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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.







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OCTOBER 9, 1997

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

THOMAS E. PETRI, Wisconsin
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
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JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
SUE W. KELLY, New York
RAY LaHOOD, Illinois
FRANK RIGGS, California
CHARLES F. BASS, New Hampshire
JACK METCALF, Washington
ROY BLUNT, Missouri
JOSEPH R. PITTS, Pennsylvania
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JOHN R. THUNE, South Dakota
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
JON D. FOX, Pennsylvania
J.C. WATTS, Jr., Oklahoma

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ELEANOR HOLMES NORTON, District of Columbia
PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
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BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
BILL PASCRELL, Jr., New Jersey
JAY W. JOHNSON, Wisconsin
JAMES P. McGOVERN, Massachusetts
TIM HOLDEN, Pennsylvania

Subcommittee on Aviation

JOHN J. DUNCAN, Jr., Tennessee, Chairman

ROY BLUNT, Missouri Vice Chairman
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RAY LaHOOD, Illinois
CHARLES F. BASS, New Hampshire
JACK METCALF, Washington
JOSEPH R. PITTS, Pennsylvania
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
JON D. FOX, Pennsylvania
J.C. WATTS, Jr., Oklahoma
BUD SHUSTER, Pennsylvania
(Ex Officio)

NICK J. RAHALL II, West Virginia
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PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
(Ex Officio)




    Borski, Hon. Robert A., a Representative in Congress from Pennsylvania

    Buffenbarger, R. Thomas, International President, International Association of Machinists and Aerospace Workers, accompanied by Bill Scheri, Member, Machinists Union

    Coleman, Walter S., President, Regional Airline Association

    Gardner, Guy S., Associate Administrator, Regulation and Certification, Federal Aviation Administration
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    Hall, Sonny, International President, Transport Workers Union of America, AFL–CIO, accompanied by Marion Finley, President, TWU Local 514

    Robeson, Robert E., Vice President, Civil Aviation, Aerospace Industries Association

    Rookey, Bernard, President, Texas Pneumatic Systems, Inc

    Wytkind, Edward, Executive Director, Transportation Trades Department, AFL–CIO


    Borski, Hon. Robert A., of Pennsylvania

    Costello, Hon. Jerry F., of Illinois

    Poshard, Hon. Glenn, of Illinois


    Buffenbarger, R. Thomas

    Coleman, Walter S
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    Gardner, Guy S

    Hall, Sonny

    Robeson, Robert E

    Rookey, Bernard

    Wytkind, Edward


Buffenbarger, R. Thomas, International President, International Association of Machinists and Aerospace Workers:

List of airline companies, types of airplanes, age number, and number of planes

FAA Flight Standards Service, International Aviation Safety Assessment Program (IASA), chart, May, 16, 1997

Revenue Passenger Miles and Total Available Seats-Miles, Bureau of Transportation, charts

Letter, October 20, 1997

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Gardner, Guy S., Associate Administrator, Regulation and Certification, Federal Aviation Administration:

Publication, Federal Aviation Regulations, Part 187—Fees June 1995

News article by Willy Stern, Business Week, ''Warning! Bogus parts have turned up in commerical jets. Where's the FAA?'' June 10, 1996

Responses to questions from Rep. Lipinski

Letter, Andrew P. Studdert, Senior Vice President, Fleet Operations, United Airlines to Rep. Borski, October 8, 1997

Response to questions from Rep. Danner

Advisory Circular, Flight Standards Service Schedule of Charges Outside the United States, March 31, 1995

Total Number of PTRS Activity Records for Part 145 Repair Stations and PTRS Surveillance Activity Records for Part 145 Repair Stations, charts, FY94 to FY97

    Hall, Sonny, International; President, Transport Workers Union of America, responses to questions from Rep. Borski
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Robeson, Robert E., Vice President Civil Aviation, Aerospace Industries Association:

Table, 1996 repair station activity as reported by the AIA companies that responded to the survey

Myths Supporting the Passage of H.R. 145

Wytkind, Executive director, Transportation Trades Department, AFL-CIO:

Responses to questions from Rep. Borski

Letter to Chairman Shuster, August 6, 1997

Article, Issues in Brief, ''The Aircraft Safety Act of 1997: Keeping Skies Safe and U.S. Jobs Secure'', August 5, 1997


    Crandall, R.L., Chairman and President, AMR, statement

    English, Hon. Phil, a Representative in Congress from Pennsylvania, statement

    Fanfalone, Michael D., National President, Professional Airways Systems Specialists, statement
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    Kraus, Michael E., PHR, Director, Human Resources, Commodore Aviation, Inc., statement

    National Air Transportation Association, statement

    Wassell, Anthony B., Chairman, Airworthiness Committee, European Association of Aerospace Industries, statement

    Benning, Ray, Director, Airline Division, International Brotherhood of Teamsters, statement

    Airline Suppliers Association, Jason Dickstein, Vice President, statement

    Deutsch, Director, Government Affairs, Association of Flight Attendants, AFL–CIO, letter

    Schick, Thomas E., Executive Vice President, Boeing Commercial Airplane Group, statement

    Wegner, Arthur E., Chairman and CEO, Raytheon Aircraft, letter, October 7, 1997

    Driscoll, Edward J., President and Chief Executive, National Air Carrier Association, statement
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    Evergreen International Airlines, Inc., memorandum, Oct. 16, 1997

    Alterman, Stephen A., President, Cargo Airline Association, letter and membership list

    Gonzalez, Thomas M., Director of Quality Assurance, Pratt & Whitney Eagle Services, statement


    Hallett, Carol B., President and CEO, Air Transport Association, letter, April 22, 1997

Letter to Chairman Shuster from Daniel P. Burnham, Vice Chairman, Allied Signal, Inc., James McNerney, President and CEO, GE Aircraft Engines, Marshall O. Larsen, President and CEO, BF Goodrich Aerospace, Bryan Moss, Vice Chairman, Gulfstream Aerospace Corporation, Ron Woodard, President, Boeing Commercial Airplane Group, Karl J. Krapek, President, Pratt & Whitney, Theodore L. Weise, President and CEO, Federal Express Corporation, James F. Peterson, Vice President and General Manager, Customer Service, Sundstrand Aerospace, and Russell W. Meyer, Jr., Chairman and CEO, Cessna Aircraft Company, May 13, 1998

    Kammann-Klippstein, Karin, Embassy, Federal Republic of Germany, letter, October 7, 1997

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    Royal Netherlands Embassy, letter, January 15, 1998

    Valentine, Barry L., Acting Administrator, Federal Aviation Administration, Foreign Repair Station Certification Listing, January-March 1997

    List of Repair Stations and their Type Rating which have an IASA Rating of Category 2 or 3 (as of January 1998), chart

    Letter from Hon. Phil English, a Representative in Congress from Pennsylvania, and Hon. Jerry Weller, A Representative in Congress from Illinois, June 23, 1997




U.S. House of Representatives,

Subcommittee on Aviation,

Committee on Transportation and Infrastructure,

Washington, DC.

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    The subcommittee met, pursuant to call, at 9:30 a.m., in Room 2167, Rayburn House Office Building, Hon. John J. Duncan, Jr. (chairman of the subcommittee) presiding.

    Mr. DUNCAN. We will go ahead and call the subcommittee to order.

    First, I would like to say good morning and welcome to everyone, and especially to our witnesses, to the hearing on H.R. 145, the Aircraft Repair Station Safety Act of 1997.

    Let me first thank our witnesses for taking time from their very busy schedules to be here with us today on what is a very significant and important matter to those in the aviation industry. In fact, we have had more requests from individuals and companies to testify than we were able to accommodate at this morning's hearing, so it may be necessary if that interest continues to go ahead and schedule a second or even a third day of hearings on this legislation.

    H.R. 145 was introduced by our good friend, the gentleman from Pennsylvania, Mr. Borski, a very active and effective member of the full committee. This bill currently has over 140 bipartisan cosponsors, many of whom serve on the Transportation and Infrastructure Committee.

    As the members of this subcommittee know, the bill would essentially restrict the use of foreign repair stations by U.S. carriers. More specifically, the bill would repeal the FAA's 1988 rule that allowed U.S. airlines to use foreign repair stations to service aircraft even when those aircraft were operated mainly within the United States.
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    This issue has been discussed a number of times by this subcommittee. I believe in 1987 and 1989 hearings were held on this. At those hearings, the Department of Transportation, the Federal Aviation Administration, the Department of State, and the Department of Commerce, as well as the entire aviation industry, testified against legislation restricting the use of foreign repair stations. On the other hand, I believe the airline unions supported placing restrictions on these repair stations overseas.

    As the members of the subcommittee know, we traveled to Europe this past August to meet with aviation officials in England, France, and Spain. It was a most productive visit for the 12 Members who went on that trip and certainly helped those who did take part to better understand the complexities of aviation around the world.

    The industry is rapidly becoming one of the most, if not the most, international or global oriented markets in the world. In fact, 40 percent of the materials used to build an airbus aircraft are manufactured here in the United States, and 60 percent of all of the airplane parts manufactured in this Nation are sold overseas. So there is no doubt that aviation plays a very significant role in our Nation's economy.

    I will say, and I think the Members who were on the CODEL would agree, that the foreign repair stations we visited were very impressive. They were clean, orderly, and seemed to have very good management. I was very impressed.

    Since 1988 the committee has received periodic reports from the FAA on the extent to which airlines were using foreign repair stations. I believe the committee has received 31 reports since that time. The most recent report, dated May 5, 1997, stated that the FAA has recently changed its recertification of foreign repair stations from biannual to annual. It also stated that the FAA is now requiring airlines to list foreign repair stations that they use on their operations specification and perform audits of those repair stations on a continuing basis.
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    There are 496 foreign repair stations certificated by the FAA around the world, and we have, as I understand it, over 4,000 certificated repair stations in this country. I strongly believe that all of these repair stations, both foreign and domestic, should be held to the same strict safety standards by the FAA, and I believe they are.

    I understand that there have been some questionable maintenance practices at facilities, both here in this country and elsewhere. Obviously, the FAA should take appropriate and swift action in those situations. We will hear today from our witnesses hopefully to help us better understand the allegations that the FAA does not have the manpower to inspect these foreign repair stations, and we will hear from our witnesses as to whether or not these foreign repair stations are siphoning away U.S. jobs.

    I strongly support the efforts to protect jobs here in the United States. I also want to assure that actions taken by this subcommittee are based on facts and any actions will not result as has happened on some occasions with a net job loss for our hard working Americans across this Nation.

    I will stop here now so that we may hear from other members of the subcommittee, and I would like to yield at this time to the very distinguished Ranking Member, my colleague and friend, Mr. Lipinski.

    Mr. LIPINSKI. I thank my friend, Chairman Duncan, for yielding to me, and I thank him for holding this hearing today.

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    This is not a new issue for our subcommittee. This subcommittee held hearings on this issue even before the Federal Aviation Administration amended its rules in 1998 to allow foreign repair stations to perform maintenance on U.S. registered aircraft, regardless of whether or not the aircraft was flown outside the USA.

    Yet, even though we have visited this issue since, many questions still remain unanswered. I am a cosponsor of the bill that is the focus of today's hearings, H.R. 145, the Aircraft Repair Station Safety Act. I am a cosponsor of the bill because I believe that the increase in the number of foreign repair stations performing work on U.S.-registered aircraft does raise significant safety and job security issues.

    It is true that foreign repair stations need to be certified and recertified each year by the FAA. However, I wonder if this is simply an unnecessary burden added to the already tremendous work load of the FAA inspectors.

    In addition, foreign repair stations do not have to meet all the regulations that are imposed on the domestic repair stations. For example, supervisors and inspectors working at foreign repair stations do not need the airmen certificates that are required of U.S. supervisors and inspectors. This is not fair to domestic repair stations who must now compete with foreign repair stations.

    However, I realize that there are many people here today who disagree with me and who do not believe H.R. 145 is a good bill. I believe today's hearings will allow us to have a lively discussion about the merits of foreign repair stations in the Aircraft Repair Station Safety Act. I look forward to hearing the testimony of our knowledgeable witnesses, and I yield back the balance of my time.
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    Thank you, Mr. Chairman.

    Mr. DUNCAN. Thank you, Mr. Lipinski.

    We are always honored to have the Ranking Member of the full committee, Mr. Oberstar, the former Chairman of this subcommittee, and I call on him at this time for any comments he has.

    Mr. OBERSTAR. Thank you very much, Mr. Chairman.

    I very much appreciate your holding this hearing, and I encouraged the holding of this hearing because I think it is necessary to get an array of facts on the table and to take an objective look at the issue of foreign repair stations, the subject that the subcommittee has considered on at least two or three occasions in the past, either the Aviation Subcommittee or the Investigations and Oversight Subcommittee.

    I would like to put a little historical framework on the issue, because it is important to have some perspective. The issue became highly charged, emotionally charged in 1988 when the Federal Aviation Administration modified its regulations to relax restrictions that had been in place on maintenance performed overseas. New regulations would allow maintenance to be done outside the U.S. on U.S.-registered aircraft even if those aircraft were operated in the domestic system.

    There are some 4,000 FAA certificated repair stations in the U.S., maybe some 300 FAA certificated foreign repair stations overseas.
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    Prior to 1988, the regulations on maintenance were established in 1949 and not changed significantly since that time. At that period in history, virtually all manufacturers of commercial transport aircraft were located within the United States. Transport aircraft engine manufacturers almost entirely were a U.S. commercial industry.

    In the air transport markets between the United States and foreign countries, overwhelmingly they were dominated by U.S. carriers. Reflecting the need that U.S. carriers would have to have some work done abroad by maintenance facilities, the FAA expected the foreign repair station to meet all the requirements and standards of a domestic repair station, except for the requirements on personnel and maintaining records. That was left to the aeronautical authorities of the foreign country.

    The regulation stipulated that only aircraft used in international service could be maintained by a foreign repair station. Those used in the U.S. trade could not be flown overseas to conduct maintenance on them. However, airlines were always permitted to set up their own repair stations overseas, and for regulatory purposes they were treated the same as if it were a base in the United States. Those were not considered foreign repair stations.

    But with the passage of time and the development of foreign aircraft manufacturing facilities, particularly in the commuter and regional field and the growth of aviation in our post-war allies and in the Pacific Rim and Europe as well, there was a growing need for maintenance to be done outside the United States as well as here.

    With the growth of a foreign aircraft manufacturing capability and the outsourcing of aircraft parts by U.S. manufacturers to foreign countries that were manufactured, facilities certified by the FAA, it made little sense to certificate a foreign aircraft as safe but to say the country in which that aircraft was built does not meet our standards to maintain that aircraft. So little by little the FAA came to the realization that there was some need to adjust the regulations.
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    The issue was further exacerbated by the protracted Eastern Airlines management-labor dispute. At the time Eastern Airlines was making very clear direct allusions that if the management-labor dispute carried on to a longer period of time, they were prepared to take work offshore and deny the International Association of Machinists the opportunity to work on their aircraft.

    The FAA right at that time was proposing to widen the authority to maintain aircraft overseas. The Congress, in an appropriations bill, required the FAA to delay its rulemaking for a period of time until, as it turned out, until after that dispute was settled ultimately with the bankruptcy of Eastern Airlines.

    The world has vastly changed since then. Significant numbers of foreign aircraft are maintained in the U.S., with U.S. maintenance mechanics, U.S. facilities. Clearly, the balance of payment is in our favor. There is worldwide capacity for and need for and current market of $23 billion for heavy airframe engine and component overhaul, as well as line maintenance, $23 billion.

    In 1985, domestic expenditures by U.S. carriers was in the range of about $4.5 billion on maintenance. Today it is nearly $10 billion. It is a huge, growing market. Under the Aging Aircraft law that we have passed and is now in place, the carriers are spending ever greater amounts of money on maintenance.

    My concern is not so much the outsourcing to other countries as it is to outsourcing beyond U.S. carrier facilities to facilities in the U.S. that are nonunion, that do not comply, that do not meet standards, and which the FAA is not sufficiently surveilling.
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    In every Congress since the modification of part 145 by the FAA, a bill has been introduced to essentially restore the pre-1988 regulations, and once again in this Congress.

    I am asked why I am the only Democrat not to sponsor this bill. I don't think labor has any better friend in the Congress than Jim Oberstar.

    But I am concerned about keeping jobs here. I am concerned about the competitiveness of this marketplace. And we are the magnet for foreign airlines to bring their business into the United States.

    A year ago, I asked representatives of the FAA and the union together in my office to discuss the issue and provide economic information on the value of maintenance performed on foreign aircraft in the U.S. against the value of maintenance performed on U.S. aircraft abroad. There is still no comprehensive report from either party in response to that request. FAA is trying to gather that information.

    But just the information that has been available in the past indicates that we have at least 20 to 50 percent, depending on the maintenance facility you are looking at, of foreign work done in the U.S. Now, if foreign governments take the same stand that we would take with this legislation, U.S. repair stations' foreign-generated business, which ranges between 20 and 50 percent, could see their business shrivel up. Foreign governments would require that foreign manufactured aircraft be maintained in the country of origin at the place of origin, and we would lose business and we would lose jobs here.
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    I think the current situation is a balance of trade success for the United States. This is a jobs issue, it is not a safety issue, especially in this era of joint airworthiness authority approval of standards and co-certification and co-surveillance of facilities.

    I think we need far tougher surveillance of domestic maintenance facilities. I think we need more FAA maintenance surveillance personnel in the domestic U.S. business, and more overseas. That is where our efforts ought to be focused. Increase the amount of surveillance, the quality of surveillance, and we also need to improve the quality of training in the United States.

    Northwest Airlines opened a major maintenance facility in my district. They are having a hard time filling both their Twin Cities and Minnesota facilities with trained personnel. We are going to change the entire curriculum and training of instructors and of maintenance personnel in order to bring them up to speed faster.

    Boeing has a need for 5,000 mechanics. They cannot fill the bill. Our problem that is right here in the U.S. we need to upgrade our training skills, our vocational training centers, expand our capability to surveil maintenance done in the U.S. and overseas, and significantly prepare the work force for the growing expansion of aviation in the domestic and international trade. That is where our challenge is, not significantly with the foreign repair stations.

    Thank you very much for this hearing.
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    Mr. DUNCAN. Thank you very much, Mr. Oberstar.

    I believe the next on our side was Mr. Pease.

    Mr. PEASE. Thank you, Mr. Chairman. I have no opening statement.

    Mr. DUNCAN. All right. Mr. Boswell.

    Mr. BOSWELL. No opening statement.

    Mr. DUNCAN. Dr. Cooksey.

    Mr. COOKSEY. I have no opening statement, Mr. Chairman. I am just here to listen and learn.

    Mr. DUNCAN. All right.

    Do any other Members on either side wish to make an opening statement?

    Mr. Metcalf.

    Mr. METCALF. Mr. Chairman, I would like to thank you for holding this hearing today. I am a cosponsor of H.R. 145, the Aircraft Repair Safety Station Act of 1997. We all agree we must provide the safest possible flying experience for the general public and that all repair stations are held to the highest standard. However, I have many concerns regarding the scope of the legislation, particularly section 2.
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    I am looking forward to hearing the testimony today from the witnesses regarding this legislation and will have some questions for the panels to gain a better understanding of its intent and ramifications.

    Thank you, Mr. Chairman.

    Mr. DUNCAN. Thank you, Mr. Metcalf.

    Anyone else wish to make an opening statement at this time? Mr. Poshard?

    Mr. POSHARD. Mr. Chairman, I would just ask unanimous consent to submit an opening statement for the record.

    Mr. DUNCAN. Thank you very much, Mr. Poshard.

    [The prepared statements of Mr. Poshard and Mr. Costello follow:]

    [Insert here.]

    Mr. DUNCAN. Ms. Danner?

    Ms. DANNER. Mr. Chairman, I have no opening statement. Thank you.

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    Mr. DUNCAN. Anyone else?

    All right, well, thank you very much. We will go ahead and begin with the witnesses.

    The first witness, as I mentioned earlier, is our very distinguished colleague and good friend, the Honorable Robert Borski from Pennsylvania.

    Bob, you may begin your testimony at this time.


    Mr. BORSKI. Thank you very much, Mr. Chairman. I, on behalf of Congressman Shays and Congressman English and over 150 of our colleagues, I want to thank you and particularly thank the distinguished Ranking Member, Mr. Lipinski, for his efforts as a cosponsor and the both of you in scheduling this hearing for today. It is my sincere hope, Mr. Chairman, that at the conclusion of this hearing, perhaps we can convince you and my friend and the distinguished Ranking Member of the full committee that your cosponsorship would certainly be most welcome.

    Much of what I have to say this morning is not new. Since my days as Chairman of the Investigation and Oversight Subcommittee, I have been concerned with what I saw to be enormous gaps in our attempts to ensure not only the safety of the airline industry for the traveling public, but also for competition with domestic repair shops.
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    Motivated by goals I know we share, Mr. Chairman, I held a series of hearings back in 1991 addressing so-called loophole airlines, airlines operated by American citizens but flown under foreign flags to escape the U.S. regulation. Back then my concerns were twofold: First, and most importantly, loophole carriers posed a potential threat to safety since surveillance of these carriers was the responsibility of the home government of the foreign air carrier. The second problem affects legitimate domestic carriers. Since they are held to lower safety standards, loophole carriers enjoyed a distinct competitive advantage over domestic carriers and who must bear the cost and expense of compliance with U.S. safety regulation.

    Mr. Chairman, I hope you will kindly indulge a former Chairman in his war stories when I tell you we wrote letters, heard hearings, and if the truth be known, bantered the FAA about the truths about these practices. Many of their own inspectors echoed then as they do today our fears. Despite initial resistance, the agency did finally acknowledge and share in our concerns.

    As a result of our persistent criticism, FAA did ensure that foreign countries were fulfilling their international obligations and properly surveiling aircraft flying under their flags. A country-by-country assessment program required FAA inspectors to visit a country and assess that government's aviation oversight capabilities. Today, at least eight countries are prohibited from flying into the United States.

    While I am proud of the work we did back then and grateful to the agency for initiatives it initially did implement, we did not go far enough to safeguard against an unanticipated yet equally dangerous threat to safety that exists as a result of the 1998 amendments to Federal aviation regulation 145. While we took steps to prohibit carriers from flying in the United States if their host country had insufficient oversight capabilities, we did not ensure the same safeguards would provide proper oversight of foreign repair stations.
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    Aircraft repair stations, whether foreign or domestic, must be certified by the FAA in order to do work on U.S.-registered aircraft. Prior to 1988, FAA regulations required foreign repair stations to demonstrate a legitimate need to service United States aircraft involved in international travel in order to be eligible for certification. Despite exceptions to this rule, including but not limited to emergency repairs, FAA regulations were directed to ensure that repairs of U.S.-registered aircraft met the most stringent safety standards and requirements.

    Furthermore, FAA's limited resources were not squandered assessing, certifying, and inspecting unnecessary stations. With the 1988 amendments, however, FAA removed the need-base requirements and allowed for even repair stations to perform both repair and maintenance work on any U.S. aircraft, regardless of whether or not it flew internationally.

    This new policy resulted in FAA certifying almost 300 new foreign repair stations. The legacy left in the wake of these changes is both problematic and reminiscent of those we sought to address almost a decade ago. The 1988 amendments created yet another loophole for us to close.

    Domestic repair stations, much like domestic carriers of the early 1990s, are at a competitive disadvantage when foreign stations operate under a different, cheaper set of standards. The cost of compliance is not insignificant. Yet, FAA regulations require domestic repair stations to adhere to a stringent array of standards, from drug and alcohol testing to the careful monitoring of personnel. And they have done so for the greater good of safety.

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    Why then should foreign repair stations be held to a lesser standard?

    The very countries that FAA prohibits from flying into our country or whose civil aviation authority has been found to be deficient are today being certified to do repair work on United States planes. My greatest concern is—FAA has certified hundreds of new foreign repair stations—is the agency does not have the resources to properly monitor all of these facilities in a manner that is consistent with ensuring the safe repair of our Nation's aircraft. It is impossible, Mr. Chairman, for FAA to determine if their high standards are, in fact, being adhered to at the many facilities that are now the responsibility to surveil.

    With H.R. 145, the Foreign Repair Safety Act, I have sought to address this problem by replacing the 1988 amendments to the Federal aviation regulation 145 with tougher certification procedures. To receive certification, foreign repair stations would have to meet the same standards imposed upon U.S. facilities and their workers, leveling the playing field, and to the extent possible, ensuring safety.

    The bill also reinstates the FAA policy of limiting foreign maintenance to aircraft engaged in international travel. The practical effect of this provision allows the FAA to focus its limited inspection resources on domestic stations and legitimate foreign stations. It is important to point out that none of these provisions would affect the eligibility of foreign repair stations with respect to emergency repairs. I hope simply that with fewer stations to surveil, FAA will have the resources necessary to provide adequate oversight, including drop-in rather than announced annual inspections.

    H.R. 145 also contains tough language to deal with the issue of bogus parts. The bill requires the FAA to revoke the certification of any domestic or foreign facility found to have knowingly used bogus parts. In this way, the legislation I have introduced discourages those facilities that try to cut corners with cheaper, less safe parts.
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    Mr. Chairman, I feel just as strongly today as I did in 1991 that there is a loophole that must be closed if we are to properly ensure the safety of the traveling public. It is all too rare that we are able to recognize and rectify a potential threat before it results in tragedy, rather than as a response to one.

    Mr. Chairman, I believe, as do over 150 of our colleagues, Republicans and Democrats, that that is just what H.R. 145 will do, and I urge you to consider further committee action on this measure.

    Mr. DUNCAN. Thank you very much, Mr. Borski.

    [Mr. Borski's prepared statement follows:]

    [Insert here.]

    Mr. DUNCAN. And the other Members I think know, on this subcommittee we follow a policy of not asking questions at this time of Members on panels because we have a chance to talk to you at many other times, and also because we have a large number of witnesses to move on to. I would like to invite you to join us up here on the dais for the remainder of the hearing. Thank you very much for your interest in this.

    At this time we will go ahead and start with panel number one, and panel number one is a singular panel, Mr. Guy S. Gardner, who is the Associate Administrator for Regulation and Certification of the Federal Aviation Administration.
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    Mr. Gardner has been with us on a number of occasions. Mr. Gardner, it is always a pleasure to have you with us, and thank you for being here. You may begin your testimony.


    Mr. GARDNER. Thank you, Mr. Chairman. Good morning to you and the other members of this Subcommittee. It is my pleasure to appear before you today to discuss the safety issues associated with H.R. 145.

    I would like to briefly summarize the formal statement that we have submitted.

    The FAA shares many of the goals of this legislation, especially that of assuring the highest possible and equivalent level of safety, but we believe the existing amendments, in combination with an update of the regulations now being prepared will achieve these safety goals. A brief history and background of the 1988 amendments are contained in my written statement, and I believe that they have been summarized very well by you, sir, and other Members of the Subcommittee in their opening statements.

    In short, by the mid-1980s, it became apparent to the FAA that it needed to update these regulations in view of the increasingly global nature of aviation, including the addition of more foreign-manufactured aircraft and aircraft parts in the makeup of the U.S. fleet.
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    These regulations were written to assure that foreign repair stations meet virtually all certification and personnel requirements that domestic stations meet. However, there are a few differences in the regulations as written.

    I would like to highlight for you two of these personnel-related differences. First, an applicant for a domestic repair station certificate must determine the abilities of its noncertificated employees performing maintenance based on practical tests or employment records. While there are no formal requirements in part 145 for foreign repair stations, our inspectors, when they are inspecting these facilities, look for evidence that employees do perform maintenance in an appropriate manner and have a skill similar to those of their domestic counterparts.

    Second, although supervisory personnel at foreign repair stations are not required to have a U.S. certificate, they often do, and if they don't, our inspectors evaluate their qualification based on qualifications of their host country, and if there is no certification there, we make a thorough investigation, applying the same standards.

    Another difference that points to our commitment to strong oversight is the requirement that foreign repair stations undergo annual or biannual certificate renewals, as was mentioned earlier. This is in contrast to domestic repair stations, which have certificates that are valid until surrendered, revoked, or suspended.

    The FAA has been reviewing the part 145 regulations for some time and in working with the Office of the Secretary, is now in the process of finalizing a NPRM that will change the regulations to both clarify that those and other significant elements of the domestic certification regulations are applied even-handedly to foreign and domestic facilities alike. We are also looking at actually upgrading the requirements at both domestic and foreign repair stations.
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    On the subject of drug testing, I noted the potential use of illegal substances by maintenance personnel overseas is a legitimate concern. We have not imposed such testing requirements on foreign nationals in response to international concerns that to do so would violate principles of foreign national sovereignty.

    However, I am pleased to note that an ICAO committee, the International Civil Aviation Organization Committee, has just recommended standards that will strengthen the prohibitions on drug use and alcohol misuse. They will give these standards to the ICAO Council next month, and if accepted, which we anticipate they will be, the Member states will have 1 year to come into compliance.

    FAA has pledged to limit certification of foreign repair stations to a number that can be safely inspected by FAA inspectors at any given time. Consequently, there are some 113 facilities on our waiting list, waiting for certification. The number of FAA inspectors assigned to full-time oversight of foreign repair stations at the end of last month stood at 73, with each inspector having responsibility for inspecting an average of 7 foreign repair facilities. In 1989, that ratio was 15 to 1.

    In short, Mr. Chairman, the FAA believes that the 1988 amendments to part 145 have served the air transportation industry well in terms of safety as aviation becomes even more global. More importantly, with the updates we will propose to make through the NPRM, which we expect to be issued by the end of the year, we can ensure an appropriate and equivalent level of safety is maintained in the system today.

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    Requirements for domestic and foreign repair facilities and their personnel are fundamentally the same, but we recognize that we must respect the sovereignty of foreign nations. We believe that the final rule in this area will address the safety concerns and goals of H.R. 145.

    It is my understanding that the Department of Commerce will be presenting you with a formal statement addressing the potential economic and trade policy consequences.

    In summary, I would like to say we have a work force of highly dedicated and experienced aviation safety inspectors who hold all repair stations, both foreign and domestic, accountable to meeting our very high safety standards. We are currently working to both clarify and improve those standards. I look forward to continuing to work with this subcommittee to make that happen.

    I would be glad to answer any questions at this time.

    Mr. DUNCAN. Thank you very much, Mr. Gardner.

    We are going to go first for questions to Mr. Fox.

    Mr. FOX. Thank you, Mr. Chairman.

    Mr. Gardner, prior to the issuance of its foreign repair station rule in 1988, the FAA used to issue exemptions to permit U.S. airlines to use foreign repair stations. If H.R. 145 were to pass, repealing the 1988 rule, would the FAA go back to issuing exemptions permitting the use of foreign repair stations or would you prohibit U.S. airlines from using foreign repair stations?
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    Mr. GARDNER. Yes, sir. The decision to implement exemption is obviously done on a case-by-case basis. Back in 1988, it is my understanding we had issued over 100 exemptions in order to meet the legitimate needs of the aviation industry. If the rule takes effect, we will insist on maintaining the high levels of safety that currently exist. If the number of foreign repair stations is less than then, the industry will have to adjust in order to meet our high standards of safety. I am not really able to say how much of those would end up being exemptions as part of that adjustment process.

    Mr. FOX. I understand FAA has commissioned the Gelman Research Company to study economic impacts of H.R. 145. Could you tell us what the study has found and can the committee members receive a copy of it?

    Mr. GARDNER. Yes, sir. Unfortunately, that report is not complete yet. They ran into more difficulty gathering the data from industry that they need to make a conclusion. That report is actually being written for the Secretary of Transportation. It is looking at both safety as well as the economic impact of the legislation. So we contracted out for that study. I assure you that the results of that study will be provided to every member of this committee when it is complete, hopefully in the next month.

    Mr. FOX. Finally, what determines whether a repair station is a foreign repair station? Is it its geographic location or the citizenship of its owners?

    First, if Boeing sets up a repair shop in a foreign country, is it a foreign repair station that U.S. airlines could not use under H.R. 145?
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    Mr. GARDNER. The definition of ''foreign repair station'' is that it is a U.S.-certified repair station geographically located overseas. It doesn't have anything to do with who the owner of the station is.

    Mr. FOX. I yield back. Thank you.

    Mr. DUNCAN. Thank you very much, Mr. Fox. Mr. Borski?

    Mr. BORSKI. Thank you very much, Mr. Chairman.

    Mr. Gardner, let me start by complimenting you on the outstanding job I think you do and FAA does throughout the world. In my prior life as the Investigation and Oversight Chairman, a lot of what we received and information we got was from FAA field people, and some of what motivates me at this time is also hearing from some people in the field who have some concerns as to whether or not we are properly inspecting stations overseas to the same degree that we do here.

    Is it a problem? Do we inspect stations, foreign repair stations, to the same extent we do here? Specifically, as I understand it, a domestic repair station could expect a drop-by inspection at any time, while a foreign repair station is more likely to have a yearly scheduled inspector visit and not likely at all to have a so-called drop-by.

    Mr. GARDNER. Yes, sir. In reference to the drop-by inspections, it is true that due to Department of State guidelines, we need to give advance notice to the country before we do any—go to any station for an inspection. Oftentimes we actually ask their civil aviation authority inspectors to join us for those inspections. So that is a limitation.
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    However, we not only do the annual inspections, but last year we had, I believe, just about 2,600 inspections conducted of the 496, I believe, foreign repair stations at this time. So it is more than the annual inspection that happens.

    As to your first question on are we adequately inspecting these stations and holding them to the same standards, my information obviously comes from my work force as well, and the information that I get from my work force is that we are holding the foreign repair stations to the same high standards we hold the domestic repair stations.

    Mr. BORSKI. I have heard of some instances where an inspector may go to a foreign station and have an enormous language problem, and that perhaps the mechanic or the people in charge are trained and understand the regulations very well in English, but once you probe and ask questions that are not specific to the regulations, there is much less of an understanding and much less of an assurance that everything is working properly.

    Have you heard anything to that extent?

    Mr. GARDNER. I asked specifically, sir, what is our process to overcome the language barrier, and an example is, take a repair station in Germany where obviously a lot of the workers do not speak English. There is a requirement, however, for foreign repair stations that the supervisors and inspectors, be able to read and understand English and to understand all of the appropriate FAA regulations and manuals that apply to their repair station.

    The worker at the mechanic level, obviously if they are speaking German, their work cards need to be in German for them to be able to understand them fully. So we work with someone who speaks both the local language as well as English when our inspectors go in, look at their work cards, compare them to the English equivalent of what they should be, to make sure the work cards are accurate.
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    Mr. BORSKI. Let me ask you a little bit about drug and alcohol testing as well. As I understand it, every domestic facility certified under part 145 must have an FAA-approved drug and alcohol testing program. Am I correct also that no FAA-certified foreign facility has a drug or alcohol testing program?

    Mr. GARDNER. Yes, sir. A point of clarification. Part 145 does not address drug and alcohol use. That is actually in part 121 and part 135, which governs the operation of the air carriers, wherein they are required to have the drug and alcohol testing program for anybody throughout who is in safety-critical positions. That includes the mechanics and also the dispatchers and pilots and crew members and so forth.

    There is an exception to that part for overseas people, and my understanding is the purpose of that is the international sovereignty issues—that we cannot mandate that on the citizens of foreign nations.

    Mr. BORSKI. Are you aware of any foreign facility which has a drug or alcohol testing program?

    Mr. GARDNER. Some do, but I don't know which ones do, sir. Again, I would refer to my opening comments, that we are working with ICAO to beef up the drug and alcohol testing standards applying to all the member nations.

    Mr. BORSKI. The absence of any such program is no bar to certification at this point, just for clarification?
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    Mr. GARDNER. That is correct.

    Mr. BORSKI. Let me ask, if I understand, your agency places a civil aviation authority in different categories depending on their effectiveness, and it is fair to say that countries with category 2 ratings are countries where there are serious questions about the effectiveness of their civil aviation authority. When a country receives a category 3 rating, it means the country's civil aviation authority simply does not comply with ICAO's standards for safety oversight.

    Am I also correct in saying there is no guideline or rule prohibiting FAA from certifying or recertifying a foreign repair station in a country rated category 2 or 3?

    Mr. GARDNER. Yes. The reason for that, sir, is they are U.S.-certified foreign repair stations we are discussing. They are not foreign-certified repair stations.

    When we do our U.S. certifications, our inspectors make sure they meet our standards, not the country's standards. Obviously, a country that is category 2 or 3, we have greater concerns about their local civil aviation authority inspectors backing up our inspector's duty, so we look closer at those examples.

    Mr. BORSKI. There are inspectors in countries found to have deficient or inadequate civil aviation authorities?

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    Mr. GARDNER. Yes, sir.

    Mr. BORSKI. Are the inspections there any more forceful than they would be anywhere else? Is it similar once a year inspection, because we can't ask to come in and look closer or more often?

    Mr. GARDNER. Our total inspector program, sir, is based around what we call a work program, where each year we look at where we need to concentrate our resources and our inspections based on the individualities of the industry we are inspecting. So if we have concerns in one area of the industry, repair stations or operations or anywhere else, then we will focus more of our inspector resources in that area. So that would apply to any nation as well obviously.

    Mr. BORSKI. You can inspect in those countries without the authority of the country to come in?

    Mr. GARDNER. We have to notify the country before we go in there.

    Mr. BORSKI. Thank you, Mr. Chairman.

    Mr. DUNCAN. Thank you, Mr. Borski.

    Ms. Granger.

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    Ms. GRANGER. No questions.

    Mr. DUNCAN. Mr. Boswell.

    Mr. BOSWELL. Thank you, Mr. Chairman.

    I, too, appreciate what is going on here today. You have kind of perked my interest in your comments about the ability of the different levels of technicians or mechanics to be able to read and I think you said understand English. If I understood you correctly, only a supervisor has to meet that standard?

    Mr. GARDNER. Yes, sir.

    Mr. BOSWELL. I wonder about that. Personally having had an experience just a couple of weeks ago, things are so high-tech today, in the airplane that I fly that the transponder was not working, and I just—it happened to be evening and I was able to watch the technician who is known to be very good at what he does. He worked and he worked and went back and looked at that manual, he went back and looked at it, and he went back and reread it. Finally, he was able to see where he was misunderstanding some little piece in that diagram and that explanation.

    I can't imagine, and I know we have some very skilled people, I know I was personally acquainted some years back, for example, in the German arena, and they are quite good. But if they can't read and understand these technical manuals, how are you assured that some supervisor is going to be available at that point with all the pressures to get that airplane back in the air? I just wonder about that. Would you comment on that?
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    Mr. GARDNER. Yes, sir. I am obviously not an inspector and would not tell you how I would do that task. But our inspectors are tasked with ensuring the supervisors and, in the case of foreign stations, inspectors who often sign off on repair work going back into flight, understand English. But the repair station supervisory and inspector personnel, the entire entity, has the responsibility that all of the mechanics are able to do their job professionally.

    An interesting thought that occurred to me when I was getting into this issue is that we work on foreign parts and airplanes in this country, so when our mechanics are out there working on Airbuses, they are using English versions of the manual, which obviously were translated from French to English, or from Portuguese.

    Mr. BOSWELL. I won't belabor the point. I would suggest you give that some consideration.

    I might ask you that again some time, to ensure that this high-tech equivalent, availability of the inspector to sign off, the pressure that we all give, I am just a little curious about it. Thank you.

    Mr. GARDNER. Thank you. You have piqued my curiosity as well.

    Mr. DUNCAN. Thank you very much, Mr. Boswell.

    Dr. Cooksey.
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    Mr. COOKSEY. Mr. Gardner, I would like to ask a two-part question. The first part is easy; the second part I would like for you to answer, too.

    What do you consider the countries that have the five best repair stations? The second part of the question is the five worst.

    Mr. GARDNER. Both of those are hard for me, sir, because I am not personally familiar with them all. I am not sure how we would rank them, either. But I know that the five worst that are still operating meet the same standards that the five best do. Obviously in any operation, including airlines as well, in the operation of airlines' manufacturing facilities, there are differences, and you might prefer to buy one car over another make of car, your preferences or judgment of which is better, but our job is to ensure that they all meet some very high standards that we set to ensure the safety of the American people, and we do that. When we finally find they go below the standards, we shut them down.

    Mr. COOKSEY. Would it be correct to assume or safe to assume that the countries we fly our airlines into maybe do not meet your standards and yet our airliners have to have some repairs done there occasionally?

    Mr. GARDNER. The only situation where our airlines would be allowed to have maintenance performed that would not be according to our regulations would be in some kind of an emergency situation, and then the airline is itself still responsible for having a method to ensure that it was done properly before they fly with people on board.

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    Mr. COOKSEY. Could you tell me which continent I would expect to find those on? Let me ask you about the former Soviet republics, aren't there some problems in that area?

    Mr. GARDNER. I am not familiar with specific problems in any specific area. I do have a very detailed list here which it might be better if I gave you on where we have repair stations in each country around the world. But I am afraid I don't have the information on specific problems, greater or less in any one place than another.

    Let me go back to my earlier point, though, if we have concerns about the ability of one repair station to meet the standards, then we focus more of our oversight on that repair facility.

    Mr. COOKSEY. I am talking about Asia. Do you feel that the repair stations there are relatively efficient according to our standards?

    Mr. GARDNER. I hate to give you the same standard answer, sir. A note of clarification here might help.

    As was mentioned, the foreign repair stations have to renew their certificate annually. We renew them for a 1-year period. In the case of Great Britain and Ireland, occasionally we renew for a 2-year period, although they have annual inspections. When they come up to renew that certificate again, we can choose to not do that. We have not renewed for various reasons in cases. Sometimes it is because agents don't have the business anymore, sometimes because we have found problems with their operation.
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    Mr. COOKSEY. Does your list clarify which ones are the problem areas?

    Mr. GARDNER. The data I tried to gather before this hearing, I was unable to separate that data out, but I have asked that we try to find that data.

    Mr. COOKSEY. I think that would be of interest to this committee, to the public.

    Thank you, Mr. Chairman.

    Thank you, Mr. Gardener.

    Mr. DUNCAN. Thank you, Dr. Cooksey.

    Mr. Traficant.

    Mr. TRAFICANT. Thank you, Chairman.

    I want to thank the Chairman for conducting a hearing on a bill that is sponsored by a Democrat. I think it says a lot about your leadership, and I wanted to thank you for it as a Democrat.

    I have a couple of questions. I would like to briefly have them answered.
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    This bill would require all maintenance facilities, domestic and foreign, to operate under the same safety standards and operating rules. Would you agree that without standards, we cannot ensure safety?

    Mr. GARDNER. Yes, sir.

    Mr. TRAFICANT. The bill also revokes the certification of any aircraft repair facility that knowingly uses bogus or substandard parts. Do you agree that that is absolutely necessary?

    Mr. GARDNER. Yes, sir, we currently do that.

    Mr. TRAFICANT. Do you and does the administration support this bill in its current form?

    Mr. GARDNER. From the safety perspective, I believe that this bill is not necessary to maintain safety.

    Mr. TRAFICANT. You do not support this bill in its current form; is that correct?

    Mr. GARDNER. Sir, I neither support nor not support it.

    Mr. TRAFICANT. The administration is going to take the position; I think it is important that we understand that position.
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    Mr. GARDNER. Yes, sir.

    Mr. TRAFICANT. I am inclined to ask the following question: Are there any changes that you would recommend to this important legislation that would make it palatable to both the administration and this Congress so that some of these important issues can be legislatively resolved?

    Mr. GARDNER. In terms of the current bill, I am anxiously awaiting, as I am sure this subcommittee is, the Commerce Department's statement on the trade and jobs issues of this.

    Mr. TRAFICANT. Would you please—and I would ask unanimous consent that any of those recommendations and other additions that you believe would be necessary from the administration standpoint or from whatever opposition might exist to this legislation—to submit them in writing and leave the record of this meeting open and submit that to our Chairman?

    Mr. GARDNER. Yes, sir.

    Mr. DUNCAN. Without objection, it will be so ordered.

    [The information follows:]

    The FAA believes that H.R. 145 is unnecessary from a safety perspective. Therefore, the Agency does not recommend changes to the legislation.
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    Mr. TRAFICANT. Mr. Chairman, I think it is very important that some of the issues addressed here be resolved. I also think this bill will go nowhere if we do not have the support of the administration. They have been absolutely effective in killing things they do not want. I think this is so important that we must understand their differences, come to some resolution on them, because I think Mr. Borski's bill is a good bill, and the elements of it should be enacted into law.

    With that, I thank you for your time and yield back my time.

    Mr. DUNCAN. Thank you very much.

    Mr. Cook?

    Mr. COOK. Thank you, Mr. Chairman.

    Mr. Gardner, I would like to get your opinion of the practical effects of H.R. 145, perhaps in general. But in terms of three areas, capacity of these repair shops, how the passage of H.R. 145 might affect business at specific locations, domestic versus foreign, whether you think H.R. 145 would enhance safety generally across the world, and some indication of practical effects of retaliatory trade practices that might result from 145 being passed.

    Mr. GARDNER. Yes, sir. The impact of the rolling back to the 1988 standards of the rule, part 145, I believe, would in effect reduce the number of foreign repair stations available for U.S.-registered airlines to use. We in the FAA will ensure that the airlines and the maintenance facilities that they do use meet our high levels of standards, whatever that may be.
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    I believe there will be an impact on the operations of those airlines to adjust to the reduced number of foreign repair stations. I don't feel competent to forecast exactly how they would do that. I am hoping that will be part of Commerce Department's statement, so that this subcommittee can have better knowledge to base its decisions on.

    The third part, sir, could you repeat that again?

    Mr. COOK. Retaliatory trade, practices that might result from the passage of this.

    Mr. GARDNER. The retaliatory trade is another issue that certainly is not in my personal expertise nor the FAA's purview, I don't think. We are working very hard on a seamless global air transportation system. I also have a vision of a seamless global air safety system, where all the nations of the world, although they meet the standards differently, all have the very same high standards.

    Mr. COOK. Could I just ask you, as a result of the first thing you said about changes in availability and certain foreign repair shops that might have to lay off people and so forth, isn't this an indication that if H.R. 145 were to pass, there could be, on a worldwide basis at least, an increased safety problem; that is, a greater likelihood of some problem, if not with a U.S. carrier or a U.S.-manufactured plane, some kind of an increase in worldwide problems or accidents that could affect the whole image of travel if people read headlines, whether they occur in Colombia or New York City or Paris?

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    Mr. GARDNER. If the current aviation number of flights and so forth stayed the same, and the number of repair stations was reduced, to me that would be an impact on safety. However, we would make the industry adjust to maintain the high levels of safety.

    Mr. COOK. Thank you.

    Mr. DUNCAN. Thank you, Mr. Cook.

    Mr. DeFazio?

    Mr. DEFAZIO. Thank you, Mr. Chairman.

    Mr. Gardner, thank you for being here today. I thank the Chairman for bringing this very important issue to the hearing.

    I would like to explore a little bit further this issue we are talking about, retaliatory trade and all of that. Are you aware of any major foreign airline which is flying its planes to the United States for the purpose of maintenance; not having them maintained while en route, but actually bringing the planes to the United States for maintenance?

    Mr. GARDNER. I don't know the answer to that, sir.

    Mr. DEFAZIO. What we are getting here is the temptation, and the same problem we are dealing with in the NAFTA agreement, which is there are supposedly competent and certified mechanics available around the world, say, in China, for 50 cents an hour. Now, I don't know that I have tremendous confidence in the mechanics working in China for 50 cents an hour and their technical competence compared to mechanics working in the United States who are being paid perhaps on the order of $20 an hour.
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    The key here is we have to resist the temptation of chasing the cheapest labor or the lowest common denominator, and I think that is what Mr. Borski is trying to get at. We think there is a level of assurance that comes with highly-paid, highly-trained, and well-supervised people.

    Now, I would go to the ValuJet instance. What did we find was the problem there? I believe it was loss of scope of control and supervision, was it not, and that was in a U.S. domestic certified facility; isn't that correct?

    Mr. GARDNER. Yes, sir, that was one of the findings.

    Mr. DEFAZIO. So we are confident that overseas, where we don't even speak the language in many cases, say, in China, that we have a better scope of control than we had in the ValuJet incident?

    Mr. GARDNER. As you are aware, sir, we have beefed up that as a result of the ValuJet accident in June of last year.

    Mr. DEFAZIO. I am still not confident we have reached that point in the U.S. We don't know where some of these parts are getting worked on. The companies don't know where the parts are getting worked on. So are we confident that something we haven't yet mastered in the United States, that we have absolutely mastered overseas, that we know all about all the subcontractors in China, or some other country? I don't mean to pick on China.

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    The point I am trying to get at, and let me go back to your statistics, you said there were 2,600 inspections overseas in the last 4 years.

    Mr. GARDNER. That was in 1996, sir.

    Mr. DEFAZIO. In 1996. Okay.

    I have a letter from Mr. Stucky, Acting Director of Flight Standards Service, who says over the past 4 years, the FAA has conducted 1,800 inspections overseas, which figures out to about one per year per overseas facility, which is what I understand pretty much we do, Right? They know we are coming. They have got lots of notice.

    Mr. GARDNER. Yes, sir.

    Mr. DEFAZIO. We show up, someone shows our person around, and then they certify it and leave.

    Now, what happens, let's say at St. Louis, for TWA. How many people do you have there, and do they show up once a year, or do they show up on a daily basis, and do they have free run of the entire facility?

    Mr. GARDNER. I don't know how many we have there, sir. They are there more than once a year obviously.

    Mr. DEFAZIO. I understand they are there on a daily basis, that you have a number of inspectors there on a daily basis, and they have passes to go anywhere; and that in contrast, when we go overseas, that we get one person who shows up once a year, with prior announcement to the government and to the facility, and we are saying this gives us a high level of assurance.
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    I don't think you would have a problem here if we were under the old rule, which is to say a U.S. airline flies overseas, it needs some maintenance, it is taken care of. But to present the temptation of chasing the cheapest labor around the world to U.S. airlines and to the less responsible operators, and have U.S. planes flying over there for major maintenance at a facility that once a year an American inspector walks through I think we cannot say is giving the American public the certainty that they need.

    Let's go to the ValuJet DC–9 in Atlanta. You are familiar with that case, I assume, where the engine blew up, there were injuries, and that was because of a bogus part inserted in Turkey into that engine; is that not correct?

    Mr. GARDNER. Yes. I believe it was improper maintenance on disks done in Turkey.

    Mr. DEFAZIO. Right. That is the point I am trying to make here. I just don't have the confidence in these overseas repair stations, particularly in the lesser developed nations, where people are being paid very minimally, that we have the scope of control or confidence that we can say to the American public, sure, it is great.

    What we are creating here, and I was just talking to your administrator a while ago, and we had substantial agreement on this, is that if you don't set a high threshold, we are dealing with the lowest common denominator problem. And the lowest common denominator problem means United wants to keep maintaining its planes in San Francisco, and TWA in St. Louis, and American down wherever they are doing it, Delta in Georgia, but if they are presented with competition by an airline, a start-up or someone else, that says, hey, you are suckers; we are getting it done over there in China for 50 cents an hour, what do you think is going to happen ultimately? They are going to drag down the standards in this country. That is the threat, and that is what Congressman Borski is trying to present here.
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    I think this is a real threat. I don't think we can be sanguine about it. There is no potential for trade war, because no foreign airlines are flying over here to access more competent, more expensive American mechanics. It is not happening. They have them serviced here en route, but are not flying them over here because they are more concerned with safety than we are to have the major work done. They are going where it is cheap, their own people, or they have a buy China, buy El Salvador policy.

    I would suggest strongly that the agency revisit the assumptions that went into this, and particularly in light of the ValuJet incidents, two of them that I mentioned, the one where we lost control here in our own country, and the other where we know a bogus part was put in by a foreign repair station, and injuries occurred. You can look at those two instances and say once a year inspecting foreign repair facilities, you can't say everything is fine. It just doesn't work.

    So that is my sermon for this morning. I will have some questions in my next round. My time has expired.

    Mr. DUNCAN. Thank you.

    Mr. Hutchinson.

    Mr. HUTCHINSON. Thank you, Mr. Chairman, for your leadership on this issue. This is very important, and I appreciate the testimony of Mr. Gardner.

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    I wanted to go through a series of questions. First of all, the whole issue here is safety and protecting the American consumer and any member of the traveling public.

    In reference to the foreign repair service stations, have there been any accidents or incidents attributable to the work of the foreign repair stations?

    Mr. GARDNER. Yes, sir. The only one I am aware of is the one that Congressman DeFazio just mentioned where a disk in a JT8D engine that was purchased by ValuJet ended up being found to have not had what was determined later should have been done, maintenance on it.

    Mr. HUTCHINSON. Has anything been done to assure the public that this is not going to happen in the future?

    Mr. GARDNER. Yes, sir. That specific one obviously was investigated by the National Transportation Safety Board. They came out with three recommendations to prevent that from occurring again. Primarily it had to deal with some ambiguous directions in the original manuals for the engine that were cleared up, and all three recommendations have been closed acceptable by the Board.

    Mr. HUTCHINSON. Do you believe that accident was because we allowed foreign repair stations to operate, or because of the other regulations, or the gaps in the regulations that you had?

    Mr. GARDNER. I believe it was the latter, sir, is what the Board concluded.
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    Mr. HUTCHINSON. Now, is there any trend presently, have you been able to determine any trend? Are our domestic carriers using foreign repair stations now, when in the past they did not use those?

    Mr. GARDNER. Well, yes, sir. The growth in foreign repair stations obviously has come since the 1988 change to part 145. However, the industry has grown worldwide in that period of time as well.

    Mr. HUTCHINSON. Now, part of this legislation provides for revocation of repair station certificates, this proposed legislation. In your view, does the FAA have adequate statutory powers to revoke any foreign repair station's certificate that commits one of the violations enumerated in its statute?

    Mr. GARDNER. Yes, sir, we have that authority currently.

    Mr. HUTCHINSON. Currently the FAA is doing the surveillance. They are doing the inspections of the foreign repair stations. Does the FAA apply part 145 uniformly in the certification of domestic repair stations versus foreign repair stations?

    Mr. GARDNER. Yes, sir. There is some ambiguity in the rule as it currently exists. All of our foreign repair station inspectors are experienced inspectors. They don't become that until they have become journeymen, so they have done some work here in the States prior to that.

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    They ensure that foreign repair station meet the equivalent standards. We are in the process, as I mentioned, of issuing a new NPRM that would make that clearer in the regulations, so the regulation is not as ambiguous as it currently is.

    Mr. HUTCHINSON. Am I understanding you correctly that foreign repair stations have to meet the same standards as a domestic repair station?

    Mr. GARDNER. There are a couple of exceptions.

    Mr. HUTCHINSON. That would be the drug testing?

    Mr. GARDNER. That is not part of 145, but that is a difference. And then whether or not the supervisors have a mechanic certificate from the United States. Our inspectors make sure they have the qualifications that are commensurate with that. And then there are some minor differences in the language that we are going to clarify.

    Mr. HUTCHINSON. Does the FAA have adequate resources to conduct the inspections and surveillance at the foreign repair stations?

    Mr. GARDNER. Yes, sir.

    Mr. HUTCHINSON. Would the FAA reduce or put on a conditional status a foreign civil aviation authority's international classification category 1, 2 or 3 if its surveillance of an FRS failed to detect a significant problem?

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    Mr. GARDNER. For clarification, our ICAO program, where we do the classifications 1, 2 and 3, is a separate program from the U.S.-certificated foreign repair station issue. We certify the U.S.-certified foreign repair stations, the issue we are addressing here today. That is as if that were a domestic repair station located geographically overseas. The ICAO program looks at a foreign country's ability to supervise basically how good of an FAA do they have, and that is a separate thing from us going in and certifying a repair station located overseas.

    Mr. HUTCHINSON. One final question. There has been some particular concern about facilities in Tijuana, Mexico, and Costa Rica. Is the FAA aware of any problems associated with any of those FRSs?

    Mr. GARDNER. We inspect those and hold them to the standards. I know the one in Tijuana, we had inspectors go down there at least five times since last October.

    Mr. HUTCHINSON. Was that an announced inspection?

    Mr. GARDNER. We would have had to call their government and tell them we were going there, due to State Department regulations.

    Mr. HUTCHINSON. Do you want authority to have unannounced inspections?

    Mr. GARDNER. That would obviously solve some of the concerns of this committee if we had that.
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    Mr. HUTCHINSON. Can you do an unannounced inspection in the United States?

    Mr. GARDNER. Yes, sir.

    Mr. HUTCHINSON. But you can't do it in foreign countries?

    Mr. GARDNER. Yes, sir.

    Mr. HUTCHINSON. Is that an international law problem or authority from Congress problem?

    Mr. GARDNER. Informing them prior to going into their facilities is a requirement laid on us by the Department of State. The legal aspects of that I am not familiar with.

    Mr. HUTCHINSON. It looks to me like that ought to change. Thank you very much.

    Thank you, Mr. Chairman.

    Mr. DUNCAN. Thank you.

    Ms. Danner.
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    Ms. DANNER. I quite agree with you, that should change.

    First of all, let me be just a little parochial. Peter, right State, wrong city. St. Louis is the hub, Kansas City has the maintenance base.

    Mr. DEFAZIO. My apologies to the gentlewoman.

    Ms. DANNER. No problem. It gives me an opportunity to laud the people who work for TWA's maintenance base in Kansas City. They are acknowledged to be among the best, and they deserve that recognition.

    In looking through the material that the chairman provided us last night, I noticed that in 1988 there were 200 foreign repair stations. Today there are 496, and there are another 113 applications.

    Mr. GARDNER. Yes, ma'am.

    Ms. DANNER. Not only would we assume that they would indeed, as other members of this committee have stated, drain jobs away from our country, but there is an involvement here for the American taxpayer. Do I assume that these foreign countries, or foreign companies, whichever is appropriate, reimburse our government for all of the expenses of the FAA inspections or; not only travel and lodging, but their base salary and their fringe benefits? Are we fully recompensed for every FAA person? Because not only do we have the people that are inspecting these 496 stations running around, but there is a potential of even more. That is a great expense on the American taxpayer.
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    Mr. GARDNER. Yes, ma'am. That is a good question. I failed to articulate that other difference in foreign repair stations. They are required to pay a fee to the FAA for our inspector's time over there. That fee is based on how many hours the inspector works there, and the formula includes not only the inspector's salary, annual salary, but the expenses that the agency has in order to have that inspector on the payroll.

    Ms. DANNER. Plus all travel expenses?

    Mr. GARDNER. Yes, ma'am.

    Ms. DANNER. And lodging expenses?

    Mr. GARDNER. Yes, ma'am.

    Ms. DANNER. So you are telling me it is a zero sum game. The individuals we hire here in the United States to inspect overseas operations cost the American taxpayer zero dollars?

    Mr. GARDNER. It is a complicated formula, and being a math major, I would not want to say it was exactly zero, but we tried to make it zero, yes, ma'am. It is a lot of factors that go into that formula, but the attempt is to make it no cost to the American taxpayer, yes, ma'am.

    Ms. DANNER. I would appreciate it if you would provide me with the schedule of one of your inspectors and how you come about ascertaining the cost.
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    [The information follows:]

    [Insert here.]

    Mr. GARDNER. I would be glad to do that.

    Ms. DANNER. Not only does it take the jobs away from our people, as I say, but it costs at the same time. I would hate to think that I would have a mechanic in my district terminated from his job because it went overseas, and have him go elsewhere and seek a job in some other field, send taxes to Washington so that he can pay to send this FAA inspector to inspect his former job.

    Mr. GARDNER. Yes, ma'am, I share that concern.

    Ms. DANNER. Thank you, Mr. Chairman. That is all I have right now.

    Mr. DUNCAN. Thank you very much.

    Mr. Metcalf.

    Mr. METCALF. Thank you, Mr. Chairman.

    Following up on the question that she just asked, it has been mentioned that a number of foreign repair stations certified by the FAA has grown from 200 to 496. Does this growth reflect a large migration of work from domestic repair stations to FAA-certified foreign repair stations? In other words, do we lose the jobs, or does it result from the growth of the aviation industry?
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    Mr. GARDNER. I believe, sir, it is a growth in the aviation industry. Congressman Oberstar mentioned in his testimony numbers that I did not have about the billions of dollars that have been spent back in 1988 and today. There is tremendous growth is what it is. So I feel certain that no person in the United States lost a job that went over there. There were jobs created over there as well as over here. How that balances out, I don't know.

    Mr. METCALF. Thank you, that is reassuring.

    Something else isn't very reassuring to me. I agree with Congressman DeFazio relative to the concern on the—well, I have lived a lot of years, and I don't believe that a scheduled inspection is anywhere near in the same league with a drop-in inspection. I have to say, do you really feel that a scheduled inspection has validity? I have been around a while, and scheduled inspections, like in the Army or anywhere else, I don't have much confidence in.

    Mr. GARDNER. Again, sir, I have to base my comments on the words I have gotten from my inspectors, who are the experts out there doing the job. They are confident what they are doing assures that high level of safety that we demand in the system.

    I understand your concerns. I have the same, having in my career been subjected to notice and no-notice inspections; I understand your point very well.

    Mr. METCALF. Thank you, Mr. Chairman.

    Mr. DUNCAN. Thank you, Mr. Metcalf.
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    Mrs. Johnson?

    Ms. JOHNSON. Thank you very much. I just have a couple of clarifications.

    The increase in these foreign stations require a number of U.S. inspectors, so it appears the jobs are going on. Are these people trained in this country?

    Mr. GARDNER. Yes, ma'am.

    Ms. JOHNSON. They are American people?

    Mr. GARDNER. Yes, ma'am. Trained and experienced in this country, I might add.

    Ms. JOHNSON. It is requiring more and more people to do this, more and more inspectors because of the increased number of stations?

    Mr. GARDNER. Yes, ma'am. As a matter of fact, as Congresswoman Danner mentioned, there are 113 on our waiting list that we are not certifying because we want to make sure we have the resources before we certify them.

    Ms. JOHNSON. This cost is completely absorbed by the foreign stations?
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    Mr. GARDNER. Yes, ma'am, through a fee system.

    Ms. JOHNSON. And all of the inspections now are pretty much announced ones?

    Mr. GARDNER. In the foreign repair stations, yes, ma'am.

    Ms. JOHNSON. So obviously if they are announced, they probably can spend—are they announced on a regular basis, every how many months or days?

    Mr. GARDNER. No, ma'am. Our inspectors determine the frequency, and when they go based on their schedules and their priorities. They have to actually do an official notification to the country telling them they are going to the station. We actually invite the investigators from that country to join us, which they very frequently do in the inspection. It also allows us to make sure we have got the right English-speaking people present so that we can go down to the deeper level of investigation.

    Ms. JOHNSON. And how long do they have to prepare when you announce? They spend a lot of time, I am sure, getting ready for these inspectors. How much time are you required to give them of your announced visit?

    Mr. GARDNER. That is a good question that I don't have an answer to. I can get that to you.

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    Ms. JOHNSON. It sounds to me like this is an exercise, but I am not sure how effective the exercise is, if they are getting preannounced and you have so many. What is the ratio of increase of the inspectors?

    Mr. GARDNER. Back in 1988, I believe we had eight. I am not sure of that number. At the end of last month, we had 73.

    Ms. JOHNSON. They are responsible for inspecting this 400 and some?

    Mr. GARDNER. Yes, ma'am.

    Ms. JOHNSON. Is that adequate?

    Mr. GARDNER. It is about the same ratio of inspectors we have in the States to the number of repair stations here.

    Ms. JOHNSON. But there are a few other factors in this country that are automatically in place that are not in place over there. It seems to me that if you have more factors going into ensuring that we are up to par on this end by preferably primarily probably unions and employees making sure that they themselves are protected on this side of the water, now on the other side, what kind of help from employees do we get in terms of not necessarily whistle-blowing, but just demanding on-site better work environments and meeting more basic minimum requirements to just be employed, along with negotiating of salary bases and benefits and that sort of thing?
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    Mr. GARDNER. Ma'am, I am not familiar with that kind of employee-supervisor infrastructure in the foreign countries. I am sure it varies from country to country.

    Ms. JOHNSON. There is really no level field type of comparisons.

    Mr. GARDNER. I just don't have that knowledge.

    Ms. JOHNSON. Thank you very much.

    Mr. DUNCAN. Thank you.

    Mr. LaHood.

    Mr. LAHOOD. Mr. Gardner, thank you for being here today. We had an opportunity to meet with the Administrator and the Secretary this morning and appreciate the comments they made about safety and the priority they place on safety.

    Mr. Gardner, I am wondering if you are aware or familiar with an article that was printed in Business Week, June 10, 1996.

    Mr. GARDNER. I am not, sir.

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    Mr. LAHOOD. Mr. Chairman, I am wondering if we could make this article a part of the record.

    Mr. DUNCAN. Yes, we certainly can, without objection.

    Mr. LAHOOD. Mr. Gardner, I want to make it a part of the record, and I hope you will read it.

    Mr. GARDNER. Yes, sir.

    [The information follows:]

    [Insert here.]

    Mr. LAHOOD. So maybe you can't respond to my questions, but the article on the cover says, ''Warning! A typical jet airliner has about 3 million parts—and some may well be fakes. Bogus parts have already caused crashes. Where is the FAA?''

    And the first page of the story highlights what Mr. DeFazio and others have talked about with respect to ValuJet in Atlanta, and talks about a gentleman sitting in an aisle reading a newspaper one minute, and then bailing out of the airplane in the next minute, and finds out that the cause of it was a faulty part which was installed in Turkey, or it was a Turkish part.

    There are a couple of quotes here. One says, I have got bad parts, said airline quality control chief. We have all got them. But who is going to admit it?
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    The other quote I was struck by, I know of people who quit running drugs and switched to aircraft parts because it is more profitable.

    I guess the question is, better than a year now since this article was written, Mr. Gardner, I wonder if the public feel any sense of security about flying airplanes if half of what is in this article is true? I think most of the flying public would absolutely be astonished and alarmed and scared to death to fly on an airplane. But if you haven't had a chance to read it, then I guess perhaps you can't respond.

    My question would be has anything really changed dramatically since this article was written with respect to the use of parts from foreign countries being installed on airplanes that are flown by the American flying public? So I will give you a chance. If you can respond to any of that, fine. If you can't, I would give you the benefit of the doubt.

    Mr. GARDNER. Yes, sir. Let me just make a comment on the suspected unapproved parts issue. I know this subcommittee has had hearings on this before my tenure on the job, and as a result the FAA created an office whose total responsibility is the management and the attack on the SUPs issue that confronts the industry. There were 30 items that came out of that program study, all of which have either been aggressively pursued in the process of being completed or have been completed.

    Any SUPs issues that are reported to us, and if some of those have not been reported to us, I need them reported to us, have all been investigated thoroughly. We are working in cooperation with not only the DOT IG, and our enforcement authority, but the FBI, DOD and other outside law enforcement agencies. Not only are we trying to track them better, but it has we have undertaken a huge education effort, obviously in our inspector work force, and throughout the mechanic industry.
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    Mr. LAHOOD. All right.

    Mr. GARDNER. We do take that problem seriously, sir.

    Mr. LAHOOD. I didn't hear your spoken summary, but I read your testimony while others were questioning you, and it is very clear from what you told Mr. Traficant that you don't—you are not in support of Mr. Borski's bill, and you are well within your right to have disagreements about that. But I guess what I am wondering really is can you assure the flying public today that they should not be concerned about the issue that is trying to be addressed in Mr. Borski's bill, that some of us have cosponsored? Is it your feeling that the flying public does not need to be concerned and does not need to be worried, and that your agency and you and the people that work for you are doing the kind of job that is necessary to assure the flying public that when they step on an airplane, that it is not going to have faulty parts, and there are not going to be parts installed by people that don't know what they are doing?

    So I wonder what your response is to that, since you don't support the legislation. Apparently you feeling that you are doing all that you can, and the people that work for you are doing all they can to assure the flying public that things are pretty safe out there.

    Mr. GARDNER. Let me clarify that I very specifically said I neither support or don't support it from a safety perspective. I believe it is not necessary to maintain the high level of safety that we currently have. I think there are some very big trade and jobs issues associated with the bill that is not the FAA's responsibility. It is clearly defined in the reauthorization bill of 1996.
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    For the American people, I have a very highly dedicated and experienced and professional work force out there 24 hours a day to make sure that we have the safest form of transportation in this world, and they work very hard at their job to do that. But we are never satisfied that it is as safe as it can be. When we find issues that we think we can improve, the industry can improve, we attack those issues.

    Mr. LAHOOD. Do you think that—again, I want to refer to this, because this is an Atlanta podiatrist who was quoted in this article, who was cited as sitting in an aisle reading a newspaper and bailing out of a plane the next minute.

    Is the idea that that could happen again in this country out of the realm of possibility because of faulty parts, because a part was installed in a foreign country that didn't meet the correct standards?

    Mr. GARDNER. Sir, I cannot guarantee zero risk to anybody in this country. I don't even think God guarantees zero risk to us in our lives. But I can guarantee that the risk is very, very low.

    Mr. LAHOOD. Thank you, Mr. Chairman. My time is up.

    Mr. DUNCAN. Thank you, Mr. LaHood.

    Mr. Oberstar.

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    Mr. OBERSTAR. Thank you very much, Mr. Chairman.

    Mr. Gardner, thank you for your presentation this morning and for the splendid work that FAA does day in and day out surveilling maintenance conducted both at home and abroad.

    One of my concerns about this legislation is today, whether an airplane is manufactured at Boeing, Douglas or Airbus, it includes parts manufactured all around the world today. We are in the era of global aviation. If H.R. 145, which represents the Federal Air Regulation 145, were enacted, a part manufactured overseas under this legislation could not be refurbished by the original manufacturer if it required maintenance on a U.S.-registered aircraft. Before 1988, the FAA could issue an exemption to its regulations for warranty work to be done by the original equipment manufacturer located outside the United States.

    There was a growing frequency of requests for such exemptions as aircraft manufacturing took off and exploded, more aircraft were being made, and there were more overseas joint production agreements, so the FAA then undertook to change the rule.

    Now, the FAA has authority to issue exemptions from regulations that it promulgates, but it would not have authority to issue exemptions from legislation enacted unless that legislation were far more liberal than the current form of the bill; is that correct?

    Mr. GARDNER. I hadn't thought of that, sir. I am obviously not a lawyer, but you are right, we did meet some of those needs through exemption, and it is not clear to me whether the legislation allows that exemption or not.
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    Mr. OBERSTAR. It would also include a requirement that the FAA cannot certify foreign repair stations that do not apply the exact standards to its facilities and personnel that the FAA applies to U.S. facilities and personnel.

    But my experience in viewing major maintenance facilities in the U.S., repair stations in the U.S., and manufacturing facilities outside, and foreign airline maintenance facilities and repair facilities, that would be tantamount to saying the foreign governments must waive their laws and apply the FAA regulations to operation of their own internal maintenance facilities and certification of mechanics.

    There was also a suggestion that we ought to have sort of a SWAT team approach to this, just show up on the premises of the foreign repair station and inspect it.

    If Airbus Industries sent, or BAE of England, sent a SWAT team of inspectors into the United States to look at maintenance performed on aircraft or parts in the U.S., there would be such a hue and cry here, we would run them out of the country on a rail.

    So that is a violation of sovereignty. The approach that has been taken with the joint airworthiness authority in which the United States participates with foreign governments, European governments and others around the world, to establish standards that all can adhere to, that represent a high level of safety, that can be held to account, and that accountability can be applied, both in the U.S. and overseas, is a far preferable way to do it. Verification is important, and we ought to continue and have a lot more inspectors to do that.

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    Now, a footnote to Mr. LaHood's comments about enforcement on bogus parts, I just want to say that the Inspector General's Office at DOT has obtained some 85 to 90 convictions resulting in—criminal convictions, resulting in substantial amounts of fines, and that ought to be a comfort to the public as well as FAA's increased surveillance.

    In the aftermath of ValuJet, FAA substantially tightened its maintenance standards and requirements, with a particular view or focus on outsourced facilities. Quality control rules require periodic self-evaluations by the repair station and oversight by FAA; contract maintenance requires repair stations to perform initial evaluation and periodic performance of FAA-certificated and noncertificated subcontractors. Higher standard of training, more supervisors and inspectors, improved repair station manuals, ratings of their computer systems that maintain control internally, and expanding the number of classes of standards for A and P certification.

    Now, are those new standards and new regulations being applied to foreign repair stations, and have there been joint discussions with foreign governments about upgrading standards to meet the post-ValuJet standard?

    Mr. GARDNER. Yes, sir. Those standards apply wherever the airline subcontracts its maintenance, foreign or domestic, and we have a very extensive, as you are aware, effort with the joint aviation authorities of Europe and other nations to increase the levels of safety worldwide.

    Mr. OBERSTAR. That is very encouraging, and I commend you for doing that.
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    In the conduct of surveillance of maintenance facilities in the U.S., FAA looks at the fitness of the facility. Is it large enough to handle the aircraft? Is it clean? Is it orderly? Can you virtually eat off the floor, as you have to be able to do in U.S. facilities? How clean is the break room? If that is in bad shape, it reflects badly on the facility.

    I worry about what quality of work is being performed. What is in the tool crib. Do they have adequate tools? Do they have proper tools, hardware, parts, lubricants, sealants? What about the bookkeeping? Are you able to track the paper trail for parts to be sure they are not being—that there aren't hangars from which parts are being robbed to be applied to operating aircraft?

    Are those the kind of procedures that our inspectors take when they are looking at foreign repair stations?

    Mr. GARDNER. When they go into a repair station, they know those kinds of things to look for and can make these subjective as well as specific evaluations of the goodness of the repair station.

    Mr. OBERSTAR. My concern in this arena is not so much movement of whole aircraft overseas for maintenance as it is for parts. Boeing is now looking for 5,000 mechanics to meet their manufacturing requirements. Domestic airlines are trying desperately to hire more mechanics. There is a hump coming in the next couple of years where there is going to be a major retirement of A and P, FAA-certified mechanics, and replacing them is going to be very difficult. Our facilities are not training enough people to fill the gap.
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    The concern that I have is as outsourcing grows in the U.S., those secondary facilities are in turn contracting overseas. I saw a recent report, the fans were shipped out from Northwest to a subcontractor, which in turn shipped them to Singapore to be repaired, and then they came back to the U.S.

    Did you have a paper trail? Do you follow that paper trail? Are you looking at the facility overseas where those parts are being maintained?

    Mr. GARDNER. Yes, sir, we oversee the paper trail. We obviously don't manage the paper trail ourselves, but it is a requirement they have a paper trail for these parts.

    Mr. OBERSTAR. The red light is on. The bells have rung for a vote.

    Can you verify that work on foreign aircraft and parts in the U.S. accounted for 38 percent of business performed at U.S.-based repair stations?

    Mr. GARDNER. I am not familiar with that number, sir.

    Mr. OBERSTAR. You don't have that number. Well, the information that I have dug up indicates that for every dollar of work performed on a U.S.-registered aircraft overseas, there is $3.50 worth of work performed in the U.S. I think the balance of payments is in our favor.
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    I am concerned about the safety as much as the jobs impacted. I don't want to lose domestic jobs as a result of legislation that we might enact here with all good intentions. I just want to be sure that we keep our eye on the ball here.

    Thank you.

    Mr. BORSKI. Mr. Chairman, just for one second, if I may, just to clarify something, an earlier line of questioning with Mr. Oberstar and Mr. Gardner about the exception and whether or not the exception that existed pre-1988 would be available at post-1988. Let me assure both of you it would be. It is our intention, I think the legislation says that, and it is the intention that the exception would still be valid.

    Thank you very much.

    Mr. DUNCAN. Well, let me apologize to all of the witnesses, especially those on the second panel, but we do have a series of three votes at this time, and so it is going to be—that would be fine with me, but I just told Mr. DeFazio we are going to bring Mr. Gardner back. I had hoped we could submit any other questions to Mr. Gardner in writing so he can go, but Mr. Lipinski first said he wanted to ask some questions, so Mr. DeFazio came up to me, and I said, yes, we are bringing him back. So if you could remain for a few more minutes, then we will hopefully let you go very soon after we start back so we can get to the next panel. We will be in recess at this time for these votes.

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    Mr. DUNCAN. We will go ahead and proceed once again with the hearing. I apologize to the witnesses for the length of time it took to do those votes. The second vote instead of being a 5-minute vote was another 15-minute vote, so it took us much longer than we thought.

    I go now to Mr. Lipinski.

    Mr. LIPINSKI. Thank you, Mr. Chairman. Mr. Gardner, it is always a pleasure to see you.

    Mr. GARDNER. Yes, sir.

    Mr. LIPINSKI. Earlier you were talking, I think it was to Mr. DeFazio, it may have been Mr. Oberstar also, talking about the number of inspections that are made at foreign repair stations. I am a little confused. There was a figure of 1,600 over a 4-year period, but there was also a figure of 2,600 in 1996. Could you clarify that for me?

    Mr. GARDNER. Yes, sir. Thank you for bringing that up because I wanted to correct what I said. I spent a lot of time getting ready for this hearing trying to get numbers that were apples-to-apples numbers, and I am afraid I came up with some apples-to-oranges numbers. I am going to have to supply later for the record the accuracy of that.

    The 2,600 number was not the number of inspections as was presented to me. It was the number of the type of report that inspectors put in, and there could be several of those per inspection. I need to go back and clarify those numbers, get some apples-to-apples numbers for this subcommittee and supply that for the record if I could.
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    [The information follows:]

    [Insert here.]

    Mr. LIPINSKI. I think everyone on the committee would be very much interested in finding out exactly how many inspections by the FAA there are of foreign repair stations. Do we have any figures at the FAA telling us how many American carrier planes are repaired at foreign air stations and how many foreign air carrier planes are repaired at American repair stations?

    Mr. GARDNER. I don't have those numbers right now, sir. We can try to dig those out again for the record.

    Mr. LIPINSKI. You say you will try to dig them out. Does that information exist at the FAA, do you know?

    Mr. GARDNER. I mentioned earlier the report that the Secretary asked us to put together for him, I believe at Congressman Oberstar's request. Gellman is the company doing that trying to dig those numbers out. It has been difficult, which is why it has taken them so long to get the report. I am hoping that report will shed some light on that kind of information.

    Mr. LIPINSKI. Also would this report or could this report tell us—I will take Delta, for instance, because they certainly seem to do most of their own maintenance work. Would that report be able to tell us how much Delta has done at a foreign repair station, how much American, how much United, Continental, right on down the line; would that be feasible to get that information?
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    Mr. GARDNER. I don't know. I will have to check on that, sir. Breaking it up by carrier, you mean?

    Mr. LIPINSKI. Yes, by carrier.

    Mr. GARDNER. I don't know. I will have to check on that information.

    Mr. LIPINSKI. It would also be interesting, I believe, to see how much each carrier does in-house; not only American carriers, but the foreign carriers that fly into the United States, how much maintenance they do in-house. It would be interesting to see, too, how much maintenance some American carriers might do for foreign carriers. I would like to see that entire breakdown, because I don't really think—some of the issues that have been discussed here this morning, I don't really know if we can make a concrete decision on them until we have a lot of this information that you and I are talking about at the present time.

    I think it is also important—I have been to Iberia's repair station. I have been to British Airways repair station. Mr. Oberstar mentioned that you have to be able to eat off the floor at repair stations for the FAA to approve them. Certainly at those two you would have no trouble eating off the floor. I seriously question if there would be any problems at those type of facilities.

    By the same token, I would like to see a breakdown on how much repair work of American carriers are done at an Iberia, a British Airways, and how much are done at XYZ repair station, where I think very possibly we could have some kind of problems. I would like to have all that information. I am sure the other Members of the committee would like to have it also. I don't really think we can make an informed, intelligent decision—I support this piece of legislation. I think this piece of legislation may need to be narrowed in some areas, may need to be more specific in some areas before we could actually pass it, but I think this type of information is information we need. So I would appreciate you trying to get that for us, and if you can't, let us know. Perhaps there are some other sources we could use to get that type of information.
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    [The information follows:]

    [Insert here.]

    Mr. LIPINSKI. Mr. Chairman, I thank you.

    Mr. DUNCAN. Thank you very much.

    Ms. Danner, I believe, has another question.

    Ms. DANNER. Thank you, Mr. Chairman. Between two committees, floor action, now three luncheons, today is not long enough, but we will try to maintain a little bit of continuity.

    I am back to the issue of prior notice. You said that in your past life, you have been subjected to both prior notice and no notice at all. Is it fair to assume that preparations were made when prior notice was given?

    Mr. GARDNER. Thank you. I would like to clarify that, because in terms of the systems involved, the capabilities of the people involved, these are not things you can fix because you have a day's or 2 days' notice if somebody is coming by. That is really a lot of what we inspect, not just repair stations, but any aviation operation, is to make sure that it is has the right people and the right systems to make the safety standards work.

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    Ms. DANNER. When you say right people, I am going to guess that these foreign repair stations get more than 1 or 2 days' notice. I am going to guess that they get a substantial amount of lead time that there is an inspector coming.

    Mr. GARDNER. Actually the lead time only has to be to get the clearance to get into the country; i.e., getting your airplane ticket and approval to fly in there. In the cases where we have inspectors in that country, for instance, the United Kingdom is an example, the notification could be that morning that I am coming by this afternoon.

    Ms. DANNER. Let's take a country where you do not have people stationed permanently. How much notice would they have?

    Mr. GARDNER. I don't know exactly, but the inspector has to get permission from our State Department to travel to that country, and part of that process is where they notify the country that they are coming. I will have to get that information for the record for you.

    Ms. DANNER. I would appreciate that.

    Mr. GARDNER. Yes, ma'am.

    Ms. DANNER. I truly would appreciate getting the information, Mr. Gardner. Sometimes I ask for things, and I have to ask again and again again, and we don't want to have to do that often, do we?

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    Mr. GARDNER. Yes, ma'am.

    [The information follows:]

    [Insert here.]

    Ms. DANNER. One last inquiry, if you will indulge me, Mr. Chairman. What about these many countries and companies we are serving who oftentimes default on their payments? Do we continue to inspect them? Is every country and every company up to date on their current payments to us for our FAA inspectors?

    Mr. GARDNER. I don't know. Currently they are. But we will nonrenew their certificate. One of the causes for nonrenewal is lack of meeting the payments. I don't know the current status of that.

    Ms. DANNER. Would that be failure to meet it one time?

    Mr. GARDNER. I don't know that specifically, ma'am.

    Ms. DANNER. Who knows that? Does someone who is with you know the answer to that question?

    Mr. GARDNER. I don't believe so.

    Ms. DANNER. I really wish you would get that information to me.
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    Mr. GARDNER. Yes, ma'am.

    Ms. DANNER. Because my information is that there is one country in South America that has failed to meet their payments three times, and for us to continue to send personnel to these countries that don't meet their obligations is, I think, unconscionable.

    Mr. GARDNER. I agree with you. If I could, I would like to get that information specifically later from you that I can certainly address your specific questions, and we will also address the general question.

    [The information follows:]

    A certificate will not be renewed unless all fees have been paid; there are no exceptions to this policy. Failure to make the first renewal payment, therefore, always results in nonrenewal by default.

    Ms. DANNER. Because I believe that it is incumbent upon you through rules and regulations, and if not that, we can do it by law, to ascertain that these countries are keeping current. For us to ship jobs overseas and then go over there and inspect them at our expense is double jeopardy for our people. Thank you very much.

    Mr. DUNCAN. Thank you very much.

    We need to go ahead and get to the second panel. Do you want to ask any more questions? Go right ahead.
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    Mr. BORSKI. Thank you very much for your courtesy, Mr. Chairman.

    Mr. Gardner, earlier in our discussions we talked about the FAA inspectors. I suggested that some of them have contacted our office to talk about some of their concerns they have. You said that you certainly listen intently to those inspectors as well.

    Mr. GARDNER. Yes, sir.

    Mr. BORSKI. It is my understanding that the union representing the inspectors are in strong support of this bill. Why would you think they would be in support of this?

    Mr. GARDNER. I don't know, sir. I wasn't even aware of that.

    Mr. BORSKI. Let me mention one other thing if I can, Mr. Chairman. I received a letter today from United Airlines expressing their support for this legislation. I would ask unanimous consent that that be made part of the record. I also understand American Airlines has also expressed strong support for this as well. Without belaboring the point, I am just curious if you would have a retort to why United and American and the unions representing the FAA inspectors would all think this is a good idea?

    Thank you.

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    Mr. GARDNER. That would certainly be inappropriate for me to even guess.

    Mr. BORSKI. Thank you very much, and I appreciate it, Mr. Chairman.

    Mr. DUNCAN. We will make that letter a part of the record.

    [The information follows:]

    [Insert here.]

    Mr. DUNCAN. Mr. Gardner, I will just thank you. I can say one thing, there is certainly unity about the desire on the part of Members to try to establish some sort of way to have unannounced inspections. I think there is plenty of agreement about that.

    I will say I was impressed with the repair stations we visited. I have this picture in my mind of these repair stations being little, tiny places, for some reason, and we go into these huge hangars. They were gigantic operations.

    There may be some question about whether we are approving too many of these foreign repair stations too fast. I certainly share everybody's opinion that we don't want to ship American jobs overseas, but maybe this is legislation that we can work on and sort of have a meeting of the minds about and get everybody together on, and that is what we will try to do in some way.
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    Thank you very much for being with us at this time. You always do an outstanding job representing the FAA here at our committee. Thank you very much.

    We will call the second panel forward at this time.

    Mr. BLUNT. [presiding.] Let's go ahead and welcome our second panel. The second panel includes Mr. Sonny Hall, International President of the Transport Workers of America, associated with the AFL-CIO; Robert Robeson, Vice President, Civil Aviation, Aerospace Industries Association; Thomas Buffenbarger, International President, International Association of Machinists and Aerospace Workers; Walter Coleman, President, Regional Airline Association; Edward Wytkind, Executive Director, Transportation Trades Department, AFL-CIO; and Bernard Rookey, President, Texas Pneumatic Systems, Inc.

    We are glad you are here. We want to move this hearing along because this really obviously is an important topic, and we want to get all this information on the record. Members will be going back and forth with things here around lunch. We will continue to move the hearing. We have your written testimony, and within the 5-minute limit you can either read as much of that as you want to or try to summarize it. I will just leave that up to you. Mr. BLUNT. Mr. Hall, we will start with you. Glad you are here today.

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    Mr. HALL. Thank you, Mr. Chairman. If I could, outside of the statement I have is to inform you that, we also have a letter from Mr. Crandell, Chairman American Airlines stating his support of H.R. 145, and if the committee would like, we would submit our copy of their letter also.

    Good morning, Mr. Chairman. I want to express our appreciation for your invitation to my union to appear at this hearing today. Our union, TWU, represents some 50,000 airline employees, more than 15,000 of whom are responsible for aviation maintenance. I would request that my written statement be placed in the record.

    I will be sharing my oral statement with my coworker and friend Marion Finley to my left during our brief oral presentation. Marion is a licensed airframe and power plant mechanic and inspector of some 35-year standing at American Airlines maintenance and engineering facility in Tulsa, Oklahoma, as well as the President of the local covering this large base.

    Marion is accompanied by Mike Martin, secretary-treasurer of local 567 covering American's second overhaul base at Alliance, Texas; and Art Luby, our air transport division counsel, behind me.

    Before deferring to Marion, let me state clearly that in supporting this bill, TWU is not seeking to block access to foreign stations to carriers operating overseas so they can obtain needed safety repairs. Nor are we seeking to prevent U.S. carriers from securing normal product support from foreign manufacturers. Any regulatory agency, however, should seek to create a safe and level playing field for the operations and the people overseas. To its credit, the administration has sought a single standard of safety. The changes made to part 145 in 1988 and the way they have been implemented truly have been an exception to this principle of safety.
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    Mr. HALL. Let me now introduce airline mechanic Marion Finley.

    Mr. FINLEY. Good morning, Mr. Chairman. Transport Workers Union Local 514 represents 7,000 men and women, some 5,000 of whom are responsible for heavy maintenance of American Airlines fleet of aircraft as well as the component parts of these aircraft. This work includes light and heavy seat checks as well as engine teardown and buildup. In our facility we also perform a substantial amount of overhaul maintenance for various domestic carriers on a contract basis. Mike Martin's base at AFW also performs the same sort of overhaul work, including work for outside carriers.

    I think that it is important that the committee have a clear understanding of the level of scrutiny my members work under. American has 29 FAA inspectors assigned full time to surveillance of its maintenance operation. At least five of these inspectors are assigned full-time to just Tulsa. They are auditing logbooks and work cards every day.

    All of my members working in shops or online know that an inspector could show up unannounced at any time, looking over their shoulder while they are accomplishing their work. And inspectors have the run of the plant, and there is noplace they don't go. My member also knows that if an inspector sees something he doesn't like, and here we are talking about discrepancies that can be as minute as an incomplete reference to a section of the maintenance manual and a signoff, he or she will receive a letter of inquiry from the FAA. If the FAA is not satisfied with the response, the member is subject to license suspension, revocation or civil penalty. I can assure you the agency's legal staff also proposes such penalties.

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    I am not here to complain about this level of scrutiny. There are certain cases where I have strongly disputed the FAA's treatment of one of my members or the interpretation of a manual. But I respect the inspectors we deal with, and I believe they also respect the role of the union in representing its members and conveying the FAA's message of doing the work by the book. On the other hand, I well know that this type of oversight and accountability does not exist in a vast majority of the foreign repair stations.

    I testified at a 1989 hearing on this issue. I was deeply concerned about the new rule and spoke strongly against it. I was not persuaded by the FAA's assurance, but never in my worst nightmare did it occur to me that in less than 8 years we would more than double the number of foreign repair bases. It also didn't occur to me that these stations would enjoy an external exemption from U.S. drug and alcohol testing as well as other safety standards. I don't think anyone present that day ever imagined such a situation.

    Our members have come to accept the random drug and alcohol testing regulation, though these requirements are obviously still a major source of fear and uncertainty. We have had few positive tests, but I have unfortunately seen the careers of several young people destroyed due to positive tests, and now a mechanic caught drinking on the job, no matter how small the amount, is barred from performing aircraft maintenance for life.

    Again, I am not here protesting drug or alcohol testing, but I do protest having to compete with foreign facilities for work when those stations can avoid the cost and inconvenience of these rules. I also protest the message being sent to U.S. employees that somehow drug and alcohol testing is necessary for our people but not for foreign competitors.

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    I have stated, I respect the FAA and the inspectors we deal with, but the FAA has to have credibility with our mechanics if it is going to do its job. Unfortunately, we now have a two-tiered system for aircraft maintenance in which domestic facilities like mine are subject to one standard of oversight and behavior, but must compete against a whole network of foreign stations subject to a completely different type of oversight. I don't think that senior leadership of the FAA has ever understood how badly this has undermined the Agency's credibility with U.S. maintenance workforce. I believe, though, if you polled the inspectors with the day-to-day responsibility for surveillance of our system, you could get an idea of the adverse impact on this double standard.

    I am not an expert on trade or foreign affairs. I am just an Okie mechanic, but I know a double standard when I see one, and I know what is meant to have an inspector looking over my shoulder on a daily basis. I think H.R. 145 is a fair and limited way of dealing with my concerns, and I hope you pass it.

    Mr. BLUNT. Thank you Mr. Hall. Thank you Mr. Finley.

    Mr. Robeson.

    Mr. ROBESON. Thank you, Mr. Chairman. We welcome the opportunity to appear before the committee on behalf of the Nation's manufacturers of transport aircraft, helicopters, engines, et cetera.

    Mr. Chairman, since the regulations became effective in 1988, on four separate occasions legislation has been introduced to examine the FAA decision to certify foreign repair stations. In each prior instance, after much debate on the issues of safety and jobs, little evidence was presented supporting the need for the elimination of this class of repair station, and Congress wisely elected not to proceed on the basis of unsubstantiated proposals.
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    In our view, H.R. 145 will not improve aviation safety. The FAA has always required that all work performed on U.S.-registered aircraft be accomplished in accordance with FAA-approved maintenance operation specifications. Foreign repair stations, certificated by the FAA and operating in accordance with FAA requirements and surveillance, have been providing safe and proper maintenance and alterations on U.S.-registered aircraft and their components for many years. Through their respective oversight procedures, the FAA and industry intend that safe maintenance practices will continue, and safety will not be adversely affected by the continuing application of the current regulations.

    When the FAA issues a foreign repair station a certificate, a finding must be made that the holder is competent to perform safely the repair for which it is rated. The FAA reviews the application, analyzes the station's proposed inspection procedures, the quality control system, including proper documentation, et cetera.

    The certification process for repair stations is thus substantially the same as the process the FAA uses for domestic repair stations, whether they are independent or affiliated with an OEM, and involves substantially the same standards.

    We do, however, believe that H.R. 145 would adversely affect U.S. employment. Our members are greatly concerned regarding the impact of this legislation on their business strategies. If U.S. operators are denied the option of using foreign repair stations, foreign aviation authorities and possibly the European Union might retaliate by restricting the ability of U.S.-based repair stations to work on foreign registered aircraft.

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    I might note here for the record that currently there are some 1,000 U.S. stations which are operating under JAA approvals at this point. Those approvals were put in place, under the JAR 145, since the revision of FAR 145 in 1988.

    We believe that those approvals would be at risk through retaliation. Thus, we believe that the real threat to the aerospace industry employment would be the establishment of trade barriers that could result in foreign retaliation affecting not only domestic repair station work, but overall U.S. aerospace sourcing of spares, equipment and resources necessary to support the manufacturing process.

    In the total marketing scheme, the sale of equipment is accompanied by warranties and a commitment by OEMs to support their products. Any restriction that would create a barrier to the normal business process, such as the reversal of the 1988 amendment to 145, would encourage foreign sourcing that could ultimately result in net loss of employment in the U.S. in both the repair and the manufacturing sectors.

    Let me skip over to our view of our international trade obligations, and I will note that I spent 10 years on that side of the business. We believe that the proposed restrictions on part 145 would contravene U.S. international agreements, including the 1979 GATT Agreement on Trade and Civil Aircraft, the Agreement on Technical Barriers to Trade, and the Agreement on Trade and Services.

    We do not believe that Congress should pass legislation that would require the FAA to breach international trade obligations of the United States and expose the U.S. industry to retaliation by our trading partners. Our conclusion is that there is a continuing outstanding safety record, that there are international trade considerations, including a favorable balance of trade in aircraft manufacture, product support and maintenance, and that these provide a sound basis for retention of current 145 provisions. A reversal of 145 could invite retaliation by our trading partners, would encourage foreign sourcing of equipment and parts, and could result in a net loss in employment in both manufacturing and maintenance.
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    I might also note that yesterday the Financial Times of London carried an article in which the European Airline Association has approached the European Union Commission and requested that they submit a demarche to the United States Government on this subject.

    Thank you, Mr. Chairman.

    Mr. BLUNT. Thank you.

    Mr. Buffenbarger.

    Mr. BUFFENBARGER. Thank you, Mr. Chairman. My name is R. Thomas Buffenbarger. I am the International President of the International Association of Machinists and Aerospace Workers. The machinists union represents 120,000 employees in the aviation industry. In addition, we represent 100,000 employees in the aerospace industry who manufacture airframes, jet engines and component parts. As a trade union, we are constantly focused on the economic security and opportunities for our members and their families.

    This is not the only reason I appear before you today. The manufacture and maintenance of safe aircraft has always been a high priority for this organization. We have a record of working closely with the FAA, the National Transportation Safety Board, and, of course, our employers, the carriers. We all have one common goal in mind, to constantly improve on safety practices.

    The IAM supports H.R. 145 because we believe that this legislation will place our members in the global arena on equal footing with their competition. We are joined in this position by our largest employer and carrier, United Airlines. This legislation drives up the standards of safety requirements that our members work within today for foreign-based repair stations.
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    There are some who will point their finger at our organization and others in this room who will attempt to accuse us of protectionism. This is false. We have contributed to the growth in safety of this industry since its inception. Our experience is deep. Out of 162,000 airline mechanics in this country, 81,000 were trained by our own Armed Forces. We are veterans of this country and veterans of this industry. I will place any one of our licensed airframe and power plant mechanics' diligence and job performance against anyone around the world.

    I am accompanied here today by William Scheri, General Vice President of our Transportation Department, and a member and a licensed mechanic Wayne Gallimore from San Francisco, California, an employee of United Airlines. He is here to respond to any specific questions you may have.

    The global environment is no stranger to the IAM. We are not afraid to compete. As we look into the future, even conservative estimates show us that the airline industry and the number of airplanes in the sky around the world will continue to grow. The economically stable airlines will continue to purchase new planes, and eventually the old planes will be purchased by start-up carriers.

    Potentially this creates three problems. First, the small carriers are more apt to move to low-cost maintenance facilities where the same standards of excellence do not exist.

    Second, the problem of replacement parts used in the repair of airframes and jet engines are being counterfeited and not certified. This bill discourages the use of those parts by revoking certifications of violators.
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    Third, there are more inspectors than in 1988, but in comparison to the growth and aging of the fleets, the certification and inspection process must be enhanced.

    In conclusion, I ask for your support on behalf of our members and their families and will respond to any questions that you may have at this time. I would also request that my written statement be accepted into the record.

    Mr. BLUNT. Thank you, Mr. Buffenbarger.

    Mr. Coleman.

    Mr. COLEMAN. Thank you, Mr. Chairman. I am Walter Coleman, President of the Regional Airline Association. The Regional Airline Association appreciates the opportunity to appear before this committee today to express our views on this issue.

    We have an excellent commercial aviation system in the United States. An important element of this system has been and continues to be the availability of quality aircraft and aircraft components that are manufactured outside the United States. Many of these aircraft and aircraft systems may have their primary maintenance performed by the original equipment manufacturer overseas or by other maintenance and repair specialists located outside the U.S. This is of crucial importance to the U.S. regional airlines.

    A large majority of the passenger service provided by regional airlines in the United States is flown on aircraft manufactured outside of the U.S. Among the 2,127 regional aircraft in the passenger fleet, 62 percent are manufactured outside the U.S. All of the aircraft operated by regional airlines with 20 seats or more are manufactured outside the United States. U.S. regional airlines do not have the option to acquire U.S.-manufactured aircraft in the growing 20- to 50-passenger-seat category.
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    I would add that the average age of the U.S. regional fleet is 7 years.

    Few U.S. regional airlines have airline fleets which are of total domestic origin. Many U.S. regional carriers have aircraft or components that may require periodic repairs or inspection performed by FAA-certificated overseas repair stations. These may be the preferred site to send this equipment because they either were the original manufacturers of the equipment or are experts in performing the required inspections or repairs because the product was manufactured overseas.

    The expertise and competence that exists with foreign repair stations does not suggest that the hundreds of certificated repair stations in the U.S. are not capable of performing equally competent work. However, for many operators of foreign-manufactured aircraft, the option that may best benefit the airline and the communities the airlines serve is to have the repairs and modifications performed at foreign repair stations.

    I would like to comment on the communities served by regional airlines. They, too, are a crucial ingredient to this discussion. There are 743 communities in the U.S. which receive scheduled airline service. In the 48 contiguous States, 481 communities have scheduled airline service. And within that 481, 296 are served exclusively by regional airlines. This means that within the 48 contiguous States, three-fifths of the communities are dependent on regional airlines for their scheduled airline service. Since many of the airlines serving these communities operate aircraft built outside the United States, the continued access to overseas repair stations for component inspection or repair is desirable in order to maintain the scheduled service.
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    I would like to comment on safety. The Regional Airline Association is not aware of any reduction in safety under FAR part 145 as it applies to foreign repair stations. We have had no indications from our members of safety concerns raised as a result of repairs or modifications performed by foreign repair stations. FAA-certificated repair stations, foreign and domestic, know they must maintain the standards required under the FARs in order to maintain their certificate and to maintain their business as a certificated repair station.

    This committee often examines safety issues, and we in the industry have frequently worked with the committee in examining information to address identifiable safety concerns and determine an appropriate course of action. We have not been advised of any safety information that the committee has that would raise safety concerns with the work performed by foreign repair stations.

    A final comment on the global aspects of aviation. Few industries exemplify multinational characteristics as thoroughly as commercial aviation. Several countries usually participate in the construction of aircraft, contributing airframes or portions of airframes, power plants, avionics and other components. The sharing of the manufacturing tasks benefits the participating nations and their economies and benefits aviation by creating and maintaining worldwide aviation component expertise.

    Limitations on or removal of FAA certification of foreign repair stations would be in conflict with the legitimate and appropriate multinational aspects of commercial aviation. Thank you.

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    Mr. BLUNT. Thank you, Mr. Coleman.

    Mr. Wytkind.

    Mr. WYTKIND. Thank you, Mr. Chairman. I want to thank Chairman Duncan for holding this hearing. I also want to thank Representative Lipinski for his support of this legislation and, of course, the leadership of Congressman Borski, who has led the fight to try to bring some sensibility to FAA regulations.

    I am Ed Wytkind, I am the Executive Director of the Transportation Trades Department, AFL–CIO. Our organization doesn't simply represent aviation unions. We have membership across all the modes of transportation.

    Our interest on this goes well beyond the interest of airline mechanics and overall aviation labor concerns. This issue and this legislation relates to a larger question about why working families, both union and nonunion, across America have to continue to cope with government policies that allow globalization to become a tool to erode public and worker safety, and to erode jobs and the security of those jobs.

    Fortunately the issue has taken hold in Congress with over 150 sponsors of H.R. 145, including a majority of this full committee as well as, the nation's second largest carrier, American, and then, as you heard earlier today, United Airlines. The two largest carriers now support this legislation.

    It has long been our position that FAR 145 regulations as amended in 1988 should be changed because they allow unnecessary and possibly substandard foreign stations to get FAA approval. These amended regulations are an open invitation to foreign stations to lure lucrative business from U.S. carriers.
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    Before the changes took effect, a rational basis was used to determine whether a foreign station could receive the FAA's seal of approval. First and foremost, did that foreign station demonstrate a legitimate need, other than we want to tap into the U.S. repair marketplace, to service aircraft engaged in international travel. This allowed enough stations to be certified around the world that were essential to support international aviation. But significantly, it properly limited the foreign stations to deal with FAA resource issues that we have heard about at this hearing today and to ensure that, to the extent possible, U.S.-registered aircraft was being maintained and overhauled by the well trained and highly skilled United States.

    That regime worked well. It always worked well. But today a foreign station can get certified even if there is little or no international travel expected of that city or country.

    For example, we have aircraft flying between Washington D.C. and Chicago, and it can find its way down to Mexico or Costa Rica, or it could find its way to Turkey, which has already been the subject of discussion earlier today with the ValuJet incident to get maintenance work done.

    The results of the 1988 regulatory changes were predictable, and to this day we know—we see what we said would happen back then actually happening. The number of foreign stations has more than doubled, even though a lot of those stations, a large substantial number of them at least, are in places where an overburdened FAA simply can't get to those facilities to do their job, and they are not in locations where we see a lot of international commerce flowing to those countries.
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    Meanwhile, we have this double standard, where U.S. mechanics and all transportation workers continue to face a battery of drug and alcohol testing requirements as well as a number of other safety mandates as a condition of their employment. However, the foreign mechanics performing the exact same kind of work do not need to meet the same standards. We heard earlier from the FAA that this somehow has something to do with sovereignty of other nations. The fact is that we are not trying to attack other nation's sovereignty. We are saying that if you want the FAA seal of approval, you will meet our standards. No one is imposing regulations, but we do want all stations to meet the standards that are required for FAA approval.

    The whole notion that the FAA can handle its workload really isn't supported by the facts. The fact is that there are 470 foreign facilities that have been discussed, actually I heard earlier it was 496, so the figure has grown since we wrote this testimony. The union that represent inspectors, which are the inspectors that the FAA itself says it defers to for expertise, has strongly endorsed this legislation. Yet the FAA continues to speak about the fact that the current regulations work well and shouldn't be changed.

    The fact is that most foreign stations only receive a visit from a U.S. inspector once a year. This is supported by a letter that I received from the FAA that essentially quantified what we said all along. Out of all the inspections performed, it came out to one per facility per year. So the figures that have been thrown around, they are supported in a letter dated October 8, 1997, and it says very clearly, based on the empirical evidence, and I might note, everything seems to be perfect, not one instance of revocation, which means that they are not getting there to do it. You can't revoke licenses if you don't physically show up at the facility to find the violations. That is really the biggest problem that has been identified today.
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    The last point I would just raise is that if the inspectors are going to show up once a year, we basically have a white glove system where they are going to make sure the facility looks right, feels right and passes inspection. That is not the kind of retail policy we should be supporting in Congress. They should show up; they should do their job. It seems kind of funny that United, and American, which supports this bill, the leaders in aviation maintenance practices worldwide, literally have inspectors living on their properties. And meanwhile, these facilities like Quepos in Costa Rica and other places around the world have no inspections, and if they do, it is luckily once a year at the most.

    I would conclude. I will be happy to answer your questions. Along with the aviation unions and specifically the mechanics unions, we have been in the forefront working on this issue for years and we are happy to be here to have a chance to testify on H.R. 145, and we will be happy to answer any questions you may have.

    Mr. BLUNT. Thank you, Mr. Wytkind.

    Mr. Rookey.

    Mr. ROOKEY. Good morning. My name is Bernie Rookey, President of Texas Pneumatic Systems, based in Arlington, Texas. I also serve on the board of directors and am a founding member of the Aeronautical Repair Station Association. I appreciate the opportunity to testify in strong opposition to H.R. 145, which should be called the H.R. Jobs Act of 1997.

    My testimony reflects my own views and those of a majority of ARSA members. ARSA is dedicated to fostering regulatory compliance through education and training. We have worked with—ARSA is also a strong supporter of the highly successful part 145 maintenance harmonization process undertaken by the U.S., the 23 European nations that comprise the JAA and other countries. This effort will produce substantially similar maintenance regulations throughout the world. The JAA effort has resulted already in the certification of over 1,000 repair stations in the U.S. that are now authorized to perform maintenance on foreign registered aircraft and components.
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    I am happy to report that TPS has grown from three employees when we started in November 1994 to over 50 today. Our annual revenues are approaching $10 million.

    I realize that H.R. 145 is strongly supported by organized labor. I don't know what percentage of aviation mechanics are represented by unions, but they do not speak for me, my employees or the vast majority of maintenance workers employed by smaller repair stations across America, many of whom are ARSA members.

    Mr. Chairman, most of the repair stations in the U.S. are small, nonunionized shops like TPS that specialize in the repair of components. Obviously there are only so many type certificated aircraft engines and propellers in service today, but there are literally millions of parts in transport category aircraft, and all of them must be maintained in accordance with FAR 43 and 145. Additionally those aircraft which are type certificated in the U.S. but registered elsewhere will in many cases be maintained in accordance with U.S. Standards. This is because the ability to register an aircraft in the U.S. is an important economic incentive for aircraft owners.

    The subcommittee has heard from several witnesses today about the safety and economic impact of H.R. 145. Let me provide you with my perspective.

    The safety issue is a clever ruse. Certainly we can all appreciate the surface appeal of that argument, but in my opinion, it just doesn't hold water. As the FAA has indicated, the vast majority of rules which apply to domestic repair stations also apply to foreign repair stations. This includes the requirement for adequate housing facilities, equipment and personnel; the critical performance rules in FAR 43; the need to use approved data for repairs and alterations; the approval for return to service requirements; and the IPM or Inspection Procedures Manual. While there are some differences in the repair station rules, notably the absence of drug and alcohol testing, which is only a part 121 rule and not a 145 rule, and the use of noncertificated personnel not certificated by the FAA, it is important to put these issues into perspective.
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    First, the reason that drug and alcohol testing is not required at foreign repair stations is because the laws of many countries do not permit it. Additionally, drug and alcohol testing is not conducted in the U.S. for any employee of an FAA production approval holder or for repair station employees not performing work for an air carrier.

    Second, while it is true that the foreign repair station employees are not generally certificated by the FAA, under FAR 145 the only employee who must be certificated in a domestic repair station is the one directly in charge of maintenance. Many supervisors and inspectors who approve items for return to service in the United States do possess an FAA mechanic or repairman's certificate, but this is not a requirement.

    Finally, it is important to note that the countries in which foreign repair stations are located are members of the ICAO and as such are required to follow ICAO rules or their equivalent. In some respects, such as the requirement for a maintenance technician to possess a rating for the type of aircraft, powerplant or system being worked on, the ICAO requirements are more stringent than our own.

    I understand that members of the subcommittee and its staff have visited many of the foreign repair stations in Europe and Asia and were favorably impressed. It may be interesting to the subcommittee that many of the foreign repair stations are owned by U.S. production approval holders, such as Pratt and Whitney, Allied Signal and General Electric. These facilities were established to provide worldwide customer support for these U.S.-made products.

    Most of the FAA-certificated foreign repair stations are concentrated in just a few areas of the world. For example, over 40 percent are in the U.K., Germany and France. Another 16 percent can be found in Singapore, Japan and Australia. Over 20 percent of the certificates have been issued to foreign air carriers. Over time I would expect to see a greater number of FAA foreign repair stations established in other parts of the world as aviation continues to be the engine that fuels economic growth.
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    In light of my testimony today, it may come as a surprise that ARSA opposed the 1988 amendments to H.R. 145. At the time we also believed that jobs would be lost to foreign repair stations. Our fears never materialized. On the contrary, the companies that I work for gained foreign customers as aviation grew at a faster rate internationally than it did domestically. Needless to say, the more foreign customers we attracted, the more jobs we created in the United States. Today the influx of parts sent to the United States for repair and overhaul far exceeds those sent out of the United States.

    Today over 20 percent of TPS' business is derived from foreign sources. Of this amount, South America accounts for 60 percent. The Pacific Rim represents 30 percent, and 10 are from European JAA countries. We received our JAR 145 certification in 1995, and recently we have received approval from the Governments of China, Indonesia, Singapore and Thailand to perform maintenance on components used on their aircraft. I can assure the subcommittee that certification inspections to which TPS was subjected by these foreign authorities were just as comprehensive and demanding as the FAA's inspections.

    Mr. Chairman, in spite of the FAA's neutrality on H.R. 145, it is clear from their testimony that the landscape of the global repair station industry will be irreparably and significantly altered if this legislation is adopted. Should that occur, could any of us blame the JAA or any foreign government if they were to impose similar artificial restrictions on the ability of their airlines to have repair work performed in the United States? Is there anyone that seriously doubts this would happen?

    TPS is ready to compete with any repair station, domestic or foreign. I have complete confidence in my employees and the quality of work they produce. We are well-positioned in the marketplace. I firmly believe that as the world expands its aviation infrastructure, more and more foreign airlines will have a need for our services in the years ahead.
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    With all due respect to the proponents of this bill, I do not understand why the United States would take any action to undermine international cooperation in this area. The globalization of the aviation industry has not only benefited TPS and its employees, but other large and small companies all over the world. But if this bill passes, other countries will have no choice but to respond in kind.

    Mr. Chairman, this legislation is a throwback to the protectionist days of U.S. trade policy. It is a bad bill. I urge the subcommittee not to adopt it. Thank you very much. I would be happy to answer any questions.

    Mr. BLUNT. Thank you, Mr. Rookey.

    I thank the entire panel not only for the testimony you submitted orally here, but the really good testimony that we have put on the record. There will be questions from the panel. There is a vote on the floor right now. We will take a break for at least 10 minutes. In about 10, 12 minutes from now, we will start back up and we will have questions for this panel.


    Mr. BLUNT. The vote on the floor was on the Appropriations conference committee on transportation, the general revenue part of transportation, so Transportation Committee members all needed to be there for that vote. Again, we are glad you are here today. We appreciate the testimony we have got on the record.
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    Mr. Rookey, you mentioned retaliation of various kinds by our foreign competitors. If you could cite just a couple of quick examples of what you think might happen if this legislation passed.

    Mr. ROOKEY. I think that, as a result, if we put this bill in place, I believe that the retaliatory efforts by other civil aviation authorities would come in the form of failure of them to approve U.S. repair stations to perform work for those air carriers in their countries. I cited some examples of foreign civil aviation authorities that have inspected our facilities and approved us to work for their international air carriers. I believe that if this bill should pass, then we, in turn, would not be allowed to work on their air carriers parts, which would in turn lop off about 20 to 30 percent of my revenue.

    Mr. BLUNT. Do you have any idea what the balance in that trade-off is? How much work do we do for foreign carriers compared to the work that we do in these foreign stations?

    Mr. ROOKEY. I think there is quite a bit of work that is done in the U.S. for foreign carriers. I think there are also a lot of components that are shipped in. There is also the work which is done by some of the spare parts brokers which go international.

    Mr. BLUNT. Mr. Robeson, do you have any sense of how that all plays out?

    Mr. ROBESON. Mr. Chairman, I can speak for our members. We did a survey of our members on this question. I don't know how many members I have today, I don't know who bought whom yesterday, but it is around 50. We had responses of about 11 or 12 of those members who had significant repair operations both in the States and overseas; and they are currently showing the number that Mr. Oberstar referred to, which is 3.5 to 1 in favor on our repair and overhaul operations.
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    Mr. BLUNT. Do you have any reason to believe that the 11 are less than representative of the 50?

    Mr. ROBESON. No, I think they are probably representative. We will go back and try and get some more responses from those who did not respond.

    Some of our members are not involved in civil aviation. We cover defense contractors in the aerospace business, as well, so I wouldn't expect someone like FMC, for example, to respond to this type of questionnaire.

    I might also add, if I could, about the question of retaliation, because I spent a fair part of my career in that kind of arena, that what I would expect to see happen is really what was just described by Mr. Rookey. But the normal run of events on something like that, since we do believe that this is currently covered by international trade agreements, is that you would see us dragged into a WTO case by the European Union and probably joined by some other countries—Canada, Japan and Singapore; and they would ask for some kind of finding that we had contravened our obligations, and then they would be authorized to retaliate if we did not bring our practices back into conformity with those obligations.

    The three codes I mentioned in my testimony do in fact have reference to these kinds of services, and in fact maintenance services are explicitly called out in the services agreement.

    Mr. BLUNT. Mr. Buffenbarger, on the whole service issue, you mentioned parts as a potential problem. Do you have any examples of substandard parts that have been put on planes at these foreign locations that would be helpful for us to have on the record?
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    Mr. BUFFENBARGER. Yes, I do, Mr. Chairman.

    Not too long ago, there was a Northwest flight fuel tank problem going on a Northwest 747 flight to Singapore. But to give you an example: Audio control panels, vendor was Hughes Aerospace on a 747, unauthorized foreign third-party shipment, returned to the vendor, loss of flight deck audio. This is from a list, Mr. Chairman, that I have that is included in my written statement.

    Mr. BLUNT. So your list is in the record of those parts problems?

    Mr. BUFFENBARGER. Yes, it is.

    Mr. BLUNT. Thank you. Mr. Wytkind, you mentioned substandard safety and other problems in these depots. Is this because of the failure of the 1988 standards, or why do you think—is this a bigger problem or just a bigger problem because there are more than twice as many of the repair stations as there were 10 years ago?

    Mr. WYTKIND. There are, I think, a number of reasons which have been raised today. First of all, you have rules that were in place up until 1988 that worked well in this industry. You have foreign repair stations all around the world that deliver the services needed for our industry. After 1988, suddenly those facilities started blossoming all over the world in places where you wouldn't normally fly, but you were simply flying new aircraft to places like Costa Rica.
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    So we talk about substandard. The reason we are using words like ''substandard'' is because those facilities, one, don't have the same training requirements; two, don't fall under all of the regulations that even the FAA has admitted they don't fall under; and three, we don't inspect them. When you are literally living on the property of a major U.S. carrier and watching the members of these two unions and then back in other parts of the world, you are basically going for an annual visit to a station, that is hardly a level playing field on the regulatory side.

    There is one other point I just wanted to make. On the issue of retaliation, the same argument could be made that if a country threatened retaliation, we would allow tainted food into this country. The reason we don't is because we impose our standards on that food. I think that that needs to be put in the record. That is really not the reason why you do or don't pursue good aviation policy.

    Mr. BLUNT. Mr. Robeson, do you want to add anything to that?

    Mr. ROBESON. Yes, the issue is national treatment. What is proposed in this bill is denying national treatment to foreign repair stations. That is clearly a GATT violation. The food analogy is inappropriate because the real question would be, what if we imposed food standards on imported food which were more stringent than those imposed on U.S. food? That is the question. The question is, do we have no standards for a lot of the foreign repair stations while we impose standards on our own?

    Mr. BLUNT. Let me go to the bill's sponsor, Mr. Borski.
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    Mr. BORSKI. Thank you. Mr. Robeson, let me stay with that for a second if I can. My understanding is that we do have more stringent standards for domestic repair shops than we do foreign. It is not a question of giving them more stringent than we do. We currently have more stringent rules here than what the foreign repair shops have. Am I wrong?

    Mr. ROBESON. My understanding is that 145 itself is relatively more stringent for the foreign stations than for the U.S. stations. The issue where the stringency is less is in the certification of airmen.

    But what you heard from Mr. Gardner is that there is a consideration of equivalent levels of safety; I mean, if you take the United States and Europe, for example, the accident rates are virtually identical between the United States and Western Europe. So the question is, where is the safety issue?

    Mr. BORSKI. I don't think Western Europe and the United States is the problem, but let me just make sure for the record that it is clear, at least from my intention, it is not to make things tougher for foreign repair stations but to make them equal and we could compete in that vein.

    Mr. Buffenbarger, let me ask you, Mr. Gardner had suggested there was no loss of American jobs even though the foreign repair stations have exploded, almost doubled, some 300 new repair stations. Does that seem accurate to you? Do you have any different information as chairman of the subcommittee?

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    Mr. BUFFENBARGER. We have lost jobs to the foreign repair stations. If you look at the numbers that have been bandied about in this room during this hearing today, the fact is that there has been a 125 percent increase in foreign repair stations, more work going overseas and into countries like China and Singapore, which have very questionable practices on the issue of foreign aircraft repair.

    I would like to add in those countries, in most foreign countries, there is no requirement as required by the FAA and H.R. 145 for record-keeping, the tracking of sources, et cetera. So, therefore, there is a significant problem. That is what this legislation does, simply level the playing field for the members that we represent in this industry as they compete against those stations overseas.

    Mr. BORSKI. Mr. Hall.

    Mr. HALL. In response, our local union in Tulsa, Oklahoma, as soon as this new regulation went into effect in 1988, up to 1995 lost over 2,000 jobs. It is true in the last year and a half, we are starting to recapture some of that, but a tremendous amount of job loss did occur, and it will take us years to regain the last jobs.

    Mr. SCHERI. I am Bill Scheri from the machinists union.

    It is what Congressman Oberstar brought up today and we don't see this as reality. He is saying that 20 to 50 percent of foreign carrier work is now being done by U.S. certified maintenance people. We have not found that, Mr. Congressman, in our shops. We have found the opposite.
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    On United Airlines, for example, years ago we used to do work for Quantas Airlines, Span Tex, Air Nippon, TWA; prior to 1988 we used to do work for Olympic Airlines, Saudi Arabian Airlines and Aer Lingus. We don't see this big influx of work coming in; we see it going overseas.

    Example: In January of this coming year, in 1998, Northwest Airlines has plans to ship nine 747s overseas for what we call heavy maintenance, two going to China and the other seven going to Singapore. These aircraft, if they are maintained by our members in our shop, it takes approximately 50,000 hours to complete that type of check. They have got plans, they are going overseas because they get cheaper labor and this is a good example.

    The reason we are not seeing a big influx of loss of jobs—we have lost jobs and job opportunties, like my president said. But what happened, also, you get a United Airlines and Northwest Airlines has been hiring and that offset over the last few years.

    So I just point this out to you, that we have testified here many times over since 1988, and I have seen these figures increase, from 1988 to where it is at right now. And I am a licensed airframe and powerplant mechanic, and let me tell you something, this really scares me and jeopardizes my career, that somebody overseas that really don't have the dedication, training and expertise that our mechanics do, as represented by the IAM, in putting a proper fix on an aircraft. We pride ourselves on that.

    I tell you, there is a question before, I guess, this Congress, whether they have the same type of requirements. The answer is no. They are relaxed overseas.
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    I am an airframe and powerplant mechanic. It took me 2 years to get licensed. I attended Embry-Riddle Aeronautical University and my colleagues that work in my office, all of us are licensed. Over there if they do have a license, what happens, they license them for a specific aircraft. They do not go into the depth that our mechanics do in this country to obtain their A&P license.

    There are a lot of fallacies with this. I hope this Congress can see through all this smoke and return FAR 145 where it belongs prior to the change in November 1988.

    Thank you.

    Mr. BORSKI. One other observation I would like to make, Mr. Chairman, I believe most of the explosion in the foreign repair shops took place when the industry was contracting, when business was down, less planes were being ordered, and more of these foreign repair shops came about.

    Let me also just mention, Mr. Chairman, we have—and I visited myself with the subcommittee a repair station in London and one in Spain and also, earlier in the year, one in Hong Kong. While there were no particular problems with those repair stations at all in my view, I would like to note for the record that they were all countries, A, who paid their people reasonable wages, or comparable to American wage earnings; and secondly, they were all in places where foreign or international trade and flights take place—not the problem that we are trying to address here.

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    Again, Mr. Chairman, let me thank you very much—very, very much and thank the distinguished Ranking Member, Mr. Lipinski, for his help today.

    Mr. BLUNT. Thank you, Mr. Borski.

    Mr. Lipinski.

    Mr. LIPINSKI. Thank you very much, Mr. Chairman. The gentleman who was just speaking, what was his name?

    Mr. SCHERI. I am Bill Scheri, Vice President of Transportation for the IAM.

    Mr. LIPINSKI. Bill, have you ever visited any of the repair stations in Europe, foreign repair stations?

    Mr. SCHERI. No, I haven't. But I am a member of the executive board of the International Transport Federation, and we represent approximately 6 million workers across the globe; and I am very familiar with different procedures that take place in those repair stations. But I have not physically been in one.

    Mr. LIPINSKI. The reason I bring that up is because I have a great concern about these foreign repair stations from the standpoint of safety—frankly, also from the standpoint of the wages that are paid to the people working there and obviously the safety aspect, what their training has been, what their experience has been.
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    But it seems to me on a number of foreign repair stations that I have visited in Europe and, as Congressman Borski mentioned, in Asia where the general standard of living is comparable to what it is here in the United States, I don't see that as being a very significant problem along the lines that we are concerned about.

    I do see it in nations that are nowhere near as developed as we are or as, frankly, Western Europe is or a few locations in the Far East.

    I think that all of us that are interested in this legislation should try to move forward to come up with specific abuses that we can find at foreign repair stations, because unfortunately the ones that I have seen and the ones that Congressman Borski has seen, we really can't complain about. We can't pinpoint any real severe problems there, although I believe that they exist out there; and I think since you are interested in the issue and we are interested in the issue, we ought to go out of our way to try to find those locations that we are fearful do exist out there.

    If you have any comment, go right ahead.

    Mr. SCHERI. I have comments, Mr. Congressman.

    I am glad your concern is the same as ours here in the machinists union. Basically, we are concerned here because of the procedures they use. I hear here today that they follow paperwork in these foreign repair stations. They don't. They don't have the paperwork system that a licensed mechanic in this country is required to fill out under FAA procedures. In fact, a supervisor, or what they call a ''lead man'' over there, they fill no paperwork out.
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    Prior to 1988, I think it was brought up before Congress here today, we had an aircraft—and I am talking a U.S. aircraft—that had to have a repair to get them people back into this country, whatever route they were flying. That aircraft, that work was performed by a foreign mechanic. That airplane flew home. Once it landed, whether it was United Airlines or TWA, whatever the case was, our inspectors as represented by this union would look at that repair and also our mechanic would be there to make sure that that was repaired, our alteration was done in conformance with our Federal Air Regulations.

    I don't see that anymore. And what scares me, the way these certified repair stations are blooming out, there are 113 more applications pending, it is a really big concern. Believe me, they don't have the paperwork that we have, follow-on here as A&P mechanics.

    Mr. LIPINSKI. I am sure you are also aware of the fact, too, there are a number of these foreign repair stations who get certificated from the FAA because it is a badge of honor to be certificated from the FAA here, and they wind up actually doing no work whatsoever on American carriers. The Iberia location that we went to in Spain has never worked on an American plane. They have no plans to work on an American plane. If an American plane happened to land on their runway for emergency repair, they might be able to do it if they had the correct part.

    But that is something I think—we have to look at this problem in a comprehensive way, and I think that is something we should be aware of also.

    Mr. SCHERI. Can I try to give you an answer on that if I may?
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    Mr. LIPINSKI. Certainly.

    Mr. SCHERI. We have, I guess, what I have seen through our organization there is what we call 66 aircraft maintenance inspectors set up around the globe. Back in 1988, there was like 18, as I recall it, covering a little less than 200 foreign repair stations; that figure is now up to 497. I hear these cases come into my office that basically these inspectors are not going in physically, into these stations, like an FAA inspector does here in this country. Whether it be United, TWA, or a Northwest or U.S. Airways, they don't do that.

    A lot of the information is by telephone work, because if you look at their schedules that they have got to cover—and we have copies of it, and I am quite sure Congress knows it from A to Z—it is a big territory. It is almost an impossibility to stay on top of this type of operation and do it right and in accordance, like our mechanics do in this country, under the Federal Air Regulations that we have to comply with. If we don't, our licenses are suspended, revoked, terminated in some cases.

    That is not the case over there, and that is what bothers me, Mr. Congressman.

    Mr. LIPINSKI. Okay.

    Mr. Robeson, you were talking about having the figures, for every $1 that a U.S.-registered carrier has performed at a foreign repair station, there is $3.50 worth of work performed over here on foreign carriers. That was your statement, right?
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    Mr. ROBESON. Let me be clear what we are talking about. The $3.50 is for work performed at our members U.S. repair facilities on foreign equipment; the $1 is repairs performed at our members' foreign facilities on U.S. equipment, okay?

    So Parker Hanifan, for example, has a repair facility at its home office in Irvine and has a repair facility in Germany. Let's just take those numbers. I can't tell you that that's Parker's number; it is an average of what we got from members. But what those numbers will tell you is that if Parker fits the average, then the Irvine facility performs $3.50 worth of repair on their product coming back in off of foreign-registered airplanes, and that $1 worth of their product on U.S.-registered airplanes is sent over to Germany for repair work.

    There can be a lot of reasons for that. They could decide to specialize, the pumps are in one facility, actuators in another; it could be that they have lines in both facilities, but one is booked up. It could be that they just have one that has been repaired, and they bring it back for installation on the airplane.

    Mr. LIPINSKI. When are these figures from, last year?

    Mr. ROBESON. They cover 1996. We did the survey over the fall of this year.

    Mr. LIPINSKI. Your association, yours, is it an association of repair stations; is that it?

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    Mr. ROBESON. No, our association represents manufacturers. But our manufacturers normally have repair facilities both as separate lines of business, as well as in order to be able to perform warranty work.

    Mr. LIPINSKI. Okay.

    Mr. ROBESON. Let me give an example. General Electric is a large producer of engines. They purchased an overhaul facility from British Airways, they purchased Greenwich Air Services, which in turn purchased UNC Corporation. It is like fish eating fish.

    Mr. LIPINSKI. Is your association then just a manufacturer of engines?

    Mr. ROBESON. No. We represent manufacturers of all kinds of aerospace products from missiles, space, satellites, aircraft. My area that I am responsible for is civil aviation; we are divided along functional areas. We have the major manufacturers of civil aviation products, Part 25 airplanes, helicopters, engines, et cetera.

    Mr. LIPINSKI. Well, the figures you have given me here, $1 to $3.50, what I am trying to find out, is that on civil aviation only?

    Mr. ROBESON. Yes.

    Mr. LIPINSKI. Also I am trying to establish the survey that you conducted of $1 to $3.50, what portion of civil aviation would that take in? How many repair stations are we talking about? Is it 50 percent of all the work done, 75 percent, 20 percent; what is it?
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    Mr. ROBESON. I don't have that number. I know I have been talking with Gellman Research that Guy Gardner mentioned, and it is hard to get a handle on the total amount of repair flows going in and out of the country.

    What I can tell you is, that number is applicable for the manufacturers and their repair facilities. I have not surveyed the number of facilities, although I could try to get that information for you. I can tell you, for example, that Pratt & Whitney has six facilities overseas, of which they are majority owners, and they have about 10 in the States. That is just as an example.

    Mr. LIPINSKI. Were they in these surveys?

    Mr. ROBESON. Yes, they were. Pratt, General Electric, Boeing, and several other companies.

    Mr. LIPINSKI. Unfortunately, I have a gentleman that I have to go and visit with in the lounge, so I am going to have to hold my questioning at this particular time. If the committee is still here when I finish, I have a number of other questions, but I have a feeling that is not going to be the case.

    Thank you, Mr. Chairman.

    Mr. BLUNT. That may not be the case, Mr. Lipinski, but we will see.
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    Mr. Coleman, I am a little confused on this topic of making the decision to send the airplane out of the country for repair. I think that is part of what you do.

    Mr. COLEMAN. Actually, it would be unlikely that our members would send their airplane out, since they are short haul, and they don't normally operate intercontinental. So it would be unlikely they would send the airplane out, although it is possible.

    But it would be components that they may send out, because they are manufactured overseas; or they may send their plane to a repair station in the United States to have some repairs or modifications done, and that repair station may have a component that they never touched, but was delivered from a foreign repair station because it was manufactured overseas.

    So there is not a lot of travel of the aircraft themselves to their point of manufacture, with the exception that a lot of the aircraft are made in Canada by Bombardia, and they may travel up there, and that is a foreign repair station.

    Mr. BLUNT. The Canadian repair stations are a different kind of problem, the same kind of problem? Anybody want to comment on that?

    Mr. BORSKI. My understanding is that Canada is not listed as a foreign repair station because of our bilateral.

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    Mr. BLUNT. So it would not be included?

    Mr. BORSKI. I don't believe so.

    Mr. ROBESON. May I address that question of bilateral safety agreements? Not with respect to Canada, but we have a maintenance procedures document that was signed between the FAA and the German LBA under a bilateral aviation safety agreement. Now, the word we have been given informally from FAA staff is, that kind of agreement would go by the boards; and presumably, the same would be true with an agreement covering Canada. So we are unclear.

    I can tell you that some of our members have had calls from a very exercised Air Canada on this subject.

    Mr. BLUNT. Mr. Borski, do you have any other questions?

    Mr. BORSKI. No, thank you.

    Mr. BLUNT. Mr. Oberstar, do you have any questions for this panel, or comments?

    Mr. OBERSTAR. Thank you, Mr. Chairman. Regrettably, I have had so many other things happening at the same time—votes—I have been distracted. While I did read the submitted testimony last night, I regret I had to miss the statements of all of my good friends assembled at this table.
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    I think they all heard me earlier. I will just restate my concern that the main problem I think facing maintenance in the United States is outsourcing by the airline carriers today to domestic repair maintenance and overhaul stations and subsequent further outsourcing by those stations to other points in the U.S. and outside the United States.

    There is also a balance of payments issue on which nobody seems to have substantial information. There is antecdotal information here and there, reports that I cited in my opening comments about fan blades from Northwest, that Northwest contracted out to a subcontractor in the U.S., which in turn shipped them to Singapore for work, and which then came back. There was nothing wrong with the work, the work was done fine, but it was $34,000 worth of work that went outside the United States.

    I think we need more substantiated cases of work that is being contracted out beyond the U.S., to understand better why that is being done; and we have to match that against the work that is being performed in the U.S. by foreign carriers at our stations, which means union jobs, which means jobs in the local economy, and be careful that we do not trade away a benefit for a significant larger loss. That is my main concern here. And I do not think all the facts are available for us to make that judgment.

    I will be glad to hear your responses.

    Mr. BUFFENBARGER. I think I can speak with a little bit of firsthand experience on that, having been an employee of the General Electric Company and its Aircraft Engine Division, having served my apprenticeship at the Evandale, Ohio, facility, and being a little bit familiar with the construction and the manufacture and the design and the engineering of a jet engine.
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    The fact that Northwest would send fan blades to Singapore, where General Electric has built and operates an extremely large facility, and they have the work done there, only plays on the often-stated comments from that company at various levels of management to the U.S.-based employees that, you have to understand, it is a global economy, and, yes, they are a dog in the hunt for the cheapest labor.

    Now, I don't know, I have never been in the Singapore facility, but I do know this much: I have seen a lot of work come in from that facility that had to be redone to the standards we expect for safe aircraft and safe engines in this country. And I would think that one little factor has to be taken into play here, which is the economy of the U.S. is also important.

    I am more concerned about the economy of the U.S. and the economy that supports the citizens of this country and the workers. I am more concerned about that than I am about the economy of Singapore or its strategic value to us in some way, shape or form.

    I would think, as we look at the legislation that is before us in this subcommittee, that instead of exporting some of our management practices as the dog in the hunt for the cheapest labor, we should start exporting some of the good things about this country, like our standards and what we expect in quality, the integrity of aircraft parts, all those things that reassure a worldwide public that it is safe to fly. I think that has to take great weight in this legislation.

    Mr. OBERSTAR. I fully agree. I don't dispute that one bit. But I want to know for sure that before we move legislation, we know what the balance of benefits is here, because I have been in numerous maintenance facilities over 15 years and seen a great deal of work performed on foreign aircraft in U.S. maintenance facilities, and I don't want to see us take an action that will invite retaliation by foreign governments that will cost us jobs in the U.S. To the extent we can, we must tighten up on our review of maintenance facilities overseas and domestically.
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    I think it is a greater threat when you have an organization such as found in the United States, an MRO shop, that has $28-an-hour wages to which work is being shipped out, outsourced from a U.S. carrier to be performed, not the whole aircraft, but significant numbers of parts, even safety-critical parts, being done in shops that charged $15 or more an hour less than is being charged—than the union workers are getting.

    Now, I think the new regulations, in the aftermath of ValueJet, are going to have their effect on those outsourcing competitors, most of them being nonunion shops, but that seems to me the first line of defense, that we ought to be a lot tougher on those shops. And if work is going to be subcontracted to a company in the U.S., then it should not be further subcontracted outside the U.S.

    My main interest is—and nobody seems to have the numbers except Boeing, and they have supplied some information that shows about 38 percent of work performed in the U.S. is on foreign carriers.

    Mr. HALL. Could I comment on that?

    First, let me say on behalf of my union and, I am sure, all the unions here, your earlier statement that you have been a strong supporter of labor is certainly true, as it is true with many members of this committee. That is why your opinion means a great deal to us, sir.

    I would just ask you to balance those concerns that you just alluded to with the issue of safety. In spite of comments down the line on my right that this is a jobs bill, as you describe it, it is not. It is job-related, but it is safety-bound, it is safety-priority.
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    I just ask you to compare two issues. One is that, in foreign stations, there are some—like Germany, for example, that have good civil aviation control, professional people. There are many where we have stations now, foreign stations, where we do not have any—any validity in the civil aeronautics ability to check maintenance work in their own country. This is not T.W.U. saying that; it's what the administration has said, that is what the FAA has said.

    The last point I would like to mention, because I have great difficulty understanding people that continue to say, there is a balance here—the same, equal as to inspection of maintain work is conducted—I also come out of the transit industry with buses. One thing we do throughout the country, both private and public, is to perform unannounced inspections of buses. They are conducted by State government, they are done by city government all the time. These unannounced inspections obviously have a safety component. If it didn't, we would not be doing them here in this country.

    Yet we can sit here and hear some say, they do not do it in the other countries yet it has no safety relationship, and we can't continue—to sit here and say, but everything is equal, apples to apples.

    We would like to hear from you, your concerns about this bill, and perhaps how we could talk together, and hopefully get you to sign onto this bill, because it is important to us. Your concerns mean a lot to us, and we would like to hear them, and I know you would certainly like to hear our concerns.

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    Mr. OBERSTAR. Thank you very much for a very thoughtful comment. I know that United contracted out a considerable amount of work in the U.S. because of their allegation that their own internal maintenance operations were overloaded. They could not handle the work; they contracted it out.

    The aircraft came back and they had literally to rework every one of the aircraft that they had contracted out in the U.S. Stuff wasn't shipped out elsewhere; it was sent out to nonunion shops.

    That is a safety consideration, you bet it is.

    I have also seen some work sheets that were provided just a few weeks ago by a machinist brother, Tom Trotter, who had work sheets on aircraft parts sent to domestic outsourcing maintenance facilities and then shipped overseas, and they came back and every one of them had discrepancies.

    We have got to have more of that kind of information to make the case—two purposes: one, to step up the surveillance of those facilities overseas; and secondly, to make the case for this legislation.

    Mr. Scheri?

    Mr. SCHERI. Thank you, Mr. Oberstar.

    First of all——
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    Mr. OBERSTAR. A great advocate of the machinists union, a strong voice for labor.

    Mr. SCHERI. Yes, you have been.

    Mr. OBERSTAR. You. You.

    Mr. SCHERI. You have been, too. My brothers and I also have to convince you to sign on to this bill.

    Jim, let me say this—Congressman Oberstar, excuse me—that them aircraft that you are talking about, they went to what we call a repair station in Arizona. It is called Goodyear. For your information, if it went to a union shop, that work would have been done correctly. That shop is nonunion out there.

    Mr. OBERSTAR. It is Dynair in Phoenix.

    Mr. SCHERI. And Dynair also, that is another nonunion one. I would point that out to you, and as you know, you have known me a long time and I don't like to make statements when you are not in this room, but I did make a statement before this Congress; and our records don't show that anywheres from 20 to 50 percent of foreign flag maintenance work is coming into our hangers.

    The opposite is true, Mr. Oberstar. We no longer do the foreign flag maintenance work. On such carriers as TWA, United Airlines, in the past, Eastern Airlines, which is no longer in business, it is not there anymore.
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    You talk about a balance of trade. You know as well as I do, all Members of Congress here, how this came about. It was through the Secretary of the Department of Transportation in 1988, Elizabeth Dole. She had five people convince her this was the right thing to do when they met over in Europe. We have been trying to convince Congress ever since that she was wrong in changing FAR 145.

    This is not a trade bill, and I bring it to your attention, and I know you have defended labor all your life. We have two industries left in this country intact. One is aerospace, and the other one is the air transport industry. And here we are, trying to destroy a big industry called air transport, in what I say is farming our work out overseas.

    It really bothers this union, and you know our feelings, and I will stop there.

    Mr. OBERSTAR. I appreciate that very much. Your words are spoken with deep feeling and great earnestness, and we are on the same track. We are just approaching it differently. I want to build a much more solid case than I see right now, lest we see some retaliation against the United States that costs us jobs and results in further deterioration of safety.

    We will continue to work together.

    Mr. ROOKEY. Mr. Oberstar, I would like to say something.

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    In support of opposition to the bill, I feel that if this bill is passed, the retaliation will be devastating to small companies such as mine. We derive a good percentage of our business from foreign operators sending their work in, and also, indirectly, from many of the major, major parts brokers in this industry. And I feel that should this bill pass, we would be severely, severely economically hurt.

    Mr. OBERSTAR. Thank you.

    Mr. BLUNT. Thank you. I thank the panel. We appreciate the hearing today and all the information you have put before the committee.

    [Whereupon, at 1:36 p.m., the subcommittee was adjourned.]

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