. Quality food service is absolutely
    essential to the rider, but options for lower cost service should be
    investigated. Amtrak would provide meal cars to the concessionaire, who
    would pay a reasonable fee to Amtrak for an effective service monopoly.
        The same approach could be very successful for the operation of
    sleeping car services. Even if Amtrak retained the basic authority to
    run all routes, a strong argument can be made that subsidy payments
    should be focused on coach travelers, with First Class services
    reasonably expected to run profitably.
        Franchising may reduce the need for Federal support; but Federal
    investment always will be needed, as it is for the airlines with the
    Federally funded air traffic control system. A franchise operator will
    have every incentive to concentrate all resources on the assigned
    route. This can only improve service and revenue returns. An experiment
    with at least one franchised route and/or service package is a risk
    worth taking.
        The ultimate object of the Amtrak Reauthorization and ARC review
    process should be to preserve and expand American rail passenger
    service. The present model does not work, and we see no easy fix simply
    by continuing the status quo. A true national network must be
    preserved. It is essential to the safety and public good of the nation.
                                     ______

        Prepared Statement of the Regional Transportation Commission of
                                Southern Nevada

                                  introduction
        The Regional Transportation Commission of Southern Nevada (RTC) is
    pleased to have the opportunity to submit this testimony to the
    Transportation Appropriations Subcommittee in support of our fiscal
    year 2003 funding requests.
        The RTC is a public entity created under the laws of the State of
    Nevada with the authority to operate a public transit system and
    administer a motor fuels tax to finance regional street and highway
    improvements. In addition, the RTC is the Metropolitan Planning
    Organization (MPO) for the Las Vegas Valley. As the public transit
    provider, the RTC operates Citizens Area Transit (CAT), a mass transit
    system that now carries more than 51.2 million annual passengers and
    recovers over 48 percent of its operating and maintenance costs from
    the farebox.
                                   community
        The Las Vegas community is currently home to over 1.4 million
    permanent residents. With 17 of the world's largest resort hotels
    adding over 32 million annual visitors, the actual population of Las
    Vegas on any given day exceeds 1.5 million persons. In addition, the
    Las Vegas metropolitan area continues to experience explosive growth.
    The 2000 census confirmed that the Las Vegas Valley is the fastest
    growing community in the United States. The economy of the Las Vegas
    Valley is characterized by a favorable business environment, a strong
    job market, an absence of a business and personal income tax, and a
    comparatively low property tax by national standards. This environment
    has fostered an era of extraordinary growth that, since 1990, has
    fueled the creation of over 175,000 new jobs and has witnessed the
    influx of over 500,000 new residents to the Valley. Current projections
    indicate that population and employment will continue to increase,
    exceeding 2.1 million residents and over 1 million jobs by the year
    2020. This dramatic growth in population brings additional challenges
    to the transportation network with increases in congestion and travel
    delays. Ensuring adequate mobility is essential to maintaining a
    superior quality of life for residents and continuing growth in
    employment.
                             citizens area transit
         Citizens Area Transit (CAT) began service in December, 1992 and at
    that time represented the largest single start-up of new bus service in
    North America in over 20 years. Annual CAT ridership has grown from
    14.9 million riders in 1993 to over 51.2 million riders in 2001; a
    growth rate of over 243 percent in only 9 years, catapulting CAT to the
    25th largest bus system in the Nation out of 2,250 transit systems. Las
    Vegas is the fastest growing city in the United States, but ridership
    on the CAT system is growing at a rate faster than other local economic
    indicators, including population, employment, hotel rooms, visitor
    volumes, airport passengers, vehicle miles traveled, and auto
    registrations.
        To address the ever increasing demand for transit services, the RTC
    has continually increased bus service. Since startup, total annual
    hours of revenue service have almost doubled, from 585,134 hours in
    1993 to over 1.2 million hours in 2001. Similarly, annual vehicle miles
    have also doubled; from 6,384,660 miles in 1993 to over 16,098,000
    miles in 2001. In addition, the CAT system has continued to
    successfully increase ridership while continuing to operate in a highly
    efficient manner. Costs per passenger have dropped consistently since
    startup, to approximately $1.49 per passenger. The recent Harvard
    study, The Private Provision of Public Transport, found the CAT
    system's cost per hour of service and farebox recovery ratio to be
    among the best in the industry.
        With 46 bus routes operating throughout the greater Las Vegas
    Valley, as well as routes in the rural communities of Laughlin and
    Mesquite, Nevada, CAT is now carrying over 4.5 million passengers per
    month, with some routes operating in excess of 200 percent capacity.
    While the CAT routes operating along the high-profile Las Vegas
    Boulevard provide service to up to 25,000 passengers per day, these
    routes account for only 18 percent of the total monthly ridership.
    Clearly, many Las Vegas residents rely heavily on the CAT system to get
    to work, school, shopping, medical services and recreational
    facilities. Providing mass transit services throughout the Las Vegas
    Valley, CAT has become essential to the fabric of the Las Vegas
    community.
        Although the CAT system has doubled service availability since
    startup, the demands for even more service continue to escalate. The
    urban boundaries of the Las Vegas Valley continue to push in all
    directions, creating new areas of growth and transit demand. In
    addition to under served areas, the frequency of service on most
    existing routes serving the residential base of the Valley is
    substantially less than needed. The single largest constraint faced by
    the RTC to providing more service continues to be lack of a sufficient
    number of coaches to meet demand. When compared to other peer cities,
    CAT transports up to 3 times the number of passengers per vehicle
    annually.
                               new starts funding
         The RTC is requesting $20 million in fiscal year 2003 New Starts
    funding for its Resort Corridor fixed guideway project. The project is
    a 3.1 mile dual direction monorail that would have a seamless
    connection with a privately financed and constructed monorail in the
    Resort Corridor. This unique project exemplifies the opportunities that
    exist in a cooperative effort between the public and private sectors.
    The private sector portion is already under construction. Preliminary
    engineering on the public portion is expected to be completed in the
    Spring of 2002. The project received a recommended rating from the
    Federal Transit Administration (FTA) in its 2002 New Starts Report and
    has been recognized for its cost effectiveness, operating efficiencies
    and environmental benefits--each of which has received a high rating
    from FTA. The Administration has included funding in its fiscal year
    2003 Department of Transportation Budget for the project. The requested
    fiscal year 2003 funds would be used for continuing development of the
    project, including land acquisition, relocation expenses, final design,
    and initial construction activities.
                               bus rapid transit
        The RTC is seeking $5 million in fiscal year 2003 bus discretionary
    funds to assist in the construction of platforms and shelters at bus
    stops for the RTC's Bus Rapid Transit project. The RTC is utilizing an
    innovative optically guided bus, known as Civis, that will operate
    along a heavily traveled commuting corridor. Traditional bus service
    along the Las Vegas Boulevard North Corridor currently carries over
    8,000 passengers a day for a 13-hour peak period. The requested funds
    would enable the RTC to construct platforms and bus shelters along the
    corridor. This project offers a distinct opportunity for the
    implementation of new bus technologies and innovative transit services
    in the United States.
        The Civis is a high capacity vehicle with low floor accessibility,
    perimeter seating, utilizing clean diesel electric power, and providing
    opportunities to reduce roadway spaces and to minimize costly traffic
    engineering improvements. The Civis vehicle carries up to 168
    passengers and has four points of entry. From a service perspective,
    the most significant element of the BRT project is the usage of an
    automated guidance system. This guidance system will assist coach
    operators in the approach to a bus stop and aligning the actual
    stopping point of the vehicle at the platformed bus stop. The
    advantages of such a system in BRT operations include maintaining close
    curb distances, ensuring that vehicle doors are aligned with loading/
    exiting areas, and eliminating gaps between the vehicle and the
    platform stopping area. This not only significantly improves boarding
    for wheelchairs and the disabled community, but also allows for off-
    vehicle fare collection. More importantly, the features described above
    allow the RTC to carry a greater number of passengers more efficiently,
    expand services, increase passenger comfort and convenience, and assist
    the region in attaining enhanced air quality benefits.
        The identified funds would assist RTC in construction of platforms
    and shelters at bus stops for the Civis service. The shelters will
    include off-board fare collection opportunities such as ticket vending
    machines, a passenger waiting area, seating and shade structures, and
    passenger amenities such as information kiosks.
        The RTC is developing this BRT project to improve capacity,
    increase efficiency, and meet the ever increasing needs for mass
    transit in the Las Vegas Valley. BRT offers the capacity and other
    transit advantages of light rail, at a significantly lower capital
    cost, and this project will help demonstrate the viability of BRT as a
    New Start solution. Given that the demand for New Start funds
    nationwide far exceeds availability, cost effective options such as BRT
    are important not just to the RTC, but to the overall Federal transit
    program.
                                highway requests
         The RTC is requesting $15 million in fiscal year 2003 Federal
    Lands Highway Funding for an Upgrade project to the Southern Beltway
    (I-215). The overall project boundaries are from Interstate 15 to
    Stephanie Street in Henderson, Nevada. This project will be completed
    in two phases, as outlined below.
        The Southern Beltway serves the rapidly growing southeast area of
    the Las Vegas Valley, including Henderson. Originally constructed as a
    4-lane facility, the traffic volumes have increased well beyond the
    Beltway's designed capacity. The facility has seen an increase in the
    number of vehicles using it from about 23,000 daily trips when it
    opened in 1997/98 to about 73,000 in the year 2000 (the last year of
    available data). This represents an average annual increase in traffic
    of about 55 percent, or about 4 percent per month. The automatic
    traffic recorder on the Beltway showed that there were almost 83,000
    vehicles a day using the facility in December, 2000. The constrained
    capacity creates severe degradation in service, particularly during the
    peak travel hours. At these times, there are about 40 percent more
    people trying to use the facility than the two lanes in each direction
    can accommodate.
        The Southern Beltway Upgrade project from Pecos Road to Stephanie
    Street consists of widening into the existing median to provide a third
    travel lane in each direction. The existing twelve foot shoulder is
    Portland Cement Concrete, and was constructed to serve as a future
    travel lane. The identified project would utilize this shoulder and
    pave the remaining twelve foot median to act as the new full width
    inside the shoulder. In addition, auxiliary lanes would be constructed
    between the existing interchanges at Pecos Road, Green Valley Parkway,
    Valle Verde Drive and Stephanie Street. The improvements are necessary
    to accommodate the existing traffic demand on this segment that
    currently meets or exceeds the capacity of the roadway. The existing
    improvements were constructed entirely with local funds. The project
    cost for this segment is $5 million.
                         bus and bus facilities funding
         The RTC is requesting $20 million in fiscal year 2003 bus
    discretionary funds for land acquisition and construction costs for a
    new Central City Transit Center (CCTC). The CCTC project will enhance
    intermodal connections among bus, monorail, and intercity rail modes.
    The project is a key component of the revitalization and redevelopment
    of downtown Las Vegas.
        The current Downtown Transportation Center, located at 300 North
    Casino Center Boulevard is a major transfer point for many CAT routes.
    However, the facility (built in 1983) was never envisioned for a
    dynamic and growing mass transit system. There are currently 17 CAT
    routes using this facility, as well as a City Trolley service and three
    Charter bus companies. During the afternoon peak period, over 55
    departures per hour are made out of this facility. Built on only three
    (3) acres of land, the facility is simply undersized for the transit
    service currently housed there. Additionally, the geographic and space
    constraints eliminate any opportunities to enhance intermodal
    connections and services.
        With this in mind, the RTC has completed a feasibility study to
    identify a potential site for a new Central City Transit Center. The
    identified area encourages intermodal connectivity to high speed rail
    (Amtrak), a New Start monorail project, the Bus Rapid Transit (BRT)
    project identified above, as well as enhancing the passenger experience
    for the regular CAT bus system, the City Trolley service, and local
    charter services. The new area also provides enhanced access for non-
    motorized transportation options (such as walking or biking) to major
    local area attractions. Additionally, the development of the new CCTC
    will provide transportation access to a currently undeveloped area in
    the City of Las Vegas, that has been identified for the largest
    redevelopment project in Southern Nevada. The availability of adequate
    transportation options is critical to the success of this redevelopment
    effort. The requested funds will allow the RTC to commence land
    acquisition and construction of this major improvement to Intermodal
    Transportation options.
                                   conclusion
         The Subcommittee has been very helpful in the past in recognizing
    the ever increasing transit needs in Southern Nevada. To continue the
    growth of the CAT system, and to facilitate the deployment of
    innovative BRT and Monorail technology, the RTC requests that the
    Subcommittee provide funding in the amount of $25 million in Section
    5309 bus discretionary funds; $20 million in New Start Funding and $15
    million in Federal Lands Highway funds. As described in this testimony,
    these projects are critical components of the comprehensive development
    of an integrated intermodal transportation system capable of meeting
    the needs of the fastest growing city in the United States.
                                     ______

              Prepared Statement of the Fleet Reserve Association

    Certification of Non-receipt of Federal Funds
        Pursuant to the requirements of House Rule XI, the Fleet Reserve
    Association has not received any federal grant or contract during the
    current fiscal year or either of the two previous fiscal years.
    The Fleet Reserve Association
        On behalf of the 140,000 members of The Fleet Reserve Association,
    I thank you Mister Chairman and distinguished members of the
    Subcommittee for the opportunity to submit the Association's views on
    the fiscal year 2003 Coast Guard budget.
        The Fleet Reserve Association (FRA) is a Congressionally Chartered,
    non-profit organization, representing the interests of U.S. Navy,
    Marine Corps, and Coast Guard personnel with regard to pay, health care
    and other benefits.
        The Association is the oldest and largest Association in the United
    States representing enlisted men and women of the Sea Services whether
    on active duty, in the Reserves, or retired. Established in 1924, FRA's
    primary mission is to act as the premier `` watchdog'' organization for
    maintaining and improving quality of life for Sea Service personnel. In
    the past 5 years, for example, FRA led the effort to amend the
    military's ``Redux'' retirement system for the better and provided a
    pay study referenced by Congress in the adoption of pay reform for mid-
    grade enlisted personnel in 2001, and subsequently by Congress in 2002
    with regard to further revising the pay for all noncommissioned and
    petty officers in grades E5 thru E9.
        In 1996, FRA sought recognition for the arduous duties performed by
    junior enlisted personnel serving aboard the Nation's naval vessels.
    Sea pay was recommended by the Association only to have the proposal
    turned down by the Navy. Last year, Congress gave the Navy and the
    Coast Guard the authority to manage its sea pay programs, the amounts
    paid to career personnel were increased and junior enlisted sailors
    again became eligible for sea duty pay.
        There are other issues and programs advocated by FRA over the past
    years that are now a reality. TRICARE for Life is a major health care
    enhancement championed by FRA and other member organizations of The
    Military Coalition. (The Coalition is comprised of thirty-two military
    and veterans' organizations representing over five million active duty,
    Reserve, Guard, retired, and veterans, their families and survivors.)
    FRA is the leading enlisted association in the Coalition and has the
    distinction of holding two of the organization's six elected offices--
    President of the Coalition Corporation, and the Administrator.
    Additionally, three of nine Coalition committees are co-chaired by
    members of the Association's legislative staff including Personnel/
    Compensation/Commissary, Health Care, and Taxes/Social Security/
    Medicare.
        The Association sponsors annual scholarship and patriotic essay
    competitions, and recognition programs honoring the Coast Guard
    Enlisted Persons and Recruiters of the Year, the Navy Sailors and
    Recruiters of the Year and the Marine Corps Recruiters and Drill
    Instructors of the Year.
    Introduction
        The Fleet Reserve Association's mission is focused on quality of
    life programs which are critically important to sustaining military
    readiness and the War on Terrorism. As it has for many years, the
    United States Coast Guard serves with distinction as the fifth branch
    of our Nation's Armed Forces and as an integral component ensuring our
    Nation's security.
        Thanks to the heroic efforts of many Coast Guard personnel in the
    aftermath of the September 11, 2001, and increasingly effective public
    affairs initiatives, the American people have an increased awareness
    of, and appreciation for the Coast Guard's multi-faceted and demanding
    mission. FRA believes this is long over due.
        Before addressing specific issues, the Association wishes to
    acknowledge the tremendous support of this distinguished Subcommittee
    for additional pay and benefit improvements enacted during the First
    Session of the 107th Congress. Across the board and targeted pay
    increases, higher housing allowances, reform of the PCS process and
    increased funding for health care are significant improvements and
    perceived as important recognition of the service and sacrifice of the
    men and women serving in the Coast Guard, and those who've served in
    the past.
        FRA remains totally committed to ensuring Coast Guard parity with
    all pay and benefits provided DOD uniformed personnel. The Association
    notes with pleasure the increased funding levels authorized for key pay
    and benefit programs in fiscal year 2002 and was especially pleased
    that adequate resources were allocated for the implementation of sea
    pay reform benefiting Coast Guard personnel during this year.
    The Fiscal Year 2003 Budget
        Regarding the Administration's fiscal year 2003 Budget, FRA first
    draws your attention to the need for additional supplemental funding to
    cover the costs of pay, health care and other benefit enhancements
    enacted as part of the fiscal year 2002 National Defense Authorization
    Act and implemented this year.
        Half of these costs, totaling $21 million, were funded in the
    supplemental legislation included as part of the fiscal year 2002
    National Defense Appropriations Act enacted last fall. FRA understands
    that Congress intends to soon authorize the remaining $21 million to
    fund these programs for the second half of the fiscal year as part of
    an emergency supplemental bill. The Association strongly supports this
    initiative. Unfortunately, this action will serve as yet another
    segment in the ongoing pattern of relying on supplemental
    appropriations to adequately fund the all important quality of life
    programs so important to the men and women serving in the United States
    Coast Guard.
        FRA is encouraged that the $7.1 billion fiscal year 2003 budget
    proposal establishes accrual funding for health care and retirement
    accounts and that the spending plan assumes enactment of the pending
    U.S. Coast Guard Authorization Act (S. 951) which authorizes over 7,462
    additional end strength billets.
        The Association is pleased that full funding for pay increases,
    health care and other benefit improvements is included in the
    Administration's fiscal year 2003 Budget. The U.S. Coast Guard's budget
    request includes operations funding of $4.6 billion, significantly
    above the fiscal year 2002 budget of $3.3 billion, and a retired pay
    account allocation of $736 million to cover the cost of implementing
    accrual accounting procedures similar to the Department of Defense's.
        The Reserve training budget totals $136 million to recruit, train,
    and support a Coast Guard Selected Reserve Force of 9,000 personnel.
    Training is essential to ensuring military readiness and fully funding
    this account is very important because Reservists are increasingly
    called upon to support the prosecution of the war effort. Due to
    inadequate end strengths levels that are commensurate with increasing
    operational commitments, all of the services must rely increasingly on
    Reserve personnel to meet mission requirements.
    Stretched to the Limit
        The headline of a November 13, 2001 Washington Times opinion piece
    reads ``Coast Guard more Important than Ever.'' FRA could not agree
    more. The article by Christopher Lehman and Scott Truver offers a
    sobering overview of the challenges facing the Coast Guard in this new
    era of heightened national security. Other newspaper stories chronicle
    the Coast Guard's operational challenges due to limited resources and
    heightened security demands in the wake of the attacks on our Nation
    last September.
        In a January 25, 2002 speech in Portland, Maine, President George
    W. Bush stated, ``I saw how the Coast Guard has responded after 9/11
    and I know how important the Coast Guard is for the safety and security
    and the well-being of our American citizens.'' He cited the rescue of
    five fishermen from a 74-foot fishing vessel that sank in heavy seas
    and noted that ``This story was repeated 4,000 times last year.'' He
    further noted that Coast Guard men and women captured over 60 tons of
    cocaine and responded to over 11,000 oil spills in 2001. These
    statistics were compiled prior the terrorists' attacks and reflect
    consistently impressive efforts and dedication to service of all Coast
    Guard personnel.
        President Bush also recognized the fact the Coast Guard men and
    women are. ``Working around the globe with the Department of Defense.''
        Because of the ``new normalcy'' requirements, Coast Guard people
    are also being pushed to exhaustion by increased work requirements that
    stretch thinly staffed units beyond their work limits and negatively
    affect readiness. To meet the challenge approximately 2,900 Reservists
    have been called to active duty, 10,000 vessels have been boarded, the
    Coast Guard has launched the largest port security operation since WWII
    and the service remains on a heightened state of alert at over 361
    major ports. In addition, hundreds of cutters, aircraft and small boats
    manned by thousands of USCG active duty and Reserve members are
    guarding our coasts. Since last September 11, the USCG has conducted
    over 30,000 port security patrols and over 3,000 air patrols. These are
    impressive efforts contributing significantly to our enhanced security
    B and they are accomplished by dedicated men and women totally
    committed to serving our Nation.
        As it has in the past, FRA strongly supports increasing end
    strengths commensurate with these growing operational commitments. The
    Association salutes the distinguished Subcommittee's leadership with
    regard to the House adopting H.R. 3507, the Coast Guard Authorization
    Act for 2001, while urging the Senate leaders to expeditiously bring
    similar legislation (S. 951) to the floor for a vote by the full
    Senate.
        The Coast Guard has not had the benefit of an authorization act
    since 1998. The Senate version of this legislation authorizes
    significant end strength increases to 45,500. The legislation also
    addresses quality of life enhancements including the authorization of
    compensatory leave for members stationed at isolated duty stations, and
    the extension of expired housing authorities to promote construction or
    acquisition of much needed housing on or near Coast Guard units where
    adequate, affordable housing may not be available.
    Pay Comparability
        FRA strongly supports the proposed 4.1 percent active duty pay
    increase included in the Administration's budget and the pending plan
    to again target career enlisted personnel for higher adjustments. The
    Association is also encouraged that the Administration is requesting
    $360 million for additional military pay in the DOD budget, however FRA
    is concerned with commensurate funding in the Coast Guard budget to
    cover this increase for its personnel.
        Thanks to the strong support from the Administration and Congress,
    significant progress is being made in closing the pay comparability gap
    through 2006. The Association believes all personnel need and deserve
    annual raises at least equal to private sector wage growth and
    appreciates the continuing higher than ECI pay hikes authorized by
    Congress and the targeted increases particularly for senior enlisted
    personnel. These leaders are increasingly valuable due to their
    seasoned experience, leadership, education, and advanced technical
    skills. They also command high wages in the civilian market and often
    express frustration regarding compressed pays at the senior enlisted
    level (E-8 and E-9) as a lack of recognition and appreciation for their
    roles as leaders and teachers.
        Pay increases are important to all Coast Guard men and women and
    convey a powerful message to service members about the importance and
    value of their service to our country. However, at the end of the 2000-
    2005 period, a pay gap in excess of 7 percent will still remain between
    military and civilian pay levels and additional increases are needed to
    close the gap.
    Benefits Disparity
        There are challenges regarding mandatory versus discretionary
    funding for benefits paid to Coast Guard personnel. Along with its
    sister services, the Coast Guard adjusts discretionary funding to best
    address its particular needs. Members of the Coast Guard are authorized
    to receive the same benefits as their DOD counterparts, however, the
    lack of adequate funds may limit what they in fact receive.
        The following list offers examples of the disparities between
    benefits offered to DOD personnel and those offered to Coast Guard
    members.

      DOD & U.S. COAST GUARD--COMPARISON OF PERSONNEL INCENTIVES & BENEFITS
    ------------------------------------------------------------------------
                                         Department of
                  Item                      Defense        U.S. Coast Guard
    ------------------------------------------------------------------------
    Enlistment Bonuses..............  $2K to $20K. DOD    $1K to $20K. USCG
                                       is also combining   cannot currently
                                       enlistment          afford to combine
                                       bonuses and         the enlistment
                                       college fund        bonus with the
                                       resulting in a      college fund;
                                       maximum payment     recruits must
                                       of $70K.            select one or the
                                                           other.
    College Fund....................  $50K..............  $30K.
    College Loan Payback............  $65K. DOD is        Currently the USCG
                                       combining the       does not have
                                       college loan        legislative
                                       payback with the    authority to
                                       enlistment bonus    implement a
                                       which results in    program of this
                                       a maximum payment   nature.
                                       of $85K.
    Distance Learning...............  Satellite based &   Currently funding
                                       web-based.          a pilot project
                                                           aboard one CG
                                                           cutter.
    Child Care Subsidies............  $3,588 per child..  $327 per child.
    ------------------------------------------------------------------------

        From this comparison, it is obvious that the Coast Guard faces
    significant challenges in providing competitive incentives to attract
    and retain an adequately trained work force. The childcare subsidy
    disparity is a startling statistic and FRA notes that childcare needs
    for Coast Guard personnel and their families are no less important than
    the needs of their DOD service counterparts.
    Housing Allowance (BAH)
        FRA appreciates Congressional support for increased basic allowance
    for housing (BAH) rates and enactment of a plan to eliminate average
    out of pocket housing costs by 2006. Adequate funds are required in the
    Coast Guard budget to cover these improvements. The Association also
    strongly supports an increase of $7 million for housing at various
    Coast Guard stations.
        Unlike the other services, the Coast Guard relies on leased housing
    for its personnel in some duty locations and funding for this program
    must be sustained. This reliance is due to the unavailability of
    military housing at or near Coast Guard duty stations, many of which
    are located in high-cost resort areas along our coasts. Because of
    these challenges, FRA advocates an accelerated implementation of the
    elimination of average out of pocket housing costs to ease the
    financial impact imposed on many Coast Guard personnel and their
    families.
    Health Care
        A top FRA priority is access to quality and affordable health care
    for all beneficiaries including U.S. Coast Guard personnel and
    retirees. The Association appreciates TRICARE improvements for active
    duty personnel including enhanced claims processing, implementation of
    TRICARE Prime Remote for dependents, and mileage reimbursement for
    specialty care for all TRICARE Prime beneficiaries including active
    duty personnel and enrolled retirees.
        Major enhancements were also enacted last year for retirees,
    including an expanded pharmacy benefit for Medicare-eligibles along
    with TRICARE For Life that offers second payer coverage to Medicare for
    older retirees. These are major improvements and recognition of the
    government's past commitments of health care for life for those who
    serve careers in the uniformed services.
        FRA offers thanks to members of the Subcommittee for supporting
    these initiatives, while reminding each member of the panel of the
    importance of continued full funding (to include both mandatory and
    discretionary requirements) for these important programs.
        Regarding collaborative efforts between DOD and the Department of
    Veterans Affairs, FRA strongly supports sharing agreements and
    partnering initiatives between the two systems that serve different
    beneficiary groups, but only if those efforts would enhance or maintain
    access to quality health care for the beneficiaries of each of the
    departments. Although this distinguished panel does not have
    jurisdiction over these issues, the Association believes that it's
    important to state its position and advise you of the ongoing work of
    the President's Task Force to Improve Health Care for Our Nation's
    Veterans.
        Other health care concerns include providing adequate health care
    coverage via a ``safety net'' for Coast Guard Reservists and their
    families in the wake of call ups since last September; providing
    TRICARE Prime Remote coverage to family members who are unable to
    reside with the service member; a waiver of the Medicare Part B penalty
    for older retirees who reached age 65 prior to October 1, 2001, and
    increasing the number of TRICARE providers.
    Recruiting And Retention
        There is an urgent need for the Coast Guard to recruit and retain
    adequate numbers of personnel to sustain the service's multi-faceted
    mission requirements. As discussed above, pending legislation will
    authorize significant end strength increases over the next three years
    and these additions will require adequately staffed and funded
    recruiting offices with associated support resources.
        Now more than ever senior petty officers are needed to guide, lead,
    teach, train, counsel, and inspire their junior charges and do likewise
    for young men and women entering the officer ranks. These petty
    officers also replace officers in positions of command and, when called
    upon, change their stripes for bars during national emergencies. FRA
    notes with pride the increasing responsibilities shouldered so
    effectively by the Coast Guard's senior enlisted personnel and takes
    great pride in representing their interests on quality of life issues
    on Capitol Hill.
        The Coast Guard is meeting its recruiting and retention goals
    thanks in part to the increased number of recruiters and infusion of
    additional advertising funds in recent years. However, the Coast Guard
    is challenged to maintain adequate numbers of qualified personnel in
    key job specialties. The service must be especially competitive for
    personnel with these skills because they see jobs in the private sector
    that offer better hours, higher wages and much less stress
    Conclusion
        As you know, the Coast Guard provides tremendous service to our
    Nation and is integral to our homeland security. Appropriations for the
    Coast Guard generate from four to five times the return on each dollar
    invested. The broad range of services and support provided by the Coast
    Guard and its personnel generally go unnoticed until there is a major
    disaster or national emergency such as the terrorists attacks of last
    September.
        As noted by President Bush in the speech cited above, ``The Coast
    Guard has a vital and significant mission. And, therefore, the budget
    that I send to the United States Congress will have the largest
    increase in spending for the Coast Guard in our nation's history.'' FRA
    strongly supports the President's budget request and urges this
    distinguished Subcommittee to do likewise.
        The Coast Guard is always there, and true to its motto of Semper
    Paratus B always ready. Please ensure adequate funding for the
    personnel programs discussed above to ensure parity with benefits and
    quality of life programs offered by the Department of Defense.
        Thank you again for the opportunity to submit the Association's
    views and for your strong commitment and continuing support of the men
    and women serving so magnificently in the United States Coast Guard.
                                     ______

       Prepared Statement of the University Corporation for Atmospheric
                                    Research

        On behalf of the University Corporation for Atmospheric Research
    (UCAR) and the university community involved in weather and climate
    research and related education, training and support activities, I
    submit this written testimony for the record of the Senate Committee on
    Appropriations, Subcommittee on Transportation.
        UCAR is a consortium of 66 universities that manages and operates
    the National Center for Atmospheric Research (NCAR) and additional
    research, education, training, and research applications programs in
    the atmospheric and related sciences. The UCAR mission is to support,
    enhance, and extend the research and education capabilities of the
    university community, nationally and internationally; to understand the
    behavior of the atmosphere and related systems and the global
    environment; and to foster the transfer of knowledge and technology for
    the betterment of life on earth. In addition to its member
    universities, UCAR has formal relationships with approximately 100
    additional undergraduate and graduate schools including several
    historically black and minority-serving institutions, and 40
    international universities and laboratories. UCAR is supported by the
    National Science Foundation (NSF) and other Federal agencies including
    the Federal Aviation Administration (FAA).
        The fiscal year 2003 budget request for the FAA should support the
    Administration's and the country's commitment to a safe, efficient, and
    modern aviation system. Specific agency goals include an 80 percent
    reduction in the fatal accident rate on U.S. carriers by 2007 and the
    upgrading of the air traffic control system. While the rate of
    commercial aviation accidents is very low worldwide, recent dramatic
    increases in air traffic (with the exception of the months following
    September 11) have resulted in an increase in the number of accidents.
    If the current rate of increase were to stay constant over the next 15
    years, the result will be an average of 50 catastrophic accidents per
    year--almost one per week. As passenger traffic increases since the
    events of September 11, it is imperative that this country not lose
    sight of the FAA Safer Skies goals and that the proposed request of
    $4.6 billion for the FAA's primary mission of safety in the skies and
    on the ground at airports be applied wisely.
        According to the National Transportation Safety Board,
    approximately 30 percent of all aviation accidents, and 37 percent of
    the fatal accidents, are weather related. Aviation weather hazards
    include low cloud ceilings and visibility; airframe icing, both on the
    ground in the airport terminal area and while airborne; runway
    contamination by ice, snow, and water; and thunderstorms and convective
    activity which produces low-altitude windshear, strong and gusty winds,
    heavy rains, hail, and lightning. (As the 1999 Little Rock accident
    that resulted in 11 fatalities demonstrates, violent thunderstorms
    continue to be among the most dangerous weather phenomena for all
    classes of aviation.)
        Regarding the fiscal year 2003 request for the FAA, I would like to
    comment on accounts related to aviation weather research that fund the
    collaborative work of researchers in universities and Federal
    laboratories. These accounts are relatively small in dollar amounts,
    but the work is potentially life-saving for our nation's pilots and
    passengers.
    Facilities and Equipment
        Within the Facilities and Equipment section of the Federal Aviation
    Administration (FAA) budget, please add $5.0 million for development
    and implementation of a terrain-induced windshear alert system. This
    pilot project would be done in the Juneau, Alaska, area because of the
    complex terrain surrounding the airport. The technology developed could
    lead to a National Terrain-Induced Windshear and Turbulence Alerting
    System that would be installed in airports nation-wide to help prevent
    crashes like the one that occurred in 1991 on approach to the Colorado
    Springs Airport. Work would include verifying the prototype alert
    system and transferring the technology to FAA systems developers. I
    urge the Committee to support the request of $2.99 billion for
    Facilities and Equipment in fiscal year 2003, and to add $5.0 million
    to support the development and implementation of a terrain-induced,
    windshear alert system.
    Research, Engineering and Development (RE&D)--Weather Program
        The Weather Program conducts applied weather research to solve
    operational aviation problems. In collaboration with the National
    Weather Service, the FAA intends to provide more accurate, accessible
    and efficient weather forecasts and severe weather warnings through the
    development of new technology, better delivery mechanisms, and superior
    aviation weather instruction materials. In addition, upgrades will be
    made to wake turbulence standards and procedures. (Wake turbulence is
    likely to have been a major contributing factor to the November
    commercial airline crash in New York.) These improvements will make
    aviation safer, improve flight planning, and increase air traffic
    controller and pilot decision-making skills regarding interpretation of
    weather forecast data. In order to allow critical research achievements
    to be applied quickly to operations, I would like to make the following
    recommendations regarding the two Weather Program accounts:
    Weather Program--Safety
        I urge the Committee to support the fiscal year 2003 Budget Request
    of $19.4 million for the Weather Program Safety account, and to add
    $2.0 million (for a total of $21.4 million) in order to initiate two
    life-saving programs:
        The National Terrain-Induced Windshear and Turbulence Alerting
    System (mentioned above) that would be installed in airports throughout
    the nation, and
        The Gravity Wave Research Program to develop a technique for
    detecting and alerting pilots to a unique set of extremely dangerous
    low-level wind conditions that precede certain thunderstorms. These
    conditions occur at and around a number of airports in the country and
    are of extreme danger to aircraft, particularly during take-off and
    landing.
    Weather Program--Efficiency
        The Budget Request for the Weather Program Efficiency account is
    decreased in fiscal year 2003 by $806,000. I urge the Committee to
    support the life-saving work of the Weather Program Efficiency account
    by appropriating the requested $9.1 million and adding $1.5 million
    (for a total of $10.6 million) to initiate a Terminal Area High-
    Resolution Winds Product that would give air traffic controllers a
    model depiction of wind location near airports based on special
    processing of data from NEXRAD radars. This addition to the request
    would mean that the account would receive only a 0.07 percent increase
    over fiscal year 2002. If possible, please consider appropriating the
    request plus inflation in addition to the add-on.
        Given past experience with the Weather Program section of the
    budget, I ask that you oppose any attempt to reallocate weather
    research funding within this account. The research community receives
    funding from the R&D budget to do work that is critical to the safety
    of U.S. citizens including turbulence forecasting, ceiling and
    visibility forecasting, thunderstorm and winter storm forecasting, and
    prediction of airborne icing. Any reallocation of funds in this line
    jeopardizes that life-saving work.
        On behalf of UCAR, as well as all U.S. citizens who take to the
    skies, I want to thank the Committee for the important work you do for
    this country's scientific research, training, and technology transfer.
    We appreciate your attention to the recommendations of our community
    concerning the fiscal year 2003 FAA budget and we appreciate your
    concern for safety within the nation's aviation systems, particularly
    during this extraordinary time in our nation's history.
                                     ______

      Prepared Statement of the Upper Mississippi River Basin Association

        The Upper Mississippi River Basin Association (UMRBA) is the
    organization created in 1981 by the Governors of Illinois, Iowa,
    Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
    the five states' river-related programs and policies and for
    collaborating with Federal agencies on regional water resource issues.
    As such, the UMRBA has an interest in the budget for the U.S. Coast
    Guard.
        In the current national security environment, it has become more
    important than ever to provide the Coast Guard with the resources it
    needs to fulfill its multiple missions. Clearly the Coast Guard has
    vital new functions specifically related to homeland security, and
    these must be adequately funded. But perhaps even more significant are
    the ways in which the Coast Guard's other traditional missions can
    contribute to enhanced security while simultaneously supporting
    navigation safety and environmental protection. This includes
    activities such as aids to navigation, vessel and facility inspections,
    emergency response, and mariner licensing. Nowhere are these services
    more important than on the Upper Mississippi River System, which
    Congress has designated as a nationally significant commercial
    navigation system and a nationally significant ecosystem. The Coast
    Guard must be adequately funded if the river is to continue to serve
    both of these important functions.
    Operating Expenses
        Of continuing concern to the UMRBA is funding for the Coast Guard's
    Operating Expenses account. The President's fiscal year 2003 budget
    proposal includes $4.635 billion for this account, an increase of 19
    percent from the fiscal year 2002 enacted level. However, this increase
    would be targeted almost entirely to homeland security projects and
    personnel-related costs, including pay raises and retirement funding.
    While details concerning the security projects are not available, some
    will undoubtedly help enhance other Coast Guard missions. However, it
    is also true that there will be increased demands on these other
    mission areas to support security operations.
        Congress must not lose sight of the fact that the Operating
    Expenses account funds activities that are critical to the safe,
    efficient operation of the Upper Mississippi River and the rest of the
    inland river system. Through these missions, the Coast Guard maintains
    navigation channel markers, regulates a wide range of commercial
    vessels in the interest of crew and public safety, and responds to
    spills and other incidents. In calendar year 1999, the Coast Guard's
    Upper Mississippi River System units inspected 644 vessels; responded
    to 100 oil spills; and managed 401 other reportable marine casualties,
    including groundings, injuries, and vessel breakaways. These numbers
    speak to the Coast Guard's vital role in establishing and enforcing
    standards, maintaining navigation aids, and responding to various
    incidents. The beneficiaries include not only commercial vessel
    operators, but also recreational boaters; farmers and others who ship
    materials by barge; and the region's citizens, who benefit enormously
    from the river as a nationally significant economic and environmental
    resource.
        Recent years have brought a number of changes to the way the Coast
    Guard operates on the inland river system, including elimination of the
    Second District; closure of the Director of Western Rivers Office;
    decommissioning the Sumac, which was the largest buoy tender on the
    Upper Mississippi River; and staff reductions. The states understand
    that these decisions were driven by the need for the Coast Guard to
    operate as efficiently as possible, and the states support that goal.
    However, such changes must be carefully considered and their effects
    monitored, particularly in light of the increased demands that we are
    now placing on the personnel and assets that remain in the region. The
    UMRBA is quite concerned that staff reductions and resource constraints
    have combined to impair the Coast Guard's ability to serve as an
    effective, proactive partner.
        In recent years, the Coast Guard's capacity to participate in
    important regional initiatives has been limited. Moreover, increased
    fuel prices and other factors have constrained the Coast Guard's
    ability to do even routine work, thus raising public safety concerns.
    Now we are learning that increased security demands are reducing the
    staff assigned to vessel inspections and limiting the Coast Guard's
    investigation of reported spills. Sending a single person to conduct
    vessel inspections reduces the rigor of those inspections, and, in a
    worst case scenario, potentially puts the inspector at risk. Similarly,
    electing not to respond to reports of small spills means some of these
    spills will go uninvestigated and puts increased demands on local
    officials who do not have the Coast Guard's expertise or resources.
    Moreover, it could result in costly delays should a spill turn out to
    be considerably larger than first reported. While everyone recognizes
    the need to adjust to our new security environment, it is essential for
    the Coast Guard to retain the capacity to perform its traditional
    missions on the Upper Mississippi River. Temporary adjustments have
    been necessary as the Coast Guard strives to meet immediate needs, but
    these should not become long term standard operating procedures. Toward
    that end, the UMRBA supports the President's fiscal year 2003 budget
    request for the Coast Guard's Operating Expenses account and urges
    Congress to ensure that sufficient resources from within this account
    are allocated to the Coast Guard's inland river work.
    Navigation Fees
        The UMRBA continues to oppose fees for navigation assistance
    services, which have been proposed frequently in previous years. Last
    year, the Administration clearly stated its opposition to such fees,
    while this year's budget proposal appears to be silent on the matter.
    The nation's navigable waterways are a critical part of our
    transportation infrastructure, just as is the national highway system.
    Providing the basic services required to operate that infrastructure
    safely is a fundamental role of government. The benefits of buoy
    placement and maintenance, vessel traffic services, radio and satellite
    navigation systems, and waterways regulation do not accrue only to the
    commercial operators who would be subject to such fees. Recreational
    boaters also directly use these services. Moreover, municipal and
    industrial water intake operators, farmers and other shippers,
    consumers, the river's natural resources, and citizens along the river
    all benefit indirectly from the contributions that these Coast Guard
    services make to the safe, efficient operation of the navigation
    system. One group simply should not be required to pay the costs of
    services whose real benefits are distributed so broadly.
    Coast Guard Reserve
        Several other Coast Guard missions and programs are also important
    to the Upper Mississippi River states. Unfortunately, devastating
    floods in several recent years have given many of this region's
    citizens direct personal experience with the importance of the Coast
    Guard's reservists. Reserve forces are a critical part of the Coast
    Guard's ability to respond effectively to natural disasters and other
    large-scale events. In addition, reservists perform key staff functions
    at many of the marine safety detachments on the inland rivers. The role
    of reservists in the region has become all the more crucial as the
    detachments' active duty staffing levels have been reduced and their
    security-related activities have increased. The UMRBA supports the
    President's request of $113 million for the Coast Guard Reserve.
    Boating Safety Grants
        In addition, the Coast Guard's boating safety grants to the states
    have a proven record of success. The Upper Mississippi is a river where
    all types of recreational craft routinely operate in the vicinity of
    15-barge tows, making boating safety all the more important. As levels
    of both recreational and commercial traffic continue to grow, so too
    does the potential for user conflicts. This is particularly true with
    major events, such as the upcoming commemoration of the Lewis and Clark
    expedition, which is expected to draw large numbers of boaters to the
    St. Louis area. Boat safety training and law enforcement are key
    elements of prevention. Unfortunately, this year the Coast Guard
    continued its long-standing practice of requesting only $59 million for
    state boat safety grants. The UMRBA urges Congress to appropriate the
    full authorized amount of $70 million to the Boat Safety account to
    support the states in this important mission.

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    American Passenger Rail Coalition, prepared statement............   177
    American Public Transportation Association, prepared statement...   179

    Bennett, Senator Robert F., U.S. Senator from Utah, remarks by...   163
    Bond, Senator Christopher S., U.S. Senator from Missouri,
      statement of...................................................     3
    Byrd, Senator Robert C., U.S. Senator from West Virginia:
        Prepared statement...........................................    16
        Questions submitted by.....................................167, 175
        Statement of.................................................    14

    Campbell, Senator Ben Nighthorse, U.S. Senator from Colorado:
        Prepared statement...........................................    19
        Questions submitted by.....................................174, 181
        Statement of.................................................   139
    Chatham Area Transit, prepared statement.........................   183
    City of Newark, New Jersey, prepared statement...................   183
    Clapp, Joseph, Administrator, Federal Motor Carrier Safety
      Administration, Department of Transportation...................    93
    Coalition of Northeastern Governors (CONEG), prepared statement..   185

    Durbin, Senator Richard J., U. S. Senator from Illinois, prepared
      state-
      ments..........................................................17, 52

    Engleman, Ellen, Administrator, Research and Special Programs
      Administration, Department of Transportation...................    93

    Fleet Reserve Association, prepared statement....................   218

    Garvey, Hon. Jane F., Administrator, Federal Aviation
      Administration, Department of Transportation:
        Prepared statement...........................................   143
        Statement of.................................................   133

    Illinois Department of Transportation, prepared statement........   186

    Jackson, Hon. Michael, Deputy Secretary, Department of
      Transportation, statements of..................................  1, 4

    Kohl, Senator Herb, U.S. Senator from Wisconsin:
        Prepared statements..........................................51, 16
        Questions submitted by.....................................174, 181

    Leahy, Senator Patrick J., U.S. Senator from Vermont, prepared
      state-
      ment...........................................................    19
    Los Angeles County Metropolitan Transportation Authority (MTA),
      prepared statement.............................................   194
    Loy, Admiral James M., Commandant, U.S. Coast Guard, Department
      of Transportation:
        Prepared statement...........................................    55
        Statements of................................................45, 52
    MaGaw, Hon. John, Under Secretary of Transportation for Security,
      Department of Transportation...................................     1
        Prepared statement...........................................    99
        Statement of.................................................    93
    McMahon, Captain Christopher, Maritime Administration, Department
      of Transportation..............................................    93
    Mead, Hon. Kenneth M., Inspector General, Department of
      Transportation.................................................    45
        Prepared statement...........................................    61
        Statement of.................................................    58
    Metropolitan Atlanta Rapid Transit Authority (MARTA), prepared
      state-
      ment...........................................................   196
    Mikulski, Senator Barbara A., U.S. Senator from Maryland:
        Prepared statement...........................................    51
        Questions submitted by.....................................170, 177
        Statement of.................................................    68
    Murray, Senator Patty, U.S. Senator from Washington, opening
      state-
      ments..................................................1, 45, 93, 133

    National Association of Railroad Passengers, prepared statement..   198
    National Congress of American Indians, prepared statement........   202
    New York State Police, prepared statement........................   203

    Pluta, Rear Admiral Paul, Assistant Commandant for Marine Safety
      and Environmental Protection, U.S. Coast Guard, Department of
      Transportation.................................................    93

    Rail Travel Center, prepared statement...........................   209
    Regional Transportation Commission of Southern Nevada, prepared
      statement......................................................   215
    Reid, Senator Harry, U.S. Senator from Nevada:
        Prepared statement...........................................   140
        Questions submitted by.....................................172, 179
    Rutter, Allan, Administrator, Federal Railroad Administration,
      Department of Transportation...................................    93

    Shelby, Senator Richard C., U.S. Senator from Alabama:
        Prepared statement...........................................   137
        Statements of.......................................11, 47, 96, 135
    Stevens, Senator Ted, U.S. Senator from Alaska, statements of...67, 146

    University Corporation for Atmospheric Research, prepared
      statement......................................................   222
    Upper Mississippi River Basin Association, prepared statement....   223

                                 SUBJECT INDEX

                                  ----------

                          DEPARTMENT OF TRANSPORTATION

                                                                       Page
    Airport:
        Parking restrictions.........................................    38
        Passenger screening..........................................    22
            Contracts................................................32, 36
    American Airlines/TWA work force, integration of.................    26
    AMTRAK...........................................................    17
        Funding......................................................    21
    Aviation:
        And surface transportation safety............................     9
        Incident.....................................................    11
        Loan guarantees..............................................    27
        Security.....................................................18, 23
            General..................................................32, 33
    Border control agency, proposed..................................    41
    Cargo security...................................................    40
    Chicago aviation capacity expansion..............................    18
    Coast Guard......................................................     6
        Capital plan.................................................    23
    Explosive detection systems (EDS)................................29, 34
        Contracts....................................................    30
        Cost of equipment............................................    31
    FAA capital program..............................................    25
    Federal Transit Administration...................................     7
    Highway:
        Funding...................................................6, 20, 35
        Funds........................................................    18
        Safety:
            Goals....................................................    29
        Program......................................................    28
    Highways.........................................................     9
    Homeland security--TSA and the Coast Guard.......................     8
    MAGLEV and high-speed rail.......................................    34
    Motor carrier safety.............................................    40
    National distress and response system............................    43
    Navigation user fee..............................................    39
    Other programs...................................................    10
    Pennsylvania, transportation priorities in.......................    36
    Pipeline security................................................    40
    Public and rail transportation...................................     7
    Public transportation and rail...................................    10
    Revenue aligned budget authority.................................    24
    Safety funding...................................................     6
    Transportation Security Administration...........................
        Associate Under Secretaries..................................    43
        Budget.......................................................    42
    Unobligated highway trust fund balances..........................    25

                        Federal Aviation Administration

    A more business-like approach....................................   146
    Additional committee questions...................................   167
    AIP, use of for security:
        Costs......................................................149, 150
        Expenditures.................................................   150
    Air traffic control facilities, security of......................   147
    Air transportation oversight system (ATOS).......................   158
    Airspace, violation of restricted................................   157
    ASR-11:
        Certification of.............................................   156
        Wide area augmentation system (WAAS) and.....................   153
    Centennial Airport, scheduled passenger service at...............   157
    Chartered aircraft, security for.................................   154
    Chicago's O'Hare Airport, pending legislation on.................   163
    Commercial airplane certification process........................   165
    Competitive procurement..........................................   166
    Cost control.....................................................   152
    Emergency information dissemination..............................   174
    En route automation modernization program........................   151
    Environmental streamlining.......................................   151
    FAA:
        Assistance to airlines with financial difficulty.............   160
        Management...................................................   142
    Financing........................................................   143
    Fixed based operations (FBOs)....................................   156
    Flight 587 accident..............................................   155
    Growth, preparing for............................................   145
    Montgomery County, MD:
        Airport approaches over......................................   170
        Noise abatement in...........................................   170
    National Transportation Safety Board.............................   155
    Oceanic air traffic control, technology for......................   152
    Olympics, FAA'S performance at the...............................   164
    Operational evolution plan.......................................   141
    Personnel reform, Senate directive on............................   167
    Radars, primary long-range.......................................   171
    Runways, time to construct.......................................   152
    Safety...........................................................   142
        And security, balancing......................................   161
        Issues, impact of shortfall on...............................   148
        Record, maintaining our......................................   144
        Staffing, hiring of..........................................   159
    Salt Lake City, radar for........................................   164
    St. George Regional Airport......................................   164
    Standard terminal automation replacement system (STARS)........161, 171
        At Philadelphia Airport......................................   174
        Deployment schedule..........................................   172
    Summer traffic and overtime costs................................   149
    Supplemental request, funding source for.........................   148
    Technology, decisions on.........................................   162
    Transition to TSA................................................   141
    Unanticipated operations costs...................................   147

                Security Challenges for Transportation of Cargo

    Administrative Procedures Act....................................   128
    Advanced notice of arrival requirements..........................   126
    Airports, 300-foot perimeter rule at.............................   121
    Aviation security................................................   129
    Cargo security in the:
        Maritime sector..............................................   102
        Motor carrier sector.........................................   103
        Rail sector..................................................   104
    Communications between agencies..................................   123
    Container:
        Examination program, port of origin..........................   127
        Inspection...................................................   125
        Security.....................................................   125
    Customer service.................................................   132
    Driver awareness and security....................................   113
    Explosives detection systems..............................122, 129, 131
    Explosives trace detection system................................   121
    Foreign vessels entering the United States, risk of..............   127
    Hazard materials action group....................................   115
    Hazardous materials:
        Direct action group..........................................   107
        Exemption of certain.........................................   114
        Identifying..................................................   111
        In transportation and pipeline systems.......................   105
        Rulemaking...................................................   108
        Shipments....................................................   110
        Transportation of............................................   109
    Maritime vulnerability...........................................   118
    National risk assessment.........................................   115
    Natural gas pipelines............................................   128
    Pipeline vulnerability...........................................   120
    Safety and security, balance.....................................   111
    Security managers, hiring of Federal.............................   130
    Shipper information..............................................   120
    Smart border.....................................................   124
    Technology, paying for...........................................   112
    Threat conditions................................................   122
    Transportation Information Operations Center (TIOC)..............   124
    Transportation:
        Security.....................................................   116
        Vulnerabilities..............................................   117

                                U.S. Coast Guard

    Acquisition, construction, and improvements budget provides a
      significant funding increase for NDS and Deepwater.............    65
    Additional committee questions...................................    89
    Burlington, Vermont breakwater...................................    91
    C-130 aircraft...................................................    73
    Capital:
    Coast Guard:
        Budget constraints...........................................    80
        Budget request represents a 27.6 percent increase............    63
        Combining with other agencies................................    87
        Fiscal year 2003 budget seeks to balance current priorities
          with multiple missions.....................................    63
        Funding......................................................    45
        Homeland security role.......................................    47
        New normalcy.................................................    71
        New security teams...........................................    86
        Plan.........................................................    49
        Recruiting and reinlistment..................................    74
        17th district................................................    72
        Status of traditional missions...............................    71
        Traditional missions.........................................    46
    Deepwater........................................................    50
        Benefits of system acquisition approach......................    90
        Benefits of the integrated system project....................    89
        Integrated...................................................    54
            Procurement..............................................    48
        Operational capability improvements..........................    90
        Procurement strategy.........................................    76
        Uncertainties with the project should be resolved this year..    66
    Fiscal year 2003 funding challenges..............................    45
    Future, shaping our..............................................    58
    Maritime security................................................    53
    National distress and response modernization.....................    60
    National distress modernization..................................    54
    National distress system.........................................47, 59
        Audit........................................................    78
        Project is likely to experience cost growth..................    65
    Navy security initiatives........................................    83
    Port security challenges.........................................    85
    Readiness, restoring our.........................................    57
    Reserve recall...................................................    69
    Search and rescue................................................    59
        Enhancements.................................................    82
        Program......................................................    54
        Stations, operating tempo of.................................    69
    Small boat station:
        Audits.......................................................    70
        Search and rescue program, fiscal year 2003 budget continues
          efforts to address deficiencies in the.....................    64
    Supplemental funding.............................................    53
    Transforming our organization....................................    56
    Vessel tracking system...........................................    89

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